PAN African eNetwork

Project
MFC
FMM
Semester - I
Ms. Mamta Mohan

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1
 Elements of the Promotional Mix

• Promotional mix: blend of personal selling

and nonpersonal selling designed to achieve
promotional objectives
– Personal selling: interpersonal promotional
process involving a seller’s person-to-person
presentation to a prospective buyer
– Nonpersonal selling includes: Advertising,
Product placement, Sales promotion, Direct
marketing, Public relations

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• Advertising
– Paid, nonpersonal communication through
various media by a business firm, not-for-profit
organization, or individual identified in the
message with the hope of informing or
persuading members of a particular audience

• Product Placement
– Marketer pays a motion picture or television
program owner a fee to display his or her
product prominently in the film or show

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 • Sales Promotion
– Marketing activities that stimulates
consumer purchasing (includes:
displays, trade shows, coupons,
premiums, contests, product
demonstrations, and various
nonrecurrent selling efforts)
– Trade promotion

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 • Direct Marketing
– Direct communications other than
personal sales contact between
buyer and seller, designed to
generate sales, information requests,
or store visits

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• Public relations: firm’s communications
and relationships with its various publics

• Publicity: stimulation of demand for

good, service, place, idea, person, or
organization by unpaid placement of
commercially significant news or favorable
media presentations

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 • Guerilla Marketing: Unconventional,
innovative, and low-cost marketing
techniques designed to get
consumers’ attention in unusual ways.

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 Sponsorships

• Provision of funds for a sporting or

cultural event in exchange for a direct
association with the events or activity

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• Growth of Sponsorships
– Sponsorship has grown rapidly during the past 30
years
– Corporate sponsorship spending has increased
faster than promotional outlays for advertising and
sales promotion
• How Sponsorship Differs from Advertising
– Sponsor’s degree of control
– Nature of the message
– Audience reaction
– Ambush marketing

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 • Assessing Sponsorship Results
– Marketers utilize some of the same
techniques to measure both advertising
and sponsorship
– The differences between the two
promotional alternatives often necessitate
some unique research techniques
– Despite the impressive visibility of special
events like soccer’s World Cup and
football’s Super Bowl, the demands do not
necessarily lead directly to increased sales
or improved brand awareness

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 Direct Marketing
• Few promotional mix elements are
growing as rapidly as direct marketing
– Related overall spending total $1.7 trillion
• Direct Marketing Communication
Channels

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• Direct Mail
– Marketers combine information from internal and
external databases, surveys, coupons, and rebates
that require responses to provide information about
consumer lifestyles, buying habits, and wants

• Catalogs
– Over 10,000 different consumer mail-order catalogs
and thousands more for business-to- business sales
are mailed each year generating over $57 million in
consumer sales and $36 million in B2B sales

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 • Telemarketing: promotional
presentation involving the use of the
telephone for outbound contacts by
salespeople or inbound contacts initiated
by customers who want to obtain
information and place orders

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 • Direct Marketing via Broadcast
Channels
Broadcast direct marketing includes:
– Brief (30 to 90 and second) direct response
ads on television or radio
– Home shopping channels like:
• Home Shopping Network (HSN)
– Infomercial: promotional presentation for
a single product running 30 minutes or
longer in a format that resembles a regular
television program

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 • Electronic Direct Marketing Channels
– Web advertising is an important component of
electronic direct marketing
– E-mail direct marketing is a natural and easy
extension of traditional direct mail marketing
• Other Direct Marketing Channels
– Print media is generally not as effective as Web
marketing or telemarketing for direct marketers
– Magazine and newspaper ads with toll-free
telephone numbers, kiosks, and other media are
still useful in many situations

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 Developing an Optimal Promotional Mix

• Factors that influence the

effectiveness of a promotional to mix:
– Nature of the market
– Nature of the product
– Stage in the product life-cycle
– Price
– Funds available for promotion

