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Marketing
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Management(MB0030)
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MBA,SMU,Sem-2,Assignment-02
5/20/2010

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ROBIN SMITH

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Q.1 a. Give a short note on bases of Segmentation. (5 marks)

Ans-
Market Segmentation

Market segmentation is the identification of portions of the market that are different from one
another. Segmentation allows the firm to better satisfy the needs of its potential customers.

The Need for Market Segmentation

The marketing concept calls for understanding customers and satisfying their needs better than
the competition. But different customers have different needs, and it rarely is possible to satisfy
all customers by treating them alike.

Mass marketing refers to treatment of the market as a homogenous group and offering the same
marketing mix to all customers. Mass marketing allows economies of scale to be realized
through mass production, mass distribution, and mass communication. The drawback of mass
marketing is that customer needs and preferences differ and the same offering is unlikely to be
viewed as optimal by all customers. If firms ignored the differing customer needs, another firm
likely would enter the market with a product that serves a specific group, and the incumbant
firms would lose those customers.

Target marketing on the other hand recognizes the diversity of customers and does not try to
please all of them with the same offering. The first step in target marketing is to identify
different market segments and their needs.

Requirements of Market Segments

In addition to having different needs, for segments to be practical they should be evaluated
against the following criteria:

• Identifiable: the differentiating attributes of the segments must be measurable so that

they can be identified.

• Accessible: the segments must be reachable through communication and distribution

channels.
 • Substantial: the segments should be sufficiently large to justify the resources required to
target them.

• Unique needs: to justify separate offerings, the segments must respond differently to the
different marketing mixes.

• Durable: the segments should be relatively stable to minimize the cost of frequent
changes.

A good market segmentation will result in segment members that are internally homogenous and
externally heterogeneous; that is, as similar as possible within the segment, and as different as
possible between segments.

Bases for Segmentation in Consumer Markets

Consumer markets can be segmented on the following customer characteristics.

• Geographic

• Demographic

• Psychographic

• Behavioralistic

Geographic Segmentation

The following are some examples of geographic variables often used in segmentation.

• Region: by continent, country, state, or even neighborhood

• Size of metropolitan area: segmented according to size of population

• Population density: often classified as urban, suburban, or rural

• Climate: according to weather patterns common to certain geographic regions

Demographic Segmentation

Some demographic segmentation variables include:

• Age

• Gender
 • Family size

• Family lifecycle

• Generation: baby-boomers, Generation X, etc.

• Income

• Occupation

• Education

• Ethnicity

• Nationality

• Religion

• Social class

Many of these variables have standard categories for their values. For example, family lifecycle
often is expressed as bachelor, married with no children (DINKS: Double Income, No Kids),
full-nest, empty-nest, or solitary survivor. Some of these categories have several stages, for
example, full-nest I, II, or III depending on the age of the children.

Psychographic Segmentation

Psychographic segmentation groups customers according to their lifestyle. Activities, interests,

and opinions (AIO) surveys are one tool for measuring lifestyle. Some psychographic variables
include:

• Activities

• Interests

• Opinions

• Attitudes

• Values

Behavioralistic Segmentation

Behavioral segmentation is based on actual customer behavior toward products. Some

behavioralistic variables include:
 • Benefits sought

• Usage rate

• Brand loyalty

• User status: potential, first-time, regular, etc.

• Readiness to buy

• Occasions: holidays and events that stimulate purchases

Behavioral segmentation has the advantage of using variables that are closely related to the
product itself. It is a fairly direct starting point for market segmentation.

Bases for Segmentation in Industrial Markets

In contrast to consumers, industrial customers tend to be fewer in number and purchase larger
quantities. They evaluate offerings in more detail, and the decision process usually involves
more than one person. These characteristics apply to organizations such as manufacturers and
service providers, as well as resellers, governments, and institutions.

Many of the consumer market segmentation variables can be applied to industrial markets.
Industrial markets might be segmented on characteristics such as:

• Location

• Company type

• Behavioral characteristics

Location

In industrial markets, customer location may be important in some cases. Shipping costs may be
a purchase factor for vendor selection for products having a high bulk to value ratio, so distance
from the vendor may be critical. In some industries firms tend to cluster together geographically
and therefore may have similar needs within a region.

Company Type

Business customers can be classified according to type as follows:

• Company size

• Industry
 • Decision making unit

• Purchase Criteria

Behavioral Characteristics

In industrial markets, patterns of purchase behavior can be a basis for segmentation. Such
behavioral characteristics may include:

• Usage rate

• Buying status: potential, first-time, regular, etc.

• Purchase procedure: sealed bids, negotiations, etc.

b. Analyze the pricing methods with relevant examples (5 marks)

Ans-

There are several types of costs to consider when conducting a breakeven analysis, so here’s a
refresher on the most relevant.
• Fixed costs: These are costs that are the same regardless of how many items you sell. All
start-up costs, such as rent, insurance and computers, are considered fixed costs since you
have to make these outlays before you sell your first item.
• Variable costs: These are recurring costs that you absorb with each unit you sell. For
example, if you were operating a greeting card store where you had to buy greeting cards
from a stationary company for $1 each, then that dollar represents a variable cost. As your
business and sales grow, you can begin appropriating labor and other items as variable costs
if it makes sense for your industry.
Setting a Price

This is critical to your breakeven analysis; you can’t calculate likely revenues if you don’t know
what the unit price will be. Unit price refers to the amount you plan to charge customers to buy a
single unit of your product.

• Psychology of Pricing: Pricing can involve a complicated decision-making process on the

part of the consumer, and there is plenty of research on the marketing and psychology of how
consumers perceive price. Take the time to review articles on pricing strategyand
the psychology of pricing before choosing how to price your product or service.
• Pricing Methods: There are several different schools of thought on how to treat price when
conducting a breakeven analysis. It is a mix of quantitative and qualitative factors. If you’ve
created a brand new, unique product, you should be able to charge a premium price, but if
you’re entering a competitive industry, you’ll have to keep the price in line with the going
rate or perhaps even offer a discount to get customers to switch to your company.
One common strategy is "cost-based pricing", which calls for figuring out how much it will
cost to produce one unit of an item and setting the price to that amount plus a predetermined
profit margin. This approach is frowned upon since it allows competitors who can make the
product for less than you to easily undercut you on price. Another method, referred to by
David G. Bakken of Harris Interactive as "price-based costing"encourages business owners
to "start with the price that consumers are willing to pay (when they have competitive
alternatives) and whittle down costs to meet that price." That way if you encounter new
competition, you can lower your price and still turn a profit. This presentation from Harris
 Interactive offers a further explanation of these methods, and About.com offers an overview
of common pricing methods.
The formula: Don’t worry, it’s fairly simple. To conduct your breakeven analysis, take your
fixed costs, divided by your price, minus your variable costs. As an equation, this is defined as:
Breakeven Point = Fixed Costs/(Unit Selling Price - Variable Costs)
This calculation will let you know how many units of a product you’ll need to sell to break even.
Once you’ve reached that point, you’ve recovered all costs associated with producing your
product (both variable and fixed).

Above the breakeven point, every additional unit sold increases profit by the amount of the unit
contribution margin, which is defined as the amount each unit contributes to covering fixed costs
and increasing profits. As an equation, this is defined as:

Unit Contribution Margin = Sales Price - Variable Costs

Recording this information in a spreadsheet will allow you to easily make adjustments as costs
change over time, as well as play with different price options and easily calculate the resulting
breakeven point. You could use a program such as Excel’s Goal Seek, if you wanted to give
yourself a goal of a certain profit, say $1 million, and then work backwards to see how many
units you would need to sell to hit that number. (This online tutorial will show you how to use
Goal Seek.)

Calculators

There are several online calculators to assist you with your breakeven analysis:

• Case Western Reserve University offers a breakeven analysis calculator that includes a
review of relevant microeconomic terms.
• This financial calculator allows you to chart your costs and profits appear in a graph.
• Inc.com offers a breakeven analysis calculator that requires a user to enter in total annual
overhead and annual year-to-date sales and cost of sales, and lets the user delineate the period
for the YTD calculations in terms of weeks.
Bid Pricing :-The stock exchanges use a system of bid and ask pricing to match buyers and
sellers. The difference between the twoprices is the bid/ask spread.

Cost-plus pricing: - It is a pricing method commonly used by firms. It is used primarily because
it is easy to calculate and requires little information. There are several varieties, but the common
thread in all of them is that you first calculate the cost of the product, then include an additional
amount to represent profit. Cost-plus pricing is often used on government contracts, and has
been criticized as promoting wasteful expenditures.

Customary pricing:- is where the product "traditionally" sells for a certain price. Candy bars of
a certain weight all cost a predictable amount -- unless you purchase them in an airport shop.

Dumping Pricing:- The Best example here would be China Dumping the Electronic Goods in
the Indian Market.

