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1 a)
Distinguish Product Marketing and Service Marketing, with suitable illustrations.
Solution : PRODUCT MARKETING
Product marketing deals with the first of the "4P"'s of MARKETING , which are
PRODUCT , PRICING , PLACE , and PROMOTIONS. Product marketing, deals with
more outbound MARKETING tasks. For example, product management deals with the
nuts and bolts of PRODUCT DEVELOPMENT within a firm, whereas product
marketing deals with marketing the PRODUCT to PROSPECTS CUSTOMERS , and
others. EXAMPLE : LUX TOILET SOAP.
Role of product marketing
Product marketing in a business addresses five important strategic questions:
What products will be offered (i.e., the breadth and depth of the PRODUCT LINE ?
Who will be the target customers (i.e., the boundaries of the market segments to be
served)?
How will the products reach those (i.e., the distribution channel)?
How much should the products be priced at?
How to introduce the products (i.e., the way to promote the products)?
THE MOST APPROPRIATE / SELECT A COMBINATION FOR YOUR
SITUATION
SAY, LUX TOILET SOAP.
your product has a '' unique advantage/benefits.
your product offers the most competitive ''value for money''.
your product is one of the affordable in the market for its range.
your product positioning in the niche market.
your product distribution is matchless in the market, available at arms length.
your product merchandising is the most attractive at the retail level.
SERVICE MARKETING
SERVICE IS ANY ACT OR PERFORMANCE THAT ONE PARTY CAN OFFER TO
ANOTHER THAT IS ESSENTIALLY INTANGIBLE AND DOES NOT RESULT IN
ANY OWNERSHIP
Services marketing is MARKETING based on relationship and value.
Marketing a service-base business is different from marketing a goods-base business.
There are several major differences, including:
The buyer purchases are intangible
The service may be based on the reputation of a single person

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It's more difficult to compare the quality of similar services
The buyer cannot return the service
The major difference in the services marketing versus regular marketing is that instead of
the traditional "4 P's," Product, Price, Place, Promotion, there are three additional "P's"
consisting of People, Physical evidence, and Process. Service marketing also includes the
servicescape referring to but not limited to the aesthetic appearance of the business from
the outside, the inside, and the general appearance of the employees themselves
EXAMPLE: EDUCATION
Service quality is not one-dimensional; it encompasses numerous factors that are
important to customer satisfaction. Satisfaction basically is related to expectations and
perceived delivery on these dimensions and as shown by the equation given below.
The quality of service delivery results in customer satisfaction & their retention as it
reinforces the perception that the value of the service received is grater than the price
paid for it.
Quality is defined as the ability of the service provider to satisfy customer needs.
Customer perception , service quality & profitability are interdependent variable.
Even in the case of products, quality is difficult to define because it is highly dependent
upon customer perception. The task is made more complicated in the case of service
because of the intengible nature of service & the variation in services offered to different
customers.
There are several reasons why customers must be given quality service. Most important
of them are
1. Industry has become so competitive that customers now have variety of alternatives. If
the customers are lost, it can be extremely difficult to win back the individual.
2. Most customers do not complain when they experience problems, these customers
simply opt out & take their business elsewhere.
There are various aspects that a customer expects from different services.
1. Reliability: This refers to the ability of the company to perform the promised service
dependably and accurately. Reliability is probably the single most important dimension
of quality. Customers expect that companies will do what they say and they will do when
they say they will do it.
2. Tangibles: This refers to the appearance of the physical facilities, equipment,
personnel, and communication materials. As services are intangible, the tangibles give an
impression to the customers about the quality of service they can expect from a firm. A
bank in a shabby building will make the customer wonder whether their money will be
safe in such a bank.
3. Responsiveness: This refers to the willingness of the employees to help customers and
provide prompt service. When you go to a bank the minimum that you expect is that the
employees would attend to you rather than chit-chat amongst themselves.

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4. Assurance: This factor is linked to several minor factors such as competence, courtesy,
credibility and security. Competence depends on the service provider's possession of the
required skills and knowledge to perform the service. The politeness, respect,
consideration, and friendliness of the service providers can be bundled into the term
courtesy. Credibility refers to the perceived trustworthiness, believability, and honesty of
the service provider. Security refers to the fact that the service should be free from
danger, risk, and doubt. In sum, the assurance factor refers to the knowledge and courtesy
of employees and their ability to inspire trust and confidence.
5. Empathy: Empathy refers to the caring, individualized attention the firm provides to its
customers. It includes access, communication and understanding. Access refers to the
approachability and ease with which the customer can contact the firm. Communication
refers to keeping the customer informed in the language they can understand and
listening to them. Understanding has to do with the efforts made by the service provider
to know customers and their needs.
The Service Quality Gaps:
Gaps between perceived & expected levels of service quality delivery result in the failure
of the service provider.
These are the 5 gaps.
-The First gap does not know what customers expect. rea
-The second gap is between what the customer expects and what the management
understands as the customers' expectation from the company.
-The third gap is with reference to the management's understanding of the customer
expectations and the service quality standards set by the management.
-The fourth gap is between the quality specifications and actual service delivery.
-The fifth gap is between what is communicated to customers and what is actually
delivered.
It is possible to measure the gaps and take corrective actions to fill them to the extent
possible. The most difficult gap to fill is the one between customer expectations and the
perceived service delivery. The expectation of the customers keeps rising with every
good experience. When a customer visits the service organization, he/she expects a better
service than what was experienced in the last encounter.
The service marketing challenges are
-to generate re-sales
-to create a waiting list
-to create a positive word of mouth advertising
as a lot of new business is generated from satisfied customers.
WHICH MEANS THAT THERE IS NO/LITTLE GAP BETWEEN
SERVICE EXPECTATIONS AND SERVICE DELIVERY.
HOW DO YOU MATCH SERVICE EXPECTATION WITH DELIVERIES
IN PRODUCT MARKETING , WE RELY ON 4 P's
-product attributes/benefits
-pricing strategy
-place [ right / easy place to buy]

