MCM605_Marketing Management

Marketing Environment 43 Political Factors: These determine the extent to which government and government policy may impact on an organization or a specific industry. This would include political policy and stability as well as trade, fiscal and taxation policies too. Economic Factors: These factors impact on the economy and its performance, which in turn directly impacts on the organization and its profitability. Factors include interest rates, employment or unemployment rates, raw material costs and foreign exchange rates. Social Factors: These factors focus on the social environment and identify emerging trends. This helps a marketer to further understand their customers’ needs and wants. Factors include changing family demographics, education levels, cultural trends, attitude changes and changes in lifestyles. Technological Factors: These factors consider the rate of technological innovation and development that could affect a market or industry. Factors could include changes in digital or mobile technology, automation, research and development. There is often a tendency to focus on developments only in digital technology, but consideration must also be given to new methods of distribution, manufacturing and also logistics. Environmental Factors: These factors relate to the influence of the surrounding environment and the impact of ecological aspects. With the rise in importance of CSR (Corporate Sustainability Responsibility), this element is becoming more important. Factors include climate, recycling procedures, carbon footprint, waste disposal and sustainability. Legal Factors: An organization must understand what is legal and allowed within the territories they operate in. They also must be aware of any change in legislation and the impact this may have on business operations. Factors include employment legislation, consumer law, healthy and safety, international as well as trade regulation and restrictions. Political factors do cross over with legal factors; however, the key difference is that political factors are led by government policy, whereas legal factors must be complied with. CU IDOL SELF LEARNING MATERIAL (SLM)

44 Marketing Management A PESTEL analysis helps an organization identify the external forces that could impact their market and analyse how they could directly impact their business. It’s important when undertaking such an analysis that the factors affecting the organization are not just identified but are also assessed – for example, what impact might they have on the organization? The outcomes of a PESTEL analysis can then be used to populate the opportunities and threats in a SWOT analysis. 3.7 Responding to the Marketing Environment Many companies view the marketing environment as an uncontrollable element to which they must adapt. They passively accept the marketing environment and do not try to change it. They analyse the environmental forces and design strategies that will help the company avoid the threats and take advantage of the opportunities the environment provides. Other companies take an environmental management perspective. Rather than simply watching and reacting, these firms take aggressive actions to affect the publics and forces in their marketing environment. Such companies influence legislation, stage media events, run advertorials to shape public opinion, press law suits to change forces in their favour, etc. Marketing managers cannot always control environmental forces. But whenever possible, they will take a proactive approach to the marketing environment. Box 3.1 Examples of Opportunities Posed by Marketing Environment in India ---------------------------------------------------------------------------------------------------------------- 1. The New Economic Policies of the Government of India in general. 2. The New Industrial Policy. 3. Liberalisation of industrial licensing. 4. Foreign Exchange Management Act (FEMA) and Competition Act. 5. Curtailment of and disinvestments in public sector. 6. The New Trade Policy – lowering of import tariffs, abolition of import licenses, convertibility of rupee, globalisation, etc. 7. Fiscal and monetary reforms, banking sector reforms, capital market reforms. 8. Removal or phasing out of subsidies. 9. Encouragement to foreign direct investment (FDI). 10.Dismantling of price controls and introduction of market-driven price environment. CU IDOL SELF LEARNING MATERIAL (SLM)

Marketing Environment 45 Box 3.2 Examples of Threats Posed By Marketing Environment In India ---------------------------------------------------------------------------------------------------------------- 1. Entry of Multi-National Companies (MNCs) into the Indian market on a large scale increases the competition for products and services. 2. ‘Survival of the fittest’ rule forces many weaker and small-scale companies to close down due to non-viability. 3. Big players start buying smaller players through mergers and acquisitions. 4. Removal of subsidy affects profitability and viability of many industries. (Fertiliser industry is one such affected sector where units had to close down or stop production of certain products). 5. Banks and insurance sector came under competitive environment and were compelled to operate viably, at par with the private sector. 6. In general, many industrial units across India faced a destabilization consequent to the economic reforms. Their markets, market shares and profits came under severe pressure and viability became a big question. 3.8 Summary Marketing activities do not take place in a vacuum, isolated from all external forces. In fact, all marketing operations are conducted in a highly complex, dynamic and changing environment. “A company’s marketing environment consists of the actors and forces outside marketing that affect management’s ability to build and maintain successful relationships with target customers.” Environmental scanning is an important requirement for companies to understand threats and opportunities. Companies will face forces from the micro environment and the macro environment. The microenvironment consists of the following actors close to the company that affect its ability to serve its customers: (1) The company (2) The suppliers (3) The marketing intermediaries (4) The customer markets (5) The competitors (6) The public. The macro environment consists of the following larger societal forces that affect the microenvironment: (1) Demographic (2) Economic (3) Natural (4) Technological (5) Political (6) Legal (7) Cultural. PESTEL analysis is a technique used by companies for analysing the environmental forces – it stands for political, economic, social, technological, environmental and legal. Many companies view the marketing environment as an uncontrollable element to which they must adapt. They passively accept the marketing environment and do not try to change it. They analyse the environmental forces and design strategies that will help the company avoid the threats and take advantage of the opportunities the environment provides. CU IDOL SELF LEARNING MATERIAL (SLM)

46 Marketing Management 3.9 Key Words/Abbreviations Environment scanning: Analysing the factors/forces in the environment Micro environment: Inside the company and controllable forces Macroenvironment: Outside company and uncontrollable forces PESTEL: Political, economic, social, technological, environmental, legal Opportunities and threats: Factors helpful to company and disadvantages to company Marketing research: Systematic study of marketing activities marketing intelligence system: Collection of market information about competition Middle men: Dealers Financial intermediaries: banks and financial firms Reseller markets: Wholesalers Brand loyalty: Consumers sticking to same brand Demographic environment: Age, gender, occupation, income etc Ecomark label: Mark given for eco friendly products Cultural values: Based on morality and ethical behaviour 3.10 Learning Activity 1. Do a PESTEL analysis for any company of your choice and write down the opportunities and threats faced by them. ----------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------- 2. Take the example of an Indian TV manufacturer and identify the opportunities and threats faced by them because of the LPG policy implementation by Government. ----------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------- 3. Identify the environmental factors affecting mobile service providers in India today and explain the positive and negative factors faced by them. ----------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------- CU IDOL SELF LEARNING MATERIAL (SLM)

Marketing Environment 47 3.11 Unit End Questions (MCQ and Descriptive) A. Descriptive Types Questions 1. Environmental scanning is an important requirement for all companies to remain successful – Discuss. 2. Explain the different forces which affect marketing in the microenvironment. 3. Elaborate how macro environmental forces provide opportunities and pose threats to a company. 4. Changing consumer expenditure pattern creates challenges to marketing – Justify. 5. Explain how the different types of publics can facilitate or impede marketing activities of a firm. 6. Describe how companies use the technique of PESTEL analysis and bring out their benefits. 7. Discuss the concept of marketing environment? Discuss the role of environment in the success of marketing function and activities. 8. Elaborate the factors affecting marketing in macro environment? Give examples. B. Multiple Choice/Objective Type Questions 1 Microenvironment consist of (a) Suppliers (b) Customers (c) Competitors (d) Publics (e) All of the above 2. The publics include (a) Financial (b) Media (c) Government (d) Citizen-action groups (e) All of the above 3. Economic environment is affected by (a) Slowdown in real income growth (b) Competitors activities (c) Population growth (d) Legal activities 4. Green marketing involves (a) Marketing vegetables (b) Marketing fruits (c) Marketing eco-friendly products (d) All of the above Ans.: 1. (e), 2. (e), 3. (a), 4. (c). CU IDOL SELF LEARNING MATERIAL (SLM)

48 Marketing Management 3.12 References Text Books 1. Dr. K.Karunakaran, Marketing Management, HPH, 2012 2. Philip Kotler, Marketing Management, Pearson/PHL, 12th ed,2012 Reference Books 1. Ramaswamy and Namakumari, Marketing Management, Macmillian, 2006 Web Resources 1. https/www. journals.elsevier.com 2. https//www.managementstudyguide.com CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 4 DEMAND FORECASTING, MARKET SEGMENTATION, TARGETING AND POSITIONING Structure: 4.0 Learning Objectives 4.1 Introduction 4.2 Meaning and Importance of Demand Forecasting 4.3 Measures of Market Demand 4.4 Major Concepts in Demand Measurement 4.5 Steps in Forecasting 4.6 Methods of Sales Forecasting 4.7 Market Segmentation 4.8 Need for Segmentation 4.9 Bases for segmentation 4.10 Segmenting Consumer Markets 4.11 Requirements for Effective Segmentation 4.12 Target Marketing 4.13 Positioning 4.14 Summary 4.15 Key Words/Abbreviations 4.16 Learning Activity 4.17 Unit End Questions (MCQ and Descriptive) 4.18 References

