MS-06

Management Programme

ASSIGNMENT SECOND SEMESTER 2013

MS-06: Marketing for Managers

School of Management Studies INDIRA GANDHI NATIONAL OPEN UNIVERSITY MAIDAN GARHI, NEW DELHI 110 068

ASSIGNMENT Course Code Course Title Assignment Code Coverage : : : : MS - 06 Marketing for Managers MS-06/TMA/SEM - II/2013 All Blocks

Note : Attempt all the questions and submit this assignment on or before 31st October, 2013 to the coordinator of your study centre.

1. (a) Marketing in the performance of business activities that directs the flow of goods and services from the produces to consumers. Discuss the above statement by taking two suitable examples of your choice. (b) Discuss the concept of service and report on the reasons for the growth of the service sector.

2. (a) What are the various elements of marketing mix? Explain each of there elements and their importance in the marketing planning process of a consumer durable company manufacturing room air conditioner. (b) Discuss the procedure of conducting marketing research in the Indian Context.

3. (a) Who is a consumer? Define consumer behavior and discuss why a knowledge of consumer behavior in essential for Marketers. (b) Discuss Product Life Cycle concept and elaborate on the importance of PLC as a tool for monitoring and nurturing a the brand. Illustrate with suitable examples.

4. (a) What do you understand by the term Marketing Communication and its role in

the

promotion of a firms product or service. Discuss with two suitable examples one choosing from FMCG & other from a service offering. (b) Discuss the importance and relevance of sales and distribution function in a manufacturing and marketing organization of your choice.

(a) Marketing in the performance of business activities that directs the flow of goods and services from the produces to consumers. Discuss the above statement by taking two suitable examples of your choice. "Marketing is the performance of business activities that directs the flow of goods and services from producer to consumer or user." This definition is undoubtedly an improvement on describing marketing as selling as it shows that marketing does encompass other activities besides selling. Schematically, this definition can be reproduced as shown below: PRODUCER Product ----------------------- CONSUMER Need

Marketing activities This is very common idea among many people, for example, inadvertising agencies, as they normally are required to advertise to sella product, which already exists. Similarly, salesman are also given'products' and asked to sell them. Therefore, to them marketing often,starts with a product. Meaning of Marketing Function As an entrepreneur, when we went to start a new business, we don't have a product. In fact we will have to decide what product we should manufacture and sell. We have first to decide what product we should select. This, we can do only if we can do only if we identify the needs which require satisfaction among human beings. Once, we have identified the needs of a group of human beings (or called market segment), we can determine the product which can help to satisfy their needs. This is a part of the marketing concept or we can say the part of modern philosophy of marketing. Philip Kotler, an author in area of marketing defined marketing "a human activity directed at satisfying needs and wants through exchange processes." Human Needs The human need is a state in which a person feels deprived of something. There are many human needs described in many ways. Briefly, these needs can be divided into two types. 1. Physiological needs 2. Psychological and Sociological needs. The physiological needs consist of the need for food, clothing, shelter and even sex. Similarly, there are social needs for belonging, affection and love from others. Of course, there are higher order psychological needs of self-actualisation.

Important to understand that there are different needs for human being on the earth. At any time some needs in a human being are dormant and unsatisfied, whereas others are active and are being satisfied. A marketing man may thus devise a product or service aimed at satisfying a certain dormant need and thus provide satisfaction to the user. This is why a man is often described as a bundle of dormant wants. The need exists buy these have to the converted into 'wants' by a marketing strategy. In a socially competitive society, people may have unlimited wants but the ability to buy may be restricted on account of their economic background. They will, therefore, select from among those products, which give satisfaction or are needed more. Thus, when they are backed by ability to buy, the wants are converted into demand for your product. Therefore, when people decide to satisfy their needs and wants, in terms of marketing activities, exchange takes place. On the current activities of human being, we can develop a process-oriented definition of marketing as "the process of ascertaining consumer needs, converting them into products or services, and then moving the product t or service to the final consumer or user to satisfy certain needs and wants of specific consumer segment or segments with emphasis on profitability, ensuing the optimum use of the resources available to the organisation". In practice, often, separate departments with their own way of perform the business functions, such' as production, finance and marketing, are performed by separate departments with their own way of thinking, production is often considered the more important function as compare to marketing. This practice is, gradually losing ground and it is being recognized that unless you can sell a product, you should not manufacture it. Production-orientation evolved because often products were designed and developed by inventors who hoped that they would sell. However, if these products fail to satisfy some needs they would never sell in the market place. Therefore, consumer oriented thinking becomes necessary for any business to survive and grow. Normally, a salesman would like to think of his activity as a 'selling' process. Wh"en he does this, he is more cohcerned with handling over this product and receiving money in exchange. However, if he adopts the modern philosophy of treating it as a 'buying' process, his job becomes easier. This would definitely help him to start feeling and thinking of a customer. For instance, as he puts himself in the shoes of the customer and asks the question-why should I buy this article? His job will become smoother, as he will then know about the benefits and the disadvantages of the product or the service he is offering. This is an illustration of customeroriented focus.

