Plc as a tool for marketing strategy

PLC AS A TOOL FOR MARKETING STRATEGY

Topic: MARKETING MANAGEMENT

1. Explain the following:
(a) Production concept
(b) Product line
(c) Augmented product
(d) Social marketing concept
2. Explain various concepts of marketing with suitable examples.
3. “PLC as a tool for marketing strategy” justify.
4. Explain process of selecting the final price.
5. Explain “direct marketing” and its applicability with examples

CONTENT

1. Explain the following:
(a) Production concept
(b) Product line
(c) Augmented product
(d) Social marketing concept
I. INTRODUCTION

Every company can have different ideas or philosophy. For example, a particular
company can have its idea or philosophy that if the production is done on a large
scale, the cost would be less and the the product would be sold automatically

In this way, such a company will concentrate mainly on the large scale
production of goods. Similarly, some other company can have a different idea. It may
have an idea that if the quality of the product is improved, there will be no difficulty in
selling the product.

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Under the marketing management philosophy, we shall study the following
four concepts: production concept, product line, augmented product, social marketing
concept.
II. BODY
(a) Production concept:

Business concerned itself primarily with production, manufacturing, and
efficiency issues. To put it another way, if a product is made, somebody will want to
buy it. The reason for the predominance of this orientation is there was a shortage of
manufactured goods (relative to demand) during this period so goods sold easily.

The basic proposition is that customers will choose products and services that
are widely available and are of low cost. So business is mainly concerned with making
as many units as possible. By concentrating on producing maximum volumes, such a
business aims to maximise profitability by exploiting economies of scale. Managers
try to achieve higher volume with low cost and intensive distribution strategy. This
seems a viable strategy in a developing market where market expansion is the survival
strategy for the business. Companies interested to take the benefit of scale economies
purse this kind of orientation.

In a production-orientated business, the needs of customers are secondary
compared with the need to increase output. Such an approach is probably most
effective when a business operates in very high growth markets or where the potential
for economies of scale is significant. It is natural that the companies cannot deliver
quality products and suffer from problems arising out of impersonal behavior with the
customers.
(b) Product line:

A product line refers to a number of products that are related and developed by
the same manufacturer. A product line includes different products that are offered to
the public at varying price points. This way, a manufacturer or company can ensure
that all products within a linewill be purchased by all kinds of people. Product line
extension refers to any additional products that may be added to a current product line.

Most of the time, product extensions are introduced to the public in order to
ward off competitors. By creating products that match other, competitive products,

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manufacturers are able to keep customers interested in a product that they are familiar
with. Since most people purchase brands that they know, these same consumers are
more likely to purchase a new product from a brand that they are comfortable with
rather than purchase a product from an unknown brand.

Marketers create target markets based upon age groups, geographical locations,
and ethnicity. Target markets refer to a group, or groups, of people that are likely to
purchase one product. Thus, even though products might be related, some products
may look different, smell different, and even appear unrelated in order to appeal to
different types of people.

For example, many air freshener manufacturers offer a variety of products
ranging, targeted to parents with young children; to simple aerosol air fresheners,
targeted to consumers who don't want to spend a lot of money on an air freshener.
While these products are related, they are vastly different.

Clearly, a great deal of strategy goes into marketing various products. Marketers
must be aware of competition at all times in order to advise manufacturers on new

products that should be added to an existing product line. In addition, a marketing
agency should be aware of those products that sell, and those that remain unpopular.

Through the collection of statistical data, marketers can effectively determine
what products should be kept within a product line, and what products should be
phased out. Pricing is used to create a large barrier between different products, and
higher-priced products are usually justified based upon certain ingredients.
(c) Augmented product:

An augmented product is a product with additional features and services that set
it aside from similar competitors. Companies augment their products to increase
revenues, and may create additional streams of revenue in the process, depending on
the types of products and services they offer. Consumers may preferentially select an
augmented product when they have an option, which puts demand on manufacturers
to continue adding innovations to their products to capture and hold consumer
attention. Accessibility, products may be accessed by customers quickly such as
availability when needed, quick delivery, shipment in person.

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The core product may be something like a computer. The manufacturer can add
features like warranty, customer support, membership with a club, or accessories that
come with the computer, such as a laptop case or a keyboard. A computer
manufacturer has a number of manufacturers who create products of similar quality
that operate in a similar way, and consumers may differentiate between various
offerings on the basis of the augmented product package.

