Principles of

Marketing Management
Faculty : Prof . Ashok Kumar

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 Ground Rules.

 Do not enter the class while the session is in progress.

 Do not chew gums or eat while the session is on.
 Do not read news paper or engage yourself in any other
reading or writing other than the subject.
 Follow classroom etiquettes & manners
 Keep your mobile phone switched off while in class.
If a student remain absent for one or more sessions, he or
she must cover up the same before attending the next
session.
Be present for Internal assessments ( quiz, presentations ,
written assessment) in the schedule communicated.
There will not be any re assessment if you miss any of
them.
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Important internal assessment dates to be noted:

Activity Date /period weightage

Marketing Quiz Fourth week 10 Mks

of July

Assignment Second week 10 Mks

presentation of Aug

Mid Term Third week 20 Mks

Assessment of Sep
( written)

Topics for Marketing quiz : Topics covered in the class, Extra reading from
strategist Business standard , Economic Times - Brand Equity & Business
world , Business India , Indian Management

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 Assignment work :

Assignment work to be done in pair only.

Identify a product or service brand for study from the following sectors only.

Conduct an exhaustive SWOT analysis of the brand in discussion under the

following heads.
1. Economic factors .
2. Political factors
3. Technological factors
4. Competition factors
5. Consumer choice decision factors
6. Legal factors
7. Product factors
8. Price factors
9. Positioning factors
10. Distribution factors
11. CRM factors
Identify three( minimum ) key weakness / threat .

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You may use resources like company web site, business magazines, independent
sites product literature, press release etc.

Submit synopsis of the assignment on the announced date along with all
information supported by photocopy of the information gathered .

The cover page should indicate :

1. Assignment title 2. MT’s id and Names , Div
3. Submission date
4. Presentation to be made only in power point . Duration for presentation will be
10 min.
Brand to be chosen from :

1. Food & beverage category 9 Apparel 17 confectionary

2. Personal care 10 Gems & Jewelry 18 Health care
3. Hygiene care 11 Watches 19 Entertainment
4. Laundry care 12 Men's grooming products
5. Foot wear 13 women’s grooming 20 Info channel
6. Consumer electronics 14 2 wheeler bike & scootrates
7. Lighting 15 4 wheeler economy & luxury
8. Office equipments 16 Home furnishing

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Core text books : 1 Marketing Concepts & cases
Michael J.Etzel, Burce .J. Walker
Ajay Pandit

2 Marketing Management
Rajan Saxena

3 Marketing Management
Philip Kotler ( 13 th edition )

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Why business needs Marketing
orientation-?

Market Clutter

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MARKET CLUTTER

LACK DIFFERENTIATION
NO USP

COMMODTIZED PRODUCT
& SERVICE

PRICE WAR

BLOOD 8
8
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BATH
Should marketing plan and strategies be
Market driven or
Marketing driven ???

Marketing driven is an holistic approach keeping

Social , ecological ,Consumer & economic aspect of
business and developing a marketing process, which
helps the organization to position the brand in the minds
of consumer distinctly unique to get an extra mind
share .

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 HOLISTIC MARKETING CONCEPT.

Process Packaging Products &

Internal Services
Employees Internal Integrated Communication
Stake marketing marketing
holders Holistic Perceived Value
Marketing

Ethics Socially Relationship Partner

Responsible marketing
Legal Marketing

Environment Community Customer Channel

Movement from product perspective to customer perspective.

The holistic marketing concept is based on development ,design &

implementation of marketing programmes ,processes & strategies.
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 Changing perspective of Marketing
•Transactional Marketing

BG
•Relationship Marketing

•Social Marketing

RSTV
•Viral Marketing

•Buzz marketing

•Green Marketing

They are not Marketing Jargons but facts

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 Marketing management revolves around :

Understanding of market from holistic perspective.

Identifying market segments and target

Managing the customer relationship

Managing the cost

Creating , positioning and controlling your identity ( brand )

To stay tune with your market & constantly communicate with

them by formulating effective marketing game plans.

