MarketingStrategies andApplications

MUMBAI NEW DELHI NAGPUR BENGALURU HYDERABAD CHENNAI PUNE LUCKNOW AHMEDABAD ERNAKULAM BHUBANESWAR INDORE KOLKATA GUWAHATI

Dr. R. GopalDirector & HoD – Dept. of Business Management,

Padmashree Dr. D. Y. Patil University,Navi Mumbai.

Dr. Pradip ManjrekarDean – Business Management,

Padmashree Dr. D. Y. Patil University,Navi Mumbai.

© Authors

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PrefaceThe importance of Marketing Strategy in Business/Industry is undeniable. As such, the

subject and its basic concept are required to be clearly understood by all those who are or willbe operating in the business/industry. A number of well written books are available on thesubject, however, we felt the dearth of a textbook which is very simple to understand and whichis addressed to the student community as such. Hence, our endeavours to fill this gap. Thisbook will be of great help to the students appearing for MBA, MS, MBA (Part-time), M.Comand other allied Management Courses of Indian Universities. More particularly, the book coversthe portions of Mumbai, Pune, Nagpur, North Maharashtra Universities.

We sincerely believe that this book will be of great help to the students as well as teachersas a textbook for the respective subjects.

Our gratitude is due to Mr. Vijay D. Patil, Chancellor, Padmashree Dr. D.Y. Patil University,Navi Mumbai, for writing a Foreword to this book. Last but not the least we express our sincerethanks to Prof. Deepak Bhivpathaki for publishing this book.

Maximum efforts have been taken to make the text error free. Still, we do not rule out thepossibility of some errors/misprints. We will be grateful to the readers if such errors/misprints canbe pointed out.

Critical examination and any suggestions from the readers are welcome and will be highlyappreciated.

Dr. Pradip Manjrekar Dr. R. Gopal

ForewordProf. Dr. R. Gopal and Prof. Dr. Pradip Manjrekar have bestowed upon me a unique

honour by asking me to write a Foreword to their book, Marketing Strategies and Applicationsof which I have no authority. Perhaps my only qualification to write a Foreword is my experienceof managing several educational institutions.

If you want to learn swimming enter into water and if you want to teach well I wouldsuggest you to write a book. Prof. Dr. R. Gopal and Prof. Dr. Pradip Manjrekar have done aservice to themselves and to the student community by writing a book on Marketing Strategiesand Applications. I hope the teachers will find it useful while teaching the subject in a class andthe students will find it still more useful in understanding the subject and passing the examinationwith credit.

I congratulate Prof. Dr. R. Gopal and Prof. Dr. Pradip Manjrekar for authoring this bookand wish them all success in their career as author and teacher.

Mr. Vijay D. PatilChancellor,Padmashree Dr D. Y. Patil University, Navi Mumbai

Contents1. Marketing Concept 1 – 11

2. Formulation of Marketing Strategies 12 – 22

3. Customer’s Value Perception and Customer Relationship Management 23 – 31

4. Segmentation, Targeting, Positioning and Product Differentiation 32 – 39

5. Internal External Analysis 40 – 47

6. Industry Analysis 48 – 58

7. Product Life Cycle and the Corresponding Strategies 59 – 64

8. Portfolio Analysis and Business Assessment Matrices 65 – 75

9. Porter’s Value Analysis and Marketing 7S Model 76 – 82

10. The Generic Strategies 83 – 87

11. Product Strategy 88 – 99

12. Price Strategies 100 – 109

13. Place Strategy (Distribution Strategies) 110 – 117

14. Promotional Strategy 118 – 127

15. Market Leader Strategies 128 – 131

16. Services Marketing Strategies 132 – 153

17. Innovation Strategies 154 – 163

18. Rural Marketing Strategies 164 – 185

19. Recession Marketing Strategies 186 – 189

20. Relationship Marketing Strategies 190 – 214

University Papers 215 – 222

Marketing Concept 1

CHA

PTER

1 Marketing Concept

Marketing DefinedMarketing has been defined in several ways by several people. Some of the most commonly

heard definitions are given below:

1. Marketing is a set of activities that directs the flow of goods and services from the producerto the consumer.

2. Marketing is a set of processes through which goods and services are exchanged betweenthe maker and the user.

3. Marketing is a total system of interacting business activities designed to plan, price, promoteand distribute “want” satisfying products and services to both the present and the potentialcustomers.

