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The marketing conceptrests on four pillars: target market, customer needs, integrated marketing andprofitability.Distinctions between the Sales Concept and the Marketing Concept: The Sa
Advertising forces people to buy goods that they do not want MARKETING MANAGEMENT Answer any FIVE questions All questions carry equal marks 1 Explain the following: (a) Production concept (b) Product line (c) Augmented product (d) Social marketing concept 2 Explain various concepts of marketing with suitable examples 3 Explain market segmentation with suitable examples 4 “PLC as a tool for marketing strategy" justify 5 Explain process of selecting the final price 6 “Advertising forces people to buy goods that they do not want" Elucidate 7 Explain the process of integrated Marketing communication 8 Explain “direct marketing" and its applicability with examples CONTENT 1 Answer No1 The Product Concept: This orientation holds that consumers will favor those products that offer the most quality, performance, or innovative features Managers focusing on this concept concentrate on making superior products and improving them over time They assume that buyers admire well-made products and can appraise quality and performance However, these managers are sometimes caught up in a love affair with their product and do not realize what the market needs Management might commit the “better-mousetrap” fallacy, believing that a better mousetrap will lead people to beat a path to its door The Selling Concept: This is another common business orientation It holds that consumers and businesses, if left alone, will ordinarily not buy enough of the selling company’s products The organization must, therefore, undertake an aggressive selling and promotion effort This concept assumes that consumers typically show buying inertia or resistance and must be coaxed into buying It also assumes that the company has a whole battery of effective selling and promotional tools to stimulate more buying Most firms practice the selling concept when they have overcapacity Their aim is to sell what they make rather than make what the market wants The Marketing Concept: This is a business philosophy that challenges the above three business orientations Its central tenets crystallized in the 1950s It holds that the key to achieving its organizational goals (goals of the selling company) consists of the company being more effective than competitors in creating, delivering, and communicating customer value to its selected target customers The marketing concept rests on four pillars: target market, customer needs, integrated marketing and profitability Distinctions between the Sales Concept and the Marketing Concept: The Sales Concept focuses on the needs of the seller The Marketing Concept focuses on the needs of the buyer The Sales Concept is preoccupied with the seller’s need to convert his/her product into cash The Marketing Concept is preoccupied with the idea of satisfying the needs of the customer by means of the product as a solution to the customer’s problem (needs) The Marketing Concept represents the major change in today’s company orientation that provides the foundation to achieve competitive advantage This philosophy is the foundation of consultative selling The Marketing Concept has evolved into a fifth and more refined company orientation: The Societal Marketing Concept This concept is more theoretical and will undoubtedly influence future forms of marketing and selling approaches The Societal Marketing Concept: This concept holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors (this is the original Marketing Concept) Additionally, it holds that this all must be done in a way that preserves or enhances the consumer’s and the society’s well-being This orientation arose as some questioned whether the Marketing Concept is an appropriate philosophy in an age of environmental deterioration, resource shortages, explosive population growth, world hunger and poverty, and neglected social services Are companies that do an excellent job of satisfying consumer wants necessarily acting in the best long-run interests of consumers and society? The marketing concept possibily sidesteps the potential conflicts among consumer wants, consumer interests, and long-run societal welfare Just consider: The fast-food hamburger industry offers tasty buty unhealthy food The hamburgers have a high fat content, and the restaurants promote fries and pies, two products high in starch and fat The products are wrapped in convenient packaging, which leads to much waste In satisfying consumer wants, these restaurants may be hurting consumer health and causing environmental problems 2 Answer No3 Definition: According to Philip Kotler:” Market segmentation is the subdividing of market into homogenous sub set of customers, where any subnet may conceivably be selected as market target to be reached with distinct marketing mix Benefits of Market segmentation o Meeting different customer needs o Enhanced profits for business: customers have different disposable incomes and vary in how sensitive they are to price Thereupon businesses can raise average prices o Better opportunities for growth: Market segmentation can build sales o Retain more customers: business can retain customers who might otherwise switch to competing products and brands with customer at different stages of their life Four segment a market by: o Demographics: uses various population measures including age, gender, income, ethnic background, education, and occupation as the basis for dividing people into specific markets Demographic segmentation