Marketing environment

Unit 3: Marketing Environment.

3.1. Introduction.

A marketing oriented company always looks its external environment carefully to analyze opportunities and threats. This external environment influences company’s strategies in two levels i.e. external macro environment and external micro environment. The macro environment involves political and legal, economic and natural, social and cultural and technology environment. The micro environment consists of supply chain, customer and competitor. These factors are uncontrollable by the organization. Even the best company faces threat if any of the external environments are adverse to it. A moderate company will be successful if the external environment favors it. Hence marketing companies should monitor the external environment carefully and continuously.

Objectives:

After studying this chapter you will be able to explain

a. The need of environmental scanning.

b. How external micro environment affects the company’s strategies.

c. The influence of external macro environment on company’s plans.

d. The difference between the external macro and micro environment.

e. The role of organization’s internal environment in dealing with opportunities and threats.

3.2. Environmental scanning

This is the process of gathering, analyzing and forecasting of external environments’ information to identify opportunity and threats that company faces.

Need for environmental scanning:

It helps in

1. Identifying the opportunities company has in immediate future.

2. Identifying the threats faced by the company.

3. Demand forecasting

4. Developing appropriate business plans.

5. Adjusting company strategy in changing competitive environment.

3.3. Analyzing the organization’s micro environment

Marketing department let alone can not satisfy all the needs of customer. Therefore it is essential to integrate the functions of suppliers, publics, company departments and intermediaries in creating the value to the customer. These forces are known as organization’s micro environment.

Microenvironment: The forces which are very close to company and have impact on value creation and customer service

Figure 3.1

Forces in the micro environment

Micro Environment

3.3.1. The company:

Remember in the previous unit we discussed about the strategic and marketing planning. Deducing a strategic plan in to specific marketing plan require coordination of other functions like finance, Human resource, production, and research and development. For example, Safe Express, a leader in the supply chain management solution wants to hold its position in the US $ 90 billion Indian logistics market. Company plans to expand its service areas in the coming months. To meet the targets of the marketing plan, other departments of safe express also expanding their horizon. Company is coming out with logistics parks in different cities; plan’s to hold seven million square feet of warehousing capacity in the next three years and investing Rs 10 billion in three years to meet that targets. The above example shows that company’s marketing plan should be supported by the other functional department activities also.

3.3.2. Intermediaries:

Marketing intermediaries: The firms which distribute and sell the goods of the company to the consumer.

Marketing intermediaries plays an important role in the distribution, selling and promoting the goods and services. Stocking and delivering, bulk breaking, and selling the goods and services to customer are some of the major functions carried out by the middlemen.

3.3.3. Publics:

These are microenvironment groups, which helps company in generating the financial resources, creating the image, examining the companies’ policy and developing the attitude towards the product.

We can identify six types of publics

1. Financial publics influence the company’s ability to obtain funds. For example, Banks, investment houses and stockholders are the major financial publics.

2. Media publics carry news and features about the company e.g. Deccan Herald

3. Advertisement regulation agencies, telecom regulation agency( TRAI), and insurance regulation agency(IRDA) of the government

4. Citizen action groups: Formed by the consumer or environmental groups. For example, people for ethical treatment of animals (PETA) or Greenpeace.

5. General publics: a company should be concerned towards general publics’ attitude towards its products and services.

6. Internal publics: Employees who help in creating proper image for the company through word of mouth.

3.3.4. Competitors:

A company should monitor its immediate competitor. It should try to position its product differently and be able to provide better services.

3.3.5. Suppliers

Suppliers are the first link in the entire supply chain of the company. Hence any problems or cost escalation in this stage will have direct effect on the company. Many companies adopted supplier relation management system to manage them well.

3.3.6. Customers:

A company may sell their products directly to the customer or use marketing intermediaries to reach them. Direct or indirect marketing depends on what type of markets in which company’s customers present. Generally we can divide the markets into five different categories. They are

a. Consumer market.

b. Business market

c. Reseller market

d. Government market and

e. International market

You will come to know about these five different markets from the following example.

