Plc as a tool for marketing strategy

Explain the following: a Production conceptb Product linec Augmented productd Social marketing concept2.. Explain the following: a Production conceptb Product linec Augmented productd So

PLC AS A TOOL FOR MARKETING STRATEGY Topic: MARKETING MANAGEMENT 1 Explain the following: (a) Production concept (b) Product line (c) Augmented product (d) Social marketing concept 2 Explain various concepts of marketing with suitable examples 3 “PLC as a tool for marketing strategy” justify 4 Explain process of selecting the final price 5 Explain “direct marketing” and its applicability with examples CONTENT 1 Explain the following: (a) Production concept (b) Product line (c) Augmented product (d) Social marketing concept I INTRODUCTION Every company can have different ideas or philosophy For example, a particular company can have its idea or philosophy that if the production is done on a large scale, the cost would be less and the the product would be sold automatically In this way, such a company will concentrate mainly on the large scale production of goods Similarly, some other company can have a different idea It may have an idea that if the quality of the product is improved, there will be no difficulty in selling the product 1 Under the marketing management philosophy, we shall study the following four concepts: production concept, product line, augmented product, social marketing concept II BODY (a) Production concept: Business concerned itself primarily with production, manufacturing, and efficiency issues To put it another way, if a product is made, somebody will want to buy it The reason for the predominance of this orientation is there was a shortage of manufactured goods (relative to demand) during this period so goods sold easily The basic proposition is that customers will choose products and services that are widely available and are of low cost So business is mainly concerned with making as many units as possible By concentrating on producing maximum volumes, such a business aims to maximise profitability by exploiting economies of scale Managers try to achieve higher volume with low cost and intensive distribution strategy This seems a viable strategy in a developing market where market expansion is the survival strategy for the business Companies interested to take the benefit of scale economies purse this kind of orientation In a production-orientated business, the needs of customers are secondary compared with the need to increase output Such an approach is probably most effective when a business operates in very high growth markets or where the potential for economies of scale is significant It is natural that the companies cannot deliver quality products and suffer from problems arising out of impersonal behavior with the customers (b) Product line: A product line refers to a number of products that are related and developed by the same manufacturer A product line includes different products that are offered to the public at varying price points This way, a manufacturer or company can ensure that all products within a linewill be purchased by all kinds of people Product line extension refers to any additional products that may be added to a current product line Most of the time, product extensions are introduced to the public in order to ward off competitors By creating products that match other, competitive products, 2 manufacturers are able to keep customers interested in a product that they are familiar with Since most people purchase brands that they know, these same consumers are more likely to purchase a new product from a brand that they are comfortable with rather than purchase a product from an unknown brand Marketers create target markets based upon age groups, geographical locations, and ethnicity Target markets refer to a group, or groups, of people that are likely to purchase one product Thus, even though products might be related, some products may look different, smell different, and even appear unrelated in order to appeal to different types of people For example, many air freshener manufacturers offer a variety of products ranging, targeted to parents with young children; to simple aerosol air fresheners, targeted to consumers who don't want to spend a lot of money on an air freshener While these products are related, they are vastly different Clearly, a great deal of strategy goes into marketing various products Marketers must be aware of competition at all times in order to advise manufacturers on new products that should be added to an existing product line In addition, a marketing agency should be aware of those products that sell, and those that remain unpopular Through the collection of statistical data, marketers can effectively determine what products should be kept within a product line, and what products should be phased out Pricing is used to create a large barrier between different products, and higher-priced products are usually justified based upon certain ingredients (c) Augmented product: An augmented product is a product with additional features and services that set it aside from similar competitors Companies augment their products to increase revenues, and may create additional streams of revenue in the process, depending on the types of products and services they offer Consumers may preferentially select an augmented product when they have an option, which puts demand on manufacturers to continue adding innovations to their products to capture and hold consumer attention Accessibility, products may be accessed by customers quickly such as availability when needed, quick delivery, shipment in person 3 The core product may be something like a computer The manufacturer can add features like warranty, customer support, membership with a club, or accessories that come with the computer, such as a laptop case or a keyboard A computer manufacturer has a number of manufacturers who create products of similar quality that operate in a similar way, and consumers may differentiate between