Semester 1

Fundamentals of Marketing

Definition:
“Marketing is the science and art of exploring, creating, and delivering value to satisfy the
needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It
defines, measures and quantifies the size of the identified market and the profit potential. It
pinpoints which segments the company is capable of serving best and it designs and promotes
the appropriate products and services.” – Phillip Kotler.

Evolution of marketing:
1. Product orientation phase- Till 1930s, the common philosophy was that whatever
was produced by the organisation would result in an automatic demand by the
consumer.
2. Sales Orientation Philosophy: It states that mere making available the best product
is not enough; it is futile unless the firm resorts to aggressive salesmanship.
3. Customer Orientation Philosophy: The undertaking is to study and understand the
needs, wants, desires and values of potential consumers and produce the goods in
the light of these findings so that consumer specifications are met totally.
4. Social Orientation Philosophy: This new concept goes beyond understanding the
consumer needs and matching the products accordingly. This philosophy cares for
not only consumer satisfaction but for consumer welfare or social welfare. Such
social welfare speaks of pollution-free environment and quality of human life.

Fundamental marketing concepts

1) Needs-The easiest explanation of the concept “needs” is the basic human

requirements like shelter, clothes, food, water, etc. this is the basis for everything that
follows. Unless a consumer doesn’t have a need, he will not act on it.
2) Wants- Wants are the outcomes of needs. When a customer realises what he “wants”
to satisfy his need with, it is called a want. He identifies a product/service that fulfils
his need. Wants usually have many options.
3) Demand- A want becomes a demand when a consumer chooses from the various
options available to him. This combined with willingness to pay and ability to pay
converts his want into a demand.
Let’s take an example to understand this better.
Mr. A is hungry. So here, food is the “need” of Mr. A
He decides that he wants to eat pizza. This is his “want”. (It creates various options for
him i.e. places to order from)
Mr. A chooses to order pizza from Dominos. This is a demand.
4) Target Market- Target Marketing refers to dividing the market into small units
comprising of like-minded people.
Example: Kellogg’s K Special mainly targets individuals who want to cut down on
their calorie intake.
 Relationship marketing- Relationship marketing focuses on customer loyalty and
long-term customer engagement rather than shorter-term goals like customer
acquisition and individual sales.

Marketing Channels
A marketing channel is a set of practices or activities necessary to transfer the ownership of
goods, and to move goods, from the point of production to the point of consumption and, as
such, which consists of all the institutions and all the marketing activities in the marketing
process.
In simple words, it means the activities involved in moving the goods from its production
stage to the final consumer.
There are various kinds of marketing channels. They are as follows:
 Direct selling- marketing and selling of products directly to consumers away from a fixed
retail location. It means the personal presentation, demonstration, and sale of products and
services to consumers, usually in their homes or at their jobs.
 Selling through intermediaries- A marketing channel where intermediaries such as
wholesalers and retailers are utilized to make a product available to the customer is called an
indirect channel.

 Dual distribution- Dual distribution describes a wide variety of marketing arrangements by

which the manufacturer or wholesalers uses more than one channel simultaneously to reach
the end user.

 Reverse channels- Each of the other channel flows from producer to intermediary (if there
is one) to consumer. Technology, however, has made another flow possible. This one goes in
the reverse direction and may go from consumer to intermediary to beneficiary. It refers to
making money from recycling a product.

CUSTOMER VALUE, SATISFACTION AND LOYALTY

Customer Value is the perception of what a product or service is worth to a Customer versus
the possible alternatives. Worth means whether the Customer feels s/he or he got benefits and
services over what he paid.

In a simplistic equation form, Customer Value is Benefits-Cost (CV=B-C).

What the Customer pays is not only price (cash, cheque, interest, payment during use such as
fuel and servicing for a car) but also non-price terms such as time, effort, energy, and
inconvenience.
Customer loyalty: Customer loyalty can be said to have occurred if people choose buy one
particular product, rather than use products made by other companies.
Customers exhibit customer loyalty when they consistently purchase a certain product or
brand over an extended period. For example, customers, would prefer buying a brand say
Lake because of their previous experience.
Customer satisfaction: Customer satisfaction measures how well the expectations of a
customer concerning a product or service provided by your company have been met.
Customer satisfaction is an abstract concept and involves such factors as the quality of the
product, the quality of the service provided, the atmosphere of the location where the product
or service is purchased, and the price of the product or service.

CUSTOMER VALUE PROPOSITION

Customer Value Proposition is a marketing term which is a persuasive statement for
customers stating detailed benefits that customer will get after purchasing the product or
service.
It consists of the total benefits which a vendor guarantees that customer will get in return of
customer’s associated payment. It basically describes why a customer should buy this product
or use this service and designed to convince customers to buy and use them.

ANALYSING CONSUMER MARKETS-

 Cultural: Culture is the fundamental determinant of a person's wants and consuming

behaviour. A culture includes behaviour, values and assumptions. Persons with same
cultures tend to be more alike in dress, speech patterns, transport facilities and
entertainment avenues used.

 Social: Group Membership: Groups in which a person is a member have an influence

on his consuming behaviour. People are members of primary groups like family,
friendship groups, neighbours, co-workers where interaction is very frequent.

 Personal factor: The personal factors that have an influence on consumption patterns
and behaviour, age and stage in the life cycle, occupation and economic
circumstances personality and self-concept, lifestyle and values.

FIVE STAGE BUYING DECISION PROCESS MODEL

(Decision making based on level of involvement and brand differentiation)
Step 1 of consumer buying behaviour – Problem recognition
The first step of consumer buying behaviour starts when the customer realizes that he wants
or needs something. These requirements may be low involvement ones, or high involvement
ones
Step 2 of consumer buying behaviour – Information search
The major source of information for customers, and the sources which influence consumer
buying behaviour heavily are – Friends, commercials & advertisements, Public and
experience.
Step 3 of consumer buying behaviour – Evaluation of alternatives
Customers current needs, his financial standing, psychograph and many such things influence
the alternatives which the customer will consider.
Step 4 of consumer buying behaviour – Purchase
The purchase of the product, depends on the values, attitude and lifestyle which defines the
customer.
Step 5 of consumer buying behaviour – Post purchase behaviour.
Many companies take proactive steps in keeping customers satisfied or even delighted so that
they are happy with the brand and don’t switch.

MARKETING - MIX DECISIONS (FOUR PS)ss

1. Product – What the company is manufacturing?

2. Price – What is the pricing strategy used by the company?
3. Place – Where is the company selling?
4. Promotions – How is the company promoting the product?

CONTEMPORARY ISSUES IN MARKETING

GREEN MARKETING

Green marketing refers to the process of selling products and/or services based on
their environmental benefits. Such a product or service may be environmentally friendly in
itself or produced in an environmentally friendly way, including: Being manufactured in a
sustainable fashion.

HOSPITAL AND HEALTH CARE MARKETING AND ITS ROLE

Changing health systems and uncertain financial situations are forcing hospitals
around the world to better promote themselves to patients and referrers in order to stay
competitive. However, marketing measures vary greatly across institutions and countries.

Healthcare organisations, hospitals and the like have long believed that the role of the
Marketing function in their organisation is limited to organising health camps, CME’s and
marketing communication, mostly of the ‘below the line’ variety. The marketing function in a
hospital has surely to be much more than this. The marketing team in the hospital must play a
critical role in customer engagement.

DIGITAL MARKETING

Digital marketing (also known as data-driven marketing) is an umbrella term for

the marketing of products or services using digital technologies, mainly on the Internet, but
also including mobile phones, display advertising, and any other digital medium.
E-MARKETING

E-Marketing can be defined as the process of advertising and selling products and
services on the internet, for example, on a company website or by email.

ADVANTAGES OF E-MARKETING

1. Internet provides “24/7” service to its users. So you can build and make customers
relationships worldwide, and your customers can shop or order products at any time.
2. The cost of spreading your message on the internet is nothing. Many social media
sites like Facebook, LinkedIn and Google Plus allow you to freely advertise and
promote your business.
3. You can easily and instantly update your registered customers or subscribers through
email.
4. Visitors or potential customers of your website can get up to the minute information
on each visit.
5. If you are having a sale, your customers can start shopping at the discounted prices
literally as soon as they open their email.

DISADVANTAGES OF E-MARKETING

1. If you want a strong online advertising campaign you have to spend money. The cost
of web site design, software, hardware, maintenance of your business site, online
distribution costs and invested time, all must be factored into the cost of providing
your service or product online.
2. Almost over 60% of households now a day shop online. While that numbers are
continuously growing, your company needs to reach maximum people.
3. Some people prefer the live interaction when they buy any product. And if your
company has a small business with one location, this may also deter customers from
buying who live at long distances.
4. Your company should have updated information on your site. This requires research
and skills and thus timing of updates is also critical.
5. Is your company web site secure? There are many incorrect stereotypes about the
security of the internet. As a result, many visitors of your business web site will not
want to use their credit card to make a purchase. So there is a fear in the minds of
your visitors of having their credit card info stolen.

RURAL MARKETING

Rural marketing is a process of developing, pricing, promoting, and distributing

rural specific goods and services leading to desired exchange with rural customers to satisfy
their needs and wants, and also to achieve organizational objectives.

Urban to Rural: FMCG Goods, Agricultural fertilizers, automobiles, etc. are offered
by the urban market to the rural market.

 Rural to Urban: The agricultural supplies viz. Fruits, vegetables, flowers, milk, etc.
is offered from the rural market to the urban market.
SEMESTER 2

1.Product management

What is product management?

Product management is an important organizational role. Product managers are typically found at
companies that are building products or technology for customer or internal use. This role evolved
from the brand manager position that is often found at consumer packed goods companies

What do project managers do?

Person responsible for overseeing all activities and functions associated with a particular
product or product family. Also called brand manager in case of consumer goods and
services. The product manager is often considered the CEO of their product and is
responsible for the strategy, roadmap, and feature definition for that product or product line.
The position may also include marketing, forecasting, and profit and loss (P&L)
responsibilities.

The product manager often analyses market and competitive conditions and lays out a
product vision that is differentiated and delivers unique value based on customer demands.
The role of product management spans activities from strategic to tactical. At its best, product
management provides cross-functional leadership — bridging gaps within the company
between different functions, most notably between engineering-oriented teams, sales and
marketing, and support.

Product market

The marketplace in which a final good or service is bought and sold. A product market does
not include trading in raw or other intermediate materials, and instead focuses on finished
goods purchased by consumers, businesses, the public sector and foreign buyers.

Competitor Analysis

Competitive research can be a huge time-saver — especially when new products are being
launched.

The time and effort spent spend building and marketing a product could take months or even
years. That is why investing in a few hours of competitive research could yield huge long-
term rewards for product managers and their organizations — if they can confirm early on
how their product adds value. After all, they need to know what makes their product stand out
in market. The best way to do that is to research and assess everyone else in the market with
them.

What is competitive research?


Competitive research involves capturing information on competitors' metrics that matter most
to your own business. Product managers should begin by identifying who and what the
product is up against in market. This gives them a strong understanding of how unique their
idea truly is. This is also an important first step towards understanding whether their idea
warrants more of their valuable time and effort.

Competitive research can help answer these core questions:

 "Are there other companies doing exactly what I (want to) do?"
 "Are my potential customers getting a product or service at the level that they want or
need?"

Why does it matter?


Product managers must prove they are building critical components that matter to their
business and potential customers. After all, products should never be built in a vacuum —
they should solve specific needs for the business and customer. As the product's CEO, they
must define these two things before motivating the product team to build, market, sell, and
support the solution.

Product managers need quantifiable metrics to:

 Compare their work to the competition

 See where they can fill gaps in customer competition


Product Portfolio Models

 -Classification of product portfolio models as standardized, customized and financial

models.
  -Standardized product portfolio models assume that the value of market position or
market share depends on the structure of competition and the stage of the product
life cycle.
What is the BCG Matrix?

The Boston Consulting group’s product portfolio matrix (BCG) is designed to help with long-
term strategic planning, to help a business consider growth opportunities by reviewing its
portfolio of products to decide where to invest, to discontinue or develop products. It's also
known as the Growth/Share Matrix.

The Matrix is divided into 4 quadrants derived on market growth and relative market share,
as shown in the diagram below.

 1. Dogs: These are products with low growth or market share.

 2. Question marks or Problem Child: Products in high growth markets with low market
share.

 3. Stars: Products in high growth markets with high market share.

  4. Cash cows: Products in low growth markets with high market share

How to use the BCG Matrix?

To look at each of these quadrants, here are some tips:

 Dogs: The usual marketing advice is to remove any dogs from your product portfolio as
they are a drain on resources.

 For example, in the automotive sector, when a car line ends, there is still a need for spare parts.
As SAAB ceased trading and producing new cars, a whole business has emerged providing SAAB
parts.

 Question marks: Named this, as it’s not known if they will become a star or drop into the
dog quadrant. These products often require significant investment to push them into the
star quadrant. The challenge is that a lot of investment may be required to get a return. For
example, Rovio, creators of the very successful Angry Birds game have developed many
other games you may not have heard of. Computer games companies often develop
hundreds of games before gaining one successful game. It’s not always easy to spot the
future star and this can result in potentially wasted funds.

 Stars: Can be the market leader though require ongoing investment to sustain. They
generate more ROI than other product categories.

 Cash cows: ‘Milk these products as much as possible without killing the cow! Often
mature, well established products. The company Procter & Gamble which manufactures
Pampers nappies to Lynx deodorants has often been described as a ‘cash cow company’.

 Brand Name
The brand name is huge – and we’re not just talking about brand equity. The way the brand
name sounds and the images it evokes both impact the purchase decision. Product
Placement
In physical retail environments, product placement is hugely important. You’re obviously
going to see much better results if your product is on an end cap in a highly trafficked area of
the store versus tucked away on the bottom shelf in a back corner. This has nothing to do
with the product itself, but is totally related to location.
 Packaging
While some would argue packaging is a product related factor, most would agree it’s a non-
product factor. If you remove the packaging and dispose of it in order to access the product,
it’s not part of the product itself. With that being said, you should spend a considerable
amount of time and effort perfecting packaging if you want to grab attention and positively
influence purchase decisions.
Reputation
In an age where social media is king, word of mouth marketing is the key to promoting and
maintaining a positive reputation. “Customers don’t give much weight to seller messages
anymore,” writes business expert Kristin Thiago. “They talk directly to each other. What your
current customers are saying about you will either help you sell more – or drive away
business.”
Pricing
 The fifth non-product factor that buyers consider is pricing. The challenge here is
determining just how price sensitive your target market is. In some industries, price is the
number one non-product factor. In others, it plays a very minimal role.
 For example, a customer buying a mop may be very price sensitive. If one mop is $9.99 and
the other is $24.99, chances are they’ll choose the cheaper option. However, if you’re selling
$75,000 convertibles, a couple thousand dollars in difference may not matter much.

The Shell Directional Policy Matrix

It is another refinement upon the Boston Matrix. Along the horizontal axis are prospects for
sector profitability, and along the vertical axis is a company’s competitive capability. As with
the GE Business Screen the location of a Strategic Business Unit (SBU) in any cell of the
matrix implies different strategic decisions.
 Double or quit – gamble on potential major SBU’s for the future.
 Growth – grow the market by focusing just enough resources here.
 Custodial – just like a cash cow, milk it and do not commit any more resources.
 Cash Generator – Even more like a cash cow, milk here for expansion elsewhere.
 Phased withdrawal – move cash to SBU’s with greater potential.
 Divest – liquidate or move these assets on a fast as you can.
 However, decisions often span options and in practice the zones are an irregular shape and do
not tend to be accommodated by box shapes. Instead they blend into each other.
 Product Planning

 Product planning, by definition, is the strategizing process that spans from idea conception to
product market launch. Strong product planning is crucial for the company – if any step fails,
then the entire initiative might be doomed.
 Stages of product planning:
Product Conception
 Market Research
 Introducing The Product

Product Life Cycle

 Once the product has been released widely, it’s part of a life cycle, which is still a stage of the
product planning. There are four main stages of the product lifecycle, which are:
 Introduction: As mentioned above, it’s about bringing a new product to the market and
making people aware of it.
 Growth: This is where the product has had a successful introduction and feedback from
customers is being used to refine the product and its marketing, enabling its sales to grow.
 Maturity: At this stage, the product is well-established in the marketplace and is close to its
peak, with a lot of competition and the need for successful marketing campaigns and special
offers to keep things on track.
 Decline: At this point in the cycle, the product is no longer thriving. It may have been
surpassed in the market or there may be no need for its existence anymore, so the company
has to remove it from the market and focus on developing a replacement product to keep
moving forwards.