Out of sight is out of mind

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 Customer delivered Value
Marketing process in an organization aims to achieve its organizational
goals by being more effective than its competitors in creating ,
delivering & communicating customer value to the identified set of
consumers in the market .

What is perceived customer value?

Value = Benefits
Cost

Where Cost = ( Monetary +Time+ Energy+ Psychic Cost)

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 Determinants of CDV

TCV = Product Service + Emotional Image

+ +
value Value Value Value
CDV -
CTC = Monitory + Time + Energy Psychic
+
cost Cost Cost cost

.
Higher the CDV , higher will be the delight ness in customer &
vice a versa. Satisfaction = delight ness
Delighted customer’s are likely to be more loyal than satisfied.

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Not for circulation : for internal use only 15
HOW SALES IS DIFFERENT
FROM MARKETING ?

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 MARKETING &SALES
PROCESS IN AN ORGNIZATION.

Engage to INVOKE interest

RETAIN In a buyer

Make the
Buyer
INVEST

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Sales function integrated in to the Business Goal.

Sales Business
Control Goal

Sales Marketing
Execution Plan

Sales
plan

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 SALES Structure in an Organization
C.M.O

MKTG MKTG
SALES MARCOM
CONSUMER
MKTG
SERVICE LOGISTICS SUPPORT
RESEARCH

Sales structure in an organization depends on nature of

business & Complexity in
1 Product or service level.
2. Specific Skill Required to address the
business
3. Coverage required to address.

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In a Rs 250 cr rapidly growing breakfast cereal
consumption market in India , multinational brands
like Corn flakes , Chocos, Special K , Single- serve K
Pak ( Kellogs) , Quaker ( Fritolay’s ) , Amaze
( HUL) Cerevita ( Nestle ) and other regional
players like Bagrry’s India with products such as
Musesli are competing for the pie of the market.

Are they creating sufficient customer delivered value

or not ?

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 How is value enhancement done?

4 steps of value providing process in any marketing situation are

:
1-Value selection
2-Value creation
3-Value communication
4-value enhancement

Managing the elements of Marketing variable.: A vehicle for

creating & delivering customer value.

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 Hierarchy of Marketing Function.

Marketing
Head CMO

Business Innovation & Head Prod Marcom

Dist.
Dev Strategic Sales Mgmt

W/H & Transport

Mkt MR& Retail

P1 P2 P3
Ser CB Franchise

Regional
Head /ZM

KAM/ LAM
AM/DM

SO /SE Not for circulation : for internal use only 22

RM
A sole vehicle for creating & delivering
customer value :James Culliton’s MARKETING MIX
MARKETING MIX : A recipe for successful marketing strategy
Components of Marketing MIX
1. Product , 2. Price ,

Sub elements Sub elements

Product design Margin ,Discount, Pricing
Product feature policies, payment term,
Product Quality credit term , pricing
Product warranty & service strategies for different
Brand name , model style market situation.
Product life Internal & external factors
Product differentiation of price components
Product launch & Value pricing
New product decision
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3. Place 4. Promotion

Sub elements Sub elements

Channels of distribution. Types of promotion
Channel Design Advertising, Public
Type of channel members Relation, Sales
Location of store promotion, Personal
Channel remuneration, selling, Media mix for
Channel evaluation & motivation different market ,
Transportation product
Ware housing & inventory Media vehicles
Convenience of shopping Media decision &
Promotion budget
Building the brand

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 Shift in Marketing Perspective
Market feed back

Product Customer Value C

U
Price Cost S
T
Place Convenience O
M
Promotion Communication E
R
External market Factors ( Marketing Environment)

Product centric Customer centric

Approach Approach
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 Managing Marketing Mix & Marketing
Environment

Internal
Variables External
variables
Customer Value
Customer cost Competition, Consumer
Customer convenience Demand
Customer Demographic, Socio-
Communication cultural,
Political,
Economic. ,Technology
Government policies.
Legal, ( law of the land)

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 Competition Analysis
Michael Porter’s 5 force model to study the barriers to entry

Potential Entrants
Threat of new entrants

Industry competitors
or rivalry among the
Suppliers existing firms Buyer
Bargaining
Bargaining
power
power
Threat of substitutes
Substitutes

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 Demographic trends.
Population, Age Gender, Literacy religious composition. Etc.
India : an Ideal marketing ground to understand demographic
trends.
Concern of large MNCs : How to harness the potential of 2/3 rural
population having highest degree of diversity in the rural India to
the main stream of the business.

