mba final notes marketing

MARKETING ORIENTATION Navneet Rawat

MARKETING FOR THE MILLENIUM…

05/01/2023 NAVNEET RAWAT

FUTURE ISN’T AHEAD OF US IT HAS ALREADY HAPPENED!Marketing Decision Marketing StrategiesConsumer MarketBusiness MarketGlobal MarketNon Profit Organization & Govt.

MarketsEnvironment


THE PRODUCT IS SOLD BEFORE IT MANUFACTURED!

Marketing Mix

Right ProductRight PriceRight PlaceRight Promotion


GREAT ACTOR - CONSUMER!

Consumer & CustomerConsumer Need/Want/DemandCustomer Life Time ValueCustomer Experience Management


Marketing Orientation ApproachProduction ConceptProduct ConceptSelling ConceptMarketing ConceptSocietal Concept


Marketing Oriented ApproachContinuous ResearchTarget MarketConsumer Needs Integrated MarketingConsumer Satisfaction


Sustainable Competitive AdvantageCustomer in FocusCore Competency


By: Philip Kotler

What is Marketing: According to Philip Kotler, “The term Marketing is defined as a social and managerial process by which individuals and groups obtain what they need and want through creating, offering and exchanging products of value with others” is known as Marketing.


By: Clarke & Clarke

Marketing is a Business Activity and this activity includes transfer of Ownership & Physical Distribution of Commodities & Service from Producer to Consumer.


American Marketing AssociationMarketing is the activity, set of

institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.


By: Eldridge

Marketing Management is a Business activity to maximize the profit & to implementation of Marketing Mix i.e. 4P’s to the selected segment or market.


By: Peter Drucker

"Management is a multi-purpose organ that manages business and manages managers and manages workers and work."


By: Mary Parker Follet

"Management is the art of getting things done through people."


By: Henri Fayol

"To manage is to forecast and to plan, to organise, to command, to co-ordinate and to control."


By: Harold Koontz

"Management is the art of getting things done through and with people in formally organised groups.


Definition Management

Management is Six Ms i.e. Men and Women, Money, Machines, Materials, Methods and Markets.


Nature of Marketing Marketing + Management Marketing is a Managerial Function. Marketing is a system of Interacting Business

Activities. Marketing is an Economic Function. Marketing is a Social Process. Marketing is a Legal Process. Marketing Management is a Business

Process. Marketing Management is Both Science and

Art.


Scope of Marketing

Continuous Research.Study of Consumer Want and Need.Study of Consumer Behaviour.Product Concept.Production Concept.Pricing Concept.Place Concept.Promotion Concept. Consumer Satisfaction.


Marketing Process

Situation AnalysisMarketing StrategyMarketing Mix Implementation Control


MARKETING CHALLENGES in 21st Century


21st CENTURY

The current Millennium has unfold new business rules. The market place is not, what it used to be. It is changing radically as a result of major societal forces.


Changing Market Place

Customers are increasingly demanding.

Customers need, want & expectation changing more rapidly.

Customer want essentially the same thing.

New Product and Services are coming more quickly than in past.

Competition for Sales is intense.Competition is now global. Internet & e-commerce.


Pressure on Marketing

Marketing Environment Fit.Sustainable Competitive Advantage.Customer Life Time Association.Customer Experience Management.Rapid Technological Changes.Heterogeneous & Fragmented

Market.Market ResearchMarketing Information System


MarKeTinG PLaN


MARKETING PLANNING

IntroductionDetails of Marketing plan1. Title page2. Chapter Executive Summary3. Current Situation Evaluation4. Marketing Strategy Plan5. Implementation6. Marketing Information System7. Financial Summary


Marketing Competitiveness

"Marketing Competitiveness is the ability of a business to improve continuously marketing process capabilities and deliver better value to customers than competitors."


Ways to Improve Marketing Competitiveness

Customer values - Customer values should be viewed not only in terms of product characteristics, but also in terms of processes which deliver the product. Both the product and process concept have to be right to achieve customer satisfaction.

Identify and Promote USP - Unique Selling Proposition is something that sets a product apart from its competitors in the eyes of existing customers as well as new customers. Marketers are required to identify USP of their product and effectively communicate it with the target audience.

Cost efficient operations - Business is required to be organised and operated efficiently, so that the cost of production and distribution be minimised.

Customer delight - Business organisations must provide proper customer services to delight its customers.


Market Competition

Perfect Competition Imperfect CompetitionMonopolyOligopolyMonopolistic


MARKETING STRATEGY

Introduction

Marketing Strategy Planned or Unplanned

Market Dominance Strategy Innovation Strategy Integration StrategiesAggression StrategiesCost Leadership Strategies


CASE STUDY

CASE + DISCUSSIONCase is a description of a real life

business problem that a businessman has faced at some point of time and as such needed his attention, analysis and decision.

Discussion means resource pooling of analytical minds, cerebral insight and experience to arrive at better solutions through creative thinking.


FLOW CHART

STEP 1 : Identify the key problem areas.

STEP 2 : Generate alternative courses of action.

STEP 3 : Evaluate each course of action.

STEP 4 : Make suitable assumption.STEP 5 : Taking decisions either as

stand alone or a combination of alternatives debated in Step 3.

STEP 6 : Decision taken short term and Long term.


Changes in Lifetime Achievements Both the brothers discussed their views like

good professionals. They decided to refer the proposed strategy changes to Dr. Phadke, who had retired many years ago. Dr. Phadke was well loved and respected by all the employees of the company. He resisted being drawn into the arguments of the two Ambadis. He finally accepted to give his advice. Caste yourself in the role of Phadke and pronounce the changes needed in the marketing strategy practiced by Bhai Ambadi during his lifetime of achievement.


CASE STUDY

The Objective (Problem)

To determine changes needed in the marketing strategy of Reliable Electricals for two brothers (i.e. Mr. Appu & Mr. Jaykumar)


Alternatives1. Bhai Ambadi built Reliable Electricals from scratch using

quality, complete product range, advertising, wider coverage, & letting the price be governed by specifications.

2. Bhai Ambadi is no more. Competitive environment calls for competitive prices & larger volumes.

3. One view is to reduce advertising and sales promotion to cut prices.

4. The other view is to reduce prices by planning adequate quality for ‘throw way’ and continuous improving technologies.

5. Shift emphasis of advertising to competitive prices and contemporary technology products.

6. Many more……


Evaluating Alternatives

Alternatives could be created by considering one change at a time and evaluating its merits and demerits. There can, thus, be the following solutions.


Assumptions

Change in Marketing Strategy is also required due to the Indian economy being Liberalized & opened to Global Competition.


Solution ( Mr. Phadke Role) Marketing Strategies for Mr. Appu.

1. Advertising is an important facet of marketing in a competitive environment. Retaining advertising will keep the customers informed about the USPs of the product of Reliable Electricals.

2. Reliable Electricals has been Pricing its products as per the specifications. Making Prices competitive, by altering the specification, should be communicated to the customers.

3. The company has adopted the policy of reaching out to more customers. This will not be possible without advertising.

4. Cost reduction due to reduced advertising is not possible. Its better we go by ‘Cost Leadership Strategies’.


Solution ( Mr. Phadke Role) Marketing Strategies for Mr. Jaykumar.1. Market Liberalized & open to Global players. Changed

environment cannot be tackled by old strategies. Technology changes and competition would call for the products of Reliable Electricals.

2. The products must exploit the latest technologies.3. The products be designed for a pre-planned life and be

adequate quality.4. We have to adopt Innovation Strategies & role of

Pioneers.5. Keeping in mind technology can become an expensive

proposition.6. Right amount of quality will help reduce the price &

make the products competitive in the market.


