MARKETING MIX & DECISIONS

MARKETING MIX
Marketing Mix has been defined as the collection of marketing tools the firms use to pursue its marketing objective. McCarthy classified these tools into four broad groups, which he called the 4Ps of Marketing: Product,

Price, Place, Promotion

4 Ps
Product Product Variety, Quality, Design, Features, Packaging, Sizes, Warranties, Returns Price List price, Discount, Allowances, Payment Period, Credit terms Promoti Sales Promotion, Advertising, on Sales Force, Public Relations, Direct Marketing Place Channels, Coverage, Assortments, Locations, Inventory, Transport

Concept/Developing New Market Offerings

Six categories of new products

New-to-the-world products: it creates an entirely new market

New product lines: It allows the company to enter in an established market for the first time.
Additions to existing product lines: New product that supplements the existing product line.

 Improvements and revisions of existing products: It provides improved performance and greater perceived value to the customer.

Repositioning
Cost reductions

Necessity of NewProduct Development

Incremental innovation: Customer needs innovation in their small routine things also.
Fast Changing Technologies: Fast changing technologies made new product development absolute necessary.

Why do new products fail?

The idea is good, but the market size is overestimated. The product is not well designed. A high-level executive pushes a favorite idea through in spite of negative research findings. Development costs are higher than expected. Competitors fight back harder than expected.

 The product is incorrectly positioned in the market, not advertised effectively, or overpriced.

The product fails to gain sufficient distribution coverage or support.

Challenges in New-Product Development

Shortage of important ideas in certain areas
Fragmented markets

Social and governmental constraints

 Cost of development Capital shortages

Faster required development time

Shorter product life cycles

New Product Planning/Arrangements

New-product deployment requires specific criteria one company established the following acceptance criteria 1.The product can be introduced within five years. 2. The product would achieve technical or market leadership.

Contd..
3.The product would provide at least 30 percent return on sales and 40 percent on investment. 4. The product has a market potential of at least 15 percent growth rate. 5. Budgeting For New Product Development 6. 3Ms approach

Contd.
7.Each promising idea gets an executive champion 8.Expect some failures 9.Golden Step awards handed out each year 10. 15% rule

Contd
11.New-product managers 12.High-level management committee 13.New product department 14.Stage-gate system Gatekeepers make one of four decisions: Go Kill Hold Recycle

New Product Development Process

Idea Generation Idea Screening Concept Development & Testing Marketing Strategy Business Analysis Product Development Market Testing Commercialization

Idea Generation
Interacting with Others:- i.e sales
representatives,employees,customers,Interm ediaries,Competitors,top management etc

Creativity techniques:Techniques for stimulating creativity in individuals and groups for generating ideas

Idea Screening
Attribute listing and modifying Forced relationships Morphological analysis: Starting with the problem and modifying it. Reverse assumption analysis: Reversing the normal assumptions of the entity

Contd.
New contexts: Take familiar process and put them into new context Mind-mapping: Mapping the thoughts Combining two product concepts and ideas : Cyber Cafs-cafeteria + Internet Kinder Surprise- candy + toy Cereals bars cereal + snacking

Idea Screening
Is the product idea compatible with company objectives, strategies, & resources? Ideas should be written down & reviewed each week by an idea committee. The company then sorts the proposed ideas into three groups: promising ideas, marginal ideas, & reject. In screening ideas, the company must avoid two types of errors. 1. A DROP- error 2. A GO- error

Concept Development & Testing

Product idea can be turn up in many questions. Product concept: Concept gives answer a) Who will buy the product? b) What benefit they will get? c) when they will use? Concept development Category concept Productpositioning map Brand concept

Marketing Strategy
New product manager will develop a preliminary strategy plan like.. Target market Product positioning About sales Market share Profit goals Pricing Distribution Marketing budget, promotion

Business Analysis
Evaluate the proposals business attractiveness Management needs to prepare sales, cost,& profit projections to determine whether they satisfy company objectives. Estimating total sales Estimating costs and profits ( break even analysis, risk analysis)

CONCEPTS OF PRODUCT & BRANDING A product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. Products that are marketed include physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas.

 According to Philip Kotler, A product is a bundle of physical services and symbolic particulars expected to yield satisfactions or benefits to the buyer.
According to W. Alderson, A product is a bundle of utilities consisting of various features and accompanying services.

