Marketing Notes

Introduction to Services
Services Characteristics V/s Goods

Goods Services Resulting implications
Tangible Intangible - Services cannot be inventoried.

- Patented.
- Readily displayed or communicated.
- Pricing is difficult.
Standardized Heterogeneous - Service delivery and customer satisfaction

depend on employee actions.
- Service quality depends on uncontrollable
factors
Production Simultaneous production - Customers & employees affect

the service
separate from and consumption outcome.
consumption
Nonperishable Perishable - Difficult to synchronize supply

and demand with services.
- Services cannot be returned or resold.
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The services triangle and technology
Company
Internal Marketing
External Marketing
Enabling promises
Making promises
Technology
Providers Customers
Interactive Marketing
Keeping promises
Expanded Marketing Mix For Services
Product Place Promotion Price
Physical good features Channel type - Promotion blend Flexibility

Quality level Exposure - Salespeople Price level
Accessories Intermediaries Number Terms
Packaging Outlet locations Selection
Differentiation
Training
Warranties Transportation Incentives
Discounts
Product lines Storage - Advertising Allowance
Branding Managing channels Targets
Media types
Types of ads
Copy thrust
- Sales promotion
- Publicity

People Physical evidence Process
- Employees Facility design - Flow of activities

Recruiting Equipment
Standardized
Training Signage Customized
Motivation Employees dress - Number of steps
Rewards - Other tangibles Simple
Teamwork Reports Complex
- Customers Business cards - Customer involvement
Education Statements
Training Guarantees
Consumer Behaviour in Services

Continuum of evaluation for different types of products
Most goods Most services

Difficult to
Easy to evaluate
evaluate
High in search qualities High in experience qualities High in credence qualities
Consumer decision making and evaluation of

services
Information Search
Evaluation of Alternatives
• Use of personal sources • Evoked set smaller
• Perceived risk high
Culture
• Language
• Values and customs
• Material culture * Aesthetics
Purchase and Consumption Postpurchase Evaluation

• Attribution of dissatisfaction to
• Emotion & mood self & less complaints
• Service provision as drama
• Service roles and expected scripts
• Innovation diffusion slow
• Compatibility of customers • Brand loyalty high due to more
search costs

DISTRIBUTION
DISTRIBUTION
A COMPANY LAUNCHING A PRODUCT NEEDS

1. SALES CHANNEL (TALKING ABOUT PRODUCT)
2. DELIVERY CHANNEL (HOME DELIVERY, INSTALLATION)
3. SERVICE CHANNEL
THE 3 NEED NOT BE SAME.

Marketing Channels
M C M C
M D C
C M
M C
C M
No. of contracts = 3
No of contracts = 9
Marketing Channels
∞ customer marketing channels
Manufacturer Consumer
Eureka Forbes
Manufacturer Retailer Consumer
Medicines
Manufacturer Retailer Consumer

Wholesaler
Bombay Dyeing

Marketing Channels
∞ Industrial marketing channels
Manufacturer Industrial
Consumer
ABB
Manufacturer Industrial Industrial

distributor Consumer
Bombay Dyeing
Industrial Industrial
Manufacturer Manufacturer’s
distributor Consumer
sales branch
Car spares
CHANNEL LEVELS
EACH INTERMEDIARY WHO BRINGS PRODUCT AND ITS TITLE

CLOSER TO BUYER CONSITUTES CHANNEL LEVEL.
• ZERO CHANNEL - Door to door home parties, mail order,
telemarketing, TV selling, manufacture stores.
• ONE LEVEL
• TWO LEVEL
• THREE LEVEL

CHANNEL DESIGN DECISIONS
Decide what is ideal, feasible, available
I. CHANNEL DESIGN IN TUNE WITH MARKETING OBJECTIVES.
II. CUSTOMER’S DESIRED SERVICE OUTPUT LEVELS - Eg.
CONVENIENCE, FASTER SERVICE, PRODUCT VARIETY, SMALL
LOT SIZE ETC.
ESTABLISH CHANNEL CONSTRAINTS
A. PRODUCT CHARACTERISTICS - PERISHABLE, NON-
STANDARDISED, BULKY.
B. S/W OF DIFFERENT INTERMEDIARIES
C. COMPETITORS CHANNEL
D. COMPANY’S STRENGTH & RESOURCES.
E. ENVIRONMENTAL CONDITIONS - Eg. IN RECESSION, SHORTER
CHANNEL & WITHOUT NON-ESSENTIAL SERVICES.
IDENTIFYING MAJOR CHANNEL ALTERNATIVES
A. TYPES OF INTERMEDIARIES - Eg. CELL PHONES. SEARCH FOR

INNOVATIVE CHANNEL BECAUSE LESS DOMINANCE.
B. NO. OF INTERMEDIARIES - EXCLUSIVE V/S SELECTIVE V/S
INTENSIVE.
C. TERMS & RESPONSIBILITIES OF CHANNEL MEMBERS - E.g.
TERRITORIAL RIGHTS, MUTUAL SERVICES & RESPONSIBILITIES.
(Franchisees)

EVALUATING CHANNEL ALTERNATIVES
I. ECONOMIC - AGENT FOR SMALLER FIRMS, LOW VOLUME

TERRITORIES.
II. CONTROL - LESS ON AGENT.
III. ADAPTIVE
CHANNEL MANAGEMENT DECISIONS
I. SELECTING CHANNEL MEMBERS - NO. OF YEARS, OTHER LINES

CARRIED, REPUTATION, CO-OPERATIVENESS, GROWTH AND
PROFIT RECORD.
II. MOTIVATING - THROUGH TRAINING, SUPERVISION & SHARING
INFORMATION. - Using power (coercive,reward, legitimate,
expert & referent power) to get co-operation.
III. EVALUATING CHANNEL MEMBERS.
IV. MODIFYING CHANNEL ARRANGEMENTS.
V. MANAGING CHANNEL CONFLICT

Channel dynamics
• A conventional marketing channel comprises an
independent producer, wholesaler(s), and retailer(s).
Each is a separate business entity seeking to
maximize its own profits,even if this goal reduces
profit for the system as a whole.
• A vertical marketing system (VMS), by contrast,

comprises the producer, wholesaler(s), and retailer(s)
acting as a unified system. One channel member
owns the others or franchises them or has so much
power that they all cooperate. The vertical marketing
system can be dominated by the producer, the
wholesaler, or the retailer.
1. Corporate VMS - combines successive stages of

product & distribution under single ownership.
I.e. vertical integration.
2. Administered VMS - Co-ordinates successive

stages of production & distribution through size & power
of one of the members . E.g. HLL commands high level
of cooperation from reseller in terms of shelf-space,
displays etc.
3. Contractual VMS - consists of independent firms

at different levels of production and distribution
integrating their programs on a contractual basis to
obtain more economies and /or sales impact than they
could achieve alone.
E.g. retailer co-operative, franchise organizations.

I. Horizontal Marketing Systems - In which two or
more unrelated companies put together resources or
programs to exploit on emerging marketing opportunity (
called symbiotic marketing). E.g. SBI & Management.
III. Multichannel Marketing Systems - Occurs when a

single firm uses two or more customer segment.
Channel Conflict
• Types of conflict
1. Vertical channel conflict
2. Horizontal channel conflict
3. Multichannel conflict

Causes of channel conflict
• Goal incompatibility - dealers want short-term profits
while company wants long-term customer
satisfaction.
• Unclear roles & rights.
• Differences in perception - of market, customer

needs, economic outlook / e.g. company optimistic,
deal pessimistic).
• Intermediaries great dependence on manufacturer.
Why are marketing intermediaries used &

why not direct marketing
• Lack of financial resources for direct marketing.
• Not feasible / practical.
• Channel members add time, place, possession, form
utility. Thus it is not whether various channel functions
need to be performed but rather who is to perform them.
• Key Functions
– Information
– Promotion
– Ordering
– Financing
– Risk taking
– Physical possession
– Payment
– Title

PRICING
PRICING
I. CONSISTENT WITH TARGET MARKET & POSITIONING

A) PRICE - DETERMINED BY OBJECTIVES - SURVIVAL, PROFIT OR
MARKET SHARE OR SIGNALLING LEADERSHIP.
B) METHOD - COST BASED V/S CUSTOMER BASED V/S
COMPETITOR BASED.
C) UNDERSTAND CUSTOMER PRICE SENSITIVITY (PRICE
ELASTICITY OF DEMAND)
D) OTHER FACTORS

Setting the Price
Selecting the pricing objective
Determining demand
Estimating Costs
Analyzing competitor’s costs, prices and offers
Selecting a pricing method
Selecting the final price
6 MAJOR PRICING OBJECTIVES
• SURVIVAL
• MAXIMUM CURRENT PROFIT
• MAXIMUM CURRENT REVENUE
• MAXIMUM SALES GROWTH
• MAXIMUM MARKET SKIMMIMG
• PRODUCT QUALITY LEADERSHIP
• ANY OTHER - SOCIAL OBLIGATIONS ETC.

Selecting the Pricing Method
• Markup pricing
• Target return pricing
• Perceived value pricing
• Value pricing
• Going rate pricing
• Sealed bid pricing
Selecting the Final Price

• Psychological pricing
• Influence of other marketing mix elements on

price
• Company pricing policy
• Impact of price on other parties

Adapting the Price
I. Geographical pricing
II. Pricing discounts & allowance
III. Promotional pricing
IV. Discriminatory pricing
V. Product mix pricing
Adapting the Price
I. Geographical pricing
II. Price Discounts & allowances - Cash discounts,

Quantity discounts, functional discounts,
seasonal discounts, allowances.