Scope and Appropriateness of Marketing Function The first and foremost role is that it makes more potential aggregate demand and thus enlarges the size of the market. If we ask how does it help in the economic growth of a country. Then the answer is that through stimulation of demand, people are motivated to work harder and earn additional money to buy the various ideas, goods and services being marketed. An additional advantage which accrues is that it accelerated the process of monetising the economy which in turn facilitates the transfer of investible resources. (In India, about one-fourth of GNP and more than one-third of agricultural output are still non-monetised). Another important role which marketing plays is that it helps in the discovery of entrepreneurial talent. Peter Drucker (a celebrated writer in the relevant field) makes this point very clearly when he observes that marketing is a multiplier of managers and entrepreneurs. In the history of Indian industrial development during this century, we will find that several Indian industrialists began their business careers as distributors and wholesalers, and from the experience so gained ventured into the more risky fields of manufacturing and production activities. Still another important contribution which marketing makes is that it helps in sustaining and improving the existing levels of employment. The question occurs, how does it happen? Answer is that when a country advances economically it takes more and more people to distribute goods and proportionately a lesser number to make them. That is from the employment point of view production becomes relatively less significant than marketing and the related services of transportation, finance, communication, insurance, etc. which spring around it.

(b) Discuss the concept of service and report on the reasons for the growth of the service sector.

Affluence: per capita increase in income: from Rs. 238 in 1950 to Rupees 11934 in 1998 is an indicator of increase in general affluence levels.( Pest control, personal security, interior design). Leisure time: People have some spare time for travel and holidaying. Hence travel agencies, resorts, hotels, and entertainment. Others would like to use this time to enhance their career prospects. Hence education, distance learning, part - time courses. Life expectancy: Health programmes have contributed significantly to increase in life expectancy, hence old age homes, nursing homes, health care, insurance etc. Working Wives: Increase in numbers of working women has triggered an increase in day care facilities for children, packed food and home delivery. Product Complexity: Growth of a large number of products that can only be serviced by specialized persons e.g washing machines, water purifiers, home computers etc. needing after sales service, maintenance etc. Life's complexity: As daily routines get busier, individuals find it difficult to manage things on their own. Hence tax consultants, legal advisors, insurance consultants, property advisors etc. Resource scarcity and ecology: With depleting natural resources, need for conservation increases. Hence pollution control agencies, car pools, water management etc. New products: IT has given rise to PCOs, pager service providers, web shoppers etc. The contribution of the Services Sector in the Indian GDP has also increased very rapidly as many foreign consumers have shown interest in the country's service exports. This is due to the fact that India has a large pool of highly skilled, low cost, and educated workers in the country. This has made sure that the services that are available in the country are of the best quality. Foreign companies seeing this have outsourced their work to India especially in the area of business services which includes business process outsourcing and information technology services. This has given a major boost to the Services Sector in India, which in its turn has made the sector contribute more to the India GDP. The contribution of the Services Sector in India GDP has increased a lot in the last few years. The Services Sector contributed only 15% to the Indian GDP in 1950. Further the Indian Services Sector's share in the country's GDP has increased from 44% in 1990- 1991 to 51% in 2005 and around 55% in 2006-2007. Thus the Services Sector in India accounts for over half of the

country's GDP. The Indian Economy is the second fastest growing in the world. GDP growth rate was 9.4 % in 2006-2007.Presently about 8.9%. The economy is the 12th largest in the world (GDP =USD 1.09 trillion in 2007). India ranks 15th in the services output and it provides employment to around 23% of the total workforce in the country