Experience curve pricing: -A pricing policy in which a company expands its market share by
fixing a low price that high cost competitors cannot match. For Ex – Spykar Jeans.

Loss Leader Pricing :-The intent of this pricing strategy is to not only have the customer buy
the (loss leader) sale item, but other products that are not discounted. For Eg Big Bazzar.

Prestige pricing:- Cheap products are not taken seriously by some buyers unless they are priced
at a particular level. For example, you can sometimes find clothing of the same quality brand at
Nordstrom as you do at the Men's Warehouse. But because it is priced higher,
Nordstrom's clientele believes it to be of higher quality.

Professional pricing:- Pricing used by people who have great skill or experience in a particular
field or activity. For Eg Corporate Professionals

Promotional pricing :- It is related to the short term promotion of a particular product. For
Ex :- Pricing of a product during its Launch.

Q.2 Explain the benefits and demerits of the different types of advertising media. How will
a marketer decide on the suitable media for his/her products? (10 marks)
 Newspapers:

Newspapers are one of the traditional mediums used by businesses, both big and small alike, to
advertise their businesses.

Advantages Disadvantages

· Ad space can be expensive

· Allows you to reach a huge number
· Your ad has to compete against the clutter of other
of people in a given geographic area
advertisers, including the giants ads run by supermarkets
· You have the flexibility in deciding
and department stores as well as the ads of your
the ad size and placement within the
competitors
newspaper
· Poor photo reproduction limits creativity
· Your ad can be as large as necessary
· Newspapers are a price-oriented medium; most ads are
to communicate as much of a story as
for sales
you care to tell
· Expect your ad to have a short shelf life, as newspapers
· Exposure to your ad is not limited;
are usually read once and then discarded.
readers can go back to your message
· You may be paying to send your message to a lot of
again and again if so desired.
people who will probably never be in the market to buy
· Free help in creating and producing
from you.
ad copy is usually available
· Newspapers are a highly visible medium, so your
· Quick turn-around helps your ad
competitors can quickly react to your prices
reflect the changing market conditions.
· With the increasing popularity of the Internet,
The ad you decide to run today can be
newspapers face declining readership and market
in your customers' hands in one to two
penetration. A growing number of readers now skip the
days.
print version of the newspaper (and hence the print ads)
and instead read the online version of the publication.

Ans-

Magazines:
Magazines are a more focused, albeit more expensive, alternative to newspaper advertising. This
medium allows you to reach highly targeted audiences.

Advantages Disadvantages

· Long lead times mean that you

· Allows for better targeting of audience, as you can choose
have to make plans weeks or
magazine publications that cater to your specific audience or
months in advance
whose editorial content specializes in topics of interest to your
· The slower lead time heightens
audience.
the risk of your ad getting
· High reader involvement means that more attention will be
overtaken by events
paid to your advertisement
· There is limited flexibility in
· Better quality paper permits better color reproduction and full-
terms of ad placement and
color ads
format.
· The smaller page (generally 8 ½ by 11 inches) permits even
· Space and ad layout costs are
small ads to stand out
higher

Yellow Pages:
There are several forms of Yellow Pages that you can use to promote and advertise your business.
Aside from the traditional Yellow Pages supplied by phone companies, you can also check out
specialized directories targeted to specific markets (e.g. Hispanic Yellow Pages, Blacks, etc.);
interactive or consumer search databases; Audiotex or talking yellow pages; Internet directories
containing national, local and regional listings; and other services classified as Yellow Pages.

Advantages Disadvantages

· Wide availability, as mostly everyone

uses the Yellow Pages
· Pages can look cluttered, and your ad can easily get
· Non-intrusive
lost in the clutter
· Action-oriented, as the audience is
· Your ad is placed together with all your competitors
actually looking for the ads
· Limited creativity in the ads, given the need to
· Ads are reasonably inexpensive
follow a pre-determined format
· Responses are easily tracked and
· Ads slow to reflect market changes
measured
· Frequency

Radio:

Offers a wide range of publicity possibilities. It is a mobile medium suited to a mobile people. It
reaches the bedroom and breakfast table in the morning and rides to and from work in the car,
lulls us to sleep at night and goes along to the beach, to the woods and on fishing trips, a
flexibility no other medium can match.

Advantages Disadvantages

· Radio is a universal medium enjoyed by

people at one time or another during the day, · Because radio listeners are spread over many
at home, at work, and even in the car. stations, you may have to advertise simultaneously
· The vast array of radio program formats on several stations to reach your target audience
offers to efficiently target your advertising · Listeners cannot go back to your ads to go over
dollars to narrowly defined segments of important points
consumers most likely to respond to your · Ads are an interruption in the entertainment.
offer. Because of this, a radio ad may require multiple
· Gives your business personality through the exposure to break through the listener's "tune-out"
creation of campaigns using sounds and factor and ensure message retention
voices · Radio is a background medium. Most listeners
· Free creative help is often available are doing something else while listening, which
· Rates can generally be negotiated means that your ad has to work hard to get their
· During the past ten years, radio rates have attention.
seen less inflation than those for other media

Television:

A medium that permits the use of the printed world, spoken word, pictures in motion, color,
music, animation and sound effects all blend into one message, possesses immeasurable potency.
Television has become a dominant force, the primary source of news and entertainment and a
powerful soapbox from which citizens protests can be communicated to the nation and the world.
This medium has greatly altered national election campaigns and has diminished the role of the
 political parties. Events made large by TV shape public opinion worldwide.

Advantages Disadvantages

· Message is temporary, and may require multiple

exposure for the ad to rise above the clutter
· Television permits you to reach large
· Ads on network affiliates are concentrated in
numbers of people on a national or regional
local news broadcasts and station breaks
level in a short period of time
· Preferred ad times are often sold out far in
· Independent stations and cable offer new
advance
opportunities to pinpoint local audiences
· Limited length of exposure, as most ads are only
· Television being an image-building and
thirty seconds long or less, which limits the
visual medium, it offers the ability to convey
amount of information you can communicate
your message with sight, sound and motion
· Relatively expensive in terms of creative,
production and airtime costs

Steps to Media Planning

Every media plan begins with target audience. The target audience can be classified in terms of
age, sex, income, education, occupation and other variables. The audience can also be classified
as children teenagers, yound adults, office goers, newly married couples, parents,
grandparents,etc. i.e DECIDING ON TARGET MARKETS.

The classification of the target audience helps the media planner to understand the media
consumption habits, and accordingly choose the most appropriate media or media-mix The
media planner can also select the most appropriate programme (in case of radio and TV) to
insert advertisement.

Matching media and market

Advertisers must always attempt to match the profile of the target market with the demographic
characteristics of a given medium’s audience.Let us consider an example of cigarette
advertising. The target market for this is men in the age group of 25 to 60 years. The advertiser
would consider placing ads in magazines having a predominantly male readership. Advertising
in magazines having a predominantly female readership would be mostly wasteful for this
product. It may be true that rarely does any magazine have a 100 percent male readership. Even
so, when selecting a predominantly men’s magazine, the advertiser would minimize wasteful
expenditure, Some media, such as general interest consumer magazines and newspapers,
network radio and television offer to an advertiser the means of transmitting ad messages to a
cross-section of the consumer market. Against this, some other media, such as spot radio and
television, special interest magazines, business publications, and some business newspapers
offer the means of reaching selective group of audience. The selectivity offered by some media
is useful for advertisers, for it enables them to reach a distinct target market with minimum
waste. In fact, a great deal of information on the media about their demographic characteristics
is provided by the media themselves.The objective of any media planner is to achieve the best
possible matching of the media and the market.

DECIDING ON MEDIA OBJECTIVES:

The media planner has to decide on the media objectives. Media objectives often are stated in
terms of reach, frequency, gross rating points and continuity.

Media objectives

You can contribute most to the media process in the definition of objectives (what you want the
plan to accomplish). Before media planning can start, companies have to define
the marketingobjectives of the product/ idea proposed to be advertised.

For example, if a professional camera manufacturer decides to launch an automatic camera to

expand his market, his marketing objective would be to reach those segments of the population
who are photo enthusiasts but do not want to be hassled by the intricacies of operation of
professional cameras, the fun loving people who want to capture moments of joy and
togetherness. The manufacturer may also target the existing professional camera users to
consider a replacement in order to have the pleasure of an automatic camera, which obviously
will be faster, having mastered the manual one. The marketing objective, hence, would be to
extend distribution into new geographic markets or income groups as also the current users of
cameras

The following could be the media objectives

• To reach photo enthusiasts of that age and income group who are the chief purchasers.

• To concentrate the greatest weight in urban areas where the target audience would
normally be found and where new ideas gain a quicker response.

• To provide advertising support at a consistent level except when it needs extra weight
during announcements and the holiday season, when such target buyers are planning to
visit exotic places or to meet their kith and kin.