Consumers weighing a choice between two similar options may pick the one
with more apparent benefits, like the laptop that comes with a case and a year's
support plan. It is also possible to get consumers to pay more through the use of an

augmented product, because the consumer could feel like the extra features make it a
better deal. Consumers view these options as value adders, and can interact with the
product and the marketing much differently depending on the level of features
available.
d) Social marketing concept:

The societal marketing concept was an offshoot of the marketing concept
wherein an organization believes in giving back to the society by producing better
products targeted towards society welfare.

The societal marketing concept calls upon marketers to build social and ethical
considerations into their marketing practices. They must balance and juggle the often
conflicting criteria of company profits, consumer want satisfaction, and public
interest. Yet a number of companies have achieved notable sales and profit gains by
adopting and practicing the societal marketing concept. Some companies practice a
form of the societal marketing concept called cause related marketing. Pringle and
Thompson define this as “activity by which a company with an image, product, or
service to market builds a relationship or partnership with a ‘cause,’ or a number of
‘causes,’ for mutual benefit.

They see it as affording an opportunity for companies to enhance their corporate
reputation, raise brand awareness, increase customer loyalty, build sales, and increase
press coverage. Smart companies will respond by adding “higher order” image
attributes than simply rational and emotional benefits. Thus societal marketing

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concept as related to cause related marketing differs mainly because here, the
company makes a proactive effort to give back to the society.
III. CONCLUSION

Today, in the context of rich and diverse market demand, increasingly
competitive, scarce business resources, the role of marketing management is
becoming increasingly important in business maintenance and development.

Proper understanding and application of marketing management knowledge will
contribute to the success of business operations. This will establish a strong position
and grow in a modern business environment.

2. Explain various concepts of marketing with suitable examples.
I. INTRODUCTION

What philosophy should guide a company marketing and selling efforts? What
relative weights should be given to the interests of the organization, the customers,
and society? These interest often clash, however, an organization’s marketing and
selling activities should be carried out under a well-thought-out philosophy of
efficiency, effectiveness, and socially responsibility.

Five orientations philosophical concepts to the marketplace have guided and
continue to guide organizational activities:

(1) Production Concept
(2) Product Concept
(3) Selling Concept
(4) Marketing Concept
(5) Societal Marketing Concept
II. BODY

The Production Concept. This concept is the oldest of the concepts in
business. It holds that consumers will prefer products that are widely available and

inexpensive. Managers focusing on this concept concentrate on achieving high
production efficiency, low costs, and mass distribution. They assume that consumers
are primarily interested in product availability and low prices. This orientation makes

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sense in developing countries, where consumers are more interested in obtaining the
product than in its features.

The Product Concept. This orientation holds that consumers will favor those
products that offer the most quality, performance, or innovative features. Managers
focusing on this concept concentrate on making superior products and improving them
over time. They assume that buyers admire well-made products and can appraise
quality and performance. However, these managers are sometimes caught up in a love
affair with their product and do not realize what the market needs. Management
might commit the “better-mousetrap” fallacy, believing that a better mousetrap will
lead people to beat a path to its door.

The Selling Concept. This is another common business orientation. It holds
that consumers and businesses, if left alone, will ordinarily not buy enough of the
selling company’s products. The organization must, therefore, undertake an
aggressive selling and promotion effort. This concept assumes that consumers
typically show buying inertia or resistance and must be coaxed into buying. It also
assumes that the company has a whole battery of effective selling and promotional
tools to stimulate more buying. Most firms practice the selling concept when they
have overcapacity. Their aim is to sell what they make rather than make what the
market wants.

The Marketing Concept. This is a business philosophy that challenges the
above three business orientations. Its central tenets crystallized in the 1950s. It holds

that the key to achieving its organizational goals (goals of the selling company)
consists of the company being more effective than competitors in creating, delivering,
and communicating customer value to its selected target customers. The marketing
concept rests on four pillars: target market, customer needs, integrated marketing and
profitability.

The Societal Marketing Concept. This concept holds that the organization’s
task is to determine the needs, wants, and interests of target markets and to deliver the
desired satisfactions more effectively and efficiently than competitors. Additionally,

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it holds that this all must be done in a way that preserves or enhances the consumer’s
and the society’s well-being.

This orientation arose as some questioned whether the Marketing Concept is an
appropriate philosophy in an age of environmental deterioration, resource shortages,
explosive population growth, world hunger and poverty, and neglected social services.

Are companies that do an excellent job of satisfying consumer wants necessarily
acting in the best long-run interests of consumers and society?

Just consider:The fast-food hamburger industry offers tasty but unhealthy food.
The hamburgers have a high fat content, and the restaurants promote fries and pies,
two products high in starch and fat. The products are wrapped in convenient
packaging, which leads to much waste. In satisfying consumer wants, these
restaurants may be hurting consumer health and causing environmental problems.

