Marketing Strategy 3.0

Environment IMC Marketing Strategies Competitive Strategies Strategic Frameworks Pricing Branding STPD Promotion Place Product

Dr Amit Rangnekar

www.dramitrangnekar.com

[email protected]

Check out these Notes and Case Studies at www.dramitrangnekar.com

1. Marketing strategy - Overview 2. Pillars of Marketing - STPD strategies

3. Market situation strategy - Leaders, challengers, followers, nichers

4. Competition analysis - Porter's 5 forces model for competitive environment, Benchmarking exercise, understanding competitive moves and postures 5. Sustainable competitive advantage - Porter's generic strategies

6. Portfolio models - BCG and GE McKinsey matrix

7. New product strategies - Innovation, Market entry, Product line extension 8. Communications strategy - Managing communications mix for products, brands 9. Advertising using and sales promotion strategy - campaigns

10. Brand building - FMCG, Consumer durables & Services cases

11. Distribution strategy- Designing of channel systems, Managing multichannel systems 12. Pricing strategy- Value pricing, Optimisation of pricing

13. Marketing Planning - Introduction, growth and mature markets. Pruning of products; Reference material

Books 1. Strategic Market Management 3e David Aaker 2. Strategic Marketing (West & Ford)

3. Mktg Mgt (Kotler, Keller, Koshy, Jha 13e) 4. Market driven strategy (George Day) 5. Marketing as Strategy (Nirmalya Kumar) 6. Marketing Strategy (Ferrell 4e/ Walker 2e), 7. Marketing Strategy - Boyd. Walker and Larreche Notes www.dramitrangnekar.com

Cases Library, Harvard, ICFAI, Praxis, Business- Today / India / World, CIM Daily ET, Brand Equity, Hindu-Business Line, Business Std- Strategist, Websites

www.dramitrangnekar.com ,

Knowledge@Wharton, Insead, Brands Asia, Mckinsey Quarterly, Economist, Forbes, Business Week, Harvard Business School / Review, www.cim.co.uk , www.knowthis.com , www.marketingpower.com,

www.etstrategicmarketing.com, www.brandrepublic.com

Table of Contents

No Subject Topics/s Cases from Pg

1 Strategy Overview, Marketing Plan Environment, Industry, Competitors, Customers Faze 3, McDonald India launch 5

2 Marketing Strategy STPD Moov, Bisleri 12

3 Strategy Frameworks

Porters Generic, Specific strategies, BCG Matrix, GE-McKinsey Matrix, Ansoff Matrix, Value Chain Model

18

4 Competitive Strategies

Leader, challengers, followers, nichers

Auto Industry, Thai Beer

22

5 Product Development, mix, range Tata Nano 26

6 Integrated Marketing Communication

Promotion, Advertising Taj Hotels, Cadbury

33

7 Brand Management Identity, Image, Positioning, Portfolio extensions

Chic Shampoo, Harley Davidson

37

8 Distribution Channel length Dabbawallas,

Flipkart

43

9 Pricing Approaches, strategies Pricing strategies 45

10 Immersive Reading Competitive strategies 48

Notes adapted through readings, cases and notes from- Harvard Business School/

Review, Ivey, Stanford, Kellogg, MIT Sloan, LBS, Insead, Wharton, Emory; publications by Porter, Kotler, Keller, Kapferer, Nirmalya Kumar & Mckinsey; Economic Times, Indian and international business magazines, and the internet. Garnished with my own

About the Author

Dr Amit Rangnekar, MBA (Marketing) and PhD (Business Strategy) from NMIMS, Mumbai, has over 2 decades of progressively responsible pharma industry experience with Centaur Pharmaceuticals. In 2006 Dr Rangnekar was awarded a 10 nation scholarship to Europe by the

Government of Denmark to complete his doctoral research. His co-authored book "Cases in Indian Management" was launched in Mumbai, Dubai and London in 2008.

Embarking onto teaching as a hobby in 2003, Dr Rangnekar is a visiting faculty at Mumbai's leading B-Schools. His repertoire of insightful notes and compelling case studies have added value to over 7,500 MBA students. He shares his thoughts and knowledge with a global audience through his immensely popular website and blog, which have together clocked over 800,000 hits.

Dr Rangnekar has presented on various business case studies on marketing, branding and business strategy, at B-schools and corporates across India and Europe. He has been a part of global leadership programmes of numerous Fortune 100 companies in Europe and Asia. He is an external guide for two PhD research scholars.

Co-ordinates Email [email protected] , [email protected]

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1 Marketing Strategy Overview

SWOT Analysis- assess the internal / external environment a firm operates in

Strategic fit- effective match and management of environmental opportunities and threats with organisational strengths and weaknesses

Strategic Groups- Set of firms with similar strategic dimensions & using similar

strategies. Intra strategic group firm competition greater than inter. More heterogeneity in performance of firms within strategic groups. Eg Cars, PC, Airlines, segmented by sensitivity to price, quality, technology & service

Strengths (Internal) Weaknesses (Internal) USP's, capabilities, competitive advantage,

resources, experience, knowledge, data, financials, marketing, reach, communication, service, legacy innovation, location, geography, price, value, IT quality, accreditations,

processes, systems, culture, values, behaviour, management, reputation,

Proposition, capabilities gaps, presence, strength, reputation, reach, financials, vulnerabilities, timescales, deadlines, pressures, supply chain, morale, attrition, commitment, leadership, processes & systems, management,

Opportunities (External) Threats (External) Market / business / NPD, NMD, industry phase

and potential, competitor vulnerabilities, global influences, demographics or lifestyle trends, technology, innovation, niches, verticals / horizontals, geographies, new contracts, research, partnerships, distribution, volumes, production, economies, season, influences

PEST, competitive intentions, market demand, contracts and partners, sustaining capacities, finances & capabilities, obstacles, insurmountable weaknesses, industry cycles, seasonality Situation analysis

External factors Internal factors Consumers Competitors Environment Resources Capabilities Skills

The Environment

The external business environment PESTLE analysis

Political Economic

Environmental, legislative, regulatory, policy, stability, initiative, lobbies, war and conflict, pressure groups, unions

Economy, global trends, taxes, levies, FDI, interest, inflation, unemployment, GDP, Stocks, forex, climate, market, trade cycles, industry specific factors

Sociocultural Technological

Demographics, lifestyles, social mobility, educational levels, Attitudes, opinions, beliefs, buyer behaviour, ethnic & religious factors

Competing & emerging technologies, R&D, costs and capacities, PLC, solutions, innovation, information, communication, IPR, licensing, disruption

Legal Environmental

Legislative structures, anti-trust laws, trade policies, employment legislation, exit laws, foreign trade regulations

Sustainability, green issues, energy, natural factors

1) Threat of New Entrants: Entry Barriers

 Economies of scale- Marginal efficiency improvement, as firm incrementally increases in size

 Product differentiation- Unique products, Customer loyalty, competitive prices  Capital requirements- Physical facilities, Inventories, Marketing activities, capital  Switching Costs-One-time costs customers incur when buying from different

suppliers. Costs-new equipment, retraining employees

 Access to Distribution Channels- Stocking or shelf space, price breaks

 Cost Disadvantages- No- scale, proprietary technology, access to raw materials, markets

 Government policy- Licensing and permit requirements, deregulation of industries Expected retaliation- Responses by existing competitors may depend on a firm’s present stake in the industry (available business options)

2) Bargaining Power of Suppliers (increases when):  Suppliers are large and few in number

 Suitable substitute products are not available

 Individual buyers are not large customers of suppliers and there are many of them

 Suppliers’ goods are critical to buyers’ marketplace success

 Suppliers’ products create high switching costs.