Adapting the price
III. Promotional Pricing
1. Loss leader pricing

2. Special event pricing
3. Low interest financing
4. Larger payment terms
5. Warrantees & service contract
6. Psychological discounting - e.g. Rs. 1000/- earlier
now Rs. 800.
7. Rebates
IV. Discriminatory Pricing
1. Customer segments
2. Product form
3. Image
4. Location
5. Time - e.g. Where yield is important.
V. Product mix pricing
1. Product line pricing

2. Optional feature pricing
3. Captive product pricing
4. Two parts pricing - (Fixed + Variable)
e.g. telephone operators
5. Byproduct pricing
6. Product bundling pricing

PRICING TERMINOLOGY
VALUE PRICING - GIVING MORE VALUE IN RELATIONSHIP TO

PRICE PAID.
PENETRATION PRICING - CHARGING LOWER PRICE TO GAIN
MARKET SHARE.
SKIMMING PRICING - CHARGING AS HIGH AS POSSIBLE TO GET
FIRST LAYER OF CUSTOMERS AND THEN PROGRESSIVELY LOOK
DOWNWARDS.
TARGET COSTING - DETERMINE PRICE AT WHICH PRODUCT
MUST SELL GIVEN ITS APPEAL AND COMPETITION AND THEN
WORK BACKWARDS.
PENETRATION SKIMMING
1. WHEN PROFITS POSSIBLE 1. HIGH PRICE-PERCEIVED

THROUGH VOLUMES QUALITY RELATIONSHIP
2. PRICE-SENSITIVE MARKET 2. PRICE INSENSITIVITY
3. HIGH COMPETITION 3. COMPETITION IMMINENT
4. COST IS MORE FIXED 4. COST IS MORE VARIABLE
THAN VARIABLE THAN FIXED.

MEASURING PERCEIVED VALUE
I. PV > PRICE > V COST

MAY BE DELIBERATE
II. PRICE > PV > VC
REDUCE PRICE OR INCREASE PERCEIVED VALUE
III. PRICE > VC > PV
FAILURE SCENARIO
IV. OPTIMAL IS PRICE = PV > VC
METHODS FOR CALCULATING PERCEIVED VALUE
1. DIRECT PRICE RATING METHOD

WHAT PRICE WILL YOU PAY FOR C IF A IS RS. 90/-
2. DIRECT PERCEIVED VALUE RATING METHOD
GIVE MARKS OUT OF 100 TO A B C. IF PRICE OF A IS 90.
WHAT SHOULD BE PRICE OF C.
3. DIAGNOSTIC METHOD
PRODUCT
ATTRIBUTES IMP A B C

METHODS FOR CALCULATING PERCEIVED VALUE
4. ECONOMIC VALUE TO CUSTOMER

REFERENCE NEW NEW
PRODUCT A PRODUCT Y PRODUCT Z
(SAME AS X) WITH INCRE-
MENTAL
FEATURES
PURCHASE PRICE 300 600* 700*
STARTUP COSTS 200 100 200
POST PURCHASE COSTS 500 300 400
1000 1000 1300
ESTIMATING PRICE SENSITIVITY
NAGLE HAS IDENTIFIED FOLLOWING FACTORS FOR LESS SENSITIVITY

1. UNIQUE VALUE EFFECT
2. SUBSTITUTION AWARENESS
3. DIFFICULT COMPARISION Eg. CARPETS, DOCTORS
4. TOTAL EXPENDITURE EFFECT (VIS-A-VIS INCOME) Eg. SALT
5. END COST EFFECT - PRODUCT SMALL PART OF END PRODUCT
6. SHARED COST EFFECT
7. SUNK INVESTMENT - PRODUCT USED IN CONJUNCTION WITH
ASSETS PREVIOUSLY BOUGHT
8. PRICE - QUALITY EFFECT
9. INVENTORY EFFECT - CANNOT STORE PRODUCT
IF DEMAND ELASTIC, LOWER PRICE

OTHER FACTORS
1. PRICE AS INDICATOR OF QUALITY

2. BUYERS HAVE REFERENCING PRICING IN MIND - FAIR PRICE, PRICE
BANDWIDTH.
3. PSYCHOLOGICAL PRICING BARRIER
4. ODD END PRICING SHOULD BE AVOIDED IF HIGH PRICE IMAGE
IMPORTANT.
5. HOW IMPORTANT IS PRICE TO INDIA IN PURCHASE DECISION_-
JUST ASKING CUSTOMERS THROUGH SURVEYS IS NOT ENOUGH
(CONJOINT ANALYSIS BETTER).
INITIATING PRICE CHANGES
INITIATING PRICE CUT INITIATING PRICE INCREASE
REASONS REASONS
1. Excess capacity 1. Expected improved profitability
- Might trigger a price war 2. Cost Inflation
2. Declining market share 3. Overdemand
3. Drive to dominate through lower costs
Risks
- Low Quality trap
- Fragile Market Share trap. Buyer
loyalty is not ensured
- Shallow pocket trap. Reserves are less.
Staying power is less.
4. Economic recession

BETTER METHOD THAN INCREASING PRICE (ESPECIALLY
PRICE SENSITIVE MARKET)
1. Shrink amount of product

2. Substitute less expensive materials
3. Reduce or remove product features / services
4. Less expensive packaging or promoting larger pack sizes.
5. Reducing number of models / sizes
6. Creating new economic brands
REACTIONS TO PRICE CHANGES
CUSTOMER’S REACTIONS COMPETITOR’S REACTIONS
TO PRICE CUT Competitor will react when few firms, product

homogeneous, buyers highly informed. It is
1. Product might be faulty
important to estimate the competitor’s likely
2. Not selling well reactions before affecting a price change.
3. Financial trouble. Company may go The factors to be considered are :
out of business.
1. Competitor’s Financial Position
4. Prices may fall further. Hence wait.
2. Competitor’s Sales and Capacity, Customer loyalty
5. Quality is reduced
3. Competitor’s Corporate Objectives
6. New model
• Market Share - Likely to match p/c
TO PRICE INCREASE
• Profit Maximisation - Likely to improve Quality &
1. Item is hot Sales Efforts
2. Item has good value 4. Customer Loyalty
3. Seller is greedy

RESPONDING TO COMPETITOR’S PRICE CHANGES
Analyse the problem on the following lines:

• Why was the price reduced?
• Is it permanent?
• How are other competitors likely to respond?
• What will happen to company’s market share and profits if it does not respond?
Response varies with situation - importance of product in Co’s portfolio, stage of PLC, markets
price sensitivity, behaviour of costs with volume. It is better to anticipate than to react.
Homogeneous-product Market Nonhomogeneous product Market Factors
• Little choice but to match price cut

• However, price increase need not be Price Quality Realiability Service
matched. Ultimately competitors will Strength of these factors may desensitize buyers to
be forced to reduce. price changes
RESPONDING TO COMPETITOR’S PRICE CHANGES
Reactions:
1. Maintain Price when -
• Not likely to lose market share
• Might regain market later
2. Raise perceived quality
3. Reduce Price when -
Costs fall with volume
Market is price sensitive
Difficult to rebuild market share later
4. Launch lower price fighter line

PRICE-REACTION PROGRAM FOR MEETING A COMPETITOR’S
PRICE CUT
HAS COMPETITOR NO HOLD THE PRICE AT PRESENT

CUT HIS PRICE? LEVEL…CONTINUE TO WATCH
COMPETITOR’S PRICE.
YES
NO NO
IS THE PRICE LIKELY IS IT LIKELY TO BE HOW MUCH HAS THE

TO HURT PRESENT PERMANENT PRICE PRICE BEEN CUT?
SALES? YES CUT? YES
BY < 2% BY 2-4% DROP BY > 4%

INCLUDE PRICE BY HALF OF DROP PRICE TO
DISCOUNT COUPON THE COMPETITOR’S COMPETITOR’S
FOR THE NEXT PRICE CUT PRICE
PURCHASE

INTRODUCTION TO INTEGRATED
MARKETING COMMUNICATIONS
And Yet Another… by AAAA

… a concept of marketing
communications planning that
recognizes the added value of a
comprehensive plan that evaluates the
strategic roles of a variety of
communications disciplines-for
example, general advertising, direct
response, sales promotion and public
relations-and combines these
disciplines to provide clarity,
consistency, and maximum
communications’ impact through the

Thus IMC can help us deliver
• Different media for same message:
Nescafe- ads Vs Sales Promotion,
Bagpiper- yaaron ka yaar (TV, Radio)
• Consistency over time: Lux
• Different message over different audience:
Fair & Lovely- Urban Vs Rural areas
• Same message in different languages:
Coke
WHY I M C ????????
In early 90s, no one made a fuss about
IMC. In fact not many people were even
aware of this.
Then why is it so important now ?

IN THOSE DAYS
• 1 single channel – everyone
saw it
• MDH Masala and Hawkins
could place an ad every
weekend to become legends
• Limited competition in markets
• Which meant functional claims
would take years to bridge
HOWEVER TODAY…
• Market: Cluttered
• More competition: Less Buyers
• Media Exposure is very high
• Media Fragmentation: Many TV
Channels and even more newspapers
and weekly newsmagazines
• Lifestyle change: Malls and Cafes
• Technology – Email, net, mobile, SM S -
easy access to information for
customer

AND..
• Shrinking budgets and demand for
accountability
• And acceptance by marketing managers
that specialization is important
Advert sing
MARKETING COMMUNICATIONS MIX
ALSO CALLED PROMOTION MIX CONSISTS OF

1. ADVERTISING
2. SALES PROMOTION
3. PUBLIC RELATIONS AND PUBLICITY
4. PERSONAL SELLING
5. DIRECT MARKETING
6. MERCHANDISING
7. EVENT SPONSORSHIP
8. PRODUCT DESIGN
9. ONLINE ADVERTISING
10. WORD OF MOUTH RECOMMENDATION

COMMON COMMUNICATION PLATFORMS
ADVERTISING SALES PUBLIC PERSONAL DIRECT
PROMOTION RELATIONS SELLING MARKETING
Print and broadcast Contests, games, Press kits Sales Catalogs
ads sweepstakes, Speeches presentations Mailings
Packaging—outer lotteries Sales meetings
Seminars Telemarketing
Packaging inserts Premiums and Annual Incentive Electronic
gifts reports programs shopping
Motion pictures
Sampling Charitable Samples TV shopping
Brochures &
booklets Fairs & trade donations Fairs and trade Fax mail
Posters and leaflets shows Sponsorship shows E-mail
Exhibits s
Directories Voice mail
Reprints of ads Demonstrations Publications
Coupons Community
Billboards
Rebates relations
Display signs
Point-of-purchase Low-interest Lobbying
displays financing Identity
Entertainment media
Audio-visual
material Trade-in Company
Symbols and logos allowances magazine
Videotapes Continuity Events
programs
Tie-ins
COMMUNICATIONS: THE OLD

