About the Ansoff’s Matrix

The Ansoff’s product and market growth matrix is a marketing planning tool which usually aids a business
in determining its product and market growth.

Market penetration

In market penetration strategy, the organization tries to increase its market share by using its existing
products and services in existing markets. This can be achieved by using competitive pricing strategies,
advertising, aggressive promotional campaign, personal selling and intensive distribution to establish
customers’ loyalty or finding new customers within existing markets. In Market Penetration, the risk
involved in its marketing strategies is the least since the products are already familiar to the consumers
and so is the established market. Eg…..

Product development

In product development strategy, companies try to create new products and services targeted at their
existing markets or modification of existing product at existing markets to achieve growth and increased
frequency of buying. This strategy is also suitable for a business where the products or services need to be
differentiated in order to remain competitiveness. These new products or modified products may be
obtained by probably change its outlook or presentation, increase the products performance or quality and
Investment in research and development of additional products. In this strategy, promotion is focus on
existing customer and use the same distribution channel in existing market. The risk involve in product
development is double to market penetration strategy. Eg……

Market Development

The third strategy is Market Development. It may also be known as Market Extension. In this strategy, the
business sells its existing products to new markets. This can be made through further market segmentation
to aid in identifying a new customer’s base. This strategy is used when the existing markets have been fully
exploited and need to venture into new markets. There are various approaches to this strategy, which
include new geographical markets, new distribution channels, new product packaging, and different pricing
policies. It also has to consider PEST analysis on new geographical markets. Various businesses have

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adopted the franchise method as a way of setting up other branches in new markets. The risk involve in
market development is also double to product development. Eg……

Diversification

In diversification strategy, organization tries to grow its market share by introducing new products into
new markets or starting up business beyond its current products and market. It is the most risky strategy
because the business is moving with new products into new markets in which it has no experience.
However, this strategy is equal balance between risk and reward and can be high rewarding. In this
strategy, organization also has to consider both product development and market development strategy.
There are two type of diversification and they are related diversification and unrelated diversification. In
related diversification, business remains in the same industry. For example, a cake manufacturer diversifies
into a fresh juice manufacturer. Unrelated diversification is starting business in the different or unrelated
industry. Good example is the easy jet which has diversified into car rentals, gyms, fast foods and hotels.

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Value chain is a series of departments that carry out value-creating activities to design, produce, market,
deliver, and support a firm’s products.

Customer value is the key ingredient which decides whether a marketing formula is failure or success.
Marketing alone cannot provide that superior value to the customers. Even if it plays the lead role, it can
only act as a partner in attracting, keeping and growing target customers. Marketers must work closely
with other internal department of the company to form an effective internal value chain that serves
superior value chain to the customers.

Each department of a company acts as a link in the company’s internal value chain. Each department plays
an important role in designing, producing, and marketing, delivering, and supporting the firm products. A
firm’s success doesn’t only depend on how well every department performs their work, but also how well
every department coordinates their activities.

Company’s different functions should work in harmony to produce value for customers. But in practice,
interdepartmental relations are full of conflicts and misunderstandings. Thus marketing department takes
the customer’s point of view and try to get all department to think customer and develop smoothly
functioning value chain. Eg….

To create superior customer value, an organization needs to look above its own internal value chain and
needs to look at its value delivery network such as suppliers, distributors and ultimately its customers.
Almost every organization of today’s world partnering with other members of their supply chain—
suppliers, distributors, and ultimately customers—to improve the performance of their customer value
delivery network. Competition no longer takes place only between individual competitors. Rather, it takes
place between the entire value delivery networks created by these competitors. Eg…

Relationship Marketing

Relationship marketing means customer relationship management and it is the most importance concept
of modern marketing. It is overall process of building and maintaining profitable customer relationships by

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delivering superior customer value and satisfaction. It involves managing detailed information about
individual customers and carefully managing customer touch points to maximize customer loyalty.

To build lasting customer relationships, company need to create customer value and satisfaction.
Customer-perceived value is the customer’s evaluation of the difference between all the benefits and all
the costs of a market offering relative to those of competing offers.( some customer value mean sensible
products at affordable price and others mean that paying more to get more)

Customer satisfaction depend on the product’s perceived performance relative to a buyer’s expectation.

 Not match expectation= dissatisfied

 Match expectation=satisfied

 Exceed expectation= delighted

Higher level of customer satisfaction lead to greater customer loyalty. Smart company aim to delight
customers by promising only what they can deliver and delivering more than they promise and it not only
make repeated purchase but also create word of mouth.

Marketing control

During the implementation of marketing plans, ,marketers must practice constant marketing control –
evaluating the results of marketing strategies and plan and taking corrective action to ensure that the
objectives are attained. Marketing control consists of four steps- the first set specific marketing goals,
measuring its performance in marketplace and evaluates the causes of any difference between expected
and actual performance. Finally, management takes corrective action to close gaps between goals and
performance.

Philip Kotler considers four types of marketing control:

1. Annual Plan control,2. Profitability control,3. Efficiency Control,4. Strategic Control

Annual Plan Control:

Annul plans are prepared for various activities including setting objectives (expected results or standards),
allocating resources, defining time limit, and formulating rules, policies and procedures. Annual plan
control relates to sales and the actual results are measured and compared with standards to judge
whether annual plans are being (or have been) achieved.

Depending on the degree of difference between the planned and the actual results, causes are detected
and suitable corrective actions are undertaken. Thus, it contains checking ongoing performance against
annual plan and taking corrective action. There are five measures used in annual planning control and
which are analysis of different sales, analysis of market share, analysis of market expenses to sales,
financial analysis and analysis of customer and stakeholder attitudes.

Profitability Control:

To find out how far company is achieving profits, certain profitability related standards are set and
compared with actual profitability results. Profitability control calls for measuring profitability of various
products, channels, territories, customer groups, order size, etc. It provides necessary information to

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management to determine whether products, channels, or territories should be expanded, reduced, or
eliminated.

Process of Marketing-Profitability Analysis: systematic and logical process is used for analysis of
profitability and it involves:

1. Identifying Functional Expenses:

It consists of determining expenses to be incurred for the marketing activities like salaries, rents,
advertising, selling and distribution, packing and delivery, billing and collection, etc.

2. Assigning Function Expenses to Marketing Entities:

Simply, expenses of particular head (for example, salary or advertising) are associated with different
entities like products, channels, territories or customers groups.

3. Preparing Profits and Loss statement:

A profit and loss statement is prepared for each type of products, channels, territories, etc., to evaluate
their relative performance. Based on relative performance in form of profitability, management can decide
on products, channels or territories to be expanded, reduced or eliminated.

4. Taking Action:

On the basis of the profit and loss statement, necessary actions can be directed.

Actions include one or more of followings:

i. Expanding product(s), ii. Reducing product(s),iii. Eliminating product(s),iv. Reducing any of the expenses

v. Increasing sales, etc.

Efficiency Control:

This control concerns with measuring on spending efficiency. While profitability control reveals the relative
(in relation to different entities like products, territories, channels, etc.) profits a company is earning, the
efficiency control shows the ways to improve efficiency of various marketing entities like sales force,
advertising, distribution, sales promotion, and so on. In order to evaluate efficiency level of different
marketing activities, the efficiency standards (of ideal performance) are set and are compared with actual
performance.

Efficiency control can improve efficiency of marketing department in two ways – one is, improving ability
of various marketing activities to contribute more in reaching the goals, and the second is, reducing
expenses or wastage. There are five main types of efficiency control and which involve controlling sales
force efficiency, advertising efficiency, sales promotion efficiency, distribution efficiency, and marketing
research efficiency.

1. Sales Force Efficiency Control:

To measure efficiency of sale force (salesmen), certain key criteria are developed. Common criteria used to
measure and evaluate the sales force efficiency include: Average number of sales calls per salesman in a

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day, Average revenue generated per call, Average costs incurred per call, Number of new customers
created during specific period, Number of customers lost in a given period.

2. Advertising Efficiency Control:

Advertising is the most expensive among all the promotional tools.So, it is extremely necessary to find out
efficiency level of advertising efforts. A company sets advertising goals (standards) and compared actual
contribution of advertising to decide how far advertising has been capable to fulfill firm’s expectations.
Advertising efficiency control mainly involves measuring cost efficiency or contribution efficiency.

3. Sales Promotion Efficiency Control:

Sales promotion efficiency measures the impact of sales promotion efforts on sales, profits,
competitiveness, and consumer satisfaction. Such efforts include offering a wide range of short-term
incentives to stimulate buyer interest and consumer trial.it tries to measure costs and impact of each of
sales promotion tools.

4. Distribution Efficiency Control:

By a suitable distribution network, company can improve its profitability on one end and consumer
satisfaction on the other end. Distribution efficiency control measures how far company’s distribution
system is efficient to achieve marketing goals.Distribution efficiency gives valuable information to select
the most cost-effective distribution option and sub-options. Company can minimize distribution costs
and/or improve profits and competitiveness. In the same way, it can increase consumer satisfaction, too.