Solution ( Mr. Phadke Role)Greater volumes should bring

additional profits due to economies of scale. These should be invested for technology updation.

Advertising and sales promotion is necessary. The customer must be informed about the use of latest technology and price competitiveness of the product.

MARKETING INFORMATION SYSTEM

The Importance of Information

WhyInformation

IsNeeded

MarketingEnvironment

StrategicPlanning

Customer Needs

Competition


MARKETING INFORMATION SYSTEM (begins & ends with info.)

To understand the proper role of information systems one must examine what managers do and what information they need for decision making. We must also understand how decisions are made and what kinds of decision problems can be supported by formal information systems. One can then determine whether information systems will be valuable tools and how they should be designed.


MKIS An understanding of the different roles managers

play and how marketing information systems can support them in these roles·

An appreciation of the different types and levels of marketing decision making.

A knowledge of the major components of a marketing information system.

An ability to clearly distinguish between marketing research and marketing intelligence, and internal record.

An understanding of the nature of analytical models & expert panel within marketing information system.


MKIS Definition

MKIS is a planned system of collecting, processing, storing, and disseminating data in the form of information needed to carry out the function of management.

According to Philip Kotler “a marketing information system consist of People, Equipment, and Procedure to gather, sort, analyze, evaluate, and distribute.”


MARKETING RESEARCH "the process or set of processes that links the

consumers, customers, and end users to the marketer through information — information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing research specifies the information required to address these issues, designs the method for collecting information, manages and implements the data collection process, analyzes the results, and communicates the findings and their implications."


Definition MR

Philip Kotler “ MR is the systematic design, collection, Analysis & Reporting of data & finding relevant to a specific marketing situation facing the company.”

AMA “ MR the systematic gathering, recording, & analyzing of all data about problem relating to the marketing of goods & services.”


Marketing Research

Marketing research is often partitioned into two sets of categorical pairs, either by target market:

1. Consumer marketing research, and2. Business-to-business (B2B) marketing

research. Or, alternatively, by methodological

approach:1. Qualitative marketing research, and2. Quantitative marketing research.


Marketing Research Organizations engage in marketing research for two reasons: (1)

to identify and (2) solve marketing problems. This distinction serves as a basis for classifying marketing research into problem identification research and problem solving research.

Problem identification research is undertaken to help identify problems which are, perhaps, not apparent on the surface and yet exist or are likely to arise in the future like company image, market characteristics, sales analysis, short-range forecasting, long range forecasting, and business trends research. Research of this type provides information about the marketing environment and helps diagnose a problem.

The findings of problem solving research are used in making decisions which will solve specific marketing problems.

Marketing research Approaches

By marketing department itself

Fieldwork by an agency

Full services of marketing research

agency is used

By marketing Research department

Types of marketing research

Ad-hoc research

Continuous research interview

Consumer panels Retail auditsTelevision

view ship panel

Ad-hoc research An ad-hoc research focuses on specific

marketing problem and collects data at one point in time from one sample of respondents. e.g :- a co. wants to find impact of latest advertising campaign on its sales.2 types

1. Custom designed studies are based on specific needs of the client.The questionnaire is designed specifically for finding a solution to the client’s problem.


Ad-hoc research2.Omnibus surveys : provide those seeking information about

markets and opinions with a means to get quick, relatively low cost answers to their questions without financing and organising a full market or opinion research survey themselves. The research company conducts a number of interviews with the target group on a regular basis: these interviews combine a number of standard questions which are always asked - generally including demographic information (age, sex, occupation) or eg company classification information for a business survey - with questions effectively sponsored by clients. The answers to these questions are analyzed shortly afterwards, cross-referenced with some or all of the classification data, and delivered to the client either as tables or in a report.

Continuous research interview

In this method same respondents are interviewed repeatedly.

1.Consumer panels:- these are formed by recruiting large number of households which provide information about their purchases overtime. By using same households and tracking the same variables over period of time measures of brand loyalty and switching can be determined.

2.Retail audits Study of a selected sample of retail outlets,

provided as subscription-based service by market research firms. Retail-audit service providers gather information on a brand's sales volume, sales trends, stock levels, effectiveness of in-store display and promotion efforts, and other associated aspects.

Television viewership panelThe audience size of program is

measured minute by minute. Commercial breaks can be allocated rating points according to the proportion of target audience watching the program.

Stages in the Marketing Research process

Initial contact Research brief Research proposal Types of research methods Main data collection stage Survey methods Questionnaire design Pilot stage Data analysis & interpretation Report writing & presentation

1. Initial contact: there is a realization that’s a marketing problem require information to help find its solution. The marketing department may contact the internal marketing research staff or an outside agency. Assuming that the research requires the assistance of a marketing research agency , meeting is arranged to discuss the nature of the problem and the client ‘s research needs . if the client and its market are new to the agency some exploratory research like a search on the internet , is conducted prior meeting .

2.Research brief: At the meeting the client explains the marketing problems and the research objectives. the marketing problem may be to attract new customer to product and the research objectives would be to identify customer who can use the product and to identify the future of the product that appeal to them most Prerequisites for commissioning a good research : terms like market , market share , competitors should be clearly defined for the purpose of the research . some research in the MR agency may be specialist in particular data gathering.

3. Research proposal:- The research proposal defines what the marketing research agency promises to do for its client and how much it will cost. It should be written to avoid misunderstanding. It should demonstrate an understanding of client’s marketing and research problem. The agency should state very clearly what it is going to do and why, who is going to do it and when.

Types of research methods

ExploratoryResearch

DescriptiveResearch

experimentalResearch

•Test hypotheses about cause- and-effect relationships.

.

• Gathers preliminary information that will help define the problem

and suggest hypotheses.

• Describes things as consumers’ attitudes and demographics

or market potential for a product.

Main data collection stage Sampling process:- The sampling process

aims at deciding who and how many people should be interviewed. First, the universe i.e. the group which forms the subject of study has to be clearly defined.

Sample size:- this involves arriving at number of respondents who must be surveyed to yield a representative sample of all demographic subgroups of respondents who are being studied.

Sample selection:- After selecting the sample size it must be determined as to how the sample would be selected for response. The sample can be selected by using either the probability methods or by using the nonprobability methods.

Survey methodsSurvey method involves selecting how to

interview the respondents who have been selected.

Face to face interviewsTelephone interviewsMail surveys

Step 7: Design the questionnaire. A primary responsibilities of a marketing researcher

is to design the data collection instrument or questionnaire in a manner so that it is easily understood by the respondent and administered to them.

Design stage:-Start from easy and then proceed to complexClose ended and open ended questionsEasy languageAvoid calculations

Pilot stage

Once preliminary questionnaire has been designed it should be tested. If pilot proves satisfactory the final questionnaire to be choose. If there are some drawbacks then it can be ratified and second pilot survey can be conducted.

Data analysis and interpretationBefore analysis and interpretation the

data has to be prepared first. The raw data that has been collected must be edited. Preliminary checks must be conducted to improve the quality of data collected.

Report writing and presentation

The results of research have to be presented in form of report or presentation. The key elements in research project are:-

Title pageList of contentsPrefaceExecutive summaryConclusionsAppendices

CONSUMER BEHAVIOUR

Consumer Buying Behavior

Consumer Buying Behavior is the decision process and acts of people involved in buying and using products. Consumer Buying Behaviour refers to the buying behaviour of the ultimate consumer —those who purchase products for personal use and not for business purposes.