MODEL VS NEW
Traditional Model
Of ?????????
Communications
IMC
???????? Multiple audiences
And / or
Multiple Tasks

Contd….
Traditional Model Only where audiences

Of Can be segregated by
Media Usage
Communications
IMC IMC
Multiple audiences
Led primarily by Advertising.
And / or
Uniquely defined audience.
Multiple Tasks
ELEMENTS OF
COMMUNICATION
SENDER Encoding Message Decoding RECEIVER
Media
Noise
Feedback Response

DEVELOPING EFFECTIVE COMMUNICATIONS
1. UNDERSTAND COMMUNICATION PROCESS

2. UNDERSTAND CONCEPTS OF SELECTIVE ATTENTION,
DISTORTION, RETENTION
DEVELOPING EFFECTIVE
COMMUNICATIONS -
• IDENTIFY TARGET AUDIENCE – affects what to

say, how to say, when, where and to whom to say.
• SITUATION ANALYSIS & DETERMINE
COMMUNICATION OBJECTIVES
• DESIGNING THE MESSAGE
• SELECT THE COMMUNICATION CHANNELS
• ESTABLISH TOTAL PROMOTION BUDGET
• DECIDE ON PROMOTION MIX
• MEASURE PROMOTION RESULTS

DETERMINING COMMUNICATION
OBJECTIVES
HIERARCHY OF EFFECTS MODEL

AWARENESS
COGNITIVE STAGE
KNOWLEDGE
AFFECTIVE STAGE LIKING
PREFERENCE
CONVICTION
BEHAVIOUR STAGE PURCHASE
Design the Message
• Based on the AIDA model

Awareness
Interest
Desire
Attention

Message Issues
• What to say ? ( Message Content ) –
Benefit promise/USP. eg- Maggie 2
minutes
• How to say it logically? ( Message

Structure )- Appeal, Conclusion Drawing
.eg- Femina – Woman of Substance
• How to say it symbolically? ( Message

Format )
• Who should say it? ( Message Source ) –

Celebrity, expert, Common man. Eg –
Amitabh Bacchhan- Reid and Taylor,
SELECTING COMMUNICATION CHANNELS
1. PERSONAL CHANNELS – Advocate channel (salespersons)

expert channel (independent) social channel (neighbors, friends etc.)
2. NON-PERSONAL CHANNELS – Media, atmospheres and events.

ESTABLISH TOTAL PROMOTION BUDGET
1. AFFORDABLE METHOD
2. UNIT OF SALES OR CASE RATE METHOD
3. PERCENTAGE OF SALES METHOD
4. COMPETITIVE PARITY METHOD – spend as much as competition
5. SHARE OF VOICE METHOD
6. OBJECTIVE & TASK METHOD
7. EMPIRICAL METHOD
8. QUANTITATIVE MATHEMATICAL MODEL
9. INVESTMENT SPENDING
10. PECKHAM’S METHOD - For new products spend twice, For established
products same share or less
PROMOTIONAL TOOLS
UNDERSTANDING UNIQUE CHARACTERISTICS AND COSTS OF

EACH
1. ADVERTISING – Strategic and long term, most economical form of
consumer contact, transforms products into brands.
Persuasive, expressive public presentation hence perceived as legitimate but
impersonal .
2. SALES PROMOTION – Short term, tactical
Creates quick response but not effective in building long-run brand
preference.
3. PUBLIC RELATIONS & PUBLICITY – High credibility, dramatization,
catch buyers off guard.
4. PERSONAL SELLING – Useful in later stages but long-term cost
commitment.
5. DIRECT MARKETING – Customized, interactive, secrecy.
6. MERCHANDISING or Point of Purchase activity for traffic building in
outlets especially self-service outlets

PROMOTIONAL TOOLS
7. EVENT SPONSORSHIP – should be relevant target audience.

8. PRODUCT DESIGN – and packaging and brand name acts as silent
salesmen.
9. ONLINE ADVERTISING – internet users few, but interactive.
10. WORD OF MOUTH recommendations – need to be stimulated through
proper identification of opinion leaders
DECIDING ON PROMOTION MIX
FACTORS
a) TYPE OF PRODUCT MARKET – business v/s consumer markets
b) Push v/s Pull strategy
c) Buyer – readiness stage
d) Product lifecycle stage

The Communication
Process
Communication
- passage of information, the exchange of

ideas, or the process of establishing a
commonness or oneness of thought
between the sender and receiver.

Success Factors
• Nature of Message: striking, eye catching,
• Audience’s interpretation of it
• Environment in which it is received: eg.
20% off in recession would be more
effective.
Words, pictures, sounds, colours may
have different meanings to different people
Eg: Black; in urban areas- sophisticated, in
rural areas- death
Basic Model of Communication
Sender’s field of Receiver's field of

experience experience
Sender Message Receiver

Feedback Noise Response

Target Audience Identification &
Communication
• Individuals: Personal selling

• Groups: Multi-level personal selling
• Market Niches: Personal selling/ Direct
Mail
• Market Segments: Newspapers,
Magazines, TV
• Mass Markets: Advertising, Publicity
Models of Response Process
AIDA model represents stages of sales-person must take a

Customer through in personal selling.
Stages AIDA Model
Cognitive Attention
Stage
Affective Interest
stage Desire
Behavior
al Stage Action

Developed by Robert Levidge and Gary Steiner, the model helps in

Setting and measuring objectives.
Stages Hierarchy of
Effects Model
Cognitive Awareness
Stage Knowledge
Affective Liking
stage Preference
Conviction
Behavior Purchase
al Stage
For adoption of new product. Trial through demonstration and

Sampling. Leading to adoption/rejection.
Stages Innovation
Adoption
Cognitiv AwaMreond
e Stage eesls
Affectiv
e stage Interest
Behavio Evaluation
ral Trial

• Information Processing Model: Developed by

William Mc Guire
• Similar to Hierarchy of effects model,
attention and comprehension are similar to
awareness and knowledge. Yielding is similar
to liking. There is a new element ‘retention’ in
this model.
• Model assumes the receiver as an
information processor and is in a ‘being
persuaded’ situation (e.g.: advertising) and
this is a response hierarchy.
Stages Information Processing

Model
Cognitive Presentation
Stage Attention
Comprehension
Affective Yielding
stage Retention
Behavioral Behaviour
Stage

Methods of obtaining Feedback
Effectiveness tests Steps in

persuasion
Circulation reach Expospurroec/perse
ssentati
Listener, reader, on
viewer recognition Attention
Recall. Checklists
Comprehension
Brand attitudes,
purchase intent Message
Recall over time acceptance/ yielding
Retention
Inventory, PoP
consumer panel Purchase behaviour
Integrated Information
Response Model (for Low
Involvement)
Cognition Trial Affect Commitment

Integrated Information
Response Model (for High
Involvement)
Lower Lower
Advertising Low order order
+
beliefs affect
Trial
Direct Exp. High Higher order beliefs Higher order affect Commitment
FCB Planning Model
Thinking Feeling
High 1. Informative 2. Affective
Involveme (thinker) (feeler)
nt Car, house, Jewelry,
furnishings, cosmetics,
new motorcycles
Low 3p. 4. Self
Involveme rHoadbuict satisfaction
nt ts (reactor)
Formation Cigarettes,
(doer) liquor, candy
Food,

ADVERTISING, MEDIA & SALES PROMOTION
DEVELOPING & MANAGING AN ADVERTISING

PROGRAM
• MISSION
• MONEY
• MESSAGE
• MEDIA
• MEASUREMENT

Creative Strategy
POSSIBLE ADVERTISING OBJECTIVES
1. INFORMATIVE ADVERTISING – used in pioneering stage to build

primary demand.
2. PERSUASIVE ADVERTISING – important in competitive stage, to
build selective demand.
Comparative advertising.
3. REMINDER ADVERTISING – for mature products reinforcement
advertising for assurance.

TABLE 21.1 POSSIBLE ADVERTISING OBJECTIVES
TO INFORM
Telling the market about a new Describing available services
product Suggesting new uses for a Correcting false impressions
product
Reducing buyers’ fears
Informing the market of a price
Building a company image
change
TO PERSUADE
Explaining how the product works
Building brand preference Persuading buyers to purchase
Encouraging switching to the brand now
Changing buyers’ perception of Persuading buyers to receive a
product attributes sales call
TO REMIND
Reminding buyers that the product Keeping it in buyers’ minds
may be needed in the near future during off-seasons
Reminding buyers where to buy it Maintaining its top-of-mind
awareness
DECIDING ON ADVERTISING BUDGET
FACTORS
1. STAGE IN PRODUCT LIFECYCLE
2. MARKET SHARE AND CONSUMER BASE
3. COMPETITION AND CLUTTER
4. ADVERTISING FREQUENCY REQUIRED
5. PRODUCT SUBSTITUTABILITY

CHOOSING ADVERTISING MESSAGE
A. MESSAGE CONSTRUCTION - (CONTENT)

- Benefit Promise Or Unique Selling Proposition Should Be Believable,
Desirable And Exclusive And Supported By A Reason – Why
- Benefit Promise Is Strategic In Nature And Should Not Change Unless
Change In Product Formulation, Marketing Strategy, Or Changing
Consumer Needs / Wants.
- Should Appear In Headline
CHOOSING ADVERTISING MESSAGE
B. MESSAGE EXECUTION
a. APPEALS – rational, emotional, moral
b. TONE – positive, humour ?
c. WORDS
d. FORMAT – placement of elements, typography (press) background,
colour, arresting key frame (TV).
e. STRUCTURE (conclusion) drawing, one sided v/s two sided argument,
order of presentation).

Promotional Executions
• The way the promotional appeal is

presented
– C a n b e executed in multiple ways
• Str ai gh t s e ll
through • Slice of life
multiple media & promotional
• Technical expertise
• Life style
• Scientific Evidence
• Animation
• Demonstration
• Personality symbol
• Comparison
– Direct or indirect • Fantasy
• Testimonial • Dramatization
– Authority, celebrity, peer • Mood or Image
• Musical
Message Appeals
• Rational- comparative vs competitive
• Moral
• Emotional – fear, pride, love, sex, humour,
joy, grief

Conclusion Drawing
• Should the message draw a firm
conclusion or leave it to the receivers?
- Messages with explicit conclusion are
more easily understood.
- Open ended ads are more effective for
involved audiences.
Message Sidedness
• One sided Message: Mentions only
positive attributes.
• Two side Message: presents both good
and bad points.

