2 MARKETING MANAGEMENT PRODUCT: Meaning Goods & Services Product Mix Levels of ProductPLC- Managing PLC
3 MARKETING MANAGEMENT Types of new product Test marketing a new product NEW PRODUCT DEVELOPMENTTypes of new productTest marketing a new productPortfolio analysisBranding- Definition, Purpose & significance and Branding DecisionsPackaging and labeling- Purpose ,types and new trends in packaging
4 MARKETING MANAGEMENT PRICE Meaning Importance Pricing Objectives Factors influencing Pricing decisionsApproaches to PricingSetting the price and managing the price changes
5 MARKETING MANAGEMENT PLACE Importance Functions of Distribution ChannelsIntroduction to various channels of distributionsDesigning of Marketing ChannelsIntroduction of Wholesaling, Retailing, FranchisingDirect MarketingImpact of technology & internet on Distribution
6 MARKETING MANAGEMENT PROMOTION Concept and role in Marketing Promotional Mix-Advertising, Sales Promotion , Personal Selling, Public RelationsImpact of technology internet on PromotionEXTENDED P’S OF MARKETINGPeople, Process & Physical Evidence
7 PRODUCTPRODUCT:Anything that can be offered to market for attention ,acquisition use ,or consumption that might satisfy a want or needBundle of physical ,Service and symbolic attributes designed to satisfy a customer’s wants and needs.
8 PRODUCT Classification Consumer Products(B2C) Products, which are purchased by the ultimate consumers or users for satisfying their personal needs and desires are referred to as consumer products. For example, soap, edible oil, eatables, textiles, toothpaste, fans, etc. which we use for our personal and non business use are consumer goods.Destined for use by ultimate consumer
9 INDUSTRIAL/ORGANIZATIONAL/B2B PRODUCTS Industrial products are those products, which are used as inputs in producing other products. The examples of such products are raw materials, engines, lubricants, machines, tools, etc.Industrial products are meant for non personal and business use for producing other products.The market for industrial products consists of manufacturers, transport agencies, banks and insurance companies, mining companies and public utilities.
10 Consumer Products(B2C) Depending upon shopping efforts Consumer products are further classified as1.Convenience Products2. Shopping Products3. Specialty Products4. Unsought Products
11 Consumer Products(B2C) Convenience ProductsGoods and services that consumer wants to purchase frequently immediately and with minimal effort. Easily availablee.g Toothpaste, Magazines,Shopping ProductsAfter comparing competing offerings on price, quality and stylee.g Television, Furniture ClothingUnsought productsLittle product knowledge or if aware little or even negative intereste.g Pre-needed Funeral plansSpecialty ProductsStrong brand preference and loyalty, special purchase efforts, little comparison of brands, low price sensitivitye.g luxury cars, Tax Attorney
12 Convenience Products CHARCTERISTICS a) These products are purchased at convenient locations, with least efforts and time(b) Convenience products have a regular and continuous demand,as these generally come under the category of essential products(c) These products have small unit of purchase and low prices. For example the eggs are sold at Rs.28 per dozen and the customers purchase them in small numbers(d) Convenience products have standardised price as most of these products are branded products;(e) The competition in these products is high as the supply is greater than the demand. The marketers have, therefore, to heavily advertise for these productsf) Sales promotion schemes or short term incentives such as sales contests, discount offers, etc play an important role in the marketing of such products
13 Convenience Products Classification: (a) StaplesMost frequent and most routinely purchased e.g Milk, Dry cleaning(b) ImpulseTotally unplanned .Exposure to the product triggers want e.g Savvy magazines and chocolates(c) EmergencyPurchases result from urgent and compelling needse.g Emergency room visit, Asthma inhalers
14 Shopping Products Characteristics (a) The shopping products are generally of durable nature, i.e., they normally survive many uses(b) The unit price as well as profit margin of shopping products is generally high;(c) As these products have high unitprice, customers compare the products of different companies before making selection;(d) Purchases of shopping products are generally pre-planned and there is little degree of impulse buying in these products(e) Retailers generally play an important role in the sale of shopping products as lot of persuasive effort is needed to convince the buyers to purchase them.
15 Shopping Products Classification (a) Homogeneous: All products are considered similarShopping focus mainly on price comparisons e.g Airplane flights/T.V(b) Heterogeneous: Shopping focus on quality comparisons e.g Child Care, Selection of flat/Appt
16 Specialty Products Characteristics (a) The demand for speciality products is limited as relatively small number of people buy these products;(b) These products are generally costly and their unit price is very high;(c) These products are available for sale at few places as the number of customers is small and are willing to take extra efforts in the purchase of these products;(d) An aggressive promotion is required for the sale of speciality products, in order to inform people about their availability, features, etc.(e) After sales services are very important for many of the speciality products.
