Module-4

Marketing Mix
Prof. Rajesh Kurandwad
 Product /Service & Brands

PRODUCT BRAND
Levels of Products
 Levels of Products
 Core Benefit : service or benefit that customer really buys
 Ex: Hotel- Sleep & rest
 Basic Products : market define the basic requirement for the
product
 Expected Product: a set of attributes & conditions a buyer
normally expects.
 Ex: Hygenic, fresh towels, working lamps …..
 Augmented Product : features that exceed the customers
expectation.
 Brand positioning and competition takes place
 Potential Products:
 Which encompasses all the possible augmentations and
transformation that undergo in future.
 Classification of Products
 Classification is based on the :
 durability & tangibility &
 uses ( Consumer & Industrial )
 Durability & Tangibility:
 Products can be classified into three groups
 Non durable – consumed in one or few uses
 Durable Goods –survive many uses
 Services - intangible , inseparable , variable &
perishable
 Required more quality control, supplier credibility and
adaptability
 Classification of Products
 Classification based on the use :
1. Consumer goods classification
2. Industrial goods classification

 Consumer products can be further classified as :

1. Convenience Products
2. Shopping Products
3. Specialty Products
4. Unsought Products
 Product Classification
1. Convenience Products :
 These are the products that customers buy
Ex: Soaps , Sweets, Newspaper, Bread
 Customers buy frequently, immediately and with minimum
comparison
 Convenience products are low priced, intensely distributed at
convenient stores.
 Mass productions
 These are further classified as :
 Staple goods - routine purchases – toothpate , soap,Biscuits
 Impulse Goods - purchased without planning Ex: Chocolates &
Candies
 Emergency goods - purchased when needed in urgent Umbrella
 Product Classification
2. Shopping Products:
 Less frequently purchased product and services
 Consumer compare carefully on suitability , quality, price &
style
 Products are distributed through fewer outlets but provide
deeper sales support
 Ex: - furniture, Clothing , Appliances, Hotel & airline services
3. Specialty Products :
 Products with unique characteristics & brand identifications
for which a significant buyers makes a special purchase
3. Ex: Luxury cars , expensive watches, jewellary
 Product Classification
 Unsought Products :
 Theses are the products that consumers either does not know
or do not think of buying.
 Ex: Insurance, Blood donation,

 Industrial Product :
 Industrial products can be classified into three groups based on how it
enters the production process:
1. Materials & Parts
2. Capital Items &
3. Supplies
 Product Classification
1. Materials & Parts :
 Goods that enter manufacturers product completely
 Material and parts are further classified as :
 Raw materials
 Farm products ( Veg, Live stocks, fruits)
 Natural Products (Fish , Petroleum, Iron )
 Manufactured materials and parts
 Component Materials – usually fabricated further
 Ex: Pig Iron converted to steel
 Components parts - enter the finished product with no further
change in form
 Ex: small Motors
 Product Classification
2. Capital Items:
Long lasting goods that facilitate developing or managing the finished products
Types of capital items:
 Installations (building, factories, boilers gensets..)
 Major purchases , bought directly from the producers
 Equipments ( portable equipments and tools )
 These do not become the part of the finished goods
 Have shorter lifespan than installation
 Supplies & Business Services:
 Short term goods and services which facilitate developing or
managing the finished products
 Maintenance and Repair Items (Paints ,Nail & Brooms)
 Operating Supplies (Lubricantts,stationeries,writing papers)
 Purchased with minimum efforts on straight rebuy basis.
 Prices and services are imp considerations
 Product Mix
Product Mix
Width