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 • Nature of the market
– Personal selling may prove effective with a market composed of a
limited number of buyers
– Advertising is more effective when a market has large numbers of
potential customers scattered over sizable geographic areas
– Personal selling often works better for intermediary target
markets
• Nature of the product
– Highly standardized products with minimal servicing requirements
usually need less personal selling than custom products with
complex features and/or frequent maintenance needs
– Consumer products are more likely to rely heavily on advertising
than are business products

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 • Stage in the product life-cycle
– Promotional mix must be tailored to the products
stage in the product life-cycle
– In the introductory stage, there is a heavy emphasis
on personal selling to the to the intermediaries
– However, advertising and sales promotion help to
create awareness and stimulate initial purchases
– In the growth and maturity stages, advertising gains
relative importance
– Personal selling efforts at marketing intermediaries to
expand distribution is continued
– In the maturity and early decline stages, firms
frequently reduce advertising and sales promotion
expenditures

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 • Price
– Advertising dominates the promotional mix for low-
unit-value products due to the high personal contact
costs of personal selling
– Consumers a high-priced items like luxury cars
expect lots of well-presented information via
videocassettes, CDs, fancy brochures, and personal
selling
• Funds available for promotion
– A critical element in the promotional strategy is the
size of the promotional budget
– While the cost-per-contact of a $2 million, 30-second
TV commercial during the Super Bowl is relatively
low, such an expenditure exceeds the entire
promotional budgets of many, if not most firms

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 Influencing Factors Personal Selling Advertising
Nature of the market Limited number Large number
Number of buyers Concentrated Dispersed
Geographic Business purchaser Ultimate consumer
concentration
Type of customer
Nature of the product Custom-made, complex Standardized
Complexity Considerable Minimal
Service Business Consumer
requirements
Type of good or Trade-ins common Trade-ins uncommon
service
Use of trade-ins
Stage in the product life cycle Often emphasized at every stage; Often emphasized at every stage;
heavy emphasis in the introductory and heavy emphasis in the latter part
early growth stages in acquainting of the growth stage, as well as the
marketing intermediaries and potential maturity and early decline stages,
consumers with the new good or to persuade consumers to select
service specific brands
Price High unit value Low unit value

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 Pulling and Pushing
Promotional Strategies

• Pulling strategy: promotional effort by a seller to

stimulate demand among final users, who will then
exert pressure on the distribution channel to carry the
good or service, pulling it though the marketing
channel
• Pushing strategy: promotional effort by a seller to
members of the marketing channel intended to
stimulate personal selling of the good or service,
thereby pushing it through the marketing channel

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 Budgeting for Promotional Strategy

• Percentage-of-sales method

• Fixed-sum-per-unit method

• Meeting competition method

• Task-objective method

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 Method Description Example
Percentage-of- Promotional budget is set as a “Last year we spent $10,500 on
sales method specified percentage of either past promotion and had sales of $420,000.
or forecasted sales. Next year we expect sales to grow to
$480,000, and we are allocating $12,000
for promotion.”
Fixed-sum-per- Promotional budget is set as a “Our forecast calls for sales of 14,000
unit method predetermined dollar amount for units, and we allocate promotion at the
each unit sold or produced. rate of $65 per unit.”

Meeting Promotional budget is set to “Promotional outlays average 4 percent

competition match competitor’s promotional of sales in our industry.”
method outlays on either an absolute or
relative basis.

Task-objective Once marketers determine their “By the end of next year, we want 75
method specific, promotional objectives, percent of the area high-school students
the amount (and type) of to be aware of our new, highly
promotional spending needed to automated fast-food prototype outlet.
achieve them is determined. How many promotional dollars will it
take, and how should they be spent?”