• To select those media, which will help strengthen the creative strategy and help
demonstrate convenience, ease of shooting and, of course, excellent results. The “Hot
Shot” camera with the’Khatak’ sound became an instant success with the photo
enthusiasts in the late eighties in India.

• To reach target buyers through those media to gain greater frequency and lesser cost per
opportunity

Media objectives are built around answers to five questions: who, when, where, how often, and
in what way?

MEDIA EVALUATION

After the objectives are defined there is a need to evaluate each media in order to reach a
conclusion about the type of media that will be most effective for the accomplishment of the
objectives.

The objects of the evaluation are:

 • To see which media are feasible.

• To pick the main medium.

• To prepare for the decision on how it should be used.

• To see whether there are suitable supporting media if required.

Creative suitability:

There may be obvious reasons why a particular medium is especially suitable for the campaign
or another is unsuitable, a coupon is to be included or the absence of colour is critical. Often the
preference of the creative group is not backed up by concrete evidence but they have strong
views nevertheless about the media to use and those not to use.

The agency is not in the business of reaching consumers with exposures of advertisements
(which tend to be the media department’s natural criterion), but in the business of selling the
product. So if the creative choice looks at all reasonable in media terms, it is usually sensible for
the planning to accept it.

Sometimes the creative choice is unreasonable and may have been reached without full
consideration of the alternatives.

An idea:

Sometimes a media idea, or better an idea which involves media and creative content, is
‘obviously’ right or simply a novelty, which is expected to attract attention and so work. A press
advertisement in the shape of the product, using publications that have never before carried this
type of advertising, a radio commercial announcing ‘officially’ there is now no shortage of the
product, a TV commercial that starts with silence and black screen, a poster that looks like a
shop window and so on. Sometimes a change is as good as an increased budget.
Proven effectiveness:

When there is evidence that a particular medium is the most efficient, the choice is obvious. The
evidence may come from the tests on our own product or from a study of competitor’s activities.

The advertiser often insists on using the same medium as before, even without testing its
effectiveness. The best predictor of an advertising schedule is the schedule for the previous year.
This is not always laziness. It is partly because the media scene is not very different from year to
year: media change is dictated by a major shift in the market place, a new medium, a new
definition of the target, or a new advertising idea. Advertisers resist change because it involves
more risk than to continue with a proven, viable strategy.

Availability and timing:

The type of product or copy claim may prevent the use of a medium- this is most likely to rule
out TV, on which, for example cigarettes are not advertised. The flexibility required by the
advertiser, for example being able to cancel or change advertising at a few days’ notice, may
also rule out a medium-for example it may make colour press impossible.

Competition:

“We can’t come off the box, that’s where our competitors are.”

‘Look, there’s no advertising for this product in women’s magazines: let’s dominate there.’

Of the two policies- match the competition or avoid it- the first is more common in media
choice. This may be because the main purpose of the advertising is defensive- to reassure
existing buyers and reassure existing buyers and diffuse competitors’ attacks. It may also be a
fear of leaving him to dominate a medium. Or the medium normally chosen is simply the most
suitable for that product group. Or the consumer and the trade have come to expect the
advertising to be in that medium and look for it there, so it works best there.; on the same
principle, shops often do better together in the High Street than scattered over the town.

These arguments apply to large advertisers: McDougalls will not leave spillers to be the only
large flour manufacturer on TV, nor Cadburys leave TV to Mars. But for the small budgets it
could be inefficient to hit competition at knee-level. A small advertiser might do better to
dominate a less used medium.

CHOOSING AMONG MAJOR MEDIA TYPES:

The media planner has to know the capacity of the major media types to deliver reach,
frequency, and impact. The major advertising media along with their costs, advantages, and
limitations are to be well understood. Every media plan requires that specific media types be
selected – Doordarshan, Direct mail, satellite TV, newspapers, magazines, etc. Media planners
must consider several variables before choosing among major types:

Target –audience media habits:

This is the most important factor. Housewives watch more of television, whereas, working
women go for magazines. Again television programmes have different viewers. For instance,
“world this week” is viewed by teenagers and young adults. Therefore, it would be advisable to
advertise during “World this week” such products which are of interest to teenagers and young
adults. Radio and television are the most effective media for reaching teenagers.

Products:

Products that require demonstration can suit for television. For example, the demonstration of
the use of a vacuum cleaner by Eureka Forbes. Financial advertising such as new issue of shares
is good in newspapers. Women's dresses are best shown in color magazines, and Polaroid
cameras a best demonstrated on television. Media types have different potentials for
demonstration, visualization, explanation, believability, and color.

Again there are media restrictions on certain products. For instance, alcoholic drinks and
cigarettes cannot be advertised in press as well as on DD and AIR, hence these two options are
totally ruled out.

Message:
The type of message dictates the type of media. For example, an ad that features technical
information is best suited for specific magazines. Again, an ad from retailer announcing major
sale on discount requires more of local newspapers.

Cost Factor:

Television is very expensive, where as, radio is very economical. However, cost is not the only
factor, even if it is calculated on the basis of cost per- person reached. The impact of the media
is to be taken into account.

SELECTING SPECIFIC MEDIA VEHICLES

Once a decision is made on media types, specific media vehicles within each medium must be
chosen. For instance, the media planner may take a decision to select only magazines. The
question now appears in which magazines. There are several classes of magazines- General
interest like Reader’s digest, Women Interest magazines like Femina, Savvy, Elle, Business
interest magazines like Business India, Business Today. If the decision is to select Business
Interest Magazines- then the media planner may consider the following:

• Business India

• Business World

• Fortune India

• Dalal Street Journal

• Business Today

• Advertising & Marketing

Q.3 Write a note on new product development and product mix. (10 marks)
Ans-

Marketing mix is an imperative concept in modern marketing and academically it is referred to

as the set of controllable tools that the firm blends to produce the response it wants in the target
market, so it consists of everything the firm can do to influence the demand for its product
(Kotler and Armstrong, 2004). It is important to realise that marketing mix strategy of any
company can have one major function, that is, strategic communication of the organisation with
its customers (Proctor, 2000). It was further argued that marketing mix provides multiple paths
as such communication can be achieved either in spoken form and written communications
(advertising, selling, etc.) or in more symbolic forms of communication (the image conveyed in
the quality of the product, its price and the type of distribution outlet chosen). However, the key
element is that the main aspects of marketing mix that will be discussed below "should not be
seen as individual entities, but as a set of interrelated entities which have to be set in conjunction
with one another" (Proctor, 2000: 212).

Main Aspects of Marketing Mix

The easiest way to understand the main aspects of marketing is through its more famous
synonym of "4Ps of Marketing". The classification of four Ps of marketing was first introduced
and suggested by McCarthy (1960), and includes marketing strategies of product, price,
placement and promotion. The following diagram is helpful in determining the main ingredients
of the four Ps in a marketing mix.

• Product

In simpler terms, product includes all features and combination of goods and related services
that a company offers to its customers. So theAirbusproduct includes its body parts such as the
engine, nut bolts, seats, etc along with its after-sales services and all are included in the product
development strategy of the Airbus. However, a serious criticism can be raised here in terms of
how marketing mix analysis will cater for companies such as ABN Amro Bank,Natwest
Bank, British Airways and Fedex Corporation as they don't possess tangible products. It was
argued that is it feasible to omit service-oriented companies with the logic that the term
"services" does not start with a "P", however, it was asserted that these companies can use the
terminology of "service products" under marketing mix strategy making (Kotler & Armstrong,
2004).

Lazer (1971) argued that product is the most important aspect of marketing mix for two main
reasons. First, for manufacturers, products are the market expression of the company's
productive capabilities and determine its ability to link with consumers. So product policy and
strategy are of prime importance to an enterprise, and product decisions dictate the scope and
direction of company activity. Moreover, the market indicators such as profits, sales, image,
market share, reputation and stature are also dependent on them. Secondly, it is imperative to
realise that the product of any organisation is both a component and a determinant of the
marketing mix as it has a great influence on the other elements of the mix: advertising, personal
selling, channels of distribution, physical distribution and pricing. So without proper product
policy, a company can not pursue for further elements of marketing mix.

Pricing

Pricing is basically setting a specific price for a product or service offered. In a simplistic way,
Kotler and Armstrong (2004) refer to the concept of price as the amount of money that
customers have to pay to obtain the product. Setting a price is not something simple. Normally
it has been taken as a general law that a low price will attract more customers. It is not a valid
argument as customers do not respond to price alone; they respond to value so a lower price
does not necessarily mean expanded sales if the product is not fulfilling the expectation of the
customers (Lazer, 1971).

Generally pricing strategy under marketing mix analysis is divided into two parts: price
determination and price administration (ibid).