 Suppliers pose a threat to integrate forward into buyers’ industry 3) Bargaining Power of Buyers (increases when):

 Buyers are large and few in number

 Buyers purchase a large portion of an industry’s total output

 Buyers’ purchases are a significant portion of a supplier’s annual revenues

 Buyers can switch to another product without incurring high switching costs

 Buyers pose threat to integrate backward into the sellers’ industry 4) Threat of Substitute Products (increases when):

 Buyers face few switching costs

 The substitute product’s price is lower

 Substitute product’s quality & performance >= existing product

 Differentiated industry products, valued by customers, reduce this threat 5) Intensity of Rivalry among Competitors (increases when):

 There are numerous or equally balanced competitors

 Industry growth slows or declines

 There are high fixed costs or high storage costs

 There is a lack of differentiation opportunities or low switching costs

 When the strategic stakes are high

Analysing Industry

 Structure- Consolidated (Auto, Telecom)/ fragmented (Restaurants, Laundry)

 Competition- Monopoly (Railways, Gillette, Amul) / duopoly (Pepsi-Coke, Boeing- Airbus)/ oligopoly (Pharma, Steel, Auto, Telecom)

 Market structure- Leader, challenger, followers, nicher (LCFN)

 Lines- Broad (Electronics, Auto)/ narrow (Steel, Telecom, Hotels)

Analysing Competition

 Satisfy same / similar needs- Segments served

 Direct / indirect - Eg Coke- direct Pepsi, indirect Bottled water, juice, beer

 What products do they offer? Brands, categories dependence?

 What channels do they use? What pricing strategies have they pursued?

 Their management and financial resources?

 What are their objectives? What are their core competencies?

 What alliances are they pursuing, and for what purpose?

 Their success in the marketplace? Share of market /voice /mind /heart?

Competition

Analysing customers

 Who are the customers, segments

 What do they buy, where do they buy, when do they buy, how frequently do they buy  How do they choose, how do they use, why do they prefer a product

 How do they respond to marketing programs  Long term value of customers

Category Need fulfilled Brand Competitors Product Competitors Generic Competitors Basic

requirement

Market products similar customer features, benefits & price

Compete in same class, but features, benefits & price differ in

Market different products to solve same problem, satisfy same basic need Beverages Refreshment Coke, Pepsi

Thums Up

Tea, Nimbu Pani Mineral water

Regular water

Chocolates Dessert/ snack

Dairy Milk, 5Star Celebrations

Mithai, Namkeens Ice creams, Fruits

Aniseed/Saunf Candy, Sugar

Films Entertainment PVR Fame Adlabs Single screen Drama theatre TV, Shopping Reading, Internet

Strategy

1. Directing action towards desire outcome

2. A plan of action to gain a competitive advantage over rivals

3. Deliberately choose different set of activities to deliver a unique mix of value- Porter Marketing

 Entire business from the point of view of the customer- Drucker

 Identify, create, manage demand to provide value to a customer for a profit -Kotler

 The right product, in the right place, at the right time, at the right price.-Adcock

 Concept- Satisfaction of customer & their needs, focus of business activities. IBM  Philosophy- Owned by everyone from within the organization

Marketing strategy answers 2 questions  Why should our customers buy our product

 Which customer needs do our products fulfill more effectively than competitors

 Nokia not the 1st mover but No.1 by giving customers what they desired

 Sony & Apple don’t rely on MR, create new categories through innovation

 Google search effective due to a simple, uncluttered & efficient approach

 Differentiation by- price, reach, delivery, design, service, technology, etc but it should be valuable & meaningful to customers. Eg Hybrid cars, solar mobiles

How marketing strategy relates to corporate and business level strategies Corporate level Business/es to be in Set strategic corporate goals, Business level Gain competitive advantage SBU goals, develop broad strategy Functional level Attain marketing goals Marketing strategy implementation Product level Implement tactics Marketing mix

How marketing relates to strategy  Business activities align with business

strategy- achieve corporate objectives

 Marketing- firm’s link to customers & competitors, shapes strategy

 Eg Amul’s corporate goal- to be ‘world’s largest food brand’

 Marketing plans & tactics (global availability, effective communication, value price, products & service to delight customers) should evolve around that goal.

 Amul can augment with new brands, segments & categories with business potential where Amul can deliver on its capabilities.

Marketing strategy defines

 The target segment- size, demographics, psychographics

 How should the product be positioned to appeal to the market- primary benefit

 How should the product be branded-

 Product potential- sales, market share, profit estimates Ferrari’s marketing strategy

 Target (Luxury sports car)

 Position to appeal to that market (Speed, design, performance)

 Branding- identify and differentiate product from competitors (Prancing Horse logo,

formula 1,brand communication) Illustration- PC market

 Launch- 1970s, small segment- technologists & mathematicians

 Apple improved, simplified use, software widened use

 1980s- IBM further widened use, sales growth exponential, new competitors

 Desktops at work & home, replacements, peripherals

 1990s- Internet but PC maturity, customer & price resistance, declining profits

 2000- Commoditisation, shakeout, HP- M&A Compaq, IBM sold PC biz- Lenovo

 Faster processors, flatter screens, converged PCs and all in one printers, laptops Marketing Plan- “Plan your work, and work your plan”

 A campaign that aims to fulfill a company’s market strategy

 What will the company do in NPL and supporting older ones

 Timing of its sales and promotional activities, pricing intentions & distribution efforts

 How will the plan be controlled and the results measured.

