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  1. UNIT-1:COURSE CONTENTS • Current business landscape & changing demands. • Global competitive pressures. • Survey findings on international sourcing. • Characteristics of future winners. • International economists view on importance of sourcing.


  3. THE NEW MARKETING REALITIES Network information technology: • The industrial age was characterized by mass production and mass consumption. • The information age promises to lead more accurate levels of production, more targeted communication and more relevant pricing.

  4. THE NEW MARKETING REALITIES Globalization: • Technological advances in transportation, shipping, and communication have made it easier to market to other countries and source products and services from other countries.

  5. THE NEW MARKETING REALITIES Deregulation: • Most of the growth in the various sectors of the Indian economy is due to the government policy of deregulation and liberalization.

  6. THE NEW MARKETING REALITIES Privatization: • Converting public companies to private ownership and management to increase efficiencies. Example: UK • British Airways. • British telecom.

  7. THE NEW MARKETING REALITIES Heightened competition: Resulting in rising promotion costs and shrinking profit margins. • Domestic brands. • Foreign brands. • Store brands (Private levels).

  8. THE NEW MARKETING REALITIES Industry convergence: New opportunities lie in the intersection of two or more industries. • Example:Computing and consumer electronics industries are converging as the giants of the computer world such as Dell, Gateway and Hewlett-Packard release a stream of entertainment devices –from MP3 player to Plasma TVs and camcorders. • The shift to digital technology is fueling this massive convergence.

  9. THE NEW MARKETING REALITIES Consumer resistance: Due to bad or over marketing. • A 2004 Yankelovich study found record levels of marketing resistance from consumers. • Negative opinions about marketing and advertizing .

  10. THE NEW MARKETING REALITIES Retail transformation: • Growing power of giant retailers and “category killers”-home shopping, e-commerce on the internet. • Entertainment. • Food courts. • Demonstrations.


  12. NEW CONSUMER CAPABILITIES A substantial increase in buying power: • Buyers are only click away from comparing from competitors prices and product attributes.

  13. NEW CONSUMER CAPABILITIES A greater varieties of available goods and services: • Amazon .com: world’s largest bookstore branched into retail sales of music and movies ,clothing and accessories ,consumer electronics, health and beauty aids and home & garden products. • Buyer can order goods online from anywhere in the world.

  14. NEW CONSUMER CAPABILITIES • A great amount of information about practically everything: • Read any newspaper, in any language, from where in the world.

  15. NEW CONSUMER CAPABILITIES Greater ease in interacting and placing and receiving orders: • Buyers can place orders from home, office or mobile phone 24 hours a day,7 days a week and quickly receive goods at their home or office.

  16. NEW CONSUMER CAPABILITIES An ability to compare notes on products and services: • Social networking sites bring together buyers with common interests. • provides competitive information ,mostly based on consumer reviews, price features and user’s experience pertaining to a varieties of products.

  17. NEW CONSUMER CAPABILITIES An amplified voice to influence peer and public opinion: • The blogs.




  21. THE COMPANY ORIENTATION TOWARDS THE MARKET PLACE • The production concept: Consumer will prefer products that are widely available and inexpensive. Therefore production-oriented businesses concentrate on achieving high production efficiencies, low costs and mass distribution. Example: China . • Largest PC manufacturer ,Levono and domestic appliances giant Haier take advantage of the country’s huge and inexpensive labor pool to dominate the market.

  22. THE COMPANY ORIENTATION TOWARDS THE MARKET PLACE • Product concept: Consumer favor products that offer the most quality ,performance or innovative features. • Focus is on making superior products and improving them overtime. • A new or improved product will not necessarily be successful unless it’s priced, distributed ,advertized, and sold properly.

  23. THE COMPANY ORIENTATION TOWARDS THE MARKET PLACE • The selling concept: Consumers and businessman, if left alone, will not buy enough of the organization’s products. • Therefore focus on aggressive selling and promotion efforts.(Sell what they make ,rather than make what the market want). • It is practiced most aggressively with unsought goods like insurance and encyclopedias. Or it is used when the firm have overcapacity.

  24. THE COMPANY ORIENTATION TOWARDS THE MARKET PLACE • The marketing concept: Emerged in 1950s. • Focus on “Customer –centered” than “product –centered”.(A “sense –and respond” philosophy). • The job is not to find the right customers for your products, but to find the right products for your customers. • Example: Dell computer –customized features as desired by the customer.

  25. THE COMPANY ORIENTATION TOWARDS THEMARKET PLACE • Selling focuses on the needs of the seller. • Marketing focuses on the needs of the buyer.

  26. THE COMPANY ORIENTATION TOWARDS THE MARKET PLACE • The holistic marketing concept: • Focus on development, design and implementation of marketing programs, processes, and activities that recognize their breadth and interdependencies . • It recognizes that “Everything matters” in marketing and that a broad, integrated perspective is often necessary.







