Marketing Management -MB0030

BIDYUT ROY Roll No:510916600

SET – 2
Q.1 Write a short note on product life cycle.
Answer to question 1:
Product life cycle management is the succession of strategies used by management as a
product goes through its product life cycle.The conditions in which a product is sold changes
over time and must be managed as it moves through its succession of stages.

Product life cycle

The product life cycle goes through many phases, involves many professional disciplines, and requires
many skills, tools and processes. Product life cycle (PLC) has to do with the life of a product in the
market with respect to business/commercial costs and sales measures; whereas product life cycle
management (PLM) has more to do with managing descriptions and properties of a product through its
development and useful life, mainly from a business/engineering point of view. To say that a product
has a life cycle is to assert four things: 1) that products have a limited life, 2) product sales pass
through distinct stages, each posing different challenges, opportunities, and problems to the seller, 3)
profits rise and fall at different stages of product life cycle, and 4) products require different marketing,
financial, manufacturing, purchasing, and human resource strategies in each life cycle stage.

The different stages in a product life cycle are:

1.Market introduction stage
I:* costs are high
II:* slow sales volumes to start
III:* little or no competition - competitive manufacturers watch for acceptance/segment growth losses
IV:* demand has to be created
V:* customers have to be prompted to try the product
VI: makes no money at this stage
2.Growth stage
I:* costs reduced due to economies of scale
II:* sales volume increases significantly
III:* profitability begins to rise
IV:* public awareness increases
V:* competition begins to increase with a few new players in establishing market
VI:* increased competition leads to price decreases
3.Mature stage
I:* Costs are lowered as a result of production volumes increasing and experience curve effects
II:* sales volume peaks and market saturation is reached
III:* increase in competitors entering the market
IV:* prices tend to drop due to the proliferation of competing products
V:* brand differentiation and feature diversification is emphasized to maintain or increase market
share
VI:* Industrial profits go down
4.Saturation and decline stage
I:* costs become counter-optimal
II:* sales volume decline or stabilize
III:* prices, profitability diminish
IV:* profit becomes more a challenge of production/distribution efficiency than increased sales
A new product progresses through a sequence of stages from introduction to growth, maturity, and
decline. This sequence is known as the product life cycle and is associated with changes in the
marketing situation, thus impacting the marketing strategy and the marketing mix.
The product revenue and profits can be plotted as a function of the life-cycle stages as shown in the
graph below:
Product Life Cycle Diagram
 Marketing Management -MB0030
BIDYUT ROY Roll No:510916600

3 Explain the product mix pricing strategies with example.

Answer to Question3:

Price
• The money charged for a product or a service
• Cost is incurred to the supplier/producer in supplying/producing the product
• Price is paid by the buyer to acquire the product

Pricing Products
• The amount of money charged for a product or service, or the sum of the values that consumers
exchange for the benefits of having or using the product or service
• Price is the only element in the marketing mix that produces revenue; all other elements
represent cost.
• Price is also one of the most flexible elements of the marketing mix.

Pricing Products
• The most common mistakes in setting prices are;
 pricing that is too cost oriented
 prices that are not revised often enough to reflect market changes
 pricing that does not take rest of marketing-mix into account
 Marketing Management -MB0030
BIDYUT ROY Roll No:510916600

 prices that are not varied enough for different products, market segments &
purchase occasions

Four views of price

• Economist’s view: Price is set by the forces of supply & demand
• Accountant’s view: Price should cover costs so that profit can be earned
• Customer’s view: Price has to represent good value
• Marketer’s view: Pricing is an opportunity to gain competitive advantage

Factors influencing pricing decisions

• Costs of production
• Competitive prices
• Customer’s perception of value
• Customer demand
• Target market
• Marketing mix
• Stage in the product lifecycle
• State of the economy
• Expectations of distributors
• State of competition in the market

Product Mix
• Total composite of products offered by a particular organization
• Consists of both product lines and individual products
• Product line is a group of products within the product mix that are closely related, either because
they function in a similar manner, are sold to the same customer groups, are marketed through
the same types of outlets, or fall within given price ranges.

Product Mix Pricing Strategies

Product line pricing :
• Setting price steps between various products in a product line
• Is based on the cost differences between the products, customer evaluations of different
features & competitor’s prices
e.g. Sony Trinitron & Sony WEGA TVs

Product lining is the marketing strategy of offering for sale several related products. Unlike product
bundling, where several products are combined into one, lining involves offering several related products
individually. A line can comprise related products of various sizes, types, colors, qualities, or prices. Line
depth refers to the number of product variants in a line. Line consistency refers to how closely related the
products that make up the line are. Line vulnerability refers to the percentage of sales or profits that are
derived from only a few products in the line.

