CHAPTER 5

Creating long-term loyalty relationships:

The Cornerstone of holistic marketing is strong customer relationships. Marketers must win
customers by connecting with them - listening and responding to them, informing, and
engaging them, and maybe even energizing them in the process.

What customers appreciate?

Customers appreciate knowing that you expect to be held accountable for their success after
the sale is complete. It provides them with a sense of reduced risk.

Engage-win-grow
Successful salespeople use the “engage-win-grow” sales approach to get closer to their
customers and continue a positive relationship.
Here are the strategies that will win the battle for customer mind share:
1. Research the organization:
What’s going on with the customer that’s significant? What companies are its
rivals in the marketplace? Who makes purchasing decisions? Your research should tell you what
matters most to them.
2. Visualize success.
Help the customer visualize future success, and discuss how to make that
vision a reality. The vision for a brighter future that you present should include how you
and your products or services will continue to add genuine value for the customer.

3. Elevate the conversation.

Route the conversation to what your customer wants to accomplish,
why it
matters to him/her and how you can help the person achieve this goal. Prioritize the
customer’s targets – the needs he/she wants to fill – not your targets.

4. Differentiate value.
Your value represents more than product features and benefits. It should
fulfill the customer’s goals and be sustainable over time. Try to break down the
elements of your product or service’s unique value.

5. Grow the sale.

 In the grow phase, you drive success after the sale by developing the strongest possible
relationship with your customers and extending your success to new opportunities.

6. Expand the relationship.

Summarize how your customer secured value by buying from you.
Try to help your customer attain additional success over time. Rely on the insights you
developed through research and interactions to make your case.

7. Engage them
Long-term customers generally do far more than buy a company’s products.
They connect with the business itself, which incentivizes them to keep coming back.
Through your website, email messaging, and social media posts, make sure you’re
engaging the customers and increasing their personal connection.

8. Allow them to experience your brand.

Nothing can replace the experience of interacting with a company in
person. When customers can meet you and your team, while also seeing your products
live, they’ll feel a stronger connection than if they’d only purchased from your website
and read your email messages.
Find opportunities to meet your customers in person, using experiential
marketing techniques to announce, invite, and follow up afterward. Any Road allows
you to leverage these experiences. They process the entire customer journey - from
scheduling and registration to closing the loop after the experience to gather feedback.

9. Provide value
Your goal is to introduce new customers to the products you provide. A
consumer’s goal is to find products and services that add some type of value to their
lives. you can make connections that will add value to your customers’ lives, which will
in turn make them want to keep buying from you.

10. Respond to every concern.

Even the most loyal customer can have problems. When someone calls for
help, it’s important to offer the same friendly, attentive service no matter how many
times they’ve bought from you. But if a long-term buyer has an issue, it’s important to
flag the call for immediate attention to avoid losing someone who regularly makes
purchases.
Building Customer value, satisfaction,
and loyalty:
Consumers are better educated and informed than ever, and they have the tools to verify
companies claims and seek out superior alternatives. Effective competition depends largely on
the company's ability to do a better job of providing value to customers and meeting or
exceeding their expectations.

Customer Value:
Customer Value is the perception of what a product or service is worth to a Customer versus
the possible alternatives. Worth means whether the Customer feels s/he or he got benefits and
services over what s/he paid.
What the Customer pays is not only price (cash, cheque, interest, payment during use such as
fuel and servicing for a car) but also non-price terms such as time, effort, energy, and
inconvenience).
The benefits include the advantages or quality of the product, service, image and brand of the
company or the brand of the product, values, experience, success one gets in using the product
and so on.

Creating Customer Value increases customer satisfaction and the customer experience. (The
reverse is also true. A good customer experience will create value for a Customer). Creating
Customer Value (better benefits versus price) increases loyalty, market share, price, reduces
errors and increases efficiency. Higher market share and better efficiency leads to higher
profits.

Steps in a Customer Value Analysis

 Identify the major attributes and benefits customers value.
 Assess the quantitative importance of the different attributes and benefits.
 Assess the company’s and competitors’ performances on the different customer values
against their rated importance. Customers describe where they see the company’s and
competitors’ performances on each attribute and benefit.
 Examine how customers in a specific segment rate the company’s performance against a
specific major competitor on an individual attribute or benefit basis.
 Monitor customer values over time. The company must periodically redo its studies of
customer values and competitors’ standings as the economy, technology, and features
change.
Satisfaction:
A person’s feelings of pleasure or disappointment that results from comparing a
product’s perceived performance to (or outcome) to expectations.

Customer satisfaction:
Customer satisfaction is a form of expectation of value on some factors like array of
products, excellent brand quality (reliability, durability and performance), moderate prices,
goods & services and personnel and corporate image.

Customer experience:
Customer experience is the combined interactions a customer has with your brand. It looks at
the lifecycle of the customer, mapping each and every touchpoint the customer has with you. It
highlights where you’re delivering an exceptional experience, building loyalty and advocacy.
And where you’re delivering a poor experience, driving your customers to competitors.

Customer loyalty:
Customer loyalty is a measure of a customer’s likeliness to do repeat business with a company
or brand. It is the result of customer satisfaction, positive customer experiences, and the overall
value of the goods or services a customer receives from a business.
Customer loyalty is the result of consistently positive emotional experience, physical attribute-
based satisfaction and perceived value of an experience, which includes the product or services.

Attracting and Retaining Customers

Companies seeking to expand their profits and sales must spend considerable time and
resources searching for new customers. The main steps in attracting and retaining customers
show in term of a funnel. The marketing funnel identifies the percentage of the potential target
market at each stage in the decision process, from merely aware to highly loyal.

Customer Perceived Value (CPV)

Customer-perceived value (CPV) is the difference between the prospective customer's

evaluation of all the benefits and all the costs of an offering and the perceived alternatives.
Total customer benefit is the perceived monetary value of the bundle of economic, functional,
and psychological benefits customers expect from a given market offering because of the
product, service, people, and image.
Total customer cost is the perceived bundle of cost customers expect to incur in evaluating,
obtaining, using, and disposing of the given market offering, including monetary, time, energy,
and psychological costs.
Loyalty is a deeply held commitment to rebuy or patronize a preferred product or service in the
future despite situational influences and marketing efforts having the potential to cause
switching behavior.
Value delivery system is all the experiences the customer will have on the way to obtaining and
using the offering.

CLV:
Customer lifetime value (CLV) is one of the key stats to track as part of a customer experience
program. CLV is a measurement of how valuable a customer is to your company, not just on a
purchase-by-purchase basis but across the whole relationship.
Customer lifetime value is the total worth to a business of a customer over the whole period of
their relationship. It’s an important metric as it costs less to keep existing customers than it
does to acquire new ones, so increasing the value of your existing customers is a great way to
drive growth.
Knowing the CLV helps businesses develop strategies to acquire new customers and retain
existing ones while maintaining profit margins.

How do you measure customer lifetime value?

If you’ve bought a $40 Christmas tree from the same grower for the last 10 years, your CLV has
been $400 – pretty straightforward. But as you can imagine, in bigger companies with more
complex products and business models, CLV gets more complicated to calculate.

Some companies don’t attempt to measure CLV, citing the challenges of segregated teams,
inadequate systems, and untargeted marketing.
When data from all areas of an organization is integrated however, it becomes easier to
calculate CLV.
CLV can be measured in the following way:

 Identify the touchpoints where the customer creates the value

 Integrate records to create the customer journey
 Measure revenue at each touchpoint
 Add together over the lifetime of that customer.
 Annual profit per customer X Average number of years that they remain a customer
– the initial cost of customer acquisition
 If your customer isn’t valuable or is costing you too much, then reassess your pricing.

Cultivating customer value:

Customer relations describes the ways that a company will engage with its customers to
improve the customer experience. This includes providing answers to short-term roadblocks as
well as proactively creating long-term solutions that are geared towards customer success.
The principles behind building profitable customer relationships, it seems, will never go out of
style. From the days of the corner store to today’s most agile enterprises, the following 12
principles remain the backbone of cultivating successful relationships.
1.Continuously Learn About Your Customers.
When you know your customers, you can make sound business decisions
about how to develop your relationships with them. Maintain your knowledge in customer
profiles that are available to all who need them.

2. Anticipate Customer Needs.

Knowledge of your customers presents new
opportunities for making the right offer or delivering the right service to the right person at the
right time.

3.Handle Different Customers Differently.

The power of this principle lies in the potential for optimizing
the value of each customer relationship through differential treatment. Based on customer
segmentation, contact centers can provide user-appropriate Web and IVR interfaces, routing
routines, the best-suited agents, and appropriate content.

4.Interact with Customers.

No matter how sophisticated the technology that
organizations and customers use to communicate, your customers are human, and people
appreciate being recognized, listened to and understood. Relationships tend to develop when
you interact.

5.Focus on revenue and retention more than on reducing costs.

Yes, a renewed focus on building relationships can require so
many organizations wide process changes that operational cost savings may well be realized.
But keep your eyes on value, overall revenue and retention first.

6.Increase value for your customers and of your customers.

It is precisely because building customer relationships increases value
both for customers and the organization that it is such a compelling strategy. When executed
properly, the focus on building relationships and brand loyalty is a win-win for customers and
the organization alike.
7.Present a single face to your customers to make their experiences with your organization
seamless.
Take a holistic view of your customers and consolidate
information from across the organization, regardless of geography, department, function,
contact channel, social community, or product line.

8.Enable information sharing and interaction across the organization.

It is both a requirement and a benefit of customer relationship
management that organizations improve their internal communication processes.

9.Create business rules to drive all customer relationship management decisions and
automation.
Business rules codify and automate processes, specifying what should
happen in specific situations, thus enabling both differentiated customer treatment and
automation.