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• Figure 15.9
– Allocation of Promotional Budgets for consumer
Packaged Goods

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 Measuring the Effectiveness of
Promotion
• Two basic measurement tools:
– Direct sales results measures the effectiveness of
promotion by revealing the specific impact on sales
revenues for each dollar of promotional spending
– Indirect evaluation concentrates on quantifiable
indicators of effectiveness like:
• Recall - how much members of the target market remember
about specific products or advertisements
• Readership – size and composition of a message’s
audience

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• Measuring Online Promotions
– Early attempts at measuring online promotional
efforts involved counting hits and visits
– Incorporating direct response and comparing
different promotions for effectiveness
– Two major techniques for setting online
advertising rates:
• Cost per impression (CPM), technique that related
the cost of an ad to every thousand people who read
it
• Cost per response (click-throughs), which assumes
that those who actually click on an ad want more
information

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 Distribution Channels and Supply
Chain Management

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 Distribution Channels &
Value networks
• Push Strategy- sales force and trade
promotions
• Pull Strategy- Advertising
• Hybrid channels- IBM, ICICI
- Channel integration & Customer expectations
- ability to order online, pick up at convenient
retail location, return online order, right to avail
discounts on online & offline purchases

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 Customers fall in 4 categories

• Habitual shoppers
• Deal seekers
• Variety loving
• High involvement shopper

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 Value network
( VN)

• A system of partnership and alliance to source and

deliver its offering.
• Think of the target market and then think of the
supply chain
• SIVA- Solution , information Value and access.
• E.g. Palm- consists of whole community of suppliers,
assemblers of semiconductors , components , plastic
cases, lcd displays, accessories offline & online
resellers, 275,000 developers who have created 21,000
soft wares for computers and smart phones.

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 Channel demand planning
• Can estimate if the company can make
more money upstream or down stream.
• More aware of disturbances any where on
supply chain.

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 Role of channels
• Sales channel , Service channel , Delivery
channels.
• Bring in financial resources .e.g. 250
strong dealers help Mauriti udyog manage
its capital better.
• Help break bulk 7 create assortment.
• More effective due to specialization,
contacts, experience, scale of operation.

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 Functions of channels

• Physical flow
• Title flow
• Payment flow
• Information Flow
• Promotion flow.

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 Channel levels

• 0 level – direct marketing

• 1,2, 3 level
• Reverse flow channels- refilling ,
refurbishing , disposing of products.

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 Channel design decisions

Analyzing customer's service output

levels-
• Lot size
• Waiting and delivery time.
• Spatial convenience
• Service backup

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 Channel design decisions
- Establishing objectives
Vary with product characteristics ( perishable
products, bulky pdts local taxes)
-identifying major alternatives
( types of available intermediaries,
no of intermediaries ( Exclusive, selective
,intensive)
Terms and conditions

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 Channel design decisions
- Companies reward the customer to switch fm high cost to
low cost channel.
• cost estimation, economic criterion
- Selecting channels
- No of yrs in business
- Other lines carried
- Growth & profit record
- Financial strength.
- Cooperativeness
- Service reputation

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 Channel design decisions
Evaluating channels
• Sales quota attainment
• Average inventory levels
• Customer delivery time
• Treatment of damaged goods
• Cooperation in promotional schemes.

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 Channel Management and Leadership

• Channel Captain: a dominant and controlling

member of a marketing channel

• Channel Conflict
– Horizontal Conflict
• Most often, horizontal conflict causes sparks between
different types of marketing intermediaries that handle
similar products
• Sometimes results from disagreements among channel
members at the same level

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 – Vertical Conflict
• Channel members at different levels find many
reasons for disputes
• Example: when retailers develop private brands to
compete with producers’ brands or when
producers establish their own retail outlets or
WWW Sites
– The Gray Market
• Grey Good: product made abroad under license
from a Indian firm and then sold in the Indian
market in competition with that firm’s own domestic
output
• Viewed by producers as undesired competition

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 Vertical Marketing Systems
• Vertical marketing system (VMS):
planned channel system designed to
improve distribution efficiency and
cost effectiveness by integrating
various functions throughout the
distribution chain
– Forward integration
– Backward integration

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• Administered marketing system: VMS
that achieves channel coordination when a
dominant channel member exercises its
power

• Corporate marketing system: a VMS in

which a single owner operates at each
stage in its marketing channel

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• Contractual marketing system: VMS
that coordinates channel activities through
formal agreements among channel
members like:
– Wholesaler-Sponsored Voluntary Chains
– Retail Cooperatives
– Franchises

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 Strategic planning

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 Strategic planning

• Perspective of Planning.
• How to make a Marketing plan.

