Question # 01:

Marketing emphasizes consumer orientation as well as

satisfaction in order to maximize profit. However marketing
concept is taken in terms of selling and advertising?
Distinguish marketing with selling and advertising within the
context of Pakistani environment.

Answer:

The American Marketing Association’s definition of marketing

embodies these principles

“Marketing is the process of planning and executing the

conception, pricing, promotion & distribution of ideas, goods,
and services to create exchange that will satisfy individual and
organizational objectives”

Philip Kotler defines marketing as under:

“Marketing is a social and managerial process by which

individuals and groups obtain what they want and need
through creating, offering and exchanging products of value
with others” (Kotler 1991)

Difference between Selling & Marketing:

Selling is an important activity of Marketing, It consists in transferring

goods and services to the customers. The main emphasis in selling is
on Profit maximization through Sales Volume. Marketing on the other
hand is a broader area and its functions as a whole aim at customer
satisfaction and profits through customer satisfaction. Again in
Marketing, the selling effort is customer oriented but in selling the
effort is company oriented.
The concept of selling assures that customers if left alone will not buy
enough of the company’s products. These goods are already produced
and an aggressive selling and promotional effort has to be persuaded.
The customer’s demand on the other hand, determines production in
marketing. Thus, in selling the focus is on products while in marketing
the focus is on customer needs.

Definition of Selling
“Activities associated with communicating ideas and making sale and
thus effecting the transfer of ownership of a product”

Definition of Advertising
The term advertising originates from the Latin word “adverto” which
means to turn round. Advertising thus denotes the means to draw
attention to any object or purpose. In the marketing context,
advertising has been defined “as a paid and non-personal form of
presentation and promotion of ideas, goods or services by an
identified sponsor” There is not only an identified sponsor but also
an identified media and message behind every advertisement.
Through and advertisement, the advertiser intends to spread his ideas
about his product/offerings among his customers and prospects.

“Advertising is any paid form of non-personal presentation and

promotion of ideas, goods or services by an identified sponsor”

Above definitions have clearly elaborated the functions of each

element, basic function of marketing is to sell produced goods or
services and ideas to the prospective customer, therefore, advertising
and selling are the basic tools of marketing. Through marketing, the
advertiser brings out the demands, wants and needs of the people to
buy his products or services.

In Pakistani environment, all the three elements play their role one way
or the other. Some companies promote their sales through selling
techniques and with the help of advertising. For example, to sell basic
needs; producer need not promote the produced goods through
advertisement, for example when a farmer harvests his crop and gets
the yield of Wheat crop, he would not advertise in the media to sell his
product, this is of basic need of every human being so his product will
be sold without any advertisement, or marketing. In continuation of
above, basic needs of food, health, education, shelter marketing,
selling with advertising is not a necessary tool to sell.

Institutions involved in social sector are involved in marketing of their

products or services rather than selling and advertising. Following are
in social sector of marketing:

 Shoukat Khanum Memorial Cancer Hospital & Research Center

 Edhi Foundation

 Fatmeed Foundation

The miracle of Shaukat Khanum Memorial Cancer Hospital & Research

Centre does not just lie in its creation but the fact that it has been
providing free treatment facilities to over 70% of its patients since over
a decade now. The institution has spent over Rs. 5 billion (US $ 80
million) in supporting the treatment of thousands of indigent cancer
patients. This has only been possible due to generous donors and well-
wishers who have supported the cause over the years. Let us trace
back the footsteps of history in an attempt to cover the times, events
and people who have brought this Hospital to where it stands today.

In the field of agriculture, Pakistani companies involved in agriculture

inputs do not rely on advertising but heavily focus on marketing &
selling, because products offered by these companies are of basic
needs of the farmer community.

In recent years, chain stores, departmental stores, food outlets offering

food items have sprung up in Pakistan, One such example is of
Gourmet Bakers in Lahore; some years back they were operating only
one outlet, whereas now they have established their outlets in all areas
of the city. They just chose “Easy to approach” location and succeeded.

