We'll continue with frameworks used in marketing analysis..

PESTEL

            A PESTEL model consists of Political, Economic, Social, Technological, Environmental and Legal factors which are a part of a framework that is used in strategic management. PESTEL is used in external analysis as a part of market research and gives an overview of the different macro environmental factors that the company has to take into consideration. The factors are as follows:

1.      Political factors are how and to what degree a government intervenes in the economy. Specifically,  it includes areas such astax policy, labor law, environmental law, trade restrictions, tariffs, and political stability. Events like EU enlargement, WTO treaties are examples of political factors.

2.      Economic factors include economic growth, interest rates, exchange rates, unemployment, inflation, stock market etc. For example, interest rates affect a firm's cost of capital and therefore to what extent a business grows and expands. Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy.

3.      Social factors include the cultural aspects and include health consciousness, population growth rate, age distribution, income distribution, career attitudes and emphasis on safety. For example, an aging population may imply a smaller and less-willing workforce (thus increasing the cost of labor).

4.      Technological factors include technological aspects such as R&D activity, automation, innovation, technology incentives and the rate of technological change. They can determine barriers to entry, minimum efficient production level and influence outsourcingdecisions.

5.      Environmental factors include ecological and environmental aspects such as weather, climate, and climate change, which may especially affect industries such as tourism, farming, and insurance. Environmental factors are also giving birth to new industries focused on issues like global warming.

6.      Legal factors include discrimination law, competition law, consumer law, antitrust law, employment law, and health and safety law. These factors can affect how a company operates, its costs, and the demand for its products.

            The model's factors will vary in importance to various companies depending upon its industry, position etc. What managers need to do is to think about which factors are most likely to change and which ones will have the greatest impact on them i.e. each firm must identify the key factors in their own environment.

            For example, consumer and B2B companies tend to be more affected by the social factors. A global defense contractor would tend to be more affected by political factors. A company which has borrowed heavily will need to focus more on the economic factors. A company may also wish to divide factors into geographical relevance, such as local, national, and global (also known as LoNGPESTEL).

Happy Reading..!

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Porter’s 5 Forces

Porter’s 5 Forces tool was created by a Harvard Business School professor, Michael Porter in 1979, to analyze the attractiveness and likely-profitability of an industry. It helps you understand both the strength of your current competitive position, and the strength of a position you're considering moving into.The 5 fundamental competitive forces are:

1. The entry of competitors – How easy or difficult it is for new entrants to start to compete and which barriers do exist. Capital requirements, Government policies, access to distribution channel, customer loyalty to existing brands etc. play a major role.

2. The threat of substitutes – How easy can a product or service be substituted, especially by cheaper ones. What are buyer switching costs and how the product differentiation will be perceived.

3. The bargaining power of buyers – How strong is the position of buyers, can they work together to order large volumes. What is buyer concentration, degree of their dependency on existing players, buyer price sensitivity, how well informed they are etc.

4. The bargaining power of suppliers – How strong is the position of sellers, are there many or only few potential suppliers, is there a monopoly. What is strength of distribution channel, employee solidarity (e.g. Labour Unions) etc.

5. The rivalry among the existing players – Is there a strong competition between the existing players, is one player very dominant or are all equal in strength/ size. How strongly will the existing players retaliate to the new entrant is also a matter of concern.

A change in any of the forces normally, requires a business unit to re-assess the marketplace given the overall change in industry information. These forces determine the competitive intensity and therefore attractiveness of a market . Attractiveness in this context refers to the overall industry 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. Care should therefore be taken not to underestimate or under-emphasize the importance of the existing strengths of the organization when applying this five competitive forces framework of Porter.

An important extension to Porter was found is the concept of complementors (also called "the 6th force"), helping to explain the reasoning behind strategic alliances. According to most references, the sixth force is government or the public. While Porter indirectly rebutted the assertions of other forces, by referring to innovation, government, and complementary products and services as "factors" that affect the five forces.

Happy Reading..!

