Recap of 29th Nov Session.

Positioning:-
How it shud be done?
Based on- a)Key differentiating factors?
b)How to deal with competitors?
An effort should be made to critically analyse the various factors affecting positioning.

Generic Strategies:-
By Michael Porter (The Guru of Defining/Designing Mktg Strategy)
5 Force Model


Five forces determining segment structural attractiveness:-

Porter's five forces is a framework for the industry analysis and business strategy development formed by Michael E. Porter of Harvard Business School in 1979. It draws upon Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one in which the combination of these five forces acts to drive down overall profitability. A very unattractive industry would be one approaching "pure competition", in which available profits for all firms are driven down to zero.

Three of Porter's five forces refer to competition from external sources. The remainder are internal threats.

Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally, requires a business unit to re-assess the marketplace given the overall change in industry information. The overall industry attractiveness does not imply that every firm in the industry will return the same profitability. Firms are able to apply their core competencies, business model or network to achieve a profit above the industry average. A clear example of this is the airline industry. As an industry, profitability is low and yet individual companies, by applying unique business models, have been able to make a return in excess of the industry average.

Porter's five forces include - three forces from 'horizontal' competition: threat of substitute products, the threat of established rivals, and the threat of new entrants; and two forces from 'vertical' competition: the bargaining power of suppliers and the bargaining power of customers.

This five forces analysis, is just one part of the complete Porter strategic models. The other elements are the value chain and the generic strategies.

Porter developed his Five Forces analysis in reaction to the then-popular SWOT analysis, which he found rigorous and ad hoc.

Porters fives forces model is an excellent model to use to analyse a particular environment of an industry. So for example, if we were entering the PC industry, we would use porters model to help us find out about:

1) Competitive Rivalry
2) Power of suppliers
3) Power of buyers
4) Threats of substitutes
5) Threat of new entrants.

The above five main factors are key factors that influence industry performance, hence it is common sense and practical to find out about these factors before you enter the industry. Lets look at them below.


Competitive rivalry
Segment Rivalry- The competitors will try to convince the target audience through mktg mix,brand positioning,dealer networks etc.Dealing with the competitors includes study of questions like: Who are your rivals? Define your competitors??
Competition is the thing that can move the entire base of customers.
A starting point to analysing the industry is to look at competitive rivalry. If entry to an industry is easy then competitive rivalry will likely to be high. If it is easy for customers to move to substitute products for example from coke to water then again rivalry will be high. Generally competitive rivalry will be high if:

• There is little differentiation between the products sold between customers.
• Competitors are approximately the same size of each other.
• If the competitors all have similar strategies.
• It is costly to leave the industry hence they fight to just stay in ( exit barriers).
Eg:ISB Vs IIM case.
-Micromax Vs Nokia.
-Maggi Vs Top Ramen.
-Starbucks Vs CCD.
-NTT docomo one of the most successful mobile in Japan.
Docomo entering India through a collaboration with TATA(using 1 paisa/sec plan).
If the leaders in their respective business(in India) like IIM,Nokia,Maggi,CCD respond to the new entrants ultimately the Goodwill of the new entrant increases.
Filmy Example:-In Dulhe Raja movie Govinda runs a dhaba just opposite to a 5 star hotel owned by Kadar Khan.



Power of suppliers

Suppliers are also essential for the success of an organisation. Raw materials are needed to complete the finish product of the organisation. Suppliers do have power. This power comes from:

• If they are the only supplier or one of few suppliers who supply that particular raw material.
• If it costly for the organisation to move from one supplier to another (known also as switching cost)
• If there is no other substitute for their product.
Eg:Automobile-Bajaj Scooter of past Vs Bike manufacturers of recent market like Honda,TVS,M&M.
Electronics- Suppliers of electronic goods like Chroma,VSP,Next.


Power of buyers

Buyers or customers can exert influence and control over an industry in certain circumstances. This happens when:

• There is little differentiation over the product and substitutes can be found easily.
• Customers are sensitive to price.
• Switching to another product is not costly.
Eg:Real estate sector before recession and after it.
Changes in the Real Estate scenario of Kharghar to be observed after the news of Navi Mumbai International Airport.
Bias Mkt: Customer is the king in bias mkt although CRM practices are not much developed and lot of improvement is expected.
Indian mkts are not customer driven, there are at times issues regarding legal aspects,consumption etc.
Buyer power can be seen in services provided by McD-Free coke for 1 min delay.
Domino's-Free delivery if delayed than 30 mins.


Threat of substitutes

Are there alternative products that customers can purchase over your product that offer the same benefit for the same or less price? The threat of substitute is high when:

• Price of that substitute product falls.
• It is easy for consumers to switch from one substitute product to another.
• Buyers are willing to substitute.
Eg: GSM Vs CDMA, LCD Vs LED.
Bulky TV's, monitors being replaced by sleek design.
Pager Vs Mobile,VCR Vs CD players, Xerox m/c Vs All in 1 OneStopSoln.


Threat of new entrant

The threat of a new organisation entering the industry is high when it is easy for an organisation to enter the industry i.e. entry barriers are low.

An organisation will look at how loyal customers are to existing products, how quickly they can achieve economy of scales, would they have access to suppliers, would government legislation prevent them or encourage them to enter the industry.
Eg:Walmart,Starbucks to enter in Indian mkt.
Walmart has only cash n carry ie wholesale mkt yet they can be a big player in their core business.

Generic Strategies to counter the 5 forces:
Strategy can be formulated on 3 levels like
1)Corporate level 2) Business unit level 3) Functional or Departmental level
The Business unit level is the primary context of industry rivalry.Michael Porter identified 3 generic strategies(Cost leadership,differentiation and focus)that can be implemented at the business unit level to create competitive advantage.The proper generic strategy will position the firm to leverage its strength and defend against the adverse effects of 5 forces.

Entering into 2011:- This would be the most challenging decade for service providers as mkt will grow n mature and hence Changing with the Change is important.
"Change is the only Constant"