5. Marketing Research Efficiency Control:

Marketing research is process of gathering, analyzing, and interpreting data relating to any marketing
problem. Marketing research is an expensive option and company need to know how far marketing
research efforts and costs are instrumental in achieving marketing goals. It provides necessary details to
improve research policies and practices.

Strategic Control:

Strategic control implies a critical review of overall marketing effectiveness in relation to broad and long-
term objectives and firm’s response to marketing environment. It deals with evaluating firm’s ability to
define and achieve marketing goals, and response pattern to environment. Normally, strategic control
verifies company’s long-term performance with reference to the close competitors.

A good control system offers the following benefits:

It provides timely information to management to take corrective actions.

It facilitates delegation and decentralization of authority and helps to expand the span of supervision.

It enables management to verify the quality of various plans and helps to review, revise and update the
plans.

It stimulates action by spotting the variations from the original plan highlighting them for the people who
can set things right.

It maintained various factors in their correct interrelationships and proceeds proper direction.
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Limitation of Control:

1. A firm cannot control the external factors-technological changes, changes in fashions, Government
policies, social changes etc.

2. In some cases, standards of performance cannot be defined in quantitative terms, for example, human
behaviors.

3. Control is a time-consuming and expensive process.

4. Control may not be acceptable to employees.

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1. Advise one of your clients on the importance of effective marketing research and identify
the key elements of the marketing research process.
( 2016 March Q5) ( 20 marks)

Answer- Marketing research definition, importance of effective marketing research, diagram of research
process, explain detail the diagram from( defining the research objective to report the findings) ( Page-106-
119)

Marketing research is systematic problem analysis, model building and fact finding for the purposes of
important decision making and control in the marketing of goods and services. There are many importance
of effective marketing research. By doing marketing research, marketers can get information about the
market and marketing environment, it can help marketers to measure the current situations and to
anticipate future development and make better decision. It also helps to identify new opportunities in the
marketplace, suggest appropriate distribution channels, evaluate and analyze the company’s reputation
and performance, minimize the risk involved in making decisions and one steps ahead of competitors.

Marketing research process has four steps and which are described below.

The first step is finding what needs to be researched. This can be a difficult step because if the company
does not identify the correct research opportunity and they can get skewed data that does not help them
solve the problem or assist in growing their business. It contains two parts of defining problem and setting
up research objectives. In problem definition, it is important to be specific, avoiding uncertainties and
simplifications. Care should also be taken, not to define problems in too narrow and that may distract the
researcher’s perspective.

Once the problem is defined, the next step is what the researcher wants to achieve and is called objectives.
To be meaningful and help focus the researcher’s attention, this objective should be SMART. The purpose
of this objective is to act as guide to the researcher and help him in maintaining a focus of research.
Marketing research project might have one of the three type of objectives.

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The objective of exploratory research is to conduct when the researcher doesn’t know how and why the
certain phenomenon occurs. Eg. How does a customer evaluate the quality of bank or airline services?
Focus group, interviewing key customer groups, experts and even search for printed and published
information are some common techniques. The objective of descriptive research is to carry out to describe
phenomenon or market characteristic. Eg the study of the effect of sales promotions on customer buying
behaviors of electronic products in Myanmar and objective of causal research is to establish cause and
effect relationship, eg. The influence of income and life style effect on purchase decision.

The next step in marketing research is to develop the research plan. The research plan will allow
marketers to sort out the details of which information they need to make a reasonable marketing decision.
In these part marketers first need to identify the data they need to make marketing decisions. So marketer
make sure to use the right data. There are two sources of data or information ( primary & secondary)

Secondary data: it refer to the information that has been collected earlier by someone else. This includes
printed or published reports, news items,etc. this also include internal documents like invoices, sales
reports, payments history of customers etc. Primary data: to overcome the limitations of inconsistency,
oldness and bias, the researcher turn to the primary data. Primary sources refer to the data collected
directly from the market place, customers. They are also reliable data sources and help in overcoming
limitations of secondary data. The problem of primary data is costly and spends more time. Data can be
collected through any or combination observation or experimentation or survey method.

The researcher next puts the research plan into action and it involves collecting, processing, and analyzing
the information. Data collecting can be carried out by research staff or outside firm. Researchers must also
process and analyze the collected to isolate important information from insight. It is important to
understand raw data has no usage in marketing research and appropriate analytical tools must be used.
The most elementary is arithmetic analysis using percentage and ratio. Statistical analysis like mean,
medium, mode, percentages, standard deviation and coefficient of correlations should be used to measure
the result.

The last stage is report and making presentation to the decision makers. It is important that the report is
summary and called executive summary and giving birth eye view of the research. The structure of good
report should contain introduction of problem, marketing research finding or survey finding, interpretation
of research findings and policy suggestion. Thus managers and researchers must work together closely
when interpreting research results and must share responsibilities for the whole research process and
resulting decisions.

( if you have other idea on importance of market research and research process depend on your own
experience, you can create with your own idea)

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An online interview is an online research method conducted using computer-mediated communication

(CMC), such as instant messaging, email, or video. Online interviews are separated into synchronous online
interviews and asynchronous online interviews.

Synchronous online interview is conducted in real time such as Skype interviews, face to face video chat
and using web browser. An asynchronous online interview takes place when the researcher and the
participant are not online at the same time. These interviews will use email and conducted across time
zones or with busy participants, allowing them to answer questions at their convenience.
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Online interviews typically ask respondents to explain what they think or how they feel about an aspect of
their social world. In online interviews, data is primarily generated through conversations between a
researcher and "respondent". Researchers select respondents, recruiting individuals who can provide
insight on a particular phenomenon, situation, or practice.

Advantages

- Can carry out interviews with a very geographically dispersed population.

- Can interview individuals or groups who are often difficult to reach such as (disabled/in prison/in
hospital) or the socially isolated (drug dealers/terminally ill/ etc.) or those living in dangerous places
(e.g. war zones).

- Researchers and participants can be comfortable while still maintaining their personal space and
private.

- The advantage of privacy

- Provide savings in costs to the researcher

- Record data quickly and accurately

- Reduce the environmental impact of research by eliminating the resource expenditure associated
with traveling long distances

Limitations

- Difficult to establish a good rapport and level of trust between researcher and participant in a
computer-mediated research relationship.

- Hard to communicate with participants with varying degrees of technical skill within a population.

- Not able to maintain attention, as the researcher may not have control over distractions that are
interrupting the interviewee's engagement with the interview.

- In text-based interviews participants and researchers are not visible to one another and this can
make it difficult to assess how questions and responses are being interpreted on either side due to
a lack of visual cues

Main influences of customer buying behavior

Customer buying behavior is the buying behavior of final customers – individuals and households that buy
goods and services for personal consumption. Consumers make buying decision every day and buying
decision is the focal point of the marketer’s efforts. Marketers research customer buying decision in great
detail of what, where, when, how much and why they buy the products. However, seeing inside the
customers head and figure out why they buy the products is difficult for marketers. Following figure shows
that marketing and other stimuli enter the customer’s black box and produce certain responses.

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To figure out why customers buy products, marketers want to understand how the stimuli changed into
responses inside the black box which has two parts. They are buyer’s characteristics influence on their
stimuli and buyer’s decision process effect on their behavior. In general there are four things influence on
customer purchases and they are cultural, social, personal and psychological characteristics. Marketers
cannot control such factors but they must take into account.

Culture is the fundamental determinant of a person’s wants and behavior. People in different country will
have different culture and behavior. Marketers must closely attend to cultural values in every country to
understand how to best market of their existing products and find opportunities for new products. Each
culture consists of smaller subcultures with shared value systems based on common life experiences and
situations. Many subcultures make up importance market segments, and marketers often design products
and marketing programs tailored to their need. Social class is society’s relatively permanent and ordered
divisions whose members share similar values, interests and behaviors. Social class members show distinct
products and brand preference in many areas.

In social factor, reference groups are the entire group that has a direct or indirect influence on a person’s
attitude or behaviors. Marketers must decide how to reach and influence the group’s opinion leaders.
Family is the most importance consumer buying organization in society and marketers are interested in
roles and influences of family members on purchase of different products and services. The person’s
position in groups that he or she participates can be defined in terms of role and status. People choose of
products that reflect and communicate their role and desired status in society. Marketers must be aware
of the status symbol potential of products and brands.

A buyer’s decisions are also influences by personal characteristics such as buy’s age and life cycle stage,
occupations, economic situation, lifestyle and personality and self-concept. People change the goods and
services they buy over their lifetimes. Buying is also shaped by the stage of the family life cycle. Marketers
often define their target markets in term of life cycle stage and develop appropriate products and
marketing plans.

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Occupations and economic circumstance influences consumption pattern and marketers try to identify the
occupational groups that have interest in their products and services. People coming from the same
subculture, social class and occupation may have different lifestyles. Lifestyle involves measuring
consumer’s major activities, interest and opinion. It can help marketers understand changing consumer
values and how they affect buyer behavior.

