Beruflich Dokumente
Kultur Dokumente
MBA-II semester
MB0030
Marketing Management
SET 1
Q.1 Explain the meaning of marketing and its importance in business.
Importance of Marketing.
Peter Drucker, the famous management thinker in one of his classic articles has
said “Marketing is everything”. All other activities in the organization are support
services to the marketing strategy that the company pursues. Marketing is
important not only to the company but to the consumers and society and to the
economy.
Consumer stands to benefit from marketing activities. He has more alternatives
to choose from, improved and better quality products are available and he is able
to buy goods at convenient locations. Thanks to much improved customer
service, a consumer is able to complain and expects his complaint to be attended
in reasonable time. He can now buy with credit or debit card or cash or on
installments.
For the society as a whole, marketing is important because it acts as a change
agent making people use latest products and improves the standard of living of
the people. As we know, the main objective of marketing is to produce products
and services for the society as per their needs and tastes, and while doing so it
creates demand for these goods and services, encourages them to use them,
thus leading to higher demand and sales. This higher demand allows the
company to achieve economies of scale in both production and distribution
resulting in decrease in production and distribution costs which can be used to
reduce prices to consumers.
For a company in any business, marketing is considered to be the most important
activity. It helps an organization to keep abreast of changes taking place in the
market and consumer tastes and
Preferences through market research. Based on this reliable data, it responds to
these changes by rectifying any drawbacks in its products or changing its
competitive strategy. Thus the company’s decision-making and planning are not
based on just hunches but on sound market information. The firm that follows
such practices is sure to prosper under all conditions. Marketing provides an
effective channel of communication to the company with its consumers by way of
advertising and sales promotion. Marketing thus brings revenue and earns
goodwill for the company.
Successful operation of marketing activities creates, maintains and increases the
demand for goods and services in the economy. It results in the increased level of
production. This, in turn, increases the national income, which is beneficial to the
economy. Marketing operations require the services of intermediaries such as
wholesalers, retailers, transporters, and service provides for storage, finance,
insurance and advertising. These services provide employment in large numbers.
Q.2 Explain the relevance of BCG matrix and GE matrix with examples.
1. SBU: FMCG
Industry growth rate: 24% (AC Nielson retail audit report 2007)
Company growth rate: 50% (the Hindu business line 19th January 2008)
Company’s market share: 8% (outlook business)
Largest competitor share: HUL: 54% (outlook business)
Relative market share= 0.14
GE matrix:
1 Management can use the GE business matrix to classify SBU’s on the basis of
two factors
a. Market attractiveness: Market size, entry barriers, competitors, technology and
profit margin are some factors used to analyze the market attractiveness.
b. Business position can be determined on the basis of market share, SBU size,
R&D capabilities and cost controls
Each cell in the model represented by the particular strategy namely, invest
strategy, protect strategy, harvest strategy and divest strategy
Business position
4. Harvest strategy: SBUs should not receive substantial new resources and if
required, sell them.
5. Divest strategy: SBUs which falls into this category should not receive any
resources and sell i or shut it as early as possible.
Axis components:
Model Components:
Dogs:
Low Market Share / Low Market Growth. In these areas, SBU’s market presence is weak, so it's going
to take a lot of hard work to get noticed. Also, you won't enjoy the scale economies of the larger
players, so it's going to be difficult to make a profit.
Cash Cows:
High Market Share / Low Market Growth Here, SBU’s are well-established, so it's easy to get
attention and exploit new opportunities. However it's only worth expending a certain amount of effort,
because the market isn't growing and your opportunities are limited. here we can say cash cow can be
milked.
Stars:
High Market Share / High Market Growth Here SBU’s are well-established, and growth is exciting!
These are fantastic opportunities, and you should work hard to realize them.
Low Market Share / High Market Growth These are the opportunities no one knows what to do with.
They aren't generating much revenue right now because you don't have a large market share. But, they
are in high growth markets so the potential to make money is there. Here there are two choices, either
to invest heavily to bring it to star position or divest or liquidate from that position. Question Marks
might become Stars and eventual Cash Cows, but they could just as easily absorb effort with little
return. These opportunities need serious thought as to whether increased investment is warranted.