Price determination is referred to as the processes and activities employed to arrive at a price for
a product including consideration of relative prices of products within the same line, and
differences in price for similar products of differing grades and qualities.

Price administration is referred to as the activities involved in fitting basic prices to particular
sales situations such as geographic locale, functions performed by customers, position of
distribution channel members, or special sales situations. An example of this is special
discounted prices at, for instance, GAP,NEXTetc or Coca ColaandPepsiwheredifferent prices
are set in different geographical areas considering the difference in patterns of usage as well as
varying advertisement costs.

Placement

Placement under marketing mix involves all company activities that make the product available
to the targeted customer (Kotler and Armstrong, 2004). Based on various factors such as sales,
communications and contractual considerations, various ways of making products available to
customers can be used (Lazer, 1971). Companies such as Ford, Ferrari, Toyota, and Nissan use
specific dealers to make their products available, whereas companies such asNestle involve a
whole chain of wholesaler retailers to reach its customers. On a general note, while planning
placement strategy under marketing mix analysis, companies consider six different channel
decisions including choosing between direct access to customers or involving middlemen,
choosing single or multiple channels of distributions, the length of the distribution channel, the
types of intermediaries, the numbers of distributors, and which intermediary to use based on the
quality and reputation (Proctor, 2000)

Promotion

Promotional strategies include all means through which a company communicates the benefits
and values of its products and persuades targeted customers to buy them (Kotler and Armstrong,
2004). The best way to understand promotion is through the concept of the marketing
communication process. Promotion is the company strategy to cater for the marketing
communication process that requires interaction between two or more people or groups,
encompassing senders, messages, media and receivers (Lazer, 1971). Taking the example
of Nokia, the sender of the communication in this case is Nokia, the advertising agency, or both;
the media used in the process can be salesmen, newspapers, magazines, radio, billboards,
television and the like. The actual message is the advertisement or sales presentation and the
destination is the potential consumer or customer, in this case mobile phone users.

Limitation of Marketing Mix Analysis (4Ps of Marketing)

Despite the fact that marketing mix analysis is used as a synonym for the 4Ps of Marketing, it is
criticised (Kotler & Armstrong, 2004) on the point that it caters seller's view of market analysis
not customers view. To tackle this criticism, Lauterborn (1990) attempted to match 4 Ps of
marketing with 4 Cs of marketing to address consumer views:

Product – Customer Solution

Price – Customer Cost
Placement – Convenience
Promotion – Communication

How to Write a Good Marketing Mix Analysis

To follow a simple and best approach for marketing mix analysis, it is imperative to understand
the purpose of this analysis. So the basic key is to analyse the company's overall marketing
strategy primarily through the strategies it follows under the 4Ps of marketing.

So the approach should be to keep equal balance in analysing all four elements of marketing
mix. The following points should be considered while carrying out analysis:

• While analysing a company's product, a common fallacy can be focusing on the final
outlook of the product and that gives rise to a naïve approach. Analysts should consider
and analyse all major product decisions that the company may have carried out including
quality, features, options, style, brand name, packaging, sizes, after-sales services,
warranties, returns, etc. Moreover, the company's position, as well as marketing strategy
in the market, can be judged on the basis of its product mix including width, length,
depth and consistency (Proctor, 200). Width is the number of lines the firm carries, for
example Sony has various lines including TV, video, cameras and laptops. Length is the
number of items in the product mix, for example Toshibahas different types of TVs and
laptops. Depth is the number of variants of each product offered in the line such as clock
radios, car radios and pocket radios. Finally, consistency is how closely related the
various product lines are in terms of the use to which they are put, more commonly
including electrical and entertainment products. So, using these bases for product
strategy classification will lead to easy and effective analysis. Finally, one should
attempt to identify what the company is actually aiming at through its product. There can
be three possible product strategies in a company's action (Proctor, 2000). Either it aims
the product at the market such asErickson with new mobile phones to cater for the
business class; it can be given a "face lift" such as Marks & Spencer'sattempt with more
customer-specific products; and it can be withdrawn, discontinued or eliminated such
as Marks & Spencer closing down its unprofitable units across the globe.

• To write a valuable pricing analysis of a company, the key is to correlate its pricing
strategy with its product position in the market. The company may use various pricing
strategies such as penetration, skimming, competition-based pricing, psychological
 pricing, price wars, etc (Proctor, 2000). A company uses penetration prices if its product
is entirely new to the market so it may charge low prices to increase market share. It may
be observed thatPorsche and Ferrariuse skimming pricing where they may charge a
higher price as they know their specific customers will buy their product at any price.
Sometimes companies have more fluctuating prices so an analyst should consider that
their might be competition going on or a price war has broken through between rivals.
For instance,Pepsi and Coke often indulge in such price wars. Sometimes psychological
dimensions can be considered as well. Customers easily find products
in Tesco,Asda or Sainsbury'swith price tags of £2.99 or £4.99 rather than £3 or £5 as
customers may perceive them as £2 or £4. So the writer must analyse which of these
strategies a company is following and for what reason.

• Similarly, placement analysis requires the knowledge of a company's distribution

channels, for instance analysis of the fact that a company is involving any middleman or
not. If analysis of a consumer-good producer such as Nestle,Cadbury, and Colgate &
Palmolive is carried out, there are high chances that a middleman will be involved
considering the size of the market in target. However, industrial producers such
as Airbus may opt for direct distribution considering the limited number of customers.
Similarly, it should be noted that a company may be using a specific intermediary if the
ease, reliability, image of the particular outlet, the way in which it performs and the deals
which can be struck with the distributor are satisfactory. So, a company may choose
C&A rather thanMarks and Spencer, or Tesco rather than any other retail outlet (Proctor,
2000). On a general note, a very good analysis can be made if the placement related the
six questions highlighted in previous sections are tackled.

• Finally, the basic step in promotion analysis is to identify the communication objective
that the company is aiming at. There can be multiple communication objectives that can
be identified. One should analyse how the promotion strategy is aimed at creating
awareness of the product or service, provision of product information, brand recognition,
gaining access to a target audience that is inaccessible to a salesman, evoking desire for a
product or service, merely making the selling task easier, overcoming prejudices,
creating a reminder or to allay cognitive dissonance (Proctor, 2000). Once the
communication objective is identified, then it is imperative to analyse the message and
 the promotional mix that is used by the company including advertisement, sales
promotion, publicity and personnel selling. For Instance Nike very rarely uses personal
selling due to its established brand awareness, however, it continually uses
advertisements with communication objective of creating a product reminder. Contrary
to that,Unilevermay use personal selling, advertisements as well as offering discounts
(sales promotion) if it launches a new consumer good such as toothpaste or soap to cater
for the communication objective of creating new product awareness.

Q.4. Select any brand of toilet soap and evaluate its positioning strengths or weaknesses in
terms of attributes, benefits, values, brand name and brand equity. Also, examine how
competitive brands influence the marketing strategies of the selected soap. (10 marks)
Ans-

Toilet Soap:-

LUX

Lux soap was first launched in 1916 as laundry soap targeted specifically at 'delicates'. Lever
Brothers encouraged women to home launder their clothes without fear of satins and silks being
turned yellow by harsh lyes that were often used in soaps at the time. The flake-type soap
allowed the manufacturer some leeway from lye because it did not need to be shaped into
traditional cake-shaped loaves as other soaps were. The result was a gentler soap that dissolved
more readily and was advertised as suitable for home laundry use.

Lux toilet soap was introduced in 1925 as bathroom soap. The name 'Lux' was chosen as a play
on the word "luxury." Lux has been marketed in several forms, including bar and flake and
liquid (hand wash, shower gel and cream bath soap).

Lux in step with the changing trends and evolving beauty needs of the consumers, offers an
exciting range of soaps and Body Washes with unique elements to make bathing time more
pleasurable. One can choose from a range of skincare benefits like firming, fairness and
moisturising.
Lux stands for the promise of beauty and glamour as one of India's most trusted personal care
brands. Since its launch in India in the year 1929, Lux has offered a range of soaps in different
colours and world class fragrances. Lux is a beauty soap of film stars. Lux recognized the need
for a compelling message about beauty that would resonate with women of today.
From the 1930s right through to the 1970s, Lux soap colours and packaging were altered several
times to reflect fashion trends. In 1958 five colours made up the range: pink, white, blue, green
and yellow. People enjoyed matching their soap with their bathroom colours.
In the early 1990s, Lux responded to the growing trend away from traditional soap bars by
launching its own range of shower gels, liquid soaps and moisturizing bars. Lux beauty facial
wash, Lux beauty bath and Lux beauty shower were launched in 1992.

In 2004, the entire Lux range was re-launched in the UK to include five shower gels, three bath
products and two new soap bars. 2005 saw the launch of three exciting new variants with
dreamy names such as “Wine & Roses” bath cream, “Glowing Touch” and “Sparkling Morning”
shower gels.

