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Marketing Management(MB0030)

MBA,SMU,Sem-2,Assignment-02

5/20/2010

ROBIN SMITH

Q.1 a. Give a short note on bases of Segmentation. (5 marks)

Ans-

Market Segmentation

Market segmentation is the identification of portions of the market that are different from one

another. Segmentation allows the firm to better satisfy the needs of its potential customers.

The Need for Market Segmentation

The marketing concept calls for understanding customers and satisfying their needs better than

the competition. But different customers have different needs, and it rarely is possible to satisfy

all customers by treating them alike.

Mass marketing refers to treatment of the market as a homogenous group and offering the same

marketing mix to all customers. Mass marketing allows economies of scale to be realized

through mass production, mass distribution, and mass communication. The drawback of mass

marketing is that customer needs and preferences differ and the same offering is unlikely to be

viewed as optimal by all customers. If firms ignored the differing customer needs, another firm

likely would enter the market with a product that serves a specific group, and the incumbant

firms would lose those customers.

Target marketing on the other hand recognizes the diversity of customers and does not try to

please all of them with the same offering. The first step in target marketing is to identify different

market segments and their needs.

Requirements of Market Segments

In addition to having different needs, for segments to be practical they should be evaluated

against the following criteria:

Identifiable: the differentiating attributes of the segments must be measurable so that they

can be identified.

Accessible: the segments must be reachable through communication and distribution

channels.

Substantial: the segments should be sufficiently large to justify the resources required to

target them.

Unique needs: to justify separate offerings, the segments must respond differently to the

different marketing mixes.

Durable: the segments should be relatively stable to minimize the cost of frequent

changes.

A good market segmentation will result in segment members that are internally homogenous and

externally heterogeneous; that is, as similar as possible within the segment, and as different as

possible between segments.

Bases for Segmentation in Consumer Markets

Consumer markets can be segmented on the following customer characteristics.

Geographic

Demographic

Psychographic

Behavioralistic

Geographic Segmentation

The following are some examples of geographic variables often used in segmentation.

Region: by continent, country, state, or even neighborhood

Size of metropolitan area: segmented according to size of population

Population density: often classified as urban, suburban, or rural

Climate: according to weather patterns common to certain geographic regions

Demographic Segmentation

Some demographic segmentation variables include:

Age

Gender

Family size

Family lifecycle

Generation: baby-boomers, Generation X, etc.

Income

Occupation

Education

Ethnicity

Nationality

Religion

Social class

Many of these variables have standard categories for their values. For example, family lifecycle

often is expressed as bachelor, married with no children (DINKS: Double Income, No Kids),

full-nest, empty-nest, or solitary survivor. Some of these categories have several stages, for

example, full-nest I, II, or III depending on the age of the children.

Psychographic Segmentation

Psychographic segmentation groups customers according to their lifestyle. Activities, interests,

and opinions (AIO) surveys are one tool for measuring lifestyle. Some psychographic variables

include:

Activities

Interests

Opinions

Attitudes

Values

Behavioralistic Segmentation

Behavioral segmentation is based on actual customer behavior toward products. Some

behavioralistic variables include:

Benefits sought

Usage rate

Brand loyalty

User status: potential, first-time, regular, etc.

Readiness to buy

Occasions: holidays and events that stimulate purchases

Behavioral segmentation has the advantage of using variables that are closely related to the

product itself. It is a fairly direct starting point for market segmentation.

Bases for Segmentation in Industrial Markets

In contrast to consumers, industrial customers tend to be fewer in number and purchase larger

quantities. They evaluate offerings in more detail, and the decision process usually involves

more than one person. These characteristics apply to organizations such as manufacturers and

service providers, as well as resellers, governments, and institutions.

Many of the consumer market segmentation variables can be applied to industrial markets.

Industrial markets might be segmented on characteristics such as:

Location

Company type

Behavioral characteristics

Location

In industrial markets, customer location may be important in some cases. Shipping costs may be

a purchase factor for vendor selection for products having a high bulk to value ratio, so distance

from the vendor may be critical. In some industries firms tend to cluster together geographically

and therefore may have similar needs within a region.

Company Type

Business customers can be classified according to type as follows:

Company size

Industry

Decision making unit

Purchase Criteria

Behavioral Characteristics

In industrial markets, patterns of purchase behavior can be a basis for segmentation. Such

behavioral characteristics may include:

Usage rate

Buying status: potential, first-time, regular, etc.

Purchase procedure: sealed bids, negotiations, etc.

b. Analyze the pricing methods with relevant examples (5 marks)

Ans-

There are several types of costs to consider when conducting a breakeven analysis, so here’s a

refresher on the most relevant.

Fixed costs: These are costs that are the same regardless of how many items you sell. All

start-up costs, such as rent, insurance and computers, are considered fixed costs since you

have to make these outlays before you sell your first item.

Variable costs: These are recurring costs that you absorb with each unit you sell. For

example, if you were operating a greeting card store where you had to buy greeting cards from

a stationary company for $1 each, then that dollar represents a variable cost. As your business

and sales grow, you can begin appropriating labor and other items as variable costs if it makes

sense for your industry.

Setting a Price

This is critical to your breakeven analysis; you can’t calculate likely revenues if you don’t know

what the unit price will be. Unit price refers to the amount you plan to charge customers to buy a

single unit of your product.

Psychology of Pricing: Pricing can involve a complicated decision-making process on the

part of the consumer, and there is plenty of research on the marketing and psychology of how

consumers perceive price. Take the time to review articles on pricing strategyand

the psychology of pricing before choosing how to price your product or service.

Pricing Methods: There are several different schools of thought on how to treat price when

conducting a breakeven analysis. It is a mix of quantitative and qualitative factors. If you’ve

created a brand new, unique product, you should be able to charge a premium price, but if

you’re entering a competitive industry, you’ll have to keep the price in line with the going rate

or perhaps even offer a discount to get customers to switch to your company.

One common strategy is "cost-based pricing", which calls for figuring out how much it will

cost to produce one unit of an item and setting the price to that amount plus a predetermined

profit margin. This approach is frowned upon since it allows competitors who can make the

product for less than you to easily undercut you on price. Another method, referred to by

David G. Bakken of Harris Interactive as "price-based costing"encourages business owners

to "start with the price that consumers are willing to pay (when they have competitive

alternatives) and whittle down costs to meet that price." That way if you encounter new

competition, you can lower your price and still turn a profit. This presentation from Harris

Interactive offers a further explanation of these methods, and About.com offers an overview

of common pricing methods.

The formula: Don’t worry, it’s fairly simple. To conduct your breakeven analysis, take your

fixed costs, divided by your price, minus your variable costs. As an equation, this is defined as:

Breakeven Point = Fixed Costs/(Unit Selling Price - Variable Costs)

This calculation will let you know how many units of a product you’ll need to sell to break even.

Once you’ve reached that point, you’ve recovered all costs associated with producing your

product (both variable and fixed).

Above the breakeven point, every additional unit sold increases profit by the amount of the unit

contribution margin, which is defined as the amount each unit contributes to covering fixed costs

and increasing profits. As an equation, this is defined as:

Unit Contribution Margin = Sales Price - Variable Costs

Recording this information in a spreadsheet will allow you to easily make adjustments as costs

change over time, as well as play with different price options and easily calculate the resulting

breakeven point. You could use a program such as Excel’s Goal Seek, if you wanted to give

yourself a goal of a certain profit, say $1 million, and then work backwards to see how many

units you would need to sell to hit that number. (This online tutorial will show you how to use

Goal Seek.)

Calculators

There are several online calculators to assist you with your breakeven analysis:

Case Western Reserve University offers a breakeven analysis calculator that includes a review

of relevant microeconomic terms.

This financial calculator allows you to chart your costs and profits appear in a graph.

Inc.com offers a breakeven analysis calculator that requires a user to enter in total annual

overhead and annual year-to-date sales and cost of sales, and lets the user delineate the period

for the YTD calculations in terms of weeks.

Bid Pricing :-The stock exchanges use a system of bid and ask pricing to match buyers and

sellers. The difference between the twoprices is the bid/ask spread.

Cost-plus pricing: - It is a pricing method commonly used by firms. It is used primarily because

it is easy to calculate and requires little information. There are several varieties, but the common

thread in all of them is that you first calculate the cost of the product, then include an additional

amount to represent profit. Cost-plus pricing is often used on government contracts, and has been

criticized as promoting wasteful expenditures.

Customary pricing:- is where the product "traditionally" sells for a certain price. Candy bars of

a certain weight all cost a predictable amount -- unless you purchase them in an airport shop.

Dumping Pricing:- The Best example here would be China Dumping the Electronic Goods in

the Indian Market.

Experience curve pricing: -A pricing policy in which a company expands its market share by

fixing a low price that high cost competitors cannot match. For Ex – Spykar Jeans.

