2nd Semester Assignment - MB0030

8/9/2019 2nd Semester Assignment - MB0030

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1. Explain BCG Matrix?

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Name Syed Khaleelullah

Roll No. 530910706

Program MBA 2nd SemesterAssignment

Subject Marketing Management,set1

Code MB0030


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This model is used to identify companys SBUs position in the market.This model identifies the SBUs strengths weaknesses, opportunities andthreats on the basis of market growth rate and relative market share.This model is also known as growth share matrix.

The origin of the Boston Matrix lies with the Boston Consulting Group inthe early 1970s. It was devised as a clear and simple method for helpingcorporations decide which parts of their business they should allocatetheir available cash to. Today, this is as important as ever because of thelimited availability of credit.

However, the Boston Matrix is also a good tool for thinking about whereto apply other finite resources: people, time and equipment.

Market share is the percentage of the total market that is being serviced

by your company, measured either in revenue terms or unit volumeterms. The higher your market share, the higher proportion of the marketyou control.

The Boston Matrix assumes that if you enjoy a high market share you willnormally be making money (this assumption is based on the idea that youwill have been in the market long enough to have learned how to beprofitable, and will be enjoying scale economies that give you anadvantage).

The question it asks is, "Should you be investing your resources into thatproduct line just because it is making you money?" The answer is, "notnecessarily."

This is where market growth comes into play. Market growth is used as ameasure of a market's attractiveness. Markets experiencing high growthare ones where the total market is expanding, which should provide theopportunity for businesses to make more money, even if their marketshare remains stable.

By contrast, competition in low growth markets is often bitter, and whileyou might have high market share now, what will the situation look like ina few months or a few years? This makes low growth markets lessattractive

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Axis components:a. Market Growth rate: the rate at which market is growing.b. Relative Market Share: market share of the SBU dived by the

market share of the largest competitor.

Model Components:

These groups are explained below:

Dogs:Low Market Share / Low Market Growth.In these areas, SBUs market presence is weak, so it's going to take a lotof hard work to get noticed. Also, you won't enjoy the scale economies ofthe larger players, so it's going to be difficult to make a profit.

Cash Cows:High Market Share / Low Market GrowthHere, SBUs are well-established, so it's easy to get attention and exploitnew opportunities. However it's only worth expending a certain amount ofeffort, because the market isn't growing and your opportunities arelimited.here we can say cash cow can be milked.

Stars:High Market Share / High Market GrowthHere SBUs are well-established, and growth is exciting! These are

fantastic opportunities, and you should work hard to realize them.

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Question Marks (Problem Child):Low Market Share / High Market GrowthThese are the opportunities no one knows what to do with. They aren'tgenerating much revenue right now because you don't have a large

market share. But, they are in high growth markets so the potential tomake money is there. Here there are two choices, either to invest heavilyto bring it to star position or divest or liquidate from that position.Question Marks might become Stars and eventual Cash Cows, but theycould just as easily absorb effort with little return. These opportunitiesneed serious thought as to whether increased investment is warranted.

Key PointsThe Boston Matrix is an effective tool for quickly assessing the optionsopen to you, both on a corporate and personal basis.

With its easily understood classification into "Dogs", "Cash Cows","Question Marks" and "Stars", it helps you quickly and simply screen theopportunities open to you, and helps you think about how you can makethe most of them.

Limitations:

As any other marketing theories in the field, the BCG matrix model is notperfect either. There are according problems of this theory.

Some limitations concerning the particular use of BCG include:1. Only two dimensions market share and product or service growthrate, are employed. These are the first limitations.2. How to define market and how to get data about market share are alsoproblems.3. High market shares dont always necessarily lead to profit at all times.It is not the only success factor.4. Low share or niche businesses can be profitable too, which means inthe real world some Dogs can be more profitable than cash Cows.5. The model cannot reflect the growth rates of the general market and

market growth is not the only indicator for market attractiveness.6. The model also neglects the effects of synergy between differentbusiness units.

2. Describe the marketing mix for Pepsi.

Marketing Mix:The product, its price, promotion and distribution / position blendedtogether to get favourable response from the customer.

