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ASSIGNMENT ON MARKETING MANAGEMENT

ASSIGNMENT ON
MARKETING
MANAGEMENT

BY RAHUL GUPTA
Q.1 Write a short note on product life cycle?
Answer

 Introduction:
Product life cycle management is the succession of strategies used by management as a
product goes through its product life cycle. The conditions in which a product is sold
changes over time and must be managed as it moves through its succession of stages.

Product life cycle:


A product's life cycle (PLC) can be divided into several stages characterized by the
revenue generated by the product. If a curve is drawn showing product revenue over time, it
may take one of many different shapes, an example of which is shown below:

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Product Life Cycle Curve

The life cycle concept may apply to a brand or to a category of product. Its duration
may be as short as a few months for a fad item or a century or more for product categories
such as the gasoline-powered automobile.

Product development is the incubation stage of the product life cycle. There are no sales
and the firm prepares to introduce the product. As the product progresses through its life
cycle, changes in the marketing mix usually are required in order to adjust to the evolving
challenges and opportunities.

Introduction Stage:

When the product is introduced, sales will be low until customers become aware of
the product and its benefits. Some firms may announce their product before it is introduced,
but such announcements also alert competitors and remove the element of surprise.
Advertising costs typically are high during this stage in order to rapidly increase customer
awareness of the product and to target the early adopters. During the introductory stage the
firm is likely to incur additional costs associated with the initial distribution of the product.
These higher costs coupled with a low sales volume usually make the introduction stage a
period of negative profits.

During the introduction stage, the primary goal is to establish a market and build primary
demand for the product class. The following are some of the marketing mix implications of
the introduction stage:
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• Product - one or few products, relatively undifferentiated


• Price - Generally high, assuming a skim pricing strategy for a high profit margin as
the early adopters buy the product and the firm seeks to recoup development costs
quickly. In some cases a penetration pricing strategy is used and introductory prices
are set low to gain market share rapidly.
• Distribution - Distribution is selective and scattered as the firm commences
implementation of the distribution plan.
• Promotion - Promotion is aimed at building brand awareness. Samples or trial
incentives may be directed toward early adopters. The introductory promotion also
is intended to convince potential resellers to carry the product.

Growth Stage:

The growth stage is a period of rapid revenue growth. Sales increase as more customers
become aware of the product and its benefits and additional market segments are targeted.
Once the product has been proven a success and customers begin asking for it, sales will
increase further as more retailers become interested in carrying it. The marketing team may
expand the distribution at this point. When competitors enter the market, often during the
later part of the growth stage, there may be price competition and/or increased promotional
costs in order to convince consumers that the firm's product is better than that of the
competition. During the growth stage, the goal is to gain consumer preference and increase
sales. The marketing mix may be modified as follows:

• Product - New product features and packaging options; improvement of product


quality.
• Price - Maintained at a high level if demand is high, or reduced to capture additional
customers.
• Distribution - Distribution becomes more intensive. Trade discounts are minimal if
resellers show a strong interest in the product.
• Promotion - Increased advertising to build brand preference.

Maturity Stage:

The maturity stage is the most profitable. While sales continue to increase into this
stage, they do so at a slower pace. Because brand awareness is strong, advertising
expenditures will be reduced. Competition may result in decreased market share and/or
prices. The competing products may be very similar at this point, increasing the difficulty of
differentiating the product. The firm places effort into encouraging competitors' customers
to switch, increasing usage per customer, and converting non-users into customers. Sales
promotions may be offered to encourage retailers to give the product more shelf space over
competing products.

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During the maturity stage, the primary goal is to maintain market share and extend the
product life cycle. Marketing mix decisions may include:

• Product - Modifications are made and features are added in order to differentiate the
product from competing products that may have been introduced.
• Price - Possible price reductions in response to competition while avoiding a price
war.
• Distribution - New distribution channels and incentives to resellers in order to avoid
losing shelf space.
• Promotion - Emphasis on differentiation and building of brand loyalty. Incentives to
get competitors' customers to switch.

Decline Stage:

Eventually sales begin to decline as the market becomes saturated, the product
becomes technologically obsolete, or customer tastes change. If the product has developed
brand loyalty, the profitability may be maintained longer. Unit costs may increase with the
declining production volumes and eventually no more profit can be made.

During the decline phase, the firm generally has three options:

• Maintain the product in hopes that competitors will exit. Reduce costs and find new
uses for the product.
• Harvest it, reducing marketing support and coasting along until no more profit can
be made.
• Discontinue the product when no more profit can be made or there is a successor
product

The marketing mix may be modified as follows:

• Product - The number of products in the product line may be reduced. Rejuvenate
surviving products to make them look new again.
• Price - Prices may be lowered to liquidate inventory of discontinued products.
Prices may be maintained for continued products serving a niche market.
• Distribution - Distribution becomes more selective. Channels that no longer are
profitable are phased out.
• Promotion - Expenditures are lower and aimed at reinforcing the brand image for
continued products.

