Management Module - X

The Management Module
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AN INTRODUCTION
MANAGEMENT:
The process of planning, organizing, staffing, leading and

controlling the functions of an organization towards achieving
its predetermined goals
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Management: Functions and Processes
Functions:
• Planning
• Organizing
• Staffing
• Directing
• Controlling
Processes:
A set of standardized sequential work activities in which
managers engage as they plan, organize, lead and control
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Other Important Terms
Management Roles:
• Interpersonal
• Informational
• Decisional
Management Skills:
• Technical
• Human
• Conceptual
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Organizations
Types Of Organizations:
• Sole Proprietorship
• Partnership
• Company – Privately Held
• Company – Publicly Limited
• NGO’s
• PSU
• Government Organizations
• Associations and Cooperatives
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Model of Youth Categorization
I Upto 12 years
N Gen Future
D (Child)
E India
P 2030
Gen Next A
E
13 – 24 Years G
N India
(Teenager, Young adult) E
D 2020
E
P
N
Gen Now R
C
25 – 39 Years O
E
India G
(Prime Adulthood) R
P 2010
E
R
Gen Yesterday S
O
S
G 40 – 54 Years India I
R
E
(Middle Age) 2000 O
N
S
S
Gen Vintage
I 55 Years and above
O
N
India (Elderly)
1985
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Source: Marketing Whitebook 2011 - 12
Managing Organizations Today:
Top 10 Management Challenges today:

1.Attracting and retaining enough employees at all levels to meet the
needs of organic and inorganic growth
2.Creating a value proposition that appeals to multiple generations
3.Developing a robust leadership pipeline
4.Rounding out the capabilities of hires who lack the breadth of
necessary for global leadership
5.Transferring key knowledge and relationships
6.Stemming the exodus of Gen X'ers from corporate life
7.Redesigning talent management practices to attract and retain Gen Y's
8.Creating a workplace that is open to Boomers in their "second
careers“
9.Overcoming a "norm" of short tenure and frequent movement
10.Enlisting executives who don't appreciate the challenge
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Managing Organizations Today: Organizational Structure
Organizational structure consists of activities such as task allocation,

coordination and supervision, which are directed towards the achievement of
organizational aims
Types of Structures:
•Functional structure
•Divisional structure
•Matrix structure
•Flat Structures
•Team Structure
•Network Structure
•Virtual Structure
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Managing Organizations Today: Organizational Structure 1
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Managing Organizations Today: Organizational Structure 1 extended
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Managing Organizations Today: Organizational Structure 1 extended
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Demography: New Perspectives
 In what area is India static today?

 Probably ‘None Whatsoever’
 Indian Youth is the largest in size amongst the 1.2 billion
Indians
 Indians between 15 – 25 constitute 65% of India’s population
 We are extremely focused on the Indian Youth and their
Habits:
 What are they Eating
 On what are they Spending
 What Media are they watching?
 What are they Reading if they are at all…..
 What are they watching (Viewing)?
 Where are they spending their Free time?
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Demography: New Perspectives
The Working Woman in her 50’s with grown children
The Working Woman in her 30’s with 2 young children in day care
Which Car is each of the women above buying?
Is each one of them not emphasizing on a

different set of attributes while buying a car?
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Indian Youth
The Indian
High youth
primarily sh
disposable op
from a hedo
incomes nic
perspective
The spirit of work, the spirit of travel and the spirit of excelling in life
p or t an t ly serve as Keep pace with

They im
p r o du c t in formation change and
new identify with and
seekers predict future
demand
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Indian Youth
Understanding the size of Indian Youth

 25 – 39: ‘Youth’ who are capable of funding their independent
consumption decision now (‘Generation Now’)
 13 - 24: The ‘Young’ who are not capable of independently
funding their consumption decision now but may be able to do
so in the next few years (‘Generation Next’)
 13 - 24 (‘Generation Next’) : A distinct amalgamation of two
behaviorally distinct groups, 13 – 18 years old (‘teenagers’) and
19 – 24 years old (‘young adults’)
 The above two segments constitute 26% and 27% of the Indian
population respectively: 300 million and 308 million out of 1.14
billion consumers
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Indian Youth
Classification of population by ‘Generations’
Generational Age In numbers - Penetration %

classification millions
Gen Future Upto 12 years 232.56 20
Gen Next 13 – 24 years 300.16 26
Gen Now 25 – 39 years 308.21 27
Gen Yesterday 40 – 54 year 207.25 18

(Yest)
Gen Vintage 55 years and 96.35 8
above
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Indian Youth
Classification of ‘Gen Next : 13 – 24 years’ by SEC
SEC Gen Next (13 – 24 years)

Projected Base 300,160,104
SEC-A 3%
SEC-B 5%
SEC-C 7%
SEC-D 7%
SEC-E 8%
SEC-R1 14%
SEC-R2 19%
SEC-R3 13%
SEC-R4 18%
SEC-R5 6%
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Indian Youth
Information Sources for ‘Gen Next – 13 – 24 years’
Source of Gen Next

Information (13 – 24 years)
Projected Base 151,280,723
Television 100%
Print Media 44%
Radio 18%
Internet 4%
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Professional Management
Fact or Fiction?:
• Professional Management is Scientific Management

• Managers use a Quantitative Approach
• Managers understand Organizational Behavior
• Managers practice Knowledge Management
• Managers expose themselves and learn Case Studies
• Managers review themselves and change their strategies
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Global Changes
THE WORLD OVER:
• Decline in Purchasing Power

• Emergence of New Markets
• Saturation of Markets
• Globalization
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What Builds Great Organizations
ADAPTABILITY TO CHANGE:
• A CONSTANTLY CHANGING WORLD
• THE LIFE CYCLE OF NEEDED CHANGE REDUCING
• DON’T FEAR CHANGE, EMBRACE IT
• STOP MANAGNG AND START LEADING
ORGANISATIONAL ETHICS:
• ETHICAL ORGANISATIONS GROWING
• HIGH LEVELS OF INTEGRITY EXPECTED
• ORGANISATIONS - INNOVATION & MARKETING SUCCESS
• HIGH TRANSPARENCY
• PROMOTE ENTREPRENEURSHIP
• EMPOYEES – A SENSE OF OWNERSHIP
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Building The Future
• DRIVE QUALITY THROUGH THE ORGANSATION – EVERY EMPLOYEE

• QUALITY – A CULTURE, AN OBSESSION
• DRIVE COST & SPEED FOR COMPETITIVE ADVANTAGE
• DRIVE VISION AND MAKE THE ORG SHARE YOUR VISION
• LOOK FOR THE QUANTUM LEAP
A MENTION OF SOME GREAT ORGANISATIONS
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PLANNING
WHAT IS PLANNING?
Planning involves the following:

• Defining the organization’s goals
• Establish an overall strategy for achieving those goals
• Developing a comprehensive set of plans to integrate and
coordinate organizational work
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PLAN?
Why on earth should managers PLAN?
4 reasons why we plan:

• To give direction
• To reduce the impact of change
• Minimize the wastage & redundancy &
• To set the standards used in controlling
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PLANNING – Some Facts
Relationship between PLANNING & PERFORMANCE:
• Formal planning is associated with higher profits, higher return

on assets and other financial results
• The quality of the planning process and the appropriate
implementation of the plans probably contribute more to high
performance than does the extent of planning
• This relationship above is influenced by the planning time
frame
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PLANNING: Goals and Plans
GOALS: What is a goal?
Desired outcomes for individuals, groups or an entire

organization
PLANS: What is a Plan?
Steps (often documented) that outline how goals are going to be

met. This would include resource allocations, schedules, and
other necessary actions to accomplish the goals
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PLANNING – A Critique
The Pit-falls:
• Planning may create rigidity

• Tough to plan effectively for a dynamic environment
• Formal plans cannot replace creativity and intuition
• Focus changes to ‘today’s competition’, not ‘tomorrow’s
survival’
• It reinforces success, and it can sometimes breed failure
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Marketing
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The Definition of Marketing
Definition:
Marketing is the activity, set of institutions, and processes for creating,

communicating, and delivering and exchanging offerings that have value
to customers, clients, partners and society at large (NEW)
Marketing is an organizational function and a set of processes for creating,

communicating, and delivering value to customers and for managing
customer relationships in ways that benefit the organization and its stake
holders (OLD)
by The American Marketing Association
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The Definition of Marketing
The Social Definition:
Marketing is a societal process by which individuals and groups obtain

what they need and want through creating, offering, and freely exchanging
products and services of value with others
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Marketing Management
Definition:
Marketing Management is the art and science of choosing target

markets and getting, keeping, and growing customers through
creating, delivering, and communicating superior customer value
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Marketing Management Tasks
8
 Developing Marketing Strategies and Plans
 Capturing Marketing Insights
 Connecting with Customers
 Building Strong Brands
 Shaping the Market Offerings
 Delivering Value
 Communicating Value
 Creating Long-term Growth
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The Scope of Marketing
What is Marketed?
No Title Examples / Explanation
01 Goods Cars. Refrigerators, Televisions sets, Food
02 Services Hospitality, Medical Services, Professional services
03 Events Miss World, The World Cup, The Olympics
04 Experiences Witnessing an Orchestra, A visit to an Amusement park
05 Persons Oprah Winfrey, Shahrukh Khan, Specific Politicians
06 Places Taj Mahal, J & K, Kerala (God’s Own Country)
07 Properties Real estate, Farms
08 Organizations Reliance, ABG Ltd, Pantaloons, Shoppers Stop
09 Information Books, Encyclopedias, CD ROMs, Dial me Services
10 Ideas Embedded in every Marketing offering is an idea
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How are Businesses and Markets Changing?
Business and the market place is radically different as a result of major,

sometimes interlinking societal forces that have created new behaviors, new
opportunities, and new challenges:
• Changing technology (product innovation)