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 Corporate and division strategic planning.
I Define the corporate mission

II Establish SBUs
Assign resources to SBU’s
- BCG Matrix
- GE model
- SWOT Analysis
III Assessing growth strategies.
- Strategic planning gap
- 3 intensive growth strategies ( Ansoff’s
product market Expansion Grid)

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 Marketing Planning: The Basics for
Strategy and Tactics
• Planning: Process of anticipating future
events and conditions and of
determining the best way to achieve
organizational goals

• Marketing planning: Implementing

planning activities devoted to achieving
marketing objectives
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• Strategic Planning versus Tactical
Planning

– Strategic planning: Process of determining

an organization’s primary objectives and
adopting courses action that will achieve
those objectives

– Tactical planning: Process that guides the

implementation of activities specified in the
strategic plan.
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 • Strategic Planning versus Tactical
Planning
– Top management
• Greater proportions of their time engaged in
planning
• Usually focus their planning activities on long-
range strategic issues
– Middle level managers
• Focus on operational planning; creating and
implementing tactical plans
– Supervisors
• Developing the specific programs to meet goals in
their areas of responsibility
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 Steps in the Marketing Planning
Process

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 Elements of strategic marketing planning

Corporate mission

opportunities objectives Resources

Corporate
&
SBU strategy

Marketing objective

Marketing strategies
Selection of target market
Marketing mix decisions

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 Defining the corporate mission.
• “ the purpose of Motorola is to honorably serve the needs of the
community, by providing products and services of superior quality.
At a fair price to our customer., to do this so as to earn adequate
profits., which is required for the total enterprise to grow. and by so
doing provide an opportunity for our employees and shareholders to
grow to achieve the reasonable personal objectives.

In fosys technologies limited

• “to achieve our objectives in an environment of fairness, honesty
and courtesy towards the clients, employments vendors and society
at large.”
E-bay
• ‘ We help people trade practically any thing on earth. We will
continue to enhance the online trading experience of all collectors,
dealers , smaller business, unique item seekers, bargain hunters ,
opportunity sellers and browsers.

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 To define mission

• To define mission – address ‘ What

business are we in”, Who is our customer?
• What is the value to the customer?
• they are best when they reflect the vision-
an impossible dream

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 3 major characteristics-Mission

• 3 major characteristics
• They focus on limited Number of goals.
• Stress the company’s major policies and
values.
• They define the major competitive sphere.
in terms of industry,
• Products and applications. competence,
• Market segment, Vertical , geographical
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 Defining the business
company Product Market
definition definition
Xerox We make We help
copying improve office
instruments productivity
Encyclopedia We sell We distribute
Britannica Encyclopedia information
carrier We make air We provide
conditioners climate control
and furnaces at home.

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 Establish SBUs

• The purpose is to develop separate

strategies and assign appropriate funding.

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 Methods for Marketing Planning

• Business Portfolio Analysis

– Strategic Business Units (SBUs) are key
business units within diversified firms
• A division, product line, or single product may
define an SBU
• Firms redesign their SBUs as market conditions
dictate

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 • The BCG Matrix
– Market Share/ Market Growth Matrix: a
marketing planning tool that classifies a
firm’s SBU’s or products according to
industry growth rates and market shares
relative to competing products
• Stars
• Cash Cows
• Dogs
• Question Marks

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 Corporate and Division
Strategic Planning

The Boston
Consulting
Group’s
Growth-
Share
Matrix

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BCG Market Share/Market Growth Matrix

