MARKETING

MANAGEMENT II
MBA Term III, 1st year
Integrated Marketing Communication
- By AMIT SETH
Integrated Marketing
Communication
 Product availability in
market
 INFORM  To propagate the
distinctive feature
 PERSUADE
 REMIND
 To get feedback on
how the consumers
accept its products and
interpret its message
 Marketing Communication
PRODUCT Product Variety
Quality
Design List Price
Features Discounts
Brand Name Allowances
Packaging
Payment Period
PRICE
Credit Policy/Cash Discount

Sales Promotion
Advertising
PROMOTION
Sales Force
Public Relations Channels
Direct Marketing Coverage
Availability
Location
PLACE
Merchandising
Transportation
Basic Model of Communication
Features, size, shape,
Product Personality design & Finish

PRODUCT
COMMUNI
CATION First Appeal
Colour, shape, size, labels,
Packaging lettering & material used
Communicates Brand Name
Package Design
Overall Product Personality
BRAND
NAME

Great Communication Value

COMPANY
NAME Communicates Status / Reputation Strategy
 Price Quality Equation
PRICE Price Status Equation
COMMUNIC Indicator of Technological Superiority
ATION Consumer Concept ‘A reasonable price.”

The Store Image Exclusive/Demonstra

tion centers
Store level Merchandising
PLACE Industrial Stores
COMMUNIC A powerful Communication Instrument
ATION
Store choice is linked to Store Image
• Formulate the criteria
• Identify the characteristics
• Compare the two
• Decide whether the store is acceptable
 Personal Selling
• Product Knowledge

PROMOTION • Customer- Salesman identification

Key Account
COMMUNICA
• Ability to listen & Communicate Management
TION • Right Sales Message

Publicity
Sales • Oversee and influence news & Stories
Promotions
• Conduct Publicity campaigns with some innovations
• Premium & Gifts
• Constant vigil on the media relations
• Sampling
• Sponsorship programs & Event Management
•Fair & Trade
Shows Public Relations
• Demonstrations • Management of Reputation
•Coupons / •Good Corporate reputation makes selling easier
Rebates and cheaper
•Contests & • PR is more vigorous in bad times
Games
Sponsorship
• Gaining Publicity
• Fostering favorable brand, company association/ Recognition
• Improving Community Relations
• Supplements other promotional materials

Exhibitions
• to tap genuinely interested customer
• Creates awareness & develops relationship with new prospects
• Provides product demonstrations
• Stimulates needs of customers
• Gathers competitive Intelligence
• Launching pad for new products
• Appointment of new dealers/distributors
• Improve company image
• Feedback from ultimate customers for product innovation
• To book orders & to make sale
 Selection of Media Denotes the means employed to draw attention to any
object or purpose.
• Target Audience
Defined ‘As any paid form of non personal
• Reach
presentation and promotion of ideas, goods or
• Scheduling services by an identified sponsor.
Decision Areas of Advertising Management:
ADVERTISING • Advertising Objective
• Advertising Budget
• Print Media • Deciding the Copy
• News Papers
Deciding the media:
• Magazines • Medium or a channel for carrying the
•Trade intended advertising message to the target
Journals audience
• Direct Mailer • Outdoor • Transit Advertising
• Audio/Visual • Hoardings • Fairs & Exhibitions
• TV •Posters • Banners
• Radio • Neon Sign • Dealer’s Sign Board
Factors in an Ad that bring about audience persuasion
1. The source or the endorser
 Creditability of the source
 Attractiveness of the
source
 Disposition of the
audience
2. The message
 Message Structure
 Message sidedness
 Order of Presentation
 Climax Order
 Anti-climax order
 Pyramidal order
 Message Conclusion
 The Message Appeal
Rational Appeals
 Physical features-
oriented
 Functional-oriented
 Brand to brand
comparisons
Emotional Appeals
Love, Affection, Enjoyment,
Fun & Humour, Sense of
Prestige, distinctiveness
and luxury, Feeling of
envy, fear of
uncertainties
Organizing Campaign Development
Four options for organizing Campaign:
1. Small Companies-Hire Ad agencies
2. In-House Advertising Department (Copy Writer,
Media-buyer, Production personnel)
3. Some Key Adv. Executives on Company role +
Adv. Agency provide full service like Creative
Work, Media Planning, buying, Strategy
Development, Market Research etc.)
4. In house Staff for some Adv. Functions like
Copy Writer, Creative Artist Designer; but for
Media Agencies are hired.
Agency Selection
 Define Requirement
 Develop a pool list of Agencies
 Credential analysis of Agencies
 Issue brief to short listed Agencies
 Full Agency Presentation
 Analysis of presentation and worthiness of
agencies
 Select final Ad agency
Public Relation
 Establish goodwill and mutual understanding
between an organization and its public.
 Public Relation activities include:
 Publicity
 Corporate Advertising
 Seminars
 Publications
 Lobbying &
 Charitable Donations
Function of Public Relations
 Foster prestige & reputation of the company
 Awareness & interest creation about product &
company.
 Tackling social & Environmental issues.
 Presentation of useful information about product &
company.
 To retain talented pool of employees.
 To keep trust of stake holders.
 Impression to supplier about credit worthiness.
 Liaison with politicians & public officials.
 Responds effectively to negative publicity
PUBLICITY
 Two-way of mass communication, part of Public
Relation.
 Publicity is undertaken for
 Promoting new products
 Increasing sales of existing products
 Highlighting employees achievements
 Company’s civic activity
 Pollution Control Steps
 Research & Development success
 Financial performances
 Company progress report
 Other missionary or social contributions
Publicity
Definition: “Publicity involves securing editorial space
as divorced from paid space, in all media read,
viewed or heard by company’s customer or
prospects, for the specific purpose or assisting in
meeting the sales goals.”