• Globalization
• Deregulation
• Privatization
• Customer empowerment
• Customization
• Heightened competition
• Industry convergence
• Retail transformation
• Disintermediation
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Holistic Marketing
Holistic Marketing: It is based on the development, design, and implementation of
marketing programs, processes, and activities that recognizes their breadth and
interdependencies
Senior Other Products & Channels

Marketing Communications Services
Department Management Departments
Internal Integrated
Marketing Marketing
Holistic
Marketing
Socially Relationship
Responsible Marketing
Marketing
Ethics Community Customers

Partners
Environment Legal
Channel
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Company Orientation towards the Marketplace
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The Marketing Mix
The Marketing Mix:
The set of marketing tools the firm uses to pursue its marketing objectives
The
Marketing Mix
Product Place
Product Variety Channels
Target Market
Quality Coverage
Design Assortments
Features Locations
Brand Name Inventory
Packaging Transport
Promotion
Sizes Advertising
Price
Services Sales Promotion
List price
Warranties Personal Selling
Discounts
Returns Direct Marketing
Allowances
Public Relations
Payment Period
Event Marketing
Credit Terms
Word of Mouth Marketing
Interactive Marketing
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The Marketing Mix
The
Marketing Mix
Product Place
Product Variety Channels
Target Market
Quality Coverage
Design Assortments
Features Locations
Brand Name Inventory
Packaging Promotion Transport
Sizes Price Advertising
Services List price Sales Promotion
Warranties Discounts Personal Selling
Returns Allowances Direct Marketing
Payment Period Public Relations
Credit Terms Event Marketing
Word of Mouth Marketing
Interactive Marketing
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Marketing Core Concepts
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Exercise: Assignment No 01
Individual Assignment:
Book-Review
Study and then review Chapter 1 & 2 of the specific Edition that you are
studying of Marketing Management by Philip Kotler
The format of submission can be a Word Document (Arial font size 11
points), typed please
Alternative:
The format of submission can be a PowerPoint Document
All Electronic copies to be handed over to the CR by my next lecture

File Name: Roll No: Name Surname Chap 01.doc or ppt
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Product Life Cycle
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The Product Life Cycle
The 4 Stages of the Product Life Cycle:
 The Introduction Stage

 The Growth Stage
 The Maturity Stage
 The Decline Stage
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The Product Life Cycle - Introduction
INTRODUCTION STAGE:
• Period of slow growth
• Initial market acceptance is in doubt
• The product is obviously not profitable
• High marketing and other expenses too
Marketing strategy in this stage is based on combinations of product, price,

promotion and distribution
STRATEGY:
Price and promotion are used to generate the following strategy
alternatives:
Name Price Promotion Category
High Skimming High Heavy
Low Skimming High Low
High Penetration Low Heavy
Low Penetration Low Low
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The Product Life Cycle - Growth
GROWTH STAGE:
• There is substantial profit improvement

• Product acceptance is visible in markets
• Retail feedback is positive as customers are buying
• Competition counters with new offerings
STRATEGY
 Product Improvement
 New feature addition
 New models introduction
 Development of new market segments
 Addition of new market channels
 Selective demand stimulation
 Price reductions to bring in new customers
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The Product Life Cycle - Maturity
MATURITY STAGE:
• Intense rivalry for a mature market

• Efforts are limited to attracting a new population, leading to
a proliferation of sizes, colors, attachments, and other
product variants
• Battle to retain market share
• Competition counters with new offerings
• Sales growth slows down, profits first peak and then begin
to decline
STRATEGY
a. Search for new markets and new and varied uses for the product
b. Improvement of product quality through changes in features and style
c. New marketing mix perspectives
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The Product Life Cycle - Decline
DECLINE STAGE:
• Sales in the category or product decline with decrease in

profitability
• Need to exit but sometimes exit barriers exist
• Some competitors have left by this stage
• Promotional expenses can be reduced
• Structural changes are normally implemented as the best
infrastructure or resources are not recommended on the
product now
STRATEGY
1. Increasing the firm’s investment to get a good or dominating
market position (maybe even re launch)
2. Decreasing the firm’s investment posture in unprofitable segments
and strengthen the firm’s posture in profitable segments or niches
3. Harvesting the firm’s investments to recover cash quickly
4. Divesting the business by selling assets in the best possible way
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Perspectives of The Product Life Cycle
Introduction Growth Maturity Decline

Characteristics
Sales Low sales Rapidly rising Peak Sales Declining Sales
sales
Costs High Cost per Average cost Low Cost per Low Cost per
customer per customer customer customer
Profits Negative Rising profits High profits Declining
profits
Customers Innovators Early adopters Middle majority Laggards
Competitors Few Growing Stable number Declining
number beginning to number
decline
Marketing Create product Maximize Maximize profit Reduce
Objectives awareness and market share while defending expenditure
trial market share and milk the
brand
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Perspectives of The Product Life Cycle
Introduction Growth Maturity Decline

Marketing Create product Maximize market Maximize profit Reduce
Objectives awareness and share while defending expenditure and
trial market share milk the brand
Strategies
Product Offer a basic Offer product Diversify brands Phase out weak
product extensions, and models items
service warranty
Price Use cost-plus Price to penetrate Price to match or Cut price
pricing the market beat competitors
Distribution Build selective Build intensive Build more Go selective;
distribution distribution intensive phase out
distribution unprofitable
outlets
Advertising Build product Build awareness Stress brand Reduce to level
awareness among and interest in the differences and needed to retain
early adopters mass market benefits hardcore loyalists
and dealers
Sales Promotion Use heavy sales Reduce to take Increase to Reduce to
promotion to advantage of encourage brand minimal level
entice trial heavy consumer switching
demand
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Market Segmentation
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Market Segmentation
Degrees of Break-down
 Mass Marketing
 Segmentation
 Niche Marketing
 Micro-niche marketing
 Individual marketing (Customization)
 Mass Customization
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Degrees of Market Break-down
 Mass Marketing
The seller engages in mass production, mass distribution, and
mass promotion of one product for all buyers
E.g.: Ford, Coca-Cola
 Segmentation
A market segment consists of a group of customer who share
a similar need or needs. This could be low-cost, or luxury
experience
Marketers advise to offer segmented customers a flexible
offering consisting of a naked solution containing the product
and the service elements that all segments members value,
and discretionary options that some segment members value
E.g.: car manufacturers offer several variants to the same
model
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 Niche Marketing
A Niche is a more narrowly defined customer group seeking a
distinctive mix of benefits. Marketers usually identify niches
by dividing a segment into sub-segments
An attractive niche is characterized as follows: The customers
in the niche have a distinct set of needs: they will pay a
premium to the firm that best satisfies their needs; the niche
is not likely to attract other competitors; the nicher gains
certain economies through specialization and the niche has
size, profit, and growth potential
Whereas segments are fairly large and normally attract
several competitors, niches are fairly small and attract only
one or two competitors
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 Micro-niche marketing
A Micro-niche is a very small segment of the market which has
very few customers. A niche within a niche could also be called
a micro-niche. Micro niches obviously have high profitability as
customers are willing to pay more to have their needs met
 Individual marketing (Customization)

Customization is the concept of a “segment of One”. This is a
low-volume high-profit segment and the product is made
specifically to cater to the needs of a single customer
E.g.: Harley-Davidson bikes, Diet Programs
 Mass Customization
Increasing number of customers are demanding Customized
offerings for the price of a Mass product
E.g.: Dell computers, Automobiles abroad, Paint Companies
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Segmenting Consumer Markets
SEGMENTATION /SEGMENTATION VARIABLES
BASES
GEOGRAPHIC
Region North, Central India, North Eastern States
City Size Metros, Mini metros, Towns Class A, B & C
Density of Area Urban, Semi-urban, rural
Climate Temperature, Hot, Rainy, Humid
DEMOGRAPHIC
Age Under 12, 12 – 18, 18 – 25, 25 – 35, 35 – 49, etc
Gender Male, female
Marital Status Single, Married, Divorced, Live-ins, Widowed
Income Under Rs. 18,000, Rs. 18,000 – 50,000, Rs. 50,000 – 1,00,000, etc
Education High School, Higher Secondary, Graduate, Post graduate
Occupation Professional, Blue Collar, White Collar, Government, PSU, Civil
Services, Armed Forces, etc
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BASES
PSYCHOLOGICAL
Needs motivation Shelter, Safety, Security, Affection, Sense of Self Worth
Personality Extrovert, aggressives, novelty seekers
Perception Low risk, Moderate risk, high risk
Learning Low involvement, high involvement
Attitudes Positive attitude, negative attitude
PSYCHOGRAPHIC
Lifestyle Status seekers, conformists, couch potatoes, economy minded
SOCIOCULTURAL
Cultures Northerners, South Indians, East Indians, North Easterners
Religion Christians: Catholics, Protestants; Hindus, Jews, Muslims, Boris
Sub-cultures North Easterners, Dalits, OBC’s, Hispanics, Afro Americans, Asians,
Caucasians, Anglo Saxons
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BASES
USE RELATED SEGMENTS