III. CONCLUSION

From the basic philosophies, companies may choose to apply to their business
activities. The choice of a particular philosophy depends on factors such as:
competitive position, product and service features, market situation ... But the most
important thing in modern marketing management trends is to bring high satisfaction to
their customers, business profits and social benefits.

3. Explain market segmentation with suitable examples.

I. INTRODUCTION
Market segmentation is the process of dividing a market up into different groups

of customers, in order to create different products to meet their specific needs. The
most obvious type of segmentation is between customers who buy distinctly different
products. For example, in manufacturing sandwiches, you would clearly be able to
make a distinction between creating sandwiches for vegetarians and those for meat
eaters.
II. BODY

Basis of Market Segmentation:

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- Gender:
The marketers divide the market into smaller segments based on gender. Both
men and women have different interests and preferences, and thus the need for
segmentation.
Organizations need to have different marketing strategies for men which would
obviously not work in case of females.
A woman would not purchase a product meant for males and vice a versa.
The segmentation of the market as per the gender is important in many industries

like cosmetics, footwear, jewellery and apparel industries.
- Age Group:
Division on the basis of age group of the target audience is also one of the ways
of market segmentation.
The products and marketing strategies for teenagers would obviously be
different than kids.
Age group (0 - 10 years) - Toys, Nappies.
Age Group (10 - 20 years) - Toys, Apparels, Books, School Bags.
Age group (20 years and above) - Cosmetics, Anti-Ageing Products, Magazines,
apparels and so on.
- Income:
Marketers divide the consumers into small segments as per their income.
Individuals are classified into segments according to their monthly earnings.
The three categories are:
1) High income Group
2) Mid Income Group

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3) Low Income Group

Stores catering to the higher income group would have different range of
products and strategies as compared to stores which target the lower income group.

Pantaloon, Carrefour, Shopper’s stop target the high income group as compared
to Vishal Retail, Reliance Retail or Big Bazaar who cater to the individuals belonging
to the lower income segment.

- Marital Status:

Market segmentation can also be as per the marital status of the individuals.
Travel agencies would not have similar holiday packages for bachelors and married
couples.

- Occupation:

Office goers would have different needs as compared to school / college
students.

A beach house shirt or a funky T Shirt would have no takers in a Zodiac Store as
it caters specifically to the professionals.

Types of Market Segmentation

- Psychographic segmentation:

The basis of such segmentation is the lifestyle of the individuals. The
individual’s attitude, interest, value help the marketers to classify them into small
groups.

- Behaviouralistic Segmentation:

The loyalties of the customers towards a particular brand help the marketers to
classify them into smaller groups, each group comprising of individuals loyal towards
a particular brand.

- Geographic Segmentation:

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Geographic segmentation refers to the classification of market into various
geographical areas. A marketer can’t have similar strategies for individuals living at
different places.

Nestle promotes Nescafe all through the year in cold states of the country as
compared to places which have well defined summer and winter season.

McDonald’s in India does not sell beef products as it is strictly against the
religious beliefs of the countrymen, whereas McDonald’s in US freely sells and
promotes beef products.

III. CONCLUSION
Segmentation refers to the process of creating small segments within a broad

market to select the right target market for various brands. Market segmentation helps
the marketers to devise and implement relevant strategies to promote their products
amongst the target market.

A market segment consists of individuals who have similar choices, interests and
preferences. They generally think on the same lines and are inclined towards similar
products. Once the organizations decide on their target market, they can easily
formulate strategies and plans to make their brands popular amongst the consumers.

4.“PLC as a tool for marketing strategy” justify:
I. INTRODUCTION

A product in the market will go through the stages of development and
declination. The development phases of the product from time to time are known as
the "Product Life Cycle", abbreviated as PLC.

Product life cycle is a key concept of marketing. It vividly describes four stages in
product consumption: Introduction, growth, maturity and decline.

Companies should be aware of their products stages to propose the following
appropriate marketing plans: Product introduction, old product renewal, or
replacement with a new product line to help businesses applications in numerous
marketing strategies.

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II. BODY
The product life cycle consists of four stages: introduction, growth, maturity, and

decline. Figure A illustrates the product life cycle. Determination of a product's stage
in its life cycle is not based on age, but on the relationship of sales, costs, profits, and
number of competitors. Each of these stages is described below.

Figure A
Product Life Cycle

INTRODUCTION.
When a new product is introduced to a market, the innovators may be the only

people aware of the new product. If the product is a new product class, the innovators
may not know what the product uses are. Recalling that the innovators represent only
a small percent of the population, the sales of the new product will be low. However,
there is an advantage in this situation in that the new product does not yet have any
competition. During the introduction stage of a new product, the developer enjoys a
monopoly.

