01 Marketing Strategy 9wyx6LyWuy

marketing strategy
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marketing strategy
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Edited by:
Dr. Deepak Gupta
NMIMS Centre for Distance and Online Education
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iSBn:
978-93-5119-491-0
NMIMS Centre for Distance and Online Education

Address: V. L. Mehta Road, Vile Parle (W), Mumbai – 400 056, India. NMIMS Centre
C O N T E N T S
CHAPTER NO. CHAPTER NAME PAGE NO.
1 Introduction to Marketing 1
2 Concept of Strategy 27
3 Strategic Intent of a Business 51
4 External Environment and Industry Analysis 79
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Internal Environment and Organisational Analysis 105
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6 Customer Value, Corporate and Business Strategies 131
7 Competitive Strategies 153

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8 Marketing Strategies 183

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Developing Strategies for Consumer and

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Industrial Market
10 Marketing Strategies and Marketing Mix 237
11 Branding Strategies 279
12 Case Studies 313

iv
m a r k e t i n g s t r at e g y
C U r r i C U l U m
introduction to marketing: Defining Marketing, Essential Concepts of Marketing, Concept of

Marketing Mix
Concept of strategy: Introduction to Strategy, Strategic Mapping, Strategic Decision Making

Paradigm Shift in Marketing Strategies - Marketing Mix: From 4p’s to 4a’s
strategic intent of a Business: Concept of Strategic Intent, Vision Statement, Concept of Mission
Statement, Difference between Vision and Mission, Setting Goals and Objectives of Business,
Concept of Stretch, Leverage and Fit
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external environment and industry analysis: Concept of Environment, Components of External
Environment, Industry Analysis
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internal environment and Organisational analysis: Concept of Internal Environment,
Organizational Analysis, Value Chain Analysis
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Customer Value, Corporate and Business strategies: Customer Value, and Corporate Strategic
Planning, Business Units Strategic Planning
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Competitive strategies: Competitive Forces, Identifying and Analysing Competitors, Competitive

Strategies for Market Leaders, Competitive Strategies for Others, Consumer-Oriented Strategies,
Resource-Based Strategies
marketing strategies: Concept of Marketing Strategies, Financial Considerations in Evolving

Marketing Strategy
Developing strategies for Consumer and industrial market: Analysing Consumer Behaviour,
Buying Decision Process, Organisational Buying and Business Market, Stages Involved in Buying
Process
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marketing strategies and marketing mix: Segmentation, Target Market Selection Strategies,
Strategies for Existing Products, Strategies for New Product Development, Concept of Price, Pricing
Strategies, Distribution Strategies, Strategies for Developing Effective Marketing Communication,
Marketing Communication Mix
Branding strategies: Concept of Brand, Developing Branding Strategy, Concept of Brand Equity,
Building Brand Equity, Measuring and Managing Brand Equity, Developing Brand Positioning Strategy,
Differentiation Strategy
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C H a
1 P t e r
INTRODUCTION TO MARkETING
CONTENTS
1.1 Introduction
1.2
1.2.1
1.2.2
Defining Marketing
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Evolution of Marketing
Scope of Marketing
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1.2.3 Objectives of Marketing
1.2.4 Nature of Marketing
1.2.5 Importance of Marketing
Self Assessment Questions
Activity
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1.3 Essential Concepts of Marketing

1.3.1 Needs, Wants and Demands
1.3.2 Market
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1.3.3 Exchange
1.3.4 Value and Satisfaction
1.3.5 Marketing Channels
1.3.6 Competition
1.3.7 Target Markets, Segmentation and Positioning
1.3.8 Concept of Differentiation in Marketing
1.3.9 Integrated Marketing
1.3.10 Marketing Utilities
Activity
1.4 Concept of Marketing Mix
Activity
1.5 Summary
1.6 Descriptive Questions
1.7 Answers and Hints
1.8 Suggested Reading for Reference
2 MARkETING STRATEGy
Introductory caselet
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a mistake in marketing
Coca Cola emerged as the most famous product of the planet and
got the status of the world’s most powerful brand. In 1980s, Coke’s
nearest competitor, Pepsi, forced it to undertake blind test pro-
motion. In the blind test promotion technique, consumers were
given two unlabelled drinks to compare, and they did not know
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about the brand and had to select the preferred one. As the blind
tests were conducted by Pepsi, the consumers preferred Pepsi,
as they were unaware of the other brand. This made Coca Cola’s
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management increasingly concerned about their brand and their
loss of position.
According to Roy Stout, Coca Cola, “If we have twice as many

vending machines, dominate fountain, have more shelf space,
spend more on advertising, and are competitively priced, why are
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we losing share?”
Gradually, the market share of Coca Cola started falling. The R&D
department of Coca Cola tried to find out the reasons for falling
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market share. The research was carried out secretly and it was
discovered that people preferred Pepsi because it was sweeter.
Thus, the new sweeter Coke formula was established and 200,000
taste tests were conducted. The results came out to be positive.
Consumers preferred the taste of new Coke over the traditional
one.
On 23 April 1985, Coke launched a press conference in New york

City and introduced new Coke with expensive advertising and a
slogan, The Best Just Got Better.
Pepsi responded to Coke through aggressive advertising and pub-

lic media. According to Roger Enrico, President and CEO of Pep-
si, “The withdrawal of original coke from the market and launch
of new Coke is indication of victory of Pepsi over Coca Cola”. De-
spite the enormous research and advertising, new Coke was a fail-
ure. The reason was that the taste of new Coke was worse than
the taste of original Coke. Consumers set up protest groups for
INTRODUCTION TO MARkETING 3
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getting the original Coke back. The angry and deeply saddened
customers called Coca Cola’s toll free number to make their com-
plaints. The introduction of a new Coke failed to get an image of
product improvement. The consumers were emotionally attached
to the old Coke.
The failure led to re-introduction of original Coke and it was re-

named as Classic Coke. Thus, the new Coca Cola has withdrawn
from the market and it returned back to the original taste.
The reason for the failure of new Coke was that it misunderstood
the need of its customers. Coke did not have any taste problem.
The main reason for the fall in the Coca Cola’s market share was
the introduction of Diet Coke by Coca Cola, which got famous and
was preferred and loved by consumers. However, Coca Cola fo-
cused on the success of Pepsi’s taste only and ignored the success
of Diet Coke. It failed to understand the importance of marketing
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soft drinks and focused on winning taste tests.
According to Don keough, President of Coca-Cola, “The simple

fact is that all the time and money and skill poured into consumer
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research on the new Coca-Cola could not measure or reveal the
deep and abiding emotional attachment (connection) to original
Coca-Cola felt by so many people”.
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LEARNING OBJECTIVES
After studying this chapter, you will be able to:

> Explain the concept of marketing
> Define the essential concepts of marketing
> Discuss the concept of marketing mix
1.1 intrODUCtiOn
Marketing refers to a process that involves carefully designing, im-
plementing and controlling formulated strategies to facilitate the
exchange of goods and services between organisations and custom-
ers. The consumer will purchase the product or service only when
it appears useful or worth spending money for. Marketing includes
all the activities and processes that involve understanding the market
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behaviour and consumer behaviour in order to give a high consum-
er value. In other words, marketing includes all activities required to
make the product or service available to the right set of customers at
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the right place and at the right time.
Marketing has a direct influence on the profit margins of an organisa-

tion. An organisation should identify the consumer’s need for a prod-
uct and select to produce a product that meets the requirement of the
consumer. Creating needs as per the needs of the consumer will result
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in optimum profit for the organisation. This also helps in maintaining

long-term and sustainable relationships with customers. It creates a
competitive environment that helps in creating reliable product dis-
tribution systems to supply products across different locations.
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There are ten types of marketing entities. These are goods, services,
experiences, events, persons, places, properties, organisations, ideas
and information. The marketing process needs to accomplish nine
functions in order to connect the producers to consumers. These func-
tions are buying, selling, financing, storage, transportation, process-
ing, grading and standardising, risk-taking and market information.
The chapter begins by explaining the concept of marketing at length.

In addition, the chapter explains the core concepts of marketing that
include market, needs and wants, exchange and demand. Towards the
end, it explains the marketing mix elements in detail.
1.2 DeFining marketing

Traditionally, the word marketing was considered to be related to ad-
vertising and selling an organisation’s products. However, with grow-
ing competition, marketing has no longer only related to advertising
and selling. It now involves understanding customers’ needs and ex-
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pectations, offering products that satisfy those needs, communicating

to them how an organisation’s products are different from that of its
competitors and developing long-term relationships with customers.
The following are some popular definitions of marketing:
According to the American Marketing Association, “Marketing is the

process of planning and executing the conception, pricing, promotion,
and distribution of ideas, goods, and services to create exchanges that
satisfy individual and organisational objectives”.
According to Giancarlo Pallavicini, an Italian economist, “Marketing

is defined as a social and managerial process designed to meet the
needs and requirements of consumers through the processes of creat-
ing and exchanging products and values”.
According to the marketing guru Philip kotler, “Marketing is typical-

ly seen as the task of creating, promoting, and delivering goods and
services to consumers and businesses; it is defined as a societal pro-
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cess by which individuals and groups obtain what they need and want
through creating, offering, and freely exchanging products and ser-
vices of value with others”.
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Marketing forms an integral part of an organisation. This is because
various functions of an organisation, such as finance, operations and
accounting, would be meaningless if there is no demand for the organ-
isation’s products and services. Marketing is an attempt to create and
boost demand for an organisation’s products and services.
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The main aim of marketing efforts is to entice the target audience by

presenting an organisation’s offering through the intended exchanges
of values as well as effective communication tools. This in turn leads
to long-term relationships between an organisation and its custom-
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ers. In a nutshell, it can be said that marketing addresses three ma-

jor concerns, which are; identifying the target customers, satisfying
customers’ needs and retaining the customers. Thus, marketing is an
organisational function that keeps customers at the centre of all of its
activities.
1.2.1 eVOlUtiOn OF marketing
Traditionally, organisations believed in the production of goods on a

large scale and were not concerned about the quality of products and
customers’ requirements. However, over a period of time, there was
a significant increase in market competition. A number of sellers had
emerged in the market; thus, customers had more products to choose
from. If a seller was unable to meet the requirements of customers,
they might switch to other sellers.
Therefore, the focus of organisations gradually shifted from mass pro-

duction to the sale of their products. Consequently, after the produc-
tion and sales era, the concept of marketing emerged in the 1970s.
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SELF ASSESSMENT QUESTIONS
1. Define marketing.
2. The sales era focused on the production of products in large
quantities. (True/False)
3. Which of the following is not an objective of marketing?
a. Creating a demand for products by identifying the needs
and wants of customers.
b. Increasing the market share of an organisation.
c. Building the goodwill of the organisation in the market.
d. Improving the production process of an organisation.
4. Each party at the end of the exchange process should feel
confident that it has ‘something of value’. (True/False)
ACTIVITy S
Visit a manufacturing organisation and meet its marketing head.
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Hold a discussion on the importance of marketing for the products
the organisation manufactures.
1.3 essential COnCePts OF marketing

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Marketing includes various key concepts that a marketer needs to

know. Without the knowledge of these concepts, it is not possible to
meet customers’ expectations and organisational objectives. The prin-
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cipal concepts of marketing are based on the product created by the

organisation. Marketing is a business function that deals with pro-
moting and selling products and services. That is the reason all the
concepts of marketing are product based. In order to effectively im-
plement marketing strategies, you need to understand the concepts
of marketing.
1.3.1 neeDs, Wants anD DemanDs
Needs and wants refer to an individual’s basic requirements, such as

food, clothing and shelter. According to kotler, “Human need is a state
of felt deprivation of some basic satisfaction”. Wants arise when the
basic needs are satisfied. And kotler adds, “Wants are desires for spe-
cific satisfiers of these deeper needs”. Needs, wants and demands are
part of the basic marketing principles. These three simple concepts
hold huge importance in marketing, as products can be differentiated
on the basis of whether they fulfil needs, wants or demands. Needs
refer to the basic human requirements, such as food, clothing and
shelter. An individual cannot survive without these basic necessities.
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Products that fall under the need category do not require any push to
sell. Customers purchase these products themselves.
Wants are a step ahead of needs. Need becomes want when it is fo-
cused in some specific direction. For example, a person may feel hun-
gry and thus, comes through the need for food. But when this need for
food becomes directed towards having some specific meal, such as a
pizza, then it becomes a want. Therefore, wants are not a mandatory
part of life. One does not need to eat pizza to survive, but one can con-
sume pasta because it suits his/her taste, therefore it is his/her want.
Demand means a want for specific products supported by an ability

to pay. For instance, there can be many people who would like to have
Bugatti, Lamborghini, Ferrari or Limousine, but only few of them will
have the desires and ability to pay for these luxury cars. you might
want to purchase a Bentley or go for a cruise. But can you actually
buy a Bentley or go for a cruise? Therefore, the organisations that are
selling Bentley or providing cruise services cannot consider you to be
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a customer, as they keep in mind not only the willingness of people to
buy their product or services but also their ability to buy a product or
service. Demand is a step ahead of want. When an individual wants
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something that is premium and he/she also has the ability to pay for it,
the want gets converted to demand. For example, when one wishes to
eat pizza from Pizza Hut and one can afford to pay for it, it becomes
his/her demand. Measuring how many people actually want to buy
products is very important for deciding the demand. Marketers can
market products only if there is a demand for their products. Market-
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ers cannot generate the need; it is something that already exists in the
market. They have to identify those needs and influence the want.
1.3.2 market
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A market refers to a place where a business is carried out or where ac-

tual buying and selling of products take place. The term market does
not necessarily denote any particular place for buyers and sellers. The
market can also be a virtual place where buying and selling are done
through the Internet. According to H.E. Mitchell, “Market, for most
commodities, may be thought of not as a geographical meeting place but
as getting together of buyers and sellers in person, by mail, telephone,
telegraph, or any other means of communication”. The term market is
used in various contexts. Markets may symbolise the type of the prod-
uct, such as steel market, automobiles market and cloth market. The
markets are also classified based on the quantities sold. The place where
the products are traded in bulk is called wholesale market and where
the products are traded in small quantities is called retail market.
1.3.3 eXCHange
Exchange refers to the act of obtaining a product or service from

someone who is willing to provide you the product or service in return
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of a value. Marketing creates an environment for the sellers and buy-

ers to make transactions. This transaction is completed when the ex-
change process takes place. An exchange takes place when the wants
of customers are fulfilled by the products or services offered by the or-
ganisation. According to kotler, the prime condition for the exchange
to take place is the existence of at least two parties. Both the parties
attempt to maximise benefits and minimise costs so that the exchange
is profitable to both. Exchange takes place when one party has some-
thing that interests the other party or might be of value to the other
party. In addition, only if both parties are willing to deal with each
other.
1.3.4 ValUe anD satisFaCtiOn
The concept of value in marketing relates to the benefits derived by

customers from a product. Value can be defined as a ratio between
benefits and costs. Value can be defined by quantitative and qualita-
tive measures. Qualitatively, value is the perceived reward that relates
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to the customers physical and emotional condition. It is also related
to the cultural, economic, social and environmental factors. Quanti-
tatively, value is the profit in terms of financial targets, percentage or
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money. Organisations need to take into account the ratio of value and
cost in order to deliver value to customers. The customers’ perceived
value is low when organisations deliver high value at high price. The
customers’ perceived value is high when organisations deliver high
value at low price.
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Satisfaction in marketing measures how much does the products and

services provided by the organisation meet the consumer expecta-
tions. It also refers to the judgment made by a person of the perceived
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implementation of a product with respect to the consumer expecta-

tions. If the perceived value of the product is less than the expected
value, it leads to dissatisfaction. If the perceived value equals to the
expected value, it brings satisfaction and if the perceived value of the
product is greater than what has been expected then it results in cus-
tomers’ delight. The general formula to derive the value of a product
is expressed as follows:
Value = Benefits/ Price
Or
Value = Quality received / Expectations
Or
Value = Benefits – Costs
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Strategic market management
Marketing management
Marketing strategy
Marketing strategy
What is market differentiation?

Definition and meaning
Integrated Marketing | What is Inte-

grated Marketing?
The Marketing Mix and 4 Ps: Understanding

How to Position Your Market Offering
Marketing Concept
Marketing Mix
What is Marketing? and Basic Marketing

Concepts | Notes Desk
Marketing Concept & Marketing Orientation

C H a
2 P t e r
CONCEPT OF STRATEGy
CONTENTS
2.1 Introduction
2.2
2.2.1
2.2.2
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Introduction to Strategy
Features and Importance of Strategy
Levels of Strategy
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2.2.3 Roles of a Strategist
2.2.4 Concept of Strategic Business Unit (SBU)
2.2.5 Strategy vs. Tactics
2.2.6 Strategy vs. Planning
2.2.7 5 P’s of strategy by Mintzberg
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Activity
2.3 Strategic Mapping
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2.3.1 Four perspectives in Strategic Mapping

Activity
2.4 Strategic Decision Making
2.4.1 Types of Strategic Decisions
2.4.2 Features of Strategic Decisions
2.4.3 Issues in Strategic Decisions
Activity
2.5 Paradigm Shift in Marketing Strategies - Marketing Mix: From 4P’s to 4A’s
Activity
2.6 Summary
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strategies FOllOWeD at Walmart
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Walmart is a leading retail corporation that was established by
Sam Walton in 1962 in Arkansas, USA. At present, it has 3,200
stores in the US and 1,100 stores in countries such as Mexico,
Uk, Brazil, Puerto Rico, China, Argentina, korea, Germany
and Canada. In 1979, Walmart achieved sales revenue of $1bil-
lion, and in 2002, it became the largest retailer in the world
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with sales revenue of $218 billion. In 2010, Walmart became

the largest public corporation in the world with respect to its
sales revenue figures.
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Walmart offers products at a cheaper price than its competi-

tors. It follows the “everyday low prices” strategy, which pro-
vides the organisation with a competitive advantage. This is
one of the most successful strategies adopted by Walmart.
Because of the cheaper price of products offered at Walmart,
more than 100 million customers visit a Walmart store every
week. The competitors are not able to match the low product
price offered by Walmart.
Because of its highly efficient supply chain and centralised buy-

ing, Walmart achieved cost leadership. It made negotiations as
well as entered into partnerships with the vendors. It has more
than 3,000 suppliers, including Procter & Gamble, Johnson &
Johnson and Clorox. However, the organisation ensures that it
does not become too dependent on a single vendor. Therefore,
at Walmart, a common practice is to not purchase more than
4% of the total purchase volume from a single vendor.
CONCEPT OF STRATEGy 29
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Walmart owns about 12,000 trailers and 3,000 trucks for trans-
porting merchandise and supplies more than 85% of its products
through its own distribution channel. On the other hand, its com-
petitors outsource the transport of merchandise and supply less
than 50% of their total merchandise through their own distribution
channels.
Walmart uses an innovative technology in its business processes.

