Marketing Management [kotler]

Name: Nitin Sawhney Course: PGDBA Assignment Subject: Marketing Management Reg. No: 200310123

Marketing Management

Question 3: What are the four phases of marketing program? Explain each phase. Answer: The four phases of Marketing program are: • • • •

Setting Goals and establishing strategies Develop a marketing plan Putting the plan into action Evaluating the effectiveness of the marketing plan.

Phase I – Setting goals and establishing Strategies: Useful information can be obtained on number of topics when manager attempt to select a new strategy to pursue. Changes in size or trend of demand – or changes in the structure or composition of the market – may suggest that a new strategy is appropriate. Changes in media trends – such as growth of cable television – may signal the emergence of an opportunity that might be exploited with certain new strategies. Needs, wants and/or dissatisfactions in relevant market segments may suggest that a problem exists, waiting to be resolved., if the right situation can be identified. Phase II – Develop a Marketing Plan: When developing marketing plans, managers often use marketing research to identify key market segments. By measuring their attitudes and opinions towards the features of available products and how these products are used, managers can identify important product and advertising considerations to include in their plan. Phase III – Putting the plan into action: When a plan is put into action, management must monitor the effects of the plan to see if it is achieving its objectives. The research is likely to measure – • If the plan is achieving the desired level of retail availability. • If the target market segments are seeing the advertisements • If the copy is communicating the intended message • If the promotions are achieving the desired trial rates • How much consumers are using and Phase IV – Evaluating the plan effectiveness: At the end of the operating period, management will want to reappraise the plan and compare results with the objectives. Such a reappraisal will involve an aggregation and compilation of most of the information obtained during the planning and action phases, with a special emphasis on sales, market share, marketing costs and contribution to profit. It will also measure brand awareness, trial rates, preferred brands and other measures of marketing results. Question 05: What is the basic purpose of a marketing informatino system?

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Answer: Marketing Informatino System (MIS): “It is a structured and interacting complex of persons, machines and procedures designed to generate and orderly flow of pertinent information collected from Intra and extra company resources, for use as the basis for decision making in specisif responsibility areas of marketing management.” An MIS agent gives marketing managers accurate, timely and relevant information to make better decisions. It cannot however reduce decision -making to an exact science. The experiences, intuitions and judgement of the marketing managers also play a part. But it is the relevant, timely and accurate information that is the key of good decision making. Following functions are always performed by an MIS : Setting up the system and deciding what information is needed. Collecting the data. Analysing and evaluating the data. Disseminating the conclusions Incorporating those conclusions into the subsequent strategy and feeding back the results so that the information system can be developed further. The input is raw data. The output is relevant marketing information to decision makers. It is a valuable tool for planning, implementing the data. Mechanics of Effective MIS 1 Select key competitors to evaluate. Focus on three or four per market at the most. 2 Select data collections in each department. This should include people in sales, purchasing, engineering, marketing, R& D and finance. 3 Apply the right resource levels to the task. It is usually worthwile having atleast a part tie competitive analyst, to chase, coordinate and evaluate competitive data. 4 Insist on regualr returns from data collectors. 5 Publish regular-tactical and strategic reports on competition. The tactical ones could be fortnightly and widely circulated. The strategic ones would be less frequent, perhaps quarterly and go to senior management only. A MIS has a Recurrent Data Subsystem (RDS) and a Non – Recurrent Dtat Subsystem (NDS). The RDS routinely performs all MIS functions on useful, recurrent, internal and externak data. This provides a continous flow of data into the system for conversion to

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relevant information. The RDS is usually comupterized and has access to many sources of data. The NDS which is not routinized, handlesnon-recurring internal and external data generated because of special problems or to access market opportunity. Marketing Research, for all practical purposes, is synonymous with NDS

Question6: What are the two major types or stages in marketing research design? How do they differ? Answer: Marketing Research can be defined as “the systematic gathering and recording and analysing of data about problems realting to the marketing of goods and services.