PRODUCT LEVELS
The most fundamental level is the Core Benefit. The fundamental service or benefit that the customer is really buying. A hotel guest is buying rest and sleep. Marketers must see themselves as benefit providers. At the second level, the marketer has to turn the core benefit into a Basic Product. Thus, a hotel room includes a bed, bathroom, towels, desk, dresser, etc.

 At the third level, the marketer prepares an Expected Product, a set of attributes and conditions that buyers normally expect when they purchase this product. As hotel guest expect a clean bed, fresh towels, working lamps, and a relative degree of peace. At the fourth level, the marketer prepares an Augmented Product that exceeds customer expectations. Thus, a hotel can include a remote control television sets, fresh flowers, rapid check-in, express check-out, and fine dining & room services.

 At the fifth level stands the Potential Product, which encompasses all the possible augmentation and transformation the product might undergo in the future. . For e.g., free tea or coffee with instant tea or coffee maker in the room.

PRODUCT CLASSIFICATIONS 1.On the basis of Durability & Tangibility: a. Non-Durable goods i.e. soaps, snacks, and toothpastes b. Durable goods like Refrigerators, Televisions, clothing, c. Service like Haircuts, repairs,

2.On the basis of Consumer Goods: a. Convenience goods For e.g., Tobacco products, soaps, newspaper. It can be further divided as: Staples Purchased on regular basis Toothpaste & Soaps. Impulse Purchased without any planning or search effort Magazines & Snacks. Emergency Purchased when a need is urgent Umbrellas & Medicines.

b. Shopping goods:-For e.g., Furniture, Clothing, Used cars and major appliances. c.Specialty goods:- For e.g., Cars, stereo components, photographic equipments, and mens suits. d. Unsought goods:-For e.g., Plots, Encyclopedias, etc

3.On the basis of Industrial goods: a.Material and parts They are those goods that enter the manufacturers product completely. They fall into two classes: Raw material Wheat, Cotton, Crude Oil, Iron ore, etc. Manufactured material and parts Cement, Wires, Tyres, small motors.

b. Capital items They are long lasting goods

that facilitate developing or managing the finished product. They include two groups:

Installations Buildings, generators, drill pressures, computers, elevators, etc. Equipments Factory equipments & tools like hand tools, lift trucks, etc.

c. Supplies & business services They are

short lasting goods and services that facilitate developing or managing the finished product. Supplies are of two kinds:
Operating Supplies lubricants, coal, writing paper, pen, pencils, etc. Maintenance & repair items paints, brooms, nails, etc.

 Business services are of two kinds:

Maintenance & repair services Window cleaning, typewriter repair, etc. Business advisory services legal, management consulting, advertising, etc.

PRODUCT MIX
A product mix is the set of all products and items that a particular seller offers for sale. A product mix is also called product assortment.
For example: An enterprise like Hindustan Unilever limited (HUL) manufactures or deals with different varieties of soap, hair oil, toothpaste, toothbrush, shampoos, etc., the group of all these products is called Product Mix.

 According to American Marketing Association, Product Mix is the composite of products offered for sale by a firm or a business unit.

Product Mix is the list of all products offered for sale by a company.

 Product Item It means a specific product of certain specifications, such as Lux soap, Colgate toothpaste, HMT watches, LG televisions, etc.

 Product Line A product line is a group of different product items that are closely related with each other in the sense that they satisfy the needs of a particular class, or sold through the same channel of distribution, or sold to the same group of customers. Toothpaste, watch, TV, scooter, typewriter, etc. is the example of product line. Here, it is appropriate to note that a particular brand of a product is a product item and all the brands of the same product are included in product line.

 It can be concluded that a single product item is called as a Product Item. All the product items of the same group are collectively known as a Product Line and all the product lines manufactured or distributed by an enterprise are collectively known as Product Mix.

 The Width of a product mix refers to how many different product lines the company carries. The above table shows a product mix width of the 5 lines The Length of the product mix refers to the total number of items in the mix. In the above table, it is 20. It can also be the average length of a line. This is obtained by dividing the total length (here 20) by the number of lines (here 5), an average product length is 4.

 The Depth of the product mix refers to how many variants are offered of each product in the line. If closeup comes in 4 sizes and three formulations (red, blue, green), it has a depth of 12.

FACTORS INFLUENCING CHANGE IN PRODUCT MIX

1. 2. 3. 4. 5. 6. 7. Change in Market Demand Competitive Actions & Reactions Production Influence Financial Influence Increase in profits Desire to change the companys image Goodwill of the company

BRAND
Acc. to American Marketing Association, A brand is a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them for those of competitors.