This has played a crucial role in providing a competitive advantage
over its competitors. The organisation uses the latest technologi-
cal innovations, including UPC, POS, real-time market research
and store performance tracking system. Moreover, Walmart has in-
stalled its own satellite network system that helps in sharing infor-
mation among different distribution centres, stores and suppliers.
This has also helped in reducing the inventory cost for the organi-
sation. In addition, Walmart’s strategy is to set up its stores in small
towns, whereas its competitors set up their stores in big towns.
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LEARNING OBJECTIVES

> Explain the concept of strategy
> Describe strategic mapping and its advantages
> Explain the importance of strategic decision making
> Discuss the paradigm shift in marketing mix strategies
2.1 intrODUCtiOn
The term strategy refers to an action plan that offers guidance to an
organisation in attaining its objectives and achieving success. For the
success of an organisation, it is important to create and manage strat-
egies as they help in achieving long-term organisational objectives.
Managing strategies or strategic management is an on-going process
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in which an organisation continuously updates its strategies with re-
spect to changes taking place in the market environment.
The process of formulating long-term plans for an organisation is

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defined as strategic decision making. The relationship between the
strategies and business model of an organisation defines the success
of strategic management. If the strategy of an organisation is in line
with its business model, strategic management in the organisation is
effective.
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In this chapter, you will study the concept of strategy, its features and
importance. The chapter discusses three different levels of strategy –
corporate, business and functional. It also explains the role of a strate-
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gist in an organisation. Next, you will study about the role of strategic
mapping in an organisation. Further, the chapter describes the con-
cept of strategic decision making, including its process and features.
In the end, it discusses the paradigm shift in the marketing mix strat-
egies.
2.2 intrODUCtiOn tO strategy

The concept of strategy was established in the 1960s by Igor Ansoff,
known as the father of strategic management. The word strategy is
derived from the Greek word Strategia, which means a military gen-
eral. The dictionary defines strategy as a plan of action to achieve a
set of pre-determined and specific goals, but the word has no definite
meaning, as various people have defined strategy in different ways.
The following are some popular definitions of strategy:
Strategy is the direction and scope
of an organisation over the long term, which achieves advantage for the
organisation through its configuration of resources within a challenging
environment, to meet the needs of markets and to fulfil stakeholder ex-
pectations
Corporate strategy is the pattern of

decisions in a company that determines and reveals its objectives, pur-
poses or goals, produces the principal policies and plans for achieving
those goals, and defines the range of business the company is to pursue,
the kind of economic and human organisation it is or intends to be, and
the nature of the economic and non-economic contribution it intends to
make to its shareholders, employees, customers, and communities
how
There are
three fundamental issues regarding strategists, who they are, how they
get there, and the skills they need”. In an organisation, a strategist per-
forms various significant functions. Some of them are listed as follows
SBU
is any part of a business organisation which is treated separately for
strategic management purpose
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2.3 strategiC maPPing

Strategic mapping refers to a communication tool that states how an
organisation creates value in order to achieve set organisational goals.
It shows a way of logical step-by-step journey between different stra-
tegic objectives in the form of a cause and effect chain. Strategy map-
ping is done through a diagram that gives a clear picture of organisa-
tional objectives in accordance with its value system. It may also be
called an element of documentation related to a balanced scorecard.
The first diagram was drawn by Dr. Robert S kaplan and David P
Norton in 1996 on a piece of paper to facilitate documenting a bal-
anced scorecard.
A balanced scorecard refers to a strategic planning and management

system. It is used in various government and non-government organ-
isations and businesses and industries across the globe. It is used to
achieve the vision and objectives of organisations through the proper
alignment of its business activities so that internal and external com-
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munication and performance of organisation could be improved. It
was formulated by Dr. Robert kaplan and David Norton in the 1990s
as a performance measurement context.
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Strategy mapping helps in improving the performance and internal
perspective of the working of an organisation and contributes to the
learning and growth perspective. Therefore, it enables an organisa-
tion to achieve the set objectives of perspectives, such as financial,
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customer, internal and organisational capacity. Figure 2.4 depicts stra-

tegic mapping by using four perspectives:
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Figure 2.4: Strategic Mapping

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in the fast changing environment of technological changes, their

skills and knowledge need to be updated and enhanced to achieve
organisational goals.
Most of the highly successful companies, such as Apple, IBP and HP

use strategic mapping. The process of implementing strategic plan-
ning can be better understood by looking at the following strategic
map, as shown in Figure 2.5:
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Figure 2.5: Strategic Map
As shown in the figure, the company first thinks the strategies from
the customer’s perspective. Next, it converts the customer’s perspec-
tive into financial perspective that meets the strategic goals of the or-
ganisation.
5. Strategic mapping refers to a communication tool that states

how an organisation creates value in order to achieve set
organisational goals. (True/False)
6. The concept of the balanced scorecard was formulated by
Dr. Robert S kaplan and ___________.
7. There are four perspectives in strategic mapping given by
Dr. kaplan and Norton, such as financial, customer,
____________ and innovation and learning.
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ACTIVITy
List the issues that you may face while making strategic decisions
for your organisation, which deals in the manufacturing of automo-
bile parts in the Indian market.
ParaDigm sHiFt in marketing

2.5 strategies - marketing miX: FrOm
4P’s tO 4a’s
A business can never flourish until its customers are satisfied with
its products and services. With increased awareness, customers have
a large number of options for making their purchases. Therefore, it
is not possible for marketers and organisations to dupe customers.
There have been different strategies used in marketing mix so far.
4Ps is one of the most common model of marketing and thus, used by
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many organisations to promote their products and increase their sales
volume in the past. There can still be seen the cases of the 4P model
of the marketing mix. However, the paradigm has shifted towards 4A
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model which is a customer centric model. Earlier there was a differ-
ent model of 4C, which was followed by the 4P model for a long time.
Figure 2.7 shows how the paradigm shift in marketing strategies has
taken place from 4P’s to 4A’s:
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4P’s 4C’s 4A’s

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Figure 2.7: Paradigm Shift in Marketing Strategies
In the past, organisations were focused on their profits and products

using different strategies. However, with the change in time, they are
more focused on customers. Initially, 4P’s were introduced by kotler
for the marketing mix strategy, giving importance to product, place,
price and promotion, and then later, these were replaced by 4C’s, such
as customer value, customer costs, customer convenience, and cus-
tomer communication. The 4C model was different from 4P approach
as it was customer centric. However, later the 4A model became very
prevalent. The 4A model is more customer centric and pertinent to
rural consumers that keeps the interest of the rural consumers alive.
The elements of the 4A model are awareness, availability, affordability
and acceptability.
India is one of the biggest consumer markets in the world. It has 12.2%
world’s consumers. Further, 70% consumers live in rural areas which
constitute an untapped market of 850 million consumers. Therefore,
organisations have shifted their focus more on rural areas as com-
strategia
Marketing strategy
Marketing strategy
What is Strategic Mapping?
What is the Balanced Scorecard?
What Makes a Marketing Strategy Different From

a Marketing Plan? About
The concept of Strategy - MBA

Knowledge Base
Marketing Mix from 4P’s to 4A’s | Business

Article | MBA Skool-Study.Learn.Share
C H a
3 P t e r
STRATEGIC INTENT OF A BUSINESS
CONTENTS
3.1 Introduction
3.2
3.2.1
3.2.2
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Concept of Strategic Intent
Strategic Intent Process
Importance of Strategic Intent
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Activity
3.3 Vision Statement
3.3.1 Features of Vision Statement
3.3.2 Creating Vision Statement
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Activity
3.4 Concept of Mission Statement
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3.4.1 Features of Mission Statement

3.4.2 Creating Mission Statement
Activity
3.5 Difference between Vision and Mission
Activity
3.6 Setting Goals and Objectives of Business
3.6.1 Features of Objectives
3.6.2 Difference between Objectives and Goals
3.6.3 Hierarchy of Objectives
3.6.4 Factors Affecting the Objectives
3.6.5 Strategic Objectives and Financial Objectives
3.6.6 Critical Success Factors
Activity
CONTENTS
3.7 Concept of Stretch, Leverage and Fit

Activity
3.8 Summary
S
IM
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“Over our 40-year history, we have built the Starbucks brand with
a goal of staying true to our values and our guiding principles with
a deep sense of humanity, going forward, we will continue to focus
on what made us a different kind of company, one that balances
profitability and social conscience while providing exceptional
shareholder value.”
n o t e s
The mission statement and the guiding principles of the organi-

sation play a vital role in motivating the employees to retain the
leadership position of the organisation and also maintain social
responsibilities. Due to these reasons, Starbucks has met over-
whelming financial success. It earned $10.71 billion in the finan-
cial year 2010. Also, in 2011, Starbucks was ranked as the 16th
“most admired company in the world” by Fortune magazine.
Additionally, Starbucks has also been appreciated for its attempts
at environmental protection, recycling of used resources and wa-
ter conservation.
S
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STRATEGIC INTENT OF A BUSINESS 55
n o t e s
LEARNING OBJECTIVES

> Discuss the concept of strategic intent
> Explain vision statement
> Describe the concept of mission statement
> Explain the difference between vision and mission
> Discuss how to set the goals and objectives of a business
> Discuss the concept of stretch, leverage and fit
3.1 intrODUCtiOn
A predetermined set of aspirations, meant to be achieved by an organ-
isation, is referred to as the strategic intent. Strategic intent consists
of a framework that gives directions for achievement of goals; this is
S
known as strategic management. As a manager, one should be well-
versed in the concepts of strategic intent, as it is imperative to have a
strategic approach for the realisation of organisational objectives.
IM
The concept of strategic intent includes various elements, such as vi-
sion, mission, objectives and business definition of an organisation.
Vision represents the position that an organisation hopes to achieve in
the future, whereas mission includes the means and ways to achieve
the vision. Predetermined, specific and measurable long-term objec-
M
tives constitute the mission of an organisation. To achieve its long-

term objective, every organisation has to select a unique path and the
selection of that path is determined by the business definition of the
organisation.
N
This chapter will elaborate on the concept of strategic intent, its pro-
cess and importance. It will also explain the elements of strategic in-
tent. These elements are vision, mission and objectives. The features
and process of creating a vision statement will also be dealt with in
detail. Also, you will be familiarised with the features, process and
elements of a mission statement. The chapter will also state the ba-
sic difference between vision and mission. you will also learn about
the features of organisational objectives and the difference between
objectives and goals. Hierarchy of objectives, issues faced in objec-
tive setting and factors affecting the objectives are some other top-
ics that will be covered here. Strategic and financial objectives, along
with Critical Success Factors (CSFs), are also dealt with in detail in
the chapter. The concepts of stretch, leverage and fit are explained
towards the end.
“Put a man on the moon by the end of the decade”
Vision is a description of something (an
organisation, a corporate culture, a business, a technology, an activ-
ity) in the future.
Vision is a mental perception of the kind
of an environment an individual, or an organisation aspires to cre-
ate within a broad time horizon and the underlying conditions for the
actualization of this perception.
Vision is the category of intentions
that are broad, all inclusive and forward thinking.
Our purpose is to make sustainable living commonplace. We work
to create a better future every day, with brands and services that help
people feel good, look good, and get more out of life.
We aspire to be the global steel industry benchmark for Value Cre-

ation and Corporate Citizenship
Our vision is to be earth’s most

customer centric company; to build a place where people can come to
find and discover anything they might want to buy online.
We create happiness by providing the finest in entertainment

for people of all ages, everywhere.
To establish Starbucks as the most recognised and respected

brand in the world.
The World’s Premier Food

Company, Offering Nutritious, Superior Tasting Foods To People
Everywhere
To be the company that best understands and satisfies the product,

service and self-fulfilment needs of women - globally.
To
help people be healthy, secure and comfortable.
To be the premier Toy Brands - today and to-

morrow.
To solve the unsolved problems innovatively
we will…
to achieve our objectives in an environment of

fairness, honesty and courtesy towards our clients, employees, vendors
and society at large.”
Google’s mission is to organize

the world’s information and make it universally accessible and useful.
McDonald’s brand mission is

to be our customers’ favourite place and way to eat. Our worldwide oper-
ations are aligned around a global strategy called the Plan to Win, which
centre on an exceptional customer experience – People, Products, Place,
Price and Promotion. We are committed to continuously improving our
operations and enhancing our customers’ experience.
Mission is the essential purpose of the or-

ganisation, concerning particularly why it is in existence, the nature of
the business (es) it is in and the customers it seeks to serve and satisfy.
Mission is the purpose or reason
for the organisation’s existence.
Our mission is to be America’s

leading small town and neighbourhood retailer dedicated to deliver-
ing desirable brand name family apparel with exceptional value and
service!
To be a
successful chain of friendly, neighbourhood drugstores. Our knowl-
edgeable, caring associates work together to provide a superior phar-
macy experience, and offer everyday products and services that help
our valued customers lead healthier, happier lives.
n o t e s
The vision statement is focused on the future; it provides inspiration

and motivation. It not only defines the future of an organisation but
also the future of the industry or society in which the organisation
hopes to bring about change.
Mission could boost the confidence of an organisation with the aid of

this small self-talk: “We can do this and we are the ones ordained to do
this, for we are the best at it.” Mission could produce revolutionary
ideas about the mundane, banishing mediocrity.
On the other hand, vision creates an impulse of embracing the change

that is a step closer to a very positively powerful image of the future.
The excitement about the future that it builds surpasses any appre-
hension about the present uncertainty and change is recognised as a
catalyst.
Table 3.1 shows the points of differences between mission and vision
statements.
taBle 3.1: DiFFerenCes BetWeen missiOn
anD VisiOn statements
mission statement
S
Vision statement
IM
About A mission statement A vision statement out-
talks about how you lines where you want
will get to where you to be. It communicates
want to be. It defines both the purpose and
the purpose and values of your business.
primary objectives re-
M
lated to your customer

needs and team values.
Answer It answers the ques- It answers the ques-
tions, “What do we tion, “Where do we aim
N
do?” “What makes us to be?”

different?”
Time A mission statement A vision statement
talks about the present talks about the future.
leading to its future.
Function It lists the broad goals It lists where you see
for which the organ- yourself some years
isation is formed. Its from now. It inspires
primary function is you to give your best.
internal; it defines the It shapes your under-
key measure or meas- standing of why you
ures of the organisa- are working here.
tion’s success and its
prime audience is the
leadership, team and
stockholders.
n o t e s
taBle 3.1: DiFFerenCes BetWeen missiOn

anD VisiOn statements
Change your mission statement As your organisation
may change, but it evolves, you might feel
should still be connec- tempted to change
ted to your core values, your vision. However,
customer needs and mission or vision state-
vision. ments explain your
organisation’s founda-
tion; so change should
be kept to a minimum.
Developing a statement What do we do today? Where do we want
For whom do we do it? to be going forward?
What is the benefit? When do we want to
Why do we do what we reach that stage? How
do? What do we do, for do we want to do it?
whom do we do and
why do we do?
statement S
Features of an effective Purpose and values of
the organisation: Who
are the organisation’s
Clarity and lack of
ambiguity: describing
a bright future (hope);
IM
primary “clients” memorable and en-
(stakeholders)? What gaging expression;
are the responsibilit- realistic aspirations;
ies of the organisation alignment with organ-
towards the clients? isational values and
culture
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source: http://www.diffen.com/difference/Mission_Statement_vs_Vision_Statement

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7. Mission statement focuses on the future, while vision statement

emphasises on the current status of an organisation. (True/
False)
ACTIVITy
Using the Internet, study and compare the mission and vision state-
ments of some organisations.
setting gOals anD OBJeCtiVes OF

3.6
BUsiness
One of the most important activities of an organisation is setting the
goals and objectives of business. Setting the goals and objectives splits
the vision and mission into easily implementable actions. Objectives
are set due to the following reasons:
n o t e s
The western organisations have traditionally been following the fit

approach. A path-breaking article named “Strategic Intent” was pub-
lished by professors Hamel and Prahlad in the Harvard Business Re-
view in 1989. In this article, they presented their argument that the
western organisations cut their aspirations short to match those as-
pirations with the available resources. On the other hand, the Japa-
nese organisations achieved greater success by leveraging the avail-
able resources. Many Japanese organisations saw success owing to
the concept of stretching the organisational aspirations beyond what
the resources could match. For example, the revenue of komatsu was
less than 35% of Caterpillar’s in 1970. This is because komatsu was
dependent on a single product, the small bulldozer, and also was con-
fined to business within Japan. In 1985, komatsu became a $2.5 billion
organisation, with a wide array of products in its kitty. The organisa-
tion could stretch its ambition beyond its capabilities owing to its aptly
adopted strategic intent — encircle caterpillar.
Therefore, it is evident that the fit approach leads to a more realis-
S
tic strategic intent, whereas the stretch and leverage approach leads
to a more idealistic one. This happens since strategy is made accord-
ing to the real changes in the environment in strategic fit, whereas in
IM
stretch, goals are extended according to an organisation’s aspirations.
A stretch helps in presenting the potential of the organisation. Thus,
a strategy should be developed keeping in mind the stretch exercise
and not the fit exercise. The strategic intent of an organisation has the
potential to stretch its aspirations and ambitions beyond its capabili-
ties. This ultimately leads to a higher benchmark of success.
M
The following quote has been taken from Hamel and Prahlad’s book
“Competing for the Future”:
“If strategic architecture (a high-level blue print for the deployment of
N
new functionalities, the acquisition of new competencies or the migra-

tion of existing competencies and the re-configuring of the interface with
customers) is the brain, strategic intent is the heart. It should convey a
sense of stretch-current resources and capabilities are not sufficient for
the task.”
10. Define the fit approach.

11. The fit approach leads to a more realistic strategic intent,
whereas the stretch and leverage approach leads to a more
_____________one.
ACTIVITy
Using the Internet, identify the importance of the stretch and lever-
age approach and fit approach in Indian companies.
n o t e s
3.10 ansWers anD Hints
ansWers FOr selF assessment QUestiOns
topic Q. no. answers

Concept of Strategic Intent 1. Strategic intent delineates an or-
ganisation’s goals and the means
to achieve them.
2. c. Design
Vision Statement 3. False
4. Envisioned future
Concept of Mission 5. Mission describes the scope and
Statement purpose of a business and, there-
fore, acts as a guideline to formu-
Difference between Vision

6.
7. True
S
late strategies for the future.
d. Flexible
IM
and Mission
Setting Goals and 8. False
Objectives of Business
9. Critical Success Factors (CSFs)
Concept of Stretch, 10. A fit approach is a situation
M
Leverage and Fit wherein an organisation’s re-

sources fit or match with the en-
vironment through employment
of techniques such as SWOT
N
analysis.
11. Idealistic
Hints FOr DesCriPtiVe QUestiOns
1. Strategic intent lays out the goals, objectives, future direction

and the core principles of an organisation. Refer to Section
3.2 Concept of strategic intent.
2. The long-term goals of an organisation are defined as its vision.
Refer to Section 3.3 Vision statement.
3. Mission puts forward the reason for the existence of an
organisation and the path to achieve the vision. Refer to Section
3.4 Concept of mission statement.
4. A vision statement defines what a company wants to do in the
future, whereas a mission statement outlines what it wants to
do now. Refer to Section 3.5 Difference between Vision and
mission.
Marketing strategy
Marketing strategy
Mission Statement vs Vision Statement - Differ-

ence and Comparison | Diffen
Strategic Intent
What’s the difference between Mission and Vi-

sion?
Critical Success Factors: Focusing Attention

on the Things That Are Important
Mission and Vision Statements: Unleashing

the Power of Purpose
Concept of Stretch, Leverage and Fit in Strategic

Management - INDIACLASS INDIACLASS
C H a
4 P t e r
EXTERNAL ENVIRONMENT AND INDUSTRy ANALySIS
CONTENTS
4.1 Introduction
4.2
4.2.1
4.2.2
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Concept of Environment
Characteristics of Environment
Types of Environment
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Activity
4.3 Components of External Environment
4.3.1 Political Environment
4.3.2 Economic Environment
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4.3.3 Socio-Cultural Environment

4.3.4 Technological Environment
4.3.5 Ecological Environment
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4.3.6 Legal Environment

Activity
4.4 Industry Analysis
4.4.1 Industry Evolution
4.4.2 Porter`s Approach to Industry Analysis
4.4.3 Industry Life Cycle Model
4.4.4 Industry Life Cycle Stages and a Company’s Marketing Strategies
4.4.5 Merits and Demerits of Industry Life Cycle
4.4.6 International Risk Assessment
Activity
4.5 Summary
n o t e s
LEARNING OBJECTIVES

> Discuss the concept of environment of an organisation
> Discuss the various elements of external environment
> Describe porter’s model of industry analysis
4.1 intrODUCtiOn
Once the process of formulation of vision, mission, goals, and objec-
tives of an organisation is complete, analysis of the environment in
which an organisation operates, is carried out. An organisation is in-
fluenced by two types of environment – external/macro and internal/
micro environment. The external environment affects an organisation
on a macro level, which includes factors that are beyond the control
S
of the organisation. On the other hand, internal environment affects
an organisation on a micro level and includes internal factors that are
within the control of the organisation.
IM
External factors are important since they offer opportunities and cre-
ate threats for the organisation. Therefore, an organisation needs to
analyse the environment in which it can operate by formulating effec-
tive strategies. In this chapter, you will be familiarised with the con-
cepts of environment, external environment, and industry analysis in
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detail.
4.2 COnCePt OF enVirOnment