Consumer Buying ProcessProblem

recognition

Informationsearch

Evaluation ofalternatives

Purchasedecision

Postpurchasebehavior

1. Need RecognitionWhen a person has an unsatisfied need, the buying process begins to satisfy the needs. The need may be activated by internal or external factors. The intensity of the want will indicate the speed with which a person will move to fulfill the want. On the basis of need and its urgency, forms the order of priority. Marketers should provide required information of selling points.

2. Information SearchIdentified needs can be satisfied only when desired product is known and also easily available. Different products are available in the market, but consumer must know which product or brand gives him maximum satisfaction. And the person has to search out for relevant information of the product, brand or location. Consumers can use many sources e.g., neighbors, friends and family. Marketers also provide relevant information through advertisements, retailers, dealers, packaging and sales promotion, and window displaying. Mass media like news papers, radio, and television provide information. Now a days internet has become an important and reliable source of information. Marketers are expected to provide latest, reliable and adequate information.

3. Evaluation of AlternativesThis is a critical stage in the process of buying. Following are important elements in the process of alternatives evaluation

a. A product is viewed as a bundle of attributes. These attributes or features are used for evaluating products or brands. For example, in washing machine consumer considers price, capacity, technology, quality, model and size.

b. Factors like company, brand image, country, distribution network and after-sales service also become critical in evaluation.

c. Marketers should understand the importance of these factors to consumers of these factor to consumers while manufacturing and marketing their products.

4. Purchase DecisionOutcome of the evaluation develops likes and dislikes about alternative products or brands in consumers. This attitude towards the brand influences a decision as to buy or not to buy. Thus the prospective buyer heads towards final selection. In addition to all the above factors, situational factors like finance options, dealer terms, falling prices etc., are also considered.

5. Post- Purchase BehaviourThis behaviour of consumer is more important as for as marketer is concerned. Consumer gets brand preference only when that brand lives up to his expectation. This brand preference naturally repeats sales of marketer. A satisfied buyer is a silent advertisement. But, if the used brand does not yield desired satisfaction, negative feeling will occur and that will lead to the formation of negative attitude towards brand. This phenomenon is called cognitive dissonance. Marketers try to use this phenomenon to attract user of other brands to their brands. Different promotional-mix elements can help marketers to retain his customers as well as to attract new customers.

Postpurchase Behavior

Can minimize through:Effective Communication

Follow-upGuaranteesWarranties

Underpromise & overdeliver

Cognitive Dissonance?Did I make a good decision?

Did I buy the right product?

Did I get a good value?


BUYER BLACK BOX(B3) MODEL

The CONSUMER (ACTOR)Initiator: the person who first suggests or thinks of the idea of buying a particular product or service.

Influencer: a person whose views or advice carry weight in making the final buying decision

Decider: the person who ultimately makes the final buying decision or any part of it

Buyer: the person who makes the actual purchaseUser: the person who consumes the product or service

Choice criteriaChoice criteria are the various features

and benefits a customer uses when evaluating products.

Technical criteria related to performance of product and include reliability, durability, comfort and convenience.

Economic criteria concern cost aspects.Social criteria concern social norms.Personal criteria concern with individual

psychology.

Extended Problem Solving (EPS) - High degree if complexity

Often occurs with expensive items or can be fuelled by doubts and fears.

All 7 consumer decision making stages are often used (need recognition, search for information, pre-purchase evaluation of alternatives, purchase, consumption, post-consumption evaluation and divestment).

Dissatisfaction often leads to negative word of mouth

A longer time is taken to decide.

The Buying Situation

Limited Problem Solving (LPS)Low degree of complexity

Consumers don't have time, motivation or resources to engage in EPS.

Little search and evaluation before purchase. Consumers always look for familiarity and

low prices.

Limited Problem Solving

Habitual Problem Solving

Lowest degree of complexity .Same brand and same product, unless

'out-of-stock‘. Inertia to change. Brand is trusted.

Determinants of consumer behaviour

Internal factors:Perception, learning, motivation,

belief and attitude, personality, lifestyle, life cycle.

External factors:-Culture, social class, reference

groups.

Perception

Unlike motivation that requires a reaction to a stimulus, perception relates to the meaning that is assigned to that stimulus. As marketers we are interested in how buyers perceive and react to products in relation to such matters as quality, aesthetics, price and image, since products not only exist in practical terms, but also how they are perceived by consumers in relation to need satisfaction. This perception by the buyer is affected by the nature of the product itself, by the circumstances of the individual buyer, and by the buyer’s innate situation in terms of how ready they are to make the purchase in terms of needing it at a particular point in time. It is, or course, necessary that the product or service (i.e. the stimulus) receives the attention of the potential buyer. Buyers have numerous stimuli competing for their attention, so marketers must make their stimuli as interesting and attractive as possible because potential buyers only act on information that is retained, and this is the foundation of how the product or service is communicated together with the choice of media.

Learning Experience precedes learning and this can alter

perceptions and attitudes. It also intensifies a shift in behaviour, so when a buyer perceives that certain products are more favourable than others within his or her reference group, repeat purchases are made to promote this acceptability. Every time a satisfactory purchase is made, the consumer becomes less likely to depart from this purchasing behaviour The result is brand loyalty, and the ultimate success of marketing is in terms of customers making repeat purchases or becoming ‘brand loyal’.

Motivation

Hierarchy of needs (from A.H.Maslow) Physiological needs - hunger, thirst and shelter Safety needs - protection and security Social needs - recognition and belonging Respect and self-esteem Self actualisation

Most purchasing decisions are a composite of such motives, quite often a deciding factor might be price which is of course more of an economic restriction than a motive. It can, therefore, be seen that a number of motives might be at play when making a purchasing decision - some motives stronger than others - and the final decision might be a compromise solution.

Belief and AttitudeIn marketing terms, the sum total of our attitudes can be regarded as a set of cognitions that a potential buyer has in relation to a potential purchase or a purchasing environment. This is why certain stores or companies go out of their way to engender favourable attitudes and it is why manufacturers seek to induce loyalty towards their particular brand or product. Once this attitude has been established in the mind of the consumer, it might be difficult to alter. Even a minor dissatisfaction can cause a fundamental shift in disposition. This process can work for and against a manufacturer or retail establishment, an a method of attempting to change attitude is through promotional appeals and through a programme of public relations.

Personality and Self concept :This means how we think other people see us, and how we see ourselves. As individuals we might wish to create a picture of ourselves that is acceptable to our reference group. This is communicated to the outside world by our individual behaviour. Marketers are interested in this behaviour as it relates to our purchase and consumption of goods. Personality is the principal component of the self concept. It has a strong effect upon buyer behaviour. Many purchase decisions are likely to reflect personality, and marketers must consider personality when making marketing appeals. Psychological theory suggests that we are born with instinctive desires which cannot be satisfied in a socially acceptable manner and are thus repressed. The task of marketing in this context is to appeal to inner needs, whilst, at the same time, providing products which enable them to be satisfied in a socially acceptable way.

Lifestyle:- lifestyle is the pattern of living as expressed in person’s activities, interests and opinions. Lifestyle have been found to correlate with purchasing behaviour. Company can choose advertising which is in line with the values and beliefs of this group.

Life cycle:- Disposable income, purchase and purchase requirements may vary according to life cycle stages.

Extenal factors

Culture:- culture refers to traditions, values and basic attitudes of whole society within which an individual lives.cultural norms are learnt by an individual from childhood.culture teaches an individual the acceptable norms of behaviour and tells him rights or wrongs.cultural influences can be seen in food habits and dressing style of people.