Usage Rate Heavy Users, Moderate Users, Light Users, Non Users
Awareness Status Unaware, aware, interested, enthusiastics
Brand Loyalty None, Some, Strong
USE SITUATION
Time Morning, Night, Leisure, Work
Objective Personal, Gift, Snack, Fun, Achievement
Location Home, Work place, In store, Friends Home
Person Self, family members, boss, peers
BENEFIT Social acceptance, economy, lasting, value for money,
convenience
HYBRID SEGMENT
Demographic + Psychographic
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Market Segment Targeting
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Exercise / Group Work
Think of as many Segments you can for a product/service as

follows:
• A Construction Business
• A Laptop Manufacturer
• The P. R. Course at XIC
• An LCD Television Brand
• An Indian Fast food Brand
• A Travel & Tours Company
• A Luxury Sea Cruise
• The Palace on Wheels
• Hospitality (5 star hotels)
• Coaching classes for MBA colleges
• Gymnasium
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Think of 3 differentiators which have not been given before by

the manufacturers of these products but you believe they
would have immense value to consumers :
• A Television Set
• A Mouse (for a Computer)
• Tomato Ketchup
• Packaged Water
• Lip Gloss
• Motorcycle
• Condom
• Potato Chips
• Refrigerators
• Tube-light
• Wrist-Watches
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Innovators
High Resources
High Innovation
Principle Status Action

oriented oriented oriented
Thinkers Achievers Experimenters
Believers Strivers Makers
Low Resources
Low Innovation
Survivors
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The VALS Framework
Psychographic Segmentation:
The major tendencies of the four groups with higher resources
are:
 Innovators:
Successful, sophisticated, active, ‘take-charge’ people with high
self-esteem. Purchases often reflect cultivated tastes for relatively
upscale, niche-oriented products and services
 Thinkers:
Mature, satisfied, and reflective people who are motivated by
ideals and value order, knowledge, and responsibility. Favor
durability, functionality, and value in products
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The VALS Framework
 Achievers:
Successful, goal-oriented people who focus on career and family.
They favor premium products that demonstrate success to their
peers
 Experimenters:
Young, enthusiastic, impulsive people who seek variety and
excitement. Spend a comparatively high proportion of income on
fashion, entertainment, and socializing
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The VALS Framework
The major tendencies of the four groups with lower resources are:
 Believers:
Conservative, conventional, and traditional people with concrete
beliefs. They favor familiar products, and are loyal to the
established brands
 Strivers:
Trendy and fun loving who are resource constrained. They favor
stylish products that emulate the purchases of those with greater
material wealth
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The VALS Framework
 Makers:
Practical, down to earth, self-sufficient people who like to work
with their hands. They favor products with a practical or functional
purpose
 Survivors:
Elderly, passive people who are concerned about change. They are
loyal to their favorite brands
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Market Targeting
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Market Targeting
Once we have identified market-segment opportunities, we

have to decide on which ones to target
Marketers are increasingly combining variables in an effort

to identify smaller, better-defined target groups
Marketers need to use relevant variables to segment a

market. Sometimes one variable is relevant, but another
may not be. Else a combination of variables may be
required to target customers effectively
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Market Targeting
One the firm has identified its market-segment opportunities, it

has to decide how many and which ones to target
To be useful, market segments must rate favorably on 5 key
criteria:
Measurable
The size, purchasing power and characteristics of the segments
can be measured
Substantial
The segment should be large and profitable enough to serve
Accessible
The segments can be effectively reached and served
Differentiable
The segments are conceptually distinguishable and respond
differently to different marketing-mix elements and programs
Actionable
Effective programs can be formulated for attracting and serving
the segments
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7.Steps in the Step 7 Marketing-Mix Strategy
Segmentation
Process
Step 6 Segment ‘Acid Test’
Step 5
Segment Positioning
Step 4
Segment Profitability
Step 3
Segment Attractiveness
Step 2 Segment Identification
Step 1 Needs-based Segmentation
Source: Adapted from Robert Best, Market-Based Management
70
Steps in the Segmentation Process
Needs based Segmentation: Group customers into segments based

on similar needs and benefits sought out by customers in solving a
particular consumption problem
Segment identification: For each needs-based segment, determine
which demographics, lifestyles, and usage behaviors ,make the
segment distinct and identifiable (actionable)
Segment Attractiveness: Using predetermined segment
attractiveness criteria (such as market growth, competition intensity,
etc), determine the overall attractiveness of each segment
Segment Profitability: Determine segment profitability
Segment Positioning: Create a value proposition and a product-price
positioning strategy for each segment based on that segments
unique customer needs and characteristics
Segment Acid Test: Create segment storyboards to test the
attractiveness of each segment’s positioning strategy
Marketing Mix Strategy: Expand segment positioning strategy to
include all aspects of the marketing-mix: product, price, promotion
and place
Source: Adapted from Robert Best, Market-Based Management
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5-Patterns of Target Market Selection
M1 M2 M3 M1 M2 M3 M1 M2 M3
P1 P1 P1
P2 P2 P2
P3 P3 P3
Single-segment Selective Product

concentration specialization specialization
M1 M2 M3 M1 M2 M3
P1 P1
P – Product
P2 P2
M - Market
P3 P3
Market Full market

specialization coverage
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Evaluating and Selecting the Market Segments
The firm looks at two factors: The segments overall attractiveness

and the company’s objectives and resources
Does the segment have overall attractiveness, such as size,
growth, profitability, scale economies, etc
Does investing in the segment make sense as the company has
limited resources and has to choose their business segment?
After evaluating different segments, the company can consider 5

patterns of target market selection:
Single-segment Concentration:
The firm enjoys operating economies through specializing its
production, distribution, and promotion. If it captures segment
leadership, the firm can earn a high return on its investment
The risks are that a particular market segment can turn sour or a
competitor may invade the segment
Companies can try to operate in a supersegment rather than in a
single segment. A supersegment is a set of segments sharing some
exploitable similarity
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5-Patterns of Target Market Selection
M1 M2 M3 M1 M2 M3 M1 M2 M3
P1 P1 P1
P2 P2 P2
P3 P3 P3
Single-segment Selective Product

concentration specialization specialization
M1 M2 M3 M1 M2 M3
P1 P1
P – Product
P2 P2
M - Market
P3 P3
Market Full market

specialization coverage
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Segment by Segment Invasion Plans
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Segment-by-Segment Invasion Plan
Customer Group
Airlines Railroads Truckers
Large
computers
Product Variety
Midsize
computers
Personal
computers
Company A Company B Company C
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Updating Segmentation Schemes
Updating Segmentation Schemes:
Market segmentation must be done periodically because segments

change. One way to discover new segments is to investigate the
hierarchy of attributes consumers examine in choosing a brand if
they use phased decision strategies. This process is called market
partitioning
Companies must monitor potential shifts in consumers’ hierarchy of

attributes and adjust to changing priorities
Socially Responsible Market Targeting:
Marketing comes in for criticism when the market segments it targets

are vulnerable ones. Hence it is important for marketers to target the
interests of not only the company, but also that of the targeted
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Basis
• The Top 3 Realty Businesses in India, Kolkata,

Bangalore, Delhi, Mumbai, Hyderabad or Chennai
Research the different Retail Customer Segments possible, the

Segments they target and their Positioning
What is their Corporate Vision if any?
How have these Realtors specifically used P.R. in their

Communication
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Product Positioning
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Product Positioning
After segmenting and targeting its product, a company positions its

offering so that the target market recognizes the company’s distinctive
offering and image
Positioning is the act of designing the company’s offering and image to

occupy a distinctive place in the mind of the target market. The goal is to
embed the brand in the mind of consumers to maximize the potential
benefit to the firm
Positioning results in the creation of a customer-focused value

proposition
Ex:
• M & M’s Scorpio – “the luxury of a car and the thrill of a SUV”
• Indica – “More car per car”
• Domino’s Pizza - “A good hot pizza, delivered to your door within 30 minutes of
ordering, at a moderate price
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Product Positioning
Al Ries & Jack Trout coined the word POSITIONING:
Positioning starts with the product. A piece of merchandise, a

service, a company, an institution, or even a person….But
positioning is not what you do to a product. Positioning is what
you do to the mind of the prospect. That is, you position the
product in the mind of the prospect
Positioning as per all approaches requires that similarities and

differences between brands be defined and communicated.
Specifically, deciding on a positioning requires determining a
frame of reference by identifying the target market and the
competition, and identifying the ideal points-of-parity and the
points-of-difference brand associations
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Product Positioning
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Product Positioning
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Product Positioning
Points-of-Parity Versus Points-of-Difference:
To achieve a POP on a particular attribute or benefit, a sufficient number

of consumers must believe that the brand is “good enough” on that
dimension. There is a “zone” or a “range of tolerance or acceptance”
with POP. The brand does not have to be seen literally equal to
competitors, but consumers must feel that the brand does well enough
on that particular attribute or benefit
The key to positioning is not so much in achieving a POD but as in

achieving a POP
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Product Positioning
Points-of-Parity Versus Points-of-Difference:

Establishing CATEGORY MEMBERSHIP
Lakme is the leading brand of cosmetics

TCS is the leading software consulting firm
Raymond is a leading brand of men’s formal wear
These are examples of Category Membership. It is important that

consumers understand what the brand stands for, and not just what it is
Occasionally a company may try to straddle 2 frames of reference: e.g.

luxury and performance
“The Ultimate Driving Machine” slogan for BMW helped establish

leadership for both categories
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Product Positioning
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Product Positioning
Choosing Points-of-Parity and Points-of-Difference:
Points-of-parity are driven by the needs of category membership and the

necessity of negating competitors’ Point-of-differences
In choosing Point-of-differences, two important considerations are that
consumers find the POD desirable and that the firm has the capabilities to deliver
on the POD
3 key consumer desirability criteria for POD’S:

• Relevance: Westin Stamford Hotel & Thin crust Pizza
• Distinctiveness: Splenda sugar Versus Equal & Sweet n Low
• Believability: Chanel No 5’s association with haute couture
3 key consumer deliverability criteria for POD’S:
• Feasibility: Cadillac and its perception
• Communicability: Nivea Wrinkle Control Cream with Q10 enzyme
• Sustainability: Time based endurance: Gillette, Microsoft
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Product Positioning
Creating Points-of-Parity and Points-of-Difference:
Competitive brand positioning is that many of the attributes or benefits that make
up the Points-of-Parity and Points-of-Difference are negatively correlated. For
example, it may be difficult to position the brand as both ‘inexpensive’ and as ‘of
high quality’
Consumer generally want to maximize both attributes and benefits
The possible ways to do this are:

• Present Separately
Head & shoulders had 2 separate campaigns to drive dandruff removal and
appearance and beauty of hair
• Leverage Equity of another Entity
Most laptop manufacturers found co-op advertising with Intel for the ‘Intel
Inside’ campaign useful
• Redefine the Relationship
APPLE Computers “The Power to be Your Best” campaign
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Product Positioning
DIFFERENTIATION STRATEGIES:
 Product Differentiation
Basis could be a number of product or service dimensions: product form,
features, performance, conformance, durability, reliability, reparability, style and
design
Quality as a major product differentiator
 Personnel Differentiation
Singapore Airlines, IBM, McDonald’s, and several others train their people well
and build a personnel based service culture. Better trained personnel exhibit 6
characteristics: Competence, Courtesy, Credibility, Reliability, Responsiveness,
and Communication
 Channel Differentiation
Coverage, expertise, and performance
 Image Differentiation
Brand identity and Brand image
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The Brand
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BRAND - Evolution of the Concept
Brandr = “to burn”

-An Old Norse word
Brands were and still are means by which the owners of livestock
mark their animals to identify them
A Brand is a name, term, sign, symbol, logo or design, or a

combination of them, intended to identify the goods and services
of one seller or group of sellers and to differentiate them from
those of competition
-The American Marketing Association (AMA)
The above different components of a brand that identify and

differentiate it can be called brand elements
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Identifiable Brand Elements
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Identifiable Brand Elements: THE FORD FAMILY
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Identifiable Brand Elements: THE Cadbury FAMILY
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BRAND ELEMENTS
Brand Elements:
Different components of a brand that identify and
differentiate it
 Name
 Term
 Sign
 Symbol
 Logo
 Design
 Combination of them
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Brand Elements
Name
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Brand Elements
Term
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Brand Elements
Term
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Brand Elements
Sign
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Brand Elements
Symbol
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Brand Elements
Symbol
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Brand Elements
Symbol
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Brand Elements
Logo
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Brand Elements
Logo
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Brand Elements
Logo
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Brand Elements
Design
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Apple – Customer Engagement & Experience Program
The Apple Store – The Store that Never Sleeps
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BRAND ELEMENTS
Brand Name:
Google:
Chosen amongst 3000 choices
What is Google?: Googol is a trillion zeros after 1
Victor:
Chosen by TVS after search
Heralds a new product after Suzuki break up with TVS
The work of loads of user research
A super success
Pentium:
Branding of unseen technology
The 5th generation processor
The Campaign ‘Intel Inside’
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BRAND ELEMENTS
Brand Name:
So can we make rules for a Brand Name choice:

Of course we can……..so what would they be???
 Should be short
 Easy to pronounce
 Should be usable in a global context (cultural acceptance)
 Hence NO ill meanings in a foreign language
 Ideally should denote the usage or the category
 The URL with the same name should be available
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Brand Roles
A Brand plays several roles some of which are below:

To Consumers:
Identifying the source from where the product comes
Gives responsibility to the product maker
Reduces risk
Reduces time for market search for the product
Creates a bond with the maker of the product
Stand for several things
Signifies quality
To Manufacturers:
Identification for easy handling
Legal protection
Signal of quality level to satisfied customers
Endows unique associations
Creates competitive advantage
Source of financial returns
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Brand Leadership
Tellis and Golder’s factors for enduring brand leadership:
They identified 5 factors as the keys to enduring brand leadership:

Vision of the Mass Market
A clear vision and eye for market tastes that are more likely to build a
broad based sustainable customer base
Managerial Persistence
Backing is required on a continuous basis as breakthroughs in
market leadership come after long periods of time
Financial Commitment
Demands for research, development of the market and for
communication investments need financial commitment
Relentless Innovation
Changes in consumer taste require constant innovation
Asset Leverage
New category leadership emanates if related category leadership
exists
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Challenges to Brand builders
Brand builders encounter several challenges in the brand building

process:
• Savvy, demanding and well informed customers

• Complex Brand families and portfolios
• Maturing markets
• Increasing competition
• Differentiation challenges
• Brand loyalty shrinkage
• Private label growth
• Trade Power has increased tremendously
• Media fragmentation
• New media and communication options
• High launch or introduction costs
• Short term orientation on all quarters
• Increasing attrition of teams
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How Brand Communication Works
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How Brand Communication Works
4. Noise
Physical and Psychological Distraction
3. Communication
1.Source 2. Message 5. Receiver
Chanel
(Encoding) Brand Messages (Decoding)
Media, TV, Radio,
Company Brand Ads, PR Releases, Customer,
Newspapers,
Agency Coupons, Signage Prospects
Magazines, Internet,
Customer Service Other Stakeholders
Mail, Phone
6. Feedback Interactivity
• Immediate Response
• Delayed Response
• No Response
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Customer Initiated Brand Communication
Customer Initiated IMC Message
Busy signal, company delays,

incomplete info
(Noise)
800 number, letter,

Question, E-mail,
Customer or
Complaint, salesperson, Company
other stakeholder
Compliment Customer service,
Internet (Receiver)
(Source)
(Message)
(Channel)
4 R’s
(Responsiveness, recourse,
recognition, respect)
(Feedback)
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Consumer-Based Brand Equity
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Customer Based Brand Equity
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Building a Strong Brand
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Consumer Based Brand Equity Pyramid
4. Relationships
What about you and me?
Resonance
3. Response
What about you?
Judgements Feelings
2. Meaning
Performance Imagery What are you?
1. Identity
Salience Who are you?
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Sub-dimensions of Brand Building Blocks
Loyalty
Attachment
Community
Engagement
Warmth
Quality Fun
Credibility Excitement
Consideration Security
Superiority Social Approval
Self-respect
Primary Characteristics and

Secondary Features User Profiles
Product Reliability, Durability Purchase and Usage situations
And Serviceability Personality and Values
Service Effectiveness, Efficiency History, heritage, and experiences
and Empathy
Style and Design
Price
Category Identification
Needs Satisfied
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Sub-dimensions of Brand Building Blocks
Resonance
Loyalty
Attachment
Community
Engagement
Feelings
Judgment Warmth
Fun
Quality Excitement
Credibility Security
Consideration Social Approval
Superiority Self-respect
Performance Imagery
Primary Characteristics and
Secondary Features
Product Reliability, Durability User Profiles
And Serviceability Purchase and Usage situations
Service Effectiveness, Efficiency Personality and Values
and Empathy; Style and Design History, heritage, and experiences
Price
Category Identification
Salience Needs Satisfied
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Brand Salience – Brand Awareness:
BRAND SALIENCE refers to the awareness of the brand.

