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Marketing Management-II

by

Prof. Ravi Shekhar Kumar

XLRI - Xavier School of Business, Jamshedpur
ravishekhar@xlri.ac.in
Contact No. 3186

Brief of Course Outline: Agenda

Integrating Firms activities with marketing strategy
Rationale behind marketing activities
Understanding 4Ps & related concepts
Marketing in Special condition

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Brief of Course Outline

Functional Knowledge
Quiz/Test/Assignment
:
30%
Class Participation/Case Analysis:
20%
Group Project
:
20%
End Term
:
30%
Note:
Class Participation/Case Analysis will be assessed by instructor based on
preparation for class, participation, sincerity, regular attendance,
maintaining discipline & general behavior in the class.

Please respect others in the class.

Group Project: Group of 6 members shall work on a topic. Submission
dates will shared later.

Brief of Course Outline

Decision making will also be learnt in the course
Visualization is through identifying the problem
Analysis is through analysis of various options
Solution is through how the participants are translating the analysis
into decision.

Decision making will be evaluated through course

embedded Case Analysis.
Grading will be as per institute norms.

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What is Marketing
Marketing is
the activity, set of institutions, and processes for
creating, communicating, delivering and exchanging
offerings
that have value for the customers, clients, partners
and society at large. ..(AMA, 2007)

But, What has been main theme of Marketing?

Marketing revolves around exchange process.
What is exchanged?
What benefits & cost a consumer incur in
exchange process?

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Customer Delivered Value

Product value
Services value
Personnel value

Total
customer
value

Image value

Customer
delivered
value

Monetary cost
Time cost
Energy cost

Total
customer
cost

Psychic cost
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4 Ps vs 4 Cs
Product

Price

Place

Promotion

provides

represents

provides

enables 2 way

Customer Solution

Customer Cost

Convenience

Communication
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What is a product/Service?
A product is anything that can be offered to a market for
attention, acquisition, use, or consumption that might satisfy
a need or want.
Palmer (1994) defines Service as
The production of an essentially intangible benefit, either
in its own right or as a significant element of a tangible
product, which through some form of exchange satisfies an
identified consumer need.

What is a Brand?
A name becomes a brand when consumers associate it
with a set of tangible and intangible benefits that they
obtain from the product or service
It is the sellers promise to deliver the same bundle of
benefits/services consistently to buyers
A brand is therefore more than a product, as it can have
dimensions that differentiate it in some way from other
products designed to satisfy the same need.

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Five Levels of Product

Potential product
Augmented product
Expected product
Basic product
Core benefit

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Levels of Product
Core benefit is the service or benefit customer is really buying.
Basic Product is a basic version of the product containing only
those attributes or characteristics absolutely necessary for its
functioning but with no distinguishing features.
Expected product is a set of attributes or characteristics that
buyers normally expect & agree to when they purchase a
product.
Augmented product includes additional product attributes,
benefits, or related services that distinguish product from
competitors.
Potential product includes all the augmentations &
transformations that a product might ultimately undergo in future.

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Illustration: Five Levels of Meaning for a Product

Core Benefit : A hotel guest is buying rest & sleep.
Basic Product: Hotel room includes a bed, bathroom,
towels, desk & dresser.
Expected Product: Hotel guests minimally expect a clean
bed, fresh towels, working lamps, and a relative degree of
quiet.
Augmented Product: Prompt room service, internet,
bathtub, meeting area
Potential product: Spa, Home feel, private swimming Pool,
Home Theatre

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Illustration: Five Levels of Meaning for a Product

Core Benefit : Traveler buys Transportation
Basic Product: Unreserved class in Train
Expected Product: Reserved Class
Augmented Product: Travel in 1st/ Executive Class
Potential product: Saloon with all facilities

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Firms Offerings
Represent Firm in market
place
Forms
Product
Services
Ideas
Combination

Why offer?
Profitability
Awareness & image
Customer satisfaction
Market share
Strategic implications
Long-term viability
Competitiveness

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Classification of Firms Offering

Based on Durability & Tangibility
Based on Consumer
Based on Evaluation Criteria

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Classification on Durability & Tangibility

Non-durable Goods
Tangible goods normally consumed in one or few uses. Eg- Soft
drink, shampoos

Durable
Tangible goods that normally survives many uses Eg-Refrigerator

Services
Intangible, inseparable, variable, & perishable products that
normally require more quality control, supplier credibility, &
adaptability. Eg- hair cut, legal advice, appliance repair