Marketing, branding, and packaging must align on messaging, value proposition,

and communication to accomplish the following:

Value Proposition

Brand Recognition

Brand Awareness

Expectations

Co-branding

Symbols and Icons

SERVICES MARKETING

Classification of Services

The promotion of economic activities offered by a business to its clients. Service marketing
might include the process of selling telecommunications, health treatment, financial,
hospitality, car rental Personal and business services
Service Blueprinting
Service blueprint is basically a flowchart of the service. Service blueprint is basically a
flowchart of the service process. It is a map in which all the element or activities,
their process. It is a map in which all the element or activities, their sequencing and
interaction can be visualize.
Benchmarking
Benchmarking - a standard by which something can be Benchmarking - a standard by which
something can be measured or judged. It is defined as measuring the measured or judged. It is
defined as measuring the performance of a business against that of the strongest performance
of a business against that of the strongest competition in order to establish ‘best practice’.
Competition in order to establish ‘best practice’.

Internal benchmarking

Competitive benchmarking
3.Sales and Distribution Management

• “Sales management is the attainment of sales force goals in an effective and efficient
manner through planning, training, leading, and controlling organizational resources”
• Sales management is planning, direction and control of personal selling. This
essentially includes recruiting, selecting, equipping, assigning, supervising,
compensating and motivating the sales force

Objectives of Sales Management

• Generate sales and earn revenue
• Providing Profitability
• Improving Market Share
• Improving Corporate Image

Sales process implementation

 Facilitates the customer's progression through the buying process
 Applies appropriate tactics to guide the process towards a favourable decision.
Account management
 Develops objective-driven, actionable plans with the customer
 Call/Account strategies support business growth at the customer and align
with overall customer plan
 Constructs strong profit, margin, ROI, and cost/benefit analyses to track
progress
 Distils data and information sources into actionable conclusions
Opportunity planning
 Develops objective-driven, actionable plans with the customer
 Call/Account strategies support business growth at the customer and align
with overall customer plan
 Constructs strong profit, margin, ROI, and cost/benefit analyses to track
progress
 Distils data and information sources into actionable conclusions
Value based selling
 Able to develop a broad offering for the customer (or channel partner)
 Creates solutions for the customer drawing from the entire company solution
(technology, products and processes)
Types of Compensation Plans
• Straight Salary
• Straight Commission
• Combination Plan
Leading the sales force
5 Steps to Leading a Sales Force
 Set Post Announcement Metrics
 Win their Hearts
 Be an Empathetic Leader
 Offer Support
 Promote and Communicate Positivity
Evaluate Sales Performance
1 Decide on a timeframe to evaluate sales performance, i.e. monthly, quarterly or annually.
Do not make impetuous decisions without giving sufficient time for the sales executive/team
to perform.
2 Choose the determinants to evaluate sales performance.
3 Give equal importance to quantity and quality of business generated as sometimes the
business might suffer losses though sales executives/teams exceed sales targets.
4 Conduct periodic product reviews with your sales team and customers.
5 Make a note of the average expenditure incurred by the sales executive/team for every call
made on a client.
6 Take the opinion of colleagues, superiors and customers while rating the appearance,
attitude, motivation, cooperation level and team spirit of a sales executive.
7 Assign grades that indicate the performance level and also mention areas where there is
scope for improvement.
• Sales Promotion
Sales promotion is one of the five aspects of the promotional mix. (The other 4 parts of the
promotional mix are advertising, personal selling, direct marketing and publicity/public
relations.) Media and non-media marketing communication are employed for a pre-
determined, limited time to increase consumer demand, stimulate market demand or improve
product availability. Examples include contests, coupons, freebies, loss leaders, point of
purchase displays, premiums, prizes, product samples, and rebates.
Trade sales promotion techniques
 Trade allowances: short term incentive offered to induce a retailer to stock up on a
product.
 Dealer loader: An incentive given to induce a retailer to purchase and display a
product.
  Trade contest: A contest to reward retailers that sell the most product.
 Point-of-purchase displays: Used to create the urge of "impulse" buying and selling
your product on the spot.
 Training programs: dealer employees are trained in selling the product.
 Push money: also known as "spiffs". An extra commission paid to retail employees to
push products.
 Trade discounts (also called functional discounts): These are payments to distribution
channel members for performing some function.
• Sales Forecasting and Budgeting Sales
 Sales forecasting is estimating what a company's future sales are likely to be in the
future. It is a projection into the future of expected sales, given a stated set of
environmental conditions.
 Sales forecasting plays a vital role in sales planning, budgeting and decision making.
 Forecasting in marketing is partly art and partly science. The blend of the two is
fundamental for successful forecasting. The amount of each varies from one situation
to another.
 There can be two approaches to sales forecasting:
o Break down approach and Build up approach.
 The steps in Break down methods are:
1. General environment forecast
2. Industry sales forecast
3. Company sales forecast
4. Sales forecast for product lines
5. Individual product forecasts.
o In Buildup approach, estimated sales figures for individual products/market
segments are totaled up to arrive at forecast figures. This can be rather
cumbersome process if the organization has many product varieties serving
multiple markets.

 Sales forecasting methods:

o Qualitative methods
 Expert’s opinion method
 Delphi method
 Sales force composite method
 Survey of buyer’s expectation method / User expectation method / End-
use method
o Quantitative methods (statistical methods)
 Extrapolation method
  Moving Average method
 Exponential Smoothening method
 Time series analysis
 Regression analysis
 Test marketing.
o Market Research methods
 Different measures of forecast errors are:

o Mean absolute percentage error (MAPE)

o Mean absolute deviation (MAD)
o Mean squared error (MSE)
o Bias
SALES BUDGETING
Sales budget is a financial plan, which shows how the resources should be allocated to
achieve forecasted sales. The main purpose of sales budget is to plan for maximum utilization
of resources and forecast sales.
Methods of Sales Budgeting
There are a variety of methods which can be used to prepare a sales budget. The following
are some of the popular methods to prepare a sales budget:
 Affordable Budgeting
This is a method generally used by organizations dealing in industrial goods. Also, firms,
which do not give importance to budgeting or firms which are having small size of operation,
make use of this judgmental method.
 Rule of Thumb
Such as a given percentage of sales. Companies involved in mass selling of goods and
companies dominated by the finance function are the major users of this method.
 Competitive Method
A few companies, the products of which face tough competition and many challenges in
selling and which need effective marketing strategy to maintain profits, make use of this
method. Using this method needs knowledge of how our competitor is working with regards
to resource allocation.
Management of Sales territory and sales quota
 SALES TERRITORY
 Sales territory is a geographical grouping of existing and potential customers
allocated to
o an individual
o a group of salespersons.
 o a branch
o a dealer
o a distributor
o A marketing organization
 Essentially designing territory means to divide the market into convenient clusters.
 Sales territory must be designed to meet certain criteria such as easy administration,
accessibility, optimization of travel time.
 Designing of sales territories can be done by Equal Workload Method or Equal
Potential Method.
 Designing of sales territory has various advantages:
o Better market coverage
o Better work load distribution
o Improves the performance of salespersons
o Reduces loss of sales (opportunities)
o Reduces sales expenses
o Increases individual attention to key customers
o Advantages of segmentation can be gained. As characteristics of different
territory can be different.
o More effective planning, implementation and control.
o Helps in assigning responsibilities to salespersons. Accountability is better.

 SALES QUOTAS
 Sales quota is the target or goals assigned to sales units (such as sales person, dealer,
distributor, territory) to be achieved in a specific period of time.
 Sales quotas (quantified objectives) may be expressed either in monetary terms or in
volume terms.
 These quantified objectives should be realistic.
 The basis for fixing the sales quota should not only be potential of the territory and
the past data but also factors such as territory’s importance to the company, the
market share expected from it and the profitability of sales in that territory.
 Participative approach while fixing the sales quota is desirable.
 The objective of fixing Sales quotas are:
o Motivating the sales force
o To bring in the right focus (products to be given importance)
o These form an important basis for feedback, evaluation of and reward for the
performance of a sales unit.
 Types of sales quota:
o Sales volume quota: These are basically of three kinds
 Monetary sales volume quota
 Unit sales volume quota (resorted to because rupee value may vary –
price may vary)
 Point sales volume quota (followed in multi-product situations.
Relative weightage. A unit of a product may higher points than another
product)
o Sales Budget quota: These quotas are set with the objective of controlling
expenses, increasing gross margin / profit. Profit quotas are set. By this the
salesmen are encouraged to sell more profitable products. Expenses are often
controlled by setting an expense budget as a percentage of the territory sales.
o Sales activity Quota: Activity quotas are fixed for salesmen in addition to sales
quotas.
 o As an example the activity quota may be set for number of
 sales call to be made
 number of dealer contacts
 number of product demonstrations to be made
 number of new accounts to be created
 Methods for fixing sales quota:
Sales quotas can be fixed based on -
o Sales potential / forecast
o Average of Past sale
o Executive judgment
o Judgment of salesmen

• The concept of channel flows

Marketing channel can be defined as the procedure of activities that need to be performed to
distribute the finished goods at the point of production to the customer at the point of
consumption. Manufactures use different channels to distribute the finished goods to
customers. However, the most common methods are wholesale or retail, which are discussed
further. The profit is distributed between the elements of distribution channel, so if the
channel is longer, each element has lower profit margin and there is less scope for discounts
for the consumer. In a shorter channel, the distribution is divided between fewer elements,
profit is higher for each element and higher discounts can be provided to the customer.
 Wholesale
In this distribution channel, wholesalers buy the products and then distribute to consumers.
Wholesalers directly purchase goods from the manufacturer in large quantity at a discounted
price. Several service taxes and sales taxes are also reduced, which in turn reduces the cost of
the final product. The wholesaler then sells the product to the consumer. From the
consumer’s perspective, wholesale is a cheaper option as the cost of the product is lower than
retail value and for wholesalers, the profit margin is higher because of bulk purchase from the
producer.
 Retail
In retail distribution channel, the finished goods are purchased by a wholesaler or distributor,
the wholesaler sells to retail shops and then the product is sold to the consumer. The
wholesalers buy the product in bulk; then the product is sold to the retailers in lesser
quantities; further, the retail shops sell the product to the customers. Here the distribution
channel is longer than wholesale, so the profit margin for each element is comparatively
lower and the customer gets a higher cost than wholesale.

• Basics of warehouse/inventory/ transportation planning

 The factors considered for designing physical distribution system are:
o The distribution objectives and the minimum service level desired.
 o Expectations of the customer in the product delivery (lead time, meeting
emergencies etc.)
o Finding out what the competitors do?
o Optimizing cost which means incurring lowest cost without sacrificing the
minimum service level.
o Ensuring flexibility of the system.

 Functions involved in physical distribution are:

o Transportation
o Inventory management
o Warehousing
o Order processing
o Packaging
o Material handling
Intermediaries
 Following are the types of intermediaries in a marketing channel:
o Sole selling agent:
 It is a large marketing intermediaries with large resources. Operates in
an extensive territory. Works on commission basis. Usually chosen
when a manufacturer prefers to stay out of marketing and distribution
task.
o C&F agents (CFAs)
 Often manufacturers employ carrying and forwarding agents, referred
to as CFAs or C&F agents. They act as branches of the manufacturer.
They do not resell products but act as agent/ representative of the
manufactures.
 Wholesaler/stockiest
o A wholesaler buys in bulk (large quantities) from the and resells the goods in
sizable lots to semi-wholesalers and retailers.
 Retailer/ Dealer.
o They sell to the ultimate customers. They are at the last end of the distribution
chain.
• Managing channel partner
CPM provides repeatable methods and tools, and develops the skills required to effectively
identify and recruit channel partners, jointly plan for partners’ growth and success, and
significantly improve the level of relationship with channel partner organizations. The result
of CPM is a more successful channel sales organization with higher levels of sales
productivity, more efficient use of channel support resources, and more profitable business.
CPM focuses on helping sales professionals to develop higher levels of business to, though,
and with a portfolio of channel partners
Distribution channel management is the collective set of activities and operations B2B firms
employ to get their product to market via channel partners as efficiently and effectively as
possible. These include but are not limited to the following business impact areas:
 Sales Forecasting
 Channel Marketing Management
 Inventory Management
 Incentive Program Management
 Revenue Recognition
 Financial Compliance and Risk Management
 Data Integrity
On a day-to-day basis, many channel-centric companies are overpaying commissions to
partners, losing business due to stock outs, under-collecting royalties, and missing out on
huge new sales opportunities. Many are also at risk for noncompliance penalties due to
records that aren't audit-ready, specifically regarding timely closing and revenue recognition.
Most companies are constantly struggling to address all this ever-growing complexity with
inefficient, piecemeal approaches and an overworked staff who is always a couple steps
behind the curve. Current systems are incomplete in data reconciliation, automation, analytics
and integration with other enterprise applications. They often succumb to believing whatever
their partners say and paying claims without question in order not to rock the boat.
Worse yet, some companies have simply adopted a culture of acceptance that the complexity,
inefficiency and profit leakage in their go-to-market channels are just “necessary evils” that
can’t be resolved. So they’ve settled into a pattern of ignoring the issues and accepting the
losses.

4. Brand Management
 What is branding?

A brand is the idea or image of a specific product or service that consumers connect with,
by identifying the name, logo, slogan, or design of the company who owns the idea or image.
Branding is when that idea or image is marketed so that it is recognizable by more and more
people, and identified with a certain service or product when there are many other companies
offering the same service or product.
Branding can build an expectation about the company services or products, and can
encourage the company to maintain that expectation, or exceed them, bringing better products
and services to the market place.

 Need for branding?

Successful branding is about promoting your strengths. You need to be sure that you can
always deliver your promises using these strengths, sometimes referred to as 'brand values'. It
can help your product stand out against competitors’. This is particularly important in
competitive markets. It is known that customers pay more for branded products than for
unbranded products.
1) Branding helps to grow your reputation
A strong, consistent brand image (which often starts with a well-designed logo) will
help you to establish your business. Branding can help you win investment
A strong, well-known brand can help you to generate future business, and even
increase your business’ value by giving you more leverage in your industry.

2) Branding can help you win new customers

A good brand will make it easier for you to win referral business.

3) Branding can boost employee pride and satisfaction

When an employee works for a company with a well-respected brand, and they
genuinely agree with what your brand stands for, they will be more satisfied with their
job and have a higher degree of pride in the work that they do.

4) Branding can help to build trust in your marketplace

A professional appearance and well-strategized branding will help you build trust
with consumers, potential clients and suppliers. People are more likely to do business
with a company that has a polished and professional brand image.

5) Branding supports your advertising efforts

It’s easier to create strong advertising (and expect better results from it) if you have a
strong brand. Advertising can be as big (and expensive!) as TV, press and radio ads,
and as strategic as social media ads, competitions and special offers.

 Brand identity is a unique set of brand associations that the brand strategist aspires to
create or maintain. These associations represent what the brand stands for and imply a
promise to customers from the organization members. Brand identity should establish
a relationship between the brand and the customer by generating a value proposition
involving functional, emotional or self-expressive benefits. It is generally the first
word that people behind the brand may utter when asked what the brand stands for.
E.g.-
Lux – Beauty bar for young women
Dettol – Antiseptic, protection.

 Brand associations are driven by brand identity-what the organization wants the
brand to stand for in the consumers mind. The association’s consumers make with
brand support brand equity. These associations may include product attributes,
 a celebrity spokesperson or a symbol. Brand should be associated with something
positive so that the customers relate your brand to being positive.

 Brand essence is a compact summary of what the brand stands for. It is the “heart
and soul” of the brand. Some people refer to the brand essence as the brand mantra,
while for others, the brand’s mantra is synonymous with the brand’s tagline or slogan.
Brand essence represents the identity, communicate and energize with those people
inside the organization. Brand essence is timeless or for a long period of time.