Message Structure
• Where should the most important
message be placed?
- Research on learning and memory indicates
that items presented first and last are
remembered better than those
presented in the middle.
Ad message recall as a function

of Order of Presentation
Recall
Beginning Middle End

Verbal Vs. Visual Messages
• When verbal information is low in imagery
value, use of pictures increases both
immediate and delayed recall.
• When verbal information is high in imagery
value addition of pictures does not
increase recall.
Source Factors
• Credibility: Extent to which the recipient sees the
source as having relevant knowledge, skill or
experience and trusts the source to give
unbiased, objective information.
‹ Applying expertise- use of doctors, dentists etc.
‹ Applying trustworthiness- use of hidden cameras
to record consumers liking for the brand.

Source Attractiveness
• Similarity: Athletes endorsing sports goods
• Likeability: Using celebrities
Drawbacks
• Overshadowing the product
• Overexposure of the celebrity

Summary Slide
• Thank You
ADVERTISING COPY STRATEGY

(CREATIVE BRIEF)
• SHOULD BE TRUE TO OVERALLPOSITIONING OF PRODUCT

• SHOULD BE WRITTEN
• POSITIONING SHOULD BE CLEAR, COMPETITIVE,
CORRECT FOR PRODUCT & TARGET MARKET, NON-
GENERIC, BELIEVABLE

GOOD COPY STRATEGY
HAS FOUR PARTS

1. WHAT ADVERTISING AIMS TO CONVEY - CENTRAL
PROMISE
2. FACTS TO SUPPORT
3. CUSTOMER ADDRESSED
4. TONE & ATMOSPHERE
SUPPORT
1. PRODUCT ITSELF - INGREDIANTS - REAL OR PERCEIVED

2. PEOPLE WHO MAKE IT
3. PACKAGING
4. WAY IT IS SOLD
5. ACTUAL CONSUMER REPORTS
6. PEOPLE WHO BUY IT
7. REGION
8. OPINION OF INDEPENDENT JUDGES

RECOGNISING GOOD ADVERTISING
1. STRATEGIC FIT WITH POSITIONING

2. DISTINCTIVE / EXCLUSIVE
3. COMPETITIVE
4. NON-GENERIC
5. PROVOCATIVE
6. CONTENT MORE IMPORTANT THAN STYLE
7. BOING FACTOR
8. BELIEVABLE LOGIC
9. VISUAL / VERBAL COHERENCE
10. CONSUMER EMPATHY
MEDIA BRIEF
• TARGET AUDIENCE
• ADVERTISING
• REACH V/S FREQUENCY
• MEDIA HABITS OF TARGET AUDIENCE
• TIMING OF CAMPAIGN
• REGIONAL WEIGHTS
• SHARE OF VOICE DESIRED IN EACH MARKET
• CREATIVE REQUIREMENTS - MINIMUM SIZE OR
LENGTH OF TIME

JUDGING MEDIA PLANS
1. AGREED TARGET AUDIENCE

2. AGREED ADVERTISING MESSAGE
3. MEDIA DECISIONS
AGREED TARGET AUDIENCE
QUESTIONS TO ASK
1. CAPTIVE SALES OR CONQUEST SALES
2. DEMOGRAPHIC CHARACTERISTICS
3. REGIONAL CHARACTERISTICS
4. PSYCHOLOGICAL CHARACTERISTICS

Media
Planning
Brand and Category Analysis
Category Development Index
Percentage of product
CDI = category total sales in
market
Percentage of total X 100
Indian population in
market

Brand and Category Analysis
Brand Development Index
Percentage of brand sales

in market to total Indian
BDI = s a l e s
P e r c entage of total
India population in
market
BDI and CDI

• Help the product manager achieve focus
in locating geographical regions that
require focus
• These figures help in test marketing of
new products and in testing
advertisements

MEDIA PLANNING & STRATEGY
1. Deciding On Reach, Frequency & Impact

2. Choosing Among Major Media Types
3. Selecting Specific Media Vehicles
4. Deciding On Media Timing
5. Deciding On Geographical Media
Allocation
DECIDING ON REACH, FREQUENCY & IMPACT
• REACH ( R ): The number of different

persons or households exposed to a
particular media schedule at least once
during a specified time period.
• FREQUENCY (F): The number of times
within the specified time period that an
average person or household is exposed
to the message.
• IMPACT (I): The qualitative value of an
exposure through a given medium (thus
a food ad in Good Housekeeping would
have a higher impact than in the Police

Reach and Frequency
Reach of One Program Reach of Two Program
Total market audience reached Total market audience reached
Duplicated Reach of Both Unduplicated Reach of Both
Total reached with both shows Total reach less duplicate
Graph of Effective Reach

25%
Ineffective
Reach
20%
Effective
Reach
15%
Ineffective
10% Reach
5%
0% 0 5 10 15
Exposures

REACH V/S FREQUENCY
REACH FREQUENCY
• Launching new products • Strong competitors

• Launching new • Complex story
extensions • High consumer
• Infrequently purchase resistance
brands • Frequent purchase cycle
• Undefined target market • High forgetting rate
Marketing Factors Important to

Determining Frequency
• Brand history
• Brand share
• Brand loyalty
• Purchase cycles
• Usage cycle
• Competitive share of voice
• Target group

Creative Factors In Determining
Frequency
• Message complexity
• Message uniqueness
• New vs. continuing campaigns
• Image versus product sell
• Message variation
• Wearout
• Advertising units
Media Factors Important to

Determining Frequency
• Clutter
• Editorial environment
• Attentiveness
• Scheduling
• Number of media used
• Repeat Exposures

CHOOSING AMONG MAJOR MEDIA TYPES
FACTORS
1. TARGET AUDIENCE MEDIA HABITS
2. PRODUCT
3. MESSAGE
4. COST
CHOOSING AMONG MAJOR MEDIA TYPES

1. TV – Best for Demonstration Purpose
2. NEWSPAPER – best for launch
announcements, authoritative medium.
3. MAGAZINES – can segment audiences, long
life span, pass on readership but periodic
hence advertising impactless.
4. RADIO – good reminder medium
5. CINEMA – South and smaller towns
6. OUTDOOR – geographically selective
medium
7. OTHERS – neon signs, matchbox covers,

SELECTING SPECIFIC MEDIA VEHICLES
DEPENDS ON
• In PRINT – circulation, effective
audience, effective ad-exposed
audience which affects cost per
thousand criterion.
• In TV – effective audience, TRP, QRP
Determining Relative
Cost of Media
• CPM (cost per thousand)
Cost of ad space/time
= x1000
Circulation/Audience
• CPRP (cost per rating point)

Cost of commercial time
=
Program rating

DECIDING ON MEDIA TIMING
• Depends on buyer turnover, purchasing frequency forgetting
rate
• Macroscheduling problem
• Microscheduling problem
• CONTINUITY
• CONCENTRATION – spending all in one period
• FLIGHTING – advertising followed by hiatus then second
flight
• PULSING – continuous advertising at low weight level
reinforced periodically by waves of heavier activity.
CONTINUITY V/S BURSTS
CONTINUITY BURSTS
• FREQUENT PURCHASE PATTERN • INFREQUENT PURCHASE

PATTERN
• HIGH LEVEL OF IMPULSE BUYING
• STRONG LOYALTY TO
• EXPANDING MARKET BRAND
• NO BUDGET CONSTRAINTS • HEAVY LAUNCH WEIGHT
• BUDGET LIMITATIONS

TIMING DEPENDS ON
• BUYER TURNOVER
• PURCHASE FREQUENCY
• FORGETTING RATE
TIMING PATTERNS (SEE APPENDIX NO.13)

Concentrated
Level Rising Falling Alternating
(1) ( 3) ( 4)
(2)
Continuous
(5)
(6) ( 7) ( 8)
Intermittent
( 10 )
( 9) ( 11) ( 12)
Month

SALES PROMOTION
SALES PROMOTION
SALES PROMOTION CONSISTS OF A DIVERSE COLLECTION OF

INCENTIVE TOOLS, MOSTLY SHORT-TERM, DESIGNED TO STIMULATE
QUICKER AND / OR GREATER PURCHASE OF A PARTICULAR PRODUCT
BY CONSUMERS OR TRADE.
WHILE ADVERTISING OFFERS A REASON TO BUY, SALES PROMOTION

OFFERS AN INCENTIVE TO BUY.

REASON FOR SALES PROMOTION INCREASE
1. MANY BRANDS & SEEN AS SIMILAR

2. COMPETITION USES IT
3. CONSUMERS MORE PRICE ORIENTED
4. TRADE DEMANDS MORE DEALS
5. ADVERTISING EFFICIENCY HAS DECLINED
6. MEDIA CLUTTER
WHY SALES PROMOTION POPULAR
1. SALES PROMOTION PRODUCE RESULTS

2. SALES PROMOTION PRODUCE RESULTS QUICKLY
3. SALES PROMOTION IS ALWAYS WELCOMED BY ALL - CONSUMERS,
TRADE, SALESFORCE
4. SALES PROMOTION IS RELATIVELY EASY & INEXPENSIVE TO
IMPLEMENT
5. MOST PRODUCT MANAGERS ARE UNDER GREAT PRESSURE TO
INCREASE THEIR CURRENT SALES
6. SMALL SHARE FIRMS FIND IT ADVANTAGEOUS TO USE SALES
PROMOTION AS CANNOT AFFORD TO MATCH MARKET LEADER’S
LARGE ADVERTISING BUDGETS & CANNOT OBTAIN SHELF SPACE

PROBLEMS OF SALES PROMOTION
1. SALES PROMOTION TEND TO ORIENT MARKETING MANAGERS

TOWARDS THE SHORT-TERM
2. OVERUSE RESULTS IN ERODING ATTITUDES TOWARDS BRAND
3. SALES PROMOTION OFTEN ATTRACT BRAND SWITCHERS AND NOT
LOYALISTS OF OTHER BRANDS.
4. SALES PROMOTION USED IN MARKETS OF HIGH BRAND
SIMILARITY, PRODUCE A HIGH SALES RESPONSE IN SHORT RUN
BUT LITTLE PERMANENT GAIN IN MARKET SHARE
5. IN MARKETS OF HIGH BRAND DISSIMILARITY, SALES PROMOTION
CAN ALTER MARKET SHARES PERMANENTLY.
SALES PROMOTION TOOLS
UNDERSTAND WHAT EACH TYPE OF SALES PROMOTION TOOL CAN OR

CANNOT DO.
CONSUMER FRANCHISE BUILDING TOOLS WHICH REINFORCE THE
CONSUMER’S BRAND UNDERSTANDING THROUGH IMPARTING
SELLING MESSAGE ALONG WITH DEALS ARE BETTER E.g. PREMIUMS
RELATED TO PRODUCT, FREE SAMPLES ETC.
TRADE PROMOTIONS - LOOK FOR PROOF OF PERFORMANCE &
PREVENT FORWARD BUYING OR DIVERTING.
LOOK FOR CREATIVE EDGE.

