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Check out these Notes and Case Studies at www.dramitrangnekar.com Sub Topic Marketing Environment Strategy Marketing plan Industry Analysis (Porters 5 forces) Controlling plan implementation Marketing concepts Marketing Mix (4Ps) Product New Product Development (NPD) Place Price Promotion Integrated marketing Communication(IMC) Brand Management Marketing Strategy Segmentation Targeting Positioning Differentiation Product life cycle (PLC) Strategic Gap Analysis Ansoffs Product Market matrix BCG Matrix GE Matrix Porters Generic strategies Mckinseys 7S Model Competitive Strategy Competitive Strategies Market Dominance strategies Market Leaders strategies Market Challengers strategies Market Followers strategies Market Nichers strategies Customer and competitor orientation Page 2-9 2 4 5 8 9 10 10 11 15 17 19 20 22 30 30 31 32 34 35 36 36 37 37 38 39 40 40 40 41 43 44 45 46 Case Studies from Moser Baer McDonalds India launch Fab India, Faze3 Nivea
Tata Nano, ZooZoos Dabbawallas Amul Bisleri DNA Mumbai launch Natural Ice cream, Amar Chitra Katha, Rolex, Audi Nivea Sun Hidesign Moov Dolce & Gabbana Harley Davidson Samsung Toyota Gillette Brand Dominance- India Chic Shampoo Aircel Vodafone (Hutch) Dabbawallas, Kancheepuram Sarees
Notes adapted through readings, cases and notes from- Harvard Business School/ Review, Ivey, Stanford, Kellogg, MIT Sloan, LBS, Insead, Wharton, Emory; publications by Porter, Kotler, Keller, Kapferer, Nirmalya Kumar & Mckinsey; Economic Times, Indian and international business magazines, and the internet. Garnished with my own experience, insights & knowledge.
Specific
Long-distance transportation for large-volume producers of low-value, low-density products Long-haul, coal carrying railroad
Physical
Based on existing products / technology
Strategy1. Directing action towards desire outcome 2. A plan that aims to give the enterprise a competitive advantage over its rivals. 3. Broad formula for how a business is going to compete. Competitive strategy is deliberately choosing a different set of activities to deliver a unique mix of value. Michael Porter Marketing strategy answers 2 questions Why should our customers buy our product Which customer needs do our products fulfill more effectively than competitors Nokia not the 1st mover but No.1 by giving customers what they desired Sony & Apple dont rely on MR, create new categories through innovation Google search effective due to a simple, uncluttered & efficient approach Differentiation by- price, reach, delivery, design, service, technology, etc but it should be valuable & meaningful to customers. Eg Hybrid cars, solar mobiles How marketing relates to strategy Business activities/functions align with business strategy- achieve corporate objectives
Marketing strategy defines The target segment- size, demographics, psychographics How should the product be positioned to appeal to the marketprimary benefit How should the product be branded Product potential- sales, market share, profit estimates Ferraris marketing strategy Target (Luxury sports car) Position to appeal to that market (Speed, design, performance) Branding- identify and differentiate product from competitors (Prancing Horse logo, formula 1,brand communication)
Strategic marketing environment
Illustration- PC market Launch- 1970s, small segment- technologists & mathematicians Apple improved, simplified use, software widened use 1980s- IBM further widened use, sales growth exponential, new competitors Desktops at work & home, replacements, peripherals 1990s- Internet but PC maturity, customer & price resistance, declining profits 2000- Commoditisation, shakeout, HP- M&A Compaq, IBM sold PC biz- Lenovo Faster processors, flatter screens, converged PCs and all in one printers, laptops
Monthly marketing budget Monthly sales forecast (units & value) Periodic plans- monitor, review & action SWOT Analysis- To assess the internal / external environment a firm operates in Strengths (Internal) USP's, capabilities, competitive advantage, resources, experience, knowledge, data, financials, marketing, reach, communication, service, legacy innovation, location, geography, price, value, IT quality, accreditations, processes, systems, culture, values, behaviour, management, reputation, Opportunities (External) Market / business / product development, industry potential and phase, competitor vulnerabilities, new markets, demographics or lifestyle trends, global influences, technology, innovation, niches, verticals / horizontals, geographies, surprise, new contracts, information and research, partnerships, distribution, volumes, production, economies, season, influences Weaknesses (Internal) Proposition, capabilities gaps, presence, strength, reputation, reach, financials, vulnerabilities, timescales, deadlines, pressures, supply chain, morale, attrition, commitment, leadership, processes & systems, management, Threats (External) PEST, competitive intentions, market demand, contracts and partners, sustaining capacities, finances & capabilities, obstacles, insurmountable weaknesses, industry cycles, seasonality
The Environment
Economic
Economy, global trends, taxes, levies, FDI, interest, Stocks, forex, climate, market, trade cycles, industry specific factors
Sociocultural
Demographics & psychographics, Attitudes, opinions, beliefs, buyer behaviour, ethnic & religious factors
Technological
Competing & emerging technologies, R&D, costs and capacities, solutions, innovation, information, communication, IPR, licencing, disruption
How to analyse Industry - (Michael Porter, HBR-Jan, 2008) Good industry analysis looks at average profitability over a period 3-5 year period can distinguish temporary/ cyclical changes from structural changes Industry analysis should not declare an industry attractive or unattractive but help understand the underpinnings of competition and the root causes of profitability Analyse industry structure quantitatively, than qualitatively with lists of factors Quantify the 5 forces: % age of buyer's total cost accounted for by industry's product (to understand buyer price sensitivity); %age of industry sales required to fill a plant or operate logistical network of efficient scale (to assess barriers to entry); buyer's switching cost (to determine inducement an entrant or rival must offer customers).