Case Study: How market research supports the new product development process

Introduction
Market research is the process by which businesses find out about customers' needs, wants and desires. It makes possible the successful development of new products.
This study shows how an international company, Beiersdorf, combines market research with new product development on its NIVEA Deodorant brand to provide exciting new products that better meet consumer requirements.
Beiersdorf has a clear goal - to be as close as possible to consumers, regardless of which country they live in. Developing superior consumer insights is fundamental to the continued future success of Beiersdorf and its international brands like NIVEA, Eucerin and Atrixo. These are the result of more than 120 years of experience in research and development.
Beiersdorf has launched many new brands and products into a variety of countries and categories. Being an innovation leader has allowed Beiersdorf actively to shape its markets and set new trends. These product launches have led to long-term global growth.
The key stages of market research and new product development
Market research involves the systematic gathering, recording and analyzing of data about customers, competitors and the market. This links marketers to consumers by supplying essential information to solve marketing challenges and help with marketing decisions.
Market research helps a company create and develop an up-to-date and relevant portfolio of products.
Creating new products
Beiersdorf's international Market Research team is based at company headquarters in Hamburg, Germany. The team's objective is to be the voice of the consumers within the organisation. High-quality market research has helped secure the long-term future of the business. Analysing and understanding the data gathered on consumers' behaviours, needs, attitudes and opinions minimises the risks involved in making marketing decisions.
Market research in a global organisation needs the help and support of the company's overseas affiliate companies. Most affiliate companies (in the UK for example) have dedicated Market Research Managers. They help the central research team in gathering and interpreting consumer views. These views provide information or insights that ultimately result in the development of new products suitable for a global market.
This case study follows the development of a new NIVEA Deodorant called Pearl and Beauty aimed at young women. This case study will give you a clear picture of how market research has helped New Product Development (NPD).
Identifying consumer views and product needs – where to start?
Market research should start with the consumer and serves two purposes:
1) To inform companies about consumer needs and desires. What are the trends in the market? What do consumers want?
2) To give consumers the opportunity to talk to the providers of products and services so that their views are taken into account.
Businesses exist in a fast-moving world with increased consumer choice. It is essential that a company knows its market and its consumers before developing any new product. Lots of questions need answering.
Consumer insights drive New Product Development. This information takes into account their behaviours, attitudes and beliefs. It is an expression of their wishes and desires. Businesses use consumer insights to create opportunities for their brands. It is the starting point that enables brands to fit meaningfully into consumers' lives.
Across countries, consumers are different in terms of culture and lifestyle. NIVEA's challenge was to find similar insights from consumers across different countries. This was used to optimize product development.
Secondary research
In the deodorant category, NIVEA used many secondary research sources to discover consumers' views and their need for deodorants. These related to different markets and were supplied by local country market researchers. These included:
i. A consumer Usage and Attitude study. This had been conducted a few years earlier across various markets (UK, France and USA).
ii. An external study by Fragrance Houses. This covered the importance of scent and fragrance to people's well-being and mood.
Primary research
The research team felt therefore there was not enough recent knowledge about the consumer in the secondary research. They commissioned some primary qualitative research in key markets (Germany, France, UK and USA). This was aided by the local Market Research Manager. The aim was to understand the motivations for using deodorant amongst the female consumer.
Primary research is used when there is no existing data available to answer your questions.
The research involved small discussion groups of females. This helped researchers understand the beliefs and motivations of this group. There were several main findings:
• There is steady growth in females shaving. They wanted to look after their underarms throughout all seasons (not just in summer).
• Women cared increasingly about the condition of their underarms.
• Women desired attractive, neat underarms. This symbolised sensuality and femininity.
• The deodorant segment remained focused on functional rather than beautifying products.
Results of the research
The market research revealed an unexplored market potential for NIVEA Deodorant. The brand did not have a specific product that addressed 'underarm beauty' for the female consumer. No direct competitor was offering a product to meet these needs. So there was a clear opportunity to develop a new product. This would fit across different markets and with the current NIVEA Deodorant range.
Turning consumer insights into product concepts
Consumers showed a need for a 'beautifying, caring deodorant'. The team generated ideas on how to address the consumer need.
From these ideas the marketing team created 'product concepts'. These describe the product benefits and how they will meet the consumer needs. Several concepts were written in different ways. These explained and expressed unique product attributes.
The company needed to know which concept was preferred by prospective consumers. It carried out market research to test whether the concepts would work. The research was conducted amongst the desired target market. For Pearl and Beauty, the desired target market was 18-35 year-old women who were beauty-orientated, followed fashion and looked for products with extra benefits.
Quantitative research on the concept was carried out in two test markets (France and Germany). An international company like Beiersdorf must test products in more than one market to assess properly the global appeal.
The concepts were tested monadically. Monadic testing means that the respondent of the test is only shown one concept. This stops the respondent being biased by seeing many variations of the same product concept.
A number of criteria were used to test the concepts:
1) Deodorant category performance measures. These included wetness, dryness, and fragrance. The new concept must deliver generic core benefits.
2) Product attributes specific to the new product and NIVEA core values. The new Pearl and Beauty product has additional benefits to a 'regular' deodorant. For example, it leaves your skin feeling silky and gives you beautiful underarms. Consumers needed to understand and see these benefits.
3) The product needed to be relevant and motivate a consumer to purchase it.
The team chose the 'winning' concept. This best conveyed beauty while remaining relevant to the deodorant category and NIVEA brand.
Next the research team tested various name ideas for the product and developed different designs for the packaging. Packaging design plays a very important role in helping to communicate the image of the product. Pearl and Beauty needed to communicate femininity and sophistication. Pink was a natural colour choice for the packaging. They also used a soft pearlescent container to emphasise the 'pearl extracts' in the product.
Various design ideas were tested using quantitative market research. In addition, this helped to predict the volume of the new products that would be sold, the optimal selling price and the level of switching from existing NIVEA Deodorant and competitor products.
Testing the product, brand positioning and advertising
Testing
The stages described so far produced a product concept that consumers felt was relevant and which they were willing to buy. The next stage was to test the product on actual customers. Many product launches fail, despite great advertising. A big reason is because the product fails to live up to the promises made.
The Market Research Team conducted a product usage test. A de-branded sample of the proposed new product was given to the target consumer of females in several countries. De-branded means the deodorant was in a blank container so that the consumers did not know who made the product or what type it was. Very often consumers form opinions about products and services from advertising and packaging. This can sometimes be very strong and creates a bias in what they think of a product before trying it.
The consumers were asked to use the new deodorant for a week. They kept a diary of when they used it and scored the performance of the deodorant against a list of criteria. These included:
• Did it keep you dry all day?
• Did you have to reapply it?
• Did you like the fragrance?
• Did it last all day?
• Was the deodorant reliable?
Consumers applied the 'de-branded' deodorant under their right armpit and continued to use their current deodorant under their left armpit. This helped the users gauge if it was as good as or better than the brand they normally used. This gave a measure of how likely the consumer would be to swap brands.
The results of the test were very positive. Most consumers loved the fragrance and the feel of the product on their skin. They felt it performed as well as their current deodorant. Most said they would swap their brands after trying the product.
Brand positioning
Now the marketing team had a new product idea that consumers liked. It had a name and packaging design that were well received. They now needed to check how this fitted with the rest of the NIVEA Deodorant brand positioning and range.
The brand position is the specific niche in the market that the brand defines itself as occupying.
The NIVEA Deodorant Pearl and Beauty adds a touch of feminine sophistication and elegance to the NIVEA Deodorant brand's personality. This built on the core deodorant positioning. It made NIVEA Deodorant more appealing, modern and unique to trendy, young female consumers.
Using qualitative research to inform advertising
The next stage was to brief an advertising agency to develop communication to support the launch of the new product. Through market research the team could check whether the advertisements positively supported and communicated the new product.
The company conducted qualitative research on some advertising ideas amongst various groups of the target consumers. It presented ideas in the form of 'storyboards' of what a TV advert could look like. The objective was to evaluate which were the best ideas in terms of:
• Did they stand out as exciting or different?
• Were they relevant to the consumer?
• Did they communicate the right things about the new product?
• Did they persuade the consumer to want to purchase the product?
Evaluating success
Once the product is launched and the consumer can actually purchase it, the research process does not stop.
Continuous consumer tracking can be carried out to find out consumers' views of the new product. This involves interviewing people every day to find out whether they are using the product, what they think of it and why they would purchase it.
Beiersdorf uses other, secondary data sources such as consumer panel data and EPOS (electronic point of sale) data. These monitor the sales effectiveness of the product throughout the launch phase and through the product life cycle.
Conclusion
New product development should start with an insight based on consumer needs.
Throughout the NPD process, market research is a valuable tool for Beiersdorf to check viability and minimise the risk of the product launches.
Being an international company, it is essential that Beiersdorf develops new products using the insights of consumers across markets and cultures. This ensures the products are relevant to a large number of global consumers and will deliver the maximum return when launched.
This maximises return on investment for the company and results in happy, satisfied and loyal consumers.

