Marketing Management Notes PDF

MARKETING MANAGEMENT DR ANAND NANDWANI, ASSOCIATE PROFESSOR, MERI  Product Product  In marketing, a product is anything that can be offered to a market that might satisfy a want or need.  It may include:  Physical goods  Services  Places  Ideas...

MARKETING MANAGEMENT DR ANAND NANDWANI, ASSOCIATE PROFESSOR, MERI  Product Product  In marketing, a product is anything that can be offered to a market that might satisfy a want or need.  It may include:  Physical goods  Services  Places  Ideas  Persons  Organizations Product Levels Product Levels  1. Core Product / Benefit: The fundamental service or benefits that the customer is really buying, e.g. A hotel guest is buying “rest and sleep”  2. Generic / Basic Product: Turn the core benefits into a basic product, e.g. the hotel room etc.  3. Expected Product: A set of attributes and conditions that buyers normally expect and agree to when they purchase the product, e.g. Clean Toilets, working lights etc.  4. Augmented Product: Meeting the customers’ desires beyond expectations, e.g. fresh flowers, rapid check-in, express check-out, fine dining etc.  5. Potential Product: it encompasses all the augmentations and transformations that the product might ultimately undergo in the future. Offering benefits that not only satisfy customers but also surprise and delight them, e.g. refrigerator full of fruits and chocolates etc.  Product classification Product Classification  Product can be classified on the basis of varying product characteristics:  Durable / Non-durable  Tangible / Intangible  Consumer Goods (Convenience Goods, Shopping Goods, specialty goods)  Industrial Goods (Materials, Parts, Capital Items)  Other Classifications:  Consumable / Non-Consumable  FMCG / Non-FMCG  Product Mix Product Mix  Product mix or product assortment is the set of all products and items that a particular sellers offers for sale to its buyers.  An organisation's product mix has following four dimensions :-  Width,  Depth,  Length, and  Consistency. Product Mix Product Mix  Width: The width of an organisation's product mix pertains to the number of product lines that the organisation is offering. For example, Hindustan Uni Lever offers wide width of its home care, personal care and beverage products. Width of HUL product mix includes Personal wash, Laundry, Skin care, Hair care, Oral care, Deodorants, Tea, and Coffee.  Depth: The depth of an organisation's product mix pertains to how many variants are offered of each product in the line. Variants includes size, colour, flavors, and other distinguishing characteristics. For example, Close-up, brand of HUL is available in three formations and in three sizes. Hence, the depth of Close-up brand is 3*3 = 9.  Length: The length of an organisation's product mix pertains to the total number of items in the product mix. As in the given diagram of Hindustan Uni Lever product mix, there are 23 products, hence, the length of product mix is 23.  Consistency: The consistency of an organisation's product mix refers to how closely related the various product lines are in use, production, distribution, or in any other manner. Product Line  Product Line is a group of products that are closely related because they perform a similar function, are sold to the same consumer group, are marketed through same channels, or fall within same price ranges. Product Line  Marketing managers have to decide the optimal length of the product line by adding new items or dropping existing items from the line.  Line Stretching Decision - Line stretching means lengthening a product line beyond its current range. An organisation can stretch its product line downward, upward, or both way.  Downward Stretching means adding low-end items in the product line, for example in Indian car market, watching the success of Maruti-Suzuki in small car segment, Toyota and Honda also entered the segment.  Upward Stretching means adding high-end items in the product line, for example Maruti- Suzuki initially entered small car segment, but later entered higher end segment.  Two-way Stretching means stretching the line in both directions if an organisation is in the middle range of the market.  Line Filling Decision - It means adding more items within the present range of the product line. Line filling can be done to reach for incremental profits, or to utilise excess capacity Product Line  Line Modernization:  Line Featuring:  Line Pruning:  Product Life Cycle Concept Product Life Cycle Concept  Product life cycle can be defined as "the change in sales volume of a specific product offered by an organisation, over the expected life of the product." Product Life Cycle Concept The four major stages of the product life cycle are as follows :-  Introduction,  Growth,  Maturity, and  Decline. Introduction Stage  A period of slow sales growth as the  The product is unknown, product is introduced in the market.  The price is generally high,  Profits are non-existent because of  The placement is selective, and heavy expenses incurred in connection with product introduction.  