 Acc. to William J. Stanton, All Trade marks are brands and thus include the word, letters or numbers which may be pronounced; they may also include a pictorial design. In essence, a brand identifies the seller. Brand can be name, trademarks, logo or other symbol. For e.g., in case of soaps, we can identify from the brand name like Lux, Breeze Cinthol, Pears, Dove.

 The company can register the brand name so that other producers may not copy its brand. A brand name when registered is called trademark. For e.g., Godrej is a trademark. It is the main name which is used by any company to sell the different products, like Godrej Locks, Godrej soaps, Godrej appliances, etc.

Functions of Branding
It is easy to makes the product identification. A consumer can asked for a product by name instead for description. Customers are assured of the same product with the same quality level. The firm is also identified by the brand name. It helps the consumers to form a brand image.

 Consumer feels less risk when purchasing a brand with which they are familiar. It helps in advertising & packaging activities. It helps to create and sustain brand loyalty to particular products. It helps in price differentiation of products.

 Large number of products even today live in market mainly due to an effective use of brand names, for e.g., Dettol is simply an antiseptic lotion, but the company is being successful in creating an impression in the minds of most of the people that Dettol means antiseptic lotion or antiseptic lotion means Dettol.

Designable qualities of a brand name

It should suggest something about the products benefits or qualities. Easy to pronounce, read, recognize, & remember. It should be distinctive. It should not hold a bad meaning or association in foreign language. Capable of registration & legal protection.

BRAND EQUITY Brand Equity is highly related to how many customers are the brand loyal. Brand Equity refers to a set of assets & liabilities linked to a brand, its name and symbol that add to or subtract from the value provided by a product or service to a firm and or to that firms competitors.

 Acc. to Aaker, Brand equity is related to the degree of brand name, recognition, perceive brand qualities, strong mental & emotional associations and other assets such as trade mark, patent, and channel relationship. Brands vary in the amount of power and value they have in the marketplace. At one extreme there are brands that are not known by most buyers. At other extreme, there are brands for which buyers have a fairly high degree of brand awareness.

Aaker also identify 5 levels of customer attitude towards his/her brand from lowest to highest. Customers will change brands, especially for price reasons. No brand loyalty. Customer is satisfied. No reason to change the brand. Customer is satisfied and would incur costs by changing brand.

 Customer values the brand and sees it as a friend. Customer is devoted to the brand.

many customers are in classes 3, 4, or 5. Thus we can say that brand equity is the result of brand awareness, brand acceptance, brand preference and brand loyalty

Brand Equity is highly related to how

Advantages of Brand Equity

The company will enjoy reduced marketing costs because of consumer brand awareness and loyalty. The company will have increased bargaining power with distributors & retailers because customers expect them to carry the brand. The company can charge a higher price than its competitors because the brand has higher perceived quality.

 The company can more easily launch extensions programs because the brand name carries high credibility. The brand offers the company some defense against price competition.

BRAND CHALLENGES/ DISADVANTAGES Building Brand Equity needs total organization to deliver value. It is expensive. Once Brand is positioned, it is very tough to reposition Managing Brand Equity Branding Challenges Branding Decision: To Brand or Not to Brand?

 Branding poses several challenges to the marketer. The key decisions are as follows 1. Branding Decision: To Brand or Not to Brand?
First decision is whether the company should develop a brand name for its product or not. In the past, most products went unbranded. Producers & intermediaries sold their goods out of barrels, bins, and cases, without any supplier identification. Today, branding is such a strong force that hardly anything goes unbranded. Salt is packaged in distinctive manufacturers containers, and even food products like chicken are being sold under strongly advertised brand names. E.g., KFC

2.Brand-Sponsor Decision: A manufacturer has several options with respect to brand sponsorship. The product may be launched as a manufacturer brand (sometimes called a national brand), a distributor brand (also called reseller, store, house, or private brand), or a licensed brand

name.

3.Brand-Name Decision:Manufacturers and service companies who brand their products must choose which brand names to use. Four strategies are available: Individual names: When a business or industrial enterprise uses different brands for all of its products, it is called individual brand. E.g., All toilet soaps of HUL. Blanket Family names: When a business or industrial enterprise uses a single brand for all its products and for all the segments of its market, it is known as blanket family names. E.g., Bajaj

 Separate family names: When a business or industrial enterprise uses different brand for different product lines is called separate family names for all products. Company-Individual names: Some manufacturers tie their company name to an individual brand for each product. E.g., Kellogg (Kelloggs Rice Krispies, and Kelloggs Corn Flakes).

