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ALLAMA IQBAL OPEN UNIVERSITY ISLAMABAD

(Department of business administration)

MAKETING THEORY AND PRACTICE(561)

Q. 1 Internal databases always give information about opportunities and problems help to
plan marketing programs and evaluate performance, being a Marketing Manager of any
Fast Moving Consuming Goods (FMCG), what information would you like to have in your
internal database? How this information would be used?
ANS:
INTRODUCTION:
The term FMCG refers to those retail goods that are generally replaced or fully used up over a short
period of days, weeks, or months, and within one year. This contrasts with durable goods or major
appliances such as kitchen appliances, which are generally replaced over a period of several years.
FMCGs have a short shelf life, either as a result of high consumer demand or because the product
deteriorates rapidly. Some FMCGs – such as meat, fruits and vegetables, dairy products and baked goods
– are highly perishable. Other goods such as alcohol, toiletries, pre-packaged foods, soft drinks and
cleaning products have high turnover rates. The following as the typical characteristics of FMCGs:
From the consumers' perspective:
Frequent purchase
Low involvement (little or no effort to choose the item -- products with strong brand loyalty are
exceptions to this rule)
Low price
From the marketers' angle:
High volumes
Low margins
Extensive distribution networks
High stock turnover
ROLE OF MARKETING MANAGER:
By itself information has no worth its value come from its uses in many cases information
will do a little in changing managers decisions or the cost of the information may exceeds the
returns from the improved decision marketers should not assume that the information should
always be worth obtaining rather they should always weigh carefully the cost of getting more
information against the benefits resulting from it .Marketing manager can obtain the needed

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information from:
• Internal data
• Marketing intelligence
• Marketing research.
INTERNAL DATABASE
"Electronic collection of consumer and market information obtained...

 The database Marketing is the process of building, maintaining and utilizing the
databases (on the customer, products, suppliers and resellers) for the purpose of
contacting, transacting and building relationships.  The database marketing is an
interactive approach to marketing, which uses the individually addressable
marketing media and channels such as mail, telephone and the sales force.

 Features

 The salient features of database marketing include:

ü      Extending help to a company to reach its target audience;

ü      Stimulating the customer demand; and

ü      Recording and maintaining an electronic database of the customer, and all
commercial contacts, so that the business firm could improve their future contacts
and devise a more realistic marketing strategy.

 Characteristics of Database Marketing 

1. Each actual or potential customer is identified as a record on the marketing

database.
2. Each customer record contains information (used to identify the likely
purchases of particular products and how they should be approached) on:

 Identification and access (eg. Name, address, telephone No)

 Customer needs & characteristics (demographic and psychographic
information about customers, the industry type and decision making unit
information for the industrial customers)
 Campaign Communications (whether the customer has been exposed to
particular marketing communication campaigns)
 Customers past responses to communications done as a part of the
campaigns
 Past transactions of customers (with the company and possibly with the
competitors).

1. This enables the firm to decide on how to respond to the customer needs.
2. The database is used to record the responses of the customer to the firm’s
initiatives. (e.g. marketing communications or sales campaigns).

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3. The information is also made available to the company’s marketing policy

makers which enables them to decide:

 The target markets or segments appropriate for each product or service.

 The marketing mix (price, marketing communications, distributions channel,
etc) appropriate for each product in each target market.

Q2A

Difference between a product and service

A PRODUCT IS TANGIBLE WHEREAS SERVICE CAN NOT BE PHYSICALLY TOUCHED

Differences in marketing

Selling a service is fundamentally different than selling a product. Unfortunately, most of the
marketing books on the shelves today focus product marketing. This article will highlight five
differences between product and service marketing.

1. Services are intangible. When you buy a product, you have a fairly good idea of what
you are buying because you can physically see it – and maybe even give it a trial run –
before you buy. The selling process involves ordering the product, paying for it, and
having it delivered within a few days.

