MS Notes

[sagar sankhe]

Q. STPD analysis? What is its importance in marketing strategy?

Ans:

STPD in Marketing Strategy: Segmenting, Targeting, Differentiation And Positioning

Firms identifies segments it can serve best to. Firms segment, target, position & differentiate its product. 

Segmentation:  (Dividing a market up into distinct groups of buyers)

> Geographic: nations, states, regions, cities

> Demographic: age (glare, taste, touch), gender, family size, family life cycle, income, occupation, religion, race, nationality

> Psycho-graphic: social class, lifestyle, socio-economic, values - AIO or personality characteristics

> Behavioral: occasions (Valentine’s Day), types of benefits sought, user status (new, regular, ex/non), usage rate, loyalty status, attitude & readiness stage

E.g. Geo-Demographic Segmentation (combination): GEO - City, DEMO - low income = low income city dwellers.

Business Markets are segmented by personal characteristics, demographics, operating variables, situational factors & purchasing approaches.

International Markets are segmented by Geographic’s, Economics (Developed), Political/Legal, Cultural (language)

Segments should be  Measurable, Accessible, Substantial, Differentiable, Actionable

Targeting: Evaluating each segment’s attractiveness & selecting 1 or more segments to enter. A target segment is a group of customers for whom a seller customizes its marketing mix (product, price, place, promotion)

> Undifferentiated/Mass Marketing: Ignore market segment differences & target the whole market 

> Differentiated/Segmented Marketing: Several market segments & designs separate offers for each one E.g. Toyota Corporation - Corolla, Camry, Aurion + Lexus

> Concentrated/Niche Marketing: Few segments or niche’s, Fine tune market mix effectively to its targeted niche, Usually less competition

> Micro & Local/Individual Marketing: Tailoring products & marketing programs to the needs/wants of specific individuals & local customers, Individual Marketing involves 1 to 1 marketing

Differentiation and Positioning:

Positioning is developing a product and brand image in the minds of consumers. It can also include improving a customer's perception about the experience

E.g. Porsche positioned as a performance car.

Step 1: 

Perceptual Mapping shows current positioning of all competing brands. Spot where are you? Is it where you want to be seen?

Step 2: Identifying your differentiating factor (here cars)

> Product: features, performance, style, consistency, reliability, durability & design

> Service: speedy, convenient or careful delivery, installation or repair

> Channel: channel coverage, expertise & performance. Amazon has smooth functioning direct channel

> People: hiring & training employees for interaction/experience

> Image: establish images to convey offerings distinctive benefits & positioning + symbols & sponsorship

Avoid under positioning, over positioning & confused positioning. Differences that are important(matter to customers), distinctive, communicable, non-imitable, affordable & profitable.

Step 3: Positioning Strategy

Full positioning a.k.a. value proposition (Answer to why should I buy your brand over competitor's offering?)

> More For More: most upscale G/S, higher price, vulnerable to more for the same. E.g. IPhone

> More For The Same: Lexus Vs BMW

> Same For Less: Discount stores, Bunning’s

> Less For Much Less – 2$ Store

> More For Less – hard to sustain long term

Position must be communicated & delivered & monitored & adapted. 

E.g. more for more: high quality products, high price, distribute through high quality dealers & advertise in high quality media.

Q. Importance of distribution? Process of selecting suitable distribution strategy?

Ans:

Product distribution (or place) is one of the four elements of the marketing mix. We make our product/service available for use to a consumer by direct/indirect means (intermediaries)

Logistics is planning, implementing and controlling the physical flow of raw materials, final products or services and information from source of supply, to the final end-user (or consumer)

Type of membership/distribution intensity:

> Intensive distribution: Large number of resellers stock the 'product' (essential products e.g. pharma to ensure wide availability)

> Selective distribution: Suitable' resellers stock the product (e.g. Tanishq)

> Exclusive distribution: Specially selected resellers or authorized dealers(typically only one per geographical area) are allowed to sell the 'product' (e.g. exclusive Titan watches outlet)

Steps for designing the distribution strategy are:

> Defining customer service levels (customer expectation and competition)

> Distribution objectives and steps (threshold time, place, possession utility freedom to cust)

> Structure of the network required (Budget, cost, which channel member to use?)