Task of Publicity Department:

 Availability of well organized information.

 Media Relations and to provide them relevant

information.
 Stimulating media to cover information for the best

interest of the organization.

Characteristics of Publicity
 Creditable Message
 No Media Cost
 News items interest worthiness for publication’s
readers.
 Headline should briefly introduce the story.
 Opening paragraph should be brief summary.
 Copy content should be factual supported by facts &
figures.
 Length of release should be brief & meaningful.
 Layout – Properly aligned and readable
Sales Promotion
Philips Kotler “Those marketing activities other than
personal selling, advertising and publicity that
stimulate consumer purchasing and dealer
effectiveness, such as display, shows,
demonstrations, expositions and various non-current
selling efforts, not in ordinary routine.”
Importance/Growth of Sales Promotion
 To make customer impulsive for purchase of item,

effective tool to regenerate consumer interest.

 Effective media for small player.

 Rising cost of advertising and advertising clutter has

made sales promotion an attractive proposition

  Sales promotion increase sales in short span.
 Exploit better opportunities to garner market.
 Measuring the sales impact is easier.
Consumer Level Dealer Level Salesmen Level
Samples, Gifts, Incentives, training, Commissions, training,
Coupons, Credit, trade discnts, credit,
Samples, Award &
Guarantee Cards, Awards & Gifts,
Gifts, Bonus, Profit
Exchange offers, Trips & Meetings,
Sharing, Trip &
Rebates, Seasonal Free
Meetings,
Discnts, Loan facility, Transportation,
Appreciation &
Extended EMIs, Advertising
Recognition,
Courtesy visit, Free material, Joint
Conferences, Leave
Accessories, Extra Publicity
Quantity, Free Encashment
demonstration, free
trial, Money Refund,
Free Home delivery.
 Sales Promotion Objectives
 Fast Sales boost
 Encourage Trial
 Encourage repeat purchases
 Stimulate purchase of larger stocks
 Gain distribution and shelf space
 Evaluating Sales Promotion
 Pre Testing Research
 Group Discussion
 Hall Test
 Experimentation
 Post Testing Research
 Criteria of Sales
 Consumer panel data- Loyal Users v/s New Users
 Enquiry for dealership/channel partners
PERSONAL SELLING
Definition: “ Salesmanship is an ability to persuade
people buy goods or services at a profit to seller and
with a benefit to buyer”
- - National Salesman’s Training Society of USA

Basics of Personal Selling

- Two-way communication
- Personal Attention
- Detail demonstration
- It supports other promotional tools
- Immediate feed back
- Individual Services
- Flexibility
- Improving Image
Sales Process
Sales Process involves specific steps to sell the
product to customers:
1. Type of Salesman
2. Type of Products
3. Time available v/s work pressure
4. Product/brand and popularity
5. Consumer behavior
6. Number of customers to be attended at a time
7. Current trend in marketing and selling
8. Company’s policies, rules and practices
9. Company’s image and goodwill
10. New v/s existing product
A - Attention Steps of Sales Promotion
 Presales Preparation
I - Interest
 Prospecting  Complete
 Pre-Approach  Clear
Consistent
D - Desire  Approach 