On the other hand, services are highly customized and tailored to your client’s specific
needs. As small-business owner, each client you work with brings with him a new set of
circumstances. With this comes an element of uncertainty. Prospects want everything to
go as smooth as possible but must evaluate whether you can do what you say you will,
whether your proposed solution is right for them, and whether they can develop a good
working relationship with you.

2. Service marketing involves building relationships and working together with clients.
With products, chances are that once you buy the product, you will never see the sales
person again. With services, however, you will be working with your prospects
throughout the job so the last thing you want to be perceived of is a sales person.

Therefore, that initial consultation is the first step toward building a working relationship
and setting expectations that will be carried through the rest of the project. If the initial
“personal chemistry” just isn’t there, you will save yourself a lot of headaches by walking
away from the job.

3. Service providers must be more selective when choosing prospects. You can sell a
product to anyone with the money to buy it. With services, money is a factor, but there
are a number of other qualifiers. These include whether your services match the problem
your prospect wants you to solve, how easy the prospect is to work with, and whether
your prospect will be satisfied with the services you provide. You want to weed out any

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clients you believe might become “difficult.” Ideal clients are “good fits” with your
company.

4. Objections can be warnings rather than something to be overcome. With product

selling, salespeople are trained how to overcome their prospect’s objections. They’re goal
is to make the sell regardless of if the prospect wants it. With services, objections may be
a red flag warning that this prospect is a ‘bad match’ for your company.

5. Pricing differs with projects. With products, pricing is fairly standard and easy to
calculate. Vendors can negotiate within a certain range to give discounts for bulk or
frequent orders. Often, there are economies of scale with the more products that are
produced. Services, however, usually are more difficult to price. There is initial work
involved in diagnosing your prospect’s problem, estimating the job, and preparing a
proposal. Some firms charge an initial fee just to do the analysis required to draw up the
proposal for the problem. Once your client accepts, they’re getting your time, and your
time is valuable. You have bills to pay, salary requirements and other clients that require
your attention, so you don’t have nearly as much flexibility with pricing.

When you create your marketing strategy to sell your services, it is important to take into
consideration these key differences between service marketing and product marketing.

Q2:b

Positioning the products in marketplace for competitive advantage.

 
Product Positioning - 4 Differentiation Tips and competitive  
advantage
 

Here are 4 product positioning tips to differentiate your business for  

to get competive advantage.
 
Luckily, it’s not all that hard to stand out from the crowd, as long you
realize the importance of product positioning. Positioning is the art  
of matching your marketing message, with the desires, feelings, &
beliefs of the particular type of customer that you know you can  
service better than anybody else. You make yourself "visible" as the
kind of business this individual would naturally be attracted to.

Well, you really don’t have to look very far to see that effective
product positioning is about as common as caviar at a McDonald’s

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outlet. Just look in the yellow pages, look on the net, and you’ll soon
see what I mean.

It’s more of the same old same old, look at us were #1 for pricing,
service & selection nonsense. It’s just meaningless drivel. Anyone
can say these things & everyone does, & I ask you this.

Are you guilty of spouting these "buy from us for no apparent

reason" platitudes? Don’t feel guilty if you are. Just take these
product positioning tips to heart.

What happens when everybody in your industry says the same thing?
Customers don’t know how to tell the difference between one
product & another, so they make their decision based on price. And
everybody loses. The customer doesn’t get the product that best fits
their needs. You don’t make nearly as many sales as you could, and
those that you do make, are at less margin than you would like.

Listen, if you can just get the principle that I’m about to reveal
hammered into your head, you’ll have more business than you can
handle, and you won’t worry about having to undercut the
competition.

That sounds pretty good doesn’t it?

Here’s the secret. Just take the time to communicate, clearly,

specifically, & thoroughly why you‘re different & how that difference
makes a difference in your customer’s perception of his or her life.
Such a simple concept, but so rare, it can’t help but differentiate you.