Loss Leader Pricing :-The intent of this pricing strategy is to not only have the customer buy

the (loss leader) sale item, but other products that are not discounted. For Eg Big Bazzar.

Prestige pricing:- Cheap products are not taken seriously by some buyers unless they are priced

at a particular level. For example, you can sometimes find clothing of the same quality brand at

Nordstrom as you do at the Men's Warehouse. But because it is priced higher,

Nordstrom's clientele believes it to be of higher quality.

Professional pricing:- Pricing used by people who have great skill or experience in a particular

field or activity. For Eg Corporate Professionals

Promotional pricing :- It is related to the short term promotion of a particular product. For Ex :-

Pricing of a product during its Launch.

Q.2 Explain the benefits and demerits of the different types of advertising media. How will

a marketer decide on the suitable media for his/her products? (10 marks)

Ans-

Newspapers:

Newspapers are one of the traditional mediums used by businesses, both big and small alike, to

advertise their businesses.

Advantages Disadvantages

· Allows you to reach a huge number

of people in a given geographic area 

· You have the flexibility in deciding

the ad size and placement within the

newspaper 

· Your ad can be as large as necessary

to communicate as much of a story as

you care to tell 

· Exposure to your ad is not limited;

readers can go back to your message

again and again if so desired. 

· Free help in creating and producing

ad copy is usually available 

· Quick turn-around helps your ad

reflect the changing market

conditions. The ad you decide to run

today can be in your customers' hands

in one to two days.

· Ad space can be expensive 

· Your ad has to compete against the clutter of other

advertisers, including the giants ads run by supermarkets

and department stores as well as the ads of your

competitors 

· Poor photo reproduction limits creativity 

· Newspapers are a price-oriented medium; most ads are

for sales 

· Expect your ad to have a short shelf life, as newspapers

are usually read once and then discarded. 

· You may be paying to send your message to a lot of

people who will probably never be in the market to buy

from you. 

· Newspapers are a highly visible medium, so your

competitors can quickly react to your prices 

· With the increasing popularity of the Internet,

newspapers face declining readership and market

penetration. A growing number of readers now skip the

print version of the newspaper (and hence the print ads)

and instead read the online version of the publication.

Magazines:

Magazines are a more focused, albeit more expensive, alternative to newspaper advertising. This

medium allows you to reach highly targeted audiences.

Advantages Disadvantages

· Allows for better targeting of audience, as you can choose

magazine publications that cater to your specific audience or

whose editorial content specializes in topics of interest to your

audience. 

· High reader involvement means that more attention will be

paid to your advertisement 

· Better quality paper permits better color reproduction and

full-color ads 

· The smaller page (generally 8 ½ by 11 inches) permits even

small ads to stand out

· Long lead times mean that you

have to make plans weeks or

months in advance 

· The slower lead time heightens

the risk of your ad getting

overtaken by events 

· There is limited flexibility in

terms of ad placement and

format. 

· Space and ad layout costs are

higher

Yellow Pages:

There are several forms of Yellow Pages that you can use to promote and advertise your business.

Aside from the traditional Yellow Pages supplied by phone companies, you can also check out

specialized directories targeted to specific markets (e.g. Hispanic Yellow Pages, Blacks, etc.);

interactive or consumer search databases; Audiotex or talking yellow pages; Internet directories

containing national, local and regional listings; and other services classified as Yellow Pages.

Advantages Disadvantages

· Wide availability, as mostly everyone

uses the Yellow Pages 

· Non-intrusive 

· Action-oriented, as the audience is

actually looking for the ads 

· Ads are reasonably inexpensive 

· Responses are easily tracked and

measured 

· Frequency

· Pages can look cluttered, and your ad can easily get

lost in the clutter 

· Your ad is placed together with all your

competitors 

· Limited creativity in the ads, given the need to

follow a pre-determined format 

· Ads slow to reflect market changes

Radio:

Offers a wide range of publicity possibilities. It is a mobile medium suited to a mobile people. It

reaches the bedroom and breakfast table in the morning and rides to and from work in the car,

lulls us to sleep at night and goes along to the beach, to the woods and on fishing trips, a

flexibility no other medium can match.

Advantages Disadvantages

· Radio is a universal medium enjoyed by

people at one time or another during the day,

at home, at work, and even in the car. 

· The vast array of radio program formats

offers to efficiently target your advertising

dollars to narrowly defined segments of

consumers most likely to respond to your

offer. 

· Gives your business personality through the

creation of campaigns using sounds and

voices 

· Free creative help is often available 

· Rates can generally be negotiated 

· During the past ten years, radio rates have

seen less inflation than those for other media

· Because radio listeners are spread over many

stations, you may have to advertise

simultaneously on several stations to reach your

target audience 

· Listeners cannot go back to your ads to go over

important points 

· Ads are an interruption in the entertainment.

Because of this, a radio ad may require multiple

exposure to break through the listener's "tune-out"

factor and ensure message retention 

· Radio is a background medium. Most listeners

are doing something else while listening, which

means that your ad has to work hard to get their

attention.

Television:

A medium that permits the use of the printed world, spoken word, pictures in motion, color,

music, animation and sound effects all blend into one message, possesses immeasurable potency.

Television has become a dominant force, the primary source of news and entertainment and a

powerful soapbox from which citizens protests can be communicated to the nation and the world.

This medium has greatly altered national election campaigns and has diminished the role of the

political parties. Events made large by TV shape public opinion worldwide.

Advantages Disadvantages

· Television permits you to reach large

numbers of people on a national or regional

level in a short period of time 

· Independent stations and cable offer new

opportunities to pinpoint local audiences 

· Television being an image-building and

visual medium, it offers the ability to convey

your message with sight, sound and motion

· Message is temporary, and may require multiple

exposure for the ad to rise above the clutter 

· Ads on network affiliates are concentrated in

local news broadcasts and station breaks 

· Preferred ad times are often sold out far in

advance 

· Limited length of exposure, as most ads are only

thirty seconds long or less, which limits the

amount of information you can communicate 

· Relatively expensive in terms of creative,

production and airtime costs

Steps to Media Planning

Every media plan begins with target audience. The target audience can be classified in terms of

age, sex, income, education, occupation and other variables. The audience can also be classified

as children teenagers, yound adults, office goers, newly married couples, parents,

grandparents,etc.  i.e DECIDING ON TARGET MARKETS.

The classification of the target audience helps the media planner to understand the media

consumption habits, and accordingly choose the most appropriate media or media-mix The

media planner can also select the most appropriate programme (in case of radio and TV) to insert

advertisement.

Matching media and market

Advertisers must always attempt to match the profile of the target market with the demographic

characteristics of a given medium’s audience.Let us consider an example of cigarette advertising.

The target market for this is men in the age group of 25 to 60 years. The advertiser would

consider placing ads in magazines having a predominantly male readership. Advertising in

magazines having a predominantly female readership would be mostly wasteful for this product.

It may be true that rarely does any magazine have a 100 percent male readership. Even so, when

selecting a predominantly men’s magazine, the advertiser would minimize wasteful expenditure,

Some media, such as general interest consumer magazines and newspapers, network radio and

television offer to an advertiser the means of transmitting ad messages to a cross-section of the

consumer market. Against this, some other media, such as spot radio and television, special

interest magazines, business publications, and some business newspapers offer the means of

reaching selective group of audience. The selectivity offered by some media is useful for

advertisers, for it enables them to reach a distinct target market with minimum waste. In fact, a

great deal of information on the media about their demographic characteristics is provided by the

media themselves.The objective of any media planner is to achieve the best possible matching of

the media and the market.

DECIDING ON MEDIA OBJECTIVES:

The media planner has to decide on the media objectives. Media objectives often are stated in

terms of reach, frequency, gross rating points and continuity.

Media objectives

You can contribute most to the media process in the definition of objectives (what you want the

plan to accomplish). Before media planning can start, companies have to define

the marketingobjectives of the product/ idea proposed to be advertised.

For example, if a professional camera manufacturer decides to launch an automatic camera to

expand his market, his marketing objective would be to reach those segments of the population

who are photo enthusiasts but do not want to be hassled by the intricacies of operation of

professional cameras, the fun loving people who want to capture moments of joy and

togetherness. The manufacturer may also target the existing professional camera users to

consider a replacement in order to have the pleasure of an automatic camera, which obviously

will be faster, having mastered the manual one. The marketing objective, hence, would be to

extend distribution into new geographic markets or income groups as also the current users of

cameras 

The following could be the media objectives

To reach photo enthusiasts of that age and income group who are the chief purchasers.

To concentrate the greatest weight in urban areas where the target audience would

normally be found and where new ideas gain a quicker response.

To provide advertising support at a consistent level except when it needs extra weight

during announcements and the holiday season, when such target buyers are planning to

visit exotic places or to meet their kith and kin.