Service Industries & Bata Pakistan are involved in manufacturing &

marketing of shoes in Pakistan. They also focus on selling through
marketing rather advertising. As far selling through marketing &
advertising is concerned, marketing plays its role where basic needs
are concerned and required to be fulfilled and advertising is put to
action beyond basic needs, such as drinking Pepsi or Coca Cola is not
a basic need, it’s a want. Social setup of a consumer also plays a role
in creating needs, wants and demands. Some goods or items are
purchased to fulfill individual needs, wants or demands, owing a motor
car is not a need, want or demand for all the users, it’s a need for
some one and luxury for others.

Mobile phone has become a basic tool of communications for most of

the people, as it saves time, resources to contact a friend to find his
whereabouts, to remain in touch with family & friends, and business
associates. In today’s fast moving world, time has become a precious
item to be saved for all segments of the society. Some years back,
mobile phone was a luxury not a need. Cellular companies operating
here in Pakistan initiated a race to sell their connections, for which they
resorted to all possible means of advertising; they all launched
aggressive selling and advertising campaigns to attract the customer.
They ignored the basic principles of marketing and adopted negative
marketing approach to sell their connection. Now a day every second
commercial on electronic media is from one cellular company or the
other.

In my opinion, marketing with selling and advertising in the Pakistani

context is as under; companies selling products to fulfill the basic
needs and demands of human beings are more active in marketing
whereas companies which offer products other than needs and wants
resort to advertising to attract the consumer.
Question # 02: Discuss the significance of marketing at Macro
and Micro level for developing countries like Pakistan,
Bangladesh and Sri Lanka.

Answer: Significance of Macro &Micro Marketing

Marketing efforts both on the part of the firm as well as the state i.e. both at
the macro and micro levels is relevant to growth. When the involvement of
the Government in the marketing and distribution of ideas, essential goods
and services is significant, it is called macro-marketing. As against this
where a firm enjoys enough freedom to design and implement its marketing
efforts it is consideration to be micro marketing.

In developing countries like, Pakistan, Sri Lanka and Bangladesh, state or

governments have to get themselves involved in marketing activities at
macro level to promote specific fields, which in the long run benefit the
economic growth as well as well being of the community.

Pakistan

In Pakistan, Government specially focuses to promote Agriculture, tourism,

Power Generation and Education sectors along with export oriented industry;
use of Natural Gas has also been as a substitute to petroleum products, to
save foreign exchange, promoted lately by the Government.

Government of Pakistan has subsidized Agricultural inputs, exempted

imports of hybrids seeds, pesticides, fertilizers from sales tax and certain
imports duties. Cheaper but quality imports of Agricultural inputs
encouraged local companies to cater to local market needs & help achieve
targets in food sufficiency within the country. Government encourages
agricultural scientists to prepare high yields crops with low inputs for future
need of the country. Provincial government provides timely assistance
straining to farmer community to learn and use of new technologies.
Government has established and promoted Export oriented industrial estates
throughout the country to explore international markets in Textile, Hand
made items, Sports, Cutlery and stainless steel products. Imports of luxury
items are being discouraged to save foreign exchange. Businessmen have
been offered tax exemptions, rebates and soft loans who have established
their business entities in such estates. Such benefits, on one hand,
encourages organizations to establish new business set ups, generates new
employment and help economic growth of the country.

Government of Pakistan does not have the resource and infrastructure to

provide education to every child. In education, both public and private sector
are doing their best to promote education in the country. Government has
upgraded many colleges to universities. AIOU and Virtual University are the
prime examples where student can enhance their education through
distance learning system.

Twentieth and twenty first century has witnessed revolutionary advancement

both in technology and science. This advancement requires continues power
supply to run the industry and infrastructure of the country but due to the
construction of Dams by India at rivers, floating from J&K supply of water
has decrease drastically as Pakistan depends heavily upon hydel power
resulting a great short fall in demand and supply of Electricity. Government
has exempted import of power generation machinery from import duties and
taxes to overcome the problems. Above steps have been initiated at Macro
level to keep the pace of economic growth at Micro level.