50 Marketing Management 4.0 Learning Objectives After studying this unit, you will be able to: Understand the need and methods of demand forecasting Learn the importance of market segmentation and its bases Familiarise with the process of targeting and positioning 4.1 Introduction This unit will help to make you understand the need and methods of demand and sales forecasting. You will also learn about the need for market segmentation, the process of STP, the bases of segmentation, evaluation of segments, target marketing strategies and positioning strategies. 4.2 Meaning and Importance Every company wants to know the existing status of its products in the market and the future prospects. The company also wants to know what the prospects for its sales during a specific period are and whether there is scope to increase sales and market share in the future, and if so, to what extent. Sales forecast is an estimate of sales, in monetary or physical units, for a specified future period, with a chosen marketing plan, under an assumed set of economic and marketing environmental forces. By providing estimates of market trends, industry demand, and company sales possibilities for a product, sales forecasting serves as the starting point for all business activities of a company. The following marketing decisions are based on sales forecasting: (i) Number of salesmen required to achieve sales quotas or objectives. (ii) Allocation of sales quota to each salesman. (iii) Determination of sales force compensation plan. (iv) Determination of sales territories based on market potential. (v) Advertising and sales promotion programmes. (vi) Physical distribution and channel selection. (vii) Pricing decisions and strategy. (viii) Production plans. (ix) Inventory control and purchasing. CU IDOL SELF LEARNING MATERIAL (SLM)

Demand Forecasting, Market Segmentation, Targeting and Positioning 51 (x) Estimating standard costs. (xi) Budgeting and controlling expenses. (xii) Planning requirements. (xiii) The entire marketing mix, i.e., product, price, promotion, and placement, revolves around the sales forecasts made by the company for its products. 4.3 Measures of Market Demand Sales forecasts are based on estimates for market demand. At least 90 different types of demand estimates could be prepared by a company for its products. A company can measure demand for six different product levels, five different space levels, and three different time levels. Each of these measures serves a specific purpose. For example, a company may forecast short-run demand for a specific product for the purpose of ordering raw materials, planning production, and borrowing cash. Sometimes it may forecast regional or territorial demand for its major product line to decide whether to set up regional or territorial distribution. Forecasts also depend on which type of market is being considered. The size of a market depends on the number of buyers who might exist for a particular market offer. The market could be broken down in many productive ways. 1. The potential market is the set of consumers who exhibit a sufficient level of interest in a marketing offer. Potential customers should also have purchasing power and access to the product offer. 2. The available market is the set of consumers who have interest, purchasing power, and access to a particular product offer. 3. The target market is the part of the available market the company decides to pursue. 4. The penetrated market is the set of consumers who are buying the company’s product. 4.4 Major Concepts in Demand Measurement The major concepts in demand measurement are market demand and company demand. Within each, we distinguish a demand function, a sales forecast, and a potential. Market Demand: The marketer’s first step in evaluating marketing opportunities is to estimate total market demand. Market demand for the product is the total volume that would be bought by a target group of customers in a target geographical area in a specific time period in a specified marketing environment under a specific marketing programme. CU IDOL SELF LEARNING MATERIAL (SLM)

52 Marketing Management Market Forecast: Only the minimum level of industry marketing expenditure and efforts will actually occur. The market demand corresponding to this level is called the market forecast. Market Potential: Market potential is the highest limit approached by market demand as industry marketing expenditures approach infinity for a given marketing environment. Company Demand: Company demand is the company’s estimated share of market demand at alternative levels of company marketing effort in a given time period. This share will depend on how its products, services, prices, communications, etc. are perceived by consumers relative to the competitors. Company Sales Forecast: This is the expected level of company sales based on a chosen marketing plan and an assumed marketing environment. Related to the company sales forecasts, there are two additional concepts involved. First is a ‘sales quota’, which is the sales goal set for a product line, company division, or sales officer. Generally, sales quotas are set slightly higher than estimated sales to stretch the sales force’s effort. Second is a ‘sales budget’, which is a conservative estimate of the expected volume of sales and is used for making current purchasing, production, and cash flow decisions. The sales budget is based on the sales forecast and the need to avoid excessive risk. Sales budgets are generally set slightly lower than the sales forecast. Company Sales Potential: This is the sales limit approached by company demand as the company’s marketing effort increases relative to that of competitors. The absolute limit of company demand is, of course, the market potential. For estimating current demand, companies estimate total market potential, then analyse and determine the area market potential (territory- wise), industry sales and market shares. 4.5 Steps in Forecasting The process of sales forecasting involves two steps, i.e., measuring ‘market demand’ and then forecasting ‘company sales’. Market demand is the total sales volume that all companies selling a product during a specified period of time in a specified market could expect to achieve under ideal conditions. It is the achievable portion of the ultimate market potential. Company demand or sales is the portion of market demand that a specific company could expect to achieve under ideal conditions. For example, market demand applies to all televisions, but company sales potential refers only to a single brand of TV like Samsung or Akai. A sales forecast is an estimate of the sales possibility of a company’s brand or product during a specific period, in a specific market, under a specific marketing plan and environment, CU IDOL SELF LEARNING MATERIAL (SLM)

Demand Forecasting, Market Segmentation, Targeting and Positioning 53 expressed in monetary or unit terms. The sales forecast is normally prepared after market demand and sales potential have been estimated. 4.6 Methods of Sales Forecasting 1. Opinion of Executives: The oldest type of sales forecasting is a broad guess made by executives in charge of business. One or more top executives forecast future sales based on personal knowledge based on market information, through customer contacts or by reading published data. Although quick, this method has the weakness of subjectivity and lacks scientific validity 2. Sales Force Composite Method: Many companies base their sales forecasts on the estimates given by salesmen, which are consolidated by sales managers for a territory or region and for the company. Since they have direct contact with customers and first-hand field information, they can estimate future buying intentions. But some may make hasty guesses which may not be reliable. Also, some salesmen may be over-optimistic or too pessimistic about future sales prospects. 3. Customer’s Expectations (or survey of buyer’s intentions): Customers can be requested to communicate their buying intentions in a coming period. This is suitable for businesses selling products to a few key customers (like in industrial marketing). If customers’ expectations are accurate, sales forecasts will also be accurate. 4. Statistical Sampling: Sampling can be used to get total sales estimates. Based on sample survey done in representative sub-groups of territories, data can be extended or generalized to get total sales forecast. 5. Time Series Analysis: This is a common mathematical projection of future sales. It involves projection of past sales trends into the future (trend extrapolation). To predict future sales, an analysis of four kinds of historical sales variations is done. (i) Seasonal variations (ii) Business cyclical variations (depression, boom, slump, etc.) (iii) Long- term trends of sales (iv) Irregular or unexplained variations. By isolating variations in sales, an analyst can estimate with accuracy the sales forecast. 6. Correlation Analysis: When there is a close relationship between sales volume and a well-known economic indicator or index, a correlation study can be done. A high correlation means that the extrapolated index values will indicate future sales volume. E.g.: Sales of petrol are related to automobile sales. CU IDOL SELF LEARNING MATERIAL (SLM)

54 Marketing Management 7. The Delphi Method: This is also a form of expert opinion method used especially for working out broad-based, futuristic estimates rather than sales forecasts. In this method, a panel of experts in the field is interviewed with the help of a questionnaire and their reactions and opinions recorded. An analysis of the result gives the final estimates. Since no single sales forecasting method is perfect, companies and marketers generally use a combination of forecasting methods to ensure that they get a reliable estimate. Limitations The executive opinion method gives results based on opinions and not facts. These forecasts are not readily amenable to breakdown into product-wise, month-wise or territory-wise forecasts. In sales force composite method, salesmen do not use sophisticated techniques of forecasting. They are also not experts in forecasting. They can be over-optimistic or too pessimistic about future sales. In the customer’s expectations method, customers themselves may not be aware or clear of their consumption pattern or buying intentions. They may also be unwilling to discuss about their intentions. In time series method and trend extrapolation, the difficulty is that whereas it is easy to explain why a specific trend is going in the way it does, it is not equally easy to predict when the turn will actually set in. Sales forecasts form the bases of all planning by the company. For the marketing department, it is the key to the planning of promotion programme, management of sales force, reallocation of territories, planning of plant and warehousing facilities, and all other activities of marketing. Marketing information systems or data bases are naturally a must for reliable sales forecasts and business planning. The sales forecast, therefore, predicts an expanding market for mobile phones in India and the world. 4.7 Market Segmentation “Market segmentation is the process of dividing a market into distinct subgroups of consumers with distinct needs, characteristics, or behaviour , who might require separate products or marketing mixes.”(Philip Kotler). The marketing people identify different ways to segment the market and develop profiles of the resulting market segments. Market segmentation is just the first step in a three-phase marketing strategy known as STP. After segmenting the market into homogenous clusters, the marketer must select one or more segments to target. So the second step is target marketing, which is the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter. To accomplish this, the marketer must decide on a specific marketing mix that is, a specific product, price channel, CU IDOL SELF LEARNING MATERIAL (SLM)

Demand Forecasting, Market Segmentation, Targeting and Positioning 55 and promotional appeal for each distinct segment. The third step is market positioning, which involves arranging for a product to occupy a clear, distinctive, and desirable place relative to competitive products, in the minds of target consumers. 4.8 Need for Segmentation Before the widespread acceptance of market segmentation, the prevailing way of doing business with consumers was through mass marketing, that is, offering the same product and marketing mix to all consumers. The essence of this strategy was summed up by Henry Ford, who offered the Model T car of Ford Motor Company to the public “in any colour they wanted, as long as it was black”. Coca Cola also practiced mass marketing initially when it sold only one size bottle. All consumers were alike and had the same background, education and experience, mass marketing or undifferentiated marketing would be a logical strategy. But companies today understand that they cannot appeal to all buyers in the market, or at least not to all buyers in the same way. Consumers are too numerous, too widely scattered, and too varied in their needs and buying practices. Moreover, the companies themselves vary widely in their abilities to serve different segments of the market. Rather than trying to compete in a mass market, sometimes against superior competitors, each company must identify the parts of the market that it can serve best and most profitably. Marketing companies have generally moved away from mass marketing nowadays and toward market segmentation and target marketing. They identify market segments, select one or more of them, and develop products and marketing programmes tailored to each. Instead of scattering their marketing efforts (the ‘shotgun’ approach), companies are focusing on the consumers who have greater interest in the values they create best (the ‘rifle’ approach). The strategy of segmentation allows companies to avoid head-on competition in the market by differentiating their product offerings, not only on the basis of price but also through styling, packaging, promotional appeal, distribution methods and superior service. Benefits of Market Segmentation Market segmentation benefits both the consumer and the marketer, and because of this marketers of consumer goods are eager practitioners. Maruti Udyog Ltd., for example, offers cars for different segments the small, the less costly Maruti 800, the middle level Maruti Zen A/C, and the higher level model Maruti D Zire A/C. Hotels also segment their markets and target different level hotels (1 star, 2 star,3 star, 5 star) to different market segments. Industrial firms CU IDOL SELF LEARNING MATERIAL (SLM)

