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Nature & principles of Strategic Marketing.

Changing philosophies of Marketing :-

Marketing Philosophy Emphasis

Production – oriented concept Production

Sales – oriented concept Promotion

Consumer – oriented concept Consumer satisfaction

Competitive – oriented concept Competitive differential

advantage
Consumer needs and
Market – oriented concept
competitive advantage
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 Marketing Planning
1) Elements of marketing plan
2) Product line
3) Market
4) Pricing
5) Inventory & Distribution
6) Marketing communication
7) Customer service
8) Competitors action

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 Strategic Marketing helps to identify
1. Where are we now?
2. Where do we want to be in the future?
3. How are we going to get there?
4. How will we know when we get there?

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 Tasks of Strategic Marketing

Strategic direction Market scope

Tasks of
strategic
marketing

Formulation of Monitor and control

market offering performance

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 Principles of Strategic Marketing
1. The principle of Cooperative Spirit (create & keep
customers).
2. The principle of Selectivity & Concentration (selection of
target resources in that target).
3. The principle of customer value(quality /quantity for price).
4. The principle of differential advantage (over competitors).
5. The principle of integration (among different components of
strategies).

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 Strategic Marketing framework:-
The strategic hierarchy:
a) The corporate strategy :-
➢ Firm’s business definitions;
➢ Intended outcome of the strategy;
➢ Resource allocation to the business;
➢ Programmes for future growth.
b) The business strategy:
Business strategy deals with a firm’s single strategy business unit
(SBU) –‘a distinct business, with its own set of customers and competitors
that can be managed relatively independently of other businesses with in
the organization.’
➢ The SBU’s objectives & scope.
➢ How resources should be allocated to its product-market entities and
functional departments? and
➢ Which broad competitive strategy to pursue to build a sustainable
competitive advantage in its product markets?

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 Strategic Marketing framework:-
3) The functional framework
Action plans for managing a particular functional area within a business
in a way that supports the other levels of strategy. Functional area – Marketing/
Production /Finance / HR.
Growth strategies: -
Current New
markets markets

Market Market
Current penetration development
products strategy strategy

Product Diversification
development strategy
New
strategy
products

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BOSTON CONSULTING GROUP GROWTH SHARE
MATRIX:
Relative market Low market Share:

High Low
market market
share share

Market Market
High market penetration development
growth rate strategy strategy

Product Diversification
development strategy
New products strategy

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The GE Business Portfolio Matrix:
Business Strength

Strong Medium Weak

Market Attractiveness

High I I S

I S H
Medium
S H H
Low

I = Invest/ Grow Strategy.

S = Selectivity/ earnings strategy.
H= Harvest/ divest strategy

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 The Marketing Environment
The environment facing the marketing manager:

External
Environment

Socio-
cultural Economic
Immediate
component Component
environment

Intermediaries Suppliers
The
Component Component
Organization
Internal
Environment

Customer Employees
Competitive Component Component Technological
component
Component

Legal- political
Component
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Porter’s five forces model of competitive structure:

Threats of new
entrants

Bargaining power of Rivalry amongst Bargaining power of

suppliers existing competitors customers

Threats of
substitute
products or
services

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Identification of Opportunities (SWOT Analysis)

Internal environment

Strengths Weaknesses
External environment

strengths weaknesses
Opportunities
opportunities(SO) opportunities(WO)
strengths threats (ST) weaknesses threats
Threats (WT)

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 4) Assessing Corporate Capabilities and Resources
Assembling strategic capability –
Understanding corporate capabilities and Resources

Establishing and sustaining a competitive advantage

Value chain analysis

Resource audit and utilizations

Business process reengineering

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Resource –
1. Tangible Resources:
a) Financial Assets,
b) Physical Assets,
c) Operation Assets,
d) System Assets.
2. Intangible Resource:
a) Human Resources,
b) Innovation and Technology ,
c) Marketing Assets,
d) Corporate Culture

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Corporate Capabilities:
Types of Corporate Capabilities:

Strategic
Capabilities
Functional
Capabilities

Operational
Capabilities

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Competitive Advantage Model:

Resources

Distinctive Competitive Super

Value creation
competencies advantage performance

Capabilities

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Competitive Advantage :-Establishing & sustaining for
sustainability -
1. Test of inimitability – (extent to which a firm’s resources
and capabilities can be duplicated by the competitors).
2. Test of durability – (how long it can maintain its
distinctive competence by measuring the rate at which its
resources and capabilities can dissipate).
3. Test of appropriability :- the extent to which company shall
enjoy the benefits created by its distinctive competencies.
4. Test of Substitutability :-Within a unique competence used
by a term as competitive advantage can be surpassed by a
different vesicle.
5. Test of competitive superiority: - to access the worth of a
firms competencies in comparison to its competitors.

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 Competitive Advantage:- it measured in them of –
1. Firm’s position –
✓ Cost
✓ Differentiations
✓ Protected niche
2. Firm's Skills –
✓ Customer orientation
✓ Relationship with the public
✓ Intra-organizational relationship
✓ Specialized knowledge
✓ Technical expertise
✓ Flexible organization
3. Resources -
✓ Economic of scope and scale
✓ Financial experience
✓ market coverage
✓ workforce
✓ share expansion.
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Business Process Re-engineering:

Rethink Redesign

Retool

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 Customers, Market and Competition
5) Analyzing consumer behavior:
Black Box Model (kurt lawn):
Input Transformation process Output

Stimuli Black Box (buyer’s mind) Consumer Behavior

External Internal Decision

factors factors
Marketing mix
➢Product ➢Needs & Motives ➢Purchases
➢Price ➢Perception & self concept ➢No Purchases
➢Place ➢Attitude ➢Request For More
➢Promotion other ➢Learning Information
➢Social class ➢Personality
➢Family
➢Culture
➢Reference Group
➢Opinion Leadership 21
 Study of consumer behavior helps a firm to answer –

1) Who are our consumers?

2) What do they buy?
3) Where do they buy?
4) When do they buy?
5) How do they buy?
6) Why do they buy?

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 Buying Process:-
Need recognition

Pre Decision Stage Search to information

Evaluation of alterative

Decision Stage Purchase decision

Post decision stage Post purchase review (performance of the

product)

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The Dimensions of consumer decision making –

Extension Limited decision Routine response

decision-making making behavior

▪High perceived risk ▪Moderate perceived risk ▪Low perceived risk

▪High involvement ▪Moderate involvement ▪Low involvement
▪Infrequently ▪occasionally purchased ▪Frequently purchased
purchased product product product
▪Little or no product ▪Law product familiarity ▪familiarity
familiarity product familiarity
▪Limited choice criteria

Factors influencing Buying Situation

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 Buying Roles:-
1) The infector ( Who first propose the idea buying a
product or service )
2) The influencer ( Whose opinion is valued by consumer
in his buying decision )
3) The decider ( Who decides about buying )
4) The buyer ( Who enact the purchasing act)

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 Factors that influence consumer Behavior:
Why do customer Buy ?
Internal factors :
1. Psychological influence
2. Needs & Motives ( Maslow’s hierarchy of needs )
3. Perception
4. Learning
5. Personality &self-concept
External factors:-
1. Socio culture influence
2. Family
3. Culture
4. Reference group
5. Opinion leadership .

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Competitor analysis and competitive position:
Market concept of competitor :
1. Product from competition : (Include the companies
within the scope of competition that offer a similar
product market.)
➢ Luxor vs Montex (Gel)
➢ Tea ( Tajmahal vs Tata gold )
2. Product class competitor :- Competitor among the
companies that operate in the same product /
service category .
➢ Maruti ( Alto 800 ) VS Hyundai (EON)

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Competitor analysis and competitive position:
Market concept of competitor :
3. Generic competition :-
➢Includes all products & service that are considered by the
customer capable of meeting the same need .
➢Jet airways vs other airlines vs Indian railways vs other
transport companies (Bus)
4. Budget competition :-
➢ All items are competing for the same spending power
.The item do not fall with in the same product form or
class but compete with each other as they are purchased
from same general budget . ( Table vs carpet vs TV)
➢ Budget competition , generic competitive , product class
competitor , product form competition.
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LEVELS OF COMPETITION

Budget competition

Generic competition

Product class competition

Product form competition

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Components of competitor Analysis :-

What are the

competitor’s
current strategy
?
What are the
What are the
competitor’s
competitor’s
current and
strengths and
future
weaknesses?
objections?