4. Marketing is a set of human activities directed at facilitating exchanges, i.e., it is a humanactivity directed at satisfying needs and wants through an exchange process.

We define Marketing as a process by which Organizations

1. Identify customer needs

2. Satisfy customer needs and

3. Make profits.

In other words it can be said that the Marketing Manager must know:

Who are our customers?

What do they need?

What can we do to satisfy their needs? That is, what products and services should weoffer so that the wants and needs of the customers can be satisfied?

2 Marketing Strategies and Applications

For meeting the needs, it is necessary to understand their present need and their futureneeds. Typically, for e.g., we must answer the questions:

1. What do the customers need? For e.g., we must answer the question, does the Indianteenager want to buy a saree or a salwar kameez or a skirt or a blouse, etc.

2. When do they wish to buy? Do they wish to buy during Diwali? X Mas? Ramzan? Birthdayetc?

3. What quantities do they wish to buy? Do they wish to buy one saree or two sarees?

4. What is their preference in terms of color? Price? Brands, etc.

5. Does the customer need finance to buy the product? For e.g., the high growth in the saleof automobiles or the housing sector is due to the availability of loans from banks.

6. Is SERVICE a very important factor? For e.g., Maruti had identified the service needs ofthe customer and therefore, came the advertisement campaign - about the availability ofservice station at Leh, etc.

In the case of industrial customers, some of the questions could be as follows:

1. Is the customer a TRADITIONAL CUSTOMER or an INNOVATIVE CUSTOMER? Fore.g., A customer could buy the traditional fuse with a copper wire or he could go in forthe recent new technology Miniature Circuit Breaker.

2. Does he prefer to REPLACE identically or does he EXPERIMENT? Thus, for e.g., inmany of the sugar companies, the manager looks for an identical piece as was existing sothat he can replace it directly or in some of the forward looking companies like Reliance,Birlas, the managers are constantly looking out for new products which will reduce space,give more operational efficiency and comfort and finally reduce costs.

3. Does the customer need financial help? Does he expect the supplier to arrange loansfrom the banks?

4. In case of many major projects, customers are talking of SINGLE WINDOW – i.e.,customers are saying — Here is the agreed sum of money, please purchase all equipment,coordinate with all the sub suppliers, etc. At the end of the construction period, you thesupplier will construct the complete project and hand over the complete project in workingcondition as per agreed terms to us for our use. Typically, the Build Operate and TransferProjects or Build and Transfer Project mooted by the Government of India, i.e. thesupplier will build the Flyover completely and then handover the flyover to theGovernment or he can operate the flyover for a few years and then handover.

5. Does he need only the BARE MINIMUM or does he look for ADDITIONAL FEATURES?

6. Does he base his entire decision on PRICE & DELIVERY ONLY, i.e., LOW PRICE?

In many cases it is imperative to note the purchasing pattern of the customer. For e.g.,Government companies normally place the orders only in the month of August/September andask for delivery before January/February. In case the delivery and payment is not done by February,the budgetary money lapses and hence, the Government organizations would like to spend themoney before the budget lapses.

Marketing Concept 3

In conclusion the manager must be able to identify the following:

1. Customer Needs

2. Technology Products

3. Financing Requirements

4. Service Requirements

5. Single Window

6. Economics of Buying

7. Psychology of Buying, etc.

Before we proceed further, it is imperative for us to know a little about Industrial Markets.Industrial Markets are:

Regional or Geographical in nature and are generally concentrated in certain areas.

Demand for the products is known to a certain extent and can be predicted.

Demand is generally inelastic.

Market is knowledgeable.

Market is segmentable either by industry, by technology, etc.

Distribution channels are generally short.

Reference is a must for success.