 Brand personality is a set of human characteristics that are attributed to

a brand name. A brand personality is something to which the consumer can relate; an
effective brand increases its brand equity by having a consistent set of traits that a
specific consumer segment enjoys. This personality is a qualitative value-add that a
brand gains, in addition to its functional benefits. There are five main types of brand
personalities: excitement, sincerity, ruggedness, competence and sophistication.
Customers are more likely to purchase a brand if its personality is similar to their
own. For Example:

Excitement is synonymous with a carefree, spirited and youthful attitude.

Sincerity is highlighted by a feeling of kindness, thoughtfulness, and an orientation
toward family values.
Ruggedness is thought of as rough, tough, outdoorsy and athletic.
Competence, in the mind of a consumer, is considered to be successful, accomplished
and influential, highlighted by leadership.
Sophistication makes a brand seem elegant, prestigious and sometimes even
pretentious.

 Brand image is the current view of the customers about a brand. It can be defined as
a unique bundle of associations within the minds of target customers. It signifies what
the brand presently stands for. It is a set of beliefs held about a specific brand. In
short, it is nothing but the consumers’ perception about the product. It is the manner
in which a specific brand is positioned in the market. Brand image conveys emotional
value and not just a mental image. Brand image is nothing but an organization’s
character.
For e.g. Volvo is associated with safety and Toyota is associated with reliability.

6. Consumer behaviour

Consumer behaviour includes how consumers make a decision on whether to buy or not, and
how they consume and dispose of the product. When a company knows this, they can adapt
the marketing mix in order to meet the needs of the consumers.

 To understand the consumers in the target market, marketing managers rely on the 7
O’s framework of consumer research.
7 So: Occupants, Objects, Objectives, Organizations, Operations, Occasions, Outlets

Who constitutes the market? Occupants

What does the market buy? Objects
Why does the market buy? Objectives
Who participates in buying? Organizations
How does the market buy? Operations
When does the market buy? Occasions
Where does the market buy? Outlets

 The Buying Process

A buying process is the series of steps that a consumer will take to make a purchasing
decision. A standard model of consumer purchase decision-making includes
recognition of needs and wants, information search, evaluation of choices, purchase,
and post-purchase evaluation.
In the buying decision a person can play any role in the list of roles given below.

 Initiator - He may initiate the purchase by another person by explaining to him the
needs served by a product.
 Influencer - He may influence another by suggesting which brand needs to be
bought.
 Decider - He is the decider to buy it.
 Buyer - He is the actual buyer who goes into the market and buys.
 User - He is the user of the product.

 Buying behaviour

Consumer buying behaviour is the sum total of a consumer's attitudes, preferences,

intentions, and decisions regarding the consumer's behaviour in the marketplace when
purchasing a product or service. The study of consumer behaviour draws upon social
science disciplines of anthropology, psychology, sociology, and economics.
 Habitual buying behaviour
In this buying situation, the purchaser is not involved in the product and there is not
much risk and there is no appreciable difference between various brands available. He
buys the brand by habit.

 Variety seeking buying behaviour

In this buying situation also, the purchaser is not that much involved, but likes to try
various brands

 Complex buying behaviour

In this buying situation, the buyer is very involved and spends some time to learn
about various alternatives available and buys the product/brand.

 Less careful buying behaviour with more chance of dissonance

In this buying situation, the differences between brands is not much and customer
takes decisions quickly. But there is a possibility that he may experience some
disappointment and tries to justify his purchase decision

 The stages of buying decision process

 Problem recognition: A potential purchaser first recognizes a need for a product

 Information search: He goes around searching for information the available
alternatives
 Evaluation of alternatives: He evaluates the alternatives
 Purchase decision: He makes the purchase decision
  Post purchase behaviour

 Post purchase satisfaction

The buyer's satisfaction is a function of the closeness between the buyer's product
expectations and the product's perceived performance.
 Post purchase actions
If buyers are satisfied they may purchase again.
If they are dissatisfied, they may return the product. They will nform their friends not to buy.
 Post purchase use and disposal
The marketer has to be monitor use of the product. If people bought the product but are not
using it, sales will not grow. If people are using the product for additional uses not anticipated
by the marketer, the information is of value in increasing sales.

 Customer lifetime value (CLV) is a metric that represents the total net profit a
company makes from any given customer. CLV is a projection to estimate a
customer's monetary worth to a business after factoring in the value of the relationship
with a customer over time. CLV is an important metric for determining how much
money a company wants to spend on acquiring new customers and how much repeat
business a company can expect from certain consumers.
CLV is different from customer profitability (CP), which measures the customer's
worth over a specific period of time, in that the metric predicts the future whereas CP
measures the past.
CLV is calculated by subtracting the cost of acquiring and serving a customer from
the revenue gained from the customer and takes into account statistics such as
customer expenditures per visit, the total number of visits and then can be broken
down to figure out the average customer value by week, year, etc.

Common ways of calculating a company's CLV include the following:

Average revenue per user: Determine the average revenue per customer per month (total
revenue ÷ number of months since the customer joined) and multiply that value by 12 or 24
to get a one- or two-year CLV. This approach is simple to calculate but does not take
customer behaviour into account or changes over time, either in customers' preferences or
company strategy.

Cohort analysis. A cohort is a group of customers that share a characteristic or set of

characteristics. By examining cohorts instead of individual users, companies can get a picture
of the variations that exist over the course of an entire relationship with groups of customers.
Factors such as market changes, seasonality and the introduction of new products,
competitors or promotions could skew cohort analysis.

Individualized CLV. Companies not interested in broadly calculating CLV often focus on
determining the total value of customers by source, channel, campaign or other mediums
such as coupons or landing pages on a company website. This could mean comparing CLVs
as obtained through social media advertising against those from other digital marketing
tactics, for example, with a focus on whether company resources are being efficiently spent.

SEMESTER 3

1. BUSINESS TO BUSINESS MARKETING

Definition of B2B Marketing

B2B (business-to-business) marketing is marketing of products to businesses or other

organizations for use in production of goods, for use in general business operations (such as
office supplies), or for resale to other consumers, such as a wholesaler selling to a retailer.

Industrial marketing

Industrial marketing, also known as business-to-business (B2B) marketing, is a branch of

communications and sales that specializes in providing goods and services to other
businesses, rather than to individual customers

Segmentation Challenges in Business-To-Business Markets

Below we summarise the main differences between consumer and business-to-business

markets, and set out the implications for market segmentation:

1) B2B markets have a more complex decision-making unit: In most households, even the
most complex and expensive of purchases are confined to the small family unit, while the
purchase of items such as food, clothes and cigarettes usually involves just one person. Other
than low-value, low-risk items such as paperclips, the decision-making unit in businesses is
far more complicated. The purchase of a piece of plant equipment may involve technical
experts, purchasing experts, board members, production managers and health and safety
experts, each of these participants having their own set of (not always evident) priorities.

2) B2B buyers are more ‘rational’: The view that b2b buyers are more rational than consumer
buyers are perhaps controversial, but we believe true. Would the consumer who spends
$3,000 on a leather jacket that is less warm and durable than the $300 jacket next-door make
a similar decision in the workplace? Consumers tend to buy what they want; b2b buyers
generally buy what they need.
3) B2B products are often more complex: Just as the decision-making unit is often complex
in business-to-business markets, so too are b2b products themselves. Even complex consumer
purchases such as cars and stereos tend to be chosen on the basis of fairly simple criteria.
Conversely, even the simplest of b2b products might have to be integrated into a larger
system, making the involvement of a qualified expert necessary. Whereas consumer products
are usually standardized, b2b purchases are frequently tailored.

4) B2B target audiences are smaller than consumer target audiences: Almost all business-to-
business markets exhibit a customer distribution that confirms the Pareto Principle or 80:20
rule. A small number of customers dominate the sales ledger. Nor are we talking thousands
and millions of customers. It is not unusual, even in the largest business-to-business
companies, to have 100 or fewer customers that really make a difference to sales. One
implication is that b2b markets generally have fewer needs-based segments than consumer
segments – the volume of data is such that achieving enough granularity for more than 3 or 4
segments is often impossible.

5) Personal relationships are more important in b2b markets: A small customer base that buys
regularly from the business-to-business supplier is relatively easy to talk to. Sales and
technical representatives visit the customers. People are on first-name terms. Personal
relationships and trust develop. It is not unusual for a business-to-business supplier to have
customers that have been loyal and committed for many years.

6) B2B buyers are longer-term buyers: Whilst consumers do buy items such as houses and
cars which are long-term purchases, these incidences are relatively rare. Long-term purchases
– or at least purchases which are expected to be repeated over a long period of time – are
more common in business-to-business markets, where capital machinery, components and
continually used consumables are prevalent. In addition, the long-term products and services
required by businesses are more likely to require service back-up from the supplier than is the
case in consumer markets.

7) B2B markets drive innovation less than consumer markets: B2B companies that innovate
usually do so as a response to an innovation that has happened further upstream. In contrast
with FMCG companies, they have the comparative luxury of responding to trends rather than
having to predict or even drive them. In other words, B2B companies have the time to
continually re-evaluate their segments and CVPs and respond promptly to the evolving needs
of their clients.

8) B2B markets have fewer behavioural and needs-based segments: The small number of
segments typical to b2b markets is in itself a key distinguishing factor of business-to-business
markets. Our experience of over 2,500 business-to-business studies shows that B2B markets
typically have far fewer behavioural or needs-based segments than is the case with consumer
markets. Whereas it is not uncommon for an FMCG market to boast 10, 12 or more
segments, the average business-to-business study typically produces 3 or 4.

Segmentation in B2B
 • A price-focused segment, which has a transactional outlook to doing business and
does not seek any ‘extras’. Companies in this segment are often small, working to low
margins and regard the product/service in question as of low strategic importance to
their business.

• A quality and brand-focused segment, which wants the best possible product and is
prepared to pay for it. Companies in this segment often work to high margins, are
medium-sized or large, and regard the product/service as of high strategic importance.

• A service-focused segment, which has high requirements in terms of product quality

and range, but also in terms of aftersales, delivery, etc. These companies tend to work
in time-critical industries and can be small, medium or large. They are usually
purchasing relatively high volumes.

• A partnership-focused segment, usually consisting of key accounts, which seeks trust

and reliability and regards the supplier as a strategic partner. Such companies tend to
be large, operate on relatively high margins, and regard the product or service in
question as strategically important.

B2B Markets Have a More Complex Decision-Making Unit

This complexity and dynamism has implications for business-to-business markets. The target
audiences for B2B communications are amorphous, made up of groups of constantly
changing individuals with different interests and motivations. Rational buyers

What does this mean for the business-to-business marketer?

To some extent the fact that business-to-business buyers are relatively rational makes our job
as B2B marketers easier – all we need to do is design and manufacture good products, and
deliver them on time and at a good price.

B2B Buyers Are More Demanding

• They have a responsibility to make the right decision when purchasing on behalf of
their companies.

• They take less risks and therefore need quality to be absolutely right.

• They have the expertise to recognise a bad offering when they see one. They are used
to getting what they want.

• They are often paying more than they would as a consumer and therefore expect more
in return.

Contemporary trends

Contemporary Marketing refers to theories that stress the importance of customer orientation
versus the traditional market orientation. They are strategies that, when implemented, offer
greater support for their client base with a product range that varies depending on what the
target market desires. Rather than what the company wants them to have.

Pricing strategy

Determining a value price is a little more difficult because one person’s value could be
another person’s expensive, or yet another person’s perception of cheap. So how do you
determine the right price for your products or services? It requires taking into account all
three factors of price, value and volume to achieve the right balance of all these factors to
maximize customer acceptance and your sales and profits.

Pricing is customer centric and therefore, you should not rely on what someone else tells you
are good for your customers. Their customers are usually not the same as yours. Test your
pricing strategies to confirm what works best for you, given your cost structure, profit goals
and what your specific market will consume at various price points is essential.

There are many options and methods to establish the price of your products or services. The
pricing strategy matrix (chart below) takes into account three attributes of setting prices,
volume, perceived value and price in a range of each attribute. You can use the chart below
to:

• Determine where your current pricing places your products or services on this chart

• Re-assess your pricing to your pricing objectives

• Compare your pricing chart to that of your major competitors to gauge your relative
product/service pricing position in the marketplace

Sales strategy

1) Prospecting

Even if your sales team is starting out cold, setting sail in the right direction is all about
quantifying quality leads. Where are you going to focus your energy and attention? Who are
your targets? Brainstorming and coming up with a comprehensive list with as many leads and
as much information as possible will help. Think previous customers, contacts, enquiries, and
contacts. Your list of prospects is your treasure map, building on this and qualifying as you
go along provides a bounty of its own.

2) Research – knowledge is power!

Do your research. Knowledge about the industry goes a long way. What are some of the
current challenges that your product/service can assist with? Know what your competition is
doing so that you can ‘one-up’ their proposition if they are mentioned. A quick Google before
a call as well as thinking specifically how your service might help relevant areas of their
business will go a long way to help you demonstrate ideas around value add.

3) Sales savvy – know your lines

Sales executives need to know how they are going to approach prospects to have a successful
conversation. For many teams, the use of a call script is very beneficial as it guides the call
through the sales process; often using a series of questions for lead generation. Business
decision makers or C-level executives do not have time for unprepared, unstructured,
speculative calls, so teams need to ensure B2B touch points care prepared, effective and
demonstrate value straight-up answering the questions: ‘Who are you? And what can you do
for me?

4) Infectious confidence

We come at this from two angles. It’s important that you have achieved an inherent
confidence in yourself, that is easy to spot, and assures the potential client who you are
talking to that you are confident, professional, have something of value to offer and will
deliver on promises. Closely related is your strong belief in the company you are working for
and the products and services on offer. Knowing not just what you do, but also how engaging
with your business can deliver real benefits is what your B2B customer really wants to hear.
Having some current examples, and case studies can go a long way to supporting your
proposition.

5) Unlocking secrets with open-ended questions

By asking the right questions, and then really listening your prospects will tell you everything
that you need to know to then close the sale. Asking really great probing questions will get
your prospects to open up, and also make them feel you are interested. It builds trust and
favour, and allows you to respond direct to their actual needs. ‘Explain to me how” and good
old “Why” are always winners.

6) Position yourself as a trusted advisor

This is what really separates the leaders from the rest. Positioning yourself and your company
as a trusted advisor will ensure your customers will buy from you. It’s worth learning and
training up your team so they are essentially expert in the areas where they are selling.

7) Speak at their level, and in their language

Inherently linked with the above, this goes beyond reading from a scripted guide, and gives
sales manages an advantage. Know who you are talking to and learn the lingo. For example,
if you are talking primarily with CFO’s you’re going to want to speak around ROI, budgets
and Capex while a HR manager may be more interested in ideas around wellbeing and
cultural impacts etc. Meet them on their level.

8) Tracking the Process – Don’t forget to close

You have probably heard the ‘always be closing’ line before, and this is always true in sales,
even in B2B. At every touch point comes the opportunity to close/engage the client into
business. This might not specifically be a sale, but can include arranging a meeting, or
permission to send a sample. It’s important to build the relationship, but not lose sight of the
end goal.

9) Seeking and pursuing referrals

Get more leads. This is fairly self-explanatory, but always remember that the person you are
speaking to may be a gateway to your next big customer. If things are going well – ask for
that referral – keeping in mind the mantra of ‘don’t ask, don’t get’.

10) Network! Network! Network!

Every day and every conversation is an opportunity to network, spread awareness of your
brand. This of yourself as a brand ambassador at all times. Keep business cards on hand, link
across social and professional networks such as linked in, and make the most of industry
events. Smile and connect – think of it as fun and watch your prospects naturally come to
you!

Channel strategy

Three areas of alignment that must be addressed to develop channel business propositions
and ensure channel readiness:

• Channel product alignment. Clearly define what market segments will be targeted by
partners; then, within those segments, determine the distribution strategy – who
should be selling what and where. Additionally, strong and verifiable evidence should
be provided showing how this new product stacks up against its competition and
demonstrating why it’s the best option for the partner to sell and the end-user to buy.

• Channel sales alignment. Working together, product marketing and channel marketing
should determine what the net margin will be for partners on the new offering and
whether additional supplier products can be attached or complementary services
added by the partner to increase the deal size.