The Modern Education System of Sri Lanka

Since independence in 1948, the government has made education one of its highest priorities, a
policy that has yielded excellent results. Within a period of less than 40 years, the number of
schools in Sri Lanka increased by over 50 percent, the number of students increased more than
300 percent, and the number of teachers increased by more than 400 percent. Growth has been
especially rapid in secondary schools, which in 1985 taught 1.2 million students, or one-third of
the student population. Teachers made up the largest government work force outside the
plantation industry. The literate population has grown correspondingly, and by the mid1980s
over 90 percent of the population was officially literate (87 percent for those above ten years of
age), with near universal literacy among the younger population. This is by far the most
impressive progress in South Asia and places Sri Lanka close to the leaders in education among
developing nations.

The government has taken an ever larger role in education. Because private institutions no
longer receive grants from the government, they are forced to charge fees while competing with
free state-run schools. The percentage of students in the state system has grown constantly, and
by the 1980s 99 percent of female students and 93 percent of male students at the primary school
level were being trained in government-run schools. The government did not have a monopoly
over education because Buddhist pansala and pirivena, Muslim schools, and Christian schools
still thrived (the Roman Catholic Church alone operated several hundred institutions from
kindergarten to secondary level, teaching over 80,000 children). The education system of the
state, however, had an overwhelming influence on the majority of the population, especially the
Sinhalese.

The state has tried to change the language of instruction in its primary and secondary schools
from English to Tamil or Sinhala. By the 1960s, the vernacular languages were the primary
medium in all government secondary schools. In the 1980s, English remained, however, an
important key to advancement in technical and professional careers, and there was still
competition among well-to-do families to place members in private English-language programs
in urban areas. Ethnic minorities long associated with European-style education still formed a
large percentage of the English-speaking elite. In the 1980s, for example, almost 80 percent of
the Burghers knew English, while among the Sinhalese the English-speakers comprised only 12
percent.

Among the major problems still facing the educational system in the late 1980s were a serious
dropout rate in the primary grades and a continuing bias toward urban environments at the
expense of the countryside. The median level of educational attainment in Sri Lanka was
somewhere between grades 5 and 9, and almost 40 percent of the students dropped out of school
after 9 years. The reasons were not hard to discern in a primarily agricultural society, where
many young people were more urgently needed in the fields or at home than in school once they
had achieved an operational level of literacy and arithmetic skills. Many urban youth from low-
income backgrounds also dropped out at an early age. This pattern provided two-thirds of the
students with an education through grade 5 but less than 10 percent of the population with a
high school degree and less than 1 percent with a college diploma. Despite government efforts in
the 1980s to expand opportunities for youth from rural areas and more sparsely inhabited
districts, the pressures for early dropout were more pressing in precisely those areas where
illiteracy was most prevalent. In Colombo, for example, the overall literacy rate was 94 percent
in 1988, while in Amparai District it was only 75 percent. Rural schools were more widely
scattered, with poor facilities and inadequate equipment, especially in the sciences. Teachers
preferred not to work in the countryside, and many rural schools did not even go up to the level
of twelfth grade.

The most dynamic field in education during the 1970s and 1980s was technical training. In the
late 1980s, the Ministry of Higher Education operated a network of twenty-seven technical
colleges and affiliated institutes throughout the country. Courses led to national diplomas in
accountancy, commerce, technology, agriculture, business studies, economics, and manufacture.
Other government institutions, including the Railway, Survey, and Irrigation Departments, ran
their own specialized training institutes. The Ministry of Labour had three vocational and craft
training institutes. The number of students in all state-run technical institutes by the mid-1980s
was 22,000. In addition, the government operated schools of agriculture in four locations, as
well as practical farm schools in each district. A continuing problem in all fields of technical
education was extreme gender differentiation in job training; women tended to enroll in home
economics and teaching courses rather than in scientific disciplines. (http://lcweb2.loc.gov/cgi-
bin/query/r?frd/cstdy:@field(DOCID+lk0082)

Education Planning and Policy of Bangladesh

Public expenditures for education were very low in Bangladesh. As a percentage of the gross
domestic product, the level of expenditure for education in 1983 was approximately 1.3 percent,
a figure that did not rise substantially through 1988. On the average, the sectoral share of
education in the total development expenditure of the government between 1973 and 1983 was
only 4.1 percent; in 1985 it was only 3.1 percent.

