Marketing Management

INTERNATIONAL SCHOOL OF BUSINESS AND TECHNOLOGY

COURSE WORK MARKETING MANAGEMENT SUBJECT CODE:

MB0030

NAME : TWAHIRWA TADEO ROLL NO: 540811570

COURSE

: MBA

SEMESTER: 2

SIKKIM MANIPAL UNIVERSITY (INDIA) UGANDA LEARNING CENTER

1. Analyze the existing business portfolio of any one company using BCG matrix, GE matrix, and Ansoff model. ANS: BCG Growth Share Matrix Developed by the Boston Consulting Group (BCG), the BCG Growth Share Matrix is a popular approach to product portfolio planning. The matrix is defined by two factors: relative market share (the company's market share relative to the competition) and market growth. To use the matrix, place each individual product in your company's portfolio into one of the four quadrants and then do the same for your competitors' products. The result has implications for brand positioning and market share. BCG Growth Share Matrix.

The matrix has four distinct quadrants: •

Stars. A star is a product in a high growth market that controls a sizeable share of that market. Stars tend to generate strong revenues. Over time, as growth slows, stars become cash cows if they hold their market share and dogs if they don't.

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Cash cows. A cash cow commands a large share of a slow growth market. The more the company invests in cash cows, the greater the return. Cash cows tend to pay the dividends, the interest on debt and cover the corporate overhead.

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Dogs. A dog has a low share of a slow growth market. Dogs often report a profit even though they are net cash users. They are essentially cash traps.

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Question marks (sometimes called wildcats). A question mark is a product with a low share of a high growth market. Their cash needs are great because of their growth, but generate little in return because their market share is low. Question marks are difficult to turn into stars because the cost of acquiring market share compounds the cash needs. They may be big winners if backed to the limit, but most often, they fail to develop a leading market position before growth slows and become dogs. The purpose of this tool is to help you balance your product portfolio. Ideally, you would eliminate any dogs, while keeping the others in a kind of dynamic equilibrium. The cash generated by cash cows can then be used to turn question marks into stars, which, in turn, may become cash cows. As noted above, many of the question marks will become dogs, which mean you'll need to compensate for these failures by improving margins on the stars and cash cows. GE/McKinsey Matrix

Industry attractiveness and SBU strength are calculated by first identifying the criteria for each, determining the value of each parameter in the criteria, and multiplying that value by a weighting factor. The result is a quantitative measure of industry attractiveness and the SBU’s relative performance in that industry. The industry attractiveness index is made up of such factors as market size, market growth, industry profit margin, amount of competition, the degree of seasonal and cyclical fluctuations in demand, and industry cost structure. The industry attractiveness index consists of factors like relative market share,

price, competitiveness, product quality, customer and market knowledge, sales effectiveness, and geographic advantages. Each SBU can be portrayed as a circle plotted on the matrix, with the information conveyed as follows: •

Market size is represented by the size of the circle.

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Market share is shown by using the circle as a pie chart.

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The expected future position of the circles is indicated by an arrow.

The sample diagram shows the relative position of an SBU with a market share of 65%. The arrow in the upward right position indicates that the SBU is expected to lose strength relative to competitors, and that the business unit is in an industry that is projected to become increasingly less attractive. The tip of the arrow indicates the future position of the center point of the circle. Both axes are divided into three segments, yielding nine cells. The nine cells are grouped into three zones: •

The Green Zone consists of the three cells in the upper left corner. If the SBU falls in this zone, it’s in a favorable position with relatively attractive growth opportunities. This position indicates a "green light" to invest and grow this SBU.

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The Yellow Zone consists of the three diagonal cells from the lower left to the upper right. A position in the yellow zone is viewed as having medium attractiveness. Management must therefore exercise caution when making additional investments in this SBU. The suggested strategy is to protect or allocate resources on a selective basis rather than growing or reducing share.

