marketing faqs
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8/12/2019 Marketing FAQs
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1. What is logistics management?
Ans - Marketing logistics involve planning, delivering, and controlling the
flow of physical goods, marketing materials and information from the
producer to a market as necessary to meet customer demands while still
making a satisfactory profit.
2. What is Supply chain Management? Give an example.
Ans - Supply chain management related to the flow of goods,
information and fund from the supplier to consumer. Basically it is the
way in which the goods pass on from the factory to the intermediariesand then to the ultimate consumer.Eg. Bharti Airtel’s supply chain
management has a central core team comprising of supply chain
subject matter experts as well as execution teams which operate
under different business divisions nationwide. Bharti Airtel realized the
importance of having competent partners for its better business
prospects due to which its supply chain function enabled maximization
of mutual growth opportunities .
3. What is the difference between a marketing mix and a promotional
mix?
Ans - The marketing mix is a planned mix of activities.
The ingredients in the marketing mix are the seven P's product, place,
price,promotion,packaging,positioning,people.
The promotional mix is the coordination of marketing communication
activities which includes publicity, sales promotion, advertising, direct
marketing and personal selling.
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4. Does logistics management and supply chain management mean the
same thing?
Ans - Logistics is that part of the supply chain process that plans,
implements, and controls the efficient, effective flow and storage of
goods, services, and related information from the point-of-origin to
the point of- consumption in order to meet customers' requirements.
Supply chain management is the integration of key business processes
from end user through original suppliers that provide products,
services, and information that add value for customers and other
stakeholders.
5. BCG Matrix?
Ans - BCG matrix (or growth-share matrix) is a corporate planning
tool, which is used to portray firm’s brand portfolio or SBUs on a
quadrant along relative market share axis (horizontal axis) and speed
of market growth (vertical axis) axis.
BCG matrix is a framework created by Boston Consulting Group to
evaluate the strategic position of the business brand portfolio and its
potential. It classifies business portfolio into four categories based on
industry attractiveness (growth rate of that industry) and competitive
position (relative market share).
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cows to induce growth but only to support them so they can maintain
their current market share. Again, this is not always the truth. Cash cows
are usually large corporations or SBUs that are capable of innovating new
products or processes, which may become new stars. If there would be no
support for cash cows, they would not be capable of such innovations.
Strategic choices: Product development, diversification, divestiture,
retrenchment
Stars. Stars operate in high growth industries and maintain high market
share. Stars are both cash generators and cash users. They are the
primary units in which the company should invest its money, becausestars are expected to become cash cows and generate positive cash
flows. Yet, not all stars become cash flows. This is especially true in
rapidly changing industries, where new innovative products can soon be
outcompeted by new technological advancements, so a star instead of
becoming a cash cow, becomes a dog.
Strategic choices: Vertical integration, horizontal integration, market
penetration, market development, product development
Question marks. Question marks are the brands that require much closer
consideration. They hold low market share in fast growing markets
consuming large amount of cash and incurring losses. It has potential to
gain market share and become a star, which would later become cash
cow. Question marks do not always succeed and even after large amount
of investments they struggle to gain market share and eventually become
dogs.
Strategic choices: Market penetration, market development, product
development, divestiture
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6. Ansoff matrix?
Ans - The Ansoff Growth matrix is another marketing planning tool that
helps a business determine its product and market growth strategy.
Ansoff’s product/market growth matrix suggests that a business’
attempts to grow depend on whether it markets new or existing products
in new or existing markets. The output from the Ansoff product/market
matrix is a series of suggested growth strategies which set the direction
for the business strategy. These are described below:
Market penetration
Market penetration is the name given to a growth strategy where the
business focuses on selling existing products into existing markets.
Market penetration seeks to achieve four main objectives:
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Maintain or increase the market share of current products – this can
be achieved by a combination of competitive pricing strategies,
advertising, sales promotion and perhaps more resources dedicated
to personal selling
Secure dominance of growth markets
Restructure a mature market by driving out competitors; this would
require a much more aggressive promotional campaign, supported
by a pricing strategy designed to make the market unattractive for
competitors
Increase usage by existing customers – for example by introducingloyalty schemes
A market penetration marketing strategy is very much about “business as
usual”. The business is focusing on markets and products it knows well. It
is likely to have good information on competitors and on customer needs.