The promotion is informative and personalised. Introduction Stage: Marketing Strategies  A rapid skimming strategy  A slow skimming strategy  A rapid penetration strategy  A slow penetration strategy Growth Stage  A period of rapid market acceptance and  The product is more widely known substantial profit improvement. and consumed,  At this stage the product is becoming  The sales volume increases, more widely known and acceptable in the market.  The price begin to decline with the  Marketing is done to strengthen brand entry of new players, and develop an image for the product.   The placement becomes more widely Prices may start to fall as competitors enter the market. spread, and  With the increase in sales, profit may  The promotion is focused on brand start to be earned, but advertising cost development and product image remains high. formation. Growth Stage: Marketing Strategies  Improve quality  Add new features  Add new models  Enter new market segments  Increase distribution coverage  Shift from product awareness to product preference advertising  Lower prices to attract next layer of price sensitive buyers Maturity Stage  A period of a slowdown in sales growth because  The product is competing with the product has achieved acceptance by most potential buyers. Profits stabilize or decline alternatives, because of increased competition.  The sales are at their peak,  At this stage the product is competing with alternatives.  The prices reaches to its lowest  Sales and profits are at their peak. point,  Product range may be extended, by adding  The placement is intense, and both width and depth.  With the increases in competition the price  The promotion is focused on repeat reaches to its lowest point. purchasing.  Advertising is done to reinforce the product image in the consumer's minds to increase repeat purchases. Maturity Stage: Marketing Strategies  Market modification  Product modification  Marketing mix modification Decline Stage  The period when the sales show a downward drift  The product faces reduced and profits set eroded.  competition, At this stage sales start to fall fast as a result product range is reduced.  The sales volume reduces,  The product faces reduced competition as many players have left the market and it is expected that  The price is likely to fall, no new competitor will enter the market.   The placement is selective, and Advertising cost is also reduced.   Concentration is on remaining market niches as The promotion is focused on some price stability is expected there.  reminding. Each product sold could be profitable as developmental costs have been paid at earlier stage. With the reduction in sales volume overall profit will also reduce. Decline Stage: Marketing Strategies  Identifying the weak products  Determining marketing strategies  The drop decision Implications and Limitations of Product Life Cycle Concept  The major weakness of product life cycle concept is that it is prescriptive in nature and focuses on strategies based on assumptions about different life cycle stages. Besides, it is difficult to tell what stage the product is in.  A product may seem to have reached the maturity stage but it might be a temporary phase before it takes another upsurge. It ignores the fact that market forces drive the PLC reflecting consumer preferences, technology, and competition.  Differentiation Differentiation  Differentiation is the act of designing a set of meaningful differences to distinguish the company’s offerings from competitors’ offerings. Tools for Competitive Differentiation  Product Differentiation  Services Differentiation  Personnel Differentiation  Channel Differentiation  Image Differentiation Product Differentiation Product Differentiation  Product differentiation is a strategic process used by businesses to distinguish their products or services from others in the market.  The goal is to make a product more attractive to a specific target audience by highlighting unique features that set it apart from competitors.  Successful product differentiation leads to brand loyalty, increased sales, and a competitive edge in the marketplace. Types of Product Differentiation  Horizontal Differentiation:  Products that offer the same benefits but differ in non-essential features fall under horizontal differentiation.  Example: Different smartphone brands with similar functionality but distinct designs or user interfaces.  Vertical Differentiation:  Vertically differentiated products vary significantly in quality or performance.  Examples: Luxury cars vs. economy cars, High-end smartphones vs. budget phones  Mixed Differentiation:  Some products combine both horizontal and vertical differentiation.  Example: Laptops with varying levels of performance (vertical) but also different designs (horizontal). Real-Life Examples  Apple iPhone:  Apple’s sleek design, user-friendly interface, and ecosystem differentiate it from other smartphones.  