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-promotions [ selected weighted mix]
IN CASE OF THE SERVICE, THE PRODUCT IS
-intangible, the greater the intangibility the more complex
the promise.
-perishable /heterogeneous, the production and consumption are often simulaneous.
IN SERVICE MARKETING, WE RELY ON 7 P's
-product service [ features/benefits]
-place [ flexibility]
-price [ flexi]
-promotions [ selected weighted mix]
-people [ ability,competent, right attitude ]
-physical evidence
-process
IN SERVICE BUSINESS,
-SERVICE MARKETING PROMOTES AND
SERVICE MANAGEMENT GENERATES RESULTS, through
*service delivery
*service quality
*customer satisfaction/ relation management
-service recovery
-service management audit.
SERVICE MANAGEMENT PROVIDES SATISFACTORY SERVICE
-by designing the customer oriented business process
-cost effective service
-continuous improvements through research/development
-improving people's abilities/competences.
SERVICE MARKETING MEETS SERVICE MANAGEMENT
-by managing customer behavior
-by conducting customer research
-by managing customer expectations
-by reverse-engineering the product/service portfolio.
-by determining what service the market needs/ we can offer.
-what do we need to do to fill the gap.
THE INTEGRITY OF PRODUCT-SERVICE DELIVERY
when the service marketing is intergrated with service management
that is ,what you promise [either explicitly or implicitily] and
what you deliver
IN THIS CASE , ''INTEGRATED'' = ''INTEGRITY''
There is no gap
WHICH MEANS CUSTOMER SATISFACTION,
WHICH IT TURN MEANS = SUCCESSFUL SERVICE MARKETING.

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b)
How do the marketing objective and marketing mix vary across the Product
Life Cycle (PLC)? Explain with a suitable example.
Solution: PRODUCT LIFE CYCLE
Products pass through a series of stages. Successful products progress through four basic
stages: (1) Introduction; (2) Growth; (3) Maturity; and (4) Decline.
The product life cycle concept provides important insights about developments at the
various stages of the product's life. Knowledge that profits assume a predictable pattern
through the stages and that promotional emphasis should shift from product information
in the early stages to product promotion in the later stages should allow the marketing
manager to improve planning.
PRODUCT LIFE CYCLE BENEFITS
Here is a brief description of what is expected to take place in the stages of the life cycle:
1. Initiation starts with the initial conception or discovery of the product idea and runs
until it has been evaluated, has become specific, and has been approved for development.
2. Development covers the various activities that transform an abstract product idea into
a concrete prototype model of the product (if it is a tangible good) that can be
manufactured.
3. Market plans and tests is our term for the final gestation phase, in which the product
would pass its last tests and everything be ready for commercialising it.
4. Introduction starts when the offering is made available to buyers, probably on a
limited scale, and continues as it is tried by innovators and experiences show slow sales
growth.
5. Growth begins when numerous tryers like the product, word of its virtues spread, and
the product sales "take off". Since the product is not established until this takes place, we
include it in this chapter of "evolving products6. Maturity comes eventually, for the
halcyon days of sharply rising demand vanish when most potential buyers have become
actual customers. This may be a very long period during which demand decelerates and
then reaches a plateau.
7. Decline sets in persistently when the product eventually becomes obsolete. When it
actually starts to toboggan, it is time to give the product a merciful death and burial.
The marketing strategist should never assume that the PLC operates inexorably, but
should rather examine a brand's or product's actual position carefully. Further a serious
effort should be made to find a winning strategy can revive a slumping demand, rather
than summarily abandoning the possibility. In that context, the PLC does pose a
hypothesis of product or brand behaviour that is useful for sales forecasting. It also
enables us to clarify strategies in terms of their timeliness.
WHY YOU SHOULD USE THE PRODUCT LIFE CYCLE CURVE
FOR ANALYSIS
The product life cycle curve can be extremely important in generating strategist, and it
should be monitored and controlled by the marketing manager. This is necessary due
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primarily to five reasons:
1 . Rapid Maturity of Products
2. Life Cycle Product Mix
3. Strategic Implications
4. Product Planning
5. Changing the Life Cycle Curve
THE PRODUCT LIFE CYCLE
Successful products progress through four basic stages: Introduction. Growth. Maturity
and Decline. This progression is known as the Product Life Cycle.
1.INTRODUCTION
The company's objective in the early stages of the product life cycle is to stimulate
demand for the new market entry. Since the product is not known to the public,
promotional campaigns stress information about its features and benefits. They also may
be directed toward marketing intermediaries in the channel to induce them to carry the
product.
In this phase, the public becomes acquainted with the merits of the product and begins to
accept it.
Losses are common during the introductory stage due to heavy promotion and extensive
research and development expenditures.
However, the ground is being laid for future profits. Companies expect.to recover the
costs and to begin earning profits when the new product moves into the second phase of
its life cycle - the growth stage.
2.GROWTH
Sales volumes rise rapidly during the growth stage as new customers make initial
purchases and early buyers re-purchase the product. 'Word-of-mouthl and advertising
induce hesitant buyers to make trial purchases.
As the company begins to realise substantial profits from its investment during the
growth stage, the product attracts competitors.
Success breads imitation and other companies rush into the market with competitive
products. The majority of firms in a particular market enter during the growth stage.
3.MATURITY
Industry sales continue to grow during the early part of the maturity stage, but eventually
they reach a plateau as the backlog of potential customers is exhausted. By this time, a
large number of competitors have entered the market, and profits decline as competition
intensifies.
In the maturity stage, differences among competing products diminish as competitors
discover the product and promotional characteristics most desired by the market. Heavy
promotional outlays emphasise subtle differences among competing products, and brand
competition intensifies.
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In this stage, often available products exceed industry demand. Companies attempting to
increase their sales and market share must do so at the expense of competitors.
As competition intensifies, the competitors tend to cut prices in an attempt to attract new
buyers. Even though a price reduction may be the easiest method of inducing additional
purchases, it is also one of the simplest moves for, competitors to duplicate.
Reduced prices result in decreased revenues for all firms in the industry unless the price
cuts produce enough increased purchases to offset the loss in revenue on each item sold.
4.DECLINE
In the final stage of the product's life, innovations or customer preferences bring about an
absolute decline in industry sales.
Sales and profits decline and companies begin to leave the industry in search of more
profitable products.
FOR EFFECTIVE MARKETING EFFORTS YOU
PRODUCT LIFE CYCLE
1.INTRODUCTION
ORGANISATION CONDITIONS
-High Costs
-Inefficient Production Levels
-Cash Demands HIGH
ENVIRONMENTAL CONDITIONS
-Few or No Competitions
-Limited Product Awareness and Knowledge
-Limited Demand
MARKETING EFFORTS
-Stimulate Demand
-Establish High Price
-Offer Limited Product Variety
-Increase Distribution
2.GROWTH
ORGANISATIONAL CONDITIONS
-Smoothing Production
-Lowering Costs
-Operation Efficiencies
-Product Improvement Work
ENVIRONMENTAL CONDITIONS
-Expanding Markets
-Expanded Distribution
-Competition Strengthens
-Prices Soften a Bit
WORK WITH
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MARKETING EFFORTS
-Cultivate Selective Demand
-Product Improvement
-Strengthen Distribution
-Price Flexibility
3. MATURITY
ORGANISATIONAL CONDITIONS
A. EARLY MATURITY
-efficient scale of operation
-production modification work
-LOW profit
B. LATE MATURITY
-product standardization
-Decreasing Profits
ENVIRONMENTAL CONDITIONS
A. EARLY MATURITY
-slowing growth
-strong competition
-expanded market
-heightened competition
B. LATE MATURITY
-Faltering demand
-fierce competition
-shrinking number of competitors
-established distribution pattern
MARKETING EFFORTS
A.EARLY MATURITY
-Emphasise Market Segmentation
-Improve Service and Warranty
-Reduce Prices
B. LATE MATURITY
-ultimate in market segmentation
-competitive pricing
-retain distribution
4.DECLINE
ORGANISATION CONDITIONS
-Permanently Declining Demand
ENVIRONMENTAL CONDITIONS