Product line 2
Product line 1 Product line 3
Fabric Wash
Bath Soaps Beverages

Bru
Lux Surf
Brooke Bond
Dove Red Lable
Le Sancy Rin
Lipton
Peers Green Label
Product line Wheel
Rexona 3 Roses
Length
Lifebuoy Sunlight
Taaza
Hamam Deepam
Breeze Taj Mahal
Ala
Super Dust
Jai
Ruby Suat
Moti 501
A1
 Product Mix
 Product mix: (also called as product assortments)
 Product mix is the set of all products & items that a particular
seller sells
 Product Line : is a group of products that are closely related
because they perform similar functions and are sold to the
same customer groups, and are marketed through the same
channels
 Product Width: No. of Product line that a company carries
 Product Length : refers to the total no of product items in
the product line.
 Product depth: refers to the number of variants offered of
each product in the line
 Product Decisions
 Product line decisions
 Line Stretching – Upward , downward & two way search
 Line filling
 Line Modernization , featuring & pruning
 Pruning is done when it leads to depressing profits
 Company is short of production capacity
 Differentiating Products & services –
Marketing Perspective
 Products Differentiations:
 Forms – size , shape physical structure
 Ex:Aspirin ( Dosage size , shape,color, coating & action time)
 Features – features supplementing the basic features
 Ex:Activa G Series (Sandard & Delux )
 customization at higher cost or Standardization at lower cost.
 Performance Quality –
 Low ,average,high or superior
 Performance quality is the level at which
product’s primary characteristics operate.
 Performance level appropriate to the target
segment
 Differentiating Products & services –
Marketing Perspective
 Conformance quality:
 Degree to which all the produced units are
identical and meet the promised specifications. Ex:
Porsche 944 – accelerate the speed to 60MPH in
10 sec
 Durability
 Measures the products expected operating life
 Reliability – Measure of the probability that a
product will not mall function
 Reparability – Measure of the ease of fixing the
product when it is malfunctioning
 Style – Products Look & Feel to buyer
 Product – Mix Pricing
 Product line pricing Ex : Intel microprocessor
 Optional feature Pricing Ex: Standard & delux ,Vxi & Lxi
 Captive –Product Pricing Ex: Razor and Razor Blade , Printers
 Two part Pricing : Ex: Fixed & Variable - Telecom, DTH
 By-Product Pricing : Petroleum product
 Product Bundling Pricing : Tour Packages , equipment with
free delivery
 Product Life Cycle
 PLC asserts four things :
1. Products have limited life
2. Product sales passes through the different stages posing
different challenges, opportunities & problems to the
seller
3. Profits rise & fall at different stages
4. Product require different marketing ,financial,
Manufacturing ,purchasing & HR strategies
Product Lifecycle Stages
 Full Market Coverage
 Undifferentiated Marketing
M M M
1 2 3
 Coca Cola
P1  Differentiated Marketing
P2  Nike - running , Golf, Cricketing
 Niche Marketing
P3
 Shahanaz Hussain’s herbal
products
 Micro Marketing
 Dell Computers , Barbie Dolls
New product development
1. Idea Generation

2.Idea Screening

3. Concept Development

4. Marketing Strategy

55.Business Analysis

6. Product Development

77. Test Marketing

88. Commercialisation
 New product development
Reasons for NPD:
 existing products may be technologically outdated
 need in the business for new Product development .
 Different segment to target
 cannibalize an existing product

1. Idea generation: NPD process

 Idea generation refers to the systematic search for new-
product ideas
 Two sources of new ideas :
 Internal - R& D , Employees
 External – Distributors , Retailers , Customers,Agencies
 New product development
2. Idea screening –
 filtering the ideas to pick out good ones & and drop poor ones.
 purpose of idea generation is to create a large number of ideas,
the purpose of the succeeding stages is to reduce that number
 company would like to go ahead only with those product ideas
that will turn into profitable products.
3. Concept Development:
 attractive ideas must be developed into a product concept
 A product idea à an idea for a possible product
 A product concept à a detailed version of the idea stated in
meaningful consumer terms
 A product image à the way consumers perceive an actual or
potential product.
 The marketer’s task is to develop this new product into alternative
product concepts Ex: Electric Car
 New product development
4. Marketing Strategy :
 it is time to design an initial marketing strategy for the new
product
 The marketing strategy statement consists of three parts and
should be formulated carefully:
 A description of the target market, the planned value proposition, and
the sales, market share and profit goals for the first few years
 An outline of the product’s planned price, distribution and marketing
budget for the first year
 The planned long-term sales, profit goals and the marketing mix
strategy.
 New product development
5. Business Strategy :
 process involves a review of the sales, costs and profit
projections for the new product to find out whether these
factors satisfy the company’s objectives
 assess the range of risk.
 sales forecast is prepared,
 analyze the new product’s financial attractiveness
6. Product Development:
 drawing or perhaps a rough prototype.
 the product idea can be turned into a workable market
offering
 New product development
7. Test Marketing:
 last stage before commercialization in the new product
development process
 the product and its proposed marketing programme are
tested in realistic market settings.
 test marketing gives the marketer experience with marketing
the product before going to the great expense of full
introduction
 it allows the company to test the product and its entire
marketing programme, including targeting and positioning
strategy, advertising, distributions, packaging etc. before the
full investment is made.
 New product development
8. Commercialization :
 Commercialisation means introducing a new product into
the market
 At this point, the highest costs are incurred: the company
may need to build or rent a manufacturing facility
 Large amounts may be spent on advertising, sales promotion
and other marketing efforts in the first year.
 Some factors should be considered before the product is
commercialized:
 Introduction timing.
 Introduction place.
New product development
1. Idea Generation

