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Module 4 Marketing Mix
Module 4 Marketing Mix
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Product
➢“Anything that can be offered to a market for attention, acquisition, use or
consumption that might satisfy a want or need”. Kotler
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Goods and Services
➢Goods :
▪ “It can be defined as articles , devices , objects or things; goods are tangible
items that can be touched or held”.
➢Services:
▪ “It can be defined as acts, deeds, performances and efforts.”
▪ A form of product that consists of activities, benefits, or satisfactions offered for
sale that are essentially intangible and do not result in the ownership of
anything.”
Barista
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Product Classification
▪ Durable/Non durable
▪ Services
▪ Consumer Product
▪ Business Products
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Durable/Non Durable
Durables: consumed over a long period of time.
✓ Example: refrigerators, washing machines, cameras etc.
✓Services
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Consumer Products
➢Consumer Products: Products used for family or individuals.
Consumer products can be further classified into :
Convenience Products: Staple goods (milk, bread, newspapers, etc.)
and impulse goods e.g. magazines, chewing gum, fast foods,
chocolate etc.
Shopping Products: Consumers spend time and they are relatively
costly i.e., refrigerators, PCs, washing machines, video cameras,
furniture, clothing etc.
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Consumer Products
• Specialty Products: These products are expensive and customers take
time in planning and purchase.
• Example: An antique car, a Mercedes, a Mont Blanc pen, designer
cloths, high-end electronics etc.
• Unsought Products: Products which are purchased during
uncertainties or problems
• Example : An umbrella, repair services, insurance policies,
encyclopedia, , burial plots, bathroom tissue etc.
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Business Products
Major Equipment: machines, mainframe computers, airplanes and buildings
Accessory Equipment: fax machines, personal computers, power tools
Raw material: natural resources and agricultural products etc
Component Parts and Materials: textiles, paper pulp and chemicals
Processed Materials: Sheet metals, chemicals, and lumber
Supplies : maintenance, repair, or operating supplies (MRO).
Finished Products: Generators, heavy machinery etc.
Business Services: advertising, legal, management consulting, marketing
research, and maintenance services.
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Product Mix
▪ A product mix is a set of all the products offer for sale by a company.
▪ All products that an organization sells.
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Product Line
• A group of closely related product items is a product line.
• Product line is a group of products that are closely related, function in
a similar manner, sold to the same customer groups and marketed
through the same types of outlets, or fall within given price ranges.
Series of related products
• Sunsilk, Clinic Plus, Clinic all clear, Dove shampoo
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Characteristic Features of Product Mix
▪ Width/ Breadth : This is the total number of product lines a
company carries
▪ Length: The length of a product mix refers to the total number of
items in the mix.
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Product Mix of HUL
Hair care Skin Care Oral Care Deodorants Detergents Toilet soaps Beverages Foods
Product Line Depth
Sunsilk Fair & lovely Pepsodent Axe Surf Liril 3 Roses Knorr
Clinic Plus Pond’s Close-Up Pond’s Rin Lifebuoy Lipton Annapurn
Denim Wheel Lux Taj Mahal a
Sunlight Breeze Brook Bond Moder
Vim Pears Bru foods
Hamam Kwality
Dove Wall’s
Savlon Kissan
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Product Life Cycle
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Introductory Stage
• The introductory stage of the product life cycle represents the full-scale launch of
a new product into the marketplace.
◆ Little competition
◆ Frequent product modification
◆ Limited distribution
◆ High marketing and production costs
◆ Negative profits with slow sales increases
◆ Promotion focuses on awareness and information
◆ Communication challenge is to stimulate primary demand
◆ High failure rates
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Growth Stage
• If a product category survives the introductory stage, it advances to
the growth stage of the life cycle.
◆ Increasing rate of sales
◆ Competitors enter into the market
◆ Market consolidation, large company may acquire small pioneering
firms
◆ Profits rise rapidly, peak, and begin declining as competition
intensifies
◆ Aggressive advertising of the differences between brands
◆ Wider distribution is key to establish
21 January 2024 Module 4
a strong market position and
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product success
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Maturity
• At this stage sales start decreasing, new users cannot be added indefinitely, but
this is the longest stage of the product life cycle
◆ Market approaches saturation
◆ Sales decrease
◆ Product lines are lengthened to appeal to additional market segments.
◆ Service and repair assume more important roles as manufacturers strive to
distinguish their products from others.
◆ Product design changes tend to become stylistic (How can the product be made different?)
rather than functional (How can the product be made better?).
◆ As prices and profits continue to fall, marginal competitors start dropping out of the market.
Dealer margins also shrink, resulting in less shelf space for mature items, lower dealer
inventories, and a general reluctance to promote the product.
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Decline
▪ A long-run drop in sales signals the beginning of the decline stage.
▪ The reason for decline in sales could be (a) technological advances(innovation) (b) increase in
competition and (c) shift in consumer's tastes and preferences etc.
▪ Sales fall and profits decline and sometimes become negative
▪ Large inventories of unsold items
✓Example: Telephone and Camera , Vinyl record
➢ Strategies:
▪ Company drops declining items from product lines and search for alternatives
▪ Elimination of all nonessential marketing expenses
▪ “Organized abandonment”
▪ Go for niche segment of diehard consumers
▪ Exit the market
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The Nature of Services
• A service is an act that one entity performs for another that is
essentially intangible and does not result in the ownership of
anything. It may or may not be tied to a physical product.
• Increasingly, manufacturers, distributors, and retailers are providing
value-added services, or simply excellent customer service, to
differentiate themselves.
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THE SERVICE ASPECT OF AN OFFERING
• Service can be a major or minor component of a company’s offering.
Based on the degree to which they involve a service, we distinguish
five categories of offerings:
• A pure tangible good,
• A tangible good with accompanying services
• A hybrid offering
• A major service with accompanying minor goods and services,
• A pure service
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DISTINCTIVE CHARACTERISTICS OF SERVICES
• Intangibility
• Inseparability.