> Policy and procedure to be followed (Code of conduct and handling/servicing guidelines)

> Define Key performance indicators (profitability, sales , number of returns, damage to goods in transit)

> State Critical success factors (fine tune for success e.g. clear, transparent and unambiguous policies and procedures)

Few additional actions:

> Periodic Sales forecasts

> Dispatch plans

> Market coverage beat plans

> Journey plans for service engineers

> Collection of sales proceeds

> Carrying out promotional activities

Q. Write notes on Online retailing/Online shopping and cite an example?

Ans:

Is electronic commerce where consumers directly buy goods or services from a seller over the Internet without an intermediary service

For Consumers >

Advantages: Convenience, Price and selection, Information and reviews

Disadvantages: Fraud and security concerns, Lack of full cost disclosure, Privacy, Hands-on inspection

For Retailers >

Advantages:

> Requires lower investment (when compared to setting up a conventional, "brick-and-mortar" store)

> Extends your reach to new customers and new markets, and builds an extensive customer base

> Quicker Return on investment (ROI) than conventional, off-line selling

> Reduces customer acquisition costs by up to 70%

> Reduces transaction costs

> Reduces advertising and promotional costs (broadcast emails, digital marketing are les costly) 

> Faster inventory turnover

> Improves your understanding of your customers on a 1-to-1 basis (feedbak and online analystics pattern)

> Helps serve your customer better by giving her greater choice and greater convenience of shopping

> Increases brand value and brand recall

> Eliminates geographical boundaries for your business, and can establish a global market for your product or service

> No need to have high inventory (when demanded source it from supplier and ship it to consumer)

Disadvantages:

> Fierce competition (Jabong, Flipkart, Snapdeal, Tradus)

> Cost of reverse pick up for faulty/damaged/unsatisfied items is bear by the firm

> Cash on delivery option

> Occasional unavoidable logistics/delivery delay causing consumer dissatisfaction

> Uncontrolled use of rating/review and online criticism causing defamation 

Q. Marketing Planning process? Give an example wrt Consumer Durable goods?

Ans:

> Mission statement: A meaningful statement of the purpose and direction of the business

> Corporate objectives: The overall business objectives that shape the marketing plan

> Marketing audit: The way the information for marketing planning is organised. 

> Assesses the situation of marketing in the business: the products, resources, distribution methods, market shares, competitors etc

> Market analysis: The markets the business is in (and targeting) – size , structure, growth etc

> SWOT analysis: An assessment of the firm’s current position, showing the strengths & weaknesses (internal factors) and opportunities and threats (external factors)

> Marketing objectives and strategies: What the marketing function wants to achieve (consistent with corporate objectives) and how it intends to do it (e.g. Ansoff, Porter)

> Marketing budget: Usually a detailed budget for the next year and an outline budget for the next 2-3 years

> Action plan: The detailed implementation plan

Q. Various pricing strategies in competitive markets?

Ans:

Price is one of the most important marketing mix for attracting customers and achieving profitability. Consumers won't buy products that are priced too high, and a business can't make a profit if its prices are too low to cover its expenses. Princng strategies most revolve around three terms competitive pricing, cost-based pricing, value pricing. There are many ways under which you can price your offering. Lets see:

Competitive Pricing involves setting prices relative to competitors. Choose to set prices slightly below those offered by competitors. Can potentially result in a price war, in which competitors repeatedly slash prices in an attempt to undercut one another

Cost-Based Pricing involves considering cost of production as a baseline to inform pricing decisions (e.g. 10 percent higher than production costs)

Value Pricing involves setting prices based on the benefit or value consumers derive from products (what consumers are willing to pay) (u may charge significantly higher if  u r believed as more value giver or luxury brand, lets see in detail:

> Premium Pricing: This method uses a high price where there is uniqueness about the product or service. This approach is used where a substantial competitive advantage exists. Such high prices are charge for luxuries

E.g.  Star Hotel rooms and Concorde flights.

> Penetration Pricing: The price charged for products and services is set low in order to gain market share. Once this is achieved, the price is increased.

E.g. Youtube giving away free subscriptions to land grab market share for new start-ups.

> Economy Pricing: The cost of marketing and manufacture are kept at a minimum.

E.g. Supermarkets often have economy brands for soups, noodle, etc.

> Price Skimming: This method charge a high price because there is many substantial competitive advantage. However, the advantage is not sustainable.

E.g. new product launches online such as albums or game.

> Psychological Pricing: This approach is used when the marketer wants the consumer to respond on an emotional, rather than rational basis.

E.g. AirTel : This launch ‘price point perspective’ 99 piece not 1 Rupee a Call for one minute to any other mobiles.

> Product Line Pricing: This method having a range of product or services the pricing reflect the benefits of parts of the range.

E.g. many travel agencies provide tour option for even in India

1 person (4 countries) 49,000

2 person (4 countries) 62,000

Family pack(2 person ,1 child ) 65, 000.

> Optional Product Pricing: Companies will attempt to increase the amount customer spend once they start to buy. Optional ‘extras’ increase the overall price of the product or service.

E.g. Airlines will charge for optional extras such as guaranteeing a window seat or reserving a row of seats next to each other.

> Captive Product Pricing: This type of pricing on products have complements, companies will charge a premium price where the consumer is captured.

E.g. Buy anti-virus software from one brand, their updates must also come from them. (F-Secure Anti Virus – Free update providing)

> Product Bundle Pricing: Here sellers combine several products in the same package. This also serves to move old stock.