2.Idea Screening

3. Concept Development

4. Marketing Strategy

55.Business Analysis

6. Product Development

77. Test Marketing

88. Commercialisation
 Pricing
 Price is the amount of money charged for the a product
or services
 It is the total value that customers exchange for the
benefits of having or using the products or services.
 This element of marketing mix generates the revenue
Synonyms for Price
 Rent  Special assessment
 Tuition  Bribe
 Fee  Dues
 Fare  Salary
 Rate  Commission
 Toll  Wage
 Premium  Tax
 Honorarium

14-32
Common Pricing Mistakes
 Determine costs and take traditional industry margins
 Failure to revise price to capitalize on market changes
 Setting price independently of the rest of the marketing
mix
 Failure to vary price by product item, market segment,
distribution channels, and purchase occasion

14-33
 Pricing
 Factors influencing the Pricing :
 Internal
 Marketing objectives
 Marketing mix strategy
 positioning the product based on pricing – Target Costing
 Cost
 Organizational Considerations – Mngt & Pdt managers
 External
 The market & Demand
 Pure, Monopolistic, Oligopolistic, competition
 Competition
 Other environmental factors
 Economic , Political, Legal
 Pricing Strategies
 Cost based Pricing
 Demand based Pricing
 Competition oriented Pricing
 Value Pricing
 Product Line Pricing
 Tender Pricing
 Affordability Pricing
 Differentiated Pricing
 Psychological Pricing
 Pricing Methods
 Cost based Pricing:
 Price is determined by adding either rupee amount or a % to
the pdt’s cost to achieve the desired profit margin .
 This do not take into consideration supply and demand ,
Competitors profile.
 Markup Pricing : a certain predetermined percentage of
Product’s cost , called markup is added to the cost of product
to determine the price.
 Markup price = ___Unit Cost__
(1- desired rate of return)

Unit Cost = Average Variable cost + Fixed cost

Unit Sales
 Pricing Methods
 Target Return Pricing (Cost – Plus) :

 Target Return Price = Unit Cost + ROI x Capital Invested

Forecasted Unit Sales
 Competition Based Pricing :
 Also known as going rate pricing
 Cost and revenues are secondary considerations
 Demand Based Pricing :
 Higher the demand greater will be the price
 Weaker the demand lower will be the price
 Common with Telephone , Hotel, Museums
 Pricing Methods
 Value Pricing :
 Also known as perceived value pricing
 Based on the consumer perceived value of a product or
services.
 Customer perception depends on co. image , warranty, post
sales service
 Product Range Pricing:
 Optional additional Items
 Low prices for basic models & increases the price for the product
 Captive Product Pricing
 Ex: Razors ( Low ) & Blade ( Margins are high)
 Pricing Methods
 Two Part Pricing :
 Ex : Telecom charges : fixed Plus Variable
 Bid Pricing :
 Based on the tenders
 Lowest Prices are considered.
 PROMOTION

 Communication is the important function in marketing and

constitutes the 4th element of marketing mix.
 Promotion mix consists of :
 Advertising ,
 Sales Promotion
 Public relations
 Personal Selling
 Publicity
 Direct Marketing

 Promotion Mix: is also known as Marketing Communication

Mix
 ELEMENTS OF PROMOTION MIX

1. Advertising : any paid form of non-personal presentation

& Promotion of ideas, goods or services by an identified
sponsor
 Advertisements includes the use of media such as newspapers,
Magazine, outdoor posters, banners, hoardings …etc.
2. Sales Promotion : short term incentives to promote sales
like display, samples, exhibitions, demonstrations, coupons,
Contests…etc.
3. Public Relations: involves building good relations with the
public by obtaining favorable publicity, building good
corporate image, &handling or avoiding unfavorable
publicity, rumors and events.
 ELEMENTS OF PROMOTION MIX