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The term environment can be defined as the surroundings or condi-

tions in which an individual or organisation lives or operates. In the
context of marketing, an organisation operates within an environment
that constitutes several internal and external factors. External factors
such as political, economic, social, cultural, technological, and legal
factors affect the organisation to a large extent. For instance, change
in political forces brings a substantial change in government policies
and plans, which ultimately affect the operations of an organisation.
Similarly, during recession, an organisation, as a whole, gets affected
by the economic conditions prevailing in a country.
On the other hand, there are some internal factors that affect the op-
erations of an organisation. Organisational culture, structure, capabil-
ities, and resources are a few internal factors that are controlled and
governed by the organisation itself. All these external and internal fac-
tors that directly or indirectly affect an organisation are referred to as
environment.
EXTERNAL ENVIRONMENT AND INDUSTRy ANALySIS 85
n o t e s
ACTIVITy
Visit a multinational retail organisation that operates in India and

meet its marketing head. Hold a discussion with him/her about the
distinctive environmental characteristics within which they oper-
ate in India.
COmPOnents OF eXternal
4.3
enVirOnment
External environment consists of outside factors that affect the busi-
ness of an organisation. Components such as political, economic, so-
cio-culture, technological, market, and legal are all different parts of
the external environment of an organisation. Figure 4.3 shows the six
main components of the external environment:
Political S
IM
Economic
External Environment
Socio-Cultural
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Technological
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Ecological
Legal
Figure 4.3: Components of External Environment
The different components of the external environment, which are po-

litical, economic, socio-cultural, technological, ecological, and legal, are
abbreviated as PESTEL. Therefore, external environment analysis is
also known as PESTEL analysis. The activities of an organisation are
influenced by every component of the external environment. There-
fore, no relative importance is given to any particular component. Let
us now discuss these components separately in the next section.
4.3.1 POlitiCal enVirOnment
Factors, such as laws related to public affairs, government policies,

fair trade decisions, tax regulations, and subsidy policies constitute
n o t e s
the political environment. The political environment might have both

positive and negative effects on the organisation. Business activities
are affected positively by government policies such as tax incentives
or subsidies; whereas strict government regulations or increase in tar-
iffs have a negative impact on business activities. For example, the
Tata Nano project in Singur was shifted to Gujarat because of political
tussles between the West Bengal government and the opposition par-
ty. Consequently, Tata had to bear a huge financial loss. It has been ob-
served that in many instances, change in the political regime creates
changes in the business environment. A new government can encour-
age investors by taking positive steps in developing the economy and
creating a better business environment.
4.3.2 eCOnOmiC enVirOnment
One of the most important components of the external environment of

an organisation is its economic environment, which includes various
macro and micro economic factors. National Income (NI), Per Capi-
S
ta Income (PCI), Gross Domestic Product (GDP), employment level,
inflation level, interest rate, and availability of credit are some of the
economic factors that directly affect various industries in a country. In
IM
addition, foreign exchange rate fluctuations and foreign trade balance
also affect the business activities of an organisation to a large extent.
The profitability of the organisation is affected by two important fac-

tors, namely demand and consumption patterns in a country. Wage
M
rate is another important economic factor that is decided by the em-

ployment level of a country. For example, in countries, such as India
and China, cheap labour is easily available since employment level
is relatively low. On the other hand, the cost of labour is significantly
N
high in developing countries such as the US.
An organisation dealing with imports or exports of goods and services

is also affected by foreign exchange rate fluctuations. For instance,
Indian IT organisations such as Wipro, TCS, and Infosys suffer a loss
with the depreciation of the US dollar as the US is a huge export mar-
ket for these organisations. A lack of adequate funds may restrict the
expansion plans of the organisation; therefore, the availability of cred-
it also affects the operations of an organisation.
4.3.3 sOCiO-CUltUral enVirOnment
Values, culture, beliefs, attitudes, opinions, and lifestyles of a society

all together constitute the socio-cultural environment. It is a repre-
sentation of the characteristics of a society in which an organisation
exists. These characteristics of the society may act either as an op-
portunity or a threat to the organisation. Let us discuss various fac-
tors that constitute a socio-cultural environment. These factors are as
follows:
Marketing strategy
Marketing strategy
Porter’s Five Forces Analysis: Assessing the

Balance of Power in a Business Situation
PESTLE - Macro Environmental Analysis
Marketing Theories – PESTEL Analy-

sis • Professional Academy Professionalacademy.com
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C H a
5 P t e r
INTERNAL ENVIRONMENT AND

ORGANISATIONAL ANALySIS
CONTENTS
5.1 Introduction
5.2
5.2.1
5.2.2
S
Concept of Internal Environment
Organisational Resource Analysis
Organisational Capability
IM
5.2.3 Core Competency
5.2.4 Competitive Advantage
Activity
5.3 Organisational Analysis
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5.3.1 Techniques of Organisational Analysis

5.3.2 Factors Affecting Organisational Analysis
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Activity
5.4 Value Chain Analysis
5.4.1 Primary Activities
5.4.2 Support Activities
5.4.3 Value Chain Analysis Process
5.4.4 Benefits and Demerits of Value Chain Analysis
Activity
5.5 Summary
5.8 Suggested Reading for References
n o t e s
LEARNING OBJECTIVES

> Discuss the concept of internal environment of an
organisation
> Describe the concept and techniques of organisational anal-
ysis
> Elaborate the concept of competitive advantage
> Explain value chain analysis
5.1 intrODUCtiOn
Organisational resources, organisational capabilities and organisa-
tional competencies are the three components of the internal environ-
ment of an organisation. An organisation uses these components to
S
identify its competencies and evaluate its performance.
The internal environment and organisational analysis help a strategist

to identify the strengths and weaknesses of the organisation. Aligning
IM
these with the reasons behind the weaknesses and providing support
makes business decisions efficient.
The chapter covers the concept of internal environment and its com-
ponents and organisational resource analysis. The chapter further
M
elaborates on different types of organisational capabilities, such as –

financial, marketing, operations, information management and gener-
al management. Next, it deals with the concept of core competencies,
competitive advantage, organisational analysis, techniques used in or-
N
ganisational analysis along with the factors affecting it. Finally, value
chain analysis is taken up in detail.
5.2 COnCePt OF internal enVirOnment

The internal environment of an organisation encompasses the
strengths and weaknesses of the organisation. An organisation’s func-
tioning is largely affected by its internal environment. Thus, it is im-
portant for an organisation to analyse its internal environment from
time to time. Analysing internal environment plays a vital role in the
process of strategy formulation and helps the organisation to deter-
mine its capabilities. In addition, it enables the organisation to utilise
opportunities in the best manner possible and maximise its profits.
Figure 5.1 depicts the components of the internal environment:
INTERNAL ENVIRONMENT AND ORGANISATIONAL ANALySIS 121
n o t e s
8. ___________________gives information related to the liquidity,

profitability, activity, and advantage aspects of the organisation
9. Name the four quadrants of a balance scorecard.
ACTIVITy
Using various sources like the Internet, magazines, newspapers, etc.,

conduct a comparative analysis for a leading retail organisation.
5.4 ValUe CHain analysis

The concept of value chain analysis, introduced by Michael Porter,
refers to a set of activities that creates value for an organisation. These
activities involve various stages through which a product reaches the
final customer. In other words, a value chain consists of lots of activi-
ties starting with raw material supply from suppliers, production and
and services to end users. S

marketing activities, and distribution activities to deliver products
Porter defined value as “the price that a customer is ready to pay for
IM
an offering.” The difference between this value and total costs that an
organisation bears for providing that offering is called profit. Value
chain analysis divides an organisation into a chain of activities where
each element in the value chain plays a significant role in delivering
value to customers contributing to profit. In other words, the major
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aim of value chain analysis is to measure the value delivered and profit
contributed by each element of the chain. This helps the organisation
to focus its strategies on those elements of the chain that contribute
the most in delivering value and profit to the organisation.
N
Value chain analysis helps in providing clarity about areas where the
strengths and weaknesses of the organisation lie. Porter divided these
areas into primary and support activities. Figure 5.4 shows primary
and support activities:
Primary Activities
Inbound
Logistics Support Activities
Operations
Outbound
Logistics Human
Firm Technology
Marketing Infrastructure Resource Procurement
and Sales Management Development
Services
Figure 5.4: Primary and Support Activities
Let us discuss these activities in the following sections.

INTERNAL ENVIRONMENT AND ORGANISATIONAL ANALySIS 123
n o t e s
5.4.3 ValUe CHain analysis PrOCess
As a tool, value chain analysis helps in knowing how to create maxi-

mum value for customers. In a manufacturing business, raw material
is used as inputs, and then value is added to turn them into something
of worth to other people. For example, a paper manufacturing organi-
sation uses wood pulp to convert it into paper that people are prepared
to pay for. Similar to a manufacturing organisation, this idea applies in
the service industry too where, inputs of time, knowledge, equipment
and systems is used to create services of real value to customers.
Value chain analysis helps in identifying the ways to create value for
customers, whether through products or services. Value chain analy-
sis is usually a three-step process, which is shown in Figure 5.5:
Activity Analysis
Value Analysis
S
IM
Changes Evaluation and
Plan for Action
Figure 5.5: Value Chain Analysis Process

M
We can explain the three steps of value chain analysis as follows:

1. activity analysis: This step intends to identify activities that
may generate value to customers. At an organisational level, this
N
includes scrutinising all business processes that the organisation

undertakes to serve customers. It includes marketing of products
or services, sales and order-taking, operational processes,
delivery, support, etc. Once brainstorming for activities (which
add value for the company) is done; a list of value-enhancing
activities is prepared. For example, the list of value-creating
activities in Pizza Hut includes procurement, inbound logistics,
operations, outbound logistics, marketing and sales, service and
support.
2. Value analysis: For each listed activity, value factors are identified.
These value factors are those factors that customers value in
the way each activity is conducted. For example, in a telephone
order-taking process, a quick answer to call will be valued by any
customer. Apart from this, he/she would also prefer; an efficient
taking of order details; fast and knowledgeable answering of
questions; and an efficient and quick resolution to any problems
that arise. Apart from this, a value to each value factor is given
Marketing strategy
Marketing strategy
Management Tools - Core Competencies - Bain

& Company - Publications
Value Chain Analysis | Strategic Management

Insight Strategicmanagementinsight.com
Value Chain Analysis: Achieving Excellence

in the Things That Really Matter
Characteristics of Organiza-
tional Analysis
Organizational Capability:
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C H a
6 P t e r
CUSTOMER VALUE, CORPORATE AND

BUSINESS STRATEGIES
CONTENTS
6.1 Introduction
6.2
6.2.1
6.2.2
Customer Value
S
Process of Value Delivery
Value Chain
IM
6.2.3 Core Competencies
6.2.4 Strategic Planning Process
Activity
6.3 Corporate Strategic Planning
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6.3.1 Defining Corporate Vision and Mission

6.3.2 Establishing Strategic Business Units
6.3.3 Allocating Resources to Each SBU
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6.3.4 Evaluating Growth Opportunities

Activity
6.4 Business Units Strategic Planning
6.4.1 Business Mission
6.4.2 SWOT Analysis
6.4.3 TOWS Analysis
6.4.4 Goal Formulation
6.4.5 Strategic Formulation
6.4.6 Strategic Implementation
6.4.7 Feedback and Control
Activity
6.5 Summary
n o t e s
strategiC marketing management: Dell inC.
Among the world’s largest multinational IT corporations, Dell Inc.

is based in Round Rock, Texas, US. The organisation’s product
portfolio consists of PCs, data storage devices, servers, comput-
er peripherals, network switches and software. In the past thirty
years, Dell has proved to be the most successful organisations. Mi-
chael Dell started this organisation in 1984, when he was only 19
years of age and was studying at the University of Texas, Austin.
Dell Inc. is an example of how an innovative idea can be turned
into a successful and sustainable organisation with the help of
strategic marketing management.
When the organisation began, it had just $1000 in hand. At first,

Dell began selling upgraded version of IBM compatible PCs to
its customers. After operating for one whole year, it began sell-
ing its PCs using its own brand name. Within no time, Dell was
S
able to take over the market for PCs. The organisation was able to
succeed so much because of direct selling. Dell was able to evade
distributors and retail sellers since it was selling directly to cus-
IM
tomers. Customers could place orders telephonically too. This
enabled the organisation to cut down the prices of its PCs consid-
erably and provide them to customers as per their requirements.
This enhanced a better rapport with customers which further
helped in producing better products too.
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There was no direct competition with others in this area. Dell fo-
cuses on the product itself and after sales services. It was able to
achieve this by removing agents representing between the com-
pany and customers. Through the Internet, direct sales went up.
N
In 1994, Dell developed a website of its own which gave it its first
results. This brought customers from all over the world. From $5
million in 1998, the company’s sales went up to $50 million a day
in 2005 through its website www.dell.com.
CUSTOMER VALUE, CORPORATE AND BUSINESS STRATEGIES 133
n o t e s
LEARNING OBJECTIVES

> Discuss the concept of customer value
> Assess corporate strategic planning
> Discuss the concept of business unit strategic planning
6.1 intrODUCtiOn
Every organisation aims at generating customer value along with high
quality products. The value delivery process begins by recognising
and giving value further conveying those values. Through value chain,
these values are being identified. Its aim is to develop value in certain
part of a business. Organisations build on a competitive advantage in
terms of developing core competencies in business processes.
S
The aim of strategic planning is to focus on different aims, means,
and changes within the organisation reasonably. In order to attain
more profitability, strategic planning forms its business in that way.
IM
The strategic planning process mainly involves formulating two types
of strategies, namely corporate strategy and business unit strategy.
A corporate strategy includes identifying corporate mission, setting
up Strategic Business Units (SBU), assigning resources to each SBU,
and assessing growth opportunities by setting up new businesses and
M
shutting down those that are less beneficial. For running individual
businesses, a business unit strategy is being used.
The chapter begins by explaining customer value. It further goes on to

N
explain the procedure of value delivery, idea of value chain and core
competencies, and strategic planning process. It also elaborates on
corporate strategic planning and activities linked with it. Towards the
end, business unit strategic planning process is being discussed.
6.2 CUstOmer ValUe

Meeting customers’ requirements and creating customer value are
the basic aims of marketing. Customer value can be defined as ben-
efits that customers receive from products or services in comparison
to their cost. These benefits can be in monetary (money saving) or
emotional terms like the enjoyment that a customer gets after buying
a product or service. However, customer value should not be confused
with the value of customers to organisations. Customer value is the
value that customers receive and not how valuable customers are to
an organisation.
However, today’s business markets are characterised with a high level

of competition. Thus, in such a case, organisations can attract cus-
n o t e s
tion, ascertaining long-term goals, assisting in planning and execution

of organisational goals, and so on. Thus, it is of paramount importance
for an organisation to plan its strategy effectively.
Strategic planning is a process of realising organisational objectives

through a set of pre-determined activities. It consists of four stages;
each stage involves different elements that are converted into activi-
ties in order to gain the goal of an organisation. Figure 6.3 shows the
stages involved in the strategic planning process:
Establishment of Strategic Intent
Formulation of Strategies
S Implementation of Strategies
IM
Strategic Evaluation and Control
Figure 6.3: Four Stages of the Strategic Planning Process

M
The four stages of the strategic planning process are as follows:

1. establishment of strategic intent: Thus stage involves laying
down the foundation for the strategic goals of an organisation.
The elements of strategic intent are vision, mission, objectives,
N
and business definition. The strategic planning process aims at

realising the strategic intent.
2. Formulation of strategies: It involves formulating appropriate
strategies of an organisation. For formulating an effective
strategy, it is necessary for an organisation to analyse its
internal (strengths and weaknesses,) and external environment
(opportunities and threats) first using various techniques. After
that, the strategist needs to analyse different alternatives in
order to select the most feasible strategy.
3. implementation of strategies: This involves putting formulated
strategies into action. It is done through different procedures
like project implementation, structural behavioural, functional
and operational implementation, and resource allocation. The
middle and lower level managers of the organisation implement
the strategy and the top management reviews the implementation
process.
4. strategic evaluation and control: This involves comparing
actual results with the desired performance. This is done by
n o t e s
evaluating the implementation of strategies, taking remedial

actions, and resolving problems by recognising weak areas.
1. The value delivery process begins before the development of a

product, continues with its progress, and exists even after the
availability of the product. (True/False)
2. When was the concept of strategy introduced?
3. Define core competency.
4. Tacit knowledge can be easily communicated and identified.
(True/False)
5. Which of the following is not a stage of the strategic planning
process?
a. Identification of customers’ requirements
b. Formulation of strategies
c. Implementation of strategies
S
IM
d. Strategic evaluation and control
ACTIVITy
Using the Internet, identify the strategic planning process of a man-

M
ufacturing organisation.
6.3 COrPOrate strategiC Planning

N
Corporate strategy aids in developing objectives, assigning resourc-

es, and coordinating with Strategic Business Units (SBUs). It is de-
veloped by the top management and includes the board of directors
and the Chief Executive Officer of the organisation. It helps in attain-
ing objectives by evaluating all business opportunities available to
an organisation. A corporate strategy includes major decisions like
mergers, takeovers, liquidation, and diversification. The process of
formulating corporate strategy is called corporate strategic planning.
Corporate strategic planning involves the establishment of objectives
and formulation of strategies for different functional departments of
an organisation like marketing, finance, human resource, and produc-
tion. Let us study the corporate strategic planning process in detail in
the next sections.
6.3.1 DeFining COrPOrate VisiOn anD missiOn
Corporate mission states the purpose of an organisation’s existence.

On the other hand, corporate vision is a forward-looking view of an
n o t e s
BUsiness Units strategiC

6.4
Planning
Apart from corporate level, strategic planning is also done for each
strategic business unit or SBU of an organisation. At SBU level, stra-
tegic planning is done as per the products of the organisation and is
focused on utilising limited resources and competing effectively. Busi-
ness unit strategic planning involves a number of steps, which are dis-
cussed in detail in the following sections.
6.4.1 BUsiness missiOn
The mission of any organisation gives it a reason for its existence.

A business unit has to state its individual mission within the organi-
sation’s mission. An appropriate mission statement not only states the
purpose of the existence of a business exists but it also mentions its
values. It consists of strategy and scope of the business and standards
S
and behaviour of different operations in the business unit. The busi-
ness mission covers all these characteristics. For example the mission
statement of Infosys is “to achieve our objectives in an environment
IM
of fairness, honesty, and courtesy towards our clients, employees, ven-
dors and society at large.”
6.4.2 sWOt analysis
Strength, Weakness, Opportunity and Threat (SWOT) analysis is con-

M
sidered to be the most unique technique of situation analysis. It was

developed in the 1960s at Stanford Research Institute. In SWOT, the
strengths and weaknesses represent the internal factors affecting the
success of an organisation. For example, the strengths include strong
N
brand image, effective distribution network, diversified products,

and the price advantage, while the weaknesses can be lack of prod-
uct range, high abrasion rate, and less awareness. On the other hand,
opportunities and threats depict external factors. For instance, oppor-
tunities can be the sudden rise of an economy, unfulfilled needs of
customers, growth in technology and changes in customer’s choices,
while threats can be collapse in the economy, political instability, and
new entrants. SWOT analysis enables an organisation to formulate
effective strategies by matching its strengths and weaknesses with op-
portunities and threats faced by the organisation.
Let us understand the concept of SWOT analysis with the help of an

example. Table 6.1 shows the SWOT analysis of PepsiCo:
n o t e s
taBle 6.1: sWOt analysis OF PePsiCO

strengths Weaknesses
z The most recognised brand z Walmart, contributing to more than 12
of the organisation is Pepsi. percent of PepsiCo’s revenue, is the larg-
z PepsiCo offers a wide est customer of the organisation. There-
range of products to satisfy fore, the financial performance of Pepsi-
the different needs of the Co can be greatly affected by any policy
customers. PepsiCo product change in Walmart. In addition, Walmart
portfolio includes highly possesses significant bargaining power
diversified products such as a buyer, which in turn influences the
as soft drinks, fruit juices, profitability of Pepsi. The everyday low
ready-to-drink teas, bottled price strategy of Walmart puts pressure
water, cakes, and cereals. on PepsiCo to keep its price low.
z PepsiCo possesses one of z More than half of the revenue of Pepsi-

the strongest distribution Co comes from the US. Therefore, any
networks. change in the economic condition of
that country can affect the sales of the
PepsiCo.
z In 2008, the revenue per employee of
Opportunities
S
Pepsi was $219,439, which was lower
than that in its major competitors.
threats
IM
z PepsiCo is striving to grasp z Now-a-days, consumers prefer health
the opportunities in other drinks over soft drinks; therefore, the
markets by acquiring local sales of soft drinks are projected to
organisations and diversi- decline. PepsiCo needs to diversify more
fying its product base. For into health drink products to adapt to the
example, the organisation changing lifestyle of the consumers.
M
recently acquired Lebedy- z Worldwide, governments of different

ansky in Russia and V Water countries are coming with strict regula-
in the Uk. In addition, the tions against soft-drink manufacturing
organisation is heavily in- organisations because of their negative
vesting in emerging markets
N
impact on health and the environment.

such as India, China, Brazil Therefore, government regulation is a
and Mexico. major cause of concern for PepsiCo.
z PepsiCo has some well-es- z Food and beverage is a highly compet-
tablished bottled water itive industry throughout the world.
brands in the US, such as Coca-Cola, Groupe Danone, kraft Foods,
Aquafina and Propel. In and Nestlé are some of the big competi-
addition to these, brands tors of PepsiCo. The intense competition
such as Cheetos Cheese in the market limits the profitability of
Flavoured Snacks, Tostitos PepsiCo.
tortilla chips, Fritos corn
chips, Doritos tortilla chips,
Sunchips multigrain snacks,
Santitas tortilla chips, and
Rold Gold pretzels are
some of the strong snacks
brands of PepsiCo in the US.
Therefore, PepsiCo is in a
good position to capture a
bigger share of the increas-
ing snacks and bottled water
market in the US.
The IPod will be like
having 1000 songs in your pocket
To provide information and tools for maximising the competitive-

ness of USA, and assist in the economic growth of industries, work-
ers, and consumers
To foster science and technological leadership by protecting intellec-
tual property, improving technical standards, and advancing mea-
surement science
To observe, protect, and manage the earth’s resources to promote en-
vironmental stewardship.
n o t e s