Stocking or shelf space, price breaks Cost Disadvantages- No- scale, proprietary technology, access to raw materials, markets Government policy- Licensing and permit requirements, deregulation of industries Expected retaliation- Responses by existing competitors may depend on a firms present stake in the industry (available business options) 2) Bargaining Power of Suppliers (increases when): Suppliers are large and few in number Suitable substitute products are not available Individual buyers are not large customers of suppliers and there are many of them
Strategic Dimensions- Extent of technological leadership, product quality, pricing policy, distribution channels, customer service Strategic Groups- Set of firms emphasizing similar strategic dimensions & using similar strategies. Intra strategic group firm competition greater than between firms outside that strategic group. More heterogeneity in performance of firms within strategic groups. Eg Cars, PC, Airlines, segmented by sensitivity to price, quality, technology & service Implementing the plan via the Marketing Mix Identify target customer segments Address customers through the marketing mix- 4Ps (Refer section on marketing mix ) Best of plans, adequate resources, skills, and effective implementation- no guarantee of success as
Marketing Concepts Product-Offered to satisfy needs OR companys offer to customers Product-Tangible eg Books ; Services-Intangible eg Banking, Finance, Hospitality Products also deliver services eg car-product & transportation-service, Mobile Products sans service risky eg TV, Fridge, AC without back-up Service Team -Risky Value (valere-latin- worth) Consumers estimate of the utility/capacity of a product/brand to satisfy their needs. Price is what you pay, value is what you get- Warren Buffet Mobiles- convergence Value proposition- Bundle of benefits a product offers to fulfill customer needs & wants Brand- An identifying symbol/words/mark distinguishing a product/company from its competitors. Branding is an essential part of marketing. Brand = (Functional + Economic+ Emotional) Value Propositions. Nokia- Functional, Amul- Economic, Saffola- Emotional Market (mercor-to buy Latin) Potential + Existing customers sharing a common need/want, able & willing to engage / enter in exchange to satisfy their needs/wants Eg Pharma Market=Doctors + Hospitals + Trade Economics( Buyers+ Sellers= Market), Marketers(Sellers= Industry, Buyers=Market) Customer- One who buys goods or services- Mother Consumer- One who consumes, but may or may not have purchased- Kid Client- A customer/ consumer/ party who pays for professional services- Lawyer, Hotel, Prosumer: Producing consumers, active, regular and influencing consumers who also initiate feedback Customer satisfaction: Core- Quality, service, value; Desire (Within an arms length of desire- coke), customer delight (Maruti service), delivery (blue dart), service (Taj) Marketing Identify, create & manage demand to provide value to a customer for a profit -Kotler Process that identifies, anticipates, satisfies customer requirements profitably-CIM The right product, in the right place, at the right time, at the right price.-Adcock Marshalling organisational resources to meet changing needs of the customerPalmer Concept- Satisfaction of customer & their needs, focus of business activities. IBM
Management (Manus hand Latin)-Optimal utilization of resources to achieve objectives eg Electricity Management is doing things right, leadership is doing right things-Peter Drucker Manager- Responsible for application & performance of knowledge- Peter Drucker Marketing Management- Demand management Marketing Mix (Neil H. Borden, '4Ps'- McCarthy) Marketing 'tactics' or tools or mix elements leading to different strategies, perceptions & value propositions Car- Mix of Engine, Mileage, Looks, Price, Features, Quality, EMI options Product Brand, features, design, quality, range Warranty, AMC, service, size, packing, performance Promotion Sales Promotion, Personal Selling, Advertising, Sponsorship, Multi-level Marketing, Direct Marketing, Trade fair & Expositions Price Strategies, Credit, Costs Place Channels, location, coverage, transportation, inventory, width, spread, reach, shippers
Product (What satisfies a need) We lead the public with new products than ask them what products they want. The public does not know whats possible, but we do, so instead of doing much market research, we create a market for a product by educating them (Akio Morita, Sony)
Product/service design guided by a deep understanding of what customers need, want,
and are willing to pay for, as determined by market understanding and research. HBS Differentiate by physical aspects & less tangible elements ( warranty, ASS, service) Competition Category Need fulfilled
Basic requirement Beverages Chocolates Films Cars Refreshment Dessert/ snack Entertainment Transportation
Generic Competitors
Market different products to solve same problem, satisfy same basic need Regular water Aniseed/Saunf Candy, Sugar TV, Shopping Reading, Internet Taxi, Auto, BEST, Local train, Walk
Physical distinctions:
Performance qualitylevel at which the products primary characteristics function Conformance qualitythe degree to which all units of the product perform equally Durabilitythe products expected operating life under natural or stressful conditions Reliabilitythe probability that the product wont malfunction or fail Repairabilitythe ease with which the product can be fixed if it malfunctions Styleproducts look and feel, Design- easy to use, sleek, lasts long Service distinctions Ordering easehow easy it is for customers to buy the product Deliveryhow quickly and accurately the product is delivered Installation- how well work is done to make the product usable in its intended location Customer trainingwhether company offers to train customers in using the product Customer consultingwhether company offers advice or research services to buyers Maintenance & repair-how company helps customers keep product in working order