• Variability
• Perishability.
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Brand as a Concept: Branding Basics
The AMA definition of a brand:
“A name, term, sign, symbol, or design, or a combination of these, intended to
identify the goods or services of one seller or group of sellers to differentiate
them from the competition.”
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Product vs Brand examples
• A watch is a product; Rolex is a brand.
• A hotel is a product; Marriott is a brand.
• A candidate is a product; you're a brand.
• A car is a means of transportation; a BMW is a symbol of exclusivity.
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Importance of Branding
Customers Sellers
• Source of identification • Identifier
• Proxy for quality • Legal protection
• Source of evaluation • Differential advantage
• A tool to simplify decision making • Unique associations
• Price premiums
• Risk reducer
• Financial risk, performance risk, time • Enhancing customer loyalty
risk, social risk, psychological risk • Higher market share
• Tool to express self image • Inelastic response to price increase
• As a barrier to entry of other brands
• Can be bought and sold as an asset
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Brand Building Process
• Identifying and developing brand plans
• Designing and Implementing brand marketing programs
• Measuring and interpreting brand performance
• Growing and sustaining brand equity
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innovative design and features, and on the lifestyle benefits of owning an
iPhone. Apple also uses public relations to generate positive media coverage
for the iPhone, and social media to connect with potential customers and build
excitement for the product.
Measuring and interpreting brand performance
It is important to measure and interpret brand performance over time to ensure
that the brand plan is effective. This involves tracking brand awareness,
brand associations, brand judgments, and brand resonance.
Brand awareness is the extent to which consumers are familiar with a brand.
It can be measured through surveys, website traffic, and social media
engagement.
Brand associations are the thoughts, feelings, and images that consumers
have about a brand. They can be measured through surveys and brand
association tests.
Brand judgments are consumers' evaluations of a brand on various
dimensions, such as quality, value, and performance. They can be measured
through surveys and customer satisfaction surveys.
Brand resonance is the depth of consumers' relationship with a brand, how
consumers feel about their brand and how connected they are to it. It can be
measured through surveys and brand loyalty programs. The company can also
measure brand resonance by tracking brand loyalty program enrollment and
participation.
Apple tracks brand performance for the iPhone using a variety of metrics,
including website traffic, social media engagement, and sales data. The
company also conducts regular brand surveys to measure consumer
awareness and perceptions of the brand.
Growing and sustaining brand equity
The goal of strategic brand management is to grow and sustain brand equity
over time. This involves managing the brand to ensure that it remains relevant
and competitive. This may involve extending the brand to new product
categories, entering new markets, or refreshing the brand's image.
Apple has successfully grown and sustained brand equity for the iPhone by
extending the brand to new product categories, such as the iPad and the
Apple Watch, and by entering new markets, such as China. The company has
also refreshed the iPhone's image over time by releasing new models with
new features and design elements.
The strategic brand management process is an ongoing process that requires
continuous monitoring and adjustment. By carefully managing their brands,
companies can build strong, positive perceptions of their brands in the minds
of consumers, which can lead to increased sales and profits.
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Brand Equity
• ‘Brand equity can be thought of as the additional cash flow achieved by
associating a brand with the underlying product or service’
(Biel 1992).
• ‘The differential effect the brand knowledge has on consumer response to
marketing of that brand’
Keller, 2004
➢Brand equity is a set of brand assets and liabilities linked to a brand, its name,
and symbol, that adds value to or subtracts from the value provided by a product
or service to a firm and/or to that firm’s customers’ (Aaker 1991).
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Price
• Price is the amount of money charged for a product or service.
• Price is the sum of all values that customers give up in order to gain the benefits
of using a product or service.
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Factors to consider when setting the Price
• Estimated Demand
✓Determine whether there is a price the market expect,
✓Estimate what the sales volumes might be at different prices
• Similar product (Nike vs Adidas),
• Substitute (Tea vs Coffee)
• Unrelated product seeking the same consumer money (DVD vs a weekend
vacation)
• Cost of Product, Distribution and Promotions
• Competitive reactions
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Setting Pricing Objectives
▪ Survival: companies pursue this when having over capacity, high competition and
changing customers wants.
▪ Short term profit (Maximize Current Profit): Maximize the profit keeping the
competitors in mind.
▪ Market skimming: Sony skimmed the market HDTV in 1990 in Japan
▪ Market Penetration: (Increase Market Share) higher sales volume will lead to
lower unit cost and higher long run profits, Ikea
▪ Quality Leadership: Charge high prices to cover higher performance quality,
Starbucks, BMW, Taj Luxury Hotels
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SELECTING A PRICING METHOD
• Markup Pricing
• Target-Rate-of-Return Pricing
• Economic-Value-to-Customer Pricing
• Competitive Pricing
• Cost based Pricing
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Mark-up Pricing
▪ Marketers fix a selling price that generally exceeds the cost incurred in the manufacturing of that
product.
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Solution
Unit Cost = Variable Cost + Fixed
Costs/Unit Sales
Rs. (10*50000) + Rs. 300,000/50,000 =
Rs.16 per unit
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Target Return Pricing
• Target return on investment
• Marketers fix the price of the product with a view to attain a target rate of ROI
made on the manufacturing of the product.
• Unit Cost : Rs. 16 Desired Return : 20%
• Invested capital : Rs 10,00000 Unit sales : 50,000
• Target return pricing = unit cost + (desired return X invested capital)/ unit sales
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Solution
Target return pricing = unit cost + (desired return x invested capital)/ unit sales
Rs 16 + (0.20 * Rs.1000000) /50000 = Rs. 20
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Economic-Value-to-Customer Pricing
• An increasing number of companies now base their price on the
customer’s economic value.
• Economic-value-to-customer pricing takes into account a host of
inputs, such as the buyer’s image of the product performance, the
channel deliverables, the warranty quality, customer support, and
softer attributes such as the supplier’s reputation, trustworthiness,
and esteem.
• Companies must deliver the value promised by their value
proposition, and the customer must perceive this value.
