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Principles of
Marketing Management
Faculty : Prof . Ashok Kumar
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Ground Rules.
Do not enter the class while the session is in progress.
Do not chew gums or eat while the session is on.
Do not read news paper or engage yourself in any other
reading or writing other than the subject. Follow classroom etiquettes & manners
Keep your mobile phone switched off while in class.
If a student remain absent for one or more sessions, he or
she must cover up the same before attending the next
session.Be present for Internal assessments ( quiz, presentations ,
written assessment) in the schedule communicated.
There will not be any re assessment if you miss any of
them.
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Important internal assessment dates to be noted:
Activity Date /period weightage
Marketing Quiz Fourth week 10Mks
of July
Assignment Second week 10Mks
presentation of Aug
Mid Term Third week 20 Mks
Assessment of Sep
( written)
Topics forMarketing quiz : Topics covered in the class, Extra reading from
strategist Business standard , Economic Times - Brand Equity & Business
world , Business India , Indian Management
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Assignment work :
Assignment work to be done in pair only.
Identify a product or service brand for study from the following sectors only.
Conduct an exhaustive SWOT analysis of the brand in discussion under the
following heads.
1. Economic factors .
2. Political factors3. Technological factors
4. Competition factors
5. Consumer choice decision factors
6. Legal factors
7. Product factors
8. Price factors9. Positioning factors
10. Distribution factors
11. CRM factors
Identify three( minimum ) key weakness / threat .
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You may use resources like company web site, business magazines, independent
sites product literature, press release etc.
Submit synopsis of the assignment on the announced date along with allinformation supported by photocopy of the information gathered .
The cover page should indicate :
1. Assignment title 2. MTs id and Names , Div
3. Submission date
4. Presentation to be made only in power point . Duration for presentation willbe 10 min.
Brand to be chosen from :
1. Food & beverage category 9 Apparel 17 confectionary
2. Personal care 10 Gems & Jewelry 18 Health care
3. Hygiene care 11 Watches 19 Entertainment4. Laundry care 12 Men's grooming products
5. Foot wear 13 womens grooming 20 Info channel
6. Consumer electronics 14 2 wheeler bike & scootrates
7. Lighting 15 4 wheeler economy & luxury
8. Office equipments 16 Home furnishing
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Core text books : 1 Marketing Concepts & cases
Michael J.Etzel, Burce .J. Walker
Ajay Pandit
2 Marketing Management
Rajan Saxena
3 Marketing Management
Philip Kotler ( 13 th edition )
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Why business needs Marketing
orientation-?
Market Clutter
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MARKET CLUTTER
COMMODTIZED PRODUCT
& SERVICE
LACK DIFFERENTIATION
NO USP
PRICE WAR
BLOOD
BATH
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Should marketing plan and strategies be
Market driven or
Marketing driven ???
Marketing driven is an holistic approach keeping Social
, ecological ,Consumer & economic aspect of business
and developing a marketing process, which helps theorganization to position the brand in the minds of
consumer distinctly unique to get an extra mind share .
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HOLISTIC MARKETING CONCEPT.
The holistic marketing concept is based on development ,design &
implementation of marketing programmes ,processes & strategies.
Holistic
Marketing
Integrated
marketing
Relationship
marketing
Internal
marketing
SociallyResponsible
Marketing
Ethics
Legal
Environment Community Customer Channel
Partner
Products &
Services
Communication
Perceived Value
InternalEmployees
Stake
holders
Movement from product perspective to customer perspective.
PackagingProcess
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They are not Marketing Jargons but facts
Transactional Marketing
Relationship Marketing
Social Marketing
Viral Marketing
Buzz marketing
Green Marketing
Changing perspective of Marketing
BG
RSTV
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Understanding of market from holistic perspective.
Identifying market segments and target
Managing the customer relationship
Managing the cost
Creating , positioning and controlling your identity ( brand )
To stay tune with your market & constantly communicate with
them by formulating effective marketing game plans.
Out of sight is out of mind
Marketing management revolves around :
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Customer delivered ValueMarketing process in an organization aims to achieve its organizational
goals by being more effective than its competitors in creating ,
delivering & communicating customervalue to the identified set of
consumers in the market .
What is perceived customer value?
Value = Benefits
Cost
Where Cost = ( Monetary +Time+ Energy+ Psychic Cost)
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Determinants ofCDV
CDV
CTC
TCV Product
value ServiceValue EmotionalValue ImageValue
Monitory
cost
Time
Cost
Energy
Cost
Psychic
cost
.
Higher the CDV , higher will be the delight ness in customer &
vice a versa. Satisfaction = delight nessDelighted customers are likely to be more loyal than satisfied.