New Product Development (NPD) Stages Idea generation- Employees, sales force, trade, competitors, customers Idea screening- Feasible, workable, practical Concept development & testing- Feedback from target audience Marketing strategy- Mix (4Ps), STPD, Targets, Projections, Geographies Product development- Final touches & Mfrg Test Marketing- Geography or Segment Commercialisation- National/Global launch NPD- risky but if based on a sound foundation- market segmentation, understanding and targeting customers - risk reduces. If NPD is first and then you figure out how to market, it usually leads to disaster. Exception- Alexander Bell invented the Telephone, but it was an innovation.Today- NPD compete with similar products /effective substitutes and customers are spoilt for choice as well as bombarded by product and marketing messages. Marketers- primary link between company, customers & competitors- strategically placed to identify latent /unmet needs and communicate to the company. Play role in pricing, place, promotion and launch plans. New Products Types -Incrementally altered or improved products Breakthrough
New to the world performance features Huge advances in performance Dramatic cost reduction Higher risk Infrequent Costlier Targets new /existing markets Envision market
Incremental
Improvement in existing product Derivative of existing platform Exploits existing forms / technology Lower risk More frequent Less costly Targets existing/ adjacent markets Listen to existing market
Marketers responsibility
Exercise: Course of NPD in your industry over L10Y- what changed the basis of competition, what were the real breakthroughs, which were only incremental? What are the new technologies / products lined up, how will they affect your company and competitors when launched, in terms of sales and profitability? Why new product development (NPD) Changing customer needs Diet Coke, Saffola New Segment Entry- Maruti SX4 New Capabilities- UB Group New Concepts- Suzuki Swift, Tata Ace / 1L Car New technology- I-Pod, I-Phone, TV Changing market needs- Scooters to Bikes Own successes- Brand / line extensions- Maggi Competitive Successes- Krackjack- 50:50, Marie Product lifecycle- MS Office, Play Station 1,2,3 Portfolio / Business realignment- Reliance Mobile Environmental changes- Music downloads
Product decisions Design: As the USP- ipod, iphone, LG Chocolate. Quality: Consistent with other elements of the marketing mix. Bose speakers Pricing: A premium pricing strategy should reflect quality or value. Benz Features: Additional features to enhance benefit offered to target market? Nokia Branding: Power of instant sales, trust, quality, reliability, loyalty base, differentiation Brand value of Microsoft > GDP of Pakistan. Does your perception change for Nike sneakers with/ without the swoosh or nike logo? Cannibalisation- Breakthrough and incremental innovations may cannibalize some part of the existing business. Eg Honda Civic hybrid-power vehicle, attracted eco-friendly or fuel economy (or both) buyers, who may have otherwise purchased Honda Civic, Accord or City. Moov sachets may tap the traveler segment and entice trial but may cannibalise Moov economy pack Wisest to move forward with new-product ideas & accept cannibalisation, else competitors will. Extending Product Lines into New Segments Once successful, companies extend their product lines to create derivative (incremental)
Place (Distribution/ channel/ intermediary) Set of institutions performing activities to move product from production to consumption-Bucklin Retail store, distributor network, e-commerce web site or a direct mail catalogue Functions- Order Processing, Warehousing, Inventory, Transportation, Collections Ensures- Availability, visibility (Dikhta hai voh bikta hai), movement, feedback Width- Trade coverage, Reach- Customer coverage, Depth- Brand coverage Growing impact of convergence- internet, mobile, retail revolution Critical- offer product where and when customers want Companies use many channels to connect/ transact business with customers. Eg Books use many paths to reach customers without causing conflicts between channels. Eg Amazon.com made books & other items conveniently available to customers on the net 24/7, book-buyers did not have to visit bookstores or browse through hundreds of books. Amazon offered convenience, faster alternative, greater selection and reviews Source- Dolan, HBS, 2000 Eg Dells strategic decision to sell PCs directly to customers by skipping trade channels allowed Dell to- capture customer information missed in other forms of distribution,
3-Level Manufacturer
Distributors (C&F)- Bulk to smaller packs, handle major area, supply to stockists Wholesalers (Stockists)- Resell to retailers, storage, coverage essential Others- Commission agents, co-operatives, indentors (imports), agents (magazines) Retailers- Strong customer influence, consumption / purchase pattern insights, service Speciality (Sports), supermarket (Big Bazaar), convenience (Kirana), factory outlets, warehouses, direct sellers (Encyclopaedia), vending machine (Tea), cooperatives (Apna Bazar, Grahak Peths, Societies), chain stores (Monginis) Internet (Services)- Channel margins and inventory costs major savings- passed on, hence economical, death of distance, geographically disperse market, niche products reach wider audience, low entry barriers, display variety & functionality, interactive, Payments risky, gaining popularity, delivery costly- Books, CDs, medicines, travel, tourism 3rd Party Logistics ( AirFreight, GATI)- Tremendous scope Channel Decisions Direct or indirect channels / Single or multiple channels Length of channel Types of intermediaries / Number of intermediaries at each level Which intermediaries? Avoid intrachannel conflict- Nike Distribution Strategy Distribution Scope Strategy How to effectively reach target customersexclusive distribution (sole rights to 1 retailer to serve given area) intensive distribution (product available at all possible retail outlets) selective distribution (selected retail outlets from many, given to serve area) Multiple Channel Strategy Employing 2/more different channels to distribute goods and services complementary (each channel handles a non-competing product/ market segment) competitive (two different and competing channels sell the same product)
Exercise: X company uses which aspects of place in its marketing plans? Are these effective in satisfying customers and generating sales and profits, or could new channels be added?
