MB0046 Marketing Management

Q.1 A. Explain the six criteria for effective market segmentation Ans. The six criteria for effective market segmentation are as follows: Identity The marketing manager must have some means of identifying members of the segment i.e., some basis for classifying an individual as being or not being a member of the segment. There must be clear differences between segments. Members of such segments can be readily identified by common characteristics as they display similar behavior. Accessibility It must be possible to reach the different segments in regard to both promotion and distribution. In other words, the organization must be able to focus its marketing efforts on the chosen segment. Segments must be accessible in two senses. First, firms must be able to make segmented customers aware of products or services. Second, they must get products to them through the distribution system at a reasonable cost. Responsiveness A clearly defined segment must react to changes in any of the elements of the marketing mix. For example, if a particular segment is defined as being cost-conscious, it should react negatively to price rises. If it does not, this is an indication that the segment needs to be redefined. Size The segment must be reasonably large to be a profitable target. It depends upon the number of people in it and their purchasing power. For example, makers of luxury goods may appeal to small but wealthy target markets whereas makers of cheap consumption goods may sell to a large but relatively poor target markets. Nature of demand It refers to the different quantities demanded by various segments. Segmentation is required only if there are market differentiation in terms of demand. The marketing manager should not only be able to find out the total demand and the differences in demand patterns in each of these segments. Measurability The purpose of segmentation is to measure the changing behavioral pattern of consumers. For example, the segment of a market for a car is determined by a number of considerations, such as economy, status, quality, safety, comforts, etc. Q.1 B. Discuss the types of target marketing strategies. Ans. The targeting strategy largely depends on the kind of product market coverage that the firm plans for the future. The product market coverage strategies are broadly classified as undifferentiated marketing, concentrated marketing, and differentiated marketing strategies. Undifferentiated marketing strategy or mass marketing strategy In the absence of a proper mechanism to classify the market into a number of market segments and analyze their potential, many firms decide on the mass marketing strategy. In this case, the marketer goes against the idea of a differentiated market and decides to sell the product to the whole market. Here the marketing manager ignores the idea of segment characteristics and differences, and develops a unified marketing programme for the entire market. This strategy keeps the overall marketing costs low and makes it easier to manage and track the market forces uniformly. The marketer tries to find out commonalities across various segments rather than focusing on the differences between segments. Concentrated marketing strategy In the second alternative strategy, the marketing manager decides to enter into a selected market segment instead of all the available market segments. When resources and market access are limited and the company has to face intense competition, the marketing manager has to stretch

the budget for market coverage. In this case, the company is likely to follow the concentrated marketing strategy.

Differentiated marketing strategy Many marketers choose to target several segments or niches with a differentiated marketing offer to suit each market segment. Maruti is the leading automobile company, which has the distinction of having different products for different market segments. Q.2 Explain the consumer buying decision process. Ans. Consumer buying decision process is explained through a number of stages and is influenced by ones psychological framework comprising the individuals personality, learning process, levels of motivation, perception towards products and brands, and formation of positive attitude towards the brand. Stages of Consumer buying decision process are as follows: 1 Problem recognition A buying process starts when a consumer recognizes that there is a substantial discrepancy between his/her current state of satisfaction and expectations in a consumption situation. A need can be activated through internal or external stimuli. The basic needs of common men rise to a particular level and become a drive. From their previous experiences, they know how to satisfy these needs like hunger, thirst, sex, etc. This is a case of internal stimulus. A need can also be aroused by an external stimulus such as sighting a new product in a shop while purchasing other usual products. 2 Information search After need arousal, the behavior of the consumer leads towards collection of available information about various stimuli. In this case, information about products and services are gathered from various sources for further processing and decision-making. The first source of consumer information is the internal source. This means the consumer first search the information regarding the relevant product from his/her inner memory. If the information is not available from internal source for making a purchase decision he or she may collect information from external sources. External sources for desired information can be grouped into four categories. Personal sources (family, friends, neighbors, and peer group) Commercial sources or market dominated sources (advertisements, salesmen, dealers, and company owned sales force) Public sources (mass media, consumer rating organizations, and trade association publications) Experiential sources (handling, examining, and using the product) The marketer will find it worthwhile to study the consumers information sources when: A substantial percentage of the target market engages in the search The target market shows some stable patterns of using the respective information sources. 3 Alternative evaluation Once interest in a product(s) is aroused, a consumer enters the subsequent stage of evaluation of alternatives. Evaluation leads to formation of buying intention that can be to either purchase or reject the product/brand. The final purchase will however depend on the strength of the positiveintention, which is the intention to buy.