Lux has recently launched its two fruit extract variants – New Lux Strawberry & Cream and Lux
Peach & Cream contain a blend of succulent fruits & luscious Chantilly cream. The most recent
addition in the brand is Lux Crystal Shine.

Study of LUX with respect to 4 P’s

a. Product

A product is anything that can be offered to a market to satisfy a need or want. Products that are
marketed include physical goods, services, experiences, events, persons, places, properties,
organizations, information and ideas.

Product Classification
• LUX is a Tangible, Non Durable Good on the basis of this classification.
• LUX and other soaps fall into the category of Convenience Good
Product Life Cycle
LUX Beauty Bar is in the maturity stage of its life cycle.

Some of the prominent variants

Lux Almond
Lux Orchid
Lux Fruit
Lux Saffron
Lux Sandalwood
Lux Rose
Lux International
Lux Chocolate
Lux Aromatic Extracts
Lux Oil and Honey Glow
Lux Provocateur

LUX Beauty Soap- Form, Features, Style

With icons of beauty endorsing the brand, the offerings made by Lux have always been superior
and have always led the market, setting benchmarks for competition.
Lux has beauty offerings in two of the four market segments – popular and premium, spanning
the needs of varied consumers.

Lux Toilet Soap in the popular segment has in the past years offered its consumers a range of
soaps enriched with the goodness of a variety of nourishing ingredients – rose extracts, almond
oil, milk cream, fruit extracts and honey which are known to harbour the secrets of incredibly
perfect skin.

At the upper end of the market is the premium range which continues to offer specialised
skincare to its consumers in the form of International Lux – a range of moisturising, deep
cleansing and sunscreen soaps.
To establish the presence of nourishing ingredients in the new Lux, a unique concept,
‘ingredients you can see in the soap’, was born. A novel metallic substrate packaging beautifully
showcased the ingredients and its globally accepted ingredient-linked perfumes heightened the
sensorial experience.
Each of the soaps in the range has milk cream, with the active ingredients of rose extracts,
sandal saffron, almond oil and fruit extracts. These create an experience in pampering
indulgence and luxury designed to bring out the star in every woman. This is the first time in the
Indian chapter of the brand that the beauty bar variant was being differentiated on the basis of its
ingredients rather than its perfume and colours.
Though Lux International, a premium variant of the toilet soap, launched in 1989, is
differentiated on the basis of its ingredients, the popular version, Lux Beauty Bar was always
projected as a “pure and mild” solution to soft and smooth skin.
Logo
Labelling
The LUX Trade Character or Logo is present prominently on the package. A novel metallic
substrate packaging showcases the ingredients, and a female model is shown on the pack. Also
displayed graphically are the key ingredients.
Packaging
The colors are different for different variants such as saffron for the saffron variant, pink for the
rose extracts etc.The Bars come in package sizes of 100g, 120g, 150 g

Lux has also launched a 45 g variant called Mini Lux priced at Rs. 5.
b. Promotion
The great Indian brand wagon started nearly four decades ago. Great brands sometimes outlast
their ambassadors as proven by Lux which celebrated its 75th anniversary in India.

The first ambassador, Leela Chitnis featured in a Lux advertisement which flagged off the Lux
wagon. She gave way to a galaxy of stars which includes Madhubala, Nargis, Meena Kumari,
Mala Sinha, Sharmila Tagore, Waheeda Rehman, Saira Banu, Hema Malini, Zeenat Amaan,
Juhi Chawla, Madhuri Dixit, Sridevi, Aishwarya Rai and Kareena Kapoor. The last frontier for
most actors aspiring to stardom is becoming a Lux ambassador. The brand has outlasted many
soaps. From the beginning, Lux became a household name across the country.

Advertising
Advertising is any paid form of non-personal presentation and promotion of ideas, goods and
services by an identified sponsor. Ads can be a cost effective way to disseminate messages,
whether to build a brand preference or to educate people.

LUX ADVERTISEMENTS THROUGH THE AGES

Leela Chitnis in the first Lux print adverstisement featuring an indian actress

Aishwarya Rai in a print advertisement featuring Lux international

Priyanka Chopra in the latest Lux advertisement

• USP or the common thread through all the advertisements is the Presence of Movie Stars
through the ages.
• The product has been positioned on the basis of REFERENCE GROUP by using a celebrity
popular at that point in time.
• Some amount of attribute positioning by mentioning the various ingredients has also been
done.
Lux campaigns have wooed millions of people over the decades. Popularly known as the beauty
soap of film stars, Lux has been an intimate partner of the brightest stars on the silver screen for
decades. An ode to their beauty, an announcer of their stardom, advertising campaigns on Lux
have featured film stars across the nation, promising their beauty and complexion to ordinary
women.
With top movie stars – from Madhubala to Madhuri, from Babita to Karisma and Kareena
having endorsed the goodness of Lux over generations, it was natural that the brand has built
equity as the best beauty soap in India.
From the beginning Lux, by using a leading film star of the time, has fulfilled the consumers’
aspirations of using beauty soaps via the rationale ‘if it’s good enough for a film star, it’s good
for me. This later moved into a transformation role of having a bath with Lux, which transports
the user into a fantasy world of icons, film stars and fairy lands.

Change in communication strategy

However, the communication was slowly seen to be losing relevance, as consumers were
beginning to question if the film star actually used the brand.
In addition to this, several competitive beauty soap brands had begun advertising using similar
methods of communication. In this context, the global brand team for Lux developed a new
communication strategy. This strategy – bring out the star in you – for the first time moved the
brand away from the long-running film star route. The film star still features in the new
communication but not as her gorgeous self but rather as an alter ego/projection of the
protagonist (a regular girl), for a few seconds of the entire ad.
Thus, for the first time the film star was used as a communication device and not as the main
feature of the ad. The move away from the film star and her fantasy world to a regular Lux user,
with the focus on the protagonist’s star quality, is a change from the norms set by Lux
advertising in the past. With the new communication strategy, the film star is used purely as a
communication device to portray star quality in every Lux user. This can be significantly seen in
the latest TV commercial of Lux Crystal Shine where Priyanka Chopra is portrayed as a normal
woman.

This idea – bring out the star in you – puts the consumer at the heart of the brands’ promise. This
promise goes beyond the functional deliverables of soap, beyond bathing and the bathroom to
the world outside. It’s a world where with Lux on her side, an ordinary woman can impact her
world with her own star quality.

This is a successful attempt to bring the brand closer to its users and to give it a more youthful
and contemporary image.

Breaking away from tradition, HLL resorts to a male and metro sexual Shah Rukh to revive Lux,
which turned 75 in 2005.

Sales Promotion
Sales promotion, a key ingredient in marketing campaigns, consists of a collection of incentive
tools, mostly short term, designed to stimulate quicker or greater purchase of particular products
or services by consumers or the trade.
Whereas advertising offers a reason to buy, sales promotion offers an incentive to buy.
Sales promotion includes tools for
Prominent Sales Promotion Schemes Used By LUX
• Lux presented 30 gm gold each to the first three winners of the Lux Gold Star offer from
Delhi. According to the promotional offer that Lux unveiled in October 2000, a consumer
finding a 22-carat gold coin in his or her soap bar got an opportunity to win an additional 30 gm
gold. The first 10 callers every week got a 30 gm gold each.
The offer could be availed only on 100 gm and 150 gm packs of Lux soap.

• Lux Star Bano, Aish Karo contest: All one needed to do was buy a special promotional pack of
Lux soap. The pack comes with a special scratch card. The 50 lucky winners and their spouses
were flown down to Mumbai to live a day like Aishwarya Rai would. They could also be given
gift vouchers worth Rs 50,000 from Shoppers' Stop along with an exclusively designed Neeta
Lulla sari and a beauty makeover by Michelle Tung, Aishwarya's preferred designer and stylist.
The pièce de résistance was a dinner date with Aishwarya Rai herself.
• Lux celebrated 75 years of stardom with the Har Star Lucky Star activity.
All wrappers of Lux had a star printed inside them. If the consumer found written inside the star,
any number from “1” to “5”, she would get an equivalent discount (in rupees) on her purchase
from her shopkeeper. If the consumer found “75 years” written inside the star, she will get a
year’s supply of Lux free.

Online contests:
Play the supercharged version of the hit puzzle game, Bejeweled. Create rows of 3 or more
identical stones and you could win a trip for two to a five-star Resort in Goa.

Public Relations:
Not only must the company relate constructively to customers, suppliers and dealers, it must
also relate to a large number of interested publics. A public is any group that has an actual or
potential interest in or impact on a company’s ability to achieve its objectives. PR involves a
variety of programs designed to promote or protect a company’s image or its individual
products.