______________________________________________________________________________________________Mantras continued ..... Marketing MixThe marketing mix is probably the most famous marketing term. Its elements are the basic, tactical components of a marketing plan. Also known as the Four P's, the marketing mix elements are price, place, product, and promotion. The concept is simple. The offer you make to you customer can be altered by varying the mix elements. So for a high profile brand, increase the focus on promotion and desensitize the weight given to price. Another way to think about the marketing mix is to use the image of an artist's palette. The marketer mixes the prime colours (mix elements) in different quantities to deliver a particular final colour. Every hand painted picture is original in some way, as is every marketing mix. These four P's are the parameters that the marketing manager can control, subject to the internal and external constraints of the marketing environment. The goal is to make decisions that center the four P's on the customers in the target market in order to create perceived value and generate a positive response. Product: - The term "product" refers to tangible, physical products as well as services. Pricing: - It includes pricing strategies, bundling, price sensitivity etc. Place: - It includes location, distribution, reverse logistics etc. Promotion: - It includes the communication routes, promotional strategies etc. for the marketing plan. "In a nut shell, marketing mix is about the right product, sold at the right price at the right place and with the appropriate promotional campaigns." Happy Reading! Enjoy!

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Let the marketers communicate ..... mantras continued.....

AIDA model is a hierarchical, four layer process using the four cognitive phases that buyers follow when accepting a new idea or purchasing a new product. It describes the basic process by which people become motivated to act on a purchase and is based on external stimuli from sales representatives. This motivation to make a purchase depends on:

1. AWARENESS of the existence of a product or service;2. INTEREST in paying attention to the product's benefits;3. DESIRE for the product.

 The fourth stage or mental state, ACTION, is a natural result of moving through the first three stages -- that desire leads to action, i.e.

1. Are you talking to me?2. Why are you talking to me?3. Good idea, but do I really need it?4. What will I have to do to get it?

According to a school of thought, Advertisements have three goals:- 

1. Inform 2. Persuade and 3. Remind

These goals are best met when the marketers properly identify the communication message and the stage of AIDA model at which it is directed.

Once the stage of AIDA model is decided, the next major task is to identify the communication channel through which the message needs to be communicated. This is what we call the communication route.

The model even helps in evaluating the success of advertisements after they have been launched.

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Today lets talk about VALS Framework. Its an important means of segmentation that we may not be familiar with. Its not based on demographics but on behavior..

VALS Framework:

VALS - short for Values And LifeStyles - is a way of viewing people on the basis of their attitudes, needs, wants, beliefs, and demographics. The VALS program was created by SRI International (now SBI) in 1978 in an attempt to "put people" into the thinking of those of us trying to understand the trends of our times - in the marketplace, economically, politically, sociologically, and humanly. The approach is holistic, drawing on insight and many sources of data to develop a comprehensive framework for characterizing the ways of life of Americans. Conceptually, VALS owes a major debt to the findings of developmental psychology. The system is currently being applied in many areas of business and is evoking interest in circles as diverse as sociology, politics, law, education, and medicine.

According to the VALS Framework, groups of people are arranged in a rectangle and are based on two dimensions (see attached image). The vertical dimensions of the VALS segmentation are consumer motivation/ innovation and consumer resources. Personality traits such as energy, self-confidence, intellectualism, novelty seeking, innovativeness, impulsiveness, leadership and vanity in conjunction with demographics determine an individual’s resources. The horizontal dimension represents primary motivations and includes three distinct types: ideals, achievement and self-expression. 

The four groups of consumers with higher resources and motivation are:

1. Innovators: Successful, sophisticated, active people with high self-esteem and highest incomes. They prefer relatively upscale, niche-oriented products and services.

2. Thinkers: Mature, satisfied and reflective people who are idealistic and value order, knowledge and responsibility a lot. They seek durability, functionality and value in products.

3. Achievers: Goal-oriented people who focus on career and family. They favor products that demonstrate success to their peers.

4. Experiencers: Young, enthusiastic, impulsive people who seek variety and excitement. They spend more on fashion, entertainment and socializing.

The four groups of consumers with lower resources and motivation are:

1. Believers: Conservative and traditional people with concrete beliefs. They prefer familiar products and are loyal to established brands.