4 Purchase decision Finally the consumer arrives at a purchase decision. Purchase decisions can be any one of the three - no buying, buying later, and buy now. No buying takes the consumers to the problem recognition stage as their consumption problem is not solved and they may again get involved in the process as we have explained. A postponement of buying can be due to a lesser motivation or evolving personal and economic situation that forces the consumer not to buy now or postponement of purchase for future period of time. If positive attitudes are formed towards the decided alternative, the consumer will make a purchase. 5 Post-purchase behavior Post-purchase behavior refers to the behavior of consumers after their commitment to a product has been made. It originates out of consumers experience regarding the use of the product and is indicated in terms of satisfaction. This behavior is reflected in repeated purchases or abstinence from further purchase. A satisfied product-use experience leads to repeated purchase, referrals from satisfied customers to new customers, higher usage rate, and also brand advocacy. Q.3 A. Discuss the Henry Assael model on buying decision behaviour. Ans. Henry Assael has come up with an explanation to analyze why consumers buy the goods they buy. He explained the relationship between the level of involvement by the consumers in the purchase of goods and services and the level at which diverse goods or services differ from one another.

Complex buying behaviour Consumers are highly involved in a purchase and aware of significant differences among brands. This is usually the case when the product is expensive, bought infrequently, risky, and highly self-expressive. Typically the consumers dont know much about the product category and have more to learn. Example: personal computer. Dissonance-reducing Sometimes, the consumer is highly involved in a purchase but sees little differences in the brands. The high involvement is based on the fact that the purchase is expensive, infrequent, and risky. Example: carpet. After purchasing the carpet, consumers might experience dissonance that stems from noticing certain disquieting features of the carpet or hearing favourable things about other carpets. Habitual buying behaviour Many products are bought under conditions flow consumer involvement and the absence of significant brand differences. Considering salt, consumers have

little involvement in this product category. They go to the store and reach for a brand. If they keep reaching for the same brand, it is out of habit and not strong brand loyalty. Variety-seeking buying Some buying situations are characterised by low consumer involvement but significant brand differences. Here consumers often do a lot of brand switching. Consumers do the brand switching for the sake of variety rather than dissatisfaction. Example: wafer potato chips. Q.3 B. Explain the five stages of Adoption Process. Ans. A large number of factors are examined to know the reaction of consumers regarding adoption of a new product. The process of accepting new product ideas by individual customers is popularly known as adoption process. The spread of this innovation across the society is known as diffusion process. Diffusion is the process by which the acceptance of an innovation (a new product, a new service, new ideas, or new practice) is spread by communication (mass media, sales people, or informal conversations) to the members of the social systems. The key elements of diffusion process include the degree of innovativeness of the product, the channels of communication, the social system, and the time required for innovation. The five stages of adoption process are: 1. Awareness During the first stage of adoption process, the product innovation is explained to the consumers. This process gives information about the new product or service. 2. Interest When consumers develop an interest in the product or product category, they search for information about how the innovation can benefit them. 3. Evaluation The evaluation stage represents a kind of mental trial of the product innovation. Only if the consumers evaluation of the innovation is satisfactory, they will actually try the product. In case the evaluation is unsatisfactory, the product is automatically rejected. 4. Trial In this stage, consumers use the product on a limited basis. Their experience with the product provides them with the critical information that they need to adopt or reject it. 5. Adoption In this stage, consumers decide to make full and regular use of the product. Q.4 Describe the components of the micro environment of marketing. Ans. Micro environment is the immediate environment in which marketers have to take decisions. The players of this environment are called actors as they have a direct bearing on the marketing decisions. This environment identifies the way a company does business and against whom it stands in the market. For example, Nirma, a detergent company has defined its competitive environment by identifying key players in business namely, the suppliers, competitors, intermediaries, and the customers. The components of a companys micro environment, namely the company, intermediaries, public, competitors, suppliers, and customers in the subsequent subsections. 1 The company Some company factors that affect the marketing decisions are: Culture and value system Organisational culture can be viewed as the system of shared values and beliefs that shape a companys behavioural norms. A value is an enduring preference as a mode of conduct or an end state. The value system of the founders of the organisation has a lasting impact on it. The value system not only influences the working of the company and the attitude of its people but also the choice of its business.