2. Changing trends: Children hold strong buying power in key

segment. ( Indian kids rank 3rd worldwide in influencing the
buying decision)
Segment Children Decision maker.
Soft drinks 33.6 %
Health drinks 31.4%
Tooth paste 30.5%
restaurants 28.6%
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 Demographic trends.
Classification.

Children, teenager, Youth Adult Middle Aged , Elderly.

Literacy Rural versus Urban

Gender: Women potential decision maker in key sector leading to

lifestyle marketing strategy.
Classification : Sophisticate
° Traditionalist
° Troubled home baby
° Ms up to date
° Ms nonsense
° Conservative
° Warm & hospitable
° Gregarious
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internal use only 29
 Doing business without

is like winking at a pretty girl in the

dark.
You only know what you are doing
but not the pretty girl.
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Many small things
have been made
large & visible by right kinds of

MarCom strategy

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 Socio Cultural & Socio economic trend.

A set of beliefs & standards followed by a group of people . It is a

sum of conscious & un conscious values , ideas, attitudes &
symbols that shape the human behavior which transits from one
generation to the next. It is a common heritage & way of life.

Cognitive ( beliefs, customs)

Internal mental
culture Normative ( Ethics, Moral
values)
Socio culture

External material ( Habits & Behavior)

culture

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 Marketing Environment Scanning w.r.t Industry

Objective : To arrive at competitive positioning .

Identify the strength of the industry & its business style
To formulate appropriate marketing/business strategy

Industry classification according to Marketing Experts

Fragmented Emerging Transitioning Maturing declining Global

Industry , Industry industry industry industry industry
…………………………………………………………………………..
unorganized Young Grown up fully grown stopped Global
& no & growing but not up, set innovation practices
standard matured standards No techy & stds
slow growth edge

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 What factors to be considered while exploring industry

1.General features.( Size Competition, Volume ,Demand , growth,

technology)
2.Industrial Environment
3. Industrial Structure
(leaders, Followers, Niche player, demand supply position,
Technology , processes, Capital intensive Labor intensive , global scope
,experience curve of a leader , Market trend Resources entry barriers
Economy of scale )
4.Industrial attractiveness( potential , future, growth , margin
competition)
5Industrial Performance Economic situation Sales volume ,
Infrastructure Cost advantages Duty , taxes etc )
6.Industrial Practices: Service driven,People centric perception driven,
Quality driven Technology driven Trend driven
7Indusrry transformation trends
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 MARKET
SEGMENTATION TARGET POSITION

(STP)

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 Market segmentation & targeting the
market.

Basics of segmentation :
One can not be everything to every one, but one can be
every thing to a select few.
In Michael Porter’s words, “ Competitive advantage of
the firm lies in being every thing to a select few. To be
every thing to every one is a sure recipe for a strategic
failure.

What did Nirma do differently in a detergent market

,which caused a humiliating defeat to HLL , a undisputed
market leader in Consumer N-D segment in 1980’s.

Is segmentation all about David

Not for circulation & use
: for internal Golith
only war?? 36
 Market segmentation is a process of dividing a
heterogeneous market in to homogeneous sub units having
…
similarities among the groups of consumers so that the
firm can compete successfully & defend against
competitive attacks to emerge as a market leader in the
.
chosen segment.

The market segmentation can be broadly divided in to :

1 CONSUMER based segmentation
2 Product based segmentation
3 competition base segmentation
4.Loyalty based segmentation

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1 Customer based segmentation

1Geographic based segmentation

Demographic, Socio graphic , psychographic
segmentation

2 Product based segmentation

Price
perceived quality
Service
Technology

3 competition base segmentation

Loyal
Soft core loyal
Switcher
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 Technology influencing marketing game plan.