To select those media, which will help strengthen the creative strategy and help

demonstrate convenience, ease of shooting and, of course, excellent results. The “Hot

Shot” camera with the’Khatak’ sound became an instant success with the photo

enthusiasts in the late eighties in India.

To reach target buyers through those media to gain greater frequency and lesser cost per

opportunity

Media objectives are built around answers to five questions: who, when, where, how often, and

in what way?

MEDIA EVALUATION 

After the objectives are defined there is a need to evaluate each media in order to reach a

conclusion about the type of media that will be most effective for the accomplishment of the

objectives.

The objects of the evaluation are:

To see which media are feasible.

To pick the main medium.

To prepare for the decision on how it should be used.

To see whether there are suitable supporting media if required.

Creative suitability:

There may be obvious reasons why a particular medium is especially suitable for the campaign

or another is unsuitable, a coupon is to be included or the absence of colour is critical. Often the

preference of the creative group is not backed up by concrete evidence but they have strong

views nevertheless about the media to use and those not to use.

The agency is not in the business of reaching consumers with exposures of advertisements

(which tend to be the media department’s natural criterion), but in the business of selling the

product. So if the creative choice looks at all reasonable in media terms, it is usually sensible for

the planning to accept it.

Sometimes the creative choice is unreasonable and may have been reached without full

consideration of the alternatives.

An idea:

Sometimes a media idea, or better an idea which involves media and creative content, is

‘obviously’ right or simply a novelty, which is expected to attract attention and so work. A press

advertisement in the shape of the product, using publications that have never before carried this

type of advertising, a radio commercial announcing ‘officially’ there is now no shortage of the

product, a TV commercial that starts with silence and black screen, a poster that looks like a

shop window and so on. Sometimes a change is as good as an increased budget.

Proven effectiveness:

When there is evidence that a particular medium is the most efficient, the choice is obvious. The

evidence may come from the tests on our own product or from a study of competitor’s activities.

The advertiser often insists on using the same medium as before, even without testing its

effectiveness. The best predictor of an advertising schedule is the schedule for the previous year.

This is not always laziness. It is partly because the media scene is not very different from year to

year: media change is dictated by a major shift in the market place, a new medium, a new

definition of the target, or a new advertising idea. Advertisers resist change because it involves

more risk than to continue with a proven, viable strategy.

Availability and timing:

The type of product or copy claim may prevent the use of a medium- this is most likely to rule

out TV, on which, for example cigarettes are not advertised. The flexibility required by the

advertiser, for example being able to cancel or change advertising at a few days’ notice, may also

rule out a medium-for example it may make colour press impossible.

Competition:

“We can’t come off the box, that’s where our competitors are.”

‘Look, there’s no advertising for this product in women’s magazines: let’s dominate there.’

Of the two policies- match the competition or avoid it- the first is more common in media choice.

This may be because the main purpose of the advertising is defensive- to reassure existing buyers

and reassure existing buyers and diffuse competitors’ attacks. It may also be a fear of leaving

him to dominate a medium. Or the medium normally chosen is simply the most suitable for that

product group. Or the consumer and the trade have come to expect the advertising to be in that

medium and look for it there, so it works best there.; on the same principle, shops often do better

together in the High Street than scattered over the town.

These arguments apply to large advertisers: McDougalls will not leave spillers to be the only

large flour manufacturer on TV, nor Cadburys leave TV to Mars. But for the small budgets it

could be inefficient to hit competition at knee-level. A small advertiser might do better to

dominate a less used medium.

CHOOSING AMONG MAJOR MEDIA TYPES:

The media planner has to know the capacity of the major media types to deliver reach,

frequency, and impact. The major advertising media along with their costs, advantages, and

limitations are to be well understood. Every media plan requires that specific media types be

selected – Doordarshan, Direct mail, satellite TV, newspapers, magazines, etc. Media planners

must consider several variables before choosing among major types:

Target –audience media habits:

This is the most important factor. Housewives watch more of television, whereas, working

women go for magazines. Again television programmes have different viewers. For instance,

“world this week” is viewed by teenagers and young adults. Therefore, it would be advisable to

advertise during “World this week” such products which are of interest to teenagers and young

adults. Radio and television are the most effective media for reaching teenagers.

Products:

Products that require demonstration can suit for television. For example, the demonstration of the

use of a vacuum cleaner by Eureka Forbes. Financial advertising such as new issue of shares is

good in newspapers. Women's dresses are best shown in color magazines, and Polaroid cameras

a best demonstrated on television. Media types have different potentials for demonstration,

visualization, explanation, believability, and color.

Again there are media restrictions on certain products. For instance, alcoholic drinks and

cigarettes cannot be advertised in press as well as on DD and AIR, hence these two options are

totally ruled out.

Message:

The type of message dictates the type of media. For example, an ad that features technical

information is best suited for specific magazines. Again, an ad from retailer announcing major

sale on discount requires more of local newspapers.

Cost Factor:

Television is very expensive, where as, radio is very economical. However, cost is not the only

factor, even if it is calculated on the basis of cost per- person reached. The impact of the media is

to be taken into account.

SELECTING SPECIFIC MEDIA VEHICLES

Once a decision is made on media types, specific media vehicles within each medium must be

chosen. For instance, the media planner may take a decision to select only magazines. The

question now appears in which magazines. There are several classes of magazines- General

interest like Reader’s digest, Women Interest magazines like Femina, Savvy, Elle, Business

interest magazines like Business India, Business Today. If the decision is to select Business

Interest Magazines- then the media planner may consider the following:

Business India

Business World

Fortune India

Dalal Street Journal

Business Today

Advertising & Marketing

Q.3 Write a note on new product development and product mix. (10 marks)

Ans-

Marketing mix is an imperative concept in modern marketing and academically it is referred to

as the set of controllable tools that the firm blends to produce the response it wants in the target

market, so it consists of everything the firm can do to influence the demand for its product

(Kotler and Armstrong, 2004). It is important to realise that marketing mix strategy of any

company can have one major function, that is, strategic communication of the organisation with

its customers (Proctor, 2000). It was further argued that marketing mix provides multiple paths

as such communication can be achieved either in spoken form and written communications

(advertising, selling, etc.) or in more symbolic forms of communication (the image conveyed in

the quality of the product, its price and the type of distribution outlet chosen). However, the key

element is that the main aspects of marketing mix that will be discussed below "should not be

seen as individual entities, but as a set of interrelated entities which have to be set in conjunction

with one another" (Proctor, 2000: 212). 

Main Aspects of Marketing Mix

The easiest way to understand the main aspects of marketing is through its more famous

synonym of "4Ps of Marketing". The classification of four Ps of marketing was first introduced

and suggested by McCarthy (1960), and includes marketing strategies of product, price,

placement and promotion. The following diagram is helpful in determining the main ingredients

of the four Ps in a marketing mix.

Product

In simpler terms, product includes all features and combination of goods and related services that

a company offers to its customers. So theAirbusproduct includes its body parts such as the

engine, nut bolts, seats, etc along with its after-sales services and all are included in the product

development strategy of the Airbus. However, a serious criticism can be raised here in terms of

how marketing mix analysis will cater for companies such as ABN Amro Bank,Natwest

Bank, British Airways and Fedex Corporation as they don't possess tangible products. It was

argued that is it feasible to omit service-oriented companies with the logic that the term

"services" does not start with a "P", however, it was asserted that these companies can use the

terminology of "service products" under marketing mix strategy making (Kotler & Armstrong,

2004).

Lazer (1971) argued that product is the most important aspect of marketing mix for two main

reasons. First, for manufacturers, products are the market expression of the company's productive

capabilities and determine its ability to link with consumers. So product policy and strategy are

of prime importance to an enterprise, and product decisions dictate the scope and direction of

company activity. Moreover, the market indicators such as profits, sales, image, market share,

reputation and stature are also dependent on them. Secondly, it is imperative to realise that the

product of any organisation is both a component and a determinant of the marketing mix as it has

a great influence on the other elements of the mix: advertising, personal selling, channels of

distribution, physical distribution and pricing. So without proper product policy, a company can

not pursue for further elements of marketing mix.

Pricing

Pricing is basically setting a specific price for a product or service offered. In a simplistic way,

Kotler and Armstrong (2004) refer to the concept of price as the amount of money that customers

have to pay to obtain the product. Setting a price is not something simple.  Normally it has been

taken as a general law that a low price will attract more customers. It is not a valid argument as

customers do not respond to price alone; they respond to value so a lower price does not

necessarily mean expanded sales if the product is not fulfilling the expectation of the customers

(Lazer, 1971).

Generally pricing strategy under marketing mix analysis is divided into two parts: price

determination and price administration (ibid).