A person’s buying choices are further influences by four major psychological factors such as motivation,
perception, learning and beliefs and attitudes. In which motivation is a need that is sufficiently pressing to
direct the person to seek satisfaction of the need. Marketers have to know the deeper into the customer
psyches and they can develop better marketing strategies.

Another one is perception and it is the process by which people select, organize and interpret information
to form a meaningful picture of the world. People emerge with different perception of same products
because of three perceptual processes of selective attention, selective distortion and selective retention.
Thus marketers must work hard to get their information through.

Another one is learning and learning describes changes in an individual’s behavior arising from experience.
Thus marketers can build demand for products by associating learning with providing positive
reinforcement. The last one of psychological factor is belief and attitude. Belief is a descriptive thought
that a person holds about something and thus marketers interested in belief that people formulate about
specific products and services because belief make up brand image that effect buying behavior. Attitude is
a person’s relatively consistent evaluations, feelings, and tendencies toward an object or idea. Attitudes
are difficult to change and marketers try to fit its products or services into existing attitude rather than
attempt to change attitudes. The above factors are many forces acting on customers buying behavior and
the customer’s choice result from the complex interplay of culture, social, personal and psychological
factors.

Product Hierarchy:
Each product is related to certain other products. The product hierarchy stretches from basic needs to
particular items that satisfy those needs. There are 7 levels of the product hierarchy:

1. Need family:

The core need that underlines the existence of a product family. Let us consider computation as one of
needs.

2. Product family:

All the product classes that can satisfy a core need with reasonable effectiveness. For example, all of the
products like computer, calculator or abacus can do computation.

3. Product class:

A group of products within the product family recognised as having a certain functional coherence. For
instance, personal computer (PC) is one product class.

4. Product line:

A group of products within a product class 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 given price
range. For instance, portable wire-less PC is one product line.

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5. Product type:

A group of items within a product line that share one of several possible forms of the product. For instance,
palm top is one product type.

6. Brand:

The name associated with one or more items in the product line that is used to identity the source or
character of the items. For example, Palm Pilot is one brand of palmtop.

7. Item/stock-keeping unit/product variant:

A distinct unit within a brand or product line distinguishable by size, price, appearance or some other
attributes. For instance, LCD, CD- ROM drive and joystick are various items under palm top product type.

Product Mix:
An organisations product line is a group of closely related products that are considered a unit because of
marketing, technical or end-use considerations. In order to analyse each product line, product- line
managers need to know two factors. These are.

i. Sales and profits

ii. Market profile

A product mix or assortment is the set of all products and items that a particular seller offers for sale. A
company’s product-mix has some attributes such as.

1. Width:

This refers to how many different product lines the company carries.

2. Depth:

This refers to how many variants, shades, models, pack sizes etc. are offered of each product in the line

3. Length:

This refers to the total number of items in the mix.

4. Consistency:

This refers to how closely the various product lines are related in end use, production requirements,
distribution channels or some other way.

Packaging
Packaging can be defined as the wrapping material around a consumer item that serves to contain,
identify, describe, protect, display, promote, and otherwise make the product marketable and keep it
clean. Well-designed package can create convenience and promotional value.

Primary packaging is the material that first envelops the product and holds it. This usually is the smallest
unit of distribution or use and is the package which is in direct contact with the contents. Primary
packaging can also used to demonstrate the proper use of an offering, provide instruction on how to
assemble the product, or any other need information.

Secondary packaging is outside the primary packaging, and may be used to prevent pilferage or to group
primary packages together. It doesn’t carry warning or nutrition lables but stills likely to have brand marks
and labels.
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Tertiary packaging is used for bulk handling, warehouse storage and transport shipping. The most common
form is a palletized unit load that packs tightly into containers.

Importance of packaging Some of the major significance of packaging can be detailed as follows:

- Can make a product more convenient to use or store, easier to identify or promote or to send out a
message.

- Can make the important difference to a marketing strategy by meeting customers' needs better.

- Packaging plays a key role in brand promotion and management. Packaging is of great importance
in the final choice the consumer will make, because it directly involves convenience, appeal,
information and branding.

- Packaging is especially important in certain industry where future sales may be based largely on the
quality, integrity and performance of a company's previous delivery.

Brand equity
Brand is more than just names and symbols. They are key element in the company’s relationships with
consumers. Brand represents consumer’s perceptions and feelings about a product and its performance.

A powerful brand has high brand equity and it is the differential effect that knowing the brand name has
on customer to the product and its marketing. It is a measure of brand’s ability to capture customer
preference and loyalty. A brand has positive brand equity when customer reacts more favorably to it than
to generic or unbranded version of the same product. If brand has negative brand equity, customers react
less favorably than to unbranded version. Company can measure brand strength along four customer
perception dimensions of differentiation, relevance, knowledge and esteem.

Thus positive brand equity drives from customer feelings about and connections with a brand. A brand
with high brand equity is very valuable asset and brand valuation is the process of estimating the total
financial value of a brand. High brand equity provides a company with many competitive advantages. A
powerful brand enjoys high level of consumer brand awareness and loyalty, more leverage in bargaining
with resellers, more easily launch line and brand extensions, defense against fierce price competition,
create basis for building strong and profitable customer relationships and customer’s equity.

Finding the best name is a difficult task and a good brand name can add greatly to a product’s success.
Selecting a good brand name start with – careful review of the product and its benefits,
- the target market
- proposed marketing strategies.

Desirable quality for a brand name include the following

1. It should suggest something about the product’s benefits and qualities.

2. It should be easy to pronounce, recognize and remember.
3. The brand name should be distinctive
4. It should be extendable
5. The name should translate easily into foreign languages.
6. It should be capable of registration and legal protection.

After building strong brand name, it must be protected and to protect their brands, marketers present
them carefully using the word brand and registered trade mark symbol.
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The Product Life Cycle

New product progresses through a sequence of stages from introduction to growth, maturity, and decline.
This sequence is known as the product life cycle and is associated with changes in the marketing situation,
thus impacting the marketing strategy and marketing mix.

The product revenue and profits can be plotted as a function of the life-cycle stages as shown in the graph
below:

Product Life-Cycle Curve

Induction Stage

In the introduction stage, the firm seeks to build product awareness and develop a market for the product.
The impact on the marketing mix is as follows:

1. Product - branding and quality level is established, and intellectual property protection such as
patents and trademarks ate obtained.

2. Pricing may be low penetration pricing to build market share rapidly, or high skim pricing to recover
development costs.

3. Distribution is selective until consumers show acceptance of the products.

4. Promotion is aimed at innovators and early adopters. Marketing communications seeks to build
product awareness and to educate potential consumers about the product.

Growth Stage

In the growth stage, the firm seeks to build brand preference and increase market share.

1. Product quality is maintained and additional features and support services may be added.

2. Pricing is maintained as the firm enjoys increasing with little competition.

3. Distribution channels are added as demand increases and customers accept the product.

4. Promotion is aimed at a broader audience.

Maturity Stage

At maturity, the strong growth in sales diminishes. Competition may appear with similar products. The
primary objective at this point is to defend market share while maximizing profit.

1. Product features may be enhanced to differentiate the product from that of competitors.

2. Pricing may be lower because of the new competition.

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 3. Distribution becomes more intensives and incentive may be offered to encourage preference over
competing products.

4. Promotion emphasizes product differentiation.

Decline Stage

As sales decline, the firm has several options:

1. Maintain the product, possibly rejuvenating it by adding new features and finding new uses.
2. Harvest the product - reduce costs and continue to offer it, possibly to a loyal niche segment.
3. Discontinue the product, liquidating remaining inventory or selling it to another firm that is
willing to continue the product.

The marketing mix decisions in the decline phase will depend on the selected strategy. For example, the
product may be changed if it is being rejuvenated, or left unchanged if it is harvested. The price may be
maintained if the product is harvested, or reduced drastically if liquidated.

PLC concept can help in developing good marketing strategies for its different stages. The product current
position suggests the best marketing strategies and resulting marketing strategies affect product
performance in later stage.

Disadvantages of PLC are that it is difficult to forecast the sales level at each PLC stage, the length of each
stage and the shape of PLC curve.

New-Product Development (NPD)

There are two major challenges in product life cycle.

One is developing new products to replace aging ones( new product development)

The other is adapting its marketing strategies.

Idea Generation

Internal idea sources

- Internal R&D process

- Pick the brains of its own people

Develop successful internal social networks

and intrapreneurial programs.

External idea sources

- sources outside of the company such as customers, competitors, distributors, suppliers, and outside design firms.

Crowdsourcing ( crowd + outsourcing)

Opening of innovation doors, inviting communities into new product development process. ( produce flood of
innovative idea)

Idea Screening

The first idea reducing stage is idea screening.

Identify good ideas and drop poor idea.

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R-W-W Screening framework:

Is it real? (real need for customer and buy it??)

Can we win? ( offer competitive advantage?, resources to make these products?)

Is it worth doing? ( offer sufficient profit potential?