Executive summary Objectives and implementation plan

Table of contents

Situation analysis Data, environment, SWOT, gaps

Focused assessment of the market opportunity

Statement of target market segments Customer and needs assessment

Competitive challenges to firm & products

Financial goals Incremental revenue improvements

Expected profits

Marketing goals Unit sales or market share

Summary of the company’s marketing strategy

Identify target market

Product position, distribution & pricing

Specific actions to achieve goals- sales force, customer rebates, national ad campaign, direct mail etc

Monthly marketing budget

Monthly sales forecast (units & value) Periodic plans- monitor, review & action

Implementing the plan via the Marketing Mix • Identify target customer segments

• Address customers through marketing mix- 4Ps (Refer section on marketing mix ) • Best plans, resources, skills and effective implementation- no guarantee of success as • Lower demand, technology, new launches by competitors, high inputs and promotion Controlling Plan Implementation (HBS)

2 Marketing Strategy

STPD- (Segmentation, Targeting, Positioning, Differentiation)

Concept Short definition Example Moov

Segmentation Identify different needs & groups in the market

Where to compete Pain segment

Targeting Target markets it can satisfy in a superior way

Which product for which market

Back pain segment within the pain segment

Positioning Occupy distinct place in customer’s mind

Locating brand in customer’s mind

Relief from back aches “Aah se aha tak”

Differentiation Communicate valuable & meaningful differences

How to compete Lamitube, non staining, effective in back pain

Segmentation

• Where to compete

• Divide market into distinct groups with distinct needs, characteristics, or behaviors • Basis- competence, resources, potential (Features, service, convenience, quality) Evaluate segment attractiveness

 Segment size and growth, own objectives and resources

 Structural Attractiveness- Level of competition, substitutes, buyers/supplier power Requirements for effective segmentation

 Measurable- Size, purchasing power, and profile of segment  Accessible- Can be reached and served

 Substantial- Large and profitable enough to serve  Differentiable- Respond differently

 Actionable- Effective programs can be developed

Principles of market segmentation (Palmer & Miller 2004, Industrial Mktg Mgt, 33(8), pp 779-85) Market segments (Size, access, differentiated)

Who buys- Customer characteristics What is bought, why- Customer behaviour

Hard Soft Objective Subjective

Demo/geographic Psychographic Behavioural

AEGIS VALS Usage Benefits

Price sensitivity, promo response, loyalty, repeats

Perceptions, preference trade-offs Segmentation matrix- Taj Hotels

Segments Features

Full service Hotels Palaces Spas Resorts Wildlife lodges Self service Luxury Premium Taj Hotels & Palaces Taj Exotica

Luxury Vivanta by Taj Taj Safaris

Premium Gateway Mid-market

Types of segmentation

4 types- geographic, demographic, psychographic, behavioural- ideal is to integrate, mix

Factors (examples) Example

G

eo

gr

ap

h

ic Country, area, region, climate

• Coke-Chota-Rural, Bada –Urban • Sweaters in HP, Kashmir

• McDonalds menu adaptation in India • Honda City- different models globally • ITC Ashirwad atta diferrent blends NEWS • India food habits- North wheat, South rice

Demo

gr

ap

h

ic

• Age (Hospitals, cycles, , toys) • Education

• Income (Garments, car, soaps) • Sex (Perfumes, hospital) • Religion, nationality

• Marital status, family size, family life cycle, generation, ocupation

• Social class- middle/lower/ upper

• LIC, Hinduja hospital • Schools

• Toyota- Lexus, Camry, Corolla • Gillette

• Beef/Pork, Halal, Kosher foods • Mature 1945+, Baby boomers 1965+,

Generation X 1976+, Generation Y 1994+ • DINK, ORCHID, YUP, WHOP

Ps yc h o gr ap h ic

• Benefits sought (costs, service, quality)

• Lifestyle, VALS (Values, attitudes, lifestyle)

• Personality, culture, social, religion • AIO- what interests them, view • Activities- Work, Hobby, Shopping • Interests- Family, fashion, food • Opinions- Self, PEST

• Nano, Taj, Titan, Nokia

• Clubs, Art, Wine Harley Davidson owners • Woodlands-rugged/extrovert

• Niche magazines - food, fashion, car, electronics, CRM B e h av io u ra l • Occasions • Personality based • Benefit segmentation • Attitude (+ve/-ve, hostile)

• Convenience (EMI, Home Delivery) • Readiness (Informed, interested,

aware)

• Greeting cards, tour operators, weddings • Blackberry addicts

• Maggi convenience, Maruti service, value • User (1st

time, regular)

• Usage (light, heavy consumption) • Loyalty (HML, switchers) Titan- edge for

formal, fastrack for casual, Raga for ethnic; Bisleri pack sizes

• By occasions, product usage, benefits sought, brand loyalty

• Occasions-

• User Status - Non-Users Vs Current Users (Credit Cards, bikes)

• Usage Rate- Heavy Users Vs. Light Users (beers)

Exercise

1. Outline a segmentation matrix for mobiles (users v features)

Targeting

 Which product for which market

 Measure segment attractiveness, select target segments

 Set of buyers sharing common needs or characteristics that a company decides to serve • Targeting factors- resources, competence, degree of product variability, PLC stage,

competitors’ strategies

Targeting choices (Derek F Abell, 1980)

Targeting strategy

Strategy What it means Example Illustration Mass marketing Target

marketing mix towards the entire market, not specific to any segment Amul Butter, Parle G, Coke Differentiated marketing (segmented) Target different marketing mixes towards different segments UB group whisky, Cadbury chocolates, HUL Market concentration Concentrating mix on any one segment of the market Ferrari- luxury sports cars, Nirma economy detergents, Big Bazaar Niche Marketing Target small market segment with specific, specialized marketing mix Travel agents focused only on Shirdi, HP, Nepal Sports shops, Florists

Positioning

 Locate brand in the customer’s mind

 Design firm’s offering & image to occupy distinct place in target customer’s mind

 Represent a distinctive big idea in the mind of the target market

Positioning types Positioning anomalies

 Attribute-Longevity-Since 1904

 Benefit- Sea view, service, speed

 Use-ICICI- Fast A/c opening

 User-Louis Philipe-Upper crust

 Category- Big small car-Indica

 Quality-Benz-Future of the automobile

 Under-Fridge-PUF

 Over- Casio start @ Rs 500, perceived expensive earlier

 Confused- Top Ramen Noodles-‘Smooth’

 Doubtful- Tall promises-Teak plantations, Ponzi schemes

 Value-Budget Hotels, Maruti Positioning strategies

Single Camry-Touch Perfection

Double Tavera-Comfortable family car Triple Liquidity, safety, returns-MFs Multiple- same

product to various

segments with intact central positioning

A chocolate-based health drink- Central positioning- nutrition, Active people- Energy, Elderly- Dietary supplement, Pregnant ladies-

essential supplement, Kids- Growth & nutrition, Executives- revitalize

Crafting the brand positioning

Positioning requires determining a competitive frame of reference, which defines associations that consumers use to evaluate directly/ broadly competing brands, as under:

Frame of reference What it means Example iPad

Identify target market Which brand for which market _{Enthusiasts, innovators}

Understand consumer behavior

Considerations in choosing brands-

attitudes, preferences Price insensitive, must-_{have, advocacy,}

Nature of competition Intensity, dominance, PLC, differentiation _{CE/ technology firms}

Points-of-parity (POP) Associations consumers view essential to be credible, common category traits, conditions necessary but not sufficient for brand choice

Midway

Laptop/mobile, touch screen, phone, net, 1GB ram, handy Points-of-difference

(POD)

Associations, attributes, benefits consumers associate, positively evaluate & believe they cannot find to the same extent with others