The number of different product lines sold by a company is referred to as width of product mix. The total
number of products sold in all lines is referred to as length of product mix. If a line of products is sold with
the same brand name, this is referred to as family branding. When you add a new product to a line, it is
referred to as a line extension. When you add a line extension that is of better quality than the other
products in the line, this is referred to as trading up or brand leveraging. When you add a line extension
that is of lower quality than the other products of the line, this is referred to as trading down. When you
trade down, you will likely reduce your brand equity. You are gaining short-term sales at the expense of
long term sales.

Image anchors are highly promoted products within a line that define the image of the whole line. Image
anchors are usually from the higher end of the line's range. When you add a new product within the
current range of an incomplete line, this is referred to as line filling.

Price lining is the use of a limited number of prices for all your product offerings. This is a tradition started
in the old five and dime stores in which everything cost either 5 or 10 cents. Its underlying rationale is that
 Marketing Management -MB0030
BIDYUT ROY Roll No:510916600

these amounts are seen as suitable price points for a whole range of products by prospective customers.
It has the advantage of ease of administering, but the disadvantage of inflexibility, particularly in times of
inflation or unstable prices.

There are many important decisions about product and service development and marketing. In the
process of product development and marketing we should focus on strategic decisions about product
attributes, product branding, product packaging, product labeling and product support services. But
product strategy also calls for building a product line.

Optional product pricing:

Pricing of optional or accessory products along with the main product.

Companies will attempt to increase the amount customer spend once they start to buy. Optional 'extras'
increase the overall price of the product or service. For example airlines will charge for optional extras
such as guaranteeing a window seat or reserving a row of seats next to each other.

Captive procduct pricing:

Setting price for products that must be used with the main product. e.g. HP printer and cartridges.

Where products have complements, companies will charge a premium price where the consumer is
captured. For example a razor manufacturer will charge a low price and recoup its margin (and more)
from the sale of the only design of blades which fit the razor.

Item made specifically for use with another item, usually from the same manufacturer. For example,
shaving blades for a razor, parts for a machine, software for a computer or operating system. Pricing of
captive product is often based on a product-mix pricing strategy where a low mark-up is set for the
companion main product (such as a razor or operating system) with a high mark-up for the supplies (such
as blades or application software).

By product pricing:
• Setting a price for by products in order to make the main products price
competitive
• Product bundle pricing: - Combining several products & offering the bundle at a
reduced price - e.g. Combo deals

Q.4 What are various logistics functions? Describe in brief.

Logistics can be classified as an enterprise planning framework for material management, information,
service and capital flows. Logistics when seen in the context of the modern day prevalent work
environment also includes information that is complex in nature besides giving importance to all the
communication and control system that are essential for efficient working of the organization.
In the words of a layman, logistics can be defined as having the right type of product or service at the
right place, at the right time, for a right price and in the right condition.

Logistics has evolved as a common and well-known business concept because of the ever increasing
complexities of modern day business. The primary goal of logistics is to effectively manage the project
life cycles and resultant efficiency. This has greatly evolved with a logistics manager's role in
efficiently designing the products of the company keeping in view the principle of efficient system of
supply chain management.

In business terms, it can be summarized as a competitive strategy adapted by the enterprise to meet
and exceed the expectations of its existing and prospective customers. It refers to a complete process
of total supply chain management that is established to achieve a state of perfection through
efficiency and integration. Logistics does not mean a single work activity but refers to a group of
activities performed to attain the goal of a business enterprise that is maximizing the Profits. This may
involve steps like purchasing, planning, coordination, transportation, warehousing, distribution and
customer service. A business can run without profits, but it needs money to fund its services, pay its
employees and grow its customer base. Logistics play an important part in the present business world;
it cannot be neglected by an enterprise focused on growth and profitability.
 Marketing Management -MB0030
BIDYUT ROY Roll No:510916600

Logistics is a mixture of several professional disciplines, such as:

1. Planning 2. Controlling 3. Directing 4.Coordination 5. Forecasting 6. Warehousing and
transportation 7. Facility location 8. Inventory management

Logistics refers to various functions associated with the organizational disciplines of planning,
managing and controlling the flow of goods and services, people and related information. It includes all
the steps that are required to achieve the timely delivery of a product, goods or services from the
point of origin to the point of destination.