Price determination is referred to as the processes and activities employed to arrive at a price for

a product including consideration of relative prices of products within the same line, and

differences in price for similar products of differing grades and qualities.

Price administration is referred to as the activities involved in fitting basic prices to particular

sales situations such as geographic locale, functions performed by customers, position of

distribution channel members, or special sales situations. An example of this is special

discounted prices at, for instance, GAP,NEXTetc or Coca ColaandPepsiwheredifferent prices are

set in different geographical areas considering the difference in patterns of usage as well as

varying advertisement costs.

Placement

Placement under marketing mix involves all company activities that make the product available

to the targeted customer (Kotler and Armstrong, 2004). Based on various factors such as sales,

communications and contractual considerations, various ways of making products available to

customers can be used (Lazer, 1971). Companies such as Ford, Ferrari, Toyota, and Nissan use

specific dealers to make their products available, whereas companies such asNestle involve a

whole chain of wholesaler retailers to reach its customers. On a general note, while planning

placement strategy under marketing mix analysis, companies consider six different channel

decisions including choosing between direct access to customers or involving middlemen,

choosing single or multiple channels of distributions, the length of the distribution channel, the

types of intermediaries, the numbers of distributors, and which intermediary to use based on the

quality and reputation (Proctor, 2000)

Promotion

Promotional strategies include all means through which a company communicates the benefits

and values of its products and persuades targeted customers to buy them (Kotler and Armstrong,

2004). The best way to understand promotion is through the concept of the marketing

communication process. Promotion is the company strategy to cater for the marketing

communication process that requires interaction between two or more people or groups,

encompassing senders, messages, media and receivers (Lazer, 1971). Taking the example

of Nokia, the sender of the communication in this case is Nokia, the advertising agency, or both;

the media used in the process can be salesmen, newspapers, magazines, radio, billboards,

television and the like. The actual message is the advertisement or sales presentation and the

destination is the potential consumer or customer, in this case mobile phone users.

Limitation of Marketing Mix Analysis (4Ps of Marketing)

Despite the fact that marketing mix analysis is used as a synonym for the 4Ps of Marketing, it is

criticised (Kotler & Armstrong, 2004) on the point that it caters seller's view of market analysis

not customers view. To tackle this criticism, Lauterborn (1990) attempted to match 4 Ps of

marketing with 4 Cs of marketing to address consumer views:

Product – Customer Solution 

Price – Customer Cost

Placement – Convenience

Promotion – Communication

How to Write a Good Marketing Mix Analysis

To follow a simple and best approach for marketing mix analysis, it is imperative to understand

the purpose of this analysis. So the basic key is to analyse the company's overall marketing

strategy primarily through the strategies it follows under the 4Ps of marketing.

So the approach should be to keep equal balance in analysing all four elements of marketing mix.

The following points should be considered while carrying out analysis:

While analysing a company's product, a common fallacy can be focusing on the final

outlook of the product and that gives rise to a naïve approach. Analysts should consider

and analyse all major product decisions that the company may have carried out including

quality, features, options, style, brand name, packaging, sizes, after-sales services,

warranties, returns, etc. Moreover, the company's position, as well as marketing strategy

in the market, can be judged on the basis of its product mix including width, length, depth

and consistency (Proctor, 200). Width is the number of lines the firm carries, for

example Sony has various lines including TV, video, cameras and laptops. Length is the

number of items in the product mix, for example Toshibahas different types of TVs and

laptops. Depth is the number of variants of each product offered in the line such as clock

radios, car radios and pocket radios. Finally, consistency is how closely related the

various product lines are in terms of the use to which they are put, more commonly

including electrical and entertainment products. So, using these bases for product strategy

classification will lead to easy and effective analysis. Finally, one should attempt to

identify what the company is actually aiming at through its product. There can be three

possible product strategies in a company's action (Proctor, 2000). Either it aims the

product at the market such asErickson with new mobile phones to cater for the business

class; it can be given a "face lift" such as Marks & Spencer'sattempt with more customer-

specific products; and it can be withdrawn, discontinued or eliminated such as Marks &

Spencer closing down its unprofitable units across the globe.

To write a valuable pricing analysis of a company, the key is to correlate its pricing

strategy with its product position in the market. The company may use various pricing

strategies such as penetration, skimming, competition-based pricing, psychological

pricing, price wars, etc (Proctor, 2000). A company uses penetration prices if its product

is entirely new to the market so it may charge low prices to increase market share. It may

be observed thatPorsche and Ferrariuse skimming pricing where they may charge a

higher price as they know their specific customers will buy their product at any price.

Sometimes companies have more fluctuating prices so an analyst should consider that

their might be competition going on or a price war has broken through between rivals.

For instance,Pepsi and Coke often indulge in such price wars. Sometimes psychological

dimensions can be considered as well. Customers easily find products

in Tesco,Asda or Sainsbury'swith price tags of £2.99 or £4.99 rather than £3 or £5 as

customers may perceive them as £2 or £4. So the writer must analyse which of these

strategies a company is following and for what reason.

Similarly, placement analysis requires the knowledge of a company's distribution

channels, for instance analysis of the fact that a company is involving any middleman or

not. If analysis of a consumer-good producer such as Nestle,Cadbury, and Colgate &

Palmolive is carried out, there are high chances that a middleman will be involved

considering the size of the market in target. However, industrial producers such

as Airbus may opt for direct distribution considering the limited number of customers.

Similarly, it should be noted that a company may be using a specific intermediary if the

ease, reliability, image of the particular outlet, the way in which it performs and the deals

which can be struck with the distributor are satisfactory. So, a company may choose

C&A rather thanMarks and Spencer, or Tesco rather than any other retail outlet (Proctor,

2000). On a general note, a very good analysis can be made if the placement related the

six questions highlighted in previous sections are tackled.

Finally, the basic step in promotion analysis is to identify the communication objective

that the company is aiming at. There can be multiple communication objectives that can

be identified. One should analyse how the promotion strategy is aimed at creating

awareness of the product or service, provision of product information, brand recognition,

gaining access to a target audience that is inaccessible to a salesman, evoking desire for a

product or service, merely making the selling task easier, overcoming prejudices, creating

a reminder or to allay cognitive dissonance (Proctor, 2000). Once the communication

objective is identified, then it is imperative to analyse the message and the promotional

mix that is used by the company including advertisement, sales promotion, publicity and

personnel selling. For Instance Nike very rarely uses personal selling due to its

established brand awareness, however, it continually uses advertisements with

communication objective of creating a product reminder. Contrary to that,Unilevermay

use personal selling, advertisements as well as offering discounts (sales promotion) if it

launches a new consumer good such as toothpaste or soap to cater for the communication

objective of creating new product awareness.

Q.4. Select any brand of toilet soap and evaluate its positioning strengths or weaknesses in

terms of attributes, benefits, values, brand name and brand equity. Also, examine how

competitive brands influence the marketing strategies of the selected soap. (10 marks)

Ans-

Toilet Soap:-

LUX

Lux soap was first launched in 1916 as laundry soap targeted specifically at 'delicates'. Lever

Brothers encouraged women to home launder their clothes without fear of satins and silks being

turned yellow by harsh lyes that were often used in soaps at the time. The flake-type soap

allowed the manufacturer some leeway from lye because it did not need to be shaped into

traditional cake-shaped loaves as other soaps were. The result was a gentler soap that dissolved

more readily and was advertised as suitable for home laundry use.

Lux toilet soap was introduced in 1925 as bathroom soap. The name 'Lux' was chosen as a play

on the word "luxury." Lux has been marketed in several forms, including bar and flake and liquid

(hand wash, shower gel and cream bath soap).

Lux in step with the changing trends and evolving beauty needs of the consumers, offers an

exciting range of soaps and Body Washes with unique elements to make bathing time more

pleasurable. One can choose from a range of skincare benefits like firming, fairness and

moisturising. 

Lux stands for the promise of beauty and glamour as one of India's most trusted personal care

brands. Since its launch in India in the year 1929, Lux has offered a range of soaps in different

colours and world class fragrances. Lux is a beauty soap of film stars. Lux recognized the need

for a compelling message about beauty that would resonate with women of today.

From the 1930s right through to the 1970s, Lux soap colours and packaging were altered several

times to reflect fashion trends. In 1958 five colours made up the range: pink, white, blue, green

and yellow. People enjoyed matching their soap with their bathroom colours.

In the early 1990s, Lux responded to the growing trend away from traditional soap bars by

launching its own range of shower gels, liquid soaps and moisturizing bars. Lux beauty facial

wash, Lux beauty bath and Lux beauty shower were launched in 1992.

In 2004, the entire Lux range was re-launched in the UK to include five shower gels, three bath

products and two new soap bars. 2005 saw the launch of three exciting new variants with dreamy

names such as “Wine & Roses” bath cream, “Glowing Touch” and “Sparkling Morning” shower

gels. 

