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Wants Wants are a step ahead of needs and are largely dependent on the needs of
humans themselves. For example, you need to take a bath. But i am sure you take
baths with the best soaps. Thus Wants are not mandatory part of life. You DONT
need a good smelling soap. But you will definitely use it because it is your want. In
the above image, the baby needs milk but it WANTS candy
Example of wants category products / sectors Hospitality industry, Electronics,
Consumer Durables etc, FMCG, etc.
Demands You might want a BMW or a Mercedes for a car. You might want to go
for a cruise. But can you actually buy a BMW or go on a cruise? You can provided
you have the ability to buy a BMW or go on a cruise. Thus a step ahead of wants is
demands. When an individual wants something which is premium, but he also has
the ability to buy it, then these wants are converted to demands. The basic
difference between wants and demands is desire. A customer may desire something
but he may not be able to fulfill his desire.
Example of demands Cruises, BMWs, 5 star hotels etc.
The needs wants and demands are a very important component of marketing
because they help the marketer decide the products which he needs to offer in the
market. Thus the flow is like this.
Product
Price
Place
Promotions
changed over time. However, a change in one of the variables may cause a change
in all the other variables as well. The variables are as follows
1) Product The first thing you need, if you want to start a business, is a product.
Therefore Product is also the first variable in the marketing mix. Product decisions
are the first decisions you need to take before making any marketing plan. A
product can be divided into three parts. The core product, the augmented product
and the tertiary product. Before deciding on the product component there are some
questions which you need to ask yourself.
What are the secondary products which can be sold along with primary
(Warranty, services)
Based on these questions, several product decisions have to be made. These
product decisions will in turn affect the other variables of the marketing mix. For
example You launch a car with is to have the highest quality. Thus the pricing,
promotions and placing would have to be altered accordingly. Thus as long as you
dont know your product, you cannot decide any other variable of the marketing
mix. However, if the product features are not fitting in the marketing mix, you can
alter the product such that it finds a place for itself in the marketing mix.
2) Pricing Pricing of a product depends on a lot of different variables and hence
it is constantly updated. Major consideration in pricing is the costing of the
product, the advertising and marketing expenses, any price fluctuations in the
market, distribution costs etc. Many of these factors can change separately. Thus
the pricing has to be such that it can bear the brunt of changes for a certain period
of time. However, if all these variables change, then the pricing of a product has to
be increased and decreased accordingly.
Along with the above factors, there are also other things which have to be taken in
consideration when deciding on a pricing strategy. Competition can be the best
example. Similarly, pricing also affects the targeting and positioning of a product.
Pricing is used for sales promotions in the form of trade discounts. Thus based on
these factors there are several pricing strategies, one of which is implemented for
the marketing mix.
3) Place Place refers to the distribution channel of a product. If a product is a
consumer product, it needs to be available as far and wide as possible. On the other
hand, if the product is a Premium consumer product, it will be available only in
select stores. Similarly, if the product is a business product, you need a team who
interacts with businesses and makes the product available to them. Thus the place
where the product is distributed, depends on the product and pricing decisions, as
well as any STP decisions taken by a firm.
Distribution has a huge affect on the profitability of a product. Consider a FMCG
company which has national distribution for its product. An increase in petrol rates
by 10 rs will in fact bring about drastic changes in the profitability of the company.
Thus supply chain and logistics decisions are considered as very important costing
decisions of the firm. The firm needs to have a full proof logistics and supply chain
plan for its distribution.
4) Promotions Promotions in the marketing mix includes the complete
integrated marketing communications which in turn includes ATL and BTL
advertising as well as sales promotions. Promotions are dependent a lot on the
product and pricing decision. What is the budget for marketing and advertising?
What stage is the product in? If the product is completely new in the market, it
needs brand / product awareness promotions, whereas if the product is already
existing then it will need brand recall promotions.
Promotions also decide the segmentation targeting and positioning of the product.
The right kind of promotions affect all the other three variables the product,
price and place. If the promotions are effective, you might have to increase
distribution points, you might get to increase the price because of the rising brand
equity of the product, and the profitability might support you in launching even
more products. However, the budget required for extensive promotions is also
high. Promotions is considered as marketing expenses and the same needs to be
taken in consideration while deciding the costing of the product.
The role of marketing mix in Strategy Marketing mix plays a crucial role while
deciding the strategy of an organization. It is the first step even when a marketing
plan or a business plan is being made. This is because, your marketing mix
decision will also affect segmentation, targeting and positioningdecisions. Based
on products, segmentation and targeting will be done. Based on the price,
positioning can be decided. And these decisions will likely affect the place and
promotion decisions. Thus, the marketing mix strategy goes hand in hand with
segmentation targeting and positioning.
1. Need Recognition - This stage refers to recognizing a need or a want that has to be
satisfied.
2. Information search - This stage refers to the part of the decision process where in
the consumer searches information from different sources about the product he
needs to buy. A successful information search leaves a buyer with possible
alternatives.
3. Evaluation of Alternatives - In this stage the consumer evaluates the alternatives he
has come across in the prior stage.
4. Purchase decision - This is a crucial stage where in the consumer decides on a
alternative and proceeds further about when to buy and the mode of purchase.
5. Purchase - This stage refers to the actual purchase made by the consumer
depending on the mode, payment conditions and the product availability.
6. Post-Purchase Evaluation - This stage will decide if the consumer will purchase the
same product again or if he is satisfied with the applications of the product in
relation to his needs. This can be improved by warranties, after sales services.
ansMarket segmentation
Market segmentation involves grouping your various customers into segments that
have common needs or will respond similarly to a marketing action. Each segment
will respond to a different marketing mix strategy, with each offering alternate
growth and profit opportunities.
Some different ways you can segment your market include the following;
Demographics which focuses on the characteristics of the customer. For
example age, gender, income bracket, education, job and cultural
background.
Psychographics which refers to the customer group's lifestyle. For example,
their social class, lifestyle, personality, opinions, and attitudes.
Behaviour which is based on customer behaviour. For example, online
shoppers, shopping centre customers, brand preference and prior purchases.
Geographical location such as continent, country, state, province, city or
rural that the customer group resides.
Targeting
After segmenting the market based on the different groups and classes, you will
need to choose your targets. No one strategy will suit all consumer groups, so
being able to develop specific strategies for your target markets is very important.
There are three general strategies for selecting your target markets:
Undifferentiated Targeting: This approach views the market as one group
with no individual segments, therefore using a single marketing strategy.
This strategy may be useful for a business or product with little competition
where you may not need to tailor strategies for different preferences.
Concentrated Targeting: This approach focuses on selecting a particular
market niche on which marketing efforts are targeted. Your firm is focusing
on a single segment so you can concentrate on understanding the needs and
wants of that particular market intimately. Small firms often benefit from
WHAT IS IT?
WHY IS IT IMPORTANT?
Homogeneous
Heterogeneous
Measurable
Substantial
Accessible
Actionable/practical
Responsive
The
range
of
segments
identified generally need to be
defined for the capabilities and
resources of the organization, so
very specialized segments may
not be appropriate
They charge more, partly to cover higher costs and partly to let the consumers
believe that the product is, certainly of higher quality.
(3) Positioning strategy based on Use or Application Lets understand this with
the help of an example like Nescafe Coffee for many years positioned it self as a
winter product and advertised mainly in winter but the introduction of cold coffee
has developed a positioning strategy for the summer months also. Basically this
type of positioning-by-use represents a second or third position for the brand, such
type of positioning is done deliberately to expand the brands market. If you are
introducing new uses of the product that will automatically expand the brands
market.