various offerings on the basis of the augmented product package Consumers weighing a choice between two similar options may pick the one with more apparent benefits, like the laptop that comes with a case and a year's support plan It is also possible to get consumers to pay more through the use of an augmented product, because the consumer could feel like the extra features make it a better deal Consumers view these options as value adders, and can interact with the product and the marketing much differently depending on the level of features available d) Social marketing concept: The societal marketing concept was an offshoot of the marketing concept wherein an organization believes in giving back to the society by producing better products targeted towards society welfare The societal marketing concept calls upon marketers to build social and ethical considerations into their marketing practices They must balance and juggle the often conflicting criteria of company profits, consumer want satisfaction, and public interest Yet a number of companies have achieved notable sales and profit gains by adopting and practicing the societal marketing concept Some companies practice a form of the societal marketing concept called cause related marketing Pringle and Thompson define this as “activity by which a company with an image, product, or service to market builds a relationship or partnership with a ‘cause,’ or a number of ‘causes,’ for mutual benefit They see it as affording an opportunity for companies to enhance their corporate reputation, raise brand awareness, increase customer loyalty, build sales, and increase press coverage Smart companies will respond by adding “higher order” image attributes than simply rational and emotional benefits Thus societal marketing 4 concept as related to cause related marketing differs mainly because here, the company makes a proactive effort to give back to the society III CONCLUSION Today, in the context of rich and diverse market demand, increasingly competitive, scarce business resources, the role of marketing management is becoming increasingly important in business maintenance and development Proper understanding and application of marketing management knowledge will contribute to the success of business operations This will establish a strong position and grow in a modern business environment 2 Explain various concepts of marketing with suitable examples I INTRODUCTION What philosophy should guide a company marketing and selling efforts? What relative weights should be given to the interests of the organization, the customers, and society? These interest often clash, however, an organization’s marketing and selling activities should be carried out under a well-thought-out philosophy of efficiency, effectiveness, and socially responsibility Five orientations philosophical concepts to the marketplace have guided and continue to guide organizational activities: (1) Production Concept (2) Product Concept (3) Selling Concept (4) Marketing Concept (5) Societal Marketing Concept II BODY The Production Concept This concept is the oldest of the concepts in business It holds that consumers will prefer products that are widely available and inexpensive Managers focusing on this concept concentrate on achieving high production efficiency, low costs, and mass distribution They assume that consumers are primarily interested in product availability and low prices This orientation makes 5 sense in developing countries, where consumers are more interested in obtaining the product than in its features The Product Concept This orientation holds that consumers will favor those products that offer the most quality, performance, or innovative features Managers focusing on this concept concentrate on making superior products and improving them over time They assume that buyers admire well-made products and can appraise quality and performance However, these managers are sometimes caught up in a love affair with their product and do not realize what the market needs Management might commit the “better-mousetrap” fallacy, believing that a better mousetrap will lead people to beat a path to its door The Selling Concept This is another common business orientation It holds that consumers and businesses, if left alone, will ordinarily not buy enough of the selling company’s products The organization must, therefore, undertake an aggressive selling and promotion effort This concept assumes that consumers typically show buying inertia or resistance and must be coaxed into buying It also assumes that the company has a whole battery of effective selling and promotional tools to stimulate more buying Most firms practice the selling concept when they have overcapacity Their aim is to sell what they make rather than make what the market wants The Marketing Concept This is a business philosophy that challenges the above three business orientations Its central tenets crystallized in the 1950s It holds that the key to achieving its organizational goals (goals of the selling company) consists of the company being more effective than competitors in creating, delivering, and communicating customer value to its selected target customers The marketing concept rests on four pillars: target market, customer needs, integrated marketing and profitability The Societal Marketing Concept This concept holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors Additionally, 6 it holds that this all must be done in a way that preserves or enhances the consumer’s and the society’s well-being This orientation arose as some questioned whether the Marketing Concept is an appropriate philosophy in an age of environmental deterioration, resource shortages, explosive population growth, world hunger and poverty, and neglected social services Are companies that do an excellent job of satisfying consumer wants necessarily acting in the best long-run interests of consumers and society? Just consider:The fast-food hamburger industry offers tasty but unhealthy food The hamburgers have a high