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Reseach design can be classified by :Function. Methodology. Functional Categories: Exploratory - Descriptive Casual - Predictive Exploratory Research Design: It is conducted when researchers need more information about the problem or opportunity, when tentative hypothesis may be formaulated more specifically, or when new hypothese are needed. Its motiv is to gather data that suggests meaningful research questions. Researchers use Focus Group Interview Technique in this kind of reserch design. Here a moderator leads six to twelve people through unstructured questions on a given topic to develop hypotheses that might lead to more specific research projects. A firm, to identify potential target markets may, for example, interview gropus of potential users in different segments with distinct profiles to establisj which groups to research further. One the problem is clearly defined, researchers try to describe a market or a part of a market by developing summary statisitics. This is called as Exploratory Research. Descriptive Research: The task is to find adequeate methods for collecting and measuring data. Casual Research: It is conducted to test hypothesis about the relationship between dependent variables. Predictive Research: It is sued to forecast future values- such as numbers of votes, saled revenue etc. Marketers try and estimate sales volume in different market conditions in orde to prdict the performance of a particular product / brand. Methodological Categories: - It can be categorized on the basis of Methods:Historical Survey Experimental Motivational Historical Research: It involves using the past experiences to find solutions to marketing problems.The preliminary exploration stage involves historical research.

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Survey Research: Involves obtaining data from respondents in person, by telephone or by mail. Experimental Research: It focuses on observing the effects that controlled changes in the independent variables. This is done by attempting to hold all other factors but the one being studied constant. Motivational Research: It is bsed on Behavioral sciences thoeries like psychology.

Question 7: What is the difference between market segmentation and concentrated marketing? Answer: Markets must identify and select their target markets. Marketing sometimes search for common characterstics among people of different ages, sez, race and income. This is called market aggregation. Market Segmentation: During the past 20 years, market sengmentation has developed and been defined in a variety of ways. In essence it is dividing a varied and differencing

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group of buyers or potential buyers into smaller grioup within which broasdly similar patterns of buyers needs exists. Marketers must identify the characterstics and wants of different groups of people within the overall market; because one marketing miz may not satisfy all of them. Market segmentation is the process of identifying smaller markets that exists within a larger market. These groups are called segments. People in a given segment are supposed to be similar in terms of criteria by which they are segmented and different from other segments in terms of these criteria.The marketing planner attempts to break the market into more strategically manageable parts which can then be targeted and satisfied for more precisely by making a series of perhaps small changes to the marketing mix. Concentrated Marketing: It implies that the organisation focuses its attention on one market segment and develops one marketing mix for that segment.The segment can vary in size from very large to very small. Because of its total focus on a single segment of the market, the firm has following advantages: Can thoroughly research the segments wants and runs a much lower risk of not being able to satisfy its target market. Long production runs may be possible. Distribution, promotion and price can be keyed to satisfy one segment. A firm that is tring to enter a market dominated by a few large firms may gain easier entry by targeting a smaller segment that the existing competitors are overlooking. The survival of small firms depends more and more on their ability to concentrate on those specialised market segments that are not attractive to their larger rinals. If a firm concentrates on a segment so small that only one firm can make a profit, potential rinals may continue to ignnore it. On the other hand, marketers who identify and focus on small segments that develop into large segments attract rinals who also want to cater to that segment. Many firms want to concentrate on the segment of the mass market that has the most people. This is referred to as the majority fallacy. Stiff competition among competitors for the segments develops while smaller segments are left untouched. Disadvantages of Concentrated marketing:-

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The organization cannot spread it risk. Thus decline in the selected segments buying power or a change in tastes or the entry of rinals can have a negative impact on profitability. Sometimes, a firm that focuses exclusively on one segment develops a specialist image in the segment. As a result it may encounter difficult in directing its efforts to other segments.

Question8: What are the four criteria for effective use of market segmentation. Answer: Markets change overnight and marketer must anticipate these changes through careful management of their information system. If a market is made up of people whose characterstics and wants are different, the market is heterogenous. Marketer must identify the characterstics and wants of different groups of people within the overall market, because one marketing mix may not satisfy all of them. Market segmentation is far more prevalent today from mass marketing. It is the proces of identifying smaller market that exists within a larger one. These small groups are called segments. It helps marketers tailor make marketing mixes to the needs of people. People in the given segment are supposed to be similar in terms of criteria by