Key Points
The Boston Matrix is an effective tool for quickly assessing the options open to you, both on a
corporate and personal basis. With its easily understood classification into "Dogs", "Cash Cows",
"Question Marks" and "Stars", it helps you quickly and simply screen the opportunities open to you,
and helps you think about how you can make the most of them.
Limitations:
As any other marketing theories in the field, the BCG matrix model is not perfect either. There are
according problems of this theory. Some limitations concerning the particular use of BCG include:
1. Only two dimensions – market share and product or service growth rate, are employed. These are
the first limitations.
2. How to define market and how to get data about market share are also problems.
3. High market shares don’t always necessarily lead to profit at all times. It is not the only success
factor.
4. Low share or niche businesses can be profitable too, which means in the real world some Dogs can
be more profitable than cash Cows.
5. The model cannot reflect the growth rates of the general market and market growth is not the only
indicator for market attractiveness.
6. The model also neglects the effects of synergy between different business units.
The GE screen matrix is essentially a derivation of the Boston Consulting Group’s Boston growth
matrix. It was developed by McKinsey and Co. for General Electric as it had been recognized that the
Boston Consulting Group matrix was not flexible enough to take broader issues into account The GE
matrix cross-references market attractiveness and business position using three criteria for each – high,
medium and low. The market attractiveness considers variables relating to the market itself, including
the rate of market growth, market size, potential barriers to entering the market, the number and size of
competitors, the actual profit margins currently enjoyed, and the technological implications of
involvement in the market. The business position criteria look at the business’s strengths and
weaknesses in a variety of fields. These include its position in relation to its competitors, and the
business’s ability to handle product research, development and ultimate production. It also considers
how well placed the management is to deploy these resources. The matrix differs in its complexity
compared with the Boston Consulting Group matrix. Superimposed on the basic diagram are a number
of circles. These circles are of variable size (see Figure 22). The size of each represents the size of
each market. Within each circle is a clearly defined segment which represents the business’s market
share within that market. The larger the circle, the larger the market, and the larger the segment, the
larger the market share.
Q.3 what do you mean by MIS? Explain its benefits, types and components.
Ans.: MIS: Philip Kotler defines MIS as “a system that consists of people,
equipment and procedures to gather, sort, analyze, evaluate and distribute
needed, timely and accurate information to marketing decision makers.
Its characteristics are as follows:
1. It is a planned system developed to facilitate smooth and continuous flow of
information.
2. It provides pertinent information, collected from sources both internal and
external to the company, for use as the basis of marketing decision making.
3. It provides right information at the right time to the right person.
A well designed MIS serves as a company’s nerve centre, continuously monitoring
the market environment both inside and outside the organization. In the process,
it collects lot of data and stores in the form of a database which is maintained in
an organized manner. Marketers classify and analyze this data from the database
as needed.
With the advent of Computer Technology, MIS has taken a step further to provide
managers direct access to the databases. This system called Marketing
Decision Support System (MDSS) links a decision maker to relevant
databases and analysis tools, thereby allowing him to gain deep insights into
needs and trends of customers with the help of sophisticated statistical analysis.
Today companies organize the information in databases such as customer
database, product database, and field sales database and combine them to be
stored in a huge database called Data Warehouse. The process of searching
through information in data warehouse to identify meaningful patterns that guide
decision making is called Data Mining.
Benefits of MIS
Various benefits of having a MIS and resultant flow of marketing information are
given below:
1. It allows marketing managers to carry out their analysis, planning
implementation and control responsibilities more effectively.
2. It ensures effective tapping of marketing opportunities and enables the
company to develop effective safeguard against emerging marketing threats.
3. It provides marketing intelligence to the firm and helps in early spotting of
changing trends.
4. It helps the firm adapt its products and services to the needs and tastes of the
customers.
5. By providing quality marketing information to the decision maker, MIS helps in
improving the quality of decision making.
Components of MIS
Ans.: A Toothpaste that uses 'concentrated' rare herbs and oils so effectively for soothing
troubled gums, protecting teeth and adding 'extended' freshness that you'll even wonder why
you EVER used mouthwash…
Reviews: “Since I began using your Pepsodent toothpaste, I've had the best checkups that I've
ever had. The person who cleans my teeth is very impressed with my gums and has begun
using Herbodent herself and is recommending it to her other patients. "
------------------------------
"I can't believe it but after less than a month, my gums are not bleeding. I was using another
product from the dentist's office and it did not help at all, but your toothpaste really, really
worked for me. I am very happy! I am going to need a lifetime's supply! "
Recognizing the power of nature's gifts, Health and Yoga recommends a natural based, herbal
toothpaste which has been manufactured using extracts and oils of natural ingredients.