4. Personal Selling : includes direct personal presentations

by the company sales force for sales and building
relationships.
5. Direct marketing: involves direct communication with
selected target customer on a one-to-one basis to
obtain an immediate response and cultivate lasting
customer relationships, using telephone,direct
mail,fax,internet.
6. Publicity: includes non-personal promotion of products
by obtaining publicity through news in media like TV,
radio,newspaper, Magazine…etc.
 This form of promotion is not paid for by the sponsor.
Advertising Theories ( AIDA)
 Integrated marketing communication

 IMC is a concept of marketing communication planning that

recognizes the added value of a comprehensive plan that
evaluate the strategic roles of a variety of communication
disciplines.
 IMC involves the process of using all forms of promotional
tools to achieve maximum communication impact.
 Distribution Strategy

 Marketing channels plays a vital role in marketing, because of

many vital functions it performs.
 Functions of channel:
1. Provide Market information - pulses
2. Promotions
3. Contacts – reduces the no. of contacts
4. Breaking bulk
5. Product assortments
6. Price Negotiations
7. Physical distribution
8. Risk taking
9. Financing
10. Selling
11. Flows of distribution
Levels of Distribution channels
 Channel Strategy

 Types of Intermediaries – channel alternatives

 Number of Intermediaries
 Exclusive Distribution – Titan & Bata
 Limiting the number of intermediaries
 Have better control
 Producer seeks dedicated and knowledgeable selling
 Selective Distribution - Goli , Woodland
 Relies on some of the intermediaries
 gains adequate market coverage with more control & less cost
 Intensive Distribution – All FMCG products
 Manufacturers are tempted to move from exclusive or selective
distribution to more intensive distribution to increase coverage and
sales.
 Types of marketing Channels

 Vertical Marketing systems

 Horizontal marketing systems
 Multi channel marketing

 Vertical Marketing System:

 Works as a unified system
 At least one member of the channel is predominant &
controls the entire channel
 Types of Marketing Channels

 Horizontal Marketing System (HMS)

 two or more unrelated companies put together resources
or program to exploit emerging marketing opportunity
 Each company lacks capital, Know-how, Production or
marketing resources to venture alone
 Co’s can work together either on a temporary or permenant
basis ( Symbiotic Marketing)
 ex: Supermarket & Banking services, H&R block & Hyatt
legal services
 Types of Marketing Channels

Multi Channel Marketing: (MCM)

Ex1: Disney sells it products (DVD)multi channel

Movie Rental Stores
Disney Stores
Retail Stores (Best Buy)
Online stores (Disney’s own )
Amazon
 Advertising Budgets
 Affordable Budgets
 What company can afford
 Percentage Sales
 At a specified percentage of sales ( Current or anticipated)
 Competitive Parity Method
 This budget is set to achieve share-of-voice parity with competitors.
 Objective task Method
 Establish market share goal
 Determine the percentage of market that should be reached (80%)
 Determine % of aware prospects that should be persuaded to try brand
 Determine the no of advertising exposures per 1% trial rate
 Determine the No. of gross rating point .(GRP – 1 exposure to 1% of tgt
population )
 Determine the budget
MEDIA SELECTION AND PLANNING
 MEDIA PLANNING AND STRATEGY
 Media are the means of delivering the creative message
to the target audience thereby achieving the
communication objective of the campaign.
 Media planning is the series of decisions involved in
delivering the promotional message to the perspective
purchaser or user of the product or brand.
 Media strategy comprises of two main decisions….
Where & in which Media to advertise---( Media Selection)
How often to expose the advertisement (Media
Scheduling)
 MEDIA PLANNING AND STRATEGY
Some basic terms and Concepts:
 The Medium is the general category of available delivery
systems ,which includes;
 Broadcast Media (Tv & Radio)
 Print Media ( Newspaper & Magazine)
 Direct Marketing
 Outdoor Advertisement
 Media Vehicle is the specific carrier within a medium
category.
 Ex:Time & Newsweek – print vehicle
 Specific program/channel on TV and radio are broadcast
vehicle
 Module-5
Strategic View of Marketing
Prof. Rajesh Kurandwad
 Module 5
Strategic View of Marketing
 Competitor Analysis – Competitive marketing
strategy
Industry Analysis :
 Industry environment in which company operates
• Competitive structure of industry
• Competitive position of the company
• Competitiveness and position of major rivals
 Five force model is created to assess the industry
Attractiveness
 This model indicates , how easy it would be to make
above average profits (for shareholders and to fund
adequate investment)
 Industry Analysis
 Porter concluded that industry attractiveness
depends on five
factors or forces:
1. Buyer Power
2. Supplier Power
3. Competitive Rivalry
4. New Entrants
5. Substitutes
Porters Five Force Model
Porter’s Five force Model
 The Value Chain
 Porter developed the value chain