Recap of 24th Nov Session.

Differentiation

Points discussed are as following:-
Strategies for Reaching Target Markets
Marketers have outlined four basic strategies to satisfy target markets: undifferentiated marketing or mass marketing, differentiated marketing, concentrated marketing, and micromarketing.
We will see Mass marketing and Target marketing with examples here:-

1)Mass Marketing:-Its nothing but MPDP ie mass production,mass distribution and mass promotion.The seller engages in mass production,distribution and promotion of one product for all buyers. Mass marketing is a market coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer. It is type of marketing (or attempting to sell through persuasion) of a product to a wide audience. The idea is to broadcast a message that will reach the largest number of people possible. Traditionally mass marketing has focused on radio, television and newspapers as the medium used to reach this broad audience. By reaching the largest audience possible exposure to the product is maximized. In theory this would directly correlate with a larger number of sales or buy in to the product. As the name says its mass so your trying to get your as many as you can.
The opposite to Niche marketing as it focuses on high sales and low prices. It aims to provide products and services that will appeal to the whole market.
Background
Mass marketing or undifferentiated marketing has its origins in the 1920s with the inception of mass radio use. This gave corporations an opportunity to appeal to a wide variety of potential customers. Due to this, variety marketing had to be changed in order to persuade a wide audience with different needs into buying the same thing. It has developed over the years into a worldwide multi-billion dollar industry. Although sagging in the Great Depression it regained popularity and continued to expand through the 40s and 50s. It slowed during the anti-capitalist movements of the 60's and 70's before coming back stronger than before in the 80's, 90's and today. These trends are due to corresponding upswings in mass media, the parent of mass marketing. For most of the twentieth century, major consumer-products companies held fast to mass marketing- mass producing, mass distributing and mass promoting about the same product in about the same way to all consumers. Mass marketing creates the largest potential market, which leads to lowered costs.
Examples:-
For example, products advertised during national television programs reach consumers in entire countries. As long as these products are available countrywide, advertising to such a huge demographic is considered successful marketing strategy. Consumers seeing products advertised on television commercials are more likely to choose them over similar store products that weren't promoted. Showing television viewers the actual product and communicating benefits such as getting sparkling white teeth by using Brand X toothpaste has been shown to increase sales of advertised products. As the commercials are repeated, the repetition through broadcasting helps to create brand recognition.In mass marketing, products that many people want or need such as soda, toothpaste, bread and household cleaners are advertised to a large audience.
-Henry Ford offered the Model-T Ford in one color ie Black.
-Coca Cola sold only one kind of coke in a 6.5-ounce bottle.

What’s the difference between mass marketing and target marketing?
Mass marketing aims to reach as many people as possible: quantity. Tend to be products
that everyone buys. Example: Coca-Cola. Burger King. K-mart. Broadcast networks(ABC, CBS).
Target marketing aims to reach a specific, “high quality” audience.Eg:World Wrestling Entertainment’s (WWE) target market is young males. Monday Night RAW® is the number one entertainment program on primetime cable among male viewers (2 million+) including the male demographics of 18-34, 18-49 and 25-54. It is shown at 9:00 PM ET to reach its target market.

The Big Question: Is Mass Marketing Dead or Alive???
Inspite of the fact that it creates largest potential market,which leads to lowest costs incurred in mass mktg which can ultimately lead to lower prices or higher margins,its still under argument.However,many critics point to the increasing splintering of the mkt,and proliferation of advertising media and distribn channels,which are making it difficult and increasingly expensive to reach a mass audience.Some claim that mass mktg is dying and most companies are turning to micromarketing at one of the 4 levels ie segments,niches,local areas and individuals.
Also creating mass marketing platforms in today's fragmenting media world is perhaps more important for certain business categories that need to influence millions of customers daily (e.g., beer, fast food, soft drinks, politicians) than trying to assemble slivers of audience in the even more fragmented web world. After all, there are not many Super Bowl, Academy Award or Olympic level broadly based media vehicles left. And there still is no more powerful marketing communications medium than television.

2)Cluttered markets(Future of Branding approach):-What was Marketing all about and why it failed along the way and gave away to now present day branding where CMO’s and Brand Managers integrated personality into the brand which essentially gives a chance to talk about Future of Branding in a cluttered market where brands can be given a human-face which consumers can associate to and in the process of association be a brand evangelist.

Marketing campaigns/promotions over the years have changed leaps & bounds. Marketing, slowly but steadily is embodying a new shape, a new trend perhaps. It’s becoming more human IMHO(in my humble opinion). By human, it means that marketing is getting intertwined more & more into human life.

The shape of marketing programs are distinctly changing from what it used to be, what is it now and where it’s going in the future. Previously, it used to be only about features, quality, attributes, usability and everything related to brand as a standalone entity. Now things have changed or more so, it is changing rapidly.

Now CMO’s and Brand managers across the world are talking about new age branding. They are putting personality back into the brand. Though some may even argue that branding is dead; but is it so? Putting India into perspective where we have got millions of customers for thousands of brands just to satisfy unique category of products; so here “Branding is Dead” would just be a misnomer(an interpretation that is known to be untrue). More so because of the readiness of the competitors to imitate even the core attributes of any brand which makes it all the more important to pursue the branding activities just to buy that customers mindshare.

What I assume is that the future of brands is to more human i.e. brands reflecting emotions. Emotions because that is what human beings are made of.

Quote-Unquote: Saying goes that human beings are mere manifestation of rationality & logic whereas the truth is that we all are emotional, sensitive and perceptive beings; E.g. we still love kids even though they infuriate us with their klutzy acts.

So, personalities change with time, what doesnt change is emotions, sensations & passion. That’s what we all are made of. So brands along with time need to reflect that. Its not that all brands need to change right away but certainly they have to because once there are too many brands in the marketplace & less time for customers to choose, they may ignore. And ignoring means all the millions & millions spend on brand building goes to waste. So personality incorporated brand can be the stepping stone to make brands more human which walks, talks and listens to your customer. The best example is Apple & Google.
Product differentiation is often necessary in competitive markets where customers have a hard time differentiating between products. For example, product differentiation might be necessary when a new laundry detergent is advertised: Since so many brands of detergent already exist, an aggressive advertising campaign would be required. Without this aggressive advertising, customers would not be aware of the product's availability and how it differs from other products on the market. The advertising budget is higher in order to pay for the additional advertising.Differentiation is quite difficult in a cluttered mkt.Its not only the brand equity that matters, other crucial factors prevail and must be emphasized too.
Eg:Examples abound of companies that spend millions of dollars on advertising in order to be key players in their respective industries (e.g., Coca Cola and General Motors).
-Sony( make.believe,Intel,Apple:They still have a brand, and they can do wonders with it.
3)Mktg Mix by E.Gerome McCarthy:-4 p's(product,price,promotion and place) are very imp in differentiating a product(Mfg sector) alongwith the 3 p's(people,process,physical evidence)applied in Service sector.
-Pricing and product aspect eg:-Sony in TV,Nokia in Cellphones.
4)Efficacy of mktg mix in differentiating a product:
When mkt share dips down suddenly,it has a drastic effect.Nokia brand-whether ppl are having a dent or head on.Promotional offers by Bigbazaar,pricing done by Sony.
5)Conditioning learning:-As a marketer,the brands condition the potential customers to a stimulus.
eg:Kishore Biyani(Head of FutureGroup) believed that everyone tried to condition people on festivals and occasions but not on national holidays like Independence day & Republic day,he has differentiated on efficacy of mktg mix by introducing unique offers on these days too.
Place aspect-Shopping mall at Ahmedabad,Shoppers Stop-by looking out for profitable location.McDonalds on National Highways.Cafe Coffee day in remote areas.