The Caterpillar dealer is able to show that although customers are asked to
pay a $10,000 premium for this tractor, they are actually getting $20,000 extra
value! The customer chooses the Caterpillar tractor because he or she is
convinced that its lifetime operating costs will be lower.
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Competition-Based Pricing
• In competitive pricing (or going-rate pricing), the firm bases its price largely on
competitors’ prices.
• All firms in industries that sell a commodity such as steel, paper, or fertilizer
normally charge the same price. Smaller firms “follow the leader,” changing their
prices when the market leader’s prices change, rather than when their own
demand or costs change.
• Some may charge a small premium or discount, but they preserve the difference.
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Cost Based Pricing
• Cost-based pricing involved setting prices based on the costs for producing, distributing and
selling the product plus a fair rate of return for its effort and risk.
• Fixed costs are costs that do not vary with production or sales level. eg. Rent, utilities, insurance,
management salaries
• Variable costs vary directly with the level of production. Their total varies with the number of
units produced, such as raw materials, labor, supplies.
• Total costs are the sum of the fixed and variable costs for any given level of production.
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Setting Final Price
• Customer-segment pricing.
• Product-form pricing.
• Channel pricing.
• Location pricing.
• Time pricing.
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PRODUCT-MIX PRICING
• Loss-leader pricing
• Optional-feature pricing.
• Captive pricing.
• Two-part pricing.
• By-product pricing.
• Product-bundling pricing.
Loss Leader Pricing: selling at a low enough price to attract consumers, even
if selling at losses. Selling below the average manufacturing costs
Drop the price on well- Known brands to stimulate additional sales.
Examples could be steeply discounted electronics, or consumer goods, or
garments.
A zero percent loan for cars. Big Baazar, Reliance mobile etc.
Optional Pricing
Many company offer to sell optional and accessory product along with the
main product.
Example: A car seller may offer a GPS and Blue tooth communication system.
Refrigerator come with optional ice makers
Laptop manufacturers charge differently for hard drives, software options,
service plan, and carrying cases
Captive Pricing
Manufacturers price the secondary products or spare parts relatively
higher than the basic product to overcome the low profits earned on the
basic product, it is termed as captive product pricing.
Example: razor blade, cartridges, video games and printer cartridges
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✓Example: HP sells low priced Printers but make money on the replacement
cartridges.
✓Example: Telephone connectivity has fixed rent as well as per call cost.
Two part pricing:
Establishing two separate charges to consume a single good or service.
Example: health club charges a membership fee and a flat fee each time a
person uses certain equipment of facilities.
By-Product Pricing
Setting prices for by-products obtained from the original product.
Milk, petroleum products, and other chemicals etc. have several by products.
Manufacturer can sell it in market to recover some of his expenses say
transportation and storage costs.
Example: when meat is processed for human consumption, the by product can
be used as food for dog/cat.
Crude oils
Example: Soya bean, oil, Soya Nuggets , soya sauce
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Interesting Pricing Strategies
• Dynamic Pricing
• Geographical Pricing
• Psychological Pricing
• Product Line Pricing
Dynamic Pricing
Adjusting price continually to meet the characteristics and needs of individual
customers and situations.
Internet sellers provide price comparison which help consumers make a
choice.
Examples:
E-Bay and Priceline consumers negotiate the final price they pay.
Dell uses dynamic pricing, raising price of component in short supply and drop
price for over supplied item.
Airlines industry
Geographical Pricing
Companies set different prices for customers situated at different geographical
locations.
Company as well as customers pay for the freight
High freight for more distance and less freight for less distance
Psychological Pricing
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Called as odd even pricing
Buyers carry reference price in their minds when looking at a given product
purchase
Sellers consider the psychology of prices, not simply the economics
Example: consumers buying a product with a price that ends with 5 or 9.
Example: Bata , Akai , Sansui usually apply this strategy
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Integrated Marketing Communications
An integrated Marketing Communication is the mixture of all
communication tools which link the marketing function with the
communication function to deliver Effective Marketing Messages.
>>>>>>>>>>>
Encoding is the conversion of the sender’s ideas and thoughts into a message, usually
words or signs, symbols.
Differences in culture, age, social class, education, and ethnicity can lead to
miscommunication.
Marketers targeting consumers in foreign countries must also consider appropriate
translation and miscommunication issues.
Since mass communicators are cut off from direct feedback, they rely on market
research or analysis of viewer perceptions for indirect feedback.
-----------------------------
Regardless of their specific sequence, several steps are involved in generating a
consumer response.
• Awareness. In order to take any kind of action, customers must be aware of the
existence of the company’s offering. If most of the target audience is unaware of the
offering, the communicator’s task is to build awareness. • Knowledge. The target
audience might have awareness but not know much more about the offering. •
Liking. Members of the target audience may know the brand, but how do they feel
about it? • Preference. The target audience might like the product but not prefer it to
other products. The com municator must then try to build consumer preference by
comparing the product’s quality, value, performance, and other features to those of
likely competitors. • Conviction. The target audience might prefer a particular product
but not develop a conviction about buying it. • Purchase. Finally, some members of
the target audience might have conviction but not quite get around to making the
purchase. The communicator must lead these consumers to take the final step,
perhaps by offering the product at a low price, offering a premium, or letting them try
it out.
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DEVELOPING AN EFFECTIVE COMMUNICATION PROGRAM
Start with the "why": What do you want to achieve with this communication
program? Is it brand awareness, driving sales, or changing behavior?
Be SMART: Set goals that are Specific, Measurable, Achievable, Relevant,
and Time-bound. For example, "Increase website traffic by 20% in 3 months"
is a SMART objective.
Align with overall goals: Ensure your communication objectives support your
business or organizational goals.
Example: A clothing brand wants to launch a new eco-friendly clothing line.
Objective 1: Increase brand awareness for the new eco-friendly line by 15%
among millennials within 6 months.