10.Empower agents with information and training.

Just as the cockpit of an airplane displays all the information a
pilot needs to fly in any conditions, the contact management screen should pull together
cleanly and clearly all that the organization knows about its relationship with that customer.

11.Retain the right customers.

Customer knowledge and the capability for differentiated customer
treatment significantly improve many organizations’ capabilities to retain customers.

12.Remember that the effective management of customer relationships is a way of doing

business.
Technology is an important enabler, but as these 12 key
principles demonstrate, cultivating customer relationships requires much more. Customer
strategy must be a way of doing business.
Building customer loyalty:
No matter the size of the business, customer loyalty is incredibly important. Repeat customers
spend up to 67 percent more than new customers. Plus, it’s up to ten times more expensive to
try to attract new customers than it is to keep the ones already doing business with you. If
you’re looking for real ways to create and keep up customer loyalty, consider implementing a
few of these strategies.
1. Set up ways to communicate with your customers
Frequent communication with your customers keeps you fresh in their minds and lets you pass
along important information.
Take the time to set up a database with contact information such as email addresses, mailing
addresses, or phone numbers. Then you can send friendly reminders, birthday greetings, or a
monthly newsletter.
2. Provide extra perks for your most loyal customers
One of the best—and perhaps one of the cheapest—ways to reward customer loyalty is to give
extra perks to your most dependable customers. Whether it’s the ability to skip the line, special
meet-and-greets, or immediate seating, customers love getting a little something extra.
3. Consider different payment plans
There are some businesses out there that are very seasonal and run into cash flow issues during
certain times of the year.
4. Provide great customer service
While this seems like a given, it’s one tip that bears repeating because it’s so important. One
survey showed that in 2013, 51 percent of customers ended their relationship with a business
because they were unhappy with the service they were receiving.
5. Don’t rely too much on technology
Even in our technologically advanced society filled with text messages and emails, we still want
the ability to interact with other human beings. Everyone can relate to the frustration of feeling
stuck in an endless loop of automated prompts until we bang on the phone keys in hopes of
reaching a real human.
6. Offer a head start
If you want to start a customer loyalty program like coffee shops use, whereby customers buy a
certain number of drinks to earn a free one, consider giving them a head start.
7. Don’t forget to smile
This is another item that seems obvious, but it’s important enough to keep being reminded of.
8. Give customers a reason to be loyal
Many people believe that Apple has some of the most loyal fans out there. Customers go to
great lengths to prove just how much they love the company, with bumper stickers, tattoos,
and vehement arguments in favor of all the products.

customer database:
A customer database is the collection of information that is gathered from each person. The
database may include contact information, like the person's name, address, phone number, and
e-mail address. The database may also include past purchases and future needs.

What is Database Marketing?

Database marketing is the practice of leveraging customer data to deliver more personalized,
relevant and effective marketing messages to customers (both existing and potential
customers). While the term database marketing can be applied to marketing programs that are
aimed at acquiring new customers, the huge amount of data available on existing customers
(and the high relative value of retaining them) makes it much more valuable in the realm of
customer marketing.

Major role of database in business

 The major role of database in business is to send reminders and updates.
 Database helps owner to make their customer updated with all the information
efficiently.
 Database is helpful in sending information to all the customers in economic manner.

B2B Customer relationship

management:
B2b CRM stands for business-to-business Customer relationship management (CRM) is the
combination of practices, strategies and technologies that companies use to manage and
analyze customer interactions and data throughout the customer lifecycle. The goal is to
improve customer service relationships and assist in customer retention and drive sales growth.
CRM systems compile customer data across different channels, or points of contact, between
the customer and the company, which could include the company's website, telephone, live
chat, direct mail, marketing materials and social networks.

Framework for CRM Identify prospects and customers

Don Peppers and Martha Rogers outline a four-step framework for one-to-one marketing that
can be adapted to CRM marketing as follows:
1. Identify your prospects and customers. Don’t go after everyone. Build, maintain, and
mine a rich customer database with information from all the channels and customer
touch points.
2. Differentiate customers in terms of (1) their needs and (2) their value to your company.
Spend proportionately more effort on the most valuable customers (MVCs). Apply
activity-based costing and calculate customer lifetime value. Estimate net present value
of all future profits from purchases, margin levels, and referrals, less customer-specific
servicing costs.
3. Interact with individual customers to improve your knowledge about their individual
needs and to build stronger relationships. Formulate customized offerings you can
communicate in a personalized way.
4. Customize products, services, and messages to each customer. Facilitate customer
interaction through the company contact center and Web site.
How to implement CRM
The implementation of a customer relationship management (CRM) solution is best treated as a
six-stage process, moving from collecting information about your customers and processing it
to using that information to improve your marketing and the customer experience.

Stage 1 - Collecting information

The priority should be to capture the information you need to identify your customers and
categorize their behavior. Those businesses with a website and online customer service have an
advantage as customers can enter and maintain their own details when they buy.

Stage 2 - Storing information

The most effective way to store and manage your customer information is in a relational
database - a centralized customer database that will allow you to run all your systems from the
same source, ensuring that everyone uses up-to-date information.

Stage 3 - Accessing information

With information collected and stored centrally, the next stage is to make this information
available to staff in the most useful format.

Stage 4 - Analyzing customer behavior

Using data mining tools in spreadsheet programs, which analyses data to identify patterns or
relationships, you can begin to profile customers and develop sales strategies.

Stage 5 - Marketing more effectively

Many businesses find that a small percentage of their customers generate a high percentage of
their profits. Using CRM to gain a better understanding of your customers' needs, desires and
self-perception, you can reward and target your most valuable customers.

Stage 6 - Enhancing the customer experience

Just as a small group of customers are the most profitable, a small number of complaining
customers often take up a disproportionate amount of staff time. If their problems can be
identified and resolved quickly, your staff will have more time for other customers.

Chapter 7

Buying Centers
A buying center is a group of employees, family members, or members of any type of
organization responsible for finalizing major purchase decisions. In a business setting, major
purchases typically require input from various parts of the organization, such as finance,
accounting, purchasing, information technology management, and senior management.
In a generic sense, there are typically six roles within buying centers. These roles include:

 Initiators who suggest purchasing a product or service

 Influencers who try to affect the outcome decision with their opinions
 Deciders who have the final decision
 Buyers who are responsible for the contract
 End users of the item being purchased
 Gatekeepers who control the flow of information

Participants in business buying behavior:

Users – The users will be the ones to use the product, initiate the purchase process, generate
purchase specs, and evaluate product performance after the purchase.
Influencers – The influencers are the tech personnel who help develop specs and evaluate
alternate products. They are important when products involve new and advanced technology.
Deciders – Deciders choose the products.
Buyers – Buyers select suppliers and negotiate the terms of purchase.
Gatekeepers – Gatekeepers are typically secretaries and tech personnel. They control the flow
of information to and among others within the buying center. Buyers who deal directly with a
vendor are gatekeepers.
 Chapter 11
What is brand equity?
Brand equity refers to the value added to the same product under a particular brand. This
makes one product preferable over others. This is brand equity which makes a brand superior
or inferior to that of others. Apple: Apple is the best example of brand equity.
Brand equity can manifest itself in consumer recognition of logos or other visual elements,
brand language associations, consumers’ perceptions of quality, and consumers’ perceptions of
value or other brand attributes.

How to Build Brand Equity

There are obvious payoffs to establishing brand equity, but it takes a lot of work and research
upfront to build and maintain this status. It begins with conducting research into the values and
needs of a target audience, as well as identifying what makes your brand different.

 Understand Your Why

Too many advertisers focus on the How (How my product will make your day easier)
versus the Why (Why does this organization do what it does). For companies like Apple,
their Why is immediately apparent. Because their advertising focuses on their brand
(and not their computers), they were able to expand their product lines into new areas
such as phones and music, where other computer companies failed.

 Test your Messaging

When creating messaging, it is still important to test your positioning with consumers.
How do they react? What do they respond best to? Are you addressing their pain
points? Are you creating the type of message they will stop and engage with?

 Drive Awareness
Once you have a compelling message, you must drive awareness for both your brand
and your company focus. This often means emphasizing brand values over product
attributes, and emotional connections over conversions.

 Maintain Consistency
Once your brand is established, be consistent. This includes using consistent typefaces
and style guides. Treat your brand like a writer would treat a character. Even if the
advertising idea is good, if it is outside of your brand’s “personality”, don’t pursue it.
  Customer Experience
Due to the rise of social media and the individual consumer’s voice, brands are no
longer just defined by what advertisements say. Brands are what consumers discuss or
perceive. Having a focus on the customer and putting them in the center of your
company will help elevate your overall brand.

Ways of Building Brand Equity

Positive brand equity is not created overnight but rather is developed over time by:

 Developing a quality product or offering excellent customer service.

 Engaging in an effective marketing plan. You can have the best product, brand name,
and logo ever, but that won't build brand equity if your potential customers don't know
about them.
 Creating a memorable brand name or logo.
 Protecting the brand with appropriate copyright or trademark registration.

How to Measure Brand Equity

1. Financial
For those looking to assign a numeric value to a brand, consider the following

Company Value: To measure the brand equity, you could think of the firm as an asset.
When subtracting the tangible assets from the overall value of the firm, you would be
left with the brand equity.
Market Share: What is your company’s market share? Leaders in the market tend to
have a higher brand equity.
Revenue potential: What does the revenue potential look like for your product? How
does this compare to your company’s current revenue?

2. Product Value
A good way to measure this would be to compare a generic product with the branded
product. In the case of soap, Unilever can measure if women were more likely to
purchase Dove over the store brand. for example, Coca Cola compared to Pepsi.

3. Brand Audit
Conducting a brand audit can also help you get a better understanding of how your
brand is performing. To begin a brand audit, review comparison sites, social channels,
and web analytics.
 4. Market price and distribution coverage: 
measures of average selling price relative to competitors and how many people have
access to the brand

5. Brand awareness:
 the degree to which customers are familiar with and have knowledge about a brand

6. Customer satisfaction/loyalty: 
whether a customer would buy the brand at the next opportunity, or remain loyal to
that brand

7. Brand Association - Keller’s Brand Equity Model

The model is based on a hierarchy of brand equity that begins with a brand establishing
their identity and differentiation, and is fully realized when the brand establishes
resonance and connection with target consumers. By understanding where your brand
is in the pyramid, you can get a better idea of how much brand equity you have, and
what the next steps should be to further establishing your brand in the consumer
conscious. The steps consist of:

Components of brand Equity:

THERE ARE FOUR KEY ELEMENTS TO BUILD YOUR BRAND

BRAND AWARENESS
Brand awareness is the extent to which people are familiar with the distinctive qualities or
image of your particular brand of services.

BRAND ATTRIBUTION
Brand attribution assumes that people draw upon their past experiences with your brand and
those prior experiences will influence future purchasing decisions.

PERCEIVED QUALITY
It may have little or nothing to do with the actual excellence of the service but rather, can be
based on image and the influence of engagement. Customers however, judge quality as a total
brand experience. Elevating this perceived value will enhance the perceived experience and
thus, increase sales.

BRAND LOYALTY
Brand loyalty is a result of brand awareness, brand attribution, perceived quality, and previous
experiences. This is important. Brand loyalty is also affected by a person’s preferences. Loyal
customers will purchase services from preferred brands, regardless of convenience or price.

What is brand value/worth?

Brand value definition:

Brand value is the monetary worth of your brand, if you were to sell it.
If your company were to merge or be bought out by another business, and they wanted to use
your name, logo and brand identity to sell products and services, your brand value would be
the amount they would pay you for that right. This is market-based brand value.
Another way to think of brand value is in terms of replacement cost (cost-based brand value). In
this sense, brand value is the amount you would need to spend to design, execute, promote
and amplify a totally new brand to the same level as your old one.
Managing Brand Equity
Once brand equity is established, it needs to be managed in order to maintain or increase its
value. The stability of the brand recognition may need to be balanced with changing markets,
consumer attitudes, government regulations, and other factors. In some situations, efforts may
be needed to revitalize the brand or even to rebrand a product.
Once established for an existing product, brand equity can be managed to extend brand
recognition to new ones.
For example, once Whirlpool established its brand for clothes washers and dryers, it expanded
the brand to ovens, dishwashers, and microwave ovens.
If consumers develop a negative impression of the company or product, a brand's equity could
be negative, decreasing both sales and the value of the company. This might happen in the
event of unfavorable media attention, such as from a highly publicized lawsuit against the
company, repeated product recalls, or cybersecurity breaches.
It can take years to establish a reputation with consumers, although it's easier today than it's
ever been. Focusing on consumer satisfaction and quality goods goes a long way towards
building positive brand equity and even making your company more attractive to buyers or
investors.

Devising a Branding Strategy

While devising a branding strategy, a firm may choose to pick existing brand elements common
to other products or line of business or may choose to completely pick up new and distinctive
brand elements. At times, firms use a combination of both.

The firm has 3 choices while devising a branding strategy:

 Develop new brand elements for new product

 Apply some of its existing brand elements
 Use a combination for existing and new brand elements

1. Brand extension: Using an established brand to launch a new product

2. Sub-brand: Combining a new brand with an existing brand
3. Parent brand: An existing brand that gives birth to a brand extension or sub-brand
 4. Master (or family) brand: A parent brand that is already associated with multiple
products through brand extensions
5. Line extension: Using a parent brand on a new product within a category it currently
serves (such as new flavors or colors)
6. Category extension: Using a parent brand on a new product to enter a new category,
different from the one it currently serves
7. Brand line: All the products (including line and category extensions) sold under a
particular brand
8. Brand mix: The set of all brand lines sold by a particular seller
9. Branded variants: Specific brand lines supplied to specific retailers or distribution
channels
10. Licensed product: Using the brand name licensed from one firm on a product made by
another firm.

Branding decision:
Branding consists of a set of complex branding decisions. Major brand strategy decisions
involve brand positioning, brand name selection, brand sponsorship and brand development.
1. Brand positioning:
Brand positioning has been defined by Kotler as “the act of designing the company’s offering
and image to occupy a distinctive place in the mind of the target market”. In other words, brand
positioning describes how a brand is different from its competitors and where, or how, it sits in
customers’ minds.
A brand must be positioned clearly in target customers’ minds. Brand positioning can be done
at any of three levels:

 on product attributes
 on benefits
 on beliefs and values

2. Brand name selection:

A brand identifies a company, product, or service as distinct from the competition. The
brand is comprised of all the things that create this identity. A brand’s name is an
essential part of the package. A brand name may be a product name (like Windows or
Gmail), or it may be the name under which the entire organization operates (like
Microsoft or Google). Because the name is so central to identity, naming a brand is an
integral part of creating the brand’s reputation, development, and future success.
 Selecting a brand name is one of the most important product decisions a seller makes. A
brand name reflects the overall product image, positioning, and, ideally, its benefits. A
successful brand name can enable a product to be meaningfully advertised and
distinguished from competitors; tracked down by consumers; and given legal protection.

3. Brand Sponsorship
Brand sponsorship is a marketing strategy in which a brand is supporting an event,
activity, person or organization. Everywhere we go we can witness sponsorship
investments: music festival, football games, beneficial events and so on. Sponsorship
allows big, medium and small brands to partner with other companies as well as event
agencies in order to generate a relationship that aims to economically gratify both the
sponsor and the sponsee.

A manufacturer has four brand sponsorship options:

 A product may be launched as a manufacturer’s brand. This is also called
national brand. Examples include Kellogg selling its output under the own brand
name (Kellog’s Frosties, for instance) or Sony (Sony Bravia HDTV).

 The manufacturer could also sell to resellers who give the product a private
brand. This is also called a store brand, a distributor brand or an own-label.
Recent tougher economic times have created a real store-brand boom.
 manufacturers can choose licensed brands. Instead of spending millions to
create own brand names, some companies license names or symbols previously
created by other manufacturers. This can also involve names of well-known
celebrities or characters from popular movies and books.
 Finally, two companies can join forces and co-brand a product.

4. Brand Development – Branding Decisions

Branding decisions finally include brand development. For developing brands, a
company has four choices: line extensions, brand extensions, multiband or new brands.

 Line extension: Using a parent brand on a new product within a category it

currently serves (such as new flavors or colors)
 Brand extension: Using an established brand to launch a new product
 Multiband means marketing many different brands in a given product category.
P&G (Procter & Gamble) and Unilever are the best examples for this.
 New brands are needed when the power of existing brand names is waning.
 Chapter 13

Brand positioning:
Brand positioning has been defined by Kotler as “the act of designing the company’s offering
and image to occupy a distinctive place in the mind of the target market”. In other words, brand
positioning describes how a brand is different from its competitors and where, or how, it sits in
customers’ minds.
A brand must be positioned clearly in target customers’ minds. Brand positioning can be done
at any of three levels:

 on product attributes
 on benefits
 on beliefs and values

Developing and establishing brand

positioning:
7-Step Brand Positioning Strategy Process
In order to create a position strategy, you must first identify your brand’s uniqueness and
determine what differentiates you from your competition.
There are 7 key steps to effectively clarify your positioning in the marketplace:

 Determine how your brand is currently positioning itself

 Identify your direct competitors
 Understand how each competitor is positioning their brand
 Compare your positioning to your competitors to identify your uniqueness
 Develop a distinct and value-based positioning idea
 Craft a brand positioning statement (see below)
 Test the efficacy of your brand positioning statement (see 15 criteria below)

What is a Brand Positioning Statement?

A positioning statement is a one or two sentence declaration that communicates your brand’s
unique value to your customers in relation to your main competitors.
How to Create a Brand Positioning Statement
There are four essential elements of a best-in-class positioning statement:

Target Customer: What is a concise summary of the attitudinal and demographic description of
the target group of customers your brand is attempting to appeal to and attract?
Market Definition: What category is your brand competing in and in what context does your
brand have relevance to your customers?
Brand Promise: What is the most compelling (emotional/rational) benefit to your target
customers that your brand can own relative to your competition?
Reason to Believe: What is the most compelling evidence that your brand delivers on its brand
promise?

Frame of reference:
A frame of reference approach engages an outside-in perspective to generate a better
understanding of a business’s customers and what they need, creating a market or context in
which a brand is positioned. It considers the wider set of products, services, brands, beliefs, and
identities that hold the customer’s attention, to recognize the full range of products with whom
the company competes.

Determining a competitive frame of

reference
The competitive frame of reference is a fancy way of describing the market or context in which
you choose to position your brand. Share any background materials, or the results of research
you’ve done about your brand. If you don’t have any formal research to share (e.g., customer
surveys, a brand audit, etc.), you can rely on the shared knowledge and experiences with the
brand of the people in the room as a substitute.
you are trying to generate the most ideas.
  What are the competitive frames of reference our brand could be competing in?
 If we asked our external brand community, including customers, partners, and other
important members, in which frame of reference would they say our brand competes?
 Do you see the brand competing in frames of reference in the future where it may not
be competing today? What are they?
Once each team has come up with as many ideas as possible, discuss as a group. Encourage
everyone to share their answers.

Identifying Potential Points-of-Difference

and Points-of-Parity
Once marketers have fixed the competitive frame of reference for positioning by defining the
customer target market and the nature of the competition, they can define the appropriate
points- of-difference and points-of-parity associations. Points-of-difference (PODs) are
attributes or benefits that consumers strongly associate with a brand, positively evaluate, and
believe they could not find to the same extent with a competitive brand. Strong brands often
have multiple points- of-difference. Two examples are Nike (performance, innovative
technology, and winning) and Southwest Airlines (value, reliability, and fun personality).

Three criteria determine whether a brand association can truly function as a point-of-
difference: desirability, deliverability, and differentiability.
1. Desirable to consumer. Consumers must see the brand association as personally
relevant to them.
2. Deliverable by the company. The company must have the resources and commitment to
feasibly and profitably create and maintain the brand association in the minds of
consumers. The ideal brand association is preemptive, defensible, and difficult to attack.
3. Differentiating from competitors. Consumers must see the brand association as
distinctive and superior to relevant competitors.

Points-of-parity (POPs) are attribute or benefit associations that are not necessarily unique to
the brand but may in fact be shared with other brands. These types of associations come in
three basic forms: category, correlational, and competitive.
Category points-of-parity:

Category points-of-parity may change over time due to technological advances, legal
developments, or consumer trends.
Correlational points-of-parity:

One challenge for marketers is that many attributes or benefits that make up their
POPs or PODs are inversely related. In other words, if your brand is good at one thing, such as
being inexpensive, consumers can’t see it as also good at something else, like being “of the
highest quality.”
Competitive points-of-parity

are associations designed to overcome perceived weaknesses of the brand in light of

competitors’ points-of-difference. One good way to uncover key competitive points-of-parity is
to role-play competitors’ positioning and infer their intended points-of- difference.
Competitor’s PODs will, in turn, suggest the brand’s POPs.

Choosing pops and PODs

One of the primary decisions that the firm has to make while launching a product is the extent
to which they would differentiate the product. A proper mix of point of difference and point of
parity is essential for a successful product.

 *Competitive advantage is a company’s ability to perform in one or more ways that

competitors cannot or will not match.
 *A Leverageable advantage is one that a company can use as a springboard to new
advantages, much as Microsoft has leveraged its operating system to Microsoft Office
and then to networking applications.
 *Points-of-parity (POP) are driven by the needs of category membership to create
category of POPs and the necessity of negating competitors. Points of Difference (POD)
to create competitive POPs. In choosing points-of-difference, two important
considerations are that consumers find the POD desirable and that the firm has the
capabilities to deliver on the POD.

Brand Mantra:
A brand mantra is a driving message that captures the essence of your brand and positions it in
the marketplace. A mantra is more than a slogan – it is a simple, yet powerful saying, phrase, or
affirmative statement used to motivate our inner being and set our intentions.
A brand mantra is short phrase (five words maximum) that encapsulates the entire positioning
platform (the competitive frame of reference, the points of difference, the points of parity, and
everything else about your brand) into one thought.

What is a differentiation strategy?

A differentiation strategy is an approach business develop by providing customers with
something unique, different and distinct from items their competitors may offer in the
marketplace. The main objective of implementing a differentiation strategy is to increase
competitive advantage. A business will usually accomplish this by analyzing its strengths and
weaknesses, the needs of its customers and the overall value they can provide.

How to create a differentiation strategy:

There are two main types of differentiation strategies that a business may carry out:
Broad differentiation strategy

A broad differentiation strategy consists of building a brand or business that is different in some
way from its competition. It is applied to the industry and will appeal to a vast range of
consumers.
Focused differentiation strategy

A focused differentiation strategy requires the business to offer unique features to a product or
service, and it must fulfill the requirements of a niche or narrow market.
Examples

 Committed to ethical buying and maintained the purity that comes from purchasing
unique handmade items.
 Focused on image, community and quality with expensive products that are built to last
and maintain value.

Alternative Approaches to Positioning

Some marketers have proposed other, less-structured approaches in recent years that offer
provocative ideas on how to position a brand. These include brand narratives, storytelling, and
cultural branding.

 Brand Narratives and Storytelling Rather than outlining specific attributes or benefits,
some marketing experts describe positioning a brand as telling a narrative or story.
narrative branding as based on deep metaphors that connect to people’s memories,
associations, and stories.16 They identify five elements of narrative branding:

(1) the brand story in terms of words and metaphors,

(2) the consumer journey or the way consumers engage with the brand over time
and touch points where they come into contact with it,
(3) the visual language or expression for the brand,
(4) the manner in which the narrative is expressed experientially or the brand
engages the senses, and
(5) the role the brand plays in the lives of consumers.

 Cultural Branding Douglas Holt believes that for companies to build iconic, leadership
brands, they must assemble cultural knowledge, strategize according to cultural
branding principles, and hire and train cultural experts.

Chapter 15
What is Competitive Dynamics
Is the set of actions and reactions in a competitive business environment that rival firms
display. The action of an individual firm becomes the key indicator of competitive dynamics as
each rival firm enacts this action in order to enhance its competitive advantage vis–à–vis its
competitors.
Competitive dynamics is often analyzed by understanding one’s competition. The most
accepted model is to start with is the AMC (Awareness, Motivation and Capability) where
awareness indicates managers’ understanding of competition followed by motivation to take on
the competition and whether capability to implement counter strategy exists or not.
Example: current smartphone industry

Porter’s Five Forces of Competitive

Position Analysis:
This theory is based on the concept that there are five forces that determine the competitive
intensity and attractiveness of a market. Porter’s five forces help to identify where power lies in
a business situation. This is useful both in understanding the strength of an organization’s
current competitive position, and the strength of a position that an organization may look to
move into.
The five forces are:

1. Supplier power. An assessment of how easy it is for suppliers to drive up prices. This is
driven by the: number of suppliers of each essential input; uniqueness of their product
or service; relative size and strength of the supplier; and cost of switching from one
supplier to another.

2. Buyer power. An assessment of how easy it is for buyers to drive prices down. This is
driven by the: number of buyers in the market; importance of each individual buyer to
the organization; and cost to the buyer of switching from one supplier to another. If a
business has just a few powerful buyers, they are often able to dictate terms.

3. Competitive rivalry. The main driver is the number and capability of competitors in the
market. Many competitors, offering undifferentiated products and services, will reduce
market attractiveness.

4. Threat of substitution. Where close substitute products exist in a market, it increases the
likelihood of customers switching to alternatives in response to price increases. This
reduces both the power of suppliers and the attractiveness of the market.
 5. Threat of new entry. Profitable markets attract new entrants, which erodes profitability.
Unless incumbents have strong and durable barriers to entry, for example, patents,
economies of scale, capital requirements or government policies, then profitability will
decline to a competitive rate.

Industry Concept of Competition

The law defines industry as any business, trade, manufacture, culling, service, employment, or
occupation. The industry here includes all concerns involved in a particular trade or business.
The jute industry, for example, includes all firms in the jute business.
Philip Kotler defines industry more precisely. To him, “industry is a group of firms that offer a
product or class of products that are the close substitutes of each other.”
There are several ways to classify an industry.

 Number of Sellers and Degree of Differentiation

 Entry and Mobility Barriers
 Exit and Shrinkage Barriers
 Cost Structure
 Degree of Vertical Integration
 Degree of Globalization

 Number of Sellers and Degree of Differentiation

The number of firms that control the supply of a product, and the homogeneity and
heterogeneity among the products may affect the strength of competition.

Pure Monopoly: Only one firm offers and undifferentiated product or services in an area
and has complete control.
Example: Electricity and gas, water company

OLIGOPOLY:
This structure is characterized by a relatively small number of competitors who are very
large in size.
Examples: automobiles, steel, oil, chemicals, rubber, etc.

MONOPOLISTIC COMPETITION:
 In these markets, there are a fairly large number of competitors selling relatively
homogeneous products.

Perfect Competition or Purely Competitive Structure

The concept of pure competition holds that a large number of small companies compete
in the marketplace, the products they sell are perfect substitutes, all consumers have
the perfect market knowledge and are rational buyers, and no barriers exist to firms
wanting to enter the market (or to those wanting to leave it)

 Entry and Mobility Barriers

In some industries, it is relatively easier for other firms to enter. But, in other industries,
it is quite difficult for a new firm to enter. It means that some industries are subject to
entry barriers.

 Exit and Shrinkage Barriers

A firm has the right to leave the industry if it finds the industry unprofitable or
unattractive from any other point

 Cost Structure
By cost structure, we mean here the mix of costs. Some industries may involve heavy
marketing and distribution costs, while others may involve heavy research and
development costs, and another may involve heavy production costs.

 Degree of Vertical Integration

In vertical integration, “operations in successive stages of production or marketing or
both are carried on under single ownership.” Vertical integration may take two forms,
such as integrating forward and integrating backward.

 Degree of Globalization
Some industries operate locally and sell their outputs/services locally. Again, there are
industries whose products/services are sold beyond the places of production or origin .

Market concept of competition:

From the market concept of competition view, a company can identify its competitors by
linking industry analysis with market analysis. By mapping out the product/market battlefield, a
company can comfortably identify its present or potential competition.

Competitive strategies for market leaders:

Competitive strategy refers the market strategy or the way or the procedure to run a business
or organization or to compete in the market without getting so much trouble:
1.Expanding the total market:
New customer: Unaware or aware
More usage: Amount and frequency of consumption.
2. Defending market share :Position Defence: Building Superior Brand Value
Flank Defence: Competitor’s price cut.
Increase price and put extra on advertising.
Pre-emptive defence: Attack before enemy starts pre-announcements.
3.Expanding Market Share
4. Frontal Attack: Value to customer by price cut
5. Flank Attack Enemy’s weak spots
Identify and attack
Geographical Expansion
6. Encirclement Attack Wide range of Gadgets
7. By pass Attack Diversify unrelated product
8. Guerrilla Attack Pepsi v Coke: Aquafina and Tropicana
9. Counterfeiter: Duplicate sell in Black Market
10. Cloner: New Packaging with slight variation
11. Imitator: Copy the concept
12. Adapter: Copy and improve

Competitor-centered company
Competitor-centered company refers to a company whose moves are mainly based on
competitors’ actions and reactions.
A competitor centered company is one that spends most of its time tracking competitors’
moves and market shares and trying to find strategies to counter them. This approach has some
pluses and minuses. On the positive side, the company develops a fighter orientation, watches
for weaknesses in its own position, and searches out competitors’ weaknesses. On the negative
side, the company becomes too reactive. Rather than carrying out its own customer
relationship strategy, it bases its own moves on competitors’ moves. As a result, it may end up
simply matching or extending industry practices rather than seeking innovative new ways to
create more value for customers.

Customer Centered Company

Customer Centered companies make their strategies based on customers' needs and responds
rather than concentrating only on the competitor.
Customer-centered companies tend to focus on identifying and satisfying customer needs and
ensuring customers have pleasant experiences when they have complaints, questions or other
interactions. Product-centered businesses emphasize developing superior products, adding new
features and improving internal processes and efficiency.

16
What Is a Product Life Cycle?
The term product life cycle refers to the length of time a product is introduced to consumers
into the market until it's removed from the shelves. The life cycle of a product is broken into
four stages—introduction, growth, maturity, and decline. This concept is used by management
and by marketing professionals as a factor in deciding when it is appropriate to increase
advertising, reduce prices, expand to new markets, or redesign packaging. The process of
strategizing ways to continuously support and maintain a product is called product life cycle
management.

4 Stages of the Product Life Cycle

Generally, there are four stages to the product life cycle, from the product's development to its
decline in value and eventual retirement from the market.
1.Development
The product development stage is often referred to as “the valley of death.” At this stage, costs
are accumulating with no corresponding revenue. Some products require years and large
capital investment to develop and then test their effectiveness. Since risk is high, outside
funding sources are limited. While existing companies often fund research and development
from revenue generated by current products, in startup businesses, this stage is typically
funded by the entrepreneur from their own personal resources.
2. Introduction
The introduction stage is about developing a market for the product and building product
awareness. Marketing costs are high at this stage, as it is necessary to reach out to potential
customers. This is also the stage where intellectual property rights protection is obtained.
Product pricing may be high to recover costs associated with the development stage of the
product life cycle, and funding for this stage is typically through investors or lenders.
3. Growth
In the growth stage, the product has been accepted by customers, and companies are striving
to increase market share. For innovative products there is limited competition at this stage, so
pricing can remain at a higher level. Both product demand and profits are increasing, and
marketing is aimed at a broad audience. Funding for this stage is generally still through lenders,
or through increasing sales revenue.
4. Maturity
At the mature stage, sales will level off. Competition increases, so product features may need
to be enhanced to maintain market share. While unit sales are at their highest at this stage,
prices tend to decline to stay competitive. Production costs also tend to decline at this stage
because of more efficiency in the manufacturing process. Companies usually do not need
additional funding at this stage.
5. Decline
The decline stage of the product life cycle is associated with decreasing revenue due to market
saturation, high competition, and changing customer needs. Companies at this stage have
several options: They can choose to discontinue the product, sell the manufacturing rights to
another business that can better compete or maintain the product by adding new features,
finding new uses for the product, or tap into new markets through exporting. This is the stage
where packaging will often announce “new and improved.”

Product life cycle strategies

The product life cycle contains four distinct stages: introduction, growth, maturity and decline.
Each stage is associated with changes in the product's marketing position. You can use various
marketing strategies in each stage to try to prolong the life cycle of your products.

Product introduction strategies

Marketing strategies used in introduction stages include:
rapid skimming - launching the product at a high price and high promotional level
slow skimming - launching the product at a high price and low promotional level
rapid penetration - launching the product at a low price with significant promotion
slow penetration - launching the product at a low price and minimal promotion

Product growth strategies

Marketing strategies used in the growth stage mainly aim to increase profits. Some of the
common strategies to try are:

 improving product quality

 adding new product features or support services to grow your market share
 enter new markets segments
 keep pricing as high as is reasonable to keep demand and profits high
 increase distribution channels to cope with growing demand
 shifting marketing messages from product awareness to product preference
 skimming product prices if your profits are too low.
Growth stage is when you should see rapidly rising sales, profits and your market share. Your
strategies should seek to maximize these opportunities.

Product maturity strategies

When your sales peak, your product will enter the maturity stage. This often means that your
market will be saturated and you may find that you need to change your marketing tactics to
prolong the life cycle of your product. Common strategies that can help during this stage fall
under one of two categories:

 market modification - this includes entering new market segments, redefining target
markets, winning over competitor's customers, converting non-users
 product modification - for example, adjusting or improving your product's features,
quality, pricing and differentiating it from other products in the marking

Product decline strategies

During the end stages of your product, you will see declining sales and profits. This can be
caused by changes in consumer preferences, technological advances and alternatives on the
market. At this stage, you will have to decide what strategies to take. If you want to save
money, you can:

 reduce your promotional expenditure on the products

 reduce the number of distribution outlets that sell them
 implement price cuts to get the customers to buy the product
 fin another use for the product
 maintain the product and wait for competitors to withdraw from the market first
 harvest the product or service before discontinuing it

Style
A style is the manner in which a product is presented and certain styles come and go. The
current style for mobile phone is touch screen and this style will last until a new technology
style appears. So the shape of a style product life cycle is like a wave, as one style fades out,
another appears.

Fashion
A fashion is a current trend or popular style in a particular field. A fashion can have a long or
short product life cycle. Certain clothing fashions last for a short period and the product life
cycle will decline very rapidly, whilst others will decline slowly or even turn into what is known
as a timeless classic product life cycle.

Fad
A fad is a product that is around for a short period and is generated by hype. As you can see (in
the graph below) for a fad product sales peak very quickly, as this product has a very short
product life cycle. Sometimes a product may follow the standard product life cycle but have one
stage of the product life cycle which has a fad type of unusually high peak in sales.

The diagram below neatly illustrates each of the three product life cycles Fashion, Fad and Style

Extension strategies
Extension strategies are marketing techniques designed to extend a product's life cycle and
delay its decline. An extension strategy will involve amendments to the marketing mix such as
upgrading or updating the product, changing the packaging or presentation, adding new
features or new design elements or lowering price.

the impact of the extension strategies on the product life cycle.

If the firm decides to continue selling the product as it reaches saturation or enters the decline
phase, it is likely to extend the life of the product by changing aspects of the marketing mix to
rejuvenate the offer. Strategies will include:

 Repackaging and new sizes: the appearance of the product can be crucial gaining a
customer's attention and developing interest
 New formulas
 Additional features
 Lower prices to maintain interest or liquidate surplus stock
 New advertising campaigns
 Altering the channel of distribution, such as online shops
 Finding new markets - this may be locally, nationally or internationally.
Examples of extension strategies are:
Advertising – try to gain a new audience or remind the current audience
Price reduction – more attractive to customers
Adding value – add new features to the current product, e.g., improving the specifications on a
smartphone
Explore new markets – selling the product into new geographical areas or creating a version
targeted at different segments
New packaging – brightening up old packaging or subtle changes

17
Product is anything that can be offered to a market that might satisfy a want or need. In
retail, products are called merchandise. In manufacturing, products are purchased as raw
materials and sold as finished goods. Commodities are usually raw materials such as metals and
agricultural products, but the term can also refer to anything widely available in the open
market. In project management, products are the formal definition of the project deliverables
that form the objectives of the project.

Services are the non-physical, intangible parts of our economy, as opposed to goods,
which we can touch or handle. Services, such as banking, education, medical treatment, and
transportation make up the majority of the economies of the rich nations.
service is a transaction in which no physical goods are transferred from the seller to the buyer.
The benefits of such a service are held to be demonstrated by the buyer's willingness to make
the exchange

Types of consumer product and level of product

Register
product differentiation (or simply differentiation) is the process of
distinguishing a product or service from others, to make it more attractive to a particular target
market. This involves differentiating it from competitors' products as well as a firm's own
products.

Differentiated service is a design pattern for business services and software, in

which the service varies automatically according to the identity of the consumer and/or the
context in which the service is used. Sometimes known as smart service or context-aware
service.

Product Brand relationship

Definition of Product
The product is a good or service or the combination of the two that is made available by the
companies in the market for sale to the end consumer. It can be in physical or non-physical
form.
The producers manufacture a product. The raw materials which are procured from the
manufacturers, then they are converted into finished goods, which are offered by them for
selling purposes. The cost of production is the investment made by the company in producing a
product, and it is sold at a price known as a selling price.
Every product is different in itself regarding size, color, brand name, shape, packaging, features,
after sales services and much more. However, the difference in the product is psychological, not
physical. These factors are more or less used by the companies to persuade customers to buy
their product. E.g., Handbags, sunglasses, jeans, shoes, belts, etc.

Definition of Brand
The market is flooded with millions of products, the name, symbol, sign, product, service, logo,
person, or any other entity that makes you distinguish a product from a clutter of products, is a
Brand. It is something; that helps the customers to identify the product as well as the company
behind it.
A brand is a combination of three things, i.e., promise, wants and emotions. It is a promise
made by the company to its customers that what they get after they buy the company’s
products? It fulfils all the wants of the customers. It is an emotion to which the customers are
attached to.

Product Hierarchy:
Each product is related to certain other products. The product hierarchy stretches from basic
needs to particular items that satisfy those needs. There are 7 levels of the product hierarchy:
1. Need family:
The core need that underlines the existence of a product family. Let us consider computation as
one of needs.
2. Product family:
All the product classes that can satisfy a core need with reasonable effectiveness. For example,
all of the products like computer, calculator or abacus can do computation.

3. Product class:
A group of products within the product family recognized as having a certain functional
coherence. For instance, personal computer (PC) is one product class.

4.Product line:
A group of products within a product class that are closely related because they perform a
similar function, are sold to the same customer groups, are marketed through the same
channels or fall within given price range. For instance, portable wire-less PC is one product line.
5. Product type:
A group of items within a product line that share one of several possible forms of the product.
For instance, palm top is one product type.

6. Brand:
The name associated with one or more items in the product line that is used to identify the
source or character of the items. For example, Palm Pilot is one brand of palmtop.

7.Item/stock-keeping unit/product variant:

A distinct unit within a brand or product line distinguishable by size, price, appearance or
some other attributes. For instance, LCD, CD-ROM drive and joystick are various items under
palm top product type.

A Product system is a group of diverse but related items that function in a compatible
manner.

A Product mix is the set of all products and items a particular seller offers for sale.
A product mix consists of various product lines.
A company of a product mix has a certain: -

 Width
 Length
 Depth
 Consistency

The width of a product mix refers to how many different product lines the company carries.
Product line and length Product width
The length of a product mix refers to the total numbers of items in the mix. We can also talk
about the average length of a line. This is obtained by dividing the total length by the no. of
lines.

The depth of a product mix refers to how many variants are offered of each product in the
line. The average depth of a company’s product mix can be calculated by averaging the no. of
variants within the brand groups.

The consistency of the product mix refers to how related the product lines are in end use,
production requirements, distribution channels, or some other way.

Products and service decisions

marketing:
 Product Attributes
 Branding
 Packaging
 Labeling
 Product Support Services
1. Product and Service Attributes
Product quality
The characteristics of a product or service that bear on its ability to satisfy stated or implied
customer needs.
Total Quality Management
Is an approach in which all of the company’s people are involved in constantly improving the
quality of products, services, and business processes.
Product Features
Features are a competitive tool for differentiating the company’s product from competitors’
products.
Product Style and Design
Style simply describes the appearance of a product.
Design is more than skin deep—it goes to the very heart of a product; it contributes to a
product’s usefulness as well as to its looks.

2. Branding:
 A name, term, sign, symbol, design, or a combination of these, that identifies the products or
services of one seller or group of sellers and differentiates them from those of competitors.

3. Packaging
The activities of designing and producing the container or wrapper for a product 10

4. Labeling
It identifies the product or brand. The label also describes several things about the product
—who made it, where it was made, when it was made, its contents, how it is to be used,
and how to use it safely.

5. Product Support Services

Product Line Decisions Product line
A group of products that are closely related 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.
A company can expand its product line in two ways: by line filling or line stretching.
• Product line filling- involves adding more items within the present range of the line.
• Product line stretching - occurs when a company lengthens its product line beyond its
current range.
Product Mix Decisions Product mix (or product portfolio) • The set of all product lines and
items that a particular seller offers for sale.
A company of a product mix has a certain: -
•Width
•Length
•Depth
•Consistency

6. Warranty:
A warranty is a type of guarantee that a manufacturer or similar party makes regarding the
condition of its product. It also refers to the terms and situations in which repairs or
exchanges will be made in the event that the product does not function as originally
described or intended.
 7. Guaranty:
a promise or assurance, especially one in writing, that something is of specified quality,
content, benefit, etc., or that it will perform satisfactorily for a given length of time: a
money-back guarantee. a person who gives a guarantee or guaranty; guarantor. a person to
whom a guarantee is made.

Ingredient Branding
“Ingredient Branding is a specific form of brand collaboration, distinct from co-branding that
highlights a specific component or brand attribute to enhance a product or service that can
potentially become a category point-of-parity, create multi-level visibility, awareness,
differentiation and preference in the down-stream value chain”
highlights a specific component or brand attribute to enhance a product or a service. It is a
long-term process in which the ingredient is becoming a part and cannot be separated from
the final product. The Ingredient Brand can create awareness, differentiation and
preference for the final product in the down-stream value chain.

Co-branding on the other side typically involves two finished consumer products used
in a single product or service. The purpose of Co-branding is to capitalize on the equity of
each brand and enhance the success of the total product. It has more promotional
character than Ingredient Branding and is short-to mid-term orientated. Good examples of
successful Co-branding are Omega & Bio steel, Panzer glass & Swarovski, McDonalds &
KitKat, Nike & Apple, GoPro & Red Bull or Adidas & Five Ten.

19
Distinctive Characteristics of Services
Four distinctive service characteristics greatly affect the design of marketing programs:
Intangibility - Unlike physical products, services cannot be seen, tasted, felt, heard, or
smelled before they are bought.
Inseparability - Services are typically produced and consumed simultaneously.
Variability - Services are highly variable because the quality depends on who provides
them, when and where, and to whom.
Perishability - Services cannot be stored, so their perishability can be a problem when
demand fluctuates.
 The New Services Realities
A Shifting Customer Relationships
Savvy services marketers must recognize three new services realities: the newly
empowered customer, customer coproduction, and the need to engage employees as well
as customers.

Customer Empowerment - customers are more sophisticated about buying support services
and are pressing for "unbundled services" so they can select the elements they want.

Customer Coproduction - the reality is that customers do not merely purchase and use a
service: they play an active role in its delivery. Their words and actions affect the quality of
their service experiences and those of others, and the productivity of frontline employees.

Satisfying Employees as Well as Customers - Excellent service companies know that

positive employee attitudes will promote stronger customer loyalty. Employees thrive in
customer-contact positions when they have an internal drive to
(1) pamper customers,
(2) accurately read customer needs,
(3) develop a personal relationship with customers, and
(4) deliver quality service to solve customers' problems.

Designing and Managing Services

A service is any act or performance one party can offer to another that is essentially
intangible and does not result in the ownership of anything. Its production may or may not
be tied to a physical product. Service industries are everywhere.

Categories of Service Mix

The service component can be a major or minor part of the total offering. Five categories of
offerings are:
1. Pure tangible good - a tangible good such as toothpaste, with no accompanying
services.
 2. Tangible good with accompanying services - a tangible good, like a cell phone,
accompanied by one or more services.
3. Hybrid - an offering, like a restaurant meal, of equal parts goods and services.
4. Major service with accompanying minor goods and services - a major service, like air
travel with additional services or supporting goods such as drinks.
5. Pure service - primarily an intangible service, such as babysitting or psychotherapy.

21
Price
A price is the quantity of payment or compensation given by one party to another in return for
one unit of goods or services. A price is influenced by production costs, supply of the desired
item, and demand for the product.
Price has many names like: rent, fare, tuition, rate, commission, wages, fee. Dues, interest,
donation, salary, charges and so on.

There are several pricing strategies:

Premium pricing: high price is used as a defining criterion. Such pricing strategies work in
segments and industries where a strong competitive advantage exists for the company.
Example: Porcha in cars and Gillette in blades.
Penetration pricing: price is set artificially low to gain market share quickly. This is done when a
new product is being launched. It is understood that prices will be raised once the promotion
period is over and market share objectives are achieved. Example: Mobile phone rates in India;
housing loans etc.
Economy pricing: no-frills price. Margins are wafer thin; overheads like marketing and
advertising costs are very low. Targets the mass market and high market share. Example:
Friendly wash detergents; Nirma; local tea producers.
Skimming strategy: high price is charged for a product till such time as competitors allow after
which prices can be dropped. The idea is to recover maximum money before the product or
segment attracts more competitors who will lower profits for all concerned. Example: the
earliest prices for mobile phones, VCRs and other electronic items where a few players ruled
attracted lower cost Asian players.
Consumer psychology and pricing:
By using psychology, you can present a perception of value or discount that will help you to sell
your products. For example, the common use of Rs.2999 over Rs.3000 has long been a matter
of pricing psychology that says: Although there is only a 1 cent difference, something in the 9
range is a greater bargain than something in the 10 range. In fact, studies show that odd
numbers are more commonly associated with lower prices than even numbers. Giving an item
free with purchase is primarily a perception of savings.

A “reference price” is the price that people expect or deem to be reasonable for a certain
type of product.
Several factors affect reference prices

 Memory of past price; Frame of reference (compared to competitive prices, pre-sale

prices, manufacturer’s suggested prices, channel-specific prices, marked prices before
discounts, substitute product prices, etc.)
 Price quality inferences: Consumers often rely heavily on price as a predictor of quality
and typically overestimate the strength of this relation.
 Price Cues: A price cue is defined as any marketing tactic used to persuade customers
that prices offer good value compared to competitors’ prices, past prices or future
prices

Price discounts and allowances the role of discount Offering discounts can be a
useful tactic in response to aggressive competition by a competitor. However, discounting can
be dangerousness carefully controlled and conceived as part of your overall marketing strategy.
Discounting is common in many industries – in some it is so endemic as to render normal price
lists practically meaningless. This is not to say that there is anything particularly wrong with
price discounting provided that you are getting something specific that you want in return.

Promotional Pricing Companies can use several pricing techniques to stimulate early
purchase

 Loss-leader pricing –
Supermarkets and department stores often drop the price on well Known brands to stimulate
additional store traffic.

 Special-event pricing - Sellers will establish special prices in certain seasons to draw in
more customers
 Cash rebates - cash rebates to Encourage purchase of the manufacturers’ products
within a specified time period. Rebates can help clear inventories without cutting the
stated list price.
  Low-interest financing - Instead of cutting its price, the company can offer customers
low- interest financing. Automakers have even announced no-interest financing to
attract Customers.
 Longer payment terms - Sellers, especially mortgage banks and auto companies, stretch
loans over longer periods and thus lower the monthly payments. Consumers often
worry less about the cost (i.e., the interest rate) of a loan and more about whether they
can afford the monthly payment.
 Warranties and service contracts - Companies can promote sales by adding a free or
low- cost warranty or service contract.
 Psychological discounting - This strategy involves setting an artificially high price and
then offering the product at substantial savings. Promotional-pricing strategies are often
a zero-sum game.

Differentiated Pricing Companies often adjust their basic price to accommodate

differences in customers, products, locations, and so on.
Customer-segment pricing - Different customer groups are charged different prices for the
same product or service. For example, museums often charge a lower admission fee to students
and senior citizens.
Product-form pricing - Different versions of the product ‘are priced differently but not pro-
portionately to their respective costs
Image pricing - Some companies price the same product two different levels based on image
differences at.
Channel pricing - Coca-Cola carries a different price depending on whether it is purchased ill a
fine restaurant, a fast-food restaurant, or a vending machine.
Location pricing - The same product is priced differently at different locations even though the
cost of offering at each location is the same.
Time pricing - Prices are varied by season, day, or hour. Public utilities vary energy rates to
commercial users by time of day and weekend versus weekday.

SETTING THE PRICE – Let us now attempt to understand the

process of how firms set prices. When does a firm set prices? A firm must set a price for the first
time when it develops a new product, when it introduces its regular product into a new
distribution channel or geographical area, and when it enters bids on new contract work. Is
Setting prices easy? It involves making a number of guesses about the future. You would want
to Know how; an organization should proceed as follows:
 1. Identify the target market segment for the product or service, and decide what share of
it is desired and how quickly.
2. Establish the price range that would be acceptable to occupants of this segment. If this
looks unpromising, it is still possible that consumers might be educated to accept higher
price levels, though this may take time.
3. Examine the prices (and costs if possible) of potential or actual competitors.
4. Examine the range of possible prices within different combinations of the marketing mix
(e.g., different levels of product quality or distribution methods).
5. Determine whether the product can be sold profitably at each price based upon
anticipated sales levels (i.e., by calculating break-even point) and if so, whether these
profits will meet strategic objectives for profitability.
6. If only a modest profit is expected it may be below the threshold figure demanded by an
organization for all its activities. In these circumstances, it may be necessary to modify
product specifications downwards until costs are reduced sufficiently to produce the
desired profit.

Steps in setting price:

1. Development of Pricing Objectives:
Objectives must be consistent with company’s overall objectives and marketing objectives. As
stated earlier, companies generally have multiple pricing objectives keeping in view their short-
term and long-term interests. In terms of priority of objectives, most companies set their
pricing objectives in terms of profit optimization, market share, or return on investment. [ Price
Setting Procedure.

2. Determination of Demand
Demand determination of a product is the responsibility of marketing manager, aided by
marketing research personnel and forecasters. Demand and competition typically set the upper
limits of the price. Demand forecasts furnish estimates of sales potential of a product reflecting
the quantity that can be sold in a specified period. These estimates help in examining the
relationship between product’s price and the quantity likely to be demanded.

3. Estimation of Costs
The purpose of price setting Procedure for a company is to set a price to cover costs involved in
a product’s production, selling, and distribution and some desired level of profit for its efforts
and risks. A product’s costs set the lowest point below which a company would not set price
and demand sets a ceiling on the price.

4. Examining Competitors Costs, Prices, and Offers

 Learning competitors’ costs, prices, and offers is an ongoing function of marketing research.
The first step is to ascertain what positive differentiation features the company’s offer contains
and not offered by the nearest competitor. The second step is to a ascertain the worth of
additional positive features to consumers and this worth should be added to the competitor’s
price to set the company’s product price. If the worth of positive differentiation features of
competitor’s product is more and the company’s product does not have those features on its
offer, then the value should be subtracted from competitor’s price for setting the company’s
product price.

5. Selecting a Pricing Strategy

A pricing strategy is a course of action framed to affect and guide price determination decisions.
These strategies help realizing pricing objectives and answer different aspects of how will the
price be used as a variable in the marketing mix, such as new product introductions,
competitive situations, government pricing regulations, economic conditions, or
implementation of pricing objectives.

6. Selection of a Pricing Method

After selection of the pricing strategy or strategies to accomplish the pricing objectives, a
company decides about a pricing method. A pricing method is a systematic procedure for
setting the prices on a regular basis.

Initiating and Responding to Price

Changes
Internal or external forces often lead on organization to change its prices. Price changes are
often initiated by the organization.

INITIATING PRICE CHANGES

An organization may initiate price changes to deal with new forces arising within the
organization or the market.
1. Increasing Price
Increasing price of a product is an attractive proposition for every business organization,
since a small increase in the price results in huge increase in the revenue and profits.
2. Lowering Price
 Several situations lead an organization to reduce the price of its products. Organizations
with excess capacity try for extra sales in order to achieve higher capacity utilization
rates.
 Low quality trap: An organization initiating price cuts may fall in a low-quality
trap when consumers associate the new low prices to a poorer quality product.
 Fragile market trap: It may fall into a fragile market trap when price sensitive
consumers wait for further price cuts or search for cheaper products.
 Shallow pocket trap: It may fall into the shallow pocket trap if financially strong
organizations react by huge price cuts to counter the price cuts initiated by a
weak organization.

RESPONDING TO PRICE CHANGES

An organization faces a strategic decision situation when competitors initiate price
changes. Responding to the price change, particularly in the case of price cuts is a
difficult question.
If the price cut has been initiated in order to use excess capacity or to cover
rising costs, it does not warrant any response.
 If the price change is temporary or short term, initiated to clear old
stocks, there is no need for response.
 If the objective is to dominate the market and the price change is
long term, the organization has to respond quickly and effectively.
 The organization should also evaluate the consequence of non-
response to the price change.
 If the price change does not seriously affect it current sales and
market share, there is no need for response.
 Before showing any response, it should carefully watch how other
competitors react to the price change.
Option 1: Increase customers perceived value of the product by increasing promotional level.
Option 2: Increase the price complemented by an improvement in quality and features of the
product.
Option 3: Add a new lower price brand to the current product line and position it directly with
the attacker’s brand.
Option 4: As a last option, reduce the price to off set the negative effects of the price attack.
 23
Network
A network which creates partnership and value in purchase, production and selling of products
is referred to as value network. Companies have developed distribution channel and network
through which it supplies final product to customers. This distribution channel and network are
referred to as the marketing channel.

Marketing channel:
A marketing channel is the people, organizations, and activities necessary to transfer the
ownership of goods from the point of production to the point of consumption. It is the way
products get to the end-user, the consumer; and is also known as a distribution channel.
Similarly, what are the four types of marketing channels? There are basically four types of
marketing channels:

 Direct selling;
 Selling through intermediaries;
 Dual distribution; and.
 Reverse channels.
In this regard, what is a Value Network in marketing?

Value Network:
A value network is a set of connections between organizations and/or individuals interacting
with each other to benefit the entire group. A value network allows members to buy and sell
products as well as share information.

Role of Marketing channels:

A marketing channel is a set of interdependent organizations involved in the process of placing
products and services with consumers.
The introduction of intermediaries between the manufacturers and the final consumer is
adopted by many organizations to facilitate the distribution of their products, especially where
a wide distribution will provide maximum exposure of their products.
Manufacturers of snack foods, pies, cigarettes and many similar products require mass
distribution in often small quantities. This distribution makes the demand management process
by one company difficult to achieve cost effective distribution.
The parties involved in the marketing channel render various key functions which increase the
effectiveness of placement through the channel. The functions are:

 information gathering and distribution

 product promotion
 arranging contacts and matching products to meet buyers needs
 negotiation of prices and financing the costs of the activities in the channel
 physical distribution of products through the channel.

Channel Management Decisions/

Channel design decision:
The success of any marketing channel lies in the foundation of right channel design decision.
But channel design is just the planning part; it needs right implementation to be successful. The
implementation can be taken care of, with the help of channel management decisions, it
includes right from, selecting a channel member to training them to motivating them and to
evaluating them on their performance.
Step # 1. Selecting Channel Members:
The first priority for any company is choosing the right channel members. As the business is
dependent upon the marketing channel partners, it becomes crucial for the success of any
company to select the best channel partner. All the companies whether it’s a product
manufacturing company like Colgate or Onida or a service company like IMS or Career
Launcher, needs a good channel partner to succeed.
Step # 2. Training Channel Partners:
Once the channel partner is selected, they need to be trained as they are the face of the
company. All the companies have intensive training programmers for its dealers to tell them
about their sales and service capabilities, product knowledge, expected service quality and
operational procedures to follow.
The training tries to facilitate performance, improve knowledge, skills and attitude of its dealers
and sales staff. The training is given both through online and offline methods, which covers
functional, technical and behavioral aspects.
Step # 3. Motivating Channel Members:
As the channel members are as important as your customers, a company needs to make them
happy. Just like anybody, channel members are also needing to be motivated. On the one hand,
the company tries to train them for their better performance and on the other hand, the
company provides them incentives, higher margins, premiums, display allowances, advertising
allowances and special deals.
Step # 4. Evaluating Channel Members:
channel members are evaluated on the basis of their sales, inventory level, service support,
delivery time performance, complaint redressal, promotional program implementation and
training performance.
Step # 5. Modifying Channel Arrangements:
With the changing times, the company needs to modify its channel arrangements. The product
line can expand, the consumers buying pattern can change, the new competition can come up,
a new distribution channel can emerge or the demand of the product can change by getting
into the later stages of product life cycle. All these factors can lead the company to change its
channel arrangement.

Channel Integration and Systems

The integration of marketing channels involves a process known as multi-channel retailing.
Multi-channel retailing is the merging of retail operations in such a manner that enables the
transacting of a customer via many connected channels.
Channels include:

 retail stores,
 online stores,
 mobile stores,
 mobile app stores,
 telephone sales,
 any other method of transacting with a customer.

Multi-channel retailing is built on systems and processes, but customer heavily dictates the
route they take to transact. Systems and processes within retail simply facilitate the customer
journey to transact and be served. The pioneers of multi-channel retail built their businesses
from a customer centric perspective and served the customer via many channels long before
the term multi-channel was used.

Omni-channel retailing is concentrated on a seamless approach to the consumer

experience through all available shopping channels like mobile internet devices, computers,
bricks-and-mortar, television, catalogue, and so on. The omni-channel consumer wants to use
all channels simultaneously and retailers using an omni-channel approach will track customers
across all channels, not just one or two.

Types of Distribution Channels

(marketing channel)
Channels of distribution can be divided into the direct channel and the indirect channels.
Indirect channels can further be divided into one-level, two-level, and three-level channels
based on the number of intermediaries between manufacturers and customers.

Indirect Channels (Selling Through Intermediaries)

When a manufacturer involves a middleman/intermediary to sell its product to the end
customer, it is said to be using an indirect channel.

Direct Channel or Zero-Level Channel (Manufacturer to Customer)

Direct selling is one of the oldest forms of selling products. It doesn’t involve the inclusion of an
intermediary and the manufacturer gets in direct contact with the customer at the point of sale.
Some examples of direct channels are peddling, brand retail stores, taking orders on the
company’s website, etc.

Retailer:
Wholesaler:

What is E-Commerce marketing

Ecommerce marketing is the practice of using promotional tactics to drive traffic to your online
store, converting that traffic into paying customers, and retaining those customers’ post-
purchase. A holistic ecommerce marketing strategy is made up of marketing tactics both on and
off your website
•Ecommerce is the meaning of growth
• It is the market by driving sales by raising awareness about an online store's brand and
product offerings.
•That means whenever you buy and sell something on the internet then you get involved in
ecommerce.
•It is currently one of the most important aspects of the Internet to emerge.

There are three way of e-commerce

Online retailing. It is the process of customers to allow searching, select and purchases the
products, services and any kind of information over the Internet.
Electronics markets. Enabling purchases is the system of Electronics market, through bids to
buy; sales, through offers to sell; and short-term trades generally in the form of financial or
obligation swaps
Online auctions. An online auction is an auction which is held over the internet. The seller sells
the product or service to the person who bids the highest price.

TYPES OF E-COMMERCE There are six basic types of e-commerce: -

B2B (Business to business), it means one business sells directly to another business.
B2C (Business to consumer), it means a business sells directly to consumer.
C2C (Consumer to consumer), it means one consumer is selling to another via auction or social
media.
C2C (Consumer to Consumer), it means markets provide an innovative way to allow customers
to interact with each other.
C2B (Consumer to Business), it means ecommerce business model in which consumers can
offer products and services to companies, and the companies pay the consumers.
B2A (Business to Administration), the category is covering all transactions and carried out
between businesses or government bodies using the Internet as a medium.
C2A (Consumer to Administration), Using the services of consumers can post concerns, request
feedback, or information directly from their local governments and authorities.

25
Advertising:
Advertising is a means of communication with the users of a product or service. Advertisements
are messages paid for by those who send them and are intended to inform or influence people
who receive them, as defined by the Advertising Association of the UK.
Description: Advertising is always present, though people may not be aware of it. In today's
world, advertising uses every possible media to get its message through. It does this via
television, print (newspapers, magazines, journals etc.), radio, press, internet, direct selling,
hoardings, mailers, contests, sponsorships, posters, clothes, events, colors, sounds, visuals and
even people (endorsements).
Setting the Objectives
An advertising objective (or advertising goal) is a specific communications task and achievement
level to be accomplished with a specific audience in a specific period of time. We can classify
advertising objectives according to whether their aim is to inform, persuade, remain, or
reinforce.

 Informative advertising aims to create brand awareness and knowledge of new products
or new features of existing product.
 Persuasive advertising aims to create liking, preference, conviction, and purchase of a
product or service.
 Reminder advertising aims to stimulate repeat purchase of products and services.

 Reinforcement advertising aims to convince current purchasers that they made the right
choice.

Deciding on the Advertising Budget

Here are five specific factors to consider when setting the advertising budget.
Stage in the product life cycle -- New products typically merit large budgets to build awareness
and to gain consumer trial.
Market share and consumer base -- High-market-share brands usually require less advertising
expenditure as a percentage of sales to maintain share.
Competition and clutter -- In a market with many competitors and high advertising spending, a
brand must advertise more heavily to be heard.
Advertising frequency -- The number of repetitions needed to put the brand's message across
to consumers has an obvious impact on the advertising budget.
Product substitutability -- Brands in less-differentiated or commodity-like product classes
(beer, soft drinks), require heavy advertising to establish a unique image

Advertising Campaigns
Advertising campaigns are the groups of advertising messages which are similar in nature. They
share same messages and themes placed in different types of medias at some fixed times.
The process of making an advertising campaign is as follows:
Research: first step is to do a market research for the product to be advertised. One needs to
find out the product demand, competitors, etc.
Know the target audience: one need to know who are going to buy the product and who
should be targeted.
Setting the budget: the next step is to set the budget keeping in mind all the factors like media,
presentations, paper works, etc. which have a role in the process of advertising and the places
where there is a need of funds.
Deciding a proper theme: the theme for the campaign has to be decided as in the colors to be
used, the graphics should be similar or almost similar in all ads, the music and the voices to be
used, the designing of the ads, the way the message will be delivered, the language to be used,
jingles, etc.
Selection of media: the media or number of Medias selected should be the one which will
reach the target customers.
Media scheduling: the scheduling has to be done accurately so that the ad will be visible or be
read or be audible to the targeted customers at the right time.
Executing the campaign: finally, the campaign has to be executed and then the feedback has to
be noted.

Sales Promotion
Sales promotion, a key ingredient in marketing campaigns, consists of a collection of incentive
tools, mostly short term, designed to stimulate quicker or greater purchase of particular
products or services by consumers or the trade. Whereas advertising offers a reason to buy,
sales promotion offers an incentive. Sales promotion includes tools for consumer promotion
(samples, coupons, cash refund offers, prices off, premiums, prizes, patronage rewards, free
trials, warranties, tie-in promotions, cross-promotions, point-of-purchase displays, and
demonstrations), trade promotion (prices off, advertising and display allowances, and free
goods), and business and sales force promotion (trade shows and conventions, contests for
sales reps, and specialty advertising).

Events and Experiences

Becoming part of a personally relevant moment in consumer's lives through events and
experiences can broaden and deepen a company or brand's relationship with the target market.
Daily encounters with brands may also affect consumers' brand attitudes and beliefs.
Atmospheres are "packaged environments" that create or reinforce leanings toward product
purchase.

Major Decisions
In using sale promotion, a company must establish its objectives, select the tools, develop the
program, pretest the program, implement and control it, and evaluate the results.

Creating Experiences
A large part of local, grassroots marketing is experiential marketing, which not only
communicates features and benefits but also connects a product or service with unique and
interesting experiences. "The idea is not to sell something, but to demonstrate how a brand can
enrich a customer's life." Consumers seem to appreciate that

Public Relations
Not only must the company relate constructively to customers, suppliers, and dealers, it must
also relate to a large number of interested publics. A public is any group that has an actual or
potential interest or impact on a company's ability to achieve its objectives. Public relations (PR)
include a variety of programs to promote or protect a company's image or individual products.
They perform the following five functions:
Press relations -- Presenting news and information about the organization in the most positive
light
Product publicity -- Sponsoring efforts to publicize specific products
Corporate communications -- Promoting understanding of the organization through internal
and external communications
Lobbying -- Dealing with legislators and government officials to promote or defeat legislation
and regulation
Counseling -- Advising management about public, issues, and company position and image
during good times and bad

Developing and Managing an

Advertising Program
Advertising can be a cost-effective way to disseminate messages, whether to build a brand
preference or to educate people. Even in today’s challenging media environment, good ads can
pay off, as they did for P&G.

In developing an advertising program, marketing managers start by identifying the target

market and buyer motives. Then they can make the five major decisions known as “the five
Ms”:
Mission: What are our advertising objectives?
Money: How much can we spend, and how do we allocate our spending across media types?
Message: What should the ad campaign say?
Media: What media should we use?
Measurement: How should we evaluate the results?

Techniques to Measure Advertising

Effectiveness:
There are different tests and several techniques in each of the test to evaluate advertising
effectiveness. Test depends on the aspects to be evaluated. Based on Philip Kotler’s views, let
us first discuss classification of tests (various ways or approaches) to evaluate advertising
effectiveness.
1. Pre-test and Post Test:
Pre-test implies testing advertising message before it is sent to specific media. Posttest implies
testing impact of advertising message after it is published in any of the media.
2.communication and Sales Effect Test:
Communication test measures communicability (ability to communicate) of the message.
Whereas sales-effect test measures advertising impact on sales volume.
3.Laboratory and Field Test:
Clearly, a laboratory test is conducted in a controlled environment in a limited scale.
Respondents are invited in a laboratory to state their response. Quite opposite, a field test is
conducted in original setting, artificial climate is not created. It is similar as conducting survey to
measure what customers think about company’s advertisement.
4.Experimental and Survey Test:

Experimental test involves testing advertising effect by conducting test by manipulating

independent variable (i.e., advertising efforts) and measuring the effect of the manipulation on
other dependent variables like sales, profits, consumer satisfaction, etc. Experimental test may
be laboratory or field test. Survey test involved knowing consumers’ view’s through a survey
method.
5.Message and Media Effect Test:
While message test involves measuring clarity, contents, believability, action ability, etc., of the
message, the media test measures effectiveness/ suitability of one or more media.