PepsiCo is one of the worlds largest food and beverage companies withannual turnover of $44 billion [2008]. The company employs

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approximately 185000 people worldwide, and its products are sold inapproximately 200countries through 4 Ps of marketing mix which arefollowing.1. Product2. Promotion

3. Place4. Price

1. Pepsi Products:

Quality:Pepsi follows on Quality standard across the globe.Pepsi has a long standing commitment to protecting the consumers whosetrust and confidence in its products is the backbone of its success. Inorder to ensure that consumers stay informed about the global quality ofall Pepsi products sold in world, Pepsi products carry a quality assuranceseal on them.One Quality Worldwide assurance seal appears on the entire range of

Pepsis beverages.The composition of the soft drink is as follows:Water (86-90%), Sugar (10-13%), CO2 (0.3 -0.7%) and Concentrate(0.2-0.4%).

- Water used in Pepsi Co soft drinks must be as safe as possible forhuman consumption. At every plant , Pepsi require incoming waterto be purified even further, using a variety of processes. Atminimum, every plant in world employs a dual back to back carbonfilter.

- Sugar must meet the standards of quality of Pepsi, which are

uniform for all plants across world. All Pepsi sugar manufacturersshould undergo the same supplier qualification process. All plants in

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the world further purify sugar with hot activated carbon anf finefiltration.

- The Co2 in each bottle of Pepsi surpasses the recognised standardsfor medical use. Each supplier undergo rigorous qualificationprocess, which includes the complete audit of refineries and testing

from international laboratories. Each batch carries certificate ofanalysis and compliance.

- Concentrates which makes up less than 1 % of Pepsi finishedbeverages, also are diligently controlled. All ingredients includingflavours, emulsifiers, preservatives, colours, sweeteners are of foodgrade and approved by global standards like JECFA/CODEX etc.

To conclude, Pepsi products comply with most stringent internationalregulations.

Design:

Pepsi logo evolution:

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2. Pepsi promotion :

Promotion is a key element of marketing program and is concerned witheffectively and efficiently communicating the decisions of marketingstrategy, to favourably influence the target customers perceptions to

facilitate exchange between the marketer and the consumer that maysatisfy the objective of both.A companys promotional efforts are the only controllable means to createawareness among publics about itself, the products and services it offers,their features and influence their attitudes favourably.Advertising:It is any paid form of non personal mass communication through variousmedia to present and promote product, services and ideas by an identifiedsponsor.PepsiCo has advertised its products through many different channels and

media. Through TV we have seen different advertisements of its productssuch as Pepsi or Dew. PepsiCo always advertises its products targetingthose favourable television programs like sports, series etc.Through News papers PepsiCo has advertised wide range of products andalso through posters a message has been sent to a lot of people about theproducts which it offers.

3. Pepsi Place:

Decisions with respect to distribution channel focus on marketing the

product available in adequate quantities at places where consumers arenormally expected to shop for them to satisfy their needs. Depending onthe nature of the product, marketing management decides to put intoplace an exclusive, intensive or selective network distribution, whileselecting appropriate dealers or wholesalers.

- Direct distribution:o Delivery of post mix cylinders and handling of key accounts; the

key accounts are different wholesalers, restaurants and hotelslike pizza hut, etc. These are known as national key accounts andare very important in terms of competition.

o Export parties.- Indirect Distribution:o Through base market distributorso Through outstation distributors.

Before delivering the product, some certain guiding principles are followedfor the assessment of distributors capability

- Applicants must have 20to 25 vehicles- Applicants must have 20000 cases of empty bottles- Applicants must deposit 1000000 as a security.

This is usually done through taking over key revenue areas. If the

distributor des not achieve sales target, the distribution is taken back andaddition of new distributor is done.

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4. Pepsi Price:

Pricing decisions are almost always made in consultation with marketingmanagement. Price is the only marketing mix that can be altered quickly.Price variables such as dealers price, retail price, discounts, allowances,

credit terms etc., influence the development of marketing strategy, asprice is a major factor that influences the assessment of the valueobtained by customers.

Supplier Manufacturer Distributor Retailer Customer

Customers directly relate price to quality, particularly in case of productsthat are ego intensive of technology based. Pepsi being a company whichemphasizes product quality, it tends to sell it products with price range

from moderately low to high prices depending on the use and targetcustomers.