Social class:-social class refers to hierarchical arrangement of society into various divisions, each of which signifies social status or standing. Income differences contribute to differences in social status.

Reference groups:- Family, close friends, school mates, neighbourhood etc. all influence buying behaviour of individual.

Customer loyalty and profitability

Some of the key arguments for customer loyalty include Reduced Customer Acquisition costs – Since it costs R to

acquire new customers, any customer you hold on to saved you R. The Loyalty Effect: Longer a customer stays longer they keep

paying you. Price Tolerance: Loyal customers keep buying from you because

they are delighted by your product and are less sensitive to prices. Some even claim that loyal customers do not even bother to use coupons and promotions, thereby saving you money.

Decreasing Cost to Serve: The more you understand your customer’s usage behavior and needs fewer the mistakes in servicing them and hence lower the cost to serve them.

Bump From Word of Mouth: Loyal customers are also your best marketers, they are happy to write online reviews and promote your products to all their friends and web communities. This means they generate additional incremental revenue.

Arguments against customer loyalty

Loyal customers may be in actual more expensive to serve. They often try to get premium service and price discounts.

Long-term customers consistently pay less than newer customers do. They believe that they deserve lower prices because co. profit from their buying consistently from them.

Customers that know they are loyal are able to use this knowledge to demand special arrangements, deliveries outside of normal opening hours, discounts, better quality, the right to choose first, etc.

The majority of companies must - in order to create the loyalty - spend lots of time and money on maintaining and expanding loyalty. And it is costly to have loyalty programs, special arrangements, publishing newspapers and folders, arranging special previews, etc.

Customer portfolio management

A customer portfolio comprises the various groups that make up the customer base of a business. For example, Coca-Cola's customer portfolio consists of restaurants, grocery stores, amusement parks and sports arenas.

Customers vary in their value to co. some are consistent big buyers while some are small buyers. Customers can also be classified on the basis of probability of future spending. The less of probability of his spending larger would be risk to co.

The existing portfolio of customers of co. would have combination of revenue and risk.

Before co. target right type of customer, it has to gather sufficient information about him to classify his revenue potential and risk.

Emotional engagement with customers

A co. should be able to connect emotionally with its customers. Following 3 practices will help companies in making their customers more loyal.

It is important to show that the co. cares about customers who have been with co. for long time.

It is important to treat customers with dignity .

It is important to trust on customers.

CRM Customer Relationship Management

(CRM) is a widely implemented strategy for managing a company’s interactions with customers, clients and sales prospects. It involves using technology to organize, automate, and synchronize business processes—principally sales activities, but also those for marketing, customer service, and technical support. The overall goals are to find, attract, and win new clients, nurture and retain those.

CRM (customer relationship management) is an information industry term for methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized way. For example, an enterprise might build a database about its customers that described relationships in sufficient detail so that management, salespeople, people providing service, and perhaps the customer directly could access information, match customer needs with product plans and offerings, remind customers of service requirements, know what other products a customer had purchased, and so forth.

CRM consists of: Helping an enterprise to enable its marketing departments to

identify and target their best customers, manage marketing campaigns and generate quality leads for the sales team.

Assisting the organization to improve telesales, account, and sales management by optimizing information shared by multiple employees, and streamlining existing processes (for example, taking orders using mobile devices)

Allowing the formation of individualized relationships with customers, with the aim of improving customer satisfaction and maximizing profits; identifying the most profitable customers and providing them the highest level of service.

Providing employees with the information and processes necessary to know their customers, understand and identify customer needs and effectively build relationships between the company, its customer base, and distribution partners.

Relationship marketing One-to-one marketing (sometimes expressed

as 1:1 marketing) is a customer relationship management (CRM) strategy emphasizing personalized interactions with customers. The personalization of interactions is thought to foster greater customer loyalty and better return on marketing investment. The concept of one-to-one marketing as a CRM approach was advanced by Don Peppers and Martha Rogers in their 1994 book, The One to One Future.

One-to-one marketing refers to marketing strategies applied directly to a specific consumer. Having a knowledge of the consumer's preferences enables suggesting specific products and promotions to each consumer. One-to-one marketing is based in four main steps in order to fulfill its goals: identify, differentiate, interact and customize.

Identify: In this stage the major concern is to get to know the customers of a company, to collect reliable data about their preferences and how their needs can best be satisfied.

Differentiate: To get to distinguish the customers in terms of their lifetime value to the company, to know them by their priorities in terms of their needs and segment them into more restricted groups.

Interact: In this phase it is needed to know by which communication channel and by what means contact with the client is best made. It is necessary to get the customer's attention by engaging with him in ways that are known as being the ones that he enjoys the most.

Customize: It is needed to personalize the product or service to the customer individually. The knowledge that a company has about a customer needs to be put into practice and the information held has to be taken into account in order to be able to give the client exactly what he wants.

Examples of companies that have made use of these techniques in order to persuade their clients.

Dell Computers; Smart Cars;


Organizational Buying Process


Variables

Demographic VariablesOperating VariablesPurchasing ApproachSituational FactorsPersonal Characteristics


Different types of Organizational PurchasesStraight RebuyModified RebuyNew Task Purchase

SEGMENTATION & TARGETING


MARKET SEGMENTATION

Market isPeople or Organization withNeeds or Want withAbility or Willingness with

Segmentation isIt is a process of dividing total market into

group of consumer who have relatively similar product needs.

Market Segment

Within a Market a

•Segment is a Sub-Group of•People Or Organizations•Sharing one or More Characteristics•That Cause them to have Similar Needs

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Market Segmentation - Why segment markets?

There are several important reasons why businesses should attempt to segment their markets carefully. These are summarized below better matching of customer needs.

Customer needs differ. Enhanced profits for business. Customers have different disposable income. Better opportunities for growth. Market segmentation can build sales. Retain more customers. Target marketing communications. Gain share of the market segment

Bases for Segmenting Consumer Markets

Geographic

DemographicAge, gender, family size and life cycle, or income

PsychographicSocial class, lifestyle,

or personality

BehavioralOccasions, benefits, uses, or responses

Nations, states, regions or cities

Target marketing The process of evaluating each market

segment’s attractiveness and selecting one or more segments to enter.

Identifying those particular groups of customers which your product/service is capable of meeting their requirements (needs) most.

Each of these groups constitute a market segment.

Selecting one or more segments to enter. Establishing and communicating the product’s

key distinctive benefits in that market.

Evaluating market segmentsSegment sizeGrowthSegment attractivenessCompany objectives and resources Competitors Buying power Supplier power

Market TargetingSingle segment concentrationSelective specializationProduct specializationMarket specializationFull Market coverage - undifferentiated marketing differentiated marketing

STPMarket

segmentation1. Identify bases

for segmenting the market.

2. Develop segment profiles

Target marketing3. Develop

measure of segment attractiveness

4. Select target segments.

Market positioning

5. Develop positioning (differentiation) for target segments.6. Develop a marketing mix for each segment.

Product positioning

The way that product is defined by consumers on important attributes - the place the product occupies in consumer’s minds relative to competing products .

Positioning is the art of designing the company’s offering and image to occupy a distinctive place in the mind of the target market.

Positioning Strategies

AttributeBenefitUse or applicationUserCompetitorProduct categoryPrice/quality

Developing the marketing mixMarketing mix: the set of controllable

tactical marketing tools: product, price, place and promotion that the firm blends to produce the response it wants in the target market.


POSITIONING (Points of Parity and Points of Difference)

Once a marketer has defined the target market and the type of competition, it’s imperative for the marketer to define the basis of this positioning. This can be done by the defining the Points of Parity and Points of Difference.


