Marketing Management Unit 2

Unit 2 The Marketing Process

Structure:
2.1 Introduction
Objectives
2.2 Marketing Mix-The Traditional 4Ps
2.3 The Modern Components of the Mix- The Additional 3Ps
2.4 Developing an Effective Marketing Mix
2.5 Marketing Planning
Marketing plan
Marketing planning process
2.6 Marketing Implementation and Control
Marketing implementation
Mechanisms to control marketing implementation
2.7 Summary
2.8 Glossary
2.9 Terminal Questions
2.10 Answers
2.11 Case Study

2.1 Introduction
In the previous unit we dealt with the basic concepts of marketing, the
exchange process, the core concepts, functions, importance, and
orientations of marketing. In this unit we will deal with how those basic
concepts are put to use in a marketing process. Marketing processes aim to
deliver increased profitability in business through improved marketing
strategy and marketing plan development. For a company to get marketing
success, they must have an effective marketing strategy and plan.
Marketing mix is a model of crafting and implementing marketing strategy.
Marketing mix is a major concept in modern marketing. It involves practically
everything that a marketing company can use to influence consumer
perceptions favourably towards its products or services so that consumer
and organisational objectives are attained.
Another important aspect of marketing strategy is marketing planning. It is a
process of designing the marketing blueprint for the future. A marketing plan
is a broad set of guidelines as to how the firm is going to accomplish its
strategic goals. Marketing mix decisions are an integral part of the marketing
planning process.

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However, the development of a marketing plan is not the end of the

marketing process. Marketing implementation and control are equally
important. High-performance companies must sharpen their expertise in
implementing and controlling marketing activities that will give them an edge
in today’s fast-paced business world.
Case Let

PepsiCo’s Marketing Plans

PepsiCo sold $3.6 billion worth of Pepsi, Diet Pepsi, Pepsi Max, and
other beverage products outside the US market in 1995. This was 8%
more than what they sold in 1994. Its international operations earned
$226 million, 16% more than the operations in 1994.
However, the Coca-Cola Co. continues to outsell PepsiCo nearly by
three cans to one can outside the US. It drives nearly 80% of its
earnings from overseas beverage sales as compared to PepsiCo's 6%.
Pepsi also trails Coke in the US. To gain market share and further
differentiate itself from its archrival, PepsiCo planned to revamp its
overseas marketing strategy with a complete redesign of the company's
cans and bottles, a fresh advertising campaign, and a renovation of its
overseas manufacturing and distribution systems. Projected cost of the
overhaul was $300 to 500 million.
Code-named "project blue," PepsiCo's plans called for updating cans
and bottles designed for overseas markets from the familiar red, white,
and blue labels to a royal blue design with a futuristic, three-dimensional
graphic of the company logo.

Fig. 2.1a: New Bottles and Can of Pepsi

(Source: http://www.theoriginof.com/wp-content/uploads/2007/04/
Pepsi-3.jpg)

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The purpose of project blue was to refocus PepsiCo's overseas image

and make its marketing more consistent. These moves paralleled a then
recent transformation in PepsiCo's overseas snacks division. For
example, the firm's Doritos brand had been standardised globally in
terms of shape, packaging, and positioning, although elements such as
seasoning and thickness were still tailored for regional taste differences.
These changes helped make Doritos the number one selling salty snack
with $2 billion sales over twenty countries. The US Executives believed
that the project blue will have a similar effect on PepsiCo's international
beverage division, giving Pepsi a boost in the global cola wars.
(Source: Lon Bongiorno, "The Pepsi Regeneration," Business Week,
March 11, 1996; Robert Frank, "PepsiCo to Revamp Beverage Line
Outside the US," Wall Street Journal, March 15, 1996)

This unit provides answers to the following questions:

What is marketing mix?
What are the traditional 4Ps and additional 3Ps of marketing?
How is marketing planning done?
What are the approaches to marketing implementation and control?
Objectives:
After studying this unit, you should be able to:
 identify the traditional 4Ps of marketing
 describe the modern 3Ps of marketing
 analyse how to develop an effective marketing mix
 explain the process of marketing planning and list the contents of
marketing plan
 elucidate the approaches to marketing implementation and control

2.2 Marketing Mix – The Traditional 4PS

A marketing mix can be referred to as a planned mix of the controllable
elements of a product's marketing plan, commonly termed as 4Ps: product,
price, place, and promotion. These four elements are adjusted until the right
combination that serves the needs of the customers, while generating
optimum income for the company is found.