MRF a tyre company sells its product directly to consumer (in case of urgency) i.e. operates in consumer market. It operates in business markets by selling tyres to companies like Maruti Udyog limited which in turn uses these tyres in their cars. MRF also sells TYREs to BMTC and KSRTC, transport organizations of Karnataka government. If MRF sells tyre in African or American countries then it is operating in the international market. If MRF buys the old tyres, retreads it and sells it to the consumer at a profit then company is operating in the reseller market.

3.4. Company’s macro environment.

Figure 3.2 Forces in the macro environment.

Macro Environment

3.4.1. Demographic environment.

Demography: 

The study of population characteristics like size, density, location, gender composition, age structure, occupation and religion.

Demography statistics helps companies to develop their products in better way. These statistics are also used in developing proper supply chain, communicating product information and changing the product attributes. Demographic environment is analyzed on the basis of the following factors.

1. Age structure of the population

2. Marital status of the population

3. Geographical distribution of the population

4. Education level

5. Migration

6. Occupation.

Age structure of the population: from the following table you can generalize that India is having 48% population who are aged less than 21 and 28% of the population are in the bracket of 21-25. Most of the companies are focusing on these two segments. For example, Radio Indigo, FM radio station from Jupiter capital venture operates in Bangalore and Goa, plays international music. Radio indigo targets youth segment who like western music.

TABLE 1: POPULATION IN DIFFERENT AGE GROUPS AND THEIR PROPORTIONS TO TOTAL POPULATION

Age group	Population	Percentage
All Ages	1,028,610,328	100.0
0 - 4	110,447,164	10.7
5 - 9	128,316,790	12.5
10 - 14	124,846,858	12.1
15- 19	100,215,890	9.7
20 - 24	89,764,132	8.7
25 - 44	284,008,819	27.6
45 - 64	139,166,661	13.5
65 - 79	41,066,824	4.0
80+	8,038,718	0.8
Less Than 18	422,808,543	41.1
Less than 21	492,193,906	47.9
Age no stated	2,738,472	0.3
Source : C2 and C14 Table, India, Census of India 2001.

Marital status of the population:

TABLE 2: POPULATION BY MARITAL STATUS AND SEX: INDIA – 2001

Marital status	Number of Persons ( in '000)			Percentage (%)
	Persons	Males	Females	Males	Females
Total	1,028,610	532,157	496,454	100	100
Never Married	512,668	289,619	223,048	49.8	54.4
Married	468,593	231,820	236,773	45.6	43.6
Widowed	44,019	9,729	34,290	4.3	1.8
Divorced / Separated	3,331	988	2,343	0.3	0.2
Source : C2 and C14 Table, India, Census of India 2001

Half of the Indian population falls into the never married category. This provides an opportunity for organized wedding industry. Indian wedding industry is worth Rs 1, 25,000 crore today. Vintage group and shaadi.com are few to name in this industry. These companies are offering end to end solution to the customers who are looking for lavish wedding in the exotic locations both in domestic and abroad.

Geographical distribution of the population

TABLE 3: NUMBER OF VILLAGES AND UAs / TOWNS BY SIZE CLASS AND THEIR POPULATION

	Population
Persons@	1,028,737,436
Males	532,223,090
Females	496,514,346
Rural	742,617,747
Urban	286,119,689
% Urban population	27.8%

Rural India with 74 crore population is a biggest market. Companies are trying to get a pie in this untapped market. For example, DCM Shriram limited, opened ‘Hariyali’ bazaars in rural market. These bazaars offer quality agriculture inputs, financial services, and farm output services.

Education level: More than 3 crore people in India either have graduation or post graduation. This has led to the growth of many sunrise sectors. This educated population fueled the growth of information technology (IT), information technology enabled services (ITES), and biotechnology industries.

 TABLE 4: NUMBER OF VILLAGES/TOWNS BY RANGE OF LITERACY RATE & SEX, INDIA, 2001.

Range of Literacy (Percent)	Persons		Males		Females
	No.of Villages	No. of UAs/Towns	No. of Villages	No. of UAs/Towns	No. of Villages	No. of UAs/Towns
Nil	3,077	0	3,546	0	9,899	0
Less than 10	8,664	0	4,516	0	28,412	0
10-25	31,494	0	14,410	0	90,198	17
25-50	162,727	122	72,057	33	244,760	475
50-75	294,596	1,740	237,381	624	186,245	2,638
75 or above	93,055	2,516	261,630	3,721	33,029	1,248
Total*	593,613	4,378	593,540	4,378	592,543	4,378
Source : Primary Census Abstract, Census of India 2001 Note: *Excludes villages/UA/Towns with no Male/Female population.