• Channel marketing alignment. Partners sell and support what they know, so building
awareness for new offerings is critical. Our data indicates that successful channel
organizations spend up to one-third of their budgets on marketing to partners. Channel
marketing should educate partners through business value propositions, while at the
same time extending a joint (supplier/partner) value proposition through the partner to
customers.
2. CUSTOMER RELATIONSHIP MANAGEMENT

Customer relationship management (CRM) is a term that refers to practices, strategies and
technologies that companies use to manage and analyse customer interactions and data
throughout the customer lifecycle, with the goal of improving business relationships with
customers, assisting in customer retention and driving sales growth.

Customer loyalty

Customer loyalty is when a supplier receives the ultimate reward of his efforts in interacting
with its customer. Customer loyalty tends the customer to voluntarily choose a particular
product against another for his need. The loyalty may be product specific or it may be
company specific. When a loyal customer has repetitive requirement of the same product,
such customers may be described as being ‘brand loyal’. On the other hand, he may also
require different products of the same manufacturer. That is to say he makes significant
purchases direct from the same supplier and that counts as the company specific loyalty.

Loyalty also means that customer is sticking to the supplier on certain grounds though he
may be having other options also. Such loyal customers tend to spend more money buy more,
buy longer and tell more people about the product or supplier. This type of long-term
customer loyalty can only be created by making the customers feel that they are number one
priority with the supplier.

Developing a CRM Strategy

A CRM strategy should outline where the destination is, summarize the current situation and

show how the business will get from where it is to where it wants to be, gaining what benefits
and at what cost.

Here are some tips to help your business develop a winning CRM strategy.

• Set a destination More than anything else, your CRM should help your company
achieve its goals. As such, your first step in implementing a CRM strategy is to
identify those goals. Once you know what you are trying to accomplish, your next
step is to determine how you plan on reaching your objectives. Break your goals
down into smaller, achievable objectives, and then map out how and when you plan to
complete these steps. This map should be flexible, allowing for revision along the
way.

• Prioritize your Customers It is common for businesses to want to treat all of their
customers equally. The problem is that the business world is not a democracy; for a
company to be successful, it must be willing to prioritize customers based upon how
profitable (or how likely to become profitable) they are.

• Communicate with your employees Your CRM may be designed to handle large
amounts of data, and to facilitate communication between various groups, but it is
 your staff that will determine whether or not your goals are met. Involve your
employee in every step of the strategic process.

• Stagger your changes If some aspect of your business isn’t working the way it should,
you might feel pressured to implement new policies and technologies as quickly as
possible in an effort to minimize any damage. The problem with this mentality is that
too many changes all at once can have a negative impact on your employee’s
productivity.

• Start tracking your customers before first contact The CRM framework makes it
possible for businesses to capture data at every stage of the customer journey. Despite
this, many businesses fail to put their CRM to work until after the first few steps have
been made. Instead, prepare for initial contact with your lead by using your CRM to
catalogue what kind of information your prospective customer shares across social
media channels.

• Sync everything to your CRM Many CRMs have their own built-in programs that
mimic the functionality of other, often-used applications. When this is the case, then it
is a simple matter for your system to sync together, so that any notes or appointments
made throughout the system are automatically tracked through the rest of the CRM.

• Evaluate and improve Every business has its own unique challenges, and no CRM
strategy — no matter how in-depth — will be able to accurately account for every
possible contingency. Accept this fact, and be willing to revaluate your approach
should it become apparent that something isn’t working as well as it could be.

Analytical CRM

Analytical CRM builds on operational CRM and establishes information on customer

segments, behaviour and value using statistical methods. It is useful for management and
evaluation purposes, the operational customer data are integrated with a centralized data
warehouse which is consolidated data based on certain criteria (e.g. sales, profits).

Implementing the CRM Strategy

(1) the various elements of a CRM System such as the company to customer touch points
that cover sales, marketing, and service functions

(2) ascertaining the ROI of the planned CRM initiative by considering the costs and
implementation timeframe

(3) the project and data requirements for the deployment of the CRM project

3. INTEGRATED MARKETING COMMUNICATION

It ensures that all forms of communications and messages are carefully linked together.
At its most basic level, Integrated Marketing Communications, or IMC, means integrating all
the promotional tools, so that they work together in harmony.

Marketing models

There are the following models of marketing communication namely: -

1. AIDAS MODEL

This is one of the oldest and most popular models of marketing communications. This
hierarchical model was first proposed by St. Elmo Lewis in 1900 for personal selling with
stages: attract attention, maintain interest, create desire and get the consumer to act. In
1911,Arthur Fredrick Sheldon revised the model by changing the first step to 'favourable
attention' and adding a fifth step ,'permanent satisfaction’. The revised model was called
AIDAS -favourable Attention, Interest, Desire, Action and permanent Satisfaction. The
various stages in the buying process of the AIDAS model are:

1) ATTENTION: To get the attention of the target customer.

2) INTEREST: To create interest in the product by giving product information (or special
features) and how it can help satisfy the needs and wants of the individual.

3) OUTCOME: Whether the potential buyer develops a favourable or unfavourable opinion

about the product.

4) DESIRE: Create a desire in the customer to possess the product. This is done by
emphasizing the benefits of the product and how it will satisfy the needs and wants.

5) ACTION: Demand action from the customer i.e. convince them to make a purchase. A
simple method to get action from the customer is to provide a toll-free number or contact
person for more information.

6) SATISFACTION: The customer is satisfied after the purchase.

EXAMPLE: Air Deccan used this model of marketing communication successfully in its
marketing campaign.

2. DAGMAR MODEL

'Defining Advertising Goals for Measured Advertising Results', abbreviated to DAGMAR,

was proposed by Russell Honey in 1961.Coney suggested that achievement of a hierarchy-of-
communications objectives leads to actual purchase. He suggested that marketing goals and
advertising goals were different. Marketing goals are measured in terms of sales whereas
advertising goals are measured in terms of the customers' movement along the hierarchy. The
various stages in this model are as follows: -

1) AWARENESS: - In this stage the customer becomes aware of the product.

2) COMPREHENSION: - The customer is aware of the product characteristics and its uses.
He is also familiar with the brand name and brand logo.

3) CONVICTION: -This stage refers to the emotional decision of proffering one brand to
another’s.

4) ACTION: - In this stage the purchase is made.

The DAGMAR model assumes a high-involvement "learn-feel-do" hierarchy. As advertising

and marketing goals are deemed distinct, advertising goals can be defined specifically tracked
and measured. The long-term effects of the advertisement can also be studied. With the help
of the DAGMAR model, the effectiveness of the advertisement can be measured in terms of
its ability to move the customer along the hierarchy. The model enabled marketers to define
the target market or audience for the commercial.

As the advertisement had to be based on the objectives, creative people involved in the
process of designing tend to feel that their creativity was being stifled. The implementation of
DAGMAR is also very costly, as extensive research is required for setting quantitative targets
and measuring them.

Example: - General Motors(GM) used the DAGMAR approach to identify advertising goals.

3. HEIGHTENED APPRECIATION MODEL

The heightened appreciation model helps the marketer to arrive at an advertising strategy.
The model suggests that an important attribute of the product category should be identified
and the advertisement should convey the link between the brand and that particular attribute.
The consumer should be convinced about the importance of the attribute and the benefits
derived from it. Advertising campaigns based on the heightened appreciation model are said
to be successful if they result in increased usage and positive image of the brand.

Example:-Traditionally, in India, toothpaste was advertised highlighting two attributes:

strength of teeth and prevention of decay of gums(advertising Strategy of Colgate).Hindustan
Lever Limited launched two brands of toothpaste- Close Up Pepsodent.The Close Up
toothpaste with mouthwash was targeted at youth and focused on freshness.The Pepsodent
brand was targeted at kids and the attribute used in advertisements was its ability to fight
germs for long periods.These attributes of toothpaste,though important,had never been
highlighted or given importance till then.After the launch of Close Up and Pepsodent,the
market share of Colgate decreased significantly. Belvilla Exclusive holiday homes

4. ADVERTISING EXPOSURE MODEL

We know that an ad message creates awareness ,conveys information about

benefits,attributes or features,builds a brand image and personality,vests the brand with
certain feelings,links the brand with group norms and peers/experts and induces purchase
behaviour.Exposure to an ad can initiate any of these processes.These five effects create an
attitude in us towards the brand,which if favourable leads to purchasing action.In
addition,certain ads just remind us about the product or brand or lead an assault on those
reasons which prevent a consumer from buying or using the brand.It is a direct inducement to
action.

5. MODEL OF JOYEE

A new model for marketing communication was suggested by T. Joyee in 1991.The Joyee
model concentrates on three areas - advertising,purchasing behaviour and consumer
attitudes.It is assumed that there is a continious cycle of events in the three areas and change
in one of the areas affect the other areas.Consumer attitudes refer to the positive or negative
feeling of an individual towards a product or service. The attitudes are developed by personal
experiences in the past or the experiences of the others.The attitude is a psychographic
characteristic and depends on age,gender,social class,regional and cultural too.It is assumed
that if the attitude towards a product is favourable,then the person is most likely to buy the
product.The advertisement is deemed effective if it is capable of changing the viewer's
attitude in the favour of the product advertised.It is not only difficult to change consumer
attitudes,but is also time consuming.Market research can identify the drivers for
change.Commercial Focusing on the drivers can be conceptualized.

6. LAVIDGE AND STEINER MODEL

1) AWARENESS: In this step,the customer becomes aware of the existence of the product.

2) KNOWLEDGE: The customer comes to know about the features and uses of the product.

3) LIKING: The customer develops a favourable attitude towards the product.

4) PREFERENCE: Here,the customer develops preference for the said brand over other
competitive products or substitutes.

5) CONVICTION: This step involves a desire to buy the product.The customer is convinced
of a good purchase.

6) PURCHASE: The customer makes the actual purchase.

EXAMPLE: Hyundai Motors Limited used the model successfully while launching its small
car, Santro, in India.

Budget planning

1. Calculate how much your overall marketing budget will total so you can best decide how
to divide it among various marketing communication actions.

2. Decide what types of advertising you will do throughout the year so you can begin to
calculate how you can divide the budget.

3. Review the previous year's advertising budget and return on investment reports, if
applicable, to gauge the costs for advertising campaigns, as well as the most lucrative and
effective advertising investments you made.
4. Assign a budget to each section of your advertising campaign and break it down by month
or week.

5. Set aside some of the marketing budget for new advertising ventures.

6. Include a segment of the advertising budget for marketing materials, such as letterhead,
flier printing, T-shirts or giveaway items.

Ethical issues

• Are obtrusive and unavoidable. We are exposed to hundreds of adverts every day
across many different mediums to the extent that almost no public space is free from
the reach of corporate branding.

• Create Artificial wants. The persuasive nature of advertising has long been argued to
make us want things we don’t really need. Firms generate artificial wants in order to
generate demands for their products. The problem here is defining what are real wants
and needs and what are artificial or false ones.

• Reinforce consumerism and materialism. The saturation of of everyday life under a

deluge of marketing communications been argued to generate and perpetuate an
ideology of materialism in society. Contemporary cultural authors now depict modern
western society as being a ‘consumer society’, where not only is consumption the
principal site of meaning and identity, but increasingly dominates other areas such as
government, education, health and personal relationships.

• Create insecurity and perpetual dissatisfaction. Ashamed of your mobile Phone? Your
cheap brand of Coffee? Your baby is not clothed in the most expensive clothes? These
are the insecurities that ad campaigns identify and enhance in order to create demand.
Advertisers present glorified, often unattainable images of ‘the good life’ for us to
aspire to. Marketing campaigns create and rely on constant dissatisfaction with our
lives and institute a pervading sense of insecurity and inadequacy.

4. RURAL MARKETING

Definition

Rural marketing is a process of developing, pricing, promoting, and distributing rural specific
goods and services leading to desired exchange with rural customers to satisfy their needs and
wants, and also to achieve organizational objectives.

Rural consumer behavior

It is influenced by :

I)Environmental Factors
a) Economicb) Politicalb) Technologicalc) Legal

II)Socio-Cultural

a) Culture and Sub-Cultureb) Social Classes (Reference group,family,etc.)

III)Personal Factors

a) Age & Life Cycleb) Occupationc) Life Styled) Self-ConceptIV)

Psychological

a) Motivationb) Perceptionc) Belief & Attituded) Learning

4Ps

1. Product

A product is the heart of rural marketing. It is a need satisfying entity to a rural consumer.
NCAER has classified consumer goods into 3 categories. These categories cover most of the
products from Rs. 100 to Rs. 20000 and above.

The following have to be kept in mind while the marketer makes a decision on the product.

1. The product for the rural markets has to be simple, easy to use and provide after sales
service or maintenance.

2. The product has to be packed for low price and convenient usage.

3. The pack has to be easily understood by the rural consumer. The information on the
pack is preferred in local language communicating the functional benefit of the product not
technical advantages.

2. Pricing

A rural customer is price sensitive and shops for value mainly because of his lower income
levels than his urban counterparts. Hence the marketer has to find ways of making the
product affordable to the rural consumer.

For example banks offer loans for tractors, pump sets, television sets and so on to make the
product affordable to a rural consumer.

Smaller unit packs are preferred in the case of FMCG products to offer at lower prices.

3. Placement or Distribution

Distribution of products is one of the biggest challenges of rural marketing.

A three tier rural warehousing setup exists:

· CWC/SWCs (Central/ State Warehousing Corporation)

· Co-operatives

· Rural Godowns

4. Promotion

Communication to rural consumer is through organized media. More number of rural

consumer (~70%) listen to radio and many go to cinema.

Rural communication can be through Conventional media or through a nonconventional

media.

Conventional media: Print, Cinema, Television and Print.

Non-conventional media: Theatre, Posters, Haats, street plays, Melas and through influential
person in the area.

The 4As of Rural Marketing

For rural market 4Ps alone are not sufficient. The 4As also has to be considered and keep in
mind while formulating the plan to enter the rural market because these are also critically
important.

1. Availability

The first challenge in rural marketing is to ensure availability of the product or service.
India’s

7, 00,000 villages are spread over 3.2 million sq km; 700 million Indians may live in rural
areas, finding them is not easy. They are highly dispersed.

Given the poor infrastructure, it is a greater challenge to regularly reach products to the far-
flung villages. Marketer should plan accordingly and strive to reach these markets on a
regular basis. Marketers must trade off the distribution cost with incremental market
penetration.

2. Affordability

The second major challenge is to ensure affordability of the product or service. With low
disposable incomes, products need to be affordable to the rural consumer, most of who are on
daily wages. A part of it has been mentioned in product (first P).

A solution to this has been introduction of unit packs by some companies. Most of the
shampoos are available in smaller packs.

ü Fair and lovely was launched in a smaller pack.

ü Godrej recently introduced three brands of Cinthol, Fair Glow and Godrej in 50- gm packs.

ü Hindustan Lever has launched a variant of its largest selling soap brand, Lifebuoy.
ü Coca-Cola has addressed the affordability issue by introducing the smaller bottle priced at
Rs

3. Acceptability

The next challenge is to gain acceptability for the product or service. Therefore, there is a
need to offer products that suit the rural market.

4. Awareness

Building awareness is another challenge in rural marketing. A large part of rural India is
inaccessible to conventional advertising media. The media penetration in rural areas is only
about 57%.It has been seen that, two out of five Indians are unreached by any media - TV,
Press, Radio and Cinema put together. Haats, mandis and melas are opportunities. Family is
the key unit of identity for both the urban and rural consumer. However, the rural consumer
expressions differ from his urban counterpart. For a rural consumer, outing is confined to
local fairs and festivals and TV viewing is confined to the state-owned Doordarshan.
Consumption of branded products is treated as a special treat or indulgence. Haats, mandis
and melas are the place of opportunities to promote awareness about the product.

Product and pricing stratergy

These factors can be categorized as internal and external factors Internal factors : The internal
factors affecting price include cost and the company’s pricing objectives. cost factors
Promotion as a cost factor Credit based transactions increase costs Pricing Objectives Profit
maximization in the long run Minimum returns on sales turn over Deeper penetration of the
market Influencing factors.