Objective 2: Drive 10% increase in sales of the new line compared to previous
lines within 3 months of launch.
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2. Identifying the Target Audience:
Who are you talking to? Understand your target audience's demographics,
interests, pain points, and media consumption habits.
Segment your audience: Divide your target audience into smaller groups with
similar characteristics for more targeted messaging.
Example: The clothing brand segments its target audience into eco-conscious
millennials who value sustainable clothing and ethical practices.
Keep it clear and concise: Communicate your key message in a way that is
easy to understand and remember.
Focus on benefits: What's in it for your audience? Highlight how your product
or service solves their problems or fulfills their needs.
Use a compelling tone: Use language that resonates with your audience and
sparks their interest.
Example: The clothing brand's message could be: "Look good, feel good, do
good with our new eco-friendly clothing line. Sustainable style that makes a
difference."
Choose the right channels: Where will your target audience encounter your
message? Consider traditional media like TV and print, as well as digital
channels like social media, email, and online advertising.
Multi-channel approach: Utilize a combination of channels to reach your
audience across different touchpoints.
Example: The clothing brand uses social media campaigns, influencer
partnerships, targeted online ads, and email marketing to reach their eco-
conscious millennial audience.
Visuals matter: Use high-quality images and videos that capture attention and
reflect your brand identity.
Be authentic and unique: Stand out from the competition with a creative and
engaging approach that resonates with your audience.
Example: The clothing brand's creative approach features visually stunning
photos and videos showcasing the eco-friendly features and stylish designs of
the new line. They also partner with eco-conscious influencers to create social
media content and promote the brand's values.
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6. Measuring Performance:
Track your metrics: Monitor your chosen metrics like website traffic, social
media engagement, sales figures, and customer feedback to understand the
effectiveness of your program.
Analyze and adjust: Use your data insights to identify what's working and
what's not, and make adjustments to your program as needed.
Example: The clothing brand tracks website traffic generated by their
campaigns, social media engagement on their posts, and sales figures for the
new line. They analyze this data to see which channels are performing best
and make adjustments to their strategy as needed.
By following these steps and using relevant examples, you can develop an
effective communication program that resonates with your target audience,
achieves your objectives, and drives success for your brand or organization.
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Setting the Communication Objectives
--------------
Setting Effective Marketing Communication Objectives:
Align with overall marketing and business goals: Ensure your communication objectives
support your broader strategic objectives.
Understand your target audience: Tailor your objectives to their needs, interests, and pain
points.
Choose the right metrics: Select measurable and relevant metrics to track your progress.
(Metrics: Website traffic, social media reach, impressions, brand mentions, surveys.
Example: Increase website traffic by 15% within 3 months - Track unique visitors, page
views, and referral sources.
)
Be specific and actionable: Clearly define what you want to achieve and how you will
measure success.
Set realistic and achievable goals: Don't aim for too much too soon.
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Communication Objectives
Possible Advertising Objectives
Informative Advertising
• Communicating customer value • Suggesting new uses for a product
• Building a brand and company image • Informing the market of a price change
• Telling the market about a new product • Describing available services & support
• Explaining how a product works • Correcting false impressions
Persuasive Advertising
• Building brand preference • Persuading customers to purchase now
• Encouraging switching to a brand • Persuading customers to receive a sales
• Changing customer perceptions of call
product value • Convincing customers to tell others
about the brand
Reminder Advertising
• Maintaining customer relationships • Reminding consumers where to buy the
• Reminding consumers that the product product
may be needed in the near future • Keeping the brand in a customer’s mind
during off-seasons
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Advertising’s goal is to help move consumers through the buying process. Some
advertising is designed to move people to immediate action. For example, a direct-
response television ad by Weight Watchers urges consumers to pick up the phone
and sign up right away, and a Best Buy retail store put newspaper insert for a
weekend sale encourages immediate store visits.
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Establish the Marketing Communication
Budget
▪ Affordable Methods and Arbitrary Allocation
▪ The Percentage of Sales Method: Based on last year, current year and future
sales
▪ The Fixed-Sum-Per-Unit Method: Allocating amount to each sales or production
unit basis.
▪ Automobiles companies use this method.
▪ Example: Our forecasts call for sales of 14000 units and we allocate promotion at
rate of $65 per unit.
✓Example: A company wants to enter into new market , it requires five persons,
Salary for them, office expenses, personal selling expenses , cost of advertising,
sales promotions etc .
✓The sum of these costs is the proposed promotional budget.
Objective-and-Task Method: The most defensible approach, the objective-
and-task method, calls upon marketers to develop communications budgets by
defining specific objectives, identifying the tasks that must be performed to
achieve these objectives, and estimating the costs of performing them. The
sum of these costs is the proposed communications budget.
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Identify the Target Audience
• Target audience is a market segment to which a marketer wants to
communicate a product or brand message.
• Target audience may be single (niche) segment, multiple segment or
mass segment
• Identify the specific needs of target audience before developing ad
program
• Identify current user, potential users, deciders, influencer etc.
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Crafting the Communication Messages
• Marketers are always seeking the “big idea” that resonates with consumers
rationally and emotion ally, distinguishes the brand from competitors, and
is broad and flexible enough to translate into different media, markets, and
time periods. Fresh insights are important for creating unique appeals and
position. A good ad normally focuses on one or two core selling
propositions. As part of refining the brand positioning, the advertiser
should conduct market research to determine which appeal works best
with its target audience and then prepare a creative brief, typically one or
two pages. This elaboration of the positioning strategy includes
considerations such as key message, target audience, communication
objectives (to do, to know, to believe), key brand benefits, support for the
brand promise, and media.
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Deciding on the Media: Selecting Communication Channel
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Defining the Communication Media Mix
• Advertising
• Online and social media communication
• Mobile communication
• Direct marketing
• Events and experiences
• Word of mouth
• Publicity and public relations
• Personal selling
• Packaging
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Advertising
➢Advertising is any paid form of non-personal mass communication
through various media to present and promote product, service and
ideas etc. by an identified sponsor.