easy to measure and is widely used Example: Segmenting your market by age as Amul has segmented their product in different age group, for kids: Amul kool, chocolate milk, Nutramul energy drink, for youth: Amul cool kafe While the target market for a given product can include females and males, Emami has segmented their product in gender For Women’s: Naturally fair For Men: Fair and handsome When companies develop pricing strategies for their brands and products, they consider the income levels of their target markets For example, designers such as Zac Posen and Isaac Mizrahi have created affordable clothing and accessories, sold at Target, to reach customers who cannot afford their high-end, more expensive lines o Psychographics: Psychographics segmentation divides the market into group base on social class, lifestyle and personality characteristics It is based on the assumption that the types of products and brands an individual purchases will reflect that persons characteristics and patterns of living Example: You operate a cruise line You currently have a fleet of three cruise ships that are in the process of being renovated You decide to segment your market into customers who want luxury, customers who want more shore excursions and customers who want a more family-friendly cruise experience You renovate each cruise ship and its itineraries to meet the needs of each market segment and advertise each ship accordingly o Geographical: This is the most common form of market segmentation, wherein companies segment the market by attacking a restricted Geographic area Potential customers are in a local, state, regional or national market place segment If a firm selling a product such as farm equipment, geographic location will remain a major factor in segmenting your target markets since their customer are located in particular rural areas Example: Certain foods have very specific geographic interest in the U.S Grits, for instance, are common in the South and Southeast regions Seafood, while enjoyed elsewhere, is marketed more heavily along the east and west coasts, where supply is fresh all year McDonald's offers seasonal seafood meals, including lobster and crab, in select markets like New England This is an example of regional segmentation based on geographic consumer preferences and product availability Small chains may find similar opportunities to achieve supply and demand advantages in select geographic markets o Behavior: behavior segmentation is possibly the most useful way to segment the market as it is based on consumers’ knowledge of, attitude towards, uses for, and response to a product (Kotler) After all, marketing is about finding out what people need and want and then developing a product that satisfies those needs Some behavior variables include: Benefit sought Usage rate Brand loyalty Use status: potential, first-time, regular, etc Readiness to buy Occasions: holidays and events that simulate purchase Summary: A product segment is a subdivision of a market Marketers can segment markets and then focus on marketing to the unique characteristics, needs and wants of each market segment Market segments can be based upon demographic, psychographic, geographic and behavior characteristics 3 Answer No5 Define price: Price is simply the value you give in exchange for a product or service Price is not static; it can change depending on the circumstances Things such as regulatory requirements, competition, consumer reaction, and your overall objectives and strategy for increasing sales will affect your pricing Pricing Objectives Pricing objectives are aligned with the company's overall goals Let's take a quick look at some pricing objectives (structures) o Competitive pricing is just matching the price of your product with the price set by the industry leader Since prices will be about the same, you will focus on other product attributes to differentiate your product, such as quality and customer service o Prestige pricing involves pricing your product high so that only wealthier customers can afford it You attempt to use the high price and limited availability to enhance your product's image, causing the product to be viewed as a status symbol A classic prestige product is a Rolex watch or Bentley o Profitability pricing is designed to maximize your profit The formula to achieve this is profits = revenue - expenses (P = R - E) You have to monitor price and volume of sales carefully, as setting the price too high will reduce sales volume, resulting in lower profits If you have a large market share, this is a viable option It can be argued that oil exporting countries use this technique o Volume pricing is when you forgo the highest price possible in exchange for sales volume with a particular customer You anticipate that increases in sales volume will more than make up for the lower profit margins Volume purchases also increase customer loyalty and reinforce your name, as the product is used longer Volume pricing is common in industrial transactions For example, you may order tens of thousands of screws at a deep discount or order hundreds of tons of refined iron to manufacture steel Pricing Strategies: Pricing strategy refers to method companies use to price their products or services Almost all companies, large or small, base the price of their products and services on production, labor and advertising expenses and then add on a certain percentage so they can make a profit There are several different pricing strategies, such as penetration pricing, price skimming, discount pricing, product life cycle pricing and even competitive pricing Pricing strategies are designed