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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

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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

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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

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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.

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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

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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

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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)

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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

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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.

I. Vertical marketing Systems

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.

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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

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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

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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

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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.

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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

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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.

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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

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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.

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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

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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

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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

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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

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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

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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

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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

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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 ?

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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, SMS -
easy access to information for
customer

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AND..
• Shrinking budgets and demand for
accountability
• And acceptance by marketing managers
that specialization is important
Advertising
Sales Promotion
Public Relations
IMC
Direct Marketing
Event Marketing
Internet Marketing

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

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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 Seminars Sales meetings Telemarketing
Packaging inserts Premiums and Annual Incentive Electronic
Motion pictures gifts reports programs shopping
Brochures & Sampling Charitable Samples TV shopping
booklets Fairs & trade donations Fairs and trade Fax mail
Posters and leaflets shows Sponsorship shows E-mail
Directories Exhibits s Voice mail
Reprints of ads Demonstrations Publications
Billboards Coupons Community
Display signs Rebates relations
Point-of-purchase Low-interest Lobbying
displays financing Identity
Audio-visual Entertainment media
material Trade-in Company
Symbols and logos allowances magazine
Videotapes Continuity Events
programs
Tie-ins

COMMUNICATIONS: THE OLD


MODEL VS NEW

Traditional Model
Single Of ?????????
Medium Communications

Multiple IMC
???????? Multiple audiences
Medium And / or
Multiple Tasks

Single Multiple
Message Message

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Contd….

Traditional Model Only where audiences


Single Of Can be segregated by
Medium Communications Media Usage

Multiple IMC IMC


Led primarily by Advertising.
Multiple audiences
Medium And / or
Uniquely defined audience.
Multiple Tasks

Single Multiple
Message Message

ELEMENTS OF
COMMUNICATION
SENDER Encoding Message Decoding RECEIVER
Media

Noise

Feedback Response

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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

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DETERMINING COMMUNICATION
OBJECTIVES
MARKETER CAN SEEK A COGNITIVE, AFFECTIVE OR BEHAVIOURAL RESPONSE FROM TARGET AUDIENCE.

HIERARCHY OF EFFECTS MODEL


AWARENESS
COGNITIVE STAGE
KNOWLEDGE THIS SEQUENCE IS
LEARN-FEEL-DO (HIGH
INVOLVEMENT/HIGH
AFFECTIVE STAGE LIKING DIFFERENCE)

DO-FEEL-LEARN (HIGH
INVOLVEMENT/LOW
PREFERENCE
DIFFERENCE)

LEARN-DO-FEEL (LOW
CONVICTION INVOLVEMENT)

BEHAVIOUR STAGE PURCHASE

Design the Message

• Based on the AIDA model


Awareness

Interest

Desire

Attention

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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,
Sachin- TVS Victor, Dentist- toothpaste,

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.

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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

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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

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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.

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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

Enc- Dec-
Sender oding Message oding Receiver

Feedback Noise Response

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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

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Models of Response Process

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

Models of Response Process


For adoption of new product. Trial through demonstration and
Sampling. Leading to adoption/rejection.

Stages Innovation
Adoption
Cognitiv Awareness
Model
e Stage
Affectiv Interest
e stage Evaluation
Behavio Trial
ral Adoption
Stage

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Models of Response Process

• 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.

Models of Response Process

Stages Information Processing


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

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Methods of obtaining Feedback

Effectiveness tests Steps in


persuasion
Circulation reach Exposure/presentati
process
on
Listener, reader, Attention
viewer recognition
Recall. Checklists Comprehension
Brand attitudes, Message
purchase intent acceptance/ yielding
Recall over time Retention
Inventory, PoP Purchase behaviour
consumer panel

Integrated Information
Response Model (for Low
Involvement)

Cognition Trial Affect Commitment

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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 3.products
Habit 4. Self
Involveme Formation satisfaction
nt (doer) (reactor)
Food, Cigarettes,
household liquor, candy

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ADVERTISING, MEDIA & SALES PROMOTION

DEVELOPING & MANAGING AN ADVERTISING


PROGRAM

• MISSION
• MONEY
• MESSAGE
• MEDIA
• MEASUREMENT

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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.

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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

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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).

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Promotional Executions

• The way the promotional appeal is


presented
• – Cansell
Straight be executed in multiple ways through
multiple media & promotional elements
• Slice of life
• 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

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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.

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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

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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.

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Source Attractiveness
• Similarity: Athletes endorsing sports goods
• Likeability: Using celebrities

Drawbacks
• Overshadowing the product
• Overexposure of the celebrity

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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

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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

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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

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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

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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

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Brand and Category Analysis

Brand Development Index

Percentage of brand sales


in market to total Indian
BDI = sales X 100
Percentage 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

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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

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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
Percentage Reach

20%
Effective
Reach
15%
Ineffective
10% Reach

5%

0% 0 5 10 15
Exposures

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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

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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

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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,
wall paintings, tamashas

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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

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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

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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

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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.

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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

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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.

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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
– Non Users Activities

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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

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OBJECTIVES OF SALES PROMOTION

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

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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

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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

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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

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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

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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.

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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

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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.

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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

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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
– Non Users Activities

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.

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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

OBJECTIVES OF SALES PROMOTION

SALESFORCE
1. ENCOURAGING SUPPORT FOR NEW PRODUCT
2. ENCOURAGING MORE PROSPECTING
3. STIMULATING OFF SEASON SALES

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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

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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

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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

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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

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Contests and Loyalty Cards

Some Special Offers

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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

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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.

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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

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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

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PRODUCT LIFE CYCLE

PLC PHASES

1. INTRODUCTION
2. GROWTH
3. MATURITY
4. DECLINE

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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
Price

Rapid- Slow-
Low penetration penetration
strategy strategy

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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

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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

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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

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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.

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PRODUCT LIFE CYCLE STRATEGIES
(SEE APPENDIX NO.6)

S
a
l
e
s Introduction
Growth Maturity Decline

Time

PRODUCT LIFE CYCLE STRATEGIES


(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
Rising profits High profits Declining profits
Negative

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

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Strategies

Offer product Diversify brands


Product
Offer a basic product extensions, service, and models Phase out weak
warranty items

Price to match or Cut price


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 consumer demand minimal
Brand switching
Promotion trial level

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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

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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

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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

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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

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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

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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

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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.

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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.

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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

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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

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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%

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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.

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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

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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.

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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.

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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

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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

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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.

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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

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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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