Apple, apps, design, gaming

Reason to believe (RTB) Consistency, legacy, trust, reputation _Innovation,

performance iPad positioning should include POD+ RTB

Exercise- POPs & PODs for Apple i-Phone 4s

Exercise- How Should Maruti position itself with respect to the Tata Nano? Perceptual mapping

 Brands 'mapped' together on 'positioning map', compared across parameters

 Identify weak/strong/absent competitive positions

 Price v range for Mumbai super stores, distinguish by competitive offerings

 Gaps regarded as opportunities for positioning/repositioning/launch

Exercise: Walmart’s India entry strategy based on above perceptual map Positions that firms have successfully claimed in India

Beauty Lux Range Croma, Titan Reach ITC, HUL, GSK

Premium Bose, Benz Youth Pepsi, Nike Kids McDonalds

Thanda Coke Fever Crocin Economy Big Bazaar

Generic Cadbury/Xerox Innovation Apple, Intel Value Maruti, Flipkart Delivery Dabbawallas Macho Enfield Tourism Goa, Kerala, Service Maruti Performance Nokia, Titan Search Google Fast food VadaPav, Udipi Salesmen EurekaForbes Headache Saridon/Anacin

Range Price Low High High Low ShoppersStop LifeStyle Runwal Crossroad Globus Giants Akbarallys ApnaBazar BigBazaar 32GB Safari Design Face Time Apple 5MP Cam Apps

Weight iOS HD Video

HUL- Axe and Rexona, (both HUL), operate in the same segment- deos. Rexona targets working population, positioned against body odour, Axe targets youth, positioned on seduction. Both contain a similar formula, target the same segment, but use completely different communication strategies, do not cannibalise.

P&G Positioning: distinct positions, even in same segments (Aaker & Joakimsthaler)

Brand Segment Position

Head & Shoulders Shampoos Anti-Dandruff

Pert Plus Shampoos Conditioner + shampoo

Pantene Shampoos Healthy + shiny hair

Ariel Detergent High Tech Detergent

Tide Detergent Tough cleaning

Cheer Detergent All-temperature cleaning

Bold Detergent Fabric softener

Differentiation

 How to compete (STP undertaken to help differentiate)

 Add meaningful & valuable differences to distinguish offering from competitor’s

 Differentiation Criteria- important, distinct, superior, preemptive, affordable  By form / features- Coke bottle shape, Heinz thick ketchup, iPhone 4s- Siri

 Differentiated on why customers buy- perception of PQRSTUV, usage and experience

 Brands differentiate on irrelevant features/benefits- many mobile phones features hardly used, newer management book editions- bigger & costlier, not always better

 Identify tangible differences -conscious, rational benefits like PQRSTUV-,

Performance (Titan), Quality (Apple), Rate (Big Bazaar), Range (Cadbury), Service (Maruti), Technology (Intel), Utility (Swiss knife), Value (Titan), Convenience (Maggi)

 Intangible Benefits - emotional, sub-conscious benefits a brand owns- Status (Benz, BMW), Prestige (Mont Blanc, Rolex)- most important leverage for brand dominance, unique (Sony, Apple), sustainable benefits (Amul, Toyota low cost)

Differential variables

Brand Performance, features, form, conformance, reliability, style, design, quality Service Delivery, ease of ordering & installation, customer training

People Competence, credibility, reliability, responsiveness, communication Channel Coverage, expertise, cost effectiveness, performance

Image Symbol, colour, slogan, ambience, atmosphere Exercise- i-phone 4s

 Key success factor? STPD?

 Where is iphone vulnerable? Economical competitors, imitators, technology

Key improvement areas? Price, promotion, features, customer service

3 Strategic frameworks

Various business level strategic frameworks to gain competitive advantage

Framework Purpose

1 _{Ansoff Product-market growth matrix} Product-market growth strategies

2 _{BCG Growth Share Matrix} Market growth-relative market helps in portfolio planning, recommending strategy

3 _{GE Matrix/ Business Screen} Analyse current portfolio, determine businesses to invest/protect/harvest/divest/

4 _{Porter Value Chain analysis} Understand value generating parts of the operations to create competitive advantage

5 _{Porter Generic business strategies} Generic sources of competitive advantage

6 _{Kellogg Specific business strategies} Strategies to gain competitive advantage

7 _{Mckinsey 7S model} Successful strategy implementation

1 Ansoff’s product-market growth matrix (HI Ansoff 1957)

Offers product-market growth strategies that set the direction for the business strategy

Existing product New product

Market penetration Product development

Existing market

• Increase share of customer spending • Increase MS, use, frequency, quantity • Non-users to users

• Product modification, new features • Different quality levels

• New products, line extensions • Maruti- Rural India penetration

• Titan- Sonata

• Apple- iPod/iPhone variants

• Maruti- Ritz, Swift • Titan-Edge, Automatic • Apple- iPad

Market development Diversification

New market

• New markets

• New distribution channels • New geographical areas

• Build • Buy- M&A • Ally- JV • Integration, Diversification • Maruti- Exports • Titan- Exports

• Apple- Emerging markets

• Maruti- Driving schools • Titan- Fastrack, Eye+ • Apple- Retail, TV

2 BCG Matrix- Growth Share Matrix Matrix, 1968 (Tata SBU, Parle Biscuits)

 Link market growth and relative market share to determine prospects for various SBU/ brands. Helps to plan portfolio, recommend strategy

 Question Mark -Low share of high growth market, consume resources, generate little- weigh risk/rewards

 Stars- Leaders, high share of high growth

?

Star Question mark

Cash Cow Dog

M a rk e t G ro w th

Relative Market Share 1 2 3 4 5 6 7 8

market, high promotion costs, generate high income, invest

 Cash cows- Leader, high share of low growth market, generate cash, low investment, ex-stars, economies, profits, fund others, milk

 Dogs-Low share of low growth market, no cash generation, consume cash, rid, divest  Portfolio balance critical, reduce dogs, milk cash cows build stars

 Limitations- Profitability, trends, environment, SBU sensitivities not considered 3 GE Matrix/Growth Share Matrix/Business Screen

Helps analyse portfolio, determine which businesses should receive more/less investment and which should be divested.

 Market Attractiveness v Business strengths

 Optimal business portfolio to fit firm strengths, exploit attractive

industries/markets

 Circle is SBU, Circle size= industry/ market size, pie size = SBU market share

 Arrows= growth of SBU/industry

 SBU's to invest, build, harvest, divest?