56 Marketing Management also segment their markets for operational economy and efficiency, as do non-profit organizations and the media. More and more businesses today are using database marketing programmes to find out who their best customers are, and these firms will then divide their customer base into segments. The small segments selected can be reached more efficiently and effectively with products and services that match their unique needs. 4.9 Bases for Segmentation The first step in developing a market segmentation strategy is to select the most appropriate bases on which to segment the market. The marketer will have to try different segmentation bases or segmentation variables, alone or in combination, to find the best way to view the market structure. 4.10 Segmenting Consumer Markets The major bases or variables used to segment consumer markets are the following: 1. Geographic segmentation 2. Demographic segmentation 3. Psychographic segmentation 4. Behavioural segmentation 1. Geographic segmentation calls for dividing the market into different geographical units such as nations, regions, states, countries, cities, or neighbourhoods. A company may decide to operate in one or a few geographical areas, or to operate in all areas but pay attention to geographical differences in needs and wants. E.g.: Woollens sold in North India and limited segments in the South like Bangalore, Hyderabad, Ooty, Kodaikanal. Tractors and fertilizers sold in rural areas while PCs/Laptops in cities. 2. Demographic segmentation divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, race, generation and nationality. Demographic factors are the most popular bases for segmenting customer groups. One reason is that consumer needs, wants and usage rates vary closely with demographic variables. Another is that demographic variables are easier to measure than most other types of variables. CU IDOL SELF LEARNING MATERIAL (SLM)

Demand Forecasting, Market Segmentation, Targeting and Positioning 57 E.g. : Garments children’s clothes, women’s wear, men’s wear. Cosmetics and toiletries beauty aids for women and shaving aids for men Airlines Economy class, club/executive class Fridge Different sizes like 135, 165, 260 litres for different family sizes 3 Psychographic segmentation divides buyers into different groups based on social class, lifestyles, or personality characteristics. People in the same demographic group can have very different psychographic makeups. In psychographics, lifestyle and attitude are the core bases from the segmentation angle, since buyer behaviour predominantly depends on them in the case of certain products. E.g. Coke and Pepsi popularity in villages Titan watches: Fast-track meant for teenagers for casual, Stylish look Raymond's, Reid & Taylor: Suiting for the elite class 4. Behaviour segmentation divides buyers into groups based on their knowledge, attitude, uses, or responses to a product. Many marketers believe that behaviour variables are the best starting point for building market segments. Occasions: Buyers can be grouped according to occasions when they get the idea to buy, actually buy or use the product. E.g.: Jewellery and saris (costly) on festivals or marriage occasions. Cornflakes, oats, jam as breakfast food. Haldiram’s products as snack food. Benefits: A powerful form of segmentation is to group buyers according to the different benefits that they seek from the product. E.g.: Proctor & Gamble – different laundry detergent segments, each with a unique benefit cleaning, bleaching, economy, fabric softening, fresh smell, strong and mild, etc. Hyundai and Maruti – Santro and WagonR- tall boy cars. Small but big. User status: Markets can be segmented into groups of non-users, ex users, potential users, first time users and regular users of the product. User rate: Markets can also be segmented into light, medium,and heavy product users. Heavy users are often a small percentage of the market but account for a high percentage of total consumption. CU IDOL SELF LEARNING MATERIAL (SLM)

58 Marketing Management Loyalty status: A market can also be segmented by consumer loyalty. Consumers can be loyal to brands, stores, and companies. Buyers can be divided into groups according to their degree of loyalty. Multiple/Hybrid segmentation: Marketers increasingly use segmentation bases to identify smaller, better defined target groups. Companies often begin by segmenting their markets using a single base, then expand using other bases. One good example of multiple or hybrid segmentation is ‘geodemographic segmentation’, which uses both geographic and demographic bases. 4.11 Requirements for Effective Segmentation To be maximally useful, market segments must exhibit the following characteristics: 1. Measurability: The degree to which the size and purchasing power of the segments can be measured. 2. Accessibility: The degree to which the segments can be effectively reached and served. 3. Sustainability: The degree to which the segments are large and profitable to be served. 4. Actionability: The degree to which effective programmes can be formulated for attracting and serving the segments. 4.12 Target Marketing Market segmentation reveals the firm’s market segment opportunities. The firm now has to evaluate the various segments and decide how many and which ones to target. Evaluating Market Segments: In evaluating different market segments, a firm must look at three different factors: segment’s size and growth, segment’s structural attractiveness, and company objectives and resources. The company should enter only segments in which it can offer superior value and gain advantages over competitors. Select Target Market Segments: After evaluating different segments, the company must decide which and how many segments it will target. A target market consists of a set of buyers who share common needs or characteristics that the company decides to serve. Target marketing can be carried out at several different levels: (a) Undifferentiated marketing (or mass marketing) CU IDOL SELF LEARNING MATERIAL (SLM)

Demand Forecasting, Market Segmentation, Targeting and Positioning 59 (b) Differentiated marketing (or segmented marketing) (c) Niche Marketing (or Concentrated marketing) (d) Micromarketing (or local and individual marketing) (a) Undifferentiated Marketing:The company decides to ignore market segment differences and targets the whole market with one offer. It focuses on what is common in the needs of consumers and designs a product and marketing programme that will appeal to the largest number of customers. The firm relies on mass distribution and mass advertising. It aims to endow the product with a superior image in people’s minds. E.g.: Coca-Cola (initially). (b) Differentiated Marketing: Here the company decides to operate in several market segments and designs separate offers for each. By offering product and marketing variations to segments, companies hope for higher sales and a stronger position within each market segment. Differentiated marketing creates more total sales than mass marketing, but at increased costs. E.g.: General Motors — a car for every ‘purse, purpose and personality’. Nike shoes — for running, golf, aerobics, cycling and basketball. Procter & Gamble — eight brands of laundry detergents. (c) Niche Marketing: Niche marketing involves marketing in a very small but profitable market segment. A niche is a very narrowly defined customer group desiring a distinctive mix of benefits. Marketers generally identify niches by dividing a segment into sub- segments. The best example for niche marketing in India is Shahnaz Hussain’s herbal products in the cosmetics sector. When most other cosmetics products are synthetic or chemical based, this company identified a group of customers who disliked chemicals and desired for safe to use herbal cosmetics. This group was educated and financially sound and was prepared to pay a premium price also. An attractive niche will have the following characteristics: 1. The customers in the niche have a distinctive set of needs. 2. They are prepared to pay a premium price to the company that best satisfies their needs. 3. The niche is not likely to attract other competitors. 4. The niche marketer gains some economies of scale through specialization. 5. The niche has adequate size, profitability and growth potential. Whereas, general market segments are large and normally attract many competitors, niches are very small and normally attract only one or two. Niche marketers generally understand their customer’s needs very well that the customers willingly pay a premium CU IDOL SELF LEARNING MATERIAL (SLM)

60 Marketing Management price. When marketing efficiency increases, niches that were seemingly very small may become more and more profitable. Nichers have three major tasks – creating niches, expanding niches and protecting niches. (d) Micro Marketing: Micro marketing is the practice of tailoring products and marketing programmes to suit the tastes of specific individuals and locations. It includes local marketing and individual marketing. Local marketing involves tailoring brands and promotions to the needs and wants of local customer groups – cities, neighbourhoods, and even specific stores. Individual marketing involves tailoring products and marketing programmes to the needs and preferences of individual customers. This process is also known as one-to-one marketing, and customized marketing. Mass customization is the process through which companies interact on a one to one basis with masses of customers to create customer-unique value by designing products and services tailor made to individual needs. E.g.: Dell computers, Mattel Barbie dolls, Levi Strauss jeans (Levi Original Spin). Many companies now practice mass customerisation. Customerisation combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the product and service offering of their choice. A platform and tools are provided by the company for customers to design their own products. Choosing a Target Marketing Strategy: Companies need to consider many factors when choosing a target marketing strategy. The company’s resources, product variability, the product’s life cycle stage, market variability and competitor’s marketing strategies have to be considered. Controversies arise when marketers attempt to profit at the expense of targeted segments – when they unfairly target vulnerable segments or target them with questionable products or tactics. (E.g.: Liquor, cigarettes, fast food for youth) 4.13 Positioning Beyond deciding which segments of the market it will target, the company must decide what positions it wants to occupy in those segments. A product’s position is the way the product is defined by consumers on important attributes – the place the product occupies in consumers’ minds relative to competing products. Positioning involves implanting the brand’s unique benefits and differentiation in customers’ minds. E.g.: Tide as a powerful, all-purpose family detergent. Rolls Royce – luxury car. CU IDOL SELF LEARNING MATERIAL (SLM)