 Value chain helps identify which activities within the firm

were contributing to a competitive advantage and which
were not

 The approach involves breaking down the firm into five

‘primary’ and four ‘support’ activities, and then looking at
each to see if they give a cost advantage or quality
advantage.
The Value Chain
 The Value Chain
Primary activities:
 Inbound logistics – receiving, storing and handling raw material
inputs. For example, a just-in-time stock system could give a
cost advantage.
 Operations – transformation of the raw materials into finished
goods and services. For example, using skilled craftsmen could
give a quality advantage.
 Outbound logistics – storing, distributing and delivering finished
goods to customers. For example, outsourcing delivering could
give a cost advantage.
 Marketing and sales – for example, sponsorship of a sports
celebrity could enhance the image of the product.
 Service – all activities that occur after the point of sale, such as
installation, training and repair,
 e.g. Marks & Spencer’s friendly approach to returns gives it a
perceived quality advantage
 Apply the value chain in a scenario

 To gain a competitive advantage over its rivals a company

must either:
 perform value creation functions at a lower cost than its rivals
or
 perform them in a way that leads to differentiation and a
premium price.
 Competitive strategy options

 Professor Michael Porter identified three generic strategies

through which an organization could achieve competitive
advantage.

1. Cost Leadership
2. Differentiation
3. Focus – Niche

Cost Leadership

Set out to be the lowest cost producer in an industry. By producing at

the lowest possible cost the manufacturer can compete on price
with every other producer in the industry and earn the highest unit
profits.
 Cost Leadership Strategy

 Advantages of Cost Leadership:

 Better margins through lower costs.
 Ability to undercut competitors on price, thus reducing
competitive
rivalry.
 Low costs act as a barrier to entry deterring new entrants.
 Low prices make substitutes less attractive.
 Better margins give more scope to absorb pressure from powerful
buyers/suppliers.
 Low costs give a platform for expansion – both gaining market
share
and moving into new markets.
 Disadvantages:
 Require Critical Mass of Production to achieve Economies of Scale
 Only room for one cost leader – no fallback position if the cost
advantage is eroded.
 Differentiation
 AIM: To offer a product that can't be matched by rivals and
charge a premium for this “difference”
 How to Achieve :
 Quality Differentiation
 Design Differentiation
 Image Differentiation
 Support differentiations – Services
 Advantages of differentiations:
 better margins through being able to charge higher prices
 higher quality offsets competitive rivalry
 product uniqueness reduces customer power
 quality acts as a barrier to entry
 quality reduces the attractiveness of substitutes
 Differentiation
Disadvantages:

 cheap copies
 being out-differentiated
 customers unwilling to pay the extra (e.g. in a recession)
 differentiating factors no longer valued by customers (e.g.
due to changes in fashion).
 FOCUS
 Aim
 Position the business in one particular niche in the market

 How to Achieve:
 find a segment where the cost leader or differentiators
have little or no presence and build business.
 A focus strategy is based on fragmenting the market and focusing on
particular market segments
 Cost focus
 Differentiation Focus
 International Marketing
 How to enter the international Markets?
 International Marketing
 Indirect and direct Exporting :
 Occasional Exporting
 Active Exporting – committedly expands into a particular market.
 Indirect exporting – sell through independent intermediaries.
 Cooperative Organisations - carryout exporting activities on behalf
of producer
 Export Management Companies

 Direct :
 Domestic based export departments
 Overseas sales branches or subsidiary
 Travelling export sales representative
 Foreign based distributors or agents
 International Marketing
 Licencing
 Company may issues licence to use the manufacturing process,
trade marks ,patents etc
 Charge royalty as a fee.

 Joint Ventures:
Retail Formats

 The Retail format is the store ‘package’ presented to the

shoppers.

 A format is defined as the type of retail mix used by a set

of retailers.

 Store format depends on the mix of variables –

Assortments, Price, transactional convenience &
experience
 Classification of Retail

Store-based
Ownership -based strategy Mix
classification

• Independent
•Chain
•Franchise
•Leased Department
•Vertical Marketing
System
•Consumer
Cooperatives
 Non-store based
retail strategy mix
(Non-traditional
retailing)

DirectMarketing
CatalogueStore
Vending Machines
E-tailing