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-Reduction of Competitors
-Limited Product Offerings
-Price Stabilisations
MARKETING EFFORTS
-Increase Primary Demand
-Profit Opportunity Pricing
-Prune and Strengthen Distribution
EXAMPLE OF MARKETING PROGRAM FOR
STAGES IN PRODUCT LIFE CYCLE
A.INTRODUCTION.
1.MARKETING OBJECTIVE
-successful entry in the market.
2.SALES
-increase sales.
3.CUSTOMERS
-identify customer segments
4.ENVIRONMENT
-Comply With External Regulations
& Accepted Values
5.PRODUCT
-Assure High Quality
6.PRICE
-use cost plus strategy
7.PROMOTIONS
-build product awareness
8.DISTRIBUTION
-build and channels
B. GROWTH.
1.MARKETING OBJECTIVE
-gain market share
-increase profitability
2.SALES
-increase / maximize sales volume.
3.CUSTOMERS
-determine customer acceptance.
4.ENVIRONMENT
-determine channel responses.
5.PRODUCT
-offer extensions or value added like service.
6.PRICE
-penetrate deeper into the market
7.PROMOTIONS
-induce trial.

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8.DISTRIBUTION
-use selective distribution
C.MATURITY.
1.MARKETING OBJECTIVE
-consolidate market share
-maximize profit.
2.SALES
-maximize sales.
3.CUSTOMERS
-determine re-purchase rates.
4.ENVIRONMENT
-monitor competitive activities
5.PRODUCT
-diversify the brands or models
6.PRICE
-price war with competitors
7.PROMOTIONS
-stress favourable evaluations
8.DISTRIBUTION
-more intensive distribution
D.DECLINE.
1.MARKETING OBJECTIVE
-arrest the market share decline.
-minimize effort/time in marketing expenses.
2.SALES
-retain sales volume.
3.CUSTOMERS
-evaluate customer complaints.
4.ENVIRONMENT
-search for new opportunities.
5.PRODUCT
-phase out weak items
6.PRICE
-cut price or offer other incentives
7.PROMOTIONS
-maintain loyalty
8.DISTRIBUTION
-depend on middleman
================================================== ============
2 a) Distinguish between Market Segmentation and Product Differentiation.
Discuss the bases that you will use in segmenting the market for the following
products:

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i)
Internet services
ii)
Electric small car
Solution: A Market segment is a subgroup of people or organizations sharing one or
more characteristics that cause them to have similar product needs.
Market segmentation is the process in marketing of dividing a market into distinct subsets
(segments) that behave in the same way or have similar needs. Because each segment is
fairly homogeneous in their needs and attitudes, they are likely to respond similarly to a
given marketing strategy. That is, they are likely to have similar feelings and ideas about
a marketing mix comprised of a given product or service, sold at a given price,
distributed in a certain way and promoted in a certain way.
Broadly, markets can be divided according to a number of general criteria, such as by
industry or public versus private sector. Small segments are often termed niche markets
or specialty markets. However, all segments fall into either consumer or industrial
markets. Although it has similar objectives and it overlaps with consumer markets in
many ways, the process of Industrial market segmentation is quite different.
The overall intent is to identify groups of similar customers and potential customers; to
prioritize the groups to address; to understand their behaviour; and to respond with
appropriate marketing strategies that satisfy the different preferences of each chosen
segment. Revenues are thus improved.
Improved segmentation can lead to significantly improved marketing effectiveness. With
the right segmentation, the right lists can be purchased, advertising results can be
improved and customer satisfaction can be increased
The purpose for segmenting a market is to allow your marketing/sales program to focus
on the subset of prospects that are "most likely" to purchase your offering. If done
properly this will help to insure the highest return for your marketing/sales expenditures.
Depending on whether you are selling your offering to individual consumers or a
business, there are definite differences in what you will consider when defining market
segments.
Category of Need
The first thing you can establish is a category of need that your offering satisfies. The
following classifications may help.
For businesses:
Strategic - your offering is in some way important to the enterprise mission, objectives
and operational oversight. For example, a service that helped evaluate capital investment
opportunities would fall into this domain of influence. The purchase decision for this
category of offering will be made by the prospect's top level executive management.
Operations - your offering affects the general operating policies and procedures.
Examples might be, an employee insurance plan or a corporate wide communications
system. This purchase decision will be made by the prospect's top level operations
management.
Functional - your offering deals with a specific function within the enterprise such as data
processing, accounting, human resources, plant maintenance, engineering design,
manufacturing, inventory control, etc. This is the most likely domain for a product or