Segmentation, targeting and
positioning
• Must know STP before sales promotion
‘coz
– No promotion is directed towards every
customer
– Buyers have different reasons to buy different
products
– No sense in directing sales promotion for loyal
customers and regular users
Whom to target the Sales

Promotion to ?
• Segment on basis of Loyalty
– Loyal Customers
– Competitive Loyals
– Switchers Target Market for
– Price buyers All Promotion Based
Activities
– Non Users

MAJOR DECISIONS IN SALES PROMOTION
1. ESTABLISH SALES PROMOTION OBJECTIVES

2. SELECT SALES PROMOTION TOOLS - CONSUMER, TRADE,
SALESFORCE, BUSINESS
3. DEVELOPING SALES PROMOTION
A. SIZE OF INCENTIVE
B. CONDITIONS FOR PARTICIPATION
C. DURATION
D. DISTRIBUTION VEHICLE
E. TIMING
F. BUDGET
4. PRETEST PROGRAM
5. IMPLEMENT
6. EVALUATE SALES PROMOTION RESULTS THROUGH SALES DATA,
CONSUMER SURVEYS & EXPERIMENTS.
OBJECTIVES OF SALES PROMOTION

CONSUMERS
1. TO INTRODUCE NEW PRODUCT & GENERATE TRIAL.
• GATHER INFORMATION.
• MAKE IT EASY TO REDUCE PROCESS.
2. TO ATTRACT NEW CUSTOMERS
3. TO INDUCE PRESENT CUSTOMERS TO BUY MORE
4. TO HELP FIRM REMAIN COMPETITIVE
5. TO INCREASE OFF SEASON SALES
6. TO REWARD LOYAL CUSTOMERS
7. BUILD LONG - TERM RELATIONSHIP.
RETAILERS
1. PERSUADE RETAILERS TO CARRY NEW ITEMS
2. PERSUADE RETAILERS TO CARRY HIGHER LEVEL OF INVENTORY
3. OFF SETTING COMPETITIVE PROMOTIONS
4. INDUCE RETAILERS TO PROMOTE BRAND BY FEATURING DISPLAY
5. STIMULATE RETAILERS TO PUSH THE PRODUCT

SALESFORCE
1. ENCOURAGING SUPPORT FOR NEW PRODUCT
2. ENCOURAGING MORE PROSPECTING
3. STIMULATING OFF SEASON SALES
TYPES OF SALES PROMOTION
CONSUMER PROMOTION - SAMPLES, COUPONS, PRICE OFFS, PREMIUMS

PATRONAGE REWARDS, FREE TRIALS, PRIZES, TIE-IN PROMOTIONS,
CROSS PROMOTIONS, POINT OF PURCHASE DISPLAYS,
DEMONSTRATIONS.
TRADE PROMOTION - PRICE OFFS, ADVERTISING & DISPLAY
ALLOWANCES, FREE GOODS
BUSINESS PROMOTION - TRADE SHOWS, FAIRS, CONVENTIONS,
SPECIALITY ADVERTISING
SALES FORCE PROMOTION - CONTESTS

Sales Promotion Tools
• Samples
• Coupons
• Cash refund offers or rebates
• Price packs
• Premium Gifts
• Prizes – contests – sweepstakes
• Patronage awards
Samples
• Offer free amount of product or service
• Might be delivered
– Door to door
– Mail
– Pick up in a store
– Attached to product
• A very expensive way

Coupons
• Help in stimulating sales of mature brand
• Should provide at least 15-20 % saving to

the customer
Cash Refund / Rebates

• Provide a price reduction after purchase
rather than at the shop
• Proof of purchase necessary

Price Packs
• Savings off the regular price of a product
• Maybe through
– Reduced price pack
– Banded pack
• Are often more effective than coupons
Premiums - Gifts
• Merchandise is offered free or at low cost
as incentive to purchase a product
• Self – liquidating premium is an item sold
below its normal price to consumers who
request it
• Maybe a
– Near Pack
– On-Pack
– In-Pack
– With-pack

Prizes – Contests -
Sweepstakes
• Prize – offers to win an expensive gift
when you purchase the product
• Contests require the submission of an
entry like a jingle or a slogan
• Sweepstakes require you to put in your
name in the lucky draw
• Gain a lot more attention than coupons or
small premiums

SALES PROMOTION
SALES PROMOTION
SALES PROMOTION CONSISTS OF A DIVERSE COLLECTION OF

INCENTIVE TOOLS, MOSTLY SHORT-TERM, DESIGNED TO STIMULATE
QUICKER AND / OR GREATER PURCHASE OF A PARTICULAR PRODUCT
BY CONSUMERS OR TRADE.
WHILE ADVERTISING OFFERS A REASON TO BUY, SALES PROMOTION

OFFERS AN INCENTIVE TO BUY.

REASON FOR SALES PROMOTION INCREASE
1. MANY BRANDS & SEEN AS SIMILAR

2. COMPETITION USES IT
3. CONSUMERS MORE PRICE ORIENTED
4. TRADE DEMANDS MORE DEALS
5. ADVERTISING EFFICIENCY HAS DECLINED
6. MEDIA CLUTTER
WHY SALES PROMOTION POPULAR
1. SALES PROMOTION PRODUCE RESULTS

2. SALES PROMOTION PRODUCE RESULTS QUICKLY
3. SALES PROMOTION IS ALWAYS WELCOMED BY ALL - CONSUMERS,
TRADE, SALESFORCE
4. SALES PROMOTION IS RELATIVELY EASY & INEXPENSIVE TO
IMPLEMENT
5. MOST PRODUCT MANAGERS ARE UNDER GREAT PRESSURE TO
INCREASE THEIR CURRENT SALES
6. SMALL SHARE FIRMS FIND IT ADVANTAGEOUS TO USE SALES
PROMOTION AS CANNOT AFFORD TO MATCH MARKET LEADER’S
LARGE ADVERTISING BUDGETS & CANNOT OBTAIN SHELF SPACE

PROBLEMS OF SALES PROMOTION
1. SALES PROMOTION TEND TO ORIENT MARKETING MANAGERS

TOWARDS THE SHORT-TERM
2. OVERUSE RESULTS IN ERODING ATTITUDES TOWARDS BRAND
3. SALES PROMOTION OFTEN ATTRACT BRAND SWITCHERS AND NOT
LOYALISTS OF OTHER BRANDS.
4. SALES PROMOTION USED IN MARKETS OF HIGH BRAND
SIMILARITY, PRODUCE A HIGH SALES RESPONSE IN SHORT RUN
BUT LITTLE PERMANENT GAIN IN MARKET SHARE
5. IN MARKETS OF HIGH BRAND DISSIMILARITY, SALES PROMOTION
CAN ALTER MARKET SHARES PERMANENTLY.
SALES PROMOTION TOOLS
UNDERSTAND WHAT EACH TYPE OF SALES PROMOTION TOOL CAN OR

CANNOT DO.
CONSUMER FRANCHISE BUILDING TOOLS WHICH REINFORCE THE
CONSUMER’S BRAND UNDERSTANDING THROUGH IMPARTING
SELLING MESSAGE ALONG WITH DEALS ARE BETTER E.g. PREMIUMS
RELATED TO PRODUCT, FREE SAMPLES ETC.
TRADE PROMOTIONS - LOOK FOR PROOF OF PERFORMANCE &
PREVENT FORWARD BUYING OR DIVERTING.
LOOK FOR CREATIVE EDGE.

TYPES OF SALES PROMOTION
CONSUMER PROMOTION - SAMPLES, COUPONS, PRICE OFFS, PREMIUMS

PATRONAGE REWARDS, FREE TRIALS, PRIZES, TIE-IN PROMOTIONS,
CROSS PROMOTIONS, POINT OF PURCHASE DISPLAYS,
DEMONSTRATIONS.
TRADE PROMOTION - PRICE OFFS, ADVERTISING & DISPLAY
ALLOWANCES, FREE GOODS
BUSINESS PROMOTION - TRADE SHOWS, FAIRS, CONVENTIONS,
SPECIALITY ADVERTISING
SALES FORCE PROMOTION - CONTESTS
Segmentation, targeting and

positioning
• Must know STP before sales promotion
‘coz
– No promotion is directed towards every
customer
– Buyers have different reasons to buy different
products
– No sense in directing sales promotion for loyal
customers and regular users

Whom to target the Sales
Promotion to ?
• Segment on basis of Loyalty
– Loyal Customers
– Competitive Loyals
– Switchers Target Market for
– Price buyers All Promotion Based
Activities
– Non Users
MAJOR DECISIONS IN SALES PROMOTION
1. ESTABLISH SALES PROMOTION OBJECTIVES

2. SELECT SALES PROMOTION TOOLS - CONSUMER, TRADE,
SALESFORCE, BUSINESS
3. DEVELOPING SALES PROMOTION
A. SIZE OF INCENTIVE
B. CONDITIONS FOR PARTICIPATION
C. DURATION
D. DISTRIBUTION VEHICLE
E. TIMING
F. BUDGET
4. PRETEST PROGRAM
5. IMPLEMENT
6. EVALUATE SALES PROMOTION RESULTS THROUGH SALES DATA,
CONSUMER SURVEYS & EXPERIMENTS.