Concept Development and Testing

An attractive idea must be developed into a product concept.( a detailed version of the idea stated in meaningful
consumer terms)

Concept development

Concept Testing. (testing new product concepts with groups of target consumers)

Marketing Strategy Development

Marketing strategy development refers to the initial marketing strategy for introducing the product to the market

Marketing strategy statement includes:

- Description of the target market

- Value proposition

- Sales and profit goals

Business analysis

involves a review of the sales, costs, and profit projections to find out whether they satisfy the company’s objectives.

Might look at sales history of similar products and conduct market surveys.

Product development

Product development show the develops of product concept into a physical products.

involves the creation and testing of one or more physical versions by the R&D or engineering departments.

Requires an increase in investment.

Test Marketing

Companies offering new products and services want to know how consumers might respond before they formally
launch into the marketplace.

Test marketing provides a way that allows marketers to get a good idea about sales potential and other
considerations that can affect sales.

Importance of Test Marketing

It gives the marketer experience with the potential ups and downs of marketing the product before going to the
great expense of full-on introduction to the market and allows the company test the product, as well as its entire
marketing program on a narrow scale, before launching on a broad scale.

the costs of developing and introducing the product are very low, or management is already confident about the
new offering and its sales potential, little or no test marketing is needed.

15
introducing a new product that requires a big investment, or when marketers are unsure about the new offering or
its plans for marketing, test marketing is needed.

Standard test markets

The marketer picks a small number of representative test cities in which it will conduct a full-blown marketing
campaign.

Standard test markets, while they have great benefits, also have significant drawbacks.

- They are costly to use

- Testing can take an extended amount of time to conduct (sometimes as long as three to five years)

- Competitors can monitor or interfere with results by lowering the price of their products in test cities, increasing
promotional efforts, or purchase all inventory of the product being tested.

Controlled Test Markets

There are several research firms that keep controlled panels of stores ready for market tests. These stores have
agreed to carry new products for a fee.

Behavior Scan, monitor and track individual consumer behavior for new products--from the viewing of product
information to purchasing activity at the checkout counter.

- Cheaper and quicker

- whether or not the controlled market represents the real market for the product.

- allows competitors to get a look at the new product before it is introduced to the broader market.

Simulated Test Markets

New products are tested in a "simulated" shopping environment. Simulation provides a measure of product
purchase, as well as the effectiveness of advertising messages against those of market competitors.

- Usually cost a lot less.

- Are completed much more quickly (can be run in eight weeks).

- Keep the new product out of competitor’s view.

- many marketers don't think of them as being able to provide results that are as accurate or reliable as larger, real-
world tests.

Commercialization

Commercialization is the introduction of the new product

- When to launch

- Where to launch

To develop successful new product, marketers have to understand customer, market and competitors.

Importance of NPD

- critical to the long-term health of a business

- most important source of revenue
- bring in higher sales, increased customer loyalty, and ultimately higher profits
16
Risks of NPD

- Overestimation of market size

- Actual product may be poorly design
- Incorrect positioning
- Launch at wrong timing
- Price too high
- Poorly advertise
- Poor market research finding
- Cost of NPD more than expected, Competitors fight back harder than expected

17
Major pricing strategies
There are three major pricing strategies.
- Customer value-based pricing
- Cost-based pricing
- Competition-based pricing
Value-based pricing
Pricing begins with analyzing customer needs and value
perceptions, and the price is set to match perceived
value.
Value-based pricing uses the buyers’ perceptions of
value, not the sellers cost, as the key to pricing. Price is
considered before the marketing program is set.
Value-based pricing is customer driven
Cost-based pricing is product drive
Two type of value-based pricing are
Good-value pricing
Valued-added pricing
Good-value pricing
Offering the right combination of quality and good
service at a fair price.
This has involved in introduction less expensive versions
of established brand name products.
It involved redesigning existing brands to offer more
quality for a given price or same quality for less.
An important type of good value pricing at retail level is
everyday low pricing.
In contract, high low pricing involves charging higher
price on everyday basic but running frequently
promotions to lower price temporary on selected item.
Value-added pricing
Attaching value-added features and services to
differentiate a company’s offers and changing higher
prices.(premium)
Advantages
-Increases profits-This method results in the highest
possible price that you can charge, and so maximizes
profits.
-Customer loyalty-Despite the high prices charged, it
can achieve extremely high customer loyalty for repeat
business .
-Quality image
Disadvantages
Niche market. The very high prices to be expected
under this method will only be acceptable to a small
number of customers.
Competition. Any company that persistently engages in
value based pricing is leaving a great deal of room for
competitors to offer lower prices and take away their
market share.
Cost-based pricing
Cost-based pricing involves setting prices based on the
costs for producing, distributing, and selling the product
plus a fair rate of return for its effort and risk.
Cost- plus pricing( markup pricing)
Cost-plus pricing adds a standard markup to the cost of
the product.
eg. Constriction company summit job bits by estimating
total project cost and adding standard markup for
profit.
Benefits
- Sellers are certain about costs and assured
profit.
- Reduced risks and uncertainties.
- Prices are similar in industry and price
competition is minimized
- Consumers feel it is fair method
Disadvantages
- Ignores demand .
- Ignores competition
- Price volume relationship.( sales volume is
based on price)
Break-Even Analysis and Target Profit Pricing (298)
Break-even pricing is the price at which total costs are
equal to total revenue and there is no profit.
Target profit pricing is the price at which the firm will
break even or make the profit it’s seeking
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Competition-based pricing
Setting prices based on competitors’ strategies, prices,
costs, and market offering.
Consumer will base their judgments of a product’s value
on the prices that competitors’ charge for similar
products.
In which company has to consider two things.
The first thing is that how does company offering
compare with competitor’s offering in term of customer
value?
If consumers perceive that the company product or
service provide greater value, they can charge higher
price.
If customer perceive less value than competitors,
company must either charge a lower price or change
customer perceptions to justify a higher price.
The next thing is that how strong are current
competitors and their pricing strategies?
If the company face with smaller competitors with
higher price they might charge lower price to drive
competitors.
If company face with strong competitors with low price,
company decide to target market niche with value
added products with higher prices.
New-product pricing Strategies
Companies bringing out a new product face the
challenge of setting prices for the first time and can
choose between two broad strategies.
Market skimming pricing
Market-skimming pricing is a strategy with high initial
prices to “skim” revenue layers from the market
Product quality and image must support the price
Buyers must want the product at the price
Costs of producing the product in small volume cannot
be so high.
Competitors should not be able to enter the market
easily.
Advantage
- High profit margin
- High cost recovery
- Dealer profits. If the price of a product is high,
then the percentage earned by distributors will
also be high.
- Quality image. A company can use this strategy
to build a high-quality image for its products,
but it must deliver a high-quality product to
support the image created by the price.
Disadvantage
- Competition.
- Sales volume
- Reduce Consumer acceptance
- Annoyed customers. Early adopters of the
product may be highly annoyed when the
company later drops
Market penetration pricing
Market-penetration pricing sets a low initial price in
order to penetrate the market quickly and deeply to
attract a large number of buyers quickly to gain market
share
Price sensitive market
Production and distribution costs decrease as sales
volume increase.
Low prices must keep competition out of the market
and penetration pricer must maintain its low price
position.
Advantage
- Entry barrier. If a company continues with its
penetration pricing strategy for some time,
possible new entrants to the market will be
frightened by the low prices.
- Reduces competition. Financially weaker
competitors will be driven from the market
- Market dominance(for a long time in order to
drive away a sufficient number of competitors)
Disadvantage
- Branding switching
- Customer loss
- Price war
- Perceived value. If a company reduces prices
substantially, it creates a perception among
customers that the product or service is no
longer as valuable, which may interfere with
any later actions to increase prices.
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Other internal and external considerations affecting price decision

Internal factors contain overall marketing strategy, objectives, marketing mix and other organizational considerations.

External factors consist of the nature of the market and demand and other environmental factors.

Overall marketing strategy, objectives and mix

Price is only one element of the company’s broader marketing strategy. Before setting up price, the company must
decide on its overall marketing strategy for its products or service . Company’s overall strategy is built around its price
and value story.

Pricing strategy is largely determining the decision on market positioning.

Company’s success come not only the price company charge from products but also from products, price and store
operations that produce greatest customer value.

Pricing is importance to accomplish company objectives. Company setting up price low to prevent competition from
entering market or set price at level of competitor to stabilize the market.

Price decision must be coordinated with the product design, distribution, and promotion to form a consistent and
effective integrated marketing mix program.

Company first position on their products on price and then other marketing mix decisions to the price they want to
charge. It call target costing.

Thus marketer must consider the total marketing strategy and mix when setting price because customers not buy price
alone and they seek the best value of the products in term of the price paid.

Organizational consideration

Small companies price are set by top management

Large company price are handle by divisional or product manager

In industrial markets, salespeople allow to negotiate with customers within certain price range and company have price
setting department to set up the best price.

The market and demand

Before setting up price, marketer must understand the relationship between price and demand for the company’s
products.

Analyzing price demand relationship

The relationship between price charge and the resulting demand level is shown below.