Price Fit between crucial financial component- cost & marketing component -value Price is what a buyer must give up in exchange for a product or service Price decisions- price point, list price, discounts, payment period, etc Commodities differentiated by price Price is high when product is perceived as new, unique, and without strong substitutes Pricing flexibility is a function of product uniqueness with implications for the PLC Objectives: sales, profits, market share, ROI, competitive position, demand, costs, survival etc Center-stage in marketing wars, Inter-firm rivalry-Mobile Industry Product differentiation blunted- Surf / Ariel, Mature products / Markets- TVs Economic Value Proposition- Titan- High priced despite local & Grey market competition Pricing Methods By Cost - Cost Plus and Break Even By Competition - Going Rate, competitive, cartelling- Tyre industry, sealed bids (tenders) Customer Oriented- Perceived Value (Lifestyles), Auctions (bazee), Value-Buffett, McDonalds Pricing Strategies Penetration- HQLP- NPL, Entry, Attract, Ensure trial- Amul Premium- HQHP-Sustainable advantage- Bose Speakers, Benz
Prestige pricing- Create perception of quality /exclusivity in consumers minds by setting high price. Many consumers judge quality by price, reasonable price connotes acceptable quality, exorbitant price adds an aura of excellence & exclusivity. Packaging & advertising reinforce this perception. Cosmetics, Clubs, High end mobiles. Bait & Hook pricing- Initial low price but high price for replacement or peripheralsGillette & Print cartridges. Generic replacement possible so (unique or incompatible) disruptive innovation can win, or warn customers of void warranties if replacement used. Exercise- Using the Pricing Strategy Matrix 1. Identify pricing strategies of a firm with a large brand portfolio 2. Pricing strategy of competitors within a product category / industry Other Pricing Strategies Psychological- Bata, Mobile Airtime Tariffs Geographical- Medicines / Electronics across countries or Urban/Rural-Electronics Promotional Extensive usage, if successful-copied, if unsuccessful-financial drain Loss Leader- Factory outlets Special Discounts / Rebates - BOGOF, % Off, Sale Pricing Strategy Matrix Price High Medium Low Quality High 1-Premium 2-HighValue 3-Penetration (Quality is only Medium 4-Over-charging 5-Medium Value 6-Good Value indicative) Low 7-RipOff / 8 False Economy 9-Economy Skimming Financing- EMIs, Low interest rates Warranties/ AMCs- Extended warranties, TVs-Onida 4 year warranty, Free AMC Psychological Discounting- Prices slashed 399 to 199, Baazee Old for New- New for Old at discounts- Exchange offers-Van Heusen, TVs Value Superstores-Big Bazaar Price point-Cadburys-Re1-Eclair, Rs2-Chocky, Rs5-5Star,Rs50-Heroes,Rs100-(Heroes), Nokia Maruti pricing strategy (hypothetical prices for illustration) Prices in lakhs 2.5 3 3.5 4 4.5 5 5.5 6
6.5
7.5 8 8.5
If you plan to buy a car costing around Rs 4 lakhs, you may look at a range between Rs 3-5 lakhs. Maruti offers 6 models and 17 variants in this range, covers all sensitive price points, offers a wide range where a customer may end up buying a lower version of a higher car model than planned. Discriminatory- Same brand/service, 2 prices Customer segment- Student discounts Product form- Ketchup-100gm-20, 250gm-45, 500gm-75 Image- Taj- Palace (Premium), Resorts (Lifestyle), Hotels (Business), Indione (Budget) Location-Theatres-Stall-50, Balcony-75, Dress Circle-100, Stadium-Pavilion, stands Time- Seasonal-Cheaper/costlier during season, happy hours, bakeries-25% off after 8 Product Mix-Profitable brands take care of others in the portfolio Product line- All segments full range- Maruti- Rs 2-8 Lacs at every 25000 interval Optional feature pricing-Ford Ikon-Insurance+ Deck+ Central Lock + Auto Cop free Captive product- Cameras / Razors cheaper but consumables Film / Blades costly 2-Part- Esselworld- admission + rides, Airtime + SMS/VMS/STD By-product- Lubricants with petrol Product bundling- Season tickets, Time share Internet- Cheapest-No layers, Transaction cost for buyer/seller minimum, auctions, bargains, visibility Other ways to increase prices without increasing price Revise discount structure Premium for urgent orders Change minimum order size or shipper Interest on overdue outstandings / penalty clause Charge for delivery/ services/ installation Produce less of low margin models
Promotion Marketing communication Objective- communication activities to ensure customers know your offerings, have favorable impression of them, and buy- sale, trial, awareness, remind, reassure Retention Levels -Reading10%, Listening20%, Audio-Visual70%; Sight, Sound, Motion effective. Integrate individual promotion mix components for effective communication Promo Tools / Mix (SPPASM DT)
Sales Promotion Contests Coupons Low finance Personal Selling Presentation Samples Demo PR Inserts Press kit Seminars Advtg Advts Hoardings Banners Sponsor ship Events Period Theme MLM Network, Residual Income Commission Direct Database Mailers, CRM Catalogue Trade Fair/Expo Demos Brochures Tech-Info
Personal Selling- (Car, Insurance)- Effective but expensive way to manage personal customer relationships (Medical Rep) Sales Promotion (Akai / Aiwa/ Sansui)- Incentive to buy, ensures trial, D2C through trade BOGOF, Coupons, Discounts, Contests, Trial Public Relations (PR)- (Political parties / Top Companies/ IPO)- Subtle inserts used in image building, firefighting - impact if managed well, long term economy Direct (Credit card / insurance company mailers)- Targeted communication- database update, response, multiple use-2% response. Contest mailers, EMI, transfer of credit, catalogues, CRM Trade Fairs and Exhibitions (Print / Auto / Pharma / IT Expo)-Trade, product display / demonstration / awareness / trial, recent decline due to Internet
Integrated Marketing Communication (IMC) Strategic process to produce a consistent brand message at each customer touch point. Use multiple communication modes to foster awareness of product / services by informing people about features and benefits, and moving them to make a purchase. Challenges are: Communication clutter (Urban Indian adult exposed to 1000 messages daily)
Creating awareness in targeted customers Producing consistent brand message at each consumer touch point Bringing them to the point of interest and confidence Making them reach for their wallets to make a purchase
The Marketing communication process: To influence customer to make a purchase. AKIPIS Mnemonic. Eg Proposed Mumbai-Ahmedabad express train will cover 500 km in 3 hours. 1. Create awareness: People will rarely buy a product/ service they are not aware of. Critical to communicate service with the targeted customer (print media).