REASONS FOR THE GROWTH OF SERVICE INDUSTRY It is obvious that the growth in the services sector has been substantive. The reasons for thisgrowth are quite a few, some of which are summarized as follows. An affluence: - The increase in per capita income from Rupees 238.8 in 1950 to Rupees 11,934.5 in 1998 is an indicator of he increase in general affluence has given rise to service like pest-control, personal security, interior designer, etc. Leisure time: - People do get some time to travel and holiday and therefore there is a need for travel agencies, resorts, hotels, and entertainment. There are others who would like to utilize this time to improve their career prospects and therefore there is a need for adult education/distance learning/part time courses. [SERVICE SECTOR MANAGEMENT] Perishability Services cannot be stored, saved, resold or returned. A bad haircut cannot be returned or resold to another customer. Hence demand forecasting and creative planning to meet the demand is a problem. Further one has to be right the first time or if things go wrong one should have strong recovery strategies to retain the customer goodwill. Due to these characteristics of services the marketeers face a major challenge in marketing of Services. REASONS FOR THE GROWTH OF SERVICE INDUSTRY Life expectancy:-The health programme have significantly contributed to an increase in life expectancy given rise to services like old age homes, nursing homes, health care, etc. Working wives: - As more and more women have started working, the need for day care for children has increased, and so is the care with packed food and home delivery.

Product complexity: - A large no. of products are now being purchased in households which can be serviced only by specialized persons like water purifies, micro wave ovens, home computers, etc. giving rise to the need for services like after sales service agents for durables, maintenance service providers, etc. Life complexity: - As the daily routine gets busier, individuals find it difficult to manage things on their own. Their leads to an obvious need for tax consultants, legal advisors, property advisers, etc. Resource scarcity and ecology: - As the natural resources are depleting and need for conservation is increasing, we have seen the coming up of service providers like pollution control agencies, car, pools, water management, etc.

2. (a) What are the various elements of marketing mix? Explain each of their elements and their importance in the marketing planning process of a consumer durable company manufacturing room air conditioner. (b) Discuss the procedure of conducting marketing research in the Indian Context. Ans (a)

Neil Borden in the year 1953 introduced the term Marketing mix, an extension of the work done by one of his associates James Culliton in 1948. Marketing Mix - A mixture of several ideas and plans followed by a marketing representative to promote a particular product or brand is called marketing mix . Several concepts and ideas combined together to formulate final strategies helpful in making a brand popular amongst the masses form marketing mix. Promotion can be through any of the following ways:

Advertising Print media, Television, radio are effective ways to entice customers and make them aware of the brands existence. Billboards, hoardings, banners installed intelligently at strategic locations like heavy traffic areas, crossings, railway stations, bus stands attract the passing individuals towards a particular brand. Taglines also increase the recall value of the brand amongst the customers.

Word of mouth One satisfied customer brings ten more customers along with him whereas one dis-satisfied customer takes away ten more customers. Thats the importance of word of mouth. Positive word of mouth goes a long way in promoting brands amongst the customers.

Lately three more Ps have been added to the marketing mix. They are as follows:

People - The individuals involved in the sale and purchase of products or services come under people. Process - Process includes the various mechanisms and procedures which help the product to finally reach its target market Physical Evidence - With the help of physical evidence, a marketer tries to communicate the USPs and benefits of a product to the end users

Four Cs of Marketing Mix Now a days, organizations treat their customers like kings. In the current scenario, the four Cs has thus replaced the four Ps of marketing making it a more customer oriented model. Koichi Shimizu in the year 1973 proposed a four Cs classification.

Commodity - (Replaces Products) Cost - (Replaces Price) involves manufacturing cost, buying cost and selling cost Channel - The various channels which help the product reach the target market. Communication - (Replaces Promotion)

Robert F. Lauterborn gave a modernized version of the four Cs model in the year 1993. According to him the four Cs of marketing are: Consumer Cost

Convenience Communication Ans: B)

Price Since Samsung is into various electronic products ranging from mobile phones to house hold appliances, it doesnt apply a specific product strategy or fit into a premium product category like Apple. In Mobile and TV segment it employs completion based pricing, ie the pricing model depends on the prices of competitors products. Sony Bravio which has been always priced at the top slot in television segment has reduced its prices due to intense competition from Samsungs high end innovative offerings from Samsung. Place Samsungs products are distributed to all major electronic goods retailers. Apart from small and lar ge scale retailers, Samsung has its own outlets Samsung Plaza which showcases all the models available with the company. It has technically competent staffs to provide all information to the customer. Its sales and marketing offices are location in 16 areas around the country with 19 branches to push sales. Institutional sales such as airport, hotels, banks, theatres are taken care by the VMB(vertical market business) department. One of the major reason for Samsungs success in Indian market its effective distribution system and after sales service. Promotion Samsung has been actively involved in sponsoring for various sorts activities and it has been associated with Olympic Games and Asian games for many years. In India Amir and Priyanka Chopra has been assigned as the brand ambassadors for Samsung. It actively promotes its products through social media campaigns.