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which they are segmented and different from other segments in terms if these criteria. The market segmentation strategies include the concentration strategy and the multisegment strategy. Concentration Strategy: It implies that the organization focuses it attention on one market segment and develops one marketing mix for that segment. The single segment can vary in size from very large to very small. It allows the firm to thoroughly research the segment's wants and run a much lower risk of not being able to satisfy its target market. Multisegment Strategy: It involves developing two or more market segments or tewo or more marketing strategies. It allows a firm to serve a greater number of potential consumers. It allows firm to utilize excess capacity to serve additional segments. The decision to segment a market should be based on : Heterogenous characterstics and wants of the potential customers. Identification and comparison of segments in terms of relative attraction. One large segment should be theer to be served profitabily. The segment(s) will be responsive to the marketing mix. Marketers must make 2 major decisions about segmentation variables : which category or categories of variable to use. How many in each category to use. The greater the number of variables used to segment a market. The greater the number of segments created and the more detailed the description as of people in each segment. It provide more information about the people in a particualr segment. There are 4 categories of segmentation variables. That are often used in segmenting consumer marketsGeographic: Marketers who practice geographic segmentation divide the mass market into geographical units like nations, regions, states, cities, climate, terrain, population etc. Marketers must also have a good understanding of population density as well as market density (ie no of people per square miles in an area that are potential customers in that area for the marketers is offering. This segmentation tends to result in the creation of a large segment that is still too heterogenous for effective marketing.

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Demographic: Here markets are identified on basis of statisitical sata like age, sex, buying power, expenditure patterns, occupation, education and the stage in the family life cycle. These variables are easy to measure their observation and surveys. Demography is the study of population, statistics, such as the number os births, deaths, marriages and age groupings. Physchographic: The variables like social class, personality and life styles are used to supplement the main geographic and demographic variables Product related consumer Characterstics Segementation: In product-related consumer characterstics segmentation the market is divided on the basis of one or more characterstics of consumer's relationship to the product.

Question 10: Why is it necessary for marketers to understand how family roles influences buyers behaviour? Answer: The consumer market consists of all the individuals and households that buy or acquire goods and services for personal comsuption. Marketers find it very useful to distinguish different consumer groups or segments and to develop products and services according to their needs. The major factors which influences consumer behavior are following : Cultural Culture Culture Social Class

Personal Personal Age & Life Cycle Stage Economic

Sub –

Social Reference

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Groups Family Status Circumstances Life Cycle Personality and Self. Psychological Motivation Perception Learning Beliefs and Attitudes Family members constitute the most influentual primary reference group shaping a buyers behaviour. For many products, however it is the family which exerts the greater single influence on behavior. This includes both the family of orientation(parents, brothers and sisters) and the family of procreation (spouse and children). The significance of the family as a determinant of buying behaviour has long been recognized and for this reason, it has been a subject of a considerable amount of research. Family of Orientation: It consists of one's parents. From parents, a person acquires and orientation towards religion , politics, economics and a sense of amlution, self-mouth and love. The parents influence on the unconscious behavior of the buyer can be significant. Family of Procreation: It is the family of one's spouse and children. The family is the most important consumer buying organization in society and has been extensively researched. Husband and wife involvement in purchase decisions varies greatly from one product category to another, with women still playing the principal role in the purchasing of food and clothing. Although this has changed somewhat over the past few years as the proportion of working women still account for some 78% of food puchases. Joint husband and wife decision making tends to be a charactertics of more expensive product choices where the opportunity cost of a wrong decision is greater. There are three patterns of decision making _____the family and the sorts of product category with which each is typically associated. These are : Husband dominant : Life Insurance; cars and Televisions Wife Dominant: Washing machine, carpets, kitchenware and non-living-room furniture.

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Equal: Living room furniture, holidays , housing, furnishings and entertainment. Husband wife involvement varies widely by product category. The wife has traditionally been the familys main puchasing agent, especially for food and staples. Incase of expensive products and service, husbands and wives engage in more joint decision – making. The marketer needs to determine which member normally has the greater influence in choosing various products. At the same time, the family members influence can vary with different sub-decisions made within a product category like :Role and Status Personal Factors Age and Life Cycle Occupation Life Style Question 13: During which two stages of the product life cycle, willyou find a mangerial emphasis on cultivating primary demand and serving core markets? Answer: The product life cycle (PLC) depicts a product sales history through 4 stages: Introduction Stage Growth Stage Maturity Stage Decline Stage The Product Life Cycle (PLC) is one of the best known but least understood concepts in marketing. The ideas that underpin the concept are straight forward suggesting that saled following a product's launch are initially clow. But then increase as awareness grows. Maturity is reached when the rate of sales growth levels off and repeat purchasers account for the majority of sales. Ultimately sales begin to decline sa new products and new technologies enter the market, leading eventually to the product being withdrawn.