2. Provide knowledge: Inform product/ service features, what it does. Describe train
amenities & schedule: comfortable seating, wi-fi, food, laptops & mobiles charging outlets, adjustable lights, convenient morning and evening schedules.
3. Create favourable impression: People buy benefits not features- things that solve
a nagging problem or help save money or provide value. Communicate key benefits-
provides value, no airport hassles/ cramped seats/ security checks/ delays- this puts rail travel ahead.
5. Create a purchase intention: If earlier steps are targeted and communicated well,
Alternatively, use market research to classify targeted customers as Unaware of product Aware of product but considers Favourably disposed Would select product if similar to competitors to the product purchase was made today Above the line (ATL) & Below the line (BTL) communication Metaphorical, horizontal line drawn by ad planners, to differentiate ATL (mainstream media- Cinema, outdoor, press, radio, TV) that allow agency commission and and those that dont- BTL (Sales promotion, direct mail, expo, packaging, PoS material, PR, merchandise, sponsorship) Advertising Copy Strategy Design ad content to transmit clear product message to target by eliminating "noise" Credible source, balance of argument, message appeal - rational, emotional, humour Celebrity, model, expert, animation, text to picturise ads Cost per thousand (CPT) Cost of ad to reach 1000 people in a particular target group, common audience base TV- normalized at 10/30 seconds, Print- 60/100cc, similarly for radio, digital, OOH Help effectively rate/value/compare across/within media, transparent Top end car maker mulls 1 ad in mainline daily v 6 months campaign in a car magazine Daily CPT- Rs 800-1000, Magazine Rs1600; Wastage- daily 80%, magazine 0% 100% CPT premium worth in magazine, but hidden with 6000 Rs/cc & Rs 1.5L/page Media owners to monetize low rating programmes (0.2 TRP), buy audiences not ratings Shift towards, price to value, newspapers rate card sanctity v TV channels opportunism Challenge: Optimal marketing resource allocation, communication vehicles to cover all consumer touch points systematically and consistently.
Buys product
Selecting right communication vehicle:-Customers at various stages of purchasing process, essential to use IMC. Eg Silky hair due to shampoo effectively conveyed on TV ad than print ad, but air travel schedules better conveyed through print ad. For highly targeted audience, product should convey technical information, or explain usage, then personal selling or internet are best. If marketing premium specialised product with limited appeal, direct database marketing may be the best and avoid waste.
Mission
Communication objectiveawareness, positioning, purchase
Message
Communication to Consumers- features & benefits Trade- margins, terms, coverage
Media
Which, how many media vehicles to use, plan, schedule
Money
Budget
Measurement
How do you measure the impact
Exercise: Select a brand, outline the IMC strategy across the 6Ms. Which media mix would you choose, why? How will you schedule the media, how long will the campaign run? What are the goals and objectives of your campaign, how will you measure them?
Brand Management Product Levels: The Customer Value Hierarchy To plan the market offering, consider 5 product levels encompassing the augmentations & transformations the product ultimately undergoes. Each level adds to customer value. Product Level s
Core Basic
What it means
Service/product bought Benefits
Marketers Job
Provide benefits Turn benefit to product
Hotel Customer
Place to sleep Bed, bath, closet
ITC Hotels
BudgetFortune
Augmented Potential
Product Mix Mix- Set of all products & product lines- total portfolio Width- No. of product lines- HUL (11)- soaps, toothpaste, shampoo, detergents etc Depth-No. of variants of each product in the line- Lux- 4 fragrances * 2 sizes= 8 Packaging The 1st point of interaction between the brand and the customer Colour, form, size, convenience become USPs & brand identities- Laalwala toothpaste Right sizing is important as it offers value and also caters to the single use customer -Shampoo Sachet, Chota Coke, Bisleri, Liquor- quart, Pint, Nips, Half Nips Innovations- Bubble / blister (razor, tablets), tetrapak (storage & perishability), hologram (additional security)- Castrol Brand Promise Harish Bijoor, Strategic Asset Nirmalya Kumar - Accenture- Accent on the future, Viagra-Vitality of Niagara Collection of associations or perceptions about a product, service, or firm Brand= Functional, Economic & Emotional Value Propositions- Deepak Jain Branding Endows the product with the power of a brand "Buildings age & dilapidate, machines wear out, people die, but brands live onAaker A name, term, sign, symbol or design, or a combination, intended to identify goods / services and to differentiate them from those of competitors Kotler A mixture of tangible and intangible attributes symbolised in a trademark, which, if properly managed, creates influence and generates value Interbrand US Brand leaders in the 1930s- J&J, Heinz, Colgate, Disney, Coke- leaders even today Brands command premium, high margins, better availability & wide customer loyalty Brand value- created by augmenting a core product with distinctive values to distinguish it from the competition. Products deliver series of core benefits to consumers (Watches- time) but consumers pay a premium for added value which enables a brand to differentiate itself from the competition. This helps a customer choose or prefer the brand. Mercedes, Sony. Companys brand decision making: To Brand or Not to Brand? Commodity- Basic product, difficult to physically differentiate in minds of consumers
Customers brand decision making (Buying a Shirt upto Rs 1000) Brands Unknown
Manzoni, Pedroni, Zegna,
Known
Louis Phillipe, Van Heusen, Arrow, Color Plus, Peter England, Dockers, Charagh Din, Oxemberg, Indian Terrain, Zodiac, Austin Reed, Allen Solly, JohnPlayer, Armani, M&S, Wills LS, Park Avenue,
Acceptable
Louis Phillipe, Van Heusen, Arrow, Austin Reed, JohnPlayer,
Unacceptable
Cambridge, Peter England, Oxemberg
Indifferent
Allen Solly, CD, Dockers, Indian Terrain
Overlooked
Armani, M&S, Wills, Zodiac, Color Plus, Arrow
Exercise: Create a customers brand decision making model and a companys brand decision making model for accompany and a category, similar to the illustrations above Brand Ladder (How does a brand get into the customers mind) Promise- Value proposition offered to customers, choice Affinity- Belief in the brand, brand differentials evident Brand BondingPerceived as delivering on promise Loyalty- Positive differential effect driving
1. 2.