Career Family Entertainment

Fast New age

forward nurturers Mouse
potatoes
optimists
Techno Digital
Gadget
Strivers hopefuls
grabbers

Pessimists
Traditionalists Media
Hand- junkies
shakers

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 Considerations for Segmentation

Segmentation to be useful and effective & it should

 Measurable:size, spend and such characteristics m
be measurable;
 Substantial: segments should be large and profitab
to serve – largest possible homogeneous group;
 Accessible: should be possible to service;
 Differentiable: conceptually separated and
distinguishable – responding differently to the tailore
marketing-mix;

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 Segmentation in B2B Markets …
Typology of buying situations
Product Low High
Complexity
Commercial
Complexity

Purchasing Dept. Technical Dept(s).

Low Dominant. Dominant.

Finance / Legal Cross – Functional

High Dominant. Decision making.

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 Role of Buying centers in B2B Market
End User / Influencer

Commercial Financial
Buyer Buyer

Management
Decision

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 Industry Segmentation in B2B market

Geography: Concentration of similar industry in a

given location.

Segment industry in terms of buyer’s quantum of

consumption.

Segment industry on the basis of industry verticals

in a given segment .

Segment the industry on the basis of decision center

location.

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 Targeting
Market segmentation shows direction i.e. identifies
potential opportunities that a firm can serve with the
resources available with the organization. It should
further investigated to assess profitability and
“barriers-to-entry”. :

 Is it profitable ?
 Is there distinct USP to address ?
 Do we have the sufficient resource ?
 Type of competition do we have & its competitive
edge.

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 Targeting
Approach : Which segment /how many to ‘target’ – a need to
balance: Segments’ overall attractiveness,
Company’s objectives and resources (i.e.
profitability). M1 M2 M3

M1 M2 M3
P1

P1
P2
P2
P3
P3
Single segment concentration
Selective specialization
M1 M2 M3
P1 M1 M2 M3
P1
P2

P2
P3

P3

Market specialization45
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Product specialization
A GE 9 cell matrix or strength
business screen matrix.
t
Organization’s business
t H M L
r Size, Growth , Profitability
H Competition level, Resource
a H
y

y
g Available , Reach ,

eg
c e
t at r at Regulation etc
st
st r
i
ld
Go

v M o gy
e
M
e /h a t e
iv r
n t st
lec G
o
Se
e
o
s N
s L
L
H M L
Business strength
: Skill, financial
soundness, technology
edge , Distribution , Brand
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R&D, prod Quality .
 Scale:1-5 20-25 High 14-19 M, 1-13 Low

Business (A) Market (B) Effective (AXB)

Strength Factor Score

Technology (4) Infrastructure (1) 4

Management (3) Un organized (1) 3

Skill Market

Distribution ( 4) Loyal (4) 16

distributor

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 Target strategies :
1. Same product to different market ( Market Penetration
strategies, or standardization Eg FMCG : Coke, Pepsi etc
Organization tries to create product specialization as its
inherent strength

Differentiation strategies : An organization differentiates its

products/services to suit different market needs &
expectations . ( Air line , Hotel, resort etc ) An
organization builds it competency in market specialization

Focus Market strategy, (Selective specialization strategy ) :

Selective consumer group in different market are
addressed with different product or services offerings.
Automobile sector , consumer durable etc

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Single segment: An organization create exclusive
niche market ( High differentiation Rolex , Benz in elite
class of consumer. )

Full market strategy : A organization tries to

addresses the entire market .

Perceived risk versus return of the above strategies.

A product failure will impact the entire market &

business incase of strategy
However Single segment strategy is good as it has
potential to emerge as a leader too.