How often and easily the brand is evoked under various situations and
circumstances
To what extent is the brand top-of-the mind and easily recalled or
recognized
BRAND AWARENESS refers to the customers ability to recall and recognize

the brand, as reflected by their ability to identify the brand under
different conditions
How well do the Brand elements serve the function of identifying the
product?
E.g.: McDonalds, GE, IBM, HUTCH, WIPRO
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Brand Awareness: Breadth & Depth
Brand awareness is characterized by breadth and depth
The DEPTH of awareness concerns the likelihood that a brand element

will come to mind and the ease with which it does so
E.g. a brand that can be easily recalled has a deeper level of awareness
than one that can only be recognized
The BREADTH of awareness concerns the range of purchase and usage

situations in which the brand element comes to mind
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Brand Performance
Brand Performance relates to the way in which the product or service

attempts to meet customers’ more functional needs
5 attributes and benefits for Brand Performance:
• Primary ingredients and supplementary benefits

• Product reliability, durability and serviceability
• Service effectiveness, efficiency, and empathy
• Style and design
• Price
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Brand Imagery
Brand Imagery deals with the extrinsic properties of the product or service,
including the ways in which the brand attempts to meet customers’
psychological or social needs
Imagery thus refers to Intangible aspects of the brand
4 categories of Intangibles linked or highlighted to the Brand are:

1.User Profiles
2. Purchase and usage situations
3. Personality and Values
4. History, heritage, and experiences
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Brand Resonance
Brand Resonance: The feeling of being In-sync with a Brand
4 categories of Brand Resonance:
• Behavioral loyalty
• Attitudinal attachment
• Sense of community
• Active engagement
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Brand Judgements
Brand Judgements focus on customers’ personal opinions and

evaluations with regards to the Brand.
4 important and relevant Brand Judgements:
• Brand Quality
• Brand Credibility
• Brand Consideration &
• Brand Superiority
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Brand Feelings
Brand Feelings
6 important types of Brand building feelings:
1. Warmth
2. Excitement
3. Fun
4. Security
5. Social approval
6. Self respect
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Brand Resonance
Brand Resonance: The feeling of being In-sync with a
Brand
4 categories of Brand Resonance:

• Behavioral loyalty
• Attitudinal attachment
• Sense of community
• Active engagement
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Brand Equity – David Aaker’s Version
Brand Equity includes 5 Categories:

Brand Loyalty
This is the strongest measure of a Brands Value is its Brand Loyalty. The
strongest form of loyalty is attachment. This level of loyalty insulates a brand from
competitive pressures such as advertising and price promotion and leads to
higher profits and margins
Brand Awareness
In its simplest form brand equity brings familiarity to a customer. A familiar brand
gives a customer a feeling of confidence, which makes the brand be considered
and chosen
Perceived Quality
A known brand conveys an aura of quality. A quality association can be of a
general halo type or can also be an attribute or category specific. A brand often
has strong price associations that influence quality perceptions
Brand associations
Subjective and emotional associations are also an important part of brand value
Other Brand Assets
Assets such as patents and trademarks, are valuable but are tied to the physical
product more than the brand
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Reduced Marketing Costs
BRAND EQUITY Trade leverage
Attracting new Customers
Provides value to
the customer by
Time to respond to Enhancing
Brand Loyalty competitive threats customer’s:
-Interpretation/
Anchor to which other Processing of
associations can be attached Information
Brand Familiarity-liking -Confidence in the
Awareness Signal of substance/ purchase decision
Commitment -Use satisfaction
Brand to be considered
Brand
Equity
Perceived Reason-to-buy
Provides value to
quality Differentiate/position
the firm by
Price
Enhancing:
Channel member interest
Extensions
-Efficiency and
Effectiveness of
Brand Help process/ retrieve Marketing programs
Associations Information -Brand loyalty
Reason-to-buy -Price/margins
Create positive attitude/ -Brand extensions
Feelings -Trade leverage
Extensions -Competitive
Other Proprietary advantage
Brand Assets
Competitive advantage
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BRAND SYSTEMS - Brand Strategy - Extension
Type Narrative Example

Line Extension Existing brand name, existing Kellogg’s variants
category, new size of flavor
Brand Same Brand Name extended to Bathing Soap to Other

Extension new product categories Toiletries
Multibrands New brand, same category LUX, Hamam, Dove,

Lifebuoy
New Brands New Brand name for a new Tata Motors & Westside
category Raheja Construction &
Shopper’s Stop
Co-brand Two or more brands getting Credit Cards, Pantaloon-
together for synergy Welingkar's tie-up
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Sales Promotion
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Sales Promotion today ……….
Sales promotion is no more a powerful marketing

tool, it’s an industry by itself
Sales Promotion is powerful enough to activate

customers
Promotional annual spends:

India: > Rs. 5000 crores
Internationally (U.S.A.): Supports Sales of
US$ 100 billion
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Sales Promotion defined ……….
Sales Promotion has been defined as a

direct inducement that offers an extra value
or incentive for the product to the sales force,
distributors, or the ultimate consumer with
the primary objective of creating an
immediate sale
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Sales Promotion increased because of ……
• The growing power of Retailers

• Declining Brand Loyalty
• Increased Promotional Sensitivity
• Brand Proliferation
• Short term focus
• Increased accountability
• Competition
• Media Clutter
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Why is Promotion Strategic today ……..
Marketing: Shift from ADVERTISING to RETAIL
Stock market: Short term over Long term effects
Customers: More sophisticated about Marketing
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Types of Sales Promotion activities
CONSUMER ORIENTED PROMOTIONS TRADE-ORIENTED PROMOTIONS

• Sampling
• Coupons • Contest and dealer incentives
• Premiums • Trade allowances
• Contests/sweepstakes • Point-of-purchase displays
• Refunds/ rebates • Training programs
• Bonus packs • Trade shows
• Price-offs • Cooperative advertising
• Frequency Programs
• Event Marketing
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CONSUMER ORIENTED PROMOTIONS

• Sampling
Door-to-door sampling when it is important to control where the
sample has to be delivered
Sampling through mail can be targeted to specific market areas
In-store sampling for sample direct to shopper control
On-package sampling to ensure it reaches the consumer. However
reaches only consumers who buy
Event based sampling: very popular
Low price market strategies today force manufacturers to go away
from sampling as sampling is expensive
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• Coupons
First done in 1895 when C. W. Post Co started using penny-off coupons to
sell its new Grape-Nuts cereal
Advantages:
Price reduction only to consumers who are price sensitive
Second to sampling to generate trial
Coupons encourage repurchase after first trial
Coupons encourage non-users to try and encourage repeat purchase
amongst users
Disadvantages:
Difficult to estimate how many consumers will use the coupon and when
Response to a coupon is rarely immediate
Difficult to restrict users of the brand from couponing
Low redemption rates and high costs
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• Coupons - continued
FSI = Free standing inserts
Newspapers and magazines used for printed coupons or now for FSI
Bounce-back coupon: Placed inside a package
Cross-ruff coupon: Redeemable on purchase of a cross (different) product
Instant coupon: Attached to pack and can be torn off and used right
away
In-store couponing: Given in the retail environment
• Premiums
A premium is an offer of an item or merchandise or service either free or at a low
price that is an extra incentive for purchasers
Free Premiums: Small gifts or merchandise included in the product or pack
High impulse values and can provide an extra incentive to buy the product
Cost is key and sometimes extra/special packaging is required
Mail-in premium: consumer required to mail in the proof of purchase
Self liquidating premiums: Requires the consumer to pay some or all of the cost of the
premium plus handling and mailing costs. Generally give a low redemption rate
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• Contests/sweepstakes
Contest: Consumers compete for prizes or money on the basis of skill or ability
Sweepstake: Winners win by pure chance. No proof of purchase ever required
Sweepstakes are more popular than contests as no skill is require for
participation
A drawback is that there are professionals or hobbyists who participate or send
in multi entries
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• Refunds/rebates
Offers by the manufacturer to return a portion of the product purchase
price after the consumer supplies some proof of purchase
Consumers responsive to this method as the size of savings increases
Refund offers encourage repeat purchase, encourage brand switching
and are very popular for consumer durables. Also for categories like
cameras, sporting goods, appliances, television sets, computers and
cars
• Bonus packs
These packs offer an extra amount of the product at the regular price by
providing larger containers or extra units. They result in a lower cost
per unit for the consumer and provide extra value without having to get
involved with complicated coupons or refund offers
The additional value is obvious to the consumer and can have a strong
impact on the purchase decision at the time of purchase
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• Price-offs
Easiest, simplest, reduces the price of the product by discounting the price
by some %
Needs to be marked or printed on the pack
The discount always reaches the consumer and cannot be misused by
trade
These cause issues of different price stocks at Retail level
• Frequency programs
The fastest growing area of sales promotions: Also referred to as
continuity or loyalty programs
Frequency programs allow the manufacturer to maintain databases and
market to consumers
They require careful management and implementation
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• Event Marketing
Event Marketing is a type of promotion where a company or brand is linked
to an event or where a themed activity is developed for the purpose of
creating experiences for consumers and promoting a product or service
(An Event Sponsorship is an integrated marketing communications activity
where a company develops actual sponsorship relations with a particular
event and provides financial support in return for the right to display a
brand name, logo, or advertising message and can be identified as a
supporter of the event
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TRADE ORIENTED PROMOTIONS
• Contests and dealer incentives

Special incentives programs to stimulate greater selling effort and
support from reseller management or sales personnel. The programs or
contests can be directed toward managers who work for a wholesaler
or distributor as well as towards store or department managers at the
retail level
• Trade allowances
A trade allowance is a discount or deal offered to retailers or
wholesalers to encourage them to stock, promote, or display the
marketer’s products. Types of trade allowances offered to retailers
include buying allowances, promotional or display allowances, and
slotting allowances
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• Point-of-purchase displays
These are promotional materials used to display and sell products. These are
in the form of shelf strips, banners, posters, dispensers, shelf cards, stand-up-
racks and others
Marketer’s also use the concept to use shelf space more efficiently through a
Planogram
• Sales Training programs