 Precise
 Sales Presentation
 Superiority
A - Action  Handling queries, 
Confidence
objections  Winning
S - Satisfaction
 Closing of Sales Attitude
 Post Sales Action
Challenges in Personal Selling
 Face to Face interaction, Flexible approach but cost to
the company.
 At least six visit reqd, Maintains relationship even if order
is not there.
 Use of IT gadgets to remain in touch /interacting with
clients, to know inventories and order status 7 dispatch
status.
 Specialized /trained /skilled manpower with product
knowledge and preferably single window system.
 Understanding of Customer requirement and competitors
offerings. Provide distinctive services.
 Find out the problems, design a solution in consultation
with customer,
Sales Force Management
 Definitions:
Albert, Johnson and David- “Sales Force
Management refers to the planning,
implementations and control of selling efforts.”
The American Marketing Association- “The
planning, direction and control of the personal
selling activities of business unit including
recruitment, selection, training, equipping,
assigning, rating supervising, motivating and
paying as these tasks apply to sales force.”
Tasks involved in Sales Management
1. Determining Personal Selling Objective:
 Sales Volume  Expansion- New Dealers
 Market Share  New Channels
 Product Mix  Proportion of cash/credit
 Profits  Outstanding Recovery
 Selling Expenses  Pre & After Sales
 Key Accounts Service
 New Accounts  Gathering Market

 Training Intelligence/feedback
 Assistance for Sales

Promotion
Formulating Sales Policies
 Discounts/Incentive  Distribution
Yearly  Dealer/Distribution/Retailer
 Quarterly  Institutional

 Quantity  Govt./CSD

 Trade Discount  Hyper & Super Markets

 International Marketing
 Pricing
 Tele Marketing
 Competitor Oriented
 Credit Policy & Cash  Product
Discount  Product Mix
 To take care of cost  Colour
 Zone wise price  Size
differentiation  Shape Packaging

 Guarantee
 Area/Zone wise
3. Structuring the Sales Force Product wise
4. Deciding Sales force size Quantity linked

Cost linked

Exploring new territories

Workload (Qty. wise)

5. Deciding Sales Territories
Potential size & Mkt.
share targeted

6. Developing Sales Forecast & Sales,

Budget/Target
7. Allocation of sales person wise, territory wise
targets
8. Creating the sales force Selection
Recruitment
Induction/Orientation

9. Managing the sales force

Compensation
Motivation
Morale Building
Coaching/ training/ skill development
Evaluation/ Appraisal
Feed back to take corrective measure
 Communication Process

Media
Encoding Decoding
Message
Sender Receiver
Noise
Feedback Response
The Purpose of Communication

• The target audience looks for conviction in the communicator

• The communicator should be focused on the interest of the target

audience.
• The purpose of communication is to fetch the desired response

from the target audience.

Identify Manage
DEVELOPING
target Integrated
EFFECTIVE
audience Marketing
COMMUNICATION
Communication
Consumer psyche
Determine • Clearly spelt out message
Objective Measure whether Sales Promotion Scheme
Results or new product launching.
• Off-season/festive /clearing

sales should be for limited period.

Design Decide on
Devise games, tempt customers to
Commun play them for the rewards offered
Media Mix on winning.
ication • Running one core message at

any one time.

• Design communication in which
Select Establish consumers want to get engaged.
Channels Budget
Identify Target Audience
 Potential Buyers
 Current Users
 Decision or Influencer
 Individuals, groups, particular public or the
general public
What to say?
When to say?
Where to say?
To whom to say?
Determine the Communication Objective
Category Need (Requirement)
Brand Awareness (Distinctive Features)

Brand Attitude (Need + Brand)

Brand Purchase Intention (Promotional Offer)

Design the Communication

Appeals
Message Search
Strategy for Themes
Ideas

Informational Appeal- Elaborates on

Creation Product/Service attributes
Strategy
Transformation Appeals
Select the Communication Channel Establish Communication Budget
 Personal Communication Channel • % age of Sales Method
 Face to Face
 Person to Audience
 Over the telephone
 Through E-mails
 Non Personal Communications
Direct to more than one
 Media
 Sales Promotion
 Events & Sponsorship
 Public Relations
•Affordable Method
• Competitive Method
• Objective & Task Method
Use right time and the correct
channel
• Specify when to interact
• Monitor customer activity and find
out the avenues whereby
communication will have real
impact.
• Dialogue is a multi-step
conversation & channels
• Dialogues preempt defections &
win back lost customers.
Deciding on Media Mix
 Advertising
 Sales Promotion
 Public Relations & Publicity
 Events & Experiences
 Direct & Interactive Marketing
 Word of Mouth Making
 Personal Selling
Measuring Communication Results
 Output v/s Expenses
 Press Clipping Counts
 Nos of Ads placed
 Media Cost
 Reach & Frequency
 Recall & Recognition Stores
 Cost per thousand calculations
Managing the Integrated Marketing
Communication Process