Brand Extension
New SKU, features, flavours, Use successful & established brand names to promo economies- Mirinda introduce new product or enter new or existing lime, Rasna mango, Pepsi 1.5L areas - Gillette Sensor, Junior Horlicks. New Sub brand New brand Combine existing + new brand Entering new segment or category with a new (Gillette Sensor Excel, Ford brand, or even to flank competitor (Maruti Ritz, Ikon Flair, Kellogg Frosties K) Tata Nano, Nokia N97)
If executed properly, brand extensions broaden & clarify brand meaning (Google, Airtel). If executed improperly or straying from central brand proposition, they dilute or confuse brand meaning (Coke). Brand extensions increase sales by new segment entry (Moov N&S) but may weaken the brand core or even cannibalise sales (Moov Sachets). Multi Branding: Introduce more brands in same segment/category. Kelloggs Cereals/Frosties/ Crispies; Titan-Fastrack, Raga, Edge, Nebula, Regalia, Xylys Ingredient branding- Create equity for materials, components, parts contained within other brands- Intel inside, Dolby theatre system, Nirlep Tawa with Teflon coating Parent brand- Existing brand which gives birth to a brand extension- Gillette, Tata Family brand- When the parent brand is already associated with multiple products through brand extensions. Cadbury 5 Star, Fruit & Nut Umbrella brand- All brands in portfolio carry corporate name- Amul- Butter, Cheese Brand extensions categories: Line extension- parent brand used for new product to target new market segment within product category served by the parent brand Maggi Noodle SKUs, Lux fragrances Category extension- parent brand used to enter a different product category from that currently served by parent brand- Kingfisher Airlines, Amul Ice creams or even Saffola- leveraging the cardiac friendly theme. Brand line- All products- original, line & category extensions, sold under a particular brand- Godrej, Videocon, Heinz Brand mix (or brand assortment)- set of all brand lines that a particular seller makes available to buyers HUL- Close-up, Pepsodent Branded variant- brand lines supplied to specific retailers / distribution channelsPharma franchisee Licensed product- where brand name is licensed to other manufacturers who actually make the product-Disney Co-branding (Hutch-Britannia, Citibank-Club Mahindra, ICICI-HP, Coke-McDonalds) 2 brands of different companies together in the same campaign / communication
Created by applying human personality traits & characteristics to a brand to appeal to a consumer's mind. Like human relationships, as brands grow, emotional dimension dominates. Consumers attracted easily to brand values like dependability (LIC), trust (Tata), honesty (Peter England), reliability (Titan), safety (Volvo), fun (Disney) Define audience, needs /wants /likes, build consumer personality profile, create brand personality to match- ensures greater willingness to buy / deeper brand loyalty Levis Profiling approach reinforces self-concept of consumers/their aspirations-Niche brands
Marketing Strategy
STPD- (Segmentation, Targeting, Positioning, Differentiation) Segmentation Where to compete Identify buyer subsets with similar needs demonstrating similar buyer behavior Segment- viable, profitable, access, measurable, potential, competitive intensity, values fit- Entry? Tourists- by state/country, age, interests- adventure, history, sports, nature, cuisine Segmentation methods Demographic segmentation (AEGIS- Age, Education, Geography, Income, Sex) By customer markets Geography-City, State, Zone (Coke-Chota-Rural, Bada Urban) Demographics- Income (Garments/Car), occupation, education, religion, age (Hospitals), sex (insurance, hospital), social class (middle/lower/upper), marital status, Generation (Net savvy) Behaviour- Occasions (Tours/Greetings/Weddings) Benefits (Quality-Sony/Nokia, Service-Dominos), Usage (consumption, heavy, light), User (new, regular), Loyalty (loyal, split, shifters, switchers), Readiness (Informed, interested, unaware), Attitude (+ve/-ve, hostile), Convenience (EMI, Home Delivery), User (Brides, Pregnancy) Ideal- integrated segment mix By business markets Demographic- Industry, Company size, Markets Operational Variables- Technology, Business terms Segmentation Matrix- Mobiles- Users (YUP, Execs, Students, Non execs, Housewives) v Features (PDA, entertainment, GPRS, memory, talk time) 1. Psychographic segmentation (Cultural, social, psychological and lifestyle) Psychographics- lifestyle (outdoor/clubs), personality (Woodlands-rugged/extrovert) Cultural- Deepest / broadest influence Social- Family/friends-most influential, religious, professional Lifestyle- How you spend your time + money + how you live eg From 1997- 1999, Readers Digest lost 3 million customers to niche magazines - food, fashion, car,
VALS- Values, Attitudes, Lifestyle Segmentation AIO- How people spend time, what interests them, self view & world view
AIO Activities Interests Opinions
Sports Shoes Market (Exercise) Which segments do Nike, Adidas & Reebok target
Targeting- Which product, which market Select segment/s to target, target resource allocation at this segment
Mass marketing- Targeting the marketing mix towards the entire market, not specific to any segment eg Amul butter, Parle G Differentiated marketing- Targeting different marketing mixes towards different segments eg UB group markets multiple whisky brands within the premium whisky segment (Teachers, Antiquity, Single Malt, Black Dog) Market concentration- Concentrating the mix on any one segment of the market eg Ferrari- luxury sports cars, Nirma economy detergents Niche Marketing- Target small market segment with specific, specialized marketing mix. Niche profitable to operate for nicher but not attractive for major players to enter
