9 marketing mix strategy - 4p

Strategic Marketing

Management

Prof. Vikram Parekh on Marketing Strategy @ 2009

Management

Contents

Marketing Strategy

1. Product strategies

2. Pricing strategies

3. Promotion strategies

4. Sales force strategies



5. Distribution strategies

6. Designing an effective marketing organization

7. Marketing strategy implementation and control

Product strategies

Introduction

1. At the heart of every organization lies one or more products that define

what the organization does and why it exists.

2. Products are not created and sold as individual elements; rather, products

are developed and sold as offerings. An organization’s product offering is

typically composed of many different elements—usually some

combination of tangible goods, services, ideas, or even people.


3. The best way to discuss products as offerings is to think about products as

bundles of physical (tangible), service (intangible), and symbolic

(perceptual) attributes designed to satisfy customers' needs and wants.

4. Given the state of commoditization in many markets, the core product (the

elements that satisfies the basic customer need) typically becomes

incapable of differentiating the product offering.

5. Product offerings in and of themselves have little value. Rather, an

offering’s real value comes from its ability to deliver benefits that enhance

a customer's situation or solve a customer's problems.

Product strategies

The Product Portfolio

1. Products fall into two general types: consumer products (used for personal use and

enjoyment) and business products (purchased for resale, to make other products, or for use

in a firm’s operations).

2. A product line consists of a group of closely related product items. A product mix or

portfolio is the total group of products offered by a company.

A. The number of product lines to offer (the width or variety of the product mix) is an

important strategic decision.

B. The depth of each product line (the assortment) is an important marketing tool. Firms


B. The depth of each product line (the assortment) is an important marketing tool. Firms

attract a wide range of customers and market segments by offering a deep assortment of

products in a specific line.

C. Benefits of offering a large portfolio of products:

a. Economies of Scale – in production, bulk buying, and promotion.

b. Package Uniformity – all packages in a product line have the same look and feel.

c. Standardization – product lines can use the same component parts.

d. Sales and Distribution Efficiency – sales personnel can offer a full range of

choices and options to customers.

e. Equivalent Quality Beliefs - customers expect and believe that all products in a

line are equal in terms of quality and performance.

Product strategies

New Product Development

1. The development and commercialization of new products is a vital part of a firm's efforts to

sustain growth and profits.

2. Though many firms base new product introductions on key themes such as product or

technological superiority, others simply tweak their current products.

3. Six strategic options related to the newness of products:

a. New-to-the-World Products (Discontinuous Innovations) – These products involve a

pioneering effort by a firm that eventually leads to the creation of an entirely new

market.


market.

b. New Product Lines – These products represent new offerings by the firm, but the firm

introduces them into established markets.

c. Product Line Extensions – These products supplement an existing product line with

new styles, models, features, or flavors.

d. Improvements or Revisions of Existing Products – These products offer customers

improved performance or greater perceived value.

e. Repositioning – This strategy involves targeting existing products at new markets or

segments.

f. Cost Reductions – This strategy involves modifying products to offer performance

similar to competing products at a lower price.

Planning for new products

Need for NPD

• Reduction in the span of PLC

• Opportunity to increase profit

• Gain competitive advantage

Risks in NPD


Risks in NPD

• Attributes of the product

• Product quality

• Price of the competitive products

• Substitute products available in the market

• Accessibility of raw materials

• Type of distribution channels to be used


Reasons for SUCCESS of new product

• Unique and better-quality product

• Adequate knowledge about the market

• Capability of the firm

Reasons for FAILURE of new product


Reasons for FAILURE of new product

• Determine the market readiness of the product

• Rely less on test marketing results

• Ensure right packaging

• Access to number of suppliers


Product planning as a customer satisfaction process

OR NPD process



New product strategies

• ”the designing of new products to satisfy well-

defined strategic roles agreed upon by the

management”

4 steps for developing a new product strategy


4 steps for developing a new product strategy

1. Studying the corporate objective of the organization

2. Scanning the market to find opportunities for NPD

3. Studying the competitors to identify their strengths

and weaknesses

4. Internal assessment to rate the success or failure of

the new products introduced by the organization


The NPD process


Product strategies

Branding Strategy

1. A brand is a combination of name, symbol, term, or design that identifies a specific product.

Brands have two parts:

a. Brand name – the part of a brand that can be spoken, including words, letters, and

numbers.

b. Brand mark – symbols, figures, or a design that cannot be spoken.