LUX PR Activities
• Press relations:
Lux has been maintaining constant communicating with its customers and potential customers,
of the various developments taking place in the brand by using press relations.
• Events:
Lux celebrated 75 years of existence in a grand way by unveiling Shahrukh Khan as their latest
brand ambassador. Kareena Kapoor, Juhi Chawla, Sridevi and Hema Malini graced the event
and made it special. All the stars have endorsed Lux in the past. The event was held at the grand
Intercontinental in Mumbai.

Limited edition:
Coming up with limited edition of the brand is also a way of attracting attention towards the
brand. It creates a buzz and a feeling of urgency to try out the product and helps in promotion of
the brand. This strategy was also implemented by Lux by bringing out limited editions like
Chocolate Seduction, Aromatic Glow, Festive Glow and Haute Pink.

c. Price
If price is too high then a company may never sell a single item of it. If price is too low then one
can lose money on every sale once all of costs of doing business are considered. Therefore the
key is to price it in such way that it appears attractive to the customer as well as profitable to the
company. HUL seems to have mastered this idea. Prices of HUL are considered the most
competitive in Indian market. The main fact for this huge success story is the strategic pricing
decision the company has adopted from time to time.

HUL always gives value for money to their consumers. It is known for its competitive pricing. It
has the advantage of quoting a reasonable price due to its economies of scale. HUL also can
quote a very competitive price due to its superior technology and optimum utilization of
inventory. It has the product range that meets the needs of all classes of consumers. It has the
products that are categorized as premium and mass products. HUL matches its prices with the
competitor who is operating in the same category. HUL also gives price offs on its products to
reward consumers who are using it for a long time and also to attract new consumers.

The price of the premium segment products is twice that of economy segment products. The
economy and popular segments are 4/5ths of the entire soaps market.
Price segments of toilet soaps
Segment Price/weight
Premium > Rs. 15 / 75 gms
Popular Rs. 8-15/75 gms
Economy < Rs. 8 /75 gms

However, recently HUL has been forced to hike its price by one rupee, to Rs17 (for 100 gm),
giving in to the pressures of inflation. This paves the way for competing soap makers like
Godrej Consumer Products (GCPL) to take price increases.
Lux has versions in all the three price segments:
Recent pricing of Lux (100 g)
Lux Crystal Shine Rs 17
Lux Festive Glow Rs 15
Mini Lux Rs 5

d. Place
Cutting-edge distribution network
HUL’s distribution network is recognized as one of its key strengths -- that which helps reach
out its products across the length and breadth of this vast country. The need for a strong
distribution network is imperative, since HUL’s corporate purpose is “to meet the everyday
needs of people everywhere.”
At Hindustan Unilever Limited, distribution network is one of the key strengths that help them
reach their products across the length and breadth of this vast country. It has 2000+ suppliers
and associates 7,000 stockists and direct coverage in over 1 million retail outlets across India.
To meet the ever-changing needs of the consumer, HUL has set up a distribution network that
ensures availability of all their products, in all outlets, at all times. This includes, maintaining
favourable trade relations, providing innovative incentives to retailers and organizing demand
generation activities among a host of other things. HUL boasts of placing a product across the
country in less than 72 hrs.
The first phase of the HUL distribution network had wholesalers placing bulk orders directly
with the company. Large retailers also placed direct orders, which comprised almost 30 per cent
of the total orders collected.
Today, the goods are transferred from the factory to the company warehouses and are sent to the
distributor from there on a daily basis. From the distributor, the stock reaches the market through
daily sales. Typically, these include the salesman registering the order of a retail outlet and
delivering the goods the next day.
Recently HUL has changed its traditional way distribution and came out with a new strategy of
distribution. It‘s because of the change in buying pattern of the consumer due to more disposable
income. There are different channels of distribution like Modern Trade, which covers all chains
of super markets like Food World, who get the stocks directly from the company. Wholesalers
and second leg of big retail outlets called Super Value stores come under the surveillance of the
distributor along with the mass retail outlets. There is also this new concept in the HUL
distribution channel called Kiosk. Kiosk is a small shop that sells only sachets and low priced
items (below Rs.10/-). Kiosk also does not come under the surveillance of the distributor.

In addition to the ongoing commitment to the traditional grocery trade, HUL is building a
special relationship with the small but fast emerging modern trade. HUL's scale enables it to
provide superior customer service including daily servicing, improving their range availability
whilst reducing inventories. HUL is using the opportunity of interfacing more directly with
consumers in this retail environment through specially designed communication and promotions.
This is building traffic into the stores while yielding high growth for the business.

RSNet
An IT-powered system has been implemented to supply stocks to redistribution stockists on a
continuous replenishment basis. The objective is to catalyse HUL’s growth by ensuring that the
right product is available at the right place in right quantities, in the most cost-effective manner.
For this, stockists have been connected with the company through an Internet-based network,
called RSNet, for online interaction on orders, dispatches, information sharing and monitoring.
RS Net covers about 80% of the company's turnover. Today, the sales system gets to know
every day what HUL stockists have sold to almost a million outlets across the country. RS Net is
part of Project Leap, HUL's end-to-end supply chain, which also includes a back-end system
connecting suppliers, all company sites and stretching right up to stockists. Powered by the IT
tools it has improved customer service, while ensuring superior availability and impactful
visibility at retail points.

For rural India, HUL has established a single distribution channel by consolidating categories. In
a significant move, with long-term benefits, HUL has mounted an initiative, Project Streamline,
to further increase its rural reach with the help of rural sub-stockists. As a result, the distribution
network directly covers about 50,000 villages, reaching about 250 million consumers.

Distribution will acquire a further edge with Project Shakti, HUL's partnership with Self Help
Groups of rural women. The project, started in 2001, already covers over 5000 villages in 52
districts of Andhra Pradesh, Karnataka Madhya Pradesh and Gujarat, and is being progressively
extended. The vision is to reach over 100,000 villages, thereby touching about 100 million
consumers. The SHGs have chosen to adopt distribution of HUL's products as a business
venture, armed with training from HLL and support from government agencies concerned and
NGOs. A typical Shakti entrepreneur conducts business of around Rs.15000 per month, which
gives her an income in excess of Rs.1000 per month on a sustainable basis. As most of these
women are from below the poverty line, and live in extremely small villages (less than 2000
population), this earning is very significant, and is almost double of their past household
income.
For HUL, the project is bringing new villages under direct distribution coverage. Plans are being
drawn up to cover more states, and provide products/services in agriculture, health, insurance
and education. This will both catalyse holistic rural development and also help the SHGs
generate even more income. This model creates a symbiotic partnership between HUL and its
consumers, some of whom will also draw on the company for their livelihood, and helps build a
self-sustaining cycle of growth.

SWOT ANALYSIS

SWOT analysis is a basic, straightforward model that provides direction and serves as a basis for
the development of marketing plans. It accomplishes this by assessing an organizations strengths
(what an organization can do) and weaknesses (what an organization cannot do) in addition to
opportunities (potential favorable conditions for an organization) and threats (potential
unfavorable conditions for an organization). The role of SWOT analysis is to take the
information from the environmental analysis and separate it into internal issues (strengths and
weaknesses) and external issues (opportunities and threats). Once this is completed, SWOT
analysis determines if the information indicates something that will assist the firm in
accomplishing its objectives (a strength or opportunity), or if it indicates an obstacle that must
be overcome or minimized to achieve desired results (weakness or threat) (Marketing Strategy,
1998).
The SWOT analysis summarizes the external environmental factors as a list of opportunities and
threats.
SWOT PROFILE OF LUX

STRENGTHS
1.Strong Market Research (door to door sampling is done once a year in Urban and Rural areas)
2.Many variants (Almond Oil, Orchid Extracts, Milk Cream, Fruit Extracts, Saffron,
Sandalwood Oil, and Honey to name a few)
3.Strong sales and distribution network backed by HLL
4.Strong brand image
5.Positioning focuses on the attractive beauty segment
6.Dynamically continuous innovation of the product and brand rejuvenation – new variants
(Aromatic Glow and Chocolate Seduction and Lux White Spa body wash) and innovative
promotions (22 carat gold coin promotion – ‘Chance Hai’)
7.Perceived to have high value for money (strong brand promotion but relatively lower price
which is a winning combination in the popular segment)
8.Though it is in popular segment, it is having mass appeal/market presence across all segments
(15% of the soap market captured by Lux (sales / volume)
9.Unique advantage of having access to resources and assets of HLL

WEAKNESSES

1.Lux is mainly positioned as beauty soap targeted towards women, hence it lacks unisex appeal
2.Usage rate/ wear rate is high and is generally mushy and soggy
3.Some variants like the sunscreen, International variant did not do well in the market
4.Certain advertisements like the recent one with Shah Rukh Khan resulted in controversial
interpretations of the message of the advertisement and lead to some loss of focus (of message
of the advertisements)
5.Stock out problems - replenishment time is high in semi-urban/rural areas
6.Earlier positioning as the “soap of the stars” has somewhat alienated the brand from a portion
of the consumers especially in rural areas.