 Mission and objectives The mission and objectives of the company guide the priorities, direction of development, business philosophy, and business policy. Management structure and nature Structure is the manner in which the tasks and sub-tasks of the organisation are related. Structure is concerned with the hierarchical relationship and the relationship between the management of different functional areas like the structure of the top management and the pattern of share holding. Human resource This concerns factors like manpower planning, recruitment and selection, compensation, communication, and appraisal. 2 Intermediaries Intermediaries are independent business units and they carry the companys products and services to the customers. Prominent intermediaries include wholesalers, retailers, merchants, selling agents, brokers, etc. Their objective of being in business is different than being in a firm, so the intermediaries will be interested in maximising their profits. Any trade promotion scheme will motivate them to push competitors product deeper and faster. 3 Public Positive and favourable public opinion is crucial to marketing success since the public is the authority that permits the existence and operation of competitive marketing systems. This environmental factor includes the general public, its support, the government, and the set of public who have a direct bearing on business. These public can be classified as welcome public, sought public, and unsought public. For example, Investors and financial institutions are under the category of welcome public, Government and media are counted as sought public. Without their help, it is difficult to have a positive impact on consumers and society. Pressure groups like consumer activists and environmental activists are unsought public because they would create problems for the firm through their righteous activities. As a marketer, one must understand that the general public grants the licence for conducting business with an expectation that the company will practise fair play. Lack of this supportive framework as evidenced by declining sales or adverse public opinion can lead to eventual failure of the firm as well as the marketing system. 4 Competitors Success or failure of an offer largely depends on how competitors react to the companys offer. Godrej was a successful refrigerator manufacturer. Once competition intensified, the company started losing market share. Today, though there is a growth in refrigerator industry, Godrej as a brand is not growing as fast as its competitors. Through the years, marketing systems have become increasingly competitive. Traditional economic analysis views competition as a battle between companies in the same industry or between substitutable products. Marketers, however, tend to accept the argument that all firms are competing for a limited discretionary buying power. Though we can say that Maruti as a car manufacturing company is facing competition from other car manufacturers, ultimately it is the consumers disposable income for which shampoos, soaps, and scooters are also competing with Maruti. A customer is expected to allocate his disposable income optimally and in the process a category also competes with another category to be in the active consideration set of customers for such an allocation. Industry has found numerous new uses for existing products, with the whole arena of competition being expanded. While this forces business to reassess long-established marketing practices, it also opens new avenues of business opportunity. Emergence of computers with multimedia as a tool of infotainment and knowledge sharing device has challenged traditional products in the entertainment market.

5 Suppliers Increase in the price of raw materials will have a bang on effect on the marketing mix strategy of an organisation. As a result, the prices may be forced up. This is the impact that the suppliers can have. Closer relationship with suppliers is one way of ensuring competitive and quality products for an organisation. 6 Customers Organisations exist because of customers. No customer means, no business. Organisations survival depends on how they meet the needs and wants of the customers and provide them with maximum benefits. Failure to do so will result in a failed business strategy. Q.5 A. Explain the types of Marketing Information systems Ans. MIS supplies three types of information, which are: Monitoring information Recurrent information Customised information The different types of marketing information are as follows: Monitoring information Monitoring information is the information obtained from scanning external sources which include newspapers, trade publications, technical journals, magazines, directories, balance sheets of companies, and syndicated and published research reports. Data are captured to monitor changes and trends related to marketing situation. Some of these data can be purchased at a price from commercial sources such as market research agencies or from government sources. Recurrent information Recurrent information is the information that is generated at regular intervals like monthly sales reports; the stock statements, the trial balance, etc. In MIS, recurrent information is the data that MIS supplies at a weekly, monthly, quarterly, or annual interval, which are made available regularly. It can also provide information on customer awareness of companys brands, advertising campaigns, and similar data on close competitors. Customised information Customised information is also called problem-related, which is developed in response to some specific requirements related to a marketing problem or any particular data requested by a manager. Q.5 B. Discuss the different components of MIS Ans. The overall objective of any MIS is to provide inputs from marketing environmental factors like target markets, marketing channels, competitors, consumers, and other forces for creating, changing, and modifying marketing decisions in the formulation of relevant and competitive marketing strategies. A complete MIS consists of internal record system, marketing intelligence system, analytical marketing system, and marketing research system. Information relevant to marketing decisions is collected from the environment, both internal and external, through the four sub systems.