Demand Forecasting, Market Segmentation, Targeting and Positioning 61 Volvo Bus – safety A product’s position is the complex set of perceptions, impressions and feelings that consumers have for the product compared with competing products. To the extent that a company can position itself as providing superior value, it gains competitive advantage. Positioning begins with actually differentiating the company’s marketing offer so that it will give consumers more value than competitors’ offers. Differentiation of market offer can be along the lines of product, service, channels, people or image. A company should develop a unique selling proposition (USP) for each brand and stick to it. The positioning strategy is chosen after considering the following alternative bases: 1. Positioning on specific product feature or attribute. 2. Positioning on benefits, problem solution or needs. 3. Positioning for specific usage occasions or applications. 4. Positioning for user category. 5. Positioning against another product competitor. 6. Positioning on quality or price. Company and brand positioning should be summed up in a positioning statement and communicated to the target market. 4.14 Summary Sales forecast is an estimate of sales, in monetary or physical units, for a specified future period, with a chosen marketing plan, under an assumed set of economic and marketing environmental forces. By providing estimates of market trends, industry demand, and company sales possibilities for a product, sales forecasting serves as the starting point for all business activities of a company. The entire marketing mix, i.e., product, price, promotion, and placement, revolves around the sales forecasts made by the company for its products. Demand forecasting is an important activity for all marketing companies to understand the potential of the market and based on which to develop their sales forecast. The major concepts in demand measurement are market demand and company demand. Within each, we distinguish a demand function, a sales forecast, and a potential. There are many steps and methods involved in demand and sales forecasting. The process of sales forecasting involves two steps, i.e., measuring ‘market demand’ and then forecasting ‘company sales’. Market demand is the total sales volume that all companies selling a product during a specified period of time in a specified market could expect to achieve under ideal conditions. It is the achievable portion of the ultimate market potential. Company CU IDOL SELF LEARNING MATERIAL (SLM)

62 Marketing Management demand or sales is the portion of market demand that a specific company could expect to achieve under ideal conditions. Market segmentation is the process of dividing the total market into small groups or sub groups of homogeneous customers. Segmentation is done based on several bases/variables. After segmentation, target market is selected and then positioning is done. 4.15 Key Words/Abbreviations Demand analysis: Analysis of the probable demand for company’s products sales forecasting: Projecting sales possibilities Delphi method: Aggregation of expert opinions for forecasting Time series: Analyzing the past sales for few years to project future sales Market demand: Total demand for the product category Company demand: How much company’s product can be sold Market segmentation: Dividing total market into small groups/segments STP: Segmenting, target marketing and positioning Bases for segmenting: Variables used for segmenting (a) Undifferentiated marketing - Mass marketing (b) Differentiated marketing - Segmented marketing (c) Niche Marketing - Concentrated marketing (d) Micromarketing - Local and individual marketing Hybrid or multiple segmentation: Using multiple bases Sales quota: Sales target given to salesmen Sales force compensation: Payment mechanism for salesmen Sales territories: Specific areas allotted to each salesman Inventory control: Management of inventories Sales budget: Money allotted for each sales territory Market share: Sales share of total market by a company Business cycle: Boom, recession, depression, etc. Correlation analysis: Statistical method of studying relationships Demographic: Related to age, gender, occupation, income, etc. CU IDOL SELF LEARNING MATERIAL (SLM)

Demand Forecasting, Market Segmentation, Targeting and Positioning 63 Psychographic: Based on psychological factors Behavioural: Based on behaviours of people Geodemographic segmentation: Based on geography and demography 4.16 Learning Activity 1. Take the example of any consumer goods brand company and trace the steps they have to follow in demand and sales forecasting. ----------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------- 2. Give examples of 4 consumer durable companies doing market segmentation for their goods. ----------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------- 3. With the example of an airline company, analyse how they do the segmentation for their service customers. ----------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------- 4. Identify 2 examples of marketing companies doing different target marketing strategies for their products. ----------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------- 5. Give five examples of different positioning strategies followed by different companies. ----------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------- 4.17 Unit End Questions (MCQ and Descriptive) A. Descriptive Types Questions 1. Sales forecasting is an important activity in the context of marketing decisions – Justify. 2. Companies use different methods for their sales forecasting. Elaborate. CU IDOL SELF LEARNING MATERIAL (SLM)

64 Marketing Management 3. Explain how market demand is different from company demand using the example of cars. 4. Sales forecasting is very useful but has limitations. Do you agree? 5. Illustrate the marketing strategies of Mahindra automobile within prevailing marketing environment. 6. You are a marketing manager of toothpaste manufacturing company who has chosen to use a full market coverage pattern of target market selection. Discuss the two broad ways (undifferentiated & differentiated marketing) by which the firm can cover the whole market. 7. Technological advancements and socio cultural forces have a great impact on marketers. Identify the major technological advancements and socio cultural changes that have affected you as a consumer. Explain their impact on your needs as a customer. B. Multiple Choice/Objective Type Questions 1. Demand forecasting involves (a) Market demand (b) Company demand (c) Sales forecast (d) Sales potential (e) All of the above 2. Sales forecast includes (a) Profitability data (b) Projected sales (c) Customer profile (d) None of above 3. Sales forecasting techniques include (a) Executive opinion method (b) Customers opinion method (c) Delphi method (d) Sales force composite method (e) All of the above 4. Bases for segmentation are (a) Geographic (b) Demographic (c) Psychographic (d) Behavioural (e) All of the above CU IDOL SELF LEARNING MATERIAL (SLM)

Demand Forecasting, Market Segmentation, Targeting and Positioning 65 5. STP is a process used for (b) Sales forecasting (a) Demand forecasting (d) Sales training programme (c) Target marketing (e) None of the above Ans.: 1. (e), 2. (b), 3. (e), 4. (e), 5. (c). 4.18 References Text Books: Dr. K.Karunakaran, Marketing Management, HPH, 2012 Reference Books: 1. Philip Kotler, Principles of Marketing, 10th ed., Pearson/PH/ 2. Jerry wind and A. Rangaswamy, “Customerization: The Second Revolution in Mass Customization”, Wharton School Working Paper, 1999. Web Resources: 1. www.tandfonline.com 2. www.marketing91.com CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 5 PRODUCT MANAGEMENT DECISIONS AND DEVELOPMENT Structure: 5.0 Learning Objectives 5.1 Introduction 5.2 Concepts of Products 5.3 Levels of Products 5.4 Product Hierarchy 5.5 Classification of Products 5.6 Consumer Products 5.7 Industrial Products 5.8 Other Special Products 5.9 Product Mix Strategies 5.10 Individual product decisions 5.11 Product Line Decisions 5.12 Product Mix Decisions 5.13 Packaging and Labelling 5.14 Summary 5.15 Key Words/Abbreviations 5.16 Learning Activity 5.17 Unit End Questions (MCQ and Descriptive) 5.18 References

Product Management Decisions and Development 67 5.0 Learning Objectives After studying this module, you will be able to understand: The concepts of products How products are classified The levels and hierarchy of products Product mix strategies Packaging and labelling strategies 5.1 Introduction Product represents the goods and services offered by a company to the target market, to satisfy needs and wants. It is the primary element in the marketing mix consisting of the 4 P’s. Products refer to tangible and intangible goods like physical objects, services, events, persons, places, organizations, ideas or combinations of these. They can be consumer products or industrial products. Each of these has different classifications. In this module, you will be learning the concepts of products and the classifications. You will learn the decision areas like individual product decisions, product line decisions, product mix decisions, etc. You will also understand the importance of packaging and labelling. 5.2 Concepts of Products “A product is anything that can be offered to a market for attention, acquisition, use, or consumption and might satisfy a want or need.” (Philip Kotler). Products refer to tangible and intangible goods like physical objects, services, events, persons, places, organizations, ideas or combinations of these. For example, cars, washing machines, soaps, exhibitions, business schools, etc. “Services are a form of product that consists of activities, benefits or satisfactions offered for sale, that are essentially intangible and do not result in the ownership of anything.” (Philip Kotler). Examples are banking, hotel, hospitals, airlines, legal services, consultancy, etc. In the total marketing offering, product is a key element. Marketing mix planning starts with formulating an offer that brings value to target customers, and satisfies their specific needs. A company’s market offer often includes both tangible goods and services. Today, some companies CU IDOL SELF LEARNING MATERIAL (SLM)

68 Marketing Management are developing and delivering total customer experience. Experiences are memorable, personal and take place in the minds of individual consumers. Examples are visit to a theme park, exhibition, etc. 5.3 Levels of Product Products have five levels, which are known as ‘customer value hierarchy’, with each level adding more customer value (See Fig. 5.1). The most basic level is the core product or core benefit. This is what the customer is actually buying. Examples: Cosmetics are bought by ladies with the hope of becoming fair and lovely. Financial services are popular because they fulfil financial dreams. At the second level, the core benefit is turned into a basic product. This will have features, design, a quality level, a brand name and packaging. At the third level, it becomes an expected product, a set of attributes and conditions normally expected by consumers when they buy the product. At the fourth level, it becomes an augmented product by offering additional consumer services and benefits that exceed customer expectations. Finally, it becomes the potential product, containing all the possible augmentations and transformations that it might undergo in the future. Consumers normally see products as complex bundles of benefits that satisfy their needs. Fig. 5.1: Five Product Levels (Source: Philip Kotler, Principles of Marketing, 10th Ed., Pearson/PHI) Differentiation, brand positioning, and competition take place at product augmentation level. As Theodore Levitt observed, “The new competition is not between what companies CU IDOL SELF LEARNING MATERIAL (SLM)

