Answers of Most important questions of Marketing, What is marketing? What is selling?
-
Upload
chitwant-tahalyani -
Category
Marketing
-
view
638 -
download
0
description
Transcript of Answers of Most important questions of Marketing, What is marketing? What is selling?
Question 1: Marketing – What is marketing? Examples. Difference between Marketing and
Selling. Why is Marketing the most important function in an organisation? What are 4 Ps of
Marketing Mix and 7ps of Service Marketing Mix? What is the difference between
Marketing a Good (tangible product) and Marketing a Service?
Answer: Marketing is identifying, understanding and meeting customer needs. It 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.
Marketing is about understanding customers and finding ways to provide products or
services which customers demand.
Example 1- The Volkswagen ‘Fly for Jetta’
Unlike the more serious campaigns from Volkswagen’s yesteryears, this TVC brings to you a
mind-boggling depiction of the idea “Anything for a Jetta”. The ad showcases a boy who is
born with a pair of wings; who has all throughout led a rather super-humanly life. His
biggest choice comes when he has to cut off his wings in order to drive his dream car. Not
able to resist the temptation of driving the luxurious Volkswagen Jetta, he ultimately
decides to get rid of his biggest asset, his ‘wings’. The car manufacturers have amazingly fit
in their unique idea of unparalleled luxury through this fictitious, larger than life backdrop.
Example 2- Airtel “Har ek friend”
The catchiest viral-ad-campaign was created by Airtel. So popular is the jingle, everyone finds
themselves humming the tune to “Har ek friend zaroori hota hai”. The makers of the ad might not
have particularly kept brand’s USPs in mind while making the song, but nevertheless they were able
to gather a more-than-expected fan following for their brand, this financial year. Be it the massive
number of downloads, status updates, or Airtel song sharing on social media, the brand was able to
strike a chord with the urban youth – a major chunk of their target consumers.
Example 3- Coca Cola
From the streets of Paris to villages of Western Africa, Coca Cola is everywhere. All credit
goes to its massive marketing which it has done in the past and still continues to do. It has
got brilliant marketing and customer engagement. How did a little company from Atlanta
become so big? Well the answer is clear, all because of its marketing efforts. Its various
marketing campaigns include-
_Friendship machine
_Coca Cola reason to believe
_Coca Cola even took help of music genres with Coke Studio.
_Even top celebrities like Aamir Khan have endorsed the Brand in India with crazy and
catchy taglines like- ‘Thanda Matlab Coca Cola ‘
Example 4- AMUL
It is yet another brand which has succeeded because of its massive marketing activities.
Right from the hoardings on the road to the amazing advertisement, the marketing by Amul
has been a huge success.
Difference between marketing and selling:
Marketing Selling
Determine future needs and has a strategy to meet those needs for the long term relationship.
Makes customer demand match the products the company currently offers.
Fulfil customer's wants and needs through products and/or services the company can offer.
Fulfil sales volume objectives
Focuses on customer’s needs External market orientation. Focuses on seller’s needs
Customer enjoys supreme importance High pressure to sell goods already produced
Product planning and development to match products with market
Fragmented approach to achieve immediate gains
Integrated approach to achieve long term goals
Converts products into cash
Converts customers’ needs into products Profits through sales volume
Profit through customer satisfaction
Why is Marketing the most important function in an organisation?
Marketing is important because it enhances the production and distribution of products and services. It also promotes product awareness to the public, boosting sales while at the same time building the company's reputation.
What are 4 Ps of Marketing Mix?
The term marketing mix is referred to the amalgamation and use of the four P’s of
marketing in a manner so as to attain the highest level of customer motivation to buy a
particular product or services. Price, place, product and promotion are elements which
constitute the four P’s of the marketing mix. Some commentators may increase the
marketing mix to the Five P's, to include people. Others may increase the mix to Seven P's,
to include physical evidence and process.
PRODUCT
Product is the bases for all the marketing activities undertaken because all the marketing
communications are aimed towards selling utmost quantities of the product .
PRICE
Price plays an important role in the success of a product or service. Not only is it a major
determining factor for the customer while buying a product but also plays a major part in
determining the image of a product in the mind of the customer. The seller has to also keep
in mind the profit element while deciding the price of a product. Thus a balance between all
the aspects has to be achieved to determine a balanced pricing strategy.
PLACE
To sell and buy a product or service a common place is required which is suitable for both
the customers as well as the sellers. The selection of a particular marketplace suitable is
very essential to match the product and brand image.
Promotion
Promotion is basically aimed towards creating an awareness in the market and the
customers mind about a particular product or service. Its cheaper than advertising and can
definitely be more credible .It helps strengthen the brand image and can be extensively
used for new product launch.
What are 7 Ps of service marketing?
1.Product
2.Price
3.Place
4.Promotion
5.Process
6.Physical evidence
7.People
What is the difference between Marketing a Good (tangible product) and Marketing a
Service?
Products come to customers whereas customers come to services. Product benefits are
embedded inside the product / package and can be transported to their customers through
distribution channels. Services are location-based and the customers need to travel to
theses service locations. When it comes to marketing of services, do remember that it is all
about customer relationships. Repeated experimentation is possible when it comes to
products and it is these experimentations that decide if the product sells itself or not. The
risk level has been lowered since the experience of the product is tested beforehand and
the customer is secure in the knowledge that the test product and final one delivered are
not radically different from one another.