4.Brand-Strategy Decision: A company has 5 choices when it comes to brand strategy as follows: Line Extensions: It consist of introducing additional items in the same product category under the same brand name such as new flavors, forms, colors, added ingredients, and package sizes. E.g., Diet Coke, Pepsi My Can.

 Brand Extensions: A company may use its existing brand name to launch new products in other categories. Honda uses its company name to cover such different products as automobiles, motorcycles, marine engines, etc. (Also Tata) Multibrands: A company will often introduce additional brand in the same product category. Sometimes the company is trying to establish different features or appeal to different buying motives. Thus, Procter & Gamble produces nine different brands of detergents

 New Brands: When a company launches product in a new category, it may find that none of its current brand names are appropriate. If Timex decides to make toothbrushes, it is not likely to call them Times toothbrushes. Co-brands: A rising phenomenon is the emergence of co-branding (also called dual branding), in which two or more well-known brand are combined in an offer. E.g., Association of any bank with any organization for its credit cards like petro card, visa master card.

5.Brand Repositioning Decision Brand repositioning decision includes the decision regarding the company should reposition the brand or not. The company may reposition the currently positioned brand later when facing new competitors, or changing customer preferences.

BRAND REPOSITIONING
Brand repositioning strategy involves altering & changing a brand position. Repositioning of a product or brand usually occurs because of decline or anticipated opportunities in other market segments. It consists of efforts to change customers perception of a product may be in order when marketers discover that the product appeals to other market segments. Other circumstances may be the change in tastes & preferences of customers or a successful new competitive product in the market.

 E.g. of 7-Up 7-Up was one of several

soft drinks bought primarily by older people who wanted a ordinary, lemon-flavored drink. 7-Up went for leadership in the noncola market by calling itself the Uncola. 7Up established itself as the alternative to colas, not just another soft drink.

 E.g. of Maruti Omni Van The Maruti experienced many ups & downs Maruti Van was given the name as Maruti Omni to give it a distinct brand image. The advertisement projected it as the most specialist car on the road as an all-in-one family car. The businessman could use it to transport goods & also for family. Thus the positioning was based on certain benefits & application to the user.

PRODUCT LIFE CYCLE

Every product passes through certain different or distinct stages, during its life span. According to Philip Kotler, The product life cycle is an attempt to recognize distinct stages in the sales history of the product. According to William J. Stanton, From its birth to death, a product exists in different stage and in different competitive environments. Its adjustment to these environments determines to a great degree that how successful its life will be

 According to Arch Patton, The life cycle of a product has many points of similarity with the human life cycle; the product is born, grows lustily, attains dynamic maturity, then enters its declining years.

Stages of Product Life Cycle

1.Introduction Stage At this stage, product enters into the market for the first time. The business has to spend lot of money on the advertising and its distribution as the buyers are unaware of the product. In launching a new product, marketing manager can set a high or a low price & promotion strategy, which are as follows:a. Rapid Skimming:-high price and a high promotion level b. Slow Skimming:-high price and low promotion c. Rapid Penetration:-low price and high promotion d. Slow penetration:- low price low promotion

2.Growth Stage Once the product crosses the introduction stage, it enters the growth stage. In this stage, both sales & profits will begin to increase as promotion costs are spread over a larger volume.
The firm uses several strategies to sustain rapid market growth as long as possible are as under: It improves product quality and adds new product features and improved styling. It adds new models of products, i.e., products of different sizes, flavors, etc., that protect the main product.

 It enters into new market segments. It increases its distribution coverage and enters new distribution channels. It shifts from product-awareness advertising to product-preference advertising. It lowers prices to attract the next layer of price sensitive buyers.

 3.Maturity Stage This stage is

characterized by slowing of growth rates of sales & profits. In fact, a decline in profits seems to appear now. The number of buyers will continue to grow, but more slowly due to cut throat competition, which often tends to narrow down to a price and promotion war. E.g., Automobile companies cars & motorcycle.

 Decline Stage This is the stage when sales decline because of technological advances, change in customer preferences in favor of more efficient and better products. The competition becomes more severe and generally the business now has limited product versions available to the customers.

Why changes occur in the Product Life Cycle

Changing Customer Needs The most fundamental of all the environmental factors is the customers needs that shape the product life cycle over a period of time. Better & more efficient product Today technology offers phenomenal opportunities to firms to develop more user friendly, low prices and attractive looking products which affects the product life cycle.

Utility of Product Life Cycle

Forecasting tool Planning tool Control tool Development of new products