The Third Five-Year Plan included efforts to improve quality by restructuring higher secondary
and college education, making it more cost effective, and introducing management controls and
performance evaluations. Community-based nonformal education approaches seemed to hold
promise as an alternative means of providing basic arithmetic and reading skills. For instance,
the Bangladesh Rural Development Board has been able to achieve low dropout rates, especially
for females, in non formal primary schooling, keeping operating costs fairly low and capital
expenditures at a minimum.

The Ministry of Education and Culture was responsible for planning, financing, and managing
education at all levels. The ad hoc Bangladesh Education Commission was appointed in 1972 to
investigate and report on all major aspects of education. In 1987 another high-level body--the
National Education Commission--was instituted. Its August 1988 recommendations were for
compulsory free education; reforms in madrasa, medical, and law education; and removal of
student politics from the campus. It was expected that the commission's recommendations would
be addressed in the fourth and fifth five-year plans covering the period up to the year 2000.

(http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+bd0057)

Bangladesh a poverty driven country of late seventies and eighties with low
literacy rate, a common Bengali had no access to get a loan from bank or
any financial institution. They have to leads their lives in a miserable
condition. Dr. M. Yaunas, a Ph.D. from foreign university took the initiative
and start lending small amounts to common Bengali people to start their
business and start lead a happy life. Dr. M. Yaunas established Grameen
Bank for this sole mission to eliminate poverty from the country.
Government of Bangladesh passed special laws to extend helps at Macro
levels to contribute. This bank has changed the lives of hundreds of
thousands of people of Bangladesh. Bank offers loans in various categories
.i.e. setting up a business, cottage industry, education and most recently
that bank does not offer loans against any security or collateral, despite the
fact that most of the cliental of the bank is poor people, rate of return is
98% of loans issued. Grameen Bank is an exemplary rate for others to follow.
Now the bank has country wide branches to cater to the needs of their
clients, support from the government of Bangladesh is at macro level and
funding, loans from Grameen Bank are micro level of marketing.

Question # 03 (a):

What are the 7 Ps of services marketing? Explain each

element with help of examples.
Answer:

Following are the 7 Ps of Services Marketing

1. Product/Services

2. Pricing

3. Promotion

4. Placing

5. People

6. Physical Evidence

7. Process

1. Product/services
There is little difference between product and service, when a
customer buys a physical product, he can feel it, see it as it has
 tangible aspect whereas services have intangible aspects, a customer
can only benefit from the service only as it has performed by the
services provider such as operating a patient consulting a lawyer,
getting advise from tax advisor.

2. Pricing
In determining the prices of services, the one characteristic, which has
great impact is their perish ability and the fact that fluctuation in
demand cannot be met through inventory. Hotels and Airlines and
telecom sectors offer lower rates during off season and lower
telephone charges for outstation calls after Peak Hours are the
example of how pricing can be used.

3. Promotion
The fundamental difference, which must be kept in mind while
designing the promotion strategy for services, is that customer relies
more on subjective impassions rather than concrete evidence. This is
because of the inherent intangible nature of services. Secondly, the
customer is likely to judge the quality of services on the actual
services. Thirdly since it is difficult to sample the services before
paying for it, the customer finds it difficult to evaluate a product.

4. Placing and Distribution

The most important decision element in the distribution strategy
relates to the issue of location of the services so as to attract the
maximum number of customer such as those of Doctors, teachers,
consultants, machinist etc, poses distribution constraints since they
are able to serve only limited and fractional markets.

5. People
 People constitute an important dimension in the management of
services in their role both as performers of services and as customer.
They must, therefore, be well informed and provide the kinds of
services that win customer approval. People as performance of
services are important because “A customer sees a company through
its employees. The employee represents the first line of contact with
the customer. The firm must recognize that each employee is a
salesman for the company services”.

