Ashok Kumar Sir

8/7/2019 Ashok Kumar Sir

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Not for circulation : for internal use only 1

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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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

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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Not for circulation : for internal use only8

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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Documents

Ashok Kumar Sir