+ + +
=
-
=+
++
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HOW SALES IS DIFFERENTFROM MARKETING ?
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INVOKE interestIn a buyer
Make theBuyer
INVEST
Engage toRETAIN
MARKETING &SALES
PROCESS IN AN ORGNIZATION.
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Salesplan
MarketingPlan
BusinessGoal
SalesExecution
SalesControl
Sales function integrated in to the Business Goal.
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SALES Structure in an Organization
C.M.O
MKTG
SERVICE
MKTGLOGISTICS
MARCOMSALESMKTG
SUPPORTCONSUMER
RESEARCH
Sales structure in an organization depends on nature ofbusiness & Complexity in
1 Product or service level.2. Specific Skill Required to address thebusiness3. Coverage required to address.
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In a Rs 250 cr rapidly growing breakfast cereal
consumption market in India , multinational brandslike Corn flakes , Chocos, Special K , Single- serve K
Pak ( Kellogs) , Quaker ( Fritolays ) , Amaze (
HUL) Cerevita ( Nestle ) and other regional players
like Bagrrys India with products such as Musesli are
competing for the pie of the market.
Are they creating sufficient customer delivered value or
not ?
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Hierarchy of Marketing Function.
MarketingHead CMO
Innovation &
Strategic
Head
SalesDist.
Business
DevProd
Mgmt
Mkt
Ser
MR&
CB
W/H&
Retail
Transport
Marcom
P1 P2 P3
Franchise
Regional
Head /ZM
AM/DM
SO /SE
KAM/LAM
RM
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A sole vehicle for creating & delivering
customer value :James Cullitons MARKETINGMIX
MARKETING MIX : A recipe for successful marketing strategyComponents of Marketing MIX
1. Product , 2. Price ,
Sub elements Sub elements
Product design Margin ,Discount, PricingProduct feature policies, payment term,
Product Quality credit term , pricing
Product warranty & service strategies for different
Brand name , model style market situation.
Product life Internal & external factors
Product differentiation of price components
Product launch & Value pricing
New product decision
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Managing Marketing Mix & Marketing
Environment
Internal
Variables External
variables
Competition, ConsumerDemand
Demographic, Socio-
cultural,
Political,Economic. ,Technology
Government policies.
Legal, ( law of the land)
Customer Value
Customer costCustomer convenience
Customer
Communication
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Competition Analysis
Michael Porters 5 force model to study the barriers to entry
Industry competitorsor rivalry among the
existing firmsSuppliers
Bargaining
power
Substitutes
Buyer
Bargaining
power
Potential Entrants
Threat of substitutes
Threat of new entrants
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Demographic trends.
Population, Age Gender, Literacy religious composition. Etc.
India : an Ideal marketing ground to understand demographic
trends.
Concern of large MNCs : How to harness the potential of 2/3 rural
population having highest degree of diversity in the rural India to
the main stream of the business.
2. Changing trends: Children hold strong buying power in key
segment. ( Indian kids rank 3rd worldwide in influencing the
buying decision)
Segment Children Decision maker.
Soft drinks 33.6 %Health drinks 31.4%
Tooth paste 30.5%
restaurants 28.6%
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Doing business without
is like winking at a pretty girl in the
dark.
You only know what you are doingbut not the pretty girl.
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Many small thingshave been made
large & visible by right kinds of
MarCom strategy
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Socio Cultural & Socio economic trend.
A set of beliefs & standards followed by a group of people . It is a
sum of conscious & un conscious values , ideas, attitudes &
symbols that shape the human behavior which transits from one
generation to the next. It is a common heritage & way of life.
Cognitive ( beliefs, customs)Internal mental
culture Normative ( Ethics, Moral
values)
Socio culture
External material ( Habits & Behavior)
culture
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Marketing Environment Scanning w.r.t Industry
Objective : To arrive at competitive positioning .Identify the strength of the industry & its business style
To formulate appropriate marketing/business strategy
Industry classification according to Marketing Experts
Fragmented Emerging Transitioning Maturing declining Global
Industry , Industry industry industry industry industry
..
unorganized Young Grown up fully grown stopped& no & growing but not up, set innovation
standard matured standards No techy
slow growth edge
Global
practices& stds
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What factors to be considered while exploring industry
1.General features.( Size Competition, Volume ,Demand , growth,
technology)2.Industrial Environment
3. Industrial Structure
(leaders, Followers, Niche player, demand supply position, Technology ,
processes, Capital intensive Labor intensive , global scope ,experience
curve of a leader , Market trend Resources entry barriers Economy ofscale )
4.Industrial attractiveness( potential , future, growth , margin
competition)
5Industrial Performance Economic situation Sales volume ,
Infrastructure Cost advantages Duty , taxes etc )
6.Industrial Practices: Service driven,People centric perception driven,
Quality driven Technology driven Trend driven
7Indusrry transformation trends
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Segmentation in B2B Markets
Commercial
Complexity
Low
High
Product
ComplexityLow High
Purchasing Dept.Dominant.