In fact, with fluoride in toothpastes and alcohol in mouthwashes being increasingly linked to
oral cancer by scientists worldwide, the switch to natural-based tooth and gum cleansers and
mouth fresheners is not only suggested but actually encouraged…even more so for children
with their delicate gums and susceptible teeth.
New and Improved! Complete Protection for Strong Enamel and Healthy Gums
Inactive Ingredients: Sorbitol, Water, Hydrated Silica, PEG 32, Sodium Lauryl Sulfate, SD Alcohol
38B, Flavor, Cellulose Gum, Zinc Citrate Trihydrate, Sodium Saccharin, Titanium Dioxide
Q. 5Explain the consumer buying decision process with respect to new products. Give
examples.
1. Awareness: the consumer became aware of the product but lacks information
about it.
2. Interest: As know previous information available consumer shows interest to
get the information about the product.
3. Evaluation: After receiving the information consumer analyzes the benefits of
new products over any existing products or substitutes and decides whether to
buy or not.
4. Trial: The consumer tries the new product on a small scale to improve his or
her estimate of its value.
5. Adoption: In this stage consumer decides to make full and regular use of the
product.
Adoption rate:
2) The Learning Model: According to the learning model which takes its cue
from the Pavlovian stimulus response theory, buyer behavior can be influenced
by manipulating the drives, stimuli and responses of the buyer. The model rests
on man’s ability at learning, forgetting and discriminating. The stimulus response
learning theory states that there develops a bond between behavior producing
stimulus and a behavior response (S. R. Bond) on account of the conditioning of
behavior and formation of habits. This theory may be traced to Pavlov and his
experiments on salivating dogs. Pavlov’s experiments brought out associations
by conditioning.
In his well known research with dogs, a bell was rung every time food was served
to a dog.
Eventually, the dog started salivating each time upon hearing the bell though no
food was served.
The dog’s behavior is conditioned; It is related to behavior producing stimulus
(bell ringing) and behavior response (salivation). The S.R. bond so established
causes a set pattern of behavior learnt by the object – dog. In terms of consumer
behavior, an advertisement would be a stimulus whereas purchase would be a
response.
Learning Process: According to the stimulus response theory, learning is
dependent on drive, cue (stimulus), response and reinforcement.
Drive: Drive may be defined as any strong stimulus that impels action. It arouses
an individual and keeps him prepared to respond. The drives may be classified as
primary drives and secondary drives. Primary drives are based upon innate
physiological needs such as thirst, hunger, pain avoidance, and sex. The
secondary drives are based upon learning. They are not innate and are derived
from the primary drives. These include the desire for money, fear, pride, rivalry,
etc.
Cue: Cue or stimulus may be defined as any object in the environment perceived
by the individual.
The aim of the marketing man is to find out or create the cue of sufficient
importance that it becomes the drive stimulus or elicits other responses
appropriate to his objective. Here, the objective is to find out those conditions
under which a stimulus will enhance the chances of eliciting a particular kind of
response.
5. The Nicosia Model: In recent years, some efforts have been made by
marketing scholars to build buyer behavior models totally from the marketing
man’s standpoint. The Nicosia model and the Howard and Sheth model are two
important models in this category. Both of them belong to the category called the
systems model, where the human being is analyzed as a system with stimuli as
the input to the system and behavior as the output of the system. Francesco
Nicosia, an expert in consumer motivation and behavior put forward his model of
buyer behavior in 1966.
The model tries to establish the linkages between a firm and its consumer – how
the activities of the firm influence the consumer and result in his decision to buy.