POP

Points of Parity (POP) are usually the attributes or functionalities or benefits or any other marketing mix elements that are not unique to the brand and might be shared by some or all the competitors, as they mostly include the basic necessities for a brand to be considered in a particular category.


There are two types of Points of Parity:

i)Category Points of Parity: These represent the necessary elements that a brand should possess for a consumer to consider it in a particular category. In other words, these elements ensure that a consumer considers your brand too while considering your competitors.

ii)Competitive Points of Parity: Once your brand provides the basic elements required by the category, the next step is to add elements which would negate the competitors’ points of difference. It gives a brand a good competitive positioning if it can provide similar or better elements as compared to its competitor’ POD.

Once a brand has established its Points of Parity, to be considered in a specific category and negated its competitors’ advantage, the next step is to develop and highlight its own advantage in the category.

Points of Difference (POD) are usually the attributes or functionalities or benefits or any other marketing mix elements that a consumer strongly associates with a brand, which he/she feels is not offered by and of the competitors. To define in short, Points-of-difference are relatively distinct aspects of a brand, as compared to its competitors.


POD Points of Difference (POD) are usually the attributes or

functionalities or benefits or any other marketing mix elements that a consumer strongly associates with a brand, which he/she feels is not offered by and of the competitors. To define in short, Points-of-difference are relatively distinct aspects of a brand, as compared to its competitors.

Unique Selling Proposition (USP)Basically Unique Selling Proposition is the distinctive unique product benefit, not offered by any competitor. Hence, Unique Selling Proposition and Points of Difference invariably talk about the same thing. Quite often you’ll notice these two terms being interchangeably used.


SUMMARY

Points of Parity is what gives a brand a competitive positioning in a category, while it’s the Points of Difference which gives a brand a competitive advantage over the competitors in that category.


BRANDING The process involved in creating a unique

name and image for a product in the consumers' mind, mainly through advertising campaigns with a consistent theme. Branding aims to establish a significant and differentiated presence in the market that attracts and retains loyal customers.


BRAND EQUITY “The value of a brand. From a consumer perspective,

brand equity is based on consumer attitudes about positive brand attributes and favourable consequences of brand use.”

AmericanMarketingAssociation

Branding expert David Aaker defined brand equity back in 1991 as:

“A set of assets and liabilities linked to a brand, its name and symbol, that adds to or subtracts from the value provided by a product or service to a firm and/or to that firm’s customers.” – David Aaker


BRAND EQUITY

Both of the above definitions are excellent, but if you put them together, you get an even better definition of brand equity.

“The tangible and intangible value that a brand provides positively or negatively to an organization, its products, its services, and its bottom-line derived from consumer knowledge, perceptions, and experiences with the brand.” — Susan Gunelius


5 Stages of Brand Experience

Brand Loyalty is typically the result of brand equity, and with brand loyalty comes increased market share. In fact, there are 5 stages of brand experience that lead to positive brand equity:

Brand awareness: Consumers are aware of the brand. Brand recognition: Consumers recognize the brand and know

what it offers versus competitors. Brand trial: Consumers have tried the brand. Brand preference: Consumers like the brand and become

repeat purchasers. They begin to develop emotional connections to the brand.

Brand loyalty: Consumers demand the brand and will travel distances to find it. As loyalty increases so do emotional connections until there is no adequate substitute for the brand in the consumer’s mind.


Brand Extension Brand extension or brand stretching is a

marketing strategy in which a firm marketing a product with a well-developed image uses the same brand name in a different product category. The new product is called a spin-off.

Brand Extension can leverage a brand name into other product categories, but success is a function of transferability of the associations, the complementarity of the new product, the similarity of the users of the new product, and the transferability of the brand symbol.

PRODUCT

Product is most important element in marketing mix. People generally buy product because they feel product are capable of serving their needs.

130

Types of Products

ConsumerProducts

IndustrialProducts

PRODUCTS

Services

Product classification

Business product Consumer productTechnology productsCommodity ProductsCustomized products

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Product Items, Lines, and Mixes

Product Item

Product Line

Product Mix

A specific version of a product that can be designated as a

distinct offering among an organization’s products.

A group of closely-related product items.

All products that an organization sells.

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Product MixWidth – how many product lines a company hasLength – how many products are there in a product lineDepth – how many variants of each product exist within a product lineConsistency – how closely related the product lines are in end use

Product mix Product mix is the sum total of all products

that a company offers. For example, a pet food manufacturer may offer several varieties of dog and cat food. These multiple products may serve different customers, dog and cat owners, but the products are all part of the company's product mix. Products within a product mix can either be similar or variegated. There are also following dimensions to product mix: width, length.

Width The width of product mix includes all the product lines

that a company sells. For example, if a vitamin company sells various vitamins, diet products and sports drinks, its product width is three

Length The length of a company's product mix pertains to the

total number of products the company sells, For example, a small consumer products company may have three product lines: snacks, cereal and canned meats. This consumer products company may sell five snack items, four cereals and three varieties of canned meats. Therefore, the company's product mix length is 12

Depth:-A company's product mix depth pertains to the total number of variations for each product. .Product variation can include flavor, fragrance, size and any other salient attribute. For example, if a small pastry manufacturer sells three flavors of pastries and two sizes of each flavor, the product depth is six.


Product Management

Product management is an organizational lifecycle function within a company dealing with the planning, forecasting, and production, or marketing of a product or products at all stages of the product life cycle.


Product Development

Testing Identifying new product candidates Gathering the voice of customers Defining product requirements Determining business-case and feasibility Scoping and defining new products at high level Evangelizing new products within the company Building product roadmaps, particularly technology

roadmaps Developing all products on schedule, working to a critical

path Ensuring products are within optimal price margins and up to

specifications Ensuring products are manufacturable, and optimizing cost

of components and procedures.


Product Development


Product Marketing

Product Life Cycle considerationsProduct differentiationProduct naming and brandingProduct positioning and outbound messagingPromoting the product externally with press,

customers and partnersConducting customer feedback and enabling

(pre-production, beta software)Launching new products to marketMonitoring the competition


Inbound and Outbound Product Management

Many refer to inbound (product development) and outbound (product marketing) functions.

Inbound product management (aka inbound marketing) is the "radar" of the organization and involves absorbing information like customer research, competitive intelligence, industry analysis, trends, economic signals and competitive activity as well as documenting requirements and setting product strategy.

In comparison, outbound activities are focused on distributing or pushing messages, training sales people, go to market strategies and communicating messages through channels like advertising, PR and events.


Product Concept Product concept is the understanding of the

dynamics of the product in order to showcase the best qualities and maximum features of the product. Marketers spend a lot of time and research in order to target their attended audience. Marketers will look into a product concept before marketing a product towards their customers.

While the "product concept" is based upon the idea that customers prefer products that have the most quality, performance, and features, some customers prefer a product that is simpler and easier to use.


New Product Development


Stage Gate Process for NPD Stage Gate process is a systematic way of

generating, then pruning, a large number of ideas into a small number of products the firm successfully launches.

A gate after each stage where the firm must make a go/no – go decision.

Type I error- Investing in a project that ultimately fails; these error occur when such a project is allowed to move from one stage to the next.

Type II error- Rejecting a project that would have succeeded.


Product Adoption Process


PRICE & PRICING

Price is the assigned numerical monetary value that one puts on the utility that one receives for goods and services. Price in our society is generally a monetary expression and is the value assigned to a bundle of form, time, place and possession utility. The price set serves as the basis of exchange and is thus an index of value for goods and services. price of new product is critical and new product must be priced according to what the market will bear.