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Figure 2.1b depicts the constituents of a marketing mix namely product,

price, place, promotion (the traditional 4Ps), people, process, and physical
evidence (the additional 3Ps).

Fig. 2.1b: Marketing Mix

(Source: http://www.bized.co.uk/sites/bized/files/images/mixmap.gif)

Let us now study the traditional 4Ps of marketing in detail.

Product
In marketing mix, the product or service is the most important element.
Customers acquire products for a singular reason that they are perceived as
the means to satisfy their needs and wants. According to Philip Kotler, “A
product is anything that can be offered to a market for attention, acquisition,
use, or consumption that might satisfy a need or want.” In effect, according
to this definition, products include physical products, services, persons,
places, organisations, and ideas.
Figure 2.2 depicts examples of some products like a packet of chips, tour
and travel, hotel, courier service, mobile phone, and a nation.

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Fig. 2.2: Examples of Products

Products have various attributes such as quality, variety, design, brand,

packaging, services, and warranties that can be manipulated depending on
what the target market wants. For example, when consumers wanted a
premium but fuel efficient sedan, Tata Motors launched Tata Indigo Marina,
which was an updated version of Tata Indigo.
Price
The second element is the price, which impacts the volume of sales.
It is a value that will purchase a specific quantity, weight, or other measure
of a product. For example, you buy a packet of chips which is net 10grams
in weight for ` 10, this value ` 10 denotes the price of the product.

Figure 2.3 depicts how price of a product (Apple Ipod in this case) is
displayed or made clear to the customers.

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Fig. 2.3: Pricing of a Product

Price is the only marketing mix variable that can be altered quickly. Price
directly influences the development of marketing strategy as it is a major
factor that influences the assessment of value obtained by customers.
Firms have to consider some factors while deciding the price of a product.
These factors are:
 Objectives of business
 The competitive environment
 Product and promotional policies of the firm
 Nature of price sensitivity
 Conflicting interest between manufacturer and intermediaries
 Routine pricing decisions
 Active entry of non-business groups in pricing decisions
Let us now study the factors in detail.
Objectives of business
Pricing is not an end in itself but a means to an end. The fundamental guide
to pricing, therefore, is the firm's overall goals.
The competitive environment
Under the present competitive conditions, it is more important for the firm to
offer the product which best satisfies the wants and desires of the
consumers than the one which sells at the lowest possible price.
Product and promotional policies of the firm
Pricing is only one aspect of marketing strategy and a firm must consider it
together with its product and promotional policies. Thus, before making a
price change, the firm must be sure that the price is at fault and not its sales
promotion program, the quality of the product, or some other element.
Nature of price sensitivity
Businessmen often tend to exaggerate the importance of price sensitivity
and ignore many identifiable factors at work that tend to minimise its role.
The various factors which may generate insensitivity to price changes are
variability in consumer behaviour, variation in the effectiveness of marketing
effort, nature of the product, importance of after sales service, the existence

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of highly differentiated products which are difficult to compare and multiple

dimensions of product quality.

Conflicting interests between manufacture and intermediaries

The interests of manufacturers and middlemen (through whom the former
often sells) are sometimes in conflict. This is called vertical conflict. For
instance, the manufacturers would desire that the middlemen should sell
their product at a minimum mark-up, whereas the middlemen would like
their margin to be large enough to stimulate them to push up the product.
Routine pricing decision
Pricing in practice is often routinised though its extent may differ from
company to company and from product to product. For example, the
management may prefer to depend on suggested prices, which is a
mechanical formula for pricing decisions. The degree of routinisation
depends on the following factors:
Number of pricing decisions – A firm has to take thousands of pricing
decisions on a wide range of products, none of which provides a substantial
proportion of sales. In this case, it will find that the cost of analysis of pricing
strategy to be adopted for each product is too high. It would, therefore, find it
economical to adopt relatively mechanical routine for pricing.
Speed in making a pricing decision – Mechanical formulae, such as a
pre-determined mark-up on full cost, have the advantage of speed, though
flexibility and adaptability to special conditions are lost.
Quality of available information – If the data on demand and costs are
highly conjectural, the best the firm may be able to do is to rely on some
mechanical formula such as cost plus formulation.
Competitive market – If a firm is selling its product in a highly competitive
market, it will have little scope for pricing discretion. This will pave the way
for routinised pricing.
Active entry of non-business groups in pricing decisions
The government, acting on behalf of the public, seeks to prevent the abuse
of monopolistic power and collusion among businessmen. There is a
complex body of regulation and even more confusing series of judicial

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decisions guiding pricing principles in every country. Very often, the

government elects to control certain prices.