➢Reach large population at low cost
➢Message can be repeated
➢It uses movement, visuals, sound and color,
➢Enhances company and brand image
• Print and broadcast ads, Packaging inserts, motion pictures,
Brochures and booklets, Posters, Billboards, PoS displays , Videotapes
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5 M, Mission, Money, Message, Media, Measurement
Advantages
Disadvantages
--------------------
Advertising can be dated to the beginning of the civilization, WoM advertising
by hawkers
Wall paintings 4000 BC
The modern advertising began in 18 century in India, classified advertising,
Bengal Gazette India's first newspapers, 1780
Advertising was imported in India from studios in England
B Duttaram and Co. is the oldest ad agency in India (1905)
Sista advertising full service ad agency came into being in 1934
Mumbai advertising club 1954
Positioning and USP concept was promoted by Volkswagen
ITC – Made for each other
Tandarsto ki raksh campaing 1964 by lifebuoy
Asian games 1982 Doordarshan started color transmission, Bombay dying first
color ads
Celebrity Kapil dev, Palmplive ka jawab nahin
Liril ad in 1985, Karan Laurel
Vimal sarees, rasna, , onida, ece bulb, maggi noodles, pan parag, vico.
Mile sur meta tumhara, 1988
Family planning, literacy
Apna Surf Lalita ji campaign
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Online and Social Media Marketing
• Designed to engage customers, raise awareness, improve image, or
elicit sales of products and services.
• Companies can offer or send tailored information or messages that
engage consumers by reflecting their special interests and behavior.
• Can trace effects by clicks on a page/ad
• Contextual placement
• Can place advertising based on search engine keywords
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Mobile Communications
• Mobile communication is a special form of online communication that
places messages on consumers’ cell phones, smart phones, or tablets
(text messages, online communication, and social media
communication).
• Increasingly, online marketing and social media rely on mobile forms
of communication such as smart phones or tablets. Mobile
communication is timely—messages can be very time-sensitive and
reflect when and where a consumer is—and pervasive, meaning that
messages are always at consumers’ fingertips.
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Direct Marketing
• Direct marketing involves the use of mail, phone, e-mail, online messaging, or in-
person inter action to communicate directly with, or solicit response or dialog
from, specific customers and prospects.
• The advent of data analytics has given marketers the opportunity to learn even
more about consumers and develop more personal and relevant marketing
communications.
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In catalog marketing, companies may send full-line merchandise catalogs,
specialty consumer catalogs, and business catalogs, usually in print form but
also as DVDs or online.
Telemarketing is the use of the telephone and call centers to attract prospects,
sell to existing customers, and provide service by taking orders and answering
questions. It helps companies increase revenue, reduce selling costs, and
improve customer satisfaction. Companies use call centers for inbound
telemarketing—receiving calls from customers—and outbound telemarketing—
initiating calls to prospects and customers.
Direct marketers use all the major media. Newspapers and magazines carry
ads offering books, clothing, Appliances, vacations, and other goods and
services that individuals can order via toll-free numbers. Radio ads present
offers 24 hours a day. Some companies prepare 30- and 60-minute
infomercials to combine the selling power of television commercials with the
draw of information and entertainment. At-home shopping channels are
dedicated to selling goods and services through a toll-free number or via the
Internet for delivery within 48 hours.
Irritation. Many people don’t like hard-sell direct marketing solicitations. Firms
have been popping up to help block unwanted junk mail.
Deception and fraud. Some direct marketers design mailers and write copy
intended to mislead or exaggerate product size, performance claims, or the
“retail price.” The Federal Trade Commission receives thousands of complaints
each year about fraudulent investment scams and phony charities.
Invasion of privacy. It seems that almost every time consumers order products
by mail or telephone, apply for a credit card, or take out a magazine
subscription, their names, addresses, and purchasing behavior may be added
to several company databases.
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Event and Experiences
• Events and experiences are company-sponsored activities and programs
designed to create brand-related interactions with consumers.
• Examples include sports, arts, entertainment, festivals, factory tours, company
museums, and street activities, as well as events for causes and less formal
activities.
• Events and experiences offer many advantages as long as they are engaging and
implicit, meaning that they involve indirect soft sell.
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consumer gets personally involved
Helps in brand building, gets visible
It is indirect soft sell
Consumers get involved and
engaged
Example: Sports, Entertainment,
Festivals, Arts, Causes, museums,
Street activities
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The name kurkure express displayed
at important points inside and
outside the train and the travellers
are also exposed to different
promotion.
Law offices decorated with oriental
rugs and oak furniture communicate
stability and success
A five star hotel will use elegant
chandeliers, marble, columns and
other sings of tangibles.
Events objectives
1. To identify with a target market
or lifestyle
2. To increase salience (notice
ability, importance) of
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company/product name
3. To create/reinforce key brand
image associations
4. To enhance corporate image
5. To create experiences and
evoke feelings
6. To express commitment to the
community or on social issues
7. To entertain key clients or
reward employees
8. To permit
merchandising/promotional
opportunities
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Publicity and Public Relations
➢Publicity: a non-personal stimulation of demand for a product by planting
commercially significant news about it… in different media
▪ Not paid, presentation is not programmed,
▪ Less control, may be negative
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community relations, lobbying
Events: news conference, seminar, outings, trade shows, exhibits, contest,
anniversaries that will reach the target customers
Sponsorship: sports, cultural events, cause,
Speeches: give talks at trade association, sales meetings leads to build
company images
The old name for MPR was publicity, the task of securing editorial space—as
opposed to paid space—in print and broadcast media to promote or hype a
product, service, idea, place, person, or organization. MPR goes beyond
simple publicity and plays an important role in the following tasks:
Repositioning mature products. In a classic PR case study, New York City had
extremely bad press in the 1970s until the “I Love New York” campaign.
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Building interest in a product category. Companies and trade associations
have used MPR to rebuild interest in declining commodities such as eggs,
milk, and potatoes and to expand consumption of such products as
green tea, and orange juice, water.