6. Physical Evidence

Clearness in doctor’s clinic, exterior appearances and interior décor of

restaurant, the comfort of the seating arrangement in a cinema hall,
adequate facility for personal needs at the airport, all contribute
towards the image of the service and organization as perceived by the
customer. The common elements in these are that they all are
physical, tangible and controllable aspects of a service organization
.They constitute physical evidence of the service.

7. Process

In service organization, the system by which you receive delivery of

service constitutes the process. In fast food outlets the press
comprises buying coupons at one counter and picking up the food
against that at another counter.

Services can be described on the basis of types of process used in the

delivery of the service. The three kinds of deliver process that are
applicable in case of service products are Line Operation, Job Shop
Operation and Intermittent Operation. Self service, restaurant and shop
are example of line operation. When the consumer requires a
combination of services using different sequences, the job shop type of
operation is more use full. Hospital, restaurants and educational
institutions usually have these types of delivery process. Intermittent
operations are use full when the types of service is rarely repeated,
Firms offering consultancy for projects use this kind of delivery system.
Advertising agencies also use intermittent delivery system since each
advertising campaign requires a unique set of input factors.
Question # 03 (b)

Discuss image building features of products in detail.

Answer:
Definition:

“A promotional approach intended to communicate an image and

generate consumer preference for a brand or product on the basis of
symbolic value”.

When a new product or service is launched or offered in the market,

key features, benefits and qualities are communicated to the
prospective customers. There are many factors which help build image
of the product or service. As the definition states “Promotional
approach intended to communicate an image” Following factors
play a vital role in building image of a product:

1. Quality

2. Pricing

3. Packaging/Placing

4. Benefits

Quality:

Quality of the product or services is of prime importance to the consumer, any

customer who is purchasing the product is expecting the quality in lieu of money he
is spending to purchase this product. Today customer is well educated, understands
the difference between competitive products. The customer expects to get the
quality as the manufacturer or service provider has promised to deliver. The
customer can compromise on high price but not on quality. For example a customer
will buy milk from Nestle or Haleeb despite their high price but customer does not
want to compromise on quality and would not buy cheaper milk from the company,
he is not aware of.

Price:

Price is also a basic feature of a product or service to build its image in the market.
While deciding the price, target market should always be considered carefully, as
the price should not be too low that the customer may think that the quality of the
product would also be low or sub standard neither it should be too high to buy by
the target market. Normal pricing would appeal to the prospective buyer to
purchase the product.

Packaging & Placing

Presentation of the product is also a very important factor. Product or service should
be presented in such a way that it attracts the customer and at the same time the
product should be easily available in the market. It would be of no use, if
manufacturer advertising heavily while product is not available in the market. If
producer chose selective markets, the products should be displayed prominently to
attract the customer.

Benefits:

When a customer has purchased the product, he or she expects some special
features, characteristics and properties which other products do not offer. Benefits
so offered to customer both tangible and intangible help keep the customer for a
long time and the producer earns profits as well. Benefits of the product should
satisfy the socio-economic needs of the customers. It must carry the worth,
customer has expected from the product.

Examine the relationship between a product’s features, the consumer’s quality

evaluation, and the marketer’s pricing in the context of a dynamic product/market
environment. Estimate a simultaneous system model using two-stage-least-squares
regression on Consumer Reports data of three high-technology consumer durables
which have shared common product/market characteristics but reached different
levels of household ownership in the late 1980s. The results of pair wise correlation
and 2SLS regression analyses revealed that the associations between prices
and quality evaluations were insignificant, but the associations between
product features and prices or between product features and quality evaluations,
varied across the three product categories at their different levels of market
penetration. As a product’s customer base widens or the consumer’s knowledge
and experience with the product accumulates, the significant association of
marketer’s prices changes from “with the product’s feature availability” to “with the
consumers’ experience-in-use advantages,” while the significant association of
consumers’ quality evaluations changes from “with the consumers’ experience-in-
use advantages” to “with the consumers’ experience-in-use disadvantages.” The
empirical results, however, suggest no relationship between the marketer’s pricing
of a product and the Consumer Reports’ overall quality evaluations on the product.

http://www.emeraldinsight.com/10.1108/09684909710163601
Question # 04:

A product passes through specific sequences of stages

corresponding to the life phases of infancy, growth,
maturity and decline. Explain each stage of product life
cycle by quoting an example of a product that you think
has passed through different stages of PLC.