As per the Council of Logistics Management, logistics has been defined as the part of the process of
supply chain that plan, control and implement an effective and efficient flow for the purpose of storage
of goods and services and other related information from the point of commencement to the point of
final consumption with a aim to satisfy the requirements of its existing and prospective customers.

All activities that are involved in the movement of goods and services from the point of origin to the
point of final consumption are grouped under the term 'logistics'. The art of managing or supervising
all these activities when grouped together as a collective unit, are placed under 'logistics
management'. People who are authorized or given the task of managing the aspect of logistics
management are referred to as 'distribution managers' or 'logistics managers'.

Logistics can be referred to as an enterprise planning network used for the purpose of information,
material management, capital flows. In the words of a layman, it can be described as delivering at the
right time, for the right price and in the right condition. When seen in the modern day competitive
business scenario, it includes complex information along with importance to the control and
communication systems of the organization. No matter the size and the area of operations of an
organization, logistics information plays an important role in the achievement of the goals of the
organization.

Functions of Logistics: Logistics has evolved in the present very competitive business environment
and is primarily concerned with the efficient and effective management of the project life cycles of the
organization and its resultant efficiencies. It can be described as a complete process that involves the
total supply chain management that is formed for the purpose of achievement of common business
objectives of the organization. The role of a logistics manager and executive has changed in a
significant manner and they are now entrusted with the task of not only ensuring delivery of products
and services, internally or externally in the organization's premises, but also to ensure the
development of logistics systems for optimal utilization of the available resources of the organization
beside the achievement of business goals.

Logistics does not refer to a single activity performed for delivery of goods, it extends to delivery of
goods at the right time, at the right place, in the right condition and at the right price. The logistics
manager ensures that no fraud is committed during the logistics process and the logistics systems run
in accordance with the predefined plans and policies of the organization. An effective and efficient
logistics system ensures the smooth functioning of the organization and it is rightly considered as an
integral part of the plans of the organization.

Logistics business plan The plan must be clearly defined so that there is no confusion in the minds of
the logistics team. This clarity will help to accomplish the desired objectives of the organization. It
must be drafted in accordance with the objectives of the organization. Its aim must be to provide
timely delivery of goods besides rendering normal functions of logistics under strict deadlines and in
conformity with business goals.

Q.5 What is IMC? Describe the communication development process in brief.

Integrated Marketing Communications:
Definition:
A management concept that is designed to make all aspects of marketing communication such as
advertising, sales promotion, public relations, and direct marketing work together as a unified force,
rather than permitting each to work in isolation.

Integrated Marketing Communications is a term used to describe a holistic approach to marketing

communication. It aims to ensure consistency of message and the complementary use of media. The
concept includes online and offline marketing channels. Online marketing channels include any e-
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BIDYUT ROY Roll No:510916600

marketing campaigns or programs, from search engine optimization (SEO), pay-per-click, affiliate,
email, banner to latest web related channels for webinar, blog, micro-blogging, RSS, podcast, and
Internet TV. Offline marketing channels are traditional print (newspaper, magazine), mail order, public
relations, industry relations, billboard, radio, and television. A company develops its integrated
marketing communication program using all the elements of the marketing mix (product, price, place,
and promotion).
Integrated marketing communication is integration of all marketing tools, approaches, and resources
within a company which maximizes impact on consumer mind and which results into maximum profit
at minimum cost. Generally marketing starts from "Marketing Mix". Promotion is one element of
Marketing Mix. Promotional activities include Advertising(by using different medium), sales promotion
(sales and trades promotion), and personal selling activities. It also includes internet marketing,
sponsorship marketing, direct marketing, database marketing and public relations. And integration of
all these promotional tools along with other components of marketing mix to gain edge over
competitor is called Integrated Marketing Communication.

Reasons for the Growing Importance of IMC:

• Several shifts in the advertising and media industry have caused IMC to develop into a primary
strategy for marketers:
• From media advertising to multiple forms of communication.
• From mass media to more specialized (niche) media, which are centered around specific target
audiences.
• From a manufacturer-dominated market to a retailer-dominated, consumer-controlled market.
• From general-focus advertising and marketing to data-based marketing.
• From low agency accountability to greater agency accountability, particularly in advertising.
• From traditional compensation to performance-based compensation (increased sales or
benefits to the company).
• From limited Internet access to 24/7 Internet availability and access to goods and services.