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Limitations of the Product Life Cycle Concept:


The term "life cycle" implies a well-defined life cycle as observed in living organisms,
but products do not have such a predictable life and the specific life cycle curves followed
by different products vary substantially. Consequently, the life cycle concept is not well-
suited for the forecasting of product sales. Furthermore, critics have argued that the product
life cycle may become self-fulfilling. For example, if sales peak and then decline, managers
may conclude that the product is in the decline phase and therefore cut the advertising
budget, thus precipitating a further decline.

Nonetheless, the product life cycle concept helps marketing managers to plan alternate
marketing strategies to address the challenges that their products are likely to face. It also is
useful for monitoring sales results over time and comparing them to those of products
having a similar life cycle.

Q.2 Explain various categories of brand sponsorship with


example?
Answer

 Introduction:
American Marketing Association defines the brand as “A name, term, design, symbol or
any other feature that identifies one seller’s good or service as distinct from those of other

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sellers. The legal term for brand is trademark. A brand may identify one item, a family of
terms, or all items of that seller. If used for the firm as a whole, the preferred term is trade
name.

 Brand Sponsorship:
Brand managers have four options of sponsoring the brand.

A. Manufacturer Brand-
The brand owned by manufacturer and promoted either directly or indirectly. This type of
strategy has been followed for many years. Pillsbury Atta is a manufacturer brand.

B. Private Brand-
These brands are also called store brands. These brands bear the store name or store
selected vendor name. Basic ingredients of private labels are:

I. It must be a unit package: It is difficult to assign a private label character to


say, rice sold loose from a 100kg bag. Even though it may enhance consumer
loyalty for whatever reason, it does not qualify as a private label product.

II. Relabeling: The unit pack must bear only the brand name of the particular
store or any other party the store may choose for its private label programme.

Private labels will enhance the category profitability; increase the negotiation power of the
retailer and better value creates better consumer loyalty. All retailers cannot go for the
private labeling. Private labels can be introduced if and only if:

a) The consumer is not getting the tangible value.

b) The retailer is not making enough returns from the sale of the branded goods.

Emerging issues in private branding:

a. The private label strategy is effective, profitable and realistic.

b. The retailer must understand the price, quality and willingness to pay.

c. The retailers must have a sufficiently large base of loyal customers in the store
before introducing the private label.
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d. The focus must be on the consumer needs and not any private agenda of the
retailers.

e. There must be a stringent system for the private label production. Quality control is
a must since there is no one else to blame.

f. Private labels must work to fill the gaps in the category and not target the brand
leader.

g. Since manufacturers may take a private label initiative o the retailer seriously and
avoid value gaps in the categories as an impediment to growing private labels.

C. Brand Licensing-
It is the legal authorization by the trade mark brand owner to allow another company to use
its brand for a free. For example- Hugo Boss, Tommy Hilfiger, Lovable, Lacoste and Nike
are some of the textile brands those licensed their brands in the Indian market. The major
benefits of brand licensing are low-cost, free publicity and revenue from royalty fees. Brand
licensing also suffers from serious limitations like lack of manufacturing control, and
failure of licensing arrangements.

D. Co-Branding-
According to Kotler, co-branding is the practice of using the established brand names of
two different companies on the same product. For example- ICICI and HPCL came together
to sell ICICI-HPCL petro cards to the customer. Here card is the co-branding between the
two companies. Co-branding helps ICICI to utilize their financial resources well. It adds
another banking facility to the bank while HPCL can lock the customer from buying the
petroleum products from competitors. HPCL also gets benefit of financial power which it
doesn’t have. Both companies promote these products. Hence, they can leverage brand
image and can reduce the cost. All companies will not get benefit from co-branding.
Sometimes company may lose the brand image f the product fails.

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Q.3 Explain the product mix pricing strategies


with example?
Answer

Pricing Strategy:
One of the four major elements of the marketing mix is price. Pricing is an important
strategic issue because it is related to product positioning. Furthermore, pricing affects other
marketing mix elements such as product features, channel decisions, and promotion.

While there is no single recipe to determine pricing, the following is a general sequence of
steps that might be followed for developing the pricing of a new product:

1. Develop marketing strategy - perform marketing analysis, segmentation, targeting,


and positioning.
2. Make marketing mix decisions - define the product, distribution, and promotional
tactics.
3. Estimate the demand curve - understand how quantity demanded varies with price.
4. Calculate cost - include fixed and variable costs associated with the product.
5. Understand environmental factors - evaluate likely competitor actions,
understand legal constraints, etc.
6. Set pricing objectives - for example, profit maximization, revenue maximization,
or price stabilization (status quo).
7. Determine pricing - using information collected in the above steps, select a pricing
method, develop the pricing structure, and define discounts.

These steps are interrelated and are not necessarily performed in the above order.
Nonetheless, the above list serves to present a starting framework.