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 Positioning in the market
To gain competitive advantage in the targeted market , an organization
must position, itself on key differentiation . The differentiation factors
generally used are :

•Product features

•Value added services

•Channel of distribution

•Price

•Brand Image

•Mind based

Selecting the positioning platform. On the basis of the differentiation that

customers will value the most .At the same time the organization must be
50
capable of addressing thisNot. for circulation : for internal use only
Measuring the Positioning strength on the percept map.
+ Price

Service
Weak service
As strength

- Price
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Not for circulation : for internal use only 52
 Product

Is product a physical commodity ?

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A consumer must derive Satisfaction, Identity, Assurance
& Memorable Experience , after consuming the
PRODUCT .

Therefore a product is a combination of tangible & intangible

factors which address the inner satisfaction of a consumer .
It is a cluster of value satisfaction for a customer.

A customer attaches value to the product in preparation to its

perceived ability to address the customer’s need.

Therefore a product is a customer’s need defined by the customer

addressing the over all value satisfaction.

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 What is product concept.

A product which communicates certain distinct meaning & hold image

in the market is termed as Product personality.

Components of product personality are :

1Generic(Basic constituent or function) : Essential features & function

2.Added feature( Differentiator ): Style,Colour, Assurance ,

reliability, quality

3. Brand name & Logo : Personality , life style , status symbol,

Association

4.Package & label : presentation , easy handling, clarity of

Instruction manual .
5.Emotional value: Not forAspiration /intangible
circulation : for internal use only factors. 55
Cross Section of a product

TECHNOLOGY (Contemporary, new generation )

PRODUCT
AGUMENTED
PRODUCT
AGUMENTED
ENHANCED
PRODUCT

CORE/ GENEIC

PRODUCT

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PRODUCT GENERIC ENHANCED AGUMENTED NEW
CATEGORY GENERATION

CONSUMER
PODUCT

INDUSTRIAL
PRODUCT

OPERATING
SUPPLIES

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Product offer depend on the product personality

Product offer range:

.Generic : Enhanced Augmented New generation product.

Basic feature Branded & .Customized Future product

& function Differentiated

Customer Satisfaction level

Low Medium High

Poor loyalty willing to change Customer retention
if competition offers is high & switches
higher differentiator when marketer do not honor
the commitment
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 Warranty& Guarantees
After Sales
Service

e
Attribut
Easy
Financing Bran le
y
option d nam St

t
e

duc
Core

Pro
product Installation
Colou
components r

ted
.

men
Loyalty

Pa
programs
y

ck

Aug
li t

POS
EN
a

a
Qu

gin
HA
NC
g
ED
PRO
Handling DC
Customer UC Education
T
ComplaintNot for circulation : for internal use only & training 59
 PRODUCT LINE DECISION
Product lines decision by the marketing function is to
address the needs of consumer Class in different segment .
Since one product is not capable of doing so, variation
within the same product or within the same category is
essential.
Organizations define product line in terms of :

1. Product length
2. Product Width
3. Product Depth

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Not for circulation : for internal use only 61
 FMCG Organization
P Product width
r ( Product Div)
o
d Detergent Beverages Dental Care Hair Care
u Surf Lipton Colgate tooth Parachute
c Rin Green label paste Dabur Amla
t Wheel Tazza Colgate tooth Bajaj Almond
Brooke Bond powder drops
Ruby Dust Colgate gel Clinic Active
L Close up cream
e Tata Tea Pepsodent Gel
n
g
t
h 62
Not for circulation : for internal use only
The number of brands under a product category refers to a product
line

The number of product category( product lines) refers to product

width .

Depth of a product refers to the number of items under each brand

Product Depth
Arial : Arial Green
Surf : Surf Exel automatic , Surf blue, Surf Kid stain
Colgate: Colgate Total, Colgate double protection , Colgate
Clolgate Herbal Colgate Cibaca sensation
whitening
Close up : Close up Tingly Red, Eucalyptus waves
l
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 Product Mix Decisions

Product line addition / deletion / modification

Product length addition / deletion / modification

Product depth addition / deletion / modification

Product portfolio analysis

Tool:
BCG matrix / Model :

A comparative analysis of market share versus Market growth

rate
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M
BCG MODEL
a
r
k
High
e Problem Child
t Star