This sort of a program acts as a motivator and can be used to reward the best
performing personnel or then to simply upgrade the skills of employees.
Product and sales training are provided and in several times at tourist holiday
locations. Further in such programs the concept of reward for past
performance and the creation of coveted performance Clubs are also
sometimes done to create further aura around such a program
The Value of training is even more important where the ticket price is high for a
product and personal selling skills come into play
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• Trade Shows
The trade show is a forum where marketers / manufacturers display
their products to current as well as prospective buyers. Trade shows
are a major opportunity to display one’s product lines and interact with
customers
• Cooperative advertising
Horizontal cooperative advertising
Ingredient-sponsored cooperative advertising
Vertical cooperative advertising
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Marketing Objectives of
Consumer Oriented Sales Promotions
1. Obtaining trial
2. Obtaining Repurchase
3. Increasing consumption of an
established Brand
4. Defending Current Customers
5. Targeting a specific market segment
6. Enhancing Integrated Marketing
Communications
7. Building Strong Brand Equity
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Marketing Objectives of
Trade Oriented Sales Promotions
1. Obtain distribution for New Products

2. Maintain Trade support for established
Brands
3. Encourage Retailers to display
established Brands
4. Build Retail Inventories
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Field Implementation Uses of Sales Promotion
1. Reach new Users

2. Introduce new product
3. Demonstrate product improvement
4. Open new markets
5. Produce trial
6. Convert triers to regular users
7. Reach large numbers of prospects
economically
8. Trade regular users up to larger sizes
9. Hold current users
10.Load current users
11.Get off-shelf display
12.Reward, load current users
13.Give consumer immediate reason to purchase
14.Add perceived value
15.Load Dealers
16.Extend ad image
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Field Implementation Uses of Sales Promotion
17. Stimulate multiple purchase

18. Sample or coupon
19. Reinforce advertising
20. Increase ad readership (upto 50% increase)
21. Build traffic
22. “Force” purchase
23. Stimulate repeat purchase
24. Create distinction in parity products
25. Create brand loyalty
26. Generate goodwill
27. Encourage price, ad features
28. Get in-store demonstrations
29. Get in-store couponing
30. Gain Facings
31. Enhance brand image
32. Flanking competition
33. Stock clearance
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Exciting Indian Promotions
• Chiclets Cricketers Promotion

Wrappers with the India 11: autographed Bat
and Book with Cricket team members
• Indian Airlines: 7 tickets to freedom
7 Boarding Passes: 1 International ticket
10 Boarding Passes:2 International tickets
• Reliance Dhamaka
Mobile Connectivity for Rs. 500
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Planning a Sales Promotion
1. Narration of Product / Market

2. Objective/s of Promotion
3. Basic Idea / Theme
4. Strategy
5. Budget
6. Results
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Design a Promotion based on the following Themes:

• New Product Launch
• Entry into a market where competitor is well entrenched
• Re-launch of a product
• Launching a very aggressive promotion
• A festival based Sales promotion
• A territory where new Distribution is created for the first
time
Domains / Industries:
Print OR Audio-visual Media Company
Travel and Tourism
A Furniture Showroom / Chain
Automobile Dealership
Jewelry Showroom (Manufacturer)
Grade 1 Restaurant
5 Star Hotel
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Marketing of Services
Introduction To Service Marketing
• Services are deeds, processes and performance

• Intangible, but may have a tangible component
• Generally produced and consumed at the same
time
• Need to distinguish between SERVICE and
CUSTOMER SERVICE
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Challenges for Services
• Defining and improving quality

• Communicating and testing new services
• Communicating and maintaining a consistent image
• Motivating and sustaining employee commitment
• Coordinating marketing, operations and human
resource efforts
• Setting prices
• Standardization versus personalization
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Examples of Service Industries
• Health Care
• hospital, medical practice, dentistry, eye care
• Professional Services
• accounting, legal, architectural
• Financial Services
• banking, investment advising, insurance
• Hospitality
• restaurant, hotel/motel, bed & breakfast,
• ski resort, rafting
• Travel
• airlines, travel agencies, theme park
• Others:
• hair styling, pest control, plumbing, lawn maintenance,
counseling services, health club
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Tangibility Spectrum
Salt

Soft Drinks
 Detergents
 Automobiles
 Cosmetics
 Fast-food
Outlets
 Intangible
Dominant

Tangible
Fast-food 
Dominant Outlets 
Advertising
Agencies 
Airlines
Investment 
Management 
Consulting
Teaching170
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Differences Between Goods and Services
Intangibility Heterogeneity
Simultaneous
Production Perishability
and
Consumption
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Implications of Intangibility
• Services cannot be inventoried

• Services cannot be patented
• Services cannot be readily displayed or communicated
• Pricing is difficult
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Implications of Heterogeneity
• Service delivery and customer satisfaction

depend on employee actions
• Service quality depends on many uncontrollable
factors
• There is no sure knowledge that the service
delivered matches what was planned and
promoted
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Implications of Simultaneous Production and Consumption
• Customers participate in and affect the transaction

• Customers affect each other
• Employees affect the service outcome
• Decentralization may be essential
• Mass production is difficult
Rajeev Chawla 174

Implications of Perishability
• It is difficult to synchronize supply and demand with services

• Services cannot be returned or resold
Rajeev Chawla 175

The Services Marketing Triangle
Company
(Management)
Internal External
Marketing Marketing
“enabling the “setting the
promise” promise”
Employees Interactive Marketing Customers

“delivering the promise”
Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler
Rajeev Chawla 176
Ways to Use the
Services Marketing Triangle
Overall Strategic Assessment Specific Service Implementation
• How is the service • What is being promoted and

organization doing on all by whom?
three sides of the • How will it be delivered and
triangle? by whom?
• Where are the • Are the supporting systems
weaknesses? in place to deliver the
promised service
• What are the strengths?
Rajeev Chawla 177

The Service Profit Chain
Employee Satisfaction Customer Satisfaction Profits
Source: An exhibit from J. L. Heskett, T. O. Jones, W. E. Sasser, Jr., and L. A. Schlesinger,

“Putting the Service-Profit Chain to Work,” Harvard Business Review, March-April 1994, p. 166.
Rajeev Chawla 178

Service Employees
• They are the service

• They are the organization in the customer’s eyes
• They are the brand
• They are marketers
• Their importance is evident in:
 The Services Marketing Mix (People)
 The Service-Profit Chain
 The Services Triangle
Rajeev Chawla 179

Service Employees
• Who are they?

 “boundary spanners”
• What are these jobs like?
 emotional labor
 many sources of potential conflict
 person/role
 organization/client
 interclient
 quality/productivity
Rajeev Chawla 180

Boundary Spanners Interact with Both Internal and External Constituents
External Environment
Internal Environment
Rajeev Chawla 181

Sources of Conflict for Boundary-Spanning Workers
• Person vs. Role
• Organization vs. Client
• Client vs. Client
• Quality vs. Productivity
Rajeev Chawla 182

Empowerment
• Benefits: • Drawbacks:
 quicker responses  greater investments in selection
 employees feel more and training
responsible  higher labor costs
 employees tend to interact with  slower and/or inconsistent
warmth/enthusiasm delivery
 empowered employees are a  may violate customer
great source of ideas perceptions of fair play
 positive word-of-mouth from  “giving away the store” (making
customers bad decisions)
Rajeev Chawla 183

Service Culture
“A culture where an appreciation for good service

exists, and where giving good service to internal as
well as ultimate, external customers, is considered a
natural way of life and one of the most important
norms by everyone in the organization.”
Rajeev Chawla 184

The Services Triangle and Technology
Company
Technology
Providers Customers
Source: Adapted from A. Parasuraman
Rajeev Chawla 185

Services Marketing Mix: 7 Ps for Services
• Traditional Marketing Mix

• Expanded Mix for Services: 7 Ps
• Building Customer Relationships Through People,
Processes, and Physical Evidence
• Ways to Use the 7 Ps
Rajeev Chawla 186

Traditional Marketing Mix
• All elements within the control of the firm that

communicate the firm’s capabilities and image to
customers or that influence customer satisfaction with the
firm’s product and services:
 Product
 Price
 Place
 Promotion
Rajeev Chawla 187

Expanded Mix for Services --the 7 Ps
• Product
• Price
• Place
• Promotion
• People
• Process
• Physical Evidence
Rajeev Chawla 188

Expanded Marketing Mix for Services
PRODUCT PLACE PROMOTION PRICE

Physical good Channel type Promotion Flexibility
features blend
Quality level Exposure Salespeople Price level

Accessories Intermediaries Advertising Terms
Packaging Outlet location Sales Differentiation
promotion
Warranties Transportation Publicity Allowances
Product lines Storage
Branding
Cont’d
Rajeev Chawla 189
Expanded Marketing Mix for Services
PEOPLE PHYSICAL PROCESS

EVIDENCE
Employees Facility design Flow of activities
Customers Equipment Number of steps
Communicating Signage Level of customer

culture and values involvement
Employee research Employee dress
Other tangibles
Rajeev Chawla 190

Ways to Use the 7 Ps
Overall Strategic Assessment

 How effective is a firm’s services
marketing mix?
 Is the mix well-aligned with overall Specific Service Implementation
vision and strategy?  Who is the customer?
 What are the strengths and  What is the service?
weaknesses in terms of the 7 Ps?  How effectively does the services
marketing mix for a service
communicate its benefits and
quality?
 What changes or improvements are
needed?
Rajeev Chawla 191