The goal of selecting the elements of proposed integrated marketing communications is to create a
campaign that is effective and consistent across media platforms. Some marketers may want only ads
with the greatest breadth of appeal: the executions that, when combined, provide the greatest number
of attention-getting, branded, and motivational moments. Others may only want ads with the greatest
depth of appeal: the ads with the greatest number of attention-getting, branded, and motivational
points within each.

Although integrated marketing communications is more than just an advertising campaign, the bulk of
marketing dollars is spent on the creation and distribution of advertisements. Hence, the bulk of the
research budget is also spent on these elements of the campaign. Once the key marketing pieces have
been tested, the researched elements can then be applied to other contact points: letterhead,
packaging, logistics, customer service training, and more, to complete the IMC cycle.

Q.6 What are alternative approaches to marketing while going international?

Study Pepsi’s international marketing strategy.
INTERNATIONAL MARKETING
Marketing grows even more complex; it is an ever-evolving discipline. It builds on past while taking
advantage of new opportunities. Each new challenge demands a firm grasp of what has happened
before, a clear picture of the present situation, and an understanding of the n-lost important new
options at the moment. In. general, the centre of attention in marketing has to shift away from the
instruments and concentrate on information. Creation of personalized customer relationships,
calculating the lifetime value of customer and investing in it, and satisfying and retaining existing
customers and using predictive modelling to target those customers n-most similar to existing
customers will be the ultimate approaches to face the marketing challenges of the 21st century. As an
art or science, marketing is undergoing dramatic and exciting changes, and the field promises to be
just as dynamic in the years ahead. Marketing has emerged as the most critical function in today's
international business climate; even the smallest of the firms are now using innovative marketing
techniques due to increasing global competition. As soon as you click on your TV, a commercial for
Ariel or Brite washing powder balloons onto the screen, followed by an advertisement of Shaukat
Khanum Memorial Hospital or the Edhi Foundation asking for your contributions towards cancer
research or zakat. You stroll down the lifestyle store counter and pick out the Citibank/AHZ Grindlays
Visa card membership brochure, allowing you to apply directly for credit cards. A representative from
Patient's Aid Foundation gives a talk at your university, soliciting new memberships and volunteers for
blood donations.. All these situations involve marketing. According to the American Association,
marketing is "the process of planning and executing the conception, pricing, promotion, and
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BIDYUT ROY Roll No:510916600

distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational
goals." The broad definition takes into account all parties involved in the marketing effort: members of
the organization that produces goods and services, resellers of those goods and services and
customers or clients.

Virtually all businesses realize that marketing plays a crucial role in their success. Marketing texts
initially had a strong bias towards packaged consumer goods, which no doubt are important; yet they
overlooked consumer services, industrial goods and services, advanced technology products, non-
profit enterprises, and government agencies. Today, marketing has greatly come in play with semi-
conductors, commercial banking, industrial chemicals, health care, computer integration services,
agricultural equipment, government services, and many other products outside the consumer
mainstream.

Any company is faced with marketing challenges, even the market leaders. Many of these challenges
rely upon perception of the market. Thus Marketing is required. In most of these cases advertising
helps, but that is the most expensive method.
The unknown alternative solution Your solution addresses a common problem differently but nobody
knows. What to do: - Create awareness by press releases, industry analysts and bloggers - Start
blogging in order to get attention - Improve the SEO of your website in order to be found on the
Internet - Create content related to your solution in order to be found on the Internet - Be present on
trade shows and on conferences on a tight budget

COMPANIES TO EXPAND INTERNATIONALLY BY:

1. Determine how much you can afford to invest in your international expansion efforts.
2. Plan at least a two-year lead time for world market penetration.
3. Pick a product or service to take or source overseas.
4. Conduct market research to identify your prime target markets.
5. Research the data to predict how your product will sell in a specific geographic location.
6. Find cross-border customers.
7. Establish a direct or indirect method of export.
8. Hire a good lawyer, a savvy banker, a knowledgeable accountant and a seasoned transport
specialist, each of whom specializes in international transactions.
9. Prepare pricing, and determine landed costs.
10. Set up terms, conditions and other financing options.
11. Brush up on documentation and export licensing procedures.
12. Make personal contact with your new targets.
13. Explore cross-border alliances and partnerships.