3. (a) Who is a consumer? Define consumer behavior and discuss why a knowledge of consumer behavior in essential for Marketers. (b) Discuss Product Life Cycle concept and elaborate on the importance of PLC as a tool for monitoring and nurturing a the brand. Illustrate with suitable examples. Ans (A): Who is a Consumer ? Any individual who purchases goods and services from the market for his/her end-use is called a consumer. In simpler words a consumer is one who consumes goods and services available in the market. Example - Tom might purchase a tricycle for his son or Mike might buy a shirt for himself. In the above examples, both Tom and Mike are consumers. 1.1 DEFINING CONSUMER BEHAVIOR: Consumer Behavior may be defined as the interplay of fo rces that takes place during a consumption process, within a consumers self and his environment. - this interaction takes place between three elements viz. knowledge, affect and behavior; - it continues through pre-purchase activity to the post purchase experience; - it includes the stages of evaluating, acquiring, using and disposing of goods and service s. The consumer includes both personal consumers and business/industrial/organizational consumers. Consumer behavior explains the reasons and logic that underlie purchasing decisions and consumption patterns; it explains the processes through which buyers make decisions. The study includes within its purview, the interplay between cognition, affect and behavior that goes on within a consumer during the consumption process: selecting, using and disposing off goods and services. Cognition: This includes within its ambit the knowledge, information processing and thinking part; It includes the mental processes involved in processing of information, thinking and interpretation of stimuli (people, objects, things, places and events). In our case, stimuli would be product or service offering; it could be a brand or even anything to do with the 4Ps. Affect: This is the feelings part. It includes the favorable or unfavorable feelings and corresponding emotions towards a stimuli (eg. towards a product or service offering or a brand). These vary in direction, intensity and persistence. Behavior: This is the visible part. In our case, this could be the purchase activity: to buy or not a buy (again specific to a product or service offering, a brand or even related to any of the 4 Ps).

The interaction is reciprocal between each of the three towards each other and with the environment. OTHER DEFINITIONS: The behavior that consumers display in searching for, purchasing, using, evalauting and disposing of products and services that they expect will satisfy their needs. - Schiffman and Kanuk ..the decision process and physical activity engaged in when evaluating, acquiring, using or disposing of goods and services." - Loudon and Bitta Marketing and consumer behavior are intrinsically connected. Without grasping a level of understanding of what drives consumers, marketers would have a pretty difficult time identifying the right market segments and putting together a marketing campaign that will attract attention. Studying consumers helps marketers improve their strategies because it gives them insight into understanding buyer behavior. By obtaining a view into how consumers think, feel, reason and choose, marketers can use this information to not only design products and services that will be in demand, but also how to present these options to the consumer base in an attractive fashion. According to Lars Perner, Ph.D., instructor at the Marshall School of Business, University of Southern California, an 'official' definition of consumer behavior is "The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society". Here are some of the other factors that influence consumer behavior and the attributes marketers should consider valuable: Decision making The thought processes consumers use in their decision making is an important behavior to try and understand. Marketers want to try and tap into what makes consumers tick as they ponder their choices and learn just what the types of things lead to a final decision. This way they can align their products to remain in the running and be hopefully chosen. Product use/complements Understanding how consumers use products and what complement items are used is of value. Marketers who gain insight to how products are used and what accompanying products are purchased can then use this information to design products and develop complement products that are enticing and attractive to consumers.

 Environmental influences Environmental influences also play an important role in consumer behavior. Culture, family, types of advertising and the media can all influence the ways consumers make choices. This is one of the reasons why advertisements are designed to be attractive and hopeful consumers identify with the content. Consumer knowledge Social awareness is also a factor. Dr. Perner brings up the example that "aggressive marketing of high fat foods, or aggressive marketing of easy credit, may have serious repercussions for national health and economy". With any information on the web readily available, there is a much higher level of consumer awareness and knowledge. People aren't going to fall for flaky advertisements or poorly designed marketing campaigns because it is easy to look things up. Marketers should understand that there are always cause and effects. Consumers today are pretty savvy and much of their behavior is focused around social awareness. Motivation What motivates consumers is also an important concept for marketers to understand. This is another valuable area to tap into because products, services and marketing campaigns can be designed to flow along the same path as consumer motivating factors. Social media marketing Friends influencing friends is also an important behavior today's marketers need to understand. It is unwise for marketers to ignore this very popular and valuable channel of advertising. Social media has become and will likely continue to maintain a strong presence in the lives of consumers, however how it is leveraged will depend on how social networks are perceived and utilized. Understanding consumer behavior is a vital component of marketing. Businesses who don't understand the how, why and where of consumers and gain insight to why they make the choices they do are going to have a much harder time making a connection and those coveted sales.