 Many company still rely on one or two communication

 COMMUNICATION TOOLS, Messages and audiences makes it
imperative that companies move toward integrated marketing
communication.
Direct Marketing
 “Direct Marketing is the process by which a firm
approaches its customers on one-to-one basis and
markets its products directly to them.”
 Difference between Direct & Conventional Marketing:
1. Conventional marketing is mass marketing, DM is one to
one marketing.
2. DM deals customers directly; Conventional mass
marketing deals them indirectly.
3. DM is interactive marketing, with two-way communication
between the firm and with each one of the customers while
Conventional Marketing is one-way activity.
4. DM does not involve marketing channels/stores.
Conventional marketing relies heavily on it.
5. DM does not involve advertising/mass promotion;
conventional marketing relies heavily on it.
 DM Compresses the steps in the marketing process: DM
tackles all the component tasks of marketing such as
customer identification/demand generation, product
adoption, packaging modification, distribution, price
negotiation, marketing communication, and sales
promotion in an integrated and compressed manner.
 Direct Marketing Advantages:
 Customer problems and need directly identified. With two-way
information, the marketer is able to fine tune his offer and match
it with customer’s requirement.
 Provide tailor made solutions.
 Satisfaction of excellence whether service or delivery of goods.
 Facilitates sharper segmentation and formulation of more fine-
tuned marketing strategies.
 Marketer can foster comparative advantage by Relationship-
building.
Cost-Effective
 Eliminates channel cost
 Eliminates advertising costs and more

effective communication.
Versatile form of Marketing
 Campaign can be timed as per convenience

 Better placed to measure responses to their

campaign and know its profitability.

 Flexibility of having selective approach.

 Special attention to large/key accounts.

Requisites for success of Direct
Marketing
 Comprehensive, Reliable and Update data
base.
 Careful and close Targeting of
markets/prospects.
 Service Guarantee and Product warranty
 Backroom logistics
 An eye for details
 Sustained efforts.
 Direct Marketing-Indian perspective
 Rising Media cost
 Growing media clutter
 New competitive pressure
 Entry of many MNC’s in India
 Though industrial products still account for a major part of all DM
spend, but now it is slowly spreading to consumer softs and
durables. Wipro, Philips India, ANZ Grindlays, Madura Coats and
TVS Suzuki
 Forms of Direct Marketing
 Mail Catalogue
 Direct mail marketing
 Direct response marketing
 Database marketing
 Telemarketing
 Teleshopping
 Online Marketing
Physical Distribution and Marketing
Logistic
 Many products fail not because of quality, features, and
price problems but because of inefficient distribution
system.
 Physical Distribution can be defined as : “Physical
distribution relates with all those activities involved in
making product available at the right place, at the right
time, for the right people (market), and in the right form
or manner pursuit of marketing goals.
 Philip Kotler; “Physical distribution involves planning,
implementing and controlling the physical flows of
materials and final goods from points of origin to points
of use to meet customer needs at profit”
Activities/Functions
1. Order Processing
2. Handling products
3. Sorting and packing
4. Warehousing
5. Transportation
6. Insurance and banking
7. Inventory control
8. Customer service etc
Importance of Physical Distribution
1. To Ensure Consumer convenience
2. To facilitate continuous production
3. To achieve economy Availability
4. To reduce degree of damage/wastage timing

5. To increase competitiveness price

6. Reduction of idle stock

7. To ensure continues availability
8. To achieve rapid turnover of stock
Order Processing
 Order Processing mainly includes:
 Receiving Order
 Recording Order
 Evaluation vacant Credit limit
 Checking old over dues
 Allocation of proper product –mix
 Executing order
 Points for consideration:
 Arrangement of products as per the quantity and product mix
 Execution as quickly as possible
 Appropriate mode of transport may be chosen
 Relevant and applicable discounts as per policy to be allowed
 Assessing effectiveness of order processing
 Inventory Control  Since inventory represents
Max cost, finance managers seek
Lead Time
Inventory stock minimization, but
Inventory level marketing wants large
Safety inventories to prevent stock
Stock level out.

Order placed Order recd Time

 When and how much to order so that stocks are replenished

 There should not be stock out as the company is waiting for the order

items to arrive.
 The more variable the lead time, the greater the fluctuation in customer

demand during the lead time and higher will be the safety or buffer stock
that company will be required to keep to prevent a stock out.
 Small, frequent orders raise orders raise order processing costs

