Marketing Strategy : Marketing Mix Development Example Of Car Accessory Maker

Marketing Mix DevelopmentMarketing Mix DevelopmentApproach for a Car Security Approach for a Car Security SystemSystem

1.1. To propose a marketing mix for XYZ Security To propose a marketing mix for XYZ Security Systems, a sister company of ABCSystems, a sister company of ABC

Marketing Mix SummaryMarketing Mix Summary

ProductProduct Two need segments: security & convenienceTwo need segments: security & convenience Need gap: No products tailor-made for the convenience segmentNeed gap: No products tailor-made for the convenience segment

Gaps to be filled by Model 50 & Model 100Gaps to be filled by Model 50 & Model 100 Performance issues with existing products gives XYZ an edgePerformance issues with existing products gives XYZ an edge Installation critical to performance. InstallerInstallation critical to performance. Installer’’s training s training

levels/willingness uncertainlevels/willingness uncertain

PricePrice Within a given range the buyer price sensitivity is lowWithin a given range the buyer price sensitivity is low Most of the buyers fall in the price segment:Most of the buyers fall in the price segment:‘‘WhateversWhatevers’’ Establishing functionality provides an opportunity to increase Establishing functionality provides an opportunity to increase

brand loyaltybrand loyalty Skimming Pricing : Model 300 & other high end variantsSkimming Pricing : Model 300 & other high end variants

Models build aspiration, become benchmarks of functionalityModels build aspiration, become benchmarks of functionality Penetration pricing for Model 50, 100. Cannibalize on sales of Penetration pricing for Model 50, 100. Cannibalize on sales of

alarm systemsalarm systems Competitive Pricing for Model 200Competitive Pricing for Model 200

Marketing Mix SummaryMarketing Mix Summary PromotionPromotion

Consumer Truth: I yearn for something which is truly secure & reliable Consumer Truth: I yearn for something which is truly secure & reliable in this insecure, unreliable worldin this insecure, unreliable world

Brand Personality: Brand to be embodied as a personal car-guardBrand Personality: Brand to be embodied as a personal car-guard Borrows from the Borrows from the ““BodyguardBodyguard”” platform that epitomizes reliable platform that epitomizes reliable

securitysecurity ‘‘SecuritySecurity’’ platform has not been appropriated by any other brand platform has not been appropriated by any other brand

Platform of security can be extended to home security system etc.Platform of security can be extended to home security system etc. Phase 1 to communication to build awareness, Phase 2 to build brand Phase 1 to communication to build awareness, Phase 2 to build brand

imageimage PR, POPs, Press & Outdoor Ads , Internet & Events to play a role in PR, POPs, Press & Outdoor Ads , Internet & Events to play a role in

communicationcommunication

DistributionDistribution Skeleton of distributor management control system does not exist. Skeleton of distributor management control system does not exist.

Little attempt in rationalizing territories & performance managementLittle attempt in rationalizing territories & performance management Existing distributors unhappy with short term distributor management Existing distributors unhappy with short term distributor management

approachapproach Network of accessory distributors independent to spare parts. Unlike Network of accessory distributors independent to spare parts. Unlike

spare parts, accessory is a spare parts, accessory is a ‘‘PushPush’’ product. product. Recommended Distribution Option : XYZ Exclusive Recommended Distribution Option : XYZ Exclusive

From Products to BrandsFrom Products to Brands

Marketing Mix DevelopmentMarketing Mix Development

Product

Strategy

Pricing

Strategy

Promotion

Strategy

Distribution

AugmentedProduct

AugmentedProductNeed SegmentsNeed Segments


Product

Strategy

Pricing

Strategy

Promotion

Strategy

Distribution

Need SegmentsNeed Segments

1. Two Segments

2. Current Alignment

3. Need Gaps

4. XYZ Need Alignment

Security Need SegmentSecurity Need Segment

ArticulatingArticulating““Even if my car is robbed, I want to be sure Even if my car is robbed, I want to be sure

that it was not robbed due to my that it was not robbed due to my carelessness or lack of efforts on my partcarelessness or lack of efforts on my part””

““A smart thief can get away with the most A smart thief can get away with the most secure systems. But I have to make it tough secure systems. But I have to make it tough for himfor him””

Actually SayingActually SayingI want a security system that actually I want a security system that actually

worksworks

Convenience Need SegmentConvenience Need Segment

ArticulatingArticulating ““I donI don’’t want to manually lock every door. I t want to manually lock every door. I

just want to do it centrallyjust want to do it centrally”” ““My young brother simply loves pressing My young brother simply loves pressing

the remote buttons.He loves showing off the remote buttons.He loves showing off almost as if he is a James Bond. You almost as if he is a James Bond. You should look at the should look at the tesshantesshan(style)(style)””

Actually SayingActually Saying I donI don’’t want a security system. I only want t want a security system. I only want

central lockingcentral locking Convenience of of central locking, the remote adds an element of style

Convenience of of central locking, the remote adds an element of style

Current Need AlignmentCurrent Need Alignment

Alignment to Security SegmentAlignment to Security Segment Existing products are the alarm system & security system. Products Existing products are the alarm system & security system. Products

target the security need segment customerstarget the security need segment customers No alarm/security system targeted at cars with central locksNo alarm/security system targeted at cars with central locks

““If a guy has central locking, I give him a rebate of 400-500 RsIf a guy has central locking, I give him a rebate of 400-500 Rs””(Prakash (Prakash Motors)Motors)

Consumers belonging to the convenience need segment are Consumers belonging to the convenience need segment are being sold the alarm/security system instead of a central being sold the alarm/security system instead of a central locking systemlocking system

““I donI don’’t have a remote central locking system. So to the customers I sell t have a remote central locking system. So to the customers I sell the alarm systemthe alarm system””(Preet Motors)(Preet Motors)

““I have heard that Silicon has a central locking system that does not I have heard that Silicon has a central locking system that does not have a remote. I sell only Piranhahave a remote. I sell only Piranha””(Classic Motors)(Classic Motors)

““I think a remote central locking will sell. Most of my customers want I think a remote central locking will sell. Most of my customers want thatthat”” (Classic Motors) (Classic Motors)

Need GapsNeed Gaps

Customers What she wants (Usually)

What she gets

(Usually)

I want a key that can lock all my doors

Manual Central Locking

Alarm System

I want a cool remote to lock all my doors

Remote Central Locking

Alarm System

I have a central lock.I want a security system

Alarm System without Actuator

package( worth Rs. 1200)

Alarm System with a discount of Rs 300-

400

I want a security system. Not the hi-fi system

An Alarm System Security System

No products tailor-made for the convenience segment.Customization absent in existing products

No products tailor-made for the convenience segment.Customization absent in existing products

XYZ Core ProductsXYZ Core Products Manual Central Locking System - Model 50Manual Central Locking System - Model 50

Lock/unlock all doors, aligned to status of driverLock/unlock all doors, aligned to status of driver’’s door.s door. Remote Central Locking System – Model 100.Remote Central Locking System – Model 100.

Remote control capability to manual central locking Remote control capability to manual central locking Car Alarm System – Model 200Car Alarm System – Model 200

Special Door, trunk and bonnet switches are connected Special Door, trunk and bonnet switches are connected to the 200 control unit. to the 200 control unit.

Siren sound if the vehicle is tampered with Siren sound if the vehicle is tampered with Car Security System – Model 300Car Security System – Model 300

Immobilizes the vehicle in addition to the siren sounding Immobilizes the vehicle in addition to the siren sounding an alarm in case of intrusion. an alarm in case of intrusion.

XYZ Need AlignmentXYZ Need Alignment

• Convenience Need Segment: Model 50, Model Convenience Need Segment: Model 50, Model 100100

• Security Need Segment:Model 200, Model 300Security Need Segment:Model 200, Model 300


Product

Strategy

Pricing

Strategy

Promotion

Strategy

Distribution

AugmentedProductAugmentedProduct

1. Core Product

2. Product Delivery

3. After Sales

4. Augmented Product

Always listen to the market Always listen to the market

Feedback of Existing ProductsFeedback of Existing Products

Accessory Retailer Feedback on Core ProductAccessory Retailer Feedback on Core Product Motor problemsMotor problems

““The motor seems to conk off.This happens in around 5-10% of The motor seems to conk off.This happens in around 5-10% of casescases””(Prakash Motors)(Prakash Motors)

““Most of the complaints that I get are motor relatedMost of the complaints that I get are motor related””(Preet Motors)(Preet Motors)

Remote related problemsRemote related problems ““ I get frequent complaints of remote not working. Sometimes the remote I get frequent complaints of remote not working. Sometimes the remote

range is a problem. One has to go very close to the carrange is a problem. One has to go very close to the car””(Classic Motors )(Classic Motors ) ““Often the remote buttons have to be pressed hard. Sometimes the light Often the remote buttons have to be pressed hard. Sometimes the light

when pressing the button fails to light offwhen pressing the button fails to light off””(Prakash Motors) (Prakash Motors)

Quality is a factorQuality is a factor ““I think Silicon products are better because it is an ISO 9002 I think Silicon products are better because it is an ISO 9002

companycompany””( Prakash Motors)( Prakash Motors)

Performance/Quality problems with existing products.Performance/Quality problems with existing products.

Our Core Product Vs. Our Core Product Vs. CompetitionCompetition

Product : Proven Technology & QualityProduct : Proven Technology & Quality Licensed from Directed, the World Leader in Vehicle Security SystemsLicensed from Directed, the World Leader in Vehicle Security Systems Adapted for Indian conditions by Adapted for Indian conditions by ABC (Parent Company of XYZ)ABC (Parent Company of XYZ)

Engineering TeamEngineering Team Directed designs accepted by GM, Hyundai, Suzuki etc.Directed designs accepted by GM, Hyundai, Suzuki etc. Only product design approved by FCCOnly product design approved by FCC Manufactured by Manufactured by ABC (Parent Company of XYZ)ABC (Parent Company of XYZ) under ISO 9001 AND QS under ISO 9001 AND QS

9000 standards.9000 standards. ABC (Parent Company of XYZ)ABC (Parent Company of XYZ) is an approved vendor to many OE is an approved vendor to many OE

CustomersCustomers

Competition Product: Uncertain QualityCompetition Product: Uncertain Quality Unknown Technology Pirated or Copied.Unknown Technology Pirated or Copied. Key Features Like Shock Sensors not reliableKey Features Like Shock Sensors not reliable Imported from unknown sources or manufactured in plants with lower Imported from unknown sources or manufactured in plants with lower

QC Standards.QC Standards. Limited OE ExperienceLimited OE Experience

Edge: Proven Technology, Quality Edge: Proven Technology, Quality

Feedback on InstallationFeedback on Installation

Accessory retailers perceive installation to be Accessory retailers perceive installation to be very critical to product performancevery critical to product performance

““If you do not install properly, the alarm might not If you do not install properly, the alarm might not activate.One of the doors might not be lockedactivate.One of the doors might not be locked””(Preet (Preet Motors)Motors)

Improper installation related complaintsImproper installation related complaints ““Of the three major complaints: Activation, Motor & Of the three major complaints: Activation, Motor &

Locking problem; activation problems are due to poor Locking problem; activation problems are due to poor installation by usinstallation by us””(Prakash Motors)(Prakash Motors)

Proper installation of product necessary to ensure performanceProper installation of product necessary to ensure performance

The Electrician: UTMThe Electrician: UTM

Not a uniform practice that the installer is trained by the Not a uniform practice that the installer is trained by the security system company in installation of security systemsecurity system company in installation of security system

Most accessory retailers apprehensive whether the UTM Most accessory retailers apprehensive whether the UTM installer would be amenable to the idea of traininginstaller would be amenable to the idea of training

““He has been in the business for 20 years. I do not know whether he He has been in the business for 20 years. I do not know whether he will be keen to learn about installation all over againwill be keen to learn about installation all over again””(Classic Motors)(Classic Motors)

These guys think that they know all. They have big egos. I donThese guys think that they know all. They have big egos. I don’’t think t think that they will welcome any further trainingthat they will welcome any further training””(Distributor A)(Distributor A)

Installers themselves are wary of any further trainingInstallers themselves are wary of any further training ““Unless there is something new. I donUnless there is something new. I don’’t feel the need for trainingt feel the need for training”” ““I have never received a complaint that something went wrong with I have never received a complaint that something went wrong with

the security system that I installedthe security system that I installed””

Installer's current training levels uncertain. Installer not open to further training

Installer's current training levels uncertain. Installer not open to further training

XYZ: Product Delivery XYZ: Product Delivery

XYZ needs to be deeply XYZ needs to be deeply involved in installationinvolved in installation

1.1. By putting up a By putting up a comprehensive training comprehensive training package for installerspackage for installers

2.2. By incentivizing installers to By incentivizing installers to undergo trainingundergo training

3.3. By insisting that accessory By insisting that accessory retailers use certified retailers use certified installers for installationinstallers for installation

After Sales ServiceAfter Sales Service

Besides Margin, After Sales Service is the key factor when a Besides Margin, After Sales Service is the key factor when a retailer recommends a systemretailer recommends a system

Accessory retailer is 1Accessory retailer is 1stst guy to be hassled by the customer guy to be hassled by the customer ““ I receive frequent complaints about the motor and the remote. I receive frequent complaints about the motor and the remote.

Initially we were replacing it ourselves. Now AutoCop does it, so we Initially we were replacing it ourselves. Now AutoCop does it, so we direct the customers to the companydirect the customers to the company””(Classic Motors)(Classic Motors)

““Usually when a customer has a problem, he brings the car to my Usually when a customer has a problem, he brings the car to my shop. I call the Wheels guy to come over & fix itshop. I call the Wheels guy to come over & fix it””(Preet Motors)(Preet Motors)

““My business is car air conditioning. I donMy business is car air conditioning. I don’’t want to spend much time t want to spend much time on security systems that I installon security systems that I install”” ( Hans Air Conditioners) ( Hans Air Conditioners)

Accessory retailer receives flak for poor after sales serviceAccessory retailer receives flak for poor after sales service ““Customers complain about after sales services. The AutoCop guys Customers complain about after sales services. The AutoCop guys

do not arrive on time/day promised. Sometimes they repair the do not arrive on time/day promised. Sometimes they repair the system, and it conks off again latersystem, and it conks off again later”” (Classic Motors) (Classic Motors)

After Sales ServiceAfter Sales Service

Accessory retailer knows that the after sales service of the Accessory retailer knows that the after sales service of the security system will have an impact on customer security system will have an impact on customer relationships. relationships.

In an insecure world,where the customer is being wooed by In an insecure world,where the customer is being wooed by the car dealer, accessory retailer wants to retain his the car dealer, accessory retailer wants to retain his customer desperately. customer desperately.

““Most of customers today buy directly from car dealers.I donMost of customers today buy directly from car dealers.I don’’t want t want my customers to face problems with the stuff they buy from my customers to face problems with the stuff they buy from meme””(Prakash Motors)(Prakash Motors)

A lifetime warranty & an effective after sales network will be mission critical in winning a retailer’s loyalty


Quality of after sales service has an impact on my relationship with a customer. I want to safeguard the relationship. I feel insecure about the growing influence of the car dealer.

Quality of after sales service has an impact on my relationship with a customer. I want to safeguard the relationship. I feel insecure about the growing influence of the car dealer.

Key Retailer InsightKey Retailer Insight



Augmented ProductAugmented Product

Besides core product,the augmented product should ensureBesides core product,the augmented product should ensure1.1. Effective installationEffective installation

2.2. Lifetime warranty and effective after sales networkLifetime warranty and effective after sales network

Effective Installation will build on product reliability and Effective Installation will build on product reliability and perceived qualityperceived quality

Attractive warranty and after sales network will build strong Attractive warranty and after sales network will build strong retailer loyalty and will be a critical factor in the retailer loyalty and will be a critical factor in the ‘‘pushpush’’ strategystrategy


Product

Strategy

Pricing

Strategy

Promotion

Strategy

Distribution

Summary Two need segments: security & convenience Need gap: No products tailor-made for the convenience segment

Gaps to be filled by Model 50 & Model 100 Performance issues with existing products gives XYZ an edge Installation critical to performance. Installer’s training levels/willingness

uncertain Improved warranty & an effective after sales service :mission critical in

winning a retailer’s loyalty


Product

Strategy

Pricing

Strategy

Promotion

Strategy

Distribution

Pricing StrategyPricing Strategy

Price SegmentsPrice Segments


Product

Strategy

Pricing

Strategy

Promotion

Strategy

Distribution


1. Price Sensitivity

2. Perceived Value

3. Price Segments

4. Segment Opportunities

Buying Process Buying Process

Step 1 Awareness Word of

mouth, Observation

Step 2 Information Search Hardly any

Step 3 Evaluate AlternativesAdvice from dealer,Threshold of money

Step 4 Purchase Car showroom, Car accessory dealer

Step 5 EvaluatePerformance, Acclimatization /Blind Spots

Buying Process:Threshold of Buying Process:Threshold of MoneyMoney

Evaluate AlternativesEvaluate AlternativesThe buyer has a threshold of The buyer has a threshold of

money to be spent say 5000. money to be spent say 5000.

““We did not want to go for a We did not want to go for a

hi-fi system for Rs 10 000hi-fi system for Rs 10 000””The car/accessory dealer The car/accessory dealer

recommends the model of his recommends the model of his

favoured brand that comes favoured brand that comes

within the thresholdwithin the threshold

The dealer has the final The dealer has the final

wordword

Evaluate AlternativesEvaluate AlternativesThe buyer has a threshold of The buyer has a threshold of

money to be spent say 5000. money to be spent say 5000.

““We did not want to go for a We did not want to go for a

hi-fi system for Rs 10 000hi-fi system for Rs 10 000””The car/accessory dealer The car/accessory dealer

recommends the model of his recommends the model of his

favoured brand that comes favoured brand that comes

within the thresholdwithin the threshold

The dealer has the final The dealer has the final

wordword

Step 1 Awareness Word of

mouth, Observation

Step 2 Information Search Hardly any

Step 3 Evaluate AlternativesAdvice from dealer,Threshold of money

Step 4 Purchase Car showroom, Car accessory dealer

Step 5 EvaluatePerformance,

Acclimatization /Blind Spots

Two price points in buyer’s mind.A hi-fi system @ 8-10 thousand.A normal one @ 3-5 thousand

Two price points in buyer’s mind.A hi-fi system @ 8-10 thousand.A normal one @ 3-5 thousand

Price SensitivityPrice Sensitivity

Price Sensitivity: ConsumerPrice Sensitivity: Consumer’’s Point of Views Point of View ““When buying a car of 3-4 Lakhs, I am not really worried about extra When buying a car of 3-4 Lakhs, I am not really worried about extra

expense of 3-5 thousand. I know that I will have to shell out an extra expense of 3-5 thousand. I know that I will have to shell out an extra 30-40 thousand on accessories /insurance /registration30-40 thousand on accessories /insurance /registration”” (Consumer) (Consumer)

Price Sensitivity: RetailerPrice Sensitivity: Retailer’’s Point of Views Point of View ““ A consumer does not come with a particular model in his mind. I A consumer does not come with a particular model in his mind. I

can recommend the model and the companycan recommend the model and the company”” (Prakash Motors) (Prakash Motors) ““A customer may ask for a certain brand. But I can usually sell him A customer may ask for a certain brand. But I can usually sell him

the system that I keep(i.e Piranha)the system that I keep(i.e Piranha)””( Classic Motors)( Classic Motors)

Within a given range (say 3-5 thousand), the buyer price sensitivity is low.Within a given range (say 3-5 thousand), the buyer price sensitivity is low.

Perceived ValuePerceived Value

Primary Benefit :User Primary Benefit :User A more efficient locking systemA more efficient locking system

““I am assured that all locking is done once I press the remote buttonI am assured that all locking is done once I press the remote button”” ““Even if I am careless, I am still assured that the locking has been been Even if I am careless, I am still assured that the locking has been been

donedone””

Perceived Barrier : Non-UserPerceived Barrier : Non-User Functionality is not fully establishedFunctionality is not fully established

““Security system is for styleSecurity system is for style”” ““I go for functionality….no I go for functionality….no sosha(sosha(show-offshow-off)) ”” ““The only thing it(security system) does is consume batteryThe only thing it(security system) does is consume battery”” ““I have already taken car insurance. I donI have already taken car insurance. I don’’t need a gizmot need a gizmo

Perceived value is not high since the functionality is not established.Primary benefit is central locking, not security

Perceived value is not high since the functionality is not established.Primary benefit is central locking, not security

Perceptual Map Perceptual Map

Security System

Car Graphics

Car Audio

Car MP3/TV

Power Steering

Leather UpholsteryAlloy Wheels

High Functionality

Low Functionality

High Style/Convenience

Low Style/Convenience

Caught in the middle. Not high on functionality.Not high on style/convenience

Caught in the middle. Not high on functionality.Not high on style/convenience

Primary Price SegmentPrimary Price Segment

CurrentBuyers

Most of the buyers fall in the segment:‘Whatevers’Most of the buyers fall in the segment:‘Whatevers’

Segment Opportunity 1Segment Opportunity 1

CurrentBuyers

Establishing functionality provides an opportunity to increase brand loyalty by increasing perceived value

Establishing functionality provides an opportunity to increase brand loyalty by increasing perceived value

FutureBuyers

Segment Opportunity 2Segment Opportunity 2

Having a low value product like central locking encourages price sensitive non-users to sample the product

Having a low value product like central locking encourages price sensitive non-users to sample the product

FutureBuyers

NonUsers


Product

Strategy

Pricing

Strategy

Promotion

Strategy

Distribution

1. Segmentation on Price

2. Model 300

3. Model 50,100

4. Model 200

Pricing StrategyPricing Strategy

Segmentation on PriceSegmentation on Price

Model 50, Model 100

Model 300

Model 200

Pricing Strategy:Model 300Pricing Strategy:Model 300

Skimming pricing strategy: Skimming pricing strategy: pricing strategy involving pricing strategy involving the use of a high price the use of a high price relative to competitive relative to competitive offeringsofferings Skimming strategies Skimming strategies

used by marketers of used by marketers of high-end goods or high-end goods or servicesservices

Without other cues, price Without other cues, price serves as an important serves as an important indicator of a productindicator of a product’’s s quality to buyersquality to buyers

SkimmingSkimming


High price and performance High price and performance increases the perceived increases the perceived value of the productvalue of the product

Currently, market for high-Currently, market for high-end security system is end security system is limited, the strategy limited, the strategy provides opportunity for provides opportunity for Model 300 and above to Model 300 and above to become the benchmarks of become the benchmarks of qualityquality

SkimmingSkimming

Model 300 & other high end variants become benchmarks of functionality.Model 300 & other high end variants become benchmarks of functionality.

PenetrationPenetration

Pricing Strategy :Model 50, Pricing Strategy :Model 50, Model 100Model 100

Penetration pricing Penetration pricing policy: policy: pricing strategy pricing strategy involving the use of a involving the use of a relatively low entry price as relatively low entry price as compared with competitive compared with competitive offerings; based on the offerings; based on the theory that this initial low theory that this initial low price will help secure price will help secure market acceptancemarket acceptance

Designed to generate many Designed to generate many trial purchasestrial purchases

PenetrationPenetration

Pricing Strategy: Model 50, Pricing Strategy: Model 50, Model 100Model 100

Low price provides an Low price provides an excellent hook to lure price excellent hook to lure price sensitive non-users into sensitive non-users into buying a central buying a central locking/remote lockinglocking/remote locking

Has the potential to Has the potential to cannibalize on sale of cannibalize on sale of higher variantshigher variants

Model 50, 100 increase penetration. Cannibalize on sales of alarm systems.

Model 50, 100 increase penetration. Cannibalize on sales of alarm systems.

CompetitiveCompetitive


Competitive Pricing Strategy:Competitive Pricing Strategy: pricing strategy that de-pricing strategy that de-emphasizes price as a emphasizes price as a competitive variable by pricing competitive variable by pricing goods at the general level of goods at the general level of competitorscompetitorsFirms focus their own Firms focus their own

marketing efforts on the marketing efforts on the product, distribution product, distribution and promotion elements and promotion elements of the marketing mixof the marketing mix

Need to leverage the Need to leverage the augmented product with augmented product with effective installation and effective installation and prompt after salesprompt after sales

Build differentiation through Build differentiation through higher perceived value by higher perceived value by reliable product performance reliable product performance and excellent serviceand excellent service

Build differentiation (higher perceived value)by reliable product performance and excellent service

Build differentiation (higher perceived value)by reliable product performance and excellent service


Product

Strategy

Pricing

Strategy

Promotion

Strategy

Distribution

Summary Within a given range the buyer price sensitivity is low Most of the buyers fall in the price segment:‘Whatevers’ Establishing functionality provides an opportunity to increase brand

loyalty Skimming Pricing : Model 300 & other high end variants

Models build aspiration, become benchmarks of functionality Penetration pricing for Model 50, 100. Cannibalize on sales of alarm

systems Competitive Pricing for Model 200


Product

Strategy

Pricing

Strategy

Promotion

Strategy

Distribution

BrandingStrategyBrandingStrategy

1. Connection Triangle: General

2. Key Consumer Insight

3. Product Connection Triangle

4. Promotion Plan

Product BenefitWhy I like it

Consumer UHTWhy I value it

BrandWhy I trust it

Connection Triangle Connection Triangle

Connection Triangle:FevicolConnection Triangle:Fevicol

Product BenefitQuality adhesive

Consumer UHTBonds of family/

friendship/love usually break

BrandA bond that will not break

User BenefitUser Benefit

Primary Perceived Benefits: UserPrimary Perceived Benefits: User A more efficient locking systemA more efficient locking system

““I am assured that all locking is done once I press the remote buttonI am assured that all locking is done once I press the remote button”” ““Even if I am careless, I am still assured that the locking has been Even if I am careless, I am still assured that the locking has been

donedone A A ‘‘DoneDone’’ thing thing

““I have seen it on many carsI have seen it on many cars”” ““like an audio system, got to have itlike an audio system, got to have it””

The main perceived benefit is a ‘more efficient locking system’ The main perceived benefit is a ‘more efficient locking system’

Non-User BarrierNon-User Barrier

Perceived Benefits : Non User Perceived Benefits : Non User StyleStyle

Perceived Barrier : Functionality is not fully establishedPerceived Barrier : Functionality is not fully established ““Security system is for styleSecurity system is for style”” ““Why spend an extra on an old car. When I buy a new Why spend an extra on an old car. When I buy a new

one, I might considerone, I might consider”” ““I go for functionality….no sosha(show-off)I go for functionality….no sosha(show-off)”” ““The only thing it(security system) does is consume The only thing it(security system) does is consume

batterybattery”” ““I have already taken car insurance. I donI have already taken car insurance. I don’’t need a gizmot need a gizmo””

The effectiveness of security systems is not proven

The effectiveness of security systems is not proven

Key Consumer InsightKey Consumer Insight

Articulating: There is nothing that a thief cannot break. However from my end I know that the theft has not happened because of my carelessness

Articulating: There is nothing that a thief cannot break. However from my end I know that the theft has not happened because of my carelessness

Actually Saying: I yearn for something which is truly secure & reliable in this insecure,unreliable world

Actually Saying: I yearn for something which is truly secure & reliable in this insecure,unreliable world

Product BenefitReliable, secure system

Consumer UHTI yearn for reliability &

security

Brand Personal Car-Guard, always by

your side

Connection Triangle Connection Triangle

Personal Car GuardPersonal Car Guard

Brand to be embodied as a personal car-guardBrand to be embodied as a personal car-guard Borrows from the Borrows from the ““BodyguardBodyguard”” platform that epitomizes platform that epitomizes

reliable security reliable security Is a strong platform that strings the consumer insight Is a strong platform that strings the consumer insight

and product benefit togetherand product benefit together

‘‘SecuritySecurity’’ platform has not been appropriated by any other platform has not been appropriated by any other brandbrand None of the insurance brands, lock brands own securityNone of the insurance brands, lock brands own security

The platform of security can be extended to other security The platform of security can be extended to other security systems like home security system etc.systems like home security system etc.

The 360 Degree Brand The 360 Degree Brand ExperienceExperience

A Brand is not just what you say it is, the brand is the A Brand is not just what you say it is, the brand is the totality of what the consumer experiences totality of what the consumer experiences From quality, to taste, to packaging, to the retail From quality, to taste, to packaging, to the retail

environment, to line extensions, to ergonomics, environment, to line extensions, to ergonomics, design and colour, to sales promotions, to price, to design and colour, to sales promotions, to price, to corporate reputations and public relations, to the corporate reputations and public relations, to the sales force and service experiences, to the delivery sales force and service experiences, to the delivery trucks, to word-of-mouth, to telemarketing scripts trucks, to word-of-mouth, to telemarketing scripts and receptionists style, to the way you answer the and receptionists style, to the way you answer the telephone, to prejudices and attitudes, to collective telephone, to prejudices and attitudes, to collective and individual memories, to history. and individual memories, to history.

Scraps and straws that add up to a companyScraps and straws that add up to a company’’s most s most valuable asset: a 360* Brandvaluable asset: a 360* Brand

-- -- Shelly Lazarus, 1998 Shelly Lazarus, 1998

Consumer

Packaging

New / Emerging media

POP

One - to - One Promotions

PR+Events

The 360 Degree The 360 Degree Communication ExperienceCommunication Experience

Mass Media

Communication TaskCommunication Task

Phase 1Phase 1 To launch the XYZ Brand and build awarenessTo launch the XYZ Brand and build awareness

Phase 2Phase 2 To build brand personality of a To build brand personality of a ““Personal Car GuardPersonal Car Guard””

Media StrategyMedia Strategy Role of Various MediaRole of Various Media

PR PR To build news around the reliability of security systems To build news around the reliability of security systems To exploit the American connection and become a thought leader in To exploit the American connection and become a thought leader in

security systemssecurity systems POPs POPs

To create in-store visibilityTo create in-store visibility To influence the consumerTo influence the consumer

Advertising : Press Ads, OutdoorAdvertising : Press Ads, Outdoor At the launch stage to build excitement around the brand At the launch stage to build excitement around the brand Spread awarenessSpread awareness Motivate tradeMotivate trade

Internet & EventsInternet & Events To create news and information about the productTo create news and information about the product To reach out to the young male adultTo reach out to the young male adult

Mad Ideas!Mad Ideas!

Car insurance and security system was co-branded ?Car insurance and security system was co-branded ?

Mercedes Benz endorsed our security system?Mercedes Benz endorsed our security system?

We reduced the car theft rate in the city we test market in?We reduced the car theft rate in the city we test market in?

The police commissioner used our system in his/her car?The police commissioner used our system in his/her car?

We threw a challenge to car thieves to We threw a challenge to car thieves to ““Dare to Steal the carDare to Steal the car””


Product

Strategy

Pricing

Strategy

Promotion

Strategy

Distribution

Summary Consumer Truth: I yearn for something which is truly secure & reliable in

this insecure, unreliable world Brand Personality: Brand to be embodied as a personal car-guard

Borrows from the “Bodyguard” platform that epitomizes reliable security ‘Security’ platform has not been appropriated by any other brand

Platform of security can be extended to home security system etc. Phase 1 to communication to build awareness, Phase 2 to build brand

image PR, POPs, Press & Outdoor Ads , Internet & Events to play a role in

communication


Product

Strategy

Pricing

Strategy

Promotion

Strategy

Distribution

Existing NetworkAudit

Existing NetworkAudit

Existing ABC (Parent Company Existing ABC (Parent Company of XYZ) Distributor MCSof XYZ) Distributor MCS

Forecast Plan Control Report

Manager Retail

Distributor

DSMRetailer / Customer Sales Plan

Route plan

Contact Plan

Customer / Retail Card

DSM Daily Score Card

Territory Sales Target

Retail Manager Contact Plan

Distributor Coverage Target

DSM Target

DSM Weekly Score Card

DSM Monthly Score Card

Distributor Weekly Score Card

Distributor Monthly Score Card

Review

Distributor Sales Target

Market Intelligence Retail Mgr

Segment Manager

Marketing Department

Review

Review

Segment Mgr Monthly Score Card

Retail Mgr Ride with

Segment Mgr Weekly Score Card

Segment Sales Target

Review

Distributor Daily Score Card

Review

Direct Sales input

Retail Mgr Daily Score Card

Review

Review

Review

Review

Segment Mgr Daily Score Card

Review

Review

Review

Distributor Quarterly ROI Analysis

Marketing Ride with

Retail Mgr Weekly Score Card

Retail Mgr Monthly Score Card

Distributor Management Distributor Management Control System (DMCS) Control System (DMCS)

CritiquesCritiques DMCS Audit conducted for West Region Regional OfficeDMCS Audit conducted for West Region Regional Office Important CritiquesImportant Critiques

Daily/weekly/monthly control and reporting absent both Daily/weekly/monthly control and reporting absent both for field sales force as well for the distributorfor field sales force as well for the distributor

Attainment of targets, variance, course corrections Attainment of targets, variance, course corrections absent. Post-mortem reports generated rather than absent. Post-mortem reports generated rather than proactive actionproactive action

No review of performance of distributor and corrective No review of performance of distributor and corrective action plans to improve performanceaction plans to improve performance

No formal feedback loops between the distributor and the No formal feedback loops between the distributor and the field sales/H.O. field sales/H.O.

No system to formally capture market intelligence, No system to formally capture market intelligence, analyze data, formulate responses to competitor/market analyze data, formulate responses to competitor/market activitiesactivities

The skeleton of distributor management control system does not exist. Distributor management personality driven, not system driven.

The skeleton of distributor management control system does not exist. Distributor management personality driven, not system driven.

Sales Distribution on Dealer Sales Distribution on Dealer RankRank

52.5%

19.6%

28.0%

% sales from top 10 % sale from Rank 10-20 % sale from Rank 21-72

Out of 72 distributors in West Zone, 52.5% sales come from top 10. Little attempt in rationalizing territories & performance management

Out of 72 distributors in West Zone, 52.5% sales come from top 10. Little attempt in rationalizing territories & performance management

Distributor Feedback: Distributor Feedback: Relationship ManagementRelationship Management

Feedback from interviews conducted with two distributorsFeedback from interviews conducted with two distributors Distributor A & Distributor B in South West Region and Distributor A & Distributor B in South West Region and

New West Region respectivelyNew West Region respectively

Short term approach to distributors managementShort term approach to distributors management • ““Car companies are trying to help their car dealers by Car companies are trying to help their car dealers by

selling spare parts through them, whereas ABC (Parent selling spare parts through them, whereas ABC (Parent Company of XYZ) is planting more distributors in the Company of XYZ) is planting more distributors in the same territory resulting in price warssame territory resulting in price wars””(Distributor B)(Distributor B)

• ““I get undercut by ABC (Parent Company of XYZ) I get undercut by ABC (Parent Company of XYZ) distributors of other areas who are willing to give any distributors of other areas who are willing to give any terms and conditions in my territory. Ultimately who terms and conditions in my territory. Ultimately who loses in the long run?!loses in the long run?!””( Distributor A)( Distributor A)

Existing distributors unhappy with short term distributor management approachExisting distributors unhappy with short term distributor management approach

Distributor Feedback: Distributor Feedback: Relationship ManagementRelationship Management

No involvement of Senior Company ManagementNo involvement of Senior Company Management• No national company-distributor meet. No No national company-distributor meet. No

dialogue/feedback on productsdialogue/feedback on products ““I want to go and see their Coimbatore plant. But I keep waiting for I want to go and see their Coimbatore plant. But I keep waiting for

opportunityopportunity””( Distributor B)( Distributor B)• ““I have other MDs calling up once in a while, to find out I have other MDs calling up once in a while, to find out

supply position, but not ABC (Parent Company of XYZ) .I supply position, but not ABC (Parent Company of XYZ) .I have seen MD , only as a picturehave seen MD , only as a picture””(Distributor B)(Distributor B)

• No company official from H.O. visits my No company official from H.O. visits my stockists/retailersstockists/retailers

Distributors regret absence of involvement of senior managementDistributors regret absence of involvement of senior management

Distributor Feedback: Market Distributor Feedback: Market IntelligenceIntelligence

Products/marketing not aligned to realities of replacement Products/marketing not aligned to realities of replacement marketmarket

Slow MovingSlow Moving• ““Can easily produce a fast moving , high volume clutch cable, Can easily produce a fast moving , high volume clutch cable,

instead of slow moving, low volume speed o-cablesinstead of slow moving, low volume speed o-cables””(Distributor B)(Distributor B) Product StrategyProduct Strategy

• ““Brakes India released disc brakes in the market as a self sufficient Brakes India released disc brakes in the market as a self sufficient unit. ABC (Parent Company of XYZ)unit. ABC (Parent Company of XYZ)’’s disc brakes was a confusing s disc brakes was a confusing set of different unitsset of different units””(Distributor B)(Distributor B)

Price Insensitive Price Insensitive • ““For truck segments which is very price sensitive ,need to keep For truck segments which is very price sensitive ,need to keep

prices competitiveprices competitive””(Distributor B)(Distributor B) ““Products like cigarette lighters at Rs . 250 on a price list. Can be Products like cigarette lighters at Rs . 250 on a price list. Can be

fitted in accessory market in Rs. 100fitted in accessory market in Rs. 100”” (Distributor B) (Distributor B) Over Engineered Over Engineered

• ““VehicleVehicle’’s life is 5-10 years. ABC (Parent Company of XYZ) s life is 5-10 years. ABC (Parent Company of XYZ) equipment will last for 15 yearsequipment will last for 15 years”” (Mr. Gopal) (Mr. Gopal)

ABC (Parent Company of XYZ) does not capture the changing needs/realities of market place

ABC (Parent Company of XYZ) does not capture the changing needs/realities of market place


Product

Strategy

Pricing

Strategy

Promotion

Strategy

Distribution

Our RecommendationsOur Recommendations

1. Accessory Vs. Spare Parts Distribution

2. Options before XYZ

3. Evaluation of Options

4. Recommended Option

Distributing Accessories Vs. Distributing Accessories Vs. Spare PartsSpare Parts

Accessories Spare Parts

Independent network of accessory distributors. The accessory distributors do not distribute spare parts.

Independent network of spare parts distributors/stockists. Spare part distributors do not distribute accessories

Target audience is the accessory retailer /installer

Target audience is the workshops and mechanics. Mechanics create a pull for the product

‘Push’ product.Demand for accessories have to be created

‘Pull’ product.

Require competitive selling , “incentives” to induce retailers to sell our brands

Selling by order taking

Typical promotion will be an ad in an auto magazine like Overdrive, with massive POP support(banners, posters, product displays and demo boards etc.)

A typical promotion will be mechanic contact programmes where company MSRs will educate/train/sell to mechanics

Distribution OptionsDistribution Options

1.1. XYZ Exclusive Distribution Network XYZ Exclusive Distribution Network

2.2. ABC (Parent Company of XYZ)ABC (Parent Company of XYZ)’’s Existing + XYZ in some areass Existing + XYZ in some areas

3.3. ABC (Parent Company of XYZ)ABC (Parent Company of XYZ)’’s Existing Distribution s Existing Distribution

Recommended OptionRecommended Option

Recommended: XYZ Exclusive Recommended: XYZ Exclusive ProsPros

High control over distribution process, service , pricing and High control over distribution process, service , pricing and channel costschannel costs

High sales , since only an accessory focused network will High sales , since only an accessory focused network will provide salesprovide sales

ConsCons Low on Flexibility to exit. But XYZ has long term plans .Low on Flexibility to exit. But XYZ has long term plans . To use existing network as a transition optionTo use existing network as a transition option

The existing network will provide some spillover salesThe existing network will provide some spillover sales

Investment : Investment vs. return in an Investment : Investment vs. return in an exclusive accessory network will become very exclusive accessory network will become very attractive once other accessory products are attractive once other accessory products are pushed in the network.pushed in the network.


Product

Strategy

Pricing

Strategy

Promotion

Strategy

Distribution

Summary Skeleton of distributor management control system does not exist.

Little attempt in rationalizing territories & performance management Existing distributors unhappy with short term distributor management

approach Network of accessory distributors independent to spare parts. Unlike

spare parts, accessory is a ‘Push’ product. Recommended Distribution Option : XYZ Exclusive Transition: Use ABC (Parent Company of XYZ) existing network while

building XYZ Exclusive network

Finally

• When can we say we have acquired a When can we say we have acquired a competitive distribution capability?competitive distribution capability?

Competitive Distribution Competitive Distribution CapabilityCapability

Top management committed to distribution strategy & Top management committed to distribution strategy & planning.planning.

Senior manager dedicated to distribution planning & Senior manager dedicated to distribution planning & management.management.

Have a disciplined distributor management control systemHave a disciplined distributor management control system Helps identify market size, distributor volume by brand/market segment Helps identify market size, distributor volume by brand/market segment Helps process what-if scenarios with different distributor portfoliosHelps process what-if scenarios with different distributor portfolios Manages performance: tracks, reviews and course correctsManages performance: tracks, reviews and course corrects Manages complex distributor relationshipsManages complex distributor relationships

Understand the concept of distribution intensityUnderstand the concept of distribution intensity Balance distribution mix to cover market segments requiring Balance distribution mix to cover market segments requiring

different intensity different intensity Understand the related concepts of coverage, penetration and Understand the related concepts of coverage, penetration and

market share.market share. Know their strategic moves: Maintain, Penetrate, Grow, Know their strategic moves: Maintain, Penetrate, Grow,

Terminate.Terminate.

Get in TouchGet in Touch

Sarvajeet Chandra Sarvajeet Chandra +91 9920803060+91 9920803060• [email protected]@sapphirez.in• [email protected]@gmail.com

Visit UsVisit Us•www.mastersungroup.comwww.mastersungroup.com•www.facebook.com/strategyexecutionwww.facebook.com/strategyexecution

Marketing Strategy : Marketing Mix Development Example Of Car Accessory Maker

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Transcript of Marketing Strategy : Marketing Mix Development Example Of Car Accessory Maker