17 Durability of Products On the basis of their durability, the consumer products have been classified into three categories”(a) Durable Products(b) Non-durable Products(c) Services.
18 Durable ProductsThese goods are generally used for a longer period, command a higher per unit margin, require greater personal-selling efforts, guarantees and after sales services, on the part of the seller.E.g Refrigerator, Radio, Bicycle, Sewing machine and kitchen gadgets
19 Non-durable ProductsThe consumer products which are normally consumed in one or few usese.g Toothpaste, Detergents, Bathing soap and Stationary products etcFrom the marketing point of view, these products generally command a small margin, should be made available in many locations and need to be heavily advertised.
20 ServicesThe durable and nondurable goods are tangible in the sense that these have a physical existence and can be seen and touched.Services are intangible in form. By services we mean those activities, benefits or satisfactions, which are offered for sale, e.g., dry cleaning, watch repairs, hair cutting, postal services, services offered by a doctor, an architect and a lawyer.
21 Distinguishing characteristics of services : (a) By their very nature, services are intangible, i.e., we can not see, feel or touch them;(b) A service is inseparable from its source. That means we cannot separate the service from the person providing the service;(c) The services cannot be stored. They are highly perishable. For example, if a tailor does not work for one week, the services he would have provided during such period go waste;(d) Services are highly variable as their type and quality depends on the person providing them. That is why, there is a difference in the extent of satisfaction we get from the services provided by different people.
22 Classification of Product shopping efforts involvedDepending uponDurability basisDurableNon durableServiceConvenienceProductShoppingproductSpecialtyUnsoughtHomogeneousHeterogonousStaplesImpulsiveEonegency
23 INDUSTRIAL/ORGANIZATIONAL/B2B PRODUCTS The important characteristics of industrial products are given below:Number of Buyers: As compared to the consumer products, the numbers of buyers of industrial products are limited. For example, sugarcane is purchased by few producers of sugar, but sugar, which is a consumer product, is purchased by crores of people in our country.2. Channel Levels: Because of limited number of buyers, the sale of industrial products is generally made with the help of shorter channels of distribution, i.e., direct selling or one level channel.3. Geographic Concentration: Because of location of industries at certain points or regions, industrial markets are highly concentrated, geographically. For instance, the demand for power loom comes from Bombay, Sholapur, Bangalore, etc where the textile industry is concentrated in our country.
24 characteristics of industrial products 4.Derived Demand: The demand for industrial products is derived from the demand for consumer products. For example, the demand for leather will be derived from demand for shoes and other leather products in the market.5. Role of Technical Considerations:Technical considerations assume greater significance in the purchase of industrial products because these products are complex products, bought for use in business operations.6. Reciprocal Buying: Some big companies from basic industries like oil, steel, rubber, and medicines resort to the practice of reciprocal buying. For example, Ashok Leyland may buy tyres and tubes from MRF, which in turn may buy trucks from Leyland, whenever it feels the need for the same.7. Leasing Out: A growing trend in industrial product market is to lease out rather than to purchase the products on outright basis because of the heavy price of these products.
25 CLASSIFICATION OF INDUSTRIAL GOODS Materials and PartsCapital ItemsSupplies and Business Services
26 Materials and PartsThese include goods that enter the manufacture’s products completelyRaw material:Farm products like cotton, sugar cane, oil seed and natural products such as minerals (say crude petroleum, iron ore), fish and lumber(b) Manufactured material and parts.These are again of two types –(I) Component materials : glass, iron, plastic and component parts such as tyre, electric bulb, steering, and battery
27 (a) Installations like elevators, mainframe Computers, CAPITAL ITEMS(II)Capital Items: These are such goods that are used in the production of finished goodsThese include:(a) Installations like elevators, mainframe Computers,(b)Equipments like Hand Tools,Personal Computer, Fax Machines, etc.
28 Supplies and Business Services These are short lasting goods and services that facilitate developing or managing the finished product.(a) Maintenance and repair items: Paint,Nails, etc(b) Operating supplies : Lubricant, Computer Stationary, Writing Paper, etc.