Positioning - Customer perception (Positioning also under brand management) Creating distinct and valued, physical and perceptual differences between ones product and its competitors, as perceived by the target customer The act of designing the firms market offering so that it occupies a distinct and valued place in the minds of its target customers Project brand identity & personality, create perception & image in consumer's mind C2C Brand perceptions differ intra segment eg Food stalls- VFM, range, clean, cheap Outward expression of brand, to develop a strategic, sustainable competitive advantage Manages perceptions, results in brand image & reputation Positioning types
Attribute-Longevity-Since 1904 Benefit- Sea view, service speed Use-ICICI- Fast A/c opening User-Louis Philipe-Upper crust Category- Big small car-Indica Quality-Benz-Future of the automobile Value-Budget Hotels, Residential flats
Positioning anomalies
Under-Fridge-PUF Over- Casio start @ Rs 500, perceived expensive earlier Confused- Top Ramen Noodles-Smooth Doubtful- Tall promises-Teak plantations, finance schemes
Perceptual mapping Brands 'mapped' together on 'positioning map', compared across parameters Identify weak/strong/absent competitive positions Price v range for Mumbai super stores, distinguish by competitive offerings Gaps regarded as opportunities for positioning/repositioning/launch
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Exercise: Walmarts India entry strategy based on above perceptual map Differentiation: how to compete (STP undertaken to help differentiate) Add meaningful & valuable differences to distinguish companys offering from competitors By form / features- Coke bottle shape, Heinz thick ketchup, Vertu-Concierge Identify tangible differences between brand & competitors-conscious, rational benefits like PQRSTUV-, Performance (Nokia), Quality (Sony), Rate (Big Bazaar), Range (Maruti, Vijay Sales), Service (ICICI Bank), Technology (HP), Utility (Bata), Value(Titan),Convenience (EMIs, Loan terms) Intangible Benefits - emotional, sub-conscious benefits a brand owns- Status (Benz, Bose) or House value (Armani, Rolex)- most important leverage for brand dominance Sustainable advantages- Brand perception as unique (Sony Trinitron), sustainable customer benefit, difficult for competitors to substitute (Amul Price, Toyota low cost) Differential variables Brand Performance, features, form, conformance, reliability, style, design, quality Service Delivery, ease of ordering & installation, customer training People Competence, response, courtesy, credibility, reliability, responsiveness, communication Channel Coverage, expertise, cost effectiveness, performance Image Symbol, colour, slogan, ambience, atmosphere Differentiation Criteria- important, distinct, superior, preemptive, affordable, profitable Summary
Product Life Cycle Helps interpret brand/market dynamics, useful in planning, control. Every product goes through a lifecycle but length, shape, duration, phases differ
PLC - Applications
Sales Costs Profits Customers Competitors Objectives Strategies Products Price Distribution Advertising Sales Promotion PR Personal Selling Direct Sponsorships Introduction Low Highest Nil Innovators Nil/existing Awareness, Trial Brand Cost + Availability Awareness Heavy to entice Trial/purchase Max Target customers, Trade Mix Max Growth High High Start Adopters Many MS, Usage Build, extend, service Penetrate, Skim Intensive Awareness, benefits Cater to demand Selective Convince, convert New customers, mix Significant Maturity Highest High High Majority Max/New tech Profit, Maintain MS Diversify, revive Competitive Extensive, Visibility Differentiation Encourage brand switch / substitution Selective Defend Loyals Specific Decline Ebb Low Ebb Laggards Many Reduce costs Sustain, hive out weak Review, drop Watchful Target Minimum Nil Minimum Selective Nil
PLC Strategies Pioneer Advantage- Inventor, product pioneer, market pioneer Growth Stage- Add products, quality, features, styles, models, segments, coverage, channels, shift advertising from awareness to preference, reduce price to attract next segment of buyers Maturity Stage- By modifying- Markets- Expand brand users and brand usage Products- quality, features Mix- Price, channels, promotion, services Decline Stage- Review investments, selective focus on key segments, markets and brands, divest
Different market needs & groups(segments) Target groups/markets it can satisfy in a superior way (targeting) Locate brand in the minds of consumers (positioning) Communicate offering (promotion) to the target market Target market recognises firms distinctive offering (differentiation) How brand satisfies consumer needs in a unique waycustomer-focused value proposition Intensive Growth Strategies Ansoffs Product-Market Matrix- Offers strategic choices to achieve growth objectives Eg- Maruti Suzuki
Markets Current Products Current New Products
Market Penetration
Launch 800, grabbed market share on styling, fuel economy, affordability
New
Market Development
Launch in class II-IV towns, easy loans, higher payback periods
Diversification
Training schools, Auto insurance, True Value cars,
Market Penetration go rural, price penetration Market Development- new audience, new region, exports NPD- existing customers, develop, innovate, new- Automobiles Diversification- related - Amul milk to foods, unrelated- Amul into Garments Integrative growth- Vertical-Backward (Reliance- Polyesters), forward (VideoconNext), Horizontal- M&A (HLL-Lakme)