Service-Quality Model
Word of mouth
Personal needs Past experience
communication
Expected service
GAP 5
Perceived service
Consumer
Marketer
Service delivery External
(including pre & post-contract) communication
GAP 4 to consumer
GAP 1 GAP 3
Translation of perceptions
into service-quality specification
GAP 2
Management perception of
consumer expectation 192
Rajeev Chawla
THE INTEGRATED GAPS MODEL OF SERVICE QUALITY
Rajeev Chawla 193

PROVIDER GAP 1: NOT KNOWING WHAT CUSTOMERS EXPECT
 The difference between customer

expectations of service and
company understanding of those
expectations
Inadequate market research orientation
 Insufficient marketing research
 Research not focused on service

quality
 Inadequate use of market research
Rajeev Chawla 194

PROVIDER GAP 1: NOT KNOWING WHAT CUSTOMERS EXPECT
Lack of upward communication

 Lack of interaction between
management and customers
 Insufficient communication
between contact employees and
managers
 Too many layers between
contact personnel and top
management
Insufficient relationship focus

 Lack of adequate market
segmentation
 Focus on transactions rather
than relationships
 Focus on new customers rather
than relationship customers
Rajeev Chawla 195

PROVIDER GAP 2: NOT SELECTING THE RIGHT SERVICE DESIGN AND STANDARDS
 A recurring theme in service

companies is the difficulty
experienced in translating
customers’ expectations in to
service quality specifications
Poor service design

 Unsystematic new service
development process
 Vague, undefined service
design
 Failure to connect service
design to service positioning
Rajeev Chawla 196

PROVIDER GAP 2: NOT SELECTING THE RIGHT SERVICE DESIGN AND STANDARDS
Absence of customer-defined
standards
 Lack of customer-defined
service standards
 Absence of process
management to focus on
customer requirements
 Absence of formal process for
setting service quality goals
 Inappropriate physical evidence

and service-scope
Rajeev Chawla 197

PROVIDER GAP 3:NOT DELIVERING TO SERVICE STANDARDS
 The discrepancy between

development of customer
driven service standards and
actual service performance by
company employees
 Deficiencies in human
resource policies
 Ineffective recruitment
 Role ambiguity and role
conflict
 Poor employee-technology job
fit
 Inappropriate evaluation and
compensation systems
 Lack of empowerment,
perceived control and
teamwork
Rajeev Chawla 198

PROVIDER GAP 3: NOT DELIVERING TO SERVICE STANDARDS
 The discrepancy between

development of customer driven
service standards and actual
service performance by company
employees.
 Failure to match supply and
demand
 Failure to smooth peaks and
valleys of demand
 Inappropriate customer mix
 Over reliance on price to smooth
demand
 Problems with service
intermediaries
 Channel conflict over objectives
& performance
 Channel conflict over costs and
rewards
 Difficulty controlling quality and
consistency
 Tension between empowerment
and control
Rajeev Chawla 199

PROVIDER GAP 4: NOT MATCHING PERFORMANCE TO PROMISES
 The difference between service

delivery and the service provider’s
external communications
Lack of integrated marketing

communications
 Tendency to view external
communications as independent.
 Not including interactive marketing
in communication plan.
 Absence of a strong internal
marketing program.
Ineffective management of customer

expectations
 Not managing customer
expectations through all forms of
communication.
 Not adequately educating the
customer
Rajeev Chawla 200

PROVIDER GAP 4: NOT MATCHING PERFORMANCE TO PROMISES
 The difference between service

delivery and the service provider’s
external communications.
 Over promising
 Over promising in advertising
 Over promising in personal selling
 Over promising through physical
evidence cues
 Inadequate horizontal communications
 Insufficient communication between
sales and operations.
 Insufficient communication between
advertising and operations.
 Differences in policies and procedures
across branches and units.
Rajeev Chawla 201

Human Resource Strategies for Closing GAP 3
Hire for
r Service
fo Competencies B
Pr e t
e
t t
pe e s and Service E m e f e he
m B le pl rred
Co the op Inclination oy
Pe er
Str ard nd
Te Inte kills
Tr nica tive
Re ure a
ch rac
ai n l
Hire the
Pe ervi g
ers
fo and
Right People
rfo ce
n
w
as
S
o
r
rm
Me
S
Develop
Employees
Customer-
Empower
Employees
Customers
Retain the People to

Oriented
Treat
Best Deliver
as
Service Service
People Delivery
Quality
Em th any’
wo e
rk
Inc ee
am ot
Provide
plo e
Te rom
Co Visio
lud s in
Needed Support
y
mp n
P
e
Systems
De
Se v el o
s
re
or rvic p a su al
i
Int ente -
e
Provide Me tern e
Pr ern d In rvic y
oc Supportive Se alit
e s al
se
s Technology Qu
and
Equipment
Rajeev Chawla 202

Tools for Strategic Marketing: Value Chain Analysis & The BCG Matrix
Growth Opportunity: Assessing and Planning
Desired Sales
Diversification Growth
Strategic
Planning
Integrative Growth Gap
Sales (Value)
Intensive Growth
Current Portfolio
Time (years)
Rajeev Chawla 204

The Value Chain – Michael Porter
Rajeev Chawla 205

• The firm should estimate its competitors costs and performance as

benchmarks against its own costs and performance
• The firm should further study the ‘best of class’ practices of the
world’s best companies
• The firm’s success not only depends on how well each department
performs it’s work, but also on how well the various departmental
activities are coordinated to conduct core business processes
• These core business processes include:
 The market sensing process
 The new offering realization process
 The customer acquisition process
 The customer relationship management process
 The fulfillment management process
Rajeev Chawla 206

The Generic Value Chain – Michael Porter
The Generic Value Chain
Firm Infrastructure
Human resource management

SUPPORT Margin
ACTIVITIES
Technology development
Procurement
Inbound Outbound Marketing Service

Operations Margin
Logistics Logistics and Sales
PRIMARY ACTIVITIES
Rajeev Chawla 207

Porter has identified 10 Drivers for Cost reduction:
• Economies of Scale
• Learning
• Capacity Utilization
• Linkages between activities
• Interrelationships with suppliers and buyers
• Degree of Vertical Integration
• Timing of Market Entry
• Generic Strategy
• Geographical location
• Institutional factors
Rajeev Chawla 208

The Boston Consulting Group approach
THE GROWTH-SHARE MATRIX

(The Brand Portfolio Matrix)
20%
Stars Question Marks
4
1
15% 3
Market Growth rate
10%
Cash Cow Dogs
5% 7
6
0
10x 5x 1x .5x .2x .1x
Relative Market Share
Rajeev Chawla 209


Question Mark:
Businesses that operate in high-growth markets but have low
relative market shares. A question mark requires a lot of cash
because the company has to spend money on plant, equipment,
and personnel to keep up with the fast growing market, and
because it wants to overtake the market leader. The company has
to think hard about whether to keep pouring money into this
business.
Stars:
These are the market leaders in a high-growth market. A Star does
not necessarily produce a positive cash flow for the company. The
company must spend substantial funds to keep up with the high
market growth, and to fight off competitors’ attacks
Rajeev Chawla 210


Cash Cows:
Stars with a falling growth rate that still have the largest relative market share and
produce a lot of cash for the company. The Company does not have to finance
expansion because the market’s growth rate has slowed. Because the business is
the market leader, it enjoys economies of scale and higher profit margins. The
company uses its cash cows to pay bills and support other businesses. A
company having only one cash cow is highly vulnerable. If this cash cow starts
losing relative market share, then the company will have to pump money back
into it to maintain market leadership
Dogs:
Businesses that have weak market shares in low-growth markets. A company
cannot afford to have more than one dog as it eats into its resources and
profitability. The company should consider whether it is holding on to these
‘dogs’ for good reasons (maybe an expected turnaround in the market growth rate
or a new chance at market leadership; or an expected shortage for some period of
some raw material it possesses to make such a product, etc)
Rajeev Chawla 211

Rajeev Chawla
•Consultant-Marketing and General Management

•Corporate trainer
•Educationist
rajeevchawlas@hotmail.com
rajeevchawlas@gmail.com
Mobile: 93205-20203
Rajeev Chawla
212
Individual Assignment:
XIC Web-Site: Marketing through Web-Sites
After going through the Web-Site of XIC, suggest 3 changes to be

incorporated in the Web-Site which can impact the Marketing of XIC or
the Programs better
Explain why are you suggesting these changes
All Physical copies to be handed over to the CR by Wednesday 21 st July,

2010 before the first lecture of the day
Rajeev Chawla 213

Group Assignment: Groups of 4: 1 – 4; 5 – 8; Last 2 groups of 5

each
Select any Industry: Service or Product

Define it hypothetically for us
Now choose a Brand Name for a new Venture you are starting
Can you give us rules for choosing a brand name
All Electronic copies to be handed over to the CR by

Wednesday 21st July, 2010 before the first lecture of the day
File Name: Roll No: Name Surname BN.doc or ppt
Rajeev Chawla 214

Marketing: Stimuli and Strokes
Products: Retail:
 Bathing Soap  Super Market
 Health Beverages  Mall
 Apparel for Women  Grocery Store
 Mobile Phones  Chemist
 Chocolate
 Wedding Jewelery Retail:
 Passenger Automobiles  Departmental Store
 Stationary  Exclusive Store
 Biscuits
Rajeev Chawla 215