because more orders have to be placed but reduce inventory carrying

costs because lesser average inventory is held.
Elements of Inventory Costs
 Interest on capital tied up in the inventory
 Warehouse rent
 Staff Salaries
 Insurance
 Rates and taxes
 Stationary
 Postage & Communication charges
 Administrative Overheads
 Costs of handling, unloading and stacking
 Loss due to damage and deterioration while on storage
 Cost of order processing/record keeping/accounting
Marketing Channels
 Route or pathway through which products
flow from producers to consumers is called
distribution channel.
 Philip Kotler: “Use of intermediates like
wholesalers, retailers, agent, etc., between
manufacturers and consumers for the
purpose of facilitating availability of goods
and services is known as distribution
channel.
Channels Provide Distribution Efficiency
 Minimize the number of contacts needed for
reaching consumers
 Break the bulk and cater to tiny requirement
 Supply products in suitable assortments
 Provide Salesmanship
 Help in price mechanism
 Sub distribution & financing support
 Assist in merchandising
 Provide market intelligence
 Acts as a change agent and generate demand
Types of Channels
 Direct Channel
1. Distribution from factory gate
2. Distribution via showroom and retail outlets
3. Distribution by salesman
4. On-line marketing/cyber marketing
 Indirect Channels
1. One-level-channel
2. Two-level-channel
3. Three-level-channel
4. Multilevel channel
Types of Marketing Intermediates
 Sole selling Agent  Retailer/Dealer
 Marketer  Broker
 C&F Agent  Franchisees
 Redistribution  Authorized
Stockiest representatives
 Stock/Distributor/W  Commission
holesaler Agents
 Semi-wholesaler  Jobbers
Steps involved in designing a channel
System
1. Formulating the channel objectives
2. Identifying the functions to be performed by the channel
3. Analyzing the product and linking the channel design to
the product characteristics
4. Evaluating the distribution environment, including legal
aspects
5. Evaluating competitors channel design
6. Evaluating company resources and matching the
channel design to the resources
7. Generating alternative designs, evaluating them and
selecting the one that suits the firm best.
Warehousing
 Storage and warehousing are not similar
terms,
 Storage is marketing activity that involves
holding and preserving products from the time
of their production until their sale.
 Warehousing embrace storage plus a broad
range of functions such as assembling,
breaking the bulk, dispatching as per the need
of middleman, sorting/classification, providing
market intelligence, preparing product for
reshipping.
Classification of Warehouse
1. On the basis of Commodity
 Special Commodity Warehouses
 Cold Storage Warehouses
2. On the basis of Ownership
 Private Warehouses
 Cooperative Warehouses
 Public Warehouses
 Household Warehouse
 Bonded warehouse
 Company’s own distribution centers
Benefits offered by Warehouses
1. Protection from fire, sunlight, dust, theft, heat/cold
2. To store or preserve perishable products like milk,
fruits, vegetables, flowers, and certain types of
chemicals for reasonably longer period.
3. Provide facilities such as inspection, protection,
records, displacement on demand, insurance etc.
4. Warehouses at different key centers can speed-up
order processing efficiently with less risk and costs.
5. Producers and sellers can avail loans on the product
stored.
6. Facilitates quick and continuous availability, low price
quality etc.
Transportation
 Main task in transportation Management:
 Assessment of the transportation requirement
 Choosing the ‘mix’ of transport modes
 Deciding the routing
 Development of operational plans
 Implementation/review
 Control of transport cost
 Transport management involves decisions on:
 How much to move ?
 When to move ?
 Where to move
 By what mode, or combination of modes to move?
 Pricing Strategies
 Price is the value that the company expects to
get from customers in return of the product or
the services the company is providing to the
customer.
 Price decision is one of the most critical
decision. Many products fail not due to quality,
features, and performance, but due to faulty
pricing policies.
 It effects profits of the company on one hand,
and product purchase decision of the
consumers on the other hand.
 Price is also powerful tool for responding
competitors strongly. Price does not
determine only quality and performance, but
it also implies status and prestige aspects of
product.
 Definitions: “Price is the economic value of
the product (good and service) normally
expressed in term of money.”
 Price is an agreement between sellers and
buyers at which goods and services are
exchanged for money.
Different views on Price
 Consumer views: Price is perceived value of product
that includes value of physical product, plus other related
benefits like after sales services, guarantee and
warrantee, prestige of company, brand image, credit
facility, installation, education etc.
 Marketers’ view: According to them, price of the
product includes cost of physical product, cost f
promotion, cost of related services, and cost of
distribution.
 Different terms are used for expressing Price for different
product/service like, rent, tuition ,fare, toll, premium,
fees, wage, salary, honorarium, duties, tax, charge,
commission, interest, bribe etc.
Setting the Price
 Selecting the Price Objective: It is an act of
setting price for the product. Objective of pricing can be
classified in five groups.
1. Profits Related Objectives-
1. Maximum Current Profit Fixed percentage of sale
Return on investment
2. Target return on investment
Fixed rupee amount
2. Sales Related Objective
1. Sales Growth
2. Target Market Share
3. Increase in market share
3. Competition Related Objectives:
1. To face competition
2. To keep competitors away
3. To achieve Quality leadership by pricing
4. To remove competitors from the market
4. Customer Related Objectives:
1. To win confidence of customers
2. To satisfy customers
5. Other Objectives:
1. Market penetration
2. Promoting a New Product
3. Maintaining image and reputation in the market
4. To skim the cream from the market
5. Price Stability
6. Survival and growth
Price Adjustment/Strategies
 Initiating price changes
 Circumstances under which price can be
raised
 Circumstances under which prices may be
cut.
 Proactive price cut
Tactics Of Price Change
 Price increase/decrease in one go.
 The company takes a avoidable hit in its
revenues if it unwittingly reduces prices
more than that was required to create a stir
in the market.
 Customers do expect prices to go up
incrementally, so a small price hike does not
alarm them. But a company which resorts to
price hikes very frequently, runs the risk of
being charged with always rising its prices.
The image may be harmful in the long run.
 Suppliers should ensure customers that the price hike
would take place only under strictly specified and
verifiable circumstances.
 For different elements of product price should be
different so as to make customer enable for buying
different element from different source and different
interval.
 When discounts are offered indiscriminately and vary
from dealer to dealer, it may effect direct landing cost
to the consumer. Customer distrust such companies.
 Introduce a low price fighter brand to counter a cut
price fighter brand to cut price competitor while
keeping the price premiumness of the main brand
intact.
Internal Factors
 Prerogative of top management
 USP/Degree of Product differentiation
 Costs v/s Value
 Elements of Marketing mix
 Objectives of company
 Product Life Cycle
 Quality of product
 Brand Image and reputation
 Category of Product
 Market Share
External Factors
1. Demand for the product
2. Competition
3. Variation in prices of rawmaterials
4. Buyer behaviour
5. Govt restrictions
6. Seasonal Effect
7. Economic factors
Pricing Method
1. Mark up pricing method
2. Perceived – value pricing method
3. Going-rate pricing method
4. Sealed-bid pricing method
5. Target return pricing
6. Break-even analysis method
7. Graphic method
Pricing Policies
 Penetration pricing policies
 Skimming pricing policies
 Psychological pricing policies
 Brand image pricing policies
 Pricing policies and discounts and
allowances
 Credit v/s cash pricing policy
 Strategic pricing
Strategic Aspects of Marketing
 Concept of Value Chain: Marketing involves satisfying customer s’
need and wants. The task of any business is to deliver customer
value at a profit while being socially responsible. In hypercompetitive
economy with increasingly rational buyers faced with abundant
choices, a company can win by fine-tuning the value delivery
process and choosing, providing and communicating superior value.
 Any firm through its market offering, extends the benefit sought by
customer. The customer assigns different weights for the different
benefits that he seeks from the offer and makes a mental note of the
total value provided by the offer. The total weight he assigns to a
product offer reflects the value he perceives in it.
 Customer feels happy when the value exceeds the cost he incurs.
The largest the value-cost gap. The greater is his satisfaction.
 The entire job of marketing management commencing with planning
and strategy formulation, and extending to control of the marketing
effort, is concerned purely with this task- arriving at the wining
configuration of benefit –value-cost-satisfaction.
 The Value Chain : Michael Porter of Harvard has proposed the
‘Value Chain’ as a tool for identifying ways to create more customer
value. According to this model, every firm is a synthesis of activities
performed to design, produce, market, deliver and support its
product.
Generic Value Chain
Firm Infrastructure Ma
rgi
Human Resource Management n
Support
Activities Technology Development
Procurement