Expected
future
strategies

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 Competing through superior service &
customer relationship :
Customer service triangle:
Strategy

customer
service

System Staff
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 Success Factors (4Cs) in Customer Service
Strategy
customer
Commitment
Customer service culture
service
Competitive strategy complaint
benchmarking management

To listen to the customers about the marketing service

for development & maintaining effective Customer services. A
pattern of beliefs &expression that the member of an
organization have internalized as a result of being shaved by
then over a long period of time is bond to influence their
behavior at work.
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 Transaction versus Relationship Marketing:
Transaction marketing Relationship marketing
➢ Focus on single sale ➢ Focus on service of independent transaction.
➢ Aim to catch the customer ➢ Aims to keep the customers.
➢ Little emphasis on customers ➢ High emphasis on customer’s service.
➢ Dialogue & tailored communication.
Customer service.
➢ Assess potential of market segment on the
➢ Mass market broadcast basis of lifetime value .
➢ Assess potential of market segment ➢ Interaction between a marketer and his
on the basis of market share. customers for a longer period i.e. lifetime.
➢ Interaction between marketer & his ➢ High customer commitment.
customer for limited time. ➢ Business is detained by its customer
➢ Limited customer commitment. relationship .
➢ Business is defined by its products

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 Determinants of Relationship Marketing:
1. Climate : ( The willingness of parties to work toward long
term relationship ).
2. Expectations : ( Rules / Norms w.r.f acceptable conduct
& performance and play an important role in the
creation and maintainance of relationship) .
3. Commitment : ( Marketer’s attitude that relects his
identification and attachment to the customers).
4. Trust : ( Customer’s willingness to rely on a term to
perform as promised and in the way he expects).

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Relationship marketing process: -
1. Selection of key customers
2. Study of expectations
3. Formulation & implementation of strategies
continuously with structured marketing programmes. (A
formal exchange relationship in which not only
customers identity is known but a record of his each
transaction is also maintained by the firm .)
4. Micromarketing: a practice of a firm in which it tailors
it’s market opening on one to one basis.
5. Cooperation and feedback.

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 Market, Targeting and Positioning:
Changing era of Marketing:

The one to
Mass Segment Niche
targeting one
Marketing Marketing marketing
strategy Marketing

Marketing Product Collaboration &

standardization product
strategy differentiation & customization of
differentiation
customization of Marketing
market offering offering

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 Bases for segmentation :-
1. Geographic segmentation :
➢ Nations
➢ Regions
➢ Countries
➢ Cities
➢ Climate
➢ Terrain
➢ Population density
➢ Market density
2. Demographic segmentation:-
➢ Age
➢ Sex
➢ Family size
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 Bases for segmentation :-
➢ Family life cycle
➢ Income
➢ Occupation
➢ Education
➢ Religion
➢ Social class
➢ Ethnic status
3. Psychographic segmentation :
➢ Personality
➢ Value
➢ Attitude
➢ Interests
➢ Lifestyle
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 Bases for segmentation :-
5. Behaviouristic Segmentation:
➢ Usage rate
➢ Brand loyalty
➢ User status
➢ Benefit sought
6. Industrial Marketing segmentation:
➢ Basis for segmentation for Industrial Markets
✓ Nature of the industry.
✓ Nature of the organization
✓ Usage of the product
✓ Usage rate
✓ Buyer’s motive
✓ Geographical variable
✓ Method of purchase
✓ Individual characteristics.
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 Marketing Strategies
Competitive Advantage: Generic Strategies (Porter):

Competitive Advantage

Low cost Differentiation

Competitive scope

1. Leadership 2. Differentiation
Broad target

3A.Focus 3B.Differentiation
Narrow target Focus

Three Generic Strategies

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Cost leadership strategies:
➢ Price competition among rival sellers is especially
vigorous.
➢ The industry’s product is standardized or readily
available from other sellers.
➢ There are few other ways to achieve product
differentiation, thereby making buyers very sensitive to
price differences.
➢ Most buyers use the product the same ways.
➢ Buyers incur low switching costs .
➢ Buyers are large & have significant power to bargain
down prices.