Technical Dept(s).Dominant.
Finance / LegalDominant.
Cross FunctionalDecision making.
Typology of buying situations
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Role of Buying centers in B2B Market
End User / Influencer
Commercial
Buyer
Management
Decision
Financial
Buyer
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Industry Segmentation in B2B market
Geography: Concentration of similar industry in agiven location.
Segment industry in terms of buyers quantum of
consumption.
Segment industry on the basis of industry verticals
in a given segment .
Segment the industry on the basis of decision
center location.
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TargetingMarket segmentation shows direction i.e. identifies
potential opportunities that a firm can serve with theresources available with the organization. It should
further investigated to assess profitability and
barriers-to-entry. :
Is it profitable ?
Is there distinct USP to address ?
Do we have the sufficient resource ?
Type of competition do we have & its competitiveedge.
T ti
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Approach : Which segment /how many to target a need to
balance: Segments overall attractiveness,
Companys objectives and resources (i.e.profitability).
Targeting
Single segment concentratioSelective specialization
Product specializationMarket specialization
M1 M2 M 3
M1 M2 M3
M1 M2 M3
P1
P2
P3
P1
P2
P3
P1
P2
P3
P1
P2
P3
M1 M2 M3
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Business (A) Market (B) Effective (AXB)
Strength Factor Score
Scale:1-5 20-25 High 14-19 M, 1-13 Low
Technology (4) Infrastructure (1) 4
Management (3) Un organized (1) 3
Skill Market
Distribution ( 4) Loyal (4) 16
distributor
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Target strategies :
1. Same product to different market ( Market Penetration
strategies, or standardization Eg FMCG : Coke, Pepsi etc
Organization tries to create product specialization as its
inherent strength
Differentiation strategies : An organization differentiates its
products/services to suit different market needs &expectations . ( Air line , Hotel, resort etc ) An organization
builds it competency in market specialization
Focus Market strategy, (Selective specialization strategy ) :
Selective consumer group in different market areaddressed with different product or services offerings.
Automobile sector , consumer durable etc
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Single segment: An organization create exclusive
niche market ( High differentiation Rolex , Benz in elite
class of consumer. )
Full market strategy : A organization tries to
addresses the entire market .
Perceived risk versus return of the above strategies.
A product failure will impact the entire market &
business incase of strategy
However Single segment strategy is good as it haspotential to emerge as a leader too.
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Positioning in the market
To gain competitive advantage in the targeted market , an organization
must position, itself on key differentiation . The differentiation factorsgenerally used are :
Product features
Value added services
Channel of distribution
Price
Brand Image
Mind based
Selecting the positioning platform. On the basis of the differentiation that
customers will value the most .At the same time the organization must be
capable of addressing this .
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Product
Is product a physical commodity ?
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A consumer must derive Satisfaction, Identity, Assurance &
Memorable Experience , after consuming the
PRODUCT .
Therefore a product is a combination oftangible & intangible
factors which address the inner satisfaction of a consumer .
It is a cluster ofvalue satisfaction for a customer.
A customer attaches value to the product in preparation to its
perceived ability to address the customers need.
Therefore a product is a customers need defined by the customer
addressing the over all value satisfaction.
Wh t i d t t
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What is product concept.
A product which communicates certain distinct meaning & hold image in
the market is termed as Product personality.
Components of product personality are :
1Generic(Basic constituent or function) : Essential features & function
2.Added feature( Differentiator ): Style,Colour, Assurance ,
reliability, quality
3. Brand name & Logo : Personality , life style , status symbol,Association
4.Package & label : presentation , easy handling, clarity of
Instruction manual .
5.Emotional value: Aspiration /intangible factors.
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PRODUCT
CATEGORY
CONSUMER
PODUCT
INDUSTRIAL
PRODUCT
OPERATING
SUPPLIES
GENERIC ENHANCED AGUMENTED NEW
GENERATION
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Product offer depend on the product personality
Product offer range:
.Generic : Enhanced Augmented New generation product.
Basic feature Branded & .Customized Future product
& function Differentiated
Customer Satisfaction level
Low Medium High
Poor loyalty willing to change Customer retention
if competition offers is high & switches
higher differentiator when marketer do not honor
the commitment
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Core
product
components
.