Building the corporate image in a way that reflects favorably on its products.
The late Steve Jobs’s heavily anticipated Macworld keynote speeches helped
to create an innovative, iconoclastic image for Apple Corporation.
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Personal Selling
◆ Personal selling—Face-to-face interaction with one or more
prospective purchasers for the purpose of making
presentations, answering questions, and procuring orders.
◆ Provides detailed explanation/demonstration of product
◆ Message can be varied according to motivations of each customer
◆ Can be directed only to qualified prospects
◆ Most effective promotion form in obtaining sale and satisfying
customer
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Chapter 10 Product Concepts
Packaging
Contain and Protect
Promote
Facilitate Recycling
Packaging, sometimes called the 5th P, is all the activities of designing and producing
the container for a product.
Most, however, treat packaging and labeling as an element of product
strategy.
Warranties and guarantees can also be an important part of the product
strategy and often appear on the package.
Various factors contribute to the growing use of packaging as a marketing tool.
An increasing number of products are sold on a self-serve basis. In an
average supermarket, which may stock 15,000 items, the typical shopper
passes some 300 products per minute. Given that 50 percent to 70 percent of
all purchases are made in the store, the effective package must perform many
sales tasks: attract attention, describe the product’s features, create
consumer confidence, and make a favorable overall impression.
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Rising affluence means consumers are willing to pay a little more for the
convenience, appearance, dependability, and prestige of better
packages.
Packages contribute to instant recognition of the company or brand. In the
store, they can create a billboard effect, such as Garnier Fructis with its
bright green packaging in the hair care aisle.
Unique or innovative packaging such as resalable spouts can bring big
benefits to consumers and profits to producers.
Packaging Objectives
Packaging must achieve a number of objectives:
1. Identify the brand.
2. Convey descriptive and persuasive information.
3. Facilitate product transportation and protection.
4. Assist at-home storage.
5. Aid product consumption.
To achieve these objectives and satisfy consumers’ desires, marketers must
choose the aesthetic and functional components of packaging correctly.
Aesthetic considerations relate to a package’s size and shape, material, color,
text, and graphics.
Functions of Labels
A label performs several functions. First, it identifies the product or brand—for
instance, the name Sunkist stamped on oranges. It might also grade the
product; canned peaches are grade-labeled A, B, and C. The label might
describe the product: who made it, where and when, what it contains, how it is
to be used, and how to use it safely. Finally, the label might promote the
product through attractive graphics.
-------------------------
Packaging involves designing and producing the container or wrapper for a product
Labels identify the product or brand, describe attributes, and provide promotion
-----------------
➢Labeling
➢Label is integral part of packaging. It takes two forms.
➢Persuasive
▪ Focuses on promotional theme or logo
▪ New, improved, super
➢ Informational
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▪ Helps make proper selections
▪ Lowers cognitive dissonance
▪ Disclose health and nutritional details, i.e, low fat, reduced cholesterol , low
calorie, fresh
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Sales Promotions
▪ Advertising offers a reason to buy, sales promotion offers an
incentive.
▪ Collection of incentive tools, mostly short term, designed to
stimulate quicker or greater purchase of particular products or
services by consumers or the trade.
• Attracts attention, offers strong purchase incentives, boosts sagging
sales
• Stimulates quick response
• Not effective in building long-term brand preferences
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DEVELOPING A MEDIA PLAN
• The media planner must determine the most cost-effective vehicles
within each chosen media type.
• Media planners must consider factors such as audience size, audience
quality, audience-attention probability, the medium’s editorial quality
and media cost and then calculate the cost per thousand persons
reached.
• Communication programs involve a range of different media that
should seamlessly convey the desired message to the target audience.
• Determining the Media Reach, Frequency, and Impact.
• Selecting Media Timing and Allocation.
When choosing media, the advertiser must make both a macro scheduling and a
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micro scheduling decision. The macro scheduling decision is related to seasons and
the business cycle. Suppose 70 percent of a product’s sales occur between June and
September. The firm can vary its communication expenditures to follow the seasonal
pattern, to oppose the seasonal pattern, or to be constant throughout the year. The
micro scheduling decision calls for allocating communication expenditures within a
short period to obtain maximum impact. Suppose the firm decides to buy 30 radio
spots in September. Communication messages for the month can be concentrated,
dispersed continuously throughout the month, or dispersed intermittently.
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Developing the Creative Approach
Developing the Creative Approach
• DETERMINING THE MESSAGE APPEAL
• SELECTING THE MESSAGE SOURCE
• DEVELOPING THE CREATIVE EXECUTION
The creative approach is the artistic heart of your communication program. It's where
you transform your message into a captivating experience that resonates with your
audience and drives desired action. Let's delve into the three key components:
Emotional Hook: Tap into your audience's emotions, aspirations, or fears. Think
humor, nostalgia, inspiration, or even a sense of urgency.
Rational Appeal: Focus on logic, facts, and benefits. Highlight how your product or
service solves problems or improves lives.
Social Appeal: Connect with shared values, cultural trends, or a sense of belonging.
Promote a cause or encourage positive social change.
Example: A brand promoting healthy eating could:
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and promote body positivity.
2. Selecting the Message Source:
Visual Identity: Design captivating visuals that align with your brand and message
appeal. Consider photography, illustrations, animation, or video.
Storytelling: Craft a compelling narrative that engages your audience and evokes
emotions. Use characters, conflicts, and resolutions to illustrate your message.
Interactive Elements: Encourage audience participation through quizzes, polls,
contests, or even augmented reality experiences.
Example: The healthy eating brand could:
Visual Identity: Create vibrant ads featuring colorful, appetizing dishes shot in warm,
inviting settings.
Storytelling: Develop a series of short videos showcasing families struggling with
unhealthy eating habits, then transitioning to enjoying delicious, nutritious meals
together.
Interactive Elements: Launch a social media contest where users share their healthy
recipe creations with a branded hashtag.