Product Management Decisions and Development 69 produce in their factories, but between what they add to their factory output in the form of packaging, services, advertising, customer advice, financing, delivery arrangements, warehousing, and other things that people value.” 5.4 The Product Hierarchy The product hierarchy stretches from basic needs to particular items that satisfy those needs. The hierarchy consists of six levels, as explained below using Coca-Cola as an example: 1. Need family: The core need that underlines the existence of a product family. Example: Thirst. 2. Product family: All the product classes that can satisfy a core need with reasonable effectiveness. Example: Mineral water, beer, fresh juice, bottled juice, tea, coffee, soft drinks 3. Product class: A group of products within the product family recognized as having a certain functional coherence. Also known as product category. Example: Soft drinks. 4. Product line: A group of products within a product class that are closely related because they perform a similar function, are sold to the same customer groups, are marketed through the same outlets or channels, or fall within given price ranges. A product line may be composed of different brands or a single-family brand or individual brand that has been line extended. Example: Aerated soft drinks. 5. Product type: A group of items within a product line that share one of several possible forms of the product. Example: Cola drinks. 6. Item or product variant: A distinct unit within a brand or product line distinguishable by size, price, appearance or some other attribute. Example: Coca-Cola. 5.5. Classification of Products Products can be classified into two classes based on the types of consumers who use them, i.e., Consumer products and Industrial products. Consumer products are products and services bought by final customers for personal consumption. Example: Television set, toothpaste, soap, dress, etc. Industrial products are those purchased for further production, processing or for use in conducting a business. CU IDOL SELF LEARNING MATERIAL (SLM)

70 Marketing Management Example: Raw materials, farm products, cement, motors, tyres, etc. The basic distinction between a consumer product and an industrial product is based on the purpose for which the product is bought. 5.6. Consumer Products Consumer products can be further classified into convenience products, shopping products, speciality products and unsought products. These products differ in the ways consumers buy them, and therefore, in how they are marketed. Marketing considerations for consumer products are given in Table 5.1 below. MARKETING CONSIDERATIONS FOR CONSUMER PRODUCTS Types of Consumer Product Marketing Convenience Shopping Speciality Unsought Considerations Customer buying Frequent Less frequent Strong brand Little product behaviour purchase, little purchase, much preference and awareness, planning, little planning and loyalty, special knowledge (or if comparison or shopping effort, purchase effort, aware, little or shopping effort, comparison of little comparison even negative low customer brands on price, of brands, low interest) involvement quality, style price sensitivity Price Low price Higher Price High Price Varies Distribution Widespread Selective Exclusive Varies distribution, distribution in distribution in convenient fewer outlets only one or a few locations outlets per market area Promotion Mass promotion Advertising and More carefully Aggressive by the producer personal selling targeted advertising and by both producer promotion by personal selling and resellers both producer and by producer and resellers resellers Examples Toothpaste, Major appliances, Luxury goods, Life Insurance, magazines, televisions, such as Rolex Red Cross blood laundry detergent furniture, clothing watches or fine donations crystal (Source: Principles of Marketing, Philip Kotler, Pearson Education) Table 5.1: Marketing Considerations for Consumer Products CU IDOL SELF LEARNING MATERIAL (SLM)

Product Management Decisions and Development 71 Convenience Products These are consumer products that the customers buy frequently, immediately, and with a minimum comparison and buying effort. Example: soaps, sweets, newspapers, matchbox, bread, etc. Such convenience products are usually low priced, and marketers distribute them through many local shops to make them readily available when customers need them. Speciality Products These are consumer products with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort. Examples: Luxury cars, expensive watches, jewellery, etc. Unsought Products These are consumer products that the consumer either does not know about or knows about but does not normally think of buying. Examples: Life insurance, cemetery plots, blood donation, etc. Unsought products require a lot of advertising, personal hard selling and other marketing efforts. 5.7. Industrial Products Industrial products can be classified into three groups of materials and parts, capital items, and supplies and services. Materials and Parts This group includes raw materials and manufactured materials and parts. Raw materials consist of farm products (wheat, cotton, fruits, vegetables) and natural products (fish, wood, natural petroleum, iron ore). Manufactured materials and parts consist of component materials (iron, yarn, cement, wires) and component parts (small motors, tyres, castings). Most manufactured materials and parts are sold directly to industrial users. Price and service are the major marketing factors. Branding and advertising tend to be less important. Capital Items These are industrial products that aid in the buyer’s production or operations including installations and accessory equipment. Installations consist of buildings (factories, offices) and fixed equipment (generators, large computer systems, lifts). Accessory equipment includes portable factory equipment and tools (hand tools, fork lifts) and office equipment (PCs, fax machines, desks, chairs, etc.) CU IDOL SELF LEARNING MATERIAL (SLM)

72 Marketing Management Supplies Supplies include operating supplies (lubricants, coal, paper, pencils) and repair and maintenance items (paint, nails, brooms). Business services include maintenance maintenance and repair services (house keeping, annual maintenance contracts, computer repair) and business advisory services (legal, management consultancy, advertising) which are supplied on contract basis. 5.8. Other Special Products The concept of a product includes other special products over and above tangible ones. They are organizations, persons, places and ideas. Organizations market themselves as a product through corporate image building advertisements. Examples: Reliance, IBM, SAIL, Philips, Samsung, and Business Schools (IBS, IIM). Person marketing consists of marketing personalities as a product to build favourable public opinion for them. Examples: Presidential candidates, Members of Parliament, MLAs, film stars (Amitabh Bachchan), sports persons (Tendulkar, Tiger Woods). Place marketing involves advertising and attracting tourists, immigrants and business people to cities, states, and countries. Singapore, Hong Kong and Goa do a lot of marketing in these lines. In social marketing, ideas are marketed for improvement of social well-being of people. Examples: family planning, small savings, anti-smoking, anti-drug abuse, human rights, etc. 5.9 Product Mix Strategies Three types of product decisions are normally involved in marketing. They are: 1. Individual product decisions 2. Product line decisions 3. Product mix decisions 5.10. Individual Product Decisions The important product decisions involved here are product attributes, branding, packaging, labelling and product support services. CU IDOL SELF LEARNING MATERIAL (SLM)

Product Management Decisions and Development 73 Product Attributes: The benefits offered by a product are delivered by product attributes such as quality, features, and style and design. Product quality is the ability of a product to perform its promised functions. It includes durability, reliability, ease of operation and repair, which are linked to customer value and satisfaction. Quality of the product is an important positioning tool for marketers. Product features are a competitive tool used to differentiate the company’s product in the market. Product style and design help to attract attention of the customers, improve performance of the product and also give competitive advantage in the market (e.g., Flat screen TV, flat computer monitor). Branding: Branding is an important tool for marketers to create separate identity for a company’s product. A brand is a name, term, sign, symbol, or design, or a combination of these, that identifies the maker or seller of a product or service (Philip Kotler). Branding adds value to a product and consumers view a brand as an important part of a product. In today’s marketing scenario, branding has become a powerful and essential tool and hardly anything goes unbranded. Even products like salt, oil, fruits, milk, and poultry are branded. Example: Tata salt, Sungold mangoes, Amul and Nandini milk, Real Good chicken. Consumers have many advantages in branding. Brand names help them to identify products which might benefit them. Brands also tell the consumer something about product quality. Regular buyers of a brand are sure of getting the same benefits, features and quality each time they buy. The marketers or sellers also have several advantages in branding. The brand name becomes the basis on which a whole story can be built about a product’s special attributes and qualities. The seller’s brand name and trade mark provide legal protection for unique product features that otherwise might be copied by competitors. Branding helps sellers to establish brand image, brand personality, brand equity and brand loyalty for products. Branding will also facilitate the seller to segment markets and practice differential marketing. 5.11. Product Line Decisions A product line is a group of products that are clearly related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges. Example: Bata and Nike shoes, Nokia and Motorola mobile phones. The important product line decision involves product line length, i.e., the number of items in the product line. The product line is short if the marketer can increase profits by adding new items. CU IDOL SELF LEARNING MATERIAL (SLM)

74 Marketing Management The product line is too long if the marketer can increase profits by dropping items. A company can lengthen its product line in two ways: by line stretching or by line filling. Product Line Stretching occurs when a company lengthens its product line beyond its present range. It is possible for the company to stretch its line upward, downward or both ways. For example, Maruti can stretch its product line upwards by introducing a luxury car for the rich customers, or a cheaper small car for the lower income groups, which will be downwards extension. Product Line Filling involves addition of new items within the existing range of product line. Line filling is usually done to get extra profits, to satisfy dealers, use excess capacity, and plugging holes to keep out competitors. If line filling is overdone, it may result in cannibalism and customer confusion. The marketer should also ensure that new items added are noticeably different from existing products. 5.12 Product Mix Decisions A product mix (assortment of products) consists of all the product lines and items that a particular marketer offers for sale. For example, Hindustan Lever carries a variety of product lines like cosmetics, detergents, beverages (coffee, tea), food items, etc., and its product mix consists of more than 1000. The product mix of a company has four important dimensions: (i) Product mix width (ii) Product mix length (iii) Product mix depth (iv) Product mix consistency Product mix width refers to the number of different product lines the company carries. Example: Procter & Gamble carries 250 brands in lines of fabric and home care, baby care, feminine care, beauty care, health care, and food and beverage products. Product mix length refers to the total number of items the company carries within its product lines. Example: P&G has many brands within each line — 7 laundry detergents, 6 soaps, 5 shampoos. Product mix depth refers to the number of versions offered of each product in the line. CU IDOL SELF LEARNING MATERIAL (SLM)