Lux has recently launched its two fruit extract variants – New Lux Strawberry & Cream and Lux

Peach & Cream contain a blend of succulent fruits & luscious Chantilly cream. The most recent

addition in the brand is Lux Crystal Shine.

Study of LUX with respect to 4 P’s

a. Product

A product is anything that can be offered to a market to satisfy a need or want. Products that are

marketed include physical goods, services, experiences, events, persons, places, properties,

organizations, information and ideas.

Product Classification

• LUX is a Tangible, Non Durable Good on the basis of this classification.

• LUX and other soaps fall into the category of Convenience Good

Product Life Cycle

LUX Beauty Bar is in the maturity stage of its life cycle.

Some of the prominent variants

Lux Almond 

Lux Orchid 

Lux Fruit

Lux Saffron 

Lux Sandalwood 

Lux Rose 

Lux International 

Lux Chocolate 

Lux Aromatic Extracts 

Lux Oil and Honey Glow

Lux Provocateur

LUX Beauty Soap- Form, Features, Style

With icons of beauty endorsing the brand, the offerings made by Lux have always been superior

and have always led the market, setting benchmarks for competition.

Lux has beauty offerings in two of the four market segments – popular and premium, spanning

the needs of varied consumers. 

Lux Toilet Soap in the popular segment has in the past years offered its consumers a range of

soaps enriched with the goodness of a variety of nourishing ingredients – rose extracts, almond

oil, milk cream, fruit extracts and honey which are known to harbour the secrets of incredibly

perfect skin. 

At the upper end of the market is the premium range which continues to offer specialised

skincare to its consumers in the form of International Lux – a range of moisturising, deep

cleansing and sunscreen soaps.

To establish the presence of nourishing ingredients in the new Lux, a unique concept,

‘ingredients you can see in the soap’, was born. A novel metallic substrate packaging beautifully

showcased the ingredients and its globally accepted ingredient-linked perfumes heightened the

sensorial experience. 

Each of the soaps in the range has milk cream, with the active ingredients of rose extracts, sandal

saffron, almond oil and fruit extracts. These create an experience in pampering indulgence and

luxury designed to bring out the star in every woman. This is the first time in the Indian chapter

of the brand that the beauty bar variant was being differentiated on the basis of its ingredients

rather than its perfume and colours.

Though Lux International, a premium variant of the toilet soap, launched in 1989, is

differentiated on the basis of its ingredients, the popular version, Lux Beauty Bar was always

projected as a “pure and mild” solution to soft and smooth skin.

Logo

Labelling

The LUX Trade Character or Logo is present prominently on the package. A novel metallic

substrate packaging showcases the ingredients, and a female model is shown on the pack. Also

displayed graphically are the key ingredients.

Packaging

The colors are different for different variants such as saffron for the saffron variant, pink for the

rose extracts etc.The Bars come in package sizes of 100g, 120g, 150 g

Lux has also launched a 45 g variant called Mini Lux priced at Rs. 5.

b. Promotion

The great Indian brand wagon started nearly four decades ago. Great brands sometimes outlast

their ambassadors as proven by Lux which celebrated its 75th anniversary in India.

The first ambassador, Leela Chitnis featured in a Lux advertisement which flagged off the Lux

wagon. She gave way to a galaxy of stars which includes Madhubala, Nargis, Meena Kumari,

Mala Sinha, Sharmila Tagore, Waheeda Rehman, Saira Banu, Hema Malini, Zeenat Amaan, Juhi

Chawla, Madhuri Dixit, Sridevi, Aishwarya Rai and Kareena Kapoor. The last frontier for most

actors aspiring to stardom is becoming a Lux ambassador. The brand has outlasted many soaps.

From the beginning, Lux became a household name across the country. 

Advertising

Advertising is any paid form of non-personal presentation and promotion of ideas, goods and

services by an identified sponsor. Ads can be a cost effective way to disseminate messages,

whether to build a brand preference or to educate people.

LUX ADVERTISEMENTS THROUGH THE AGES

Leela Chitnis in the first Lux print adverstisement featuring an indian actress

Aishwarya Rai in a print advertisement featuring Lux international

Priyanka Chopra in the latest Lux advertisement

• USP or the common thread through all the advertisements is the Presence of Movie Stars

through the ages.

• The product has been positioned on the basis of REFERENCE GROUP by using a celebrity

popular at that point in time.

• Some amount of attribute positioning by mentioning the various ingredients has also been done.

Lux campaigns have wooed millions of people over the decades. Popularly known as the beauty

soap of film stars, Lux has been an intimate partner of the brightest stars on the silver screen for

decades. An ode to their beauty, an announcer of their stardom, advertising campaigns on Lux

have featured film stars across the nation, promising their beauty and complexion to ordinary

women. 

With top movie stars – from Madhubala to Madhuri, from Babita to Karisma and Kareena having

endorsed the goodness of Lux over generations, it was natural that the brand has built equity as

the best beauty soap in India. 

From the beginning Lux, by using a leading film star of the time, has fulfilled the consumers’

aspirations of using beauty soaps via the rationale ‘if it’s good enough for a film star, it’s good

for me. This later moved into a transformation role of having a bath with Lux, which transports

the user into a fantasy world of icons, film stars and fairy lands. 

Change in communication strategy

However, the communication was slowly seen to be losing relevance, as consumers were

beginning to question if the film star actually used the brand. 

In addition to this, several competitive beauty soap brands had begun advertising using similar

methods of communication. In this context, the global brand team for Lux developed a new

communication strategy. This strategy – bring out the star in you – for the first time moved the

brand away from the long-running film star route. The film star still features in the new

communication but not as her gorgeous self but rather as an alter ego/projection of the

protagonist (a regular girl), for a few seconds of the entire ad. 

Thus, for the first time the film star was used as a communication device and not as the main

feature of the ad. The move away from the film star and her fantasy world to a regular Lux user,

with the focus on the protagonist’s star quality, is a change from the norms set by Lux

advertising in the past. With the new communication strategy, the film star is used purely as a

communication device to portray star quality in every Lux user. This can be significantly seen in

the latest TV commercial of Lux Crystal Shine where Priyanka Chopra is portrayed as a normal

woman.

This idea – bring out the star in you – puts the consumer at the heart of the brands’ promise. This

promise goes beyond the functional deliverables of soap, beyond bathing and the bathroom to the

world outside. It’s a world where with Lux on her side, an ordinary woman can impact her world

with her own star quality. 

This is a successful attempt to bring the brand closer to its users and to give it a more youthful

and contemporary image. 

Breaking away from tradition, HLL resorts to a male and metro sexual Shah Rukh to revive Lux,

which turned 75 in 2005. 

Sales Promotion

Sales promotion, a key ingredient in marketing campaigns, consists of a collection of incentive

tools, mostly short term, designed to stimulate quicker or greater purchase of particular products

or services by consumers or the trade.

Whereas advertising offers a reason to buy, sales promotion offers an incentive to buy.

Sales promotion includes tools for

Prominent Sales Promotion Schemes Used By LUX 

• Lux presented 30 gm gold each to the first three winners of the Lux Gold Star offer from Delhi.

According to the promotional offer that Lux unveiled in October 2000, a consumer finding a 22-

carat gold coin in his or her soap bar got an opportunity to win an additional 30 gm gold. The

first 10 callers every week got a 30 gm gold each.

The offer could be availed only on 100 gm and 150 gm packs of Lux soap.

• Lux Star Bano, Aish Karo contest: All one needed to do was buy a special promotional pack of

Lux soap. The pack comes with a special scratch card. The 50 lucky winners and their spouses

were flown down to Mumbai to live a day like Aishwarya Rai would. They could also be given

gift vouchers worth Rs 50,000 from Shoppers' Stop along with an exclusively designed Neeta

Lulla sari and a beauty makeover by Michelle Tung, Aishwarya's preferred designer and stylist.

The pièce de résistance was a dinner date with Aishwarya Rai herself. 

• Lux celebrated 75 years of stardom with the Har Star Lucky Star activity.

All wrappers of Lux had a star printed inside them. If the consumer found written inside the star,

any number from “1” to “5”, she would get an equivalent discount (in rupees) on her purchase

from her shopkeeper. If the consumer found “75 years” written inside the star, she will get a

year’s supply of Lux free.

Online contests:

Play the supercharged version of the hit puzzle game, Bejeweled. Create rows of 3 or more

identical stones and you could win a trip for two to a five-star Resort in Goa. 

Public Relations:

Not only must the company relate constructively to customers, suppliers and dealers, it must also

relate to a large number of interested publics. A public is any group that has an actual or

potential interest in or impact on a company’s ability to achieve its objectives. PR involves a

variety of programs designed to promote or protect a company’s image or its individual products.