• Pricing strategies : Optional product pricing Captive product pricing Product bundle
pricing Penetration pricing Economy pricing Value pricing Coinage pricing
Psychological pricing Pricing strategies

• Discounts and allowances: Cash discounts or bargaining benefits Free gift Schemes
for retailers Discriminatory pricing: Customer segment pricing Product form pricing
Location pricing

• Optional product pricing : Optional product pricing is the pricing of optional or

accessory products along with the main product like a company selling tractors for a
low sticker price but charging high prices for serving and spare parts. Ex: Optional
product pricing

• Captive product pricing : Captive product pricing is setting a price for products that
must be used along with the main product , such as blade for a razor and film for a
camera. Ex: Captive product pricing

• Product bundle pricing : Product bundle pricing is combining several products and
offering the bundle at a reduced price . Companies very commonly use this pricing
 strategy during periods of inflation it helps to generate sales and attract customers in a
highly competitive market , it is mostly used in festival. Product bundle pricing

• Penetration pricing : A penetration pricing policy involves setting prices of products

relatively low compared to those of similar products. This pricing policy is
appropriate when demand is elastic. Ex: Anchor white and Ajanta tooth pastes used
this pricing to enter the crowded dental cream market Penetration pricing

• Economy pricing : Economy pricing is no-frills low price, the cost of marketing and
manufacturing are kept to a minimum. Regional and local manufacturers usually
follow this economy pricing strategy as they have limited investments to make on
building brands and developing channels. Ex: Nirma & Ghari Economy pricing

• Value pricing : When economic recession or increased competition forces a company

to provide value products and services to retain sales. Ex: Godrej No.1 soap placed
their offering containing rose, sandalwood neem and other ingredients at a very
economical price . Value pricing

• Coinage pricing : Prices are set of a coin value. Coinage price is directly proportionate
to the package size. These packs are small in size and are normally meant for one time
consumption(shampoo sachet)or days consumption(tea bag)or a week’s
consumption(bathing or washing soap). Coinage pricing

• Psychological pricing : The price quality relationship refers to the idea that consumers
tend to equate product quality with the price charged. In the color TV segment LG at
a higher price is considered a better buy than Texla and Jolly brands particularly in R1
households. Psychological pricing

• Discounts and allowances : Cash discounts or bargaining benefits Free gift Schemes
for retailers Discriminatory pricing Discounts and allowances

• Discriminatory pricing : Price discrimination exists when sales of identical goods or

services are transacted at different prices from the same supplier, different prices are
charged on the basis of different consumer groups, location, product form etc.
discriminatory pricing may take the following norms- Consumer segment pricing
Product form pricing Location pricing Discriminatory pricing

• Consumer segment pricing : Discriminatory pricing based on consumer segments. Ex:

Museum often charge low admission fee for students and senior citizens. Consumer
segment pricing

• Product form pricing : Different versions of the same product are priced differently
but not proportionately to the increase in costs. Ex: Microsoft sold different versions
of its operating software windowsXP at different price level . Windows vista home
basic version is sold at $200 and with some variations the same operating software
windows vista ultimate version is sold at $320. Product form pricing
 • Location pricing : Discriminatory pricing based on different locations, even though
the cost of offerings at each location is identical. Ex: Theatre charges different prices
for different audience preferences for different locations. Location pricing

Future direction

Increasing consumer spending in rural areas needs a concentrated logistics infrastructure.

Service providers develop and focus on energy efficient technologies, improved traceability,
effective network designs and food specific performance metrics. They must build capacity
that is not restricted to single product types but allows them to strategically expand their
service basket across a range of product types.

Applications

Promoting Digital Literacy

'E-commerce' To Change The Game

App Or Two For Rural As Wel

Integration Can Be As Simple As Bringing Mobile And Radio Together

Multichannel retailing

The term ‘multichannel retailing’ is a new way of describing what is really an ‘old’
phenomenon, but one that has become increasingly relevant and topical. Though
multichannel retailing is of great importance in retail practice and has already received
considerable attention from researchers, there is still no consensus on whether retailers should
integrate or separate their retail channels.

CHAPTER 5: RETAIL MANAGEMENT

• Strategic alternatives
Business environments are highly uncertain and executives need to be innovative and flexible
to survive. They achieve this through strategic alternatives that enable their companies to
maintain a competitive edge over rivals. For instance, executives can adapt through safer
small investments or risky and costly changes, according to the "Harvard Business Review."
Some alternative strategies include price focus, differentiation, diversification and adjacent
businesses.

• Market Penetration
Market penetration is a measure of the amount of sales or adoption of a product or service
compared to the total theoretical market for that product or service. In addition, market
penetration can also include the activities that are used to increase the market share of a
particular product or service.
• Retail format development
Retail Format Development Growth Opportunity
an opportunity in which a retailer develops new retail format; a format with a different retail
mix, for the same target market.

• Location strategies in retailing

Location is the most important ingredient for any business that relies on customers. It is also
one of the most difficult to plan for completely. Location decisions can be complex, costs can
be quite high, there is often little flexibility once a location has been chosen and the attributes
of location have a strong impact on a retailer’s overall strategy.
• International Retailing
International trade and commerce has existed for centuries and played a very important part
in the World History. However International Retailing has been in existence and has gained
ground in the past two to three decades. The economic boom in several countries, coupled
with globalization have given way to Organisations looking at setting up retailing across
borders. The advent of internet and multimedia has further changed the dimensions as far as
International Retailing is concerned.

• Merchandise management at retail

Merchandising management is the science of evaluating human behavior and buying habits in
order to determine the best way to stock, display, and sell goods at retail stores.

Merchandise buying and holding is a vital part of implementing merchandise plans.

This is a step by step process and involves following stages:

(i) Collecting information,

(ii) Selecting vendors,

(iii) Evaluating merchandise,

(iv) Negotiation with vendors,

(v) Buying merchandise,

(vi) Receiving and stocking merchandise,

(vii) Re-ordering, and

(viii) Re-evaluating
• Attributes and functions affecting the buying organization
External Environmental Factors
Regulatory Changes
Economic Conditions
Social Environment:
Political Environment
Competition
Internal Organizational Factors
Organizational Structure
Organization's Goals and Objectives:
Policies and Procedures

• Buying, Outsourcing of Merchandise at retailer

• Sources of supply and Selection
Supplier selection is the process by which firms identify, evaluate, and contract with
suppliers. The supplier selection process deploys a tremendous amount of a firm’s financial
resources

• Category Management at retailer

The concept of segregating similar products into separate groups is called as category
management. The complete range of merchandise available at the retail store is divided into
separate product categories consisting of related products.

6. DIGITAL MARKETING

How to Use of online advertising as best tool for brand building

 Advertising on search engines- One of the most frequently used Internet advertising
methods is Search Engine Marketing (SEM), and of course Google tops them all. In
fact, the huge technological giant has a method so you do sponsored
advertising: Google Ad Words. The main benefit of this type of advertisement is
that they enable improving your website’s positioning through paid advertising.

 Advertising on social networks- It would be foolish to overlook the power that social
networks have in helping you attain a successful business. And is not only
effective within your digital marketing strategy but advertising on social networks is
increasingly gaining more followers thanks to its effectiveness. In fact, the majority of
 social networks offer the possibility to create advertisements right on their platforms,
whether it be promoting messages and content or creating specific advertisements.

 Banners- Banners are, probably, the best known form of online advertising and
much of this is because they were the first advertisements to appear on the Internet.
 Advertising through Blogs- It consists of a type of collaborative advertising and in
order to take advantage of its potential you must search for the leaders in your
sector to pay them in exchange for them writing an article where they speak
highly of your products or services.

 Advertising on cell phones- This is without a doubt one of the advertising strategies
on the Internet that has gained more popularity in the past years since practically the
entire world has a smartphone or other type of mobile device they regularly connect
with. This causes more and more companies to opt to adapt their advertisements to the
fastest growing medium. And contrary to what happened long ago when the majority
of mobile advertisements were just simple adaptations of computer
advertisements, now advertisements are more intended to be viewed from
a smartphone without being bothersome; whether they be text, video or images.

Concept of Search Engine Marketing and Use of Google Ad words

What is search engine marketing?

Search engine marketing is about promoting a website by enhancing its presence in search
engine results pages (SERPs). Nowadays one cannot simply develop a website with ill-
organised and outdate content. It would hardly be of any use. Can ones business be easily
found on the internet? If not, one need to spend some time reforming or rewriting the content
of your website and making it more relevant in terms of search engines. It is inevitable in a
highly competitive environment where you have to do the best in order to be on the top in
SERPs.

Here are the 7 key concepts of SEM or search engine marketing:

 Understanding search engines- Search engines play a pivotal role in making an online
business successful. Therefore, you have to develop an understanding how search
engines rank a website. Online marketers also have to consider the fact that search
engines continuously change their trends. One thing work today does not necessarily
work tomorrow. So it is important to follow the trends and make changes accordingly.

 Keyword selection- The incorporation of keywords is an important concept when it

comes to optimizing a website. It is also called content optimization. A keyword is
something we type in the search box in order to access desired information. If your
website is not fully optimized for keywords, you will probably lose the race. Further,
you have to understand what phrases your customers are typing in search boxes while
looking for the products and services that you offer.
  Selection of a URL- Be careful while creating a URL. Search engine friendly URL’s
are of great help in the process of optimizing a website. Include words in a URL
which best represents your products and services, especially when you are running an
online store and your business is largely depends on the website.

 Organic results and Pay-per-click (PPC) - Pay-per-click and organic search results are
the two ways you can effectively use to put your online presence in a decent position.
PPC allows you to pay search engines for displaying your ads. On the other hand,
organic results are to influence the way search engines rank websites.

 Back-links- Back-links play a crucial role in improving the repute of your website. It
is when other websites endorse your website. However, it is important that your
website gets endorsements from reputable websites. Search engines pay close
attention to backlinks. Therefore, make sure that you have quality content on your
website.

 Use of Google tools- Coupons, Analytics, Sitemaps and Product Research are some of
the important tools that you can use to monitor the performance of your website and
get valuable information. Moreover, you can list your online business with search
engines. There is no denying the fact that the success of your business depends greatly
on how you promote and present your business to the online world. Search engine
marketing is surely a great way to stay relevant in the competition.

Use of Google ad words

 Key word Research- The most valuable use of Ad Words for SEO is to research
keywords. It is simple to use Ad Words to research keywords. You can either enter
the URL of your site or put in some seed keywords, the tool will then automatically
generate a whole bunch of suggested keywords. Look at the results and shortlist all
the keywords that seem relevant and have a decent global search volume.

 To ensure that the Keywords You Have Picked Convert Well- After you have picked
your keywords, you need to verify if these keywords really work for you – i.e. if they
convert properly. No matter how precise you've been when picking your keywords, if
you don't test them in practice, you can never know for sure if they work well or don't.
You can pick lucrative keywords with high global search volume and low levels of
competition and still end nowhere.

 For Getting a Better CTR with Your Existing Rankings-In addition to keyword
research, Ad Words is a valuable tool for getting a better CTR (Click Thru Rate) with
your existing rankings. You might rank well for a given keyword, get a lot of traffic,
and still be unable to monetize this traffic because your CTR is low. The reasons for
this might be various but inadequate titles and description could be a very possible
reason.

 For Geographic targeting-One more good use of Ad Words for SEO is geo targeting.
If you bid on traffic from many geographic locations, you can use Google Analytics
to compare how different locations convert. It is quite natural to have significant
discrepancies in the conversions for the same keyword among the countries. When
 you go to Google Analytics and see which countries are converting best, you can
invest more effort in them. For instance, you can create local pages for these countries
or target the geo-specific keywords with exceptionally good conversion rates.

Key Factors in Designing and managing mobile marketing campaigns

Smartphone and tablet owners spend nearly three hours on average staring at these devices
every day, according to digital analytics firm Flurry. And research from Ericsson indicates
that by 2020, there will be 6.1 billion smartphone users around the globe. With stats like
these, marketers have been standing up and taking notice of the power of mobile devices. If
you’re among that group of marketers, here are three important factors to consider as you
engage in mobile marketing:

1. Usability. Mobile has had a huge impact on the way people obtain and communicate
information. Smartphones and tablets make our daily lives easier and often blend seamlessly
with our activities throughout the day. Usability is important when it comes to how a website
or app is programmed to function. If your app is too technical or your responsive website
design doesn’t flow well, people lose interest and go elsewhere.

Factors that contribute to overall usability include:

1. Easy-to-read content
2. Simplified navigation
3. Touch screen elements
4. Readability
5. Performance of the program

Keep in mind that responsive design for websites means more than shifting where things
appear on a screen. Make sure your website is easy to navigate, call-to-action buttons are
large and legible, and the overall look and feel of the website encourages your users to linger
on the site longer, regardless of how small their screen is.

Apps, which are already designed to make a person’s life easier, should place usability as one
of the highest priorities. An app is completely built for mobile from the start. It is beneficial
to conduct usability testing during the alpha and beta stages to prevent people from
discovering issues after the app has launched.

2. Timing. You can’t grab a customer or prospect’s interest if they’re asleep or too busy at
work. Your customers drive your business, so if your buyers are more likely to online shop
over their lunch break, but you’re sending daily deals emails at 7:00 pm, you won’t maximize
traffic to your site.

If you’re using push marketing strategies like SMS, or text messaging, timing is everything.
Because the nature of these messages is immediate delivery, improper timing could turn off
some customers. It’s off-putting to receive a text at 3:00 am because a company did not take
into account that the user is in a different time zone.

3. Privacy. When your phone is a part of your daily life, privacy becomes increasingly more
important. Phones house sensitive data, and it’s vital that people feel like this data is secure.
The Mobile Marketing Association (MMA) has established a set of mobile guidelines that
businesses need to follow to maintain proper privacy policies without penalization. The
guidelines highlight how businesses should obtain and send information; maintain privacy
and security, and the preferred language and principles for mobile development. It’s
important for people to know that companies are respectful of sensitive information and
comply with industry regulations. Successful privacy policies help build consumer trust.

Use of Facebook, Tweeter and LinkedIn in as social media marketing

Facebook
Most every marketer today is leveraging Facebook, or trying to figure out how to do so.
Marketers can decide how much investment to put against this customer-centric platform and
determine their goals. While some see it as a branding play, others are trying to drive direct
marketing from it. Either way, considers these points:
• Engagement vs. Marketing: This debate still rages on, but the choices about post
intent should follow your strategy, overall. If a brand wishes to balance engagement
and marketing, remember that engagement posts (posts that ask questions or
encourage response) are more likely to get those sought-after "likes" and comments.
• Likes and Comments: The more likes and comments, the more a page is seen as
relevant by Facebook. Just like a search engine, Facebook uses data to decide how
relevant posts are and how visible they are to a given marketer's fans.
• Remember Where a Brand's Posts Are: When a post is displayed to your Facebook
fans, that message is on their walls, not your brand page. Avoid asking fans to check
out any part of a Facebook page without providing a direct link to that page.
• Leveraging Facebook: Like many sites, Facebook wants brands to keep their fans
within Facebook's walls—literally. Although you may want to link outside for certain
campaigns, remember to link to branded Facebook pages or applications, as well.
• Keep it Short: Just like an email subject line, Facebook posts work better when they
are short and concise. Of course, it's about scanning content and making it easy for
fans to engage.
• Timing Is Everything: Forgive another analogy to email, but sending messages out
at the right time is really important on Facebook. And just like email, it's based on the
customer or fan base. Test different times of day for posting messages to any targeted
audience.
• Measure and Measure Again: Like all digital marketing media, measurement is
possible and really critical to understanding how much budget should be allocated to
Facebook and how this channel contributes to marketing efforts.

Twitter
Twitter is a network for both consumer and B-to-B brands. It can be used very successfully
for customer service, marketing, engagement, branding and all combinations. Marketers can
leverage the power of 140 characters successfully by:
• Having a Strategy: Every marketer needs to think about strategy on every social
network. But, with Twitter, it seems more important. It's OK to have more than one
Twitter account (one for service, marketing, education, etc.), and that will help make
sure messages are relevant for each account, respectively.
• Engaging in the Channel: It's tempting to think of Twitter as a blast of content, but
it's really a one-to-one channel. Be prepared for individuals to challenge or respond to
a Twitter post as they contribute to the conversation.
 • Be Ready to Respond: Not responding to a direct message on Twitter is different
from not responding on Facebook, in that messages sent through Twitter were
probably directed to the accountholder to begin with. On Facebook, it's all about
community. But, on Twitter, it's likely the customer is looking for an accountholder
(the brand) to respond.
• Keep it Short: It's best to keep messages even shorter than 140 characters. Allow
followers to "retweet" content by giving them room. Try to keep tweets to 110
characters.
• Hash tags Rule: Hash tags are a way of organizing content because users choose how
to see their Twitter content by looking at hash tags. This works for brands in two
ways—it allows content to appear to new people who are tracking or searching on the
topic, and it can lead to new followers on an account as a result. Hash tags are single
words, but you can run several words together, like "#My Wish List." See what is
trending on Twitter or look at sites like Hashtags.org to help choose appropriate hash
tags.
• Create a Voice: A brand can have fun with Twitter. Consider creating some
personalities who can leverage the channel. Like all social media, be transparent, but
also keep it real.