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The Red Zone consists of the three cells in the lower right corner. A harvest strategy should be used in the two cells just below the three-cell diagonal. These SBUs shouldn’t receive substantial new resources. The SBUs in the lower right

cell shouldn’t receive any resources and should probably be divested or eliminated from a firm’s portfolio. There are strategy variations within these three groups. For example, within the Red Zone, a firm would be inclined to quickly divest itself of a weak business in an unattractive industry, whereas it might perform a phased harvest of an average SBU in the same industry. While the GE/McKinsey Matrix represents an improvement over the relatively simplistic BCG Growth-Share Matrix, it still encompasses a limited view of the competitive landscape. The matrix doesn’t take into account interactions among SBUs or the core competencies that lead to value creation. For these and other reasons, some believe the matrix is better suited for providing an overview of the current market rather than serving as a resource allocation tool. Ansoff Growth Strategy Matrix

The matrix presents four main strategic choices, ranging from an incremental strategy in which current products are sold to existing customers to a revolutionary strategy in which new products are sold to new customers. •

Market penetration. In this quadrant, the company markets existing products to existing customers. The products remain unchanged and no new customer segments are pursued; instead, the company repositions the brand, launches new promotions or otherwise tries to gain market share and accordingly, increase revenue.

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Market development. Here, the company markets existing products to one or more new customer segments. These customers could represent untapped verticals, virgin geographies or other new opportunities.

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Product development. This quadrant involves marketing new products to existing customers. The company grows by innovating, gradually replacing old products with new ones.

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Diversification. This quadrant entails the greatest risk; here, the company markets new products to new customers. There are two types of diversification: related and unrelated. In related diversification, the company enters a related market or industry. In unrelated diversification, the company enters a market or industry in which it has no relevant experience. These quadrants represent varying degrees of risk. Assuming that the more a business knows about its market, the more likely it will be to succeed; the market penetration strategy entails the least risk, while the diversification strategy entails the most.

QN.2. Discuss the Macro environment of a pharmaceutical company ANS: There are many factors in the macro-environment that will effect the decisions of the managers of any pharmaceutical company. Tax changes, new laws, trade barriers, demographic change and government policy changes are all examples of macro change. To help analyze these factors, managers can categorize them using the criteria below; Political environment. This refers to government policies such as the degree of intervention in the economy. What services does a government give priority? To what extent does it believe in subsidizing firms in general and the pharmaceutical industry in particular? What are its priorities in terms of business support? Political decisions can impact on many vital areas for business such as the education of the workforce, the health of the nation and the quality of the infrastructure of the economy such as the hospitals and access routes. Economic environment. This includes interest rates, taxation changes, economic growth, inflation and exchange rates. Economic changes have a major impact on a firm's behavior. For example: higher interest rates may deter investment because it costs more to borrow, a strong currency may make exporting more difficult because it may raise the price in terms of foreign currency, inflation may provoke higher wage demands from employees and raise costs, higher national income growth may boost demand for the health industry's products. Social and cultural environment. Changes in social trends can impact on the demand for a firm's products and the availability and willingness of individuals to work. In the developed world, for example, the population has been ageing. This has increased the costs for firms who are committed to pension payments for their employees because their staff are living longer. It also means some firms such have started to recruit older

employees to tap into this growing labor pool. The ageing population also has impact on demand: for example, demand for medicines increases. Technological environment: new technologies create new products and new processes. This will influence the kind of technology to be employed by companies in this industry. This may make the industry over rely on automated systems for production. Technology can reduce costs, improve quality and lead to innovation. These developments can benefit consumers as well as the organizations providing the products. Natural environment: environmental factors include the weather and climate change. Changes in temperature can impact on many industries including health and insurance. With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider. The growing desire to protect the environment may have an impact on the pharmaceutical industry, for example, more taxes may be imposed and this general move towards more environmentally friendly production processes will affect demand patterns and business opportunities. Legal factors: these are related to the legal environment in which firms operate. Legal changes can affect a firm's costs (e.g. if new systems and procedures have to be developed) and demand (e.g. if the law affects the likelihood of customers buying the good or using the service). Different categories of law include; consumer laws; these are designed to protect customers against unfair practices such as misleading descriptions of the product, competition laws; these are aimed at protecting small firms against bullying by larger firms and ensuring customers are not exploited by firms with monopoly power, employment laws; these cover areas such as redundancy, dismissal, working hours and minimum wages. They aim to protect employees against the abuse of power by managers, health and safety legislation; these laws are aimed at ensuring the workplace is as safe as is reasonably practical. They cover issues such as training, reporting accidents and the appropriate provision of safety equipment.