The messages from the firm first influence the predisposition of the consumer
towards the product. Depending on the situation, he develops a certain attitude
towards the product. It may lead to a search for the product or an evaluation of
the product. If these steps have a positive impact on him, it may result in a
decision to buy. This is the sum and substance of the ‘activity explanations’ in the
Nicosia Model. The
Nicosia Model groups these activities into four basic fields. Field one has two
subfields the firm’s attributes and the consumer’s attributes. An advertising
message from the firm reaches the consumer’s attributes. Depending on the way
the message is received by the consumer, a certain attribute may develop, and
this becomes the input for Field Two. Field Two is the area of search and
evaluation of the advertised product and other alternatives. If this process results
in a motivation to buy, it becomes the input for Field Three. Field Three consists
of the act of purchase. And Field Four consists of the use of the purchased item.
SET 2
1.
a) Lifestyle:
People exhibit different lifestyles and goods they consume express their
lifestyles.
Many companies seek opportunities in lifestyle segmentation. But lifestyle
segmentation does not always work.
b) Personality: Marketers have used personality variables to segment the
markets. They endow their products with brand personality that corresponds to
consumer personalities.
b) Benefits: Buyers can be classified according to the benefits they seek. For
example, Peter
England, a madhura garment brand positioned its wrinkle free trousers on the
basis of benefits.
c) User Status: Markets can be segmented into nonusers, potential users, first
time users and regular users of a product. Each market segment requires a
different marketing strategy. The company’s market position will also influence
its focus. Market leaders will focus on attracting potential users, whereas smaller
firms will try to attract current users away from the market leader. For example,
Kishkinda resort near Hampi classifies its customers according to this
characteristic. Resort believes that locals falls into nonuser category, affluent
class who comes to Hampi as potential users, foreigners as first time users rich
people near Hampi who frequently come there as regular users.
d) Usage Rate: Markets can be segmented into light, medium and heavy
product users. Heavy users are often a small percentage of the market but
account for a high percentage of total consumption. Marketers prefer to attract
one heavy user rather than several light users and they vary their promotional
efforts accordingly.
For example, Alan Paine textile brand, offered 4 cotton trousers for Rs 999.
Company is interested in getting profit from sales volume.
Ans. b: I. Cost plus pricing: The method of adding markup to the total cost of
the product
Procedure for calculating cost plus pricing:
a. Find out the variable cost per unit and fixed cost.
b. Estimate the number of units the company is intended to sell.
c. Calculate the Unit cost by the following formula
Fixed costs
Unit cost = Variable cost +Unit sales
d. Find out the required mark up( desired return on sales)
e. Calculate the price by the following formula.
Unit cost
Price= (
1Desired return on sales)
Problem: Company X would like to sell 75,000 units in the year 2008. The fixed
cost of the company is Rs 2 Lakh and variable cost is Rs 5 per unit. Company
wants 30 % profit after sales. Calculate the Price of the product to achieve
desired sales and profit.
Solution:
Unit cost= VC+ (FC/ unit sales)
= 5+ (200,000/75000)
= 7.67
Price = Unit cost/ (1desired return on sale)
= 7.67/ (10.3)
= 10.85 Approx Rs 11/unit.
Q.2 Explain the benefits and demerits of the different types of advertising media. How
will a marketer decide on the suitable media for his/her products?
Newspapers
Advantages
• Your ad has size and share, and can be as large as necessary to communicate as much of a
story as you care to tell.
• The distribution of your message can be limited to your geographic area.
• Split-run tests are available to test your copy and your offer.
• Free help is usually available to create and produce your ad.
• Fast closings. The ad you decide to run today can be in your customer's hands two days from
now.
Disadvantages
• Clutter. Your ad has to compete for attention against large ads run by supermarkets and
department stores.
• Poor photo reproduction limits creativity.
• A price-oriented medium. Most ads are for sales.
• Short shelf life. The day after a newspaper appears, it's history.
• Waste circulation. You're paying to send your message to a lot of people who will probably
never be in the market to buy from you.
• A highly visible medium. Your competitors can quickly react to your prices.
Magazines
Advantages
• High reader involvement means more attention will be paid to your advertisement.
• Less waste circulation. You can place your ads in magazines read primarily by buyers of your
product or service.
• The smaller the page (generally eight and half by eleven inches) permits even small ads to
stand out.
Disadvantages
• Long lead times (generally 90 days) mean you have to make plans a long time in advance.
• The cost for space is higher in addition to higher creative costs.
Yellow Pages
Advantages
Disadvantages
• All of your competitors are listed so you run the ad as a defensive measure.
• Ads are not very creative since they follow certain formats.