Marketing Strategy and the Marketing Mix:


Before the product is developed, the marketing strategy is formulated, including target
market selection and product positioning. There usually is a tradeoff between product
quality and price, so price is an important variable in positioning.

Because of inherent tradeoffs between marketing mixes elements, pricing will depend on
other product, distribution, and promotion decisions.

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Estimate the Demand Curve:

Because there is a relationship between price and quantity demanded, it is important to


understand the impact of pricing on sales by estimating the demand curve for the product.

For existing products, experiments can be performed at prices above and below the current
price in order to determine the price elasticity of demand. Inelastic demand indicates that
price increases might be feasible.

Calculate Costs:

If the firm has decided to launch the product, there likely is at least a basic understanding of
the costs involved; otherwise, there might be no profit to be made. The unit cost of the
product sets the lower limit of what the firm might charge, and determines the profit margin
at higher prices.

The total unit cost of a producing a product is composed of the variable cost of producing
each additional unit and fixed costs that are incurred regardless of the quantity produced.
The pricing policy should consider both types of costs.

Environmental Factors:

Pricing must take into account the competitive and legal environment in which the company
operates. From a competitive standpoint, the firm must consider the implications of its
pricing on the pricing decisions of competitors. For example, setting the price too low may
risk a price war that may not be in the best interest of either side. Setting the price too high
may attract a large number of competitors who want to share in the profits.

From a legal standpoint, a firm is not free to price its products at any level it chooses. For
example, there may be price controls that prohibit pricing a product too high. Pricing it too
low may be considered predatory pricing or "dumping" in the case of international trade.
Offering a different price for different consumers may violate laws against price
discrimination. Finally, collusion with competitors to fix prices at an agreed level is illegal
in many countries.

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Pricing Objectives:
The firm's pricing objectives must be identified in order to determine the optimal pricing.
Common objectives include the following:

• Current profit maximization - seeks to maximize current profit, taking into


account revenue and costs. Current profit maximization may not be the best
objective if it results in lower long-term profits.
• Current revenue maximization - seeks to maximize current revenue with no
regard to profit margins. The underlying objective often is to maximize long-term
profits by increasing market share and lowering costs.
• Maximize quantity - seeks to maximize the number of units sold or the number of
customers served in order to decrease long-term costs as predicted by the experience
curve.
• Maximize profit margin - attempts to maximize the unit profit margin, recognizing
that quantities will be low.
• Quality leadership - use price to signal high quality in an attempt to position the
product as the quality leader.
• Partial cost recovery - an organization that has other revenue sources may seek
only partial cost recovery.
• Survival - in situations such as market decline and overcapacity, the goal may be to
select a price that will cover costs and permit the firm to remain in the market. In
this case, survival may take a priority over profits, so this objective is considered
temporary.
• Status quo - the firm may seek price stabilization in order to avoid price wars and
maintain a moderate but stable level of profit.

For new products, the pricing objective often is either to maximize profit margin or to
maximize quantity (market share). To meet these objectives, skim pricing and penetration
pricing strategies often are employed. Joel Dean discussed these pricing policies in his
classic HBR article entitled, Pricing Policies for New Products.

 Skim pricing:
Attempts to "skim the cream" off the top of the market by setting a high price and selling to
those customers who are less price sensitive. Skimming is most appropriate when:

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• Demand is expected to be relatively inelastic; that is, the customers are not highly
price sensitive.
• Large cost savings are not expected at high volumes, or it is difficult to predict the
cost savings that would be achieved at high volume.
• The company does not have the resources to finance the large capital expenditures
necessary for high volume production with initially low profit margins.

 Penetration pricing:
It pursues the objective of quantity maximization by means of a low price. It is most
appropriate when:

• Demand is expected to be highly elastic; that is, customers are price sensitive and
the quantity demanded will increase significantly as price declines.
• Large decreases in cost are expected as cumulative volume increases.
• The product is of the nature of something that can gain mass appeal fairly quickly.
• There is a threat of impending competition.

As the product lifecycle progresses, there likely will be changes in the demand curve and
costs. As such, the pricing policy should be reevaluated over time.

The pricing objective depends on many factors including production cost, existence of
economies of scale, barriers to entry, product differentiation, rate of product diffusion, the
firm's resources, and the product's anticipated price elasticity of demand.

Pricing Methods:
To set the specific price level that achieves their pricing objectives, managers may make use
of several pricing methods. These methods include:

• Cost-plus pricing - set the price at the production cost plus a certain profit margin.
• Target return pricing - set the price to achieve a target return-on-investment.
• Value-based pricing - base the price on the effective value to the customer relative
to alternative products.
• Psychological pricing - base the price on factors such as signals of product quality,
popular price points, and what the consumer perceives to be fair.

In addition to setting the price level, managers have the opportunity to design innovative
pricing models that better meet the needs of both the firm and its customers. For example,
software traditionally was purchased as a product in which customers made a one-time
payment and then owned a perpetual license to the software. Many software suppliers have
changed their pricing to a subscription model in which the customer subscribes for a set

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period of time, such as one year. Afterwards, the subscription must be renewed or the
software no longer will function. This model offers stability to both the supplier and the
customer since it reduces the large swings in software investment cycles.