G
r
o
w
t
h Cash Cow Dog

R
a Low
t
e High Low
Relative market Share/
Profit 65
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 Analyzing Usage Trend

Existing

U
S
E

New
New
Existing Customer
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 Process of development of new products
Stages :
1. Idea generation
2 . Define market segment & target
3 . Concept development & testing
4. Feasibility test
5 Product development
6. Test marketing
7. market strategy for Commercialization
Idea generation happens through:
Changing customer needs
Competition strategy
R&D effort
Entry of global player
Trade channels
Employee idea
Top Management
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Existing Use /Existing Customer: Business must explore the
possibility of enhancing the market penetration through selective but
intensive distribution strategy. Alternatively it can also go for extensive
coverage if it can leverage on its existing distribution network . The
business must evaluate the cost versus return analysis .

Existing Use /New customer : Reposition the product & enhance the
perceived value Lifebouy plus.

New Use/New Customer Use concept marketing & new product

development strategy ( Heavy investment )

New Use / Existing customer : Increase product depth & reposition.

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 Product life Cycle

Maturity
stage

Decline
Shake Out
Stage stage
Sale

Infant Growth
stage stage

Time
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 New Product Decision
Why New product ?
Product fails due to improper segmentation of the market
Technology innovations change drives the existing product
obsolescence
Market transforms due to external factors ( Government policy,
Customer preference)
What is a new product for an organizations.
Research shows that 70 % cases new product involves changes
within the current product lines ,& in 20% of the cases it is new to
the organizations & 10% of the cases it is new to the world.
Product modifications are by : 1. cost reduction ( 7%)
2. Repositioning (11% )
3. Improvements (26% )
4. Addition to existing
5 product lines ( 26%)
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 Packaging - Most neglected “P” of Marketing
The total product personality which includes stature of its brand
& its intrinsic values are conveyed by the manner in which the
packaging strategy is followed . It acts an important marketing
tool.
Eg Jhonni Walker - blue label’s premium image ( each bottle is
being numbered. )
Role packaging is very critical to create 1 Appeal 2 Display & 3
Functionality

Aesthetics Packaging Material

decision

Convenience

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Package material : Factors like weight , shape , cost , availability,
durability , hygiene , freshness , portability , Environment
( thermal stability ) conditions determine the materials to be used
for the product packaging.
Eg Wood to paper & plastics
Steel glass , Low or high density poly ethylene ( LDPE, HDPE )
Aseptic Packaging from tetra pack.

Convenience : Usage, Handling ,transporting , ease of dispensing

etc.

Aesthetics : Color , Shape, style , appearance, look , feel etc

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 Packaging - Most neglected “P” of Marketing

Functionality Packaging Appeal

Conceptualization

Display
Appeal : It deals with visual packaging . Positioning &
differentiation of the product a mid of the competition. Visual
imagery is a key component to hold to consumer to the brand &
create a high recall & recognition.
Eg CLINIC ALL CLEAR Anti dentruff shampoo
Display : Packaging enhances shelf appeal & image .

Functionality : The most comfortable way to exploit the complete

usage , features & functions of a product.
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 Marketing performance & control.

What to Measure in marketing .

Traditional approach. Market Share , Sales , Profit
Contemporary approach:
Customer satisfaction,
Customer attitude & perception tacking
Competitor analysis
Customer profitability
Sales person’s productivity analysis

How to measure & control :

To measure the above factors, there are four types of controls
exercised by any successful marketing function.

Annual plan control Efficiency control

Profitability control Strategic control
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 Price

Is price = Value ?

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 Factors influencing pricing
Internal factors
Objective of the organization
Price elasticity of demand
Features function of the product
Differentiator of the product USP
Stage of PLC
Influence of other element of marketing mix
External factor
Consumer preferences (Value perceived)
Competition
Demand
Government rules & control
Social consideration
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 Pricing objectives of an organization

 Profit maximization in short term

 Profit optimization in long term
 Market penetration ( build market share Eg Coke )
 Achieve volume sales (Sachet or small SKU )
 New market entry
 Displace competition from the market
 Build consumer base
 Keeping parity with competition
 Maintain competitive market position

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 Demand Government Policy

Corporate
objective

Regulation PRICE
Competitor’s
pricing

Technology Cost

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 Price Sensitivity

Price sensitivity defines the level at which the customer become

sensitive to price change .