You see, people really don’t buy on price at all. They buy on value. If
they bought a cheaper product, it’s because you didn’t demonstrate
the value of yours. Admittedly, there is a certain percentage of the
market that is best served by an inferior low end product, but this
segment is much smaller than it appears. More often than not,
people cannot differentiate, buy based on price, & live to regret it.
This is a crying shame, & were not going to stand for it much longer,
are we?

As you absorb this material you will become intimate with the
following 4 product positioning principles that will set your business
apart.

Unique Selling Proposition

Something unique, that you have to offer. Not necessarily entirely

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unique. You can appear unique by simply packaging your product or

service in a unique way. For example, a lawyer, might advertise flat
rate incorporation, and attract a lot of customers because the market
fears the open ended legal bill. In reality, it is all of the other "back
end" services that come about as a result of incorporation that
generate incorporation revenues. But who do you think will end up
getting more of that lucrative business, the flat rate USP savvy
attorney, or Mr. Conventional?

Risk Reversal
Differentiate yourself with outrageously bold guarantees, that you're
competition don't have the guts for. Most people are genuinely
honest, and if your service is what you say it is, you've got nothing to
worry about. The increased sales volume will be well worth it.

Inordinate Value
Leverage your advertising, by offering to let complimentary
businesses come along for the ride, in exchange for a free sample of
their wares. Then bundle those into your offering. Cut the right
deals, & your offer will appear "irresistible", compared to your
competition.

Clear, Complete, & Concise Customer Education

Here's were most advertisers fall down, and you can stand head &
shoulders above the crowd. Tell your full story. Don't make people
try to figure out on their own why they should be doing business with
you. Spell it out for them.

Spend some time thinking deeply about these product positioning

ideas, and how you can use them to your advantage. Your market
share is predicated on how well you assimilate them, & apply them to
the promotion of your business.

Q3

PRODUCT LIFE CYCLE

Product life cycle management (or PLCM) is the succession of strategies used by business
management as a product goes through its life cycle. The conditions in which a product is sold
(advertising, saturation) changes over time and must be managed as it moves through its
succession of stages.

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Contents

 1 Product life cycle (PLC)

o 1.1 Request for deviation
o 1.2 Market identification
 2 Lessons of the product life cycle (PLC)
 3 Limitations

Product life cycle (PLC)

Like human beings, products also have their own life-cycle. From birth to death human beings
pass through various stages e.g. birth, growth, maturity, decline and death. A similar life-cycle is
seen in the case of products. The product life cycle goes through multiple phases, involves many
professional disciplines, and requires many skills, tools and processes. Product life cycle (PLC)
has to do with the life of a product in the market with respect to business/commercial costs and
sales measures. To say that a product has a life cycle is to assert four things:

 that products have a limited life,

 product sales pass through distinct stages, each posing different challenges, opportunities, and
problems to the seller,
 profits rise and fall at different stages of product life cycle, and
 products require different marketing, financial, manufacturing, purchasing, and human resource
strategies in each life cycle stage.

The four main stages of a product's life cycle and the accompanying characteristics are:

Stage Characteristics

1. costs are high

2. slow sales volumes to start
1. Market introduction 3. little or no competition
stage 4. demand has to be created
5. customers have to be prompted to try the product
6. makes no money at this stage

1. costs reduced due to economies of scale

2. sales volume increases significantly
3. profitability begins to rise
2. Growth stage 4. public awareness increases
5. competition begins to increase with a few new players in establishing
market
6. increased competition leads to price decreases

3. Maturity stage 1. costs are lowered as a result of production volumes increasing and

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experience curve effects

2. sales volume peaks and market saturation is reached
3. increase in competitors entering the market
4. prices tend to drop due to the proliferation of competing products
5. brand differentiation and feature diversification is emphasized to
maintain or increase market share
6. Industrial profits go down

1. costs become counter-optimal

2. sales volume decline or stabilize
4. Saturation and 3. prices, profitability diminish
decline stage 4. profit becomes more a challenge of production/distribution efficiency
than increased sales

Request for deviation

In the process of building a product following defined procedure, an RFD is a request for
authorization, granted prior to the manufacture of an item, to depart from a particular
performance or design requirement of a specification, drawing or other document, for a specific
number of units or a specific period of time. :c)

Market identification

Termination is not always the end of the cycle; it can be the end of a micro-entrant within the
grander scope of a macro-environment. The auto industry, fast-food industry, petro-chemical
industry, are just a few that demonstrate a macro-environment that overall has not terminated
even while micro-entrants over time have come and gone.