2. Strivers: Trendy and fun-loving people who are resource-oriented. They favour stylish products that emulate the purchases of those with greater material wealth.

3. Makers: Practical, down-to-earth, self-sufficient people who like to work with their hands and like products with a practical/functional purpose.

4. Survivors: Elderly, passive people who are concerned about change. They are loyal to their favorite brands.

Understanding of VALS framework is crucial to marketers as they can apply their understanding of VALS segments to plan marketing strategies. VALS was first developed on the basis of the American population, however now international versions have been developed. The Japanese version of VALS (see attached image) divides society into 10 consumer segments on basis of life orientation and attitude to social change. 

You can refer to Page 213-214 of Marketing Management – KKKJ for details.______________________________________________________________________________________________

Hi !

Today let's discuss Consumer buying behavior to understand various stages of a purchase process.

Consumer Buying Behavior

Buying Behavior is the decision processes and acts of people involved in buying and using products.Consumer Buying Behavior refers to the buying behavior of the ultimate consumer. A firm needs to analyze buying behavior for the following reasons:

1. Buyers’ reactions to a firms' marketing strategy have a great impact on the firm’s success.2. The marketing concept stresses that a firm should create a Marketing Mix (MM) that satisfies (gives utility to)

customers, therefore there is a need to analyze what, where, when and how consumers buy.3. Marketers can better predict how consumers will respond to marketing strategies.

Six Stages to the Consumer Buying Decision Process (For complex decisions):

1. Problem Recognition (awareness of need)-- Difference between the desired state and the actual condition. Deficit in assortment of products. Eg. Hunger--Food. Hunger stimulates your need to eat. Can be stimulated by the marketer through product information--did you not know you were deficient? I.E., see a commercial for a new pair of shoes and it stimulates your recognition that you need a new pair of shoes.

2. Information search—There may be internal search by using ones memory or an external search if one needs more information.

Some sources are friends and relatives (word of mouth) and other sources include marketer dominated sources like comparison

shopping; public sources etc. A successful information search leaves a buyer with possible alternatives, the evoked set.

Eg.

Hungry, want to go out and eat, evoked set is

Chinese food

Iindian food

Burger KingKondike Kates etc.

3. Evaluation of Alternatives—Buyer needs to establish a criteria for evaluation which features what the buyer wants or does not want. As a buyer, you rank/weight alternatives or resume search. If you decide that you want to eat something spicy, then Indian food gets highest rank etc.If you are not satisfied with your choice, then return to the search phase. Can you think of another restaurant? Look in the yellow pages etc. Information from different sources may be treated differently. Marketers try to influence by "framing" alternatives.

4. Purchase decision-- This involves choosing a buying alternative. This includes product, package, store, method of purchase etc.

5. Purchase-- This may differ from decision, depending upon time lapse between 4 & 5, product availability.

6. Post-Purchase Evaluation—Outcome of purchase may be satisfaction or dissatisfaction. You may undergo the process of Cognitive Dissonance meaning that you question whether you have made the right decision. This can be reduced by warranties,

after sales communication etc. Eg. After eating an Indian meal, you may think that what you really wanted was a Chinese meal instead.

Actual purchase is only one stage of the process. Not all decision processes lead to a purchase. All consumer decisions do not always include all 6 stages, this is determined by the degree of complexity of the decision.

Happy Reading .. !______________________________________________________________________________________________

Hi..!

Today lets talk about New Product Development Process:

Improving and updating product lines is crucial for the success for any organisation. Failure for an organisation to change could result in a decline in sales and with competitors racing ahead. New product development (NPD) is the term used to describe the complete process of bringing a new product or service to market. Companies typically see NPD as the first stage within the overall strategic process of product life cycle management used to maintain or grow their market share. Products go through the stages of this lifecycle and will eventually have to be replaced.

The Process:

One thing to keep in mind is that not all products go through all the stages in the process. Some stages may be skipped or some combined together, depending on the product and the organizational practices. Yet this remains the most comprehensive model for the product development process.