 Forecast for N3-5Y- strategy, competition, PLC, technology, policy, incorporate in length & direction of arrows

Strategies for SBU in various quadrants

Business strength

(Resources, competencies, brands, MS, customer loyalty, cost structures, distribution, access to finances, raw material, technology, innovation) Market attractiveness

(Market size, growth, profitability, pricing freedom, rivalry, risks v returns, differentiation, segments, channels)

High Medium Low

Strong Invest Invest Protect

Medium Invest Protect Harvest

Weak Protect Harvest Divest

Implementation of portfolio analysis

 Identify drivers important to overall strategy, assign relative importance weights

 Score SBU's each driver, Multiply weights times scores for each SBU, Interpret results Market Attractiveness: size, growth, profits, potential, differentiation rivalry

Business Strength: Assets, competence, brands, MS, growth, loyalty, margin, technology / innovation, distribution, capacity, financial resources, cost structure

 GE Matrix v BCG- 3*3 grid, allows more sophistication, broader

 Limitations- Core competencies not represented, SBU Interactions not considered Exercise- For a diversified conglomerate, outline SBU strategies by plotting GE matrix

Strong Medium Weak

High Medium Low 1 2 3 4 1 2 3 4 Business Strength M a rk e t A ttr a c tiv e n e ss

4 Value Chain analysis (Porter) Template that allows firm to

understand parts of its operations that create value (margin) & those that do not. Analyse specific inter-related activities through which firm can create competitive advantage.

 Understand cost position

 Benchmark activities against competitors to match/ improve efficiencies, or outsource

 Facilitate implementation of a chosen business-level strategy

 Primary activities- goal is to create competitive advantage

 Support activities- facilitate or

support primary activities to create competitive advantage 5 Generic Business Strategies- Porter

Sources of competitive advantage-Cost leadership, Differentiation, Focus Competitive Advantage- A sustainable competitive advantage gained by offering customers greater value and benefits through better PQRSTUV & people

Cost Leadership

 Cost leader low price- competitive advantage lowest cost, ‘no frills’- Amul

 Low cost not always low price- Toyota- high quality, lower costs, better margins Differentiation

 Intense Competition, brand clutter - 25000 pharma firms, 4 cars in 1983, 400 2011

 Spoilt for choice- 4 car models 1983, 14 in 1993, 83 in 2003, 400+ in 2012

 Select 1/more vacant differentiated needs, position firm to meet criteria-Domino’s

 Differentiators- PQRSTUV, design, delivery, reach, delight

 Competitive advantage in a broad range of market / industry segments

 Differentiated goods/services satisfying needs- sustainable competitive advantage

 Specific targeting, price insentive, value focus- high prices & margins- Apple, Intel

 Innovation and improvement important

 Competitive advantage with additional costs, but increased revenue will offset Differentiation Focus or Niche strategy

 Specialise within just 1/ more small market segments with different customer needs

 Competitors target broader customers group, existing brands not meeting demand

 Tour Operators- Nepal or HP or South only, Glaxo- Pharmaceuticals

N a rr o w B ro a d

Low Cost High Cost

C o m p e ti ti v e s c o p e Competitive advantage Overall cost leadership Cost focus Differentiation Differentiation focus

 Niche- Specialization by narrow segment / market / industry, but small, specialist niches disappear in long term- often used by smaller firms- Florist, Sports shop

 Cost focus – Difficult to achieve if industry depends on economies of scale- telecom

 Eg Country Level -Strategic Differentiation

6 Specific Business Strategies (Kellogg)

Strategies employed by firms to gain competitive advantage

Exercise: Identify specific strategies of SBU in a conglomerate / brands in a portfolio

7 Mckinsey 7-S Framework- Successful strategy implementation if all 7 elements present

 Strategy, Structure, Systems-hardware, others software

 Shared values- What firm stands for, shared beliefs & attitudes

 Strategy- Operational Plans to reach identified goals. Environment, competition, customers

 Structure-How the SBUs relate to each other

 System-Procedures, processes-financial/hr/mktg/mis

 Staff- Able people, well trained

 Style- Common way of thinking & behaving eg smiles

China India

Hard Infrastructure- Ports,Roads,Power, Mfrg

Soft Infrastructure- Software, ITES, Auto, Biotech

Factory of the World Back End

Government support Entrepreneurship

Grow larger GE, RIL, Pfizer

Downsize Avon, Sara Lee, Tata’s in 1990s, Merck 1996

Diversify into new markets Walmart, Amul, Pepsi

Dominate a niche Ferrari, Dabbawallas

Outsource production process IKEA, Nike, Airtel Integrate production process Armani, Tiffany, D&G Be cost leader even if quality is sacrificed Nano, Kia

Be quality leader even if costs increase BMW, Samsung, 4 Seasons Drive rivals from the market Microsoft, Essel Propack Co-operate with rivals Sony, BMS, Pfizer

Innovate Apple, Intel

4 Competitive Strategies

Identify competitive position wrt self, role played by market leader, challenger, follower, nicher, plan and implement strategies to gain competitive advantage, attain objectives. Sustainable competitive advantage (SCA)

 Competitive advantage is necessary to compete, but sustainable competitive advantage helps consistently command above average returns

 Understanding competitive position helps erect barriers against competition  Eg SCA Singapore Airlines (SIA)- best in-flight service, others improved service,

SIA added modern fleet, improved- ground service, in-cabin entertainment, comfort levels

 SCA Amul- procures 97L litres milk daily from 27L farmers. Strong backward linkage and scale gives Amul cost leadership in milk processing which ensures low penetrative prices, infeasible for competitors to match. Amul leverages its milk proficiencies to related areas- spray, butter, cheese, ice cream, dahi, etc.  SCA Apple- transforms industries with innovative convergence products, closed

ecosystem and design, command premium price

Competitive strategies- used by firms to gain advantage over competition

Market dominance- Leader(Nokia), challenger(Samsung), follower (Sony), nicher (HTC) Innovation strategies – Based on NPD, technology & business innovation. Three types:

Pioneers, Close followers and Late followers

Growth strategies – Organic and Inorganic, Integration (Horizontal & vertical), Diversification or conglomeration, M&A, Alliances, Strategic acquisitions. Warfare based- Offensive, defensive, flanking, guerilla

Competitive Strategies Typologies Examples

Market dominance strategies- based on player’s dominance / share of the industry

Leader Nokia

Challenger Samsung, Apple

Follower Sony, LG

Counterfeiter Fake mobiles Cloner Karbon, Lemon Imitator Nokia, Micromax Adaptor LG, Sony

Nicher HTC, Blackberry

Innovation strategies

Ascertain firms rate of NPD, business innovation, cutting edge technology

Pioneers Apple, Intel

Late followers Nokia Close followers HTC Intensive growth strategy

Ansoff’s Growth Matrix-existing and new- products v markets. Eg Maruti

Market penetration Maruti in rural India New market Devt Maruti SE Asia exports New product Devt Swift, SX4, Ritz

Marketing Warfare strategies

 Combination (defensive + offensive) strategies- to protect/ grow/ attack

 Key- leadership, motivation, intelligence gathering, strategies, logistics, and communications (Defensive, Offensive, Flanking, Guerilla)

Strategy Action Illustrations

Defensive Warfare (Market Leader)

Block strong competitive moves. Consolidate, NPL, reach, brand building, grow the market

Apple, HUL, Amul Offensive Warfare

(# 2/3 with resources to challenge leader)

Attack leader’s weakness, narrower the better. Skilled used of resources

Moov, Maruti, Hero Honda Flanking Warfare

(# 4-6 with resources to pursue flanking in that market segment)

Open new uncontested area, near leader’s position, tactical surprise key, persevere. Leader may also flank. Ability to create, maintain separate category critical

Toyota- Lexus, Intel-Celeron, Rolex-Tudor, HUL- Wheel

Guerilla Warfare (Small players with low

resources

Hit and run strategy. Identify small segment that can be defended, agility key.