(4) Positioning strategy based on Product Process Another positioning approach
is to associate the product with its users or a class of users. Makes of casual
clothing like jeans have introduced designer labels to develop a fashion image. In
this case the expectation is that the model or personality will influence the
products image by reflecting the characteristics and image of the model or
personality communicated as a product user. Lets not forget that Johnson and
Johnson repositioned its shampoo from one used for babies to one used by people
who wash their hair frequently and therefore need a mild people who wash their
hair frequently and therefore need a mild shampoo. This repositioning resulted in a
market share.
(5) Positioning strategy based on Product Class In some product class we have to
make sure critical positioning decisions For example, freeze dried coffee needed to
positions itself with respect to regular and instant coffee and similarly in case of
dried milk makers came out with instant breakfast positioned as a breakfast
substitute and virtually identical product positioned as a dietary meal substitute.
(6) Positioning strategy based on Cultural Symbols In todays world many
advertisers are using deeply entrenched cultural symbols to differentiate their
brands from that of competitors. The essential task is to identify something that is
very meaningful to people that other competitors are not using and associate this
brand with that symbol. Air India uses maharaja as its logo, by this they are trying
to show that we welcome guest and give them royal treatment with lot of respect
and it also highlights Indian tradition. Using and popularizing trademarks generally
follow this type of positioning.
(7) Positioning strategy based on Competitors In this type of positioning
strategies, an implicit or explicit frame of reference is one or more competitors. In
some cases, reference competitor(s) can be the dominant aspect of the positioning
strategies of the firm, the firm either uses the same of similar positioning strategies
as used by the competitors or the advertiser uses a new strategy taking the
competitors strategy as the base. A good example of this would be Colgate and
Pepsodent. Colgate when entered into the market focused on to family protection
but when Pepsodent entered into the market with focus on 24 hour protection and
basically for kids, Colgate changed its focus from family protection to kids teeth
protection which was a positioning strategy adopted because of competition.
Introduction Stage
In the introduction stage, the firm seeks to build product awareness and develop a
market for the product. The impact on the marketing mix is as follows:
Product branding and quality level is established, and intellectual property
protection such as patents and trademarks are obtained.
Pricing may be low penetration pricing to build market share rapidly, or
high skim pricing to recover development costs.
Distribution is selective until consumers show acceptance of the product.
Promotion is aimed at innovators and early adopters. Marketing
communications seeks to build product awareness and to educate potential
consumers about the product.
Growth Stage
In the growth stage, the firm seeks to build brand preference and increase market
share.
Product quality is maintained and additional features and support services
may be added.
Pricing is maintained as the firm enjoys increasing demand with little
competition.
Distribution channels are added as demand increases and customers accept
the product.
Promotion is aimed at a broader audience.
Maturity Stage
At maturity, the strong growth in sales diminishes. Competition may appear with
similar products. The primary objective at this point is to defend market share
while maximizing profit.
Product features may be enhanced to differentiate the product from that of
competitors.
Pricing may be lower because of the new competition.
3. Profits
Introductio Growth
n
Low Sales Rapidly
Increasing
Sales
High cost
Average cost
per customer per customer
Negative
More Profit
4. Customer
Innovators
5. Competitor
Few
1. Sales
2. Costs
Maturity
Decline
Peak Sales
Declining Sales
The complete range of products present within a company is known as the product
mix. In any multi brand organizations, there are numerous products present. None
of the organizations wants to take the risk of being present in the market with a
single product. If the company has only a single product, than the demand of the
product will be too great or the company does not have the resources to expand the
number of products it has.
However, if the business market is any example, than all the top companies have
multiple products. Coca cola, Apple, Microsoft, Nestle, Hindustan unilever,
Pharmaceutical companies, so on and so forth. These companies need to have a
wide product portfolio to be present in the market and to have a sustainable
business model. The combination of products that they have in their product
portfolio can be the product mix.
Product mix As explained, product mix is a combination of total product lines
within a company. A company like HUL has numerous product lines like
Shampoos, detergents, Soaps etc. The combination of all these product lines is the
product mix.
Product line The product line is a subset of the product mix. The product line
generally refers to a type of product within an organization. As the organization
can have a number of different types of products, it will have similar number of
product lines. Thus, in Nestle, there are milk based products like milkmaid, Food
products like Maggi, chocolate products like Kitkat and other such product lines.
Thus, Nestles product mix will be a combination of the all the product lines within
the company.
Length of the product mix If a company has 4 product lines, and 10 products
within the product line, than the length of the product mix is 40. Thus, the total
number of products against the total number of product lines forms the length of
the product mix. This equation is also known as product line length.
Width of the product mix Where product line length refers to the total number of
product lines and the products within the product lines, the width of the product
mix is equal to the number of product lines within a company. Thus, taking the
above example, if there are 4 product lines within the company, and 10 products
within each product line, than the product line width is 4 only. Thus, product line
width is a depiction of the number of product lines which a company has.
Depth of the product mix It is fairly easy to understand what depth of the product
mix will mean. Where length and width were a function of the number of product
lines, the depth of the product mix is the total number of products within a product
line. Thus if a company has 4 product lines and 10 products in each product line,
than the product mix depth is 10. It can have any variations within the product for
form the product line depth.
Product line consistency The lesser the variations between the products, the more
is the product line consistency. For example, Amul has various product lines which
are all dairy related. So that product mix consistency is high. But Samsung as a
company has many product lines which are completely independent of each other.
Let us take an example of P&G as a company and understand product mix. This
will be not be a precise example and all products of P&G might not be taken into
consideration. But the example will help you understand product mix within an
organization.
Detergents Arial, Arial oxyblue, Ariel bar, Tide, Tide naturals, Tide bleach, Tide
plus.
Shampoos Head and shoulders, Head and shoulders anti dandruff, Pantene,
Pantene damage repair, Pantene pro-v
In the above example the following can be learned about the product mix of P&G
Product mix Length 12
Product mix Width 2
Product mix Depth 7 in detergents and 5 in shampoos
Product mix consistency High as both are bathroom products.
customers perceive a higher value, then the price fixed will be high and vice versa.
Market research is needed to establish the customers perceived value as a guide to
effective pricing.
2. Going-rate pricing:
In this case, the benchmark for setting prices is the price set by major competitors.
If a major competitor changes its price, then the smaller firms may also change
their price, irrespective of their costs or demand.
The going-rate pricing can be further divided into three sub-methods:
a. Competitors parity method:
A firm may set the same price as that of the major competitor.
b. Premium pricing:
A firm may charge a little higher if its products have some additional special
features as compared to major competitors.
c. Discount pricing:
A firm may charge a little lower price if its products lack certain features as
compared to major competitors.
The going-rate method is very popular because it tends to reduce the likelihood of
price wars emerging in the market. It also reflects the industrys coactive wisdom
relating to the price that would generate a fair return.
3. Sealed-bid pricing:
This pricing is adopted in the case of large orders or contracts, especially those of
industrial buyers or government departments. The firms submit sealed bids for jobs
in response to an advertisement.
In this case, the buyer expects the lowest possible price and the seller is expected
to provide the best possible quotation or tender. If a firm wants to win a contract,
then it has to submit a lower price bid. For this purpose, the firm has to anticipate
the pricing policy of the competitors and decide the price offer.
4. Differentiated pricing:
Firms may charge different prices for the same product or service.