Migration:

 Geographical shift in the population is becoming an interesting area in the demographic studies. The Table 6, list out the various reasons for migration.

TABLE 5: NUMBER OF MIGRANTS BY PLACE OF BIRTH – INDIA 2001

	Category	Migrations by Place of birth	Percentage
A.	Total Population	1,028,610,328
B.	Total Migrations	307,149,736	29.9
B.1	Migrants within the state of enumeration	258,641,103	84.2
B.11	Migrants from within the districts	181,799,637	70.3
B.12	Migrants from other districts of the state	76,841,466	29.7
B.2	Migrants from other states in India	42,341,703	13.8
B.3	Migrants from other countries	6,166,930	2.0
Source : Table D1 India, Census of India 2001.

TABLE 6: REASONS FOR MIGRATION OF MIGRANTS BY LAST RESIDENCE WITH DURATION (0-9 YEARS) INDIA 2001

Reason for migrations	Number of Migrants			Percentage to Migrants
	Persons	Males	Females	Persons	Males	Females
Total migrants	98,301,342	32,896,986	65,404,356	100.0	100.0	100.0
Reason for migration : Work / Employment	14,446,224	12,373,333	2,072,891	14.7	37.6	3.2
Business	1,136,372	950,245	186,127	1.2	2.9	0.3
Education	2,915,189	2,038,675	876,514	3.0	6.2	1.3
Marriage	43,100,911	679,852	42,421,059	43.8	2.1	64.9
Moved after birth	6,577,380	3,428,673	3,148,707	6.7	10.4	4.8
Moved with households	20,608,105	8,262,143	12,345,962	21.0	25.1	18.9
Other	9,517,161	5,164,065	4,353,096	9.7	15.7	6.7
Source: Table D3, Census of India 2001

Marketers started identifying the niches in the migrated communities and offered their goods and services. For example, Nandhini, an Andhra restaurant in Bangalore catering to the food needs of the Andhra community. Patrika, a Rajasthan based daily now available through out the country.

Occupation:

TABLE 7: DISTRIBUTION OF MAIN WORKED BY DIFFERENT INDUSTRIAL CATEGORIES, INDIA 2001

Industrial category	Main Workers ('000s)	Percentage (%)
Total main workers *	312,972	100.0
Agricultural & allied activities	176,979	56.6
Mining & quarrying	1,908	0.6
Manufacturing	41,848	13.4
Electricity, gas and water supply	1,546	0.5
Construction	11,583	3.7
Wholesale, retail trade & repair work, Hotel and resturants	29,333	9.4
Transport, storage & communications	12,535	4.0
Financial intermediation, Real estate, business activities	6,109	2.0
Other services	31,131	10.0
Source : Industrial classification data based on sample.

Agriculture is the main occupation of the people in India but the share of other services is growing rapidly. The other service category includes IT and ITES. Employees of these categories have high disposable income. This has led to the opening of specialty stores and manufacturing of the luxury items in the country.

3.4.2. Political and legal environment.

Government policies, legislation, regulations, and stability will directly affect the business. Therefore it is inevitable for the firm to closely monitor this environment. The political and legal forces are grouped into the following four categories.

1. Monetary and fiscal policies: These policies regulate government spending, money supply and tax legislation.

2. Social legislation and regulations. Environmental protection act which specifies the emission level.

3. Government relationships with industries: Government subsidies and change in tariff rate will have direct impact on the particular company.

4. Legislation related to marketing:

Following are the list of legislation which affect marketing activities of the company.