Next Session: Crafting Brand Positioning(taking into account Attributes,Brand and Space).

Recap of 19th nov,2010

Ansoff's matrix provides four different growth strategies:

Market Penetration - the firm seeks to achieve growth with existing products in their current market segments, aiming to increase its market share.

for example: Micromax is gaining its market share in an existing market created by majorbrands like nokia, sony ericsson, samsung etc. in an existing product ie. mobile phones.

Market Development - the firm seeks growth by targeting its existing products to new market segments.

for example: e-services,providing e-services to the banking system like transactions, account check etc.kelloge's has developed a breakfast habbit in india which wasnot there in the indian market.

Product Development - the firms develops new products targeted to its existing market segments.

For example, Mc.Donald's is always within the fast-food industry, but frequently markets new burgers.

Diversification - the firm grows by diversifying into new businesses by developing new products for new markets.

for example: pepsi was previously only in the soft drink manufacturing business but it diversified it's business into health drinks and snacks,

Bajaj was a scooter manufacturer then it diversified into bikes.

Then the concept of ' touch point ' was been discussed, it means interaction with the customers through various means.

like

through e-banking site,

through tollfree numbers to call, where consumers can interact and give their feedbacks or queries.

through message like ' chaat ke thaat ' where the tagline is ' hum sab chatore hai ' where consumers can relate themselves to the message.

through service like free demonstration of any product.

through media,

through retail like the product's placing in the retail stores.

first mover advantage and the first mover disadvantage:

first mover advantage is the advantage gained by the initial occupant of a market segment. This advantage is there from the fact that the first entrant can gain control of resources that followers may not be able to match.

for example: Maggi noodles which is the first mover in indian market in its category and created a huge market share in it.

first mover disadvantage:

first, it must educate its customers about the new product or service. This situation poses a significant risk since would-be customer response to products cannot always be predicted.

Second, the issue of having to educate market participants also holds true for partners and suppliers.

Third, first movers often make costly mistakes that enable later entrants to penetrate the market. for example: The internet search market. Yahoo! and many of the other search players treated search technology as a loss leader. As a result, they invested little in developing their search technology. This strategy provided Google with the opportunity to differentiate itself.

A video of Interview with Allwyn Agnel(PagalGuy.com Editor)

http://www.youtube.com/watch?v=3cBjCvRNkWI&feature=player_embedded

Recap of 22nd Nov session

Segment Attractiveness-it is about the manner in which a company comes out in its own way to communicate to people.

in the present world,people have become more conscious about legal aspects regarding a company. so there has been an modification of PEST analysis to address the legal aspect and further termed as PESTL analysis.In India ,with the enforcement of the RTI act people have gained a tool to question any wrongdoing.Indian people have become very finicky like the US people and do not want to engage with companies facing legal issues.

Telecom being an attractive segment,many companies ventured in this sector but Uninor is facing legal issues regarding licenses acquired through unfair means.
At times when indian stock market seemed scaling heights,there was the scam of demat accounts where people traded through multiple accounts.
Reality shows on Indian channels have become an attractive segment .Certain shows have crossed a limit and are broadcasting content inappropriate for cetain audience .This has forced the government to become cautious and take steps such as to change timings which can affect show TRPs.

In short,it has become essential for companies to be aware of existing laws so that they do not cross the line where their business get affected in negative direction.

Another concept existing in today's world is that of Parasitical Marketing,where certain stores (or mini-stores) act as parasites in the shopping malls
e.g.Virgin mobile stores-sell new mobile connections to people who mainly visit malls for window shopping.
jawed habib salons in malls also attract customers in a similar manner.


Segment Profitability
Certain segments which are attractive but not profitable
e.g. education sector was profitable during 1990s but in the present time it is not because of cut throat competition and certain legal issues.
unorganised durable stores with upcoming of Organised stores like Next(in electronics) are not profitable (their main drawback is that they cannot come up with their own brands as in case of FMCG goods).

In case of retail sector ,we can say it was not profitable although attractive.So subhiksha ,spencer faced problems in their businesses.subhiksha unlike hypercity opened many chains without consolidating on single outlet which proved non-beneficial .
In retail sector,if questions like"is ticket size (e.g. male grooming) increasing?" get positive response ,then it can be considered as profitable segment.(Note: ticket size can be explained like a customer's expenditure in a salon increasing as he goes for facial and all).
but pantaloons made an intiative to make the segment profitable by placing its brand of john miller along with other brands (without letting the customer know about it)

In telecom sector,if the ARPU is increasing ,then it can be said to be a profitable segment in a particular market.

we can learn that segment attractiveness should not be the basis if the segment is not profitable.In short, consolidation should be the first step/priority.


we can pose a question whether attractiveness of IPL (in seasons 1,2,3) be made profitable (in season 4).

Recap of 18th Nov Session.

Transition from Segmentation to Targeting
Advanced segmentation and target marketing so you can sell more and spend less.

What's the new approach?

Knowing your customers precisely, and the most effective ways to reach them are the keys to unlocking profitability. By turning in-depth data into a unified, actionable understanding, these Segmentation and Targeting solutions connect you with your most valuable customers.

Segmentation and Targeting solutions:

-Prioritize your key customers and prospects, enabling you to limit waste and increase efficiency.

-Clarify your optimal marketing mix across all elements, providing a clear view of who and where your best customers and prospects are.

-Identify and reach your targets online, and in mobile audiences.

-Integrate your own customer data with world-class market and media data to move confidently from insights to marketing action.

Effective targeting:-

1)Identify & profile distinct groups of buyers who differ in their needs and preferences.
2)Select one or more market segments to enter.
3)Establish & communicate distinctive benefits of market offering.