The following are some the types of differentiated pricing:
a. Customer segment pricing:
Here different customer groups are charged different prices for the same product or
service depending on the size of the order, payment terms, and so on.
b. Time pricing:
Here different prices are charged for the same product or service at different
timings or season. It includes off-peak pricing, where low prices are charged
during low-demand tunings or season.
c. Area pricing:
Here different prices are charged for the same product in different market areas.
For instance, a firm may charge a lower price in a new market to attract customers.
d. Product form pricing:
Here different versions of the product are priced differently but not proportionately
to their respective costs. For instance, soft drinks of 200,300, 500 ml, etc., are
priced according to this strategy.
market skimming pricing
An approach under which a producer sets a high price for a new high-end
product (such as an expensive perfume) or a uniquely differentiated technical
product (such as one-of-a-kind software or a very advanced computer). Its
objective is to obtain maximum revenue from the market before substitutes
products appear. After that is accomplished, the producer can lower the price
drastically to capture the low-end buyers and to thwart the copycat
competitors.
loss leader pricing
An aggressive cost setting strategy whereby a retail outlet deliberately sells
particular desirable products below their cost to attract customers. The idea
behind loss leader pricing is that the profits from additional purchases that
customers will make while in the store will more than cover the store's loss on
the heavily discounted product.
or
A business strategy in which a business offers a product or service at a price
that is not profitable for the sake of offering another product/service at a
greater profit or to attract new customers. This is a common practice when a
business first enters a market; a loss leader introduces new customers to a
service or product in the hope of building a customer base and securing future
recurring revenue.
18.What according to you is sales promotion?
ans-Sales promotion is one level or type of marketing aimed either at the consumer
or at the distribution channel (in the form of sales-incentives). It is used to
introduce new product, clear out inventories, attract traffic, and to lift sales
temporarily.
To promote your business in an effective way, consider using the tried and true
sales strategies of "Push" and "Pull." Whether you use coupons, giveaways or
incentives for your best salesperson, you will see your bottom line increase.
product. If your business has the resources, you can launch a campaign to get end
consumers excited about your products. Television, print and electronic advertising
options lend themselves to the pull strategy.
Combining Push and Pull
To bolster sales, try combining the two systems. For instance, offer your customers
coupons, free gifts or a frequent customer loyalty incentive to drive traffic to your
business. These activities fall under the "pull" strategy.
At the same time, offer your sales team an incentive such as a vacation contest,
extra commission or a better parking space for selling a particular product or
moving a certain volume of merchandise. This falls under the "push" strategy.
By combining the two methods as part of an overall promotion, you will be
matching motivated buyers with an eager sales team to increase sales growth.
19.Explain the terms ATL and BTL and TTL ?
ans- ATL
Above-the-line advertising includes tactics used to reach a mass audience and build
a brand for a new or existing business. The types of advertising activities are
commonly advertising placements purchased by an advertising agency on behalf of
a company. Advertising agencies are able to take commission from the sales of
above-the-line advertising. Companies can explore several types of above-the-line
advertising, depending on the target market they're trying to capture.
EX-television, cinema, radio, print, and Out-of-home to promote brands or
convey a specific offer.
BTL
In general, an advertising strategy in which a product is promoted in mediums
other than radio, television, billboards, print, film and the internet. Types of below
the line advertising commonly include direct mail campaigns, trade shows and
catalogs; this advertising type tends to be less expensive and more focused. Belowthe-line advertising is typically conducted by the company itself.
BREAKING DOWN 'Below The Line Advertising'
Below the line advertising seeks to reach a consumer (instead of a mass audience)
directly rather than through an intermediary, such as would be the case with a
commercial during a television show. This type of advertising is often centered on
specific localities and is used to promote products that a consumer will want to see
in person. It can be coupled with in-store sales help in order to explain the features
of the product.
EX- sales promotions, direct marketing, personal selling and sponsorship.
posters, pump\lets , Handouts, Organising exhibitions , Roadshows , Reducing
the price, PR etc.
TTL
TTL is the mixture of both the advertising strategy. TTL refers to an advertising
strategy involving both above and below the line communications in which one
form of advertising points the target to another form of advertising thereby
crossing the 'line'.
The use of mass advertising forming a prospect or customer database, which can
be implemented for direct marketing activities. An example of this would be
an ad on TV, which features a toll-free number for driving direct contact with
new clients or customers.
In the TTL approach, a mix of ATL and BTL are used to integrate a marketer's
efforts and optimize returns from these separate investments.
This switch in the TTL approach has shifted its emphasis more towards BTL.[3] The
idea remains to optimize the return on marketing budget spent by focusing one's
energy on winning smaller yet more crucial BTL battles than ATL wars with wellfunded competition. A few examples are: bus stand hoardings, pamphlets, small
informational sheets along with the newspaper, etc.
Direct marketing removes the "middle man" from the promotion process, as a
company's message is provided directly to a potential customer. This type of
marketing is typically used by companies with smaller advertising budgets, since
they cannot afford to pay for advertisements on television and often do not have
the brand recognition of larger firms.
IMPORTANT
PERSONAL SELLING
Personal selling is where businesses use people (the "sales force") to sell the
product after meeting face-to-face with the customer.
The sellers promote the product through their attitude, appearance and specialist
product knowledge. They aim to inform and encourage the customer to buy, or at
least trial the product.
A good example of personal selling is found in department stores on the perfume
and cosmetic counters. A customer can get advice on how to apply the product and
can try different products. Products with relatively high prices, or with complex
features, are often sold using personal selling. Great examples include cars, office
equipment (e.g. photocopiers) and many products that are sold by businesses to
other industrial customers.
The main advantages and disadvantages of personal selling can be summarised as
follows:
and lead generation opportunities. The same can be said for utilising social media
channels and personalised email marketing.
7. Far greater exposure: your business can be seen anywhere in the world from
one marketing campaign, the cost to do this using traditional methods would be
considerable. Plus once you have optimised the key word search content in your
website you should see a long-term return on your investment and will be fairly
low cost to maintain your ranking.
8. Viral: how often do your sales flyers get passed around instantly by your
customers and prospects? Online, using social media share buttons on your
website, email and social media channels enables your message to be shared
incredibly quickly, just look how effective it is for sharing breaking news. If you
consider the average facebook user has 190 friends of which an average of 12%
see their liked posts your one message has actually been seen by 15 new
prospects, now imagine a number of them also like and share your message and
their friends do the same? Mind blowing isnt it. However a word of caution, bad
news can travel much quicker so make sure you have a risk management strategy
to tackle negative press as soon as it is circulated.
9. Not Intrusive: I know most people hate receiving sales mailshots or phone calls
at inconvenient times on stuff that they have little interest in. Online people get the
choice to opt in or out of communications and often it is relevant because they
were the ones searching for it in the first place. Also, have you ever got frustrated
receiving a regular email on a topic that interests and adds value to you? Nor me
so dont underestimate the power of market segmentation and tailored marketing.
10. Greater engagement: With digital marketing you can encourage your
prospects, clients and followers to take action, visit your website, read about your
products and services, rate them, buy them and provide feedback which is visible
to your market. So it doesnt take long for good publicity to enhance the prospects
of your business.
or
The most notable benefits of online advertising over traditional advertising
are:
Cost implications: The electronic medium is a powerful mile ahead of other
means when it comes to cost. Covering a huge audience is possible with a
limited spend online, resulting in a much better return on investment
percentage. And, this is one of the biggest reasons why SMB's are now
considering online marketing to their marketing strategy and who really can't
bear the cost of outdoor banner advertising, trade shows or magazine ads.