• · Companies act 1956.
• · Industrial dispute act 1957
• · Consumer protection act
• · Minimum wages act
• · Payment of bonus act.
• · Environmental protection act
• · Industries development and regulation act.
• · Trade union act
• · Contract law
• · Factories act 1948
• · The contract labor (regulation and abolition) act1970.
• · Sales promotion employees’ act1976
• · Shops and establishment act 1953
• · Copyright act 1957
• · Trade marks act 1999
• · Patents act 1970
• · Designs act 2000
• · Foreign exchange management act 1999

3.4.3. Economic and Natural environment:

Consumer spending pattern

According to National sample survey 2005-06,

1. Monthly per capita consumption in rural area: Rs625.

2. Monthly per capita consumption in urban area: Rs1, 171.

3. Food expenditure in monthly per capita consumption: 53%

4. Food expenditure in monthly per capita consumption: 40%

The above data shows that most of the expenditure in monthly per capita income goes to the food expenditure only. Marketers in the non food category should promote heavily to change this spending pattern. Companies in the food category should note that food expenditure in monthly per capita expenditure is coming down. Hence extra effort is required by these companies to sell their products.

Interest rate: when interest rates are high, consumer tend not to make long term purchase like housing. If the interest rate is low people put their money in alternative financial options where they get better return.

Inflation: If the inflation is high, consumer buying power will go down. Hence government always tries to control the inflation within the limit.

Changes in income: The rise in the salaries of the employees, improved performance of stock market and better industrial growth led to the change in the income pattern in India. Many Indians became millionaires and billionaires. Percentage of below poverty line is decreasing, but the concern is rich and poor divide is growing.

NATURAL Environment:

Environmental concerns are growing over the years. Governments increased regulations to manage the natural resources. Marketers should aware of such trends in the natural environment. Some of the factors which organizations should keep a vigil are

a. Inadequate raw materials

b. Global warming and pollution levels and

c. Regulatory world.

a. Inadequate raw materials: We are over depending on Middle East countries for petroleum products. Automobile companies are improving their technologies and also planning to come out with hybrid cars which use alternative fuels.

b. Global warming is a big issue today.

c. Regulatory world; The Indian government through environmental protection act, making stringent rules on emission and environment standards. Companies, particularly in automobiles should adhere to those norms, which are expensive and time consuming.

3.4.4. Social and cultural environment:

1. Working women and rise of metro sexual man.: 

Number of women who are working in India is increasing. This segment is looking towards products which help them to bring better work life balance. MTR a fast food giant in south India started offering ready to eat products to this segment. The products are instant in nature where a woman dips a product in the hot water for 2-3 minutes and serves. Metro sexuality is another new phenomenon, wherein a man also assumes the role of women like purchasing household items and helping in kids’ education etc. It made marketers’ task more difficult on positioning their products.

2. Time short people: 

 This segment involves people who work long hours and have less personal time. These people are looking for products which satisfy them quickly and conveniently. For example, Easy bill, from Hero group offers one stop solution to consumer to pay their utility bills and do other financial transactions.

3.4.5. Technology environment

1. Growth of information and technology and biotechnology industries: 

Manufacturing organization adopted many technology solutions in the recent years. This has boosted the performance of IT companies. For example, companies adopted ERP solutions, CRM packages and other software to reduce the cost, retain the customer and increase the efficiency. Biotech firms came out with innovative health solutions to the consumer. This has resulted in companies like wockhard and Nicolas Piramil to invest heavily in this sector.

2. Nano technology: 

The technology in waiting, which is expected to reduce the size and cost of the materials.

3. TATA nano car, a technology breakthrough: This has been described as a giant leap by an Indian manufacturer. TATA Company used different metal compositions, engine configurations and accessories to bring path breaking entry level car which just cost Rs 1 Lakh to the consumer.

3.5. Difference between Micro environment and Macro environment.

Macro EnvironmentV/S Micro Environment
Parameter	Macro environment	Micro environment
Size	Large	small
Uncertainty	Very high	low
complexity	High	low
control	Cannot be controlled	Can be controlled to some extent
Example	PEST	Customer, Supplier

               

PEST (Political and legal, economic and natural, social and cultural, and technology environment) Analysis:
Factors	Weightage	Opportunity	Threats	Score
1. Political and legal environment
a. Monetary policy
b. Fiscal policy
c. Environmental policy
d. Lobby groups
2. Social and cultural environment
a. Gender
b. demographics
c. work culture
3. Economic and natural environment
a. Income
b. Spending power
c. Inflation
d. Interest rate
e. Raw materials
f. Taxation
4. Technology environment
a. Entry barriers
b. Growth of technology
c. Transfer of technology
Total	1

3.6. Summary

· Environmental scanning is necessary to understand opportunities and threats faced by the company.