Sample price listRegular Pepsi (150ml) ->Rs.8/-Pepsi (250ml) ->Rs.15/-Pepsi can (300ml) ->Rs.25/-Pepsi (1.5L) -> Rs.50/-

3. Choose any well-known company and study the microenvironment and macro environment for the same.

Company : Pepsi Co

Micro Environment

Supplier :

Marketing Intermediaries:The***** was set up in **** and is the selling agent for Pepsi in India, itis based in the *****. It manages the supply of several wholesalers,retailers, restaurants, hotels and other such food outlets. In order toachieve the projected sales targets effectively, the organisation ensures acomprehensive strategic alignment with the overall Pepsis businessstrategy.Customers:Pepsi customers are mostly of young generation between age 14 and 30years.

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Competitors:Coca-Cola is the main competitor in India.

Publics:There are lots of public are included such as channels, investment houses,radio stations, news papers community groups, general public etc. Andalso internal public include workers, board of directors, managers and soon.

Macro Environment:

Demographic forces:Age:

The age of potential customers is around 14 to 30years.Income:As far as income levels are concerned, Pepsi targets mainly middleclass to the upper class.

Economic Forces:When the economy of the consumer becomes low and expenses becomehigh, consumers move towards another product which is of lower costthan the PepsiCo product.Natural forces:Due to any earthquake, or disaster shortage of product will be there by

marketers or suppliers, so this affects the product and market.Technology Forces:There is huge investment from the government to develop theinfrastructure opportunities and the creation of the new product such asnew advanced formulas, changes in technology of production this affectsthe product.Political and legal:India is politically stable and hence economy is stable and as a result itattracts investments from other countries. This increases other beveragescompanies to enter Indian market and this in turn affects the Pepsi

products.

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Cultural forces:Majority of Indians are non vegetarians and they expect the beveragesthey consume must be free from all insects. Hence even if a small insectis found in an Pepsi product in any part of India by a customer, thisaffects the business of Pepsi in whole country.

4.Write a short note on consumer buying behaviour

Consumers are individuals, households, or businesses who use theproducts. Here we will consider only individuals and households.Consumer characteristics vary from country to county. Therefore it is achallenging task for marketer to understand the need, buying behaviour

of consumer before developing the product and marketing program.Characteristics affecting the consumer behaviour:Marketer need to understand the impact of the following factors on his/her organisation.a. Cultural factors:

- Culture is the combination of customs, beliefs and values ofconsumers in a particular nation. Majority of Indians arevegetarians and a company which sells non-vegetarian items shouldanalyse these values of the consumer. For example, KFC which sellschicken dishes all over the world added vegetarian burgers in their

menu to serve vegetarian consumers.- Subcultures are part of culture comprising, geographic regions,

religions, nationalities and racial groups. The value system of thesegroups differs from others. For example, Hindus in north Indiaprefer to spend their time with family during the navaratri festival.During this time to attract consumers, restaurants started offeringthe authentic navarathri dishes.

- Social Class are permanent groups in the society whose membershave common linking's. According to Mckinsey consumer report,Indian consumers can be classified into 5 different categories.

o

Deprived: Deprived are the people who earn less thanRs.90000 annually. This group is also known as below povertyline. People in this category will do less of semiskilled work.

o Aspires: Aspires belongs to the families who earn betweenRs.90000 to Rs. 200000. This group consists of shop keepers,industrial workers, and small land holding firms. Half of theirearned money goes for basic amenities and food.

o Seekers: Seekers earn between Rs200000 and Rs. 500000.This class varies largely. This group contains fresh workers,middle level employees, government employees and business

people.

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o Strivers: Strivers earn between Rs500000 and Rs1000000.They are considered very successful. The group containsbusiness people, large farmers, senior government officialsand professionals. They are leading the consumption leadIndia growth.

o Global Indians: They are earning more than Rs.1000000.this group is comprised of senior officials, professionals, andtop business executives. India is witnessing growth in thisclass.

b. Social factors:Human beings are social animals. They live and interact with otherpeople. Therefore there is a chance of influence by others on theiropinions. Marketers identify such influential persons or groups ofconsumer. Generally such groups are classified into two major groups

namely reference groups and family.Reference Groups are used in order to evaluate and determine thenature of given individual or other groups characteristics and socialattributes. Reference groups are those that people refer to whenevaluating their own qualities, circumstances, attitudes, values andbehaviours.Family: Indian culture gives utmost importance to the family. Peoplediscuss with their family before purchasing the valuable items.Therefore many companies use either whole family or kids in theirpromotional programs.