29 Maintenance & Repair Services BUSINESS SERVICESMaintenance & Repair ServicesUsually supplied under contract by small producersAvailable from the manufacturer of original equipmente.g. Window cleaning, Copier repairBusiness advisory Services:e.g. Legal ,Management Consultancy, advertising
30 Industrial Goods Material & parts Capital items Supplier & Business ServicesRaw materialManufacturedmaterial& partsInstallationEquipmentMaintenance& repairitemsOperating &SuppliersFormproductNaturalproductsComponent
31 Product mix/Product Assortment Complete set of all Products offered for sale by a companyThe number of products carried by the firm at a given point of time
32 HUL Product Line HUL Food Brands Home care Brands Personal Care Brand HULFood BrandsHome care BrandsPersonal Care BrandWaterRed LabelActive WheelAviancePure itBrooke BondCifAxeTaj MahalDomexClinic PlusLiptonRinClose upBruSunlightPepsodentAnnapurnaSurf ExcelSunsilkKnorrVimVaselineKwality WallsAyushBreezeDoveHamamLifebuoyPearsRexsona
34 Real Activ (No Added Sugar) Dabur Chyawanprakash Hair oil Health CarePersonal CareFoodsHealth SupplementsHair CareReal Fruit JuicesDabur ChyawanprashReal Activ (No Added Sugar)Dabur ChyawanprakashHair oilBurrst(Light and Refreshing Fruit Beverage)Dabur Chywan JuniorDabur AmlaHommadeGlucose-DDabur Amla Flower MagicCooking PasteHoneyVatika Enriched Coconut oilTomato PureeVatika Enriched Almond Hair oilCoconut MilkOral CareDabur Red Tooth PasteShampooBabool tooth PasteVatika Smooth And SilkyMeswak Tooth pasteVatika Root StrengtheningPromise tooth PasteBlack ShineLal Dant ManjanVatika Danddruff ControlBabool Mint Fresh GelDabur Total ProtectDigestivesConditionerHajmola TabletsVatika Smooth And Silky ConditionerHajmola CandyVatika Root Strengthening ConditionerSkin CareUveda RangeComplete Fairness RangeMoisturiser Face WashClarifiying Face WashDabur Gulabari
35 Product LineA group of products clubbed together by virtue of satisfying a particular class of needs ,being used together or distributed through the same channel or possessing common physical or technical characteristicsA group of closely related products constitute a product line
36 Some terms Width/Breadth of product mix The number of Product line it carriesLength/Depth of Product lineNumber of items or brand in lineDepth of Product lineTotal number of items under each brand in line, in terms of variants, shades models packs size
39 Adding /StretchingIs done due to structural changes in the market place- the most important being the customer lifestyles and demographic characteristics like rising income and lower proportion of income being spent on food and other essential items .Two types:Stretching downStretching up
40 Stretching downInitially taken its position in high price slot ,stretches the line downwards by offering the products in the same line for lower end marketsHULSurf- 40/K.g NirmaSunlight-26/k.gWheel- 10/k.g
41 Stretching upThe firm moves up the line from its original posture and makes higher priced offers from its stablePhilips-
42 Line fillingThe firm introduces more items to the line to plug certain gaps in its current range of offers.Intention: Full line company, customers do not go to competitors for offers/models in particular price slotVideocon co lour T.V: Initially on launch target was elite market segment hence introduced premium rangewithin three years launched 14 ” Private-Yupiee, Bazooka-Top end, Turbo tough – MI, Budget line-LMInew offers inch Models, 02-20, 4-21,1-25,1-29.
43 Line pruningConscious decision to reduce the number of items in the product line ,the company is trying to save the cost and maximize the efficiencies in production and distribution and promotion
44 Marketing is not about providing products or services it is essentially about providing changing benefits to the changing needs and demands of the customer’
45 When an organization introduces a product into a market they must ask themselves a number of questions. Who is the product aimed at? What benefit will they expect? How do they plan to position the product within the market? What differential advantage will the product offer over their competitors?
46 Kotler suggested that a product should be viewed in three levels Kotler suggested that a product should be viewed in three levels. Level 1: Core Product. What is the core benefit your product offers?. Customers who purchase a camera are buying more then just a camera they are purchasing memories. Level 2 Actual Product: All cameras capture memories. The aim is to ensure that your potential customers purchase your one. The strategy at this level involves organizations branding, adding features and benefits to ensure that their product offers a differential advantage from their competitors. Level 3: Augmented product: What additional non-tangible benefits can you offer? Competition at this level is based around after sales service, warranties, delivery and so on.