· Micro environment factors like marketing intermediaries, suppliers, competitors, publics and customers influences company’s strategies. These are controllable to some extent.

· Population variables like age, gender, marital status and occupation helps the company to assess the market and change or develop their offerings

· Shortage of raw material and increase in the income disparity are immediate concerns of the organizations.

· Working women and time short people changing the socio- cultural environment of the country.

· Technology is helping company to reduce cost, increase the efficiency and save time.

· Micro and macro environment are differentiated on the basis of size, complexity, and uncertainty.

Strategic marketing process

Unit 2: Strategic Marketing Process:
2.1. Introduction.
Marketing strategies and programs in the organizations are derived from the companywide strategic planning. Thus, you have to understand how organizations develop their strategic plans. After analyzing the strategic plan, you should be able to relate these plans’ role in guiding the marketers, and application of these plans to serve customers with the help of company employees as well as intermediaries.

Objectives:
After studying this chapter you should be able to:
1. Describe the companywide strategic planning.
2. Discuss how to design marketing planning models
3. Identify the marketing mix exists in the company.
4. Prepare marketing planning for the company.

2.2. Strategic Planning
Strategic planning is the process of defining the company mission, setting the long term and short term objectives, designing an appropriate business portfolio and coordinating functional strategies of the company.
Looking at the definition, you will be able to identify four important factors of the strategic planning. They are
1. Defining the company mission.
2. Formulating the objectives
3. Designing an appropriate business portfolio
4. Coordination among functional strategies.
Now, we will discuss the above points and their relevance to the marketing plans.
2.2.1. Defining the company mission:
An organization mission explains who its customers are, how it satisfies their needs and what type of products it offers.
Let me explain this concept by taking a mission statement of the trends in vogue, a family beauty saloons chain from cavin care, a well known fast moving consumer goods (FMCG) company in India. The mission statement is
“1. To provide the customer an unparalleled service experience
2. To provide the customer the largest range of "natural" products and services
3. To be the first to introduce sub-formats and value-added services
4. To be the most preferred family beauty salon chain for customers, employees and
Alliance partners
5. To provide consistent profits to all stakeholders”
Trends in vogue mission statement analysis:
a. Who its customer is? Mission statement 4 states “family who are going to beauty saloons” as their customers.
b. How it satisfy their needs? Mission statement 1 and 2 describes the needs as unparalleled service experience and offering largest range of natural products and services
c. What type of products it offers? The company offers natural products in their beauty saloons.
2.2.2: Formulating the objectives.
Mission statement provides a general view of the company’s customer, products and their method of satisfying the customer. Mission statement is once again divided into specific objectives which are stated in writing, can be measured quantitatively and fixed for particular time. Objectives may be business oriented or market oriented. They help marketers to develop strategies and programs. You will come to know how organizations deduce their mission into different objectives form the following example of Bharat Electronics Limited (BEL), a public sector enterprise in the electronic field.
Mission: To be a customer focused globally competitive company in defence electronics and in other chosen areas of professional electronics, through quality, technology and innovation.
Objectives:
o To be a customer focused company providing state-of-the-art products & solutions at competitive prices, meeting the demands of Quality, delivery & service.
o To generate internal resources for profitable growth.
o To attain technological leadership in defence electronics through in-house R&D, partnership with defence/research laboratories & Academic institutions.
o To give thrust to exports.
o To create a facilitating environment for people to realize their full potential through continuous learning & team work.
o To give value for money to customers & create wealth for shareholders.
o To constantly benchmark company’s performance with best-in-class internationally.
o To raise marketing abilities to global standards.
o To strive for self-reliance through indigenization
2.2.3: Designing an appropriate business portfolio.
After setting mission and objectives, management will develop its business portfolio.
Business portfolio is the right mix of businesses that company operates and products that offers to customers.
Portfolio analysis is the process by which company analyze its products and businesses.
Company develops their business portfolio in two steps
a. Analyze the existing business portfolio and decide which business should receive more, less or no investment.
b. Developing the new business portfolio for future to meet growth opportunities and eliminating the unprofitable portfolios.
Analyzing the existing business portfolio:
The current business portfolio of the company is analyzed by the businesses in which it operates. To make it clearer, let me take an example of ITC group. The company operates in FMCG, hotels, paper boards, specialty papers and packaging and agribusiness. These businesses are independent from each other and have their mission and objectives separately. These subsidiaries of organizations are called as Strategic business units (SBU)Strategic business unit: The unit of the company that has separate mission and objectives and that can be planned independently from other businesses.
Characteristics of SBU.
1. It may be brand, or a product line or separate division of the company.
2. It is having distinct mission and objectives.
3. Have own executive team.
Strategic planning models used in assessing the existing businesses:
1. BCG matrix ( Boston Consultancy Group)
2. GE matrix ( General electric)
BCG matrix: This model is used to identify company’s SBU’s position in the market. As it identity’s the company’s SBU’s strength, weaknesses, opportunities and threats on the basis of market growth rate and relative market share, this model is also known as growth share matrix .