Price Discounts:
The normally quoted price to end users is known as the list price. This price usually is
discounted for distribution channel members and some end users. There are several types of
discounts, as outlined below.

• Quantity discount - offered to customers who purchase in large quantities.


• Cumulative quantity discount - a discount that increases as the cumulative
quantity increases. Cumulative discounts may be offered to resellers who purchase
large quantities over time but who do not wish to place large individual orders.
• Seasonal discount - based on the time that the purchase is made and designed to
reduce seasonal variation in sales. For example, the travel industry offers much
lower off-season rates. Such discounts do not have to be based on time of the year;
they also can be based on day of the week or time of the day, such as pricing offered
by long distance and wireless service providers.
• Cash discount - extended to customers who pay their bill before a specified date.
• Trade discount - a functional discount offered to channel members for performing
their roles. For example, a trade discount may be offered to a small retailer who may
not purchase in quantity but nonetheless performs the important retail function.
• Promotional discount - a short-term discounted price offered to stimulate sales.

Product Pricing Strategies:


The most challenging stage of product is introductory stage. In introductory stage of new
product companies face the challenge of setting the prices for the first time. Companies
have only one chance to get new product price right. They can choose among the two
strategies i.e. market skimming pricing and market penetration pricing.

Market Skimming Pricing:

Companies interested in profitable sale set initially high price for a product to skim
maximum revenue from the segments which is willing to pay high price and then slowly
move to low price.

Market Penetration Pricing:

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Companies interested in large market share set low price for a product in order to attract large
number of customer.

Product Mix Pricing Strategy:


The strategies of setting the price for a product when the product is part of product mix.

Product Line Pricing:

Same product with different features the price is kept on the bases of the cost difference
between the products in product line and customer evaluation of features and competitor
prices. For example Sony offering different television with different features at different
prices.

Optional Product Pricing:

It’s the pricing of the main product with the accessories or optional product for example car
with power window CD changer and car without power window and CD changer.

Captive Product Pricing:

Pricing of the product which must be used with the main product for example films must be
use with VCR, CD must be use with CD player etc.

Product Bundle Pricing:

Making the bundle of different product and price the bundle at a reduce price. It is basically
for selling the slow moving items.

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Q.4 What are various logistics functions? Describe in brief?


Answer

 Introduction:
A logistic function or logistic curve is the most common sigmoid curve. It models the
"S-shaped" curve (abbreviated S-curve) of growth of some set P, where P might be thought
of as population. The initial stage of growth is approximately exponential; then, as
saturation begins, the growth slows, and at maturity, growth stops.

A simple logistic function may be defined by the formula

Where the variable P might be considered to denote a population and the variable t
might be thought of as time. If we now let t range over the real numbers from −∞ to +∞
then we obtain the S-curve shown. In practice, due to the nature of the exponential function
e−t, it is sufficient to compute t over a small range of real numbers such as [−6, +6].

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 Standard logistic sigmoid function:


The logistic function finds applications in a range of fields, including artificial neural
networks, biology, biomathematics, demography, economics, chemistry, mathematical
psychology, probability, sociology and statistics.

 Logistic differential equation:


The logistic function is the solution of the simple first-order non-linear differential
equation

Where P is a variable with respect to time t and with boundary condition P (0) = 1/2. This
equation is the continuous version of the logistic map. One may readily find the (symbolic)
solution to be

Choosing the constant of integration eke = 1 gives the other well-known form of the
definition of the logistic curve

The logistic curve shows early exponential growth for negative t, which slows to linear
growth of slope 1/4 near t = 0, then approaches y = 1 with an exponentially decaying gap.

The logistic function is the inverse of the natural logic function and so can be used
to convert the logarithm of odds into a probability; the conversion from the log-likelihood
ratio of two alternatives also takes the form of a logistic curve.

The logistic sigmoid function is related to the hyperbolic tangent, A.p. by

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In ecology: modeling population growth:


A typical application of the logistic equation is a common model of population growth,
originally due to Pierre-François Verhulst in 1838, where the rate of reproduction is
proportional to:

• The existing population


• The amount of available resource.

All else being equal. Thus the second term models the competition for available
resources, which tends to limit the population growth. Letting P represent population size
(N is often used in ecology instead) and t represent time, this model is formalized by the
differential equation:

Where the constant r defines the growth rate and K is the carrying capacity.

Interpreting the equation shown above: the early, unimpeded growth rate is modeled
by the first term +rP. The value of the rate r represents the proportional increase of the
population P in one unit of time. Later, as the population grows, the second term, which
multiplied out is −rP2/K, becomes larger than the first as some members of the population P
interfere with each other by competing for some critical resource, such as food or living
space. This antagonistic effect is called the bottleneck, and is modeled by the value of the
parameter K. The competition diminishes the combined growth rate, until the value of P
ceases to grow (this is called maturity of the population).