Radio
Advantages
• A universal medium. Can be enjoyed at home, at work, and while driving. Most people listen
to the radio at one time or another during the day.
• Permits you to target your advertising dollars to the market most likely to respond to your
offer.
• Permits you to create a personality for your business using only sounds and voices.
• Free creative help is usually available.
• Rates can generally be negotiated.
• Least inflated medium. During the past ten years, radio rates have gone up less than other
media.
Disadvantages
• Because radio listeners are spread over many stations, to totally saturate your market you have
to advertise simultaneously on many stations.
• Listeners cannot refer back to your ads to go over important points.
• Ads are an interruption to the entertainment. Because of this, radio ads must be repeated to
break through the listener's "tune out" factor.
• Radio is a background medium. Most listeners are doing something else while listening, which
means your ad has to work hard to be listened to and understood.
• Advertising costs are based on ratings which are approximations based on diaries kept in a
relatively small fraction of a region's homes.
Television
Advantages
Disadvantages
• Ads on network affiliates are concentrated in local news broadcasts and on station breaks.
• Creative and production costs can quickly mount up.
• Lead time can result in items being sold out before ad runs.
• Most ads are ten or thirty seconds long, which limits the amount of information you can
communicate.
Direct Mail
Advantages
• Your advertising message is targeted to those most likely to buy your product or service.
• Your message can be as long as necessary to fully tell your story.
• You have total control over all elements of creation and production.
• A "silent" medium. Your message is hidden from your competitors until it's too late for them
to react.
Disadvantages
Telemarketing
Advantages
Disadvantages
Advantages
Disadvantages
Stage 2: Idea screening: Organization may have various ideas but it should find
out which of these ideas can be translated into concepts. In an interview to Times
of India, Mr. Ratan Tata, chairman
TATA group discussed how his idea saw many changes from the basic version. He
told that he wanted to develop car with scooter engine, plastic doors etc... But
when he unveiled the car so many change were there in the product. This shows
that initial idea will be changed on the basis of market requirements.
Stage 3: concept development:
Concepts used for Tata Nano car are
Concept 1: low end 'rural car,' probably without doors or windows and with plastic
curtains that rolled down, a fourwheel
Version of the auto rickshaw
Concept 2: a car made by engineering plastics and new materials, and using new
technology like aerospace adhesives instead of welding.
Concept 3: Indigenous, in-house car which meets all the environment standards
Stage 4; Concept testing: at this stage concept was tested with the group of
target customers.
Stage 5: Marketing strategy development: The marketing strategy development
involves three parts.
The first part focuses on target market, sales, market share and profit
goals.TATA’s initial business plan consisted sales of 2 Lakh cars per annum. The
second part involves product price, distribution and marketing budget strategies.
TATA’s fixed Rs. 1 Lakh as the car price, and finding self employed person who
works like agent to distribute the cars. The final part contains marketing mix
strategy and profit goals.
Stage 6: business analysis: it is the analysis of sales, costs and profit estimated
for a new product to find out whether these align with company mission and
objectives.
Stage 7: Product development:
TATA nano car development (source; business world nanolution)
1. Tried to outsource the product from allover the world.
2. Development of ‘mule’ or prototype with 20bhp.
3. Designing the small engine
4. Thermodynamic simulations and final engine
5. Development of MPFI with help of Bosch.
6. Cost reduction and negotiating with vendors.
7. Sona Koyo and Rane Group came up with hollow steering shafts, saving cost
and cutting weight. Sharda Motors and Emcon designed the exhaust system and
MRF tweaked the tyres to bear extra weight on rear wheels.
Stage 8: test marketing:
1. The product is introduced into the realistic market
2. The 4P’s of marketing are tested.
3. The cost of test marketing varies with the type of product.
Stage 9: commercialization: In this stage product is completely placed in the
market and aggressive communication program is carried out to support it.
Product mix: The number of product line and items offered by marketer to the
consumer
A company’s product mix has four different dimensions. They are product mix
width, product mix length, and product mix depth and product mix consistency.
Product mix width: The total number of product line that company offers to the
consumers.
Product mix length: The total number of items that company carries within its
product line.
Product line depth: The number of versions offered of each product in the line.
For example, Jyothy laboratories’ Jeeva Natural is offered in three versions i.e.