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Because the product is at the very heart of marketing strategy, the need to manage it strategicallt is of paramount importance, since how well this is done is the key both to the organization's overall financial performamce and so the gaining and retaining of the market share. The managerial emphasis on cultivating primary demand and serving core markets is mainly found in two stages of PLC:Introduction Stage Growth Stage Introduction Stage:Launching a new product is called the introductory stage. Introducing a new product is always a risky venture. Almost every company has had spectacular features.A new product category requires a longer introductory period because primary demand must be stimulated. Even a brand that has got acceptance in other markets will require introduction in new markets.The basic goals in the introductory phase are to induce acceptance and to gain initial distribution. Promotion is needed to inform potential buyers of the products availability, nature ad uses, to encourage wholesalers and retailers to stock it. Funds are invested in promotion on the expectation of future profits. Profits are negative in the introductory stage because sales volume is low, distribution is limited and promotional expenses are high. A company must choose its launch strategy consistent with its intended product positioning. This initial strategy, though, the first step in the grander marketing plan for the products entire life cycle, is very important. Growth Stage: If a product has been launched successfully, the sales begin to increase rapidly in the growth stage as new customer enter the market and old customers make repeat purchases. Ne dealers and distributors may need to be added, new pack sizes may need to be introduced. This is the stage of peak profits. As new customers are attracted, market expland, attracting competitors who copy and improve on the features of the new product. New product forms and brands intercompetition intensifies and industry profits begin to decline at the end of the growth stage, but total industry sales are still rising. In this phase, the company faces a trade off between high market share abd high current profit.By spending a lot of money on product development, promotion and distribution, the company can capturea dominant position. In doing so however, it gives up current profit and hoped to make it up in the next stage. This stage requires a lot of managerial emphasis as future needs are anticipated in this stage.

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Question14 : Briefly describe the major differences between one price policy and flexible price policy. Answer: Price is undoubted a significant strategic valuable and in many markets, despite a growth in the importance of no-price factors, it is still the principal determined of consumer choice. There are four principal factors which influence the pricing decision: The company' marketing objectives The company' pricing objectives The determinants of demands including costs, competitors and consumers. The product itself and the extent to which it has any distinguishing features. A marketer also has to decide whether to sell a product at the same price to all buyers or at different prices to different buyers. The choice is bewteen a one price policy and the flexible price policy. One Price Policy: All customers who buy a seller's product under the same conditions, in the same quantities, and at the same time pay the same price uner a one price policy. This makes it easy to administer prices and eliminates the risk of losing customer goodwill due to a differential price treatment. But there is no room for tailoring the price to the

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customer. This can be a big problem, especially in industrial marketing where prices are often negotiated between buyer and the seller. Flexible Price Policy: Different customers, who buy a seller's product under the same conditions in the same quantities and at the same time, pay different prices under a flexible, or variable price policy. Price is more active marketing mix element. Marketers who practice differential pricing set two or more prices for a product in order to appeal to different market segments price elasticity of demand for the product. Thus lower prices are set for the more price elastic market segments and higher prices are set for the more price inelastic market segements. Differential pricing can be based upon differences marketing to enable sales people to tailor their prices to a prospective situation. This is often referred to as price shading. Flexible pricing exists in practically all roles transactions that involves trade – ins. Marketers who engage in flexible pricing should try to ensure that customes can be segmented into different market segments based on price elasiticity of demand for the prodcut. Several risks are associated with flexible pricing. There is a practical loss of customer goodwill if some buyers learn that they paid more than the other buyers. Also, sales people tend to be overly optimistic that price reductions will help them increase sales. Thus their productivity suffers when they devote too much time and effort to price negotiation and not enough to non-price elements in their offerings. There is also less central control over pricing when sales people operate under a flexible price policy.