Easier targeting means: Due to the nature of the internet, it is possible to
taper down the target audience so that only the segment that does view the
ad consists of potentially strong buyers. In fact, there is a lot of geographical
targeting to make the ads relevant to users. Similarly, users web browsing
history can be made a base for zeroing in on preferences and avoiding
useless repetitions.
Measurable: This is one of the most important factors in deciding the
impact of online advertising. On the internet, it is possible to collect accurate
data of hits, pages visited, number of times the ad was viewed by the same
user, how the user reached to the ad or the website, and whether the activity
resulted in a sale.
Versatility: Unlike offline media, online advertising can be highly
interactive. From incorporating videos and games to audio messages and
sections for query input, there are many methods to keep the consumer
keenly and constantly engaged.
Speed: Once an ad copy is ready, the distance between the advertiser and its
consumers can be rapidly covered. Deployment can be immediate as most of
the time the delivery of ad schedules is not dependent upon the publishers
schedule. Even modifications and replacements in the ad are faster on the
internet.
25.What are the problems faced in online marketing?
ans- Online marketing also brings with it disadvantages some of which are as
follows:
a.Authenticity: the authenticity of the product maybe questionable, as the real product
is not available at the time of its purchase. The product may not turn out as expected
by the customers. However, sites like Jabong.com or Myntra.com , keeping this point
in view are offering its customers the option to return the product if they are
dissatisfied with it after a trial. This has increased the goodwill and popularity of such
sites.
b.Internet marketing scams : Fake schemes like get-rich-quick or win cash prize on
the internet, often lure the users to payout huge sums of money to such frauds and not
gettomg anything in return. It has given rise to a lot of scams and fraudulent activities
detrimental to the users.
c.Security issues: Consumers maybe hesitant to disclose their personal information on
the internet as they may feel the invasion of their privacy.
26.Differentiate between business market and consumer market.
ansBusiness Marketing: Business Marketing refers to the sale of either products or
services or both by one organization to other organizations that further resell the
same or utilize to support their own system.
Consumer Marketing: on the other hand refers to the transaction of goods and
services between organizations and potential customers.
The above definitions of business marketing and consumer marketing highlight the
difference between the two commonly used terms in marketing (B2B and
B2C).Business marketers do not entertain consumers who purchase products and
services for their end-use. They deal only with other businesses/firms to sell their
products.In consumer markets, products are sold to consumers either for their own
use or use by their family members.
There are many difference between business markets and consumer markets.Some
of the differences areDifference between business markets and consumer markets due To The
Nature Of Purchases
A. Organizational consumers purchase capital equipment, raw materials,
semifinished goods, and other products for use in further production or operations
or for resale to others, whereas final consumers usually acquire the finished items
for
personal,
family,
or
household
use.
B. Organizational consumers are likely to require exact product specifications.
Final consumers more often buy on the basis of description, style, and color.
C. Organizational consumers often use multiple-buying responsibility, in which
two or more employees formally participate in complex or expensive purchase
decisions. Final consumers employ it less frequently and less formally.
or
Larger buyers (such as hotels, hospitals, schools, and universities) who purchase
goods and services for use in the production of their own goods or services.
IMPORTANT
Guerrilla marketing
Guerrilla marketing is an advertisement strategy concept designed for small
businesses to promote their products or services in an unconventional way with
little budget to spend. This involves high energy and imagination focusing on
grasping the attention of the public in more personal and memorable level. Some
large companies use unconventional advertisement techniques, proclaiming to be
guerrilla marketing but those companies will have larger budget and the brand is
already visible.[1] The main point of guerrilla marketing is that the activities are
done exclusively on the streets or other public places, such as shopping centers,
parks or beaches with maximum people access so as to attract much audience.[2]
Unlike typical public marketing campaigns that utilize billboards, guerrilla
marketing involves the application of multiple techniques and practices in order to
establish direct contact with the customers.[3] One of the goals of this interaction is
to cause an emotional reaction in the clients and the final goal of marketing is to
get people to remember brands in a different way than they are used to . The
technique involves from flyer distribution in public spaces to creating an operation
at major event or festival mostly without directly connecting to the event but using
the opportunity. The challenge with any guerrilla marketing campaign is to find the
correct place and time to do the operation without getting involved in legal issues.
The different types of guerrilla marketing are: Ambient, Ambush, Stealth, Viral and
the new concept called Street Marketing,
Companies using guerrilla marketing rely on its in-your-face promotions to be
spread through viral marketing or word-of-mouth, thus reaching a broader
audience for free. The use of this tactic is not designed for all types of goods and
services, and it is often used for more "edgy" products and to target younger
consumers who are more likely to respond positively.
28What do you understand by Services Marketing? How is it different from Product
Marketing. Give examples?
ans- SERVICES DEFINED
Any act or performance that one party can offer to another that is essentially
intangible and does not result in the ownership of anything. Its production may not
be tied to a physical product
Kotler, 1991.
or
What is Service? The New View
Service includes every interaction between any customer and anyone representing
the company, including:
Dealers
SalespeopleReceptionists and Schedulers
Management and Executives
Service Employees
Billing and Accounting Personnel
Web site and any e-channel Interaction.
Why do firms focus on Services?
i)Services can provide higher profit margins and growth potential than products
ii)Customer satisfaction and loyalty are driven by service excellence
iii)Services can be used as a differentiation strategy in competitive markets.
Characteristics of ServicesCompared to Goods
Intangibility
Perishability
Inseparability
Heterogeneity
Implications of Intangibility
Services cannot be inventoried
Pricing is difficult
Implications of Heterogeneity
Service delivery and customer satisfaction depend on employee and customer
actions
There is no sure knowledge that the service delivered matches what was planned
and promoted
Implications of Simultaneous Production and Consumption (Inseparability)
Customers participate in and affect the transaction
Customers affect each other
Employees affect the service outcome
Decentralization may be essential
Mass production is difficult
Implications of Perishability
It is difficult to synchronize supply and demand with services
All human actors who play a part in service delivery and thus influence the
buyers perceptions: namely, the firms personnel, the customer, and other
customers in the service environment.
Physical Evidence
The environment in which the service is delivered and where the firm and
customer interact, and any tangible components that facilitate performance or
communication of the service.
Process
The actual procedures, mechanisms, and flow of activities by which the service is
deliveredthe service delivery and operating systems.
or
The first four elements in the services marketing mix are the same as those in the
traditional marketing mix. However, given the unique nature of services, the
implications of these are slightly different in case of services.
1. Product: In case of services, the product is intangible, heterogeneous and
perishable. Moreover, its production and consumption are inseparable.
Hence, there is scope for customizing the offering as per customer
requirements and the actual customer encounter therefore assumes particular
significance. However, too much customization would compromise the
standard delivery of the service and adversely affect its quality. Hence
particular care has to be taken in designing the service offering.
2. Pricing: Pricing of services is tougher than pricing of goods. While the latter
can be priced easily by taking into account the raw material costs, in case of
services attendant costs - such as labor and overhead costs - also need to be
factored in. Thus a restaurant not only has to charge for the cost of the food
served but also has to calculate a price for the ambience provided. The final
price for the service is then arrived at by including a mark up for an adequate
profit margin.
3. Place: Since service delivery is concurrent with its production and cannot be
stored or transported, the location of the service product assumes
importance. Service providers have to give special thought to where the
service would be provided. Thus, a fine dine restaurant is better located in a
busy, upscale market as against on the outskirts of a city. Similarly, a holiday
resort is better situated in the countryside away from the rush and noise of a
city.
Branding Approaches
- Individual product branding - Each new product is assigned a new name with no
connection to other brands owned by a company.