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Factor Ratings Market attractiveness-attractive4 to unattractive1, Business strength-4strong to 1 weak Top 3 corner- strong in attractiveness, invest/grow; Diagonal 3- medium in attractiveness, selectivity, manage earnings; Bottom 3 corner- low in attractiveness, harvest / divest Implementation of portfolio analysis Identify drivers important to overall strategy, assign relative importance weights Score SBU's each driver, Multiply weights times scores for each SBU, Interpret results Review factors affecting Market Attractiveness: Size, growth, profits, demand, pricing, risks, competition/rivalry, differentiation Factors affecting SBU Competitive Strength
M a r k e t G r o w th
M a rk e t A tt ra c tiv e n e s s
Perceptible Changes Quality to World Class-Titan Creativity to Innovation- Technology Durability to Obsolescence- IT Price to EMI- Housing, Insurance Range to Features- All in one mobiles
O v e r a l l cD o i fs f te r e n t i a t i o n le a d e r s h ip o s t f o c u s C N a rro w D if f e r e n t ia t io n f o c u s o s t
L o w C H o i gs th C Cost Leadership Low cost leader-competitive advantage to produce at lowest cost, no frills- Amul Low cost not always low price- Toyota- high quality, lower costs, better margins
Differentiation Over communication (urban Indian adult 681 messages daily), Information overflow Intense Local, Regional, National, International Competition- 25000+ pharma firms Spoilt for choice- 4 car models 1983 to 14 in 1993 to 83 in 2003, Brand clutter Select 1/more vacant differentiated needs, position firm to meet criteria-Dominos Premium pricing- Reflect superior product quality, features and service, Reasons to prefer the product over other, less differentiated products- Plasma TV, Benz Competitive advantage in a broad range of market / industry segments Differentiated goods/services satisfying needs- sustainable competitive advantage Specific targeting, price insentive, value focus- high prices & margins- Sony, Nokia Innovation and improvement are important. Competitive advantage with additional costs, but increased revenue will offset Differentiation Focus or Niche strategy Specialise within just 1/ more small market segments with different customer needs Competitors targeting broader customers group, existing brands not meeting demand Tour Operators- Nepal or HP or South only, Glaxo- Pharmaceuticals Niche- Specialization by narrow segment / market / industry, but small, specialist niches could disappear in long term- often used by smaller firms- Florist, Sports shop
Competitive Strategy
Marketing strategies of a market leader, followers, nicher and challengers Business Strategies (Kellogg) Grow larger Downsize Diversify into new markets Dominate a niche Outsource production process Integrate production process Be cost leader even if quality is sacrificed Be quality leader even if costs increase Drive rivals from the market Co-operate with rivals Innovate Imitate GE, RIL, Pfizer Avon, Sara Lee, Tatas in 1990s, Merck 1996 Walmart, Amul, Pepsi Ferrari, Dabbawallas IKEA, Nike, Airtel Armani, Tiffany, D&G Nano, Kia BMW, Samsung, 4 Seasons Microsoft, Essel Propack Sony, BMS, Pfizer Apple, Intel Nokia, Indian pharma industry
Marketing strategyIntegrates an organization's marketing goals and policies into a cohesive marketing plan to achieve marketing objectives. Dynamic and interactive. Eg economy pricing to attract consumers, establish relationship, move products up the value chain Competitive strategies Market dominance- Leader(Nokia), challenger(Samsung), follower (Sony), nicher (HTC) Innovation strategies Based on NPD, cutting edge technology & business innovation. Three types: Pioneers, Close followers and Late followers Growth strategies Organic and Inorganic, Integration (Horizontal & vertical), Diversification or conglomeration, M&A, Alliances, Strategic acquisitions. Warfare based- Offensive, defensive, flanking, guerilla Market dominance Measure of the strength or control of a brand, service or firm relative to competitive offerings, generally expressed in terms of market share, geographical reach and number of players. Monopoly, duopoly, oligopoly, fragmentation, consolidation, concentration.
1. Position defense Build superior brand power, make brand almost impregnable. Samsung and LG have invested heavily in promotion but captured more of Motorolas and Sonys share than Nokias
3. Encirclement attack Manoeuver to capture a wide slice of the enemy's territory through a "blitz"-launching a grand offensive on several fronts- Aircel launch 4. Bypass attack
A nicher or a market niche leader could be an alternative to being a follower in a large market. But niches can weaken/expand, so smaller firms avoid competing with larger firms by occupying small but profitable markets of little or no interest to larger firms. Eg Logitech specialized in computer mouse niche, expanded to peripherals- headsets, keyboards and Webcams. Dabbawallas niched into home cooked meal delivery but sustained as their rates deter others (couriers/logistics) from expanding into this space. Company and Competitor focus Company focused Pushes boundaries Leader Stays within boundaries Nicher
Customer and Competitor Orientations Competitor centered company Customer focused firm Focus on competitor activities Focus on customer development (market growth 4%, quality(reach, prices, new services) Formulate competitive reactions (increase ad/promo spends, price cuts) Alert firm, market focused
sensitive segment @ 8%; deal-prone customer segment grows fast, but such customers not loyal Reach & satisfy quality segment, avoid price cuts Identify opportunities, target customer & emerging needs better wrt resources & goals