fat content, and the restaurants promote fries and pies, two products high in starch and fat The products are wrapped in convenient packaging, which leads to much waste In satisfying consumer wants, these restaurants may be hurting consumer health and causing environmental problems III CONCLUSION From the basic philosophies, companies may choose to apply to their business activities The choice of a particular philosophy depends on factors such as: competitive position, product and service features, market situation But the most important thing in modern marketing management trends is to bring high satisfaction to their customers, business profits and social benefits 3 Explain market segmentation with suitable examples I INTRODUCTION Market segmentation is the process of dividing a market up into different groups of customers, in order to create different products to meet their specific needs The most obvious type of segmentation is between customers who buy distinctly different products For example, in manufacturing sandwiches, you would clearly be able to make a distinction between creating sandwiches for vegetarians and those for meat eaters II BODY Basis of Market Segmentation: 7 - Gender: The marketers divide the market into smaller segments based on gender Both men and women have different interests and preferences, and thus the need for segmentation Organizations need to have different marketing strategies for men which would obviously not work in case of females A woman would not purchase a product meant for males and vice a versa The segmentation of the market as per the gender is important in many industries like cosmetics, footwear, jewellery and apparel industries - Age Group: Division on the basis of age group of the target audience is also one of the ways of market segmentation The products and marketing strategies for teenagers would obviously be different than kids Age group (0 - 10 years) - Toys, Nappies Age Group (10 - 20 years) - Toys, Apparels, Books, School Bags Age group (20 years and above) - Cosmetics, Anti-Ageing Products, Magazines, apparels and so on - Income: Marketers divide the consumers into small segments as per their income Individuals are classified into segments according to their monthly earnings The three categories are: 1) High income Group 2) Mid Income Group 8 3) Low Income Group Stores catering to the higher income group would have different range of products and strategies as compared to stores which target the lower income group Pantaloon, Carrefour, Shopper’s stop target the high income group as compared to Vishal Retail, Reliance Retail or Big Bazaar who cater to the individuals belonging to the lower income segment - Marital Status: Market segmentation can also be as per the marital status of the individuals Travel agencies would not have similar holiday packages for bachelors and married couples - Occupation: Office goers would have different needs as compared to school / college students A beach house shirt or a funky T Shirt would have no takers in a Zodiac Store as it caters specifically to the professionals Types of Market Segmentation - Psychographic segmentation: The basis of such segmentation is the lifestyle of the individuals The individual’s attitude, interest, value help the marketers to classify them into small groups - Behaviouralistic Segmentation: The loyalties of the customers towards a particular brand help the marketers to classify them into smaller groups, each group comprising of individuals loyal towards a particular brand - Geographic Segmentation: 9 Geographic segmentation refers to the classification of market into various geographical areas A marketer can’t have similar strategies for individuals living at different places Nestle promotes Nescafe all through the year in cold states of the country as compared to places which have well defined summer and winter season McDonald’s in India does not sell beef products as it is strictly against the religious beliefs of the countrymen, whereas McDonald’s in US freely sells and promotes beef products III CONCLUSION Segmentation refers to the process of creating small segments within a broad market to select the right target market for various brands Market segmentation helps the marketers to devise and implement relevant strategies to promote their products amongst the target market A market segment consists of individuals who have similar choices, interests and preferences They generally think on the same lines and are inclined towards similar products Once the organizations decide on their target market, they can easily formulate strategies and plans to make their brands popular amongst the consumers 4.“PLC as a tool for marketing strategy” justify: I INTRODUCTION A product in the market will go through the stages of development and declination The development phases of the product from time to time are known as the "Product Life Cycle", abbreviated as PLC Product life cycle is a key concept of marketing It vividly describes four stages in product consumption: Introduction, growth, maturity and decline Companies should be aware of their products stages to propose the following appropriate marketing plans: Product introduction, old product renewal, or replacement with a new product line to help businesses applications in numerous marketing strategies 10 II BODY The product life cycle consists of four stages: introduction, growth, maturity, and decline Figure A illustrates the product life cycle Determination of a product's stage in its life cycle is not based on age, but on the relationship of sales, costs, profits, and number of competitors Each of these stages is described below Figure A Product Life Cycle INTRODUCTION When a new product is introduced to a market, the innovators may be the only people aware of the new product If the product is a new product class, the innovators may not know what the product uses are Recalling that the innovators represent only a small percent of the population, the sales of the new product will be low However, there