Marketing and Corpo- 6. Corporate level strategy is de-
rate Strategic Plan- veloped by the top management,
ning which include the board of direc-
tors and the Chief Executive Officer
of the organisation.
7. Corporate mission states the pur-
pose of an organisation’s existence.
8. SBUs
9. True
10. BCG
Business Units Strate- 11. Strength, Weakness, Opportunity
gic Planning and Threat (SWOT) analysis is
considered to be the most unique
technique of situation analysis.
12. TOWS
13.
14.
S-O Strategies
True
S
IM
1. Customer value is being used in order to assess customer base

by the organisations. Refer to Section 6.2 Customer Value.
M
2. Core competency is the collective learning of an organisation,

attained by coordinating various skills of employees and
integrating technologies. Refer to Section 6.2 Customer Value.
N
3. Strategic planning begins at the corporate level and is followed

by business unit and functional level strategies that embrace
the marketing strategy. Refer to Section 6.3 marketing and
Corporate strategic Planning.
4. Strategic planning is a process of realising organisational
objectives through a set of pre-determined activities. Refer to
Section 6.2 Customer Value.
5. The strategic planning of an SBU is focused on utilising limited
resources and competing effectively in the market using best
possible ways. Refer to Section 6.4 Business Units strategic
Planning.
6. Strength, Weakness, Opportunity and Threat (SWOT) analysis is
considered to be the most unique technique of situation analysis.
Refer to Section 6.4 Business Units strategic Planning.
Marketing strategy
Marketing strategy
What is Customer Value? - Marketing,

Definition & Quiz Video - Lesson and Example | Education Por-
tal
Core Competence Analysis: Building Sus-

tainable Competitive Advantage
Mission and Vision Statements: Unleashing

the Power of Purpose
Boundless
C H a
7 P t e r
COMPETITIVE STRATEGIES
CONTENTS
7.1 Introduction
7.2 Competitive Forces
S
Activity
IM
7.3 Identifying and Analysing Competitors
Activity
7.4 Competitive Strategies for Market Leaders
7.4.1 Expanding the Total Market
M
7.4.2 Defending Market Share

7.4.3 Expanding Market Share
Activity
N
7.5 Competitive Strategies for Others

7.5.1 Market Pioneers’ Strategies
7.5.2 Market-Challenger Strategies
7.5.3 Market-Follower Strategies
7.5.4 Market-Nicher Strategies
Activity
7.6 Consumer-Oriented Strategies
Activity
7.7 Resource-Based Strategies
Activity
7.8 Summary
COMPETITIVE STRATEGIES 155
n o t e s
A Blue Ocean that is successful is capable of creating strong

brands, which are not easy in Red Ocean. An important charac-
teristic of the Blue Ocean strategy is not to accept the conservative
and traditional form of strategy. The following are the fundamen-
tal differences between the Blue Ocean and Red Ocean strategies:
Blue Ocean strategy red Ocean strategy

Develop a new market space Compete in the existing market
Make the idea of competition Overcome competition
immaterial
Develop a new demand Manipulate the present demand
Break the cost trade-off Create the cost trade-off
S
IM
M
N
n o t e s
LEARNING OBJECTIVES

> Describe the competitive forces of market
> Define the primary competitors
> Analyse the strategies, objectives, strengths, and weakness-
es of competitors
> Elaborate on the competitive strategies for market leaders,
market pioneers, market challengers, and market nichers
> Discuss consumer-oriented strategies
> Define resource-based strategies
7.1 intrODUCtiOn
It is not possible to create a strong brand without having an under-
S
standing its competitors. Nowadays, there is stiff competition in al-
most every industry. An organisation may face competition from local
as well as for organisations. These organisations try to gain profit in
IM
order to extend their market share by applying different strategies.
Only experts in marketing strategies can handle such competitions,
which have been designed creatively.
This chapter highlights the role of competition and the strategies mar-
M
keters need to adopt to successfully sell their brand in the market.
7.2 COmPetitiVe FOrCes

N
An industry refers to a group of organisations that offer similar prod-

ucts and services to customers. Every industry faces competition;
hence, organisations form their own strategies to face the competition
in order to sustain themselves in the industry. Many organisations
only consider the competitors that are within the industry and ignore
the other aspects that competitors consider in their assessments.
Organisations compete with other organisations in order to get a big-

ger share of the market. Some major competitors in the IT industry of
India are Infosys, TCS, HCL, Wipro, and Mahindra Satyam. The IT in-
dustry also consists of various stakeholders like buyers and suppliers.
In order to formulate competitive strategies, an organisation needs to
analyse the industry in which it operates.
An organisation also needs to assess the productivity of a specific in-

dustry before getting into it. Michael E. Porter of Harvard Universi-
ty created a very efficient model for the assessment of an industry.
This model is called Porter’s Five Forces Model. Porter discusses the
probability of an industry that relies on the level of competition in the
n o t e s
1. Which of the following is not a competitive force in Porter’s

model?
a. Threat of complementary products
b. Threat of new entrants
c. Rivalry within the industry
d. Bargaining power of suppliers
2. If there are only a few suppliers in the market, it will increase
the bargaining power of the suppliers. (True/False)
3. If a buyer buys products in a large quantity, the bargaining
power of the buyer ___________.
ACTIVITy
S
Using the Internet, select an industry and study its competitive
forces.
IM
iDentiFying anD analysing
7.3
COmPetitOrs
M
According to Philip kotler, “Poor firms ignore their competitors, aver-

age firms copy their competitors, and winning firms lead their compet-
itors.”
The competitors of an organisation determine its market position,

N
market share and profit. Thus, it is essential for an organisation to

identify its competitors. It is quite easy to find out one’s main com-
petitors. For example, Coca Cola is aware of its greatest competitor,
which is Pepsi; Pepsodent is aware of Colgate; and Tide’s biggest
competitor is Surf. However, the range and size of real and potential
competitors of any organisation may vary and can be much broader
than it appears. Organisations face competition from existing as well
as emerging competitors or new technologies. Nowadays, the main
competitors are coming from developing countries, which are com-
peting with multinationals and also show themselves as strong global
forces. The global market is upgraded through their knowledge about
the proficient use of domestic methods of production, revenue, talent,
and the supply chain.
Identifying competitors depends on various factors. For this purpose,

an organisation can analyse its market share relative to other organ-
isations producing similar products or services in the same category,
or manufacture a substitute that belongs to the same industry. In this
“To expand our leading
position, we’re driving the development of products for emerging mar-
kets and further expanding our local value creation.”
“Indirect attack is
the most fruitful approach that has the greatest chance of success
while conserving the greatest amount of strength.”
n o t e s
ACTIVITy
Using the Internet, identify Indian organisations that use custom-

er-oriented strategies.
7.7 resOUrCe-BaseD strategies

Every organisation is a collection of unique resources and capabili-
ties, which provide it the basic strategy and basic means of returns.
In over-competitive business environment of today, an organisation
can be defined as a group of developing abilities that is enthusiastical-
ly managed to pursue above-average returns. Therefore, differences
in the performances of the organisation are driven mainly from their
unique resources and capabilities instead of the industry’s structural
features.
Resources are the inputs of the production process of an organisation.

S
These resources include cash, equipment, skilled workers, patents,
finance and talented managers. Resources can be tangible or intangi-
ble. The set of resources available tends to become larger in the hands
IM
of an effective organisation. Individual resources may not result in a
competitive advantage. It is through the synergistic combination and
integration of sets of resources that competitive advantage is formed.
Resource-based strategies enable organisations to assess the strategic

assets available to them. Resource-based thinking is based on the con-
M
cept that the effective application of all useful resources of an organ-

isation enables it to get a competitive advantage over its competitors.
The two types of resources are tangible and intangible. Tangible re-
N
sources are physical things, for example, land, buildings, machinery,

tools and revenue. Physical assets are easily available in the market.
Therefore, little advantage is bestowed to organisations in the long
run as competitors soon obtain the same resources.
Intangible assets are non-physical in nature but are still possessed

by an organisation. Some examples of intangible resources are brand
name, trademarks, and logical resources. As compared to tangible
resources, intangible resources such as brand name, is established
with time, which other organisations cannot buy. Intangible resources
mainly remain in the organisation and prove to be the fundamental
source of continued competitive advantage.
Michael Porter’s model of five forces aims at the organisation’s outer

competitive surrounding.
Unlike the Input/output model (I/O), the resource-based idea is based

on the perception that an organisation’s internal atmosphere, based
on means and abilities, is more important for determining strategic
n o t e s
7.9 DesCriPtiVe QUestiOns

1. Discuss the competitive forces present in the market.
2. Explain how organisations identify and analyse their competitors.
3. Discuss the competitive strategies adopted by market leaders.
4. Explain the competitive strategies for organisations other than
market leaders.
5. Discuss consumer-oriented strategies that are adopted by
organisations.
6. Explain some resource-based strategies that are used by
organisations.
topic
Competitive Forces
Q. no.
1. a.
S
answers
Threat of Complementary
IM
Products
2. True
3. Increases
Identifying and Ana- 4. The competitors of a firm deter-
M
lysing Competitors mine its market position, market

share and profit.
5. True
Competitive Strat- 6. False
N
egies for Market

Leaders
7. Flank defence involves creating
safeguards at weak points by the
market leader.
Competitive Strate- 8. Market challengers have the
gies for Others second or third position in the
industry and have the ability to
challenge the market leaders by
attacking at their weaker points.
9. Bypass
10. Guerrilla attack includes small
attacks on the different markets of
the competitors.
11. Imitator
Marketing strategy
Marketing strategy
N
M
IM
S
C H a
8 P t e r
MARkETING STRATEGIES
CONTENTS
8.1 Introduction
8.2
8.2.1
8.2.2
S
Concept of Marketing Strategies
Porter’s Generic Strategies
Marketing Warfare Strategy
IM
8.2.3 Goal Attacking Strategy
8.2.4 Market Expansion Strategies
8.2.5 Boston Consulting Group Matrix
8.2.6 GE Nine-Cell Matrix
8.2.7 Mckinsey’s 7-S Model
M
8.2.8 PIMS Model

8.2.9 Malcolm Baldridge Model
8.2.10 Ansoff’s Product-Market Growth Strategy
N

Activity
8.3 Financial Considerations in Evolving the Marketing Strategy
Activity
8.4 Summary
n o t e s
tata grOUP—BUsiness POrtFOliO analysis

tHrOUgH BCg matriX
Strategic positioning of an organisation can be analysed by Bos-

ton Consultants Group (BCG) Matrix. BCG product portfolio ma-
trix uses the dimensions of the relative market share and mar-
ket growth rate and has four categories, namely, cash cows, dogs,
stars and question marks. ‘Cash cows’ denote the industries with
a high market share and a low market growth. ‘Dogs’ refer to the
industries with a low market share and a low market growth.
‘Stars’ denote the industries with a high market share and a high
market growth. ‘Question marks’ denote the industries with a low
market share and a high market growth.
The Tata Group, India’s biggest business group, functions in over

80 countries. The group operates in seven extensive sectors that
range from steel, automobiles, energy, chemicals, hotels and con-
S
sumer goods to communication systems. Tata Steel, Tata Motors,
Tata Consulting Services and Tata Power generate around 50 per
cent of the group’s revenue. Tata Group encompasses more than
IM
100 businesses, which operate in 6 continents, and employs more
than 350,000 employees. Managing a portfolio that comprises of
100 businesses is not an easy task. The business portfolio for the
Tata Group is as follows:
M
taBle: tata PrODUCts anD serViCes

FOr BUsinesses
Advanced composites Defence Hospitality
N
Aerospace Design services Industrial equipment

Agricultural products E-learning Information technology
Automotive industry E-trading Pharmacy
Beverages Energy Realty
Books Engineering Steel
Chemicals Financial services Telecommunications
Construction Food products Trading
Consultancy Funding Wood products
The business portfolio analysis of businesses under the Tata um-

brella can be done by using the BCG matrix. The analysis consid-
ers the operational and financial performances of each business to
understand their growth rate with respect to market growth. Tata
Steel, Tata Power, Tata Motors, Titan and Indian Hotels appear as
clear ‘stars’. Therefore, they require increasing investments for
more growth. Tata Chemicals, Tata Consulting Services and Tata
Tea come out as ‘cash cows’ that require being held on for near
future. Tata Teleservices, Voltas, Tata AIG and Tata Communica-
MARkETING STRATEGIES 185
n o t e s
tions emerge as ‘question marks’. There is no product that could

be clearly kept in the ‘dogs’ category. The following figure shows
the portfolio analysis of the Tata Group with the help of the BCG
matrix:
STARS QUESTION MARKS

Indian Hotels
Tata Communication
Tata Steel
Voltas
Tata Motors
Tata Teleservices
Tata Power
Tata AIG
Titan
CASH COWS
Tata Tea
Tata Consulting Services
S
IM
Tata Chemicals DOGS
M
Figure: Portfolio Analysis of the Tata Group
Though the telecom sector is growing at a fast speed in India, the

N
low presence of Tata Teleservices is an indicative sign of danger for

the Tata Group, as the group aims to remain in the top three slots
in any new sector it enters.
The group has undertaken many acquisitions not only in the coun-
try but also in other countries such as South East Asia, Europe and
the United States. For instance, Tata’s acquisition of Corus (Uk)
helped it in gaining a big market share. Its acquisition of Daewoo
in korea helped it in achieving a high market share in the korean
automobile market and created a star category for the group. Tata
Group aims to position itself as a global brand.
n o t e s
LEARNING OBJECTIVES

> Describe various marketing strategies
> Implement marketing warfare strategies
> Describe the market growth strategy in various market
situations
> Explore the chances of market expansion for an organisation
> Describe Ansoff’s product-market growth strategy
> Explain the financial considerations in evolving the market-
ing strategy
8.1 intrODUCtiOn
The previous chapter focused on competitive strategies that are devel-
S
oped by organisations to keep pace with other organisations and sus-
tain in the industry. Apart from these strategies, marketing strategies
are developed by organisations to achieve marketing objectives and
IM
sustain the customer base.
The key to success for an organisation lies in its marketing strategies,

as they act as the foundation for marketing plans. Organisations can
achieve their marketing objectives by effectively formulating and im-
plementing the marketing strategies. These strategies also help an or-
M
ganisation in diversifying its business into new geographical areas,

introducing new technology and gaining competitive advantage. The
business environment has become very dynamic; therefore, organi-
sations need to devise new and innovative marketing strategies on a
N
regular basis to sustain their customer base and increase their market
share. Marketing strategies revolve around the four P’s of marketing,
namely, product, price, place and promotion.
This chapter explains the concept of the marketing strategy in detail.

It also talks about the different marketing strategies. At the end, it de-
scribes the financial considerations in evolving the marketing strategy.
8.2 COnCePt OF marketing strategies

Strategies give a defined route to any business for achieving the set
objectives. Marketing strategies determine the preference of the
market segment, brand positioning, marketing mix and resources
allocation.
n o t e s
An organisation follows a process to create a marketing strategy,

which is shown in Figure 8.1:
Reviewing Setting
Creating the present the Planning Implementing Reviewing
the team scenario marketing the action the strategy the strategy
objective
Figure 8.1: Process of Creating a Marketing Strategy
This process of creating a marketing strategy is explained as follows:

1. Creating the team: It is the first step towards the preparation of
strategic managers in an organisation.

2. reviewing the present scenario: It involves analysing the
S
a marketing strategy. Team implies the formation of a group of
IM
internal factors, such as strengths and weaknesses, and external
factors, including opportunities and threats, of the organisation.
3. setting the marketing objective: It determines setting marketing
goals to answer basic questions, such as what product to launch,
when to launch and how to launch. These marketing objectives
M
should be set after considering organisational goals.

4. Planning the action: In this step, the marketing department
prepares a plan of action to implement the marketing strategy. It
N
prepares a framework of actions to achieve organisational goals.

5. implementing the strategy: It includes introducing a product in
the market through various media, such as print and electronic
media.
6. reviewing the strategy: This involves evaluating marketing
strategies to determine whether the desired results have been
achieved or not. This step helps an organisation to know the
performance of marketing strategies in terms of achieving
market share.
With the help of the marketing strategy, an organisation strives to in-

crease its market share for achieving the economies of scale in the
functional areas, such as production, distribution and advertising.
The organisation increases the market share by lowering prices, im-
proving the product quality, increasing advertising expenditures, ex-
panding distribution channels and merging with the competitors. The
organisation that has a large market share often dictates the market
and keeps the competitors at bay. The organisation with a large mar-
a collection of
statistically documented experiences drawn from thousands of busi-
nesses, designed to help understand what kinds of strategies (e.g., qual-
ity, pricing, vertical integration, innovation, and advertising) work best
in what kinds of business environments. The data constitute a key re-
source for such critical management tasks as evaluating business per-
formance, analysing new business opportunities, evaluating and reality
testing new strategies, and screening business portfolios
n o t e s
6. ______________ strategy involves the development of either

new technologies or new models.
7. ____________ strategy defines the path of the organisation’s
long-term objective.
8. Market development means selling more products in the same
market. (True/False)
9. The combination of industry attractiveness and business
strength is represented in the GE nine-cell matrix. (True/
False)
10. What are the seven elements of Mckinsey 7-S Model?
11. What does PIMS stand for?
ACTIVITy
S
Using the Internet, find out the scope of the marketing warfare
strategy of Tata Motors in India.
IM
FinanCial COnsiDeratiOns in
8.3
eVOlVing tHe marketing strategy
In an organisational context, finance is necessary to perform various
functions, such as marketing, production and sales. An organisation
M
cannot be established without the availability of funds. Therefore,

accessibility to finance is imperative for the very existence of an
organisation.
N
Marketing activities of an organisation require finance to carry out

essential functions, such as sales, advertising and distribution. In the
sales function, the organisation needs finance to promote its products
through sales promotion activities. In the advertising function, the or-
ganisation needs finance to use advertising modes, such as print and
electronic media. The use of electronic media requires more funds
as compared to print media. In the distribution function, the organ-
isation needs finance to either buy or rent distribution centres and
arrange transportation to supply goods to these centres.
Before selecting a marketing strategy, the organisation needs to check

the feasibility of all the alternatives available by comparing the cost in-
volved in carrying out a strategy and the expected profit. If the cost of
undertaking a strategy is less than the expected profit, then the strat-
egy would be said to be feasible for the organisation and vice versa.
This process of checking the feasibility is called financial analysis. Any
incorrect financial business decision may have an adverse impact on
the profitability of an organisation.
n o t e s

4. True
5. Philip kotler and J. B. Quinn
6. Leapfrog
7. Goal attacking
8. False
9. True
10. Structure, strategy, skills, staff,
style, systems and shared values
11. Profit Impact of Market Strategies
Financial Considerations 12. Profitability ratios
in Evolving the Marketing
Strategy
13. True
S 14. False
IM
1. Marketing strategies determine the preference of the market

segment, brand positioning, marketing mix and resources
allocation. Refer to Section 8.2 Concept of marketing strategies.
M
2. Porter has given three generic strategies – cost leadership, focus

and differentiation. Refer to Section 8.2 Concept of marketing
strategies.
3. Expansion through integration widens the scope of an
N
organisation’s growth by combining the activities related to the

present activity of an organisation. Refer to Section 8.2 Concept
of marketing strategies.
4. Goal attacking strategy defines the path of the organisation’s
long-term objective. Refer to Section 8.2 Concept of marketing
strategies.
5. BCG illustrates the relationship between the rate of growth
in business and relative business share. Refer to Section
8.2 Concept of marketing strategies.
6. Some of the important financial ratios necessary for analysing
the different aspects of marketing strategies are profitability
ratios and liquidity ratios. Refer to Section 8.3 Financial
Considerations in evolving the marketing strategy.
Marketing strategy
Marketing strategy
Integrative growth strategy (growth by combina-

tion) MBA Notes on Integrative growth strategy (growth by combina-
tion)
Inkling
BCG Matrix
Ansoff Matrix
GE / McKinsey Matrix
Growth Strategies in Business

N
M
IM
S
C H a
9 P t e r
DEVELOPING STRATEGIES FOR CONSUMER

AND INDUSTRIAL MARkET
CONTENTS
9.1 Introduction
9.2
9.2.1
9.2.2
S
Analysing Consumer Behaviour
Cultural Factors
Social Factors
IM
9.2.3 Personal Factors
9.2.4 Psychological Factors
Activity
9.3 Buying Decision Process
M
9.3.1 Problem Recognition