For example Godrej introduced memory backup auto washing machine.They have shown family enjoying without any problems of washingclothes.

c. Personal Factors:Individual factors like age, occupation, lifestyle and personalityinfluence the consumer decision making. Personality is the image ofpersonal traits. Traits includes self confidence, dominance, autonomy,defensiveness, adaptability and aggressiveness. Many companies usethis concepts in their marketing communications. Bajaj pulsar usedmuscularity to highlight its image(definitely male).

d. Psychological factors:

Motivation: (Need Hierarchy theory)One of the most mentioned theory of motivation is the Hierarchy ofneeds put forth by psychologist Abraham Maslow. He saw humanneeds in the form of a hierarchy, ascending from the lowest to thehighest. As per him the needs are:i. Physiological:

These are important needs for sustaining the human life. Food,water, warmth, shelter, sleep, medicine and education are the

basic physiological needs. Until these needs are satisfied noother motivating factor will work.

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ii. Security or safety:These are the needs to be free of physical danger and of the fearof losing job, property, food, shelter. It laso includes protectionagainst emotional harm.

iii.Social needs:

People will try to satisfy their needs for affection, acceptance andfriendship.

iv.Esteem needs:Once the people are satisfied with social needs, they would liketo have esteem needs like power, prestige, status, self-confidence, self respect, achievements recognition and attention.

v. Needs for self actualisation:Highest need in this hierarchy of needs. It is the drive to becomewhat one is capable of becoming. It includes growth, achievingones potential and self fulfilment.

Marketers interested in finding what state of need of hierarchy theconsumer is in and what type of product to be developed to suit hisor her need.Perception:It is the process of acquiring, interpreting, selecting and organisingsensory information.Marketers research their consumer profile and communicates theproduct or service messages to them either through radio, demo ortelevision.

Types of consumer buying behaviour:High involvement Low involvement

Significant differencebetween brands

Complex buyingbehaviour

Variety seekingbuying behaviour

Few differencesbetween brands

Dissonance reducingbuying behaviour

Habitual buyingbehaviour

Complex Buying Behaviour:Consumers who are representing this behaviour are highly involved inthe purchase if the product or service. The process become complexas different between brands is very high. For example, customer who

wants to purchase refrigerator would like to know the meaning ofdefrosting, door lock, digital temperature control etc. The price of theproduct is usually high.Comparison of 3 brands and significant difference between them:

LG GR T282

AkaiD186

Electrolux Kelvinator386

Defrost system Door lock Adjustable shelves

Moisture and humiditycontrol X

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Deodorising ability Water dispenser X X

From the above table it is clear that marketer should first develop thebelief about the brand, provide the information and differentiatecompany brand from others.

Dissonance reducing buying behaviour:The behaviour exhibited by the customer when product purchasesrequire high involvement but not only have few differences existed.For example, customers who want to purchase CTV will not find manydifferences between the brands but the price of the product and itstechnicality makes customer to involve more. But customer will intoshow post purchase dissonance which is very difficult to control.Variety seeking buying behaviour:When there is significant difference between the bands existing butcustomer will not involve more while purchasing, marketer identifythis behaviour as variety seeking behaviour. There are many varietiesof biscuits available. One can purchase salt biscuits, cream biscuits,Marie biscuits etc. The customer who purchases Britannia tiger earliermay purchase sun feast biscuit next time. This does not mean that thequality of tiger is inferior to other. In this situation marketer shouldunderstand the following: -

- The market leader should encourage customers to buy repeatedly.

- Make product available and visible to customer.- The firm who is not market leader should come out with

promotional techniques to encourage customer to purchase theproduct.