LinkedIn
LinkedIn is used by most companies today in a variety of ways—for recruitment, company
pages, groups and advertising. Marketers should think of their LinkedIn profiles as
introductions to them—for prospective clients, customers and employees, in both consumer
and B-to-B markets.
• Company Pages: Make sure to include keywords for natural search in corporate
profiles to ensure that the page appears in search listings. Include links to your
primary site and other social properties of the brand.
• Relevant Groups: If you choose to create a group, think about your communication
strategy. LinkedIn groups can be very busy and interesting places, provided the host
takes care of the community. Make sure group members aren't advertising
inappropriately. Post interesting and thought-provoking content. Find the sweet spot
for conversation through testing and measurement—and, when interest generates
conversation threads, do more of the same.

Microsites as Brand Positioning tool

Definition- Microsites are hard to define and can cover a broad range of media.
Contently defines a microsite as “a branded content site that lives outside of the company
homepage.”
Microsites can take a number of forms.

 Some microsites are essentially specialized blogs that showcase industry knowledge
and position brands as subject matter experts. Red Bull’s Red Bulletin is a specialized
blog that effectively positions the brand as adventurous and fun.
 Info graphics can be a form of microsite, especially if they are interactive and
function independent of the main website and navigation. They can draw attention to
an issue, cause, or topic relevant to the sponsoring brand. Derby, LLC’s “Visual
 Guide to the Kentucky Derby” is a great info graphic that ties in with the brand name
and the region in which the company operates.
 Some are interactive experiences that take advantage of recent gamification trends in
marketing. The game design can be tied into a relevant product or industry, or just
offer an “added value” associated with the brand. In 2014, Coca-Cola purchased every
URL from ahh.com to a-with-61-hs .com as part of an elaborate microsite strategy.
 Campaign-based microsites serve as the central hub for a large-scale marketing
campaign. Additional marketing channels (like social media and even television ads)
drive traffic to the site in hopes of a goal conversion.

Advantages of Microsites

 Brand awareness - Microsites are a great way to share the important elements of your
brand. Microsites that are highly engaging, interactive, and shareable promote your
brand across all the channels they’re shared in. Microsites that are informative or fun
(but not related to a product) keep your company top-of-mind in the consumer’s mind.
Microsites devoted to products or product lines do this in an even more tangible way,
allowing customers to really see the value your business can provide them.
Brand awareness is a key first step in driving sales, regardless of your business model
or industry. Before you can convince customers to purchase your product or service,
you have to make them aware of your brand and the value you provide. As consumers
become more social purchasers (looking for reviews online, asking friends on
Facebook for purchase advice, and sharing sales with their network), having an
established brand presence is critical to your company’s growth potential.
 SEO value- Search engines still dominate user behaviour online, and so SEO and
SEM practices are still an important part of a marketing strategy. Microsites can boost
your SEO efforts in a number of ways. Popular and quality microsites tend to be
shared across the web. Depending on your project, advertising and marketing blogs,
gaming sites, and even local bloggers can pick up your microsite and feature it. A
strong link building campaign can lead to further external links.
If your microsite is hosted under your own URL (again, what some marketers call a
branded vertical) (e.g. www.yourwebsite.com/microsite), you can expect really
measurable and strong SEO benefits. Links back to your microsites from trusted
websites and blogs are a huge boost for your search engine efforts. External links are
still considered the number one source for determining your site’s ranking in search
engines. The more people share your microsite, the more search engines will view
your website as credible and trustworthy. This can boost your rankings on all your
targeted keywords.
If you choose a separate URL for your microsite (e.g. www.ourmicrosite.com), you
can still experience some SEO benefits, although the results are a little harder to
measure. It’s fair to assume your microsite will link back to your own website in some
way. As your microsite is shared, it becomes a trusted link pointing back to your
home URL, adding link equity to your home site.
Some companies may choose to build a microsite that’s built around one or two
highly-prized (and frequently-searched) keywords. By building a site dedicated to
these keywords, you can ensure you rank high against your competitors.
  Increase customer engagement- it’s nothing new–engaged customers are better
customers. Engaged customers are happier and more energetic about your brand.
They see the value your organization offers them. There’s a strong incentive for
businesses to build engagement, too. Engaged customers are more likely to be return
purchasers, and they also are key to strong word-of-mouth marketing (still the most
powerful marketing channel there is!). If you can enthuse your customers or leads,
there’s a good chance they’ll share their experience with friends.
 Generate new leads- In addition to increasing customer engagement and boosting
your SEO efforts, microsites can serve as an excellent resource for cultivating new
leads and adding prospects to your sales funnel. The simple design and
straightforward approach of these sites make them incredibly effective at engaging
new audiences you otherwise might have failed to reach.
In order to encourage the most leads possible, it’s important to consider a few key
things. The site you create should be useful, fun, and/or easy to use for your
prospects. The purpose of your site also needs to be perfectly clear, so avoid adding
unnecessary information or features that might make it cumbersome. And while your
site doesn’t need to be revolutionary with its features or design, understand that you
are generally looking to attract a large audience. The more entries you can add to your
sales funnel, the more conversions you’ll be rewarded with in the end.
Finally, the addition of a well-placed, well-designed call-to-action (think “buttons”)
can make all the difference when it comes to improving your conversion rate. An
enticing CTA that compliments the content of your site will encourage visitors to
learn more about your brand, products, or services.
 Show knowledge/subject matter expertise- Many microsites showcase a company’s
expertise in a particular industry or with a particular product or service. If you use
your microsite to educate potential customers, you can position yourself as a subject
matter expert in your field.
Positioning your brand as having expert knowledge can have significant payoffs. Not
only does it establish your company as being credible, but it presents opportunities for
partnerships down the road. Credibility matters in networked world–vendors,
investors, reviewers, and customers all care about trustworthy, honest brands. A well-
designed microsite can give you credibility that will pay off down the road.
 Explain your business and value better- Microsites can also serve as excellent
platforms to better explain your business and the value you offer without coming
across as pushy. The specific nature of a well-crafted site results in a focused, detailed
approach to brand storytelling and makes it easy to highlight products or services in
unique, fun ways.
This also goes a long way towards helping visitors better understand your brand
messaging. You’d be surprised the impact a small one or two page spotlight can have
on a specific product or service you offer. Bigger brands especially can benefit from
microsites that target specific demographics or promote individual products.

Blogging as effective marketing tool

Blog marketing is the process of reaching a business' target market through the use of a blog.
Initially, business owners would have a blog separate from their websites, but eventually,
they integrated the two to make it easier for them to manage, as well as easier for visitors to
access.
Today, many business owners use a blogging platform, such as Word Press, for both their site
and blog. Further, as blogging has grown in ease and popularity, many people have created
businesses from blogging (as opposed to having a business first then blogging). For example,
some food blogs are businesses in and of themselves.

The Pros of Blog Marketing

The very nature of blogging makes them idea for marketing since they provide new content
to draw people back and offer a way for consumers and businesses to interact. Here are a few
other benefits:

 Inexpensive to start and run- While there are free blogging platforms, such as
Blogger and Wordpress.com, to maintain a professional appearance that allows for
your unique brand to shine through, use a self-hosted option, such as WordPress.org.
For the cost of a domain and webhosting, you can have customized blog marketing
for you.
 Easy to use - Most blogging platforms are simple to use. If you can copy, paste, type,
drag & drop, and upload, you can have a professional looking blog.
 Effective way to have new and return traffic come to your site so what's new-
Offering tips, updates and other new content gives people a reason to return to
your business website.
 Improves search engine ranking- Google in particular likes to find and rank new
content, and many entrepreneurs use blogging specifically for search engine
optimization (SEO)
 Allows you to show off your expertise to gain trust and credibility with your
market. People like to know who they do business with. With a blog you can prove
you're an expert, provide helpful tips and other valuable information, all of which help
consumers feel good about spending money on your product or service.
 Connect with your market- While most businesses now use Twitter and other social
platforms more than blogs for engagement, blogs can allow you to have a
conversation with your market. This allows you to build trust and rapport, as well as
get feedback and provide customer service.
 It can make money beyond your product or service- You can accept advertising,
promote affiliate products and get sponsors, adding additional sources of revenue to
your business.

The Cons of Blog Marketing

Like just about everything else in life, there is a downside to blogging, including:

 Time consuming- Creating new content and updating your blog can take a significant
amount of time. Hiring freelance writers and a virtual assistant can help.
 Need a constant stream of ideas- Along with time, having something new blog
about is one of the biggest challenges bloggers face.
 It can take time to see results- The Internet is overloaded with information, so
getting people to your blog takes time.
 It needs to be marketed too- You're using the blog to market your business, but for it
to work, people need to know about it, which means you have to find your target
market and entice them to your blog.
How to Do Blog Marketing
Starting a blog and using it to promote your business can be set up within minutes. It's the on-
going management and marketing that will take time.

 Make a blog marketing plan- What are you going to share on your blog? News, tips,
resources, etc.? Further, how often will you update your blog? Daily, weekly, etc?
 Create your blog- Decide on your blogging platform, and set it up, including
customization that fits your business. Be sure to use the same logo on your blog as on
your website (if you have a separate website), to retain consistency. If you use a free
blog platform (not recommended for business blogging), have a domain name
pointing to the blog so make it easier for consumers to get to your site.
 Fill your blog with several posts ASAP- Readers don't like to visit a blog with only
one or two posts. Add ten or more posts quickly, and then go to your regular post
schedule.
 Market your blog- It's very easy to integrate social media into your blogs, so that
your blog posts go out to your followers. Include your blog on your marketing
materials as well.
 Reply to comments- Remember, blogs are social, so people will ask questions,
provide feedback, or share their opinion. Delete spam posts.

Do’s and Don’ts of Internet Marketing

Internet Marketing Do’s –

 Do review your website design and navigation: Keep the navigation of your
website simple and make it easy to find things. It should not be so complex that your
visitors become frustrated and leave. Your website should be well-organized with the
use of menus, dynamic and user-friendly. The website should be attractive,
professional and eye-catching, so that when users arrive, they are captivated.

 Do Search Engine Optimization: Use SEO to help your website rank higher in the
organic search results. Choose keywords that you users are most likely to use when
searching for a certain topic. Plan a solid strategy for your SEO. Then add related
terms used in optimization including: On-page, Off-page, linking and personalization
that you want to be well-known.
When it comes to Google, realize that SEO has shifted more towards content,
usability, and mobile. Google’s algorithm doesn’t reward sites that become obsessed
with SEO rankings, but those that focus more on what its users are looking for.

 Do include a blog for your website: Writing blog article posts is a tactic that still
helps businesses today. A blog helps you to bring in more traffic to your website and
helps increase interest in your niche. Make use of the RSS feeds in your blogs, so that
the user can be notified of updates and new posts whenever they’re made.

 Do make use of Social Media networks: Social media is a very hot medium in
today’s world of online marketing, so you should put it to use as much as you can.
 Social sites allow you to make your post viral. The more people who are exposed to it,
the more viral your content can become. It also helps to boost your brand popularity.

 Do make use of online advertising: In addition to SEO, paid advertising did right
increase sales and income. Using Pay-per-click (PPC) for example, will help your site
appear quicker on search results pages. Combined with SEO, this can be an excellent
advertising tool. A benefit of PPC is that you only have to pay whenever someone
clicks on your ad link.

Internet Marketing Don’ts –

 Don’t use duplicate content: Whenever possible, use fresh and newly written
content to get better results. In the field of Internet marketing, copying the same
content from other websites is not acceptable. Your business website can be banned if
you are caught copying the content and can even face a lawsuit. Instead, it’s better to
use your own content and keep it updated on a regular basis.
 Don’t like your own posts: It’s not advisable to like your own post to get more likes.
Rather it creates a negative impression on the users about you and your brand. Also,
this won’t help in extending your reach, either. Instead focus on developing a habit of
posting regularly on social media sites.
 Don’t start advertising an incomplete website: Until your website is fully
functional and complete, do not advertise it, have it indexed, or say anything about it
until it is ready. Once operational, you can then add it to groups, do press releases and
list it to search engines to announce your website. You can also encourage your online
friends to add your website links on their sites, to increase web traffic and interest for
your site.
 Don’t use long boring messages: Using long and boring messages are never
accepted by anyone. Avoid writing long messages, quotes, or replies on posts. Your
messages should always be short and to the point. No one is interested in reading
unnecessary lengthy content. Everyone in today’s world is busy and doesn’t have the
time, so be concise when writing content.
 Don’t forget about mobile users: Always create a mobile responsive site, so that it is
easier to use and in turn you may receive a positive response. According to Forbes,
87% of online sales by 2017 will be made from tablets and smartphones. So,
whenever you are creating a website, always think about the mobile users by adding a
responsive web design.
CHAPTER 7
SUSTAINABLE MARKETING
Sustainable marketing calls for socially and environmentally responsible actions that meet the
present needs of consumers and businesses while also preserving or enhancing the ability of
future generations to meet their needs. Figure 7.1 compares the sustainable marketing concept
with marketing concepts we studied in earlier chapters.
The marketing concept recognizes that organizations thrive from day to day by
determining the current needs and wants of target group customers and fulfilling those needs
and wants more effectively and efficiently than competitors do. It focuses on meeting the
company’s short-term sales, growth, and profit needs by giving customers what they want
now. However, satisfying consumers’ immediate needs and desires doesn’t always serve the
future best interests of either customers or the business.
For example, McDonald’s early decisions to market tasty but fat- and salt-laden fast
foods created immediate satisfaction for customers and sales and profits for the company.
However, critics assert that McDonald’s and other fast-food chains contributed to a longer-
term national obesity epidemic, damaging consumer health and burdening the health care
system. In turn, many consumers began looking for healthier eating options, causing a slump
in the sales and profits of the fast-food industry. Beyond issues of ethical behaviour and
social welfare, McDonald’s was also criticized for the sizable environmental footprint of its
vast global operations, everything from wasteful packaging and solid waste creation to
inefficient energy use in its stores. Thus, McDonald’s strategy was not sustainable in terms of
either consumer or company benefit.
Whereas the societal marketing concept identified in Figure 4.1 considers the future
welfare of consumers and the strategic planning concept considers future company needs, the
sustainable marketing concept considers both. Sustainable marketing calls for socially and
environmentally responsible actions that meet both the immediate and the future needs of
customers and the company.
Today, McDonald’s has responded with a more sustainable strategy of diversifying
into salads, fruits, grilled chicken, low-fat milk, and other healthy fare. It is committed to
doing what is right: being a good neighbor and a valued partner in every one of its
communities.
Fig 7.1 Sustainable Marketing
McDonald’s and its suppliers are collectively focused on three responsibility areas: ethical,
environmental, and economic. The company works with more than 100 Canadian suppliers
who provide it with wholesome and sustainable ingredients for its foods. After a long search
for healthier cooking oil, McDonald’s phased out traditional artery-clogging trans fats
without compromising the taste of its French fries. And the company launched a major
multifaceted education campaign—” it’s what I eat and what I do . . . I’m loving’ it”—to help
consumers better understand the keys to choosing balanced and active lifestyles. McDonald’s
has even developed an environmental scorecard that rates its suppliers’ performance in areas
such as water use, energy use, and solid waste management. McDonald’s more sustainable
strategy is benefiting the company as well as its customers. Sales have increased by more
than 50 percent and profits have more than quadrupled. The company consistently appears in
the Dow Jones Sustainability Indexes, recognizing its commitment to sustainable economic,
environmental, and social performance. Thus, McDonald’s is well positioned for a
sustainably profitable future.4Truly sustainable marketing requires a smoothly functioning
marketing system in which consumers, companies, public policymakers, and others work
together to ensure socially and environmentally responsible marketing actions. Unfortunately,
however, the marketing system doesn’t always function smoothly. The following sections
examine several questions about sustainability: What are the most frequent social criticisms
of marketing? What steps have private citizens taken to curb marketing ills? What steps have
legislators and government agencies taken to promote sustainable marketing? What steps
have enlightened companies taken to carry out socially responsible and ethical marketing that
creates sustainable value for both individual customers and society as a whole?