3. Explain the components of MIS. ANS: A marketing information system is a set of procedures established to collect, analyze and distribute accurate, prompt and appropriate information to different levels of marketing decision makers. It is a planned system developed to facilitate smooth and continuous flow of information, provides pertinent and right information at the right time to the right person. A typical marketing information system consists of the following components; An internal records system is one of the major components. This consist information on the; order to payment cycle and the sales information system. The order to payment cycle, records the timing and size of orders placed by consumers, the payment cycle followed by consumers and the time taken to fulfill the orders. Customers place orders through sales agents and companies dispatch the goods and receive payments directly or through the bank. A sales information system on the other hand records everything in the sales department, starting from sales call reports to prospects history to sales territory and quota information for better sales planning and forecasting purpose. Marketing intelligence system is the other component of marketing information system. This consists a set of procedures and sources used by managers to obtain everyday information about developments in the marketing environment. This system supplies happenings data unlike internal records system which supplies results data. Marketing managers collect data from published sources like books, magazines and journals, by talking to customers, intermediaries and sales personnel. Some companies appoint specialists to gather consumer and competitor information, who does mystery shopping to monitor the performance of their own or competitor’s dealers. Another component of MIS is marketing research system.

This provides the manager with information pertaining to the market whenever need arises. This involves making marketing research survey by collecting primary data about the market situation. This research may be conducted by the marketing department it self or may be out sourced to any marketing research agency. The other component is the analytical marketing systems. This is a coordinated collection of data, systems, tools and techniques with supporting soft ware and hard ware by which an organization gathers and interprets relevant information from business and environment and turns it into a basis for marketing action. All the data which is generated through the other three systems described above are stored in a data base. The storage and retrieval capability of decision support system allows the collection and use of a wide variety of data throughout the company. Senior managers can access the data base and continually and monitor sales, markets, performance of the sales people and other marketing systems as well.

4. Explain the Henry Assael model of buying decision behavior. ANS: Henry Assael has come up with an explanation to analyze why consumers buy the goods they buy. He explained the relationship between the level of involvement by the consumers in the purchase of goods and services and the level at which different goods or services differ from one another. He therefore came up with four different buying behaviors out of this comparison as explained below; Significant

High involvement difference Complex buying behavior

Low involvement Variety seeking

buying

between brands behavior Few differences between Dissonance reducing buying Habitual buying behavior brands

behavior

Complex buying behavior. Here customers are highly involved in the purchase of the product or service. The process is complex as the difference between brands is very high. Here the customer wants to know every detail of the product he is to purchase and also know what the difference means in terms of satisfaction. For example, when buying a specific brand of a DVD, he will compare all the functions and would want to know what the difference means. Therefore, the marketer has the obligation to clarify all the details to a customer with such buying behavior. Dissonance reducing buying behavior is the other. This behavior is exhibited when there is high involvement by the customer in purchasing goods where a few differences exist. For example, a customer who wants to buy CTV will not find many differences between the brands but the price of the product and its technicality makes a customer involve more. The customer here will show post purchase dissonance which may be difficult for the marketer control. Variety – seeking buying behavior also arises. In this behavior, the customer will not involve more while purchasing, but goods significantly differ. For example a customer buying juice products, there are many varieties in the market available, like; sun sip,

quencher, qungwa. The customer who purchased quencher at one time may try sun sip another time just to explore. The marketer is therefore advised to encourage the customer buy repeatedly in case of a market leader, make the product visible, and where the product is new, encourage customers through promotions. Assael also identifies the habitual buying behavior. Under this behavior, the customer has a low involvement between the brands and few differences between the brands exist which leads to a habitual buying behavior. For example mineral water companies, a few differences exist between the products and there fore the customer does not search information to purchase a particular brand. Here marketers are expected to use price and sales promotions to stimulate product trial, use more visual aspects of advertisement, and use classical conditioning theory to create advertisements. The above four aspects cover the different buying behaviors as espoused by Henry Assael, as well as what the marketer is expected to do if any of these behaviors is observed in a prospective customer.