OPPORTUNITIES
1. Soap industry growing by 10% in India
2. Beauty segment’s Compounded Annual Growth Rate (CAGR) is very high. An indication of
this is that Fair and Lovely’s segment is increasing at a fast rate - Lux must reinforce its
presence in the beauty segment
3. More promotions like price-offs and samples
4. Retentive strategy required as the soap segment is in the mature stage of its product life cycle
5. Line extension – probably with more variants catering to the beauty segment like natural,
herbal soap etc
6. Liquid body wash is currently in the growth stage – Lux should come out with more variants
in this segment
7. Level of servicing is high during sales promotion schemes – this could be brought down
8. It has a large market share and hence has a strong hold over the market

THREATS

1. New entrants/local competitors/MNCs would increase the competition (Camay, P&G)

2. High internal competition – Pears also catering the beauty segment (also from HLL stable)
3. Excessive dependence on beauty segment makes Lux vulnerable to changing customer tastes
4. Technological change makes the existing products obsolete – Lux should focus on
technological innovations like Body Wash
5. Its in the maturity stage in the Product Life Cycle and has a threat of slipping down to decline
stage if constant reinvention of the brand is not carried out.

Competitor analysis

Internal competitors

Lifebuoy:
Born: 1895
History: Owned by Unilever Plc., the parent company of Hindustan Unilever Ltd.
Status: Has 18% market share in the bathing soaps category, worth Rs6,000 crore
Lifebuoy landed on Indian shores in 1895, when the country was in the grip of a plague
epidemic. With its positioning as a powerful germicidal and disinfectant, and with a strong
carbolic smell, it was what the nation was looking for. But the health advantage waned over time
as competitors came out with soaps that promised both health and beauty.
It was around 2002 that the product moved from being a hard soap to a mild soap that delivered
a significantly superior bathing experience. The new soap had a refreshing fragrance and its
overall positioning changed, painting its promise of health in softer, more versatile and
responsible hues—for the entire family. The packaging was also changed: The rugged looking
packs were soon replaced with a softer pinkish cover. This was followed by a series of ads
highlighting the soap’s germ-fighting benefits.
Lifebuoy had become a family soap with hygiene as its core promise. Right from the early days,
the brand has preferred effective communication to celebrities. An exception is its recent,
limited exposure campaign with cricketer Yuvraj Singh.

External Competitors

Santoor:
Santoor is the flagship brand in the Wipro Consumer Care & Lighting stable and the 2nd largest
brand of soap in India in the popular segment of the category. The brand enjoys two decades of
trust since its launch in 1986 and has grown to be counted amongst the top brands in the Country
in an intensively competitive market. Millions of women across the country have discovered the
secret of younger looking skin with Santoor. It is a truly unique soap that combines the goodness
of natural ingredients - Sandal, Turmeric and natural Skin Softeners. Sandal provides a cooling
and soothing effect that softens skin, while turmeric controls formation of skin darkening
pigments like melanin, to give skin a radiant glow. Natural Skin Softeners make skin soft and
supple. The end result, skin that is so healthy and beautiful, it lies about your actual age!
Amongst the first brands in the Country to launch an offering with the twin ingredient benefits
of Sandal and Turmeric, Santoor has over the years moved from a purely natural ingredient
based appeal, to one of the most preferred beauty soaps of the day. Today, Santoor is one of the
fastest growing soap brands in India. Santoor is available in three variants – Santoor (Sandal &
Turmeric), Santoor White (Sandal & Almond milk) and Santoor Chandan which is a premium
soap manufactured with extracts of Sandalwood oil – a favourite of discerning consumers.
Cinthol:
Cinthol the popular and much-loved brand of Godrej Consumer Products Limited (GCPL)have
been a favourite of people for many years. All different soaps in its range are having feel-fresh
fragrance and high TFM index. Cinthol’s range covers an economic Lime-fresh, the medium
deo-soaps (spice, lime,cologne and the new ’sport’) and a slightly expensive “Cinthol-Original”.
For decades, Cinthol-Original is one of the best soaps made in India. It had a simple red-cover
which attracts none! But was still able to sustain itself in the market . Godrej has now launched
the improved Cinthol range. Cinthol now offers a deo-range of soaps, talc and deo-sprays in
three exciting fragrances - Classic, Cologne and Sport in a trendy new packaging. It also offers
Cinthol fresh soap and Cinthol Regular soap with new exciting packaging. The eye-catching and
vibrant packaging symbolizes a sense of adventure, zest and action. The new Cinthol range
brings 24-Hour Confidence through Active Deo Formula, which controls body odour, Powerful
DryShield that absorbs sweat, UltraScent Technology for long lasting fragrance and Freshness
that revitalises you 24x7.The new range will be available across the country at modern retail and
other outlets and will be supported by high-impact advertising on television, print, out-door, on-
line and radio.

Vivel and Superia:

The Vivel Di Wills range is available in two variants. Its unique carton pack has been developed
by ITC's design team to provide a novel consumer experience. Vivel Di Wills Sheer Radiance is
enriched with Olive Oil, to provide skin lustre to make it radiant. Vivel Di Wills Sheer Crème is
enriched with Shea Butter, to moisturize skin to make it soft and supple.

The Vivel range of soaps is available in four variants:-

Vivel Young Glow is enriched with Vitamin E and Fruit Infusions which help in providing
youthful glow to the skin.
Vivel Satin Soft is enriched with Vitamin E and Aloe Vera which help the skin feel beautifully
soft.
Vivel Sandal Sparkle is enriched with Sandalwood Oil and Active Clay which helps in
providing clear skin.
Vivel Ayurveda Essence is enriched with multiple Ayurvedic Ingredients which help protect
skin from germs and harsh environment, keeping it healthy and beautiful.

In the popular segment, ITC has launched a range of soaps and shampoos under the brand name
Superia. Superia Soaps enriched with natural ingredients give radiant glowing skin. Superia
Soaps are available in four variants :
1. Fragrant Flower: with the fragrance of Rose & Lavender Oil
2. Soft Sandal: with the fragrance of Sandal & Almond Oil
3. Natural Glow: with Neem & Coconut Oils
4. Healthy Glow: with Orange Oil
Market Segmentation
“One cannot be everything to everyone, but can be everything to a selected few”. This is the
basis for segmentation. The definition of segmentation is “market segmentation is a process of
dividing a heterogeneous market into homogeneous sub units. Market segmentation is the
identification of portions of the market that are different from one another. Segmentation allows
the firm to better satisfy the needs of its potential customers.
A good market segmentation will result in segment members that are internally homogenous and
externally heterogeneous; that is, as similar as possible within the segment, and as different as
possible between segments.
Market segmentation of Lux

As mentioned above, market segmentation is done so as to satisfy the customers more

efficiently. For a brand like Lux, which has a broad customer base, this factor becomes
absolutely critical.
The segmentations are done basically on the basis of factors like:

Lux soap concentrates in the beauty soap category. A brief description of the various factors Lux
considers are:
Gender :
Lux has been, since its introduction seen as a soap for women. Lux as a brand symbolises
beauty. The Lux ads has hosted a bevy of film stars such as from Madhubala, Babita, Hema,
Karisma to Kareena all endorsing the goodness of Lux over generations. This was done in order
to attract women who wanted to look and feel like the stars they idolised.
Age :
Lux is seen to mainly attract customers that fall within the age group of 16 to 35. In order to
cater them, Lux comes up with new and interesting variants. One of the latest entrants, Lux
Crystal Shine is mainly targeted at the youth . So is the Black Provocateur which symbolises
boldness . Another example is the chocolate variant lux which was a novel idea. All these are
introduced to catch the attention of the youth.

Income :
One of the essential characteristic of an FMCG product is an affordable price which is very
important for its fast sales. Its the meeting point of demand for a product and its price that decide
whether the product will sell or not. And the demand for a product is highly dependant on the
income of the customer. Lux is not a very costly toilet soap. Its price varies from Rs.15 to
rs.20.Therefore its target market starts from the middle income group.