Firms adopt various pricing policies to price a product or service. Some of

these policies are:
Perceived value pricing method – In this method, prices are decided on
the basis of customer's perceived value. They see the buyer's perceptions
of value as the key indicator of pricing and not the seller's cost. They use
various promotional methods like advertising and brand building for creating
this perception.
Value pricing method – In this method, the marketer charges fairly low
price for a high quality offering. This method proposes that price represents
a high value offer to consumers.
Going rate pricing – In this method, firms base their price on the average
price of the product in the industry or prices charged by competitors.
Sealed bid pricing – In this method, firms submit bids in sealed covers for
the price of the job or the service. This is based on the firm's expectation
about the level at which the competitor is likely to set up prices rather than
on the cost structure of the firm.
Psychological pricing – In this method, the marketer bases prices on the
psychology of consumers. Many consumers perceive price as an indicator
of quality. While evaluating products, buyers carry a reference price in their
mind and evaluate the alternatives on the basis of this reference price.
Sellers often manipulate these reference points and decide their pricing
strategy.
Odd pricing – In this method, the buyer charges an odd price to get noticed
by the consumer. A typical example of odd pricing is the pricing strategy
followed by Bata. Their prices are always an odd number like ` 899.99.

Geographical pricing – This is a method in which the marketer decides

pricing strategy depending on the location of the customer like domestic
pricing, international pricing, third world pricing, etc. Multinational firms

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follow such a pricing strategy as they operate in different geographic

locations.
Discriminatory pricing – This is a method is which the marketer
discriminates his/her pricing on certain basis like the type of customer,
location, etc. It occurs when a company sells a product or service at two or
more prices that do not reflect a proportional difference in the costs. One
can sell at different prices in different segments. Different prices for different
forms of the same product can sell the same product at two different levels
depending on the image differences.
Place
This is another key marketing mix tool, which encompasses the various
activities the company attempts to make the product available to the target
customers. Place mix deals with the physical distribution of products at the
right time and right place. For example, a customer usually purchases
toiletries from nearby retail stores. So, toiletry marketers must ensure that
their products are available at almost every nook and corner store.
Figure 2.4 depicts a picture of Spencer’s, a popular general retailer.

Fig. 2.4: Spencer’s is a Popular Retail Store

(Source: http://retail-guru.com/wp-content/uploads/2010/02/spencers-retail-
e1266548099819.jpg)

Distribution channels may also be used in marketing strategy to differentiate

a product from its competitors. For example, Amway distributes its products
using direct distribution channel while HUL uses multi-channel distribution
(through retailers, wholesalers, online sources, etc.). A company uses

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distribution channels like retailers, wholesalers, merchants, brokers and

value added resellers.
The management also aims to keep the physical distribution costs
(inventory, transportation, and storage) as low as possible.

Promotion
This includes the methods to communicate the features and benefits of the
products or services to its target customers. Some common methods
include advertising, sales promotion, direct selling, public relations, and
direct marketing. For example, Toyota promotes its brands by advertising,
sales promotions, public relations, sponsorships, etc.
Figure 2.5 depicts a promotional method adopted by the popular ice cream
retailer Baskin-Robbins.

Fig. 2.5: A Promotional Offer from Baskin-Robbins

(Source: http://moneysavingmom.com/wp-content/uploads/2011/02/Baskin-
Robbins-Buy-One-Get-One-Free-cone.gif)

Promotion is a key element of marketing programme that is used to

favourably influence target customers’ perceptions to facilitate exchange
between the marketer and the customer.

Activity 1
Compare the marketing mix of Hindustan Unilever and Procter & Gamble
India. Spot the differences and similarities between the two. You may use
the following links- www.hul.co.in, www.pg-india.com.

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Self Assessment Questions

1. Which of these is the main element of the marketing mix?
(a) Product
(b) Price
(c) Place
(d) Promotion
2. Price is the only revenue generating element of the marketing mix.
(True/False)
3. The concept of marketing mix was given by ____________________.
4. Advertising, sales promotion, and public relations are tools of
__________________________.

2.3 The Modern Components of the Mix – The Additional 3PS

The traditional 4Ps were not enough to market services. Considering the
increasing role of services in the economy and customer-orientation,
additional 3Ps were added to the marketing mix. These 3Ps are people,
process, and physical evidence. They play a greater role in the marketing of
services than in the marketing of products.
Let us now study the 3Ps in detail.
People
This is a very important element of the modern marketing mix or the service
mix. An essential ingredient to any service provision is the use of
appropriate staff and people. Recruiting the right staff and training them
appropriately to delivery their services are very essential if the organisation
wants to obtain a competitive advantage.
Figure 2.6 depicts a picture of the cabin crew of British Airways. Cabin crew
is an essential part of any airlines service.