Product Management Decisions and Development 75 Example: P&G Crest toothpaste comes in 13 varieties — Multi care, cavity protection, sensitivity protection, etc. Product mix consistency refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way. Example: P&G’s product mix consists of all consumer products that go through the same distribution channels and mostly to same retail shops and all for domestic end use. These product mix dimensions provide the basis for defining the company’s product strategy. The company can increase its business in four ways. It can add new product lines, thus widening its product mix. In this way, its new lines build on the company’s reputation in its other lines. The company can lengthen its existing product lines to become a more full-time company. Or, it can add more versions of each product and thus deepen its product mix. Finally, the company can pursue more product line consistency – or less – depending on whether it wants to have a strong reputation in a single field or in several fields. 5.13. Packaging and Labeling Packaging involves the activities of designing and producing the container or wrapper of a product. The package includes a product’s primary container (the tube of Pepsodent toothpaste), and also a secondary packing (the outer cardboard box). It can also include a shipping package (a large box in which assortments of 1 dozen or more are put for storage and transport). Labelling, i.e., product, brand, and price information printed on the package, is also part of packaging. Packaging’s primary function is to contain and protect the product. Traditionally, the other purposes of packaging were to provide for easy moving, handling and transportation, provide for easy placement and display on store shelves, prevent or reduce the possibility of pilferage or theft, and prevent tampering or adulteration (especially food and drugs). Today, under competitive market conditions, packages and labels are increasingly viewed as a key part of a company’s integrated marketing communications programme. It makes little sense to spend lakhs of rupees on advertising only to lose the sale in the retail store because of a lacklustre, dull package design that does not communicate to potential customers. A package design must stand out among the clutter in the shops. The package must tell customers what is inside and why the brand should be purchased. In most of the retail outlets, the employees may not know anything about the products that are displayed on the shelves. Therefore, the product’s package is the last opportunity to make an impression on a customer – packaging acts as a silent salesman. CU IDOL SELF LEARNING MATERIAL (SLM)

76 Marketing Management Marketing surveys have revealed that only 30 per cent of normal household purchases are planned prior to reaching a retail store. This means 70 per cent of purchase decisions are made in the store. Other research indicates that when consumers walk within 10 to 15 feet of a product, the brand has three seconds to make contact with the consumer. Most retail purchase decisions are made based on familiarity with a brand or product at the retail store. Consequently, a unique package that is attractive or captures the buyers’ attention increases the chances the product will be purchased, sometimes as an impulse buy. As a silent salesman, packaging performs many sales tasks like attracting attention, describing the product (ingredients, usage, nutritional data, etc.), creating consumer confidence and making the sale. Packaging creates instant product and brand recognition by the buyers and helps to influence buyers in retail shops and supermarkets. E.g., Cinthol powder with its red colour pack, Parachute coconut oil with its blue colour pack, Bru coffee with its green colour, stand out among the clutter. Shabbily designed packaging can cause headaches for buyers and result in lost sales for the company. Consumers nowadays tend to buy packages that are eye- catching, convenient to handle and use, and contemporary. Labelling Labelling can vary from simple tags attached to products to complex graphics that are part of the package. Label identifies the product or brand, describes several things about the product like manufacturer’s name, place of manufacture, date, contents, using instructions and safety precautions. Label can also promote the product through attractive graphics. To control misleading, false or deceptive labels or packages, several acts have been passed by the Government like the Packaged Commodities (Regulation) Order, 1975. In recent times, packaging has statutory regulations like printing of Maximum Retail Price (MRP), expiry date, nutritional value specification, fat content data, etc. Benefits of packaging and labelling Packaging and labelling provide the following benefits: 1. Creates customer satisfaction. 2. Protects the contents. 3. Communicates the product attributes to consumers. 4. Helps in product handling and display on racks in retail outlets. 5. Facilitates quick identification of brand name and manufacturer. 6. Promotes the product with attractive design and colours. 7. Keeps costs down. CU IDOL SELF LEARNING MATERIAL (SLM)

Product Management Decisions and Development 77 8. Provides information on the ingredients of the product, usage instructions, MRP, date of manufacture and date of expiry, etc. 9. Offers customer convenience. 10. Facilitates building brand image, brand associations, brand loyalty and brand equity. 11. Packages which are bio-degradable, or made out of recycled materials appeal to customers who are concerned about protecting the environment. These packages are easily disposable and do not affect the environment like tin or plastic. 12. Packages like reusable jars of coffee and health drinks add utility value to customers who can use them in the kitchen, and benefit manufacturers as an in-house reminder of the brand for a longer period. Packaging Strategies Two reasons could make the management consider a package change. One is to combat a decrease in sales and the other, to expand a market by attracting new groups of customers. Sometimes a company may want to take advantage of some materials like paper cartons or pet jars for a package change. Some companies change their containers to support new promotional programmes. A new package may be used as a major appeal in advertising copy or because the old container may not show up well in advertisements. Packaging the Product Line A company may decide whether to develop a family resemblance in the packing of its many products. Family packing involves the use of identical package for all products or the use of packages with some common feature. Shahnaz Hussain's Herbal, for example, uses virtually identical packaging which generally parallels its feelings about family branding. When new products are added to a line, promotional values associated with old products extend to the new ones. Family packaging should be used only when the products are related in use and are of similar quality. Reusable Packaging Reusable packaging is another strategy to be considered, which is very popular among the FMCG marketers. The reusable container can serve other purposes; say as kitchen containers, after the original contents have been consumed. Coffee, Tea, Oats, Horlicks, etc., are packed often in reusable containers. These packages also help in reminding the customers, of the product, for a long period, when the containers are used in the kitchen. Some reusable packages also CU IDOL SELF LEARNING MATERIAL (SLM)

78 Marketing Management encourage repeat purchases as the housewife attempts to collect a matching set of containers for use in the kitchen or store room. Multiple Packaging There is a new trend towards multiple packaging or the practice of placing many units in one package. Ready to eat packaged food of MTR, dehydrated soups, chocolates, handkerchiefs and towels, bed sheets, etc., are sometimes packed in bundles of three or more together, in single packs. This is a promotional means to increase total sale of a product, as a few packets are sold together in a package or bundle. Sometimes these are promoted with a discounted price for the bundled pack, or as 'buy 2 get 1 free' scheme. Legal aspects of packaging As per the Packaged Commodities (Regulation) Order of the Government of India, packages have to carry specified information like maximum retail price (MRP), date of manufacture and expiry, guarantee period, place where manufactured, batch no., volume or weight of contents, ingredients, etc. The package should also be safe and if necessary, warning labels on hazardous materials like pesticides, poison - keep away from children, highly inflammable - keep away from fire and heat, etc. should be provided. Products which conform to prescribed standards and have been certified as such have to bear the markings of AGMARK, BIS, Eco label, etc., on the package. It is illegal to copy the packaging design of the competitor (though some companies do this to get quick sales). Cost effectiveness of packaging Packaging should be cost-effective. It is important to analyse the costs involved in packaging against the benefits generated additionally. The company has to decide whether it should go for expensive packaging or ordinary one, whether to do in-company packing or to outsource packaging, whether packaging machinery is to be purchased or to resort to manual packing, and whether the benefits to consumer will be tangible or not. Social aspects of packaging There are some who feel that expensive packages are a waste of resources. Fancy expensive packages, according to them, not only raises the cost of the product to the consumer, but also leads to peculiar cases where the cost of the package is higher than the cost of the contents (like perfume in cut-glass bottles). But most marketers believe that ordinary packaging will diminish the edge of competitiveness and the drive for innovation would no longer exist. Another social concern is the disposal of non-biodegradable packages of consumer goods after the contents are used which result in piling up of solid waste. This creates unnecessary pollution in the CU IDOL SELF LEARNING MATERIAL (SLM)

Product Management Decisions and Development 79 environment resulting in ecological imbalance problems. Some types of packaging materials are difficult to destroy and are not reusable either. These reasons have made many marketing companies adopt fully bio-degradable or reusable or recycled packaging materials nowadays. Product Support Services These are customer support services offered by sellers. They include door delivery, maintenance and servicing, warranty, guarantee, etc. 5.14 Summary Product represents the goods and services offered by a company to the target market, to satisfy needs and wants. It is the primary element in the marketing mix consisting of the 4 Ps. Products refer to tangible and intangible goods like physical objects, services, events, persons, places, organisations, ideas or combinations of these. They can be consumer products or industrial products. Each of these has different classifications.“A product is anything that can be offered to a market for attention, acquisition, use or consumption and might satisfy a want or need”. Products have different levels, starting from core benefit, basic product, expected product, augmented product, the potential product. Product hierarchy consists of six levels. Products can be classified into two classes based on the type of consumers who use them, i.e., consumer products and industrial products. Consumer products can be further classified into convenience products, shopping products, speciality products and unsought products. These products differ in the ways consumers buy them, and therefore, in how they are marketed. Industrial products can be classified into three groups of materials and parts, capital items, and supplies and services. Product mix strategies involve three types of decisions: Individual product decisions- Product line decisions- Product mix decisions- Packaging and labelling decisions. 5.15 Key Words/Abbreviations Product: Anything that can be offered to satisfy a demand services: Intangible products like banking, insurance, legal Product levels: Basic product – expected product - augmented product – potential product Consumer product: Used by ultimate consumers Industrial product: Used by industries for production CU IDOL SELF LEARNING MATERIAL (SLM)