The brand loyalty it has built is a testament to successful differentiation.  Tesla Electric Vehicles (EVs):  Tesla’s EVs stand out due to their performance, range, and cutting-edge technology.  Elon Musk’s vision has created a unique selling proposition in the automotive industry.  Coca-Cola vs. Pepsi:  These cola giants differentiate through taste (vertical) and branding (horizontal).  Each has its loyal fan base based on these distinctions.  New Product Development New Product Development  The New Product Development (NPD) process is a structured approach that takes a product from its initial concept to its final market launch.  It involves a series of well-defined stages, each contributing to the successful development and introduction of a new product.  New Product Development refers to the entire journey of bringing a new product to the market. Whether it’s a completely novel product or an enhancement of an existing one.  It’s a blend of creativity and strategy that requires cross-functional collaboration.  Stages of New Product Development  1. Idea Generation (Ideation): This initial stage involves brainstorming and generating new product ideas. Example: Imagine a team discussing potential features for a fitness app—tracking workouts, personalized recommendations, and social sharing.  2. Idea Screening: Evaluate and filter ideas based on feasibility, alignment with business goals, and market potential. Example: A software company screens various app ideas and selects one that aligns with their expertise and market demand.  3. Concept Development and Testing: Develop detailed concepts for the chosen idea. Test these concepts with target customers to gather feedback. Example: A car manufacturer creates concept designs for an electric SUV and tests them with potential buyers.  4. Marketing Strategy Development: Define the target market, positioning, pricing strategy, and distribution channels. Example: A beverage company develops a marketing plan for launching a new energy drink—targeting young athletes through social media ads.  5. Business Analysis: Assess the financial viability of the product. Estimate costs, revenue projections, break-even points, and profitability. Example: A tech startup analyzes development costs, expected sales volumes, and potential profit margins for their new productivity software.  6. Product Development: Create prototypes or develop the actual product. Fine-tune features based on feedback from testing. Example: A fashion brand designs clothing samples based on customer preferences gathered during focus groups.  PRICING PRICING  Pricing is the process of determining the value at which a manufacturer or service provider will exchange their goods or services. Pricing Objectives  Pricing objectives are the goals that drive how businesses set prices. These objectives apply to both new and existing customers.  The direction provided by pricing objectives is crucial for adjusting prices over time to meet specific business goals. Pricing Objectives  Maximize Short-Term or Long-Term Profit  Penetrate New Markets  Increase Sales Volume  Steal Market Share from Competitors  Generate Interest Around New Products  Survive Slow Business Periods  Real-World Examples of Pricing Objectives  Apple iPhone Pricing Strategy: Apple aims for premium positioning, emphasizing innovation and cutting-edge technology. Their high prices reflect perceived value, creating an aspirational brand image.  Objective: A market for innovative ideas.  Walmart’s Low Prices: Walmart focuses on low prices to capture a massive market share. Their “Everyday Low Price” strategy attracts cost-conscious consumers.  Objective: Ruling the market through affordability. Determinants of Price  Product Cost:  Utility and Demand:  Extent of Competition in the Market:  Government and Legal Regulations:  Market Conditions and External Factors:  Consumer Expectations:  Pricing Methods and Strategies.  Price Skimming: Initially setting a high price and gradually lowering it as the market evolves.  Cost-Plus Pricing: Calculating costs (production, marketing, distribution) and adding a markup for profit.  Penetration Pricing: Introducing a product at a low price to gain market share quickly.  Predatory pricing: Predatory pricing, also known as aggressive pricing (also known as "undercutting"), intended to drive out competitors from a market. It is illegal in some countries.  Dynamic Pricing: Adjusting prices in real-time based on demand, supply, or other external factors.  Odd pricing: In this type of pricing, the seller tends to fix a price whose last digits are odd numbers. A good example of this can be noticed in most supermarkets where instead of pricing at $10, it would be written as $9.99.  Value-Based Pricing: Setting prices based on the perceived value to customers.  Competitive Pricing: Determining prices based on what competitors charge.  Economy Pricing: Offering products at low prices by minimizing marketing and overhead costs.  THANK YOU