Habitual Buying behaviour:The low involvement between the brands and few differences inbrands leads to this type of behaviour. For example spice powdermarketed by MDH, Everest or MTR have very few differences betweenthem and customers do not search the information to purchase

particular product. The following strategies can be followed bymarketer:- Use price and sales promotions to stimulate product trial.- Use more visible aspects than wording in the advertisements.- Television is the better medial for this type of products.- Use classical conditioning theory to create advertisements.

5.Company A has homogeneous consumer preferences inthe market; Company B sells different variants of soaps,

While Company C is a small firm with constrainedresources. What do you think is the most suitable

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market coverage strategy for the all the threecompanies.

Depending on the emerging patterns of the market segmentation,

homogenous preferences, diffused segmentation and cluster preference, acompany chooses its market segmentation strategy.

Company A:

This company can follow un-differentiated marketing strategy. In thismarket coverage strategy, in which the company A treats the targetmarket as one and does not consider that there are market segments thatexhibit uncommon needs. The company A, focuses on the centre of thetarget market to get maximum advantage. The feature of one product all

segments calls for presenting one market mix for the target market.

Company B:

This company can follow Differentiated marketing strategy. The companyB goes for proper market segmentation as depicted by its analysis of thetotal market. The company, therefore, goes for several products orseveral segment approach which calls for preparing different marketingmixes for each of the market segment. This strategy can be followed bycompany B which sells different soaps and each of them has its ownmarket. Thus the company B creates segment in the soap market and notin toiletries market.

Company C:

This company can follow concentrated marketing strategy. The companyC follows one product one segment principle. The manufacturer getsmaximum knowledge about the segment needs and therefore acquiresspecial reputation. This strategy can also help the small companies like Cto stand against a large corporation because the small company cancreate niches in its one product one segment approach by providing

maximum varieties.

Comparison of market coverage strategy:

Focus Undifferentiatedmarketing

DifferentiatedMarketing

ConcentratedMarketing

Product One/few Many One/ FewSegment All Many One/ FewMarketingMix

One Many One/ Few

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Given the comparison of different coverage strategies, it is easy to locatethe strategies for companies A, B and C.

Company Undifferentiatedmarketing

DifferentiatedMarketing

ConcentratedMarketing

A Least Suitable Most Suitable More SuitableB Most Suitable More Suitable Least SuitableC More suitable Least Suitable Most Suitable

Given the above table, the firms resources and the products requirementin its present form would decide the choice of a particular market-coverage strategy. Finally the competitors adoption of a particularstrategy should be considered for deciding companys own strategy.

6. Describe various bases for positioning the productwith example.Overcoming positioning difficulties enables the company to solve themarketing-mix problem. Thus seizing the high-quality position, requiresthe firm to produce high quality products, charge a high price, distributethrough high-class dealers and advertise in high-quality media vehicles.The bases of positioning strategies that are available are:

a. Attribute Positioning:

A company positions itself on an attribute such as size or number ofyears in existence. Sun feast position its snack brand as bigger lighterand crisper.

b. Benefit Positioning:

The product is positioned as a leader in certain benefit.Automotive Hyundai santroHeadline:Indias best loved family car is now indias simplest car to driveSub headline:Hyundai introduces santro zip line automatic. No shifting gears, no

clutch no problem.

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Baseline:The simplest car to drive (Positioning)

c. Use or Application Positioning:

Positioning the product as best ofrsome use and application. Forexample kenstar positioned its product as unexpectedly cold.

d. User positioning:

Positioning the product as best for some user group. For example inParle-G, the booy was positioned as rock star. This advertisementbasically targets kids and boys.

e. Competitor Positioning:

The product claims to be better in some way than a named competitor.For example, in the advertisement of Matrubhumi, base line says, In the wake of ABC results, Matrubhumi celebrates the addition of33960 copies while nearest competitor laments the loss of 7258copies.Planner, take note.It is directly mentioning its and competitors sales of news paper.

f. Product Category Positioning:

The product is positioned as the leader in a certain product category.Bajaj CT100 was positioned as leader in the entry segment bikes.

g. Quality or Price Positioning:

The product is positioned as offering best value. Vegitable oil branddhara position itself as anokhi shuddata, anokha asarThis means, company offers unique purity and unique effect.

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2nd Semester Assignment - MB0030