The essential difference between Industrial Markets and Consumer Markets can be seen fromthe following aspects:

1. Market Structure

2. Products

3. Buyer Behaviors

4. Channels, etc.

The essential differences between industrial markets and consumer markets are given below.

Core Issue Industrial Markets Consumer Markets

Market Structure Geographically concentrated, Geographically dispersed,Relatively few buyers Mass markets

Products Highly technical-oriented Standardized product, service,Customised services, Product delivery and availability areand delivery availability are somewhat importantcritical

Buyer Behaviors Technical expertise and Impulsive buying, Family canfunctional involvement is a must, get involved, Social,Rational behavior, Interpersonal Psychological motives play arelationship is important, predominant part, Less

4 Marketing Strategies and Applications

Reciprocity sometimes plays technical expertise required,a part Personal relationship not

required

Decision making process Distinct and observable at Non-observable mental stages.every stage

Channels Short, more direct and perhaps Indirect, Multlinkages. Channelsfewer linkages are generally long

Promotion Personal selling is a must Mass communication, e.g.,Print advt., TV, etc.

Price Competitive bidding negotiation List prices onlyprocess. List prices are only forstandardized products

Additionally in Industrial Markets, there are several players involved before a decision ismade. Consider the case of any organization, some departments would initiate the proposal. Thiswould then have to be cleared by the approvers, say the consultants and then it goes to thepurchase department for purchasing the product, etc.

The is indicated in the Fig. 1.1 given below:

The participants in an industrial buying process are many.

UsersInitiators Influencers

Gatekeepers

Buyers Deciders

Approvers

Fig. 1.1: Participants in an Industrial Buying Process.

Again in Industrial Buying, there are several layers of people with different interest. Thus, fore.g., the interest of the purchase department would be essentially to buy at the lowest price, whilethe top management’s interest would be on overall return on investment or profitability.

The different layers are explained in the Fig. 1.2 given below:

Marketing Concept 5

Fig. 1.2: Identification of Who is Who in an Organization

The key to success in the case of consumer markets is to understand the customer needs andwants. This can be understood through an understanding of the Maslow’s Hierarchical Needs.

Every human being has some needs and wants which we have to understand tosucceed in the market place

Identification of who is who in an organization and their needs is an important factor.

Member of the Organization Expectations of the Member

In Institutional Market and Industrial Markets, we normally talk to purchasers or specialists.

Return on Investment

Economic Value Addition, etc.

Productivity Improvement Process Reengineering, etc.

Technology, Features, etc.

Price, Price and Price

TopManag-ement

MiddleManagement

Specialists/Technicians

Purchase Department

Fig. 1.3: Maslow’s Chart

Consequent to these differences between the Industrial Markets and the Consumer Marketsis seen through the importance of the 4 Ps of Marketing. These differences are illustrated below:

(e.g., ego satisfactionstatus, prestige, etc.)

Pro

gres

s of

the

Min

d of

a H

uman

bei

ng

Maslow's want pyramid

Self-realization

Other PeoplesMotivation

Social Motives,(e.g., love, affection)

Safety Motives,(e.g., security, no anxiety of the future, etc.)

Psychological Needs(food, clothing and shelter)

6 Marketing Strategies and Applications

The importance of the 4Ps also differs depending on the nature of the product.

Type of Product Characteristics in terms of Level of importance of the 4Psvolumes/margins of marketing

Non-durable (FMCG) Volume: Very High (++++) Promotions: Very High (++++)Margins: Low (+) Distribution: Very High (++++)

Durable Goods Volume: High (++) Promotions: High (+++)Margins: Low (+) Distribution: High (+++)

Personal selling:Very High (++++),Guarantees: Very High (++++)

Service Goods Volume: Low (+) Credibility: High (+++)Margins: High (++) Response Time: High (+++)

First Time Right: Very High(++++)

Industrial Products Volume: Low (+) Product Knowledge: Very HighMargins: Very High (+++) (+++)

Response Time: High (+++)Reference: Very High (++++)

Fig. 1.4: 4Ps of Marketing Difference

The Difference between Selling and MarketingMarketing is essentially the art of identifying the customer’s needs and developing suitable

solutions to satisfy the needs, while selling involves the art of selling the solutions to the customer.Consider the small case:

A leading market research organization identified that more than 30% of the users of abeauty cream product (e.g., Fair and Lovely or Nivea, etc.) are men. The organization also identifiedthe reason why men use these products, — a Feminine Product – viz., lack of a masculine product,

The issue can we come out with a product exclusively to be used by men? — The solution –Fair and Handsome — A male beauty product and later on Nivea for men, etc.