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Fig. 2.6: Cabin Crew of British Airways

(Source: http://www.topnews.in/files/British-Airways_7.jpg)

Consumers make judgments and deliver perceptions of the service based

on the behaviour and performance of employees they interact with.
Therefore, the service staff should have the appropriate interpersonal skills,
aptitude, and service knowledge to provide the service that the consumers
are paying for.
Process
This refers to the way in which a service is delivered to the end customer.
For example, when you go to McDonalds drive-through, you are first greeted
by an attendant who asks you for your order. Then, he/she notes down your
order and informs a crew member about it. By the time you pay the billed
amount, your order arrives. You take your order and leave. This represents
a service delivery process.
Figure 2.7 depicts a simple loan delivery/processing process.

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Fig. 2.7: Loan Delivery Process

Service process can be mechanised as well. For example, movie theatres

have introduced online ticket booking facility and ticket kiosks to offer
convenience to customers and also reduce the human element in the
service delivery process.

Physical evidence
Physical evidence is the tangible part of a service. Service customers
experience a greater perceived risk as they cannot rate a particular service
until it is consumed. Therefore, service providers should try to attach an
element of tangibility to their service offering.
Physical evidence can include web pages, paperwork (such as invoices,
tickets, and despatch notes), brochures, furnishings, ambience, signage
(such as those on aircraft and retail stores), brand logos, uniform of
employees, business cards, and the building itself.
Figure 2.8 depicts the physical evidence associated with large discount
retailer, Big Bazaar.

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Fig. 2.8: Physical Evidence Associated with Big Bazaar

Self Assessment Questions

5. ____________________ refers to the way in which a service is
delivered to the target customer.
6. Physical evidence is used to attach an element of _________________
to the service.

2.4 Developing an Effective Marketing Mix

To develop an effective marketing mix the company should consider the
following factors and then choose the most appropriate mix of elements
(7Ps) to target the customers:
Company’s resources – These are one of the prime factors affecting the
company’s marketing mix. The financial, human, and technological
resources available with the company affect the composition of the
marketing mix.
The firm needs to conduct a Strength, Weakness, Opportunity, and Threat
(SWOT) analysis for the business unit.

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Figure 2.9 depicts the SWOT analysis diagram with likely sources of
strengths, weaknesses, opportunities, and threats of a company.

Fig. 2.9: SWOT Analysis

(Source: http://www.bizstrategies.biz/images/SWOT-Analysis-sm.jpg)

The key points to remember about SWOT are shown in figure 2.10.

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Fig. 2.10: Key Points in SWOT

Demographics – It implies to the changes in the composition of the market,

the demand of the population, the opportunities in the country, etc. that
affect the marketing mix.
Current and projected economic conditions – It connotes the economic
factors like inflation, employment, taxes, and other economic factors that
influence marketing mix decisions.
Market potential – Analysis of market potential for new products considers
market growth, prospect's need for your offering, the benefits of the offering,
the number of barriers to immediate use, the credibility of the offering and
the impact on the customer's daily operations.
Competitors – They are important considerations that affect the marketing
mix of a firm as the potential for competitive retaliation is based on the
competitor’s resources, commitment to the industry, cash position,
predictability, and status of the market.
Figure 2.11 depicts the Porter's five forces analysis model, which is an
important tool for assessing the potential for profitability in an industry. It
works by looking at the strength of five important forces that affect
competition.

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Fig. 2.11: Porter’s Five Forces Model

(Source: www.hbr.org)

Let us now study the forces in detail.

Supplier power – The power of suppliers to drive up the prices of inputs.
Buyer power – The power of customers to drive down products’ prices.
Competitive rivalry – The strength of competition in the industry.
Threat of substitution – The extent to which different products and
services can be used in place of a particular product.
Threat of new entry – The ease with which new competitors can enter the
market if they see that a product is making good profits (and then drive your
prices down).
By thinking about how each force affects a product and by identifying the
strength and direction of each force, you can quickly assess the strength of
a product’s position and ability to make a sustained profit in the industry
Self Assessment Questions
7. ______________ is not a part of company’s resources.
(a) Employees
(b) Technology
(c) Finance
(d) Media

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8. SWOT analysis is done to measure the changes in composition of the

population. (True/False)
9. ___________________ is an important tool for assessing the potential
for profitability in an industry.
10. The extent to which different products and services can be used in
place of a particular product refers to the ____________________.