Coconut Milk with
Milk Protein, Coconut Milk with Jasmine and Coconut Milk with Kasturi Manjal, and
is presented in
75gm packs.
Product mix consistency: If company’s product lines usage, production and
marketing are related then product mix is consistent else it is unrelated.
Incase of Jyothy laboratories, all six product lines are FMCGs. Hence it is having
consistent product mix. But ITC Company’s cigarette and cloth product line are
totally unrelated.
Q.4. Select any brand of toilet soap and evaluate its positioning strengths or
weaknesses in terms of attributes, benefits, values, brand name and brand equity.
Also, examine how competitive brands influence the marketing strategies of the
selected soap.
Ans.: Brand managers use three levels of positioning strategies to get the mind
share of the customer.
Product attributes Ingredients: the product speaks about the innovative
Ingredients that company offers in the product. In the
gore example the company explains the It’s gentle cleansing qualities are enhanced with
calming chamomile and witch...
Brand name: Brand provides the image to the product. Brand manager should
be careful while selecting proper name for the brand. There are six suggestions
from the Philip Kotler to create a successful brand name. They are
1. It should suggest something about the product benefits and qualities; Frooti or
appy Fizz
2. It should be easy to pronounce, recognize, and remember: Amul, Kissan, and
Ruchi
3. The brand name should be distinctive: cello, VIP
4. It should be extendable: Aashirwad Wills
5. The name should be easily translated into foreign language: Mr. White.
6. It should be capable of registration and legal protection
For example, Hindustan Unilever uses different brand names for their home and
personal care category. The above example shows us that HUL have breeze,
Dove, Liril Lux, Lifebuoy and Pears in the bath soap segment itself.
It helps company to come out with new features in the product or product
category. Organizations adopt this strategy to avoid brand cannibalization in the
given category. The major disadvantage of this strategy is none of the brands will
enjoy major market share and result in lesser profitability. In case of Hindustan
Unilever company had more than 100 brands and was forced to reduce it to 30
power brands. Other brands were not adding enough profit for the company.
New brands: The strategy of coming out with new brand for new category
products. In this strategy, company believes that existing brands can not be
extended to the new category. The new brand strategy requires huge resources
to build it. The new category if it already had some brands of other companies,
investment requirement will go up. For example, Hindustan Unilever launched
Pure it in the water purifier category. The category and brand is new to the
company.
(b) Audiovisual
Method: In order to supplement the lecturing (telling) method, training programs
include the use of visual aids, such as films, slides, posters etc., and are capable
of making, them more interesting.
(e) Role Playing Method: Role playing is a newly developed method. The sales
trainees are made to act out roles in contrived problems. The trainer explains the
situation of the problem and assigns the role of salesman and customers of
different characters to the sales trainees. Each one has to act the assigned role.
The trainer watches the role played by each and discusses their weaknesses and
strong points. A few may be selected to act the play, while others may watch it.
Thus, the salesman have chance to see and understand the ideas in different
situations. It is not suitable for new recruits.
(f) Panel Method: Members in the panel group may be permanent. The
members, who are experts in the panel, discuss the problems, and solutions are
passed to the sales trainee groups, who may have further discussion. This system
is ineffective.
2. Individual Training
(a) On the job
Training: Under this method, a new salesman is placed under an experienced or
senior salesman who trains him. First the coach explains the sales techniques
under different situations. He also takes the trainee along with him on his rounds
and gives him chances to observe the dealings with the customers. Doubts of the
trainee are also clarified. Then the coach along with the trainee calls on
customers the sales trainee is allowed to deal with the customer and the coach
observes the performance. If any weak point or shortcoming is found in the sales
trainee, they discuss how to overcome them. After some time, the sales trainee
becomes a trained and independent salesman. This system is good for traveling
salesman.
(b) Sales Manual: It is a complied textbook. It contains details of the firm and
products, job description, sales policies, opinions or reports required for reference
purposes etc. Generally, it contains many problems with suggestive solutions. A
copy of the book is given to a salesman to go through it and understand the
ideas. It works as a ready beckoner.