Multi-level Marketing
Rajeev Chawla 216

Multi-level Marketing:
• Multi-level Marketing is also called Network Marketing

• Noteworthy companies who practice this Marketing are: Herbal Life, Avon
Cosmetics, Amway, Tupperware, Japan Life, etc
• Companies dispense with the Distributor and high Advertising or
Communication costs
• The Premise to this Marketing is that ‘The Consumer/Customer is also the
Distributor’
• In this method you develop your network of Distributors who are also
Consumers to the products as individuals or families
• The success of this Marketing for both the principal company and the
customer lies in ensuring that each channel member is monitored every
single purchase cycle to ensure purchase
Rajeev Chawla 217

B1 B5
B2 B3 B4
Up lines
C1 C5
C2 C3 C4
D1 D5
D2 D3 D4
Down lines
E1 E5
E2 E3 E4
Rajeev Chawla 218

Channel Structures
(Consumer Products - FMCG)
Brand Owner / Manufacturer
Wholesaler Stockist Stockist
Semi-Wholesaler Wholesaler
Large Retailer Retailer Retailer Retailer

(Modern Trade)
Household Consumers
Rajeev Chawla 219

Channel Structures
(Consumer Products – Consumer Durables)
Dealer Dealer
Sub-Dealer
Household Consumers
Rajeev Chawla 220

Channel Structures
(Industrial Products)
Manufacturer
Agent or Broker Agent or Broker
Industrial Industrial
Distributor Distributor
Business Customers
Rajeev Chawla 221

Place - Distribution
Rajeev Chawla 222

Place - Distribution
Channels of Distribution:
Marketing Channel OR Trade Channel OR Distribution Channel
Intermediaries who stand between producers of goods and services

and the consumer are called Marketing or Distribution Channels
The functions of a Distribution Channel are:

• Be the conduit between producers and the consumer
• Develop a market understanding through information about
customers
• Keep track of competitors for the producer and give feedback
regularly of competition moves
• Do local promotions to persuade and stimulate purchasing
• Ensure finance availability to stock goods
• Place orders and stock goods from the manufacturers
• Ensure storage for the stocks
• Ensure distribution
Rajeev Chawla 223
Channel Structure Strategy
• Distribution strategies are concerned with channel strategies
• Channels are organized structures of buyers and sellers who

bridge the gap of time and space between the manufacturer
and the customer
• Channel structure refers to intermediaries that may be

employed in moving goods from manufacturers to
customers
• Direct distribution strategy is to distribute the goods to

customers and retailers directly from the company without
involving any intermediaries
• Indirect distribution means the presence of one or more

intermediaries such as wholesalers or agents
Rajeev Chawla 224

Channel Design Strategy Decisions
• Analyzing Customer Needs and Wants:

• Lot Size
• Waiting and delivery time
• Spatial Convenience
• Product Variety
• Service Back-up
• Establishing Objectives and Constraints
• Identifying Major Channel Alternatives

• Types of Intermediaries
• Number of Intermediaries
• Terms and Responsibilities of Channel Members
• Evaluating Major Channel Alternatives

• Economic Criteria
• Control and Adaptive Criteria
Rajeev Chawla 225

Channel Structures
(Consumer Products - FMCG)
Wholesaler Stockist Stockist
Semi-Wholesaler Wholesaler
Large Retailer Retailer Retailer Retailer

(Modern Trade)
Household Consumers
Rajeev Chawla 226

Channel Structures
(Consumer Products – Consumer Durables)
Dealer Dealer
Sub-Dealer
Household Consumers
Rajeev Chawla 227

Channel Structures
(Industrial Products)
Manufacturer
Agent or Broker Agent or Broker
Industrial Industrial
Distributor Distributor
Business Customers
Rajeev Chawla 228

Multi-level Marketing OR Network Marketing
B1 B5
B2 B3 B4
Up lines
C1 C5
C2 C3 C4
D1 D5
D2 D3 D4
Down lines
E1 E5
E2 E3 E4
229 Rajeev Chawla

Budgeting & Budgets
Rajeev Chawla 230

Budgets
Budget:
A budget is a financial plan for a defined period of time, usually
a year. It may also include planned sales volumes and revenues,
resource quantities, costs and expenses, assets, liabilities and
cash flows
5 Types of Budgets:
1. Master Budget:
A master budget is an aggregate of a company's individual
budgets designed to present a complete picture of its financial
activity and health. The master budget combines factors like
sales, operating expenses, assets, and income streams to allow
companies to establish goals and evaluate their overall
performance, as well as that of individual cost centers within the
organization. Master budgets are often used in larger companies
to keep all individual managers aligned
Rajeev Chawla 231

Budgets
5 Types of Budgets:
2. An Operating Budget:
An operating budget is a forecast and analysis of projected
income and expenses over the course of a specified time
period. To create an accurate picture, operating budgets
must account for factors such as sales, production, labor
costs, materials costs, overhead, manufacturing costs, and
administrative expenses. Operating budgets are generally
created on a weekly, monthly, or yearly basis. A manager
might compare these reports month after month to see if a
company is overspending on supplies
Rajeev Chawla 232

Budgets
5 Types of Budgets:
3. A Cash Flow Budget :

A cash flow budget is a means of projecting how and when
cash comes in and flows out of a business within a specified
time period. It can be useful in helping a company determine
whether it's managing its cash wisely. Cash flow budgets
consider factors such as accounts payable and accounts
receivable to assess whether a company has ample cash on
hand to continue operating, the extent to which it is using its
cash productively, and its likelihood of generating cash in
the near future. A construction company, for example, might
use its cash flow budget to determine whether it can start a
new building project before getting paid for the work it has in
progress.
Rajeev Chawla 233

Budgets
5 Types of Budgets:
4. Financial Budget:
A financial budget presents a company's strategy for
managing its assets, cash flow, income, and expenses. A
financial budget is used to establish a picture of a
company's financial health and present a comprehensive
overview of its spending relative to revenues from core
operations. A software company, for instance, might use its
financial budget to determine its value in the context of a
public stock offering or merger
Rajeev Chawla 234

Budgets
5 Types of Budgets:
5. Static Budget :
A static budget is a fixed budget that remains unaltered
regardless of changes in factors such as sales volume or
revenue. A plumbing supply company, for example, might
have a static budget in place each year for warehousing and
storage, regardless of how much inventory it moves in and
out due to increased or decreased sales
Rajeev Chawla 235

Budgets
Terms:
•Fixed Cost
•Variable Cost
•Profit & Loss Account
•Balance Sheet
•Cash Flow Statement
•Depreciation
•Sales quota
•Sales budget
Rajeev Chawla 236

The Management Module
Xavier Institute of Communications

The P.R. & Corporate Communication Batch
Rajeev Chawla 237

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The Management Module

The process of planning, organizing, staffing, leading and

Top 10 Management Challenges today:

Organizational structure consists of activities such as task allocation,

 In what area is India static today?

The Working Woman in her 50’s with grown children

Which Car is each of the women above buying?

Is each one of them not emphasizing on a

p or t an t ly serve as Keep pace with

Understanding the size of Indian Youth

Classification of population by ‘Generations’

Generational Age In numbers - Penetration %

Gen Next 13 – 24 years 300.16 26

Gen Now 25 – 39 years 308.21 27

Gen Yesterday 40 – 54 year 207.25 18

Classification of ‘Gen Next : 13 – 24 years’ by SEC

SEC Gen Next (13 – 24 years)

Information Sources for ‘Gen Next – 13 – 24 years’

Source of Gen Next

Projected Base 151,280,723

• Professional Management is Scientific Management

THE WORLD OVER:

• Decline in Purchasing Power

• DRIVE QUALITY THROUGH THE ORGANSATION – EVERY EMPLOYEE

A MENTION OF SOME GREAT ORGANISATIONS

Planning involves the following:

Why on earth should managers PLAN?

4 reasons why we plan:

Relationship between PLANNING & PERFORMANCE:

• Formal planning is associated with higher profits, higher return

GOALS: What is a goal?

Desired outcomes for individuals, groups or an entire

PLANS: What is a Plan?

Steps (often documented) that outline how goals are going to be

• Planning may create rigidity

Marketing is the activity, set of institutions, and processes for creating,

Marketing is an organizational function and a set of processes for creating,

by The American Marketing Association

The Social Definition:

Marketing is a societal process by which individuals and groups obtain

Marketing Management is the art and science of choosing target

No Title Examples / Explanation

01 Goods Cars. Refrigerators, Televisions sets, Food

02 Services Hospitality, Medical Services, Professional services

03 Events Miss World, The World Cup, The Olympics

04 Experiences Witnessing an Orchestra, A visit to an Amusement park

05 Persons Oprah Winfrey, Shahrukh Khan, Specific Politicians

06 Places Taj Mahal, J & K, Kerala (God’s Own Country)

07 Properties Real estate, Farms

08 Organizations Reliance, ABG Ltd, Pantaloons, Shoppers Stop

09 Information Books, Encyclopedias, CD ROMs, Dial me Services

10 Ideas Embedded in every Marketing offering is an idea

Business and the market place is radically different as a result of major,

• Changing technology (product innovation)

Senior Other Products & Channels

Ethics Community Customers

All Electronic copies to be handed over to the CR by my next lecture

The 4 Stages of the Product Life Cycle: