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Master of Business Administration - MBA Semester 2MB0046 – Marketing Management - 4 Credits

Assignment Set- 1 (60 Marks)

Note: Each question carries 10 Marks. Answer all the questions.

Q.1 What is Marketing Information System? Explain its characteristics, benefits and information types. (10 marks)

The main responsibility for identifying significant changes in the market place falls on the marketing department. They are better placed and have advantages in undertaking this task because they are regularly interacting with customers and observing competition.

The Marketing Departments need to develop Marketing Information Systems that provide them information about buyer wants, preferences, behavior and also about competition. They are able to do this by setting up systems and marketing related research methods to collect this valuable information whichis ultimately used to make marketing decisions.

A Marketing Information System is a set of procedures to collect, analyze and distribute accurate, prompt and appropriate information to different levels of marketing decision makers.

Characteristi cs of MI S

Philip Kotler defines MIS as ―a system that consists of people, equipment and procedures to gather,

sort,analyze, evaluate and distribute needed, timely and accurate information to marketing decision makers.

Its characteristics are as follows:

1. It is a planned system developed to facilitate smooth and continuous flow of information.

2. It provides pertinent information, collected from sources both internal and external to the company, for use as the basis of marketing decision making.

3. It provides right information at the right time to the right person.

A well designed MIS serves as a company‘s nerve centre, continuously monitoring the market environment both inside and outside the organization. In the process, it collects lot of data and stores in the form of a database which is maintained in an organized manner. Marketers classify and analyze thisdata from the database as needed.

With the advent of Computer Technology, MIS has taken a step further to provide managers direct access to the databases. This system called Marketing Decision Support System (MDSS) links a decision maker to relevant databases and analysis tools, thereby allowing him to gain deep insights into needs and trends of customers with the help of sophisticated statistical analysis.

Today companies organize the information in databases such as customer database, product database, and field sales database and combine them to be stored in a huge database called Data Warehouse. The process of searching through information in data warehouse to identify meaningful patterns that guide decision making is called Data Mining.

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B enef it s of MI S

Various benefits of having a MIS and resultant flow of marketing information are given below:

1. It allows marketing managers to carry out their analysis, planning implementation and control responsibilities more effectively.

2. It ensures effective tapping of marketing opportunities and enables the company to develop effective safeguard against emerging marketing threats.

3. It provides marketing intelligence to the firm and helps in early spotting of changing trends.

4. It helps the firm adapt its products and services to the needs and tastes of the customers.

5. By providing quality marketing information to the decision maker, MIS helps in improving the quality of decision making.

Types of Marketi ng Inf orm ati on

A Marketing Information System supplies three types of information.

1. Recurrent Information is the data that MIS supplies periodically at a weekly, monthly, quarterly, or annual interval. This includes data such as sales, Market Share, sales call reports, inventory levels, payables, and receivables etc. which are made available regularly. Information on customer awareness of company‘s brands, advertising campaigns and similar data on close competitors can also be provided.

2. Monitoring Information is the data obtained from regular scanning of certain sources such as trade journals and other publications. Here relevant data from external environment is captured to monitor changes and trends related to marketing situation. Data about competitors can also be part of this category. Some of these data can be purchased at a price from commercial sources such as Market Research agencies or from Government sources.

3. Problem related or customized information is developed in response to some specific requirement related to a marketing problem or any particular data requested by a manager. Primary Data or Secondary Data (or both) are collected through survey Research in response to specific need. For example, if the company has developed a new product, the marketing manager may want to find out the opinion of the target customers before launching the product in the market. Such data is generated by conducting a market research study with adequate sample size, and the findings obtained are used to help decide whether the product is accepted and can be launched.

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Q.2 a. Examine how a firm’s macro environment operates. (5 marks)

Forces in the macro environment

Demographic Environment

Demography: The study of population characteristics like size, density, location, gender composition, age structure, occupation and religion.

Demography statistics helps companies to forecast demand. These statistics are also used in developing proper supply chain, communicating product information and changing the product attributes. Demographic environment is analyzed on the basis of the following factors.

1. Age structure of the population

2. Marital status of the population

3. Geographic distribution of the population

4. Education level

5. Migration

6. Occupation.

Age structure of the population: from the following table you can generalize that 48% of the population in India are aged below 21yrs and 28% of the population are in the bracket of 21-25yrs. Many marketing companies are focusing on these two segments. For example, Radio Indigo, FM radio station from Jupiter capital venture operates in Bangalore and Goa, plays international music. Radio indigo targets youth segment who like western music.

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b. Mention the key points in Psychoanalytic model of consumer behaviour. (5 marks)

The psychoanalytical model : The psychoanalytical model draws from Freudian psychology.

According to this model, the individual consumer has a complex set of deep seated motives which

drive him towards certain buying decisions. The buyer has a private world with all his hidden fears,

suppressed desires and totally subjective longings.

His buying action can be influenced by appealing to those desires and longings.

According to Mr. Freud, human personality has three parts namely, 1. the “ID”, the source of all mental

energy which drives one to an action. 2.the “Super Ego”, the internal representation of what is socially

approved—one‟s conscience.3. the “Ego”, the conscious director of „ID‟ impulses for finding satisfaction in

socially acceptable manner. In other words, „ID‟ represents one‟s animal or basic impulses, „instincts‟ and

cravings for immediate and total satisfaction. These instincts might be even anti-social. The Super Ego

or conscience reflects one,s idealised or mended behaviour pattern a via media between the extremes,

that is the, conflict between “ID” and “Super Ego” is resolved by Ego. The Ego is the intermediary which

mediates and processes the dispute action as a rational con- trol centre between the conflicting extreme

sides of ID and Super Ego. It is Ego that directs ones behaviour to satisfy both the “

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ID” and “Super Ego”. Thus a person is interested in buying say KV-L34MFI SONY TV with

characteristics of Hi-black Trinitron Screen—super drum sound system, 100system memory,1 tuner

digital picture in picture, A/V Stereo, LD compatibility casting say Rs.1,05,000 with remote control. Here

his „ID‟ demands the use of consumer credit liberally to buy that costly T.V. set. The Super Ego dissuades

him from heavy borrowing as credit beyond certain limits is not

acceptable. Here the Ego acts like a mediator and comes with a fine compromise of instalment

system without away strains and drain on his financial position. Here self image of a consumer is a

great motivating force inducing him to buy certain products. This model can be presented as follows

Learning model: All theories of buyer behaviour have been basically based on a learning model

namely, Stimulation- Response or more popularly known as SR model. SR learning theory is very

useful to modern marketing and marketers. Learning is the centrifugal point in the entire study to

human behaviour. Learning, as noted earlier,

refers to a change in the behaviour which occurs as a result of practice. It is a change in the

behaviour that results from previous experience and behaviour in similar situations. What is

important, learning is a product of reasoning, thinking, information processing and, of course,

perception. Therefore, behaviour is deeply affected by the learning experiences of the buyers.

Of all the psychologists, Pavlovian stimulus or learning of buyer behaviour is widely accepted. He

says that buyer behaviour is capable of being manipulated by human drives, stimuli, and responses of

the buyer. This model banks on

man‟s ability to leave, forget and discriminate. Learning process involves three steps namely, Drive—a strong internal

stimulus which impels action. When it is directed towards a drive-reducing object, it becomes a

motive. A drive- need- thus motivates a person for action to satisfy the need. Here, the objectives are

the stimuli which the drives Cues are weak stimuli. Cues determine when the buyer will respond.

Say, we have cues such as a product advertisement

relevant to the situation and existing in our environment.

Response is the final stage which is needed to fulfill the drive or as a need which was acting as a

strong stimulus. Thus, the thirst, can be quenched by an ad. These sequential components of learning

link stimulus cue and response finally resulting in a habit. In marketing, it is better known as a

learning brand loyalty brand images and store patronage. Repeated reinforcement leads to a habit

formation and the decision process for an individual becomes a matter of routine. It is worth

MB0046 Naser Shoukat Firfireemphasizing here that we learn through trial and error and changes in our behaviour are brought

about by practice as experience. The SR model of Pavlovian learning is made clear by given figure:

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Sociological model: According to sociological model, the individual buyer behaviour is

influenced by society—by intimate groups as well as social classes. That is, his buying decisions are

not totally determined by the concept of

utility. That is his buying decisions are governed by social compulsions. As a part of

sociological model—two important variations can be considered namely, one that of Nicosia

and another Howard & Sheth.

The marketing scholars have tried to build buyers-behaviour models purely from stand point view of

marketing man. Here F. Nicosia model of 1966 and H. Sheth model of 1969are of this category.

These models are systems models where human being analysed as a system with stimuli as INPUT

and behaviour as an output

Nicosia model:

As well known consumer motivation and bevaviour expert Mr. Nicosia presented his buyer model in

1966 which attempts to establish linkages between the marketing firm and its consumer. The

MB0046 Naser Shoukat Firfireessence is how the activities of the

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firm influence the consumer and result in his direction to buy. According to his model the messages

from the firm first influence the predisposition of the consumer towards the product, he develops a

certain attitude towards the product depending on the situation. It leads to a search for the product

or on evaluation of the product. In case, these steps have a positive impact on him it may result in

decision to by. This is the sum and substances of the explanation. His model lumps these activities

into four basic fields.

Field One has two sub-fields namely, the firms attributes and the consumer attributes.An ad message from the firm

reaches consumer‟s attributes. Depending on the way the messages received by the consumer, a certain attribute may

develop and this becomes the input for the field Two. Field Two is the area of search and evaluation

of the advertised product and other alternatives. If this process results in a motivation to buy, it

becomes the input for field three. Field Three consist of the act of purchase. The field Four consists

of use of the purchased item. There is an output from field

Four --- feed back of sales results to the firm

HOWARD SHETH MODEL

John Howard and Jagdish Sheth presented their buyer model in 1969. its an integrated model. It

assumes problem solving approach in buying and adopts input-output or system approach in buying.

Howard introduced learning process in buying. Satisfaction leads brand loyalty. Discontentments

creates brand switching by the buyers. It other words , the logic of this model that there are inputs

in the form of stimuli. There are output beginning with attention to a given stimulus and ending the

purchase. In between these inputs and outputs , there are variable affecting

MB0046 Naser Shoukat Firfireperception and learning. These variables are “hypothetical” as they can not be directly measured at the time of

occurrence.

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This model can be presented in the both simple and more sophisticated form. The simple structure is as follows:

Q.3 Explain the key roles played and various steps involved in organizational buying. (10 marks)

Organization buying is the decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers. (Webster and Wind)

Some of the characteristics of organizational buyers are:

1. Consumer market is a huge market in millions of consumers where organizational buyers are limited in number for most of the products.2. The purchases are in large quantities.3. Close relationships and service are required.4. Demand is derived from the production and sales of buyers.5. Demand fluctuations are high as purchases from business buyers magnify fluctuation in demand for their products.6. The organizational buyers are trained professionals in purchasing.7. Several persons in organization influence purchase.8. Lot of buying occurs in direct dealing with manufacturers.

Organizational Buying Situations

Straight rebuyIn this buying situation, only purchasing department is involved. Thet get an information from inventory control department or section to reorder the material or item and they seek quotations from vendors in an approved list.

The "in-suppliers" make efforts to maintain product and service quality. The "out-suppliers" have to make efforts to get their name list in the approved vendors' list and for this purpose they have to offer

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something new or find out any issues of dissatisfaction with current suppliers and promise to provide better service.

Modified rebuy

In this buying situation, there is a modification to the specifications of the product or specifications related to delivery. Executives apart from the purchasing department are involved in the buying decisions. The company is looking for additional suppliers or is ready to modify the approved vendors list based on the technical capabilities and delivery capabilities.

New task buy

In this situation, the buyer is buying the product for the first time. As the cost of the product or consumption value becomes higher, more number of executives are involved in the process. The stages of awareness, interest, evaluation, trial, and adoption will be there for the products of each potential supplier. Only the products which pass all the stages will be on the approved list and price competition will follow subsequently.

Systems buy

Systems buying is a process in which the organization gives a single order to a single organization for supplying a full system. The buying organization knows that no single party is producing all the units in the system. But it wants the system seller to engineer the system, procure the units from various vendors and assemble, fabricate or construct the system.

Participants in the Business Buying Process

Users

The persons who use the item. Say for s a f e t y g l o v es t he operators.

Initiators

The persons who request the purchase. The safety officer may initiate the request for the purchase.

Influencers

Persons who held define specifications. In this case of safety gloves, the safety officer may himself define specifications. If an industrial engineer is in the organization, he may also be consulted. There can a different gloves for different working situations and industrial engineer may be more aware of specific requirements due to his special nature of work - human effort engineering.

Buyers

They are the person who actually do the buying transaction.

Gatekeepers

They control access to personnel in a company. The receptionist, the secretaries etc.

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Deciders

People who decide on product requireements and suppliers. It is the final approval for product specfications and suppliers' list.

Approvers

Persons who approve the purchase. In the case of safety gloves, the personal manager may have the power to approve.

Major Influencers on Business Buyers

Environmental factors

Expected demand for the product that the buying organization is selling, expected shortages for the item, expected changes in technology related to the item etc. are the environmental factors that will have an effect.

Organizational factors

Changes in purchasing department organization like centralized purchasing, decentralized purchasing and changes in purchasing practices like long-term contracts, relationship purchasing, zero-based pricing, vendor-performance evaluation are the organization factors of importance to marketers.

Interpersonal factors

These factors are the relationship between buyers and sales representatives of various competitor companies.

Individual factors

These factors related to the buyer. What sort of ways of interacting and service are appreciated by the buyers and what ways are considered as irritants? Marketers have to understand the reactions of buyers.

Organizational Buying/Purchasing/Procurement ProcessSteps in the Process Problem recognition General need description Product specification Supplier searchProposal solicitationSupplier selectionOrder routine specificationSupplier performance review

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Q.4 Explain the different marketing philosophies and its approach. (10 marks)

The marketing concept and philosophy is one of the simplest ideas in marketing, and at the same time, it

is also one of the most important marketing philosophies. At its very core are the customer and his or her

satisfaction. The marketing concept and philosophy states that the organization should strive to satisfy its

customers' wants and needs while meeting the organization's goals. In simple terms, "the customer is

king".

The implication of the marketing concept is very important for management. It is not something that the

marketing department administers, nor is it the sole domain of the marketing department. Rather, it is

adopted by the entire organization. From top management to the lowest levels and across all departments

of the organization, it is a philosophy or way of doing business. The customers' needs, wants, and

satisfaction should always be foremost in every manager and employees' mind. Wal-Mart's motto of

"satisfaction guaranteed" is an example of the marketing concept. Whether the Wal-Mart employee is an

accountant or a cashier, the customer is always first.

As simple as the philosophy sounds, the concept is not very old in the evolution of marketing thought.

However, it is at the end of a succession of business philosophies that cover centuries. To gain a better

understanding of the thought leading to the marketing concept, the history and evolution of the marketing

concept and philosophy are examined first. Next, the marketing concept and philosophy and some

misconceptions about it are discussed.

EVOLUTION OF THE MARKETING CONCEPT AND PHILOSOPHY

The marketing concept and philosophy evolved as the last of three major philosophies of marketing.

These three philosophies are the product, selling, and marketing philosophies. Even though each

philosophy has a particular time when it was dominant, a philosophy did not die with the end of its era of

dominance. In fact, all three philosophies are being used today.

PRODUCT PHILOSOPHY.

The product philosophy was the dominant marketing philosophy prior to the Industrial Revolution and

continued to the 1920s. The product philosophy holds that the organization knows its product better than

anyone or any organization. The company knows what will work in designing and producing the product

and what will not work. For example, the company may decide to emphasize the low cost or high quality

of their products. This confidence in their ability is not a radical concept, but the confidence leads to the

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consumer being overlooked. Since the organization has the great knowledge and skill in making the

product, the organization also assumes it knows what is best for the consumer.

This philosophy of only relying on the organization's skill and desires for the product did not lead to poor

sales. In much of the product philosophy era, organizations were able to sell all of the products that they

made. The success of the product philosophy era is due mostly to the time and level of technology in

which it was dominant. The product era spanned both the pre-Industrial Revolution era and much of the

time after the Industrial Revolution.

The period before the Industrial Revolution was the time when most goods were made by hand. The

production was very slow and few goods could be produced. However, there was also a demand for those

goods, and the slow production could not fill the demand in many cases. The importance for management

of this shortage was that very little marketing was needed.

An example illustrates the effects of the shortages. Today, the gunsmith shop in Williamsburg, Virginia,

still operates using the product philosophy. The gunsmiths produce single-shot rifles using the technology

available during the 1700s. They are only able to produce about four or five rifles every year, and they

charge from $15,000 to $20,000 for each rifle. However, the high price does not deter the demand for the

guns; their uniqueness commands a waiting list of three to four years. Today's Williamsburg Gunsmith

Shop situation was typical for organizations operating before the Industrial Revolution. Most goods were

in such short supply that companies could sell all that they made. Consequently, organizations did not

need to consult with consumers about designing and producing their products.

When mass production techniques created the Industrial Revolution, the volume of output was greatly

increased. Yet the increased production of goods did not immediately eliminate the shortages from the

pre-industrial era. The new mass production techniques provided economies of scale allowing for lower

costs of production and corresponding lower prices for goods. Lower prices greatly expanded the market

for the goods, and the new production techniques were struggling to keep up with the demand. This

situation meant that the product philosophy would work just as well in the new industrial environment.

Consumers still did not need to be consulted for the organization to sell its products.

One of the many stories about Henry Ford illustrates the classic example of the product philosophy in use

after the Industrial Revolution. Henry Ford pioneered mass production techniques in the automobile

industry. With the techniques, he offered cars at affordable prices to the general public. Before this time,

cars were hand made, and only the very wealthy could afford them. The public enthusiastically purchased

all the Model T Fords that the company could produce. The evidence that the product philosophy was

alive and well in Ford Motor Company came in Henry Ford's famous reaction to consumer requests for

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more color options. He was said to have responded that "you can have any color car you want as long as it

is black." Realizing that different colors would increase the cost of production and price of the Model T's,

Henry Ford, using the product philosophy, decided that lower prices were best for the public.

SELLING PHILOSOPHY.

The selling era has the shortest period of dominance of the three philosophies. It began to be dominant

around 1930 and stayed in widespread use until about 1950. The selling philosophy holds that an

organization can sell any product it produces with the use of marketing techniques, such as advertising

and personal selling. Organizations could create marketing departments that would be concerned with

selling the goods, and the rest of the organization could be left to concentrate on producing the goods.

The reason for the emergence of the selling philosophy was the ever-rising number of goods available

after the Industrial Revolution. Organizations became progressively more efficient in production, which

increased the volume of goods. With the increased supply, competition also entered production. These

two events eventually led to the end of product shortages and the creation of surpluses. It was because of

the surpluses that organizations turned to the use of advertising and personal selling to reduce their

inventories and sell their goods. The selling philosophy also enabled part of the organization to keep

focusing on the product, via the product philosophy. In addition, the selling philosophy held that a sales

or marketing department could sell whatever the company produced.

The Ford Motor Company is also a good example of the selling philosophy and why this philosophy does

not work in many instances. Ford produced and sold the Model T for many years. During its production,

the automobile market attracted more competition. Not only did the competition begin to offer cars in

other colors, the styling of the competition was viewed as modern and the Model T became considered as

old-fashioned. Henry Ford's sons were aware of the changes in the automobile market and tried to

convince their father to adapt. However, Henry Ford was sure that his standardized low-price automobile

was what the public needed. Consequently, Ford turned to marketing techniques to sell the Model T. It

continued to sell, but its market share began to drop. Eventually, even Henry Ford had to recognize

consumer desires and introduce a new model.

The selling philosophy assumes that a well-trained and motivated sales force can sell any product.

However, more companies began to realize that it is easier to sell a product that the customer wants, than

to sell a product the customer does not want. When many companies began to realize this fact, the selling

era gave way to the marketing era of the marketing concept and philosophy.

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MARKETING PHILOSOPHY.

The marketing era started to dominate around 1950, and it continues to the present. The marketing

concept recognizes that the company's knowledge and skill in designing products may not always be

meeting the needs of customers. It also recognizes that even a good sales department cannot sell every

product that does not meet consumers' needs. When customers have many choices, they will choose the

one that best meets their needs.

MARKET CONCEPT AND PHILOSOPHY

The marketing concept and philosophy states that the organization should strive to satisfy its customers'

wants and needs while meeting the organization's goals. The best way to meet the organization's goals is

also by meeting customer needs and wants. The marketing concept's emphasis is to understand the

customers before designing and producing a product for them. With the customer's wants and needs

incorporated into the design and manufacture of the product, sales and profit goals are far more likely to

be met.

With the customer's satisfaction the key to the organization, the need to understand the customer is

critical. Marketing research techniques have been developed just for that purpose. Smaller organizations

may keep close to their customers by simply talking with them. Larger corporations have established

methods in place to keep in touch with their customers, be it consumer panels, focus groups, or third-party

research studies. Whatever the method, the desire is to know the customers so the organization can better

serve them and not lose sight of their needs and wants.

The idea of keeping close to the organization's customers seems simple. In reality, it is very easy to forget

the customer's needs and wants. Sometimes the management is so involved with the product that their

own desires and wants begin to take dominance, even though they have adopted the marketing concept.

Yet it is easy for managers to forget the marketing concept and philosophy. For example, many years ago

—before there was a Subway on every corner—a college student opened a small submarine sandwich

shop near his university's campus. The sub shop was an immediate success. By using the marketing

concept, the young entrepreneuer had recognized an unmet need in the student population and opened a

business that met that need.

Unfortunately, the story does not end at this point. The sub shop was so successful that it began to

outgrow its original location after about three years. The shop moved to a larger location with more

parking spaces, also near the university. At the new sub shop, waiters in tuxedos met the students and

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seated them at tables with tablecloths. Besides the traditional subs, the shop now served full meals and

had a bar. Within a few months the sub shop was out of business. The owner of the shop had become so

involved with his business vision that he forgot the customers' needs and wants. They did not want an

upscale restaurant—there were other restaurants in the area that met that need, they just wanted a quicksub sandwich. By losing sight of the customers' wants and needs, the owner of the sub shop lost his

successful business.

MEETING CUSTOMER NEEDS WHILE MEETING ORGANIZATIONAL GOALS

Sometimes in the zeal to satisfy a customer's wants and needs, the marketing concept is construed to

mean that the customer is always right. However, the marketing concept also states that it is important to

meet organizational goals as well as satisfy customer wants and needs. Satisfying customer needs and

organizational goals may involve conflicts that sometimes cannot be resolved. The organization that

adopts the marketing concept will do everything in its power to meet the needs of its customers, but it

must also make a profit. Sometimes the wants of the customers may include a low price or features that

are not attainable for the organization if it is to make a profit. Consequently, the organization must hope

for a compromise between what the consumer wants and what is practical for the business to provide.

CRITICISM OF THE MARKETING CONCEPT

Interpreted literally, the marketing concept only advocates discovering consumers' wants and needs and

satisfying them. Critics assert that consumers may not be aware of all of their wants and needs. In the

1950s, were consumers aware of a need to cook their food by sending microwaves through their food? In

the 1960s, were consumers aware of a need to have personal computers in their homes? Critics argue that

the marketing concept's concentration on consumers' wants and needs stifle innovation. Organizations

will no longer concentrate on research and development in hopes that one product in ten might meet with

consumer acceptance, and will less likely come up with innovative products such as microwaves and

personal computers.

Supporters of the marketing concept have contended that it does not stifle innovation and that it does

recognize that consumers cannot conceive of every product that they may want or need. However, need is

defined in a very broad sense. In the microwave and personal computer examples, the need was not for

the specific product, but there was a need to cook food faster and a need for writing and calculating. The

microwave and personal computer satisfied those needs though the consumer never imagined these

products. The marketing concept does not stifle creativity and innovation. It seeks to encourage creativity

to satisfy customer needs.

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The marketing concept is a relative newcomer as a philosophy of doing business. However, its evolution

started before the Industrial Revolution. As time progressed, customer and business needs also evolved.

The product and selling philosophies eventually evolved into the marketing concept and philosophy.

Today, the marketing concept and philosophy stands as a formula for doing business and many believe it

is a prescription for success. It aims to satisfy customers by guiding the organization to meet the

customers' needs and wants while meeting the organization's goals.

Q. 5 What are the various stages involved in decision process when a consumer is buying new product? Also, explain the adoption process. (10 marks)

Definition of Buying Behavior:Buying Behavior is the decision processes and acts of people involved in buying and using products.

Need to understand:

why consumers make the purchases that they make? what factors influence consumer purchases? the changing factors in our society.

Consumer Buying Behavior refers to the buying behavior of the ultimate consumer. A firm needs to analyze buying behavior for:

Buyers reactions to a firms marketing strategy has a great impact on the firms success. The marketing concept stresses that a firm should create a M ar k e t i ng Mi x ( MM) that satisfies

(gives utility to) customers, therefore need to analyze the what, where, when and how consumers buy.

Marketers can better predict how consumers will respond to marketing strategies.

Ret ur n t o Cont ent s Li st

Stages of the Consumer Buying Process

Six Stages to the Consumer Buying Decision Process (For complex decisions). Actual purchasing is only one stage of the process. Not all decision processes lead to a purchase. All consumer decisions do not always include all 6 stages, determined by the degree of complexity...discussed next.

The 6 stages are:

1. Problem Recognition(awareness of need)--difference between the desired state and the actual condition. Deficit in assortment of products. Hunger--Food. Hunger stimulates your need to eat. Can be stimulated by the marketer through product information--did not know you were deficient? I.E., see a commercial for a new pair of shoes, stimulates your recognition that you need a new pair of shoes.

2. Information search--

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o Internal search, memory.o External search if you need more information. Friends and relatives (word of mouth).

Marketer dominated sources; comparison shopping; public sources etc.

A successful information search leaves a buyer with possible alternatives, the evoked set.

Hungry, want to go out and eat, evoked set is

o chinese foodo indian foodo burger kingo klondike kates etc

3. Evaluation of Alternatives--need to establish criteria for evaluation, features the buyer wants ordoes not want. Rank/weight alternatives or resume search. May decide that you want to eat something spicy, indian gets highest rank etc.If not satisfied with your choice then return to the search phase. Can you think of another restaurant? Look in the yellow pages etc. Information from different sources may be treateddifferently. Marketers try to influence by "framing" alternatives.

4. Purchase decision--Choose buying alternative, includes product, package, store, method of purchase etc.

5. Purchase--May differ from decision, time lapse between 4 & 5, product availability.6. Post-Purchase Evaluation--outcome: Satisfaction or Dissatisfaction. Cognitive Dissonance, have

you made the right decision. This can be reduced by warranties, after sales communication etc.After eating an indian meal, may think that really you wanted a chinese meal instead.

Handout...Pillsbury 1-800#s

1-800 #s gives the consumer a way of communicating with the marketer after purchase. This helps reduce cognitive dissonance when a marketer can answer any concerns of a new consumer.R e t u r n t o C o n t e n t s L i s t

Types of Consumer Buying Behavior

Types of consumer buying behavior are determined by:

Level of Involvement in purchase decision. Importance and intensity of interest in a product in a particular situation.

Buyers level of involvement determines why he/she is motivated to seek information about acertain products and brands but virtually ignores others.

High involvement purchases--Honda Motorbike, high priced goods, products visible to others, and the higher the risk the higher the involvement. Types of risk:

Personal risk Social risk Economic risk

The four type of consumer buying behavior are:

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Routine Response/Programmed Behavior--buying low involvement frequently purchased low cost items; need very little search and decision effort; purchased almost automatically. Examples include soft drinks, snack foods, milk etc.

Limited Decision Making--buying product occasionally. When you need to obtain information about unfamiliar brand in a familiar product category, perhaps. Requires a moderate amount oftime for information gathering. Examples include Clothes--know product class but not the brand.

Extensive Decision Making/Complex high involvement, unfamiliar, expensive and/or infrequently bought products. High degree of economic/performance/psychological risk.Examples include cars, homes, computers, education. Spend alot of time seeking information anddeciding.Information from the companies MM; friends and relatives, store personnel etc. Go through all six stages of the buying process.

Impulse buying, no conscious planning.

The purchase of the same product does not always elicit the same Buying Behavior. Product can shift from one category to the next.For example:Going out for dinner for one person may be extensive decision making (for someone that does not go out often at all), but limited decision making for someone else. The reason for the dinner, whether it is an anniversary celebration, or a meal with a couple of friends will also determine the extent of the decision making.

Ret ur n t o Cont ent s Li st

Categories that Effect the Consumer Buying Decision Process

A consumer, making a purchase decision will be affected by the following three factors:

1. Pe r so n al 2. Ps y cho l o g i c a l 3. Soci al

The marketer must be aware of these factors in order to develop an appropriate MM for its target market. R e t u r n t o C o n t e n t s L i s t

Personal

Unique to a particular person. Demographic Factors. Sex, Race, Age etc. Who in the family is responsible for the decision making.Young people purchase things for different reasons than older people.

Handout...From choices to checkout...

Highlights the differences between male and female shoppers in the supermarket.

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Q. 6 Explain briefly the marketing mix elements for an automobile company giving sufficient examples. (10 marks)

Marketing mix modeling is a term of art for the use of statistical analysis suchas m u lti v a r i a t e r e g r e s s i ons on sales and marketing ti m e s e r i e s d ata to estimate the impact ofvarious m a r k e ti ng t actics on sales and then forecast the impact of future sets of tactics. It is often used to optimize advertising mix and promotional tactics with respect to sales revenue or profit. The techniques were developed by econometricians and were first applied to co n su m er pac k a g ed g ood s , since manufacturers of those goods had access to good data on sales and marketing support. In the recent times MMM has found acceptance as a trustworthy marketing tool among the major consumer marketing companies

Marketing mix model

Marketing mix modeling is an analytical approach that use historic information, such as syndicated point-

of-sale data and companies‘ internal data, to quantify the sales impact of various marketing activities. Mathematically, this is done by establishing a simultaneous relation of various marketing

activities with

the sales, in the form of a linear or a non-linear equation, through the statistical technique of regression.

MMM defines the effectiveness of each of the marketing elements in terms of its contribution to sales-

volume, effectiveness (volume generated by each unit of effort), efficiency (sales volume generated

divided by cost) and RO I . T hese learnings are then adopted to adjust marketing tactics and strategies,

optimize the marketing plan and also to forecast sales while simulating various scenarios.

Elements in MMM

This is accomplished by setting up a model with the sales volume/value as the dependent variable and

independent variables created out of the various marketing efforts. The creation of variables for

Marketing Mix Modeling is a complicated affair and is as much an art as it is a science. Once the

variables are created, multiple iterations are carried out to create a model which explains the

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volume/value trends perfectly. Further validations are carried out, either by using a validation data, or by

the consistency of the business results.

The output can be used to analyze the impact of the marketing elements on various dimensions. The

contribution of each element as a percentage of the total plotted year on year is a good indicator of how

the effectiveness of various elements changes over the years. The yearly change in contribution is also

measure by a due-to analysis which shows what percentage of the change in total sales is attributable to

each of the elements. For activities like television advertising and trade promotions, more sophisticated

analysis like effectiveness can be carried out. This analysis tells the marketing manager the incremental

gain in sales that can be obtained by increasing the respective marketing element by one unit. If detailed

spend information per activity is available then it is possible to calculate the Return on Investment of the

marketing activity. Not only is this useful for reporting the historical effectiveness of the activity, it also

helps in optimizing the marketing budget by identifying the most and least efficient marketing activities.

Once the final model is ready, the results from it can be used to simulate marketing scenarios for a

‗What- if‘ analysis. The marketing manager can reallocate this marketing budget in different

proportions and see the direct impact on sales/value. He can optimize the budget by allocating spends to

those activities which give the highest return on investment.

[ed i t] Components

Marketing-mix models decompose total sales into two components:

Base Sales: This is the natural demand for the product driven by economic factors like pricing, long-term

trends, seasonality, and also qualitative factors like b r and a w a r en e ss a nd b r and l oy a lt y .

Incremental Sales: Incremental sales are the component of sales driven by marketing and promotional

activities. This component can be further decomposed into sales due to each marketing component

like T e l e v isi o n ad v e r t i s i ng or R a d i o ad v e r t i s i n g , P r i nt A d v e rti s i n g ( magazines, newspapers etc.),

Coupons, Di r e ct M a i l , Internet, Feature or Display Promotions and Temporary Price Reductions. Some of

these activities have short-term returns (Coupons, Promotions), while others have longer term returns

(TV, Radio, Magazine/Print).

Marketing-Mix analyses are typically carried out using Lin e a r R e g r e s s i o n Mo deling. N on li ne a r a nd

lagged effects are included using techniques like A d v e r t i s i ng A ds t ock t ransformations. Typical output of

such analyses include a decomposition of total annual sales into contributions from each marketing

component, a.k.a Contribution pie-chart.

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Another standard output is a decomposition of year-over year sales growth/decline, a.k.a ‗Due-to

charts‘.

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Elements measured in MMM

Base and incremental volume

The very break-up of sales volume into base (volume that would be generated in absence of any

marketing activity) and incremental (volume generated by marketing activities in the short run) across

time gain gives wonderful insights. The base grows or declines across longer periods of time while the

activities generating the incremental volume in the short run also impact the base volume in the long run.

The variation in the base volume is a good indicator of the strength of the brand and the loyalty it

commands from its users.

Media and advertising

Market mix modeling can determine the sales impact generated by individual media such as television,

magazine, and online display ads. In some cases it can be used to determine the impact of individual

advertising campaigns or even ad executions upon sales. For example, for TV advertising activity, it is

possible to examine how each ad execution has performed in the market in terms of its impact on sales

volume. MMM can also provide information on TV effectiveness at different media weight levels, as

measured by G r oss R a t i ng Poin t s ( GRP) in relation to sales volume response within a time frame, be it a

week or a month. Information can also be gained on the minimum level of GRPs (threshold limit) in a

week that need to be aired in order to make an impact, and conversely, the level of GRPs at which the

impact on volume maximizes (saturation limit) and that the further activity does not have any payback.

While not all MMM's will be able to produce definitive answers to all questions, some additional areas in

which insights can sometimes be gained include: 1) the effectiveness of 15-second vis-à-vis 30-second

executions; 2)comparisons in ad performance when run during prime-time vis-à-vis off-prime-time

dayparts; 3) comparisons into the direct and the halo effect of TV activity across various products or sub-

brands. The role of new product based TV activity and the equity based TV activity in growing the brand

can also be compared

Trade promotions

Trade promotion is a key activity in every marketing plan. It is aimed at increasing sales in the short term

by employing promotion schemes which effectively increases the customer awareness of the business and

its products. The response of consumers to trade promotions is not straight forward and is the subject of

much debate. Non-linear models exist to simulate the response. Using MMM we can understand the

impact of trade promotion at generating incremental volumes. It is possible to obtain an estimate of the

volume generated per promotion event in each of the different retail outlets by region. This way we can

identify the most and least effective trade channels. If detailed spend information is available we can

compare the Return on Investment of various trade activities like Every Day Low Price, Off-Shelf

Display etc. We can use this information to optimize the trade plan by choosing the most effective trade

channels and targeting the most effective promotion activity

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[ed i t ] Pricing

Price changes of the brand impacts the sales negatively. This effect can be captured through modeling the

price in MMM. The model provides the price elasticity of the brand which tells us the percentage change

in the sales for each percentage change in price. Using this, the marketing manager can evaluate the

impact of a price change decision.

[ed i t] Distribution

For the element of distribution, we can know how the volume will move by changing distribution efforts

or, in other words, by each percentage shift in the width or the depth of distribution. This can be identified

specifically for each channel and even for each kind of outlet for off-take sales. In view of these insights,

the distribution efforts can be prioritized for each channel or store-type to get the maximum out of the

same. A recent study of a laundry brand showed that the incremental volume through 1% more presence

in a neighborhood Kirana store is 180% greater than that through 1% more presence in a

supermarket. [ 1] B ased upon the cost of such efforts, managers identified the right channel to invest

more for distribution.

[ed i t] Launches

When a new product is launched, the associated publicity and promotions typically results in higher

volume generation than expected. This extra volume cannot be completely captured in the model using

the existing variables. Often special variables to capture this incremental effect of launches are used. The

combined contribution of these variables and that of the marketing effort associated with the launch will

give the total launch contribution. Different launches can be compared by calculating their effectiveness

and ROI.

[ed i t] Competition

The impact of competition on the brand sales is captured by creating the competition variables

accordingly. The variables are created from the marketing activities of the competition like television

advertising, trade promotions, product launches etc. The results from the model can be used to identify

the biggest threat to own brand sales from competition. The cross-price elasticity and the cross-

promotional elasticity can be used to devise appropriate response to competition tactics. A successful

competitive campaign can be analyzed to learn valuable lesson for the own brand.

[edit] Studies in MMM

Typical MMM studies provide the following insights

Contribution by marketing activity

ROI by marketing activity

Effectiveness of marketing activity

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Optimal distribution of spends

Learnings on how to execute each activity better e.g. optimal GRPs per week, optimal

distribution between 15s and 30s, which promos to run, what SKUS to put on promotion etc.Adoption of MMM by the industry

MMM is a relatively new area of application. In the last 10 years though many CPG companies have

adopted MMM. Many Fortune 500 companies such as P&G, Kraft, Coca-Cola and Pepsi have made

MMM an integral part of their marketing planning. This has also been made possible due to the

availability of specialist firms that are now providing MMM services.

Marketing-mix models were more popular initially the CPG industry and quickly spread to Retail and

Pharma industries because of the availability of Syndicated Data in these industries (primarily

from N i e l s en Co m pany and Sy m phony I R I G r oup and to a lesser extent from N PD G r oup ). Availability of

Time-series data is crucial to robust modeling of marketing-mix effects and with the systematic

management of customer data through CRM systems in other industries like Financial Services,

Automotive and Hospitality industries helped its spread to these industries. In addition competitive and

industry data availability through third-party sources like For r e s t e r R e s ea r c h ' s Ultimate Consumer Panel

(Financial Services), Polk Insights (Automotive) and Smith Travel Research (Hospitality), further

enhanced the application of marketing-mix modeling to these industries. Application of marketing-mix

modeling to these industries is still in a nascent stage and a lot of standardization needs to be brought

about especially in these areas:

Interpretation of promotional activities across industries for e.g. promotions in CPG do not have

lagged effects as they happen in-store, but automotive and hospitality promotions are usually

deployed through the internet or through dealer marketing and can have longer lags in their impact.

CPG promotions are usually absolute price discounts, whereas Automotive promotions can be

cashbacks or loan incentives, and Financial Services promotions are usually interest rate discounts.

Hospitality industry marketing has a very heavy seasonal pattern and most marketing-mix models

will tend to confound marketing effectiveness with seasonality, thus over or under estimating

marketing ROI. Time-series Cross-Sectional models like 'Pooled Regression' need to be utilized,

which increase sample size and variation and thus make a robust separation of pure marketing-effects

from seasonality.

Automotive Manufacturers spend a substantial amount of their marketing budgets on dealer

advertising, which may not be accurately measurable if not modeled at the right level of aggregation.

If modeled at the national level or even the market or DMA level, these effects may be lost in

aggregation bias. On the other hand going all the way down to dealer-level may over-estimate

marketing effectiveness as it would ignore consumer switching between dealers in the same area. The

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correct albeit rigorous approach would be to determine what dealers to combine into 'addable'

common groups based on overlapping 'trade-areas' determined by consumer zip codes and cross-

shopping information. At the very least 'Common Dealer Areas' can be determined by clustering

dealers based on geographical distance between dealers and share of county sales. Marketing-mix

models built by 'pooling' monthly sales for these dealer clusters will be effectively used to measure

the impact of dealer advertising effectively.

The proliferation of marketing-mix modeling was also accelerated due to the focus from Sarbanes-Oxley

Section 404 that required internal controls for financial reporting on significant expenses and outlays.

Marketing for consumer goods can be in excess of a 10th of total revenues and until the advent of

marketing-mix models, relied on qualitative or 'soft' approaches to evaluate this spend. Marketing-mix

modeling presented a rigorous and consistent approach to evaluate marketing-mix investments as the

CPG industry had already demonstrated. A study by American Marketing Association pointed out that top

management was more likely to stress the importance of marketing accountability than middle

management, suggesting a top-down push towards greater accountability.

Limitations

While marketing mix models provide much useful information, there are two key areas in which these

models have limitations that should be taken into account by all of those that use these models for

decisionmaking purposes. These limitations, discussed more fully below, include:

1) the focus on short-term sales can significantly under-value the importance of longer-term equity

building activities; and

2) when used for media mix optimization, these models have a clear bias in favor of time-specific media

(such as TV commercials) versus less time-specific media (such as ads appearing in monthly magazines);

biases can also occur when comparing broad-based media versus regionally or demographically targeted

media.

In relation to the bias against equity building activities, marketing budgets optimized using marketing-

mix models may tend too much towards efficiency because marketing-mix models measure only the

short-term effects of marketing. Longer term effects of marketing are reflected in its brand equity. The

impact of marketing spend on [brand equity] is usually not captured by marketing-mix models. One

reason is that the longer duration that marketing takes to impact brand perception extends beyond the

simultaneous or, at best, weeks-ahead impact of marketing on sales that these models measure. The other

reason is that temporary fluctuation in sales due to economic and social conditions do not necessarily

mean that marketing has been ineffective in building brand equity. On the contrary, it is very possible that

in the short term sales and market-share could deteriorate, but brand equity could actually be higher. This

higher equity should in the long run help the brand recover sales and market-share.

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Because marketing-mix models suggest a marketing tactic has a positive impact on sales doesn't

necessarily mean it has a positive impact on long-term brand equity. Different marketing measures impact

short-term and long-term brand sales differently and adjusting the marketing portfolio to maximize either

the short-term or the long-term alone will be sub-optimal. For example the short-term positive effect of

promotions on consumers‘ utility induces consumers to switch to the promoted brand, but the adverse

impact of promotions on brand equity carries over from period to period. Therefore the net effect of

promotions on a brand‘s market share and profitability can be negative due to their adverse impact on brand. Determining marketing ROI on the basis of marketing-mix models alone can lead to

misleading

results. This is because marketing-mix attempts to optimize marketing-mix to increase incremental

contribution, but marketing-mix also drives brand-equity, which is not part of the incremental part

measured by marketing-mix model- it is part of the baseline. True ' R e t u r n on M a r k e ti ng I n v e st m en t ' i s a

sum of short-term and long-term ROI. The fact that most firms use marketing-mix models only to

measure the short-term ROI can be inferred from an article by Booz Allen Hamilton, which suggests that

there is a significant shift away from traditional media to 'below-the-line' spending, driven by the fact that

promotional spending is easier to measure. But academic studies have shown that promotional activities

are in fact detrimental to long-term marketing ROI (Ataman et al., 2006). Short-term marketing-mix

models can be combined with brand-equity models using brand-tracking data to measure 'brand ROI', in

both the short- and long-term.

The second limitation of marketing mix models comes into play when advertisers attempt to use these

models to determine the best media allocation across different media types. The traditional use of

MMM's to compare money spent on TV versus money spent on couponing was relatively valid in that

both TV commercials and the appearance of coupons (for example, in a FSI run in a newspaper) were

both quite time specific. However, as the use of these models has been expanded into comparisons across

a wider range of media types, extreme caution should be used.

Even with traditional media such as magazine advertising, the use of MMM's to compare results across

media can be problematic; while the modelers overlay models of the 'typical' viewing curves of monthly

magazines, these lack in precision, and thus introduce additional variability into the equation. Thus,

comparisons of the effectiveness of running a TV commercial versus the effectiveness of running a

magazine ad would be biased in favor of TV, with its greater precision of measurement. As new new

forms of media proliferate, these limitations become even more important to consider if MMM's are to be

used in attempts to quantify their effectiveness. For example, Sponsorship Marketing, Sports Affinity

Marketing, Viral Marketing, Blog Marketing and Mobile Marketing all vary in terms of the time-

specificity of exposure.

Further, most approaches to marketing-mix models try to include all marketing activities in aggregate at

the national or regional level, but to the extent that various tactics are targeted to different demographic

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consumer groups, their impact may be lost. For example, Mountain Dew sponsorhip of NASCAR may be

targeted to NASCAR fans, which may include multiple age groups, but Mountain Dew advertising on

gaming blogs may be targeted to the Gen Y population. Both of these tactics may be highly effective

within the corresponding demographic groups but, when included in aggregate in a national or regional

marketing-mix model, may come up as ineffective.

Aggregation bias, along with issues relating to variations in the time-specific natures of different media,

pose serious problems when these models are used in ways beyond those for which they were originally

designed. As media become even more fragmented, it is critical that these issues are taken into account if

marketing-mix models are used to judge the relative effectiveness of different media and tactics.

Marketing-mix models use historical performance to evaulate marketing performance and so are not an

effective tool to manage marketing investments for new products. This is because the relatively short

history of new products make marketing-mix results unstable. Also relationship between marketing and

sales may be radically different in the launch and stable periods. For example the initial performance of

Coke Zero was really poor and showed low advertising elasticity. In spite of this Coke increased its media

spend, with an improved strategy and radically improved its performance resulting in advertising

effectiveness that is probably several times the effectiveness during the launch period. A typical

marketing-mix model would have recommended cutting media spend and instead resorting to heavy price

discounting.

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Master of Business Administration - MBA Semester 2MB0046 – Marketing Management - 4 Credits

Assignment Set- 2 (60 Marks)

Note: Each question carries 10 Marks. Answer all the questions.

Q.1 What is product mix? What are the strategies involved in product mix and product line? (10 marks)

Product Mix

Product mix is a combination of products manufactured or traded by the same business house to reinforce their presence in the market, increase market share and increase the turnover for more profitability. Normally the product mix is within the synergy of other products for a medium size organization. However large groups of Industries may have diversified products within core competency. Larsen & Toubro Ltd, Godrej, Reliance in India are some of the examples.

One of the realities of business is that most firms deal with multi-products .This helps a firm diffuse its risk across different product groups/Also it enables the firm to appeal to a much larger group of customers or to different needs of the same customer group .So when Videocon chose to diversify into other consumer durables like music systems ,washing machines and refrigerators ,it sought to satisfy the needs of the middle and upper middle income group of consumers.

Likewise , Bajaj Electricals.a household name in India, has almost ninety products in i8ts portfolio ranging from low value items like bulbs to high priced consumer durables like mixers and luminaires and lighting projects .The number of products carried by a firm at a given point of time is called its product mix. This product mix contains product lines and product items .In other words it‘s a composite of products offered for sale by a firm.

Product Mix and product line Decisions

Often firms take decisions to change their product mix. These decisions are dictated by the above factors and also by the changes occurring in the market place. Like the changing life-styles of Indian consumers led BPL-Sanyo to launch an entire range of white goods like refrigerators , washing machines, and microwave ovens .It also motivate the firm to launch other entertainment electronics. Rahejas, a well- known builders firm in Bombay, took a major decision to convert one of its theatre buildings in the western suburbs of Bombay into a large garments and accessories store for men ,women and children, perhaps the first of its kind in India to have almost all products required by these customer groups Competition from low priced washing powders (mainly Nirma) forced Hindustan Levers to launch different brands of detergent powder at different price levels positioned at different market segments.Customer preferences for herbs, mainly shikakai motivated Lever to launch black Sunsilk Shampoo,which has shikakai .Also ,low purchasing power. and cultural bias against shampoo market madeHindustan Lever consider smaller packaging mainly sachets , for single use .So, it is the changes or anticipated changes in the market place that motivates a firm to consider changes in its product mix.

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Q.2 What is a distribution channel? Explain the factors to be considered while setting up a distribution channel. (10 marks)

Pa t h or ' p i pe l i n e ' t hrough which g oods and s e r v i c e s f l o w i n one d i r e c ti o n ( from v e ndor t o the c o nsu m e r ) , and thepa y m en t s g enerated by them flow in the opposite direction (from consumer to the vendor).A d i s t r i bu t i on chan nel can be as short as being d i r ect from the vendor to the consumer ormay i nc l ude s everal inter-connected (usuallyi ndep e n d ent b ut mutually depen d ent) i n t e r m ed i a r i es such as w ho l e s a l e rs , d i s t r i b u t o r s, a g en ts , r e t a i l e rs . Each intermediary r ec e i v es t he item at one p r i c i ng p ointand m o v es i t to the next higher pricing point until it reaches thefi n al b u y e r . Also called ch a nn e l of d i s t r i bu t i on or m a r k e ti ng c hann e l .

The distribution channel

Distribution is also a very important component of Logistics & Supply chain management. Distribution in

supply chain management refers to the distribution of a good from one business to another. It can be

factory to supplier, supplier to retailer, or retailer to end customer. It is defined as a chain of

intermediaries, each passing the product down the chain to the next organization, before it finally reaches

the consumer or end-user. This process is known as the 'distribution chain' or the 'channel.' Each of the

elements in these chains will have their own specific needs, which the producer must take into account,

along with those of the all-important end-user.

Channels

A number of alternate 'channels' of distribution may be available:

Distributor, who sells to retailers,

Retailer (also called de a l e r or r e s e l l e r ) , who sells to end customers

Advertisement typically used for consumption goods

Distribution channels may not be restricted to physical products alice from producer to consumer in

certain sectors, since both direct and indirect channels may be used. Hotels, for example, may sell their

services (typically rooms) directly or through travel agents, tour operators, airlines, tourist boards,

centralized reservation systems, etc. process of transfer the products or services from Producer to

Customer or end user.

There have also been some innovations in the distribution of services. For example, there has been an

increase in f r anc h i s i ng and in rental services - the latter offering anything from televisions through tools.

There has also been some evidence of service integration, with services linking together, particularly in

the travel and tourism sectors. For example, links now exist between airlines, hotels and car rental

services. In addition, there has been a significant increase in retail outlets for the service sector. Outlets

such as estate agencies and building society offices are c r o w d i ng out t raditional grocers from major

shopping areas.

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Channel decisions

Channel Sales is nothing but a chain for to market a product through different sources.

Channel strategy

Gravity & Gravity

Push and Pull strategy

Product (or service)

Cost

Consumer locationManagerial concerns

The channel decision is very important. In theory at least, there is a form of trade-off: the cost of using

intermediaries to achieve wider distribution is supposedly lower. Indeed, most consumer goods

manufacturers could never justify the cost of selling direct to their consumers, except by mail order. Many

suppliers seem to assume that once their product has been sold into the channel, into the beginning of the

distribution chain, their job is finished. Yet that distribution chain is merely assuming a part of the

supplier's responsibility; and, if they have any aspirations to be market-oriented, their job should really be

extended to managing all the processes involved in that chain, until the product or service arrives with the

end-user. This may involve a number of decisions on the part of the supplier:

Channel membership

Channel motivation

Monitoring and managing channelsType of marketing channel

1. Intensive distribution - Where the majority of resellers stock the 'product' (with convenience

products, for example, and particularly the brand leaders in consumer g oods m arkets) price

competition may be evident.

2. Selective distribution - This is the normal pattern (in both consumer and industrial markets)

where 'suitable' resellers stock the product.

3. Exclusive distribution - Only lambard specially selected resellers or a u t ho r i z ed d e a l e r s ( typically

only one per geographical area) are allowed to sell the 'product'.Channel motivation

It is difficult enough to motivate direct employees to provide the necessary sales and service support.

Motivating the owners and employees of the independent organizations in a distribution chain requires

even greater effort. There are many devices for achieving such motivation. Perhaps the most usual is

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`incentive': the supplier offers a better margin, to tempt the owners in the channel to push the product

rather than its competitors; or a compensation is offered to the distributors' sales personnel, so that they

are tempted to push the product. Julian Dent defines this incentive as a C h a nn e l V a l ue P r op o s i ti o n or

business case, with which the supplier sells the channel member on the commercial merits of doing

business together. He describes this as selling business models not products.

Monitoring and managing channels

In much the same way that the organization's own sales and distribution activities need to be monitored

and managed, so will those of the distribution chain.

In practice, many organizations use a mix of different channels; in particular, they may complement a

direct salesforce, calling on the larger accounts, with agents, covering the smaller customers and

prospects. These channels show marketing strategies of an organization. Effective management of

distribution channel requires making and implementing decision in these areas.

Q.3 Discuss the communication development process with examples. (10 marks)

Communication development process, has been alternatively defined as a type of marketing and public

opinion research that is used specifically to develop effective communication or as the use

of co m m un i ca ti on t o promote s oc i al d e v e l op m en t . Defined as the former, it often includes computerized

linguistics analysis of verbatim responses to qualitative survey interviews and may, at times also involved

consumer psychological "right brain" (emotional) research techniques. Defined at the latter, it refers to the

practice of systematically applying the processes, strategies, and principles of communication to bring

about positive social change. As most providers of "communication development" research use

proprietary approaches that cannot be elaborated upon without revealing proprietary trade secrets, the

remainder of this article describes the latter definition. [ 1] T he practice of development communication can

be traced back to efforts undertaken in various parts of the world during the 1940s, but the widespread

application of the concept came about because of the problems that arose in the aftermath of Wo r l d War

I I . The rise of the co m m u n i c a ti o n s c i e n ces in the 1950s saw a recognition of the field as an academic

discipline, with D a n i el Le r ne r , W i l bur Sch r a m m , and E v e r e t t R o g e r s b eing the earliest influential

advocates. The term "Development Communication" was first coined in 1972 by N o r a C. Q ue b r a l , who

defines the field as

"the art and science of human communication linked to a society's planned transformation from a state of

poverty to one of dynamic socio-economic growth that makes for greater equity and the larger unfolding

of individual potential."[2]

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The theory and practice of development communication continues to evolve today, with different

approaches and perspectives unique to the varied development contexts the field has grown in.[3]

Development communication is characterized by conceptual flexibility and diversity of communication

techniques used to address the problem. Some approaches in the ―tool kit‖ of the field include:

information dissemination and education, behavior change, so c i al m a r k e t i n g , social mobilization, media

advocacy, communication for social change, and p a r t i c i p a t o r y de v e l op m ent co m m un i c a t i o n .

The history of organised development communication in India can be traced to rural radio broadcasts in

the 1940s. As is logical, the broadcasts used indigenous languages such

as H i n d i , M a r a t h i , G u j a r a t i and K ann a d a .

Independent India's earliest organized experiments in development communication started with

Community Development projects initiated by the union government in 1950's. The government, guided

by socialistic ideals of its constitution and the first generation of politicians, started massive

developmental programmes throughout the country. While field publicity was given due importance for

person-to-person communication - also because the level of literacy was very low in rural areas - radio

played an equally important role in reaching messages to the masses. Universities and other educational

institutions - especially the agricultural universities, through their extension networks - and international

organisations under the UN umbrella carried the dev-comm experiments further.

Development communication in India, a country of sub-continental proportions, acquires many

connotations. On one end of the spectrum are the tools and techniques locally applied by charitable and

not-for-profit organisations with very close inter-personal relations among the communicators and on the

other end is the generic, far-off, one-way sort of communication emanating from the government.

The need for development communication continues since a large population, over 600 million, lives in

rural areas and depends directly on agriculture. Poverty is reducing as percentage of population but still

over 200 million are very poor as of 2009. They all, and the urban slum dwellers, need government

support in different forms. Therefore, communication from the government remains highly relevant. In

addition to the traditional ways, a new form of communication is being tried by the union government to

support its developmental activities, though at a limited scale. Called Public Information Campaigns,

public shows are organised in remote areas where information on social and developmental schemes is

given, seminars and workshops are held, villagers and their children are engaged in competitions,

messages are given through entertainment shows. In addition, government organisations and corporates

involved in rural businesses display their wares and services in stalls lining the main exhibition area. This

approach brings various implementing agencies and service / goods providers while the information

providers encourage the visitors to make the best use of various schemes and services available. Some

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state [=provincial] governments have also adopted this model to take their development schemes to the

masses.

Community radio is another new medium getting a foothold in rural India, though in patches. NGOs and

educational institutions are given licence to set up a local community radio station to broadcast

information, advisories and messages on developmental aspects. Participation of local community is

encouraged. As community radio provides a platform to villagers to broadcast local issues, it has the

potential to elicit positive action from local politicians and civil servants.

Q.4. Select any mobile handset and mobile company and then evaluate its positioning strengths or weakness in terms of attributes, benefits, values, brand name and brand equity. (10 marks)

The new Galaxy S2 from Samsung could prove among the most substantial gadget launches with the coming yr.

Subsequent on from the really ideal advertising Galaxy, the manufacturers have raised the bar with this newmodel, fitting in an improved screen and a lightning speedy new dual core processor.

Now, the successor is made, namely the Samsung Galaxy S2. And this handset is coming up, first of all announced at Cellular Planet Congress of 2011. An incredible deal of rumors exposed it right just ahead of the MWC function was held. Then now you’ll be able to examine it which specs are accurate and fake. In situation you’re now acquiring the original Galaxy S with you, you might be somewhat shocked taking a look at what Samsung has improved in it.

The new handset is expected to begin attacking the present fresh smartphones within the market with its new exceptional attributes and specs. One of the most-discussed factors may very well be the Super AMOLED As well as display, featuring a brand new tech with greater color gamut, contrast ratio and obvious 80 per cent reduction in vitality above the earlier display version.

Without doubt with regards to excellent, the exhibit seems to be as quite excellent because the hallowed Retina program that’s found on the iPhone 4. Samsung have additional there very personal user interface on top of your Android working system that the cell phone utilizes.

With every one of the enhanced voice technologies on the Samsung GALAXY S II, clients is going to be ready to finish extra with considerably less. From opening the app to managing the messaging, social media, e-mail and calling, Samsung Voice Remedy will recognizes voice and convert it to text and vice versa.

The Android two.3.1 (Gingerbread) is set up around the telephone, that is definitely expected to be upgradable to Android two.4 inside the potential, and by natural means Samsung would validate it later on when every thing is prepared properly. Additionally, you may uncover some new attributes such as Photograph Editor to get played, and it really is a lot much more astonishing, for your dual core processing energy supports the general overall performance flawlessly.

Samsung Galax y 2 Co ntr act

Possibly more impressive might be the video capture facility which goes over and above the High definition filming offered on other phones, and offers us Complete Hd, which is frequently a resolution of 1080P instead of 720P. Storage need to have not be considered a matter since the S2 not simply has 16GB of internal room but in addition gives a micro SD card slot, enabling you to extend this by as significantly as 32GB.

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The phone also provides users DNLA compatibility, meaning your images and video clips could be wirelessly streamed to other products for instance televisions and computer systems.

This truly is the handset that is worth every single penny you invest, even it may be the next leading mobile phoneto be crowned a fantastic deal of rewards, as you possibly expected.

Q. 5 What is retailing? Explain the functions and different types of retailing with its key features. (10 marks)

Retail consists of the s a l e o f goods or merchandise from a fixed location, such as adep a rt m ent

s t o r e , bo u t i que o r k i os k , or by m a il , in small or individual lots for directcon s u m p t i on by the

purchaser. [ 1] R etailing may include subordinated services, such as delivery. Purchasers may be individuals

or businesses. In co m m e r c e , a "retailer" buys goods or p r odu c t s i n large quantities

from m anu f ac t u r e r s or i m po rt e rs , either directly or through a w ho l e s a l e r , and then sells smaller quantities

to the end - us er . Retail establishments are often called shops or stores. Retailers are at the end of

the s upp l y ch a i n. M anufacturing m a r k e t e r s s ee the process of retailing as a necessary part of their

overall d i s t ri b u t i on s trategy. The term "retailer" is also applied where a service provider services the

needs of a large number of individuals, such as a pu b l i c u t i l it y , like e l e c t ri c po w e r .

Shops may be on residential streets, shopping streets with few or no houses or in ashop p i ng m a l l .

Shopping streets may be for pe d e s t r i ans o nly. Sometimes a shopping street has a partial or full r o o f t o

protect customers from p r e c i p it a t i o n . Online retailing, a type ofe l e c t r o n i c co mm e r ce u sed for b u s i n e ss - t o-

con s u m er ( B2C) transactions and m a i l o r d e r , are forms of non-shop retailing.

Shopping g enerally refers to the act of b u y i ng p roducts. Sometimes this is done to obtain necessities such

as food and clothing; sometimes it is done as a r e c r e a t i onal activity. Recreational shopping often involves

window shopping (just looking, not buying) and browsing and does not always result in a purchase.

A m a r k e t p l ace i s a location where goods and services are exchanged. The traditionalm a r k et sq u a r e i s

a c i t y squ a r e w here traders set up stalls and buyers browse the merchandise. This kind of market is very

old, and countless such markets are still in operation around the whole world.

In some parts of the world, the retail business is still dominated by small family-run stores, but this

market is increasingly being taken over by large r e t a i l cha i n s .

Retail is usually classified by type of products as follows:

Food products

Hard goods ("hardline retailers") - appliances, electronics, furniture, sporting goods, etc.

Soft goods - clothing, apparel, and other fabrics.

There are the following types of retailers by marketing strategy:

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D epa r t m ent s t o r es - very large stores offering a huge assortment of "soft" and "hard goods; often

bear a resemblance to a collection of specialty stores. A retailer of such store carries variety of

categories and has broad assortment at average price. They offer considerable customer service.

D i s c ou n t s t o r es - tend to offer a wide array of products and services, but they compete mainly on

price offers extensive assortment of merchandise at affordable and cut-rate prices. Normally retailers

sell less fashion-oriented brands.

Supe r m a r k e t s - sell mostly food products;

Wa r ehou s e s t o r es - warehouses that offer low-cost, often high-quantity goods piled on pallets or

steel shelves; w a r eho u se c l ubs c harge a membership fee;

V a ri e t y s t o r es or "dollar stores" - these offer extremely low-cost goods, with limited selection;

Demographic - retailers that aim at one particular segment (e.g., high-end retailers focusing on

wealthy individuals).

Mom-And-Pop (or Kirana Stores as they call them in India): is a retail outlet that is owned and

operated by individuals. The range of products are very selective and few in numbers. These stores

are seen in local community often are family-run businesses. The square feet area of the store depends

on the store holder.

Spec i a l t y s t o r es: A typical speciality store gives attention to a particular category and provides

high level of service to the customers. A pet store that specializes in selling dog food would be

regarded as a specialty store. However, branded stores also come under this format. For example if a

customer visits a Reebok or Gap store then they find just Reebok and Gap products in the respective

stores.

G ene r a l s t o r e - a rural store that supplies the main needs for the local community;

C on v en i ence s t o r e s : is essentially found in residential areas. They provide limited amount of

merchandise at more than average prices with a speedy checkout. This store is ideal for emergency

and immediate purchases.

H y pe r m a r k e ts : provides variety and huge volumes of exclusive merchandise at low margins. The

operating cost is comparatively less than other retail formats. A classic example is the Metro™ in Bangalore.

Supe r m a r k e ts : is a self service store consisting mainly of grocery and limited products on non

food items. They may adopt a Hi-Lo or an EDLP strategy for pricing. The supermarkets can be

anywhere between 20,000-40,000 square feet. Example: SPAR™ supermarket. M a l l s : has a range of retail shops at a single outlet. They endow with products, food and

entertainment under a roof. Example: Sigma mall and Garuda mall in Bangalore, Express Avenue in

Chennai.

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C a t e g o r y k ill e r s o r Category Specialist: By supplying wide assortment in a single category for

lower prices a retailer can "kill" that category for other retailers. For few categories, such as

electronics, the products are displayed at the centre of the store and sales person will be available to

address customer queries and give suggestions when required. Other retail format stores are forced to

reduce the prices if a category specialist retail store is present in the vicinity. For example: Pai

Electronics™ store in Bangalore, Tata Croma.

E - t a i l e r s : The customer can shop and order through internet and the merchandise are dropped at

the customer's doorstep. Here the retailers use drop shipping technique. They accept the payment for

the product but the customer receives the product directly from the manufacturer or a wholesaler.

This format is ideal for customers who do not want to travel to retail stores and are interested in home

shopping. However it is important for the customer to be wary about defective products and non

secure credit card transaction. Example: Amazon and Ebay.

V en d i ng M a c h i n es: This is an automated piece of equipment wherein customers can drop in the

money in machine and acquire the products. For example: Soft drinks vending at Bangalore Airport.

Some stores take a n o f r i l l s app roach, while others are "mid-range" or "high end", depending on what

income level they target.

Other types of retail store include:

A u t o m a t ed Re t a i l s tores are self service, robotic kiosks located in airports, malls and grocery

stores. The stores accept credit cards and are usually open 24/7. Examples

include Z oo m Shops and R e dbox.

B i g - box s t o r e s e ncompass larger department, discount, general merchandise, and warehouse

stores.

C on v en i ence s t o r e - a small store often with extended hours, stocking everyday or roadside items;

G ene r a l s t o r e - a store which sells most goods needed, typically in a rural area;

Retailers can opt for a format as each provides different retail mix to its customers based on their

customer demographics, lifestyle and purchase behaviour. A good format will lend a hand to display

products well and entice the target customers to spawn sales.

[edit] Retail pricing

The p r i c i ng t echnique used by most retailers is c o s t - p l u s p r i c i n g . This involves adding a m a r k up amount

(or percentage) to the retailer's cost. Another common technique is su gg e st ed r e t a i l p r i c i n g . This simply

involves charging the amount suggested by the manufacturer and usually printed on the p r od u ct by the

manufacturer.

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In Western countries, retail p ri c es a re often called p s y cho l o g i c a l p ri c es o r odd prices. Often prices are

fixed and displayed on signs or labels. Alternatively, when prices are not clearly displayed, there can

be p r i ce d i s c r i m i na t i o n , where the sale price is dependent upon who the customer is. For example, a

customer may have to pay more if the seller determines that he or she is willing and/or able to. Another

example would be the practice of discounting for youths, students, or senior citizens..

[edit ]Transfer mechanism

There are several ways in which consumers can receive goods from a retailer:

C oun t e r s e r v i c e , where goods are out of reach of buyers and must be obtained from the seller.

This type of retail is common for small expensive items (e.g. jewelry) and controlled items like

medicine and liquor. It was common before the 1900s in the United States and is more common in

certain countries like India.[which ?]

D e li v e r y , where goods are shipped directly to consumer's homes or workplaces. M a i l o r d e r f rom

a printed catalog was invented in 1744 and was common in the late 19th and early 20th centuries.

Ordering by t e l e p hone i s now common, either from a catalog, newspaper,t e l e v i s i o n ad v e r t i s e m ent o r

a local restaurant m en u , for immediate service (especially for p i zz a de l i v e r y ) . D i re ct m a r k e ti n g ,

includingt e l e m a r k e t i ng and television sh o pp i ng ch a nn e ls , are also used to generate telephone

orders. O n li n e s ho p p i ng s tarted gaining significant market share in developed countries in the 2000s.

D oo r - t o - door s ales, where the salesperson sometimes travels with the goods for sale.

Se lf - s er v i c e , where goods may be handled and examined prior to purchase[edit] Second hand retail

See also: C ha r it y shop

Some shops sell second-hand goods. In the case of a n onp r o f i t sh op, the public donates goods to the shop

to be sold. In g i v e - away s h op s g oods can be taken for free.

Another form is the pawn s h o p , in which goods are sold that were used as collateral for loans. There are

also "c o ns i g n m en t " shops, which are where a person can place an item in a store and if it sells, the person

gives the shop owner a percentage of the sale price. The advantage of selling an item this way is that the

established shop gives the item exposure to more potential buyers.

[edit] Sales techniques

Behind the scenes at retail, there is another factor at work. Corporations and independent store owners

alike are always trying to get the edge on their competitors. One way to do this is to hire

a m e r chan d i s i ng so lutions company to design custom store displays that will attract more customers in a

certain demographic. The nation's largest retailers spend millions every year on in-

store m a r k e ti ng p rograms that correspond to seasonal and promotional changes. As products change, so

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will a retail landscape. Retailers can also use f a c i ng t echniques to create the look of a perfectly stocked

store, even when it is not.

A destination store is one that customers will initiate a trip specifically to visit, sometimes over a large

area. These stores are often used to "anc h o r " a shopping mall or plaza, generating foot traffic, which is

capitalized upon by smaller retailers.

Q. 6 a. What is CRM? What are its objectives? (2 marks)

CRM, or Customer Relationship Management, is a company-wide business strategydesigned to reduce

costs and increase profitability by solidifying customersatisfaction, loyalty, and advocacy. True CRM

brings together information from alldata sources within an organization (and where appropriate, from

outside theorganization) to give one, holistic view of each customer in real time. This allowscustomer

facing employees in such areas as sales, customer support, and marketing tomake quick yet informed

decisions on everything from cross-selling and upsellingopportunities to target marketing strategies to

competitive positioning tactics.

CRM helps businesses use technology and human resources to gain insight into the

behavior of customers and the value of those customers

b. Write a short note on Brand development. (8 marks)

Brand Development

For any product or service to have a successful take-off, it is vital to pay attention to its brand development. In this day and age, without branding a product does not really stand a chance against its competitors. This holds true for a website too. Brand development is quite necessary to get the attention of the audience, earning their loyalty and finally making profits. It is all about creating the right buzz about your business. And only the correct equity, positioning, identity and development will help you generate the business that you want.

Our strategy, when it comes to brand development, focuses on three major aspects, namely Logo Design, Marketing Materials and Style Guide. Let us take a deeper look into the mode of our functioning for a successful brand development:

Industry-leading Brand Development Creates Market Leaders

If your company isn‘t tapping the power within your brand development strategy, you‘re losing money. Plain and simple! A well-conceived b r and de v e l op m ent s trategy has the power to inspire both your employees to do their jobs better and your customers to remain loyal to your brand. Sound like something you need? Brand Identity Guru Inc. is the place to get it.

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Brand development is Brand Identity Guru‘s Inc. specialty. Our brand reinvention process helps companies of any size truly understand their brand development (where it is and where it needs to be) and leverage it to its fullest advantage. The process is called the BrandMasterpiece.

After going through the BrandMasterpiece process, your new b r and d e v e l op m ent s t r a t e g y w ill positively affect your company‘s bottom line—guaranteed. We also guarantee a healthy transformation of the way you do business. It sounds scary, but we promise, you‘ll be thrilled! After our proprietary measures and methodologies amass a complete picture of the state of your brand development, you‘ll wonder how you ever survived doing things differently.

Improving brand development is what we‘re about. Nothing else. For 15 years, we‘ve been teaching our clients how to improve their images, reputations, and their bottom lines with on-target brand development strategies. The cutting edge research that led to the creation of our proprietary processes showed themajor in-depth correlations between brand recognition and company value. The results? Brand action plans guaranteed to boost your bottom line. No other b r an d i ng f i r m can guarantee that!

Scott White, our founder and CEO, has been heralded numerous times by countless academics, CEOs and CFOs for his work and conclusions on the science of brand development. Likewise, Scott‘s expertise has resulted in the difference of millions of dollars for both businesses and investors who have retained his services. His unmatched thinking and strategic know-how has changed the way businesses makedecisions and use their resources. No forward-thinking executive has ever ignored him.

Brand Identity Guru‘s Inc. focus is simple: get every ounce of productivity out of its clients‘ brand development efforts. But its capabilities, the way it accomplishes this goal, are wide-ranging—they need to be. Every company is different and needs a unique brand development strategy to be successful. BrandIdentity Guru is theb r and i n g c o m pany e very company, regardless of size or market, can find theirs.