Factors affecting price sensitivity are :

 Unique value affect
 Substitute awareness affect :Substitute product has the same
function as that of the original
product & hence buyer’s
sensitivity towards the price of
the product is high.
 Price quality effect Perceived quality of the product is high
& hence price sensitivity is quite stable
& low.
 Sunk investment effect ( products bought along with assets
which has been bought earlier )
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 Learning Cost

C
O
S
T

TIME

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 Cost & Quality

Cost

Product Quality

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 Pricing Methods

1Mark up pricing = Unit cost ( FC+ CV) 1- expected

return
2Marginal cost Earn contribution toward the
overhead only . Highly competitive
situation.
3.Market price ( Follow the crowd)
4Sealed Bid pricing
5Value based pricing

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 Pricing strategies

Skimming strategy

Penetration strategy

Differential pricing strategy

Price bundling

Image pricing

Loss leader pricing

Two part pricing Not for circulation : for internal use only 83
 Pricing Terms

Pricing terms used are :

Ex works price
F.O B Price
CIF Price
Cash & Carry Price

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 Marketing logistics & Distribution

Shop Consumer
Factory

Finish Goods
storage
Transportation
Handling

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 Marketing logistics

Channel management Distribution system

Finish goods Inventory, storing
Handling & Transportation
Order processing ,Execution
Accounting , Collection

Distribution is a process of delivering the FG inventory

through appropriate marketing channel to reach the
consumer in a right market at right time at minimum
distribution cost. .
Marketing Logistics is a key task of marketing to ensure the right
product is available to the consumer at right place & at right time.
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Fulfillment cycle : Capturing market demand in shortest
possible time & meet the same in best possible time with
the help intermediately & infrastructure to stock , move
deliver the goods , service information & collect
receivables.
Delivery process Delivery Lead Time
Management

Supply Factory Stockiest Whole seller Demand

Consumer
/Distributor / Retailer

Order lead Time

Management Forecasting process.

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 Anderson Consulting Model for Distribution
Strategy

Strategy Distribution
Objectives

Transport , Inventory,
Structure Warehouse
Material Handling & packing
Channel design& Management
Process
Polices & Facilities Channel
Procedures & equipment management

Implementation
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Building blocks Marketing Logistics Process
of Marketing logistics
1. F.G Inventory stock Planning
1. Warehouse system
2. Warehouse management
2. Transportation 3. Transport management

3. Material handling 4. Documentation process

system 5. Channel design

6. Channel policy
4. Packing process .
7. Channel evaluation &
monitoring

8. Collection
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Inventory Decision & Control : An F.G inventory decision
in an organization is decided for :
1. Its lead time to arrive.
2. Market Demand
3. Order cycle
4. Nature of inventory

Nature of Inventory can be as :

1. Perishable inventory
2. Seasonal Inventory
3. Cyclic inventory

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 Elements of Inventory costs are :

Interest on capital tied up to F G inventory

Warehouse rent

Staff salary & administration cost

Insurance cost

Cost of material handling

Order processing accounting communication cost

cost associated with damage , deterioration while storing

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 Managing F.G Inventory

Managing operational stock at P.O.S retail outlet for

meeting the ready demand .
Managing stocks in transit
Managing stock awaiting for dispatch at warehouse
Managing buffer stock for meeting unplanned demand.
Preventing inventory obsolescence / spoilage ( perishable
goods )
Minimizing Inventory carrying cost

Deciding the optimum inventory level is the difficult task for the
marketing function. Balancing between stock out & excess stock is
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Warehouse Management .

Objective :
1. Timely customer service & keep track of products so
that they can be served correctly.

2. Provide communication with the sales team of the

organization for replenishment of the stock .