STAR
Question Mark
COW
DOG
High Low
Relative Market Share
Axis components:
1. Market growth rate: The rate at which market is growing
2. Relative market share: Market share of the SBU divided by the market share of the largest competitor.
Model components:
Star: This category represents the high market share and high industry growth. SBU’s in this category require large investment to defend their position. Ultimately they will turn as cash cow after some time.
Cash cows: This category represents the low growth rate and high market share which is the characteristic of SBU operating in mature industry. Here company needs less investment to hold their position. Hence it generates more cash or in management terms we say cash cow can be milked.
Question Mark: This category represents high market growth and low market share. SBU’s in this category has two options, either to invest heavily and bring them to star position or divest / liquidate from that position.
Dogs: SBU’s in this category generates less cash for the company as it operates in low growth and low market share. Usually companies will not invest in this category and try to liquidate or divest.


BCG matrix for ITC
1. SBU: FMCG
Industry growth rate: 24% (AC Nielson retail audit report 2007)
Company growth rate: 50% (the Hindu business line 19th January 2008)
Company’s market share : 8% (outlook business)
Largest competitor share: HUL: 54% (outlook business)
Relative market share= 0.14
2. SBU: Paper board
Industry growth rate: 7.2% (the Hindu business line 27th May 2007)
Company growth rate: 11% (the Hindu business line 19th January 2008)
Company’s market share: 55%
Largest competitors share: BILT 35%
ITC’s FMCG segment analysis shows that though it is market leader in some categories their overall relative market share is 0.14. Company is in the high growth low relative market share area i.e. question mark position. ITC should invest heavily to convert its SBU business position into star.
ITC’s Paperboard industry is in low growth and high market share category i.e. in cash cow segment. It should plan for investing the cash generated from this position into other businesses.
GE matrix:
Management can use the GE business matrix to classify SBU’s on the basis of two factors
1. Market attractiveness: Market size, entry barriers, competitors, technology and profit margin are some factors used to analyze the market attractiveness.
2. Business position: On the basis of market share, SBU size, R&D capabilities and cost controls we can determine the business position.
Each cell in the model represented by the particular strategy namely, invest strategy, protect strategy, harvest strategy and divest strategy
Invest strategy: In this position SBU
a. Should receive ample resources
b. Should support by well financed marketing efforts.
Protect strategy: SBU’s in this position should
a. Allocate the resources selectively.
b. Develop strategies which help in maintain its market position.
c. Generate cash needed by other SBU’s.

Business position
High Medium Low

Invest

Invest

Protect

Invest

Protect

Harvest

Protect

Harvest

Divest


Harvest strategy: SBUs should not receive substantial new resources and if required, sell them.
Divest strategy: SBUs which falls into this category should not receive any resources and sell i or shut it as early as possible.

Developing the new business portfolios
After analyzing the existing business of the company, let us discuss company’s future plans i.e. growth or downsizing. Company adopts growth strategies to become more competitive in the market, tap new opportunities and become preferred employer. Downsizing is used when product or market became unattractive to it. The Ansoff Product-Market Growth Matrix is a marketing tool created by Igor Ansoff and first published in his article "Strategies for Diversification" in the Harvard Business Review (1957). The matrix allows marketers to consider ways to grow the business via existing and/or new products, in existing and/or new markets.