International Marketing Study – PEPSI

Background of Beverage Industry in India
• Coca-Cola’s past in India
Present from 1958 until 1977
• Industry Shakeup in 1988
• State of the Industry in 1993
45% of market consisted of small manufacturers
$3.2 million market share
Low Demand for Carbonated Drinks
• Average of 3 servings a year/person in 1989
• Average of 1404 servings a year/person in U.S. in 2003
Political Environment in India
• Key Issues
India seen as unfriendly to foreign investors for many years
The “Principle of Indigenous Availability”
Policy banning imports being sold in India
The Liberalization of India’s Government in 1991
“New Industrial Policy”
Trade rules & regulations simplified
Foreign investment increased
Pepsi enters in 1986
Coca-Cola follows in 1993
Political Environment in India
• Indian Laws
Unlawful to market under their Western name in India
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BIDYUT ROY Roll No:510916600

Pepsi became “Lehar Pepsi”

Coca-Cola merged with Parle and became “Coca-Cola India”
• Different Laws for Pepsi and Coke
• Coca-Cola agreed to sell off 49% of its stock as a condition of entering and buying out
an Indian company
• Pepsi entered earlier, and was not subject to this
Political Environment in India
• India forced Coke to sell 49% of its equity to Indian investors in 2002
• Coke asked for a second extension that would delay it until 2007 India denied this
• Pepsi was held to this since they entered India in a different year.
• Coke asked the Foreign Investment Promotion Board to block the votes of the Indian
shareholders who would control 49% of Coke
Timing of Market Entry
Pepsi (early entry-1986)
• Advantages
Entered the market Before Coca-Cola and was able to gain a foothold in the market
while it was still developing
Gained 26% market share by 1993
• Disadvantages
Were forced to change their name to Lehar Pepsi
Govt. limited their soft drink sales to less than 25% of total sales
Struggled to fight off local competition
Timing of Market Entry
Coca-Cola (late entry-1993)
• Advantages
Were able to buy 4 bottling plants from industry leader Parle
Also bought Parle’s leading brands: Thums Up, Limca, Citra, Gold Spot and Mazaa
Set up 2 new ventures with Parle to bottle and market product
• Disadvantages
Denied entry until 1993 because Pepsi was already there
Harder to establish market share with Pepsi there
Were not allowed to buy back 49% of equity
Product Policies
• Catering to Indian tastes
• Entering with products close to those already available in India such as colas, fruit
drinks, carbonated waters
• Waiting to introduce American type drinks
• Coca-Cola introducing Sprite recently
Introducing new products
• Bottled water
• Responses to India’s Enormity
• Promotional Activities
Both advertise and use promotional material at Navrartri
Pepsi gives away premium rice and candy with Pepsi
• Use of different campaigns for different areas of India
“ India A” campaigns try to appeal to young urbanites
“ India B” campaigns try to appeal to rural areas
Responses to India’s Enormity
Pricing Policies
• Pepsi started out with an aggressive pricing policy to try to get immediate market
share from Indian competitors
• Coca-Cola cut its prices by 15-25% in 2003
• Attempt to encourage consumption to try to compete with Pepsi and gain market
share
• Responses to India’s Enormity
Distribution Arrangements
• Production plants and bottling centers placed in large cities all around India
• More added as demand grew and as new products were added
• Pepsi’s “Glocalization Strategies”
What is “Glocalization”?
Global + Localization = Glocalization
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BIDYUT ROY Roll No:510916600

• By taking a product global, a firm will have more success if they adapt it specifically to the
location and culture that they are trying to market it in.

Pepsi’s Glocalization
Pepsi forms joint venture when first entering India with two local partners, Voltas and Punjab Agro,
forming “Pepsi Foods Ltd”.
In 1990, Pepsi Foods Ltd. changed the name of their product to “Lehar Pepsi” to conform with foreign
collaboration rules.
In keeping with local tastes, Pepsi launched its Lehar 7UP in the clear lemon category.
Advertising is done during the cultural festival of Navrartri , a traditional festival held in the town of
Gujarat which lasts for nine days.
Pepsi’s most effective glocalization strategy has been sponsoring world famous Indian athletes, such
as cricket and soccer players.

Coke or Pepsi in the Long Run?

Pepsi
• Better marketing and advertising strategies
• More widely accepted
• More market share
Coke
• Government conflicts
• Trailing Pepsi in market share
• Pepsi will fare better in the long run
Pepsi’s Lessons Learned
• Beneficial to keep with local tastes
• Beneficial to pay attention to market trends
• Celebrity appeal makes for exceptional advertising
• It pays to keep up with emerging trends in the market
Coca-Cola’s Lesson’s Learned
• Pay specific attention to deals made with the government
• Establish a good business relationship with the government
• Investment in quality products
• Advertising is crucial