CONSUMERS
1. TO INTRODUCE NEW PRODUCT & GENERATE TRIAL.
• GATHER INFORMATION.
• MAKE IT EASY TO REDUCE PROCESS.
2. TO ATTRACT NEW CUSTOMERS
3. TO INDUCE PRESENT CUSTOMERS TO BUY MORE
4. TO HELP FIRM REMAIN COMPETITIVE
5. TO INCREASE OFF SEASON SALES
6. TO REWARD LOYAL CUSTOMERS
7. BUILD LONG - TERM RELATIONSHIP.
RETAILERS
1. PERSUADE RETAILERS TO CARRY NEW ITEMS
2. PERSUADE RETAILERS TO CARRY HIGHER LEVEL OF INVENTORY
3. OFF SETTING COMPETITIVE PROMOTIONS
4. INDUCE RETAILERS TO PROMOTE BRAND BY FEATURING DISPLAY
5. STIMULATE RETAILERS TO PUSH THE PRODUCT
SALESFORCE
1. ENCOURAGING SUPPORT FOR NEW PRODUCT
2. ENCOURAGING MORE PROSPECTING
3. STIMULATING OFF SEASON SALES

Sales Promotion Tools
• Samples
• Coupons
• Cash refund offers or rebates
• Price packs
• Premium Gifts
• Prizes – contests – sweepstakes
• Patronage awards
Samples
• Offer free amount of product or service
• Might be delivered
– Door to door
– Mail
– Pick up in a store
– Attached to product
• A very expensive way

Coupons
• Help in stimulating sales of mature brand
• Should provide at least 15-20 % saving to

the customer
Cash Refund / Rebates

• Provide a price reduction after purchase
rather than at the shop
• Proof of purchase necessary

Price Packs
• Savings off the regular price of a product
• Maybe through
– Reduced price pack
– Banded pack
• Are often more effective than coupons
Premiums - Gifts
• Merchandise is offered free or at low cost
as incentive to purchase a product
• Self – liquidating premium is an item sold
below its normal price to consumers who
request it
• Maybe a
– Near Pack
– On-Pack
– In-Pack
– With-pack

Prizes – Contests -
Sweepstakes
• Prize – offers to win an expensive gift
when you purchase the product
• Contests require the submission of an
entry like a jingle or a slogan
• Sweepstakes require you to put in your
name in the lucky draw
• Gain a lot more attention than coupons or
small premiums
Tie-in Promotions
• Involve two or more brands or companies
that team up on coupons, refunds and
contests to increase their pulling power
• Sales force of two companies push
promotions to retailers thus giving strong
thrust

Contests and Loyalty Cards
Some Special Offers

Trade Promotion Tools
• Price-Off
– Straight discount off the list price on each
case purchased during a stated time period
• Allowance
– An amount offered to display prominently the
wares
• Free goods
– Extra cases of merchandise to intermediaries
who buy a certain size
Business Promotions
• Trade Shows and Conventions
• Sales Contests
• Specialty Advertising

SALES PROMOTION - DEVELOPING THE SALES PROMOTION
PROGRAMME
1. CERTAIN MINIMUM INCENTIVE NECESSARY FOR PROMOTION TO

SUCCEED. A HIGHER INCENTIVE LEVEL WILL PRODUCE MORE
SALES RESPONSE BUT AT DIMINISHING RATE.
2. DURATION OF PROMOTION - NOT TOO SHORT (NO ONE KNOWS) OR
TOO LONG (LOSES ITS ACT NOW FORCE).
3. OPTIMAL FREQUENCY 3 WEEKS PER QUARTER AND OPTIMAL
DURATION - LENGTH OF AVERAGE PURCHASE CYCLE.
4. EACH DISTRIBUTION VEHICLE INVOLVES DIFFERENT REACH, COST,
IMPACT.
5. TOTAL SALES PROMOTION BUDGET INCLUDES ADMINISTRATIVE
COST (PRINTING, MAILING & PROMOTING THE DEAL) & INCENTIVE
COST ( COST OF PREMIUM OR PRICE OFF) MULTIPLIED BY
EXPECTED NUMBER OF UNITS THAT WILL BE SOLD ON THE DEAL.
FOR CONSUMER PROMOTION TO SUCCEED
1. VALUE OF INCENTIVE SHOULD BE PROPORTIONATE TO MAIN

PRODUCT.
2. GIFT SHOULD PREFERABLY NOT BE EASILY AVAILABLE IN THE
MARKET.
3. INCENTIVE SHOULD BE A QUALITY PRODUCT.
4. THE INCENTIVE SHOULD BE OF INTEREST TO THE CONSUMER OF
THE MAIN PRODUCT.
5. INCENTIVE SHOULD HAVE INDEPENDENT VALUE.
6. ADDITION OF FREE GIFT MUST NOT FORCE THE CUSTOMER TO
SPEND MORE ON THE MAIN PRODUCT.

Pretesting Sales Promotion
• Design on experience but conduct pretests
• Testing is inexpensive and fast
• Rank or rate promotion offers
• Restrict the promotion to a geographical
test area only
Implementing and Controlling

the Sales Promotion Program
• Must decide the lead time and sales time
• Lead time
– Prepare design, approval of package modifications material
to be mailed or distributed, advtg, POP material and the like
– Notoifcation of field sales personnel, establishing allocations
for distributors, purchase and printing of premiums, inventory
mgmt, and eventual distribution to retailer
• Sell-in Time
– Begins with promotional launch
– Ends when 95% of deal merchandise is in hands of
consumers

Measuring Effectiveness
• Sales Data
• Consumer Surveys
• Experiments
Challenges in Sales Promotions

• Consumer franchise building V/S non-
franchise building
• Forward buying
• Diverting in non deal regions
• Inability to police effectively
• Wrong billing
• Irritation of retailers

PRODUCT LIFE CYCLE
PLC PHASES
1. INTRODUCTION
2. GROWTH
3. MATURITY
4. DECLINE

PRODUCT LIFE CYCLE
THE LAUNCH PHASE

• DEFINING THE POSITIONING;
• ACHIEVING WHOLESALE DISTRIBUTION;
• ACHIEVING RETAIL DISTRIBUTION;
• AROUSING CONSUMER AWARENESS;
• ATTRACTING CONSUMER TRIAL;
• CONVERTING CONSUMERS TO THE PRODUCT; AND
• ACHIEVING BUYING CONTINUITY
FOUR INTRODUCTORY MARKETING

STRATEGIES
Promotion
High Low
High Rapid- Slow-

skimming skimming
strategy strategy
Rapid- Slow-
Low penetration penetration
strategy strategy

PRODUCT LIFE CYCLE
THE GROWTH PHASE

• INCREASING THE USER BASE;
• EXPANDING DISTRIBUTION;
• EXPANDING SHELF FACINGS;
• INCREASING PURCHASE FREQUENCY;
• SHIFT FROM PRODUCT AWARENESS ADVERTISING
TO BRAND PREFERENCE ADVERTISING;
• LOWER PRICES TO ATTRACT NEW LAYER OF PRICE
SENSITIVE BUYERS
• ENSURING ADEQUATE INVENTORIES AT
WHOLESALE AND RETAIL LEVELS; AND
• EXPLORING LINE EXTENSIONS
MATURITY PHASE
1. GROWTH MATURITY - SALES GROWTH RATE

DECLINE, LAGGARDS
2. STABLE MATURITY - SALES FLATTEN; SALES
GOVERNED BY POPULATION GROWTH &
REPLACEMENT DEMAND
3. DECAYING MATURITY - ABSOLUTE LEVEL OF
SALES STARTS TO DECLINE, CUSTOMERS
SWITCHING TO OTHER PRODUCTS

PRODUCT LIFE CYCLE
THE MATURITY PHASE

• RETAINING CURRENT USERS;
• ATTRACTING NEW USERS;
• RETAINING DISTRIBUTION;
• OPTIMISING PRODUCT LINE AND PACKAGING; AND
• OPTIMISING PRODUCT COSTS
MATURITY PHASE
1. MARKET MODIFICATION
VOLUME = NO. OF BRAND USERS X USAGE PER USER
a) INCREASING USERS
• CONVERT NON-USERS
• ENTER NEW MARKET SEGMENTS
• SNATCH COMPETITOR’S CUSTOMERS
b) INCREASING USAGE
• MORE FREQUENT USE
• MORE USAGE PER OCCASION
• NEW AND MORE VARIED USES
2. PRODUCT MODIFICATION
3. MARKETING MIX MODIFICATION

PRODUCT LIFE CYCLE
REJUVENATION
• DEVELOP AND QUALIFY MAJOR PRODUCT
IMPROVEMENT;
• REPOSITION PRODUCT VIA ADVERTISING;
• ACHIEVE NEW DISTRIBUTION OUTLETS;
• ACHIEVE CONSUMER TRIAL AND CONVICTION; AND
• ATTRACT NEW USERS AND NEW USES.
PRODUCT LIFE CYCLE
DECLINE PHASE
• RETARDING ATTRITION IN USER BASE;
• ATTRACTING ‘BARGAIN’ BUYERS;
• RESTRICTING PRODUCT LINE;
• REDUCING PRODUCT COSTS;
• RETARDING DISTRIBUTION LOSSES;
• MAXIMISING IMMEDIATE PROFITS

PRODUCT LIFE CYCLE
THE NEW PRODUCT / ESTABLISHED PRODUCT DISTINCTION

FOR THE NEW PRODUCT:
• ASCERTAIN THAT YOU REALLY HAVE A VIABLE PRODUCT

BEFORE YOU START MARKETING IT;
• CONCENTRATE EFFORTS ON DEVELOPING EFFECTIVE
POSITIONING AND ADVERTISING THAT REFLECTS THAT
POSITIONING OPTIMALLY;
• WITH THE TRADE, AIM AT DISTRIBUTION BEFORE ANYTHING
ELSE;
• CLEARLY ESTABLISH THE PRICE LEVEL THAT YOU WANT.
PRODUCT LIFE CYCLE

THE NEW PRODUCT / ESTABLISHED PRODUCT DISTINCTION
FOR THE ESTABLISHED PRODUCT:
• DO NOT WANTONLY CHANGE POSITIONING OR ADVERTISING

UNLESS YOU HAVE REAL EVIDENCE THAT THEY ARE
FUNDAMENTALLY WRONG;
• ENSURE YOUR PRODUCT HAS SUFFICIENT SUPERIORITY TO THE
COMPETITION TO MAKE IT VIABLE IN THE MARKET;
• CONCENTRATE AS A FIRST PRIORITY ON HOLDING THE
VOLUME YOU HAVE INHERITED AND THE USER BASE THAT HAS
BEEN BUILT UP;
• SEEK TO FIND EXPANSION POSSIBILITIES FOR NEW VOLUME -
NEW USERS, NEW TRADE OUTLETS, VOLUME PACKS AND
PROMOTIONS;
• UNDERSTAND AND RESPECT THE PRODUCT’S AND THE
BRAND’S HERITAGE.