Ansoffs model of product/ market expansion.


a. Market penetration: A strategy used in increasing the sales of company’s existing products without modifying it in the existing market.
Characteristics of market penetration.
1. Serve customer with existing products by opening new stores.
2. Increase the promotion activities to increase the consumption.
3. Improve the service offerings.
Café- coffee day a reputed coffee chain in south India, started its operation in brigade road, Bangalore, in the year 1996. It offers different varieties of the coffee to its existing customers. Today it is having 100 stores in Bangalore.
b. Market development: In this strategy company identifies the new markets to sell their existing products.
In case of market development company identifies and develops new markets for its existing products
Café coffee day, enthused by the success of offering a world-class coffee experience, has opened a Café in Vienna, Austria and is planning to open other Cafes in the Middle East, Eastern Europe, Eurasia, Egypt and South East Asia in the coming months.
(Source: www.cafécoffeeday.com)
c. Product development: In this strategy, Company identifies new markets and sells their existing products.
Café coffee day added quick bites and ice-cream in their menu to cater to the needs of customers.
d. Diversification:A strategy for company growth through starting up or acquiring businesses outside the company’s current products and markets.
Café coffee day started offering tea and cold drinks in its highway café retail outlets. These highway café outlets offer excellent service to the travelers on the high way.
Downsizing: Eliminating the unprofitable products of the company from its product line
In the year 2000 M.S. Banga then chairman of Hindustan Unilever limited (HUL), used power branding strategy to improve the sales and productivity. He reduced HUL’s number of products from 110 to 35. Remember, now you won’t find vigil or Margo in the market. These products from HUL, removed from the market as they were unable to contribute to the bottom line.
2.2. 4. Coordination among functional strategies.
Organization’s strategies exist in three different levels. They are corporate level, business level and operation level. In the strategic plan, company brings the synergy between all the three levels. To make it more clearly to you, company’s marketing strategy are different from HR strategies but it should bring coordination between both to meet organization’s objectives.
Self Assessment Questions 1:
i. ------------ explains who its customers are, how it satisfies their needs and what type of products it offers.
ii. Growth share matrix is also known as---------------------
iii. Cash cow in BCG matrix represents
a. High market growth and high relative market share
b. High market growth and low relative market share
c. Low market growth and high relative market share
d. Low market growth and low relative market share
iv. Product market growth model was developed by------------------
v. A strategy for company growth through starting up or acquiring businesses outside the company’s current products and markets is known as----------------




2.3. Developing the marketing mix.
Marketing mix: The product, its price, promotion and distribution blended together to get favorable response from the customer.
This is also called as 4P’s of Marketing or Market assortment.

Figure 2.1
The marketing mix
Product
· Variety
· Quality
· Features
· Brand name
· Packaging
· Services
Promotion
· Advertising
· Sale promotion
· Public relation
· Publicity
· Personal selling
Place
· Channels
· Coverage
· Assortments
· Locations
· Inventory
· Transportation

Customers and
Intended positioning
Price
· List price
· Discounts
· Allowances
· Credit period
· Credit terms






