LUX PR Activities

• Press relations:

Lux has been maintaining constant communicating with its customers and potential customers,

of the various developments taking place in the brand by using press relations.

• Events:

Lux celebrated 75 years of existence in a grand way by unveiling Shahrukh Khan as their latest

brand ambassador. Kareena Kapoor, Juhi Chawla, Sridevi and Hema Malini graced the event and

made it special. All the stars have endorsed Lux in the past. The event was held at the grand

Intercontinental in Mumbai.

Limited edition:

Coming up with limited edition of the brand is also a way of attracting attention towards the

brand. It creates a buzz and a feeling of urgency to try out the product and helps in promotion of

the brand. This strategy was also implemented by Lux by bringing out limited editions like

Chocolate Seduction, Aromatic Glow, Festive Glow and Haute Pink. 

c. Price

If price is too high then a company may never sell a single item of it. If price is too low then one

can lose money on every sale once all of costs of doing business are considered. Therefore the

key is to price it in such way that it appears attractive to the customer as well as profitable to the

company. HUL seems to have mastered this idea. Prices of HUL are considered the most

competitive in Indian market. The main fact for this huge success story is the strategic pricing

decision the company has adopted from time to time.

HUL always gives value for money to their consumers. It is known for its competitive pricing. It

has the advantage of quoting a reasonable price due to its economies of scale. HUL also can

quote a very competitive price due to its superior technology and optimum utilization of

inventory. It has the product range that meets the needs of all classes of consumers. It has the

products that are categorized as premium and mass products. HUL matches its prices with the

competitor who is operating in the same category. HUL also gives price offs on its products to

reward consumers who are using it for a long time and also to attract new consumers. 

The price of the premium segment products is twice that of economy segment products. The

economy and popular segments are 4/5ths of the entire soaps market.

Price segments of toilet soaps

Segment Price/weight

Premium > Rs. 15 / 75 gms

Popular Rs. 8-15/75 gms

Economy < Rs. 8 /75 gms

However, recently HUL has been forced to hike its price by one rupee, to Rs17 (for 100 gm),

giving in to the pressures of inflation. This paves the way for competing soap makers like Godrej

Consumer Products (GCPL) to take price increases. 

Lux has versions in all the three price segments:

Recent pricing of Lux (100 g)

Lux Crystal Shine Rs 17

Lux Festive Glow Rs 15

Mini Lux Rs 5

d. Place

Cutting-edge distribution network

HUL’s distribution network is recognized as one of its key strengths -- that which helps reach out

its products across the length and breadth of this vast country. The need for a strong distribution

network is imperative, since HUL’s corporate purpose is “to meet the everyday needs of people

everywhere.”

At Hindustan Unilever Limited, distribution network is one of the key strengths that help them

reach their products across the length and breadth of this vast country. It has 2000+ suppliers and

associates 7,000 stockists and direct coverage in over 1 million retail outlets across India.

To meet the ever-changing needs of the consumer, HUL has set up a distribution network that

ensures availability of all their products, in all outlets, at all times. This includes, maintaining

favourable trade relations, providing innovative incentives to retailers and organizing demand

generation activities among a host of other things. HUL boasts of placing a product across the

country in less than 72 hrs.

The first phase of the HUL distribution network had wholesalers placing bulk orders directly

with the company. Large retailers also placed direct orders, which comprised almost 30 per cent

of the total orders collected.

Today, the goods are transferred from the factory to the company warehouses and are sent to the

distributor from there on a daily basis. From the distributor, the stock reaches the market through

daily sales. Typically, these include the salesman registering the order of a retail outlet and

delivering the goods the next day.

Recently HUL has changed its traditional way distribution and came out with a new strategy of

distribution. It‘s because of the change in buying pattern of the consumer due to more disposable

income. There are different channels of distribution like Modern Trade, which covers all chains

of super markets like Food World, who get the stocks directly from the company. Wholesalers

and second leg of big retail outlets called Super Value stores come under the surveillance of the

distributor along with the mass retail outlets. There is also this new concept in the HUL

distribution channel called Kiosk. Kiosk is a small shop that sells only sachets and low priced

items (below Rs.10/-). Kiosk also does not come under the surveillance of the distributor.

In addition to the ongoing commitment to the traditional grocery trade, HUL is building a special

relationship with the small but fast emerging modern trade. HUL's scale enables it to provide

superior customer service including daily servicing, improving their range availability whilst

reducing inventories. HUL is using the opportunity of interfacing more directly with consumers

in this retail environment through specially designed communication and promotions. This is

building traffic into the stores while yielding high growth for the business.

RSNet

An IT-powered system has been implemented to supply stocks to redistribution stockists on a

continuous replenishment basis. The objective is to catalyse HUL’s growth by ensuring that the

right product is available at the right place in right quantities, in the most cost-effective manner.

For this, stockists have been connected with the company through an Internet-based network,

called RSNet, for online interaction on orders, dispatches, information sharing and monitoring.

RS Net covers about 80% of the company's turnover. Today, the sales system gets to know every

day what HUL stockists have sold to almost a million outlets across the country. RS Net is part

of Project Leap, HUL's end-to-end supply chain, which also includes a back-end system

connecting suppliers, all company sites and stretching right up to stockists. Powered by the IT

tools it has improved customer service, while ensuring superior availability and impactful

visibility at retail points.

For rural India, HUL has established a single distribution channel by consolidating categories. In

a significant move, with long-term benefits, HUL has mounted an initiative, Project Streamline,

to further increase its rural reach with the help of rural sub-stockists. As a result, the distribution

network directly covers about 50,000 villages, reaching about 250 million consumers.

Distribution will acquire a further edge with Project Shakti, HUL's partnership with Self Help

Groups of rural women. The project, started in 2001, already covers over 5000 villages in 52

districts of Andhra Pradesh, Karnataka Madhya Pradesh and Gujarat, and is being progressively

extended. The vision is to reach over 100,000 villages, thereby touching about 100 million

consumers. The SHGs have chosen to adopt distribution of HUL's products as a business

venture, armed with training from HLL and support from government agencies concerned and

NGOs. A typical Shakti entrepreneur conducts business of around Rs.15000 per month, which

gives her an income in excess of Rs.1000 per month on a sustainable basis. As most of these

women are from below the poverty line, and live in extremely small villages (less than 2000

population), this earning is very significant, and is almost double of their past household

income. 

For HUL, the project is bringing new villages under direct distribution coverage. Plans are being

drawn up to cover more states, and provide products/services in agriculture, health, insurance

and education. This will both catalyse holistic rural development and also help the SHGs

generate even more income. This model creates a symbiotic partnership between HUL and its

consumers, some of whom will also draw on the company for their livelihood, and helps build a

self-sustaining cycle of growth.

SWOT ANALYSIS

SWOT analysis is a basic, straightforward model that provides direction and serves as a basis for

the development of marketing plans. It accomplishes this by assessing an organizations strengths

(what an organization can do) and weaknesses (what an organization cannot do) in addition to

opportunities (potential favorable conditions for an organization) and threats (potential

unfavorable conditions for an organization). The role of SWOT analysis is to take the

information from the environmental analysis and separate it into internal issues (strengths and

weaknesses) and external issues (opportunities and threats). Once this is completed, SWOT

analysis determines if the information indicates something that will assist the firm in

accomplishing its objectives (a strength or opportunity), or if it indicates an obstacle that must be

overcome or minimized to achieve desired results (weakness or threat) (Marketing Strategy,

1998).

The SWOT analysis summarizes the external environmental factors as a list of opportunities and

threats.

SWOT PROFILE OF LUX

STRENGTHS

1.Strong Market Research (door to door sampling is done once a year in Urban and Rural areas)

2.Many variants (Almond Oil, Orchid Extracts, Milk Cream, Fruit Extracts, Saffron, Sandalwood

Oil, and Honey to name a few)

3.Strong sales and distribution network backed by HLL

4.Strong brand image

5.Positioning focuses on the attractive beauty segment

6.Dynamically continuous innovation of the product and brand rejuvenation – new variants

(Aromatic Glow and Chocolate Seduction and Lux White Spa body wash) and innovative

promotions (22 carat gold coin promotion – ‘Chance Hai’)

7.Perceived to have high value for money (strong brand promotion but relatively lower price

which is a winning combination in the popular segment)

8.Though it is in popular segment, it is having mass appeal/market presence across all segments

(15% of the soap market captured by Lux (sales / volume)

9.Unique advantage of having access to resources and assets of HLL

WEAKNESSES

1.Lux is mainly positioned as beauty soap targeted towards women, hence it lacks unisex appeal

2.Usage rate/ wear rate is high and is generally mushy and soggy

3.Some variants like the sunscreen, International variant did not do well in the market 

4.Certain advertisements like the recent one with Shah Rukh Khan resulted in controversial

interpretations of the message of the advertisement and lead to some loss of focus (of message of

the advertisements)

5.Stock out problems - replenishment time is high in semi-urban/rural areas

6.Earlier positioning as the “soap of the stars” has somewhat alienated the brand from a portion

of the consumers especially in rural areas.