1. Idea generation: (Often called the “fuzzy front end” of the process)

But where do organisations get their ideas for NPD? Sources include employees, competitors, customers, distributors and suppliers. Ideas for new products can also be obtained from basic research using a SWOT analysis, Market and consumer trends, company's R&D department, focus groups, corporate spies, trade shows etc. 

2. Idea Screening:

The objective is to eliminate unsound concepts prior to devoting resources to them. Pursuing non feasible ideas can clearly be costly for the company. This stage is also termed a GO/NO-GO gate since products are either allowed to move on to the next stage (GO) or eliminated (NO-GO).

3. Concept Development and Testing:

Once an idea or concept is selected, it needs to be taken to the target audience. Questions like what will customers think about the idea, will it be practical and feasible, will it offer the benefit that the organisation hopes it will, are some issues overlooked, how will the product be produced most cost effectively etc. should be looked after. Note that the idea and concept is not a working prototype at this stage.

4. Marketing Strategy and Development:

Marketing strategy and development stage deals with how the product/service idea will be launched in the market. A proposed marketing strategy will consist of the marketing mix strategy of the product, the segmentation, targeting and positioning strategy sales and profits that are expected.

5. Business Analysis:

The marketing strategy may seem feasible, but will the product be financially worthwhile in the long run? The business analysis stage looks more deeply into the cash flow the product could generate, the costs, target market shares, breakeven point and the expected life of the product.

6. Product Development:

Finally it is at this stage that a prototype is finally produced. The prototype will clearly run through all the desired tests, and be presented to the target audience to see if changes need to be made.

7. Test Marketing:

The product will be launched within a particular region so the marketing mix strategy can be monitored and if needed, be modified before national launch. The product and its packaging are tested in typical usage situations. Focus group customer interviews are conducted and the product is introduced at promotional events like trade shows.

8. Commercialization:

If the test marketing stage has been successful then the product will go for launch. Certain factors like timing, product launch strategy, place of product launch, advertisements and promotions, distribution pipeline, national roll out or region based entry etc. are decided during this final phase.

Come up with what the market isAnalyze the marketa) External factors: PESTEL frameworkb) Forces on industry - PORTER's 5

Analyze the companyc) SWOT: Strength, weakness (internal) and Opportunities and threats (external)

Till here is the situation analysis

Define Objective (as given in case) with clear cut numbersCome up with a strategy (closing doors!)

Why nots of where you dont want to go. ANalysis of number perhaps

Come up with marketing plan with the following coverages

Objective Segmentation - numbers Target Segment - numbers + how this target helps you achieve your objective Value proposition for that segment Designing the product Distribution networks Communicate the product (maybe AIDA in this)

Not just reaching the target - staying on target

Price changes over time you will do How competitors will respond to you on long term and what will you do negate that.

Conclusion

TIPS:

be complete in analysis of everything from defining to launching product to the point of the cash registers ringing!

analyze the case as a strategy not just defining market etc never mention that you are going to analyze the market by doing this framework, but just use that.

Frameworks are there so that you cover all aspects of the point. be clear on who you are. marketing manager for that product or for entire range of your company (in which

case you would think about how that product affects your other products) Of course, self consistent

Jus remember to mention the objective clearly , and have a coherent structure in your answerabout frameworks - marketing mix is 4Ps- price, product, place and promotion. remember 4Ps are part of tactics and not main strategyPorter's 5 -  when u r thinking of entering into a new industry , u try and scan the industry SWOT- it is for companies , remember - weaknesses are internal and threat is from external ... dun mix  them up BCG matrix- a 2 D graph b/w  market share and growth rate ...  to know which products of your company have the potential to make money by investing more money at present (stars),  which ones should be discontinued(dog) , in which you shouldn't invest rather just squeeze out max profits (cow)...AIDA model - awareness, interest , desire and action . this is how advertisement works in consumers' mind . in above mentioned sequence 3Cs- customers, company and competitors

more or less everything will be answered by organizing ur answer on these frameworks ... dun try to apply them forcefully . just knw the objective well and everything else will follow logically from it