Benefits of Segmentation and Targeting:-

Segmentation is essentially a process whereby a provider of goods or services
chooses to group prospective customers together on the basis of a set of common
characteristics that have significant implications for its marketing activity. Common
characteristics that might be used to segment a market include variables such as age,
income, personality and lifestyle. On the basis of those common characteristics, segments are expected to respond differently to marketing activities – they may want
different features, be more or less price-sensitive, respond to particular types of
marketing communications, or use different channels. Targeting is then concerned
with the identification of an appropriate set of segments which the organization
will seek to serve. Implicit in any decision to undertake segmentation and targeting
is the realization that no single organization is capable of being all things to all
men. It is inevitable that certain products will have particular appeal to certain
kinds of individuals. At one extreme, each individual customer could be presented
as a segment of one because each individual has different needs. In such a case, the marketing mix is bespoke to match the characteristics and needs of a single person or organization. This practice is perhaps more common than might at first be imagined. In retail markets, financial advisers provide a service encounter that is unique to the individual client – as do private bankers. In corporate markets, a customized approach is essential when dealing with large corporate clients. At the other extreme, the whole population could be treated as if it were a single homogenous segment. Traditionally, banks have treated the personal banking market as homogenous and provided a single standard current account to all customers. Increasingly, however, there is recognition that customers do have differing banking needs and that there is the potential to develop specific products for specific segments.
Thus, for example, Barclays now offers over ten different current
accounts in the UK market, targeted to a variety of segments – including children,
students, people with very high incomes and people with very low incomes.
Segmentation and targeting is a means by which a number of important benefits
are secured for both providers and consumers of products and services. In summary,
the benefits of segmentation and targeting are as follows:
1. It facilitates efficient resource utilization. Indiscriminate use of the marketing mix is
a wasteful use of precious resources. By identifying and targeting discrete segments
of consumers (retail or corporate), a company is able to limit the scope of
individual components of the mix and thus reduce costs. To take a simple example,
an advertising programme involving the use of the press media will be less
expensive if it involves the use of magazines that are read by a discrete target segment
of consumers rather than the entire population. Similarly, products
designed to meet the particular needs of a given segment will not need features they do not require. Thus, segmentation results in greater resource efficiency,
which benefits consumers through better value, shareholders through reduced
waste and lower costs, and the environment through resource efficiency.
2. It allows effective targeting of new customers. The logical next step from segmenting
a market is the selection of segments to target for marketing activities. Nowadays,
it is unusual for a company to have a completely indiscriminate approach to targeting
new customers. As the costs of customer acquisition have increased and companies become increasingly focused upon customer profitability, they have to
be selective in respect of which kinds of people or organization they want to be
their customers. It must be appreciated that different customers display different
characteristics and behaviours that impact upon customer value. For example, in
the UK, SAGA targets people aged over 50 for its range of leisure and financial
services. SAGA is able to price its motor insurance premiums very keenly, as the
over-50s represent a low-risk group in terms of propensity to incur motor claims.
Thus, SAGA can be very price-competitive and deliver superior value to this
group of consumers in a way that would not be possible if the company was
trying to serve a mass market.
3. It facilitates competitive advantage. The more specific an organization’s approach to
segmenting the market, the easier it is to establish and maintain competitive
advantage. This arises by virtue of the fact that competitive advantage is a relative
concept that involves differentiating an organization from its rivals in the
eyes of its customers. Self-evidently, the more indiscriminate the approach to targeting, the wider the array of competitors against whom an organization will
have to seek to differentiate itself. In the case of SAGA, it is required to maintain
a competitive advantage over those other organizations that also seek to target
the over-50s – such as RIAS. This presents SAGA with a smaller set of key rivals
than if it were to target the entire adult population. In turn, this makes it easier to
achieve and maintain differentiation.
4. It directs the marketing mix. Best practice dictates that each target segment chosen by an organization should be subject to a specific and relevant marketing campaign.
In this way, marketing is managed to achieve the best fit with each target segment.
Consider the case of the NFU Mutual Insurance Company. Originally aimed at
providing for the insurance needs of Britain’s farmers, it has repositioned itself
to address the insurance and investment needs of the following segments:
● farmers
● people who live in rural communities
● people who live in non-metropolitan towns and have an affinity for the
countryside.
The mix for the farming segment includes insurance products that are specific to
farmers, such as crop and livestock insurance. In terms of promotion, it advertises
extensively in the farming press. As far as rural dwellers are concerned, it uses radio
and television selectively to target those who live in predominantly rural parts of
the country. Its product range is geared towards rural dwellers with a special
interest in country pursuits such as horse-riding.
Some financial service providers are affinity-based, and this allows for particularly
close targeting of the marketing mix.

Five ways to a better case solution

1. A good solution will have an appropriate balance of:

• Due diligence: This is the process of gathering information, data and content about the case study
• Summing of insights: An insight is a clear or deep perception of the situation or the case. A pithy list of the gathered insights is important. A sub-set of these may support the solution
• A strategic solution: A single minded vision of the suggested strategy is critical. Avoid overplaying or disguising promotions as significant answers
• Indicative execution: A demonstration or explanation of suggested execution in coherence with the strategic solution is desired

2. Focus on what is important to the solution of the case; rather than enumerating all the data available

3. A mere play or re-write of shared data, without a deeper understanding, is unlikely to make a good case

4. Sharp distillation of the issue, and sharper delineation of the solution, constitutes a better answer!

5. The closer your solution is to realistic implementation, the higher the score!

Ref: http://www.draftfcbulkacomstrat.com/five%20ways.html

@11/20/2010 3:25 AM

Case-Study!

Here is something different...
This is one of prestigious Case-study competitions having several cases in their bank.
This is their latest Nokia C3 Case !

http://www.draftfcbulkacomstrat.com/about_comstrat2010.html

Aussie cricket team secret match

Additions to the Summary of 17th Nov Session

1)Target mkts:- Multiplexes comprise of abt 900 out of total 12000 cinema theatres in
India. ie abt 7% are Multiplexes but generate 75% of the revenue.Categorization of movies shown in multiplexes according to viewers.(Multiplexes Vs Stand Alone theatres).
2)Facebook introducing their new email service:Targetting employed by Facebook community.Market Penetration: How they will encourage existing facebook users accustomed to usage of other email service providers like gmail,hotmail,yahoomail to use their new email service?

Target Markets future prediction:-
Cities Population
Tier-I >50 lacs.(The Metros:Delhi,Mumbai,Chennai,Kolkata,Blore,Hyderabad)
Tier-II 10 to 50 lacs.(Pune,Ahmedabad,Surat,Coimbatore,Nagpur etc)
Tier-III 5 to 10 lacs.(Indore,Bhopal,Nashik,Raipur etc)
Looking at the above figures its being believed that Tier-II & Tier-III cities are the target mkts which are going to drive products in next decade for which mkt share & revenue has to increase.

*Relation between SEC grid and Targetting:-
SEC has an imp role to play in targetting of consumers.
Urban areas:- includes study of variables like Education and Occupation
Rural areas:-includes study of Education & type of houses of consumers-Kaccha or Pakka house.
Overall analysis of SEC tells us that Education & Occupation are the most vital dimensions on which target mkt is decided.(Here CWE ie Chief Wage Earner is to be considered).
Companies found it after research that there are many variations & final grid has education & occupation as imp factors.
About 6 lacs villages and 5200 cities are there in India,SEC grid accounts for each detail under study.
Eg:Parle & its fake/counterfeit brands like Perle etc.

BCG Matrix:-

Question Marks: Low mkt share & high growth potential.Eg-Karbonn,Micromax,Lava.
The telecom market inspite of the 2G fiasco expects lot of potential growth.A lot of strategical framework is to be used here.
Cash Cow:Nokia(Low growth rate but high mkt share).
Flank Attack-Ambush Mktg eg-HUL(Dove) Vs P&G(Pantene).
Theatres Migrating towards 2 screen: Cineplexes in tier-II cities.
Defensive Strategy:-
Nokia cant adopt it in a cluttered mkt like India,same goes for Maggi.
Defensive Strategy is the biggest Mktg Myopia in a cluttered mkt like India.(Myopia-Shortsightedness)
*Shoppers Stop:Started as a retail venture in 1991 it suffered tremendous loss in 2007-08.They have redefined their strategy with opting for the most appropriate location depending upon the catchement area and cathcment profiling.
*Subhiksha: They expanded their business by entering into new regions without analysing their customers, started new stores total of 2000 from the previous 1000 figure.Result-Failure of the business.
*Hypermarket:They took 3 years to start another store in other place by studing the variables like Location,no. of outlets,overheads,rental charges included under redifing the retail strategy.
*Education Sector:- Maharashtra is the only developed state with no IIM.PEST analysis reveal the effects like brain drain.
*FMCG: Coke Vs Pepsico(Political issues during 1980).
*Pharma Sector: Paras Pharma, Patel coming up with new product Veni,because of family issues.
Cash Cow eg:- Motorola,Pagers(Why I am Here?) low mkt growth and high mkt share.
Bajaj Scooter as cash cow but doing very well in bikes after switching their strategy from umbrella branding to 1 to 1 branding. Earlier Bajaj was associated with the name of the moped like Bajaj Chetak,Bajaj Super etc but now they have changed the branding differently like Pulsar.
*Dogs:-Low mkt share and low growth rate.
If growth rate increses there can be diagonal shift from dogs to stars.
eg: Dying fish(Political issue involved)
Fabric mkt-texture knowledge not sufficient for quality assurance of the fabric.
other eg: Casettes,Radio,Walkmans,Watches,Electric Bulbs.