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Differentiation strategies:
➢ There are many ways to differentiate the company’s
offerings from that of rivals and many buyers perceive
these differences as having value .
➢ Buyer needs and uses of the item or service are diverse.
➢ Few rival firms are following a similar differentiation
approach.
➢ Technological Change is fast paced and competition
revolves around evolving product features.

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Focus strategies:
➢ It is costly or difficult for multi segment competitors to
meet the specialized needs of the target market niche.
➢ No other rival is attempting to specialize in the same
target segment.
➢ A firm does not have the resource or capabilities to go
after a bigger price of the total market .
➢ The industry has many different niches & segments ,
alluring a focus to pick an attractive niche seated to its
resources strengths and capabilities .

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New generic strategies – (Tracey & wireman 1995):
➢ Product leadership strategies – innovation, develop or
create new products.
➢ Customer intimacy strategy – developing and sustaining
relationships with a target market .
➢ Operational excellence – low cost producers of a product
or service for its customers.

1997-Slater: Brand Champion: Mass Market

Counterparts of Customer Intimate Businesses.

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 Competitive Strategies :-
Potential market positions:-
1) Leader: An institution provides lead to the industry not only because it
has largest market share but also by setting the trends in different
elements that constitute the firm’s market offering such an institution
takes care of both his interest and of the industry.
2) Challenger: An institution that is capable of providing almost a matching
response to the competitive moves of the leader . such an institution is
capable of managing its growth by well as the followers.
3) Follower: An institution that follows the trends set by the leader in fact ,
such an institution capabilities such opportunities that are not addressed
by the leader.
4) Niche: The organization generally a smaller one that chooses a small
portion of the market in which it is specialized as its target market.

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 Strategy for Market Leader :-
1) Expand the total market:
➢ finding new users.
➢ creating new users.
➢ Encouraging more usage.
2) Protect its current market share:
➢ Portion defense : build barrier around him to stop competitors
(distinctive skills, capabilities marketing assets)
➢ Flanking defense: erect outpost that can protest the flanks from
attack .
➢ Pre –emptive defense: attack potential aggressor before he starts his
offence.
➢ Counter offensive defense – response of a market leader to real
attack by a competitor.

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➢ Mobile defense : expansion of a leader’s market territory by
broadening and diversifying his business .
➢ Contraction defense : strategic withdrawal –goring up untenable
ground to reduce overstretching on the core business which can be
depended against attack.
3) Expanding market share.

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 Market Challenger Strategies
➢ Frontal attack :- Attacks the leader territory ( matching
product by product, price for price )
➢ Flank attack:- Aggression of the challengers on a leader at
his weak point or blind spots i.e. flank geographical
segmental.
➢ Encirclement attack:- Size which involves surrounding a
defender and launching an attack on him at several points .
➢ Bypass attack:- Challenger diversities into unrelated
products or markets neglected by the leader .
➢ Guerrilla attack:- Service of small, intermittent hit and
rum attacks by a challenger to herds and destabilize the
market depends.

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 Market Follower Strategies
➢ Counterfeiter: A follower that produces a product by coping
a leader’s product and package and then attempts to sell the
same either throttle black markets or thro disreputable
dealers ( Chinese products).
➢ Cloner: The cloner as a follower emulates a leader’s product
name and packaging with a slight modification
(GORDRES).
➢ Imitators: Here the follower imitate some features and
elements of a leaders product but strives to maintain
differentiation in terms of any element of marketing mix
(mobile cost).
➢ Adapter: The adapter takes a leader’s product and bring
some necessary change and modification in it and with an
aim to improve it’s utility.
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 Market-Nicher Strategies
Niche can be developed on the basis of –
➢ Nature of the product
➢ Product line
➢ Product feature
➢ Type of end users
➢ Size of customers
➢ Customer service
➢ Quality / price spectrum

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International Marketing Strategies

contractual
Exporting
Market – direct
agreement -
Foreign
1. Licensing Strategic
entry export direct
2. Franchising alliances
strategies -Indirect investment
3. Point
export
ventures