48 The Core ProductEvery product provides a basic function that solves a customer problemThe core benefits or service consist of the benefits provided with when they purchase and use a good or serviceThe core product refers to the use , the benefit or problem solving services the consumer is really buying when purchasing the product
49 The problem solving services or core benefits that consumers are really buying when they obtain a product Locks and alarm provide security Cars provide transportation
50 The Actual Product That the customer buys The specific offering aimed at the marketTangible features associated with the productFive elements-Design-Style-Feature-Quality-Packaging
51 5 elements of Actual Product QualityBrandFeaturesStylingPackagingProduct PerformanceHelps the customer position and identify the customerCombination of product attributesAesthetic aspectsProtects and promotes the product
52 Why is it important?This the way firms have traditionally differentiated from rivalsDifferentiation permits premium pricing and build customer loyaltyImportant in segmentation ,targeting & position (STP)
53 The Augmented ProductThe additional bundle of benefits purchased with actual productAdditional Consumer services or benefitsThe term covers both- tangible Features: After Sales, Warranties-Intangible Features: Brand values
54 The Augmented Product After Sales Delivery Guarantee Credit Repairs Spare PartsAdviceMoney back Guarantee
55 Why is it important?It offers psychological benefits that enhances the value of core and actual productEnhances the attractiveness of the product and is source of competitive advantageFirms are adding values to the productCompanies wrap additional benefits around their product in order to differentiate themselves from rivals
56 Product life CycleThis describes the stages of new product goes through from beginning to endEvery product passes through certain identifiable stagesA theoretical model which describes the stages a product goes through
57 Stages of a Product Life Cycle IntroductionGrowthMaturityDecline
58 Stages in a Life Cycle Introduction Growth Maturity Decline SALES PROFITS
59 Introduction competing against older, established products Low level of salesLow capacity utilizationnot widely distributed because reluctance to take an unproven productprice usually highpromotion needs to inform the customer
60 Strategies at the introduction Objective to attract trend settersHigh Promotional spending to create awreness and inform peopleEither Skimming or penetration strategiesBought by innovators /trend setters
61 Growth Expanding market but arrivals of competitors features and options must be addedCash flow becomes positiveThe market grows, profits rise but attracts the entry of new competitorswider distributionadjustment in pricingpromotion must attract customers, advantages of the product
62 Strategies in Growth stage Advertising to promote brand awarenessIncrease in distribution outlets-intensive distributionImprovements in product- New features , improved stylingGo for market penetration and if possible price leadership
63 Maturitysales peak, profit begin to decline, customers have the product and there are many companies in the market, competition becomes very intenseall products features, option, guarantees/warranties are similar (so customer service options could be added)pricing become very competitiveincrease availability of the product becomes widerpromotion – why their product is better
64 Strategies for mature stage Need to defend positionCompetitor based pricingEnter new segmentsAttract new usersRepositioningDevelop New uses
65 Declineproduct is no longer satisfying or they discover new and better products, sales drop, little or no profittry to identify other usesdistribution is reduceprice is usually reducedmore selective and less promotions
66 Strategies for the decline phase Maintain the market shareHarvest by spending little on marketing the productPromotion to retain loyal customers
67 SUMMARY OF PRODUCT LIFE CYCLE (CHARACTERISTICS) IntroductionGrowthMaturityDeclineSalesLowRapidly rising salesPeak SalesCost/customerHigh costAverageProfitsNegativeRisingHighCustomersInnovatorsEarly adaptorsMiddle MajorityLaggardsCompetitorsFewGrowingStable begins to declineDeclining Number increases
68 SUMMARY OF PRODUCT LIFE CYCLE (Marketing Objective) IntroductionGrowthMaturityDeclineCreate Product awareness & TrialMaximize market shareMaximize profitWhile defending market shareReduce the expenditure and milk the brand
69 SUMMARY OF PRODUCT LIFE CYCLE (strategies) IntroductionGrowthMaturityDeclineProductOffer a basicExtensionserviceDiversify brandand modelsPhase out weakitemsPriceUse cost plusPrice topenetrate themarketPrice to matchor beatcompetitorsCut pricePlaceBuild selectivedistributionIntensiveBuild moreintensiveGo selectivephase outUnprofitableoutletsAdvertisingBuild productAwarenessamong earlyadoptersBuildawareness& interest inThemass marketStress Branddifferences &benefitsReduce to levelneeded toRetainHard coreLoyalSalesPromotionHeavyReduceIncrease toencourage brandswitchingReduce tominimal level
70 Boston MatrixThe Boston Matrix consulting group developed this as a tool of portfolio AnalysisIt can be applied to the portfolio of products produced by a firm or the portfolio of business owned by the companyPortfolio is the collection of businesses or products that make up a business