2.5 Marketing Planning

Planning is a process of designing the blueprint for the future. Marketing
planning for an organisation is planning for that organisation's revenue-
earning activities. Marketing managers have to face changes every day in
the market place. So a successful marketing management process should
be continuous and must involve a cycle of planning, implementation, and
control.
2.5.1 Marketing plan
A marketing plan is a written document that specifies the required actions to
attain one or more marketing objectives. A good marketing plan should
communicate to every member what is desired of them, so that they have
some level of goal clarity, understanding of assumptions that lie behind the
goals, and the context of each activity and decision.
A standard marketing plan should contain elements as explained in
table 2.1.
Table 2.1: Elements of Standard Marketing Plan
Elements Description
Executive The marketing plan should start with an executive summary of
summary and the plan and should include a table of contents. The summary
table of would help the senior management to get a glimpse of what is
contents included in the plan.
Mission The mission statement should come out of the corporate and
statement business unit level plan and explain why the business exists.
Summary of The plan should present the summary of the past performance.
performance It should explain the results of the previous strategies followed
till date by the marketer, which will help in developing a base for future
planning. This section provides relevant background data on
sales, profits, markets, competitors, number of intermediaries,
and relationships with them.

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Summary of Past marketing performance must have been measured in

financial financial terms to explain the efficacy of financial investments.
projections Summary of projections for the future comes out of the past
performance and will help in giving a snapshot of what will
happen in the future.
Market This comes out of the trend analysis and monitoring of the
overview market and indicates about the behaviour of the market in the
future. A marketer can use scenario analysis to explain the
likely behaviour of the market.
SWOT A Strategic Business Unit (SBU) is an
analysis for autonomous division or organisational unit that is small enough
major SBUs to be flexible in its operations and big enough to control most
of the factors that affect its long-term performance. If the
company has more than one SBU, the marketing planner
needs to evaluate each SBU and conduct SWOT analysis for
each SBU, as both marketing opportunities and strengths of
SBUs will vary from business to business.
Portfolio A summary of portfolios helps in allocation decisions. It will
summary of show where the money should come from and also the
all the SBUs business that needs further investments. Portfolio summary will
show how balanced the company is among its portfolios.
Market Plans are always made under certain assumptions. If the
assumptions assumptions go wrong then the plans will also go wrong. So a
careful list of assumptions should be included in the marketing
plan based on which the rest of the plan will flow.
Marketing Marketing objectives and goals in clear, measurable terms
objectives and should be included in the plan. This will serve as a milestone
goals for the execution of the plan. In this section, the marketing
planner would include the plan's major market goals expressed
in measurable terms like sales volume, market share, profit,
etc.
Financial Financial projections for three coming years will help the firm to
projections for regulate the marketing function, break overall projections into
at least three achievable targets for each responsible person and into each
years territory of the market.
Marketing In this section, the marketing planner will define the target
strategy segment(s), the target marketing strategy to be followed, and
the positioning of the product in the market in relation to
competitors.
Marketing Each marketing strategy element like product, price, place, and
action plans promotion should be elaborated through a set of functional
plans and programs.

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Activity 2:
A company is planning to launch a branded lantern in the heartland of
Bihar. Prepare a marketing plan for the launch.

2.5.2 Marketing planning process

The marketing planning process must begin by setting the corporate
objectives and should be followed by strategies and plans for each function.
Figure 2.12 depicts the five steps in marketing planning process.

Fig. 2.12: Steps in a Marketing Planning Process

1. The first step in marketing planning process is setting marketing

objectives and policies.
2. The second step is designing the marketing system. In the marketing
system, a company has to design/define each function with its
contribution.
3. The third step is developing separate objectives, programmes, and
strategies for each function (like new product development function,
pricing decisions, distribution function, promotion function) so that they
can be assessed for the target’s purpose and the broad objectives.
4. The fourth step is drawing detailed plans for each function for a shorter
period, i.e., a quarter, half a year, or a year. It will help in defining
responsibilities, timing, and costs needed to achieve the short-term
objectives.
5. The fifth step is merging the marketing plans into organisational plans.