Importance of Training:
1. To prepare the salesman to discharge his job efficiently.
2. To tell him what to do.
3. To guide him how to demonstrate.
4. To allow him to practice or perform it.
5. To check him in his performance.
• Motivating: In this stage organization identify the attributes that motivates
the sales executive to perform well. Some executive may require money
and others may status or control. Here organizations draw two types of
incentives. They are financial incentives and non financial incentives. In
financial incentives salary package, flexible expenses and fringe benefits
serves as motivators. The non financial incentives include promotion,
recognition and awards are included to motivate the sales executives.
• Evaluating: Companies are interested to know whether sales executives
are achieving the quotas set for them. To know this they ask sales
executives to send the different sales reports. It may be call reports,
expense reports, loss order report, travel plan and expenditure and so on.
These reports information are compared against the set standards. On the
basis of evaluation report incentives are announced, if required sales
executives are motivated and trained.
• Compensation: sales executives are compensated on three methods. They
are direct salary, direct commission and combined plans. In Direct salary
method sales executives are given fixed salary per month. In case of
direct commission sales executives will be working on commission basis
only. For example, Life insurance agents get straight commission. The
combined method is mixture of straight salary and straight commission
method. In this method sales executives are paid fixed salary and also
commission on the sales they make. For example, BMTC pays its
conductors fixed salary and also 2% of commission on total tickets sold in
a day.
International Marketing: The marketing concept is the idea that a firm should
seek to evaluate market opportunities before production, assess potential
demand for good, determine the product characteristics desired by the
consumers, predict the prices consumers are willing to pay and then supply
goods corresponding to the needs and wants of target markets. Adherence to
marketing concept means the firm conceives and develops products to satisfy
consumer wants. For international marketing this means the integration of the
international side of the company’s business with all aspects of its operations and
the willingness to create new products and adapt existing products to satisfy the
needs of world markets. Products may have to be adapted to suit the tastes,
needs and other characteristics of consumers in specific regions, rather than it
being assumed that an item which sells well in one country will be equally
successful elsewhere.
Once the market is found to be attractive companies should decide how to enter
this market.
Companies can enter international market from any one of the following
strategies. They are
a. Exporting
b. Licensing
c. Contract manufacturing
d. Management contract
e. Joint ownership
f. Direct investment
Exporting is the techniques of selling the goods produced in the domestic
country in a foreign country with some modifications. For example, Gokaldas
textiles export the cloths to different countries from India. Exporting may be
indirect or direct. In case of indirect exporting, company works with independent
international marketing intermediaries. This is cost effective and less risky too.
Direct exporting is the techniques in which organization exports the goods on its
own by taking all the risks. Maruti udyog limited India’s leading car manufacturer
exports its cars on its own.
Company can also set up overseas branches to sell their products. Adani exports
another leading exporter from India has international office in the Singapore.
Licensing: According to Philip Kotler licensing is a method of entering a foreign
market in which the company enters into an agreement with a license in the
foreign market, offering the right to use a manufacturing process, trademark,
patent, or other item of value for a fee or royalty’. For example, torrent
pharmaceuticals has license to sell the cardiovascular drugs of Chinese
manufacturer Tasly.
Licensing may cause some problems to the parent company. Licensee may
violate the agreement and can use the technology of the parent company.
Contract manufacturing: company enters the international market with a tie
up between manufacturer to produce the product or the service. For example,
Gigabyte technology has contract manufacturing agreement with Dlink India to
produce and sell their mother boards. Another significant manufacturer is TVS
electronics; it produces key boards in its own name as well as for other
companies too.
Management contracting: In this type a company enters the international
market by providing the know how of the product to the domestic manufacturer.
The capital, marketing and other activities are carried out by the local
manufacturer hence it is less risky too.
Joint ownership: A form of joint venture in which an international company
invest equally with a domestic manufacturer. Therefore it also has equal right in
the controlling operations. For example,
Barbara a lingerie manufacturer has joint venture with Gokaldas images in India.
Direct Investment: In this method of international market entry Company
invest in manufacturing or assembling. The company may enjoy the low cost
advantages of that country. Many manufacturing firms invested directly in the
Chinese market to get its low cost advantage. Some governments provide
incentives and tax benefits to the company which manufactures the product in
their country.
There is government restriction in some countries to opt only for direct
investment as it produces the jobs to the local people. This mode also depends
on the country attractiveness. It may become risky if the market matures or
unstable government exists.