Let us divide both sides of the equation by K [5] to give

Now setting x = P / K gives us the differential equation

For r = 1 we have the particular case with which we started.

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In ecology, species are sometimes referred to as r-strategist or K-strategist


depending upon the selective processes that have shaped their life history strategies. The
solution to the equation (with P0 being the initial population) is

Where

Which is to say that K is the limiting value of P: the highest value that the
population can reach given infinite time (or come close to reaching in finite
time)? It is important to stress that the carrying capacity is asymptotically
reached independently of the initial value P (0) > 0, also in case that P (0) > K.

Time-varying carrying capacity:


Since the environmental conditions influence the carrying capacity, as a consequence it
can be time-varying: K (t) > 0, leading to the following mathematical model:

A particularly important case is that of carrying capacity that varies periodically with period
T:

It can be shown that in such a case, independently from the initial value P (0) > 0, P (t) will
tend to a unique periodic solution P*(t), whose period is T. A typical value of T is one year:
in such case K (t) reflects periodical variations of weather conditions.

In statistics:
Logistic functions are used in several roles in statistics. Firstly, they are the cumulative
distribution function of the logistic family of distributions. Secondly they are used in
logistic regression to model how the probability p of an event may be affected by one or
more explanatory variables: an example would be to have the model
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Where x is the explanatory variable and a and b are model parameters to be fitted.

An important application of the logistic function is in the Rasch model, used in item
response theory. In particular, the Rasch model forms a basis for maximum likelihood
estimation of the locations of objects or persons on a continuum, based on collections of
categorical data, for example the abilities of persons on a continuum based on responses
that have been categorized as correct and incorrect.

In medicine: modeling of growth of tumors:


Another application of logistic curve is in medicine, where the logistic differential
equation is used to model the growth of tumors. This application can be considered an
extension of the above mentioned use in the framework of ecology. Denoting with X (t) the
size of the tumor at time t, its dynamics are governed by:

Which is of the type?

Where F(X) is the proliferation rate of the tumor.

If chemotherapy is started with a log-kill effect, the equation may be revised to be

Where c (t) is the therapy-induced death rate. In the idealized case of very long therapy, c
(t) can be modeled as a periodic function (of period T) or (in case of continuous infusion
therapy) as a constant function, and one has that

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I.e. if the average therapy-induced death rate is greater than the baseline proliferation rate
then there is the eradication of the disease. Of course, this is an over-simplified model of
both the growth and the therapy (e.g. it does not take into account the phenomenon of
clonally resistance).

Double logistic function:

The double logistic is a function similar to the logistic function with numerous
applications. Its general formula is:

Where d is its centre and s is the steepness factor. Here "sign" represents the sign function.

 Importance of a global view of Logistics:


Today’s economy is a global one and enterprises must be prepared to conduct business with
customers and suppliers anywhere in the world. Efficient logistics services system plays a
major role in competitive pricing and operational efficiency. Cutting-edge technology with
global logistics knowledge can create a seamless network of suppliers, carriers, and
regulatory agencies, warehouse facilities and clients. Global logistics effectiveness is a
process, a supply pipeline that stretches from your vendor to the customer. Use the service
of a logistics-consulting firm to assess your logistics management needs and find a logistics
solution. Assess the need for a third party logistics provider.

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• Healthcare Logistics:

Distribution of healthcare products is a great challenge for the healthcare logistics


system. Healthcare logistics has industry-specific needs of purchasing, warehousing,
transport logistics and collaboration. Specific healthcare logistics software can help solve
problems. Healthcare logistics software can help in bar code technology of medical
products for faster delivery, reduced medical errors and prevention of fraud and abuse.
Using a healthcare logistics software system can cut operation costs and result in lower
patient care costs. Streamlining operations with suppliers through effective use of e-
commerce is a resultant from applying healthcare logistics tools. Efficient healthcare
logistics system can also reduce internal labor costs.

• Distribution Logistics:

The Defense Logistics Agency is an excellent example of distribution logistics. Its


mission is to provide best distribution logistics support to America’s Armed Forces.
Distribution logistics, in this case, takes care of everything the service members eat, wear,
drive or even shoot.
Strategic Distribution Logistics is a logistic job designed to transform the Department of
Defense worldwide by integrating stock positioning and transportation.

The aim of distribution logistics services is to drive down customer wait time and cost
while improving quality and reliability of service. Distribution logistics focuses on forward
stocking.

• Logistics Solution / Logistics Services:

A logistics solution can be implemented on the recommendations of a logistics-consulting


firm. An efficient logistics solution guarantees fast return on investment. A customized
logistics solution brings about decisive impacts on logistical processes to suppliers and
customers. Logistics service is a strategic to the success of a firm. Logistics service and
solution team needs to focus on eliminating non-productive distance and real–time vehicle
fleet tracking.