Bean bags, Ghari

Market dominance – Measure of the strength of a brand, service or firm relative to competitive offerings, expressed in MS, reach and number of players. Monopoly,

duopoly, oligopoly, fragmentation, consolidation, concentration. Market Leader’s strategies:

 Expand market by- new users, new uses, more usage

 Protect MS by- adopting defense strategies

 Strategy depends on- is it worth fighting for, competence, defensive strength, choices Strategy What it means

Growth strategy Example Moov

New users New segments Housewife to physically active

adults

New uses More occasions to use Back pain to all pain

More usage Increase frequency/ quantum 1 finger to ‘Moov ki maalish’ Defense strategy

Position Defense

Create fortress defense, least successful

Nokia created too many segments to defend, lost in major segments Mobile

Defense

Broaden market, diversify, redefine business, competitive focus

Google search to You tube, android, chrome

Flanking Defense

Secondary markets (flanks) vulnerable, prone to attack

Intel Pentium + Celeron, Toyota Lexus, HUL Wheel v Nirma Contraction Divest vulnerable segments, 1990s Tata divested pharma, oil,

Defense contract, redirect resources to defendable ones

soap to focus on steel, motors, IT, hotels

Pre-emptive Defense

Attack before attack, intent retaliatory, proliferation

Nokia, Cadbury, Titan- in every segment

Counter-Offensive Defense

Respond to competitors’ head-on attack, identify weakness and launch counter attack

HUL STING op to counter Nirma

Market challenger’s strategies

Market challenger- strong, not dominant but follows an aggressive strategy to gain MS  Attack- market leader, major players, smaller vulnerable firms

 NPL, price discounts / reduction, line extensions, intense promotions

 Improve service and distribution, cost reductions

Strategy What it means Example

Frontal attack Success difficult unless sufficient resources, staying power or clear distinctive advantage(s)

Samsung Galaxy v iPhone/ iPad

Flank attack Attack leaders weak points/ blind spots/ flanks,

for challenger with inferior resources

Nirma detergent @ Rs 3/kg attacked HUL Surf Rs 13/kg

Encirclement attack

Attack the enemy on many fronts at the same time, for challenger with superior resources

VW India entry with full range, Samsung

Bypass attack Diversifying into uncontested space, unrelated products or markets neglected by the leader,

ITC Pasta entry before Maggi, Kinetic Honda, Tata Nano in low cost car segment

Guerrilla attack Launch small, intermittent hit-and-run attacks to harass and destabilize the leader

Local airlines- strategic promos to attack national carriers

Follower strategies

Follower- strong, not dominant, content to stay there, safe, low risk player

 No head-on battle with market leader, develop parallel strategies

 Plays on accepted norms in best practices, R&D, risks and costs- low failure rates

 “Innovative Imitation”- as profitable as a product innovation strategy” T Levitt HBR

 Create distinct advantages—tweak, location, services, EMI, Design- Hyundai

 Product innovation—Sony, Product-imitation- Nokia

Strategy What it means Example

Counterfeiter (illegal) Pass off as original Duplicates MB pens, Rolex Cloner Similar improvised products IBM PC, iPhone clones

Imitator Nokia No 1 without innovation

Adapter Car makers- imitate design

elements of each other Nicher strategies

Nicher- Specialise in small profitable sub segments (niches), not served by/ unattractive to larger firms- Belkin, Transcend- IT accessories, Tour operators- Shirdi/Nepal, Florists

 Profit margins emphasized rather than revenue or market share

 Competitive advantage gained through effectiveness rather than efficiency

 Successes- High value added industries/ market high margin high end products

 Nichers create niches, expand and protect them- Mobiles, Moov

 Nike constantly created new niches--cycling, walking, hiking, cheerleading, etc Niche specialist Firm specialization

End user Serve one type of end use customer

Vertical level Vertical level of production-distribution value chain Customer size Focus on selling to small, medium or large customers Specific customer Limit selling to one/few customers

Geographic Limit selling to locality, region, area

Product / product line Carry/ produce only one product/ product line Product feature Produce certain product types/ features Job-shop Customise products for individual customers Quality-price Focus on high/low quality ends

Service Offer one/ more service/s not available from competition Channel Serves only one channel of distribution

Marketing strategies (Auto industry perspective) Competitive strategies

Market dominance (Competition based)

Leader Maruti

Challenger Hyundai, Tata

Follower GM, VW, Toyota,

Nicher Ford

Innovation (NPD, NDS, Tech)

Pioneers Maruti, Santro

Close followers Hyundai, Tata, GM

Late followers VW, Toyota, Ford

Growth strategies

Organic Maruti

Inorganic Tata-JLR/Daewoo, MM-Ssangyong, VW, BMW

Integration Vertical M&M

Horizontal Tata, M&M, VW

Diversification Related Maruti- True value, finance; M&M- Kinetic, Reva Unrelated Hyundai- Aerospace, M&M-IT, Holidays

M&A MM-Ssangyong, VW, BMW

Strategic M&A Tata- JLR, Tata- Daewoo trucks

Strategic alliances Tata-Fiat, GM-SAIC, Fiat diesel engines Warfare strategies

Warfare Strategy Illustrations

Defensive (Leader) Block competitive moves Maruti- NPL, range, reach, brand Offensive (# 2/3) Exploit leader’s weakness Hyundai compact-mid size range Flanking (# 4-6/leader) Uncontested space Kizashi, Eon, Vento, Brio

Guerilla (Small player) Hit and run strategy Defensive / Offensive Marketing war Strategies

Pre-emptive strike Attack before attacked Maruti- Full range and reach Position Defense Erect fortifications Maruti- Sensitive price points, NPL Mobile defense Change positions swiftly Psychographic segmentation Counter-offensive Attack attacker Drop prices, promotion, cost leader Strategic withdrawal Retreat and regroup Withdraw Esteem, Baleno, Zen, NPL Flank positioning Strengthen flanks Maruti in premium

Deterrence Keep competitors out Maruti- small cars, penetration, reach Frontal Attack Confront head-on Hyundai / Tata compacts v Maruti Encirclement Envelop rivals position VW with full range, M&M in SUV Leapfrog Don’t confront, bypass Tata Nano new segment

Flanking Play in unimportant areas Toyota / GM / VW/ Ford economy Guerilla Low resources, hit & run

5 Product

“We lead the public with new products than ask them what products they want. They don’t know what’s possible, but we do. So instead of doing a lot of market research, we try to create a market for a product by educating them” (Akio Morita, Sony)

 Product- offered to satisfy a want or need- features, quality, services mix and price.  Product differentiation- Choice of form, features, performance quality, conformance

quality, durability, reliability, repairability, and style. PQRSTUV

 Services differentiation- Ordering ease, delivery installation, customer training, customer consulting, maintenance and repair

 Convenience items purchased frequently, immediately, with minimum effort.  Capital goods last long and are purchased infrequently by consumers.