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 1. Stars (=high growth, high market share)
- use large amounts of cash and are leaders in the business so
they should also generate large amounts of cash.
2. Cash Cows (=low growth, high market share)
- profits and cash generation should be high , and because of
the low growth, investments needed should be low. Keep profits
high
- Foundation of a company
3. Dogs (=low growth, low market share)
- avoid and minimize the number of dogs in a company.
- beware of expensive ‘turn around plans’.
- deliver cash, otherwise liquidate
4. Question Marks (= high growth, low market share)
- have the worst cash characteristics of all, because high
demands and low returns due to low market share
- if nothing is done to change the market share, question marks
will simply absorb great amounts of cash and later, as the
growth stops, a dog.
- either invest heavily or sell off or invest nothing and generate
whatever cash it can. Increase market share or deliver cash

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 • The Four strategies that can be
pursued.

• Build – increase market share

• Hold- preserve market share
• Harvest- increase short term cash
flow
• Divest- to sell and liquidate

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 Disadvantages

• High market share is not the only success

factor
• Market growth is not the only indicator for
attractiveness of a market

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 Assessing the SBU’s

The General Electric Matrix

The GE Matrix overcomes a number of the
disadvantages of the BCG .
• Firstly, market attractiveness replaces market
growth as the dimension of industry
attractiveness, and includes a broader range of
factors other than just the market growth rate.
• Secondly, competitive strength replaces
market share as the dimension by which the
competitive position of each SBU is assessed.

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 Corporate and Division
Strategic Planning

Market-
Attractivenes
s Portfolio
Strategies

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 Corporate and Division
Strategic Planning
Market-Attractiveness Portfolio Strategies

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 Factors that Affect Market Attractiveness

• - Market Size
- Market growth
- Market profitability
- Pricing trends
- Competitive intensity / rivalry
- Overall risk of returns in the industry
- Opportunity to differentiate products and services
- Segmentation
- Distribution structure (e.g. retail, direct, wholesale

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 Factors that Affect Competitive Strength

• -Strength of assets and competencies

- Relative brand strength
- Market share
- Customer loyalty
- Relative cost position (cost structure
compared with competitors)
- Distribution strength
- Record of technological or other innovation
- Access to financial and other investment
resources

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 SWOT
Analysis
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 Planning New Business
• If There is a strategic
gap between future
desired sale &
projected sales then
corporate has to plan
new Business.
Three Options are
available
• Intensive Growth
• Integrative Growth
• Diversification Growth

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 Intensive Growth

Current Products New Products

Product
Current Market Penetration Development
Market Strategy Strategy

New Market Development

Market Strategy Diversification
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 Integrative Growth

• Backward Integration
• Forward Integration

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 Diversification Growth

• Concentric Diversification ( Synergies with

existing Product Line)
• Horizontal Diversification ( New Product
with appeal to Old customers)
• Conglomerate Diversification ( New
product with no relation to the current
products or technology)

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Successful Strategies: Tools and
Techniques
• All planning strategies have the goal of
creating a sustainable competitive
advantage for a firm.

• An advantage where other companies

cannot provide the same offering or value.

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 • Porter’s Five
Forces Model

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 • First Mover and Second Mover
Strategies
– First mover strategy: Theory advocating
that the company that is first to offer a
product in a marketplace will be the long-
term market winner.

– Second mover strategy: Theory that

advocates observing closely the
innovations of first movers and then
introducing new products that improve on
the original offering to gain advantage in
the marketplace.

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 Porters generic strategies

• Overall cost leadership

• Differentiation
• Focus

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 Business Strategic Planning

Differentiation

Porter’s Generic
Focus Strategies

Overall cost leadership

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 Business Strategic Planning

Travelocity’s
Web site helps
users plan the
entire trip --
flights, lodging,
and car rental.

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 Strategic alliances

• Product service alliance

• Promotional Alliance
• Logistics Alliance
• Pricing Collaborations.