80 Marketing Management Product hierarchy: Stretches from basic needs to particular items that satisfy those needs. Product class: A group of products within the product family recognized as having a certain functional coherence. Also known as product category Product line: A group of related products of a company Product mix: All products sold by a company Packaging: External cover/container of a product Labelling: Descriptive label pasted on package Customer support services: Additional service given to customers like door delivery Convenience products: Low priced products of daily use Speciality products: Expensive products purchased once like TV, fridge, etc Unsought products: Products not demanded like dictionary Tangible and intangible goods: Tangible can be touched and felt before purchase Material and parts: Raw materials and spares Capital items:Factory, land, buildings, heavy equipments Supplies: Water, electricity, petrol, oil, stationery etc Organisation marketing: Promoting a company’ image Person marketing: Marketing individuals like politicians, film stars Place marketing: Promoting social causes like polio drops, cancer awareness Product attributes: Special features and qualities of products Door delivery: Delivering products at customer’s homes Warranty/guarantee: Promise by company to replace defective product 5.16 Learning Activity 1. Take the examples of 5 consumer durable products and analyse each of them to identify their different levels of product. ----------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------- 2. Make a list of 5 products in the classifications convenience, shopping, speciality and unsought products. CU IDOL SELF LEARNING MATERIAL (SLM)

Product Management Decisions and Development 81 ----------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------- 3. Identify and list out at least 5 industrial products under each classifications of material and parts, capital items, support and services. ----------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------- 4. Take 5 packaged FMCG products and analyse their packaging and labeling . List out the information provided on those packages or labels. ----------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------- 5. Take the example of ITC, P&G, Honda and WIPRO and explain their product mix and product lines. ----------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------- 5.17 Unit End Questions (MCQ and Descriptive) A. Descriptive Types Questions 1. Product consists of different levels – Explain using a diagram and using examples. 2. Using the example of Coca Cola, elaborate the concept of product hierarchy. 3. Discuss the classifications of consumer products and the marketing considerations for each class. Give 2 examples for each class. 4. Elaborate the meaning of industrial products and explain in detail their classifications with examples for each class. 5. Packaging is a silent salesman - Justify. 6. FMCG companies follow different packaging strategies. Elaborate. 7. Identify and discuss the five factors that influence the amount of search performed by consumers in a typical decision making process. 8. What is product positioning? What factors do bring the greatest degree of success? 9. Define the concept of product. Discuss the classification of product CU IDOL SELF LEARNING MATERIAL (SLM)

82 Marketing Management B. Multiple Choice/Objective Type Questions 1. Speciality products include: (a) Luxury cars (b) Expensive watches (c) Diamond jewellery (d) All of above. 2. Supplies include: (a) Housekeeping and AMC (b) Material and parts (c) Office equipment (d) All of above 3. At the product augmentation level, this takes place: (a) Differentiation (b) Brand positioning (c) Competition (d) All of the above. 4. For shopping products, consumers compare: (a) Price (b) Quality (c) Style/Design (d) All of the above. 5. Packaging involves activities like: (a) Primary container (b) Secondary packing (c) Shipping package (d) All of above Ans.: 1. (d), 2. (a), 3. (d), 4. (d), 5. (d). 5.18 References Text Books Dr.K.Karunakaran, Marketing Management, ed., HPH Reference Books 1. Philip Kotler, Marketing Management, ed. Pearson / PHI 2. Chunawalla.S.A , Product Management, HPH Web Resources 1. www.journals.elsevier.com 2. www. oxfordcollegeofmarketing.com 3. www.omicsonline.org CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 6 BRAND AND BRANDING STRATEGY Structure: 6.0 Learning Objectives 6.1 Introduction 6.2 Brand Concepts 6.3 Advantages and Disadvantages of branding 6.4 Brand Equity 6.5 Building Brand Equity 6.6 Guidelines for Building Brand Equity 6.7 Brand Strategy Decisions 6.8 Managing Brands 6.9 Product Differentiation 6.10 Summary 6.11 Key Words/Abbreviations 6.12 Learning Activity 6.13 Unit End Questions (MCQ and Descriptive) 6.14 References 6.0 Learning Objectives After studying this unit, you will be able to: Understand the meaning, concepts and importance of branding Familiarise with the brand equity concept and its value Learn the advantages and disadvantages of branding Understand the need and types of brand strategies

84 Marketing Management 6.1 Introduction This unit will help you to learn the meaning, importance and concepts of brand and branding. You will also understand the various brand strategy decisions like brand positioning, brand name selection, logo selection, brand extensions, brand sponsorship, brand development and brand/product differentiation. 6.2 Brand Concepts The origin of the word ‘brand’ could be traced to the Norwegian word ‘brandr’ meaning to ‘burn’. Owners of livestock (cows and sheep) had the habit of putting some identification mark on the body of the animals by using a burning hot iron, to distinguish their possession. Similarly, companies started resorting to branding to distinguish their marketing offerings (products and services) from similar products and services provided by their competitors. Amul, Nirma, Lux, Titan, Bajaj, and Nokia are examples of popular brand names. “A brand is a name, term, sign, symbol, or design, or a combination of these, that identifies the maker or seller of a product or service.” (Philip Kotler). Consumers perceive brand as an important part of a product and branding adds value to a product. Brands can be considered as the major enduring assets of a company. In the case of many successful companies, the brand value will be more than the value of the land and factory they own. Brands are powerful assets that must be carefully developed and managed. Brands are more than just names and symbols. They represent consumers’ perceptions and feelings about a product and its performance — in fact, everything that the product or service means to consumers. The real value of a strong brand is its power to capture consumer preference and loyalty. 6.3 Advantages and Disadvantages of Branding Advantage: Awareness The harder a company works on its branding and identity, in most cases, the more awareness it creates. For example, Coca-Cola is known worldwide for its product. A consumer can see it in a foreign county, with labeling in a foreign language and know it is a Coca-Cola product. The red colour and shape of the bottle is an immediate trigger in many minds as to the fact that the drink is a Coca-Cola product. This is branding and identity at its best. CU IDOL SELF LEARNING MATERIAL (SLM)

Brand and Branding Strategy 85 Advantage: Consistency in the Marketplace The more often a customer sees your brand in the marketplace, the more often he will consider it for purchase. If the brand and identity are truly kept consistent, the customer is more likely to feel that the quality is consistent and to become a loyal follower of the brand. However, this means that the product must maintain a consistency that reflects the image as well. Advantage: Customer Loyalty Well-executed branding helps create customer loyalty by reinforcing the purchase of merchandise in the consumer's mind. For sporting products, a campaign focused on physical fitness and not on a particular product helps establish the brand as a leader in the industry for both previous and future customers. When the product is associated with a lifestyle, it keeps consumers pursuing similar goals coming back. Disadvantage: Can Become Commonplace Many brands strive to be No. 1 in the minds of consumers. For example, in many parts of the U.S., people request a Coke when they go to a restaurant, not necessarily meaning a Coca-Cola product, but any soda. While it is the goal of branding to become the standard, it is not the goal to become the generic term of a line of products. Disadvantage: Negative Attributes If a product or service experiences a negative event, that will become attached to the brand. For example, a massive recall or unintentionally offensive ad campaign can tarnish a company’s brand and image, causing the company to need to build a whole new brand and identity to recapture its place in the market. Disadvantage: Pigeonholes Sometimes establishing a strong brand identity can backfire when a company needs to pivot in response to changing market conditions. A bakery known for sweet cakes may find it hard to rebrand as a purveyor of gluten-free goods when its name calls to mind images of pastries, frosting and sprinkles. 6.4 Brand Equity Brands vary in the amount of power and value they have in the market. A powerful brand has high brand equity. “Brand equity is the positive differential effect that knowing the brand name has on consumer response to the product or service. A measure of a brand’s equity is the extent to which customers are willing to pay more for the brand” (Philip Kotler). For example, compared to CU IDOL SELF LEARNING MATERIAL (SLM)

86 Marketing Management the price of `500/- for an unknown brand of walkman, a customer may be willing to pay `1000 for a Philips or Sony. David Aaker has defined brand equity as “the unique set of brand assets and liabilities that is linked to a brand.” Brand equity is the net result of all the investments and efforts that a marketer puts into building a brand. “Usership of the brand, customer loyalty towards it, its perceived quality, positive symbols and favourable associations around the brand — a bundle of all these attributes together results in brand equity.” Only by continuously monitoring all these aspects, does the marketer convert what really is a product into a brand. In simple terms, brand equity is the value or worth of a brand. A brand with strong brand equity is a very valuable asset for any company. Brand value is normally measured and expressed as the total financial value of a brand. According to an estimate, the brand value of Microsoft is $65 billion, Coca Cola is $69 billion and IBM is $ 53 billion. High brand equity provides a company with many competitive advantages. A powerful brand enjoys a high level of consumer brand awareness and loyalty. Since the brand name carries high credibility, the company can more easily launch line and brand extensions. Example: Coca Cola launching Diet Coke, P&G launching Tide, TATA launching Tata Salt. A powerful brand provides the company some defence against fierce price competition in the market. The basic asset underlying brand equity is consumer equity, which is the value of the customer relationships that the brand creates. What a powerful brand really represents is a group of brand loyal customers. Marketing people’s job is, therefore, to build customer equity using brand management as a tool. David A. Aaker has proposed a structure of five assets underlying brand equity which create value for both customers and the marketer. (See Fig. 6.1). They are as follows: CU IDOL SELF LEARNING MATERIAL (SLM)