After Sales
Service
Installation
POS
Education
& training
Handling
Customer
Complaint
Loyalty
programs
EasyFinancing
option
Warranty& Guarantees
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PRODUCT LINE DECISION
Organizations define product line in terms of :
1. Product length
2. ProductWidth
3. Product Depth
Product lines decision by the marketing function is to
address the needs of consumer Class in different segment .
Since one product is not capable of doing so, variation
within the same product or within the same category is
essential.
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FMCG Organization
P
ro
d
u
ct
L
e
ng
t
h
Product width
Detergent Beverages Dental Care HairCare
( Product Div)
Surf
Rin
Wheel
Lipton
Green label
Tazza
Brooke Bond
Ruby Dust
Tata Tea
Colgate tooth
paste
Colgate tooth
powder
Colgate gel
Close up
Pepsodent
Parachute
Dabur Amla
Bajaj Almond
drops
Clinic Active
cream
Gel
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Product Mix Decisions
Product line addition / deletion / modification
Product length addition / deletion / modification
Product depth addition / deletion / modification
Product portfolio analysis
Tool:
BCG matrix / Model :
A comparative analysis of market share versus Market growth
rate
BCG MODEL
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Relative market Share/
Profit
M
a
r
ke
t
G
r
ow
t
h
Ra
t
e High Low
Low
HighStar
Cash Cow
Problem Child
Dog
BCG MODEL
Analyzing Usage Trend
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Existing
New
Existing
U
S
E
Analyzing Usage Trend
New
Customer
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Sale
Time
Product life Cycle
Infant Growth
stage stage
Maturitystage
Decline
stageShake Out
Stage
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Packaging - Most neglected P of Marketing
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Packaging - Most neglected P of Marketing
The total product personality which includes stature of its brand
& its intrinsic values are conveyed by the manner in which the
packaging strategy is followed . It acts an important marketing
tool.
Eg Jhonni Walker - blue labels premium image ( each bottle is
being numbered. )
Role packaging is very critical to create 1 Appeal 2 Display & 3Functionality
Packaging
decisionAesthetics Material
Convenience
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Packaging - Most neglected P of Marketing
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Packaging - Most neglected P of Marketing
Packaging
ConceptualizationFunctionality Appeal
Display
Appeal : It deals with visual packaging . Positioning &differentiation of the product a mid of the competition.Visual
imagery is a key component to hold to consumer to the brand &
create a high recall & recognition.
Eg CLINIC ALLCLEAR Anti dentruff shampoo
Display : Packaging enhances shelf appeal & image .
Functionality : The most comfortable way to exploit the complete
usage , features & functions of a product.
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Price
Is price = Value ?
F t i fl i i i
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Factors influencing pricing
Internal factors
Objective of the organizationPrice elasticity of demand
Features function of the product
Differentiator of the product USP
Stage of PLCInfluence of other element of marketing mix
External factor
Consumer preferences (Value perceived)
CompetitionDemand
Government rules & control
Social consideration
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PRICE
Demand Government Policy
Corporate
objective
Regulation
Competitorspricing
Technology Cost
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L i C
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0
C
O
ST
TIME
LearningCost
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1
Cost
Product Quality
Cost & Quality
P i i M th d
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Pricing Methods
1Mark up pricing = Unit cost ( FC+ CV)
2Marginal cost Earn contribution toward the
overhead only . Highly competitive
situation.
3.Market price ( Follow the crowd)
4Sealed Bid pricing
5Value based pricing
1- expectedreturn
Pricing strategies
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Pricing strategies
Skimming strategy
Penetration strategy
Differential pricing strategy
Price bundling
Image pricing
Loss leader pricing
Two part pricing
Pricing Terms
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Pricing Terms
Pricing terms used are :
Ex works price
F.O B Price
CIF Price
Cash & Carry Price
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Marketing logistics
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Channel management Distribution systemFinish goods Inventory, storing
Handling & Transportation
Order processing ,Execution
Accounting , Collection
Distribution is a process of delivering the FG inventory
through appropriate marketing channel to reach the
consumer in a right market at right time at minimumdistribution cost. .
Marketing Logistics is a key task of marketing to ensure the right
product is available to the consumer at right place & at right time.
F lfill t l C t i k t d d i h t t
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Supply Factory Stockiest/Distributor
Whole seller/ Retailer
ConsumerDemand
Delivery Lead TimeManagement
Order lead Time
Management
Fulfillment cycle : Capturing market demand in shortest
possible time & meet the same in best possible time with
the help intermediately & infrastructure to stock , move
deliver the goods , service information & collect
receivables.