The product monopoly does not usually translate to immediate profits. The
product may have been in development for a long time and considerable development
costs are still in the recovery phase. Also, an expensive marketing effort may be
needed to introduce the product to the public. With low sales and high expenses, the
introduction stage of the life cycle is usually a money loser for the company.
However, the hope is for the future of the product, and the company usually is more
than willing to incur the losses.

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GROWTH.

As the early adopters begin to try the product, a sale begins to grow and profits
usually start to follow. This is a great time for a company introducing a new product
because the company still enjoys a monopoly early in the growth stage. The company
is reaping all the sales and profits of the new product. When Chrysler introduced the
idea of the Minivan, they were in this enviable position of having the only minivan on
the market.

As the early adopters begin influencing the early majority, sales and profits sore.
The competition has also been watching from the new product's inception.
Unfortunately for the original firm, the competition has also noticed the new product's
success. Although they cannot be the first, the competition races to offer their own
products and gain a share of a growing market. Chrysler's minivan did not maintain its
monopoly for long; soon, the other major automobile manufacturers offered models to
compete with Chrysler. Although total sales and profits continue to grow throughout
the growth stage, they are divided among many manufacturers.

MATURITY.

By the end of the growth stage of the life cycle, the market is beginning to
become very competitive, and this trend continues into the early period of the maturity
stage. Besides many more manufacturers offering their products, the producers
continue the product-differentiation process begun in the growth stage. The result is a
market saturated with many manufacturers offering many models of the product.
These manufacturers produce a multitude of models, from desktop computers to
notebooks.

With so many companies now in the market, the competition for customers
becomes fierce. Although total sales continue to grow during the first part of the
maturity stage, the increased competition causes profits to peak at the end of the
growth stage and beginning of the maturity stage. Profits then decline during the
remainder of the maturity stage. The declining profits mean that the market is not as
attractive to companies as it was in the growth stage.

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In the growth stage, even inefficient companies made money. However, only the
best companies and their products survive in the maturity stage. Manufacturers begin
to drop out as they see profits turn to losses. Though there is still competition in the
computer industry, for example, companies such as Dell and Apple have emerged as
the leaders in the market. During the later part of the maturity stage, even sales begin
to dip, putting more pressure on the remaining manufacturers.
DECLINE.

The number of companies abandoning the market continues and accelerates in
the decline stage. Not only does the efficiency of the company play a factor in the
decline, but also the product category itself now becomes a factor. By this time, the
market may perceive the product as "old," and it may no longer be in demand. For
example, the public replaced their preference for station wagons with their desire for

minivans. Advancing technology may also bypass and replace a product, as when
tapes and CDs replaced the vinyl record.

The product will continue to exist as long as a few manufacturers can maintain
profitability. The laggards will resist switching to the alternative, and manufacturers
who can profitably serve this niche will continue to do so. Eventually, even the
laggards will switch, and the last companies producing the product will be forced to
withdraw, thereby killing the product group.
III. CONCLUSION

The selection of appropriate marketing strategies for each stage of the product
life cycle is to exploit the strengths of the product and the market. When a product is
introduced to the market, enterprise should forecast its product life cycle to develop
the appropriate marketing activities. Accordingly, they will achieve their profit
maximization.

5. Explain “direct marketing” and its applicability with examples:
I. INTRODUCTION

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Today, together with the development of digital media, direct marketing is an
interactive marketing system using one or more mean of advertising media to effect a
measurable response and / or transaction at any location. Therefore, direct marketing
is done to obtain such measurable response, typically the buyer's orders.

Direct marketing helps companies convenient for their orders. They may
collect a lot of information from customers quickly, with high efficiency and low cost.

II. BODY

While many people associate direct marketing with direct mail, direct mail is
only one of several advertising media utilized by direct marketers. Other major direct
marketing media include the telephone, magazines, newspapers, television, and radio.
Alternative media include card decks, package and bill inserts, and matchbooks.
Within the major media, new technological developments are giving direct marketers
an expanded range of choices from videocassettes (possibly advertised on television,
requested by telephone or interactive computer, and delivered via mail or alternate
delivery services) to home-shopping networks, interactive television, and the Internet.