5. Discuss the segmentation strategy of a cement company. ANS: Market segmentation is widely defined as a process of dividing a potential market into distinct sub-markets of consumers with common need and characteristics. It is a complex process consisting of two main phases: identification of broad, large markets, segmentation of these markets in order to select the most appropriate target markets and develop Marketing mixes accordingly. In developing a market segmentation strategy of a cement industry, the following 7 steps will be considered; Identify and name the broad market-which for this case will be the construction industry. If your company is already on a market, this can be a starting point; more options are available for a new business but resources would normally be a little limited. The biggest challenge is to find the right balance for your business: use your experience, knowledge and common sense to estimate if the market you have just identified earlier is not too narrow or too broad compared to the production capacity of the company. Identify and make an inventory of potential customers' needs. This step pushes the creativity challenge even farther, since it can be compared to a brainstorming session. What you have to figure out is what needs the consumers from the broad market identified earlier might have. The more possible needs you can come up with, the better. Got your self stuck in this stage of segmentation? Try to put yourself into the shoes of your potential customers: why would they buy your product, what could possibly trigger a buying decision? Answering these questions can help you list most needs of potential customers on a given product market. Formulate narrower markets. McCarthy and Perreault suggest forming sub-markets around what you would call your "typical customer", then aggregate similar people into this segment, on the condition to be able to satisfy their needs using the same Marketing mix. Under this step, you may formulate outlets and sub dealers who eventually may help in the distribution chain. Start building a column with dimensions of the major need you

try to cover: this will make it easier for you to decide if a given person should be included in the first segment or you should form a new segment. Also create a list of peoplerelated features, demographics included, for each narrow market you form – a further step will ask you to name them. There is no exact formula on how to form narrow markets: use your best judgment and experience. Do not avoid asking opinions even from non-Marketing professionals, as different people can have different opinions and you can usually count on at least those items most people agree on. Identify the determining dimensions. Carefully review the list resulting form the previous step. You should have by now a list of need dimensions for each market segment: try to identify those that carry a determining power. Reviewing the needs and attitudes of those you included within each market segment can help you figure out the determining dimensions. Name possible segment markets. You have identified the determining dimensions of your market segments, now review them one by one and give them an appropriate name. A good way of naming these markets is to rely on the most important determining dimension. Evaluate the behavior of market segments. Once you are done naming each market segment, allow time to consider what other aspects you know about them. It is important for a marketer to understand market behavior and what triggers it. You might notice that, while most segments have similar needs, they're still different needs: understanding the difference and acting upon it is the key to achieve success using competitive offerings. Estimate the size of each market segment. Each segment identified, named and studied during the previous stages should finally be given an estimate size, even if, for lack of data, it is only a rough estimate. Estimates of market segments will come in handy later, by offering a support for sales forecasts and help plan the Marketing mix: the more data we can gather at this moment, the easier further planning and strategy will be.

These are the steps to segment a market, briefly presented. If performed correctly and thoroughly, you should now be able to have a glimpse of how to build Marketing mixes for each market segment.

6. a) Do you think ticket based pricing will provide continuous revenue to Infosys in the long term? Comment ANS: I think ticket pricing will not provide continuous revenue to Infosys in the long run. This is mainly because software applications become stable after some time. Therefore, this would mean that the company will lose most revenues as the applications continue to stabilize. For business continuity, I think it is better for Infosys to adopt the ticket pricing as a penetrating strategy to attract customers. But as it stabilizes, it would be much better to adopt fixed pricing in order to ensure continuous earnings in the long run. 6.b). Compare three pricing strategies discussed here and choose any one as your choice. ANS: Ticket – based pricing is more flexible and cost friendly to the customer. This is based on the fact that the customer only pays for what he wants and when he wants it. This is a very attractive pricing strategy for new entrants especially in a competitive industry. Fixed pricing is also particularly important for companies especially if they have a high market penetration. This helps a company to ensure steady inflow of funds as the company will receive maintenance fee even where there has been no work done. However, a few companies will accept dealing with a company that deals with this pricing strategy especially as the struggle to cut costs. Time and material – based pricing is based on the number of man hours spent on the project. This may also be a cost effective strategy as the price is based on the cost incurred in terms of resources and man power.

After closely looking at the three pricing strategies, I would opt for the time and material – based pricing. This is because it focuses more on the cost incurred other than the demand which will ultimately lead to better calculation of profits. It is also fairer to the buyer and the seller. Where all the companies in the industry use similar pricing strategy, it may lead to price stability.