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 Business plan

• Contents of marketing plan

• Executive summary
• Marketing strategy
• Financial Strategy
• Implementation Control

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 Business Plan/ marketing plan

• Current marketing situation

• Opportunity & issue analysis
• Objectives
• Marketing strategy
• Action Programs
• Financial projections
• Implementation & Controls.

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 Recap
• Perspective of Planning.
• How to make a Marketing plan.

Define the corporate mission

II Establish SBUs
Assign resources to SBU’s
- BCG Matrix
- GE model
- SWOT Analysis
III Assessing growth strategies.
- Strategic planning gap
- 3 intensive growth strategies ( Ansoff’s product market
Expansion Grid)

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 Assignment

• select a diversified Indian company collect

information about its businesses,
Comment on mission, suggest how many
business units. And Swot analysis
• Make a business plan for the business you
want to take up.

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 Marketing plan

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 Your Marketing Plan should help
you
• describe,
•Who you are
•What you do
•Where you are headed
•How and when you expect to get there
•Why you will be successful

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 It should also be in sync with the:

•
•Strategic vision of your company
•A document to obtain investments
•A tool for planning, measuring and
improving performance
•A basis for sound decision-making

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 It should help you,

•
•To be specific
•To evaluate the feasibility of your ideas
•To provide planning, operating, and policy
guides
•To improve decision- making, efficiency,
and control
•To improve your chances of success

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 check list marketing plan
• •Mission Statement
•Company Vision
•Company Values/Approach
Company Description
•Legal Description
•Business History and Description
•Current Status
•Future Plans
•Key Management

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• Description of Product/Service
•Advantages of Product/Service
•Proprietary Features
•Product Development Activities
•Product Liability

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• •Industry Overview
•Company Niche
•Industry Participants
•Industry Trends and Growth Patterns
•Target Market Demographics (Customer Description)
•Target Market Trends and Growth Patterns
•Market Size and Potential
•Pricing Strategy and Positioning
•Advertising
•Other Marketing
•Public Relations and Promotions

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• •Direct Competitors
•Indirect Competitors
•Comparison of Strengths and Weaknesses
•Competitive Market Niche
•Market Share Analysis
•Barriers to Entry

•Sales Process Description

•Distribution Channels
•Service and Warranty Policies

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 Key Elements in Air Line Business
• Network of Destinations
• Fleet of Aircrafts
• Continuous maintenance and housekeeping of aircrafts
• Courteous and friendly staff who are empowered to
solve customer problems on the spot.
• Punctuality in flight timings
• Low/minimum waiting time on reservations, check-ins,
security and baggage retrieval

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 Contt.

• Continuous communication with the customer

before , during, and after a flight.
• In-flight and ground services.

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 Case of Jet Airways
• Collected information about demographic characteristics
of its customers.
• Frequency of flying
• Value they looked in airline
• Flying experience.
• Introduced customized menu
• Respect is shown to the customer by the
steward/stewardess when communicating by his /her
name.
• List of customers is always available to the crew.
• Loyalty was rewarded
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 Contt..
• To meet the competition it offered differential
fare structures depending on the number of days
ahead of the travel date passenger booked a
ticket.
• To reduce costs, it offered on line reservations to
its customers.
• To loyal customers they offer the facility to track
their mileage status and redeem it online.

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 Customer Value

• Customer Value is a set of benefits that

are reckoned by the customers.

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 Components of Value
1. Functional Value: What a product can
do?
2. Economic value: What is the price
advantage in a product/service?
3. Convenience Value : How easy is the
availability of the product/service?
4. Aesthetic Value: How a product tastes,
looks, smell, sound and feels?
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 Cont..
5. Social Value: What is the social
acceptability of the product?
6. Status /Prestige value: How a product
enhances sense of status/esteem?
7. Belief value: How a product fits into one’s
religious and cultural beliefs system.
8. How a product stimulate some
sentiments/memories/past associations?
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