service, but you must recognize that the other domains may also get involved if the
purchase of the product or service becomes a high profile decision. This purchase
decision will be made by the prospect's functional management.
For the individual consumer:
Social Esteem or Pleasure - your offering satisfies a purely emotional need in the
consumer. Examples are a mink coat or a diamond ring. There are some products that are
on the boundary between this category and the Functional category such as a Rolex watch
(a Timex would satisfy the functional requirement and probably keep time just as well).
Functional - your offering meets a functional requirement of the consumer such as a
broom, breakfast cereal or lawnmower.
Segmentation of Needs FOR BUSINESS ORGANIZATIONS
Then you should establish what the need is and who is most likely to experience that
need. Your segmentation will be determined by a match between the benefits offered by
your offering and the need of the prospect. Some "need" categories for segmentation
include:
Reduction in expenses
Prospects might be businesses that are downsizing (right sizing), businesses that have
products in the mature stage of their life cycle or individuals with credit rating problems.
Improved cash flow
Prospects might be businesses that have traditionally low profit margins, businesses that
have traditionally high inventory costs or individuals that live in expensive urban areas.
Improved productivity
Prospects might be businesses that have traditionally low profit margins, businesses that
have recently experienced depressed earnings or individuals with large families.
Improved manufacturing quality
Prospects might be businesses with complex, multi-discipline manufacturing processes.
Improved service delivery
Prospects might be service businesses in highly competitive markets, product businesses
requiring considerable post-sale support or individuals in remote or rural areas.
Improved employee working conditions/benefits
Prospects might be businesses where potential employees are in short supply.
Improvement in market share/competitive position
Prospects might be new entrants to a competitive market.
Need for education
Prospects might be businesses or individuals looking for books on business planning, or
seminars on Total Quality Management.
Involvement with social trends
Prospects might be businesses concerned with environmental protection, employee
security, etc. or individuals who believe in say 'no' to drugs, anti-crime, etc.
Specific - relating to product/service characteristics
Prospects might be businesses or individuals interested in safety, security, economy,
comfort, speed, quality, durability, etc.
Factors that segment prospects

Having determined the more general segmentation characteristics you can proceed to a
more detailed analysis of the market. There are literally thousands of ways to segment a
market, but the following are some of the more typical segmentation categories.
For businesses:
Industry by SIC code
This is especially beneficial for vertical market offerings.
Size - revenues, # employees, # locations
In general if your offering is highly sophisticated, requires significant resources or
provides greater value based on volume, then the target should be the larger enterprises.
Job position/responsibility
Examples of offerings might be planning software for managers or cleaning agents for
maintenance managers.
Climate
Examples of offerings might be dehumidifiers in areas near the ocean or snow plows in
northern areas.
Time related factors
Some services in this category are vacation related industries in summer and tax planners
in the spring.
Language
An example of a language specific service is a Spanish TV channel.
Status in the industry
You might want to target businesses that are the technology leader or revenue leader or
employee satisfaction leader, etc.
Accessibility
To minimize promotion and sales expense you may want to target urban rather than rural
or local rather than national prospects.
Future potential
A good example is how Apple Computer supplied products to schools at all levels to
condition students graduating into the marketplace.
Ability to make a quick purchase decision
Targeting individual purchasers versus business committees can significantly reduce
marketing expense and increase the probability of a quick close.
Access (or lack of access) to competitive offerings
Cable TV business's significant investment in their service delivery system has allowed a
near monopoly for some time. IBM's service reputation insured minimal competition
during the mainframe days.
Need for customization
Offerings such as police cars, busses for municipalities and specialized computer systems
fall into this category.
Product or service application to a business function
Examples are data processing, accounting, human resources and plant maintenance.
For Individual Consumers:
Physical Size
Offerings might be big men's clothing, golf clubs for shorter players, etc.

Creation of or response to a fad

Examples are hula hoops, Jurassic Park T-shirts, pet rock, physical fitness, etc.
Geographic location
Marketers take advantage of location by selling suntan lotion in Hawaii, fur coats in
Alaska, etc.
Time related factors
You may be able to target vacationers in summer, impulse buyers during the holidays or
commuters at 7AM.
Demographics/culture/religion
Ethnic products would fall into this category.
Gender
Product examples are scarves for women, ties for men, etc.
Age
Product examples are toys for children, jewelry for women, etc.
Social status
This could include country club memberships, philanthropic contributions, etc.
Education
Product and service examples are encyclopedias, scientific calculators, learning to read
tools and financial counseling.
Avocation
This could include products for hunting, fishing, golf, art work, knitting, etc.
Special Interests
You could target cat lovers, science fiction readers, jazz music collectors, etc.
Accessibility
Because the individual is more difficult to reach you may want to segment by urban
versus rural, train commuters, people who read Wall Street Journal, etc.
Access (or lack of access) to competitive offerings
Due to high investment capital requirements or timing of market entry you may be able to
capture a significant market share in a specific geographical area. Examples might be a
trash service, emergency medical support, etc.
Need for specific information
Based on features or content of your offering you can target a market segment. A product
might be books on how to start a business or a service might be seminars on how to quit
smoking.
Need for customization
Product/service examples are home decoration, fashion wear, personal portraits, etc.
Need for quality, durability, etc.
Product examples are mountain climbing gear, carpenter's tools, etc.
Degree of a product/service ingredient
Segmentation based on prospect preferences is common. An example is dark chocolate
for some tastes, light chocolate for others.
While market segmentation can be done in many ways, depending on how you want to
slice up the pie, three of the most common types are:
Geographic segmentation – based on location such as home addresses;
Demographic segmentation – based on measurable statistics, such as age or income;