is an advantage in this situation in that the new product does not yet have any competition During the introduction stage of a new product, the developer enjoys a monopoly The product monopoly does not usually translate to immediate profits The product may have been in development for a long time and considerable development costs are still in the recovery phase Also, an expensive marketing effort may be needed to introduce the product to the public With low sales and high expenses, the introduction stage of the life cycle is usually a money loser for the company However, the hope is for the future of the product, and the company usually is more than willing to incur the losses 11 GROWTH As the early adopters begin to try the product, a sale begins to grow and profits usually start to follow This is a great time for a company introducing a new product because the company still enjoys a monopoly early in the growth stage The company is reaping all the sales and profits of the new product When Chrysler introduced the idea of the Minivan, they were in this enviable position of having the only minivan on the market As the early adopters begin influencing the early majority, sales and profits sore The competition has also been watching from the new product's inception Unfortunately for the original firm, the competition has also noticed the new product's success Although they cannot be the first, the competition races to offer their own products and gain a share of a growing market Chrysler's minivan did not maintain its monopoly for long; soon, the other major automobile manufacturers offered models to compete with Chrysler Although total sales and profits continue to grow throughout the growth stage, they are divided among many manufacturers MATURITY By the end of the growth stage of the life cycle, the market is beginning to become very competitive, and this trend continues into the early period of the maturity stage Besides many more manufacturers offering their products, the producers continue the product-differentiation process begun in the growth stage The result is a market saturated with many manufacturers offering many models of the product These manufacturers produce a multitude of models, from desktop computers to notebooks With so many companies now in the market, the competition for customers becomes fierce Although total sales continue to grow during the first part of the maturity stage, the increased competition causes profits to peak at the end of the growth stage and beginning of the maturity stage Profits then decline during the remainder of the maturity stage The declining profits mean that the market is not as attractive to companies as it was in the growth stage 12 In the growth stage, even inefficient companies made money However, only the best companies and their products survive in the maturity stage Manufacturers begin to drop out as they see profits turn to losses Though there is still competition in the computer industry, for example, companies such as Dell and Apple have emerged as the leaders in the market During the later part of the maturity stage, even sales begin to dip, putting more pressure on the remaining manufacturers DECLINE The number of companies abandoning the market continues and accelerates in the decline stage Not only does the efficiency of the company play a factor in the decline, but also the product category itself now becomes a factor By this time, the market may perceive the product as "old," and it may no longer be in demand For example, the public replaced their preference for station wagons with their desire for minivans Advancing technology may also bypass and replace a product, as when tapes and CDs replaced the vinyl record The product will continue to exist as long as a few manufacturers can maintain profitability The laggards will resist switching to the alternative, and manufacturers who can profitably serve this niche will continue to do so Eventually, even the laggards will switch, and the last companies producing the product will be forced to withdraw, thereby killing the product group III CONCLUSION The selection of appropriate marketing strategies for each stage of the product life cycle is to exploit the strengths of the product and the market When a product is introduced to the market, enterprise should forecast its product life cycle to develop the appropriate marketing activities Accordingly, they will achieve their profit maximization 5 Explain “direct marketing” and its applicability with examples: I INTRODUCTION 13 Today, together with the development of digital media, direct marketing is an interactive marketing system using one or more mean of advertising media to effect a measurable response and / or transaction at any location Therefore, direct marketing is done to obtain such measurable response, typically the buyer's orders Direct marketing helps companies convenient for their orders They may collect a lot of information from customers quickly, with high efficiency and low cost II BODY While many people associate direct marketing with direct mail, direct mail is only one of several advertising media utilized by direct marketers Other major direct marketing media include the telephone, magazines, newspapers, television, and radio Alternative media include card decks, package and bill inserts, and matchbooks Within the major media, new technological developments are giving direct marketers an expanded range of choices from videocassettes (possibly advertised on television, requested by telephone or interactive computer, and delivered via mail or alternate delivery services) to home-shopping networks, interactive television, and the Internet Direct Mail: Direct mail is the most heavily used direct marketing medium and the one most direct marketers learn first Direct mail has been used to sell a wide variety of goods and services to consumers as well as businesses, and it continues to grow despite postage increases Direct mail offers several advantages over other media, including