20
Buyers are less price sensitive when the products they are buying is unique or when it is high in quality or exclusive or
general need products. The total expenditure of the products is decreased when the price goes up and its occur in luxury
goods. Company need to understand the price sensitivity of the customer.

The economy

Economic conditions such as a boom or recession, inflation and interest rate have strong inpact on pricing strategies
because they effect on customer spending, customer perception of products’ price and value and company costs of
producing and selling of products.

Other external factors

Resellers –react to various price ( company should set price that give resellers a fair profit)

Government- importance external influence on price

Social concern- company short term sales, market share and profit goals

Elements of the physical distribution system:

Key elements of physical distribution system are

(i) Customer service,(ii) Order processing,(iii) Inventory control,(iv) Warehousing,(v) Transportation mode, (vi) Materials
handling

Customer service:

A company can improve customer service by:

1. Improving product availability:

By maintaining higher stock levels, and improving accuracy of deliveries in terms of delivery at the promised time and in
terms of delivery of the right assortment of products.

2. Improving order cycle time:

By reducing time between order and delivery, as well as improving consistency between order time and delivery time.

3. Raising information levels:

By enabling salespeople to have information about inventory levels at various storage points, having more reliable
information on order status of customers, and promptness in notifying customers of imminent delays.

21
4. Raising flexibility:

Development of contingency plans for urgent orders, a structure to ensure fast reaction time to unforeseen problems
like product return.

Order processing:

The idea is to reduce time between the consumer placing an order and receiving the goods. A computer link between
order department and salesperson is effective. Computers can also check the customer’s credit rating and whether the
goods are in stock, issuing an order to the warehousing, invoicing the customer and updating inventory records.

The steps that will be followed in the above situations will reveal gaps in the process to fulfill a customer order.
Customer service levels can be improved by plugging these gaps.

Inventory control:

Inventory holding is high cost and company try to keep minimum stock but sales department want to avoid out of stock.
Thus company needs to separate items into high demand and low demand. High customer service standard is set for
high demand items and lower standard is used for low demand items.

If a product has high average demand and low sigma or variability of demand, stock should be kept at multiple retail
locations close to the customer. Since sigma of demand is low, the product would be sold and there would be no
overstocking. In which the product can be transported in bulk, and its cost of transportation to multiple locations will
not be high. If a product has low average demand and high sigma or variability of demand, it should be stocked at a
central location.

After that company also has to decide as to when and how much to order so that stocks are refilled. Unless stock-out is
tolerated, the order point will be before the inventory reaches zero. This is because there is lead time between ordering
and receiving inventory, and there should not be a stock out as the company is waiting for the ordered items to arrive.

Warehousing:

Warehousing includes all activities required in the storing of products between the time they are manufactured and the
time they are transported to the customer. These activities include breaking bulk, making product assortments for
delivery to customers, storage and loading.

Storage warehouses hold goods for moderate to long periods. Distribution centers operate as central locations for fast
movement of goods to retail stores. Organized retailers, who have large number of outlets in a particular area, use
regional distribution centres where suppliers bring products in bulk.

These shipments are broken down into loads that are then quickly transported to retail outlets. Distribution centres are
highly automated. A computer reads orders and controls fork lift trucks that gather products and move them to loading
bays.

A company’s warehousing strategy involves the determination of the location and number of warehouses to have. At
one extreme, it can have one large warehouse to serve the entire market, and at the other extreme, it can have a
number of smaller warehouses that are located in its local markets.

Mode of transportation:

The selection of mode of transport will depend on the type of product, urgency of delivery and the volume being
transferred. A company can use any one for transporting their goods.

Rail: efficient large bulky freight over long distances, but lack flexibility. For small quantities, the use of rail is
uneconomical. Road: flexible because of direct access to companies and warehouses. Air: Its advantages are speed and
long distance capabilities. used to transport expensive, perishable and emergency goods. but it is costly. Water

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transportation: slow but cheap. It is used to transport bulky, low value, non-perishable goods. Pipeline: for transporting
liquids and gases.

Materials handling:

Materials handling is moving of products inside the manufacturer’s plant, warehouses and transport depots. Modern
storage facilities high level of automation, Unit handling and Containerization. . Unit handling combines multiple
packages on to pallets so that they can be moved by fork lift trucks. Containerization combines many quantities of goods
into a single large container. The container is sealed, and then it can be easily transferred from one mode to another.

Logistics information management

Companies manage their supply chains through information. Channel partners link and share information and make
better joint logistics decisions. Flows of information are closely link to channel performance. Thus companies need
simple, accessible, fast and accurate processes for capturing, processing and sharing channel information.

Importance of distribution system

- Gain a powerful competitive advantage to give customers better service or lower prices.
- Can yield tremendous cost saving to both a company and its customers
- Need in explosion in product varieties.
- Improvement in information technology has also created opportunities for distribution efficiency. Such
technology lets them.
- Effect on the environment and environmental sustainability efforts.
- Developing a green supply chain is not only environmentally responsible but also be profitable.