Lessons of the product life cycle (PLC)

It is claimed that every product has a life period, it is launched, it grows, and at some point, may
die. A fair comment is that - at least in the short term - not all products or services die. Jeans may
die, but clothes probably will not. Legal services or medical services may die, but depending on
the social and political climate, probably will not.

Even though its validity is questionable, it can offer a useful 'model' for managers to keep at the
back of their mind. Indeed, if their products are in the introductory or growth phases, or in that of
decline, it perhaps should be at the front of their mind; for the predominant features of these
phases may be those revolving around such life and death. Between these two extremes, it is
salutary for them to have that vision of mortality in front of them.

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However, the most important aspect of product life-cycles is that, even under normal conditions,
to all practical intents and purposes they often do not exist (hence, there needs to be more
emphasis on model/reality mappings). In most markets the majority of the major brands have
held their position for at least two decades. The dominant product life-cycle, that of the brand
leaders which almost monopolize many markets, is therefore one of continuity.

In the criticism of the product life cycle, Dhalla & Yuspeh state:

...clearly, the PLC is a dependent variable which is determined by market actions; it is not an
independent variable to which companies should adapt their marketing programs. Marketing
management itself can alter the shape and duration of a brand's life cycle.[1]

Thus, the life cycle may be useful as a description, but not as a predictor; and usually should be
firmly under the control of the marketer. The important point is that in many markets the product
or brand life cycle is significantly longer than the planning cycle of the organisations involved.
Thus, it offers little practical value for most marketers. Even if the PLC (and the related PLM
support) exists for them, their plans will be based just upon that piece of the curve where they
currently reside (most probably in the 'mature' stage); and their view of that part of it will almost
certainly be 'linear' (and limited), and will not encompass the whole range from growth to
decline. Product life cycle means how a product run through out all of his life. It have four stages
which are 1. introduction stage 2. growth stage 3. maturity 4. decline

Limitations

The PLC model is of some degree of usefulness to marketing managers, in that it is based on
factual assumptions. Nevertheless, it is difficult for marketing management to gauge accurately
where a product is on its PLC graph. A rise in sales per se is not necessarily evidence of growth.
A fall in sales per se does not typify decline. Furthermore, some products do not (or to date, at
the least, have not) experienced a decline. Coca Cola and Pepsi are examples of two products
that have existed for many decades, but are still popular products all over the world. Both modes
of cola have been in maturity for some years.

Another factor is that differing products would possess different PLC "shapes". A fad product
would hold a steep sloped growth stage, a short maturity stage, and a steep sloped decline stage.
A product such as Coca Cola and Pepsi would experience growth, but also a constant level of
sales over a number of decades. It can probably be said that a given product (or products
collectively within an industry) may hold a unique PLC shape, and the typical PLC model can
only be used as a rough guide for marketing management. This is why its called the product life
cycle. The duration of PLC stages is unpredictable. It is not possible to predict when maturity or
decline will begin. Strict adherence to PLC can lead a company to misleading objectives and
strategy prescriptions.

Q4

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THREE PRODUCTS OF YOUR OWN CHOICE AND DICUSS THE FACTORS

INCLUDING COST ,DEMAND ,COMPETITION AND OTHER MARKETING MIX
THAT HAS INFLUENCED ITS PRICE?