Recap of 15th Nov Session

IPL Case to be discussed keeping in mind the following points:
-What will happen to IPL?
-What has happened actually to IPL?
-How Franchise's work?

*3 Cases to be written by Feb-March 2011
1)Big-Boss's Marketing Strategy.
2)Mktg of High Tech Products.
3)IPL Case-4.

Revision of Segmentation types:-
1)Geographic:- Refers to division of mkt into diff geographical units like nations,states,regions,countries etc.One of the major geographical segmentation variables relevant to South Asia is division of mkts into rural and urban areas.These areas differ on number of imp parameters such as literacy levels,income,spending power,and availability of infrastructure,social and cultural orientations of people that affect the mkt potential,buying pattern and habits.Eg: Consumers in southern states like Tamil Nadu tend prefer freshly brewed coffee,while in other states tea is preffered,Some prefer strong tea from Assam while others prefer Nilgiri tea.

2)Demographic:-Division of mkt on the basis of variables like age,family size,family life cycle,gender,income,occupation,education,religion,race,generation,nationality,social class etc.These variables are popular bcoz they are often asociated with consumer needs and wants.Eg:
a)Acc to age & Life-cycle:- TV channels in India indicate segmentation based on age and life cycle, Aastha or Sanskar for older generation.Cartoon Network,Disney,Pogo for children; MTV and channel V for youngsters.
b)Acc to life-stage: Al Habib bank of Pakistan targets senior citizens with special savings schemes that yield a higher interest rate.
c)Gender based: Men and Women have diff attitudes and behave differently,based partly on genetic makeup and partly on socialization.Raymonds masculine brand Park Avenue and feminine brand as Be.
d)Income based:- Its a basic segmentation variable which determines the ability of consumers to participate in mkt exchange.However,income does not always predict the best consumers for a given product.Nirma washing powder was launched as the lowest priced detergent in India targeted at middle income segment of the mkt.As a brand,Nirma has maintained its middle class focus and "value for money" proposition.
e)Generation:Each generation is profoundly influenced by the times in which it grows up-the music,movies,politics and defining events of that period.Demographers call these generational groups as cohorts.The younger generations play significant roles,not only as consumers,but also as initiators and infuencors of buying decisions.A study by Walt Disney Company and Group M company reveals that about 63% of children are invloved in purchase decisions of wide range of products ranging from computers,bicylces,TV sets,automobiles.
f)Social Class:-It has a strong influence on preference in cars,clothing,leisure activities etc and also the retailers and many companies design products and services for specific social classes. The concept of social class in India is influenced by caste system-a very unique system peculiar to India.This complexity of Indian mkt has prompted the development of "SEC" as a viable method to segment mkts.

3)Psychographic:-Its the science of using psychology and demographics to better understand the consumers.Here the buyers are divided into diff groups on the basis of psychological.personality traits,lifestyle or values.Eg: Mcdonalds changed their menu in India to adapt to consumr preferences. Beef is avoided in the menu and instead,veg burger was introduced based on preference for vegetarian food.

4) Behavioral:Here,marketers divide buyers into groups on basis of their knowledge of attitude towards use of, or response to a product or service.
a)Decision roles:People play 5 roles in a buying decision:Initiator,Influencer,Decider,Buyer, and user.
Women play significant influencing and deciding role for kitchen appliances.
b)Behavioral variables:
-Occasions:Greeting cards from Archis and Hallmark,Amul chocalates as "a gift for someone you love".Monaco biscuits come with suggestions for toppings so that biscuits can be served as snacks at parties etc.
-Benefits:Shampoos offer basic cleaning of hair,conditioning effects.Brands such as Clinic,Chik,Pantene offer diff variants addressed to diverse benefit segments.
-User Status:Every product has its non-users,ex-users,potential users,first time users and regular users.eg:Blood bank cannot rely on regular donors to supply blood hence they should recruit new first time donors and contact ex-donors each with a different mktg strategy.
-Usage rate-Mkts can be segmented into light,medium and heavy product users.Eg: Cellphone service providers in South Asia offer low tariffs targeted at entry-level users of cell phone service to attract them to product or service.
-Loyalty status: 4 groups based on brand loyalty status-
a)Hard core loyals b)Split loyals c)Shifting loyals d)Switchers.
Loyalty programs tend to reduce customers propensity to switch brands.
Eg: In industries like retailing,hospitality,airlines companies offer loyalty programs like awards etc.

5)Usage Based:-eg:Sachetization of products.

Transition from Segmentation to Targetting:
Is the mkt sustainable?
Is the mkt measurable?

Nirma in its early days was a single product and employed mass mktg strategy.
But now mass mktg approach seems to be declined eg:Welding rods instance told by sir.
Bajaj Scooters believed that "Mkt for two wheelers is not sustainable" but later Hero Honda proved them wrong by introducing Hero Honda Splendor.
Newcomers in 2 wheeler production: TVS,Kawasaki,Mahindra.

On the same lines: Is the B school sustainable in India?
Is the 2 year program of MBA sustainable?
For more reading on Sustainability read: Marketing model by Lillian & Kotler.

summary of class held on 17th nov

This was a dual session with back to back classes for the first time in marketing .

The discussion took off with examples of multiplexes in India( which are 900 in number out 12000 theaters but contribute a revenue of 75 % from these theatres) and also the example of facebook coming up with its email address i.e @facebook.com. These pointed out towards the "target marketing " and also emphasised that not only sustainability and measurablility but also insights to the target marketing are necessary.

The SEC grid was discussed with the emphasis on the various dimensions in it as well as the importance of each one.


BCG matrix:





Where a company in the question mark zone would try and move into the star by using a marketing strategy (which generally could be attack) . An example give was micromax.The companies in the star zone are the ones which have to have a clear understanding of the industry , example for this was MAGGIE . The companies in the cash cow zone try to go into the star . If the related product segment grow and the company can diversify itself , this may or may not work for certain companies . Which was exemplified by Amul which was able to capture the growing markets of related products of milk and there are VCR , National which were unable to do so. The Dog is the one which has low relative market share as well as low growth rate. It aims to reach star zone which is known as the "diagonal approach ".

Our facilitator expects each one us to be in position to give atleast 20 examples for each zone and also to refer the marketing white book by business world ( which is available in the library).

Recap of 11th Nov Session

Carrying forward the Segmentation Discussion:-

Deficacy of Loyalty Cards

Loyalty programs:-These are structured marketing efforts that reward, and therefore encourage, loyal buying behavior — behavior which is potentially of benefit to the firm.