Remember, the key to an effective creative approach is to understand your audience,
choose the right appeal and source, and execute your message in a way that grabs
attention, sparks emotions, and ultimately drives your desired outcome.
By putting these tips into practice, you can turn your dry message into a powerful and
memorable experience that leaves a lasting impression on your audience.
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DETERMINING THE MESSAGE APPEAL
• Creative strategy: are the ways marketers translate their messages into a specific
communication.
• Creative strategy can be classify as informational or transformational appeals.
• An informational appeal elaborates on product or service attributes or benefits.
• Godrej washing machine can also brush (product demonstration)
• Transformational Appeal elaborates on non product related benefits or images
• Example: who uses Raymond’s (young, successful elegantly dressed men)
• What experience come from using the brand @ Liril- freshness soap
Message Source Research has shown that the source’s credibility is crucial to
a message’s acceptance. The three most often identified sources of credibility
are expertise, trustworthiness, and likability. Expertise is the specialized
knowledge the communicator possesses to back the claim. Trustworthiness
describes how objective and honest the source is perceived to be. Friends are
trusted more than strangers or salespeople, and people who are not paid to
endorse a product are viewed as more trustworthy than people who are paid.
Likability describes the source’s attractiveness, measured in terms of candor,
humor, and naturalness.
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DEVELOPING THE CREATIVE EXECUTION
• Turn big idea into actual execution to capture attention and interest.
• Find the best approach, style, tone, words and format.
• Problem – Solution: Saridon stops headache
• Slice of life: Kellogg's ad shows a young professional starting the day with
healthier breakfast and high hopes
• Life Style: this style shows how a product fits in a particular life style,
mountain dew, levis, VW
• Example: Timond watch ad shows Karan Johar, he says that success
deserves a special embrace.
• Fantasy: create fantasy around the product or it use.
• Example Axe deodorant, Hummer
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DEVELOPING THE CREATIVE EXECUTION
• Mood and image: build mood around the products, service, such as peace, love,
beauty
• Example: Singapore Airlines feature soft lighting, refined flight attendants, happy
customers
• Musicals: people and cartoons singing about the products
• Example: jingle and words in Limca fresh ho jao
• Personality Symbol: create a character that represent the product, Mr. Clean,
Britannia Tiger, Guttu Asian paints
• Technical Expertise: shows company’s expertise in making the products, SAP talks
about affordable business solutions,
• Dilmah’s Watte tea, leaves from single origin tea garden owned by them
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Measuring Communication Effectiveness
▪ Share of expenditures
▪ Share of voice
▪ Share of mind/heart
▪ Share of market
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Measurement of audience:
✓Exposure: circulation figure, TRP
✓Attention: conducting recall and recognition test
✓Comprehension: understanding the message of ad
✓Acceptance: checking two group exposed and unexposed
✓Retention: message is memorable or not
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Global Adaptation of Marketing Communications
• Following the law and customs of the country, segment they address should be
legal
• Should know the style of the ad is acceptable or not
• Ads should be created locally or at HQ
• Following glocal strategy
• Multinational companies are attempting to build global brand image by using the
same ads in all markets
Global Adaptations:
Many Product are restricted in Muslim countries (beer, wine and spirit)
Tobacco products are subject to strict regulation in many countries
No TV ads may be directed to children in Norway and Sweden
Comparison ads common in US and Canada, unacceptable in Japan, illegal in
India and Brazil
Example: Pepsi had a comparative ads in Japan that was refused by many TV
stations and eventually led to a law suit.
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Managing Integrated Marketing Communications
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reinforced across communication options; that is, the extent to which different
communication options share the same meaning.
Complementarity. Communication options are often more effective when used
in tandem. Complementarity relates to the extent to which different
associations and linkages are emphasized across communication options.
Conformability. In any integrated communication program, the message will be
new to some consumers and not to others. Conformability refers to the extent
to which a marketing communication option works for such different groups of
consumers.
Cost. Marketers must evaluate marketing communications on all these criteria
against their cost to arrive at the most effective and most efficient
communications program.
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Designing and Managing Distribution Channels
• A set of interdependent organizations (intermediaries) involved in
the process of making a product or service available for use or
consumption by the consumer or business user.
A marketing channel can be viewed as a large pipeline through which products, their
ownership, communication, financing and payment, and accompanying risk flow
to the consumer.
Marketing channels facilitate the physical flow of goods through the supply chain,
representing “place” or distribution in the marketing mix.
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Sonata Store
Titan Signet Club
Tanishq Boutique
Private multi brand outlets
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Marketing Channels Functions
• Gather information about potential and current customers, competitors, and other actors and
forces in the marketing environment.
• Develop and disseminate persuasive communications to stimulate purchasing and foster brand
loyalty.
• Negotiate and reach agreements on price and other terms so that transfer of ownership or pos
session can be effected.
• Place orders with manufacturers.
• Acquire the funds to finance inventories at different levels in the marketing channel.
• Assume risks connected with carrying out channel work. • Provide buyers with financing and
facilitate payment.
• Provide for buyers’ payment of their bills through banks and other financial institutions.
• Oversee actual transfer of ownership of goods from one organization or person to another.
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Channel Levels
▪ Zero Level: Door to door, mail order, catalogue, telemarketing, company owned outlets
✓Example: Amway and Eureka Forbes, Singer, Tupperware, Asian sky shop, Otto
Burlington.
▪ A one-level channel represents a single intermediary
✓ Example: Automobile and petrol pump dealers etc.
• A two-level channel represents two intermediaries, such as a distributers and
retailer/wholesalers who sell the product to the final consumers.
✓ Example HUL, Whirlpool, Videocon, Philips, Sony, etc
• A three-level channel represents more than two intermediaries such as wholesaler,
agents/broker(Jobber) retailer etc
✓Example: In the meat packing industry company- wholesalers - jobbers - to small
retailers.