9.3.2 Information Search
9.3.3 Evaluation of Alternatives
N
9.3.4 Purchase Decision

9.3.5 Post Purchase Behaviour
Activity
9.4 Organisational Buying and Business Market
9.4.1 Buying Situations
9.4.2 Systems Buying and Selling
Activity
9.5 Stages Involved in the Organisational Buying Process
9.5.1 Problem Recognition
9.5.2 Need Description and Product Specification
9.5.3 Supplier Search
9.5.4 Proposal Solicitation
CONTENTS
9.5.5 Supplier Selection

Activity
9.6 Summary
S
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DEVELOPING STRATEGIES FOR CONSUMER AND INDUSTRIAL MARkET 219
n o t e s
LEARNING OBJECTIVES

> Discuss the need for analysing consumer behaviour
> Explain the consumer buying decision process
> Define organisational buying and the business market
> Discuss the stages involved in the organisational buying pro-
cess
9.1 intrODUCtiOn
In the previous chapter, you have studied different types of marketing
strategies adopted by organisations. Apart from marketing strategies,
organisations need to formulate and adopt strategies for consumer
and business markets too. A consumer market deals in products and
S
services produced for end users, while a business market is a place
where organisations purchase raw materials and components to man-
ufacture final products.
IM
For formulating strategies for a consumer market, organisations first
need to analyse the consumer market. Analysing a consumer market
involves understanding the requirements of consumers and fulfilling
their needs. Every business is customer-oriented; therefore, market-
ers should focus on satisfying the requirements of their customers.
M
Assessing the consumer market has become an essential part for an

organisation in today’s dynamic business environment.
On the other hand, the buyers and suppliers of a business market

N
are different from domestic customers. While a household customer

purchases a small unit of products, for self or for family, a business
customer purchases a larger unit as an intermediate material for pro-
duction. This remains the same for the service providers too. A busi-
ness market consists of material suppliers, machinery suppliers, and
manufacturers of various other productive resources.
In this chapter, you will study about the need of analysing consumer
behaviour. It explains the consumer’s buying decision process. The
concepts of organisational buying and business market are also ex-
plained in detail in the chapter. Towards the end, the chapter discuss-
es the different stages involved in the organisational buying process.
9.2 analysing COnsUmer BeHaViOUr

According to engel, Blackwell, and mansard, “Consumer behaviour
is the actions and decision processes of people who purchase goods and
services for personal consumption”.
n o t e s
According to louden and Bitta, “Consumer behaviour is the decision

process and physical activity, which individuals engage in when evalu-
ating, acquiring, using or disposing of goods and services”.
Therefore, consumer behaviour can be defined as a study of under-

standing the way an individual responds to a product of any brand. In
other words, it is a process of determining when, how, why, and where
people purchase or do not purchase a particular product. It also in-
tends to understand the buying behaviour or preferences of consum-
ers.
Understanding consumer behaviour is the first step towards formu-

lating a successful consumer marketing strategy. It is nothing but a
move to achieve better sales figures and market performance. Buying
behaviour of consumers is influenced by social, cultural, personal, and
psychological factors. In this context, let us discuss the black box mod-
el, which shows the interaction between stimuli, customer character-
istics, and process of decision making. Marketing stimuli are arranged
S
by organisations and environmental stimuli are various factors like
cultural, social, economic, political, conditions of the society. Before
introducing any product in the market, marketers should understand
IM
the stimuli and the response of customers. Table 9.1 shows the struc-
ture of the black box for analysing consumer behaviour.
taBle 9.1: BlaCk BOX strUCtUre

environmental Factors Black Box of Consumers
M
Consumers’
marketing environ- Consumers’ Decision responses
stimuli mental Characteristics Process
stimuli
N
Product, Economic, Attitude, moti- Information Product

price, place, technologi- vation, percep- research, choice, brand
and cal, political, tion, personali- alternative choice, and
promotion cultural, and ty, and lifestyle evaluation, purchase
demographic problem timing
recogni-
tion, and
purchase
decision
Let us discuss the factors that influence consumer behaviour.
9.2.1 CUltUral FaCtOrs
Culture is the fundamental element of understanding a customer’s re-

quirements and behaviour. It is the sum of shared values among the
members of a family or a society. Customers come from different cul-
tures. Consequently, the response of a customer towards a particular
product is defined by his/her culture.
n o t e s
ni m
n
og ble
tio
ec o
R . Pr
ur se
es f
iv o
io ha
1
at ion
av rc
eh pu
rn at
lte lu
B st-
A va
Po
E
5.
3.
ar on
is se
Se ati
ch
ec a
n
rm
D rch
io
fo
Pu
In
4.
2.
Figure 9.1: Five-Stage Model of the Decision-Making Process
It should be noted here that a person need not always pass through
all the stages. For example, consumers using Colgate toothpaste daily
would not go through information search and evaluation. Here, the
S
need leads to a purchase decision. Let us discuss these stages in detail
in the next sections.
IM
9.3.1 PrOBlem reCOgnitiOn
The first stage of the buying decision is recognising the problem. In

this stage, the problem or the need of a particular product is identified
through the internal and external stimuli of a person. The internal
M
stimuli may be basic needs such as hunger, thirst, sex, and shelter.
External stimuli can be a television ad or neighbour’s new car that
often drive the possibilities of making a purchase. Thus, marketers
need to understand the need factor that drives a consumer close to the
N
product. For example, a consumer feeling hungry plans to purchase

something to fulfil his/ her hunger.
9.3.2 inFOrmatiOn searCH
The second stage of the buying decision process is information search.

Once the problem or need of a person is recognised, he/she goes for
searching the information related to his/her requirements. Consum-
ers search for information related to the price, features, quality, and
market value of a product. Thus, a marketer has to present all possi-
ble information desired by a consumer in the form of news, advertise-
ment, or websites. For example, to satisfy his/her hunger, the consum-
er searches for the various options available for food.
9.3.3 eValUatiOn OF alternatiVes
The final decision of purchasing a product or brand is taken by a cus-

tomer after a detailed research. Evaluation of alternatives involves
judging or assessing the all attributes of the required product. While
n o t e s
complete package solution for the purchase needs of an organisation.

Such approach is referred to as systems buying. According to kotler,
“Many business buyers prefer a total solution to a problem from one sell-
er, and this is called systems buying.”
Let us understand the concept of systems buying with the help of an
example. Suppose a retail organisation needs billing software for all
its retail outlets. In such a case, the organisation would convey the
required features of software to the seller. After that, it is the respon-
sibility of the seller to arrange for such complete software solution for
the organisation. The seller may contact various parties, like system
experts, financial experts, and so on to develop the required software.
Such process of buying by the organisation is called systems buying.
Systems buying is considered to be a turnkey solution as it gets all
the things done as per the requirement of the buyer organisation. The
direct supplier of such a solution who coordinates with other subse-
quent suppliers can be called the prime supplier. The subsequent sup-
pliers who are suppliers for the prime supplier are called secondary or
S
second-tier suppliers for the original buying organisation.
Apart from this, the seller manages the inventory of the buyer organ-
IM
isation. For example, Shell Oil manages the oil inventory of buyer or-
ganisations and keeps a track of replenishment. This helps both the
buyer organisation and the seller. The buyer saves the resources and
efforts involved in managing inventory, while the seller benefits from
lower operating costs. Such approach is called systems selling.
M
9. Organisations generally buy large quantities of products in a

single order instead of frequent small orders. (True/False)
N
10. Buying organisations not only buy in bulk but also look for a
_____________ available for sale.
ACTIVITy
Suppose you are the purchasing head of an organisation. your or-

ganisation wants security systems for all its branches across India.
Which organisation would you select for availing a complete pack-
age and why?
stages inVOlVeD in tHe

9.5 OrganisatiOnal
BUying PrOCess
Organisations that supply products and services to a consumer mar-
ket themselves need products and services for their businesses. Sim-
n o t e s
ilar to consumers, organisations also undergo various stages before

making a final purchase. Figure 9.2 shows the stages involved in the
organisational buying process:
Problem Recognition
Need Description and Product

Specification
Supplier Search
Proposal Solicitation
S Supplier Selection
IM
Figure 9.2: Stages of the Organisational Buying Process
Let us discuss these stages in the next sections.
9.5.1 PrOBlem reCOgnitiOn

M
The primary step in the business buying of a product is to identify

the requirement or problem area. This need can be identified in some
operational area of an organisation. Employees can identify the need
for a particular product in the problem area. Any such situation that
N
can be solved by the purchase of some goods or services provides a

stimulus to the organisation to make a purchase decision.
There can be many internal and external factors responsible for recog-
nising a problem. Internal factors may include decision of expansion,
new product development, a need of material or machinery for on-go-
ing production, etc. On the other hand, external factors may include
market trends, competitors’ strategy, influence of sellers’ promotional
activities, and so on.
9.5.2 neeD DesCriPtiOn anD PrODUCt sPeCiFiCatiOn
After identifying the problem, a detailed description of the need should

be defined. The need should be defined in terms of the possible conse-
quences if the product is not purchased. This stage also involves spec-
ifying product requirements in terms of quality, durability, and cost.
Product specification is of utmost importance for any buyer organisa-
tion. This is because the actual product value for an organisation can
be evaluated only with clear specifications of the product purchased.
n o t e s
9.5.3 sUPPlier searCH
After specifying the requirement, the next stage in the organisational

buying process is the supplier search. The buyer organisation looks for
the best supplier in the market that matches with the requirements of
the organisation. The buyer organisation normally approaches trade
directories, advertisements for trade, trade fairs, references from oth-
er organisations, and the Internet for searching suppliers.
9.5.4 PrOPOsal sOliCitatiOn
After searching for the suitable sellers, the buying organisation sends
proposals to them for purchase. These proposals are regarding the
desired value and benefits, quality standards, and the terms and con-
ditions of buying. On receiving the proposal, sellers respond the buy-
er organisation, arrange for product demos, and hold a discussion on
product specification.
9.5.5 sUPPlier seleCtiOn S

Supplier selection is the step of selecting the seller in order to make
IM
a final purchase after evaluating all the proposals and meetings. The
seller who agrees on the terms and conditions of the buying organi-
sation is selected by the buyer organisation. The relative importance
of suppliers’ offers and feasibility is matched by the buyer organisa-
tion to select one among them. The ranking method is suitable for this
M
analysis of supplier selection. An extensive comparison of the sup-

pliers is done based on different attributes. Since each attribute has
a distinct importance for the buying organisation, they are assigned
relative worth for effective decision making. The ranking method of
N
supplier selection has been demonstrated in Table 9.3:
taBle 9.3: ranking metHOD OF sUPPlier seleCtiOn

rating
scale
attributes Value of seller a seller B seller C Value of
the at- each
tribute attribute
z Cost of Buying (In per Good Average Average
cent)
z Market Image 40 Poor Good Good
of Seller
z Product Qual- 10 Average Average Good
ity
z Service Quality 20 Average Average Good
z Value Added 10 Poor Good Good
total 20
Marketing strategy
Marketing strategy
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M
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S
C H
10 a P t e r
MARkETING STRATEGIES AND MARkETING MIX
CONTENTS
10.1 Introduction
10.2
10.2.1
10.2.2
Segmentation
S
Geographic Segmentation
Demographic Segmentation
IM
10.2.3 Psychographic Segmentation
10.2.4 Behaviouristic Segmentation
Activity
10.3 Target Market Selection Strategies
M
10.3.1 Evaluating the Market Segment

10.3.2 Selecting the Market Segment
N
Activity
10.4 Strategies for Existing Products
10.4.1 Product Line Analysis
10.4.2 Product Mix Analysis
10.4.3 Marketing Strategies at Different Product Life Cycle Stages
10.4.4 Line Extension and Product Modification Strategies
10.4.5 Positioning and its Types
10.4.6 Product Differentiation Strategies
Activity
10.5 Strategies for New Product Development
Activity
10.6 Concept of Price
10.6.1 Factors Affecting Price
10.6.2 Pricing Objectives
CONTENTS
10.6.3 Price Setting Procedure

Activity
10.7 Pricing Strategies
10.7.1 Differential Pricing
10.7.2 Promotional Pricing
10.7.3 Product Line Pricing
10.7.4 New Product Pricing
10.7.5 Psychological Pricing
10.7.6 Competition Pricing
10.7.7 Premium Pricing
10.7.8 Value-Added Pricing
10.7.9 Discount Pricing
10.7.10 Economy Pricing
10.8
Activity S
Distribution Strategies
IM
10.8.1 Direct Distribution
10.8.2 Indirect Distribution
10.8.3 Hybrid (Mixed) Distribution
Activity
M
10.9 Strategies for Developing Effective Marketing Communication

10.9.1 Identify the Target Audience
10.9.2 Determine the Communication Objectives
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10.9.3 Design Communications

10.9.4 Select the Communication Channel
10.9.5 Create the Aggregate Marketing Communications Budget
Activity
10.10 Marketing Communication Mix
Activity
10.11 Summary
MARkETING STRATEGIES AND MARkETING MIX 239
n o t e s
DistriBUtiOn CHannel strategy OF PePsiCO
According to Al Carey, Chief Operating Officer, PepsiCo Bever-

ages and Foods, North America, “PepsiCo has continually been at
the forefront of standards adoption, promoting industrial efficiency
and adding value throughout our supply chain.”
US-based PepsiCo is one of the leading beverage and snacks food

organisations of the world. It functions in more than 150 nations
and collects revenue of more than $40 billion. In 1989, PepsiCo en-
tered India in a joint venture with the Punjab Government. Soon,
it initiated its beverage operations with R k Jaipuria Group. Pep-
siCo established its supremacy by gaining effective means of mar-
keting and distribution in the market.
PepsiCo uses various distribution channels such as Direct Store

Delivery (DSD) system, the broker warehouse system, the vend-
customers. S
ing and food service system, and the pre-sell method to reach its
PepsiCo has a very progressive distribution system, which is re-

IM
inforced by a state-of-the-art logistic system. The products of
PepsiCo such as snack foods and beverages are distributed daily
through numerous retail channels across the world. The organ-
isation targets at safeguarding the availability of products at all
the distribution centres that could be easily accessed by the cus-
M
tomers. PepsiCo focuses on the need of adapting the distribution

system that could cater to the need of its global consumers. By us-
ing the most up-to-date technology, PepsiCo and its bottlers have
significantly improved their distribution system. It also launched
N
a new distribution method known as the chilled DSD system for

items that require continuous refrigeration.
The distributors of PepsiCo store products and distribute them

to different retailers. Some of their products are transported to
customer warehouses and retail stores from the manufacturing
plants. This distribution system is identified as customer ware-
house, which is a less expensive system and is best for products
having a lower turnover. Foodservice and vending sales force is
another form of distribution system used by Pepsi Co. It distrib-
utes snacks, foods and beverages to vending operators and distrib-
uters. This distribution system can be normally seen in schools,
businesses, stadiums, restaurants, and similar kinds of locations.
n o t e s
LEARNING OBJECTIVES

> Explain the concept of segmentation
> Define target market selection strategies
> Discuss strategies for existing products
> Discuss strategies for new product development
> Discuss the concept of price
> Discuss pricing strategies
> Explain distribution strategies
> Describe strategies for developing effective marketing com-
munication
> Define marketing communication mix
S
10.1 intrODUCtiOn
In the previous chapter, you have learned to analyse the consumer be-
haviour. This analysis helps an organisation in developing strategies
IM
to promote its products and services in the market. While developing
marketing strategy, marketers often refer to a framework to formulate
and implement the marketing policies and procedures. These princi-
ples are related to segmenting, positioning, and targeting a market.
Market segmentation can be defined as a process of classifying the
M
market into different segments on the basis of age, gender, and in-
come of the customers. Market positioning involves creating an image
of the product in the minds of the customers by adopting a product
differentiation strategy. As a marketer, one should be well informed
N
about the principles of marketing management to gain a better under-

standing of marketing mechanism.
Organisations have to keep in mind all the characteristics of products

they offer while developing marketing strategies. A product can be de-
fined as an offering by an organisation to satisfy the needs and wants
of customers. It includes goods, services, information, and ideas. An
organisation needs to decide the product mix, conduct the product
line analysis, and establish the requirement to develop new products.
While planning for a product, a marketer needs to consider five as-

pects: the core benefit, the basic product, the expected product, the
augmented product, and the potential product. Organisations im-
prove their product mix through line extension and product modifi-
cation. The success and failure of an organisation largely depend on
whether it takes the effective and efficient product decisions or not. In
this chapter, you will study about various marketing strategies.
n o t e s
10.2 segmentatiOn
Have you ever thought why a watch manufacturing company, says Ti-
tan, produces various models of watches when the only purpose of
a watch is to show time and date. The organisation provides differ-
ent models of watches to offer a variety of designs and styles to its
customers. A market has different types of customers; therefore, an
organisation bifurcates the market as per the customers’ gender, age,
tastes, attitudes, and personalities. Segmentation indicates dividing
the market according to the tastes and preferences of customers. For
example, Titan divides the market into different segments by offering
watches on gender basis.
Segmentation is defined as the selection of a particular group of cus-
tomers that have similar needs and preferences. According to Donald
norman, a Doctorate of Philosophy, “Market segmentation is a natu-
ral result of the vast differences among people.” Segmentation helps in
understanding the needs of different customers with respect to their
buying behaviour.
S
A market is an entity with several diversified customers having dis-
tinguished characteristics. Organisations focus their energies and re-
IM
sources towards a particular segment of the market. Earlier, organisa-
tions used to launch a single product for the whole market; however,
fiscal liberalisation and open economy have altered the market sce-
nario in India and raised the level of competition in the market. When
an organisation launches a product, other competitors conduct re-
M
search to introduce a better version of the same product. For example,

in telecommunication, service providers offer various types of services
and tariff plans to attract customers.
Therefore, market segmentation can be called the best strategy for
N
targeting a market. Let us now discuss the basis and levels of market
segmentation in the next section.
10.2.1 geOgraPHiC segmentatiOn
In geographic segmentation, a market is divided into different geo-

graphical areas on the basis of cities, states, and countries. Study of
respective geographical areas is required in this type of segmentation.
The needs and choices of local inhabitants should be considered be-
fore offering a product. For example, PVR in Delhi plays movies in
Hindi and English; whereas, PVR in Bengaluru plays movies in Hindi,
English, kannada, Tamil, and Telugu.
knowledge of geographical regions helps the marketer to better un-

derstand the needs of the customers. For example, in hot and dry ar-
eas, coolers are preferred, but air-conditioners are more suitable for
hot and humid areas. Thus, a marketer should understand the needs
according to the geographical area and develop the product that may
attract more target customers.
`
n o t e s
ACTIVITy
Determine the basis of segmentation of MacDonald’s in India. Make

a report on it.
target market seleCtiOn

10.3
strategies
After segmenting the market, an organisation focuses on or targets
the most profitable segment to gain revenue. In this, an organisation
considers numerous factors, such as size and growth of particular seg-
ments and tries to comprehend customers and the competitive envi-
ronment. Now, let us discuss two basic components of the target mar-
ket selection process in the next section.
10.3.1 eValUating tHe market segment
S
Organisations evaluate the potential of a selected segment and verify
whether it has resources to satisfy the needs of that segment. In do-
IM
ing this, it also ensures that the organisational objectives are not at
stake while serving the segment. The approximation of sales volume
also plays an important role to evaluate the relevant market segment.
Figure 10.1 shows various factors that affect the sales volume of an
organisation:
M
Factors affecting sales

N
• Changes in productivity • Changes in the style and

• Festivals and seasons quality of a product
• Vacations • Changes in the style and
• Direct and indirect quality of a service
competition • Production efficiency and
• Deaths and births capability
• Changes in population • Motivating sales
• Changes in weather • Changes in price
• Unstable political events • Inventory and shortage
• Earnings of consumer • Distribution strategy
• Changes in credit policy
• Problems of labor
Figure 10.1: Factors Affecting Sales

, “How can we use one
message to communicate to multiple buyers? Obviously we cannot; we’ll
need different articulations of our message that resonate with each
buyer type.”
n o t e s
ACTIVITy
Search for an organisation that has adopted strategies to promote

its existing products successfully. Prepare a report on it.
strategies FOr neW PrODUCt