selectivity, personalization, flexibility, and testability It allows businesses to target individuals with known purchase histories or particular psychographic or demographic characteristics that match the marketer's customer profile Direct mail can be targeted to a specific geographic area based on zip codes or other geographic factors Personalization in direct mail means not only addressing the envelope to a person or family by name, but also perhaps including the recipient's name inside the envelope Direct mail is the most easily tested advertising medium Every factor in successful direct marketing—the right offer, the right person, the right format, and the right timing—can be tested in direct mail Computer technologies have made it easier 14 to select a randomized name sample from any list, so that mailers can run a test mailing to determine the response from a list before "rolling out," or mailing, the entire list Different packages containing different offers can also be tested Other media allow some degree of testing, but direct mail is the most sophisticated In relation to the other direct marketing media, direct mail is considered to offer the most cost-effective way of achieving the highest possible response Telemarketing usually produces a higher response rate, but at a much higher cost per response Telephone-Based Direct Marketing (Telemarketing): The use of the telephone in direct marketing has grown dramatically over the past two decades Expenditures now may equal, or even surpass, those of direct mail Telephone-based direct marketing may be outbound and/or inbound Inbound telemarketing is also known as teleservicing and usually involves taking orders and responding to inquiries In business, telemarketing can be used to reach smaller accounts that do not warrant a personal sales call as well as to generate, qualify, and follow up leads Telemarketing has the advantages of being personal and interactive It is an effective two-way communications medium that enables company representatives to listen to customers Telephone salespeople typically work from a script, but the medium allows the flexibility of revising the script as needed It also allows for up- and cross-selling While customers are on the phone it is possible to increase the size of their orders by offering them additional choices—something that tends to lead to confusion in other direct marketing media Telemarketing also has its disadvantages For example, it is more expensive than direct mail It also lacks a permanent response device that the prospect can set aside or use later It is not a visual medium—though the technology to make it one may soon be available Finally, it is perceived as intrusive, generating consumer complaints that have led to legislative actions to regulate the telemarketing industry 15 Magazines: Direct response print ads in magazines must make a definite offer or request that asks the reader to do something Typically, such ads require a reader to send in a coupon or reply card, or call a toll-free number With many consumer magazines now being published, magazine ads allow direct marketers to reach audiences with identifiable interests In addition to advertising heavily in special interest magazines, direct marketers utilize mass consumer magazines and take advantage of regional advertising space to target specific audiences Unlike general advertisers, who measure the effectiveness of their print ads in terms of reach and frequency, direct marketers measure the effectiveness of their print ads in terms of cost effectiveness—either cost-per-inquiry or cost-per-order Magazine ads offer the advantages of good color reproduction, a relatively long ad life (especially compared to daily newspapers), and a lower cost Creative costs for magazine ads are also usually lower than for direct mail But direct marketers find magazines' long lead times, slower response, and scarcer space than direct mail to be disadvantages Newspapers: While direct marketers advertise in magazines more than newspapers, newspapers have some distinct advantages These include the variety of sections offered within a newspaper, shorter closing dates, an immediate response, and broad coverage of a large and diverse audience Disadvantages include poor ad reproduction and the limited availability of color Editorial content can also have more of an adverse effect on ad response than in magazines In addition to advertising in the regular pages of a newspaper, direct marketers also advertise in free-standing inserts (FSIs) that are usually distributed with the Sunday editions of newspapers Television: Direct marketing on television is increasing Early examples of direct response advertisements on television that should be familiar to viewers include those for knives, garden tools, exercise equipment, records, and books, which ask viewers to 16 call in and order a specific product More recent developments in direct response television advertising include a return to a lengthier format, commonly known as the infomercial, where a product or other offer is explained in some detail over a time period extending to 30 minutes or more Advocates of this format point out that the greater length gives the advertiser the opportunity to build a relationship with the viewer and overcome initial viewer skepticism, and at the same time present a convincing story spelling out product features and benefits in detail III CONCLUSION The success of a direct marketing program depends on delivering the right offer at the right time to the right person in the right way Direct marketing is a complex discipline that requires expertise in several areas to achieve success It involves identifying the target market correctly and selecting the appropriate media and/or lists to reach it REFERENCE 1 Kotler, Philip, and Gary Armstrong Principles of Marketing Upper Saddle River, NJ: Prentice Hall, 2001 2 http://www.referenceforbusiness.com 3 http://businesscasestudies.co.uk 4 http://www.inc.com 5 http://managementstudyguide.com 6 http://www.marketing91.com 17