PRICING OBJECTIVES The whole pricing package that we have to device so as to

keep working towards profitability and corporate gains. We must consider:1. The Company Objective (Financial, Marketing & Strategy

Objective of the company).2. Price Elasticity (Economic Concept).3. Maximizing Long term & Short term profit.4. To increase Sales Volume & Market share.5. Market Stability.6. Maintain Price Leadership.7. Avoid Government Intervention/ Investigation.8. Obtain & maintain the loyalty in network marketing.9. Social Ethical or Ideological Objectives.10. Competitive Advantage


PRICING OBJECTIVES

A brand should not be underpriced in relation to its quality and reputation. At the same time a brand should not be over-priced which is too high for the consumer. Product differential can be set to charge extra price.

Brand image is relevant in pricing. It enables a company to introduce product at premium price though they are only slightly better than existing products.


PRICING POLICIES??


PRICE & PRICING

Correct and incorrect price has direct bearing on success or failure of the product. Mostly consider cost-plus price which recovers all costs and puts a mark up. Competitive pricing is the other most widely practiced method of setting the prices.

Pricing is the strategic process of applying value to purchase and sales order. Marketing management must address all queries related to pricing. Now a days Value base pricing is in demand.


What the Market can Bear? VALUE BASE PRICING


What the Market can Bear?The relative value of an offer

determines what the market cab bear. More than this people won’t pay.

Value Pricing is also called value-in use pricing. Here a price is assigned to a product based upon its value to the consumer in use of the product.


PERCEIVED CUSTOMER VALUECreating Value: The firm creates

value in its offer primarily through non-price elements in the marketing mix

Measuring Value: Measuring the value customers perceive in firm and competitor offers is critical. Approach are: Direct Value Assessment & Rupeemetric Method.

Perceived Value


COST PLUS PRICING

Cost plus pricing is a pricing methodology used by most firms. Despite its popularity, it is the wrong way to set prices. Cost plus pricing simply by identifying product costs, then adding a pre-determined profit margin (mark-up).

Advantage of Cost-plus pricing are:1. Profitability2. Simplicity3. Birth Control4. Death Control


Competitive Pricing

The firm should always consider competitor price. Basing the firm’s price on competitor prices is legal and ensure price parity, but focusing too heavily on competitor pricing strategies has distinct disadvantage.

Maintain Price LeadershipDiscourage New entrantsSustainable Competitive Advantage.


Pricing Methods Skimming and Penetration Pricing Price Discrimination and Variable Pricing. Dynamic Pricing Fixed Pricing or Flat Rate Pricing Customer Driven Pricing Auction Pricing Psychological Pricing Complementary Product Pricing Gray Market Pricing Pay-what-you want Pricing Topsy-Turvy Pricing Government Pricing Tactical Pricing Discounting Pricing


PERCEIVED CUSTOMER VALUEOPTION COMPARED PREFERRED

OPTIONEXTRA PRICE FOR

PREFERRED OPTION

A AND B B 600

A AND C C 780

A AND D A 300

B AND C C 180

B AND D B 480

C AND D C 720


Rupeemetric Method

Responses for four products: A,B,C, & D We calculate the Customer’s relative Value for these

options as follows: The extra price is positive for the preferred option,

negative for the non-preferred option. Each option has three comparisons. Sum these extra

prices for each option. Divide the sums of extra prices by three to calculate

the average extra price. Using the least valued as a base, find the difference

between the base and the average extra price for each option. This figure is what the customer would pay over the base.


PERCEIVED VALUE ANALYSIS

BENEFIT REQUIRED

RELATIVE IMPORTANCE WEIGHTING

SUPLIER A PRICE=5,000RATING TOTAL

SUPLIERBPRICE=45,00RATING TOTAL

SUPLIERCPRICE=3,000RATING TOTAL

CHAIR DESIGN 20 5 100

7 140

6 120

COMFORT 30 6 180

8 240

4 120

FABRIC QUALITY 15 10 150

9 135

8 120

FABRIC DESIGN 15 5 75

7 105

4 60

EASE OF PURCHASE

20 8 160

10 200

8 160

GRAND TOTAL 100 665

820

580


Perceived Value Analysis A,B, & C represent three different suppliers of easy

chairs. The results and interpretation are: Perceived Value: supplier B at Rs 820 offers the

greatest perceived value, followed by A-665 and C-580.

Price: supplier A has the highest price – Rs. 5,000; followed by B- Rs, 4,500 and C-Rs. 3,000.

Supplier C has the lowest perceived value and the lowest price, but A and B are misordered. Supplier B has the greatest perceived value -820 versus 665 for supplier A. But supplier A’s price is higher – Rs 5,000 versus Rs 4,500. since supplier B provides greater value for a lower price, it should be gaining market share.


COST PLUS PRICING

Costs are important for setting prices. After all, costs represent one-half of the profit equation: profit=sales revenues-costs. Cost plus pricing is a pricing methodology used by many firms. Despite its popularity, it is the wrong way to set prices. Cost plus pricing proceeds simply by identifying product costs, then adding a pre-determined profit margin(mark up).


COST PLUS PRICINGS.

NO.Costs Price

1. Variable Costs Rs. 4,00,000

2. Total Fixed Costs Rs. 3,00,000

3. Total Costs Rs. 7,00,000

4. Standard mark-up: 15% of costs Rs. 1,05,000

5. Price Rs. 8,05,000


Role of cost in profit planningPr ice (a) Estimated

Unit Sales Volume (b)

Sales Revenue (c=a x b)

Estimated Cost (d)

Profits (e= c - d)

480 650 2,88,000

600 500 270,000

720 400 246,000

840 300 222,000


COST PLUS PRICING

Profitability: All sales seem profitable as price

must, by definition, be above cost.Simplicity: If the firm knows its costs, pricing is

simple. Anyone can do the math.Defensibility: Legally acceptable and often

required for government and other cost-plus contracts.


Integrated Marketing Communication Many communication tools and techniques are

available for the firm. These are: Personal Communication- face to face personal

selling, telemarketing. Mass Communication- traditional advertising,

direct marketing, packaging, publicity and public relation, sales promotion.

Digital Communication- Online advertisement, website, blogs, mobile marketing, social marketing, facebook, twitter.

Word-of-Mouth Communication- Satisfy or Dissatisfy customer.


IMC ProcessContext Analysis (Desire, Communication Targets/Objectives)

Promotional Goals (Corporate Goals, Marketing Goals, Common goals)Promotional Strategy (Push or Pull Strategy)

Coordinated Communication (Integrated or Interlinked)

Implementation (Action Center)

Control & Evaluation


PROMOTION This brings about synergy and better use of

communication funds. Balancing the ‘push’ and ‘pull’ strategies. Improves the company’s ability to reach the right consumer at the right place at the right time with the right message.

ADVERTISING SALES PROMOTION PERSONAL SELLING PUBLIC RELATION PUBLICITY PROPAGANDA


ADVERTISING

Any paid form of non-personal presentation and promotion of ideas, goods, or services

Advertising tools Print (newspapers, magazines) TV Radio Outdoor Online


Advertising StrategyElement Question Link to Market &

Communication Strategies

Target Audience Whom ? Customers in target segments.Advertising Objectives

What? Operational Objectives.

Messaging What Content? Value propositionExecution How? Effective way to target

customers.Media Selection Where and

When?Select Media to reach in time.

Advertising Budget

How Much? Entire communication budget.

Evaluation Test and Measure?

Variety of measurement methods.