to achieve more specific goals on a one-off basis Let's take a look at some strategies o Penetration pricing is a strategy where you aggressively price your product substantially lower than competitor products with the objective of quickly obtaining a large market share This strategy is often employed when a company enters a new market Once the market share objective and customer loyalty has been established, the price may be gradually increased o Price skimming is a strategy where the product price changes during the product's life cycle The price is set high during product introduction to capture early adopters who are willing to pay higher prices The price will be reduced during the growth and maturity stages to capture the typical consumer The price will be reduced a third time during the product's decline to capture discount shoppers before the product is eventually taken off the market o Competitive pricing can be used as a strategy by analyzing a competitor's changes in price to determine the appropriate action to take It's important to determine why your competitor has increased or decreased its prices Is there an increase in price because of a shortage of product, a technological innovation, or because the company is desperate for revenue? For example, one competitive technique used is price shadowing Let's say that most of your competitors have increased their prices for smart phones In price shadowing, you wait to increase your price so you can attract customers who don't want to pay the increased prices o Product Life Cycle Pricing: All products have a life span, called product life cycle A product gradually progresses through different stages in the cycle: introduction, growth, maturity and decline stages During the growth stage, when sales are booming, a small company usually will keep prices higher For example, if the company's product is unique or of higher quality than competitive products, customers will likely pay the higher price A company that prices its products high in the growth stage also may have a new technology that is in high demand Summary: A price is simply the value a customer gives a seller in exchange for a product or service Businesses employ different pricing structures to achieve different strategies Common pricing structures include competitive pricing, prestige pricing, profitability pricing, and volume pricing Pricing strategies include penetration pricing, which is an attempt to enter a market and quickly gain market share Price skimming is employed to maximize profits during each stage of the product's life cycle Competitive pricing is employed to increase or decrease prices in accordance with your competition if your analysis indicates it's appropriate 4 Answer No7 Have you ever received mixed messages from someone before - one day they act like they're your best friend and the next day they ignore you? Sometimes this confusing communication pattern can also happen in a marketing environment One television ad might focus on product quality, and then a radio ad might push how the product is the cheapest on the market A marketing communication message should be integrated, which means that the message reaching the consumer should be the same even if it's from a television ad, magazine article, coupon or social media site All four elements of the promotional mix (advertising, public relations, personal selling and sales promotion) should focus on a similar message Most companies have realized how important it is to have a cohesive marketing communication plan and have adopted an IMC or integrated marketing communications plan This plan is a coordination of all promotional messages for a product or service to ensure consistency at every customer contact point A candy company called Sugar Rush Candy has established a central theme for their marketing communication message Each component of their promotional mix focuses on how Sugar Rush's candy delivers a bolt of energy without caffeine They are now in the review phase of the promotional plan and need to make sure that each part is fully integrated into a cohesive IMC IMC Plan - Advertising o All integrated marketing communication plans must start out with a cohesive advertising plan For Sugar Rush Candy, all aspects of the promotional message revolve around Bolt Candy's extra sugar dose and the fact that it can help with giving consumers more energy throughout the day The product itself has packaging that is orange and yellow which features a battery being filled up with energy The product also states that by eating the candy it will make your day more productive o This message is featured prominently in the advertising examples For instance, the television ad shows a person struggling through their day The consumer eats some Bolt Candy; it refills their internal energy battery, and they are able to finish their work day with success Radio ads also feature a cartoon voice saying over and over again how Bolt will give a person a battery-refill of energy A giant billboard ad near the local bridge continues the same message by featuring an enormous battery that is animated The battery fills up with energy as the person pours Bolt Candy into their mouth o Integrated plans are even more successful and easier to create nowadays due to the tremendous number of options for promotional messages, such as the Internet, social media and alternative advertising methods such as e-mail blasts The 'battery-full' message must be continued throughout the entire promotional mix IMC Plan - Public Relations The public relations plan for Bolt is also focused on the energy-inducing experience The public relations