The job of the Marketing Manager is essentially to identify solutions to satisfy the customer’sneeds, while the job of the Sales Manager is to sell the solution. In this case, sell the Fair andHandsome Product.

The core difference between the role of the Sales Manager and Marketing Manager in Fig.1.5 given below:

Marketing Concept 7

The Marketing Manager is a THINKER, while the Sales Manager is DOER.

Role of a Marketing Manager and Sales Manager

Marketing Manager – The Thinker Sales Manager – The Doer

Planning – Annual (Divisional) Budget Regional Budgets

Product, Pricing and Distribution Policy First Point of Contact with the Customer

Business Monitoring Make Offers and Execute the Same

Coordination with Works, Sales and Responsible for the Commercial PrincipalTransaction of the Receivables

Design and Make Available the Sales Collect Information on the Market, Competition,Training Concepts and Materials Customers, etc. and give the same to the

Marketing Manager

Design and Make Available to the Sales, Responsible for Sales and Service ImplementationAfter Sales Service Concepts

Key Account Management Provide Feedback of the Market to the MarketingManager.

Channel Management

Market Research

STRATEGIST TACTICIAN

Fig. 1.5: Core Difference between the Roles of the Sales Manager and Marketing Manager

The difference between the roles of Marketing and Sales Manager in another perspective isgiven below:

The Role of a Marketing Manager is different from the Role of a Sales Manager. Bothare however two sides of the same coin.

Parameter Marketing Manager Sales Manager

Sales Volume Top Downmarket Size Estimation: Bottom Upmarket Size Estimation: Coordination with the Strategic Industry wise, Project wise, Channel wise

Planning Group and align total market data with top down-market size.

Coordination with Independent Analyze Production Trends, Imports andMarket Consultants Exports Data from Industry Association or

any other Associations and CompetitorsActivities.

Analyze Production Trends, Importsand Exports Data from Industry

8 Marketing Strategies and Applications

Association or any other associationsand Competitors Activities. Market Share and Volume:

Monitor and compare market data Convey value propositions to thewith bottoms up data and initiate customers.corrective actions if necessary.

Market Share and Volume: Competitors Feedback: Decision and implementation of Implement pricing, Channel and

strategies for product positioning, communication guidelines along withvalue propositions including new marketing department.product development

Along with the advertising and PR Prepare the sales plan along with marketingdept., evolve and implement department.communication strategies.

Decision on price/discount and Prepare the sales plan along with marketingnecessary price list and discount divisionguidelines, Stocking policies

Along with sales, Finalization of Track opportunities and extractionchannel guidelines. feedback along with marketing

department. Preparation of quantities for Prepare a rolling forecast (i.e., current

factories and finalization of factory month + 2 months)costs.

The Role of a Marketing Manager is different from the Role of a Sales Manager. Both arehowever two sides of the same coin.

Parameter Marketing Manager Sales Manager

Training Plan and Implement Training: Plan and Implement Training:

Along with HR, plan and implement Along with Marketing, plan andtraining programmes for sales. implement training programmes for

sales and product promotion. Content to be finalized by Marketing Along with Marketing, plan and

for skill-based programmes and for implement training programmes forbehavioral-based programmes by HR. Sale Engineers.

Content to be finalized by Marketingfor skill-based programmes and forbehavioral-based programmes by HR.

Service Review quality of product to ensure Monitor the complaints and analyze thezero service (after sales service), same and communicate to marketingdefine response time for service department.Along with Service Department Coordinate with Regional Servicefinalize the service action plan and Department the service action plan andinitiate necessary service stocking levels initiate necessary stocking levels.