 Commodities- where physical differentiation is difficult

Exercise- 3 brands performing at exceptional levels despite intense competition

Product Strategy-Coordinate product mix/lines, brands, packaging & labeling- decisions Product Levels: The Customer Value Hierarchy

To plan market offering, marketer considers 5 product levels that encompass the augmentations & transformations the product ultimately undergoes. Each level adds more customer value, the 5 levels constitute a customer value hierarchy.

Exercise- Select 1 convenience & 1 capital good, compare & contrast consumers value hierarchy.

Product Levels

What it means Marketers Job Hotel

Customer

ITC Hotels

Core Product bought Provide benefits Place to sleep

Basic Benefits Turn benefit to product Bed, bath,

closet

Budget-Fortune Expected Attributes &

conditions

Minimum buyer expectations, price, convenience, location-

important (EM)

Clean bed & toilets, peace 5-Star- Welcome Aug- mented Exceed expectations

Augmented benefits become expected benefits, competitors step in- important (developed markets) Satellite TV, Tea machine, Internet Super deluxe - ITC

Potential New ways to satisfy/differentiate

Anticipate & innovate Customised service

Welcom Heritage Palaces, forts

Product Mix - HUL Portfolio- Consumer Product-Mix Width

 Product line- group of brands closely related by functions & benefits- Dell PC, Nokia mobiles

 Product mix- total set of brands marketed by a firm, may contain product lines

 Width- product mix lines - HP PCs, Laptops, Printers within home & business segments  HUL 11 lines (Personal wash, laundry, skin care…….)

 Length- total number of items in the mix- 25, average length is 25/11 = 2

 Depth- Variants of each product in the line- Lux has 4 fragrances and 2 sizes, so 8  Deciding which product lines to grow, maintain, harvest, and divest?

Home & Personal care Foods

P e rs o n a l w a sh La u n d ry Sk in c a re H a ir c a re O ra l ca re D e o d o ra n ts C o lo u r co sm e ti cs T e a C o ff e e Fo o d s Ic e c re a m Product line Lux Lifebuoy Liril Hamam Breeze Dove Pears Rexona Surf Exc el Rin Wh eel Fair & lovely Ponds Sunsilk Natural Clinic Pepso-dent Close Up Axe Rexona Lakme BB Lipton Bru Kissan Knorr Anna-purna Kwality Walls Length

Product line strategy

 Upgrade customers - Maruti 800, Alto, Zen , Wagon R

 Cross-sell- HP printers, PC & Laptops, Godrej- Washing machine, TV, fridge, microwave, AC

 Line-stretch- popular(Titan), mass(Sonata), premium(Xylys), youth (Fastrack), ethnic (Raga)

 Line fill- Maruti variants AX, LX, VX; I-Pod- nano, shuffle, classic, 80/40/20/8/4gb  Line prune- Reduce unwanted / unprofitable- Maruti Gypsy

Packaging and labeling- The 5th P, part of product strategy Packaging- 3 levels: Primary, Secondary, Shipper, Insert

 Promotional value- packaging is buyer’s 1st product encounter- can turn on or off

 Functional components- protection in transportation & storage, usage, convenience, ease of use, storage, convey usage information & instructions

Labeling- Identifying product or brand, grading, describing the product, adhering to regulatory requirements, promote through attractive graphics.

Warranties & Guarantees- Expected product performance level by manufacturer, reduces buyer’s perceived risk, if not so well-known product has superior quality. New Product Development (NPD)

 NPD- risky unless based on market segmentation and understanding of customers

 NPD is first and then you figure out how to market, it usually leads to disaster

 Challenge- similar products, effective substitutes, choice, high promotion New Products Types – Breakthrough or incrementally altered products Breakthrough Incremental  New to the world performance features

 Huge advances in performance  Dramatic cost reduction

 Improvement in existing product  Derivative of existing platform  Exploits existing forms / technology

Higher risk Lower risk

Infrequent More frequent

Costlier Less costly

Targets new /existing markets Targets existing/ adjacent markets Marketer’s responsibility

 Envision market

 Create demand

 Educate market

Listen to existing market

Accommodate current demand

Change basis of industry competition: • Electric lighting, antibiotics, microwave, credit card, transistor, heart pacemaker, hip and knee replacements, GPS

Intel’s Pentium IV computer chip- incremental improvement over Pentium III as they share same fundamental technology

Incorporated design improvements that enhanced chip performance

Windows, MS Office, Play station

Exercise: Course of NPD in your industry over L10Y- what changed the basis of

competition, what were the real breakthroughs, which were only incremental? What are the new technologies / products lined up, how will they affect your company and

competitors when launched, in terms of sales and profitability? Identifying new product opportunities

Exercise: For an industry of your choice, identify the unexplored opportunities in every quadrant, and identify the players who operate in each quadrant.

Unexplored Opportunities

New product development (NPD) Stages

 Idea generation- Employees, Sales force, Trade, Competitors, Customers

 Idea screening- Feasible, Workable, Practical

 Concept development and testing- Feedback from target audience

 Marketing strategy- Mix (4Ps), STPD, Targets, Projections, Geographies

 Product development- Final touches & Mfrg

 Test Marketing- Geography or Segment

 Commercialisation- National / Global launch

Why new product development (NPD)

 Changing customer needs – Diet Coke, Saffola

 New Segment Entry- Maruti SX4

 Changing market needs- Scooters to Bikes

 Own successes- Brand / line extensions- Maggi

 Competitive Successes- Krackjack- 50:50, Marie

 New Capabilities- UB Group

 New Concepts- Suzuki Swift, Tata Ace / 1L Car

 New technology- I-Pod, I-Phone, TV

 Product lifecycle- MS Office, Play Station 1,2,3

 Portfolio / Business realignment- Reliance Mobile

 Environmental changes- Music downloads

Product decisions

Design: As the USP- ipod, iphone,ipad

Quality: Consistent with other elements of the marketing mix. Bose speakers Pricing: A premium pricing strategy should reflect quality or value. Benz

Features: Additional features to enhance benefit offered to target market? Nokia Branding: Power of instant sales, trust, quality, reliability, loyalty base, differentiation Brand value of Microsoft > GDP of Pakistan.

Does your perception change for Nike sneakers with/ without the swoosh or nike logo? Cannibalisation- Breakthrough and incremental innovations may cannibalize some part of the existing business. Eg Honda Civic hybrid-power vehicle, attracted eco-friendly or fuel economy (or both) buyers, who may have otherwise purchased Honda Civic, Accord or City. Moov sachets may tap the traveler segment and entice trial but may cannibalise Moov economy pack Wisest to move forward with new-product ideas & accept

cannibalisation, else competitors will.

Extending Product Lines into New Segments

Once successful, companies extend their product lines to create derivative (incremental) products that address adjacent markets. Power of the brand name reduces the risk of these product-line extensions (but may devalue the brand).