It is unlikely, therefore, that this strategy will require much investment
in new market research.
Market development
Market development is the name given to a growth strategy where the
business seeks to sell its existing products into new markets.
There are many possible ways of approaching this strategy, including:
New geographical markets; for example exporting the product to a
new country
New product dimensions or packaging: for example
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New distribution channels (e.g. moving from selling via retail to
selling using e-commerce and mail order)
Different pricing policies to attract different customers or create
new market segments
Market development is a more risky strategy than market penetration
because of the targeting of new markets.
Product development
Product development is the name given to a growth strategy where a
business aims to introduce new products into existing markets. This
strategy may require the development of new competencies and requires
the business to develop modified products which can appeal to existing
markets.
A strategy of product development is particularly suitable for a business
where the product needs to be differentiated in order to remaincompetitive. A successful product development strategy places the
marketing emphasis on:
Research & development and innovation
Detailed insights into customer needs (and how they change)
Being first to market
Diversification
Diversification is the name given to the growth strategy where a business
markets new products in new markets.
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This is an inherently more risk strategy because the business is moving
into markets in which it has little or no experience.
For a business to adopt a diversification strategy, therefore, it must have
a clear idea about what it expects to gain from the strategy and an
honest assessment of the risks. However, for the right balance between
risk and reward, a marketing strategy of diversification can be highly
rewarding.
7. Porter’s five forces model?
Ans - Five forces model was created by M. Porter in 1979 to understand
how five key competitive forces are affecting an industry. Porter’s five
forces model is an analysis tool that uses five forces to determine the
profitability of an industry and shape a firm’s competitive strategy. It is a
framework that classifies and analyzes the most important forces
affecting the intensity of competition in an industry and its profitability
level.
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These forces determine an industry structure and the level of competition
in that industry. The stronger competitive forces in the industry are the
less profitable it is. An industry with low barriers to enter, having few
buyers and suppliers but many substitute products and competitors will
be seen as very competitive and thus, not so attractive due to its low
profitability.
Threat of new entrants. This force determines how easy (or not) it is to
enter a particular industry. If an industry is profitable and there are few
barriers to enter, rivalry soon intensifies. When more organizations
compete for the same market share, profits start to fall. It is essential for
existing organizations to create high barriers to enter to deter new
entrants. Threat of new entrants is high when:
Low amount of capital is required to enter a market;
Existing companies can do little to retaliate;
Existing firms do not possess patents, trademarks or do not have
established brand reputation;
There is no government regulation;
Customer switching costs are low (it doesn’t cost a lot of money for a
firm to switch to other industries);
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There is low customer loyalty;
Products are nearly identical;
Economies of scale can be easily achieved.
Bargaining power of suppliers. Strong bargaining power allows suppliers
to sell higher priced or low quality raw materials to their buyers. This
directly affects the buying firms’ profits because it has to pay more for
materials. Suppliers have strong bargaining power when:
There are few suppliers but many buyers;
Suppliers are large and threaten to forward integrate; Few substitute raw materials exist;
Suppliers hold scarce resources;
Cost of switching raw materials is especially high.
Bargaining power of buyers. Buyers have the power to demand lower
price or higher product quality from industry producers when their
bargaining power is strong. Lower price means lower revenues for the
producer, while higher quality products usually raise production costs.
Both scenarios result in lower profits for producers. Buyers exert strong
bargaining power when:
Buying in large quantities or control many access points to the final
customer;
Only few buyers exist;
Switching costs to other supplier are low;
They threaten to backward integrate;
There are many substitutes;
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Buyers are price sensitive.
Threat of substitutes. This force is especially threatening when buyers
can easily find substitute products with attractive prices or better quality
and when buyers can switch from one product or service to another with
little cost. For example, to switch from coffee to tea doesn’t cost
anything, unlike switching from car to bicycle.