Various Loyalty Cards

In marketing generally and in retailing more specifically, a loyalty card, rewards card, points card, advantage card, or club card is a plastic or paper card, visually similar to a credit card or debit card, that identifies the card holder as a member in a loyalty program. Loyalty cards are a system of the loyalty business model. In the United Kingdom it is typically called a loyalty card, in Canada a rewards card or a points card, and in the United States either a discount card, a club card or a rewards card. Cards typically have a barcode or magstripe that can be easily scanned, and some are even chip cards. Small keyring cards (also known as keytags) which serve as key fobs are often used for convenience in carrying and ease of access.

A retail establishment or a retail group may issue a loyalty card to a consumer who can then use it as a form of identification when dealing with that retailer. By presenting the card, the purchaser is typically entitled to either a discount on the current purchase, or an allotment of points that can be used for future purchases. Hence, the card is the visible means of implementing a type of what economists call a two-part tariff.

The card issuer requests or requires customers seeking the issuance of a loyalty card to provide a usually minimal amount of identifying or demographic data, such as name and address. Application forms usually entail agreements by the store concerning customer privacy, typically non-disclosure (by the store) of non-aggregate data about customers. The store — one might expect — uses aggregate data internally (and sometimes externally) as part of its marketing research. These cards can be used to determine, for example, a given customer's favorite brand of beer, or whether she is a vegetarian.

Where a customer has provided sufficient identifying information, the loyalty card may also be used to access such information to expedite verification during receipt of cheques or dispensing of medical prescription preparations, or for other membership privileges (e.g., access to a club lounge in airports, using a frequent flyer card).

United States
In the U.S., several major supermarket chains and at least one major pharmacy require the cards in order for customers to receive the advertised loyalty price. These include Smith's, Kroger and Safeway (each through both their own name and many of their regional chain names), Albertsons, Winn-Dixie, Harris Teeter, Ingles, Giant Eagle, Tops, and CVS/pharmacy. Cards from other, even competing chains will generally work at other stores to receive the advertised loyalty price, because only a few companies make the cards, but stores generally will not allow this since it will not allow a customer to be tracked, though a customer can make it work if they use a self-checkout. Even though this will work to receive the advertised loyalty price, any points and/or future discounts someone may be trying to earn from using the card at another store will not be added since a different chain would use a tracking system with a database independent of the other chain. However, some stores may also allow a customer to use the store's card if a customer does not have theirs on hand (Kroger does not allow this although customers can enter their phone number to bring their card up if they forget it, or have another customer's phone number entered) or if the customer is new and agrees to sign up right away. Many of the stores allow accumulation of fuel discounts. Some have tie-ins with airline frequent-flyer programs, and some agree to donate a percentage of sales to a designated charity. Most notably, Wal-Mart does not have a loyalty card plan (though someone who purchases a gift card can generally get a 3 cent discount per gallon of gas at the fuel stations located on Wal-Mart premises).

United Kingdom
The loyalty card market in the UK is one of the most significant in the world, with most major chains operating some form of reward system. Passcard has been claimed to be the first reward scheme or discount card, created around by Gary Wilson in 1981 and later known as Passkey.One of the first loyalty cards backed by a major chain is believed to be the Sainsbury's Homebase Spend and Save Card in 1982.
Of the "big four" supermarkets, only Sainsbury's and Tesco operate loyalty cards. Both Nectar and Tesco's Clubcard scheme have been criticised for not offering value for money. When Clubcard or Nectar points are used for money off supermarket shopping, they roughly equate to a 1% discount, although offers can increase this discount by as much as 4 times for certain rewards. Some retailers with banking operations also award points for every pound spent on their credit cards, as well as bonus points for purchasing financial services. A report in The Economist suggested that the real benefit of loyalty cards to UK outlets is the massive database potential they offer.

India
i-mint is India's largest coalition loyalty program, claiming 9 million members and 1500 network partners, with 120 billion INR of sales generated through i-mint-cards in 2009. In June 2010, German loyalty program Payback took a controlling interest in i-mint. Hero Honda's passport program claims over 3 million members.BPCL's PetroBonus fuel card program has 2 million members.Indian Oil's fleet card program XTRAPOWER and retail program XTRAREWARDS claim a combined customer base of 2.5 million. The Maruti Suzuki AutoCard, launched in association with Citibank and Indian Oil had 370,000 cardholders as at October 2008.Kingfisher Airlines FFP(Frequent flyer programs) King Club had 2 million members as on October 2010.It is the most generous FFP in Airlines.
On 07th, Mar 2007 Kingfisher Airlines announced the king of all frequent flyer schemes- The Mega Mile Move(MMM)Offer.

Program management
Across the globe loyalty programs are increasingly finding the need to outsource strategic and operational aspects of their programs, given the size and complexity a loyalty program entails. Program managers are typically agencies with specialist skills in loyalty consulting, creative and communication, data analytics, loyalty software, and back end operations. The advent of Web 2.0 and SaaS online-based services has provided lower-cost options for small businesses to offer and manage their own loyalty programs.

Loyalty cards are becoming mobile (i.e. Members Discount Card, CardStar, CardBank and Loopt).

Criticism
Companies complain that these loyalty program discount goods to people that are buying their goods anyway, and that the expense of doing these programs rarely pays. Other critics see the lower prices and rewards as bribes to manipulate customer loyalty and purchasing decisions, or in the case of infrequent-spenders, a means of subsidizing frequent-spenders. Commercial use of the personal data collected as part of the programmes has the potential for abuse. It is highly likely that consumer purchases are tracked and analyzed towards more efficient marketing and advertising (in fact, this can be one of the purposes of the loyalty card.) To some, participating in a loyalty program (even with a fake or anonymous card) funds activities that violate privacy. There has also been concern expressed regarding RFID(Radio-frequency identification) technology being introduced to loyalty cards.

Loyalty and credit card reward plans might be viewed as modern day examples of a kickback. An employee who needs to buy something (such as a hotel room or an airline flight) for a business trip but who has discretion to decide which airline or hotel chain to use has an incentive to choose the payment method that provides the most credit card rewards or loyalty points instead of minimizing cost for the organization.

Churning:-
Churning may refer to:
General examples-Churning (butter), the process of creating butter out of milk or cream.
-Churning (person), the excessive talking or rambling on by a person.
Business world examples-the turnover of TV channel subscribers/number of disconnections, loss of customers; usually shown in percentages.
-Churning (stock trade), the excessive buying and selling of stocks by a trader such as a broker to generate large commission fees.

Churner:-Customers that are becoming less loyal are called churners.The churner status is defined as a function of the volume of commercial transactions.
Redefining the notion of customer’s loyalty by considering it from a customer-centric point-of-view instead of a product-centric point-of-view,here the customer lifetime value (CLV) approach is used.CLV is defined as the discounted value of future marginal earnings, based on the customer’s activity.
Hence, a churner can be defined as someone whose CLV, thus the related marginal profit, is decreasing.Since profit is what really matters in a commercial environment, standard statistical accuracy measures for prediction need to be revised and a more profit oriented focus may be desirable.

Eg:-Lets see the condition under which a customer has to be considered as being decreasing his/her loyalty, and hence as churning. The issue in a competitive environment is that most people have more than only one supplier. For instance, in retail banking, a customer could have a current account in a first bank and a mortgage loan in another. Most people have several current accounts even if they do not use it (so-called “sleeping” accounts). As a matter of fact, we need to find a definition of a churner applicable to non-contractual products, as opposed to contractual products. Contractual products are for instance insurance, mortgage, cellular phone (if high entry or exit barriers and fixed price), in other words all products with “contractual” cash-flows. On the other hand, non-contractual products could be catalog sales, cellular phones (if low entry and exit barriers and marginal price), etc.