Horizontal product-line extensions seek to appeal to different customer tastes (Coke, Diet Coke, Vanilla Coke) while Vertical lines aim to offer a product for every pocket or for different levels of need (Ms Office Home/Professional Edition). In most cases horizontal and vertical extensions are based on incremental development. Eg Vertical- GM product-line concept pioneer- Aimed to satisfy buyers in every

economic stage of life, with Chevrolet brand for the first-time buyer of modest means- and moving progressively upscale with Pontiac, Buick, Oldsmobile, and Cadillac. Buyers would trade up to fancier and more expensive GM brands with growing affluence. Horizontal- Each GM division extended horizontally with Chevrolet-trucks, vans, SUVs. Product platform- Key to success (HBS)

Product platform (Meyer & Lehnerd) is “a set of subsystems & interfaces that form a common structure from which a stream of derivative products can be efficiently developed and produced.” Robust platforms help in incremental or derivative products for specific market segments at

Apple iPod- vertical & horizontal product-line extensions to control meaningful segments with unique products before rivals can gain traction.

Swatch- successful product family based on a common platform- simple, inexpensive to manufacture, and capable of supporting endless external variations. Product platforms based on design elegance and manufacturability give companies low-cost opportunities to customize products for different market segments. The platform of common elements can merged with unique elements to create a product for a particular market segment.

Black & Decker in the early 1970s,

created a platform of electric motor and controls on which it based dozens of consumer power tools: electric drills, sanders, saws, grinders etc. This gave B&D cost leadership, reduced complexity in operations, cut inventories, helped them take on cheaper variants and gained leadership.

Technology lifecycle-

New products are launched at short intervals to tide over technological obsolescence eg Nokia mobiles have short lifecycles so multiple models are launches in similar segments in short timer frames

Product Scope Strategy Product Design Strategy

New Product Strategy

 Perspectives of product mix-

single-product multiple products system-of-products strategy  Degree of standardization standard product customized product

modified standard product

 NPL to previous line/ new use/s/rs

improve/modify product

Pproduct imitation

product innovation.

Single product: product

development focus, avoid obsolescence, be technology leader

Multiple products:

complement brand portfolio

System of products: closely

understand customer needs & product uses

Standard product: increase

economies of scale

Customized product: compete

against mass producers of standardized products through product-design flexibility

Standard product with modifications: combine

benefits of 2 strategies above

Key-

 corporate aspirations toward NPL

 organizational openness to creativity

 environmental favour toward creativity

 screening method for new ideas

6 Integrated Marketing Communication (Promotion)

 Promotion= Marketing communication

 Objective- communication activities to ensure customers know your offerings, have favorable impression of them, and buy- sale, trial, awareness, remind, reassure

 Retention Levels -Reading10%, Listening20%, Audio-Visual70%; Sight, Sound, Motion effective. Integrate individual promotion mix components for effective

communication

Promo Tools / Mix (SPPASM DT)

Sales Promotion Personal Selling PR Advtg Sponsor ship MLM Direct Trade Fair/Expo Contests Coupons Low finance Presentation Samples Demo Inserts Press kit Seminars Advts Hoardings Banners Events Period Theme Network, Residual Income Commission Database Mailers, CRM Catalogue Demos Brochures Tech-Info



 Sales Promotion –(Akai / Aiwa/ Sansui)- Incentive to buy, ensures trial, D2C through trade BOGOF, Coupons, Discounts, Contests, Trial

 Public Relations (PR)- (Political parties / Top Companies/ IPO)- Subtle inserts used in image building, firefighting - impact if managed well, long term economy

 Direct (Credit card / insurance company mailers)- Targeted communication- database update, response, multiple use-2% response. Contest mailers, EMI, transfer of credit, catalogues, CRM

 Trade Fairs and Exhibitions (Print / Auto / Pharma / IT Expo)-Trade, product display / demonstration / awareness / trial, recent decline due to Internet

 Advertising- ‘Paid for’ communication, Difficult to measure ad impact (Amul bylines excellent, sales impact?), Helps develop attitudes /create awareness/ communicate

message, elicit response

 Type of Ads- FRESHEN-Fear, Rational, Emotional, Social, Humour, Ethical, Negative

 Media-Print- Newspapers/ magazines/ journals (local, national, trade, speciality) / pamplets

 Electronic- TV/ radio Virtual- Internet, mobiles Outdoor–Hoardings/ Banners/ Kiosks/Transport (Bus, Train, Taxi, Vans) Captive – Theatres, Train compartments, Cable TV

 Sponsorship- Organisation pays to associate with an event/cause-Sahara- Indian

Cricket /Hockey/ Olympics. Event attributes associate with sponsor-Pepsi:Youth, Sahara:Patriotism

 Multi-Level Marketing (HerbalLife, Amway)- Network, Residual Income, Flexi-timings, Initiators earn maximum, financial schemes -suspect

Promotional Spend Methods- (Half my ad-spend’s wasted, which half? Wanamaker)  Affordable –Amount decided on supposed affordability, ignores promo needs  % of Sales- Anticipated sales, not by opportunities, promo-spend varies, % basis arbitrary

 Competitive parity- Share of voice, Assumes competitive spend-collective industry wisdom- debatable, Own opportunities/strengths/reputation not considered- IIPM highest print spender

 Objectives & Task Method- Define objectives/tasks, allocate spend, difficult to implement

Pull v/s Push: Push (Sales force + Trade promotion), Pull (Advertising +Consumer promotion) - traditionally HLL-Push and P&G-Pull strategy worldwide

Integrated Marketing Communication (IMC)

Strategic process to produce a consistent brand message at each customer touch point. Use multiple communication modes to foster awareness of product / services by

informing people about features and benefits, and moving them to make a purchase. Challenges are:

 Communication clutter (Urban Indian adult exposed to 1000 messages daily)

 Creating awareness in targeted customers

 Producing consistent brand message at each consumer touch point

 Bringing them to the point of interest and confidence

 Making them reach for their wallets to make a purchase

The Marketing communication process (AKIPIS): To influence customer to make a purchase. Eg Proposed Mumbai-Ahmedabad express train will cover 500 km in 3 hours. 1. Create awareness: People will rarely buy a product/ service they are not aware of.

Critical to communicate service with the targeted customer (print media).

2. Provide knowledge: Inform product/ service features, what it does. Describe train amenities & schedule: comfortable seating, wi-fi, food, laptops & mobiles charging

outlets, adjustable lights, convenient morning and evening schedules.

3. Create favourable impression: People buy benefits not features- things that solve a

nagging problem /help save money /provide value. Communicate key benefits- city

centre to city centre comfortable travel, allows them to work productively in the trip. 4. Attain a preferred position in the customer’s mind: Customers thinking- express

provides value, no airport hassles/ cramped seats/ security checks/ delays- preferred.

5. Create a purchase intention: If earlier steps are targeted and communicated well,

the prospect will consider this alternative the next time.

6. Make the sale: Prospect travels by the express, becomes a customer.