- Family branding - New products are placed under an existing brand.
- Co-branding - The marketer partners with another firm that has an existing,
established brand in hopes that the theory two brands are better than one will
stimulate interest.
- Private or store branding - When suppliers produce products for other
companies, and place that companys brand on the product.
Brand Recall
Brand Recall is the extent to which a brand name is recalled as a member of a
brand, product or service class, as distinct from brand recognition.
Common market research usage is that pure brand recall requires "unaided recall".
For example a respondent may be asked to recall the names of any cars he may
know, or any whisky brands he may know.
Some researchers divide recall into both "unaided" and "aided" recall. "Aided
recall" measures the extent to which a brand name is remembered when the actual
brand name is prompted. An example of such a question is "Do you know of the
"Honda" brand?"
In terms of brand exposure, companies want to look for high levels of unaided
recall in relation to their competitors. The first recalled brand name (often called
"top of mind") has a distinct competitive advantage in brand space, as it has the
first chance of evaluation for purchase.
Brand recall is a marketing research test conducted by a company to understand
How many people recall the companys product brand name, as compared to
other companies product brand names?
Brand recognition is a marketing research test conducted by a company to
understand How many people recognize the companys brand in a particular
product segment
The extent to which the general public (or an organization's target market) is able
to identify a brand by its attributes. Brand recognition is most successful when
people can state a brand without being explicitly exposed to the company's name,
but rather through visual signifiers like logos, slogans and colors.
To measure brand recognition and the effectiveness of promotional campaigns,
many companies will perform experiments on study groups. Both aided and
unaided recall tests may be used. With similar products, brand recognition will
result in higher sales, even if both brands are of equal quality.
IMPORTANT
UMBRELLA BRANDING
An umbrella branding strategy, is a marketing practice that involves selling many
related products under a single brand name. Unlike individual product branding,
which uses different brand names for different products, umbrella branding uses a
single brand name, and in some cases logo, for different products.
Umbrella branding offers several benefits to marketers. They include
Extra Brand Creation not required
Single spend on advertising (for all products)
Dependant perception: The perception depends on the main brand
Easier launch of new products
Better response to new products when compared to individual branding
Umbrella branding involves creating huge brand equity for a single brand, and
thereafter leveraging that over multiple products. Umbrella branding is also known
as family branding. It is very common to find umbrella branding in FMCG
products.
On the flipside, bad reputation of any one product, may affect the equity of all the
other products using the same brand name. In India, umbrella branding is used
successfully by Amul for dairy products, Tata for its FMCG products like Tata Tea,
and Tata Salt, and Kingfisher for alcoholic beverages, mineral water(see Surrogate
Advertising), and Airlines. Wills also uses umbrella branding for its tobacco
products, apparels, accessories, and soaps & shampoo.
33.Draw and explain BCG (Boston Consulting Group) Matrix?
ans- Definition: the BCG Matrix is an early (1970) strategic portfolio
management tool created by the Boston Consulting Group.
The idea behind it is that to ensure long-term value creation, a company should
have a portfolio of products that contains both high-growth products in need of
cash inputs and low-growth products that generate a lot of cash.
Placing the products of a strategic business unit in 2 dimensions (market growth
and market share) creates 4 quadrants and corresponding investment strategies:
cash required to turn question marks into market leaders, to cover the
administrative costs of the company, to fund research and development, to service
the corporate debt, and to pay dividends to shareholders. Companies are advised to
invest in cash cows to maintain the current level of productivity, or to "milk" the
gains passively.
Dogs: Also known as pets, dogs are units or products that have both a low market
share and a low growth rate.They frequently break even, neither earning nor
consuming a great deal of cash. Dogs are generally considered cash traps because
businesses have money tied up in them, even though they are bringing back
basically nothing in return. These business units are prime candidates for
divestiture.
Question marks: These parts of a business have high growth prospects but a low
market share. They are consuming a lot of cash but are bringing little in return. In
the end, question marks, also known as problem children, lose money. However,
since these business units are growing rapidly, they do have the potential to turn
into stars. Companies are advised to invest in question marks if the product has
potential for growth, or to sell if it does not.
34.Explain Pure Monopoly, Oligopoly, Monopolisitic competition and Pure
competition?
ANS-In market economies, there are a variety of different market systems that
exist, depending on the industry and the companies within that industry. It is
important for small business owners to understand what type of market system
they are operating in when making pricing and production decisions, or when
determining whether to enter or leave a particular industry.
Perfect Competition
Perfect competition is a market system characterized by many different buyers and
sellers. In the classic theoretical definition of perfect competition, there are an
infinite number of buyers and sellers. With so many market players, it is
impossible for any one participant to alter the prevailing price in the market. If they
attempt to do so, buyers and sellers have infinite alternatives to pursue.
Monopoly
A monopoly is the exact opposite form of market system as perfect competition. In
a pure monopoly, there is only one producer of a particular good or service, and
generally no reasonable substitute. In such a market system, the monopolist is able
to charge whatever price they wish due to the absence of competition, but their
supplier has any influence over the market price, and thus, the suppliers are often
referred to as price takers. The primary reason why there are many firms is because
there is a low barrier of entry into the business. The best examples of a purely
competitive market are agricultural products, such as corn, wheat, and soybeans.
Monopolistic competition is much like pure competition in that there are many
suppliers and the barriers to entry are rather low. However, the suppliers try to
achieve some price advantages by differentiating their products from other similar
products. Most consumer goods, such as health and beauty aids, fall into this
category. Suppliers try to differentiate their product as being better so that they can
justify higher prices or to have a larger market share than the competition.
Monopolistic competition is only possible, however, when the differentiation is
significant or if the suppliers are able to convince consumers that they are
significant by using advertising or other methods that would convince consumers
of a product's superiority. For instance, suppliers of toothpaste may try to convince
the public that their product makes teeth whiter or helps to prevent cavities or
periodontal disease.
An oligopoly is a market dominated by a few suppliers. A high barrier to entry
limits the number of suppliers that can compete in the market, so the oligopolistic
firms have considerable influence over the market price of their product. However,
they must always consider the actions of the other firms in the market when
changing prices, because they are certain to respond in a way to neutralize any
changes so that they can maintain their market share. Auto manufacturers are a
good example of an oligopoly, because the fixed costs of automobile
manufacturing are very high, thus limiting the number of firms that can enter into
the market.
A pure monopoly has pricing power within the market. There is only one supplier
who has significant market power and determines the price of its product. A pure
monopoly faces little competition because of high barriers to entry, such as high
initial costs, or because the company has acquired significant market influence
through network effects, for instance.
One of the best examples of a pure monopoly is the production of operating
systems by Microsoft. Because many computer users have standardized on
software products that are compatible with Microsoft's Windows operating system,
most of the market is effectively locked in, because the cost of using a different
operating system, both in terms of acquiring new software that will be compatible
with the new operating system and because the learning curve for new software is
steep, people are willing to pay Microsoft's high prices for Windows.
36.Draw Ansoff's Matrix?
ans- To portray alternative corporate growth strategies, Igor Ansoff presented a
matrix that focused on the firm's present and potential products and markets
(customers). By considering ways to grow via existing products and new products,
and in existing markets and new markets, there are four possible product-market
combinations. Ansoff's matrix is shown below:
Ansoff Matrix
Existing Products
New Products
Existing
Markets
Market Penetration
Product Development
New
Markets
Market Development
Diversification
1. Market Penetration
This involves increasing sales of an existing product and penetrating the market
further by promoting the product heavily or reducing prices to increase sales. This
strategy has the lowest risk strategy as the firm knows the product and the market.