PRODUCT LIFE CYCLE STRATEGIES
(SEE APPENDIX NO.6)
S
a
l
e
s Introduction
Growth Maturity Decline
Time
(SEE APPENDIX NO.6)

Characteristics
Sales Low sales Rapidly rising Peak sales Declining
sales sales
High cost
Costs per customer Average cost per Low cost per Low cost per
customer customer customer
Profits High profits Declining profits

Negative Rising profits
Customers Innovators Early adopters Middle majority Laggards
Competitors Growing number Stable number Declining number

Few beginning to decline
Marketing Objectives
Create product Maximize market Maximize profit while Reduce

awareness and trial share defending market share expenditure and
milk the brand

Strategies
Offer product Diversify brands

Product
Offer a basic product extensions, service, and models Phase out weak
warranty items
Price Price to match or Cut price

Price to penetrate
Charge cost-plus Best competitors
market
Go selective:
Build selective Build intensive Build more intensive Phase out
Distribution
Distribution distribution Distribution unprofitable
Outlets
Build product Build awareness and Stress brand Reduce to level

Advertising
awareness among interest in the mass differences and Needed to retain
early adopters and Market Benefits Hard-core loyals
dealers
Reduce to take
Use heavy sales advantage of heavy Increase to encourage Reduce to
Sales promotion to entice minimal
consumer demand Brand switching
Promotion trial level

NEW PRODUCTS DEVELOPMENT
WHY DO NEW PRODUCTS FAIL-CHALLENGES
1. PUSHING A FAVORITE IDEA THROUGH INSPITE OF

NEGATIVE MARKET RESEARCH FINDINGS
2. IDEA IS GOOD BUT MARKET SIZE IS OVERESTIMATED
3. ACTUAL PRODUCT NOT WELL DESIGNED
4. INCORRECT POSITIONING
5. INEFFECTIVE ADVERTISING
6. OVERPRICED
7. DEVELOPMENT COSTS HIGHER THAN EXPECTED
8. COMPETITORS FIGHT BACK HARDER THAN EXPECTED
9. SHORTAGE OF NEW PRODUCT IDEAS
10. FRAGMENTED MARKETS

WHY DO NEW PRODUCTS FAIL
11. SOCIAL & GOVERNMENTAL CONSTRAINTS

12. COSTLINESS OF NEW PRODUCT DEVELOPMENT PROCESS
13. CAPITAL SHORTAGES
14. FASTER DEVELOPMENT TIME
15. SHORTER PLC
STAGES IN NEW PRODUCT DEVELOPMENT

PROCESS
1. IDEA GENERATION
2. IDEA SCREENING
3. CONCEPT DEVELOPMENT & TESTING
4. MARKETING STRATEGY DEVELOPMENT
5. BUSINESS ANALYSIS
6. PRODUCT DEVELOPMENT
7. MARKET TESTING
8. COMMERCIALISATION

IDEA GENERATION TECHNIQUES
1. ATTRIBUTE LISTING
2. FORCED RELATIONSHIPS
3. MORPHOLOGICAL ANALYSIS
4. NEED / PROBLEM IDENTIFICATION
5. BRAINSTORMING
6. SYNECTICS
IDEA SCREENING
EVALUATING A MARKET OPPORTUNITY IN TERMS OF

COMPANY’S OBJECTIVES & RESOURCES
I. COMPATIBILITY WITH COMPANY OBJECTIVES
• PROFIT OBJECTIVE
• SALES VOLUME OBJECTIVE
• SALES GROWTH OBJECTIVE
• CUSTOMER GOODWILL OBJECTIVE
II. COMPATIBILITY WITH COMPANY RESOURCES

• NECESSARY CAPITAL
• PRODUCTION KNOW-HOW
• MARKETING KNOW-HOW
• DISTRIBUTION CAPABILITY

PRODUCT-IDEA RATING DEVICE
PRODUCT SUCCESS (1) (2) (3 = 1 X 2)

REQUIREMENTS RELATIVE PRODUCT PRODUCT
WEIGHT SCORE RATING
Unique or superior product .40 .8 .32

High performance-to-cost ratio .30 .6 .18
High marketing dollar support .20 .7 .14
Lack of strong competition .10 .5 .05
Total 1.00 .69*
*Rating scale : .00 - .30 poor; .31 - .60 fair; .61 - .80 good. Minimum
acceptance rate: .61.
CONCEPT DEVELOPMENT AND TESTING
A product idea is a possible product that a company might

offer to the market
A product concept is an elaborated version of the idea

expressed in meaningful consumer terms

CONCEPT DEVELOPMENT
Any product idea can be turned into several products concepts . A
company can form several concepts:
Concept 1: An instant breakfast drink
Concept 2: tasty snack drink
Concept 3: Health supplement
Each of these concepts represents a category concept - that is ,
each positions the idea within a category.It is the category concept,
not the product concept, that defines the product’s competition.
• Product- positioning map - can be utilized in communicating
and promoting the concept to the market.
• Brand-positioning map - the product concept has to be turned
into a brand concept.
PRODUCT DIMENSIONS TO TEST AT CONCEPT

STAGE
1. CLARITY
2. BELIEVABILITY
3. NEED LEVEL NEED GAP SCORE
4. GAP LEVEL - BETWEEN NEW PRODUCT AND
EXISTING PRODUCTS
5. PERCEIVED VALUE
6. PURCHASE INTENTION
7. PERCEIVED USAGE-WHO,WHEN AND HOW
OFTEN

MARKETING STRATEGY
DEVELOPMENT
•Target market’s size, structure,and behavior; the planned
product positioning; and the sales, market share, and profit
goals sought in the first few years.
• The product’s planned price, distribution strategy, and
marketing budget for the first year.
• The long-run sales and profit goals and marketing-mix
strategy over time.
BUSINESS ANALYSIS
A. Estimating Total Sales - First time sales, replacement sales,
repeat sales.
B. Estimating Costs and Profits -
Projected five-year cash-Flow Statement (In Thousand Of Dollars)
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
1. Sales revenue
2. Cost of goods sold
3. Gross margin
4. Development costs
5. Marketing costs
6. Allocated overhead
7. Gross contribution
8. Supplementary contribution
9. Net contribution
10. Discounted contribution (15%)
11. Cumulative discounted cash flow

Break Even Analysis: Financial measures to evaluate
the
merit of a new-product proposal.
Risk Analysis: Here three estimates (optimistic,

pessimistic,
and most likely) are obtained for each uncertain variable
affecting profitability under an assumed marketing
environment and marketing strategy for the planning
period.
PRODUCT DEVELOPMENT
• Large jump in investment.
• The R & D department will develop one or more
physical versions of the product concept.
• Design required functional characteristics & to
communicate its psychological aspects through physical
cues.
• The functional tests are conducted under laboratory and
field conditions to make sure that the product performs for
safety & effectiveness.
• Consumer Testing includes bringing consumers into a
laboratory to giving them samples In-home product
placement tests.

Techniques for measuring consumer preferences:
The most three most common are simple ranking,
paired
comparisons, and ranking scales.
• The simple- rank- order method ask the consumer to
rank the three items in order of preference. It is
difficult to use this method when there are are many
objects to be evaluated.
• The paired-comparison method calls for presenting
pairs of items to the consumer, then asking which
one is preferred in each pair.
• The monadic -rating method asks the consumer to
rate his or her liking of each product on a scale. This
rating yields more information than the order
methods.even know the qualitative levels of her
preference for each.
MARKET TESTING
. CONSUMER GOODS MARKET TESTING
a. SALES WAVE RESEARCH –Pre-selected consumers are
offered company’s & competitor’s products three to five times.
Secrecy maintained but distribution issues can not be checked.
b. SIMULATED TEST MARKETING – Pre-selected
consumers are given money, exposed to ads. & purchase behavior
observed. Ads effectiveness checked.
c. CONTROLLED TEST MARKETING – Panel of stores
carry new products. Checks advertising promotion. But, does not
provide information how to sell to trade and also secrecy loss.
d. TEST MARKETS – Ultimate way to test a new consumer
product.

