Marketing Mix - Definition • Marketing mix is the combination of elements that go to make the marketing strategy for a company. • This helps achieve the marketing objectives of the company/brand • The mix needs to clearly differentiate your products from those of your competitors
Marketing Mix - Variables • The marketing mix focuses on 4 elements: • Price • Product • Place (Distribution) • Promotion • These variables are all interdependent • “Controllable variables” as one can choose, alter & control these
Product Mix - Definition • The physical features of the product, or the intangible aspects of the service • This covers things that make the product more attractive to buy
Product Mix • Product line/range • Design, quality, feature, models, style, appearance, size & warranty • Packaging type, materials, size, appearance & label • Merchandising • Service, pre-sale & after sales • New products launches
Product Mix – Under A Microscope Product mix & line : Launch Phase • Blended Spices a mature market • What variants to launch, which to push, how to differentiate from competition ?? • Brand the variants to be offered eg. Pindi Chhole Masala, Dakshin Sambhar Masala, Khyber Tandoor Masala Packaging : • Introduced in standi poly pouches • Resealable pouches
Product Variables – Under A Microscope Later Stage : • More to create excitement around the brand • Relevant for high impulse buying category • eg. Shampoos – Pantene’s oil fortified shampoo • Better the product - Maggi Wheat Atta Reaction to competitors - • Iodex launching white iodex
Product Variables – Under A Microscope Reactions to market scenario : • McDonalds has recognized the preference for vegetarian foods among Indians thus they have included vegetarian food in its menu. • Pizza Hut outlets being purely vegetarian in places like Ahmedabad, Mumbai
Product Variables – Under A Microscope • Merchandising done to create a buzz & remain top of mind • Eg.McDonald’s merchandising Nemo’s to coincide with the release of Finding Nemo • McDonalds agrees to distribute millions of Roger Rabbit cups to its customers • Luxor Writing Instruments Ltd. a JV of Gillette and Luxor launched 500 "Gajgamini" range of Parker Sonnet Hussain special edition fountain pens, priced at Rs. 5000. • These pens were signed by M.F.Hussain
Price • The exchange value of a product is “Price” • Going to sell at a high price and make a lot of profit in the short term • Going to sell at a low price to beat the competition and stay in the long term
Price • A well chosen price strategy should do 3 things: • Achieve the financial goals of the firm (eg.: profitability) • Fit the realities of the marketplace (will customers buy at that price?) • Support a product positioning
Price Variables • Pricing policies, levels of prices, levels of margins, discounts & rebates • Terms of delivery, payment terms, credit terms & instalment facilities • Resale price maintenance • EG. Xerox's decision to "loan" customers the Xerox 914 (the first commercial push-button office copier) and to charge them only $.05 per copy.
Types of Pricing Competitive/Penetration pricing: • 3 policies – Premium, Discount & Parity pricing • Eg. Akai Colour TV Discount Pricing • Baron International the Indian JV of Akai sold colour TVs that were priced below Rs 10,000/- alongwith exciting exchange offers & freebies • This changed the rules of the game in entertainment electronics. • His strategy was to make people buy rather than sell his product. • The strategy was built keeping in mind the price-sensitive and value-conscious Indian consumers
Types of Pricing • From 2,500 in 1994, Akai sold an amazing 4,50,000 TVs in 1998. • Akai sold at wafer-thin margins of 2%. • Money was made because of high volumes but was not enough for the manufacturer to take back some home • Thanks to this even other manufacturers had to cut back the price of their products forcing Baron to virtually work without profit, even at a loss at times. • Baron didn’t build any back-up strength in terms of after sales service or any credible infrastructure to maintain consumer confidence • If in 1996-97 Baron had clocked a net profit of Rs 28 crore, June 2001 saw it dip into the red with a net loss of Rs 74.51 crore
Types of Pricing Competitive/Penetration pricing: • The success of competitive pricing strategy depends on achieving high volume and maintaining low costs. • Discount pricing that worked - Cavinkare’s Chik shampoo has a 20% market share as against HLL’s Clinic Plus – 28%
Types of Pricing Cost-plus-profit: • Add the profit you need to your cost. • It is also called cost-orientated strategy and is mainly used by the big contractor of public works. • This strategy is only good for a businesses where the customers are public collectivities or government agencies.
Types of Pricing Value pricing: • Base prices on the value you deliver to customers. • For example, when a new technology has a very large success, you can charge high prices to the customer. • This practice is also called “skimming”. • It is easy when you are in the introductory phase of the product life cycle. • Value pricing is common in luxury items. • Sometimes the higher the price, the more you sell • Eg. Designer clothes
Types of Pricing Proactive Pricing : • Times of India offering the paper at Rs 2/- on certain days of the week • Eventually it extended the pricing through weekdays • Circulation grew in leaps & bounds
Place - Definition • Decisions about where to sell the product & how to get it there • Depends about where the customers are • Includes the "channel of distribution" - all the different middlemen
Place Variables • Channels of distribution • Types of intermediaries • Channel design • Location of outlets • Channel remuneration & dealer-principal relations • Physical distribution, transportation, warehousing, inventory levels, order processing
Place Variables Physical Distribution : • Transportation Costs – Freight, rail, road cost on the rise • Need only the best solution as time and reliability are key importance • Warehousing & Inventory Cost- Warehousing rent along with cost of labour have been going up • Inventory levels have been increasing due to competition & hoping to provide a better product delivery to the channel customers
Place Variables Channels of Distribution : • Manufacturer User • Manufacturer Mail order User • Manufacturer Door to Door Salesman User • Manufacturer Manufacturer’s Showroom User • Manufacturer Retailer User • Manufacturer Stockist/Distributor Retailer User
Place Variables Proliferation of showrooms/ exclusive outlets • Maintain a synergy in ambience, experience, service • Sony World • Titan Franchising : • Manufacturer dos not need to make large investments but a still have a strong network • NIIT • Oyzterbay
Place Variables Modern Format Shops : • Supermarkets, department stores & chain stores are the new genre • Wide variety at a touch and feel level The Co-operative Network : • 3 distribution channels – Consumer co-operative, Supermarkets & Agricultural credit societies The Public Distribution System : • Came into existence out of the need to be fair • It seek to stabilize prices of essential goods
Place Variables Non Store Marketing / Marketing without Distribution Channels: • Mail Order Marketing / Mail Order Business • Vending Machines • Home selling • Home Shopping
Place - Cases • Kitchens Of India available only at supermarkets • Ghadi detergent’s success only because it is easily available at all outlets • Platini bombed because of non availability of product at all outlets
Promotion -Definition • The function of promotion is to affect the customer behavior in order to close a sale. • Promotion includes mainly three topics: • Advertisement • Public Relations • Sales Promotions.