Profiles of major media types:

Print - Newspaper

Flexibility; timeliness; good local marketcoverage; broad acceptability; believability

Short life; poor production quality

Television Good mass-market coverage; low cost per exposure; combines sight, sound, and motion; appealing to the senses

High absolute cost; high clutter; less audience selectivity

Radio Good local acceptance; high geographic and demographic selectivity; low cost

Audio only; low attention (“half heard”); fragmented audiences

Print - Magazine

High geographic and demographic selectivity; credibility and prestige; quality production; long life; good pass-along

high cost; no guarantee of position

Outdoor Flexibility; high repeat exposure; low cost; low message competition; good positional selectivity

Little audience selectivity; creative limitations

Online High selectivity; low cost; immediacy; interactive capabilities

Small, demographically skewed audience; low impact; audience controls exposure

Medium Advantages Limitations


SALES PROMOTION

SP is a complex blend of communications techniques providing extra customer value, typically for trial to stimulate immediate sale.

Consumer promotionTrade promotionRetail promotion


SALES PROMOTION Short-term incentives to encourage the purchase or sale of

a product or service. Sample: a small amount of a product offered to customers

for trial. (perfumes) Coupon: certificate that gives buyers a saving when they

purchase a specified product Price off (cents-off deal): reduced price that is marked by

the producer directly on the label or package. Premiums: prizes, gifts consumers receive when

purchasing products. (shampoo with shower gel). Discount: a straight reduction in price on purchases during

a stated period of time Allowances: promotional money paid by manufacturers to

retailers in return for an agreement to feature the manufacturer's products in some way .


PERSONAL SELLING

Personal presentation by the firm’s sales force for the purpose of making sales and building customer relationships.

Personal selling tools Personal presentation Trade shows Telecommunication


PUBLIC RELATION Building good relations with the company’s

various publics by obtaining favorable publicity, building up a good “corporate image”, and handling or heading off unfavorable rumors, stories, and events

It is unpaid advertising PR tools

Press releases Sponsorships (Mc Donald’s and the hospital

53753) Special events (Vodafone and the charity

complex)


PUBLICITY

CHANNEL MANAGEMENT AND DISTRIBUTION


DISTRIBUTION SYSTEM

Distribution System identifies and describes intermediaries that facilitate supplier goods and services reaching consumers and/or other end-user customers. A Distribution Channel or network comprises a subset of these entities; the functions they perform and their inter relationships are continually in flux.


Differing views of DistributionResource (Location)

Iron, Ore, Coal,

Limestone (Australia)

Steel Processing Equipment

s (Germany)

Capital(Korea)

CONCENTRATION

Producer(Location) Steel Manufacturer Company (India,

Delhi)

Product Prefabricated Steel Beams (Uttarakhand)D ISPERSION

Customer (Location)

India , Argentina, Germany, Australia, Korea

What is a Marketing Channel?

This is a set of interdependent organizations involved in the process of making a product or service available for use or consumption.

The distribution channel moves goods and services from producers to consumers. It overcomes the major time, place, and possession gaps that separate goods and services from those who would use them. Members of the marketing channel perform many key functions. Some help to complete transactions:

Distribution Channel Functions

Information: gathering and distributing marketing research and intelligence information about factors and forces in the marketing environment needed for planning and aiding exchange.

Promotion: developing and spreading persuasive communications about an offer.

Contact: finding and communicating with prospective buyers.

Matching: shaping and fitting the offer to the buyer's needs, including activities such as manufacturing, grading, assembling, and packaging.

Negotiation: reaching an agreement on price and other terms of the offer so that ownership or possession can be transferred.

Channel Design and Channel Management Decisions

Selection of Channel :

The selection of distribution is affected by many of factors, which play significant role while choosing the channel for distribution. It may include the buying pattern of consumer, type of the product is perishable, or auto mobile, weight and bulk and it also depends on the company's resources. the main affecting factors are following :-

Marketing Factors Product Factors Producer Factors Competitive Factors Distributors Intensity

SELECTING A DISTRIBUTION CHANNEL

Exclusive distribution Severely limited number of resellers in a particular geographic area .

Selective distribution Moderate number of resellers.

Intensive distribution large number of resellers.

Exclusive distribution is distribution of a product through one wholesaler or retailer in a specific geographical area. The automobile industry provides a good example of exclusive distribution. Though marketers may sacrifice some market coverage with exclusive distribution, they often develop and maintain an image of quality and prestige for the product. In addition, exclusive distribution limits marketing costs since the firm deals with a smaller number of accounts. In exclusive distribution, producers and retailers cooperate closely in decisions concerning advertising and promotion, inventory carried by the retailers, and prices. Exclusive distribution is typically used with products that are high priced, that have considerable service requirements, and when there are a limited number of buyers in any single geographic area. Exclusive distribution allows wholesalers and retailers to recoup the costs associated with long selling processes for each customer and, in some cases, extensive after-sale service. Specialty goods are usually good candidates for this kind of distribution intensity.

Selective distribution is distribution of a product through only a limited number of channels. This arrangement helps to control price cutting. By limiting the number of retailers, marketers can reduce total marketing costs while establishing strong working relationships within the channel. Moreover, selected retailers often agree to comply with the company’s rules for advertising, pricing, and displaying its products. Where service is important, the manufacturer usually provides training and assistance to dealers it chooses. Cooperative advertising can also be utilized for mutual benefit. Selective distribution strategies are suitable for shopping products such as clothing, furniture, household appliances, computers, and electronic equipment for which consumers are willing to spend time visiting different retail outlets to compare product alternatives. Producers can choose only those wholesalers and retailers that have a good credit rating, provide good market coverage, serve customers well, and cooperate effectively.

An Intensive Distribution strategy seeks to distribute a product through all available channels in an area. It provides maximum coverage of market by using all available outlets. Usually, an intensive distribution strategy suits items with wide appeal across broad groups of consumers, such as convenience goods.

Conventional Marketing Channels

A conventional distribution channel is a channel consisting of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits even at the expense of profits for the system as a whole. In this case, intermediaries operate independently or enter into some form of arrangements with suppliers and other intermediaries. Moreover, a conventional channel network tends to be fragmented because manufacturers, wholesalers and retailers bargain aggressively with each other over the prices and others. weakness of a conventional distribution system is that each and every member tries to reap a lot of profits in order to pursue their own corporate objectives. This may cause drawbacks for the system as each independent firm shows little concern for overall channel performance.

Channel integration:Describes the degree to which the three types

of marketing channels (Distribution, Communication and Service) work together to achieve optimum results for the company and provide a seamless experience for the customer or user. An example of channel integration is allowing a customer who places an order online to pick it up at a retail location---resulting in increased convenience and reduced shipping costs for the customer, and reduced inventory costs for the company at the retail location.


Vertical & Horizontal Distribution System Vertical Distribution System(VDS) is one in

which the main members of a distribution channel- producers, wholesalers, and Retailers work together as a modified group in order to meet consumer need.

Horizontal Distribution System (HDS) is merger of different channel on the same level in order to pursue marketing opportunity. By working together, channel can combine their capabilities or marketing resources to accomplish more than any one channel could alone.

Channel managementOnce the company has reviewed its

channel alternatives and decided on the best channel design, it must implement and manage the chosen channel. Channel management calls for selecting and motivating individual channel members and evaluating their performance over time.

Selecting Channel Members

Producers vary in their ability to attract qualified marketing intermediaries. Some producers have no trouble signing up channel members. For example, when Toyota first introduced its Lexus line in the United States, it had no trouble attracting new dealers. When selecting intermediaries, the company should determine what characteristics distinguish the better ones. It will want to evaluate each channel member's years in business, other lines carried, growth and profit record, cooperativeness, and reputation.