Inbound Operations Service

Marketing

gin
Logistics Outbound

r
& Sales

Ma
logistics

Primary Activities
 Market offer & Value Enhancement: The firm has a
value creating and value delivering system. It includes the
firm’s production facilities, processes, organization,
expertise etc.. The firm makes out the best possible
assemblage of benefits as per the customer’s expectations
and puts it across in the form of its market offer.
 The firm can enhance value by adjusting any of the
elements of the marketing-mix.
 Increasing the functionality of the product
 Reducing the price.
 Giving better service report
 Giving the customer easy access to the product
 Offering beneficial communication.
 Example: ABN Amro Bank, DBS Education, Pringles
Potato Chips.
 Core Competencies: Many companies today outsource less-
critical resources, if they can obtain better quality or lower cost ; but
they maintain their superiority by sticking to their main core job, where
their competency level is strong and the have edge over the others in
particular field.
 Example: Nike does not manufacture its own shoes, because certain
Asian manufactures are more competent in this task; instead Nike
nurtures its superiority in shoe design and merchandising,
 Core Competency has three characteristics:
1. It is a source of competitive advantage in that it makes a significant

contribution to perceived customer benefits.

2. It has applications In a wide variety of markets,

3. It is difficult for competitors to imitate

 A holistic Marketing Orientation and Customer value:

According to this view, marketers succeed by managing a
superior value chain that delivers a high level of product
quality, service and speed.
 Holistic marketers achieve profitable growth by expanding customer
share, building customer loyalty, and capturing customer lifetime
value. Marketing framework is designed to address three key
management questions:
1. Value exploration: How can a company identify new value

opportunities?
2. Value creation: How can a company efficiently create more

promising new value offerings?

3. Value Delivery-How can a company use its capabilities and

infrastructure to deliver the new value offerings more efficiently?