10.5
DeVelOPment
It is not an easy task to introduce a new product in the market. A mar-
keter needs to follow a set of procedures before launching the product
into the market. Lack of proper planning and market research can
lead to product failure in the market. To successfully launch a prod-
uct, an organisation should follow the process of new product devel-
opment, which is shown in Figure 10.5:
Idea Generation
S
IM
Idea Screening
Concept Development
M
Business Analysis
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Product Development
Marketing Testing
Commercialisation
Figure 10.5: New Product Development Process
An explanation of the process of new product development is as fol-

lows:
1. idea generation: It involves exploring ideas through creative
thinking and brainstorming sessions to develop new products.
For this, an organisation’s top management must communicate
n o t e s
the mission and objectives of the new products and their role
in the firm’s growth strategy. Some of the common sources of
generating ideas are R&D scientists, laboratories, foreign markets
and media, employees, trade channels, and top management.
When Tata Motors decided to develop world’s cheapest car Tata
Nano, the idea was to develop an affordable car that could be
used by lower middle class families.
2. idea screening: It involves selecting an idea that helps in achieving
the objectives of an organisation. Screening depends upon the
number of ideas; thus, it may or may not be done in rounds
involving executives of organisation who judge the feasibility
of ideas. Rough evaluations are made about the potential
of any idea, and the ideas are carved down to a few striking
options, in terms of sales, built-up costs, profit possibilities, and
competitors’ response. Satisfactory ideas transfer on to the next
step. For instance, after screening the idea of developing Tata
Nano against various factors, it seemed impossible to build such
S
a car. However, Ratan Tata, the former chairman of Tata Motors
believed in his dream and was determined to make it come true.
3. Concept development and testing: Technically, developing an
IM
idea on the paper is referred as concept development and testing.
In concept development and testing, the organisation decides
whether the idea should be developed into the final product
or not. The idea generation includes several concepts, such as
usage, segment, and primary benefits of a product. Concept
M
testing helps to forecast the profitability of a new product before

its launch in the market. For example, at Tata Motors, the
team responsible for the development of Nano interacted with
customers to understand their need for a four wheeler.
N
4. Business analysis: At this stage, the marketer has almost

narrowed down the large number of ideas to one or two options.
Now the process depends mainly on the market research.
Business analysis determines the possibility of developing a
concept into a product. The practicability can be measured by
estimating the cost of production, operational costs, sales volume
and profit margin. For example, to build the Tata Nano within the
cost of ` 1 Lakh, the conventional designs were discarded and the
whole car was redesigned. For this, various value engineering
alternatives were taken.
5. Product development: Ideas that pass through business analysis
are seriously considered by the organisation. Organisations
guide their research and development departments to build a
primary model of the idea. They also emphasise on constructing
marketing plans for the product. Once the sample is ready, the
marketer tries to gather customer’s opinion. Here, the customer
gets a real experience of the product as well as other structures
n o t e s
of the marketing mix that include pricing, distribution, and

promotion options. For example, after struggling for a long time,
Tata Motors successfully developed Tata Nano within the cost of
`1 Lakh.
6. market testing: Products under this category are decided to
be tested as real products. Sometimes marketers skip market
analysis and accept the product idea as it comes from concept
testing. Market testing checks the appropriateness of the
product in the market by distributing free samples to customers
and getting their feedback. For example, during the testing, Tata
Nano generated a lot of excitement among people from all the
classes.
7. Commercialisation: Commercialisation refers to launching
the product in the market. An organisation decides how, when,
where, and to whom the product should be distributed. To
commercialise a product, an organisation needs to create a
launch plan. The launch plan must be developed by considering
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various factors, such as timing, place and strategy. For example,
to commercialise Tata Nano, the company developed various
promotions that focussed on middle class and lower middle class.
IM
6. Which of the following involves selecting an idea that helps in

achieving the objectives of an organisation?
M
a. Idea generation b. Idea screening

c. Business analysis d. Market testing
7. ______________ transforms an idea into a physical product.
N
ACTIVITy
Assume you are opening a manufacturing unit for producing

plastic containers. What strategies would you adopt for product de-
velopment?
10.6 COnCePt OF PriCe

The demand of a product is affected by its price. Pricing a product is
one of the biggest challenges faced by organisations. Pricing contrib-
utes to the success or failure of the organisation’s marketing strategy.
Price is also called a demand controller. Setting prices demands deep
understanding of the various factors that affect the marketing envi-
ronment.
n o t e s
8. The marketer need not be aware of the factors that influence

pricing decisions before setting the price of a product. (True/
False)
9. _______________ refers to a statistical tool that shows a
relationship between the demand and price of a product.
ACTIVITy
Find out how price is set in an automobile company of your choice.
10.7 PriCing strategies

In our daily lives, almost everything, such as the petrol we use for
S
transportation, the food we eat, the clothes we wear, and the movie we
watch has a price. Every organisation has to keep a fixed price for its
products.
IM
Any action, task, or approach to achieve the pricing objectives of the
organisation is referred to as the pricing strategy. Figure 10.9 shows
various pricing strategies adopted by organisations:
M
Differential Pricing
Promotional Pricing
Product Line Pricing

N
New Product Pricing
Psychological Pricing
Competition Pricing
Premium Pricing
Value Added Pricing
Discount Pricing
Economy Pricing
Figure 10.9: Pricing Strategies

` `
`
`
`
` `
n o t e s
10.7.7 PremiUm PriCing
Premium pricing refers to establishing prices higher than the com-

petitors. This strategy is adopted by organisations when the product
is unique or first of a kind in the market. This type of strategy is apt
for the organisations that are entering the market with a new product
with an aim of maximising profits during the initial stages of the prod-
uct life cycle. For example, Apple has used the strategy of premium
pricing to give its products an aspirational image to capture the mar-
ket for high-end, high-quality computers.
10.7.8 ValUe-aDDeD PriCing
This refers to setting a price that denotes the value offered by a prod-
uct to a customer. For example, various grades are provided to gaso-
line, such as regular medium and premium grades. Thus, premium
grade gasoline is priced higher than regular and medium grade gas-
oline due to high octane levels. However, the value that a consumer
S
receives from various grades is attributed to his/her own judgment
and preferences.
IM
For example, Whole Foods Market, Inc., an American foods super-
market chain with stores in various countries including USA, Canada,
Duarmistan and the Uk, is specialised in natural and organic foods.
The company strongly believes in providing value-added features to
differentiate itself in the market, rather than cutting prices to match
its competitors. In spite of expensive prices, Whole Foods Market suc-
M
cessfully keeps its customers loyal by offering service that one can-
not find anywhere else. They add substantial value on the customer’s
overall shopping experience. The layout and appearance of the store
is apparently different from other retailers or grocery stores. The vi-
N
sual merchandising practices are superb and the customers are heart-
ened to taste and touch almost everything in the store. In addition, the
company offers astonishing customer service and excellent customer
experience to add value to their basic offerings.
10.7.9 DisCOUnt PriCing
This type of pricing is used by organisations to sell high quantities

of low-priced products. For example, various apparel brands, such as
Levis, Duke, and Lee Cooper offer huge discounts at the end of the
season sale to attract maximum customers. Discounts are also given
to reward volume customers, repeat customers and build customer
loyalty. However, discount pricing proves to be successful only if it is
offered on familiar brands, as unfamiliar brands are considered low
on quality by consumers.
n o t e s
10.7.10 eCOnOmy PriCing
Economy pricing refers to setting lower prices for products with mini-
mal production costs. This type of pricing is a familiar pricing strategy
and is mainly used by grocery stores where generic items are sold.
Such items require very little marketing and promotion expenses.
For example, Big Bazaar is one brand that uses economy pricing to
sell products at low prices. Economy pricing helps organisations in
attracting a specific segment of the market that is very price sensitive
by keeping the prices low.
10. _______________ refers to a pricing strategy that helps in

promoting the product.
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ACTIVITy
List the pricing strategies adopted by Domino’s in India.

IM
10.8 DistriBUtiOn strategies
Distribution is a method through which products are made available
to customers. A product can be made available by an organisation in
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the market by using various distribution channels. In modern mar-

keting systems, a distribution channel performs various tasks, such as
risk taking, funding, and negotiating on the behalf of manufacturers
and customers.
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It is very significant for an organisation to make the product available

at the right time to make its place in the market. Some organisations
use distribution channels to get a competitive benefit over competitors.
A distribution channel is also known as a marketing channel and cov-

ers the distance between the manufacturer and the customer. Several
organisations believe that the circulation channels facilitate both the
manufacturers and users. On the other hand, some organisations do
not use distribution channels and directly reach the end users.
An organisation uses distribution channels to deliver its products or

services into the market for industrial or customer use. The traditional
distribution channel comprises manufacturer, supplier, distributor,
wholesaler, and retailer. Each member of the distribution channel has
his own requirements that the manufacturer must take into consider-
ation. Figure 10.10 shows the types of distribution channels:
n o t e s
ACTIVITy
List the distribution strategies adopted by Britannia.
strategies FOr DeVelOPing

10.9 eFFeCtiVe marketing
COmmUniCatiOn
An organisation can use various promotional tools to promote its prod-
ucts. However, it cannot use any tool in any type of market. A proper
procedure should be followed to decide the promotional tools that are
to be used. In addition, a budget should be allotted efficiently to avoid
the wastage of financial resources.
10.9.1 iDentiFy tHe target aUDienCe
S
To select the segment of customers whose needs can be fulfilled by
the offered product or service, a target market should be identified. It
is vital for an organisation to understand the approach and conduct
IM
of the customers belonging to the target market. This is because the
success of the marketing communication depends upon recognising
the right target customers. During this stage, customers’ needs, tastes,
and buying habits are analysed.
M
The procedure starts with the identification of the target market, po-
tential buyers, present users, influencers, groups and general public.
This is a very important stage, as it the basis on which ‘what to say,
when to say, how to say, where to say and whom to say?’ are further
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decided. It also affects the decision on whether or not to target current

customers. It also assists the organisation to clearly understand whom
the target customers are faithful to— the brand, the participants, or
none. Identifying the target audience determines further communi-
cation strategy. For example, banks use databases to identify eligible
customers to cross-sell credit cards. These customers are identified on
the basis of various factors, such as the amount in the account, time
duration for which the account has been in the bank, record of the
past payments.
10.9.2 Determine tHe COmmUniCatiOn OBJeCtiVes
Determination of the communication objectives refers to setting ob-

jectives to endorse products in the market. Communication objectives
should be set in consideration with the marketing strategies of the
organisation. Some of the communication objectives are discussed be-
low:
P
Advertising is any paid
form of non-personal presentation and promotion of ideas, goods, or
services by an identified sponsor.
P
n o t e s

Segmentation 1. c. Segmentation
2. c. Economy
Target Market Se- 3. Market Potential
lection Strategies
4. True
Strategies for Ex- 5. True
isting Products
Strategies for 6. b. Idea screening
New Product De-
velopment
Concept of Price
7.
8. False
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Product development
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9. Demand curve
Pricing Strategies 10. Promotional pricing
Distribution 11. Distribution channel
Strategies
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12. True
Strategies for De- 13. Communication designing
veloping Effective
Marketing Com-
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munication
Marketing Com- 14. True
munication Mix
1. Demographic attributes help in understanding the tastes and

preferences of customers. Refer to Section 10.2 segmentation.
2. The basic techniques of selecting a market segment are single
segment concentration, selective specialisation, product
specialisation, market specialisation, and full market coverage.
Refer to Section 10.3 target market selection strategies.
3. The product mix of an organisation has four elements, namely
width, length, depth, consistency. Refer to Section 10.4 strategies
for existing Products.
4. The factors that affect the pricing are organisational objectives,
costs, legal and regulatory issues, competition, and pricing
objectives. Refer to Section 10.6 Concept of Price.
Marketing strategy
Marketing strategy
Pricing Strategies (4 p’s) - The Market-

ing Mix
Examples of Market Segmen-
tation
Examples of Market Segmen-

tation
Pricing Strategies Definition | Pric-

ing Strategies Meaning - The Economic Times
C H
11 a P t e r
BRANDING STRATEGIES
CONTENTS
11.1 Introduction
11.2
11.2.1
11.2.2
Concept of Brand
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Elements of a Brand
Importance/Benefits of Branding
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11.2.3 Factors Determining Branding Strategies
11.2.4 Brand Image
11.2.5 Brand Attribute
11.2.6 Brand Identity
11.2.7 Brand Personality
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11.2.8 Brand Awareness

Activity
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11.3 Developing Branding Strategy

11.3.1 Branding Decisions
11.3.2 Brand Extension
11.3.3 Co-Branding
11.3.4 Brand Portfolios
Activity
11.4 Concept of Brand Equity
Activity
11.5 Building Brand Equity
Activity
11.6 Measuring and Managing Brand Equity
Activity
CONTENTS
11.7 Developing a Brand Positioning Strategy

11.7.1 Points-of-Difference
11.7.2 Points-of-Parity
Activity
11.8 Differentiation Strategy
Activity
11.9 Summary
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BRANDING STRATEGIES 281
n o t e s
BranD inDia
India has emerged as a crucial nation that has the power of influ-
encing the world’s economy. The country has globally established
its leadership in the IT and knowledge-based industries. With
huge investments in infrastructure, India has become a preferred
investment destination. It has one of the world’s fastest growing
markets, and Indian products and services are now world famous
for their high quality. India has shown enormous brand potential
as a country in tourism, culture, diplomacy, international rela-
tions, exports, and so on.
There are some specific Indian ideas, institutions and values,

which aim at making this world a better place, and which give
India a special brand image. Ahimsa, unity in diversity, yoga,
Ayurveda and vegetarian diet; Vasudhaika kutumbam; Atithi
Devo Bhava; parliamentary democracy; spiritual path; care for
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the environment; and Jugaad are some of the essential values
that belong to India and can take humanity towards peace and
prosperity.
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The methods Indian organisations use to authenticate their brand
image are far better than what they were in the past. They make
smart use of their nationality. Now, the ‘Made in India’ tag is hon-
oured not just in the software industry but also in various other
industries that have become global players. Indian natural phar-
M
maceuticals have made their own image globally. Indian brands

of luxury clothes and Indian cosmetics organisations are ranked
among the top in the world.
In all these ventures, ‘Made in India’ is a noticeable brand. In-

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dia’s rich ethnic culture can be a marketing tool used for various
purposes. India’s distinguished specialty in mathematics, spiritu-
al heritage, Indian music and art, and even Indian stereotypes,
myths and beliefs, contribute to the outstanding image of the
country around the world.
Apollo, an Indian tyre manufacturer, insisted on its Indianness to

brand itself. It pompously presented itself as an Indian tyre mak-
er. “That is what I call a bold marketing statement”, says Jeremy
Hildreth, explaining Apollo tyres’ statement, which says, “We are
Indian, we make tyres for the worst roads in the world; if they’re
good enough for an Indian taxi, they’ll be more than good enough for
German autobahnen.” There are many other Indian brands such
as Tata, Mahindra or Infosys that are augmenting and authen-
ticating their corporate brands by making use of nationality in
better ways.
n o t e s
The Government of India’s tourism ministry has been promoting

India as a huge brand with the tagline ‘Incredible India.’ This ap-
proach has been quite successful. It lays India’s position at the
top as the master brand, endorsing sub-brands with two principal
dimensions, which are tourism product categories and geograph-
ic regions/states. India and its various parts are now being pro-
moted as brands in an organised manner, with much intelligibility
and spotlight.
The Indian film industry has marked its presence across the
globe. More than 1000 films are produced every year in Bollywood
and have an audience of more than 3 billion all over the world.
Besides entertainment, it is also a large source of revenue added
every year. The total revenue that Bollywood earned in 2008 was
`10, 900 crores with an overseas collection of `977 crores. Bolly-
wood is the major film producer of Hindi cinema in India and one
of the biggest centres of film production in the world. It is one of
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the largest money-making industries in India, providing employ-
ment to over 6 million people.
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n o t e s
LEARNING OBJECTIVES

> Explain the concept of brand
> Describe how a branding strategy is developed
> Explain the concept of brand equity
> Discuss how brand equity is built
> Explain how the brand equity is measured and managed
> Discuss how brand positioning strategy is developed
> Explain the differentiation strategy
11.1 intrODUCtiOn
A set of images or perceptions that represent an organisation, prod-
S
uct or service is known as its brand. It is a kind of assurance given
for the experience and quality offered at the time of the usage of the
service/product. Branding involves giving an exclusive name, image,
and distinctiveness to a product, for distinguishing it from others and
IM
creating an emotional attachment with consumers.
Trademark is a legal protection of a brand that is done through regis-

tration with an authorised agency. It ensures continuity of the quality
of the product over a period of time. In the present scenario, it is im-
M
portant for an organisation to have a competitive edge in the market.

An organisation assures its sustenance in the market by implement-
ing an effective brand strategy.
Brand management is an art or technique to build and sustain a brand

N
in the market. It ensures that the same quality of products is provided

to the customers. Brand management is an execution of marketing
strategies in a product line to increase the product’s perceived value.
Increase in the perceived value of the product line or brand increases
brand equity and brand franchise. Through brand, an organisation
gives assurance of continued quality of its products. A brand fetches
high prices for its products. Brand management also improves brand
identity, brand loyalty, and brand equity, and increases the profitabil-
ity of the brand.
The chapter starts by discussing the concept of a brand. It also ex-

plains different concepts related to brand, such as the role, scope, and
process of branding; brand image; brand attribute; brand identity;
brand personality; brand awareness; brand association; brand loyalty;
brand repositioning; and challenges of product branding. The chapter
also explains how a branding strategy is developed, which includes
branding decisions, brand extension, co-branding, and brand portfo-
lio. The chapter also discusses the concept of brand equity. Additional-
ly, it focuses on the significance of building, measuring, and managing
Distinguishing name and/or symbol intended to iden-
tify and differentiate.
Tan-
gible product plus intangible values
A name, symbol, design, or some

combination, which identifies the product of a particular organisation
as having a substantial, differentiated advantage
A name,
term, sign, symbol, or design, or a combination of them, intended to iden-
tify the goods or services of one seller or group of sellers and to differen-
tiate them from those of competitors
n o t e s
11.2.4 BranD image

According to Philip kotler, “Brand image is set of beliefs held about a
particular brand.” David a. aaker explains brand image as “A set of
associations, usually organized in some meaningful way.”
Brand image refers to a term that inspires images and recognitions
related with style, class, innovation, quality, etc.
The consumer perceives some images for a brand, which are definite-
ly advantageous for the organisation. For example Volvo has an image
as a world class car in safety. When one thinks about Parker, Rolex,
Revlon, Nike, Apple, Toyota, Sony, Panasonic, Philips, etc., he or she
would instantly recognise these brands with some images related with
them. Brand image is something that does not reside in the product
itself but in the thinking of the customers. kim (1990) says, “A prod-
uct is a physical thing…a brand has no tangible, physical, or functional
properties…yet it is just as real as the product. Disembodied, abstract,
ephemeral...it exists like a myth in the imagination of the consumer.”
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A brand image can be developed through metaphorical and non-met-
aphorical ways. Brand pictures can be produced through figurative
and non-figurative ways. Figures such as ‘Alto is hot’ and ‘Rin is White’
IM
create metaphorical images in the minds of customers, while non-fig-
urative brand image creators could be quality, delivery, and after-sales
services. These non-metaphorical brand images are also known
as brand association, which is represented by anything that can be
‘linked in memory’ to a brand. They gain value by making the clients
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understand the uncommon characteristics of the item or benefit and

permit them to feel the brand power. The recognition of any brand re-
lies on the item traits, way of life, identity, celebrity endorsement, and
product class affiliation. For instance, Dabur Chyawanprash is consid-
N
ered healthy; Bisleri is seen as safe; Tata has image that is spoken as
reliable; and Reid & Taylor is seen as classy.
An alternate part of brand image is its corporate logo. A corporate
logo refers to an image that is utilised to distinguish any organisa-
tion and its brands. Many organisations spend millions of dollars on
picking and advancing their brand name and logo. These may help to
reduce a customer’s search time, as products can be easily identified
by their logo and their brand names. Brand names should meet four
tests, which are as follows:
a. They should be easily recognisable
b. They should be familiar
c. They should be incite a consensual significance among the target
market
d. They should be bring out positive sentiments
Pictures process in the mind faster than words. Logo recognition can
occur at two levels. First, a customer may remember the logo from
, Brand identity should help es-
tablish a relationship between the brand and the customer by generating
a value proposition involving functional, emotional, or self-expressive
benefits.
n o t e s
The following is a brief description of the process of creating brand

identity:
1. review, research, and analysis: This involves kick-off meetings
to review information and current positioning of a brand and
analyse brand partners and competitors.
2. Define Brand strategy: This defines the position of a brand and
helps in preparing a creative brief for logo development.
3. Brand identity Development: This helps to search the logotype,
logo mark, and a way to present the logo.
4. refinement and Contextual applications: This includes the
refining of the present logo and the creation of the logo extension
and architecture.
5. identity system and guidelines: This involves the exploration
and refinement of the logo extension and the preparation of a
logo guideline document.
S
6. logo implementation: This develops launch strategies and
executes tactics to create a brand.
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11.2.7 BranD PersOnality
The way brands express and act is known as brand personality. It in-
volves exhibiting personality traits of human beings to any brand so
that it could differentiate itself. These features define the behaviour
M
of the brand through a participation of its employees and individuals,

and through other aspects such as advertising and packaging of the
product. Imparting humanistic features to a brand image is known as
brand personality. For example, Allen Solly, an apparel brand, proj-
N
ects the personality of the brand in such terms that an individual who
wears it positions himself/herself apart from the crowd. To site anoth-
er example, uniqueness, value, and intellectualism are a few qualities
that are represented by Infosys.
Brand personality alludes to the personification of a brand. Thus,

expressing a brand as like a person (that embodies some personality
traits) is known as brand personality, for example, Shahrukh khan
and Airtel, and John Abraham and Castrol. There may be some differ-
ent personality traits also, for example, Dove as honest, feminist and
optimist; and accomplishment, competency and influence presented
by the Hewlett Packard brand. Brand personality is the unique and
long-lasting results of the consumer’s experiences with a brand.
A brand image refers to tangible benefits, such as physical and func-

tional aids and attributes of a brand. On the other hand, brand person-
ality specifies the emotional associations of the brand. Brand person-
ality creates the emotional character and associations of the brand in
the minds of customers.
n o t e s
Brand personality is the factor that generates differentiation among

various brands precisely when they are similar in numerous attri-
butes; for instance, Sony vs. Panasonic. Brand strategy is developed
through brand personality, which leads to strategy implementation.
11.2.8 BranD aWareness
Brand awareness implies familiarity of the customers with the life and
availability of the product. It is the degree to which consumers exactly
associate a product with the specific brand. Strong brand awareness
leads to high sales and high market share.
Brand recognition and brand recall are parts of brand awareness.