Answer:

Product Life Cycle

A company, which launches new product, naturally hopes that the product
would contribute to the profits of the company and provide consumer
satisfaction for a longer period to time to come. This, however, does not
happen in real market.

There have been many products that have been gone through the life cycle,
for example VCR, Black & White Television, Tape Recorder, Dial Telephone,
Mobile phones with antenna.

The product life cycle concept suggests that a product passes through five
stages of evolution. These are

1. Product Development
2. Introduction
3. Growth
4. Maturity
5. Decline

As a product evolves and passes through theses stages profit is affected,

and different strategies have to be employed to ensure that the product is a
success within its market.
Product Life Cycle stages

Product Development
When the company perceives and develops a new product idea, the
development process starts immediately. During this period, sales are at
zero level and the company’s investment cost mount.

Introduction:
After launching the new product, management wants the product to enjoy a
long and happy life. Although it does not expect the product to sell forever,
the company wants to earn a decent profit to cover all the effort and risk
that went into launching it. Management is aware that each product will have
a life cycle, although its exact shape and length is not known in advance.

The product life-cycle stage in which the new product is first distributed and
made available for purchase. The introduction stage starts when the new
product is first launched. Introduction takes time and sales growth is apt to
be slow, Well-known products such as instant coffee, frozen orange juice, and
powdered coffee creamers lingered for many years before they entered a
stage of rapid growth.

In this stage, as compared to other stages, profits are negative or low

because of low sales and high distribution & promotion expenses. Much
money is needed to attract distributors and build their inventories. Promotion
spending is relatively high to inform consumers of the new product and get
them to try it. Because the market is not generally ready for product
refinements at this stage, the company and its few competitors produce
basic versions of the product. These firms focus their selling on those buyers
who are the most ready to buy.

Growth
The product life-cycle stage in which a product’s sales start climbing quickly.
If the new product satisfies the market, it will enter a growth stage, in
which sales will start climbing quickly. The early adopters will continue to buy
and later buyers will start following their lead, especially if they hear
favorable word of mouth. Attracted by the opportunities for profit, new
competitors will enter the market. They will introduce new product features,
and the market will expand. The increase in competitors, lead to an increase
in the number of distribution outlets, and sales jumps just to build reseller
inventories. Prices remain where they are or fall slightly. Companies keep
their promotion spending at the same or a slightly higher level. Educating
the market remains a goal, but now the company must also meet the
competition.

Profits increase during the growth stage as promotion costs are spread over
a large volume and as unit manufacturing costs fall. The firm uses several
strategies to sustain rapid market growth as long as possible. It improves
product quality and adds new product features and models. It enters new
market segments and new distribution channels. It shifts some advertising
from building product awareness to building product conviction and purchase
and it lowers prices at the right time to attract more buyers.

Maturity
The stage in the product life-cycle in which sales growth slows down or levels
off. At some point, a product’s sales growth will slow down and the product
will enter a maturity stage. This maturity stage normally lasts longer than
the previous stages and it poses strong challenges to marketing department.
Most products are in the maturity stage of the life cycle, and therefore most
of marketing management deals with the mature product.

The slowdown in sales growth results in many producers with may products
to sell. In turn, this overcapacity leads to greater competition. Competitors
begin down prices, increasing their advertising and sales promotions and
upping their R&D budgets to find better versions of the product. These steps
lead to a drop in profit. Some of the weaker competitors start dropping out,
and the industry eventually contains only well-established competitors.

Although many products in the mature stage appear to remain unchanged

for long periods, most successful ones are actually evolving to meet
changing consumer needs. Product managers should more than simply ride
along with or defend their mature products-a good offense is the best
defense. They should consider modifying the market, product and the
marketing mix.