Market penetration is often used by supermarkets and large retail chains.
2. Product Development
The business develops/introduces new products into existing markets with the aim
of selling the new product to existing customer groups. For example Microsoft
with their Xbox2 game console introduced the Kinect, an add on that allows
customers to play without the use of a controller, much like the Nintendo Wii. This
is an example of a new product which simply needs to be added onto the existing
model aimed at the existing market. Product Development is a medium risk
strategy as the business is familiar with the market but not the new product.
3. Market Development
Under a market development strategy a firm sells existing products to new
markets. For example a sandwich shop which is doing well in one area, expands
and opens another sandwich shop in a different region. Through market
development our sandwich shop has the potential to become a national chain.
There are different ways to define new markets including different locations for
sales to aiming products at different customer groups (age, background, interests,
income).
4. Diversification
Diversification involves selling new products to new markets. For example if a
business which usually sells food to families, decides it would like to sell cars to
single men it would be diversifying. Diversification is a high risk strategy as the
business is unfamiliar with the product and the target market. However as it also
has the potential to produce the highest rewards many businesses are prepared to
take the risk..
Conclusion
Ansoff's matrix enables businesses to decide growth strategy based on products
and the markets that the products are aimed at. Under the matrix they have the
option to stick with the markets and products they know (market penetration) or
change one thing the market (market extension) or the product (product
development). For those prepared to take accept big failure risks for potentially
larger rewards there is diversification into new products and markets..
THREAT OF
NEW ENTRANTS
Barriers to Entry
Absolute cost advantages
Proprietary learning
curve
Access to inputs
Government policy
Economies of scale
Capital requirements
Brand identity
Switching costs
Access to distribution
Expected retaliation
Proprietary products
THREAT OF
SUBSTITUTES
-Switching costs
-Buyer
inclination to
substitute
-Priceperformance
trade-off of
substitutes
BUYER POWER
Bargaining leverage
Buyer volume
Buyer information
Brand identity
Price sensitivity
Threat of backward integration
Product differentiation
Buyer concentration vs. industry
Substitutes available
Buyers' incentives
DEGREE OF
RIVALRY
-Exit barriers
-Industry
concentration
-Fixed
costs/Value
added
-Industry growth
-Intermittent
overcapacity
-Product
differences
-Switching costs
-Brand identity
-Diversity of
rivals
-Corporate
stakes
Whether you are starting a new business or looking for more insight into your
existing company's prospects, you probably have questions about the competition.
One way to answer those questions is by using Porter's Five Forces model.
Originally developed by Harvard Business School's Michael E. Porter in 1979, the
five forces model looks at five specific factors that help determine whether or not a
business can be profitable, based on other businesses in the industry.
According to Porter, the origin of profitability is identical regardless of industry. In
that light, industry structure is what ultimately drives competition and profitability
not whether an industry produces a product or service, is emerging or mature,
high-tech or low-tech, regulated or unregulated.
"If the forces are intense, as they are in such industries as airlines, textiles, and
hotels, almost no company earns attractive returns on investment," Porter wrote. "If
the forces are benign, as they are in industries such as software, soft drinks, and
toiletries, many companies are profitable."
Understanding the Five Forces
Porter regarded understanding both the competitive forces and the overall industry
structure as crucial for effective strategic decision-making. In Porter's model, the
five forces that shape industry competition are:
Competitive rivalry. This force examines how intense the competition currently is
in the marketplace, which is determined by the number of existing competitors and
what each is capable of doing. Rivalry competition is high when there are just a
few businesses equally selling a product or service, when the industry is growing
and when consumers can easily switch to a competitors offering for little cost.
When rivalry competition is high, advertising and price wars can ensue, which can
hurt a business's bottom line. Rivalry is quantitatively measured by the
Concentration Ratio (CR), which is the percentage of market share owned by the
four largest firms in an industry.
Bargaining power of suppliers. This force analyzes how much power a business's
supplier has and how much control it has over the potential to raise its prices,
which, in turn, would lower a business's profitability. In addition, it looks at the
number of suppliers available: The fewer there are, the more power they have.
Businesses are in a better position when there are a multitude of suppliers. Sources
of supplier power also include the switching costs of firms in the industry, the
presence of available substitutes, and the supply purchase cost relative to
substitutes.
Bargaining power of customers. This force looks at the power of the consumer to
affect pricing and quality. Consumers have power when there aren't many of them,
but lots of sellers, as well as when it is easy to switch from one business's products
or services to another. Buying power is low when consumers purchase products in
small amounts and the seller's product is very different from any of its competitors.
Threat of new entrants. This force examines how easy or difficult it is for
competitors to join the marketplace in the industry being examined. The easier it is
for a competitor to join the marketplace, the greater the risk of a business's market
share being depleted. Barriers to entry include absolute cost advantages, access to
inputs, economies of scale and well-recognized brands.
Threat of substitute products or services. This force studies how easy it is for
consumers to switch from a business's product or service to that of a competitor. It
looks at how many competitors there are, how their prices and quality compare to
the business being examined and how much of a profit those competitors are
earning, which would determine if they have the ability to lower their costs even
more. The threat of substitutes are informed by switching costs, both immediate
and long-term, as well as a buyer's inclination to change
Personal Selling:
38.Sell this pen/bottle/notebook to me?
ans-watch videos,and read articles.
39.What are different skills required to be a good sales person?
ansBelow are the skills required to be, best among the herd of successful Sales people
(I have tried to condense the skills to sell either a Product/Service):
1.
Effective Communicator
Communication covers a large territory. I am not talking about superb orator skills
here, but the ability to speak clearly and in a manner that is easy to understand.
Sales is all about talking to people and getting them to understand what you are
trying to communicate.
2.
Ability to Listen
Along with speaking, a great salesperson knows when to stop talking and listen.
They never cut someone off while they are talking, because in doing so they would
fail to hear a key element in identifying what that person's needs might be.
3.
Asks Questions
Salespeople are naturally inquisitive and know that in order to isolate what the real
need or desire is in the buyer, they need to ask questions that will lead them to the
answer. They naturally ask questions because they have a desire to help solve the
problem.
4.
Problem Solver
Another natural skill is the desire and ability to solve problems. Great salespeople
are always solving problems. The ability to hone in on what the buyer's problem is
and offering suggestions that will effectively solve the issue with respect to what
products or services you sell, generally results with a sale.
5.
Well Organized
I am not necessarily mentioning about the personal surroundings, but more with
the thoughts and methods of planning. Sales people have a keen ability to break
things down into smaller steps and organize a plan of action. They know how to
analyze what their goal is and in what order the steps need to be in order to reach
the goal.
6.
A successful sales person moves forward on his own. They never need anyone to
tell them when it is time to go to work because they know that if they do not work,
they will not earn. They are also very persistent to finish what they start. They
achieve their goals, even if they are small ones.
7.
Having the attitude that they can do just about anything that they put their mind to,
is usually very common among sales people. They do not tremble or quake from
meeting or talking to people or try something new. They rarely allow negatives that
are either spoken to them or about them to affect what they are trying to
accomplish because they know who they are and what they are capable of doing.
8.
The best sales people are very well mannered. Others may not realize it, but good
manners are a way of showing respect to others. People are attracted to those that
respect them and mutual respect is fundamental in building lasting relationships
with people, including buyers.
9.
Naturally Persuasive
Another very common inherent skill with great salespeople is that they are very
persuasive or know how to get what they want. They focus on what they want and
they are persistent to keep chipping away until they get what they want. They
almost never give up or give in.