Price component of the global marketing mix

In any country, three basic factors determine the boundaries within which market prices should
be set. The first is product cost, which establishes a price floor, or minimum price. While it is
certainly possible to price a product below the cost boundary, few firms can afford to do this for
extended periods of time. Second, competitive prices for comparable products create a price
ceiling or upper boundary. International competition almost always puts pressure on the prices of
domestic companies. A widespread effect of international trade is to lower prices. Indeed, one of
the major arguments favoring international business is the favorable impact of international
competition upon national price levels and, in turn, upon a country’s rate of inflation. Between
the lower and upper boundaries for every product there is an optimum price, which is a function
of the demand for the product as determined by the willingness and ability of customers to buy.
The interplay of these factors is reflected in the pricing policies adopted by many Global
companies in the mid-1990s.

A global manager must develop pricing systems and pricing policies that address these
fundamental factors in each of the national markets in which his or her company operates. The
following is a list of eight basic pricing considerations for marketing outside the home country.

1. Does the price reflect the product’s quality?

2. Is the price competitive?
3. Should the firm pursue market penetration, market skimming, or some other pricing objective?
4. What type of discount (trade, cash, quantity) and allowance (advertising, trade-off) should the
firm offer its international customers?
5. Should prices differ with market segment?
6. What pricing options are available if the firm’s costs increase or decrease? Is demand in the
international market elastic or inelastic?
7. Are the firm’s prices likely to be viewed by the host-country government as reasonable or
exploitative?
8. Do the foreign country’s dumping laws pose a problem?

A firm’s pricing system and policies must also be consistent with other uniquely global
constraints. Those responsible for global pricing decisions must take into account international
transportation costs, middlemen in elongated international channels of distribution, and the
demands of global accounts for equal price treatment regardless of location. In addition to the
diversity of national markets in all three basic dimensions of cost, competition, and demand, the
international executive is also confronted by conflicting governmental tax policies and claims as
well as various types of price controls. These include dumping legislation, resale price
maintenance legislation, price ceilings, and general reviews of price levels.

Global Pricing Strategies

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An effective pricing strategy for international markets is one in which competition and costs
have influenced the pricing decision. Only examining the price levels of competitive and
substitute products in target markets can determine competitive prices. An excellent way to get
this information is to visit the market personally. Once these price levels have been established,
the base price can be determined. The four steps involved in determining a base price are:

1. Determine the price elasticity of demand. Inflexible demand will allow for a higher price.
2. Estimate fixed and variable manufacturing costs on projected sales volumes. Product adaptation
costs must be calculated.
3. Identify all costs associated with the marketing program.
4. Select the price that offers the highest contribution margin.

The final determination of a base price can be made only after the other elements of the
marketing mix have been established. These include the distribution strategy and communication
strategy. The nature and length of channels utilized in the marketing program will affect margins,
as will the cost of advertising and communications. Clearly, the marketing program has a
dramatic effect on the final price of the product.

Q5:

DIRECT MARKETING ( DAWLANCE )

1: Kind of direct marketing efforts at DAWLANCE

Direct Marketing Channel:

It’s a marketing channel that has a no intermediary levels.   DAWLANCE’s power

division uses this type of channels.  Its major clients are large organizations and not the
end user.  So people from these organization directly contact DAWLANCE’s marketing
department of power division when tenders are flooded, design, specification and price
are discussed. 

2: how to have easy to order Dawlance

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Since the major buyer of DAWLANCE in Power Product is Government Sector, the sales
procedure of Power/marketing department is quite different from Appliance/Marketing
Department.

The main steps involved in sales/marketing procedure of Power Division are:

 Bid Submission
 Bid opening
 Bid Evaluation
 Letter of Indent (LOI)
 Billing

3:Differentiation strategies of Dawlance

DAWLANCE has the differentiation of designs ,new technology,promotions with respect to its
competitors.

4:Competitive advantages and disadvantages of Dwalance

ADVANTAGES

 LATEST TECHNOLOGY

 CAPITAL

 NETWORK OF KEY DISTRIBUTORS

 MARKET LEADER

DISADVANTAGES

High price

Variety of colours not enough

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