Value of effective distribution network
- Information, promoting, contact, matching,
negotiation
Factors consider in selection of appropriate
distribution channel
By designing of effective marketing channels, company
need to analyze customer’s needs, setting channel
objectives, analyzing major channel alternative, and
evaluating those alternatives.
1. Analyzing consumer needs
Marketing channels are part of overall customer value
delivery network.
Added value to customers
Finding out what the target customers wants.
Balancing customer need and cost.
2. Setting channel objective
Channel objective depend on target level of customer.
Identify several segments and deciding which segment
to serve the best.
Want to minimize cost and meet customer service
requirement.
It is influenced by the nature of the company, its
products, its marketing intermediaries, its competitors,
and its environment.
3. Identifying major alternatives
Identify its major alternatives in term of the types of
intermediaries, the numbers of intermediaries, and
responsibilities of each channel member.
Types of intermediaries
The firm should identify the types of channel members
available to carry out its channel work.
Direct selling Vs indirectly through resellers
 Retailers
 Value added resellers
 Independent distributers
 Dealers
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Number of marketing intermediaries
Intensive distribution
 Sold in millions of outlets
 Maximum brand exposure
 Consumer convenience
 Raw materials, FMCG
Exclusive distribution
 Limited numbers of dealers
 The exclusive right
 Stronger dealers selling support
 Grater value added dealer service
 Luxury products
Selective distribution
 More than one but fewer than all of
intermediaries
IMC
Customers are bobarded by commercial message
from the broad range of sources.
Conflicting messages from the different sources can
result in confused company images, brand positions
and customers’ relationship.
More companies today are adopting the concept of
integrated marketing communication.
Different media play unique roles in attracting
information and persuading consumers, and it must
be carefully coordinated under the overall
marketing communications plan.
Integrated marketing communications is the
integration by the company of its communication
channels to deliver a clear, consistent, and
compelling message about the organization and its
brands. At most basic level IMC means integrating
all the promotional tools and work together in
harmony.
 Selected large retailers
 Good market coverage with more control
 Less cost than intensive distribution
Responsibilities of channel member
 Should agree on price policies, conditions of
sales, territory right, and specific services to be
performed
4. Evaluating the major alternatives
Select the one that best satisfy its long-run objectives
according to economic, control and adaptability criteria.
 Using economic criteria, company compares the
likely sales, costs, and profitability of different
channel alternatives
 Control criteria, control over marketing of
products and keep as much control as possible.
 Adaptability criteria, keep channel flexible and
so it can adapt to environment changes.
It start with customers and communication at each
customer touch point must deliver consistent
messages and positioning.
Values of IMC
 Create competitive advantage, boost sales and
profits while saving money, time and stress.
 Consolidates its image and relationship with
customers.
 Create customer loyalty and customer life time
value.
 Carefully linked messages also help buyers by
giving timely reminders, updated information
and special offers help them move comfortably
through the stages of their buying process.
 Customer databases can identify precisely
which customers need what information
when… and throughout their whole buying life.
Promotion mix
Promotional mix also calls marketing communication
mix. Specific blending of advertising, public relations,
personal selling, sales promotion, and direct marketing
tools.
24
Aim is to persuasively communicate customer value and
build customer relationships.
Advertising- paid form of nonpersonal presentation and
promotion of ideas, goods, or services by identified
sponsor. It include broadcast, print, internet, mobile,
outdoors and so on.
Sales promotion- short term incentive to encourage the
purchase or sales of products or service. Include
discounts, coupons, displays and demonstrations.
Personal selling- personal presentation by the firm sales
force for the purpose of making sales and building
customer relationship. Include sales presentation, trade
shows and incentive programm.
Public relation- building good relationship with the
company’s various public by obtaining favorable
publicity, building up a good corporate image, and
handling or heading off unfavorable rumors, stories,
events. Include press release, sponsorships, events and
web page.
Direct marketing- direct communication with carefully
targeted individual customers to both obtain an
immediate response and cultivated lasting customer
relationship. Include catalogs, direct response TV,
kiosks, the internet, mobile marketing.
Two forms of promotional mix strategies- push and pull
strategy.
Push strategy- pushing the products through marketing
channels to final customers. Producers directs its
marketing activities to channel members to induce
them to carry out the product and promote it to final
customers.
Pull strategy- producers direct it marketing activities
toward the final customers to induce them to buy the
products.
Key contribution of advertising campaigns
Advertising is a good way to inform, persuade and
educate people.
Marketing management makes four decisions when
setting up advertising campaign.
Setting advertising objectives
Set objective base on past decisions about target
market, positioning and marketing mix.
It help to build customer relationship by communicating
customer value.
it can be classified by their primary purpose to inform,
persuade or remind.
Informative advertising- heavily used when
introduction of new product category, and build
primary demand.
Persuasive advertising- competition increase and want
to get competitive advantage and build selective
demand.
Comparative advertising- attack advertising directly or
indirectly compares its brand to competitors.
Reminder advertising- for mature products helps to
maintain customer relationships and keep customers
thinking about the products.
Some design to move people to immediate action and
other build long-term customers relationship.
Setting the advertising budget
Setting up budget depends on
 its stage in product life cycle. Eg introduction
stage require large advertising budget.
 Market share eg less market share need large
advertising budget.
 Many competitors eg. Undifferentiated brands
like coca cola need large amount of budget
 Consumer packaged goods have to spend too
much on advertising but B2B marketers
generally underspend on advertising.
Developing advertising strategy
Consists of creating advertising message and selecting
advertising media.
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Creating advertising message- no Metter how big
budget, advertising can succeed only if it gains attention
and communicate well with customer.
Message strategy- creating affective advertising
messages to communicate to customers, to get
customer to think about the products or services, and
react to the product or services.
Effective message strategy begins with identifying
customer benefits depend on its positioning and
customer value creation strategies.
It must be creative concept, big idea( distinctive and
memorable), meaningful, believable, and distinctive.
Message execution – big idea turn into actual and
execution capture the target market’s attention and
interest. Creative team must be best approach, style,
tone, words, and format for executing.
Executing style consists of slice of life, lifestyle, fantasy,
mood or image, musical, personality symbol, technical
expertise, scientific evidence, and testimonial evidence
or endorsement.
Advertisers also must choose a tone ( eg P&G use
positive tone), use memorable and attention-getting
words and format.
Selecting advertising media
Media selection contains major steps of the following:
1. determining reach, frequency, and impact,
2. choosing among major media type
3. selecting specific media vehicles and
4. choosing media timing
1. Determining reach, frequency and impact- reach
must be measure of the percentage of people in the
target market area, frequency is a measurement of how
many times the average person in the target market
and impact is the qualitative value of message
exposure. Advertisers want to choose media that will
engage consumers rather than simply reach them.
2. Choosing among major media types- major media
types contain television, the internet, newspapers,
direct mail, magazines, radio and outdoor and each
medium has its own advantages and limitations.
Media planners have to choose the media that will
effectively and efficiently present the message to the
target customers.
Advertisers finding the new ways to reach customers by
supplementing the traditional mass media with more
specialized and highly targeted media that cost less,
target more effectively and engage customer more
fully. Thus it creates and delivers involving brand
content to target consumers.
3.Selecting specific media vehicles- media planners
must choose the best media vehicles( specific media)
within each general media types.
By doing this they must consider cost of production
advertising for different media and balancing media
costs against several media effectiveness factor and also
exposure value.
4.Deciding on media timing- an advertiser must also
decide how to schedule the advertising over the course
of a years according to the sales of the products and
seasonal pattern. They also plan media timing schedule
continuity and pulsing.
Evaluating advertising campaign/ evaluating
advertising effectiveness and the return of advertising
investment
Measuring advertising effectiveness and return on
advertising investment is hot issue for most companies.
Advertisers evaluate communication effects and the
sales and profits effects.
Measuring communication effects contain
communication of advertising message well, attitude
changes, products awareness, knowledge, and
preference.
Sales and profits effects are measured by comparing
past sales and profits with past advertising expenditures
and experiment by testing the effects of different
advertising spending level.
26
Distinguishing between above the line and below the
line promotional activities.
Advertising Any paid form of non-personal presentation
and promotion of ideas, goods, or services by an
identified sponsor. Use advertising to inform,
persuade, and remind.
Above the line marketing
Pay commission to advertising agency for mess media
and it is used to promote brands and reach out to the
target customers.
Broadcast Media (Television, radio)
Television Advantages- Combines sight, sound and
motion, highest coverage
Disadvantages- High absolute cost
Radio Advantages- Low cost, High coverage
Disadvantages- Audio only (low attraction), Fragmented
audience
Print Ads (Newspaper, magazine)
Provide detail product information and customer can
read at own pace.
Newspaper Advantages- Timeliness, good coverage
Disadvantages- Short shelf life
Magazine
Advantages- High geographic and demographic
selectivity, Disadvantages- Long ad purchase lead time.
Outdoor
Billboards, Advantages- Good coverage
Disadvantages- High cost
Below the line marketing
It is more one to one and involves the distribution of
pamphlets, stickers, brochures, point of sales materials,
roadshows and so on.
Advantages-
Low cost,
High coverage like rural markets where the reach of
mass media like print or television is limited,
More personalize,
Can interact directly and get direct respond from
customers,
Disadvantage
Targeting may be difficult
Extensive training may be required for the marketing
teams.
Deeper understanding of the customers and their
culture is required
Public Relations
Building good relations with the company’s various
publics by obtaining favorable publicity, building up a
good corporate image, and handling or heading off
unfavorable rumors, stories and events.
Functions of PR
PR department may perform the following functions.
Press relation or press agency – Create and place
information in media to get attention of public
Product publicity – Publicize the product
Public affairs – Build and maintain national or local
community relationships
Lobbying – Build and maintain relationships with
government officials to influence legislations
Investor relations – Maintain relationships with
shareholders and others in financial community
Development – Work with donors or members of non-
profit organizations to gain support
PR can have a strong impact on public awareness at
lower cost. Company doesn’t pay the media. But it pays
for developing interesting content and events which
could pick up by several media.
27
PR can be powerful brand building tool.