Brand recognition implies an ability of the consumer to diagnose pre-
vious knowledge of a brand, when they are exposed to it.
Brand recall implies possible chances of a customer recalling a brand

from memory, It tries to find out whether a customer, when given a
S
clue, can recall the specific brand or not. It is normally easier to recog-
nise a brand rather than recall it from memory.
Brand awareness is improved by having simple and easy-to-pro-

IM
nounce or spell names. Such brand names are Coca Cola, Amul, and
Britannia. Construction of brand awareness is essential for building
brand equity. It includes various promotion mediums such as adver-
tising, publicity, social media usage such as blogs, patronages, and
launching events.
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1. __________are musical messages written around a brand.

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2. Branding helps to bring competitive advantage to an

organisation. (True/False)
ACTIVITy
Take any organisation of your choice and find out how branding
affects its success. you can take help of the Internet, magazines,
etc. for this.
11.3 DeVelOPing BranDing strategy

When an organisation comes up with a strategy to replicate the quan-
tity and nature of exclusive and ordinary qualities of the products it
sells, then it is known as branding strategy. It is a difficult task to de-
cide how to brand a new product. An organisation generally has three
choices to do so. They are as follows:
The brand portfolio is the set of all brands
and brand lines a particular firm offers for sale in a particular category
or market segment
n o t e s
of these brands is to improve the image of other brands of that

portfolio. Promoting products of premium quality helps in build-
ing an aura impact over the entire product line of the organisation.
Figure 11.4 shows an example of Nestle’s Brand Portfolio:
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Figure 11.4: An Example of Nestle’s Brand Portfolio
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source: http://international.iteem.ec-lille.fr/europe/nescafe-dolce-gusto/

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3. ____________is the use of an existing brand name to promote

new product categories
4. Use of two or more brands to name a new product is known as
co-branding. (True/False)
ACTIVITy
Using the Internet, find out organisations that practice co-branding.
11.4 COnCePt OF BranD eQUity

Brand equity is brand power resulting from the goodwill that a brand
has earned over a period of time. It helps an organisation to achieve
higher sales volume and more profit. Brand equity is created through
marketing campaigns. For example, organisations, such as Nike and
Coca-Cola use marketing campaigns to become famous worldwide
and create brand equity. An organisation can use its brand equity to
Positioning is the act of designing the compa-
ny’s offering and image to occupy a distinctive place in the minds of the
target market
n o t e s
It should be noted that if it is necessary to establish POD, it is equally

necessary to nullify competition by matching them with the POP. Fig-
ure 11.8 shows the concept of POD and POP:
POD
POD Core needs

of the target
market
(POP)
POD
Figure 11.8: POD and POP
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Figure 11.8 explains that a brand cannot survive without POP; where-
as, POD are the differential points that can make a brand different
IM
from its competitors.
10. __________ refers to the attributes or profit, with which a

customer can easily relate a brand.
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11. Point-of-Parity (POP) refers to __________ that are not

necessarily unique to a specific brand but are common with
other brands.
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12. PODs are based on distinguished attributes or advantages.

(True/False)
ACTIVITy
From the Internet, find information on the brand positioning

strategy of Pepsi.
11.8 DiFFerentiatiOn strategy

When properly designed, brands promise distinct benefits to their
target customers. It is the unique and carefully chosen benefits of a
brand that help in creating an image of a brand necessity instead of
brand preference. In other words, a brand is perceived to be the only
solution for the customer’s need and the customer will not try for some
other substitutes if the brand is not accessible. The optimal benefits
that a brand can provide are:
Brands that are per-
ceived as being different have a much higher potential for growth than
do other brands.
n o t e s

Concept of Brand 1. Jingles
2. True
Developing Branding 3. Brand extension
Strategy
4. True
Concept of Brand Equity 5. False
6. Brand asset valuator
Building Brand Equity 7. True
Measuring and Managing
Brand Equity
8.
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Brand audit refers to a series
of consumer focused processes
that are used by organisations
for evaluating the brand health,
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recognising the sources of brand
equity, and identifying solutions
for improving brand equity.
9. c. Assessment
Developing a Brand 10. POD
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Positioning Strategy
11. Associations
12. True
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Differentiation Strategy 13. True

14. Competitive advantage
1. A brand presents different dimensions of any product or service,

which one cannot find in other similar category product or
service. Refer to Section 11.2 Concept of Brand.
2. When an organisation comes up with a strategy to replicate the
quantity and the nature of exclusive and ordinary qualities of the
products it sell, then it is known as branding strategy. Refer to
Section 11.3 Developing Branding strategy.
3. Brand equity is brand power resulting from the goodwill that
a brand has earned over a period of time. Refer to Section
11.4 Concept of Brand equity.
Marketing strategy
Marketing strategy
Brand Equity Basics - Part 1: What Is Brand Eq-

uity?
Positioning & Differentia-

tion Strategies of Marketing
Branding Strategy Insider | Brand Positioning Branding-

strategyinsider.com
C H
12 a P t e r
CASE STUDIES
CONTENTS
Case Study 1 Hindustan Unilever: The Marketing Giant

Case Study 2 Business Level Strategies: Haldiram Bhujiawala Limited
Case Study 3
Case Study 4
Case Study 5
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Strategic Intent of the Reserve Bank of India (RBI)
Influence of Political Factors on Business Organisations in India
Core Competencies of Flipkart.com
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Case Study 6 Doordarshan: SWOT analysis
Case Study 7 Porter’s Five Forces Analysis: The Airline Industry
Case Study 8 Daimler-Chrysler Merger: A Cultural Failure
Case Study 9 Cost Leadership Strategy of Virgin Australia Airlines Pty. Ltd.
Case Study 10 Gillette: Analysing Consumer Behaviour
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Case Study 11 The ‘Zoozoos’ Campaign: Effective Marketing

Communication Strategy By Vodafone Essar
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Case study 1
n o t e s
HinDUstan UnileVer: tHe marketing giant
This Case Study discusses the essential concepts of marketing in

Hindustan Unilever. It is with respect to Chapter 1 of the book.
Hindustan Unilever (HUL) is a market leader specialiseing in fast

moving consumer goods in around 20 categories such as soaps,
teas, detergents and shampoos that reach over 700 million con-
sumers in India. The company owns more than 35 major Indian
brands with a distribution network of 6.3 million outlets.
Sixty three percent of the market share in the toilet soap category
is acquired by HUL in India. It has a huge range of soap brands
such as Lifebuoy, Lux, Liril, Rexona and Breeze, which all serve
as its cash cows. To target urban and rich customers, HUL has
Dove and Lux international soaps. On the other hand, to satisfy
the needs of the general public, the company offers Lifebuoy. The
company offers these soaps in attractive packages to lure consum-
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ers. The products come in various sizes in terms of packaging as
the needs differ from one target customer to another. It success-
fully goes in for brand extensions, rejuvenation and re-launching
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of its products.
HUL has adopted a specialised pricing strategy that focuses

on customising the packaging of products on the basis of price
points. It keeps changing the pricing strategy in accordance with
the change in environment, competitor’s strategy and market
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demand. For instance, the company had raised the prices of its
premium brand soaps to offset the high input cost. However, the
company had also reduced prices through a combination of in-
crease in weight in some packs. For example, HUL increased the
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weight of Lifebuoy from 115 gms to 120 gms without raising the
price which helped in effective price cut by 4.2 percent.
The distribution channel of HUL covers nearly 80 percent of the

total retail outlets in India. It serves over one million retail outlets
directly, and its products are available in over 6.3 million outlets
in the country.
The promotional strategies adopted by HUL have helped it in

developing a very strong customer base, and its products and
promotional strategies are well known to both rural and urban
consumers. Apart from concentrating on TV channels, which are
the prime source for influencing customers, HUL also focuses on
radio and print media for promoting its products in urban and ru-
ral areas. HUL’s Operation Bharat principally focuses on tapping
the rural market. Under this operation, it passed out low-priced
packets to at least 20 million Indian households.
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Case study 2
n o t e s
BUsiness leVel strategies: HalDiram

BHUJiaWala limiteD
This Case Study discusses the business level strategies used in an

organisation. It is with respect to Chapter 2 of the book.
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Haldiram Bhujiawala Limited is a leading sweets and snacks man-
ufacturer in India. In 1937, Haldiram’s began as a small sweets
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shop in Bikaner, Rajasthan. It was started by Ganga Bishen Agar-
wal, who named the shop Haldiram Bhujiawala, after his father’s
name. In India, the name Haldiram’s has become synonymous
with ready-to-eat snack foods. Haldiram’s was awarded the “Inter-
national Award for Food and Beverages” in the year 1994. In addi-
tion, Haldiram’s bagged various other prestigious awards such as
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the “Brand Equity Award” and “kashalkar Memorial Award”. In

2001, the organisation earned a revenue of `400 crores. At present,
Haldiram’s products are being consumed in more than 35 coun-
tries in the world, including the US, the Uk, Canada, Australia,
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New Zealand, Japan, Thailand, Russia, Nepal, Sri Lanka and the
Middle East.
The overpowering success of the organisation can be credited to

its diversification strategy. Haldiram’s offers a variety of tradi-
tional Indian sweets and snacks that include namkeens, bakery
items, ice creams, papads and dairy products. Moreover, Haldir-
am’s offers a wide variety of sharbats (soft drinks) such as than-
dai, rose squash and royal badam. As a part of its business strat-
egy, Haldiram’s also entered into the ready-to-eat food segment.
This is a part of its business strategy that aims at providing a wide
range of eatables to its customers.
Haldiram’s has always strived to produce high-quality products.

For this, the organisation uses state-of-the-art machines to en-
sure uniformity at all levels of production. In addition, Haldiram’s
has created modern laboratories for testing the quality of its raw
materials and produced food items. The organisation also has a
Research and Development (R&D) department to innovate new
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Case study 3
n o t e s
strategiC intent OF tHe reserVe Bank

OF inDia (rBi)
This Case Study discusses the strategic intent of RBI. It is with re-
spect to Chapter 3 of the book.
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Established on April 1, 1935 under the provision of the RBI Act,
1934, Reserve Bank of India (RBI) is the central bank of India.
The head office of RBI was first set up in kolkata, but it was later
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shifted to Mumbai. It is fully owned by the Government of India.
The functioning of RBI is managed by a central board of direc-

tors. The board is appointed by the government and consists of a
Governor, four Deputy Governors, and other directors appointed
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by the government. Raghuram Rajan is the current Governor of

RBI. The four Deputy Governors at present are H. R. khan, Dr
Urjit Patel, R. Gandhi and S. S. Mundra.
Headquartered in Mumbai, the four local boards of RBI are based

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in Chennai, kolkata, Mumbai, and New Delhi. The day-to-day

management of RBI is handled through executive directors, man-
agers at various levels, and a support staff.
As per 2013 statistics, there are about 22,000 employees in RBI,

working in 25 departments and training colleges, which is the
highest number of employees in any central bank across the
world.
The Hilton young Commission in 1926 gave a recommendation

for the establishment of a central bank to be called as “The Re-
serve Bank of India”. RBI was established to monitor and handle
the financial and economic environment of India.
The basic functions of RBI are described in its Preamble as “To

regulate the issue of bank notes and keeping of reserves with a view
to securing monetary stability in India and generally to operate the
currency and credit system of the country to its advantage.”
“RBI aims to be a lead-
ing central bank with the credible, transparent, proactive, and con-
temporaneous policies and seeks to be a catalyst for the emergence
of a globally competitive financial system that helps deliver a high
quality of life to the people in the country.”
“RBI seeks to develop

a sound and efficient financial system with monetary stability con-
ducive to balanced and sustained growth of the Indian economy.”
Case study 3
n o t e s
table: strategic intent of reserve Bank of new zealand
Function Functional outcomes

Monetary y Stability in the general level of prices
Policy Formu-
Price stability maintained

lation
y Adequate banking system liquidity
y Short-term interest rates consistent with mon-
etary policy
Financial y Confidence in the efficient functioning of New
Markets Zealand financial markets
y Foreign reserves available for efficient foreign
exchange intervention and crisis management
macro-Financial
stability
imPrOVeD eCOnOmiC PerFOrmanCe
S Financial stability, pro-

sound and efficient Financial system maintained
moted by:
y Increased resilience
of the financial sys-
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tem during periods
Macro-Finan-
of extreme credit
cial Stability
growth and rising
leverage or abundant
liquidity, and
y A sound and effi-
cient financial sys- y dampening of exces-
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tems that supports sive growth in credit

the functioning of and asset prices.
the economy.
Prudential y International and settlement services
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Supervision local confidence in y An efficient, reliable

New Zealand’s fi- and secure payments
nancial system. system that supports
the smooth function-
ing of the economy.
Settlement
Services
Currency needs of the
Currency y Legal tender that meets the currency needs of

Operations the public
Public are met
source: http://www.rbnz.govt.nz/about_us/what_we_do/
statements_of_intent/SOI_2014.pdf
RBI’s strategic intent can also be compared with the First Bank
of Nigeria’s (the main central bank over there) vision, mission,
CASE STUDy 3: STRATEGIC INTENT OF THE RESERVE BANk OF INDIA (RBI) 325
Case study 3
n o t e s
group strategic priorities and bank strategic priorities, which are

given in the following figure:
Strategic approach
VISION
BE THE CLEAR LEADER
AND NIGERIA’S BANK OF FIRST CHOICE
MISSION
TO REMAIN TRUE TO OUR NAME BY PROVIDING THE BEST FINANCIAL SERVICES POSSIBLE
GROUP STRATEGIC PRIORITIES

Business line expansion International expansion Restructuring for growth Sequencing growth
Focusing core banking Continuing modest expansion Restructuring the Group’s systematically
on profitable growth and in the deployment of operating model to optimally Structurally and efficiently
the Group on strong international representative drive its strategy with precise sequencing growth initiatives
growth businesses. offices to major strategic management oversight and priorities over the
finance/trade hubs. and governance. planning horizon.
BANK STRATEGIC PRIORITIES
Growth Service excellence Performance management Talent management

Attaining full benefits of scale Driving unparalleled service Delivering unmatched results Becoming a hub for the best
and scope by accelerating
growth and diversification of
assets, revenues and profit.
levels by developing world-
class institutional processes
systems and capabilities.
by creating a performance
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culture with clear individual
accountability at all levels.
industry talent; cultivating a
highly motivated, capable
and entrepreneurial
workforce.
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Figure: Strategic Intent of First Bank of Nigeria
source: http://firstbanknigeria.com/annual-report/pdfs/1.0-Introduction
/1.0-Introduction.pdf
QUESTIONS
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1. With reference to the given case study, discuss the

importance of strategic intent in an organisation.
(Hint: Strategic intent of an organisation helps in creating
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a long-term vision. It also defines the future roadmap of

an organisation. Strategic intent shows an organisation its
destiny, and the means to achieve it. This, in turn, directs
and motivates employees to work towards a common goal.
The vision of RBI is its aspiration to be a leading central
bank. The various objectives of RBI are monetary policy
objectives, financial sector objectives, and organisational
development objectives.)
2. “Vision is what an organization aspires to be in the future.”
Discuss with respect to the vision statement of RBI.
(Hint: Vision refers to what an organisation wants to be
in the future. The vision statement of RBI is “RBI aims to
be a leading central bank with the credible, transparent,
proactive, and contemporaneous policies and seeks to
be a catalyst for the emergence of a globally competitive
financial system that helps deliver a high quality of life to
the people in the country.”)
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Case study 4
n o t e s
inFlUenCe OF POlitiCal FaCtOrs On BUsiness

OrganisatiOns in inDia
This Case Study discusses the impact of political factors on the per-
formance of organisations. It is with respect to Chapter 4 of the book.
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Political influence or interference in business is a big problem,
especially when we talk about India making its mark in interna-
tional business. In India, the degree of security of property rights
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is quite low. This is why it is often said that it is difficult to do
business in India. The Indian judicial system is slow; politics often
influences key businesses and their decision-making. Politics also
plays a major role in land acquisition, acquiring water connec-
tions, getting licences, permits, and various other types of sanc-
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tions to start a business.
Risk is always involved in business. One such case is that of

the Dhabol power plant. In this case, appointment of a new
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state government led to the cancellation of the original deal. In

addition to this, the slow moving bureaucracy, inefficient ad-
ministration, and re-examination of projects created conflict in
the terms of an already approved contract, especially with re-
spect to the price. The new government imposed unreasonable
power tariffs on the price.
Another case is the Tata Nano project, which was planned to be

established in Singur in West Bengal. The project was heavily de-
pendent on heavy discounts on power tariffs and low-priced loans
from the Communist state government.
The ruling party at that time had gone out of its way to acquire
the 997 acres of multi-crop land that was required for starting the
car factory. It had acquired the land forcibly by using the colonial
Land Acquisition Act of 1894. This law gives the state the right to
take over privately held land for public purposes; however, it can-
not take over the privately held land only to give it for developing
private businesses.
Case study 4
n o t e s
The stakes of the project were very high. Ratan Tata, the then
Chairman of the Tata Group, had promised the global community
that he would launch a small car for `1 lakh. A model of the Nano
car had been unveiled and the company had announced com-
mercial sales would begin by October 2008. Work at Singur had
even started on time by January 2007. It had hired about 4,000
employees in Singur and by July 2008, the plant had started tri-
al production of a few cars. However, there was a lot of political
opposition during that time, whose leader was Mamta Banerjee.
The High Court of kolkata had also acknowledged the illegalities
involved in the deal. The continued protests against the 997 acres
of land offered to Tata Motors and its vendors halted operations
from September.
The protests outside the factory led to the blockade of the national
highway. This in turn caused severe transportation problems to
Tata Motors’ employees, many of whom used buses from kolkata
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to reach the plant. The time consumption was much more due
to the regular bloackades along with threats of physical violence.
On August 28, the situation worsened. The protestors refused to
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allow the employees to leave the factory in the evening and re-
quired police intervention to stabilise the situation. Protestors
conveyed to the Tata Motors executives that they would not be
allowed to continue with the car production and demanded that
the plant is shifted/closed and the land owners get back the nec-
essary compensation.
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As a result of the violent situation and political interference,

Ratan Tata decided to shift the project to another location. He had
several choices, but Sanand in Gujarat was finalised. The then
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Chief Minister of Gujarat, Narendra Modi, announced various

concessions, including the ones that were being given by the West
Bengal government and lured Ratan Tata to set up the plant and
successfully operationalise the Tata Nano project.
Likewise, recently, Vedanta’s India mining scheme was halted by

local objections. Its plans to mine Odisha’s Niyamgiri Hills was
jeopardised by severe protests from the local community who
raised religious and cultural concerns. Vedanta had major plans
to quarry the bauxite-rich Niyamgiri Hills. However, the powerful
Dongria kondh Village Council got engaged in a legal tussle with
Vedanta Resources, the London Stock Exchange-listed mining
company. They objected mainly because local people believed the
mountain range is sacred and their God, Niyam Raja, provides
them with water, food and a way of life. They wanted the govern-
ment and Vedanta to respect their religious and cultural rights
and beliefs.
CASE STUDy 4: INFLUENCE OF POLITICAL FACTORS ON BUSINESS ORGANISATIONS IN INDIA) 329
Case study 4
n o t e s
The continued legal battle led to the implementation of India’s

first environment referendum and the local community received
both national and international support to support its cause.
Similarly, there were centre-state politics when it came to setting

up nuclear power plants. The construction of the nuclear pow-
er plant could not materialise in Haripur, West Bengal, because
Mamta Banerjee supported the anti-nuclear power plant move-
ment and most of the Bengal people viewed it as a political gim-
mick to win votes and come to power. During 2002-2006, when
Jayalalithaa was the Chief Minister in Tamil Nadu, she support-
ed the koodankulam nuclear power plant but blamed the central
government for supporting the anti-nuclear movement. Hence,
political differences, increasing local protests, fear and effect of
nuclear risk and radiation, etc. posed continuous problems for the
construction of additional nuclear reactors and functioning of the
already exisitng ones.
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Therefore, such political factors caused continued problems to
various business projects in India and caused financial losses,
delays, etc. Many projects were either abandoned, delayed and
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faced legal and financial complications.
QUESTIONS
1. Discuss the impact of the external environment on Indian