Marketing Concept 9

Finalize action plan for training of Keep track of returned goods and sparesservice personnel at works and/or management so as to ensure timelyparent’s body factory for product support to customers.knowledge and service knowledge.

Discuss and finalize the service EBIT.

Cost Operating Costs Operating CostsManufacturing Costs (including idle Quantity Targets fulfillment (Mostcosts and extra cost) Important) Plan, Monitor, Implement and

Control free SuppliesCost Productivity Selling and Distribution costs Selling and Distribution, Costs Selling cost as a % to sales“Sales Margin(including Advertising and other as a % age to salespromotional costs, Travel costs)Marketing Costs as a % to Sales Sales Margin as a % to Selling and

distribution costs.

EBIT as a % to sales

(The above are only a few of the majorcosts)Non Operating Costs Non Operating CostsOptimize utilization of manpower at Debtors Provision, Bad Debts, Sales TaxMarketing Sales, Works, Logistics and Forms, Liquidation of non moving stocksService per guidelines.Monitor and Control EBIT Assets (e.g., Optimize Utilization of Manpower at Sales,Debtors, Stocks/Inventories and Fixed Logistics and ServiceAssets an Factories)Monitor, Implement and Control Monitor and Control EBIT Assets (e.g.,Training Programs Debtors, Stocks/Inventories and Fixed

Assets and Sales Office)Monitor, Implement and Control TrainingProgrammes for Sales Manpower andCustomers.

Fig. 1.6: Difference between the Role of Marketing and Sales Managers

Marketing Process DefinedAs mentioned earlier, marketing is a process of identifying customer needs, satisfying these

needs and in the bargain making profits.

Having identified the customer needs, the issues are:

1. What process do we use to satisfy the customer needs and make profits?

2. What is the relation between customer and the marketer and what does this link mean tothe marketer?

10 Marketing Strategies and Applications

The Marketing process comprises of

1. identifying what is it that the marketer wants? Or what are the business objectives of themarketer?

2. identifying segments where the marketer can cater so as to reach is goals

3. identifying the 4Ps of marketing.

4. selecting one set of the 4Ps from the numerous alternative solutions

5. implementing the selected set of 4Ps and

6. finally achieving market success.

It must be understood, that the marketer must constantly review the process keeping in mindthe environment, competition, government policy, etc.

This is best illustrated by the Fig. 1.7 given below:

Setting up of the business objectives is the starting point of anymarketing process

Fig. 1.7: Marketing Process

The 4 Ps of marketing present different challenges to the marketer, for, e.g.,

1. The first P of Marketing, viz., Product translates itself into customer solution, which inturn results into issues for the marketing manager. Some of the issues could be whatquantity should one manufacture? What should be the production policy? Etc.

2. The 2nd P of Marketing – Price translates itself into the customer cost This now results intocore issues like, can we use price as a differentiation? What return do we get? Is thissufficient? Does it meet our business targets?

The Marketing Process Comprises of:

Business Customer Marketing Mix Decision ImplementObjectives Segmentation

Competitor Analysis Regulatory Framework

Macroeconomic Environment

MarketSuccess

Marketing Concept 11

3. The 3rd P of Marketing – Promotion translates itself into customer communication. Typicallythe marketing manager has to decide on what promotion tool should he use? Should heuse the print media? If yes, which one? What are the costs involved? etc.

4. Finally the 4th P of Marketing – Place translates itself into customer convenience. Thismeans, what channel should the marketing manager use to ensure that the goods reachthe customer? How many intermediaries? What costs are involved? etc.

The 4Ps of marketing which presents different challenges to the marketer are given in Fig 1.8below:

The 4Ps of Marketing create different managerial issues to an organization whichin turn creates different marketing processes

Which output do weCustomer Solution Product Policy offer? What do we give

to the customers?

Customer Cost Price Policy What do we get inreturn?

CustomerDistribution Policy

How do we reach theConvenience output to the customer?

Customer CommunicationHow does the

Communication Policyinformation reachthe customer?

Fig. 1.8: 4Ps of Marketing which Presents Different Challenges to the Marketer