team concentrates on promoting the non- caffeine energy boost to the media in order to get good, free coverage on local news The message is consistent in that the candy is better for consumers than coffee or energy drinks The team also sponsors local teen hangouts and charity events where Bolt T-shirts (with the full battery logo) are given out for free IMC Plan - Sales Promotion The integrated marketing communications plan, which also contains a sales promotion element, focuses short-term sales efforts with the same promotional message The store displays feature a large battery with Bolt candy filling up different cartoon characters with energy Bolt product coupons reflect the same image and sweepstakes revolve around winning different adventure challenge trips that will include free Bolt candy to allow the winner to have the energy to enjoy their prize IMC Plan - Personal Selling Even the Bolt sales team is instructed to focus their sales message on an energy increase without caffeine The sales team explains to retailers that their product is better than the competition because not only does the candy taste great, but it also delivers a Bolt of energy This key promotional message continues with the sales force showing how the entire campaign (sales promotion, advertising and public relations) all concentrate on one integrated marketing communication plan Summary: In this day and age, a marketing manager must create not just a promotional mix, but an integrated marketing communications plan This plan is a coordination of all promotional messages for a product or service to ensure consistency at every customer contact point The product's promotional message should be consistent and create an overall integrated theme 5 Answer No8 Direct marketing is just what it sounds like - directly reaching a market (customers and potential customers) on a personal (phone calls, private mailings) basis, or mass- media basis (infomercials, magazine ads, etc.) Direct marketing is often distinguished by aggressive tactics that attempt to reach new customers usually by means of unsolicited direct communications But it can also reach out to existing or past customers A key factor in direct marketing is a "call to action." That is, direct marketing campaigns should offer an incentive or enticing message to get consumers to respond (act) Direct marketing involves the business attempting to locate, contact, offer, and make incentive-based information available to consumers Benefit of direct marketing Buyers o Convenient o Easy to use o Private o Access to a wealth of information o Immediate Sellers o Building relationships o Targeting of small groups or individuals with customized offers in a personalized fashion o Access to buyers that couldn’t be reached via other channels o Low-cost, effective alternative for reaching specific markets Types of Direct Marketing: Three main types of direct marketing include: Telemarketing: Direct marketing that involves calling people at home or work to ask for donations, an opinion, or for sales purposes Telemarketing is a direct marketing sales technique that has the advantage of speed in a marketing campaign When you are a conducting a telephone solicitation you should first introduce yourself then offer an incentive in solving a problem that you know exists (to do this would require you to do some research on the business or what individuals would be looking for in your product) Ask question that you know will lead to a yes answer (keep prospects on phone answering yes to your questions) Describe your product or service and how it solves the client's needs Ask if they have any questions You now can ask for a face to face meeting, or to get permission to send information via mail or e-mail, or make another brief follow-up call If unavailable, ask what would be a good time to call back Email Direct Marketing: The most common medium today for direct marketers is e-mail because of its low cost, and because customer responses can be generated rapidly You must understand that the internet is a different medium The copy that worked for you in postal mail will not on the internet, not as e-mail In e-mail copywriting, the subject is the headline, you must write succinct headline-3 to 5 words Your subject determines whether your e-mail gets read or not Next, make it personal People on the internet want personal notes Next, get to the point keep it short and simple Next, give them an incentive to act by giving them a reason to buy now Next, include a call to action to tell people what you want them to do Don't leave them wondering what to do next Next, drive people to your web site (don't try to close the sale in the e-mail) Next, build relationship with your clients Listen to their want and needs Treat your clients like you would treat yourself Next, you must follow through on your promises that you made to your client Do what you said you were going to do Direct Mail Marketing: One of the most commonly used mediums in direct marketing is direct mail Direct mail allows you to design marketing pieces in many different formats Direct mail can include envelope mailers, catalogues, self-mailers, snap mailers, dimensional mailers, brochures, and postcards When you write your direct mail piece make sure you know your target market, and how you are going to appeal to their wants and needs Write your objective and refer to it often Don't lose sight of where you want to go with the piece that you are writing You can purchase a mailing list of businesses and services in your target market from a list company, or you can develop your own list by gathering email addresses on your web site