Role of PR
Strong impact on public awareness at much lower cost
than advertising can. PR develop interesting story or
event, picked up by several media and have same effect
as advertising that cost millions of dollars.
It effect on brand building, sales and profits and
customers involvement and relationships. It is also
called powerful brand building tools.
Majors PR tools
 News ( create favorable news about the
company)
 Special events( news conferences, press tours,
grand openings, and fireworks displays, laser
light shows, multimedia presentations or
educational programs.
 Written materials ( annual report, brochures,
articles, newsletters and magazines.
 Audiovisual materials( DVDs and online videos)
 Identify materials ( logos, stationery, brochures,
business cards, uniforms).
 Public service activities
Direct response advertising
Promotional method in which a prospective customer is
advised to respond immediately and directly to the
advertiser, through the use of a 'device' provided in the
advertisement.
These devices (called direct response mechanisms)
include a
- (1) coupon to cut and mail,
- (2) business reply card,
- (3) toll-free telephone number, or, on the
internet,
- (4) hotspot to click,
- (5) direct mail
- (6) printed advertising
- (7) telemarketing or direct respond. Most retail
sale advertisements are direct response
advertising in one way or the other.
It’s track able. That is, when someone responds,
advertisers know which media was responsible for
generating the response. This is in direct contrast to
mass media or “brand” marketing
It’s measurable. Advertisers know which advertising
media are responded and how many sales received
from each one, advertisers can measure exactly how
effective of each media. Advertisers can drop or change
the media types that are not giving them a return on
investment.
It uses compelling headlines and sales copy. Direct
response marketing has a compelling message of strong
interest to customers’ prospects.
It targets a specific audience or niche. Prospects within
specific verticals, geographic zones or niche markets are
targeted. The ad aims to appeal to a narrow target
market.
It makes a specific offer. Usually the advertising makes
a specific value-packed offer. Often the aim is not
necessarily to sell anything from the advertising but to
simply get the prospect to take the next action, such as
requesting a free report.
It demands a response. Direct response advertising has
a “call to action”, compelling the prospect to do
something specific. It also includes a means of response
and “capture” of these responses. Interested, high
probability prospects have easy ways to respond such
as a regular phone number, a free recorded message
line, a web site, a fax back form, a reply card or
coupons.
When the prospect responds, as much of the person’s
contact information as possible is captured so that they
can be contacted beyond the initial response.
Point of sales materials
POSM is the advertising materials that are used to
communicate brand information to the consumers at
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the POP/POS places and is part of the BTL campaign
platform.
POSM includes Buntings/Streamers, Posters, Dangler,
Dummy Pack (enlarged, reduces), Shelf Branding, Shelf
Talker, Leaflets & Leaflets Dispenser, Wobblers etc.
Benefit of POSM
Reminding consumers of marketer’s products and
sometimes offering incentives to buy.
Reinforce messages of other marketing communications
such as advertising or PR.
Stimulating purchasing of customers.
Persuade customers to make final decision in favor of
the promotional brand if they have a choice of
competing products.
Cross sell, up sell opportunities
Consumer Sales Promotion
Advertising offers reasons to buy a product or service,
sales promotion offers reasons to buy now. Consumer
sales promotions are marketing activities targeted at
the consumer to encourage them to buy the product.
Marketer use consumer sales promotion for short-term
or enhance customer brand involvement and it include
a wide range of tools - samples, coupons, refunds,
premiums, point-of-purchase displays to contests,
sweepstakes, and event sponsorships.
Samples - A trial amount of product and most effective
but most expensive way to introduce a new product.
Coupons - Standard mechanism for sales promotions.
Rebates(Cash Refunds) - Consumers are offered money
back if the receipt and barcode are mailed to the
producer.
Price Packs(Cent-off deals) - Temporary reductions in
price, such as 50% off an item.
Premiums - Promotional items that can be received for
a small fee when redeeming the proof of purchase.
Point of purchase(POP) - an end cap or center store
display where retailers can show the products to
customers to increase awareness.
Contests - Calls for consumers to submit an entry.
Sweepstakes - Calls for consumers to submit their
names for a drawing.
Event marketing(Event sponsorships) - Create their
own brand marketing events or serve as sole or
participating sponsors of events created by others.
Consumer sales promotion must be coordinated
carefully with other promotion mix elements rather
than creating only short-term sales or temporary brand
switching, sales promotions to reinforce the product's
position and build long-term customer relationships.
Sales Force Promotions
Sales promotion plays a major role in most business
firms is directed towards the sales people and referred
to as sales force promotions. These schemes are
intended to motivate sales people to put in more efforts
to increase sales, increase distribution, promote new or
seasonal products, sell more deals to resellers, book
more orders develop prospects lists and build up
morale and enthusiasm.
Some of these activities are meant to prepare the sales
people to do their jobs well and include sales meetings
and manuals, training programmes, sales presentations,
film and slide shows etc. Prize distribution to winners is
the more tangible aspect of any such programme.
Objectives of sales force promotion schemes are:
 Increase sales volume
 Introduce a new product
 Reducing selling costs
 Offset competitive promotions
 Improve working habits
 Develop new prospect lists etc.
Trade Promotions
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Trade promotions are marketing activities executed
between manufacturers and retailers.
Trade promotions help companies differentiate a
product, increase product visibility, and increase the
product purchase rate. But while there are multiple
products on the market, retailers only have a finite
space to display items on their shelves.
It is therefore sometimes necessary to encourage
retailers to stock your item instead of your
competitor's.
Manufactures use several trade promotion tools. Many
of the tools used for consumer sales promotions -
contests, premiums, displays - can also used as trade
promotions.
To this point, trade promotions include:
Trade allowances are incentives used to encourage a
retailer to stock a product such as cash discounts or
promotional incentives.
Dealer loaders are incentives given to a dealer to
display a product, such as in-store displays, premiums,
or rebates.
Trade contests are used to encourage retailers to sell
products, as the retailer who sells the most wins a prize.
Training programs teach employees or retailers the
benefits and uses of a product.
Push money is an extra commission paid to encourage
the stocking and selling of a product.
Moreover, Trade sales promotion must be coordinated
carefully with other promotion mix elements.
Seasonal Discount (SD)
Discount offering - price lesser than original price.
SD - a discount on seasonal goods. For example, snow
equipment for sale in summer.
SD - to pull the customers to buy their offering.
SD - become a compulsion - to provide -customers - not
offering discounts during some seasons will lose their
customers.
some firms - offer discount on other seasons - name off
SD - where the firms may not earn.
Disadvantages of SD - may have to offer discounts on
every season - not offering the discounts - may
dissatisfied the customers -disgruntled - may not buy
the product.
Becomes imperative for the firms and companies to
look not offer discounts at every season.
Short term profit - hampering long term profits.
Sponsorships
the practice of promoting a company`s interest and its
brand by tying them to a specific and meaningful
related event, organization or charitable cause.
It has become an increasingly popular medium of
corporate communication especially among companies
operating in consumer markets.
Objectives of sponsorship
. Enhancing corporate image
• Increasing awareness of brands
• Stimulating the sales of products or services
• Leveraging corporate good will
• Sponsorship is the underwriting of a special event
Advantages
Enhancing reputation and image• Making corporate
social responsibility and corporate community
investment visible• Increased loyalty• Building
relationships• Aiding differentiation• Increasing sales•
Generating awareness
Criteria for sponsorship
Relevance - The event, organization, or cause you are
considering sponsoring must have some degree of
relevance to the services or products you provide.
Brand fit - Your brand fit must fit the event.
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Mission alignment - The interests of the event or
organization should not conflict with the interests of the
company.
Business result - The company must have a reasonable
basis to believe that the sponsorship will create a
tangible business result. It doesn't necessarily have to
produce a profit, but it should at least increase
company awareness, brand awareness, or help foster a
positive view of the company.
Direct marketing
DM consists of connecting directly with carefully
targeted segments or individual consumers, often on a
one-to-one, interactive basis. Using detailed databases,
companies tailor their marketing offers and
communications to the narrowly defined segments or
individual buyers.
It seek a direct, immediate and measurable consumer
response. DM continue to become more internet-based
and internet marketing is claiming a first growing share
of marketing spending and sales.
Effective direct marketing begins with a good customer
database. Consumer database is an organized collection
of comprehensive data about individual customers.
Consumer database can be important tool for building
stronger long-term customer relationships.
Major forms of direct marketing-
Personal selling- personal presentations by the firm’s
sales force for the purpose of making sales and building
customers relationships.
Direct Mail Marketing: marketing that occurs by
sending an offer, announcement, reminder, or other
item directly to a person at a particular address.
Flexible, personalized, but suffers from junk mail image.
Catalogue Marketing: DM through print, video or digital
catalogues that are mailed to select customers, made
available in stores or presented online.
Telemarketing: using telephone to sell directly to
customers.
Outbound and inbound, suffers from consumer
burnout, technology to block calls
Direct-response Television Marketing: DM via
television, including direct response television
advertising and interaction television.
Kiosk Marketing: information are placing and ordering
machines. It going to where the customers are.
Online Marketing
Efforts to market products and services and build
customer relationships over the internet.
Benefits of Direct Marketing
For buyers: Convenient, Easy to use, Private, Access to a
wealth of information, Immediate, Interactive
For Sellers
- Powerful tool for building relationships
- Allows for targeting of small groups or
individuals with customized offers in a
personalized fashion
- Can be timed to reach prospects at the right
time
- Offers access to buyers that couldn’t be reached
via other channels
- Low-cost, effective alternative for reaching
specific markets.
Distinguishing between direct and indirect methods of
entering overseas market
Indirect export-
The manufacturers use independent export
intermediaries located in its own country and
manufacturer doesn’t have direct contact with
international customers or partners.
Advantages
-low entry cost
-low financial risk
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–entry difficulties are lied on the domestic intermediary
–low staffing requirements
–lack of marketing costs
–the least complicated mode of internationalization
–relatively simple extension of sales markets
Disadvantages
–low profitability of the transactions
–full dependence on the domestic intermediary
–lack of knowledge on the foreign market(s)
–inability to gain international experience
–the domestic intermediary can find a better provider
–an intermediary may itself start the production in the
country
Direct Exporting (DE)
DE occurs - producing firm takes care of exporting
activities - direct contract with clients - foreign market.
Involved - handling documentation, physical delivery
and pricing policies.
Advantages
Customer relations: Know the clients and are able to
offer better services.