Psychographic segmentation – based on lifestyle preferences, such as being urban

dwellers or pet lovers.
If you’re interested in target marketing, the first step is to do the research that will help
you define and zero in on your target market.
The requirements for successful segmentation are:
homogeneity within the segment
heterogeneity between segments
• segments are measurable and identifiable
• segments are accessible and actionable
• segment is large enough to be profitable
These criteria can be summarized :
D Differential: it must respond differently to a different marketing mix
A Actionable: you must have a product for this segment to be accured
M Measurable: size and purchasing power can be measured
A Accessible: it must be possible to reach it efficiently
S Substantial: the segment has to be large and profitable enough
The variables used for segmentation include:
1.Geographic variables region of the world or country, East, West, South, North, Central,
coastal, hilly, etc. country size/country size : Metropolitian Cities, small cities, towns.
Density of Area Urban, Semi-urban, Rural.
climate Hot, Cold, Humid, Rainy.
2.Demographic variables
-age
-gender Male and Female
-sexual orientation
-family size
family life cycle
Education Primary, High School, Secondary, College, Universities.
income
occupation
education
3.socioeconomic status
religion
nationality/race
language
4.Psychographic variables
personality
life style
value
attitude

5.Behavioural variables
benefit sought
product usage rate
brand loyalty
product end use
readiness-to-buy stage
decision making unit
profitability
When numerous variables are combined to give an in-depth understanding of a segment,
this is referred to as depth segmentation.
When enough information is combined to create a clear picture of a typical member of a
segment, this is referred to as a buyer profile. When the profile is limited to demographic
variables it is called a demographic profile (typically shortened to "a demographic"). A
statistical technique commonly used in determining a profile is cluster analysis.
THE BY-PRODUCT OF MARKET SEGMENTATION IS THE
IDENTIFICATION OF THE PARTICULAR SEGMENT, WHICH ONE
WANTS TO EXPLOIT.
What Does Product Differentiation Mean?
A marketing process that showcases the differences between products. Differentiation
looks to make a product more attractive by contrasting its unique qualities with other
competing products. Successful product differentiation creates a competitive advantage
for the seller, as customers view these products as unique or superior.
Product differentiation can be achieved in many ways. It may be as simple as packaging
the goods in a creative way, or as elaborate as incorporating new functional features.
Sometimes differentiation does not involve changing the product at all, but creating a
new advertising campaign or other sales promotions instead.
In marketing , product differentiation is the process of distinguishing a product or
offering from others, to make it more attractive to a particular target market . This
involves differentiating it from competitors' products as well as one's own product
offerings.
Differentiation is a source of competitive advantage. Although research in a niche
market may result in changing your product in order to improve differentiation, the
changes themselves are not differentiation. Marketing or product differentiation is the
process of describing the differences between products or services, or the resulting list of
differences. This is done in order to demonstrate the unique aspects of your product and
create a sense of value. Marketing textbooks are firm on the point that any differentiation
must be valued by buyers . The term unique selling proposition refers to advertising to
communicate a product's differentiation .
The major sources of product differentiation are as follows.
Differences in quality which are usually accompanied by differences in price
Differences in functional features or design
Ignorance of buyers regarding the essential characteristics and qualities of goods they are

purchasing
Sales promotion activities of sellers and, in particular, advertising
Differences in availability (e.g. timing and location).
The objective of differentiation is to develop a position that potential customers see as
unique.
Differentiation primarily impacts performance through reducing directness of
competition: As the product becomes more different, categorization becomes more
difficult and hence draws fewer comparisons with its competition. A successful product
differentiation strategy will move your product from competing based primarily on price
to competing on non-price factors.
Most people would say that the implication of differentiation is the possibility of
charging a price premium; however, this is a gross simplification. If customers value the
firm's offer, they will be less sensitive to aspects of competing offers; price may not be
one of these aspects. Differentiation makes customers in a given segment have a lower
sensitivity to other features (non-price) of the product
Significance
Offered under different brands by competing firms, products fulfilling the same need
typically do not have identical features. The differentiation of goods along key features
and minor details is an important strategy for firms to defend their price from levelling
down to the bottom part of the price spectrum.
Within firms, product differentiation is the way multi-product firms build their own
supplied products' range.
At market level, differentiation is the way through which the quality of goods is
improved over time thanks to innovation. Launching new goods with entirely new
performances is a radical change, often leading to changes in market shares and industry
structures.
In an evolutionary sense, differentiation is a strategy to adapt to a moving environment
and its social groups .
Vertical differentiation
Vertical differentiation occurs in a market where the several goods that are present can be
ordered according to their objective quality from the highest to the lowest. It's possible to
say in this case that one good is "better" than another.
Vertical differentiation can be obtained:
1. along one decisive feature;
2. along a few features, each of which has a wide possible range of (continuous or
discrete) values;
3. across a large number of features, each of which has only a presence/absence "flag".
In the second and third cases, it is possible to find out a product that is better than another
one according to one criteria but worse than it in respect to another feature.
Vertical differentiation is a property of the supplied goods but, as it is maybe needless to
say, the perceived difference in quality by different consumer will play a crucial role in
the purchase decisions.
In particular, potential consumers can have a biased perception of the features of the good
When evaluating a real market, a good starting point is a top-down grid of interpretation,
we shall present first in 3 segments.
Extremely low Low It usually does not work, it does not last, and it has important