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Self Assessment Questions

11. A __________________ refers to a written document that specifies the
required necessary actions to attain one or more marketing objectives.
(a) Marketing planning
(b) Marketing plan
(c) Marketing strategy
(d) Marketing mix
12. Marketing planning has to be a continuous process. (True/False)
13. Deciding the positioning of the product is a part of marketing strategy
decisions. (True/False)

2.6 Marketing Implementation and Control

Marketing implementation and control activities are very important and focus
on “how” to put marketing strategies into action.
Based on the views of Orville C Walker, Jr., and Robert W Ruekert it can be
said that firms have two types of strategies:
Intended strategy – This is the strategy that a company wants to
implement. It is developed during the planning phase.
Realised strategy – This is the strategy that actually takes place while the
strategy is being implemented.
During implementation, the intended strategy is converted into realised
strategy. The realised strategy, in most cases, is worse than the intended
strategy.
After the marketing plan has been implemented, the marketing managers
should take appropriate control and evaluation measures. You will learn
about marketing implementation and control in the subsequent subsections.
2.6.1 Marketing implementation
Marketing managers can adopt different approaches to implement
marketing strategies. In this regard, two general approaches are:
1. Internal marketing
2. Quality control management

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Internal marketing
Company employees are the internal customers and all those individuals
who patronise a company are referred to as external customers. Internal
customers (company employees) are the ones who work to satisfy external
customers. Thus, the needs of these two groups must be met to ensure
successful implementation. It is understandable that if the internal
customers are not satisfied, external customers may not be served in a
manner that would result in satisfaction. Companies, besides directing their
communications to external customers, also use internal marketing to
attract, train, motivate, and retain qualified and competent internal
customers (employees).
To implement internal marketing, management at all levels takes necessary
steps to understand and accept their respective roles in the implementation
of marketing strategy and the importance of delivering satisfaction to the
company’s external customers.
Internal marketing activities focus on designing programmes to satisfy the
needs of the company’s employees. For this purpose, many companies use
planning sessions, employee workshops, appreciation letters, and personal
conversations.
Quality control management
With increasing competition, declining market shares, and more demanding
customers, quality has become a major concern in many companies. As a
result, some companies are adopting the following three philosophies:
Total Quality Management (TQM) – TQM is the customer-supplier
interface, both externally and internally, and at each interface there are a
number of processes.
Quality Function Development (QFD) – QFD is preferred to convert the
requirements of customer into engineering specifications. This is applied in
the initial stages of the design phase so that the need of customer is
incorporated into the final product.
Return On Quality (ROQ) – According to David Greising, those advocating
ROQ pursue a policy of improving quality only in those dimensions that
produce tangible customer benefits, lower costs, or increased sales. This

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focus on bottom line forces companies to ensure delivering the quality level
that customers actually want.
2.6.2 Mechanisms to control marketing implementation
All the implementation control procedures are related to:
Setting performance standards
Measuring actual performance against these standards
Taking corrective timely actions to reduce gaps between desired and actual
performances
Setting performance standards – Developing marketing plans and
controlling activities are closely linked. Statements made in the plan
document with respect to accomplishing different goals clearly determine
performance standards and provide control criteria. For example, if one of
the marketing objectives was to increase sales by 10% and this got
translated into achieving a monthly sales of ` 5,00,000, then it becomes a
performance standard.
Measuring actual performance against set standards – Actual
performance concerns not only different departments within the marketing
unit but also some outside organisations contracted or hired for providing
different goods and services such as advertising agencies, research
providers, resellers, consultants, etc. Measuring performance of individuals,
teams, or departments within the marketing unit does not pose any
problems. Performance of different departments within the marketing unit
significantly depends on the performance of outside assistance providers.
The best that the marketing control process can do, in the case of external
assistance providing firms, is to monitor their activities as closely as
possible.
Taking corrective and timely actions – For taking corrective actions to
control or reduce the gap between set standards and the actual
performance, there are a number of options available to marketing
managers. In general, they can opt for steps to improve the actual
performance, totally modify or change the performance standards by making
appropriate changes in the objectives, or develop a combination of these
two general approaches. For example, to improve the sales performance,

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sales people may be given additional training in some aspect of selling, or

the sales targets can be revised.
Evaluation problems
There is an overlap between marketing activities and other business
activities and because of this, determining the costs of marketing activities
accurately by the marketing managers is nearly impossible. For example, to
measure the sales results directly flowing from advertising is a very difficult
proposition. Other problems include the cost of required information from
outside firms, unavailability of information, and the severity and frequency of
unpredictable environmental changes that can adversely affect the
controlling of marketing activities.
2.6.3 Marketing control methods
Marketing objectives are often stated in terms of sales, costs, profits,
product or brand awareness, etc. Performance evaluation always relates to
measuring the accomplishment of objectives.
Figure 2.13 depicts the three general approaches to focus on sales, costs,
and marketing audit.

Fig. 2.13: Marketing Control Methods

Let us now study the three approaches in detail.