Feel more confident and secure. Feedbacks and
suggestions.
Profits : No intermediaries.
Control : Have total control over negotiations and
transactions.
Patents, copyrights and trademarks are protected.
Dealings are done personally and get better sense of
market.
Future Plans : Several options for improvement and
expansion.
Plenty of opportunities.
Limitations
-High resources need ( money, time, effort)
-need to have detailed plan
-reduced customer care
- can’t respond to clients quickly like agent.
- high transport costs
–potential trade barriers
- high cost of maintaining the own distribution network
- time-consuming of building up the own distribution
network
- Need online support and prepared for answer if
dealing in technical products.
-Decision must weigh down on one side.
Franchising
The franchisee uses another firm's successful business
model and brand name to operate effectively an
independent branch of the company. The franchiser
maintains a considerable degree of control over the
operations and processes used by the franchisee.
Franchiser helps with things like branding and
marketing support. Typically ensures that branches do
not cannibalize each other's revenues. A quick way to
set up own business without starting from scratch.
Advantages
1. Based on a proven idea.
2. Can use a recognized brand name and
trademarks.
3. Support - training for setting up business -
manual telling how to run the business.
4. Have exclusive rights in territory.
5. Easier way to start the business.
6. Benefit - communicating and sharing ideas.
7. Have relationships with suppliers.
Limitations
1. Costs may be higher than expect.
2. Agreement includes restrictions and might not
make changes to suit local market.
3. Other franchisees could give the brand a bad
reputation.
4. All profits are usually shared with the
franchisor.
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Licensing
Business arrangement - gives permission to
manufacture product for a specified payment.
Involves - to use patents, trademarks, copyrights,
designs, and intellectual for a percentage of revenue.
Fast way to generate income and grow business. It
taking advantage of existing company and exchange for
revenue.
Licensor - limited rights available to the licensee in host
country.
The rights include patents, trademarks, managerial
skills, technology, and others .
The licensor take one-time payments, technical fees,
and royalty payments -calculated as percentage of
sales.
Advantages
1. Obtain extra income.
2. Reach new markets.
3. Quickly expand with little risk and large capital
investment.
4. Pave the way for future investments.
5. Retain established markets.
6. Political risk is minimized.
7. Highly attractive.
Limitations
1. Lower income.
2. Loss of control and loss of quality
3. High risk to trademark and reputation.
4. The partner can become competitor.
Joint Venture (JV)
JV - strategic alliance between two or more individuals.
Partnerships and JV are similar but have significantly
different implications involved.
Partnership - involves a continuing, long-term business
relationship - JV is single business project.
Parties enter JV to gain individual benefits - share of the
project objective.
JV is not a separate legal entity.
Revenues, expenses and asset ownership usually flow
through JV to the participants.
Once the JV has met its goals the entity ceases to exist.
Advantages
1. Provide companies with the opportunity.
2. Allow to enter related businesses.
3. Access to greater resources.
4. Sharing of risks.
5. JV can be flexible.
6. JV offer creative way for companies to exit.
7. Can separate business from the rest of the
organization.
Limitations
Takes time and effort to build the right relationship.
1. The objectives are not 100 percent clear and
communicated.
2. Imbalance in levels of expertise, investment by
the different partners.
3. Different cultures and management styles.
4. Don't provide enough leadership and support.
5. Success in JV depends on the research and
analysis of the objectives.
It may be potential for growth and needs to fit with
overall business strategy.
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Important to review of business strategy before
committing to JV.
Help to define what can sensibly expect and can decide
better ways to achieve business aims.
Overseas Agents (OA)
Sales agent acts on your behalf in the overseas market.
Have to paid commission for any sales ranging from 2.5
% to 15 %.
Key benefit - to get the advantage of extensive
knowledge.
Advantages
1. Reduced cost for recruitment, training.
2. Should be well placed to identify and exploit
opportunities.
3. Need some time to build up own contacts.
4. Maintain more control.
Limitations
1. Responsible for shipping and other trade-
related logistics.
2. Need to specify in agent contract for credit
check of customers.
3. Arrangements must be made to access sales
ledger as part of the commission payments
process.
4. After-sales service can be difficult.
5. Can lose some control over marketing and
brand image.
Sales forecasting
A sales forecast is an estimation of sales volume that a
company can expect to attain within the plan period. A
sales forecast is not just a sales predicting. It is the act
of matching opportunities with the marketing efforts.
Many of sales forecasting methods are listed below:
Surveys of buyers’ intentions
Composite sales force options
Expert opinion
Test market
Past sales analysis
Leading indicators
Benefits of sales forecasting methods
. Supply and demand for the products can easily be
adjusted
A good inventory control by avoiding the weakness of
under stocking and overstocking
a forward planner of raw materials, labor, plant layout,
financial needs, warehousing, transport facility etc.
Sales opportunities are searched out on the basis of
forecast
Indicator to the department of finance as to how much
and when finance is needed; and it help to overcome
difficult situations
Efficiency of sales person and sales department can be
measured.
Setting budget of the firm is based on forecasts
Limitations of Sales Forecast
1. Fashion: Difficult to forecast for the fashion because
it is difficult to say as when a new fashion will be
adopted by the consumers and how long it will be
accepted by the buyers.
2. Lack of Sales History:
A sales history or past records are essential for a sound
forecast plan. If the past data are not available, then
forecast is made on guess-work. Mainly a new product
has no sales history and forecast made on guess may be
a failure.
3. Psychological Factors:
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The forecaster may not be able to predict exactly the
behavior of consumers. Eg. Rumors can affect market
variables.
Survey of Buyers’ Intentions Method:
Used for sales forecasting and known as consumers’
expectations or opinions survey. A sale is the result of
consumer intention to buy the product. Many
companies conduct periodical survey of consumers’
buying interest to know when and how much they will
buy. A sample of potential consumers is surveyed to
know how much of the stated product they would buy
at a given price during a specified future time period.
Advantages
i. More reliable and relevant information can be
collected.
ii. This method is more suitable for industrial products.
iii. It is highly effective for short-run sales forecasting.
iv. This method is proved effective when consumers
state their intention clearly and adhere to it.
Disadvantages
i. It is applicable only for short-run forecasting.
ii. It is expensive method and needs a lot of
preparations. Also, it needs a large amount of time.
iii. Consumers may not express their intention clearly,
or may not behave as per intention expressed.
iv. In case of highly scattered large number of
consumers, it is not applicable.
v. Poor response rate is the major problem in our
country. They do not respond to the questions asked
and/or do not return questionnaire fully completed.
vi. Purchase intention is subject to change as per social
and economic circumstances. One cannot expect
consistent intention over time.
vii. Selection of the sample of potential buyers is
difficult task as who, how many, and from which places
respondents should be selected. Limitations of sampling
become the limitation of the method.
It is especially more effective when:
(1) There are relatively few buyers,
(2) Buyers are willing to express buying intentions
reliably,
(3) Company has enough time and money to spend, and
(4) There is high probability that stated intention would
result into actual purchase.
Composite of Sales Force Opinion Method:
Called sales force estimate method. Ask salesmen, to
estimate demand for a given time. Each sales
representative estimates how much each current and
prospective customer will buy the company’s product.
They are offered certain incentives to encourage them
better estimate. Salesmen have direct and close contact
with customers, competitors, dealers, and overall
market environment, they can provide more reliable
estimates of the future sales.
Advantage
i. Salesmen have better insight into the recent market
trend than any other groups. So, more accurate
estimate is possible.
ii. It motivates and encourages salesmen as their
opinions are considered by the company.
iii. It is suitable to all products and firms.
iv. No need to spend extra. Only limited incentives are
sufficient to get desired results.
v. It is a speedy method to estimate sales.
vi. They can provide estimate in terms of products,
territory, and customers.
vii. They struggle to fulfill the estimate they have given.
High degree of commitment prevails.
Disadvantages
i. Salesman may not have time. Their regular work may
suffer.
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ii. Lack of experience and expertise to perform such
task.
iii. Reliability is a question. There is possibility of
manipulation of estimates.
iv. The future sales are affected by a large number of
factors. Sales people may not be aware of them.
Therefore, the sales estimates given by sales force may
be less reliable.
v. For their protection, they may underestimate sales.
Expert opinion method:
Company can also take assistance of experts to obtain
forecasts. The experts include dealers, suppliers,
distributors, consultants, and trade associations. These
experts supply their estimate individually or jointly in
form of the pooled individual estimate. Some
companies buy economic and industry forecasts from
well-known economic firms or experts. Take into
account strengths of company’s strategies and market
situations, exert their sales estimate for a given time
period.
Advantage
i. Less expensive and speedy estimates can be obtained.
ii. Balanced estimate is possible as more experts are
involved.
iii. Pooled knowledge can be used. Experts of various
fields contribute to sales forecasting.
iv. It is the only option when the past sales data are not
available.
v. Estimates tend to be more neutral as experts are
external to organization.
Disadvantage
i. It is based on opinions, and therefore, reliability is
always doubtful.
ii. It is difficult to fix responsibility of the final estimates
as many experts contribute to forecasting.
iii. it is not possible to get sales estimates in terms of
products, customers, or territories.
iv. Possibility of prejudice or bias cannot be ignored.
v. All opinions, right or wrong, may be given equal
importance.
Budgetary Control System
-A system of controlling cost which include the
preparation of budgets, coordinating the departments
and establishing responsibilities, comparing actual
performance with the budgeted and acting upon results
to achieve maximum profitability.
Objectives of Budgetary Control
-Compel for planning: responsible for setting target,
anticipating problem and giving direction
-Communication of ideas & plans: aware of what is
supposed to do
-Coordinating the activities: coordinate the activities of
different departments
-Establishing a system of control: compare actual results
-Motivating employees: improving their performance
Benefits of Budgetary Control
-organization's whole objectives & results can be
achieved
-revel the difference between actual result & budget
-organization can be stabilized
-by examining departmental results, internal audit can
be established
-the standard costs can be provided
-productive efficiency can be measured
-specify the resources, revenues and activities required
to carry out for coming year
-provide excellent record of organizational activities
-improve resources allocation
-provide a tool for corrective action through
reallocation.
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B2B and B2C differences

Characteristic B2B B2C

Demand organizational individual

volume large Small

No.of customers Small/few Large/many

location concentrate Disperse

distribution More direct More indirect

Nature of buying More More personal

professional

Buying influence multiple Single

negotiation complex Simple

reciprocity yes No

leasing Greater Lesser

promotion Personal selling advertising

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