Consumerism, Marketing & Environment

Consumerism started in the United States of America (USA) some decades back and received
the blessings of American government when in 1962, a consumer “Charter of Rights”
declared by the late President John F. Kennedy was passed by the congress. The Charter
according to Picard (1972) stipulates that: (I). The Consumer has a right to safety. (ii). He has
a right to be informed about goods/services he wishes to buy. (iii). He has the right to choose
whatever product or service he wishes to buy. (iv). He has the right to be heard.
Consumerism is an organized movement of citizens and government agencies to improve
the rights and power of buyers in relation to sellers. Both marketers and consumers have
rights that need to be protected. Traditional sellers’ rights include the following:
• The right to introduce any product in any size and style, provided it is not hazardous to
personal health or safety or, if it is, to include proper warnings and controls
• The right to charge any price for the product, provided no discrimination exists among
similar kinds of buyers
• The right to spend any amount to promote the product, provided it is not defined as unfair
competition
• The right to use any product message, provided it is not misleading or dishonest in content
or execution
• The right to use buying incentive programs, provided they are not unfair or misleading
Traditional buyers’ rights include the following:
o The right not to buy a product that is offered for sale
o The right to expect the product to be safe
o The right to expect the product to perform as claimed
Comparing these rights, many believe that the balance of power lies on the seller’s side. True,
the buyer can refuse to buy, but critics feel that the buyer has too little information,
education, and protection to make wise decisions when facing sophisticated sellers.
Consumer advocates call for the following additional consumer rights:
• The right to be well informed about important aspects of the product
• The right to be protected against questionable products and marketing practices
• The right to influence products and marketing practices in ways that will improve “quality
of life”
• The right to consume now in a way that will preserve the world for future generations of
consumers
Each proposed right has led to more specific proposals by consumerists and consumer
protection actions by government. The right to be informed includes the right to know the
true interest on a loan (truth in lending), the true cost per unit of a brand (unit pricing), the
ingredients in a product (ingredient labelling), the nutritional value of foods (nutritional
labelling), product freshness (open dating), and the true benefits of a product (truth in
advertising). Proposals related to consumer protection include strengthening consumer rights
in cases of business fraud, requiring greater product safety, ensuring information privacy, and
giving more power to government agencies. Proposals relating to quality of life include
controlling the ingredients that go into certain products and packaging and reducing the level
of advertising “noise.” Proposals for preserving the world for future consumption include
promoting the use of sustainable ingredients, recycling and reducing solid wastes, and
managing energy consumption. Sustainable marketing applies not only to consumers but also
to businesses and governments. Consumers have not only the right but also the responsibility
to protect themselves instead of leaving this function to the government or someone else.
Consumers who believe that they got a bad deal have several remedies available, including
contacting the company or the media; contacting federal, provincial, or local agencies; and
going to small claims courts. Consumers should also make good consumption choices,
rewarding companies that act responsibly while punishing those that do not. Ultimately, the
move from irresponsible consumption to sustainable consumption is in the hands of
consumers.
Green Marketing
Marketing has been traditionally described as the “process of planning and executing the
conception, pricing, promotion and distribution of ideas, goods and services to create
exchanges that satisfy individual and organizational objectives”. Even though the definition
does not explicitly specify society or environment, a moment’s reflection would make it clear
that marketing cannot exist without either society or environment. This implicit belief about
the importance of society and environment led to newer developments in the field of
marketing culminating in the concept of sustainable marketing and green marketing. The
earliest definition of Green Marketing – which evolved out of the American Marketing
Association’s (AMA) workshop on Ecological Marketing – was that “Green Marketing is the
study of positive and negative aspects of marketing activities on pollution, energy depletion
and non-energy resources”. This definition had three major aspects – (a) it defined ecological
marketing as a subset of the domain of marketing (b) It allowed comparison between the
between the positive and the negative aspects and (c) it focused on a narrow range of
ecological activities. The definition suffered from the limitation that it did not focus on
activities in which harm to the environment and society was being done due to allied
activities of marketing. Another definition defined Green Marketing as “Green or
Environmental Marketing consists of all activities designed to generate and facilitate any
exchanges intended to satisfy human needs or wants, such that the satisfaction of these needs
and wants occurs, with minimal detrimental impact on the natural environment”. This
definition was a much broader definition of green marketing and allowed considering
marketing aspects which were left out in the earlier definition.
Green Marketing & 4P’s
Those of you that have looked at the traditional “business studies” view on marketing, will be
familiar with the P’s of the “marketing mix”. This particular bit of jargon means that
somebody, somewhere, had this brain-wave when he noticed that a number of important
things for marketing started with P.

Product:
Green marketing is all about the product (or service). The whole point is that this one is
different, it doesn’t just do what it says on the tin, but it also takes into account a whole lot of
things that most other products don’t. In a way, you can say that your product is a hell of a lot
bigger than everybody else’s product. Don’t forget to use that when you are talking about it.
Green Marketing begins with ‘green design’. Product design constitutes an active interface
between demand and supply. An example by Ottman and Terry super concentrated laundry
detergents are associated with energy
saving, reduced packaging, space and money. The product itself has to be made in such a way
that it satisfies consumer and manufacture’s needs. For ecologically sustainable products to
be successful, green branding attributes have to be efficiently communicated. Most buyer
decisions are influenced by the labeling, (green labeling) that states all that makes the product
green compliant.
Price:
Pricing green products and services seems difficult, but it shouldn’t be. You only need to
follow these simple steps:
o Find out what other people are charging for similar products and services, both green
and non-green
 o Calculate an average for green and an average for non-green
o Estimate how much you need to charge in order to cover for your costs (this includes
you and all of your partners and employees making a living)
o Compare (green-A) to (B)
If they’re about the same (less than 10% difference), you are in business. If you can offer a
lower price than (green-A), don’t offer the lowest price you think you can do (you might have
missed something), but you may undercut your competitors a little. If you find that (green-A)
is a lot lower than you think you can do, find out how they can do what they do, and make
your business decisions accordingly. If there is no (green-A), it’s OK to make your offer
somewhat higher than the non-green equivalent. But if you find that (non-green-A) is a lot
lower than you think you can do, you need to put your creative thinking hat on. The price of
green product has to be affordable for the customer to encourage purchase. Industrial
differentiation works only when products reduce client’s cost. Most buyers are influenced by
advertisement that reflects a company’s commitment to environment
Promotion:
This is what everybody thinks that marketing is about: getting the message out about your
product or service. Promoting green products has a lot of pitfalls, but there is one simple
exercise that can help you a lot. Imagine that everybody in the world who may need your
product or service, was already using it. Not to excess, not any more than they actually need,
and those people who don’t need it aren’t using it. What would the world look like? Use this
vision in your promotional materials to show that you understand what being green is about.
Companies that do green advertisement that tend to portray an image of
environmental friendliness, influences their customer purchase decisions. Consumers love to
associate themselves with companies that are environmental stewards. When a company
communicates this through their advertisements, promotions, publicity and corporate social
responsibilities, they are sure to get many loyal customers.
Place:
Where are you selling? At people’s homes, over the Internet, in a shop? The environment
where a sale happens can have a big impact on the outcome. If you can, in every little way
you can, make this environment more natural and eco-friendly, your chances of making an
eco-sale will increase. Green distribution is a very delicate operation. Customers must be
guaranteed of the ‘Ecological nature’ of the product. The green environment is a constantly
regulated environment and as such high level of compliance is necessary when carrying out
distribution of green products. This is a common procedure in the United States
Corporate Social Responsibility
Corporate responsibility policies have been gaining increasing attention from senior
executives as questions of sustainability and green agendas have come to permeate business
the world over.
The financial crisis has only heightened this trend by forcing companies to clearly identify
themselves as responsible and trustable. Yet executives commonly don’t understand the most
effective ways to design and implement sustainability programs. Because of that they can’t
fully capitalize on the potential corporate responsibility has for creating business value, and
they are achieving little with it despite all their interest. So far businesses have mostly
focused on direct routes to getting business value from corporate responsibility. They have
pursued easy-win strategies or activities with direct commercial benefits, such as measuring
and reducing their corporate carbon footprints.
Such activities undoubtedly bring some value to businesses and society, but they fall
far short of the mark. What we are slowly starting to see is a second wave of corporate
responsibility behavior marked by a clearer focus on the total business value such policies
can bring. To fully benefit from corporate responsibility, businesses must wake up to the fact
that they need to take a more indirect route to creating value with it. They must start by
seeing where and how key stakeholders react to a firm’s corporate responsibility initiatives.
In practical terms, this involves moving away from a top-down strategy determined
by the board to a richer process of bottom-up co-creation with stakeholders. It means using
focus groups and other marketing research techniques to understand the deeper psychological
needs that corporate responsibility can answer for stakeholders, such as the self-esteem and
pride that a consumer can draw from affiliating with a socially responsible company. With
such knowledge companies can elicit and gauge the demands of their target audiences. They
stand to learn a lot. For example, recent research involving Procter & Gamble, General Mills
and Timberland revealed that many of their stakeholders had no idea of the companies’
corporate responsibility initiatives, or had a very limited understanding and didn’t find them
personally relevant. Because of that, they often questioned the companies’ motivations for
engaging in corporate responsibility activities. Now those companies have been able to build
stronger connections with their stakeholders by improving their communication to build
active participation and engagement in their initiatives. Their shift to a stakeholder-centric
approach has brought them observable improvements in corporate responsibility return, such
as increased customer and employee loyalty. Finding your corporate responsibility strategy
by catering to stakeholders might sound cynical if you’re a purist who thinks only of some
larger social good, but adopting that kind of more sophisticated strategy actually benefits all.
The reality is that the external stakeholders you engage with will often prove to be
your toughest critics, and they will insist on much richer and ambitious corporate
responsibility programs of genuine social benefit. Indeed, part of the challenge is to judge
which of the ideas put forward by stakeholders are realizable, commercially viable and
valuable. At the same time, those external stakeholders give you an invaluable source of
feedback about what actions can make customers and clients connect more favorably with a
given brand. That in turn improves your company’s image and thus increases the business
value of committing to corporate responsibility. In moving to such a model, businesses must
make internal changes to support the execution and evaluation of their initiatives. Companies
are commonly criticized for not involving their boards enough in corporate responsibility.
That is a fallacy. To the contrary, they are most often too top-down, generating ideas in the
boardroom and passing them on to a sustainability or corporate responsibility department that
often doesn’t act in concert with the strategy or marketing department. To effectively
capitalize on the indirect route to corporate responsibility value, programs need to operate
through more traditional and developed business functions. In particular, they should involve
the marketing team. Marketing always has the knowhow to conduct meaningful campaigns
and measure return on investment.
 Moreover, involving marketing in consumer research and analysis enables that
department to coordinate how a corporate responsibility program is presented to those it
wishes to influence. That creates a virtuous circle, giving marketing a useful tool, beyond its
traditional mix of price and product, for differentiating the company and its products from the
competition. Many businesses champion their credentials in the area of corporate
responsibility, but few capitalize on effective implementation and measurement of it to
strengthen their brand identities. As corporate responsibility becomes a bigger shaper of
companies’ public images, ignoring the advantages of effective corporate responsibility
marketing becomes an increasingly higher stakes gamble. With the costs of ignoring
corporate responsibility–or, worse, getting it wrong–steadily increasing, businesses need to
find sophisticated ways to link social and business value at the individual, stakeholder level.
Too often corporate responsibility is looked at and discussed broadly, relying on sweeping
aggregate-level research and analysis to gauge its effectiveness and method of execution.
Consultancies and business educators have been guilty of promoting that approach. Now is
the time for business leaders and those who seek to influence them to step up and put aside
macro-focused thinking for the deeper, more thoughtful insight they need. Now is the time
for companies to realign both internally and with their outside audiences to unite social good
with hard-nosed commercial value.

Consumerism, Consumption and Ethical Marketing

The average person who reads the news is aware of the many problems that stem from how
global capitalism and consumerism operate. Global warming and climate change threaten to
wipe out our species and the planet. Dangerous and deadly working conditions are common
on the production lines of many goods we consume. Tainted and toxic food products appear
regularly on the shelves of grocery stores. People working in many industries and services
sectors, from fast food, to retail, to education, cannot afford to feed themselves and their
families without food stamps. The list of problems could go on and on. When the problems
connected to our way of life are so many and diverse, how can we act in ways that are rooted
in respect for the environment and others? How can we be ethical consumers?
For most of us, the implications of our consumer practices remain unconscious or
subconscious, in large part because they are far removed from us, geographically speaking.
However, when we think consciously and critically about them, they can take on a different
kind of economic, social, and political significance. If we frame the problems that stem from
global production and consumption as unethical or morally corrupt, then we can visualize a
pathway to ethical consumption by selecting products and services that break from harmful
and destructive patterns. If unconscious consumption supports and reproduces the
problematic status quo, then a critically conscious, ethical consumption can challenge it by
supporting alternative economic, social, and political relations of production and
consumption.
Let’s examine a couple of key issues, and then consider what an ethical consumer
response to them looks like.
Raising wages around the world with fairly produced goods: Many of the products we
consume are affordable because they are produced by low-wage workers around the world
who are kept in impoverished conditions by the capitalist imperative to pay as little as
possible for labor. Nearly every global industry is plagued with this problem, including
consumer electronics, fashion, food, and toys, to name just a few. Farmers who sell produce
via global commodities markets, like those who grow coffee and tea, cocoa, sugar, fruits and
vegetables, and grains, are historically underpaid.
Human rights and labor organizations, and some private businesses too, have worked
to reduce this problem by shortening the global supply chain that extends between producers
and consumers. This means removing people and organizations from that supply chain so that
those who actually make the goods receive more money for doing so. This is how fair trade
certified and direct trade systems work, and often how organic and sustainable local food
works too. It is also the basis of the Fair phone -- a business response to the troubled mobile
communications industry. In these cases, it’s not just shortening the supply chain that
improves the situation for workers and producers, but also, the transparency of it, and the
regulation of it that ensures that fair prices are paid to workers, and that they work in safe and
respectful conditions.
Protecting the environment through ethical consumption: Another key set of problems
stemming from the global system of capitalist production and consumption is environmental
in nature, and includes the sapping of resources, environmental degradation, pollution, and
global warming and climate change. In this context, ethical consumers look for products that
are sustainably produced, like organic (certified or not, as long as transparent and trusted),
carbon neutral, and mixed cropped instead of resource intensive monoculture farming.
Additionally, ethical consumers seek products made from recycled or renewable materials,
and also, look to reduce their consumption and waste footprint by repairing, reusing,
repurposing, sharing and trading, and by recycling. Measures that extend the life of a product
help reduce the unsustainable use of resources that global production and consumption
requires. Ethical disposal is just as important as ethical consumption.
So, it is possible to be an ethical consumer in today’s world. It requires conscientious
practice, and a commitment to consuming less overall in order to pay a higher price for
equitable, environmentally sustainable goods. However, from a sociological standpoint, there
are other issues regarding culture and race that raise other ethical issues regarding
consumption, and these deserve critical attention too.

CHAPTER 8
PRODUCT INNOVATION
Product innovation means different things to different people. Some, for example,
tend to think in terms of a product which is ‘first of its kind’, whether in the UK or in some
larger market. Naturally, few small firms achieve innovation of that degree. And such radical
innovation is not necessarily more important than the steady, incremental improvements to
existing ranges of products, which far more firms take part in. Indeed, since about 1970 there
seems to have been a steady swing towards product improvement rather than totally new
products, throughout the industrial world1. We felt there was good reason, therefore, to adopt
a broad rather than a narrow view of product innovation. As we stated briefly in the
Introduction, we defined it as development of new products, changes in design of stablished
products, or use of new materials or components in manufacture of established products. In
other words, anything which is new to the business and its product range is counted as
innovation, even if similar products are available elsewhere or if the change is an incremental
one.