Forecasting process.
Delivery process
Anderson Consulting Model for Distribution
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Polices & Facilities ChannelProcedures & equipment management
Channel design& Management
Transport , Inventory,Warehouse
Material Handling & packing
DistributionObjectives
Strategy
Strategy
Structure
Process
Implementation
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Building blocks
of Marketing logistics
1. Warehouse system
2. Transportation
3. Material handling
system
4. Packing process .
Marketing Logistics Process
1. F.G Inventory stock Planning
2. Warehouse management
3. Transport management
4. Documentation process
5. Channel design
6. Channel policy
7. Channel evaluation &
monitoring
8. Collection
Inventory Decision & Control : An FG inventory decision
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0
Inventory Decision & Control : An F.G inventory decision
in an organization is decided for :
1. Its lead time to arrive.
2. Market Demand3. Order cycle
4. Nature of inventory
Nature of Inventory can be as :1. Perishable inventory
2. Seasonal Inventory
3. Cyclic inventory
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Managing F.G Inventory
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Managing F.G Inventory
Managing operational stock at P.O.S retail outlet for
meeting the ready demand .
Managing stocks in transit
Managing stock awaiting for dispatch at warehouse
Managing buffer stock for meeting unplanned demand.
Preventing inventory obsolescence / spoilage ( perishable
goods )
Minimizing Inventory carrying cost
Deciding the optimum inventory level is the difficult task for the
marketing function. Balancing between stock out & excess stock is
the greatest challenge .
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Managing warehousing
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a ag g wa e ous g
Reduces instant transportation which could be costly and
time consuming
1. Meet instant market demand
Warehouse decision
1. Deciding the number of warehouses
2. Location of ware houses
3. size/capacity of ware houses Exclusive
4. Type of warehouses
Non exclusive
5Warehouse on the basis of product type
Warehousing is done by C&F agents /stockist/ distributor
incase of FMCG organization.
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Transportation
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Transportation
Ensures time utility & place utility to the productManaging transportation :
1. Assessment of transportation requirement . ( Basis
of product mix type , location , speed, demand )2. Choosing the transport mix ( Surface/ sea/air route
by volume or weight )
3. Deciding the routing
4. Developing operational plan5. Control of transportation cost
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Channel Types
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Reaching to Mass
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Reaching to Mass
Cost effectiveness economies of scales e.g. FMCG
Distributor
Sharing the risks defaulters, storing goods at differentlocations, etc.
Delegate the routine work and concentrate on creativework
Bulk breaking & meeting the needs of small retailers
Building distribution efficiency
Provide salesman ship
Provide market intelligence
Channel Member & channel length
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g
1Wholesale dealer
2 stockist/Distributor /C&F Agents /Depot
3Retailer 3 broker 4 Commission agents 5Authorized
representatives 6 Franchises
1.Manufacturer Stockiest /Distributor whole seller retailer
2. Manufacturer Whole seller user
3. Manufacturer Exclusive showroom/ Brand shop user
4. Manufacturer Franchise user
5 Manufacturer Agents User
Franchising
An e cl si e retailing here the franchise is an independent
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An exclusive retailing ,where the franchise is an independent
business unit ,who abide by the marketing plans &
policies of the franchiser & pays him a fee for the use hisbrand & know how , marketing process , product
formulation etc .
Benefits
1. Exclusive positioning of the franchiser /manufacturers
product & services .
2. High visibility & standing in the market
3. Promotion cost is shared between franchiser & franchisee
4. Minimizes the margin war in the market
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Examples of franchises
caf coffee day
Domino Pizza outlet
NIITs training center
LG care cosmetics
kwality Walls Ice cream parlor from HLL
Lakmes beauty saloon from Lakme Lever
McDonalds burger outlet
Kaya kalp beauty saloon
Barista coffee ,Zed career Academy
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WHOLESALE DEALER
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FUNCTIONS
Act as a buffer between Retailer and companyfor storage of stocks
Ensure Distribution of goods to 100 % potentialretailers
Develop demand for the product in market andensure continuous sales growth
Help the company in conducting localpromotions
Feed the information to company about the
competitors, new outlets opened, potential ofarea, sales reports, etc.
Suggest ways of local promotion to the company
Help company in settling customer complaints,
statutory problems
O t i f M k ti L i ti
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Outsourcing of Marketing Logistics
3 PL Tie up with express service organization .Leveraging on their infrastructure.
PICK PACK & DROP
Benefit : Cost efficiency & advantageSpeedy response
Focus on the competitive advantage
AFL , Elbee Safex Express DHL ,
Fedex , Gati Blue dart UPS
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