Positioning
Lux—derived from the word luxury— was launched in 1899 as a laundry soap in the UK. In
1925, the brand was extended to the toilet soap category. It was positioned as a beauty soap in
India, and HUL has since used successful film actors of the time—such as Leela Chitnis,
Madhubala, Hema Malini and Kareena Kapoor—to endorse the product.
Lux’s secret of longevity has been its consistent evolution—be it the soap colour, packaging or
new variants, the brand has banked on innovation to keep its youthful image intact. Extending
the soap cake to a range of shower gels, liquid soaps and moisturizing bars has helped the brand
keep consumers excited and the competition at bay.
What has not changed is the consistency in its communication and its positioning. Its tag lines—
if it’s good enough for a film star, then it’s good for you too to Play with beauty—have
conveyed the same message over the years. It taps into an emotion very close to humanity’s
basic need—social interaction. The brand has always hired celebrities when they have reached a
certain height rather than using them at the start of their careers. This has helped the customers
to relate to their idols on screen.
From being a soap for the stars, Lux has recently started positioning itself in such a way that the
ordinary woman can relate to the brand. The advertisements show not the star, but the actress in
the character of an ordinary girl or woman, which any woman can identify with. This
positioning has helped the brand in striking a chord with the target consumers.

Q. 5 As a salesperson in a fast moving consumer goods company, what kind of training and
development methods do you feel are required? How important is training for sales force
and how can it be evaluated? (10 marks)
Ans-
Training and development methods which are required for Salesperson of FMCG
company:

Who Should Attend?

This intensive course is ideal for front line sales executives who sell directly to the retail market.
It will offer a new perspective for experienced sales staff and provide the necessary tools for
them to thrive in the competitive retail environment. It is also suitable for sales executives who
have recently moved into FMCG selling. They will learn both new and old techniques to
enhance their performance.

About the Programme

FMCG selling is unique, as the products are Fast Moving Consumer Goods. Not only do you
need to convince the customer to buy, but you must also build strategic partnerships, manage the
stocks and the promotions to gain a competitive advantage, and sustain the customer's
commitment with every new order placed. This course will give you practical guidance, help
you to build stronger relationships with retailers, develop the key skills necessary to manage all
aspects of the stock, and improve your own sales performance.

Course Objectives

• To understand the concepts of FMCG selling

• To know how to find out your customers' needs and offer the best solutions

• To learn how to develop stronger relationships with customers - that produce higher sales

• To gain competitive advantage through a clearer understanding of your markets

• To develop the key FMCG skills of shelf space management and promotions

• To make optimal use of time

• To be able to build mutually beneficial partnerships with your retailers

What You Will Gain

• Ways to build the best relationships with retailers

• Tools to help you sell effectively

• An opportunity to look at ways to manage stock and promotions

• A competitive advantage over your main competitors

Programme Contents

DAY ONE

• What Is FMCG Selling?

• Being Prepared For The Sale

> SWOT Analysis Of You, Your Company & Your Products
> BCG (Boston Consulting Group) Analysis Of Your Products
> Knowing Your Customers, Your End-Users, & Your Competitors
> USPs (Unique Selling Points) Of Your Product In Line With Retailer & End-User
Needs
 • Building & Maintaining Relationships
> Roles & Responsibilities Of A Salesperson
> Qualities Of A Salesperson
> Selling As A Professional
> Understanding Relationships With Others Using The Johari Window

• Making The Sale Through Relationship Selling

> Identifying The Needs Of Your Customer
> Developing Needs Through Effective Questioning Techniques
> Offering Solutions By Matching Specific Needs
> Closing The Sale

DAY TWO

• Continuous Commitment From Retailers

> Case Study To Determine How To Secure Continuous Commitment
> The Importance Of Good Communication Skills
> Managing Customer Relationships

• Shelf Space Management

> Managing Shelf Space Positions
> Merchandising
> Out Of Stock Management

• Advantages & Disadvantages of Promotions

• Time & Territory Management

> Territory Management
> Avoiding Time Wasting Traps
> Cash Collection

• Gaining Competitive Advantage

> Case Study To Determine How To Handle The Changing Priorities Of Retailers
> Building Strategic Partnerships
> Making The Relationship Work For You & Your Customer
2 Days - Non-Residential

Delegate spaces available on the following course dates:

Before the course each delegate will be asked to complete a Pre-Course Briefing Form to
determine their individual objectives for attending the course. These objectives will be used by
the tutor to give on-target training that is focused on the individual delegates.

At the end of the course each delegate will be asked to complete a Personal Development Plan
that can be used as part of future appraisals and that will also be an important tool for
management reference.

Importance of Training for Salesforce:-

Good salespeople are hard to find, and the search can be very time consuming. However, good
managers know that searching for personable sales professionals with strong work ethics will
benefit the company in the long run. There are various things to consider when searching for a
good sales force.

1. Growing Your Business

A good sales force will meet and exceed its sales goals. In doing so, your company will see a
consistent growth in profits.

2. Building Client Loyalty

A good sales force is loyal to its company, and loyal salespeople often attract loyal clients.
Clients also prefer to work with professionals who know their product.

3. Department Morale
Good sales professionals earn the respect of their peers by working hard. Work environments
that foster mutual respect have high morale and are more productive.
 4. Lower Cost to the Company
A good sales force works efficiently. Efficient employees understand that their salaries are
investments, and will make good use of their time. This will lower the cost involved in running
your department and help you keep your department's expenses under budget.

5. Building Your Reputation

If you hire an excellent sales force, its stellar performance will be viewed as a reflection of your
talents. This will help you maintain job security, and it will assist you with career advancement
at the appropriate time.

Sales Force Evaluation:-

Whether you use packaged sales assessment tools, skills tests or your own sales know-how, it's
important to evaluate the effectiveness of your sales force. There are specific areas you need to
look at as you conduct evaluations.

1. Competence
Salespeople can't sell unless they know what they are talking about. The sales competencies to
gauge include: product knowledge, competition awareness, networking effectiveness and
industry savvy. Sales skills tests are useful for such measurements.

2. Lead Management
Look at your salespeople's methods for prospecting, their ability to secure appointments, their
capacity to nurture relationships and their savvy for qualifying leads. Use one-on-one meetings
and pointed questions to glean this data.

3. Closing Deals
Consider your salespeople's lead to close ratio (the number of sales calls they make in a period
of time vs. the number of deals they secure). A good ratio varies depending on industry and
market. Comparison to peers is the best way to set a standard.

4. Customer Evaluations
Feedback from your customers, especially those you lose, can be a great way to evaluate
salespeople. Use customer feedback forms to find out how well salespeople represent your
products and provide service.

5. Quotas
A seller's ability to consistently meet practical, quantifiable, worthy sales quotas may be the
most objective way to evaluate success. Check progress frequently by using monthly or
quarterly quotas, rather than annual quotas.

Q. 6 What is International Marketing? What are the various strategies to enter

International markets? Explain. (10 marks)
Ans- International Marketing-
International Marketing is the performance of business activities that direct the flow of a
company's goods and services to consumers or users in more than one nation for a profit.
International marketing is often not as simple as marketing your product to more than one
nation. Companies must consider language barriers, ideals, and customs in the market they are
approaching.Tailoring your marketing strategies to attract the specific group of people you are
attempting to sell to is highly important and can serve the number one cause of failure or
success.
Strategies to enter International Market-

After the decision to invest has been made, the exact mode of operation has to be determined.
The risks concerning operating in foreign markets is often dependent on the level of control a
firm has, coupled with the level of capital expenditure outlayed. The principal modes of
engagement are listed below:

 Exporting (which is further divided into direct and indirect exporting)

 Joint ventures

 Direct investment (split into assembly and manufacturing)

Exporting

Direct exporting involves a firm shipping goods directly to a foreign market. A firm employing
indirect exporting would utilise a channel/intermediary, who in turn would disseminate the
product in the foreign market. From a company's standpoint, exporting consists of the least risk.
This is so since no capital expenditure, or outlay of company finances on new non-current
assets, has necessarily taken place. Thus, the likelihood of sunk costs, or general barriers to exit,
is slim. Conversely, a company may possess less control when exporting into a foreign market,
due to not control the supply of the good within the foreign market.eg.-

Joint

ventures

A joint venture is a combined effort between two or more business entities, with the aim of
mutual benefit from a given economic activity. Some countries often mandate that all foreign
investment within it should be via joint ventures (such as India and the People's Republic of
China). By comparison with exporting, more control is exerted, however the level of risk is also
increased.
Direct investment

In this mode of engagement, a company would directly construct a fixed/non-current

asset within a foreign country, with the aim of manufacturing a product within the overseas
market.

Assembly denotes the literal assembly of completed parts, to build a completed product. An
example of this is the Dell Corporation. Dell
possesses plants in countries external to the United
States of America, however it assembles personal
computers and does not manufacture them from
scratch. In other words, it attains parts from other
firms, and assembles a personal computer's constituent parts (such as a motherboard, monitor,
GPU, RAM, wireless card, modem, sound card, etc.) within its factories. Manufacturing
concerns the actual forging of a product from scratch. Car manufacturers often construct all parts
within their plants. Direct investment has the most control and the most risk attached. As with
any capital expenditure, the return on investment (defined by the payback period, Net Present
Value, Internal Rate of Return, etc.) has to be ascertained, in addition to appreciating any related
sunk costs with the capital expenditure.