Direct Mail:

Direct mail is the most heavily used direct marketing medium and the one most
direct marketers learn first. Direct mail has been used to sell a wide variety of goods
and services to consumers as well as businesses, and it continues to grow despite
postage increases. Direct mail offers several advantages over other media, including
selectivity, personalization, flexibility, and testability. It allows businesses to target
individuals with known purchase histories or particular psychographic or demographic
characteristics that match the marketer's customer profile. Direct mail can be targeted
to a specific geographic area based on zip codes or other geographic factors.
Personalization in direct mail means not only addressing the envelope to a person or
family by name, but also perhaps including the recipient's name inside the envelope.

Direct mail is the most easily tested advertising medium. Every factor in
successful direct marketing—the right offer, the right person, the right format, and the
right timing—can be tested in direct mail. Computer technologies have made it easier

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to select a randomized name sample from any list, so that mailers can run a test

mailing to determine the response from a list before "rolling out," or mailing, the
entire list. Different packages containing different offers can also be tested. Other
media allow some degree of testing, but direct mail is the most sophisticated. In
relation to the other direct marketing media, direct mail is considered to offer the most
cost-effective way of achieving the highest possible response. Telemarketing usually
produces a higher response rate, but at a much higher cost per response.

Telephone-Based Direct Marketing (Telemarketing):
The use of the telephone in direct marketing has grown dramatically over the

past two decades. Expenditures now may equal, or even surpass, those of direct mail.
Telephone-based direct marketing may be outbound and/or inbound. Inbound
telemarketing is also known as teleservicing and usually involves taking orders and
responding to inquiries. In business, telemarketing can be used to reach smaller
accounts that do not warrant a personal sales call as well as to generate, qualify, and
follow up leads.

Telemarketing has the advantages of being personal and interactive. It is an
effective two-way communications medium that enables company representatives to
listen to customers. Telephone salespeople typically work from a script, but the
medium allows the flexibility of revising the script as needed. It also allows for up-
and cross-selling. While customers are on the phone it is possible to increase the size
of their orders by offering them additional choices—something that tends to lead to
confusion in other direct marketing media.

Telemarketing also has its disadvantages. For example, it is more expensive
than direct mail. It also lacks a permanent response device that the prospect can set
aside or use later. It is not a visual medium—though the technology to make it one
may soon be available. Finally, it is perceived as intrusive, generating consumer
complaints that have led to legislative actions to regulate the telemarketing industry.

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Magazines:

Direct response print ads in magazines must make a definite offer or request
that asks the reader to do something. Typically, such ads require a reader to send in a
coupon or reply card, or call a toll-free number. With many consumer magazines now
being published, magazine ads allow direct marketers to reach audiences with
identifiable interests. In addition to advertising heavily in special interest magazines,
direct marketers utilize mass consumer magazines and take advantage of regional
advertising space to target specific audiences.

Unlike general advertisers, who measure the effectiveness of their print ads in
terms of reach and frequency, direct marketers measure the effectiveness of their print
ads in terms of cost effectiveness—either cost-per-inquiry or cost-per-order. Magazine
ads offer the advantages of good color reproduction, a relatively long ad life
(especially compared to daily newspapers), and a lower cost. Creative costs for
magazine ads are also usually lower than for direct mail. But direct marketers find
magazines' long lead times, slower response, and scarcer space than direct mail to be
disadvantages.

Newspapers:

While direct marketers advertise in magazines more than newspapers,
newspapers have some distinct advantages. These include the variety of sections
offered within a newspaper, shorter closing dates, an immediate response, and broad
coverage of a large and diverse audience. Disadvantages include poor ad reproduction
and the limited availability of color. Editorial content can also have more of an
adverse effect on ad response than in magazines. In addition to advertising in the

regular pages of a newspaper, direct marketers also advertise in free-standing inserts
(FSIs) that are usually distributed with the Sunday editions of newspapers.

Television:

Direct marketing on television is increasing. Early examples of direct response
advertisements on television that should be familiar to viewers include those for
knives, garden tools, exercise equipment, records, and books, which ask viewers to

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call in and order a specific product. More recent developments in direct response
television advertising include a return to a lengthier format, commonly known as the
infomercial, where a product or other offer is explained in some detail over a time
period extending to 30 minutes or more. Advocates of this format point out that the
greater length gives the advertiser the opportunity to build a relationship with the
viewer and overcome initial viewer skepticism, and at the same time present a
convincing story spelling out product features and benefits in detail.
III. CONCLUSION

The success of a direct marketing program depends on delivering the right offer
at the right time to the right person in the right way. Direct marketing is a complex
discipline that requires expertise in several areas to achieve success. It involves
identifying the target market correctly and selecting the appropriate media and/or lists
to reach it.

REFERENCE
1. Kotler, Philip, and Gary Armstrong. Principles of Marketing. Upper Saddle
River, NJ: Prentice Hall, 2001.
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