• Logistics Software:

Integrated logistics management software will help gain a competitive edge. SAP, a leading
logistics software provider, delivers tools and capabilities that can help your logistics
Services Company operate with efficiency, flexibility and speed. Logistics software benefits
warehouse logistics management by implementing cross docking. Logistics software offers
tracking and tracing tools that allow measurement of key performance indicators (KPIs).

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• Reverse Logistics Services:

Reverse logistics services allow manufacturers to increase customer satisfaction by


providing a complete view of their supply chains, including goods in the return loop.
Integrating the reverse logistics services into the complete logistics job provides feedback
for the design, engineering, assembly and distribution. Reverse logistics involves is all
about products that are returned by the customers, either for repair or after-sales service.
The questions that need to be asked before applying a reverse logistics management system:

- Where is the repair facilities located?


- How should you integrate your reverse logistics processes into your
total after-sales supply chain?
- Should you outsource the reverse logistics return loop?

Q.5 What is IMC? Describe the communication development


process in brief?
Answer:

 Introduction:
Integrated Marketing Communications is a term used to describe a holistic approach to
marketing communication. It aims to ensure consistency of message and the complementary
use of media. The concept includes online and offline marketing channels. Online
marketing channels include any e-marketing campaigns or programs, from search engine
optimization (SEO), pay-per-click, and affiliate, and email, banner to latest web related
channels for webinar, blog, micro-blogging, RSS, podcast, and Internet TV. Offline
marketing channels are traditional print (newspaper, magazine), mail order, public relations,
industry relations, billboard, radio, and television. A company develops its integrated
marketing communication program using all the elements of the marketing mix (product,
price, place, and promotion).

Integrated marketing communication is integration of all marketing tools, approaches, and


resources within a company which maximizes impact on consumer mind and which results
into maximum profit at minimum cost. Generally marketing starts from "Marketing Mix".
Promotion is one element of Marketing Mix. Promotional activities include Advertising (by
using different medium), sales promotion (sales and trades promotion), and personal selling
activities. It also includes internet marketing, sponsorship marketing, direct marketing,
database marketing and public relations. And integration of all these promotional tools

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along with other components of marketing mix to gain edge over competitor is called
Integrated Marketing Communication.

Reasons for the Growing Importance of


IMC:
Several shifts in the advertising and media industry have caused IMC to develop into a
primary strategy for marketers:

1. From media advertising to multiple forms of communication.


2. From mass media to more specialized (niche) media, which are centered on specific
target audiences?
3. From a manufacturer-dominated market to a retailer-dominated, consumer-
controlled market.
4. From general-focus advertising and marketing to data-based marketing.
5. From low agency accountability to greater agency accountability, particularly in
advertising.
6. From traditional compensation to performance-based compensation (increased sales
or benefits to the company.

Selecting the Most Effective


Communications Elements:
The goal of selecting the elements of proposed integrated marketing communications is to
create a campaign that is effective and consistent across media platforms. Some marketers
may want only ads with the greatest breadth of appeal: the executions that, when combined,
provide the greatest number of attention-getting, branded, and motivational moments.
Others may only want ads with the greatest depth of appeal: the ads with the greatest
number of attention-getting, branded, and motivational points within each.

Although integrated marketing communications is more than just an advertising campaign,


the bulk of marketing dollars is spent on the creation and distribution of advertisements.
Hence, the bulk of the research budget is also spent on these elements of the campaign.
Once the key marketing pieces have been tested, the researched elements can then be
applied to other contact points: letterhead, packaging, logistics, customer service training,
and more, to complete the IMC cycle.

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Q.6 What are alternative approaches to marketing while going


international? Study Pepsi’s international marketing strategy?
Answer

 Introduction:
International marketing (IM) or global marketing refers to marketing carried out by
companies overseas or across national borderlines. This strategy uses an extension of the
techniques used in the home country of a firm.[1] According to the American Marketing
Association (AMA) "international marketing is the multinational process of planning and
executing the conception, pricing, promotion and distribution of ideas, goods, and services
to create exchanges that satisfy individual and organizational objectives."[2] In contrast to
the definition of marketing only the word multinational has been added.[2] In simple words
international marketing is the application of marketing principles to across national
boundaries. However, there is a crossover between what is commonly expressed as
international marketing and global marketing, which is a similar term.

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The intersection is the result of the process of internationalization. Many American and
European authors see international marketing as a simple extension of exporting, whereby
the marketing mix 4P's is simply adapted in some way to take into account differences in
consumers and segments. It then follows that global marketing takes a more standardized
approach to world markets and focuses upon sameness, in other words the similarities in
consumers and segments.

Four Ps:
Elements of the marketing mix are often referred to as 'the four Ps':

• Product - A tangible object or an intangible service that is mass produced


or manufactured on a large scale with a specific volume of units.
Intangible products are often service based like the tourism industry &
the hotel industry or codes-based products like cell phone load and
credits. Typical examples of a mass produced tangible object are the
motor car and the disposable razor. A less obvious but ubiquitous mass
produced service is a computer operating system.
• Price – The price is the amount a customer pays for the product. It is
determined by a number of factors including market share, competition,
material costs, product identity and the customer's perceived value of
the product. The business may increase or decrease the price of product
if other stores have the same product.