  33. THE HOLISTIC MARKETING ORIENTATION AND CUSTOMER VALUE Customer focus Core competencies Collaborative network Value exploration Value creation Value delivery

  34. Difficulties in reaching success in twenty-first century

  35. DIFFICULTIES IN REACHING SUCCESS IN TWENTY –FIRST CENTURY In consumer packaged goods, distribution concentration has increased greatly: • Much distribution is in the hands of giant corporations and multinationals. • Power has been transferred from manufacturers to distributors. • Slotting fees-exit fees, promotion fees etc.

  36. DIFFICULTIES IN REACHING SUCCESS IN TWENTY –FIRST CENTURY • Hypermarket and super market chain control (in the food sector) more than 80 percent of final consumer purchases. • Major franchises –McDonald’s ,KFC, Subway, Domino’s Piza-accounts for another major shares. • There is similar situation across all industries.

  37. DIFFICULTIES IN REACHING SUCCESS IN TWENTY –FIRST CENTURY The number of competitors has been reduced, but the number of brands has strongly increased: • Many producers were not able to survive the strong pressure of the giant retailers and either disappeared or were acquired by the “big fishes’.

  38. DIFFICULTIES IN REACHING SUCCESS IN TWENTY –FIRST CENTURY Product life cycle have been dramatically shortened: • New products last for a shorter time. • For companies ,it is easier to launch new brands due to available resources and consumer is increasingly are ready to try the new brands that they see advertized. • In the hyper markets the desperate war for shelf space intensifies.

  39. DIFFICULTIES IN REACHING SUCCESS IN TWENTY –FIRST CENTURY It is cheaper to replace than to repair: • Hard goods do not last as long as formerly. • Example: • Laser printer. • Electric razor. • Laptop.

  40. DIFFICULTIES IN REACHING SUCCESS IN TWENTY –FIRST CENTURY Digital technology has provoked a revolution in many markets: • It has led to a whole range of products: • Computer, • interactive TVs, • Digital phones, • Smart dishwashers, • Microwaves, • Toasters.

  41. DIFFICULTIES IN REACHING SUCCESS IN TWENTY –FIRST CENTURY The number of varieties of a given product has increased radically: • Go to a super market and write down the names of all the yogurts you can buy, by flavor and sizes. • You can probably list over 50 different yogurts: Plain, with sugar, with vanilla, with pieces of different fruits, various flavors, low fat, or nonfat, etc.

  42. DIFFICULTIES IN REACHING SUCCESS IN TWENTY –FIRST CENTURY Markets are hyper fragmented: • Companies ,in their search for differentiation, have identified and created more segments and niches, resulting in highly fragmented markets. • Ultimately this will lead to one-to-one customized products and marketing.

  43. DIFFICULTIES IN REACHING SUCCESS IN TWENTY –FIRST CENTURY Advertising saturation is reaching its highest levels and fragmentation of media is complicating the launch of new products: • A normal citizen of a large urban area is daily exposed to an average of 2,000 advertising or communication stimuli. • More than 100 television stations, 200 radio stations, 1,000 magazines. • Audiences are so diverse in their media habits that companies have to invest in many media to reach them.

  44. DIFFICULTIES IN REACHING SUCCESS IN TWENTY –FIRST CENTURY Markets are much more competitive: • Now the challenge is to fight against fragmentation,saturation, and the storm of novelties that appear daily in the markets where we compete.

  45. GRANT THORNTON –SURVEY ON SOURCING TRENDS • In order to continue providing up-to-the moment authoritative coverage of the global supply chain, World Trade has partnered with the well respected consulting firm Grant Thornton to survey sourcing trends within leading U.S. manufacturing companies.

  46. FINDING -1 • In the following excerpt on sourcing practices and trends, Grant Thornton reports that a substantial number of the three-quarters of major U.S. companies currently sourcing internationally have made changes or are planning to make changes to alter supply chains to source closer to home. CLOSER TO HOME

  47. WHY CLOSER TO HOME ? • These changes are being driven by considerations other than price, such as supply chain resiliency (flexibility) and responsiveness, suggesting the many more—and more complex—variables entering into supply chain decisions.   FLEXIBILITY AND RESPONSIVENESS

  48. FINDING -2 Most source internationally The vast majority of survey respondents are sourcing internationally. • 2008: More than three in four companies (77%) report spending at least some of their 2008 supply chain budgets on international sourcing. • 2007: Essentially the same percentage as in 2007 (76%). 77% SUPPLY CHAIN BUDGET SPENT ON INTERNATIONAL SOURCING

  49. FINDING-3 Among those sourcing internationally: • China is the most frequent supplier country (22%), • Other Asian countries (16%). • Western Europe (14%). • Canada (12%). • Mexico (9%).  38% SOURCING IN ASIAN COUNTRIES