2. To be truly effective, a brand should succinctly capture the product offering in a way that

answers a question in the customer’s mind.

3. Strategic Issues in Branding Strategy


3. Strategic Issues in Branding Strategy

4. Manufacturer versus Private-Label Brands

1. Private-label brands or store brands are owned by the merchants that sell them.

2. Strategically, the choices to sell, carry, or distribute manufacturer brands or private-

label brands are not an either-or decision as both types of brands of key advantages.

3. Manufacturer brands are important in driving customer traffic.They also give customers

confidence that they are buying a widely known brand from a respected company.

Brand Alliances

• Cobranding is the use of two or more brands on one product to leverage the equity of

multiple brands to create distinctive products with distinctive differentiation.

• Brand licensing involves a contractual agreement where a company permits an organization

to use its brand on non-competing products in exchange for a licensing fee.

Marketing Strategy










Pricing strategies

Introduction

1. There is no other component of the marketing program that firms become

more infatuated with than pricing. There are at least four reasons for this

attention:

1. There are only two ways for a firm to grow revenue: increase prices or

increase the volume of product sold.

2. Pricing is the easiest of all marketing variables to change.

3. Firms take considerable pains to discover and anticipate the pricing strategies


3. Firms take considerable pains to discover and anticipate the pricing strategies

and tactics of other firms.

2. Price is considered to be the only real means of differentiation in mature

markets plagued by commoditization.

3. Having a solid understanding of pricing issues is important because far

too many firms and their managers use a seat-of-the-pants approach to

pricing by guessing the best price for their goods and services

Pricing strategies

The Role of Pricing in Marketing Strategy

• The Seller's Perspective on Pricing

• The Buyer's Perspective on Pricing


Pricing strategies


The Seller's Perspective on Pricing

1. Sellers have a tendency to inflate prices because they want to receive as

much as possible in an exchange with a buyer.

2. Price is often more about what the seller will accept in exchange for a

product, rather than market reality.

3. From the seller's perspective, four key issues become important in pricing:


3. From the seller's perspective, four key issues become important in pricing:

1. Costs – A firm that fails to cover both its direct and indirect costs will not

make a profit.

2. Demand – Firms must know what customers will pay for a product before

offering it for sale. To fully understand the relationship between price and

demand, firms must have a good knowledge of the price elasticity associated

with their product offering.

3. Customer value – The bottom-line impact or value delivered to the customer is

often more important than the selling firm’s costs.

4. Competitors’ prices – A selling organization should be very much aware of

what its competitors charge for the same or comparable products.

Pricing strategies


The Buyer's Perspective on Pricing

1. Buyers often see prices as being lower than market reality.

2. For buyers, price is about what the buyer will give up in exchange for a

product. The key for the selling firm, is to determine just how much the

buyer will give up.

3. From the buyer's perspective, two key issues determine pricing strategy:


3. From the buyer's perspective, two key issues determine pricing strategy:

1. Perceived value – What buyers will give up in exchange for a product depends

on their perceived value of the product.

2. Price sensitivity – Buyers experience unique and varying buying situations

that cause them to be more or less sensitive to price.

4. Value can be defined as a customer’s subjective evaluation of benefits

relative to costs to determine the worth of a firm’s product offering relative

to other product offerings. A simple formula for value:

Perceived Value = Customer Benefits

Customer Costs

Pricing strategies

Pricing Strategies

• Base Pricing Strategies

• Adjusting Prices in Consumer Markets

• Adjusting Prices in Business Markets


Pricing strategies

Pricing Strategies

Base Pricing Strategies

1. A firm's base pricing strategy establishes the initial price and sets the range of possible price

movements throughout the product's life cycle.

2. Base pricing approaches:

A. Market Introduction Pricing – used when products are first launched into the market

a. Pricing skimming occurs when a firm intentionally sets ahigh price relative to the

competition.

b. Penetration pricing occurs when a firm sets a relatively lowinitial price to maximize sales,


b. Penetration pricing occurs when a firm sets a relatively lowinitial price to maximize sales,

gain widespread market acceptance, and capture a large market share quickly.

B. Prestige Pricing – setting prices at the top end of all competing products in a category

to promote an image of exclusivity and superior quality.