71 The axes of the Matrix Relative Market Share -This is expressed not as % but share in relation to other firms in market-This is the measure of the firms /Product’s strength in marketMarket Growth-% rate of growth of sales in the market-A measure of market atrractivenessFrom this we derive four cells as a means of analyzing the product
72 Assumptions underlying BM Market share can be gained by investment in marketingMarket share gains will always generate cash surplusesCash surpluses can be generated when the product is in the mature stageThe best opportunity to build a dominant market position is during the growth phase
75 Question MarkLow share of rapidly growing marketCash flow is negativeHas potential but the future is uncertainIt could either be a star or a dog
76 Strategy for Question Mark Invest to increase the market shareSubstantial investment to achieve growth at the expense of powerful competitorsInvest in promotionsBuild selectively
77 Stars High Share of rapidly growing market Position of leadership in a high growth marketThe product/business is relatively strong and the market is growingAlthough the product generates income it is countered by high spendingNet cash flow is neutral
78 Strategy for stars Investment to sustain growth Build sales and market shareSpend to keep competitors at bayInvest to maintain or increase leadership positionRepel challenges from competitors
79 Cash CowsHigh share of slowly growing MarketMature stage in PLCLittle potential for growthLarge positive cash inflow
80 Strategy for Cash Cows Harvest Defend market share Aim for short term profitsLittle need of investmentLittle potential for further growthReduce investment in order to maximize short term cash flow and profitsUse profits from cash cows to invest in new products
81 Dogs Means unattractive Low share of a slowly growing Market No real potentialDogs are either- Products that have failed-Products that are in decline phase
82 Strategy for Dogs Phase out or sell off (Divest) Not worth investing inAny profit made has to be re invested just to maintain market share
84 CriticismMarket growth is inadequate measure of a markets attractivenessMarket share is an adequate measure of products ability to generate cashThe focous on market share and market growth ignores issues such as developing a sustainable competitive advantageThe product life cycle varies
85 BCG Matrix for Bharti Airtel Stars?RetailInsuranceCowsDogsFixed Line ServicesHIGHMobile ServicesDTH & IPTVBroad BandMarket Growth RateWhat they are doing in retail for last 4 years.What to put in Cash Cow.Bharti InfratelThe Company has entered into a joint ventureagreement with Vodafone Essar Limited (Vodafone)and Idea Cellular Limited (Idea) to form an independenttower company (“Indus Towers Limited” or “IndusTower”) to provide passive infrastructure services in16 circles of India. The Company and Vodafone willhold approximately 42% each in Indus Tower and thebalance 16% will be held by Idea. Pursuant to theaforesaid agreement, Bharti Infratel Limited hassubscribed 50,000 equity shares of Rs. 10 each in IndusTowers Limited on December 17, 2007 for an aggregatevalue of Rs. 500 thousand. For this purpose, BhartiInfratel Ventures Limited has been incorporated as awholly owned subsidiary of Bharti Infratel Ltd. Thetelecom passive infrastructure will be transferred toBharti Infratel Ventures for ultimate merger in IndusTowers Limited.TheCompany’s 61,984,721 mobile customers accounted fora 23.8% of wireless (GSM + CDMA) market share as onMarch 31, 2008.The revenues from the mobile services for the financialyear were Rs. 218,697 mn., a growth of 55% over therevenues in the previous financial year. The mobile servicesbusiness contributed 80% to the consolidated revenues.Telemedia ServicesDuring the year, the Broadband and Telephone Servicesbusiness was renamed as Telemedia Services in line withthe Company’s growing focus on new media solutionsand foray into IPTV and DTH businesses.The Company provides broadband (DSL) and telephoneservices (fixed line) in 15 circles spanning over 94 citiesacross India. As on March 31, 2008, the Company had2,283,328 customers (a growth of 22%), of which 34.8%(~795,000) were subscribing to broadband / internetservices.The Company’s strategy for Telemedia business is to focuson the cities with high revenue potential, excepting forDTH which will be an all India offering. The productoffering in this segment includes supply and installationof fixed-line telephones providing local, national andinternational long distance voice connectivity andbroadband Internet access through DSL. The business alsoprovides value added services such as intelligent networkPassive Infrastructure ServicesThe undertaking relating to the entire assets and liabilitiesof telecom passive infrastructure was transferred fromBharti Airtel Limited to Bharti Infratel Limited pursuant toa scheme of arrangement sanctioned by the Honble HighCourt of Delhi. Bharti Infratel provides passiveinfrastructure services on a non-discriminatory basis to alltelecom operators in India. Bharti Infratel deploys, ownsand manages passive infrastructure on an all India basis.The Company has approximately 52,000 towers as onMarch 31, 2008, of which approx 30,000 towers will betransferred to Indus Towers Ltd (a Joint Venture betweenBharti Infratel, Vodafone and Idea Cellular) for 16 circles.LOWHIGHLOWRelative Market Share85