Brand and Branding Strategy 87 Fig. 6.1: Managing Brand Equity (Source: David A. Aaker, Managing Brand Equity, The Free Press, N.Y. 1991) 1. Brand loyalty: When customers perceive high value for a brand name or symbol and exhibit high loyalty to the brand, it is an important asset. It can be used for persuading the customers for additional purchase or for spreading goodwill through word of mouth. 2. Name awareness: Awareness creation about a brand name among the target audience is a necessary precondition for trial of products or services. Customers rarely purchase an unknown brand. 3. Perceived quality: A well-known brand always conveys an image of good quality, durability and dependability. Customers form their own judgment about quality and get induced into purchase decision. (E.g.: Nokia, Nike, Titan, etc.) 4. Brand associations: Customers have certain subjective and emotional attachments which form a part of the brand equity. These associations together form a “ brand personality”, which suggests situations and customers for whom the particular brand is suitable. (E.g. Omega watches, Reid & Taylor suiting, Parker pens, etc.) 5. Other assets: Patents, trade mark, etc. are other valuable assets of a brand. CU IDOL SELF LEARNING MATERIAL (SLM)

88 Marketing Management 6.5 Building Brand Equity Building brand equity is an important activity for marketers. From the figure given in 6.1 and the explanation, it is clear that brand equity is the result of factors like brand awareness, brand loyalty, brand image (perceived quality) and brand associations. The brand equity evolves when the customers have higher brand awareness, brand recognition and strong brand associations which are favourable and unique. The strength of brand association is determined by the levels of information search and processing by the consumers. The nature of information, quality and quantity of information sought will also affect the association. The more deeply a consumer thinks about a product, the more will be the brand association. Brand strength is also affected by the consistency of the information. Favourable brand association is created when the company develops marketing strategies effectively to deliver product-related and non-product-related benefits that are expected, desired and preferred by the consumers. This process has to be consistent over a period of time. The brand associations should be unique, i.e., it should be a set of meaningful points of different brand associations to gain competitive advantage. Building brand equity requires careful consideration of the following: 1. Choice of brand elements that make up the brand. 2. Developing and implementing marketing support programmes. 3. Leveraging secondary associations by linking the brand to other entities. The marketer has to consider the complimentarily and consistency of different ways and means of building brand equity. The complimentarily factors are choice of different brand elements and different marketing support programmes. It is necessary that the strengths of some elements are compensated for the weaknesses of other elements. Consistency refers to the fact that different brand elements and marketing activities share the same common meaning. It also implies that the meaning is communicated to the consumers without much distortion. 6.6 Guidelines for Building Brand Equity The following six guidelines have been suggested by Kevin Keller for building brand equity: 1. Mix and match brand elements like brand names, logos, symbols, characters, slogans, jingles and packages. Choose different brand elements to achieve different objectives and design brand elements to be mutually complementing each other. 2. Create rich brand image and perceived quality by developing and linking product and non-product-related associations to the brand. Product Decisions 153. CU IDOL SELF LEARNING MATERIAL (SLM)

Brand and Branding Strategy 89 3. Value-based pricing: Set prices and discount policies over time to reflect value perceptions of the consumers, and incorporate their willingness to pay a premium price for the brand. 4. Channel synergy: This involves blending 'push' strategies for channel members and 'pull' strategies for consumers. 5. Marketing communications: A wide range of communication channels should be used to create awareness, strengthen favourable and unique brand associations. It is also necessary to maintain consistency for reinforcing the developed associations. 6. Leverage secondary association: When some dimensions are missing, they can be compensated by associating other entities like company, channel, other brands, celebrities or brand ambassadors (endorsers) that build the brand image. It is not enough to just build brand equity. It has to be sustained and managed over longer period of time. For this, marketing managers have to take a broad view of brand equity. This is all the more important especially when the company is operating in multiple markets. Creating brand hierarchy is critical in these cases. The brands should have unique brand elements. In order to achieve this, new brands and brand extensions have to be designed to maintain an optimal product portfolio. Brand awareness and positive brand image has to be created in each of the market the company is doing business in. Long-term view is necessary because the marketing support activities will have impact not only in the current period, but also in the future. Brands that are described as 'strong' have many characteristics distinguishing them: Prominence in the product category Capacity to evoke a more extensive, richer set of associations Visual images and logo or taglines linked to them more easily recalled and retrieved from memory High regard by consumers, and High market share and market leadership. The following guidelines have been suggested by brand strategy experts like Aaker and Keller for building strong brands: 1. Build brand identity: Consider brand as a person or an organization, or a product. Brand image is different from brand identity. Image refers to how the brand is perceived, and identity is how the company aspires to be perceived. CU IDOL SELF LEARNING MATERIAL (SLM)

90 Marketing Management 2. Commit for a value proposition: Each brand has a driving value proposition. Identify the driver and the functional, emotional and self - expressive benefits that consumers expect. Build the brand relationship to strengthen the above. 3. Position the brand: The positioning of the brand should consider necessary and desired points of parity and points of differentiation in the product category. Clear positioning will guide a clear communication strategy. 4. Implement with consistency: The communication should be aimed at creating brand awareness and brand association. Also, it should be consistent and durable. 5. Consistency over time: Maintain logos, symbols and imagery without change. If there is a need for change, understand the consumers' minds before making any modification. 6. Brand system: The brands in the product portfolio of a company should have synergy. 7. Leveraging the brand: Plan for extensions carefully to increase the brand identity, image and other positive associations. 8. Monitoring brand equity: Monitor the brand over time, including awareness, perceived quality, brand loyalty and brand associations. Communication channels and messages also need to be monitored regularly. 9. Brand responsibility: Assign responsibility of a brand to some one who can co-ordinate all the brand-related activities in the company. 10. Invest in brands: Continue to invest on brands to nurture them. It is important to enhance brand equity by continuous product innovation, new creative advertising messages and extensive distribution, to sustain the consumer relevance and user/usage imagery. 6.7 Brand Strategy Decisions The important brand strategy decisions are as below: 1. Brand Positioning — Attributes Benefits Beliefs and values 2. Brand name selection — Selection Protection CU IDOL SELF LEARNING MATERIAL (SLM)

Brand and Branding Strategy 91 3. Brand sponsorship — Manufacturer’s brand Private brand Licensing Co-branding 4. Brand development — Line extensions Brand extensions Multibrands New brands 1. Brand Positioning Marketers can position their brands clearly in target customers’ minds at three levels. Positioning based on product attributes is the lowest level (e.g: face cream–cleansing). A better positioning is by using the brand name with a desirable benefit to the customer. (e.g: face cream – Ponds – softer skin, glowing skin ). Strongest brands are positioned on strong beliefs and values. (e.g: face cream– makes you more attractive). Example: Clearasil, Halo shampoo. While positioning a brand, the marketing people have to establish a mission for the brand and a vision of what the brand must be and will do. A brand is a company’s promise to deliver a specified package of features, benefits, services, and experiences to the customers. 2. Brand Name Selection Selection of a brand name starts with a careful analysis of the product and its benefits, the target market, and proposed marketing strategies. A good brand name, after all, will add greatly to a product’s success. The following are the desirable qualities for a brand name: (a) The name should be suggestive of the product’s benefits and qualities. E.g.: Fair & Lovely, V-guard, Whirlpool (b) It should be easy to pronounce, recognize and remember. E.g.: Ariel, Surf, Nokia, Pepsi (c) The brand name should be distinctive. E.g.: Kodak, Oracle, Canon (d) It should be extendable. E.g.: Amazon.com online bookseller expanded into other categories. CU IDOL SELF LEARNING MATERIAL (SLM)

92 Marketing Management (e) The brand name should translate into foreign languages easily, and should not have different meanings in different languages. Product Decisions 155. (f) The name should be capable of registration and legal protection. For this, the name should be original and not copy of other product names. After the selection is over, the brand name has to be legally protected to prevent competitors using the name. Occasionally, however, some protected brand names become very successful and become generic names used by all. E.g.: Xerox, Cellophane, Linoleum, Vaseline. When the number of product lines and the variety of products increase, the job of selecting a brand name becomes difficult and complicated. Some alternatives available are: Individual brand names: Here each product of the company is given an independent brand name. Hindustan Lever Ltd., for example, gives separate brand names for its products — bathing soaps line: Dove, Lux, Pears, Lifebuoy, Liril, Hamam; detergents line: Surf, Rin, Wheel Family or Umbrella brand names: Here different groups of related products of a company are marketed under one brand name. Example: HLL’s Brooke Bond for tea and coffee products, Kissan for foods line, Lakme for cosmetics line. Amul is umbrella/family brand name for milk products. Company name as brand name: Some companies use the company name as brand name for their products. Example: Philips, Bajaj, Cadbury, BPL, HMT, Samsung and Godrej. Brand Logo Selection Most companies use a logo along with the brand name, for visual identification. A logo is a pictorial symbol intended to communicate with the consumers. Logo improves recognition of the product by customers. It is an accompaniment to the brand name and the two together identify a company’s product. Logos can be made of anything — words, letters, pictures or graphics. Examples of popular logos: 1. Air India - Maharaja 2. Ceat Tyres - Rhino 3. Amul Butter - Girl 4 Asian Paints - Gattu the boy CU IDOL SELF LEARNING MATERIAL (SLM)