OPPORTUNITIES

1. Soap industry growing by 10% in India

2. Beauty segment’s Compounded Annual Growth Rate (CAGR) is very high. An indication of

this is that Fair and Lovely’s segment is increasing at a fast rate - Lux must reinforce its presence

in the beauty segment

3. More promotions like price-offs and samples

4. Retentive strategy required as the soap segment is in the mature stage of its product life cycle

5. Line extension – probably with more variants catering to the beauty segment like natural,

herbal soap etc

6. Liquid body wash is currently in the growth stage – Lux should come out with more variants

in this segment

7. Level of servicing is high during sales promotion schemes – this could be brought down

8. It has a large market share and hence has a strong hold over the market

THREATS

1. New entrants/local competitors/MNCs would increase the competition (Camay, P&G)

2. High internal competition – Pears also catering the beauty segment (also from HLL stable)

3. Excessive dependence on beauty segment makes Lux vulnerable to changing customer tastes

4. Technological change makes the existing products obsolete – Lux should focus on

technological innovations like Body Wash

5. Its in the maturity stage in the Product Life Cycle and has a threat of slipping down to decline

stage if constant reinvention of the brand is not carried out.

Competitor analysis

Internal competitors

Lifebuoy:

Born: 1895

History: Owned by Unilever Plc., the parent company of Hindustan Unilever Ltd.

Status: Has 18% market share in the bathing soaps category, worth Rs6,000 crore

Lifebuoy landed on Indian shores in 1895, when the country was in the grip of a plague

epidemic. With its positioning as a powerful germicidal and disinfectant, and with a strong

carbolic smell, it was what the nation was looking for. But the health advantage waned over time

as competitors came out with soaps that promised both health and beauty.

It was around 2002 that the product moved from being a hard soap to a mild soap that delivered a

significantly superior bathing experience. The new soap had a refreshing fragrance and its

overall positioning changed, painting its promise of health in softer, more versatile and

responsible hues—for the entire family. The packaging was also changed: The rugged looking

packs were soon replaced with a softer pinkish cover. This was followed by a series of ads

highlighting the soap’s germ-fighting benefits.

Lifebuoy had become a family soap with hygiene as its core promise. Right from the early days,

the brand has preferred effective communication to celebrities. An exception is its recent, limited

exposure campaign with cricketer Yuvraj Singh.

External Competitors

Santoor:

Santoor is the flagship brand in the Wipro Consumer Care & Lighting stable and the 2nd largest

brand of soap in India in the popular segment of the category. The brand enjoys two decades of

trust since its launch in 1986 and has grown to be counted amongst the top brands in the Country

in an intensively competitive market. Millions of women across the country have discovered the

secret of younger looking skin with Santoor. It is a truly unique soap that combines the goodness

of natural ingredients - Sandal, Turmeric and natural Skin Softeners. Sandal provides a cooling

and soothing effect that softens skin, while turmeric controls formation of skin darkening

pigments like melanin, to give skin a radiant glow. Natural Skin Softeners make skin soft and

supple. The end result, skin that is so healthy and beautiful, it lies about your actual age! 

Amongst the first brands in the Country to launch an offering with the twin ingredient benefits of

Sandal and Turmeric, Santoor has over the years moved from a purely natural ingredient based

appeal, to one of the most preferred beauty soaps of the day. Today, Santoor is one of the fastest

growing soap brands in India. Santoor is available in three variants – Santoor (Sandal &

Turmeric), Santoor White (Sandal & Almond milk) and Santoor Chandan which is a premium

soap manufactured with extracts of Sandalwood oil – a favourite of discerning consumers.

Cinthol:

Cinthol the popular and much-loved brand of Godrej Consumer Products Limited (GCPL)have

been a favourite of people for many years. All different soaps in its range are having feel-fresh

fragrance and high TFM index. Cinthol’s range covers an economic Lime-fresh, the medium

deo-soaps (spice, lime,cologne and the new ’sport’) and a slightly expensive “Cinthol-Original”.

For decades, Cinthol-Original is one of the best soaps made in India. It had a simple red-cover

which attracts none! But was still able to sustain itself in the market . Godrej has now launched

the improved Cinthol range. Cinthol now offers a deo-range of soaps, talc and deo-sprays in

three exciting fragrances - Classic, Cologne and Sport in a trendy new packaging. It also offers

Cinthol fresh soap and Cinthol Regular soap with new exciting packaging. The eye-catching and

vibrant packaging symbolizes a sense of adventure, zest and action. The new Cinthol range

brings 24-Hour Confidence through Active Deo Formula, which controls body odour, Powerful

DryShield that absorbs sweat, UltraScent Technology for long lasting fragrance and Freshness

that revitalises you 24x7.The new range will be available across the country at modern retail and

other outlets and will be supported by high-impact advertising on television, print, out-door, on-

line and radio. 

Vivel and Superia:

The Vivel Di Wills range is available in two variants. Its unique carton pack has been developed

by ITC's design team to provide a novel consumer experience. Vivel Di Wills Sheer Radiance is

enriched with Olive Oil, to provide skin lustre to make it radiant. Vivel Di Wills Sheer Crème is

enriched with Shea Butter, to moisturize skin to make it soft and supple.

The Vivel range of soaps is available in four variants:-

Vivel Young Glow is enriched with Vitamin E and Fruit Infusions which help in providing

youthful glow to the skin.

Vivel Satin Soft is enriched with Vitamin E and Aloe Vera which help the skin feel beautifully

soft.

Vivel Sandal Sparkle is enriched with Sandalwood Oil and Active Clay which helps in providing

clear skin.

Vivel Ayurveda Essence is enriched with multiple Ayurvedic Ingredients which help protect skin

from germs and harsh environment, keeping it healthy and beautiful.

In the popular segment, ITC has launched a range of soaps and shampoos under the brand name

Superia. Superia Soaps enriched with natural ingredients give radiant glowing skin. Superia

Soaps are available in four variants :

1. Fragrant Flower: with the fragrance of Rose & Lavender Oil

2. Soft Sandal: with the fragrance of Sandal & Almond Oil

3. Natural Glow: with Neem & Coconut Oils

4. Healthy Glow: with Orange Oil 

Market Segmentation

“One cannot be everything to everyone, but can be everything to a selected few”. This is the

basis for segmentation. The definition of segmentation is “market segmentation is a process of

dividing a heterogeneous market into homogeneous sub units. Market segmentation is the

identification of portions of the market that are different from one another. Segmentation allows

the firm to better satisfy the needs of its potential customers.

A good market segmentation will result in segment members that are internally homogenous and

externally heterogeneous; that is, as similar as possible within the segment, and as different as

possible between segments.

Market segmentation of Lux

As mentioned above, market segmentation is done so as to satisfy the customers more efficiently.

For a brand like Lux, which has a broad customer base, this factor becomes absolutely critical.

The segmentations are done basically on the basis of factors like:

Lux soap concentrates in the beauty soap category. A brief description of the various factors Lux

considers are:

Gender :

Lux has been, since its introduction seen as a soap for women. Lux as a brand symbolises beauty.

The Lux ads has hosted a bevy of film stars such as from Madhubala, Babita, Hema, Karisma to

Kareena all endorsing the goodness of Lux over generations. This was done in order to attract

women who wanted to look and feel like the stars they idolised.

Age :

Lux is seen to mainly attract customers that fall within the age group of 16 to 35. In order to

cater them, Lux comes up with new and interesting variants. One of the latest entrants, Lux

Crystal Shine is mainly targeted at the youth . So is the Black Provocateur which symbolises

boldness . Another example is the chocolate variant lux which was a novel idea. All these are

introduced to catch the attention of the youth.

Income :

One of the essential characteristic of an FMCG product is an affordable price which is very

important for its fast sales. Its the meeting point of demand for a product and its price that decide

whether the product will sell or not. And the demand for a product is highly dependant on the

income of the customer. Lux is not a very costly toilet soap. Its price varies from Rs.15 to

rs.20.Therefore its target market starts from the middle income group.

Positioning

Lux—derived from the word luxury— was launched in 1899 as a laundry soap in the UK. In

1925, the brand was extended to the toilet soap category. It was positioned as a beauty soap in

India, and HUL has since used successful film actors of the time—such as Leela Chitnis,

Madhubala, Hema Malini and Kareena Kapoor—to endorse the product. 

Lux’s secret of longevity has been its consistent evolution—be it the soap colour, packaging or

new variants, the brand has banked on innovation to keep its youthful image intact. Extending

the soap cake to a range of shower gels, liquid soaps and moisturizing bars has helped the brand

keep consumers excited and the competition at bay.