Ans (B): All products and services have certain life cycles. The life cycle refers to the period from the products first launch into the market until its final withdrawal and it is split up in phases. During this period significant changes are made in the way that the product is behaving into the market i.e. its reflection in respect of sales to the company that introduced it into the market. Since an increase in profits is the major goal of a company that introduces a product into a market, the products life cycle management is very important. Some companies use strategic planning and others follow the basic rules of the different life cycle phase that are analyzed later. The understanding of a products life cycle, can help a company to understand and realize w hen it is time to introduce and withdraw a product from a market, its position in the market compared to competitors, and the products success or failure. For a company to fully understand the above and successfully manage a products life cycle, needs to develop strategies and methodologies, some of which are discussed later on. THE PRODUCT life cycle is an important theory in the fields of management and economics. Technological discontinuities cause a period of ferment in which alternative product forms compete for dominance due to the large amount of market and technological uncertainty that exist following a technological discontinuity. New firms enter the market and competition focuses on product innovation. Eventually, however, the process of experimentation between the firm and the users of the product leads to the appearance of a dominant design where standardized parts, software, and manufacturing equipment appear [2], [3], [28]. The appearance of this dom- inant design causes the competition to change from product or service performance to the effective use of complementary assets such as marketing, distribution, competitive manufac- turing (e.g., process innovation), and after-sales support [27]. Firms who are unable to successful produce the dominant design or do not have the required level of capabilities in the complementary assets often exit the industry [4], [29]. The most controversial aspect of the product life cycle theory is the role of dominant designs. Research suggests that the con- cept does not apply to some products and systems [13], [22] and a single dominant design has not emerged in many indus- tries [9], [32]. The strongest criticism of this concept comes from Klepper [16]. His model of the product life cycle uses economies of scale and convex adjustment costs, as opposed to dominant designs, to explain reported patterns of firm entry and exit and increased spending on process innovation. In turn, re Manuscript received October 1, 2002; revised April 1, 2003. Review of this manuscript was arranged by Department Editor F. Betz. duced firm entry and firm asymmetries in capabilities lead to a reduced spending on product innovation. This paper applies the product life cycle theory to the issue of product line management with two goals in mind: 1) to under- stand how product line management evolves over the life of an industry and 2) to compare Kleppers model with the traditional model of the product life cycle. To our knowledge, this will be the first paper to address the first question and, thus, provides a starting point for research in this area. Although there is a large volume of literature on related

topics like multi project man- agreement and the use of common platforms,1 these analyses do not address the evolution of product line management over the product life cycle and instead largely analyze mature products. This paper uses the mobile phone industry to look at these two questions. 2 Using Uzumeri and Sandersons *30+ classification of product variety and change, there is bo th a large variety of and fast rate of change in both families and models and, thus, the mobile phone industry occupies the upper right corner of each quadrant(seeFig.1).3 Mobile phone firm typically define product families in terms of different analog and digital air-interface standards; these standards define the interface between the phone and the base station. Within a specific standard, different models are developed for different users and user needs. When there are many models and/or families and change is slow, traditional methods of platform management that emphasize the use of common parts are relevant (e.g., see [19]). When there are few models and/or families and change is rapid, innovation and fast product development management are important (e.g., see [26]). When there are both many models and change is rapid, both common parts and innovation become important and the mobile phone industry provides insight into this pattern of plat- form management. This paper also uses Wheelwright and Clarks *31] classification of development projects. Development projects can be classified as breakthrough, platform and derivative projects. Breakthrough projects involve significant change in the products core concepts (e.g., new families), platform projects create new system solutions (sometimes called plat- form products4 ), and derivative projects involve incremental change. We find that Kleppers model of the product life cycle theory in combination with product line management provides a better explanation for the evolution of competition in the mobile phone industry than the traditional product life cycle, provided two caveats are introduced. First, the role and effect of economies of scale are a function of firm strategy. The market that constitutes the economies of scale depends on the degree to which a platform covers multiple families (e.g., standards) and models, which is one aspect of product line management. The effect from economies of scale also depends on firm pricing strategies, which has been documented in historical analyses, and extreme discounting in order to benefit from these economies of scale became the cornerstone of some strategies such as those recommended by the Boston Consulting Group. Many argue that this strategy was taken to unprofitable extremes in the 1970s. Second, depending on the firms strategy with respect to product platforms, it is largely market growth in a particular standard that defines the economies of scale. In this way standards do act as dominant designs in that they require firms to develop capabilities in the standard. However, the selection of these standards in committees (i.e., dejure standard) eliminated the predominant design phase of competition in the mobile phone industry or at least relegated it to competition within a committee.