C. Value-based Pricing – setting reasonably low prices, but still offering high quality

products and adequate customer services. The practice is commonly called EDLP in

retail markets.

D. Competitive Matching – focuses on matching competitors' prices and price changes.

E. Non-price Strategies – building a marketing program around factors other than price.

Non-price strategies are most effective when 1) the product can be successfully

differentiated, 2) customers see the differentiating characteristics as being important, 3)

competitors cannot emulate the differentiating characteristics, and 4) the market is

generally not sensitive to price.

Pricing strategies

Pricing Strategies

Adjusting Prices in Consumer Markets

1. Promotional Discounting – using sales or other special

promotions to attract customers and create excitement.

2. Reference Pricing – comparing the actual selling price to an

internal or external reference price.


internal or external reference price.

a. All customers use internal reference prices, or the internal

expectation for what a product should cost.

b. External reference prices are typically provided by the

manufacturer or retailer.

3. Odd-Even Pricing – prices are rarely set at whole, round

numbers.

4. Price Bundling – bringing together two or more

complementary products for a single price.

Pricing strategies

Pricing Strategies

Adjusting Prices in Business Markets

1. Trade Discounts – Manufacturers will reduce prices for certain

intermediaries based on the functions that the intermediary performs.

2. Discounts and Allowances – Business buyers can take advantage of sales

and other price breaks including discounts for cash, quantity or bulk

discounts, seasonal discounts, or trade allowances for participation in


advertising or sales support programs.

3. Geographic Pricing – Selling firms often quote prices in terms of

reductions or increases based on transportation costs or the actual physical

distance between the seller and the buyer.

4. Transfer Pricing – Transfer pricing occurs when one unit in an

organization sells products to another unit.

5. Barter and Countertrade – In business exchanges across national

boundaries, companies use products, rather than cash, for payments.

Pricing strategies

Pricing Strategies

Legal and Ethical Issues in Pricing

Price Discrimination

1. Price discrimination occurs when firms charge different prices to different customers.

2. In general, price discrimination is illegal, unless the price differential has a basis in actual cost differences

in selling products to one customer relative to another.

3. There are two ways to defend price discrimination:

a. Base the difference on the lower costs of doing business with one customer compared to another.

b. One customer receives a lower price offer in order to meet the price of a competitor.

Price Fixing


Price Fixing

1. Price fixing occurs when competitors collaborate in setting prices.

2. The U.S. Department of Justice has determined that, while following a competitor's lead in an upward or

downward trend is acceptable, there can be no signaling of prices for particular products in this process.

Predatory Pricing

1. Predatory pricing occurs when a firm charges very low prices for a product with the intent of driving

competition out of business or out of aspecific market.

2. Predatory pricing is illegal; however, it is extremely difficult to prove in court. The challenge in predatory

pricing cases is to prove that the predatory firm had the willful intent to ruin the competition.

Deceptive Pricing

1. Deceptive pricing occurs when firms intentionally mislead customers with price promotions.

2. Superficial discounting occurs when a firm advertises a sale price as a reduction below the normal price

when it is not the case.

Marketing Strategy










Promotion strategies

Introduction

1. Marketing communications includes conveying and sharing meaning between

buyers and sellers, either as individuals, firms, or between individuals and firms.

2. Integrated marketing communications (IMC) refers to the strategic, coordinated

use of promotion to create one consistent message across multiple channels to

ensure maximum persuasive impact on the firm's current and potential customers.

3. IMC takes a 360-degree view of the customer that considers each and every

contact that a customer or potential customer may have in their relationship with


contact that a customer or potential customer may have in their relationship with

the firm.

4. Integrated marketing communications has grown in importance:

a. IMC allows a firm to foster long-term relationships with customers.

b. Firms using IMC enjoy reduced costs and more efficient use of promotional

resources.

c. Many firms have moved to IMC because mass media advertising has become

more expensive and less predictable than in the past.

d. Advancing technology now allows firms to target customers directly via

direct mail, e-mail, or online promotion.


Strategic Issues in Integrated Marketing Communications

1. When selecting promotional elements to include in the IMC program, it is important to take a

holistic perspective.

2. The classic model for outlining promotional goals is the AIDA model:

1. Attention – the first major goal of any promotional campaign is to attract the attention of potential

customers.

2. Interest – the firm must spark interest in the product by demonstrating its features, uses, and benefits.

3. Desire – good promotion will stimulate desire by convincing potential customers of the product's

superiority and its ability to satisfy needs.


4. Action – promotion must push customers toward the actual purchase.

3. The role and importance of specific promotional elements varies across the steps in the

AIDA model.

1. Mass communication elements, such as advertising and public relations, are used to stimulate

awareness and interest.

2. Sales promotion activities, such as product samples or demonstrations, are vital to stimulating

interest in the product.

3. The enhanced communication effectiveness of personal selling makes it ideal for moving potential

customers through desire and into action.

4. Other sales promotion activities, such as product displays, coupons, and trial size packaging, are well

suited to pushing customers toward the final act of making a purchase.


Strategic Issues in Integrated Marketing Communications

4. The firm must also consider its promotional goals with

respect to the supply chain. In essence, the firm must decide

whether it will use a pull strategy, a push strategy, or some

combination of the two.

a. Firms use a pull strategy when they focus their promotional efforts

toward stimulating demand among final customers, who then exert


toward stimulating demand among final customers, who then exert

pressure on the supply chain to carry the product.

b. Firms use a push strategy when they focus their promotional efforts

on members of the supply chain to motivate them to spend extra time

and effort on selling the product.

5. The role and importance of specific promotional elements

varies depending on the nature of the product and its stage in

the product life cycle

Marketing Strategy










Sales force strategies

• Developing and implementing sales force strategy

• Sales channel

• Designing the sales organization

• Managing the sales force

• Personal selling



Sales force strategies

• 19th century = IBM Inception

• Sales-oriented business culture

• Founder = Thomas J. Watson (importance to sales in 1950s

• Sales force was trained

• Sales force was usually assisted by the middle & top

management at IBM


management at IBM

• 1980 = Situation changed, started thinking beyond the sales

plan

• 1980 = sales force was reduced to 70,000 (150,000 in 1990)

• Products with less than 20 – 25% margin sold through dealers

• IBM sales personnel moved from order takers to consultants

Developing and implementing

sales force strategy

• An effective sales force strategy is very important for

achieving sales targets

• Steps in developing & implementing sales force strategy:

– Role of sales force

– Defining the selling process


– Defining the selling process

– Choosing appropriate sales channels

– Designing the sales organization

– Managing the sales force, and

– Evaluating the sales force performance

Developing and implementing

sales force strategy

• Role of sales force

– Making sales calls or

presentation

– Increasing sales and

thereby profits

• Role of sales force

– Trade seller (selling &

supporting to marketing

channels)

– Missionary selling (direct

selling to the customers)


– Seller (customer acquisition

& retention)

– Problem solver (educating

customer, fulfilling needs)

– Service provider (handling

complaints, order taking)

– Information provider

– Relationship builder

selling to the customers)

– Technical selling (providing

technical assistance to

customers)

– New business selling (acquiring new customers for

the company)

Defining the selling process

• Prospecting

• The pre-approach

• Approach

• Sales presentation

• Handling of objection

It involves identifying and

collecting information abut a

group of customers who may

purchase the product

It is the stage where a



• Closing the sale

• Follow-up

It is the stage where a

salesperson gets ready to

approach a customer, here the

salesperson tries to obtain the

maximum information about the

prospects and also tries to meet

them. This information about

prospects can be collected from

various sources


• Prospecting


• Approach



It is the initial stage of the

contact between the salesperson

and the prospect. Even if this

stage lasts only a few minutes, it

plays a crucial role in effecting

sale




• Follow-up

sale

Here salesperson tries to create

the maximum interest in the

prospect for the product by

explaining the various benefits

that it can offer


• Prospecting


• Approach



In personal selling process, customer

objections can come up at any time – at

the approach stage, presentation stage,

at close of sales or just after one

objection has been effectively handled.

In handling objections, various

approaches used are:




• Follow-up

approaches used are:

• Neglecting the opposition (usually

unintended)

• Agreeing with the objection but drawing

attention to various other features that

may compensate for the objection

• Explaining the matter clearly to the

prospect and showing him / her that the

objection is very minor, or any attending to

the concerns of the prospect directly by

comparing the product with competitors

product to show a better deal


• Prospecting


• Approach



Here, the salesperson tries to

induce the prospect to purchase

the product and close the sale

Ensuring that the customer makes




• Follow-up

Ensuring that the customer makes

purchases again from the

salesperson

Sales channels

Sales channels through which

direct marketing takes place

include:

• Mail orders or Catalogs

• Tele-marketing

Tele-marketing makes use of the

telephone to contact customers

Teleshopping is a kind of direct

marketing for exhibiting a

product on television


• Tele-marketing

• Teleshopping

• Direct response through

media

product on television

Direct response through media

is akin to mail order marketing. It

makes use of various media like

TV, radio, newspaper, etc. to

inform customers about a

product

Designing the sales organization

Various types of organization

structures that sales

organization generally adopt:

• Line organization

• Line & staff organization

Authority flows down from top

level to bottom level in a

hierarchical manner and

decision-making is highly

centralized. Suited for small

organizations or departments



• Functional organization

• Horizontal organization

• Product-based sales force

specialization

• Geographic sales force

specialization

• Market based sales force

specialization

organizations or departments

Staff specialist in various areas

like marketing research,

advertising, etc. they advise to

the sales managers, sales staff.

Suited for large sales personnel

organization or organization

with large products and large

customer base







The specialist for each activity

like sales promotion or

advertising will have line

authority over the salespersons

Self-managing teams for various






specialization


specialization


specialization

Self-managing teams for various

functions like sales, new product

development, etc

Firms which offers diverse

products like banking, insurance,

services, and so on, salesperson

who are specialized in selling

each of these products will be

required







For organization that adopts

geographic specialization, the

sales force will be grouped on the

basis of geographical regions

Salesperson sells a range of






specialization


specialization


specialization

Salesperson sells a range of

products that are suitable for a

particular market or a customer

group

Managing the sales force

The management of the sales

force involves:

• Selection

• Training

• Performance measurement

Application forms

Personal interview

Performance evaluation process

1. Choose the basis for


• Performance measurement

• Motivation

• Evaluating the sales force

performance

1. Choose the basis for

evaluation

2. Determine expected level of

performance

3. Measure the actual

performance

4. Assess the performance

Personal selling

In 2006, 5.4crore people in the

world were engaged in

personal selling

Worldwide sales worth $99 bn

Selling that involves a face-to-

face interaction with the

customer

Personal selling is one of the


Worldwide sales worth $99 bn

were made through personal

selling in 2006

Personal selling is one of the

components of promotion, the

other being advertising, sales

promotion, and publicity

Personal selling involves

higher costs than

advertisements

Amway, Tupperware, Avon

Personal selling

Personal selling objectives

Qualitative objectives

– The effectiveness of personal selling

depends upon the overall corporate


depends upon the overall corporate

objectives and the various elements in the

promotion mix

Quantitative objectives

– Achievement of the sales volume or sales

targets fixed for the sales force

RECAP: Sales force strategies

• Developing and implementing sales force strategy

• Sales channel

• Designing the sales organization

• Managing the sales force




Marketing Strategy










Distribution strategy

• Strategic issues in distribution

• Types of distribution channels

• Considerations in distribution channels

• Distribution intensity

• Conflict and control in distribution channels



• Managing the channel

• International channels

Distribution strategy

• In August 2005, HCL Infosystems launched low cost PC @

Rs.9,990

• In 2005, HCL market share was 13.7% in PCs & notebook

market

• Traditionally, HCL had distribution network consisted of

fair mix of retail outlets and distributors


fair mix of retail outlets and distributors

• HCL new distribution strategy

– To strengthen its distribution network

– To sell its products through internet portals

Strategic issues in distribution

Strategic distribution

management mainly

encompasses three issues:

1. Analyzing the present

distribution system

Issues related to marketing

decisions:

Product issues

Pricing issues

Promotion issues


2. Deciding on the distribution

system that is required in the

future

3. Devising strategies to revamp

the current distribution

system and creating the new

distribution system for the

organization

Promotion issues

Issues related to channel

relations:

Channel power issues

Back-end

Middle level

Front-end

Loyalty issues

Types of distribution channels

Zero level

Manufacturing Consumer

door-to-door selling, mail order catalogs, telemarketing, and

manufacturing-owned retail outlets. Eg. Eureka forbes, barista coffee,

One level

Manufacturing Retailer Consumer


Manufacturing Retailer Consumer

Automobile dealer

Two level

Manufacturing Wholesaler Retailer Consumer

FMCGs, consumer electronics. HUL, P&G, Sony & Toshiba

Three level

M Agent Wholesaler Retailer Consumer

• Reverse Channel of Distribution

• Flexible distribution channels

Considerations in distribution

channels

Middlemen considerations

Customer considerations

Product considerations

Price considerations

Setting up a distribution

To ensure that middlemen

have certain characteristics

which make them suitable for

the job

A major consideration in



channel

Functions of distribution

channel

Designing the structure of the

distribution channel

Operation of distribution

channel

A major consideration in

choosing a distribution

channel is the ability of the

channel to reach customers in

the most effective manner

Nature of the product should

be considered .

IKEA (page 430)


channels






The organization may have

decided on the price at which

it intends to sell its products.

This decision will impact its

decision to choose the

distributor



channel

Functions of distribution

channel

Designing the structure of the

distribution channel

Operation of distribution

channel

distributor

In setting up a distribution

channel involves deciding on

the various functions to be

performed by the channel


channels






Storage, transportation, investing,

bulk breaking, after sales service

Designing the structure depends on

factors like type of consumers of

the product, the needs of the



channel

– Functions of distribution

channel

– Designing the structure of

the distribution channel

– Operation of distribution

channel

customers, the features of the

product, the organizational needs,

the competitive position of the

organization, organizational

objectives, etc.

In putting the distribution channel

into operation, the availability of

appropriate channel members is of

extreme importance

Distribution intensity

Distribution intensity is the

level of availability –

intensive, selective, or

exclusive - selected for a

particular product by the

marketer

Distribution intensity will be

the lowest

Distribution intensity will be

greater than in the case of


marketer

• Exclusive coverage

• Selective coverage

• Intensive coverage

greater than in the case of

exclusive coverage

Distribution intensity is high

Distribution intensity

Determinants of distribution

intensity

• Brand strategy of

manufacturer

Brand strategy focuses on brand

positioning on the basis of quality

as well as target focus

Channel practices focus on the

coordination efforts and support


manufacturer

• Channel practices of

manufacturer

• Retailer requirements

• Control variables

programs of the manufacturers

Contractual limitations as well as

investments made by the retailers

Three control variables – the use of

distributors, use of multiple

channels, and the sales volume of

the brand

Conflict & control in distribution

channel

Identifying channel conflict

• The real cause of

disagreement

• End users served by the

channels The importance of aggrieved distribution channel

Decision making framework in the

face of channel conflict


channels

• Effect on marketers profit

• Avoidance of a channel

collapse Try to

prevent the

conflict

Allow the

aggrieved

channel to

decline

Try to restore

confidence in

the channel

Do not act

High Low

Low

Hig

h

The importance of aggrieved distribution channel

Possib

ility

of a d

angero

us

channel c

onflic

t

Managing the channel

Managing distribution

channel involves decisions

regarding costs arising out of

transportation, warehousing,

and so on.

• Mutually beneficial

manufacturer-distributor

relationship

• Flexibility in manufacturer-

distributor relationship


Various principles for

effective management of the

distribution channels and in

maintaining better

manufacturer-distributor

relationships:

• Maximum control over the

distribution network

• Adequate incentives for

distributors

International channels

Considerations in setting up

global distribution channels

Problems with local channel

partners

• Select distributors carefully

• Select distributors with a

long-term focus

• Build long-term

relationships with the


partners

Guidelines in order to fend off

the likely problems that may

arise in international

distribution:

relationships with the

distributors

• Provide adequate support

for the local distributors

• Control over the localized

marketing strategy

• Ensure adequate

information flow

RECAP: Distribution strategy

• Strategic issues in distribution

• Types of distribution channels

• Considerations in distribution channels

• Distribution intensity




• Managing the channel

• International channels

Marketing Strategy










Designing effective mktg orgn

• Considerations in organization design

• Organizational design options

• Selecting an organization design

• Global dimensions of organizations


Designing effective mktg orgn

• HLL faced many problems in year 2000

• Revenues stagnant from 2000 to 2000

• Profit fell by Rs.3.5bn

• HLL losing market share to P&G

• In April 15, 2004 HLL announced a reorganization of


• In April 15, 2004 HLL announced a reorganization of

its management structure

• Splitting FMCG businesses into two divisions;

– Foods

– Home & Personal Care (HPC)

Considerations in Orgnal Design

Major considerations are:

• Internal & external

organizations

• Vertical structure

• Horizontal relationships

• Speed of response

Deciding upon the functions to be

carried out within the organization

and the functions that need to be

carried out with the aid of external

agencies

Vertical structure relates to the



• Managing the operating

environment

number of levels in the

organizational structure. Reducing

the number of levels and increasing

the span or control can also help to

reduce costs to a great extent

Contrasting Spans of Control





organizations




Horizontal structure implies “the

movement from the functional or

vertical organization to an

organization that is aligned along

core processes that meet the needs

of the customers”. These structures

are generally adopted with the

objectives of decreasing cost and




environment

objectives of decreasing cost and

increasing quality

One of the most important

obstacles to innovation is the

unavailability of the required

development time. The ‘speed’ at

which products reach the market is

the most important factor for

success in global businesses




organizations




Organizations should be able to

change radically and to develop

new organization structures which

will help them to adapt to the

opportunities and threats prevailing

in the business environment. Best

way is to network like joint

ventures, strategic alliances,




environment

ventures, strategic alliances,

strategic collaborations, and

linkages with distribution channels

Organizational design options

• Traditional marketing

organizations

– Functional organization

– Product organization

– Market organization

– Combination of matrix

organization (Functional,

CEO

Marketing Manager



Balanced, Project Matrix)

• New forms of marketing

organizations

– Marketing exchange

company

– Marketing alliance company

Advertising Manager

Manager

Sales Manager

Market Research Manager

New Products Manager



organizations






CEO

Marketing Manager





organizations


company


ManagerProduct A

Manager

ManagerProduct B

ManagerProduct C

ManagerProduct D



organizations






CEO

Marketing Manager





organizations


company


ManagerEast Zone

Manager

ManagerWest Zone

ManagerNorth Zone

ManagerSouth Zone



organizations





organization (Functional, Products

Marketing

Manager

Advertising SalesMarketing





organizations


company


Products Advertising SalesMarketing Research

Product A

Product B

Product C

Territory A Territory B Territory C



organizations






Two fundamentals issues to be

considered while organizing

marketing activities:

1. Time to be taken for achieving a

particular marketing objective

with the aid of both internal

organization (i.e. employees) and

external organization (i.e.





organizations


company


external organization (i.e.

alliances formed for marketing)

2. Organizing or structuring both

the internal and the external

organization for the achievement

of marketing objectives



organizations






This is a type of marketing

organization in which all the

activities are focused on markets

and consumers like ERP for

marketing information,

computerized information systems,

linking suppliers via extranet





organizations


company

– Marketing alliance

company

A marketing alliance company acts

as a functionally specialized

marketing organization which

coordinates a network of strategic

alliances. It is a horizontally

organized company which acts as a

hub to coordinate the activities of

various specialist manufacturer

Selecting an organization design

Major consideration in

selecting an organization

structure

• Organizing marketing

activities and structure

– Bureaucratic structure

– Transactional structure

Centralized control will monitor and

assess the performance of the

activities

Discrete marketing tasks like media

buying, market research etc., are

more suitable for this structure



– Relational structure

– Organic structure

• Marketing environment

and structure

• Innovativeness and

structure

Activities are organized through a

relationship with external suppliers

This structure is used when the

market situation is highly uncertain.

It is usually adopted for planning

and development of new products

Selecting an organization design

Major consideration in

selecting an organization

structure

• Organizing marketing

activities and structure

– Bureaucratic structure


The environmental conditions

which favour the formation of

marketing networks include fast

technological innovations, shorter

PLCs, clearly segmented consumer

preferences, and the presence of a

market base which extends beyond

the national boundary



– Relational structure

– Organic structure

• Marketing environment

and structure

• Innovativeness and

structure

the national boundary

Innovativeness of an organization is

likely to have an impact on its

organization structure. Innovative

organization are likely to have

flexible structures. E.g., BMW

Global dimensions of organizations

The challenges and market

conditions faced by MNCs like

Coca-Cola, Nestle, HP, etc vary

across the countries in which

they operate. The state of

globalization of various business

units of an MNC also differs

Types of global organization

structure

• Domestic organization

• Volume expansion

• International division

• Functional structure


Considerations in global

organizations:

• Identifying the necessity for

reorganization

• Identifying the effective way of

integration

• Identifying the most effective

structure

• Functional structure

• Product line structure

• Geographic structure

• Matrix structure

RECAP: Designing effective mktg orgn

• Considerations in organization design

• Organizational design options

• Selecting an organization design

• Global dimensions of organizations


Marketing Strategy










Marketing strategy implementation & control

• Marketing plan

• Marketing strategy implementation

• Strategic evaluation and control

• Marketing control



• IBP = Indo-Burman Petroleum Company Ltd

• Established in 1909 in Rangoon (Burma)

• In 1942, headquarter shifted to India

• In 2002, IBP become part of ICO Group

• IBP is well known for its successful retail marketing


• IBP is well known for its successful retail marketing

• It is less known that it is also involved in

manufacturing and marketing of lubricants and

greases, industrial explosives, and cryo-containers, in

addition to marketing petroleum products


• In 1997, IBP launched Q&Q (Quality and Quantity) assurance

scheme

• In 2003, the company launched the same marketing program, re-

christening it ‘Pure Bhi Poora Bhi’ (meaning good both in quality

and quantity)

• In Nov 2002, IBP launched premium grade MS (medium speed)

petrol under the name josh and in Dec 2002 launched Shakti, a


petrol under the name josh and in Dec 2002 launched Shakti, a

premium grade HSD

• Company negotiated with Amul & McDonald’s for opening their

franchise stores at the IBP retail outlets.

• The company marketing this two branded fuels in select retail

outlets in major cities in mumbai, Hyderabad and Noida

• The success of an organization depends on how well the marketing

strategy is formulated and implemented, Here, IBP succeeded in

both the aspects


• Marketing plan





Marketing plan

Marketing planning is a logical

sequence of activities that involves

the setting of marketing objectiv3s

and the formulation of a marketing

plan to achieve those objectives.

It is the process of identifying ‘what’

Some of the strategic issues faced

with regard to the marketing plans

are:

• Lack of adequate support from top

management

• Lack of support from line

management


and ‘to whom’ the sales are to be

made in the long term, in order to

achieve the sales target and to

generate revenues. Results of

formalized marketing planning

process are:

• Improved communication

• Enhances coordination

• Anticipation of developments

• Reducing conflicts

• Isolating marketing planning from

corporate planning

• Perceived as once-a-year activity

Marketing strategy implementation

Prerequisite for effective

implementation

• Coordinating

• Assigning

• Examining

• Organizing

Barriers to the implementation

of marketing strategy

• Marketing functions

• Marketing programs

• Marketing systems

• Marketing policies


• Organizing

• Effective communication

• Planning

• Restructuring the

organization

• Reducing the complexity

• Issue resolving system

• Marketing policies

Strategic evaluation and control

Five steps

• Identification

• Setting standards for

performance

• Measurement

• Comparing with the

Strategic marketing audit

This audit provides a systematic and

objective evaluation of an

organization, in addition to providing

information about its market

dynamics. The strategic marketing

audit has three analytical phases


• Comparing with the

standards

• Corrective action

• Are deviations in performance

temporary fluctuations?

• Is there any problem in the

implementation of the processes?

• Are the present processes in

implementation suited to meet the

standards?

• Extensive diagnosis of the

organization’s past and present

marketing situation

• Prognosis of the organization’s

position in the future situation

• Introducing new policies or making

the necessary changes in the

present policies

Strategic evaluation and control

There are two important role

that the strategic marketing

audit has to play:

• To act as a tool to introduce

changes in the marketing

practices or activities of an

Selecting criteria for assessing

performance:

ROI on marketing = sales, profit,

market share, customer

satisfaction, brand value, etc.

• Obtaining and analyzing the

information


practices or activities of an

organization

• To play the vital role of

orienting the organizational

analysis and control

information

� Internal information system

� Standardized information sys

� Specialized research studies

• Performance assessment

� Sales analysis

� Marketing cost analysis

Marketing control

Marketing control involves

activity control and personnel

control

Activity Control

Process of ensuring that the

marketing activities produce a

Type of control

• Formal

• Informal

Corrective measures


marketing activities produce a

desire results

Personnel Control

Attempts of the management

and other stakeholders within

the organization to influence

the behavior and activities of

the marketing personnel to

achieve the desired results

RECAP: Marketing strategy implementation & control

• Marketing plan





Marketing Strategy










9 marketing mix strategy - 4p

Documents