 Corporate and Division Strategic Planning: Most
Corporate consist of four organization level:
1. The Corporate level
2. The division Level
3. The business Unit level
4. The Product level
 All corporate headquarters undertake four planning
activities:
1. Defining the corporate mission
2. Establishing strategic business units
3. Assigning resources to each SBU
4. Assessing growth opportunities
 Corporate
Planning
 Measuring
Division Results
Planning  Organizing
 Diagnosing
 Business Results
 Implementing
Planning
Implementing  Taking
Product Corrective
Planning action

Planning Controlling
1. Defining the Corporate mission: Good Mission
statements have five major characteristics:
1. They focus on a limited number of goals.
2. Mission statements stress the company’s major policies and
values. They narrow the range of individual discretion so that
employees act consistently on important issues.
3. They define the major competitive spheres within which the
company will operate.
4. They take a long term view. They should be enduring;
Management should change the mission only when it ceases to
be relevant .
5. A good mission statement is as short, memorable, and
meaningful as possible.
Product Mission may vary on the basis of:
 Industry  Market Segment
 Products and applications  Vertical

 Competence  Geographical
 Reliance Industries- To become a major player
in the global chemicals business and
simultaneously grow in other growth industries
like infrastructure.
 Tata Information System- To be India’s most
successful and most respected IT company.
 Mckinsey & Co.-To help the business
corporations and governments to be more
successful.
 Cadbury India- To attain leadership position in
the confectionary market and achieve a strong
national presence in the food drinks sector.
 Establishing Strategic Business Unit: A business can
define itself in terms of three dimensions:
 Customer groups
 Customer needs
 Technology

 Large companies normally manage quite different

businesses, each requiring its own strategy. An SBU has
three characteristics:
1. It is a single business, or a collection of related business, that
can be planned separately from rest of the company.
2. It has its own set of competitors.
3. It has a manager responsible for strategic planning and profit
performance, who controls most of the factors affecting profits.
 HMT-HMT is a 50 year old Public Sector undertaking
with 16 production units, 24 divisions, 35000 employees
and a large basket of products, which include machine
tools, flexible manufacturing systems and factory
automation, tractors, printing machines, moulding
machines, dairy machinery, bearings, lamps and lamp
making machines and a wide range of watches,
mechanical, quartz, analouge and digital watches.
 HMT can be grouped into five groups:
1. Machine Tools
2. Consumer Products
3. Tractors
4. Engineering components and industrial machinery
5. Technology and information system
 Assigning Resources to each SBU: Management
decide how to allocate corporate resources to each
SBUs.
 The GE/ Mckinsey Matrix classifies each SBU according
to the extent of its competitive advantage and the
attractiveness of its industry.
 More recent methods firms use to make internal
investments decisions are based on shareholder value
analysis (SVA), and whether the market value of a
company is greater with an SBU or without it (whether it
is sold or spun off). These value calculations assess the
potential of a business based on potential growth
opportunities from global expansion, repositioning or
retargeting, and strategic outsourcing.
  Assessing Growth Opportunities: Assessing growth
opportunities includes planning new businesses,
downsizing, and terminating older businesses. If there is
a gap between future desired sales and projected sales,
corporate management will need to develop or acquire
new businesses to fill it.
Current Products New Products

1. Market- 3. Product-
Current
penetration development
Markets
Strategy Strategy
2.Market- 4. Diversion
New Development Strategy
Markets Strategy
 Retail Management
 Organized Retailing: Retailing includes all the
activities in selling goods or services directly to final
consumers for personal, no business use. Providing
place, time, form and possession utilities to consumers is
the essence of distribution management. Retailing takes
care of a major part of this task.
 Retailing v/s whole selling: Two main characteristics
distinguish retailing from wholesaling-
1. Unlike whole selling, retailing is aimed at the actual or
ultimate consumer.
2. Unlike wholesaling, retailing involves selling for
personal consumption. Those who buy from a
wholesaler are either retailers or institutional buyers.
 Retail Formats:
 Specialty Stores
 Department Store
 Supermarket
 Convenience Store
 Discount Store
 Off-price retailer
 Super store/Hyper market
 Catalog showroom
 Retailer Strategy: Ronald Gist’s Margin-Turnover
Framework
High Turnover

Low margin-High High margin-High Turnover-

Turnover-Discount Store Convenience Store

Low Margin High Margin

High Margin-Low
Low margin-Low Turnover. An up-
turnover-Disaster market specialty store