E.g. a) Videos and CDs are often sold using the bundle approach

b) Furniture marts sold full house accessories as a pack (Fridge, washing machine, A/c.)

> Promotional Pricing: This pricing to promote a product is a very common application.

E.g. BOGOF (Buy One Get One Free).

> Geographical Pricing: This type of pricing is evident where there are variations in price in different parts of the world.

E.g. Compare Petroleum products cost in Kuwait and Oman with India.

Q. Igor Ansoff Matrix, Internet Advertising, Guerilla Marketing Strategy? GE Matrix?

Ans:

Igor Ansoff Matrix ( Product–Mkt  Expansn Matrix)

Ans:

Growth strategies by Igor Ansoff. Focused on the firm's present and potential products and markets (customers). By considering ways to grow via existing products and new products, and in existing markets and new markets, Four possible product-market combinations. 

Helps a business determine its product and market growth strategy.

> Mkt Penetration: Increase sales in existing mkt using existing product but using innovative ways to increase usage 

Typical task which is implemented is change in the positioning. Communication via advertising is a major weapon (High Money Spent).  Positive result will be increased product usage in terms of frequency or quantity.

Eg  Boroline was earlier in winter, now round the year, Loreal Hair colors, not only for grey haired people, Coke consumption Thanda matlab cocacola

> Mkt Development: Target new customers in existing market or else target entirely new market but using existing product. Focus is on increasing customer base/count. Investment in Distribution network, Promotion , Communication, Inventory

Eg Voadafone (new mkt=India) bcoz European mkt reached plateau, Aspirin (new mkt= Asia) bcoz US mkt was dying, McD (new customers via freerecharge coupans) to broaden customer base.

> Product Development: Target existing market by introducing new product. Customer base is increased in terms of new purchases. Cross selling, up-selling are few of the popular techniques.

Eg. ICICI Bank- Securities, MF, Insurance. Up-selling of credit cards (silver, gold, platinum, titanium to same cust base), cross-selling (TV brand selling its its home theaters to its TV customers or Tata nano offered to Tata employees at schemes),

Q. Competitive advantage?

Ans:

Allowing it to generate greater sales or margins and/or retain more customers than its competition. Firms work on cost structure, product offerings, distribution network and experience to gain such advantage:

> Cost Leadership Strategy: Offer products or services at the lowest cost in the industry. The challenge of this strategy is to earn a suitable profit for the company. 

E.g.  Walmart succeed with this strategy by featuring low prices on items on which customers are price-aware, while selling other merchandise at less aggressive discounts. Products are to be created at the lowest cost in the industry (removing middle men and efficient use of distribution centers made this possible for walmart)

> Differentiation Strategy: Provide a variety of products, services, or features to consumers that competitors are not yet offering or are unable to offer. This gives a direct advantage to the company

E.g. Dell had launched mass-customizations on computers to fit consumers' needs

> Innovation Strategy: Introduce completely new or notably better products or services in marketplace, (breakthrough product offering) 

E.g. Aple iPod, iPad tablets

> Operational Effectiveness Strategy: Perform internal business activities better than competitors. Improve the operations of the company through refinement

E.g. Zara Fast fashion (Zara's product cycle time from the design phase to the manufacturing phase is 4 to 5 weeks while the industry average is 6 to 9 months

Q. Social Marketing?

Ans:

<Note it is different from social media marketing which allows usage of twitter, facebook, linkedin, pinterest, myspace, wordpress blogs like social media for marketing campaigns>

It involves application of commercial marketing concepts, knowledge, and techniques to non-commercial ends (such as campaigns against smoking and drunken driving) for the society's welfare. OR You can say for promotion of goods and services in a way that helps in promoting the consumers' and  the society's well being.

Includes answering these questions:

> Which people to work with (target audience)

> What behaviour to influence (target goal)

> How to go about it (implementation)

> How to measure it (measure and control)

For example: the Balbir Pasha Campaign in Mumbai

Q. Porters Five force model?

Ans:

Michael Porter's Five Forces Analysis: 

Michael Porter provided a framework that models an industry as being influenced by five forces. This model identifies and analyzes 5 competitive forces that shape every industry, and helps determine an industry's weaknesses and strengths. 

1. Competition in the industry: 

2. Potential of new entrants into industry: 

3. Power of suppliers: 

4. Power of customers:

5. Threat of substitute products: 

Thanks & Regards,
Sagar Sankhe

Sagar Ramkrishna Sankhe

Ex-Employee: TATA CONSULTANCY SERVICES. (2009-2012)

MMS 2012-14

Consultancy & Entrepreneurship Committees Member at
Sydenham Institute of Management Studies, Research & Entrepreneurship Education (SIMSREE), Mumbai.
Contact No: 9773682257