defects
Extremely High High Exclusivity, non practical, status symbol
In this way, you can vertically position different brands and product versions, also using
clues fromadvertising campaigns.
If you compare widely different goods fulfilling the same (highly-relevant) need, you
may distinguish at the extreme of your spectrum necessity goods and at the other luxury
goods. In other cases, what makes this difference is, instead, the nature of the need
fulfilled.
As a general rule, better products have a higher price, both because of higher production
costs (more noble materials, longer production, more selective tests for throughput,...)
and bigger expected advantages for clients, partly reflected in higher margins.
Thus, the quality-price relationship is typically upwards sloped. This means that
consumers without their own opinion nor the capability of directly judging quality may
rely on the price to infer quality. They will prefer to pay a higher price because they
expect quality to be better.
This important flaw in knowledge and information processing capability - an instance of
bounded rationality - can be purposefully exploited by the seller, with the result that not
all highly priced products are of good quality .
Through this mechanism, the demand curve is always downward sloped, can instead turn
out to be in the opposite direction.
Horizontal differentiation
When products are different according to features that can't be ordered, a horizontal
differentiation emerges in the market.
A typical example is the ice-cream offered in different tastes. Chocolate is not "better"
than lemon.
Horizontal differentiation can be linked to differentiation in colours (different colour
version for the same good), in styles (e.g. modern / antique), in tastes.
This does not prevent specific consumers to have a stable preference for one or the other
version, since you should always distinguish what belongs to the supply structure and
what is due to consumers' subjectivity.
It is quite common that, in horizontal differentiation, the supplier of many versions
decide a unique price for all of them. Chocolate ice-creams cost as much as lemon ones.
When consumers don't have strong stable preferences, a rule of behaviour can be to
change often the chosen good, looking for variety itself. An example is when you go to a
fast food and ask for what you haven't eaten the previous time.
Fashion waves often emerge in horizontally-differentiated markets with imitation
behaviours among consumers and specific styles going "in" and "out".
Determinants
How a product rates according to different measures of quality or taste depends on its
physical and immaterial characteristics. The raw material from which it has been built,
the share of high/low quality ingredients / components, its engineered design, its
production process are typical determinants of product specificity.
More broadly, product differentiation can be:
the indirect effect of different endowments in raw materials, know-how, style preference
of different firms ignoring each others;

the conscious choice, out of firm strategies, to position each product against competitors;
the costly, uncertain, and difficult outcome of innovation efforts.
The bases that you will use in segmenting the market for the following products i)
Internet services THIS IS A SERVICE PRODUCT. THE USERS ARE MOSTLY
''DOMESTIC'' USERS, family / individuals.
FOR THE INDIVIDUALS
1.Demographic variables
*age
*gender Male and Female
*sexual orientation
*family size
*family life cycle
*Education Primary, High School, Secondary, College, Universities.
*income
*occupation
*education
2. socioeconomic status
*religion
*REGIONAL FOCUS
*language
3. Geographic variables
*region of the country,NORTH / SOUTH/ EAST/ WEST/CENTRAL etc.
*metro/ rural : Metropolitan Cities, small cities, towns.
*Density of Area Urban, Semi-urban, Rural.
*climate Hot, Cold, Humid, Rainy.
4.Psychographic variables
*personality
*life style
*value
*attitude
5.Behavioural variables
*benefit sought
*product usage rate
*brand loyalty
*product end use
*readiness-to-buy stage
*decision making unit
*profitability
*income status
ii) Electric small car
ELECTRIC '' SMALL CAR''
IN UNIVERSAL TERM, the CAR is a small car.
IN INDIAN TERM,
-nano is specifically designed for the indian market.

-it is designed for the indian market

-it is designed ''as a value for money''
-it is designed with india made parts.
THE MARKET SEGMENTATION VARIABLES CONSIDERED
FOR THE BUSINESSES.
-reduction in capital expenses.
-reduction in operation expenses.
-reduction in maintenance expenses.
-improvement in the cash flow.
-improvement in the working conditions for field employees.
-improvement in the productivity of field employees.
-improvement in the business market coverage
-improvement in the business results.
FOR THE INDIVIDUALS
1.Demographic variables
*age
*gender Male and Female
*sexual orientation
*family size
*family life cycle
*Education Primary, High School, Secondary, College, Universities.
*income
*occupation
*education
2. socioeconomic status
*religion
*REGIONAL FOCUS
*language
3. Geographic variables
*region of the country,NORTH / SOUTH/ EAST/ WEST/CENTRAL etc.
*metro/ rural : Metropolitan Cities, small cities, towns.
*Density of Area Urban, Semi-urban, Rural.
*climate Hot, Cold, Humid, Rainy.
4.Psychographic variables
*personality
*life style
*value
*attitude
5.Behavioural variables
*benefit sought
*product usage rate
*brand loyalty
*product end use

*readiness-to-buy stage
*decision making unit
*profitability
*income status
b)
What are the major considerations involved in designing the marketing
organization for a European furniture manufacturer foraying into Indian market?
================================================== =============
3 a)
Discuss the variables that affect the distribution decisions for the following:
i)
DTH services
ii)
Fast Food Joint
Solution : The variables that affect the distribution decisions for the following are :
i) DTH services
-service fee
-agents' commission.
-no. of agents.
ii) Fast Food Joint
-consumer pricing
-franchisees' margins.
-no. of outlets.
PLUS OTHER FACTORS TO CONSIDER FOR BOTH.
1.what is the corporate objective.
2.what is the corporate strategy.
3.what is the marketing objective.
4.what is the marketing strategy.
5.what is the sales objective.
6.what is the sales strategy.
7.what is the distribution objective.
8.what is the distribution strategy.
1.DISTRIBUTION BASICS----???
-who are the buyers
-where do they buy
-why do they buy
-where the market areas--geographically
-what conveniences do they require
2.DISTRIBUTION RANGE ----???
1.Range: WHICH ONE IS SUITABLE.
horizontal, vertical, corporate, administered, contractual.
2.Range: WHICH COMBINATION IS IDEAL.
middleman, agent, broker, wholesaler, retailer, distributor, dealer,
reseller, franchise holder.
3.Range:WHAT FACTORS WOULD AFFECT THE DISTRIBUTION CHANNEL.