Promotion Variable • Personal selling : Objectives, level of effort, quality of sales force, cost level, level of motivation • Advertising : media mix, budgets, allocations & programs • Sales promotional efforts, display, contests, trade promotions • Publicity & public relations
Case Study – Marketing Mix for Haldiram’s PRODUCTS : • Haldiram's product range included namkeens, sweets, sharbats, bakery items, dairy products, papad and ice-creams . • Namkeens remain the main focus area for the group contributing close to 60% of its total revenues. • Have a Nagpur unit manufactured 51 different varieties of namkeens, the Kolkata unit manufactured 37 and the Delhi unit 25 • The raw materials used to prepare namkeens are of best quality and are sourced from all over India.
Case Study – Marketing Mix for Haldiram’s PRODUCTS : • Customize its products to suit the tastes and preferences of customers from different parts of India. • For example, it launched 'Murukkus,' a South Indian snack, and 'Chennai Mixture' for South Indian customers. 'Bhelpuri,' was made for customers residing in western India. • The company offered certain products such as 'Nazarana,' 'Panchratan,' and 'Premium' gift packs only during the festival season. • This helped Haldiram's compete effectively in a market that was flooded with a variety of snack items in different shapes, sizes and flavors
Pricing : • The company's pricing strategy took into consideration the price conscious nature of consumers & the large unorganized market it was battling • Introduced small packets of 30 grams, priced as low as Rs.5. • The company also launched namkeens in five different packs with prices varying according to their weights
Pricing : Source: ICMR
PLACE : Manufacturing Unit Carrying & Forwarding Agent (C&F) Distributors Retail Outlets
C&F agents received a commission of around 5%, while distributors earned margins ranging from 8% to 10%. • The retail outlets earned margins ranging from 14% to 30%. • Apart from the exclusive showrooms owned by Haldiram's, the products were available at supermarkets, sweet shops, provision stores, bakeries and ice cream parlors. • The products were also available in public places such as railway stations and bus stations that accounted for a sizeable amount of its sales.
Haldiram's also offered its products through the Internet. • The company tied up with indiatimes.com , Giftstoindia.com, giftssmashhits.com, tohfatoindia.com and channelindia.com • This was to enable NRI’s residing abroad to send Haldiram's gift packs to specified locations in India.
Promotion : • Magazines & print were used • Point of sales (Posters, Danglers, Buntings, Shelf Talkers) • Mailers to corporates during Diwali for bulk orders
Promotion : • Since namkeens were impulse purchase items, attractive packaging in different colors influenced purchases. • Haldiram's used the latest technology (food items were packed in nitrogen filled pouches) to increase the shelf life of its products. • While the normal shelf life of similar products was under a week, the shelf life of Haldiram's products was about six months. • The company projected the shelf life of its products as its unique selling proposition. • Posters highlighting the shelf life of its products carried the caption 'six months on the shelf and six seconds in your mouth.'
Promotion : • The company established restaurants in Nagpur and Delhi. • In Nagpur an innovative strategy was undertaken to increase its business • It facilitated people who were traveling by train through Nagpur station to order food from places where stockists of Haldiram's Nagpur unit were located. • The customers could order for lunch/dinner by sending a demand draft (DD) or cheque to the Nagpur unit or giving the same to specified local distributors belonging to the Nagpur unit. • Along with the DD/cheque, customers had to provide information such as the name of the train, its likely time of arrival at Nagpur, their names and coach and seat numbers.
Godrej Noble House&Chai Time Marketing Mix Case Study
Godrej Tea Product : • Launched 2 new tea products : • Godrej Noble House & Godrej Chai House • Godrej Chai House is targeted at the popular and mid-premium segment while Godrej Noble House is being positioned in the premium category. • A phased launch beginning with Andhra Pradesh, Tamil Nadu, Uttar Pradesh, New Delhi and Mumbai. • Tea being offered in different parts of the country is different.eg. In South it will be Dust, whereas the north would have Leaf tea. • These product variations reflect the fact that consumers in different parts of the country have heterogeneous taste. • Dust tea is very popular in the south, Gujarat prefers loose tea….
Godrej Tea Price, positioning and packaging : • Nobel House is priced at Rs 55 for a 250 gm pack for its leaf varient and Rs 48 for the dust. • Chai House is priced at Rs 40 for a 250 gm pack of leaf and Rs 37 for dust. • Tea available in in 2kg, 1kg, 500gm, 250gm, 100gm, 50gm and 25gm packaging at prices as low as Rs 3. • Plans to introduce Re 1 packs. • The pricing on both products represents a 13% discount to the Tata Tea and Hindustan Lever Ltd. counterparts.