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Tangibility Spectrum

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Categories with Service Mix

Pure
Tangible
Good

Tangible
Good
with
Services

Hybrid

Major
Pure
Service Service
withGoods

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Classification based on Consumer

Consumer Goods
Industrial Goods

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Consumer Goods Classification

Convenience Products

Shopping Products

Buy frequently & immediately

> Low priced
> Many purchase locations
> Includes:
Staple goods
Impulse goods
Emergency goods

Buy less frequently

> Gather product information
> Fewer purchase locations
> Compare for:
Suitability & Quality
Price & Style

Specialty Products

Unsought Products

Special purchase efforts

> Unique characteristics
> Brand identification
> Few purchase locations

New innovations
> Products consumers dont want to
think about.
> Require much advertising &
personal selling
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Industrial Goods classification

Materials & Parts
Raw materials: Farm Product (Wheat, Cotton) & Natural Product (Iron ore,
Crude Petroleum)

Manufactured materials & Parts: Component Material (Iron, Yarn,

Cement) & Component Parts (Motors, Tyre, castings)

Capital items
Installation (Factories Building & heavy equipment)
Equipment (Hand tool, Lift Truck)

Supplies & Business services

Maintenance & Repair Item (Paints, nail, broom)
Operating Supplies (Lubricants, writing paper)
Maintenance & Repair Service (Window Cleaning)
Business Advisory Service (Legal, Management consulting)

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Classification based on Evaluation Criteria

Search Goods
Consumer can evaluate product attributes like
sturdiness, size, color, style, design, weight & ingredient
composition by visual inspection. Eg: Grocery products
Experience goods
Consumer cannot assess quality by inspection and actual
product trial & experience is necessary to judge
performance. Eg: Vacation
Credence Goods
Consumer may rarely learn the product attributes. Eg:
Insurance Coverage, Hospital services.

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Goods vs Service Continuum

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What do you mean by Product Portfolio?

The assortment of products that a company offers
to a market
also called Product Mix

What are its components?

Width of Product Mix

Length of Product Mix
Depth of Product Mix
Consistency of Product Mix

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Product Mix
Width - number
of different
product lines
Length - total
number of items
within the lines

Product Mix all the product

lines offered

Depth - number
of versions of
each product
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Illustration of Product Mix of HUL

Width of Product Mix
How many different product lines?
Personal Wash; Skin Care & Cosmetics; Hair Care; Deodorants; Oral
Care; Fabric Care; Kitchen & Floor Care; Tea; Coffee; Food; & Ice
Cream

Length of Product Mix

Number of items in the mix
For Personal Wash: Lux; Lifebuoy; Liril 2000; Hamam; Breeze; Dove;
Rexona

Depth of Product Mix

Number of variants offered in a product line

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Illustration of Product Mix of HUL

Personal
Wash

Skin
Care &
Cosmet
ics

Hair
Care

Deodor
ants

Oral
Care

Fabric
Care

Kitchen
& Floor
Care

Tea

Coffee

Food

Ice
Cream

Lux

Fair &
Lovely

Sunsilk

Axe

Closeup

Surf
Excel

Domex

Brook
Bond
Red
Lable

Brooke
Bond
Bru

Kissan

Kwality
Walls

Lifebuoy

Ponds

Clinic
Plus

Rexona

Pepsoda
nt

Rin

Cif

Lipton

Knorr

Liril 2000

Vaselin
e

Clear

Active
Wheel

Vim

Brook
Bond 3
Roses

Annapur
na

Hamam

Aviance

Sunlight

Brook
Bond
Taza

Modern

Breeze

Lakme

Comfort

Brook
Bond Taj
Mahal

Dove

Ayush

Rexona

Brook
Bond
Sehatma
nd
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Why do firms have Product Portfolio?

Targeting Multiple Segments

Diversifying Risk
Increase Revenue
Economies of Scope

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Product Portfolio Management (PPM)

What are tools for Product Portfolio Management?
Financial Measure
Market Measures
Product Related Measure

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PPM : Financial Measure

Measures are
ROI, ROS, Payback, NPV, Economic Profit,.
What are advantages?
Clarity, Conceptual simplicity, Comparable results
But.What could be disadvantages?
Silence on strategic & market issues; Potential
misallocation of investment funds; Uncertainty in
estimates
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