legal, regulatory, language, customs, government policies,

logistics, currency, costs.
4.Range: WHAT KIND OF COVERAGE IS REQUIRED
intensive, selective, exclusive.
5.Range: WHAT TYPE OF SYSTEM
centralised, decentralised.
Distribution Strategy
-What distribution strategy is optimal for your business model?
-Who are the key channel partners with whom you must build or maintain key
relationships?
-How do you manage conflict with channel partners?
--------
Distribution & Logistics Strategy
Customer Considerations .
-is it the customers' knowledge of the products,
-is the customer's price sensitivity in the product category,
-is it how the customer make purchase decisions, their logistics and customer service
needs,
-is it the comfort using technology to meet their needs.
***is it the following
-product knowledge
-price sensibility
-purchase process decision
-service needs
-logistics needs
-technology comforts
etc etc
Channel Considerations.
-is it the reseller ability to create differential product demand,
-is it the reseller coverage of targeted markets,
-is it the reseller customer service capacity,
-is it the reseller physical distribution systems,
-is it the overall cost control orientation, and
-is it the ability to use technology in both demand creation and cost control.
***is it the following
-selling skills
-market coverage
-customer service capacity
-physical distribution system
-cost effectiveness
-technology orientation
-e-business strategy
etc etc
Company Portfolio Considerations.
-is it the Maturity of product portfolio often dictates

support needed from the channel and therefore is a core driver of channel
strategy. For example, launching newer products that require significant end user
education without the active support of trusted channels with long-term customer
relationships can be very difficult.
*** is it the following
-product maturity
-sales volume
-unit product margins
-capacity utiliztion
-benefit selling needs
-pull promotional strategy
etc etc
Company Operational Considerations.
-is it the company philosophy towards demand creation through personal selling,
-is it the internal customer service and logistics capabilities, and
-is it the company approach to the use of information technology and e-commerce.
***is it the following
-product maturity
-sales volume
-unit product margins
-capacity utiliztion
-benefit selling needs
-pull promotional strategy
etc etc
-
OTHER FACTORS
-cycle time for filling orders.
-effectiveness of the order fulfillment
-the risk factor in operation
-facility sizing
-space requirements
-storage systems
-material handling requirement.
-stock levels
-stock out frequency.
-stock handling cost
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b) What are the criteria marketers must evaluate before selecting a brand name?
Solution: The criteria marketers must evaluate before selecting a brand name
BRANDING MEANS CREATING A BRAND IDENTITY
FOR THE PRODUCT THROUGH
-symbol / logo / fonts/ color/ sound.

-product features/ benefits/ quality/ certainty/ reliability/delivery/ packaging/design.

WITH WHICH CREATE
-a perception through
-a visual/ communication/ behavior
WHICH
WHICH
-BRAND
-BRAND
-BRAND
-BRAND
RESULTS IN A BRAND PERSONALITY
CONSISTS OF
PERMEATION
DISTINCTIVENESS
VALUES
IMAGE
WHICH HELPS TO DEVELOP
1. BRAND PLATFORM, WHICH INCLUDES
-vision
-mission
-value
-personality
-positioning
-strategy
2.BRAND ARCHITECTURE, WHICH INCLUDES
-association
-commitment
-earnings
-essence
-identity
-extension
-harmonization
-image
-licensing
WHICH CREATES FOR THE
-sales
-market share
-consumer preference
-builds loyalty
-raises relative price
WHICH RAISES THE
BRAND EQUITY
-distinctiveness
-perceived quality
-value
-permeation
PRODUCT
PRODUCT

-personality
-competitive innoculation
-potential
WHY BRANDING IS IMPORTANT
FOR A PRODUCT TO BE SUCCESSFUL, IT MUST
-bring continuous sales
-gain market share,
-win consumer preference
-build loyalty
-raises the relative price.
WHICH RAISES THE EQUITY/ BRAND EQUITY OF THE PRODUCT
THAT IS WHY BRANDING IS SO IMPORTANT.
PRODUCT BRANDING
BRANDING IS VERY IMPORTANT TODAY, FROM BOTH
SIDES OF THE MARKETING EQUATION.
FACTOR ONE --MARKETERS' SIDE
THE MARKETERS CREATE A PLATFORM FOR THEIR PRODUCT'S BRAND
THROUGH
-symbol / logo / fonts/ color/ sound.
-product features/ benefits/ quality/ certainty/ reliability/delivery/ packaging/design.
Favorable brand attitudes are the determinants of brand loyalty - consumers must like the
product in order to develop loyalty to it. In order to convert occasional purchasers into
brand loyalists, habits must be reinforced. Consumers must be reminded of the value of
their purchase and encouraged to continue purchasing the product in the future.
To encourage repeat purchases, advertisement before and after the sale is critical. In
addition to creating awareness and promoting initial purchases, advertising shapes and
reinforces consumer attitudes so these attitudes mature into beliefs, which need to be
reinforced until they develop into loyalty. Ads reinforce consumer's perception and
behavior. Remember, it is easier to reinforce behaviors than to change them and the sale
is just the beginning of an opportunity to turn the purchaser into a loyalist.
THE MARKETERS ADOPT THE FOLLOWING TO DEVELOP BRAND
LOYALISTS.
Develop an unbeatable product - if you want to keep customers, make sure they can get
what they want from your product.
Give customers an incentive to repeat-purchase - chance to win a prize, gift with a certain
number of proofs of purchase, in-pack discount coupon, etc.
Stand behind your product - if customers don’t trust the product, they won’t purchase it
again.
Know your trophy customers and treat them best of all .
Make it easier to buy your brand than competing brands - availability and simplicity are
keys in today’s high-speed world. Customers appreciate convenience more than ever.
Go to your customers - bring the product to customers when possible.
Become a customer service champion - seek to serve the customer and they will repeat-
purchase…again and again!

FACTOR SECOND-----BUYERS' SIDE

ON THE OTHER SIDE OF THE MARKETING EQUATION.
Brand loyalty is a consumer’s preference to buy a particular brand in a product category.
It occurs because consumers perceive that the brand offers the right product features,
images, or level of quality at the right price. This perception becomes the foundation for a
new buying habit. Basically, consumers initially will make a trial purchase of the brand
and, after satisfaction, tend to form habits and continue purchasing the same brand
because the product is safe and familiar.
CORE BRAND LOYALISTS seek distinct advantages:
products are perceived as effectively differentiated from their competitors.
products satisfy consumer needs on both intellectual and emotional levels.
products consistently deliver on their brand promise, thus they consistently deliver value.
When brands resonate with customers at this level, there is a powerful emotional
relationship in place. This is the key element that leads to loyalty.
THE PRODUCT OFFERS, EXACTLY, WHAT THE BRAND LOYALISTS SEEK:
-product distinctiveness
-product perceived quality
-product value for money.
-product permeation
-product personality
-product competitive innoculation
-product's perceived potential
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4a)
Both primary data and secondary data complement each other in marketing
decision making. Explain.
Solution: Both primary data and secondary data complement each other in marketing
decision making.
1.PRIMARY RESEARCH
Primary Sources
Some definitions of primary sources:
Primary sources are original materials on which other research is based
They are usually the first formal appearance of results in the print or electronic literature
(for example, the first publication of the results of scientific investigations is a primary
source.) They present information in its original form, neither interpreted nor condensed
nor evaluated by other writers.
They are from the time period (for example, something written close to when what it is
recording happened is likely to be a primary source.)
Primary sources present original thinking, report on discoveries, or share new