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Question16: What is the difference between a short and a long channel of distribution? Answer: A product cannot reach its target market if the distribution is not fully planned and implemented. Producers involves the services of middlemen in bringing their products to market. The producers, the intermediary and the consumer constitutre the marketing channel of the product. A marketing channel is the series of marketing institutions that faciliates transfer of title to a product as it moves from producere to the ultimate consumer or industrial user. Producers, middlemen and final buyers are participants in a channel. All channels have a producer and an ultimate consumer/user. But when a producer sells directly to the final buyer, there are no middlemen in the channel. Marketing channel have a vertical dimension as well as horizontal dimension. They are interrelated and together form a channel's structure. Short Channel of Distribution: A channel which has a producer and a consumer only is a direct or short channel of distribution. There are no intermediaries or middlemen between the producer and the final buyer. They are much more common in industrial than in consumer product marketing because the industrial buyers are often concentrated geographically, buy in large quantities, buy products with a high unit value, buy complex products that require after sales service and insist on delaing directly with producers. Producers may choose to sell directly for several reasons They may believe that they can do a better job than available middlemen.

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They can have greater control over the distribution of their products when they handle the job themselves. Acceptable middlemen may be unwilling to handle the producer's product. Producers of bulky products may not want to transport to middlemen, but may wish to send them directly to the final buyer. Producers who have few customers/ producers with complex products requiring after sales service, training for usage may not use middlemen at all.

Producers who use Direct Distribution are able to keep in direct contact with the final buyer. They makes it easier to keep tabs on buying behavior and customer changing wants. Long Channel of Distribution: A channel which has 5 types of participants in it and hence called as less direct channel or long channel of Distribution. Here the producer entrusts some part of distribution task to independent middlemen, however must work closely wth them to ensure final buyer satisfaction. For shopping products eg Cars, Clothing, Home Appliances The Producer – Retailer – Ultimate Consumer For Convenience Products The Producer – wholesaler - Retailer – Ultimate Consumer Channels for convenience products tends to be long because consumer wants ot buy them with a minimum effort. Industrial channels are common for industrial products. Generally, however, indirect channels for industrial products are shorter than consumer product channel.

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Question17: What are the three important criteria for marketers to consider choosing a channel of distribution? Answer: A marketing channel is the series of marketing institutions that facilitates transfer of title to a product as it moves from producer to ultimate consumer or industrial user. Decision regarding selection of distribution channels must be made in terms of company's overall marketing objectives and strategies. Most are made by the producers of products, who are guided by 3 overall criteria Market Coverage : It means the size of the potential market to be served. While a producer could make four direct contacts with ultimate consumers, if that same produict could make four direct contacts with ultimate consumers , if that same producers instead contacts 4 retailers who, in turn make 4 contacts each with ultimate consumers, the total number of market contacts goes to 16. And if that producer instead contacts 4 wholesalers, who can contact 4 retailers, and they inturn each contact 4 ultimate consumers, the total number of market contacts goes to 64. Here, the use of intermediaries increases the market coverage. It is an important aspect for many marketers. It should be clear, that a major consideration in the choice of a Distribution channel is the desired level if market coverage, which depends on nature and size of market to be served. Control: It is important to have a control over the product. A short Distribution channel gives the greatest control to producers. Some products have an image of high quality and if they were to appear in discount stores or low quality department stores, their ability to stimulate exchange would diminish. Thus their marketers use shorter distribution channels, selling directly to the retail outlets, which they want their products displayed. Also, some products needs aggressive selling activity and servicing by retailers in order for exchange to occur. Markter prefer only those intermediaries who can and will provide

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such activity in selling the product. Therefore, they will choose a shorter, more direct distribution channel. Costs: Marketers must also consider costs while selecting a Distribution Channel. Many consumers think that shorter the channel, the lower the price to them. But it should be noted that intermediaries are specialists and they usually can perform the distribution function more efficiently than producers can.

Therefore, cost is usually lower than intermediaries are used in Distribution channel. Also, a direct channel require a substantial investment on part of manufacturer, who must maintain a sizable force and clerical help in order to process orders and service customers. A shorter Distribution channel results in limited market coverage, les control over thr product and reduced costs. Different products, markets and manufacturers require different distribution systems. Marketers must consider small factors like market's size, location, product is for industrial use or for consumer, the quantity of products exchanged, the perishability of products, the financial position and management abilities of the marketers etc. while selecting the right Distribution channel.

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