1. Product: It is a good, service, idea, place or person that offered to customer to satisfy his/her need. The attributes comprising product are variety, quality, warranty, design, packaging, and service
For example, Marico, a FMCG company offers hair oil in two brand names i.e. parachute and nihar. The brand nihar, offered in two types of packaging i.e. Sachets and bottles and offered in two qualities i.e. coconut oil and perfumed hair oil.
2. Price: the value at which customer is willing to purchase the product.
For example, BSNL offers prepaid service recharge coupons in Rs175, Rs335, Rs500, Rs 1000, Rs2000 and Rs 5000 denominations.
3. Place: Distribution of goods from the factory to the target customer. It includes distributors, stockiest and retailers. To illustrate, Zenith computers uses authorized distributor to sell laptops and desktops to the target customers.
4. Promotion: communicating product features and its uses to target customers through different Medias. For example, Bharati group promotes its cellular services AIRTEL through TV, Radio and news paper.
2.4. Planning, control and implementation.
2.4.1 Marketing planning:
Though strategic plan exists in the organization but it is very essential to have functional plans to coordinate departmental activities. For example, the marketing plan guides the sales and distribution activities of the organization. Therefore it is essential to know what the contents of a marketing plan are.
Contents of marketing plan
a. Executive summary: Brief summary of plan, which help busy executives to go through the points very quickly.
b. Analyzing the current market situation: The following factors should be answered in this section.
i. What is the intended market and market segment?
ii. What is the consumer buying behavior process for particular category of products?
iii. How conducive is the marketing environment to do the business?
iv. Whether company got right marketing mix for intended target customer?
v. Who are major competitors and what are their marketing strategies?
c. PEST analysis: In this section, the external environment of the company is analyzed to find opportunities and threats.( for detail see UNIT 3)
d. Objectives and issues: This part of the marketing plan should discuss marketing objectives that company would like to achieve in particular period and issues that may affect them.
e. Marketing strategy: This section should highlight on
i. Identifying the segmentation, target customer and positioning strategy
ii. 4P’s of marketing
f. Planned activities: the following factors should be discussed in this section
i. What are the programs that company plans to undertake?
ii. Who are responsible to monitor these programs?
iii. How much time it takes to complete the program?
iv. How much will it cost?
g. Marketing Budget
h. Control: Any program implemented need to be controlled to check its performance. Hence organization should take periodic auditing by a review committee. The control process for the plan should be discussed in this section.
2.4.2 Marketing Implementation and control.
Marketing implementation:
The process in which marketing strategies and plans are converted in to proper marketing actions to achieve the objectives.
Marketing implementation depends on the following factors:
1. Organization structure
2. Organization culture

Marketing control: The process of evaluating marketing performance and taking corrective actions .
Marketing control involves four steps they are
a. Set specific marketing goals.
b. Measure the marketing performance
c. Evaluate the market performance against objectives
d. Take corrective actions
Marketing control is divided into two parts. They are operation control and strategic control. Operation control involves assessing the current activities against annual plan and taking corrective actions. Strategic control is used to assess whether existing strategic plans of the company meets the opportunities exist for it. Marketing audit is used as a strategic control tool.
According to Philip Kotler “marketing audit is comprehensive, systematic, independent and periodic examination of a company’s environment, objectives, strategies and activities to determine problem areas and opportunities and to recommend a plan of action to improve the company’s marketing performance.
Characteristics of marketing audit:
1. Comprehensive.
2. Systematic
3. Independent
4. periodic
Components of marketing audit:
1. Marketing environment audit
2. Marketing strategy audit
3. Marketing organization audit
4. Marketing systems audit
5. Marketing productivity audit.
6. Marketing function audit
Self assessment questions2:
i. Example of strategic control is-----------------
ii. Marketing implementation depends on ------------------- and -----------------.
iii. Marketing mix is also known as--------------- and ---------------
iv. Which of the following does not belong to the marketing control?
a. Set specific marketing goals.
b.Measure the marketing performance
c. Evaluate the market performance against objectives
d. Understand the organization culture
v. PEST analysis helps to identify company’s ------------------ and -----------------------
Summary:
· Strategic planning process involves defining the company mission, formulating the objectives, designing an appropriate business portfolio and coordination among functional strategies.
· BCG and General electric models are used to analyze existing market situation of SBU.
· SBU’s growth and downsizing strategies are determined by Ansoff model of product- market growth matrix.
· Marketing mix or 4Ps of marketing is the assortment of product, place, price and promotion.
· Marketing implementation depends on organization structure and its culture.
· Marketing audit is used as a tool for control.

Terminal questions:
1. Explain how organization defines its mission..
2. Discuss the models used to analyze the existing business portfolio of the company.
3. Explain the Ansoff ‘s product market growth matrix
4. What is marketing mix? Explain its components.
5. Briefly explain the contents of marketing planning.



Answers to SAQ’s and TQ’s:
SAQ1:
i. Mission
ii. BCG
iii. C. Low market growth and high relative market share
iv. Igor Ansoff
v. Diversification.
SAQ2:
i. Marketing audit
ii. Organization stricture and organization culture
iii. 4P’s of marketing and market assortment.
iv. D. understanding the organization culture
v. Opportunities and threats.