Decline
The product life-cycle stage in which a product’s sales decline. The sales of
most product forms and brands eventually dip. The decline may be slow, as
in the case of oatmeal cereal or rapid as in the case of phonograph records.
Sales may plunge to zero or they may drop to a low level where they
continue for many years. This is the decline stage.
Sales decline for many reasons, including technological advances, shifts in
consumer tastes and increased competition. As sales and profits decline,
some firms withdraw from the market. Those remaining may prune their
product offerings. They may drop smaller market segments and marginal
trade channels or they may cut the promotion budget and reduce their prices
further.

Carrying a weak product can be very costly to a firm and not just in profit
terms. There are many hidden costs. A product may take up too much of
management’s time. It often requires frequent price and inventory
adjustments. It requires advertising and sales force attention that might be
better used to make “healthy” products more profitable. A product’s failing
reputation can cause customer concerns about the company and its other
products. The biggest cost may well lie in the future. Keeping weak products
delays the search for replacements, creates a lopsided product mix, hurts
current profits and weakens the company’s foothold on the future.

For these reasons, companies need to pay more attention to their aging
products. The firm’s first task is to identify those products in the declining
stage by regularly reviewing sales, market shares, costs and profit trends.
Then, management must decide whether to maintain, harvest or drop each
of these declining products.

Example:

There have been many products which have gone through the life-cycle
stages. One such example is of Floppy Discs. Companies such as IBM,
Compaq, and Hewlett-Packard are the pioneer of this technology. These
companies invested heavily in R&D. In the earlier days of computers, such
floppies were used as boot diskettes. In the initial stage, as marketing of
computers was focused to a very limited segment of market, so the demand
for such floppies was on lower side, we can describe this stage as
Introduction.

As the market expanded and broaden throughout the world, so the demand
depicted an upward trend in sales. Manufacturing & marketing companies
pumped more resources in R&D, added new features, enhanced their
supplies, as there were complaints regarding data saving, formatting and
quality of the product. This was the growth stage of the product. After some
time, the capacity of hard disks improved many folds as against initial
storage capacity of mere Megabytes to Gigabytes, users started to use such
floppy diskettes as a backup tool to store their data and demand increased
as well. This stage can be defined as Growth stage.

During the last decade of twentieth century, due to technological

advancement, and better alternatives introduced in the market, demand
remained steady and observed fluctuations, both upwards & downwards.
This stage did not last long as compared to growth stage; we can describe
this stage as the maturity stage.

New inventions i.e. Compact Disk or CD, as commonly known, posed a great
threat and sales declined drastically. Decline stage of Floppy Diskettes was
even faster than pervious stages as the consumer shifted quickly to new
products due to added features, security of data, more capacity, portability
and cost effectiveness.

Question # 05:
How market segmentation differs from product
differentiation? What are the factors that a firm should
consider while selecting its segments?

Answer:

Market Segmentation Vs Product Differentiation:

Market segmentation represents an important recent advance in marketing

thinking and strategy. In earlier years many business firms saw the key to
profit to be in the development of a single product that was mass produced,
mass distributed and mass communicated. This would lead to the lowest
costs and prices and create the larges potential market. The firm would not
recognize variations and would try to get everyone in the market to want
what it produced.
As competition intensified, prices dropped and seller’s earnings declined.
Sellers did not have much control over price because of the similarity of their
products. At this stag, some sellers began to recognize the potential value of
product differentiation- that is, the introduction of differential features,
quality, style, or image in their brands as a basis for commanding a
premium. This led to a proliferation of sizes, models, options, and other
characteristics. It is important to recognize, however, that the product
variations were not based on an analysis of natural market segmentation.

Market Segmentation
Markets consist of buyers, and buyers differ in one or more ways. They may differ in
their wants, resources, locations, buying attitudes and buying practices. Through
market segmentation, companies divide large, heterogeneous markets into smaller
segments that can be reached more efficiently and effectively with products and
services that match their unique needs.
Segmenting Consumer Markets:
There is no single way to segment a market. A marketer has to try different
segmenting variables, alone and in combination to fine the best way to view the
market structure.