Rivalry among existing competitors. This force is the major determinant
on how competitive and profitable an industry is. In competitive industry,
firms have to compete aggressively for a market share, which results in
low profits. Rivalry among competitors is intense when:
There are many competitors;
Exit barriers are high;
Industry of growth is slow or negative;
Products are not differentiated and can be easily substituted;
Competitors are of equal size;
Low customer loyalty.
8. Product Life Cycle?
Ans - The product life cycle is an important concept in marketing. It
describes the stages a product goes through from when it was first
thought of until it finally is removed from the market. Not all products
reach this final stage. Some continue to grow and others rise and fall.
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The main stages of the product life cycle are:
Introduction – researching, developing and then launching the
product
Growth – when sales are increasing at their fastest rate
Maturity – sales are near their highest, but the rate of growth is
slowing down, e.g. new competitors in market or saturation
Decline – final stage of the cycle, when sales begin to fall
This can be illustrated by looking at the sales during the time period of
the product.
A branded good can enjoy continuous growth, such as Microsoft, because
the product is being constantly improved and advertised, and maintains a
strong brand loyalty.
Some key features of each stage in the product life cycle can be
summarized as follows:
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Introduction
•New product launched on the market
•Low level of sales
•Low capacity utilization
•High unit costs - teething problems occur
•Usually negative cash flow
•Distributors may be reluctant to take an unproven product
•Heavy promotion to make consumers aware of the product
Relevant strategies at the introduction stage might include:
•Aim – to encourage customer adoption
•High promotional spending to create awareness and inform people
•Either skimming or penetration pricing
•Limited, focused distribution
•Demand initially from “early adopters”
Growth
•Expanding market but arrival of competitors
•Fast growing sales
•Rise in capacity utilization
•Product gains market acceptance
•Cash flow may become positive
•Unit costs fall with economies of scale
•The market grows, profits rise but attracts the entry of new competitors
Relevant strategies at the growth stage might include:
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•Advertising to promote brand awareness
•Increase in distribution outlets - intensive distribution
•Go for market penetration and (if possible) price leadership
•Target the early majority of potential buyers
•Continuing high promotional spending
•Improve the product - new features, improved styling, more options
Maturity
•Slower sales growth as rivals enter the market = intense competition +
fight for market share•High level of capacity utilization
•High profits for those with high market share
•Cash flow should be strongly positive
•Weaker competitors start to leave the market
•Prices and profits fall
There is a wide variety of possible options for a product that has reached
the maturity stage:
•Product differentiation & product improvements
•Rationalization of capacity
•Competitor based pricing
•Promotion focuses on differentiation
•Persuasive advertising
•Intensive distribution
•Enter new segments
•Attract new users
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•Repositioning
•Develop new uses
Decline Stage
Common features at this stage include:
•Falling sales
•Market saturation and/or competition
•Decline in profits & weaker cash flows
•More competitors leave the market
•Decline in capacity utilization –switch capacity to alternative products
Potential strategies are:
•Harvest by spending little on marketing the product
•Rationalize by weeding out product variations
•Price cutting to maintain competitiveness
•Promotion to retain loyal customers
•Distribution narrowed
Extension strategies
These extend the life of the product before it goes into decline. Again
businesses use marketing techniques to improve sales. Examples of the
techniques are:
Advertising – try to gain a new audience or remind the current
audience
Price reduction – more attractive to customers
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Adding value – add new features to the current product, e.g. video
messaging on mobile phones
Explore new markets – try selling abroad
New packaging – brightening up old packaging, or subtle changes
such as putting crisps in foil packets or Seventies music
compilations
Some criticisms of the product life cycle
•The shape and duration of the cycle varies
•Strategic decisions can change the life cycle •It is difficult to recognize exactly where a product is in its life cycle
•Length cannot be reliably predicted
•Decline is not inevitable?
•Assumes no reversion to earlier consumer preferences
•It can become a self fulfilling prophecy
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