10. Know your Product/Service (Domain Expertise)
This is one of the main requisite to sell anything to anybody. A good salesperson
knows in and out of a product/service very well. Customers/Buyers are interested
to know all the possible solutions that a product can suffice, because you can
convince someone to buy something, if you know everything about it. The Point of
caution here is, when a sales person is presenting about a product/service; he/she
These skills may be not be the exhaustive list for a Successful Sales person, but are
definitely the key drivers that a Sales person should posses. As I mentioned in the
initial paragraph, there are a few natural skills that should already exist within
those who want to be successful in selling.
contact with a company, those who have repeated contact with a company and those
who have made a purchase.
or
When it comes to sales, success is all about finding prospects who are ready to become
paying customers. Unfortunately, given the overall size of the potential customer pool,
and the relative few prospects who are capable of completing the journey, it can be
very difficult to identify the right people on which to focus your sales efforts. This is
where the management of your sales funnel comes into play.
The sales funnel is basically nothing more than an attempt to visualize a concept in
which qualified buyers are located and separated from the less-than qualified prospects
around them.
42.What is AIDA selling model. Demonstrate it with example?
ansAIDA is a communication model used by firms to help them sell their products and
services. AIDA is an acronym for Attention, Interest, Desire, Action.
Attention
When a product is launched the first goal is to grab attention. Firms spend
millions thinking about how to grab attention for their product. The method used to
gain attention will depend on the product, options include sponsorship, hospitality
events and large promotion campaigns. If the product is a gadget or technology a
firm may decide to showcase it at a technology exhibition for example E3 the
annual video game conference show which is visited by journalists and technology
industry professionals. If the product is trendy and fashionable the firm may ask a
celebrity who will appeal to the target market to endorse it.
Interest
Once you have secured people's attention, the next job is to hold their interest.
This is done by promoting product features and clearly stating the benefit the
product has to offer. The aim at this stage is to provide the customer with
information that will move them to the next stage of the process, desire.
Desire
The third stage is desire; at this point you want the information (interest) customers
have about your product to create a desire to have your product. A unique selling
point will help customers desire it over competitor products. If your product is a
trend setter, the latest "must have" product, buzz marketing will help create a
strong desire.
Action
The final stage is the purchase action, if a company has been successful with its
AIDA strategy then customers will purchase its products. The task at this stage is
to help the purchase action by making it as simple as possible. For example by
offering a range of payment options and avenues e.g. Credit card, cheque, via high
street shops and through the internet.
Characteristic of Short
Channel
Characteristic of long
channel
Market factors
Business users
Consumers
Geographically
concentrated
Geographically dispersed
Extensive technical
knowledge & regular
service required
Channel width = The number of intermediaries found at the same level in the
channel.
(refer boooks)
44.What do you mean by intensive distribution, selective distribution and exclusive
distribution?
ansFor taking your products to the end-users i.e consumers, you certainly need a
distribution channel. Choosing a distributor is a proven way that helps in the
growth of your business and vital to attain targets. While selecting distributors,
observe the prospective distributor: if he has the characteristics to become a
capable distributor, if he would be able to help you in accomplishing your business
expansion goal.
We present the three types of distribution business models to be adopted by
companies. The differences are based upon the size of the market the distributor
targets and breadth of services offering. Some partnerships are new while others
have evolved for many years. Some distributors handle many categories and
channels where others focus against a specific market segment. Lets take a sneak
peek of them:
Intensive Distribution:
This is a marketing strategy under which a company sells through the widest
possible channels and cover as many outlets as possible so that the customers come
across the product virtually wherever they go- drug stores, gas stations,
supermarkets, and the like.
Mostly common for: This strategy is common for snacks, soft drinks and juices,
foods, basic supplies, magazines.
Profit Margin: Intensive distributors work with many manufacturers and generally
sell high volumes of goods at lesser prices and earn lower margins.
Pros:
Increased sales
Wider customer recognition
Impulse buying
Cons:
Characteristically low price
Low-margin products that require a fast turnover
Selective Distribution:
This strategy is usually observed for more specialized products which are carried
through specialist distributors covering a specific geographic location. The firm
chooses some outlets for distributing its products. This option helps focus the
selling of manufacturers on selected outlets rather than dispersing it over numerous
marginal ones.
It Covers:
Product distribution here basically considers high-end items such as prestige or
designer goods e.g. Puma, Fila, Nike, Adidas.
Pros:
Save expenses
Improve marketing efficiency
Control the marketing
Cons:
Difficult to attain a variety of business objectives in relaxed conditions of
the marketing environment
Lack of adaptability to goods that are not selective
Exclusive Distribution:
Exclusive distribution is an intense form of selective distribution in which only one
distributor is appointed in each territory. Taking exclusive distributorship
opportunity is not tough but need few steps to follow. This type of distributor is
used where channel control is important to maintain brand image, brand integrity,
and often higher pricing points.
When the manufacturing firm distributes its products through just one or two major
outlets in the market that are exclusively dealing in it, it is said that the firm is
using an exclusive distribution strategy.
Apple had an exclusive distribution deal with AT&T to provide the iPhone to
consumers.
It caters to:
Exclusive distributors usually cover designer ware, major domestic appliances, and
the most luxurious items & brands like Gucci, Prada.
Pros:
More control over the market
More aggressive middleman
High brand loyalty
Cons:
Difficult to maintain a high level of brand image
Betting on one dealer in each market
Only suitable for high priced & low volume products
45.On what criteria can channel members be evaluated for their proper selection?
ansThe SCPCA method can be used to evaluate channel members.
a.Sales (S): How much sales each channel member can give within a cetain time frame
b.Cost(C):How much cost would be incurred for each channel?
c.Profitability(P):Which channel can give better profitability to the company?
d.Control(C): Whether company can have better control over its channel members or
not.
e.Adaptability (A): Whether the channel alternatives are flexible enough to any
changes or not. The channel meeting the objectives of the company is selected.
46.How would you manage a given Channel?
ansThe process by which a producer or supplier directs marketing activity by
involving and motivating parties comprising its channel of distribution.
sense, every channel member is dependent on all others and must think carefully
about the ripple effects of any price increase.
48.What is the role of a distributor in the Distribution Channel?
ans- A distributor is an intermediary entity between a the producer of a product and
another entity in the distribution channel or supply chain, such as a retailer, a
value-added reseller (VAR) or a system integrator (SI). The distributor performs
some of the same functions that a wholesaler does but generally takes a more
active role.
At a minimum, distributors handle payment and procurement but, unlike
wholesalers, their roles can be much more complex. For example, vendors that lack
the means to build out a channel program by themselves often outsource that work
to distributors. Distributors also frequently take a more proactive approach in
educating resellers about new products, through such activities as presales training,
road shows, and demos on behalf of vendors. Distributors may provide services
around the procurement process, such as contract negotiation, marketing for
resellers and SIs, and warrantees. Increasingly, distributors also host network
operations centers (NOCs).
Although the specific entities and order involved can vary, the supply chain or
distribution channel involving a distributor is generally: vendor to distributor,
distributor to reseller or SI, reseller or SI to end customer.
Prior Experience
Prior experience of the distributor in FMCG distribution will help in followings.
Distributor will take less time in understanding the functioning of various
members of the channel.
Less time to build good rapport with retailers/institutions.
Infrastructure
Infrastructure required like manpower, redistribution vehicle, godown space should
be available of required quality and quantity.
Market reputation
Market reputation of the distributor in terms of relationship with retailers will help
in efficiency of his work.