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 Marketing Mix Strategies
➢ Product:
1) Product extension strategic,
2) Product adaption strategic,
3) Product invention strategic.
➢ Promotion : Standardization vs localization.
➢ Place: Resident buyers international representations of
foreign firms& independent consultant.
➢ Pricing : cost plans approach( foreign exchange rate must
be commended) ( At lower price than domestic price .
dumping price selling )

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 Market Expansion Strategies
The market expansion matrix :
1) Concentration in terms of both the target market and countries.
2) Concentration in terms of countries but diversification in terms of
target markets.
3) Concentration in terms of target markets and diversification in terms
of countries.
4) Diversification in terms of both the target markets and the countries.
Market / Customer Target Group

Concentration Diversification

Concentration 1 2
Country

3 4
Diversification

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Information for Marketing Decision-Making
Components of MIS:

Internal Report
System

Marketing Data Data Statistical Model

Intelligence Collection Bank Bank Bank
System System

Marketing
Resource System

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 Forecasting the Market Opportunities:
Sales Forecasting Techniques :
1. Direct Methods – Survey method / executive opinion / sales force
composites / Delphi method (question) controlled market
experiments .
a) Use of the control group
b) Selection of the test and control units in random.
2. Indirect Methods –
a) Trend analysis – with tine
b) Regression analysis – with reference to another item .

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 Product and New Product Strategies :
Classification of Products:
1. Consumer products and
2. Industrial products
1. Consumer products : 4 types of Consumer Product-
a) Convenience products -low priced frequently purchased
(newspaper, cigarettes , rice drugs, spices).
❑ Staple products – purchased frequently on regular basis
(toothpaste, bread, milk, vegetables).
❑ Impulse products – purchased without pre purchase
planning or search effort.( candy bar, magazines, shaving
creams).
❑ Emergence products – purchased for immediate needs
(umbrella, dunning, rainy season, medicine).
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 Product and New Product Strategies :
b) Shopping products : - consumer put considerable effort in planning and
making the purchase .
❑ Homogeneous shopping products , alike and easy to company– terms
shoes, burger.
❑ Heterogeneous Shopping products – very different in appearance and
performance (style and brands are compared )- TV sets / washing
machines .
C) Specialty products – unique characteristics and/ or brand identification
which the customer accepts and do not accept any other products– men’s
suite, wrist watches, new automobiles, fancy dresses .
d) Unsought products: - purchased by customers to solve a sudden
problem.
❑ Regularly unsought products – customer teal no immediate need yet
eventually purchase them – encyclopedia , life insurance .
❑ Newly unsought products – which are not / known to customers ( may be
SG compatible mobile phone).
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 Product and New Product Strategies :
The product mix width and the product line depth of Godrej:
Product Line Depth:
Soaps Cold drink Furniture Refrigerators Washing
machine
▪Cinthol ▪Jumpin Mango ▪Chairs, ▪Gold Cold, ▪Smart
International, Drink, ▪Desks , ▪Classic, Wash
▪Cinthol Ultimate, ▪Jumpin Apple ▪Table, ▪Ultra,
▪Doodh Ganga, Drink, ▪Book Shelves, ▪Frost free .
▪Marvel , ▪Jumpin Orange Fire Resistant ,
▪Shikakai No. 1. Drink Personal
Lockers.

Product mix width

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 Product and New Product Strategies:
The decision about product mix (addiction /elimination )
depends on :
➢ Population growth
➢ Consumer income
➢ Consumer behavior
➢ Functional areas of business

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 Product and New Product Strategies:
Stage Product Life cycle (strategies):
Introduction :- ( slow growth )
➢Cost of production / marketing is high .
➢Heavy advertisement( promotion ) .
➢Product pioneers ,acceptance with initial quality of the product
,detect & overcome the defects in the products .
Growth :- ( rapid sales gain ) – New customers & more usage by old
customers
➢Demand is higher than supply .
➢Cost of production comes down .
➢Advertisement exists for promotion
➢High profit.
➢Attracts competitors and competition intensifies.