 Internal record systems Internal record systems are available within the company across various departments and provide relevant, routine information for making marketing decisions. The most evident internal record system is the purchase and payment cycle systems. It records the timing and size of orders placed by consumers, the payment cycles followed by consumers, and the time taken to fulfil the orders in the shortest possible time. Marketing intelligence system A marketing intelligence system is the system of collecting and collating data. This system tries to capture relevant data from the external environment. It collects and manages data from the external environment about the competitors moves, government regulations, and other relevant information having a direct impact on the marketing environment of the firm. Analytical marketing systems Analytical marketing systems are also known as Marketing Decision Support Systems (MDSS). A MDSS is a coordinated collection of data, systems, tools, and techniques with supporting software and hardware. Using this collection, an organization gathers and interprets relevant information from business and environment and turns it into a basis for marketing action. It involves problem-solving technology consisting of people, knowledge, software, and hardware integrated through the information technology platform into the sales management process of the organisation. Marketing research systems Marketing research systems are based on systems and processes that help marketing managers to design, collect, analyse, and report data and findings relevant to a specific marketing situation facing the company. It also involves analysis of information, which includes a coordinated collection of data, systems, tools, and techniques with supporting software, and hardware by which an organisation gathers and interprets the relevant data and turns it into a basis for marketing action and tactics. Thus MIS includes a set of procedures and methods for the continuous analysis and presentation of information for marketing decisions. MIS does not operate in isolation; it is closely integrated with the various environments within which a business operates. This includes marketing planning system, marketing organisation and

implementation system, and marketing control system. These four systems are also a part of coordinated marketing where other departments join to achieve marketing objectives. However, MIS is directly concerned with marketing decisions related to product, pricing, place, promotion process, people, and physical evidence. Q.6 Describe the factors to be considered while developing an Effective marketing mix. Ans. To develop an effective marketing mix the company should consider the following factors and then choose the most appropriate mix of elements (7Ps) to target the customers: Companys resources These are one of the prime factors affecting the companys marketing mix. The financial, human, and technological resources available with the company affect the composition of the marketing mix. The firm needs to conduct a Strength, Weakness, Opportunity, and Threat (SWOT) analysis for the business unit. The key points to remember about SWOT are Demographics It implies to the changes in the composition of the market, the demand of the population, the opportunities in the country, etc. that affect the marketing mix. Current and projected economic conditions It connotes the economic factors like inflation, employment, taxes, and other economic factors that influence marketing mix decisions. Market potential Analysis of market potential for new products considers market growth, prospect's need for your offering, the benefits of the offering, the number of barriers to immediate use, the credibility of the offering and the impact on the customer's daily operations. Competitors They are important considerations that affect the marketing mix of a firm as the potential for competitive retaliation is based on the competitors resources, commitment to the industry, cash position, predictability, and status of the market. Let us now discuss the forces in detail. Supplier power The power of suppliers to drive up the prices of inputs. Buyer power The power of customers to drive down products prices. Competitive rivalry The strength of competition in the industry. Threat of substitution The extent to which different products and services can be used in place of a particular product. Threat of new entry The ease with which new competitors can enter the market if they see that a product is making good profits (and then drive your prices down). By thinking about how each force affects a product and by identifying the strength and direction of each force, you can quickly assess the strength of a products position and ability to make a sustained profit in the industry