Low Turnover
 Activities involved in Retailing
 Choosing the store location
 Sourcing/buying/vendor partnership/supply chain
management
 Merchandising and category management
 Visual Merchandising
 Sales Promotion
 Store positioning and building the store as a brand
 Store Operations
 IT task
 Inventory management
 Shrinkage loss prevention
 Real estate development
 Achieving efficiencies in retail operations
 Factors Facilitating the spread:
 Quality Products and lower prices
 Improved Shopping Standards
 Convenient Stocking/Display
 Shopping is blended with entertainment
 Reasons for slow adoption
 The format does not suit rural India
 Purchasing patterns not very conducive
 Inadequate growth of brands
 Supply chain problems
 Being family business, retailing enterprises have
limitation in expansion
Customer Relationship Management
 Time have changed from Product driven
market to customer driven market. Today’s
customer are much educated and demanding.
 Customer: Number of roles that can be
identified in the context of consumers, namely
initiator, influencer, decider, preparer,
gatekeeper, maintainer, buyer, user and
disposer.
 Need for Customer Retention:
 Retention cost is lesser than acquiring new
customer.
  The cost of attracting a new customer may be five
times the cost of keeping a current customer
happy. Offensive marketing typically costs more
than defensive marketing.
 Customer Relationship Marketing:
 The task of creating loyalty is called relationship
marketing.
 It is the process of creating, keeping and
maximizing the profitability of good customers.
 CRM basic theme is for the company to become
more Customer-centric. Traditional business
models were simply not designed for the speed,
flexibility and functionality of e-business.
 Benefits of Customer Relationship
Management:
 Closer Relationship with Customer
 Improvement in Customer Satisfaction
 Financial benefits ensured.
 CRM-Internal and External Considerations
 The Customer must always be at the center of
your organizational processions.
 E-business moves fast-very fast. It has to be
responsive.
 The relationship with customer begins as much
after the sale as it does before the sales.
 Building Blocks of CRM:
 Opportunity Management
 Contact Management
 Problem Management
 Sales Configuration
 Sales Compensation
 E-mail Response Management System ERMS
 Building Customer Relationship
 Concern
 Trust
 Commitment
 Service
 Getting closer to your customer:
 Building and maintaining Database
 Signaling their needs
 Brand loyalty and Sales Target
 Media Channel
 Exploit the technology
 Relationship Marketing:
 Marketing is no longer about developing, selling and delivering
products. It is progressively more concerned with the development
and maintenance of mutually satisfying long-term relationship.
 The emphasis is not only from transaction to transactions, but also
on building relationships. Delivering quality, customer service is the
key to customer retention through continuous customer satisfaction.
 Job of Marketing is to create, win and retain customer.
 Six steps in Customer Relationship
Management:
1. Define Objectives
2. Identifying customer needs
3. Develop the approach
4. Define the segments
5. Deliver the service
6. Measure the effectiveness
 Customer Development Process:
 Levels of Relationship : There are five different levels
of relating to customers:
1. Basic: The Salesperson sells the product but does not
contact the customer again
2. Reactive: The Salesperson sells the product and encourages
the customer to call if she has any question or complaints.
3. Accountable: The salesperson phones the customer a short
time after the sale to check whether the product is meeting
the customer’s expectations.
4. Proactive : The sales person phones the customer from time
to time with suggestion about improved product use or helpful
new products.
5. Partnership: The company works continuously with the
customer to discover ways effect better performance
customer.
 There are three basic factors to be considered
while fixing the foundation stones for relationship
with customer:
1. Experience
2. Word of mouth
3. Time
 It is important to put dissatisfied customers into
an intensive-care-relations to avoid losing them
or making special efforts to recover lost
customers.
 If the customers feel that they are short of time,
concise communications may be important
relationship proposition.
 Customer Relationship marketing and the Sales
Process:
 Suspect: Everyone who might possibly buy the
product is referred to as a suspect.
 Prospect: A suspect becomes a prospect as the
relationship develops. It is important to ‘qualify’
prospects, that is, separating those who genuinely may
purchase from those who can not for the time being.
 The first time clients may ask existing clients for advice and
therefore, the relationship with other clients may prove helpful.
 Customer Development Process requires considerable
investment in form of resources, time, money, and people to
enhance and build customer loyalty.
Stages in the process of
customer development
 1% of Customer
A
4% of Customer Standardized
15% of Customer Customer
Pyramid
80% of
Customer Keep them
intact
Move
them up
Get
them in
 Important Lessons learned from customer
pyramids:
1. The top 20% of the customers deliver 80% of revenue.
2. The top 20% of the customers deliver 100% of profits
3. Existing customer deliver up to 90% of revenues.
4. The bulk of marketing budgets is often spent on non-customers.
5. Between 5% and 30% of all customers have the potential for
upgrading the customer pyramid
6. Customer satisfaction is critical for migration up the pyramid
7. Reasonably satisfied customers often defect to the competition
8. Marketing and Sales are responsible for influencing consumer
behavior
9. Other departments and people also influence customer
behavior.
10. A 2% upward migration in the customer pyramid can mean 10%
more revenues and 50% more profits.