Question 2 What is positioning? What is a Positioning Map? What is an FCB Grid? What are
Points Of Parity (POP) and Points Of Differences? What is Branding?
Answer: A marketing strategy that aims to make a brand occupy a distinct position, relative
to competing brands, in the mind of the customer. Companies apply this strategy either by
emphasizing the distinguishing features of their brand (what it is, what it does and how,
etc.) or they may try to create a suitable image (inexpensive or premium, utilitarian or
luxurious, entry-level or high-end, etc.) through advertising. Once a brand is positioned, it is
very difficult to reposition it without destroying its credibility. Also called product
positioning.
Positioning refers to the perception of a product in the minds of consumer in relation to its
competing product. Positioning map is a graphical device to study and analyse the positions
or perception of each of a group of competing products in respect of two specific product
characteristic.
What is a Positioning Map?
It is a basically a graph that represents the strength or extent of the two product
characteristics on x and y-axis.
What is an FCB Grid?
FCB grid is an integrative model. This model divides goods and services into four categories,
along two axes: the Think/Feel axis, and the High Involvement/Low Involvement axis.
What are Points Of Parity (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.
What is Points Of Differences (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.
What is 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.
The American Marketing Association (AMA) defines a brand as a "name, term, sign, symbol
or design, or a combination of them intended to identify the goods and services of one
seller or group of sellers and to differentiate them from those of other sellers.
Question 3 What is Segmentation? What is Target Marketing? What is a Target Group (TG)?
What is the difference between Target Market or Target Group and Target Audience?
Answer Segmentation is the practice of dividing a customer base into groups of individuals
that are similar in specific ways relevant to marketing, such as age, gender, interests,
spending habits and so on. Customer segmentation allows a company to target specific
groups of customers effectively and allocate marketing resources to best effect. The process
of defining and subdividing a large homogenous market into clearly identifiable segments
having similar needs, wants, or demand characteristics. Its objective is to design a marketing
mix that precisely matches the expectations of customers in the targeted segment.
What is Target Marketing?
Target marketing is a marketing and advertising campaign that is targeted for a specific
group of people defined by age, sex, socioeconomic status, race, or educational level. Target
Marketing refers to the process that involves breaking a market into segments and then
concentrating your marketing efforts on one or a few key segments. .
What is a Target Group (TG)?
Target marketing is the breaking of a market into segments and focussing the marketing
efforts on one or a few important segments. It involves reaching out to consumers or new
customers aiming to sell your products and services to them.
What is the difference between Target Market or Target Group and Target Audience?
Target group is a group of customers towards which a business has decided to aim its
marketing efforts and ultimately its merchandise.
A target market is a specific, well-defined segment of consumers that a company plans to
target with its products, services and marketing activities.
The term "target audience" is a bit narrower; it refers specifically to the group of consumers
targeted by advertisements. Outside of the context of business, target audience can also
refer to the specific group of people targeted by television shows, movies and music
products. An advertisement's target audience can be the same as the brand's target market,
but a target audience can be more well defined.
Question 4 What is a Product Strategy? Explain the Total Product Concept with Examples?
What are Product Mix and Product Line?
Answer A product strategy is a plan for marketing a good that is founded upon an analysis
of the nature of the intended market, how much market share is to be achieved, how the
good is to be marketed and how much profit is anticipated. Most business marketing
directors will develop a clear and realistic product strategy prior to the launch of a new
product into its intended market.
Explain the Total Product Concept with Examples?
Kotler suggested that if you view a product on three levels it will help you extract all the
benefits that your product offers. This strategy has various names including Total Product
Concept, Augmented Product and Three Levels Of a Product.
Level One: Core Product
Level one is the most basic level and simply looks at what people set out to buy and what
benefits the producer would like their product to offer buyers. For example a camera is
expected to take pictures but there may be other benefits that the producer wants the
buyer to enjoy such as a wide lens, face recognition and high definition videos. So prior to
designing any product designers should list the core benefits the product needs to provide.
Level 2: Actual Product
Level two is about translating the list of core product benefits into a product that people will
buy. There may be competitor products offering the same benefits so the aim at this stage is
to design a product that will persuade people to purchase your product. Kotler states that
this can involve deciding on the quality level, product and service features, styling, branding
and packaging. For example Apple's iPhone design has enabled it to become a smart phone
market leader so that by September 2012 it was able to launch the iPhone 5, the 5th version
of this product. There are other smart phones on the market but Apple has managed to
design a product which people pre-order and camp overnight outside Apple's retail stores
so that they can be the first ones to buy the product.
Level 3: Augmented product
Level three involves deciding the additional non tangible benefits that a product can offer.
Competition at this level is based around after sales service, help lines, warranties,
free/cheap delivery and so on. In other words it is things that the product does not do but
customers may find them useful. Non tangible benefits such as product warranties offer
customers peace of mind and demonstrate the manufacturer has faith in the quality of its
product. In fact the ubiqtous use of some augmented benefits have turn some level three
benefits into a customer expectation for example customers expect cars to have
manufacturer warranties.
What are Product Mix and Product Line?
Product mix is a range of associated products that yields larger sales revenue when
marketed together than if they were marketed individually or in isolation from others.It
includes :
1.Width
2.Length
3.Depth
4.Consistency
5.Product market mix strategy
The product mix of a company is generally defined as the complete set of all products a
business offers to a market.
A group of related products manufactured by a single company. For example, a cosmetic
company's makeup product line might include foundation, concealer, powder, blush,
eyeliner, eye shadow, mascara and lipstick products that are all closely related. The same
company might also offer more than one product line. The cosmetic company might have a
special product line geared toward teenagers and another line geared toward women older
than 60, in addition to its regular product line, which can be used by women of any age.
Frequently, a product line includes different products that are offered to the public at
varying price points. This way, a manufacturer or company can ensure that all products
within a line will be purchased by all kinds of people. Product line extension refers to any
additional products that may be added to a current product line.
Through the collection of statistical data, marketers can effectively determine what
products should be kept within a product line, and what products should be phased out.
Pricing is used to create a large barrier between different products, and higher-priced
products are usually justified based upon certain ingredients.
Question 5 What are different types of Pricing Strategies?
Answer Psychological pricing: Pricing designed to have a positive psychological impact. For
example, selling a product at $3.95 or $3.99, rather than $4.00. There are certain price
points where people are willing to buy a product. If the price of a product is $100 and the
company prices it as $99, then it is called psychological pricing. In most of the consumers
mind $99 is psychologically ‘less’ than $100. A minor distinction in pricing can make a big
difference in sales. The company that succeeds in finding psychological price points can
improve sales and maximize revenue. This pricing strategy makes the customer thinks that,
the highest price of a product is the best or quality product.
Price leadership: An observation made of oligopolistic business behaviour in which one
company, usually the dominant competitor among several, leads the way in determining
prices, the others soon following. The context is a state of limited competition, in which a
market is shared by a small number of producers or sellers.
Price discrimination: Price discrimination is the practice of setting a different price for the
same product in different segments to the market. For example, this can be for different
classes, such as ages, or for different opening times.
Premium pricing: Premium pricing is the practice of keeping the price of a product or
service artificially high in order to encourage favourable perceptions among buyers, based
solely on the price. The practice is intended to exploit the (not necessarily justifiable)
tendency for buyers to assume that expensive items enjoy an exceptional reputation, are
more reliable or desirable, or represent exceptional quality and distinction.
Loss leader: A loss leader or leader is a product sold at a low price (i.e. at cost or below cost)
to stimulate other profitable sales. This would help the companies to expand its market
share as a whole.
Value-based pricing: Pricing a product based on the value the product has for the customer
and not on its costs of production or any other factor. This pricing strategy is frequently
used where the value to the customer is many times the cost of producing the item or
service. For instance, the cost of producing a software CD is about the same independent of
the software on it, but the prices vary with the perceived value the customers are expected
to have. The perceived value will depend on the alternatives open to the customer. In
business these alternatives are using competitor’s software, using a manual work around, or
not doing an activity. In order to employ value-based pricing you have to know your
customer's business, his business costs, and his perceived alternatives. It is also known as
Perceived-value pricing.
Question 6 What is the role of “Place” in a Marketing Mix? What is a VMS and an HMS?
What are different format of retail stores found in India? (You may refer to my class slides of
RMS)
Answer: Place (or its more common name “distribution”) is about how a business gets its
products to the customers. The objective of distribution is clear. It is to: to make products
available in the right place at the right time in the right quantities. Distribution matters for a
business of any size – it is a crucial part of the marketing mix. Although figures vary widely
from product to product, roughly a fifth of the cost of a product goes on getting it to the
customer. 'Place' is concerned with various methods of transporting and storing goods, and
then making them available for the customer. Getting the right product to the right place at
the right time involves the distribution system. The choice of distribution method will
depend on a variety of circumstances. It will be more convenient for some manufacturers to
sell to wholesalers who then sell to retailers, while others will prefer to sell directly to
retailers or customers.
What is a VMS and an HMS?
VMS is formally or informally coordinated distribution channel where its independent
members work together to achieve greater efficiency and economies of scale, and to
eliminate channel-conflict arising out of disparate individual objectives. Three common
types of VMS are: (1) Administered: coordination between production anddistribution firms
is achieved by the size and influence of the dominant firm, without a formal agreement or
ownership. (2) Contractual: independent production and distribution firms formally agree to
integrate their resources. Franchising is an example of this type. (3) Corporate: production
firm owns a retail chain (forward integration) or a retail chain owns a production firm
(backward integration).
Where as HMS is A merger of firms on the same level in order to pursue marketing
opportunities. The firms combine their resources such as production capabilities and
distribution in order to maximize their earnings potential. For example, a soft drink
company may combine with a chips producer and the two products are marketing and
distributed together. See also vertical marketing system.
What are different format of retail stores found in India?
Different types of retail formats existing in India are:
Department stores:
Full length discount stores:
Variety stores:
Off price retailer:
Factory outlet:
Speciality stores:
Membership club:
Convenience store:
Hyper market:
Supermarket:
Question 7 What is Brand Equity? How can you Build Brand Equity? (Check my marketing
notes). How can you measure Brand Equity?
Answer: Brand equity is brand's power derived from the goodwill and name recognition that
it has earned over time, which translates into higher sales volume and higher profit margins
against competing brands. It is measured by qualitative and quantitative methods. 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.
How can you Build 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. Positive brand equity can help a
company in a variety of ways. The most common is the financial benefit which enables a
company to charge a price premium for that brand.
How can you measure Brand Equity?
Both qualitative and quantitative brand research as well as performance tracking should be
used to measure equity and performance to ensure brand equity is growing over time. You
can use in-person or virtual one-on-one interviews and focus groups to gather exploratory
data related to your brand’s performance as well as research surveys to track brand equity
growth among larger sample audiences. Of course, research should be conducted with
existing customers as well as former and prospective customers to get a full picture of the
equity the brand holds. At the same time, measuring that research data against financial
performance is critical for strategic planning and decision making.
Using these various methods to collect and analyse data, you can measure performance in
three core brand equity drivers: financial, strength, and consumer.
Question 8 What is Marketing ROI or Return on Marketing Investment (ROMI)?
Answer: Return on marketing investment (ROMI) is a metric used to measure the overall
effectiveness of a marketing campaign to help marketers make better decisions about
allocating future investments. ROMI is usually used in online marketing, though integrated
campaigns that span print, broadcast and social media may also rely on it for determining
overall success. ROMI is a subset of ROI (return on investment).
In the simplest sense, ROMI is measured by comparing revenue gains against marketing
investment. This calculation, however, reflects only the direct impact of marketing
investment on a business's revenue. As a result, many digital marketers include dwell time
or brand awareness in their ROMI metrics in an effort to quantify less tangible benefits and
target future campaigns more effectively. According to ROMI expert Gary R. Powell, with
the right data and analytics, marketers can deliver between 8% - 15% increased revenue,
profit and market share to the client without any increase in marketing investment.
The purpose of ROMI is to measure the degree to which spending on marketing contributes
to profits. Marketers are under more and more pressure to “show a return” on their
activities.
Question 9 What is BCG Matrix and what is the purpose of BCG Matrix? What is Ansoff
Matrix and the purpose of such a Matrix? What is McKinsey 7’s Framework?
Answer: BCG matrix (or growth-share matrix) is a corporate planning tool, which is used to
portray firm’s brand portfolio or SBUs on a quadrant along relative market share axis
(horizontal axis) and speed of market growth (vertical axis) axis.” BCG matrix is a framework
created by Boston Consulting Group to evaluate the strategic position of the business brand
portfolio and its potential. It classifies business portfolio into four categories based on
industry attractiveness (growth rate of that industry) and competitive position (relative
market share). These two dimensions reveal likely profitability of the business portfolio in
terms of cash needed to support that unit and cash generated by it. The general purpose of
the analysis is to help understand, which brands the firm should invest in and which ones
should be divested.
Relative market share. One of the dimensions used to evaluate business portfolio is relative
market share. Higher corporate’s market share results in higher cash returns. This is because
a firm that produces more, benefits from higher economies of scale and experience curve,
which results in higher profits. Nonetheless, it is worth to note that some firms may
experience the same benefits with lower production outputs and lower market share.
Market growth rate. High market growth rate means higher earnings and sometimes profits
but it also consumes lots of cash, which is used as investment to stimulate further growth.
Therefore, business units that operate in rapid growth industries are cash users and are
worth investing in only when they are expected to grow or maintain market share in the
future.
There are four quadrants into which firms brands are classified:
Dogs. Dogs hold low market share compared to competitors and operate in a slowly growing
market. In general, they are not worth investing in because they generate low or negative
cash returns. But this is not always the truth. Some dogs may be profitable for long period of
time, they may provide synergies for other brands or SBUs or simple act as a defense to
counter competitors moves. Therefore, it is always important to perform deeper analysis of
each brand or SBU to make sure they are not worth investing in or have to be divested.
Strategic choices: Retrenchment, divestiture, liquidation
Cash cows. Cash cows are the most profitable brands and should be “milked” to provide as
much cash as possible. The cash gained from “cows” should be invested into stars to
support their further growth. According to growth-share matrix, corporates should not
invest into cash cows to induce growth but only to support them so they can maintain their
current market share. Again, this is not always the truth. Cash cows are usually large
corporations or SBUs that are capable of innovating new products or processes, which may
become new stars. If there would be no support for cash cows, they would not be capable
of such innovations.
Strategic choices: Product development, diversification, divestiture, retrenchment
Stars. Stars operate in high growth industries and maintain high market share. Stars are
both cash generators and cash users. They are the primary units in which the company
should invest its money, because stars are expected to become cash cows and generate
positive cash flows. Yet, not all stars become cash flows. This is especially true in rapidly
changing industries, where new innovative products can soon be outcompeted by new
technological advancements, so a star instead of becoming a cash cow, becomes a dog.
Strategic choices: Vertical integration, horizontal integration, market penetration, market
development, product development
Question marks. Question marks are the brands that require much closer consideration.
They hold low market share in fast growing markets consuming large amount of cash and
incurring losses. It has potential to gain market share and become a star, which would later
become cash cow. Question marks do not always succeed and even after large amount of
investments they struggle to gain market share and eventually become dogs. Therefore,
they require very close consideration to decide if they are worth investing in or not.
Strategic choices: Market penetration, market development, product development,
divestiture
The Ansoff Growth matrix is another marketing planning tool that helps a business
determine its product and market growth strategy.
Ansoff’s product/market growth matrix suggests that a business’ attempts to grow depend
on whether it markets new or existing products in new or existing markets. The output from
the Ansoff product/market matrix is a series of suggested growth strategies which set the
direction for the business strategy.
The 4 variables are :
1.Market development
2.Product development
3.Market penetration
4.Diversification
Mc Kinsey 7 framework includes :
Strategy
System
Shared Values
Skills
Style
Staff
Structure
10) What is an SBU? What is a Value Chain? What is Supply Chain Management?
Answer: Strategic Business Unit is an autonomous division or organizational unit, small
enough to be flexible and large enough to exercise control over most of the factors affecting
its long-term performance.
Because strategic business units are more agile (and usually have independent missions and
objectives), they allow the owning conglomerate to respond quickly to changing economic
or market situations. It is a division within an organization responsible for marketing its own
range of products.
Value chain is a high-level model of how businesses receive raw materials as input, add
value to the raw materials through various processes, and sell finished products to
customers. Value-chain analysis looks at every step a business goes through, from raw
materials to the eventual end-user. The goal is to deliver maximum value for the least
possible total cost. It is an interlinked value-adding activities that convert inputs into
outputs which, in turn, add to the bottom line and help create competitive advantage. A
value chain typically consists of (1) inbound distribution or logistics, (2) manufacturing
operations, (3) outbound distribution or logistics, (4) marketing and selling, and (5) after-
sales service. These activities are supported by (6) purchasing or procurement, (7) research
and development, (8) human resource development, (9) and corporate infrastructure.
The concept of Supply Chain Management is based on two core ideas. The first is that
practically every product that reaches an end user represents the cumulative effort of
multiple organizations. These organizations are referred to collectively as the supply chain.
The second idea is that while supply chains have existed for a long time, most organizations
have only paid attention to what was happening within their “four walls.” Few businesses
understood, much less managed, the entire chain of activities that ultimately delivered
products to the final customer. The result was disjointed and often ineffective supply chains.
Supply chain management, then, is the active management of supply chain activities to
maximize customer value and achieve a sustainable competitive advantage. It represents a
conscious effort by the supply chain firms to develop and run supply chains in the most
effective & efficient ways possible. Supply chain activities cover everything from product
development, sourcing, production, and logistics, as well as the information systems needed
to coordinate these activities.
The organizations that make up the supply chain are “linked” together through physical
flows and information flows. Physical flows involve the transformation, movement, and
storage of goods and materials. They are the most visible piece of the supply chain. But just
as important are information flows. Information flows allow the various supply chain
partners to coordinate their long-term plans, and to control the day-to-day flow of goods
and material up and down the supply chain.
11) What is CRM? What is “Share of Wallet”? What is Customer Life Time Value?
Answer: CRM is the abbreviation for customer relationship management. It entails all
aspects of interaction that a company has with its customer, whether it is sales or service-
related. While the phrase customer relationship management is most commonly used to
describe a business-customer relationship, CRM systems are used in the same way to
manage business contacts, clients, contract wins and sales leads.
CRM is often thought of as a business strategy that enables businesses to:
Understand the customer
Retain customers through better customer experience
Attract new customer
Win new clients and contracts
Increase profitably
Decrease customer management costs
Share of wallet refers to a marketing term referring to the amount of the customer's total
spending that a business captures in the products and services that it offers. Increasing the
share of a customer's wallet a company receives is often a cheaper way of boosting revenue
than increasing market share.
Increasing share of wallet can be done by adding new products or services that a firm will
offer to existing customers. This can also be done by cross-selling services within the same
company. As an example, a bank might recommend to an existing client a different service
that they offer, such as referring a wealth management client to an individual elsewhere in
the organization who might sell the client insurance or arrange for a mortgage. By cross-
selling within the bank they can increase their share of the customer's wallet.
In marketing, customer lifetime value (CLV) (or often CLTV), lifetime customer value (LCV),
or user lifetime value (LTV) is a prediction of the net profit attributed to the entire future
relationship with a customer. The prediction model can have varying levels of sophistication
and accuracy, ranging from a crude heuristic to the use of complex predictive analytics
techniques.
Customer lifetime value (CLV) can also be defined as the dollar value of a customer
relationship, based on the present value of the projected future cash flows from the
customer relationship. Customer lifetime value is an important concept in that it encourages
firms to shift their focus from quarterly profits to the long-term health of their customer
relationships. Customer lifetime value is an important number because it represents an
upper limit on spending to acquire new customers.[1]
12) What is a Value Proposition? Explain in detail with Examples?
Answer: A business or marketing statement that summarizes why a consumer should buy a
product or use a service. This statement should convince a potential consumer that one
particular product or service will add more value or better solve a problem than other
similar offerings. Companies use this statement to target customers who will benefit most
from using the company's products, and this helps maintain an economic moat. The ideal
value proposition is concise and appeals to the customer's strongest decision-making
drivers. Companies pay a high price when customers lose sight of the company's value
proposition. A value proposition (VP) is a statement that clearly identifies what benefits a
customer will receive by purchasing a particular product or service from a particular vendor.
A value proposition, which is an essential element of an elevator pitch, should be simple and
easy to remember. It should emphasize both the benefits the customer will receive and the
price the customer will be charged as compared to the competition. An important goal of a
value proposition is to convince the customer that he will be getting many more benefits
than he is being asked to pay for.
To create an effective value proposition, an organization should first determine exactly what
benefits a customer wants and how much the customer is willing to pay for them. The
phrase "value proposition" is credited to Michael Lanning and Edward Michaels, who first
used the term in a 1988 staff paper for the consulting firm McKinsey and Co. In the paper,
which was entitled "A business is a value delivery system," the authors define value
proposition as "a clear, simple statement of the benefits, both tangible and intangible, that
the company will provide, along with the approximate price it will charge each customer
segment for those benefits."
13) What is a Promotional Mix? What is IMC and what are its tools?
Answer: Promotion mix A specific combination of promotional methods used for one
product or a family of products. Elements of a promotion mix may include print or broadcast
advertising, direct marketing, personal selling, point of sale displays, and/or merchandising.
A promotion mix is the act of combining promotional methods such as advertising, new
media, direct mail marketing, selling, use of retail displays, and merchandising for the sale of
products and services.
Integrated Marketing Communications is a simple concept. It ensures that all forms of
communications and messages are carefully linked together.
At its most basic level, Integrated Marketing Communications, or IMC, as we'll call it, means
integrating all the promotional tools, so that they work together in harmony.
Promotion is one of the Ps in the marketing mix. Promotions has its own mix of
communications tools.
All of these communications tools work better if they work together in harmony rather than
in isolation. Their sum is greater than their parts - providing they speak consistently with
one voice all the time, every time.
This is enhanced when integration goes beyond just the basic communications tools. There
are other levels of integration such as Horizontal, Vertical, Internal, External and Data
integration. Here is how they help to strengthen Integrated Communications.
Horizontal Integration occurs across the marketing mix and across business functions - for
example, production, finance, distribution and communications should work together and
be conscious that their decisions and actions send messages to customers.
While different departments such as sales, direct mail and advertising can help each other
through Data Integration. This requires a marketing information system which collects and
shares relevant data across different departments.
Vertical Integration means marketing and communications objectives must support the
higher level corporate objectives and corporate missions. Check out the Hall Of Fame later
for more about missions.
Meanwhile Internal Integration requires internal marketing - keeping all staff informed and
motivated about any new developments from new advertisements, to new corporate
identities, new service standards, new strategic partners and so on.
External Integration, on the other hand, requires external partners such as advertising and
PR agencies to work closely together to deliver a single seamless solution - a cohesive
message - an integrated message.
Various tools of IMC are:
1. Advertising
Advertising is the most glamorous and elaborate of all marketing tools. Around the world
nearly $500 billion is spent annually on advertising, and that’s just for media time and
space! If you add in all, the costs of producing the advertisements and the salaries of people
working in the industry, the amount advertising is well over $1 trillion a year. Advertising
means different things to different people. It’s a business, an art, an institution and a
cultural phenomenon. To a CEO of a multinational corporation, advertising is an essential
marketing tool that helps create a brand awareness and loyalty and stimulates demand. To
a local restaurant owner, advertising is a way to communicate to the neighborhood. To an
art director in an ad agency advertising is the creative expression of a concept. To a media
planner, advertising is a way marketer uses the mass media to communicate to current and
potential customers.
One definition goes: Advertising is a paid, mass mediated attempt to persuade’ as direct and
simple they may seem it is loaded with distinctions. Advertising is paid communication by a
company or organizations that wants its information disseminated. In advertising language,
the company or organization that pays for advertising is called the sponsor or the client.
Advertising includes an attempt to persuade. To put it bluntly, advertisements are
communication designed to get someone to do something. Even an advertisement with the
stated objective of being purely informational has persuasion at its core. The
advertisements informs the consumer for some purpose, and that purpose is to get the
consumer to like the brand and because of that liking to eventually buy the brand. In the
absence of this persuasive intent, a communication might be news, but it would not be
advertising.
At this point we can say that for a communication to b classified as advertising three
essentials criteria must be met:
It must be paid for
It must be delivered to an audience via mass media.
It must attempt to persuade.
2. Public Relations (PR)
As a part of being a good corporate and community citizen, a firm will use public relations
(PR) as a way to create a good image and reputation. PR focuses on communication that can
foster goodwill between a firm and its many constituent groups. These constituent groups
include customers, stockholders, suppliers, employees, government, entities citizen’s
actions groups and the general public.
PR is used to highlight positive events in an organization, such as quarterly sales and profits
or noteworthy community service programmes carried out by the firm. Conversely it is used
strategically for damage control when adversity strikes an organization. PR uses techniques
like press releases, newsletters and community events to reach the target audiences. PR is
emerging as a more prominent tool in the promotional mix of many firms. As mass media
becomes cluttered with ads and as consumers retain a healthy sceptism of advertising,
public relations and communication are being viewed as an important addition to the mix.
Objectives of PR:
Within the broad guidelines of image building and establishing relationships with
constituents, it is possible to identify six primary objectives:
Promoting goodwill
Promoting a product or service
Preparing internal communications
Counteracting negative publicity
Lobbying
Giving advice and counsel
3. Personal Selling (PS)
Personal selling is the presentation of information about a firm’s product or services by one
person to another person or to a small group of people. Personal selling can be
distinguished from all forms of promotion in that it is the only one to one communication
that can deliver a completely customized message based on feedback from the receiver of
the message. In other words, if you are in the electronics shop considering the purchase of a
DVD player, the salesperson can tell you about the different brands and focus the message
content on the features of each brand based on questions you ask or information you
request. No other form of promotion- not even the Internet can customize messages in this
way.
Personal selling is the dominant variable in the promotional mix of any corporate marketers.
Complex products and services, high purchase prices, and negotiated contracts warrant the
customized communication of personal selling. In business to business markets there are
many instances where advertising sales promotion and other promotional mix variables
simply do not achieve the needed communication effect. But this is not always the case in
business to business sales.
Types of Personal Selling:
Order taking: This involves accepting orders for merchandise or scheduling services either in
written form or over the telephone. Order takers deal with existing customers who are
lucrative to the firm due to low cost f generating revenue this group. Order takers can also
deal with new customers which means that they need to be trained well enough to answer
any new question a new customer might have about product or services.
Creative Selling: This is the type of selling where customers rely heavily on the salesperson
for technical information, advice and service.
Team Selling: In this, a group of people from different functional areas within the
organization is assembled as a team to call on a particular customer. Sales teams are
prevalent in the areas of communication equipment, computer installations and
manufacturing equipment’s.
Seminar Selling: This is designed to reach a group of customers, rather than an individual
customer, with information about the firm’s products or services.
System Selling: This type of selling entails selling a set of inters related components that
fulfill all or a majority of a customer’s need in a product or service area.
4. Sales Promotion (SP)
Sales Promotion is of four types:
Consumer sales promotion: Here the efforts are directed towards the customer. For
example: price discounts, freebies
Trade Promotion: These are basically done for distributors in order to push sales through
margins and discounts.
Business to business promotion: Here promotions are between two companies; one
company may offer bulk discounts on the purchase of raw materials in large supplies etc.
Sales person’s promotions: Here the promotions are targeted to motivate the sale people
working for an organization. On achieving their targets, the sales person will win a free
holiday or he’ll receive a non-monetary benefits, etc.
Sales promotion is the use of the incentive techniques that create a perception of greater
brand value among consumers, the trade and business buyers. The intent is to create a
short term increase in sales by motivating trail use and encouraging larger or repeat
purchases. Free samples, coupons, premiums, sweepstakes and contests, rebates and price
discounts are some of the primary methods of sales promotion in the consumer market.
Sales promotion may not seem as stylish and sophistication as mass media advertising, but
expenditures on this tool are impressive. It is important to realize that full advertising
agencies specializing in advertising planning, creative planning and media placement
typically do not prepare sales promotion materials for clients. These activities are normally
assigned to sales promotion agencies that specialize in couponing, vent management,
premiums or other forms of sales promotion that require specific skills and creative
preparation. The rise in the use of sale promotion and the enormous amount of money
being spent on various programmes make it one of the most prominent forms of marketing
activity.
5. Direct Marketing (DM)
Direct marketing is an interactive system of marketing that uses one or more advertising
media to affect a measurable response and or transaction at any location. This definition
distinguishes direct marketing from other primary promotional tools in three ways:
Direct Marketing uses a combination of media: Any media can be used in a direct marketing,
and a combination of media is often used to increase effectiveness.
Direct Marketing is often used to elicit a direct response: An example of this would be
getting the message receiver to phone or mail in an order .Other forms of promotion like
traditional advertising, public relations or an event sponsorship are not designed to elicit
immediate action.
The buyer’s home by mail or literally any place where the consumer can communicate with
the marketer.
Today the primary methods of direct marketing are direct mail, telemarketing, telephone
sales solicitation and direct response advertising in magazines, newspapers, and on
television and radio.
Online ordering via the internet is another form of direct marketing and has come to known
as ‘e-commerce’ because of the totally electronic communication between and buyers and
sellers. E-commerce is business conducted between buyers and sellers using electronic
exchange media. E-commerce is quickly emerging as a significant form of direct marketing.
In addition, trade markets are emerging where buyers in specific industries are creating e-
market places to enhance the efficiency of the exchange process.
14) What is Media Planning and Media Buying? What is the difference between “Above-
the-line” (ATL) and “Below-the-line” (BTL) Advertising?
Answer: Media Planning
The first thing we do, using a combination of world class research techniques, deep
experience and analysis, is to determine with our clients who their most likely, or most
desired, customers are. We are then able to determine which media these potential
customers see, read, hear or engage with the most. This is the media planning of a
campaign; we 'plan' advertising campaigns that reach intended audiences, with the
minimum amount of wastage.
After this initial planning stage, we then work alongside creative agencies, who actually
make the advertisements. It is our responsibility to get the adverts on to the television
screens and radio, in to the press and cinemas, on to billboards and poster sites, and online.
This is what we call media buying.