Market knowledge
Distributors knowledge of the prevailing market conditions, retailers attitudes,
competitors products etc. will help in getting good hold on the market. Also
important is distributors interest in knowing day-to-day information & happenings
of the market.
Synergy
If distributor also has some other good FMCG product distribution with him, it
helps in getting more retail space for your product. That brings synergy in retail
penetration.
Technology
Use of various new technologies like SMS, computing, internet in various aspects
of the distribution process will help in getting better efficiency in communication,
operations etc.
Attitude
Distributor should possess basic managerial skills and should have a positive
attitude. He should be willing to experiment with new products and take risks.
Social profile
Age and education level of the distributor are important. Young distributor will
have many more years as active life which gives us stability for long term in that
territory. Also, well educated distributor will be more adaptive to the changing
environment, technology etc.
Future plans
As appointment of the distributor is longer term, its important to know the future
plans of the distributor for his business.
These criteria give general idea of important factors for judging. Each criterion is
evaluated based on detail work and judged based on requirements.
or
At a minimum, consider these qualities when evaluating a distributor:
Proven track record in a similar line, but no conflicts of interest with
competing products.
Mix of product lines that complement your product. Check to ensure that
they actually do represent those products.
Established distribution networks and strong contacts with key buyers. You
may have to appoint several distributors in a country like Italy where
business is done regionally and there is little consolidation.
Solid financial history (be sure to do a credit check) and sufficient cash flow
in order to extend credit to customers, as well as a willingness to invest in
your line.
Appropriate staff (in terms of numbers but also marketing savvy) to promote
your product.
Storage facilities, showrooms, shops, service workshops and after-sales
service as required by your product.
Knowledge of local import procedures and regulations.
References from other suppliers and customers.
Personal rapport. This may end up being the most important factor in your
success!
b.Bulk Breaking : Buying the product in large quantities and selling them to retailers in
smaller quantitites.
c.Warehousing: Looking after the storage of the goods.
d.Transportation: The wholesaler may enter into agreements with the company to
transport their goods to the retailers.
e.Credit and risk taking: They undertake the risk of providing credit to retailers.
He purchases goods in large quantities from the wholesaler and sell in small quantity to
the consumer.
Functions
Retailers perform a number of functions. These are:
The retailer buys a variety of products from the wholesaler or a number of wholesalers.
He thus performs two functions like buying of goods and assembling of goods.
The retailer performs storing function by stocking the goods for a consumer.
He develops personal contact with the consumers and gives them goods on credit.
He bears the risks in connection with Physical Spoilage of goods and fall in price.
Besides he bears risks on account of fire, theft, deterioration in the quality and spoilage of
goods.
He resorts to standardization and grading of goods in such a way that these are accepted
by the customers.
He makes arrangement for delivery of goods and supply valuable market information to
both wholesaler and the consumer.
Service of a Retailer
A retailer provides a number of services to the customer and to the wholesaler.
To Customers:
1. He provides ready stock of goods and as such he sells and quantity of goods desired by
the customers.
2. He keeps a large variety of goods produced by different producers and thereby ensures a
wide variety of choice to the customers.
3. He relives the consumers of maintaining large quantity of goods for future period because
he himself holds large stock of goods.
4. He develops personal relationship with the customers by giving them credit.
5. he provides free-home delivery service to the customers.
6. He informs the new product to the customers.
7. he makes arrangement for replacement of goods when he receive complaints.
To Wholesaler:
1. He gives valuable market information with regard to taste, fashion and demand for the
goods to the wholesaler.
2. The retailer maintains direct contact with the customers and so he relieves the wholesaler
with regard to maintenance of direct contact.
3. He helps the wholesaler in getting their goods distributed to the consumer.
For an organisation, at the end of the day, the product must be sold. No sales means no
profits and no profits means no business! So this in turn depends upon the quality of the
sales force. The sales force of an organisation needs to be properly selected, trained,
developed and managed so as to be able to reach out to and gain a wider customer
base and to retain the existing customers. This activity relating to the sales force is
known as sales management. Sales management entails deciding upon the sales
territory, determing the composition og the sales force and sales organisation.
or
Sales management can involve any of the following activities: (1) formulation of sales strategy
through development of account management policies, sales force compensation policies, sales
revenue forecasts, and sales plan, (2) implementation of sales strategy through selecting, training,
motivating, and supporting the sales force, setting sales revenue targets, and (3) sales force
management through development and implementation of sales performance, monitoring, and
evaluation methods, and analysis of associated behavioral patterns and costs.
Functions:
These functions differ from company to company according to their size and the nature of their
products.
Importance of Sales Management:
Sales management has gained importance to meet increasing competition and the need for
improved methods of distribution to reduce cost and to increase profits. Sales management today
is the most important function in a commercial and business enterprise.
a.Deciding the sales territory: This allocates the sales quota for the individual sales
executive and defines his boundary within which he is to work. Thus the conflict
between two sales executive is also avoided.
b.Determining the size of the sales force: This depends upon the size of the target
market. Accordingly the activities that the sales executive has to perform is listed out
and the time taken for such activities is also estimated. The number of calls that he may
have to make at a certain point of time is also analysed. Finally the number of the sales
force is decided upon.
The sales executives are given certain targets to be fulfilled within a given period of
time. This is called sales quota. The sales quota so fixed can vary according to the
organisation objectives.
They may be assigned a certain volume of goods say 6000 units in a year or Rs.40,000
worth of goods within the next 6 months. Sometimes the quotas maybe fixed on the
basis of the profit margin rather than the volume, then it is known as profit quotas.Here,
the company asks the sales executives to try to maximize the profit margin that they
get out of every sale they make.
or
Individual sales target figure assigned to each sales unit such a sales person, dealer,
distributor, region, or territory, as a required minimum for a specified period (month,
quarter, year). Sales quotas may be expressed either in dollar figures (monetary terms)
or in number of goods or services sold (volume terms).
59.What all should be considered while setting quota for the sales force?
ans60.What is a sales contest. Give some example
ans- A sales contest is a motivational program in which rewards are offered to sales people
based upon their sales and/or results. There are three types:
Direct competition the sales people compete against each other and there
is one winner
Team competition there are teams which are rewarded collectively for
winning
Goal rewards are given for achieving goals which may be won by more
than one person
or
Sales contests are taken as one of the measures of sales promotion. A sales contest is a special
selling campaign offering salesman incentives in the form of prizes or awards above and beyond
those provided by the compensation plan. Sales contests are most popular with firms specializing
in consumer products like food and drugs etc. The main object of sales contests is to provide
sales personnel with extra incentives to increase sales volume and also bring more profits to the
company. Sales contests aim at fulfilling the needs of individuals for achievement and
recognition. If they are well-organized, they can be used to counter off-season decline in sales
and bring in new customers. They also generate team spirit among the salesmen and foster a
sense of co-operation. These sales contests bring out the talented and more intelligent salesmen
to the forefront.
Objectives of the Sales Contests
Sales contests motivate salesman to increase sales volume along with higher profits. The main
objectives of sales contests are as follows:
1. To risen the sales.
2. To make new customers attracted.
3. To arrest seasonal sales slumps.
4. To push new products, high margin goods and slow moving goods.
5. To get repeated orders from present and former customers.
6. To improve sales personnel performance.
7. To bring a spirit of competition among the salesman.
8. To improve customers services.
9. To achieve the sales targets.
10. To increase incentives to sales force.
.
61.Name and explain few Forecasting methods?
ans.
62.How can the sales executives be compensated to improve premium product sales?
ans-