• Place – Place represents the location where a product can be purchased.


It is often referred to as the distribution channel. It can include any
physical store as well as virtual stores on the Internet.
• Promotion represents all of the communications that a marketer may use
in the marketplace. Promotion has four distinct elements - advertising,
public relations, word of mouth and point of sale. A certain amount of
crossover occurs when promotion uses the four principal elements
together, which is common in film promotion. Advertising covers any
communication that is paid for, from cinema commercials, radio and
Internet adverts through print media and billboards. Public relations are
where the communication is not directly paid for and includes press
releases, sponsorship deals, exhibitions, conferences, seminars or trade
fairs and events. Word of mouth is any apparently informal
communication about the product by ordinary individuals, satisfied
customers or people specifically engaged to create word of mouth
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momentum. Sales staff often plays an important role in word of mouth


and Public Relations (see Product above).

Broadly defined, optimizing the marketing mix is the primary responsibility of


marketing. By offering the product with the right combination of the four Ps marketers can
improve their results and marketing effectiveness. Making small changes in the marketing
mix is typically considered to be a tactical change. Arm Bains says making large changes in
any of the four Ps can be considered strategic. For example, a large change in the price, say
from $19.00 to $39.00 would be considered a strategic change in the position of the
product. However a change of $130 to $129.99 would be considered a tactical change,
potentially related to a promotional offer. The term 'marketing mix' however, does not
imply that the 4P elements represent options. They are not trade-offs but are fundamental
marketing issues that always need to be addressed. They are the fundamental actions that
marketing requires whether determined explicitly or by default.

Extended marketing mix:


There have been attempts to develop an 'extended marketing mix' to better accommodate
specific aspects of marketing. For example, in the 1970s, Nickels and Jolson suggested the
inclusion of packaging. In the 1980s Kotler proposed public opinion and political power
and Booms and Bitner included three additional 'Ps' to accommodate trends towards a
service or knowledge based economy:

• People – all people who directly or indirectly influence the perceived


value of the product or service, including knowledge workers, employees,
management and consumers.
• Process – procedures, mechanisms and flow of activities which lead to an
exchange of value.
• Physical evidence – the direct sensory experience of a product or service
that allows a customer to measure whether he or she has received value.
Examples might include the way a customer is treated by a staff
member, or the length of time a customer has to wait, or a cover letter
from an insurance company, or the environment in which a product or
service is delivered.

Four Cs:
The Four Ps is also being replaced by the Four Cs model, consisting of consumer, cost,
convenience, and communication. The Four Cs model is more consumer-oriented and fits
better in the movement from mass marketing to niche marketing. The product part of the
Four Ps model is replaced by consumer or consumer models, shifting the focus to satisfying
the consumer. Another C replacement for Product is Capability. By defining offerings as
individual capabilities that when combined and focused to a specific industry, creates a

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custom solution rather than pigeon-holing a customer into a product. Pricing is replaced by
cost, reflecting the reality of the total cost of ownership. Many factors affect cost, including
but not limited to the customers cost to change or implement the new product or service and
the customers cost for not selecting a competitors capability. Placement is replaced by the
convenience function. With the rise of internet and hybrid models of purchasing, place is no
longer relevant. Convenience takes into account the ease to buy a product, find a product,
find information about a product, and several other considerations. Finally, the promotions
feature is replaced by communication.

Four Cs in 7Cs compass model:


This section may need to be vilified to meet Wikipedia's quality standards. Please
help by adding relevant internal links, or by improving the section's layout. (October
2009). This section may be confusing or unclear to readers. Please help clarify the
article; suggestions may be found on the talk page. (October 2009)

An editor has expressed a concern that this section lends undue weight to certain
ideas relative to the section as a whole. Please help to discuss and resolve the
dispute before removing this message. (October 2009). A formal approach to this
customer-focused marketing mix is known as 4C(Commodity, Cost, Channel,
Communication) in 7Cs compass model. This system is basically the four Ps
renamed and reworded to provide a customer focus. The four Cs Model provides a
demand/customer centric version alternative to the well-known four Ps supply side
model (product, price, place, promotion) of marketing management.

o Product→ Commodity
o Price → Cost
o Place → Channel
o Promotion→ Communication

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 Pepsi's Global Strategy:

When the "You're in the Pepsi Generation" advertising campaign launched in 1963, it
may have been the first time a brand was marketed primarily with an association to its
consumers' inspirational attitudes. A decidedly youth-oriented strategy, the campaign hoped
to hook young Baby Boomers while they were still young. In 1984 Pepsi launched another
long-running campaign, "The Choice of a New Generation," and in 1997 they debuted the
"GeneratioNext" concept.