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 Product and New Product Strategies:
Maturity:- ( high competition )
➢Sales growth at decreasing rate .
➢Supply exceeds demand .
➢Weaker competitors drop out .
➢Firms with lower unit production & marketing costs will survive .
Decline : -( when to leave)
➢Cost control is important .
➢Attention should shift to other products.

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 Product and New Product Strategies:
Product Life cycle (strategies):
I II III III
Introduction Growth Maturity Decline
Sales and profit

Total Market Sales

+ Total Market Value

Rs 0
-
Time

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 Product and New Product Strategies:
Benefits –
➢ To determine the cost of product development.
➢ To stimulate growth & fully exploit its maturity stage.
➢ To control and reshape various phrase of the cycle .
➢ To plan new products and eliminate a poor one .
➢ To improve overall portability .
➢ To allocate resource among different products.
Benefits of PLC :
➢ It is impossible to determine the drawbacks of products at a
particular stage .
➢ The Length of each stage is complicated .
➢ All stages may not be applicable to every product .
➢ PLC cannot determine marketing success.

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 Product and New Product Strategies:
Branding:-
➢ Brand name: - Brand name is “that part of a brand which can be
vocalized –utter able”. Thus it consists of words, letters and / or
numbers that can be vocalized or pronounced. e.g. Pepsi, Limca,
Maaza Mango.
➢ Brand mark:- A brand mark is a part of the brand that appears in
the form of a symbol, design or distinctive coloring or lettering.
such part of the brand can be seen but not pronounced e.g. Air
India’s Maharaja, H.M.V’s dog, Tata (T).
➢ Trade characteristics: - A brand mark that is personified. (Giving
human characteristic to something is not human.)
➢ Trade mark: -Trade mark is a brand with legal protection which is
registered under any law.
➢ Trade Name: - A trade name is a commercial and legal name under
which a company dose its business. The Godrej is trade name of the
company .
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 Product and New Product Strategies:
Brand Equity :- Creates firm's image and develop customer loyalty
used for competitive advantages-
➢ Brand loyalty: The strongest measure of brand equity.
➢ Brand awareness:- The simplest form of brand equity associated.
➢ Perceived quality: with customers about a familiar brand.
➢ Brand associations: -Refers to ideas, values & other information
linked to focal brand .
➢ Other brand assets: Patents,trademark.

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 Product and New Product Strategies:
Brand strategies:-
➢ Generic branding :- A generic name is a brand that becomes
identified with a type of product rather than the product of
manufacturer the brand name become common descriptive type
for the product type – Xerox / Godrej/ Colgate.
➢ Individual branding: - different brand name for each product. Also
called multi brand strategy.
➢ Family branding:- ( multi product strategy) - using of a single brand
by a firm for all products. Old spice/ Johnson & Johnson.
➢ Brand licensing: - licensing is a contractual agreement whereby a
company allows someone else to use its brand name and usually
requires the product be made to its specifications of royalties.

66
 Product and New Product Strategies:
Characteristics of Good Brand Name:-
➢ Short &tempted
➢ Easy to spell and read,
➢ Easy to recognize & remember,
➢ Easy to pronounce,
➢ Pronounceable in only one way,
➢ Timely ( not outdated),
➢ Adaptable to packing & ability needs,
➢ Easily available,
➢ Not offensive, obscene or negative
➢ Suggests the product benefits,
➢ Adaptable to any advantage medium.
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 Product and New Product Strategies:
Functions of Packaging:-
➢ Containment & protection.
➢ Convenience.
➢ Identification.
➢ Information.
➢ Promotion.
Factors Governing Product Packaging Decisions :-
• Materials Used.
• Cost.
• Size, Shape, Color, Design of Package.
• Consistency.
• Promotion Strategy.
• Packaging procedure.