3. Acts as a key link in distribution chain for

A) Storage & product mixing.

B) Transport consolidation ( Bulk breaking )
C) Customer Service. ( Place utility)

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 Managing warehousing
Reduces instant transportation which could be costly and
time consuming
1. Meet instant market demand
Warehouse decision
1. Deciding the number of warehouses
2. Location of ware houses
3. size/capacity of ware houses Exclusive
4. Type of warehouses
Non exclusive

5 Warehouse on the basis of product type

Warehousing is done by C&F agents /stockist/ distributor
incase of FMCG organization.
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Warehouse Decision

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 Transportation

Ensures time utility & place utility to the product

Managing transportation :

1. Assessment of transportation requirement . ( Basis

of product mix type , location , speed, demand )
2. Choosing the transport mix ( Surface/ sea/air route
by volume or weight )
3. Deciding the routing
4. Developing operational plan
5. Control of transportation cost

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 Channel Types

Intensive Exclusive Selective

channel Channel channel

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 Designing marketing Channel

Step 1 Segment the Market

Step -2 Configuring & positioning the Channel

( channel power )

Step -3 Channel target

Step- 4 Defining responsibility & accountability for

the channel

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 CHANNEL FUNCTIONS
• Reducing gap between manufacturer and
consumer – makes product available
• Information – competitors activities, new product
launches, product performance, suggestions for
promotions
• Promotion – all local promotions like in shop,
cookery contest, exhibitions
• Resources - like Space, Manpower and Finance
• Title of goods –
• Share risk
• Shares the burden of statutory requirements
• Networking
 Stock holding at P.OS

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• Reaching to Mass

• Cost effectiveness – economies of scales e.g. FMCG

Distributor

• Sharing the risks – defaulters, storing goods at different

locations, etc.

• Delegate the routine work and concentrate on creative

work

• Bulk breaking & meeting the needs of small retailers

 Building distribution efficiency

 Provide salesman ship

 Provide market intelligence

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 Channel Member & channel length
1Wholesale dealer
2 stockist/ Distributor / C&F Agents / Depot
3Retailer 3 broker 4 Commission agents 5Authorized
representatives 6 Franchises

1.Manufacturer Stockiest / Distributor whole seller retailer

2. Manufacturer Whole seller user

3. Manufacturer Exclusive showroom/ Brand shop user

4. Manufacturer Franchise user

5 Manufacturer Agents User

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 Franchising
An exclusive retailing ,where the franchise is an independent
business unit ,who abide by the marketing plans &
policies of the franchiser & pays him a fee for the use his
brand & know how , marketing process , product
formulation etc .

Benefits

1. Exclusive positioning of the franchiser /manufacturer’s

product & services .
2. High visibility & standing in the market
3. Promotion cost is shared between franchiser & franchisee
4. Minimizes the margin war in the market

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Examples of franchises
café coffee day
Domino Pizza outlet
NIIT’s training center
LG care cosmetics
kwality Wall’s Ice cream parlor from HLL
Lakme’s beauty saloon from Lakme Lever
McDonald’s burger outlet
Kaya kalp beauty saloon
Barista coffee ,
Zed career Academy

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Not for circulation : for internal use only 104
WHOLESALE DEALER
FUNCTIONS
– Act as a buffer between Retailer and company
for storage of stocks
– Ensure Distribution of goods to 100 % potential
retailers
– Develop demand for the product in market and
ensure continuous sales growth
– Help the company in conducting local
promotions
– Feed the information to company about the
competitors, new outlets opened, potential of
area, sales reports, etc.
– Suggest ways of local promotion to the company
– Help company in settling customer complaints,
statutory problems
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 Outsourcing of Marketing Logistics

3 PL Tie up with express service organization .

Leveraging on their infrastructure.
PICK PACK & DROP

Benefit : Cost efficiency & advantage

Speedy response
Focus on the competitive advantage
AFL , Elbee Safex Express DHL ,
Fedex , Gati Blue dart UPS

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Not for circulation : for internal use only 107