 Geographic Segmentation
 Demographic Segmentation
 Psychographic Segmentation
 Behavioral Segmentation

1. Geographic Segmentation:
Geographic segmentation calls for dividing the market into different geographical
units such as nations, regions, states, counties, cities or neighborhoods. A company
may decide to operate in one or a few geographical areas or to operate in all areas
but pay attention to geographical differences in needs and wants.

Many companies today are localizing their products, advertising, promotion and
sales efforts to fit the needs of individual regions, cities, and even neighborhoods.
For example, Campbell sells Cajun gumbo soup in Louisiana and Mississippi and
makes its nacho cheese soup spicier in Texas and California.

2. Demographic Segmentation:

Demographic segmentation divides the market into groups based on variables such
as age, gender, family size, family life cycle, income, occupation, education,
religion, race, generation, and nationality. Demographic factors are the most
popular bases for segmenting customer groups. One reason is that consumer
needs, wants, and usage often vary closely with demographic variables. Another is
that demographic variables are easier to measure than most other types of
variables. Even when market segments are first defined using other bases, such as
benefits sought or behavior, their demographic characteristics must be known in
order to assess the size of the target market and to reach it efficiently.
2.1 Age and Life Cycle Segmentation:

Consumer needs and wants change with age. Some companies use age &
life-cycle segmentation, offering different products or using different
marketing approaches for different age and life-cycle groups. For example,
McDonald’s targets different age groups-from children and teens to adults
and seniors-with different ads and media. Its ads to teens feature dance-beat
music, adventure, and fast paced cutting from scene to scene; ads to seniors
are softer more sentimental.

Marketers must be careful to guard against stereotypes when using age & life
cycle segmentation. For example, although some 70-year old require
wheelchairs, others play tennis. Similarly, whereas some 40-year old couples
are sending their children off to college, others are just beginning new
families. Thus age is often a poor predictor of a person’s life-cycle, health,
work or family status, needs, and buying power.

2.2 Gender Segmentation:

Gender segmentation has long been used in clothing, cosmetics, toiletries

and magazines. For example, Procter & Gamble was among the first with
Secret, a brand specially formulated for a woman’s chemistry, packaged and
advertised to reinforce the female image. More recently, other marketers
have noticed opportunities for gender segmentation. After a research, it
showed that woman make 90 percent of all home improvement decisions,
home improvement retailer Lowe’s recently launched a family oriented
advertising campaign that reaches out to women buyers.

2.3 Income Segmentation:

Income segmentation has long been used by the marketers of products and
services such as automobiles, boats, clothing, cosmetics, financial services
and travel. Many companies target affluent consumers with luxury goods and
 convenience services. Stores such as Metro & Macro offer everything from
expensive & luxury items to day to day home products. However, not all
companies that use income segmentation target the affluent. Despite their
lower spending power, the nearly one-third of the nation’s households that
earn less than Rs: 100,000/- per year offer an attractive market.

3. Psychographic Segmentation:

Psychographic Segmentation divides buyers into different groups based on

social class, lifestyle or personality characteristics. People in the same
demographic group can have very different psychographic make ups.

Marketers also have used personality variables to segment markets. For

example, the marketing campaign for Honda’s Helix and Elite motor scooters
appears to target hip and trendy youth. But it is actually aimed at a much
broader personality group.

4. Behavioral Segmentation:

Behavioral segmentation divides buyers into different groups based on their

knowledge, attitudes, uses or responses to a product. Many marketers
believe that behavior variables are the best starting point for building market
segments.

i) Occasions:

Buyers can be grouped according to occasions when they get the idea to
buy actually make their purchase or use the purchased items. Occasion
segmentation can help firms build up product usage.

ii) Benefits Sought:

A powerful form of segmentation is to group buyers according to the

different benefits that they seek from the product. Benefit segmentation
requires finding the major benefits people look for in the product class, the
kinds of people who look for each benefit, and the major brands that
deliver each benefit.