New product development as proactive / reactive process

In an attempt to reduce the high incidence of new product failures many procedures and
models have been proposed. Criticism is often made of firms which fail to follow each step in
these procedures. Indeed, some commentators take a perverse pleasure in describing new
product failures which they, in their splendid isolation from the actual decision-making
process, attribute to the omission of one or other stage of the new product development
process. Implicit in such criticism is the assumption that the firm developing the new product
could have followed the ideal procedures in full. Yet examination of the following examples
shows that circumstances do arise which make it impossible or even inadvisable to follow the
procedures. Indeed, these examples suggest that there is amongst all new products a large
category for which the crucial factors which determine their success or failure is different
from those described in much writing on the subject.

Proactive Basics
Proactive business strategies are used to achieve predetermined goals. For instance, a
proactive marketing strategy carries out research, development and promotional objectives
for your business.
Company Audit
Proactive strategies typically develop from a company's analysis of internal strengths and
external opportunities and threats. A company that recognizes a major shift in customer
demands or technological capabilities may develop a proactive strategy to refine its products
or promotion in anticipation. Though risky, proactively leveraging your strengths and moving
ahead of threats is often important to staying ahead of competitors and maintaining long-term
stability and growth.
Reactive Basics
A reactive strategy doesn't mean your business waits for crises to plan. Instead, you develop a
strategy with more of a wait-and-see approach.
Pros and Cons
Reactive strategies usually are more conservative because you wait for external influences
before taking action. This can protect against wasted investments or unnecessary moves that
damage current success. However, companies that rely too much on reactive strategies may
miss new or emerging business opportunities. In extreme cases, companies react too slowly
to industry or market evolution and succumb to more aggressive competitors with advanced
offerings.
Steps for Creation customer focused ideas

Here are 5 steps you can take to improve customer value to grow your business:

Step 1: Understand what drives value for your customers

Talk to them, survey them, and watch their actions and reactions. In short, capture data to
understand what is important to your customers and what opportunities you have to help
them.

Step 2: Understand your value proposition

The value customers receive is equal to the benefits of a product or service minus its costs.
What value does your product or service create for them? What does it cost them–in terms of
price plus any ancillary costs of ownership or usage (e.g., how much of their time do they
have to devote to buying or using your product or service?)

Step 3: Identify the customers and segments where are you can create more value
relative to competitors. Different customers will have varying perceptions of your value
relative to your competitors, based on geographic proximity, for example, or a product
attribute that one segment may find particularly attractive.

Step 4: Create a win-win price

Set a price that makes it clear that customers are receiving value but also maximizes your
“take.” Satisfied customers that perceive a lot of value in your offering are usually willing to
pay more, while unsatisfied customers will leave, even at a low price. Using “cost-plus”
pricing (i.e., pricing at some fixed multiple of product costs) often results in giving away
margin unnecessarily to some customers while losing incremental profits from others.

Step 5: Focus investments on your most valuable customers

Disproportionately allocate your sales force, marketing dollars, and R&D investments toward
the customers and segments that you can best serve and will provide the greatest value in
return. Also, allocate your growth capital toward new products and solutions that serve your
best customers or can attract more customers that are similar to your best customers. Your
customers are the lifeblood of your business.

Opportunities sensing (externally and internally)

Strategic management is the managerial responsibility to achieve competitive advantage

through optimizing internal resources while capturing external opportunities and avoiding
external threats. This requires carefully crafting a structure, series of objectives, mission,
vision, and operational plan. Recognizing the way in which internally developed
organizational attributes will interact with the external competitive environment is central to
successfully implementing a given strategy—and thus creating profitability.

Internal Conditions
The internal conditions are many and varied depending on the organization (just as the
external factors in any given industry will be). However, management has some strategic
control over how these various internal conditions interact. The achievement of synergy in
this process derives competitive advantage. While different businesses have different internal
conditions, it is easiest to view these potential attributes as generalized categories. A value
chain is a common tool used to identify each moving part. It is a useful mind map for
management to fill in during the derivation of internal strengths and weakness. A value chain
includes supports activities and primary activities, each with its own components.

Supports Activities

Firm infrastructure: the organizational structure, mission, hierarchy and upper

management
Human resource management: the skills embedded in the organization through
human resources
Technology: the technological strengths and weaknesses (such as patents, machinery,
IT, etc.)
Procurement: a measure of assets, inventory, and sourcing

Primary Activities

Inbound logistics: deriving inputs for operational process

Operations: running inputs through organizational operations
Outbound logistics: shipping, warehousing, and inventorying final products
Marketing and sales: building a brand, selling products, and identifying retail
strategies and opportunities
Service: following up with customers to ensure satisfaction, provide and fulfill
warranties, etc.

External Opportunities and Threats

The external environment is even more diverse and complex than the internal environment.
There are many effective models to discuss, measure, and analyze the external environment
(such as Porter's Five Force, SWOT Analysis, PESTEL framework, etc.). For the sake of this
discussion, we will focus on the following general strategic concerns as they pertain to
opportunities and threats:

Markets (customers): Demographic and socio-cultural considerations, such as who

the customers are and what they believe, are critical to capturing market share. Understanding
the needs and preferences of the markets is essential to providing something that will have a
demand.
Competition: Knowing who else is competing and how they are strategically poised
is also key to success. Consider the size, market share, branding strategy, quality, and
strategy of all competitors to ensure a given organization can feasibly enter the market.
Technology: Technological trajectories are also highly relevant to success. Does the
manufacturing process of the product have new technologies which are more efficient? Has a
disruptive technology filled the need that was currently being filled?
Supplier markets: Suppliers have great power as they control the necessary inputs to
an organization's operational process. For example, smartphones require rare earth materials;
if these materials are increasingly scarce, the price points will rise.
 Labor markets: Acquiring key talent and satisfying employees (relative to the
competition) is critical to success. This requires an understanding of unions and labor laws in
regions of operation.
The economy: Economic recessions and booms can change spending habits
drastically, though not always as one might expect. While most industries suffer during
recession, some industries thrive. It is important to know which economic factors are
opportunities and which are threats.
The regulatory environment: Environmental regulations, import/export tariffs,
corporate taxes, and other regulatory concerns can poise high costs on an organization.
Integrating this into a strategy ensures feasibility.
While there are many other external considerations one could take into account during
the strategic planning process, this list gives a good outline of what must be considered in
order to minimize unexpected threats or missed opportunities.

Strategic Analysis
With both the internal value chain and external environment in mind, upper
management can reasonably derive a set of strategic principles that internally leverage
strengths while externally capturing opportunities to create profits—and hopefully
advantages over the competition.

Idea generation concept and tools

he goals of idea generation is to come up with a variety of new approaches or solutions to an

issue at hand. Whether done alone or in groups, idea generation is more productive when you
follow a few guidelines and use a variety of simple techniques that encourage divergent
thinking (suggesting many different options) and the deliberate mental processes of attention,
escape (challenging an existing concept), and movement (generating ideas freely).

Four Classic Guidelines for Idea Generation

Alex Osborn, the developer of the brainstorming technique, suggested four basic guidelines
for generating ideas in groups:
o Criticism is not allowed.
o Outlandish ideas are welcomed; the wilder the ideas, the better.
o The more ideas, the better.
o Building on and improving ideas is encouraged.
o
Three Techniques to Try

A variety of publications and Web sites describe methods and tools that, when used with
these guidelines for group idea generation, focus attention and promote escape and
movement. 2-7 Three techniques—breaking the rules, provocation, and the concepts fan—are
summarized below.

Technique 1: Breaking the Rules

This technique has two steps:
1. List assumptions or other taken-for-granted aspects of the current situation that seem
to have become the unwritten “rules” that govern your way of thinking.
 2. Temporarily escape these (e.g., “pass a law” against them, or imagine a different rule)
and use free association to generate novel ideas.
The Institute of Medicine’s design for the 21st century health care system is described as a
transition from a set of current rules to a proposed new set. For example, the current
unwritten rule, “care is based on visits,” gives rise to a host of problems involving access,
appointment scheduling, and so on. If you imagined an alternative rule, such as “care is based
on information exchange,” you could almost immediately think of innovative approaches
involving telephone, e-mail, videoconferencing, telemetry, or other Internet-based
technologies that could be effective. Some of these alternatives might be especially useful in
providing access to care in rural areas.

Technique 2: Provocation
You can use a provocation to get your mind out of its regular thinking process. One approach
is to suggest an outrageous scenario, but then use mental movement to seriously examine its
implications. A common tactic involves removing structures or resources that are thought to
be essential to the system.

The Commonwealth Fund employed this technique when it sponsored an effort to create an
innovative vision of the future for well-child care. The foundation used a variety of Internet
e-mail lists to circulate a scenario in which a strange disease had shut down all but one
paediatric practice in New York City. Health care professionals generated 21 innovative ideas
about how well-child care could be carried out, e.g., in schools, via television broadcasts,
using Web-based tools, and through better parent education. Some of these approaches might
be especially useful in addressing the needs of ethnically diverse or disadvantaged
populations.

Technique 3: The Concept Fan

In this technique, you first construct a high-level flowchart describing the steps of an existing
process and then identify the concepts underlying the steps, recognizing that some steps may
have multiple concepts. Finally, you generate alternative ways to achieve each of the
underlying concepts.
Clinicians at a large health maintenance organization in Minneapolis used this
technique to explore ways to improve access, workflow, and quality of care. Starting with a
flowchart of a typical clinic visit, they identified one step as “check in.” 4 The underlying
concept behind this step was the need to recognize the patient’s presence. Improvement
groups then identified a variety of alternative ways to recognize a patient had arrived that
could replace the usual approach to check in. For instance, one idea was to provide patients
with cards they could scan through a reader for entrance into the parking lot. This entry of
information could generate a look-up in the appointments database that sends notification and
a picture of the patient to the appropriate clinic. Clinic staff could begin preparing the
patient’s record, greet the patient by name, and immediately place the patient in an examining
room upon arrival.

The Economics of First and Second Mover

The timing of competitive actions and responses also influences an industry's competitive
dynamics. Companies taking competitive actions can be classified as first, second, or late
movers.

First movers
First movers are the companies that take an initial competitive action, either strategic or
tactical. First movers are companies that have the resources, capabilities, and core
competencies that enable them to gain a competitive advantage through innovative and
entrepreneurial competitive actions. By being first, the first mover hopes to gain a sustainable
competitive advantage, earn above-average returns until competitors respond effectively and
gain customer loyalty, thus creating a barrier to entry by competitors.

Any advantage gained generally will vary based on the type of competitive action and type of
industry as also to the extent to which the action is difficult to imitate because of the
difficulty of imitation, first mover actions based on core competencies should be sustainable
for longer periods than actions based on other factors.

There also are dangers or disadvantages of being a first mover. There are three major ones:
There are risks related to being first because of the inability to predict success of the action.
Second movers through reverse engineering or imitation can avoid high development costs.
Extent and range of marketplace competition yields greater potential risk.

In some instances, companies that delay their response to a competitive action fail to compete
effectively and their performance suffers. However, that may not always be true since it may
be more appropriate to be a second or late mover.

Second movers

Second movers are companies that respond to a first mover's competitive action, often
through imitation or a move designed to counter the effects of the (first mover's) action. How
fast a second mover responds may influence its results. Before following the first mover, a
second mover should evaluate initial customers' reactions to the first-mover’s actions and
analyses markets to identify critical issues.

Responding quickly may enable the second mover to capture some of the initial customers
and gain a degree of brand and customer loyalty and avoid some of the risks faced by the first
mover. It will also help him to learn from the first mover's mistakes and successes and avoid
market development costs (paid by the first mover).

However, a rapid response may not be possible if the product introduced by the first mover is
beyond the capability of competitors to successfully imitate and competitors do not have the
resources or capabilities that will enable them to quickly move into action.

Late movers

Late movers are companies that respond to a competitive action, but only after considerable
time has elapsed after the first mover's action and the second mover's response. And there is
a danger in moving late as a late mover's performance generally suffers relative to the
performance of first and second movers. As late movers are the last ones to respond to the
first and second movers' actions, late movers tend to be poor performers and often are weak
competitors.

New product diffusion models

Product Adoption Process

Introduction

Research shows that consumers differ in how quickly they decide to adopt (buy) a product
after they become aware of it. Everett M. Rogers' theory Diffusion of Innovation, explores
what type of person, adopts products at each stage of the product life cycle. Under Rogers'
Diffusion of Innovations theory, a product will encounter five types of purchasers as it moves
through its life cycle.

The diagram below explains the categories in Roger's Diffusion of Innovations Theory

Diffusion of innovations Diagram

Diffusion of Innovations: Innovator Stage

Roger's Diffusion of Innovations theory states that Innovators are the first to purchase
a product and make up 2.5% of all purchases of the product. Innovators purchase the product
at the beginning of the life cycle. They are not afraid of trying new products that suit their
lifestyle and will also pay a premium for that benefit. Sales to innovators are not usually an
indication of future sales as innovators simply buy because the product is new.

Diffusion of Innovations: Early Adopters Stage

The next group of purchasers are called Early Adopters and they make up 13.5% of
purchases. This group of purchasers adopt early but unlike innovators, adoption is after
careful thought. Early Adopters are usually opinion leaders in their circle (of friends, family
and colleagues) so adoption by this group is crucial for the success of the product. Early
adopters help the product's journey in becoming "socially acceptable".

Diffusion of Innovations: Early Majority Stage

The Early Majority are a cautious group of purchasers, making up 34% of purchases. The
Diffusion of Innovations theory states that this group will not buy a product until it has
become "socially acceptable". Early majority purchases are needed for the product to achieve
wide spread acceptance.

Diffusion of Innovations: Late Majority Stage

Late Majority make up another 34% of sales and they usually purchase the product during the
late stages of the product's life cycle. They are more cautious than the early majority and will
only buy after the majority of people have purchased the product.
Diffusion of Innovations: Laggard Stage

According to the Diffusion of Innovations theory the final group of people to purchase a
product are called Laggards. Laggards make up 16% of total sales and purchase the product
near the end of its life. Some laggards will never purchase a product, whilst others will buy it
because their existing product is broken and it cannot be repaired or replaced with an
identical product. Laggards may wait to see if the product will get cheaper and by the time
they purchase the product a new version of the product is often on the market.

Diffusion of Innovations Conclusion

All of the five groups described above will have opinion leaders that the group like to follow.
Opinion leaders are people who are good at selecting the next big thing such as the latest
fashion trend or electronic gadget. The challenge for firms is to persuade opinion leaders to
adopt their product. Identifying opinion leaders can be challenging, as product type will
dictate the product adoption behaviour of a person. For example, a person may be an
innovator for IT products but a laggard for kitchenware products.

Auditing innovation performance

The Innovation Audit is a method for identifying the major company’s needs, possible
weaknesses and strengths as well as the relative opportunities and threats of all factors
affecting innovative performance. It is a fact-finding technique, which identifies how the
company performs as well as the strong indications of what the company really needs.
The objective of an Innovation Audit is initially to develop a suitable set of metrics to better
address the particular organizational context, which affects the innovative performance of a
company, and then to obtain some quantitative and qualitative results by surveying all the
suitable stakeholders involved in the innovation process. The overall objective is to analyses
the results and provide a clear identification of company’s first priority needs as well as the
strengths and opportunities that should be taken into consideration. It also assists the
company to priorities and identify the more significant actions that it should adopt. The
innovation audit provides an opportunity for managers to determine whether the organization
has the required resources, infrastructure, culture, and processes to seriously consider either
focusing on or improving the current state of innovation.
Among others, some of the more specific innovation audit’s objectives are to:
o Understand current innovation performance in the main areas of strategy, process and
the organization
o Benchmark this performance against best practice, both within sector and overall at a
cross sector level
o Assess your current capabilities before making expensive changes
o Learn how to improve the use of all resources involved in the innovation process
o Develop an action plan or roadmap to implement for future development.

Only with a reliable, validated and integrated Innovation Audit that encompasses the
appropriate assessments and brings together in a coherent manner, can organizations establish
the basis for moving forward and achieving their mission and vision. The objective is not
only to perform the audit but also to develop the program to correct the problems and
progress with new opportunities.

Content of an innovation Audit

An innovation audit is a diagnostic tool and should include questions or statements covering
all areas affecting innovation. While preparing an innovation audit manager should think that
there is no such thing as an absolute innovation audit recipe for all organizations.
Nonetheless, it is possible to develop a number of metrics and indicators, which give some
indication of the innovation capability of a company. The following indicative list contains
the most important areas should be included in an innovation audit list and it can help you
begin the process of auditing innovation.

Indicative list of areas should be investigated during an innovation audit