Sales analysis – Analysis of sales is extremely important for evaluation of
marketing strategy and programmes. The sales data is conveniently
available in almost all companies and is believed to be a reliable indicator of
target market response to the company’s marketing efforts. This sales data
alone is insufficient and must be compared with the forecasted sales to
provide a useful basis for analysis. Some companies also compare the
sales data with industry sales and, more often, a particular competitor’s
sales and costs involved in achieving that sales level. For example, if the
forecasted sales was ` 5,00,000 and the actual sales in the year for which

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the forecast was made was ` 5,25,000, it tells the management the level of
success of marketing strategy and programmes.
Marketing cost analysis – It is no surprise that sometimes a company
achieves its sales objectives at a higher cost than budgeted. Cost analysis
is necessary to determine the costs incurred for performing different
marketing activities. These costs can be compared with earlier costs with
respect to performing the same activities to achieve a certain sales volume.
Marketing audit – Marketing audit is the final method of marketing
evaluation and refers to a thorough, systematic, objective examination of its
objectives, strategies, organisation, and performance. The primary purpose
of audit is to identify weak areas in executing marketing activities and
recommend actions to improve performance in these areas.
Self Assessment Questions
14. Intended strategy is always different from realised strategy. (True/False)
15. Internal marketing refers to the communication between a company and
a target customer. (True/False)

2.7 Summary
Let us recapitulate the important concepts discussed in this unit:
 Marketing mix is a model of crafting and implementing marketing
strategies. It represents controllable tactical elements. The most popular
classification of marketing mix includes product, price, place
(distribution), and promotion.
 The four traditional Ps of the marketing mix are adequate for marketing
a product but they are not enough to market a service.
 For services marketing, strategists have suggested an extended mix
which includes people, process, and physical evidence, in addition to the
four Ps.
 Marketing planning is a forward-looking exercise, which determines the
future strategies of an organisation with special reference to its product
development, market development, channel design, sales promotion,
profitability, etc.
 Marketing implementation is an important function of marketing
management process. Companies follow two major approaches to
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ensure proper strategy implementation. These are internal marketing

and total quality management.
 Marketing control involves establishment of performance standards,
evaluation of performance against laid down standards, and taking
corrective and timely action to reduce discrepancies between desired
and actual performance. Performance standards refer to expected levels
of performance against which performance can be compared.
 Control involves evaluation and effectiveness of marketing strategies,
sales analysis, marketing cost analysis, and marketing audits.

2.8 Glossary
Marketing audit: It refers to the analysis and evaluation of a firm's
marketing approach, activities, aims, and results achieved.
Marketing control: The process by which managers ensure that the
planned activities are completely and properly executed.
Marketing implementation: It requires organising and coordinating people,
resources, and activities.
Marketing mix: A planned mix of the controllable elements of a product's
marketing plan commonly termed as 4Ps - product, price, place, and
promotion.
Marketing plan: It is a written document that details the necessary actions
to achieve one or more marketing objectives.
Quality Function Development (QFD): QFD is applied in the early stages
of the design phase so that the customers’ wants are incorporated into the
final product.
Return On Quality (ROQ): ROQ assumes that there is a trade-off between
the costs and benefits of improving quality. The optimum quality level of
products and services maximises profits rather than maximising quality.
Strategic business unit: An autonomous division or organisational unit,
small enough to be flexible and large enough to exercise control over most
of the factors affecting its long-term performance.

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SWOT analysis: It is a strategic planning method used to evaluate the

strengths, weaknesses, opportunities, and threats involved in a project or a
business.
Total Quality Management: It is the continuous process of reducing or
eliminating errors in manufacturing, streamlining supply chain management,
improving the customer experience, and ensuring that employees are up-to-
speed with their training.

2.9 Terminal Questions

1. Do you think that the argument of some theorist that the traditional Ps
are not enough for services marketing is valid? Give suitable examples
to prove your point.
2. Explain the constituents of an expanded marketing mix with the help of
suitable examples.
3. Conduct a SWOT analysis for any one automobile brand of your choice.
How will this analysis help in planning marketing strategies for the
brand?
4. What do you mean by a marketing plan? Describe the contents of a
marketing plan.
5. What are major problems associated with the implementation of
marketing departments?
6. Explain the methods of marketing control.