Churning in 3G Marketing:-A churned customer is the one who has stopped using one service provider and has moved to its competitor.
Why customers churn-three general reasons:
Some change for price/tarrif reasons,others are unhappy or upset with their current service provider.Some change to get acces to better services and to gain community benefits. Types of churners:
Joiner-One who is rarely satisfied by staying with any one provider for long.
Leaver-The leaver does not leave because of something done by your competitor,the leaver is upset with you and wants to get away from you.
Changer-A changer leaves not because of anything you did,or what the competitor offered, but for their own internal reasons.

Profiling of the Customers-Immatured to Matured.
-Homogenity.
-Operating Principles.

Next Class:-Transition from Segmentation towards Targetting.
Fitment of SEC Grid.

Recap of 27th Oct Session

Topics of the Session:

1) Niche Marketing:- Niche Marketing can refer to both marketing and business choice. In and of itself, Niche Marketing refers to finding a segment of general market for a specific service or product line. One then develops a solution for needs of that particular segment and then markets it to get the word out.
Eg:- Toyota's Environment Friendly Car: PRIUS (First mass production hybrid car).
A niche market refers to that small segment of overall market base which if targeted in a focused manner results in higher yield rather than focusing on entire market segment. It is a useful way to draw customer attention.
It is such focused and targetable group of potential customers, which if targeted, will result into higher yield due to Unique Value Proposition (UVP) and Distinct Market Offering (DMO).
Distinguished characteristics of Niche Mktg:-(Acc to Kotler and Keller)
-Customers in the niche have distinct set of needs.
-They will pay a premium to the firm that best satisfies their needs.
-The niche is not likely to attract other competitors.
-The niche gains certain economies through specialization.
-The niche has size,profit and growth potential.

2) Distinct Market Offering(DMO)-

The basic requirements for a technology-oriented company to
exploit its uniqueness are: 1) Choose a core technology and then improve
and upgrade it; 2) exchange technical information while positively
fostering human relations; and 3) when an obstacle is encountered, start
from the most difficult technical aspect to overcome it. It is also important
to adopt an attitude of making every attempt cause a positive splash in
the market and with customers.
Eg:This was the attitude taken by Disco
Corporation, an industrial whetstone manufacturer based in Shinagawa,
Tokyo, with remarkable technical potential. Because the company is
unique in cutting ultrathin items such as semiconductor wafers, it
naturally attracted worldwide interest.
It should be stressed again that management is, first and foremost,
the art of adapting to the environment. While relying on a determined
mindset that can adapt to the challenges of the political, economic,
technical, and social environment, it is of paramount importance to have
a realistic attitude, keeping a firm foothold on the ground rather than
giving in to flights of imagination.

3) Sustainable Competitive Advantage(SCA)-"A strategy is well defined when you clearly make the correct choices!"
Competing in today’s business has not been any easier. The choices to make become harder everyday. The whole business world is constantly changing and affecting strategy on daily basis, but only those companies that have strong understanding of their customers’ needs and meeting these needs by solving customers’ problems and enhancing their daily lives by creating innovative products with revolutionized communication approach to position the value proposition to the target group or groups will build a sustainable strategy that can last for at least beyond the next business cycle.
Eg: Selling Coca-Cola through bottle design: A chain of
successful ideas
From its beginnings in the USA, the “black flood” of Coca Cola
spread to Europe, Asia, and now can be found almost anywhere fromthe remote African heartlands to the Himalayas. The amount of Coca-
Cola produced in one year equals the displacement of 280 Enterpriseclass
aircraft carriers. What made Coca-Cola the greatest hit of the 20th
century and captivated tastebuds worldwide?
The addictive nature of Coca-Cola may have been one of the secrets
of its success. A clever management style that favors local autonomy
may have been another. The company also devised one memorable
marketing campaign after another. However, a definitive factor cannot
be overlooked: the shape of the original bottle. One day in 1912,
Chapman J. Root, president of Root Glass Company, visited the head
offices of Coca-Cola on a mission to sell his newly designed bottle based
on the then-fashionable hobble skirt. That bottle made Root a millionaire.
According to American industrial designer Thomas Lamb, the shape of
the bottle includes 20 “ingenuities.” He wrote, “The design increases
sales and gives a sense of satisfaction to the hand that holds the bottle.
The visual and tactile sensations of the bottle made all other beverage
bottles boring and irrelevant.”
Root was the ultimate remora. Although most would imagine that
such a commercially successful bottle would have been designed by the
head office, it was in fact developed by a glass company that was not
even a Coca-Cola subcontractor. Root understood one of the mysteries
of life: the best and surest way to benefit yourself begins by benefiting
others.

Examples Discussed in the Class:

1) Paras Pharmaceuticals Ltd,Ahmedabad introduced Moov as a remedial action for joint problems faced by elder people.It was not intended towards any cosmetic therapy but colour mattered hence white colour was given due preference. Moov Vs Iodex(Flank Attack).
2)Planet Health,Ahmedabad: A Medical selling OTC medicines(Over the Counter).It includes sales of generally prescribed medicines like paracetamol,crocin,d-cold,disprin,strepsils etc.
3)Gamble Company:-It has Facebook as its client company. It develops the application of Poker game widely played on Facebook Community website.The user pattern varies drastically, about 90-98% constitute the users from outside India and mere 2% Indian users of the game.They are through with the business with a hope that Indian market comprising of students,youth(Note:-About 65% of Indian population falls below 35 years of age)will probably start playing Poker after getting good jobs and excellent pay packages.
4)Proximity Marketing: Four Square Company(Not the ciggerette one)-It provides new offers through SMS whenever you are travelling nearby the place where offer is going on in the outlet.In big malls too, Bluetooth technology is utilized efficiently to send SMS to the customers visiting the mall.Eg: Cafe Coffee Day offers sent by sms.
5)Social Media Marketing:- Use of Social Networking Websites like Facebook,LinkedIn,Twitter,MySpace etc.
Eg: OneStopSolution Company developed by a student of Amritha College,Blore: They say dont go for many other social websites for alumni interaction,instead have only one website for interacting with alumni.

[IMP ADVICE:- Manage Your Accounts on Social Networking sites Carefully and Wisely.
Proff.Dr.Ankush Sharma ki aur se participants ke hith me jaari]

Marketing trend this Diwali season or should I say negative marketing trend

A week before Diwali a news started doing rounds on the news channel, internet, blogs, word of mouth that try and avoid sweets this Diwali as they will adversely affect our health.

One can raise a question now that why only few days before Diwali?

The reason I feel behind this is the anti marketing or the negative strategies by the companies with the help of media as they would get direct benefit from it.

Needless to say that chocolates, biscuits and now even the soft drink companies have tapped this crore rupees market and in a wish to capture more, they do negative marketing against the sweets being manufactured in the country and they find it so easy as there is no sweet association in India to resist these negative marketing strategies.

Imagine the authenticity of a news on Nov1 saying that the sweets that we would eat on Diwali Nov 5 will not be good and the matter of fact is that the sweets are due for production on Nov 4th. This kind of a trend has been prevalent for the past few years depicting some fishy strategies by few FMCG companies.

Looking forward to your comments/ views please :)

http://Marketing Strategies of Tata Motors