TEST MARKETS
1. HOW MANY TEST CITIES – 2 to 6 cities.larger number if

regional differences, different marketing strategies, possible loss,
possible interference by competitors.
2. WHICH CITIES – Not over tested, good media coverage,
representative sample, average competitor activity.
3. LENGTH OF TEST – Depends on repeat purchase rate.
Period should be cut down if competitors are rushing to the
market.
4. WHAT INFORMATION – Store audit, consumer panels
( switching rates), buyer survey (Consumer attitude, usage ,
satisfaction).
5. WHAT ACTION TO TAKE – Depends on trial & repurchase
rates.
BUSINESS GOODS MARKET TESTING
. BUSINESS GOODS MARKET TESTING

a. ALPHA TESTING – In company testing to measure &
improve product performance, reliability & operating cost.
b. BETA TESTING – Inviting potential adaptors to conduct
confidential testing at site.Gives clues on problems of safety,
servicing, usage & need for training. Also can observe value
equipment adds to customer operations as a clue to pricing.
c. TRADE SHOWS – Secrecy loss.
d. DISTRIBUTOR & DEALER DISPLAY
e. TEST MARKETING

COMMERCIALISATION
1. TIMING – First entry : ( first mover advantages but

must be debugged) , parallel entry, late entry.
2. GEOGRAPHICAL STRATEGY – Planned market
roll out necessary.
3. TARGET MARKET PROSPECTS – Prime
prospects. (early adopters, heavy users, opinion leaders,
reached at a low cost)
4. INTRODUCTORY MARKET STRATEGY
DIFFUSION OF INNOVATION
Exposure to Innovation Exposure to Innovation
Innovation Characteristics
Consumer- Dependent Consumer Characteristics
Relative Advantage psychological Variables
Compatibility Perception Propagation Mechanisms
Perceived Risk Motivation Types
Complexity Personality Marker- Controlled vs.
Effect on Adoption of Value Orientation Nonmarketer Vs. Impersonal
Other Innovations Beliefs Characteristics
Consumer -Independent Attitudes Credibility
Trialability Previous Innovative Clarity
Divisibility Experience Source Similarity
Reversibility Demographics Informativeness
Realization Age
Communicability Education
Form of Innovation Income
No Innovation
Resistance
No Yes
Is Innovation Amenable Yes
to Modification ? Modification
Adoption Rejection

Innovators
Late
Early Early Majority Laggards
2.5% Adopters Majority 34% 16%
13.5% 34%
Percentage of Adopters by Category Sequence
Adopter Categories
ADOPTER DESCRIPTION RELATIVE PERCENTAGE
CATEGORY POPULATION WITHIN THE
THAT EVENTUALLY
ADOPTS
Innovators Venturesome - very eager to try new Ideas
acceptable if risk is daring; more 2.5%
cosmopolite social relationships;
communicates with other innovators.
Early Adopters Respect - more integrated into the local

social system; the persons to check with 13.5%
before adopting a new idea; category contains
greatest number of opinion leaders; are role
models.
Early Majority deliberate - adopt new ideas just prior to the

average time; seldom hold leadership positions; 34.0
deliberate for some time before adopting.
Late Majority Skeptical- adopt new ideas just after the average
time; adopting may be both an economic necessity 34.0
and a reaction to peer pressures;innovations
approached cautiously.
Laggards Traditional - the last people to adopt an innovation;

most “localite” in outlook; oriented to the past; 16.0
suspicious of the new.
100.0%

PRODUCT & BRANDING
5 LEVELS OF PRODUCT
1. CORE BENEFIT
2. BASIC PRODUCT - FEATURES, BENEFITS, DESIGN & STYLE,
PACKAGING, BRAND NAME.
3. EXPECTED PRODUCT - CREATES NO PREFERENCE
4. AUGMENTED PRODUCT - TOTAL CONSUMPTION SYSTEM
5. POTENTIAL PRODUCT
THE 5 LEVELS CONSTITUTE CUSTOMER VALUE HIERARCHY WITH
EACH LEVEL ADDING MORE CUSTOMER VALUE.

CLASSIFICATION OF PRODUCTS-CONSUMER
GOODS
DURABILITY & TANGIBILITY
1. NON-DURABLE GOODS – tangible, consumed in few uses. Many
locations, small mark up, heavy advertising.
2. DURABLE GOODS – personal selling, guarantees, higher margin.
3. SERVICES – intangible, variable, credibility of supplier very
important.
SHOPPING HABITS
4. CONVENIENCE GOODS – staples, impulse & emergency goods
5. SHOPPING GOODS – comparison shopping .Homogenous &
heterogenous strategies differ.
6. SPECIALITY GOODS – goods with unique characteristics and or
brand identification.Location should be advertised.
7. UNSOUGHT GOODS – advertising and personal selling.
Classification Of Products
Most goods Most services

Difficult to
Easy to evaluate
evaluate
High in experience qualities High in credence qualities

High in search qualities

PRODUCT LINE DECISIONS
1. PRODUCT LINE ANALYSIS

A. PRODUCT LINE SALES & PROFITS
B. PRODUCT LINE MARKET PROFILE - PRODUCT MAPPING
C. PRODUCT LINE LENGTH - UPWARD / DOWNWARD / TWO WAY
STRETCH
D. LINE MODERNIZATION
E. LINE FEATURING
F. LINE PRUNING
BRAND
A BRAND IS ESSENTIALLY A SELLER’S PROMISE TO

CONSISTENTLY DELIVER A SPECIFIC SET OF FEATURES, BENEFITS
AND SERVICES TO BUYERS.

BRANDING DECISIONS
1. BRAND OR NOT – Advantages of branding – easy processing, legal

protection, brand loyalty, segmentation ,corporate image. Also distributors
and consumer s prefer brands.
2. SPONSOR – Manufacturer / Distributor / Licensed
3. BRAND NAME – Individual / Blanket / Separate family / Co. +
Individual.
Company names legitimizes and individual name individualizes
4. BRANDING STRATEGY – Line extensions (success rate higher), Brand
extensions (risk of brand dilution test association), Multi-brands, New
brands, Co brands (also called dual branding).
5. REPOSITIONING – shifting customer preferences or competitor too
close.
ESSENTIALS OF A GOOD BRAND NAME
1. Easy to pronounce, spell and remember.

2. Suggest about benefits, quality, use or action.
3. Unique, distinctive.
4. Versatile – can be added to new products / global reach.
5. Registered and protected.

BRAND NAME TESTS
A. ASSOCIATION TEST
B. LEARNING TESTS (PRONOUNCABILITY)
C. MEMORY
D. PREFERENCE
E. GLOBAL REACH
PACKAGING TESTS
1. ENGINEERING
2. VISUAL
3. DEALER & CONSUMER TESTS
BRAND - MEANING
1. ATTRIBUTES
2. BENEFITS - FUNCTIONAL & EMOTIONAL
3. VALUE
4. CULTURE
5. PERSONALITY
6. USER
DEEP V/S SHALLOW BRAND

BRAND ASSOCIATIONS Product attributes
Intangibles
Country/geographic area
Customer benefits
Competitors Brand-name Relative price

and symbol
Product class Use/application
Lifestyle/personality Celebrity/person User/customer
HOW VALUES AFFECT BRAND CHOICE
FUNCTIONAL CONDITIONAL SOCIAL

VALUE VALUE VALUE
BRAND CHOICE
EMOTIONAL EPISTEMIC
VALUE VALUE

BRAND EQUITY (DAVID AAKER)
1. BRAND AWARENESS
2. PERCEIVED BRAND QUALITY AND FUNCTIONALITY
3. POSITIVE BRAND MENTAL & EMOTIONAL ASSOCIATIONS
4. BRAND LOYALTY
5. OTHER ASSETS - PATENTS, TRADEMARKS ,CHANNEL
RELATIONSHIPS
ATTITUDE TOWARDS BRAND
1. CUSTOMER WILL CHANGE BRAND FOR PRICE REASONS

2. CUSTOMER IS SATISFIED - NO REASON TO CHANGE
3. CUSTOMER IS SATISFIED & WOULD INCUR COSTS BY
CHANGING BRAND
4. CUSTOMER VALUES THE BRAND AND SEES IT AS A FRIEND
5. CUSTOMER IS DEVOTED TO BRAND.
BRAND EQUITY IS RELATED TO 3, 4, 5.

IMPORTANCE OF PROPER PACKAGING
1. PROTECTION
2. ADVERTISING VALUE
3. CONVENIENCE TO CONSUMERS
4. BENEFIT TO RETAILERS
5. AFTER-USE VALUE
6. IDENTIFICATION
7. INFORMATION
FACTORS TO BE CONSIDERED FOR PACKAGE DESIGNING
1. LANGUAGE
2. COLOUR
3. SIZE
4. CLIMATE
5. NATURE OF THE PRODUCT
6. LENGTH OF DISTRIBUTION CHANNEL
7. ACCEPTED NORMS
8. METHOD OF TRANSPORT USED
9. TRENDS IN PACKAGING
10. COST-BENEFIT ANALYSIS

PACKAGING
1. PRIMARY
2. SECONDARY
3. SHIPPING
DECISIONS
1. The first task is to establish packaging concept. What packaging should be
or do. e.g. protection, novel dispensing method, visibility.
2. Decision on packing elements
3. Tests – engineering tests, visual tests, dealer tests and consumer tests.
4. Labeling – identify, describe and promote.

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Introduction to Services

Services Characteristics V/s Goods

Tangible Intangible - Services cannot be inventoried.

Standardized Heterogeneous - Service delivery and customer satisfaction

Production Simultaneous production - Customers & employees affect

Nonperishable Perishable - Difficult to synchronize supply

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Expanded Marketing Mix For Services

Product Place Promotion Price

Physical good features Channel type - Promotion blend Flexibility

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- Employees Facility design - Flow of activities

Consumer Behaviour in Services

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Most goods Most services

High in search qualities High in experience qualities High in credence qualities

Consumer decision making and evaluation of

Purchase and Consumption Postpurchase Evaluation

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A COMPANY LAUNCHING A PRODUCT NEEDS

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Manufacturer Retailer Consumer

Manufacturer Retailer Consumer

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Manufacturer Industrial Industrial

EACH INTERMEDIARY WHO BRINGS PRODUCT AND ITS TITLE

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IDENTIFYING MAJOR CHANNEL ALTERNATIVES

A. TYPES OF INTERMEDIARIES - Eg. CELL PHONES. SEARCH FOR

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I. ECONOMIC - AGENT FOR SMALLER FIRMS, LOW VOLUME

CHANNEL MANAGEMENT DECISIONS

I. SELECTING CHANNEL MEMBERS - NO. OF YEARS, OTHER LINES

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• A vertical marketing system (VMS), by contrast,

1. Corporate VMS - combines successive stages of

2. Administered VMS - Co-ordinates successive

3. Contractual VMS - consists of independent firms

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III. Multichannel Marketing Systems - Occurs when a

1. Vertical channel conflict

2. Horizontal channel conflict

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• Unclear roles & rights.

• Differences in perception - of market, customer

• Intermediaries great dependence on manufacturer.

Why are marketing intermediaries used &

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I. CONSISTENT WITH TARGET MARKET & POSITIONING

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Selecting the pricing objective

Analyzing competitor’s costs, prices and offers

Selecting a pricing method

Selecting the final price

6 MAJOR PRICING OBJECTIVES

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• Target return pricing

• Perceived value pricing

• Going rate pricing

• Sealed bid pricing

Selecting the Final Price

• Influence of other marketing mix elements on

• Company pricing policy