68
 Product and New Product Strategies:
Labeling :- important dimension of packaging because of
promotional, information & legal reasons.
New Product Development: Explorations, screening,
Business analysis, Development, test marketing,
commercialization

69
 Distribution Strategy and Channel Market :
Physical Distribution:- ( activation)
➢ Transportations,
➢ Storage,
➢ Inventory control ( EOQ )/Buffer stock, ABC,
➢ Analysis.
➢ Maternal
➢ Order processing,
➢ Maternal handing system .
Distribution strategy:-
➢ Intensive distribution
➢ Selective distribution
➢ Exclusive distribution

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 Distribution Strategy and Channel Market :
Types of channels:
➢ Zero Level Channel: Producer  Consumer .
➢ One Level Channel: Producer  Retailer  Consumer.
➢ Tow Level Channel: Producer  Wholesale  Retailer  Consumer.
➢ Three Level Channel: Producer  Agent  Wholesale  Retailer  Consumer.
Channel Selection:
➢ Market Consideration,
➢ Product Consideration,
➢ Middlemen Consideration,
➢ Company Consideration,
➢ Environmental Consideration,
➢ Consumer Consideration.
Channel Intermediaries:
➢ Wholesalers
➢ Retailers. 71
 Communication Strategies :
The Strategic Process:
Setting Communication Goals

Formulation Of Communication Mix

Developing Communication Theme

Choosing Media

Evaluation And Control

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 Personal Selling & Sales Promotion :
Era of personal selling

Consultative Strategic
Marketing era Partnering era
selling era selling era

Deliver descried Advice Building

Strategic
customer customers as Win-win
planning
satisfaction consultants circumstance

Selling emphasis

73
 Pricing Policies and Strategies :
Factors Affecting Pricing Decision:
a) Internal factors :-
➢ Organizational set up,
➢ Marketing mix,
➢ Product differentiation,
➢ Costs,
➢ Objectives.
b) External factors:-
➢ Demand-
• Number and size of competitors,
• Price of the competitors product,
• Nature & economic capacity of customers,
• Consumer preference.
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 Pricing Policies and Strategies :
➢ Competition,
➢ Supplier and buyers,
➢ Economic atmosphere,
➢ Government Control.
Approaches to Pricing :-
1. Cost-oriented pricing,
2. Demand-oriented pricing,
3. Competitive pricing.

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 Pricing Policies and Strategies :
Approaches to Pricing :-
1. Cost- Oriented Pricing-
Price =cost of production +profit margin
(Fixed Costs +Variable Cost) (percentage)
2. Demand Oriented Pricing-
➢ Perceived value pricing: - On the perception of the
customers about product value.
➢ Charging what the traffic will bear: Changing the
maximum what customer will bear .
➢ Peak load pricing: -Management charges different price
for the same product / service at different times peak and
off peck periods.
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 Pricing Policies and Strategies :
3. Competitive pricing-
➢ Customary pricing: - More/ less fixed price of the product
over a long period of time.
➢ Below competition pricing :- Changing low price than the
competitors
➢ Above competition pricing: -Charging prices higher than
that of the competitors.

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 Pricing Policies and Strategies :
Pricing strategies:-
1. Discounts and allowances,
2. Geographic price politics,
3. One price versus variable price,
4. Price lining,
5. Leader pricing,
6. Psychological pricing,
7. Pricing competition versus non-price competition.

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 Pricing Policies and Strategies :
1. Discounts and allowances-
a) Quantity discounts
b) Trade discounts
c) Cash discounts
d) Promotional discounts/ allowances.
2. Geographic price policies-
a) Free on board ( FOB) no transportation,
b) Fright equalization,
c) Postage stamp pricing / uniform delivered pricing,
d) Zone pricing,
e) Basing point pricing.
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 Pricing Policies and Strategies :
Pricing of new products and services: -
1. Skimming Pricing: Firm’s changes high prices for its
product in the initial stage to recover heavy research and
promotional expenditure before competitors enter the
market.
2. Penetration Pricing: Suggest the introduction of product
with low price in order to captain the market.

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Implementing and Controlling Marketing
Strategies:
Organizing the Marketing Department:
1. Function – Oriented Organization:

Vice president marketing

Manager Manager Manager Manager

Manager sales
marketing distribution customer promotions
research system system operations

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 Implementing and Controlling Marketing
Strategies:
2. Product – Oriented Organization:
Vice president marketing

Manager Manager Manager Manager Manager

(Product A) (Product B) (Product C) (Product D) (Product E)

Deputy Manager Deputy Manager Deputy Manager

(Product (Services) (Sales)
planning)
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