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Channel Management Decisions
a) Establishing Channel Objectives
b) Selecting Channel Members
c) Identifying major channel alternatives
d) Motivating channel members
e) Evaluating Channel Members
f) Channel cooperation and conflict
g) Legal and Ethical Issues
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▪ Decide on the outlet ( high Image –shopper stops, Mark Spencer,
Low image discount outlets Big Bazaar, Max etc.)
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Establishing Channel Objectives
• Effective coverage of target market
• Efficient and cost effective distribution
• Ensure ease of procuring the products, provide wide range of choices to
customers
• Provide speedy delivery
• Project exclusive image of the company, make purchase enjoyable experience
• Helping the firm to carry on manufacturing uninterrupted believing that the
channels will take care of sales
• Build brand through merchandising
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Selecting Channel Members
▪ Experience (number of years in business)
▪ Growth and profits records
▪ Financial strength
▪ Cooperativeness
▪ Service reputations
▪ Sales efficiency
▪ Product knowledge(lines carried)
▪ Size and quality of work force
▪ Administrative ability
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Identifying Major Channel Alternatives
▪ Intensive Distribution : distributing the products through all available channels in a trade
area. Bank uses atm, branches, franchise, direct marketing
▪ Example: snack foods, soft drink, chocolates, soaps, Titan watches
▪ Selective Distribution: choosing only a limited number of retailers in a market areas to
handle its lines.
▪ Example: Samsonite, Red Tape, DKNY clothing, Burn energy drink of Coke are available
only in pubs, discos, restro bars
▪ Exclusive Distribution: severely limiting the number of intermediaries, maintain control
over service levels, granting the exclusive rights to a retailer to sell its products in a
specific geographical region/ stores.
▪ Example: Automobiles, major high-end apparels(Gucci), appliances brands
▪ Apple has exclusive contact with AT&T in US for I-phone sales
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Motivating Channel Members
▪ Conducting training programs to increase the efficiency. E.g. Ford,
BPCL
▪ Adopting a relationship marketing approach to motivate distributors
to achieve higher sales volumes.
▪ Reduce the capital employed, operating costs and risks involved,
enhance customer finance schemes and adopt sales promotional
schemes.
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Evaluating Channel Members
• Periodically evaluate intermediaries performance
• Sales target attainment
• Average inventory level
• Customer delivery time
• Treatment of damaged and lost goods
• Cooperation in promotional and training program
• Under performers need to be counseled, retrained and motivated or
terminated
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Channel Cooperation and Conflict
• No matter how well channels are designed and managed, there will
be some conflict.
• Channel conflict occurs when one channel member’s actions prevent
another channel member from achieving its goal.
• Companies distributing their offerings through different channels are
likely to face a certain level of channel conflict.
• In this context, a manager’s goal is to reduce the channel conflict by
minimizing the frictions between channel members.
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Types of Channel Conflict
• Horizontal channel conflict
• Vertical channel conflict
• Multichannel conflict
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commission
•Multichannel Conflict
•Example: The conflict between showrooms and factory outlets of a
manufacturing company for the same market.
•when Apple opened its own stores it angered it traditional retailers and had to
face law suits.
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MANAGING CHANNEL CONFLICT
✓ Negotiation,
✓ Diplomacy, mediation
✓ Developing cooperation and coordination between channel
members
✓ Joint memberships in trade associations
✓ Legal recourse
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fundamental or superordinate goal they are jointly seeking, whether it is
survival, market share, high quality, or customer satisfaction. They usually do
this best when the channel faces an outside threat, such as a more efficient
competing channel, an adverse piece of legislation, or a shift in consumer
desires. • Employee exchange. Exchanging personnel between two or more
channel levels can reduce channel conflict. GM’s executives might agree to
work for a short time in some dealerships, and some dealership owners might
work in GM’s dealer policy department. Thus, participants can grow to
appreciate each other’s point of view. • Joint memberships. Marketers can
encourage joint memberships in trade associations. Good cooperation
between the Grocery Manufacturers of America and the Food Marketing
Institute, which represents most of the food chains, led to the development of
the universal product code (UPC). The associations can consider issues
between food manufacturers and retailers and resolve them in an orderly way.
• Co-optation. An organization can win the support of its channel members by
including its leaders in advisory councils, boards of directors, and the like. If
the organization treats invited leaders seriously and listens to their opinions,
co-optation can reduce conflict, although the initiator may need to compromise
its policies and plans to win outsiders’ support. • Diplomacy, mediation, and
arbitration. When conflict is chronic or acute, the parties may need to resort to
stronger means. Diplomacy takes place when each side sends a person or
group to meet with its counterpart to resolve the conflict. Mediation relies on a
neutral third party skilled in conciliating the two parties’ interests. In arbitration,
two parties agree to present their arguments to one or more arbitrators and
accept their decision. • Legal recourse. Rather than pursuing other strategies,
a channel partner may choose to rely on legal means to resolve the conflict.43
When Coca-Cola decided to distribute Powerade thirst quencher directly to
Walmart’s regional warehouses, 60 bottlers complained that the practice would
undermine their core direct-store-distribution duties and filed suit. A settlement
allowed for the mutual exploration of new service and distribution systems to
supplement the direct-store-distribution system.44
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Legal and Ethical Issues
▪ Dual distribution: Samsung selling through distribution channel as
well as own web site with reduced price
▪ Exclusive distribution agreement, prevent from distributing
competing products
▪ Product tying
▪ Restricting sales territory
Example: small office copiers were first sold by manufacturers' direct sales
force, later through office equipment dealers, then trough mass merchandisers
and now by mail order firms and internet marketers.
Apple earlier selling through others stores later opened own store
HUL Project Sangam (MLM model, dropped due to channel partner conflict)
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now project shakti (self help group) integrating business interest with national
interest.
Now it has more than 39000 women members
Vision is to increase it to one lakh members
Covering 50 thousand villages
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The eChoupal gives farmers a lot of relevant information. This includes the
following:
Weather information
Best farming practices
Market information
Crop information
Soil testing
Feedback
Farmer information
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