information.
Some examples of primary sources:
scientific journal articles reporting experimental research results proceedings of
Meetings, Conferences and Symposia. technical reports
dissertations or theses (may also be secondary) patents
sets of data, such as census statistics works of literature (such as poems and fiction)
diaries autobiographies interviews, surveys and fieldwork letters and correspondence
speeches newspaper articles (may also be secondary) government documents
photographs and works of art original documents (such as birth certificate or trial
transcripts) Internet communications on email, listservs, and newsgroups
ALSOmeans gathering information directly from the consumers which could involve
-using questionnaire.
-using focus group [ face to face interview ]
-telephone interviews
-panel interviews
-person to person interviews
etc etc
1.MERITS
-from the primary source.
-original information.
-current data.
-reliable.
-clearly defined.
2.DEMERITS
-time consuming.
-expensive process.
-difficult to procure, sometimes.
3.LIMITATIONS.
-due to time/ cost factors, the amount of data gathering is restricted.
2.SECONDARY RESEARCH
Secondary Sources
Secondary sources are less easily defined than primary sources. What some define as a
secondary source, others define as a tertiary source. Nor is it always easy to distinguish
primary from secondary sources. A newspaper article is a primary source if it reports
events, but a secondary source if it analyses and comments on those events. In science,
secondary sources are those which simplify the process of finding and evaluating the
primary literature. They tend to be works which repackage, reorganize, reinterpret,
summarise, index or otherwise "add value" to the new information reported in the
primary literature. More generally, secondary sources

Some Definitions of Secondary Sources:

describe, interpret, analyze and evaluate the primary sources
comment on and discuss the evidence provided by primary sources
are works which are one or more steps removed from the event or information they refer
to, being written after the fact with the benefit of hindsight.
Some examples of secondary sources:
bibliographies (may also be tertiary)
biographical works
commentaries
dictionaries and encyclopedias (may also be tertiary)
dissertations or theses (more usually primary)
handbooks and data compilations (may also be tertiary)
history
indexing and abstracting tools used to locate primary & secondary sources (may also be
tertiary)
journal articles, particularly in disciplines other than science (may also be primary)
monographs (other than fiction and autobiography)
newspaper and popular magazine articles (may also be primary)
review articles and literature reviews
textbooks (may also be tertiary)
treatises works of criticism and interpretation
ALSO
means gathering information indirectly from the published source
which could involve
-using census data.
-buying published data from bureaus
-gathering data from stock exchange
-collecting information from company annual reports.
etc etc
1.MERITS
-from the secondary source.
-easy to source
-less time required.
-less expensive.
2.DEMERITS
-repackaged information.
-re-interpretation.
-not so reliable.
-old data and not current.

3.LIMITATIONS.
-not current data.
================================================== =============
b) Distinguish cyber marketing with conventional marketing. What are the reasons
for its rapid growth in the Indian context? Enumerate its limitations.
Solution: Cyber marketing
Cyber marketing has now become an indispensable segment of e-commerce
as well as the internet and World Wide Web related topics. Cyber marketing simply
refers to a technique of attracting potential customers by advertising your products or
services through such means as websites, emails, and banners.
In other words, cyber marketing is a blend of internet technology and direct marketing
principles that is adopted by business owners to find profitable customers and to interact
with them in order to enhance their business activities, thereby ensuring improved ROI
(Return on Investment.) A number of activities are involved in cyber marketing such as
online marketing, fax direct marketing, canvassing, call center direct marketing, and
mobile phone marketing via SMS (Short Message Service.)
Benefits derived from the adoption of cyber marketing techniques are immense. First of
all, it enables to minimize business costs and helps you to reach a substantial number of
customers and that too within minimal time frame. Another great benefit of cyber
marketing is that it allows you to cost-effectively reach in any type market, let it be
regional, national, and international.
Also, a significant benefit of cyber marketing is that it enables you to win profitable
customers. Exceptionally low marketing costs, high profit margin, increased customer
loyalty, round the clock services, and expansion in customer base are the other obvious
benefits of cyber marketing.
However, it is not as easy you think to enhance your business profitability via cyber
marketing techniques. In other words, in order to employ this marketing technique, it is
important that business owners and other people engaged in the internet field such as
ecommerce and marketing professionals must possess adequate skills.
Cyber marketing includes
- E-Business technology
- E-Business Communication
- E-Business Distribution Systems
- E-Business Value Strategies
- E-Business Strategy
- E-Business Management
- Individual as well as the diffusion of innovations

- How to gather and use information

- The Political, Legal, and Ethical Environment
knowledge of cyber marketing helps such areas as:
- Strategies as well as tactics involved in online marketing
- Role of E-business in restructuring the traditional distribution systems
- Way of designing advertising campaign and advertising banner
- How to employ email marketing, blog advertising, viral marketing, and Google
advertising
- What is search engine optimization (SEO) and how to increase web visitor count
through SEO?
- How to develop contents that should be included in a website
- Web analysis
- Aspects covering ethical, legal, and political sides of cyber marketing
- Cyber marketing tools
WHICH HELPS TO UNDERSTAND
- How to gain the attention of audience through an effective website
- How to use gathered information to discover new knowledge
- How to enhance the value of your business using management systems
- How to organize E-Business strategies to compete with your rivals
- How to employ different data to gain competitive benefits
CYBER MARKETING IS DIFFERENT FROM CONVENTIONAL
MARKETING.
-but it is part of your total integrated marketing programs.
-IT IS A SUPPLEMENT TO YOUR TOTAL MARKETING PLAN.
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