The newest campaign slogan, introduced this year, is "More Happy," which definitely
coincides with one concrete example of "more" in the packaging of Pepsi products today—
more designs. Many more. At least 35 distinct design ideas will grace the packaging of
Pepsi's cans and bottles this year alone, and this design strategy may continue indefinitely.

Though not "generational" in word, the campaign certainly has a youth-oriented feel
with package designs, advertising, and websites that are fun and playful. PepsiCo worked
closely with Peter Arnell and Arnell Group, based in New York City, to devise a
comprehensive new strategy that would connect with Pepsi's core consumers. Arnell
reinvented the Pepsi package as a meaningful and appealing communications tool for the
latest generation of youth that are not overwhelmed by media, music, or digital distractions.

 Experiential packaging:
Arnell Group (a wholly-owned subsidiary of Omnicom Group) is a design and brand
creation firm specializing in experiential design and product innovation, preferring to take
complete branding and packaging projects from first concept to complete market solutions.
Peter Arnell, currently chairman and chief creative officer of Arnell Group, formed the
Arnell Group Innovation Lab in 1999 to place invention and innovation at the forefront in a
collaborative laboratory for corporations interested in designing for next generation
products and experiences. Arnell applied many of his philosophies in the Pepsi project.

"Peter has taken a classic and turned it into a modern, innovative, and relevant
marketing and communications tool," said Ron Coughlin, chief marketing officer,

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beverages, PepsiCo International. The new global look launched in February with eight new
package designs across cans and bottles, and the campaign is unfolding in a similar manner
overseas. The can designs roll out one at a time approximately three weeks apart to enhance
the anticipation of discovery and to pique the interest of collectors.

"Product innovation today must be driven by deep consumer meaning and


connectivity," says Arnell. "It is less about unmet needs and more about giving people what
they haven't asked for but are dying to have. Using design to turn packaging into personal
consumer-powered media helps create the ultimate supportive and inspiring relationship
between Pepsi and its youth audience."

Thinking globally

The Pepsi can designs roll out one at a time, but the two-liter Pepsi bottles will have
three or four designs out at any given time.

Mike Doyle, creative director at Arnell Group, explains that there was a great depth
of exploration and research that was conducted before even beginning to formulate a new
Pepsi packaging strategy. PepsiCo and Arnell Group traveled extensively to emerging
markets to find key consumer product drivers for youth cultures and to learn how the Pepsi
brand was perceived in different countries. They found, somewhat surprisingly, that there
were very few differences around the world in how consumers felt about Pepsi's fun,
effervescent brand image.

"The brand equity is really consistent," says James Miller, marketing director,
Pepsi-Cola North America. They also found many consistencies in youth cultures around
the world in how today's youth is preoccupied with newness, discovery, and personalization
of their possessions. Miller describes the design campaign's goal as "sustainable discovery,"
where the consumer audience is constantly intrigued and engaged.

Designers at Arnell Group created the dozens of new and vibrant designs with only
a handful of blue and gray shades. Each design tells a story of sorts and each can design has
a unique website address on the side of the can. The first one on the "Your Pepsi" can
allows web users to design a digital billboard that will appear in Times Square, and one
coming shortly will allow users to mix their own music online.
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"We redefined packaging as media in the marketplace for Pepsi," says Doyle. "It speaks
to youth in their language." Doyle believes that the designs succeed because they are able to
capture the audience's mind space. "The designs are reflecting back to the culture instead of
talking to the culture or imposing on it."

 Reassuringly Pepsi:
Pepsi actually asked their loyal consumers what brand elements would have to remain
so that they would be intuitively reassured that their favorite drinks were not changing and
the brand they trusted was still essentially the same. Their answer was direct and consistent.
Pepsi-lovers needed to see three elements for sure—the Pepsi "globe," the iconic Pepsi blue,
and the familiar tilted Pepsi capital letters.

Arnell Group updated the primary logo substantially and cleverly without really
redesigning its key elements. The most recent logo design had the Pepsi wordmark on top
of and slightly overlapping the iconic Pepsi red-white-and-blue "globe." On the previous
can design, the word mark wrapped halfway around the can, and the globe was off-center.
The new cans and bottles have un-bundled the word and globe, making the newly centered
globe more of the hero, and the smaller Pepsi word mark less prominent.

Television ad campaigns are reinforcing the globe-centric approach by featuring a


boulder-sized Pepsi globe in various settings careening to and fro like a pinball. In the ads
and on the front of most of the new packages is the reassuring tag line: "Same Pepsi inside,
new look outside." Miller explains that it is customary and important to reassure consumers
for at least six months in situations like this. Miller also sees today's youth as demanding
authenticity from the products they come into contact with in their day-to-day experiences.
The new Pepsi design strategy is versatile because it can be authentic and stay current, and
it could also make introducing special seasonal or regional designs more intriguing and less
disruptive. "This is a new way of using packaging as media," explains Miller. "The
consumer is looking for more variety and expecting more from their brands. They want to
have a dialogue with their favorite brands."

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