2.10 Answers

Self Assessment Questions

1. (a)
2. True
3. Neil H Borden
4. Promotion
5. Process
6. Intangibility
7. d)
8. False
9. Porter’s five forces analysis

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10. Threat of substitution

11. b)
12. True
13. True
14. True
15. False

Terminal Questions
1. Services have some distinct features that render the traditional 4Ps of
marketing inadequate to market them. Therefore, additional Ps had to
be added that are more relevant for service marketing than product
marketing. For more details, refer section 2.2 and 2.3.
2. Expanded mix includes the traditional 4Ps namely, product, price, place,
and promotion and the modern 3Ps include people, process, and
physical evidence. For more details, refer section 2.2 and 2.3.
3. You can examine the strengths, weaknesses, opportunities and threats
facing any one automobile company. (You may use the following link:
http://www.freeswotanalysis.com/category/automobile). For more details,
refer section 2.4.
4. A marketing plan is a written document that details the necessary
actions to achieve one or more marketing objectives. For more details,
refer section 2.5.
5. Absence of accurate cost measurements, quality issues, and lack of
internal and external communication are some of the issues in marketing
implementation. For more details, refer section 2.6.
6. Three methods of marketing control are sales analysis, cost analysis,
and marketing audit. For more details, refer section 2.6.

2.11 Case Study

Bata’s Woes
Once upon a time, the name Bata was synonymous with footwear. The
company was a popular family destination - the whole family would buy only
Bata shoes. Then somewhere, somehow, Bata lost its way and its sheen.
The slide started sometime before 1995, when Bata changed its positioning
and decided to disengage itself from the traditional stronghold in the middle

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and lower-income segment. Wanting to woo the premium segment, Bata's

entire strategy underwent a change. It backfired and the result was a huge
loss of ` 42 crore in 1995. Then came the labour problems, which still
continue to haunt the company. One of the few successful players in the
organised sector didn't really know what hit it.

Fig. 2.14: ‘Sale’ Signs are a Common Sight Outside and Inside Bata Stores

(Source:http://4.bp.blogspot.com/_XV0AB1tU1LM/TAKU0WYisTI/AAAAAAAA
B2c/shAnUxvqLPk/s1600/DSC01600.JPG)

In 1997, Bata decided to pull up its socks. The main focus was on
controlling expenditure. Led by new boss W. K. Weston, cost cutting at
various levels resulted in an increase in profits. Better financial management
yielded the results. Three years later, the financial position stabilised. With a
commercial paper worth ` 15 crore (from ` 25.5 crore in the previous year)
and a decline in cost of fund, interest charged during the year dipped to
` 6.8 crore.

To maintain its prominent position in the organised footwear market, the

company revamped its systems. In 1999, it incurred a capital expenditure of
` 21.8 crore to modernise the existing stores, to open new stores, and to
improve the work process.
If one looks at it from the profitability point of view, the return on equity in
1999 was 8.94%. This is an improvement over the 7.44% achieved in the

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previous year. At the same time, Earning Per Share (EPS) went up from
` 4.7 per share to ` 5.9 per share. Dividend paid for financial year 1999

increased from ` 0.9 per share in the previous year to ` 1.5%.

During the past two years, Bata has launched shoes in the mid-price
segment. But the question is: will it be able to sustain increased profits over
a long period? In the volume game, it has not been able to introduce the
designs that can attract the upper segment. During 1999, Bata achieved a
turnover ` 774.6 crore, 4% higher than the previous year's sales. Net profit

grew by nearly 25% to ` 30.4 crore. Leather footwear accounted for 58%
gross sales, 30% came from rubber footwear, and 9% from plastic footwear.
The brand is bound to grow, especially since it has emotional value for
Indians. The labour problem also seems to be sorting out. Finally, things
seem to be falling in place.
Discussion Questions:
1. What do you think led to the downfall of Bata?
(Hint: Lack of planning and failure to analyse the present trends led to
its downfall.)
2. What went against Bata?
(Hint: Growing popularity of competitors like Red Tape, Shree Leathers,
and Khadims)
(Source: Abhishek Agarwal, "The Good Old Days," A & M, July 31, 2000).

References:
 Philip, K. (2007). Marketing Management: Pearson Education.
 Tapan, P.K. (2010). Marketing Management: Excel Books, New Delhi.
 Ramaswami, V.S. and Namakumari, S. (2003). Marketing Management:
Macmillan Publishers.
E-References:
 http://marketingteacher.com/lesson-store/lesson-marketing-mix.html –
Retrieved on January 23, 2012
 http://www.mindtools.com/pages/article/newSTR_94.htm – Retrieved on
January 23, 2012

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 http://tutor2u.net/business/marketing/distribution_introduction.asp –
Retrieved on January 23, 2012
 http://www.financialexpress.com/news/marketing-channels-and-value-
networks/238621/ – Retrieved on January 23, 2012

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