Media Buying
During the buying stage, Mediacom negotiates the best possible prices with media owners
such as television and radio stations, magazine publishers and website owners for the space
or airtime. Because Mediacom is one of the largest media buying agencies in the world, we
are able to buy media at an incredibly competitive price. Even so, we are always looking for
innovative ways to reduce costs further and increase the effectiveness of advertising -
whether on screen, outdoors or online.
Our clients benefit from Mediacom being part of GroupM, the world's largest media
investment management group. This gives us unparalleled negotiation power when buying
media on behalf of our clients.
Media buying, a sub function of advertising management, is the procurement of media real
estate at an optimal placement and price. The main task of media buying lies within the
negotiation of price and placement to ensure the best possible value can be secured for an
advertisement. The type of people who negotiate the price of these advertisements are
labeled "Media Buyers" in the workplace. Increasingly, the job of a Media Buyer online is
being done in real-time with advanced algorithms.
Media planning is generally the task of a media agency and entails finding media platforms
for a client's brand or product to use. The job of media planning involves determining the
best combination of media to achieve the marketing campaign objectives.
In the process of planning the media planner needs to answer questions such as:
• How many of the audience can be reached through the various media?
• On which media (and ad vehicles) should the ads be placed?
• How frequent should the ads be placed?
• How much money should be spent in each medium?
Above the Line (ATL) advertising is where mass media is used to promote brands and reach
out to the target consumers. These include conventional media as we know it, television
and radio advertising, print as well as internet. This is communication that is targeted to a
wider spread of audience, and is not specific to individual consumers. ATL advertising tries
to reach out to the mass as consumer audience.
Below the line (BTL) advertising is more one to one, and involves the distribution of
pamphlets, handbills, stickers, promotions, brochures placed at point of sale, on the roads
through banners and placards. It could also involve product demos and samplings at busy
places like malls and market places or residential complexes. For certain markets, like rural
markets where the reach of mass media like print or television is limited, BTL marketing
with direct consumer outreach programmes do make the most sense.
15) What is advertising? What are the Principles of Advertising? What is the difference
between Advertising and PR and Publicity?
Answer: Paid, non-personal, public communication about causes, goods and services, ideas,
organizations, people, and places, through means such as direct mail, telephone, print,
radio, television, and internet. An integral part of marketing, advertisements are public
notices designed to inform and motivate. Their objective is to change the thinking pattern
(or buying behaviour) of the recipient, so that he or she is persuaded to take the action
desired by the advertiser. When aired on radio or television, an advertisement is called a
commercial.
. The activity of attracting public attention to a product or business, as by paid
announcements in the print, broadcast, or electronic media. The business of designing and
writing advertisements. Advertisements considered as a group: This paper takes no
advertising.
An advertising strategy includes four elements:
Target audience
Product/service concept
Communications media
Advertising message
Five elements of advertisements
Attention – the headline should act as a stimulus and cut through the clutter. It must be
appropriate, relating to the product or service, the tone of the ad, and the needs or
interests of the intended audience.
Interest – keeps the prospects involved as the information becomes more detailed.
Credibility – makes believable claims.
Desire – describes the benefits of the product or service.
Action – motivates people to do something, such as call or visit a website
-Principles of advertising :
1. Go to the essence of the product. State the product's essence in the simplest terms of its
basic advantage. And state this both tangibly and memorably.
2. Where possible, make your product an actor in the scene; not just a prop. This makes for
a tremendously effective method of getting your product remembered. Because the
provocative element in your advertising is also the element that sells your product. This is so
simply stated, so difficult to execute.
3. Art and copy must be fully integrated. They must be conceived as a unit, developed as a
unit.
4. Advertising must have vitality. This exuberance is sometimes called "personality". When
advertising has a personality, it is persuasively different; and it is the one because of the
other. You must fight to get "bounce" in your advertising.
5. It is little less than useless to employ a so-called gimmick in advertising —- unless the
gimmick itself tells the product story.
6. Tell the truth. First, it's a great gimmick. Second, you go to heaven. Third, it moves
merchandise because people will trust you.
7. Be relevant. A wonderfully creative execution will get the big "So what" if it isn't
meaningful to their life, family, business etc. And always opt for an ad that's relevant over
one that's exciting and irrelevant.
8. Be simple. Not simpleminded, but single minded. Who has the time or the desire to listen
to advertising?
9. Safe ideas can kill you. If it's been done before, your competition will be ready for it. Your
only chance of beating the competition is with advertising they've never seen before.
Which means you've never seen it before either! Be brave.
10. Stand out. If your advertising goes unnoticed, everything has been wasted.
Just like advertising, PR often helps increase the sales as well and may include elements of
marketing. However, it is mainly focused in creating positive publicity about a particular
company, organisation or individual and maintain a good reputation in the public. By doing
so, PR helps create a relationship between let’s say a commercial company and its
customers who are more likely to choose the products from a company they have a good
opinion over those from a firm they have never heard off before or heard something
negative about it. The public reacts very differently to an add than to a newspapers article
or a TV report.
For advertising The Company pays for ad space. You know exactly when that ad will air or be
published.
Public relation’s job is to get free publicity for the company. From news conferences to
press releases, you're focused on getting free media exposure for the company and its
products/services. Publicity however, is something you hope you'll get. Why? Because
publicity can be generally gained at no cost to you.