Motivating Channel Members

Once selected, channel members must be motivated continuously to do their best. The company must sell not only through the intermediaries but to them. Most companies see their intermediaries as first-line customers. Some use the carrot-and-stick approach: At times they offer positive motivators such as higher margins, special deals, premiums, cooperative advertising allowances, display allowances, and sales contests. At other times they use negative motivators, such as threatening to reduce margins, to slow down delivery, or to end the relationship altogether. A producer using this approach usually has not done a good job of studying the needs, problems, strengths, and weaknesses of its distributors.

Training

Training provides necessary knowledge about manufacturer and its products and helps to build spirit of partnership and commitments .

Evaluating Channel Members

The producer must regularly check the channel member's performance against standards such as sales quotas, average inventory levels, customer delivery time, treatment of damaged and lost goods, cooperation in company promotion and training programs, and services to the customer. The company should recognize and reward intermediaries who are performing well. Those who are performing poorly should be assisted or, as a last resort, replaced. A company may periodically "requalify" its intermediaries and prune the weaker ones.


Channel Conflict ManagementBecause distribution channel

members have multiple organizational relationships, the potential for conflict is high.

Operational Conflict.Strategic Conflict1. Downstream Conflict2. Upstream Conflict


Conflict in Distribution System Because distribution channel members have multiple

organizational relationship, the potential for conflict is high.

Operational Conflict- occurs daily due to late shipments, invoice errors, unfulfilled promises, unacceptable product quality, supplier attempts to load channels by forcing unwanted inventory or intermediaries, and price and margin disagreements.

Strategic Conflict- is more serious and may lead to significant change in channel relationships. Sometimes strategic conflict develops slowly; other times from upstream supplier. Sometimes strategic conflict develops slowly; other times, specific actions precipitate strategic conflict.

Avoiding and resolving conflict

Developing a Partnership Approach:-There should be frequent interaction to develop mutual understanding and cooperation. Manufacturers can provide training, financial help and promotional support.

Legal Issues in Distribution:- The legality of various distribution practices varies by industry and legal jurisdiction. What is illegal in India may be normal business practice elsewhere.

Training & Motivation in conflict handling:- Staff who handle disputes need to be trained in negotiation and communication skills.

Market portioning:- To reduce conflict arising from multiple distribution channels, manufacturers can partition markets on mutually acceptable basis such as customer size or type.

Improved performance:- When manufacturer and channel members improve their performance in respective areas the source of conflict disappears.

Price Discrimination:- The competition Commission of India (CCI), established under the competition Act (2002) prohibit suppliers from collusion, and setting different prices for different buyers where this would reduce competition.

Selecting and Terminating Distribution. State and Local Laws. Tying Agreement.

Physical Distribution System Physical distribution is the group of activities associated

with the supply of finished product from the production line to the consumers. The physical distribution considers many sales distribution channels, such as wholesale and retail, and includes critical decision areas like customer service, inventory, materials, packaging, order processing, and transportation and logistics. You often will hear these processes be referred to as distribution, which is used to describe the marketing and movement of products.

Accounting for nearly half of the entire marketing budget of products, the physical distribution process typically garnishes a lot of attention from business managers and owners. As a result, these activities are often the focus of process improvement and cost saving initiatives in many companies.


Functions of Physical Distribution

The key functions within the physical distribution system are:

Customer serviceOrder processing Inventory controlTransportation and logisticsPackaging and materials


The customer service function is a strategically designed standard for consumer satisfaction that the business intends to provide to its customers. As an example, a customer satisfaction approach for the handbag business mentioned above may be that 75% of all custom handbags are delivered to the customer within 72 hours of ordering. An additional approach might include that 95% of custom handbags be delivered to the customer within 96 hours of purchase. Once these customer service standards are set, the physical distribution system is then designed to attain these goals.

Order processing is designed to take the customer orders and execute the specifics the customer has purchased. The business is concerned with this function because it directly relates to how the customer is serviced and attaining the customer service goals. If the order processing system is efficient, then the business can avoid other costs in other functions, such as transportation or inventory control. For example, if the handbag business has an error in the processing of a customer order, the business has to turn to premium transportation modes, such as next day air or overnight, to meet the customer service standard set out, which will increase the transportation cost.

Inventory control is a major role player in the distribution system of a business. Costs include investment into current inventory, loss of demand for products, and depreciation. There are different types of inventory control systems that can be implemented, such as first in-first out (or FIFO) and flow through, which are methods for businesses to handle products.

First in-first out, or FIFO, is a method in which the new products coming into the warehouse replace existing products of the same SKU so that merchandise is cycled and does not expire or become old as more recent production is available. Flow through, on the other hand, is product that does not get processed in the warehouse. It is off loaded from an inbound trailer, pushed across the warehouse and onto outbound trailers for departure without being stored in the warehouse.


Logistic Management Logistics management is that part of supply

chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers' requirements.“

The logistics management process begins with raw material accumulation to the final stage of delivering goods to the destination.

By adhering to customer needs and industry standards, logistics management facilitates process strategy, planning and implementation.


Logistic Management

Logistics Management involves numerous elements, including:

Selecting appropriate vendors with the ability to provide transportation facilities.

Choosing the most effective routes for transportation.

Discovering the most competent delivery method.

Using software and IT resources to proficiently handle related processes.

Inventory control Inventory control can be a major component of a small business

physical distribution system. Costs include funds invested in inventory, depreciation, and possible obsolescence of the goods. Experts agree that small business inventory costs have dropped dramatically due to deregulation of the transportation industry.

Inventory control analysts have developed a number of techniques which can help small businesses control inventory effectively. The most basic is the Economic Order Quantity (EOQ) model. This involves a trade-off between the two fundamental components of an inventory control cost: inventory-carrying cost (which increases with the addition of more inventory), and order-processing cost (which decreases as the quantity ordered increases). These two cost items are traded off in determining the optimal warehouse inventory quantity to maintain for each product. The EOQ point is the one at which total cost is minimized. By maintaining product inventories as close to the EOQ point as possible, small business owners can minimize their inventory costs.

Warehousing

Small business owners who require warehousing facilities must decide whether to maintain their own strategically located depot(s), or resort to holding their goods in public warehouses. And those entrepreneurs who go with non-public warehousing must further decide between storage or distribution facilities. A storage warehouse holds products for moderate to long-term periods in an attempt to balance supply and demand for producers and purchasers. They are most often used by small businesses whose products' supply and demand are seasonal. On the other hand, a distribution warehouse assembles and redistributes products quickly, keeping them on the move as much as possible. Many distribution warehouses physically store goods for fewer than 24 hours before shipping them on to customers.

Transportation & Logistic Management

Company can use any one or combination of means of transporting which include rail, road, air, water transport, pipelines etc.

Using Voyager Transportation and Logistics management solutions you can systematically balance supply chain logistics management and strategies with customer required policies. Carrier effectiveness and improved inventory management capabilities will enable you to increase perfect orders.

Together, Logility's transportation and logistics management optimization solutions enable you to:

Increase perfect orders. Raise inventory accuracy up to 99.8%. Increase picking and shipping accuracy up to 99.99%. Reduce transportation costs up to 30% for inbound, outbound and inter-

facility moves. Realize up to 80% increases in transportation operational efficiencies Improve customer service. Increase profitability.

Material handling It is moving of products inside the

manufacturer’s plant, warehouses and transport depots. One important innovation is known as unitizing/unit handling—combining as many packages as possible into one load, preferably on a pallet. A second innovation is containerization—the combining of several unitized loads into one box.

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