What has not changed is the consistency in its communication and its positioning. Its tag lines—

if it’s good enough for a film star, then it’s good for you too to Play with beauty—have conveyed

the same message over the years. It taps into an emotion very close to humanity’s basic need—

social interaction. The brand has always hired celebrities when they have reached a certain

height rather than using them at the start of their careers. This has helped the customers to relate

to their idols on screen.

From being a soap for the stars, Lux has recently started positioning itself in such a way that the

ordinary woman can relate to the brand. The advertisements show not the star, but the actress in

the character of an ordinary girl or woman, which any woman can identify with. This positioning

has helped the brand in striking a chord with the target consumers.

Q. 5 As a salesperson in a fast moving consumer goods company, what kind of training and

development methods do you feel are required? How important is training for sales force

and how can it be evaluated? (10 marks)

Ans-

Training and development methods which are required for Salesperson of FMCG

company:

Who Should Attend?

This intensive course is ideal for front line sales executives who sell directly to the retail market.

It will offer a new perspective for experienced sales staff and provide the necessary tools for

them to thrive in the competitive retail environment. It is also suitable for sales executives who

have recently moved into FMCG selling. They will learn both new and old techniques to enhance

their performance.

About the Programme

FMCG selling is unique, as the products are Fast Moving Consumer Goods. Not only do you

need to convince the customer to buy, but you must also build strategic partnerships, manage the

stocks and the promotions to gain a competitive advantage, and sustain the customer's

commitment with every new order placed. This course will give you practical guidance, help you

to build stronger relationships with retailers, develop the key skills necessary to manage all

aspects of the stock, and improve your own sales performance.

Course Objectives

To understand the concepts of FMCG selling

To know how to find out your customers' needs and offer the best solutions

To learn how to develop stronger relationships with customers - that produce higher sales

To gain competitive advantage through a clearer understanding of your markets

To develop the key FMCG skills of shelf space management and promotions

To make optimal use of time

To be able to build mutually beneficial partnerships with your retailers

What You Will Gain

Ways to build the best relationships with retailers

Tools to help you sell effectively

An opportunity to look at ways to manage stock and promotions

A competitive advantage over your main competitors

Programme Contents

DAY ONE

What Is FMCG Selling?

Being Prepared For The Sale

> SWOT Analysis Of You, Your Company & Your Products

> BCG (Boston Consulting Group) Analysis Of Your Products

> Knowing Your Customers, Your End-Users, & Your Competitors

> USPs (Unique Selling Points) Of Your Product In Line With Retailer & End-User

Needs

Building & Maintaining Relationships

> Roles & Responsibilities Of A Salesperson

> Qualities Of A Salesperson

> Selling As A Professional

> Understanding Relationships With Others Using The Johari Window

Making The Sale Through Relationship Selling

> Identifying The Needs Of Your Customer

> Developing Needs Through Effective Questioning Techniques

> Offering Solutions By Matching Specific Needs

> Closing The Sale

DAY TWO

Continuous Commitment From Retailers

> Case Study To Determine How To Secure Continuous Commitment

> The Importance Of Good Communication Skills

> Managing Customer Relationships

Shelf Space Management

> Managing Shelf Space Positions

> Merchandising

> Out Of Stock Management

Advantages & Disadvantages of Promotions

Time & Territory Management

> Territory Management

> Avoiding Time Wasting Traps

> Cash Collection

Gaining Competitive Advantage

> Case Study To Determine How To Handle The Changing Priorities Of Retailers

> Building Strategic Partnerships

> Making The Relationship Work For You & Your Customer

2 Days - Non-Residential

Delegate spaces available on the following course dates:

Before the course each delegate will be asked to complete a Pre-Course Briefing Form to

determine their individual objectives for attending the course. These objectives will be used by

the tutor to give on-target training that is focused on the individual delegates.

At the end of the course each delegate will be asked to complete a Personal Development Plan

that can be used as part of future appraisals and that will also be an important tool for

management reference.

Importance of Training for Salesforce:-

Good salespeople are hard to find, and the search can be very time consuming. However, good

managers know that searching for personable sales professionals with strong work ethics will

benefit the company in the long run. There are various things to consider when searching for a

good sales force.

1. Growing Your Business

A good sales force will meet and exceed its sales goals. In doing so, your company will see a

consistent growth in profits.

2. Building Client Loyalty

A good sales force is loyal to its company, and loyal salespeople often attract loyal clients.

Clients also prefer to work with professionals who know their product.

3. Department Morale

Good sales professionals earn the respect of their peers by working hard. Work environments

that foster mutual respect have high morale and are more productive.

4. Lower Cost to the Company

A good sales force works efficiently. Efficient employees understand that their salaries are

investments, and will make good use of their time. This will lower the cost involved in running

your department and help you keep your department's expenses under budget.

5. Building Your Reputation

If you hire an excellent sales force, its stellar performance will be viewed as a reflection of your

talents. This will help you maintain job security, and it will assist you with career advancement

at the appropriate time.

Sales Force Evaluation:-

Whether you use packaged sales assessment tools, skills tests or your own sales know-how, it's

important to evaluate the effectiveness of your sales force. There are specific areas you need to

look at as you conduct evaluations.

1. Competence

Salespeople can't sell unless they know what they are talking about. The sales competencies to

gauge include: product knowledge, competition awareness, networking effectiveness and

industry savvy. Sales skills tests are useful for such measurements.

2. Lead Management

Look at your salespeople's methods for prospecting, their ability to secure appointments, their

capacity to nurture relationships and their savvy for qualifying leads. Use one-on-one meetings

and pointed questions to glean this data.

3. Closing Deals

Consider your salespeople's lead to close ratio (the number of sales calls they make in a period of

time vs. the number of deals they secure). A good ratio varies depending on industry and market.

Comparison to peers is the best way to set a standard.

4. Customer Evaluations

Feedback from your customers, especially those you lose, can be a great way to evaluate

salespeople. Use customer feedback forms to find out how well salespeople represent your

products and provide service.

5. Quotas

A seller's ability to consistently meet practical, quantifiable, worthy sales quotas may be the most

objective way to evaluate success. Check progress frequently by using monthly or quarterly

quotas, rather than annual quotas.

Q. 6 What is International Marketing? What are the various strategies to enter

International markets? Explain. (10 marks)

Ans- International Marketing-

 International Marketing is the performance of business activities that direct the flow of a

company's goods and services to consumers or users in more than one nation for a profit.

International marketing is often not as simple as marketing your product to more than one

nation. Companies must consider language barriers, ideals, and customs in the market they are

approaching.Tailoring your marketing strategies to attract the specific group of people you are

attempting to sell to is highly important and can serve the number one cause of failure or success.

Strategies to enter International Market-

After the decision to invest has been made, the exact mode of operation has to be determined.

The risks concerning operating in foreign markets is often dependent on the level of control a

firm has, coupled with the level of capital expenditure outlayed. The principal modes of

engagement are listed below:

Exporting (which is further divided into direct and indirect exporting)

Joint ventures

Direct investment (split into assembly and manufacturing)

Exporting

Direct exporting involves a firm shipping goods directly to a foreign market. A firm employing

indirect exporting would utilise a channel/intermediary, who in turn would disseminate the

product in the foreign market. From a company's standpoint, exporting consists of the least risk.

This is so since no capital expenditure, or outlay of company finances on new non-current assets,

has necessarily taken place. Thus, the likelihood of sunk costs, or general barriers to exit, is slim.

Conversely, a company may possess less control when exporting into a foreign market, due to

not control the supply of the good within the foreign market.eg.-

Joint

ventures

A joint venture is a combined effort between two or more business entities, with the aim of

mutual benefit from a given economic activity. Some countries often mandate that all foreign

investment within it should be via joint ventures (such as India and the People's Republic of

China). By comparison with exporting, more control is exerted, however the level of risk is also

increased.

Direct investment

In this mode of engagement, a company would directly construct a fixed/non-current asset within

a foreign country, with the aim of manufacturing a product within the overseas market.

Assembly denotes the literal assembly of completed parts, to build a completed product. An

example of this is the Dell Corporation. Dell

possesses plants in countries external to the United

States of America, however it assembles personal

computers and does not manufacture them from

scratch. In other words, it attains parts from other

firms, and assembles a personal computer's constituent parts (such as a motherboard, monitor,

GPU, RAM, wireless card, modem, sound card, etc.) within its factories. Manufacturing

concerns the actual forging of a product from scratch. Car manufacturers often construct all parts

within their plants. Direct investment has the most control and the most risk attached. As with

any capital expenditure, the return on investment (defined by the payback period, Net Present

Value, Internal Rate of Return, etc.) has to be ascertained, in addition to appreciating any related

sunk costs with the capital expenditure.