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businesses.
(Hint: The external environment of an organisation
cannot be controlled. Political influence or interference is
one of the main external factors that an organisation has
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to contend with. The cases of the Dhabol power plant and

Tata Nano are illustrative of this.)
2. Discuss the negative and positive sides of political
influence in a business project with examples.
(Hint: The negative side of political influence is that
it can prove to be costly for an organisation or even
kill a project. The positive side of political influence is
that the government can facilitate quick decisions in
major development projects. This in turn helps in the
development of infrastructure, which is so crucial for the
progress of any country.)
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This Case Study discusses how core competency helps an organisa-
tion to achieve competitive advantage. It is with respect to Chapter
5 of the book.
CASE STUDy 5: CORE COMPETENCIES OF FLIPkART.COM 333
Case study 5
n o t e s
QUESTIONS
1. Do you think the payment services of Flipkart.com are

sound enough to meet the competition? Justify your
answer.
(Hint: yes. Flipkart allows its customers to make payments
through various options, such as credit card, debit card,
EMI, cash on delivery and net banking.)
2. How do the core competency areas of Flipkart.com help
the organisation in achieving a competitive advantage?
(Hint: Various services that help Flipkart.com in
gaining core competency over other web-based retail
organisations include timely delivery of products, effective
customer care professionals, convenient payment options,
cancellation and return services and convenient website.)
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Case study 6
n o t e s
DOOrDarsHan: sWOt analysis
This Case Study discusses the need of SWOT analysis for Doordar-
shan. It is with respect to Chapter 6 of the book.
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Doordarshan (DD) is India’s leading public service broadcaster,
covering 90 per cent of the country’s population with more than
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1,000 transmitters. Even today, DD is watched across the country
in around 70 million homes. It employs more than 20,000 employ-
ees who manage its metro and regional channels.
Doordarshan, for several years, enjoyed a monopoly as it was the

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only broadcaster of television programs in India. However, the

market witnessed major changes, after the opening of private
channels (cable and satellite channels). New broadcasters have re-
alised that there is a great business potential in the market. These
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private channels not only increased the number of entertainment

programs, but also improved the quality of these programs. They
also worked on new and improved technology that put a signifi-
cant impact on both, quality and quantity of the programs.
The growing competition from many private channels has pre-

sented a tremendously tough competition to DD that still needed
policies to be modernised and bring scope for innovativeness.
Strategically, DD needs to undergo a policy renovation.
Today, there are nearly 515 over-the-air and satellite television

stations in India, and the number is growing at a very fast pace.
DD has a business model that sells half-hour slots of its commer-
cial time to the producers of any program and charge a minimum
guarantee in return. For example, for the first 20 episodes of a pro-
gram, the tariff is `30 lakhs in addition to the program production
cost. This provides producers to have 780 seconds of commercial
time that can be further sold to advertisers to earn revenue.
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Case study 7
n o t e s
POrter’s FiVe FOrCes analysis: tHe airline

inDUstry
This Case Study discusses the various strategies that shape industry
competition. It is with respect to Chapter 7 of the book.
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Today, the airline industry is transforming the public’s way of liv-
ing, as now, one can easily travel and conduct businesses by short-
ening the overall travel time. The growing airline industry made
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it possible to visit places that were once considered ‘distant’.
There are various factors that affect the overall efficiency of air
transport. For example, airport capacity, route structures, tech-
nology and costs to lease or buy the physical aircraft are note-
worthy factors in the airline industry. Similarly, unpredictable
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weather is another significant factor that can shut down airports

and cancel flights, resulting in a huge loss to airlines.
According to the Air Transportation Association (ATA), “fuel is an

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airline’s second largest expense. Fuel makes up a significant por-

tion of an airline’s total costs, although efficiency among different
carriers can vary widely. Short haul airlines typically get lower fuel
efficiency because take-offs and landings consume high amounts of
jet fuel”.
Labour is another important factor that affects the airline indus-

try of any country. Compensating pilots, flight attendants, bag-
gage handlers, dispatchers and the customer service staff incur a
huge cost to the airline service providers.
It is important to consider the sources that may help an airline

to earn revenue. Airlines basically generate revenue from trans-
porting cargo, selling frequent flier miles to other companies and
up-selling inflight services. However, the largest proportion of
revenue is generated from regular and business class passengers.
Business travellers are important for airlines, as they are more
likely to travel numerous times throughout the year and tend to
spend over upgraded services, incurring more profit to the airline.
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Case study 8
n o t e s
Daimler-CHrysler merger: a CUltUral FailUre
This Case Study discusses the failure of a merger as a market ex-

pansion strategy. It is with respect to Chapter 8 of the book.
In 1998, two of the world’s prominent car manufacturers, Daim-

ler-Benz and Chrysler Corporation, decided to merge their busi-
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nesses, which ultimately ended in failure. The merger process
initiated on January 18, 1998, when Jurgen Schrempp, the CEO
of Daimler-Benz and Robert Eaton, the CEO of Chrysler met to
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discuss on the possible merger. It took almost one year for Daim-
lerChrysler (DCX) to settle the merger process and on November
12, 1998, the merger was finalised. According to both of the com-
panies, it was a “merger of equals”.
The merger of two automobile giants resulted in a large auto-

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mobile company, ranked third in the world in terms of revenues,

market capitalisation and earnings. It was on the fifth position in
the world in terms of selling the number of units (passenger-cars
and commercial vehicles combined). In 1998 itself, DCX gener-
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ated revenues of USD 155.3 billion and sold 4 million cars and
trucks. DCX was extremely confident that it would easily gain
majority of the growth opportunities present in the global auto-
motive market.
However, DCX failed to understand that to make the merger a

success, several important issues need to be addressed, among
which the most significant is that of the organisational culture.
A cultural difference may work as the biggest hurdle to the re-
alisation of the synergies recognised before the merger. There is
a clear difference between the German and American styles of
management. Daimler was a German company with a brand im-
age that portrayed it as “conservative, efficient and safe”. On the
other hand, Chrysler was known as a “daring, diverse and creat-
ing” company.
Daimler was known to be a hierarchical company with a clear

chain of command and authority. Chrysler, on the other hand,
Case study 8
n o t e s
preferred a more team-oriented and democratic approach. This

resulted in conflicting orders and disputes in different depart-
ments. American and German managers clearly had different val-
ues for working style, and therefore, different departments were
heading in opposite directions.
To minimise this cultural difference, Schrempp decided to allow

both groups to preserve their prevailing cultures. The Chrysler
group was given the sovereignty of manufacturing mass-market
cars and trucks. On the other hand, the Daimler-Benz continued
to manufacture Mercedes cars. However, the strategy of following
two entirely opposite cultures within one organisation could not
last for long.
Apart from differences in culture, there was also a problem of

trust. Employees on both sides were unenthusiastic to work with
each other. During the initial stages of the merger, a significant
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number of Chrysler’s executives either resigned or were replaced
by their Germans counterparts. When Chrysler executed poorly
in 2000, its American president was replaced with Dieter Zetsche
from Germany. The idea behind the replacement was to impose
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DaimleAr’s culture on its American counterpart.
After seeing the continual problems prevailing in the company,

Schrempp in early 1999, admitted that the DCX deal was never
really projected to be a merger of equals and Daimler-Benz had
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acquired Chrysler. His acceptance has proved that Daimler-Benz

and Chrysler Corporation merger was a big failure where both
the companies considered only the lucrative side of the market
opportunities and neglected one of the major internal factors, i.e.
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dissimilar organisational cultures.
QUESTIONS
1. Why did Daimler-Benz and Chrysler Corporation agree

to merge their businesses?
(Hint: The tremendous growth opportunities present in
the global automotive market prompted Daimler-Benz
and Chrysler Corporation to merge their businesses.)
2. Was the merger of Daimler-Benz and Chrysler Corporation
successful? Discuss the problems that merger created.
(Hint: No. The merger was a big failure as both the
companies considered only the lucrative side of the
market opportunities and completely overlooked the
factor of dissimilar organisational cultures. This worked
as the biggest hurdle leading to the failure of this merger.)
Case study 9
n o t e s
COst leaDersHiP strategy OF

Virgin aUstralia airlines Pty. ltD.
This Case Study discusses the significance of applying the cost lead-
ership strategy in an organisation. It is with respect to Chapter 8 of
the book.
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Virgin Australia Airlines Pty. Ltd. (previously known as Virgin
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Blue Airlines Pvt. Ltd.) is the second largest airline in Australia.
Based in Queensland, Australia, the airline was founded in 2000
by the Virgin Group of Sir Richard Branson. Initially, the airline
was operating in a single route with just two aircrafts. However,
within a period of just one year, Virgin Australia Airlines became
the second largest airline in Australia.
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Virgin Australia evolved as a highly integrated air services pro-

vider, with a wide-ranging domestic network and two global sub-
sidiary/joint ventures, namely Pacific Blue and Polynesian Blue.
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When the Virgin Australia Airlines entered into the market as Vir-
gin Blue, Qantas and Ansett were the two major competitors that
dominated the Australian market.
However, with the collapse of Ansett in September 2001, Virgin

Australia and Qantas were the only two major competitors left in
the market. Departure of Ansett, offered Virgin to grow rapidly by
expanding its route network.
In 2006, Virgin developed its ‘New World Carrier’ (NWC) strategy

that focused on the two major goals of maintaining cost leadership
and targetting the fare levels of competitive airlines, especially
Qantas. As part of its ‘NWC’ strategy, Virgin ordered 20 Embraer
regional jets (E-170s with 78 seats and E-190s with 104 seats) to
improve its network and offer better regularities to a wider do-
mestic market.
The airline introduced a series of value added services that not

only helped it to fetch higher-paying passengers, but also be-
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Case study 10
n o t e s
gillette: analysing COnsUmer BeHaViOUr
This Case Study discusses the importance of consumer behaviour

analysis. It is with respect to Chapter 9 of the book.
Gillette is one brand that immediately reminds everyone of ra-

zors. Over the years, the brand has been popular for its safety
razors and also offers shaving and personal care products. In
2005, in a merger, Gillette and Procter & Gamble were amalgam-
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ated. Initially, the assets of Gillette were assimilated into Procter
& Gamble as Global Gillette. However, in 2007, Global Gillette
was dissolved and integrated with Procter & Gamble Beauty and
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Procter & Gamble Household Care. The most popular products
of the Gillette brand are Gillette Mach-3 Turbo, Oral-B, and Du-
racell, which have satisfied consumers by providing high-quality
service
To offer the best in quality, Gillette conducted a research to know

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the opinion of customers about the existing razors in the market.

According to Gillette’s analysis of the consumer market, the In-
dian market, till the 1990s, was dominated by other disposable
razors. It was also reported that customers were looking for a
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multipurpose cartridge razor. This provided the marketers at Gil-

lette an opportunity to focus on delivering its high tech cartridge
and disposable razors by providing three attributes – closeness,
comfort, and safety. The brand also brought sensor razors with
independently moving twin blades in the market. However, the
price of the sensor razors was relatively high. The marketers also
studied the market of university students and IT professionals
to know their opinion about sensor razors. After analysing their
opinions, the company came out with a disposable sensor razor
along with five free blades. This had a positive impact on the con-
sumers of that segment (IT and universities). As a result of this
offer, many people switched to Gillette.
In the Indian market, Gillette introduced its various products un-

der different price segments. For example, Gillette’s Mach3 tri-
ple-blade razor was launched in the Indian market in 2004 and
was kept at a premium price. However, on research on the con-
sumer-buying behaviour, it was revealed that most of the Indian
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Case study 11
n o t e s
tHe ‘zOOzOOs’ CamPaign: eFFeCtiVe marketing

COmmUniCatiOn strategy By VODaFOne essar
This Case Study discusses the impact of effective marketing com-

munication on the performance of organisations. It is with respect
to Chapter 10 of the book.
S
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Vodafone Essar Limited is an India-based subsidiary of Vodafone.
It is one of the world’s leading global mobile networks. In today’s
competitive era, organisations are using various communication
tools to make customers aware of their products and services.
Vodafone’s Zoozoo ads are among the most successful commercial

M
ads in Indian advertisement history and have proved to be very

creative in promoting the Value Added Services (VAS) of Voda-
fone. A global advertising, marketing and public relations agency,
Ogilvy & Mather, successfully handles the responsibility of creat-
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ing these Zoozoo ads for Vodafone. These ads are aired during the
Indian Premier League (IPL) cricket tournament.
Zoozoos are eggshell-shaped characters that communicate how

the Vodafone’s unique products and services make the lives of
users simple and convenient. Every ad shows an exclusive sto-
ry enacted by Zoozoos with the purpose of informing customers
about VAS offered by the company. Soon after airing, these Zoo-
zoos have become a buzzword not only in traditional media like
television and newspapers but also in social networking sites like
Facebook, Twitter and youTube.
The Zoozoo campaigns have been started by Vodafone during IPL

Season 2 to communicate that the mobile Internet navigation is a
fun experience with Vodafone. The first Zoozoo ad showed a tele-
match being played between two teams dressed as chicken and
penguin. Commenting on the ad-execution, kapil Arora, Country
Head, Vodafone said, “The reason we brought in the concept of a
Case study 11
n o t e s
telematch was to weave in authenticity in the message through a

simple format such as that of these fun games. It clearly portrayed
how browsing mobile Internet on Vodafone is simpler and more fun
considering it enables optimisation of data and a better spread of
network.” Since then, the Zoozoo campaigns are reiterating every
year during IPL series with new concepts.
In 2014, during IPL Season 7, Vodafone launched several new

Zoozoo ads created by Ogilvy & Mather. The first two ads re-
volved around Vodafone’s two product plans, which are ‘Choose
your Number’ and ‘Chhota Credit.’ In these ads, Zoozoos commu-
nicated about the new plans of Vodafone in a creative and engag-
ing manner. ‘Chhota Credit’ displays a quiz show where a Zoozoo,
who is the quiz master, asks a question to the participant Zoozoo.
The Zoozoo wants to use a lifeline, where he could phone a friend
to get the correct answer. However, as he dials the number, he
realises that there is no balance left on his phone. Just then, a
hota Credit.’ S
message appears, ‘Ran out of balance? Top-up instantly with Ch-
Another ad campaign, ‘Choose the Number’ represents a stage

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of a reality show where a Zoozoo participant does different acts.
When he saw that judges are not impressed by his performance,
he dances on a popular Bollywood number, which the judges like
and give him full scores.
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The properties - IPL and Zoozoos - have become stronger togeth-

er for Vodafone and this is the reason why Zoozoos come back
every IPL season. Since the characters are clutter-breaking, they
make sure that Vodafone’s marketing communication isn’t lost in
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the other ads.”
Ronita Mitra, SVP, Brand Communications and Insights, Voda-

fone India, says, “The Zoozoos have become a big part of India’s
cultural conscience. Breaking through the monotony and fatigue,
the Zoozoos have been presented in a refreshed and engaging
creative format to communicate our proposition.”
Vodafone Zoozoos not only communicate the message in a cre-

ative manner but also act as an unusual and memorable creative
device to produce a good recall value to customers. The Vodafone’s
marketing communication strategy also focuses on bringing back
Zoozoos once a year to ensure longevity and value for the brand.
According to Sharda Agarwal, Executive Director, MarketGate

Consulting, “If it was there through the year, there would have been
fatigue. With this, Vodafone is ensuring longevity, a longer life for
the property. Vodafone, IPL and Zoozoo are a triangular relation-
ship and it works positively for the brand.”
CASE STUDy 11: THE ‘ZOOZOOS’ CAMPAIGN: EFFECTIVE MARkETING COMMUNICATION
STRATEGy By VODAFONE ESSAR 353
Case study 11
n o t e s
QUESTIONS
1. Discuss the marketing communication strategy followed

by Vodafone.
(Hint: The Zoozoo ads of Vodafone communicate the
message in a creative way and act as an unusual and
memorable device to produce a good recall value to
customers. The Vodafone marketing communication
strategy also focuses on bringing back Zoozoos once a
year to ensure longevity and build brand image in the
market.)
2. ‘Vodafone’s Zoozoo campaigns set a benchmark for
effective marketing communication for the entire
telecommunication industry’. Discuss.
(Hint: The Vodafone Zoozoos successfully convey the
S
message to the target audience without delivering any
dialogues. This unique feature of Zoozoos has made them
popular not only in the traditional media like television
IM
and newspapers but also in social networking sites like
Facebook, Twitter, and youTube.)
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S
Case study 12
n o t e s
lOUis PHiliPPe: BranDing in inDia
This Case Study discusses the branding strategies of Louis Philippe

in India. It is with respect to Chapter 11 of the book.
Louis Philippe is a well-known brand of Madura Fashion & Life-

style (MFL), which is also known for its brands such as Van Heu-
S
sen, Allen Solly, Peter England, and People). Louis Philippe is a
premium lifestyle brand in the Indian retail sector. The brand
portfolio includes a variety of product lines from premium range
IM
to low-cost apparel and accessories.
Louis Philippe was introduced in India in 1989, and it soon be-

came one of the most popular premium brands for men in the
country. Quality has always been the main focus of Louis Philippe.
It worked hard on providing value for money to its customers. As
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a brand, Louis Philippe stands for grace, class, prestige, and a

lavish lifestyle. The brand is named after king Louis Philippe of
France, who was well-known for his kindness and appreciation of
the arts.
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From the beginning, Louis Philippe has been considered as a

brand of fine clothing. The brand includes garments with the fin-
est fabrics and designs that have global appeal. Louis Philippe
also aims at offering sophisticated outfits to the brand-conscious
Indian men. The Franco-Italian lineage of the brand, associated
with global fashion, gives it an elite image.
MFL started focussing on Louis Philippe after acquiring the glob-

al rights for the brand in 2000. At present, Louis Philippe is a
brand leader in formal and quasi-formal wear. The product port-
folio includes a complete range of formals, semi-formals, knits,
custom-made apparel and accessories stimulated by the most
recent European fashion and styles. ‘‘Perma Press’’ and ‘‘Gods
and kings’’ are two super premium ranges of the brand that were
launched in 2001 and 2003, respectively, in an attempt to strength-
en the brand image. ‘Crest’ is another such clothing range of Lou-
is Philippe that is esteemed for its luxurious style, delicate crafts-
manship, and attention to detail. Sub-brands such as LP and
CASE STUDy 12: LOUIS PHILIPPE: BRANDING IN INDIA 357
Case study 12
n o t e s
QUESTIONS
1. With reference to the given case study, explain why

organisations need to focus on branding.
(Hint: Organisations focus on branding as it is a way of
attracting and retaining customers. Branding also helps
in reducing the risk or uncertainty that a consumer faces
when he/she buys a product for the first time.)
2. Discuss the branding strategy of Louis Philippe in India.
(Hint: Louis Philippe was introduced in the Indian market
in 1989, and it soon became one of the most popular
premium brands of menswear in the country. The focus of
the brand has always been on quality. The main thrust of
Louis Philippe’s branding strategy is on providing value
for money to its customers.)
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marketing strategy

NMIMS Centre for Distance and Online Education

CHAPTER NO. CHAPTER NAME PAGE NO.

3 Strategic Intent of a Business 51

4 External Environment and Industry Analysis 79

7 Competitive Strategies 153

8 Marketing Strategies 183

Developing Strategies for Consumer and

10 Marketing Strategies and Marketing Mix 237

11 Branding Strategies 279

12 Case Studies 313

introduction to marketing: Defining Marketing, Essential Concepts of Marketing, Concept of

Concept of strategy: Introduction to Strategy, Strategic Mapping, Strategic Decision Making

Competitive strategies: Competitive Forces, Identifying and Analysing Competitors, Competitive

marketing strategies: Concept of Marketing Strategies, Financial Considerations in Evolving

1.3 Essential Concepts of Marketing

According to Roy Stout, Coca Cola, “If we have twice as many

On 23 April 1985, Coke launched a press conference in New york

Pepsi responded to Coke through aggressive advertising and pub-

The failure led to re-introduction of original Coke and it was re-

According to Don keough, President of Coca-Cola, “The simple

After studying this chapter, you will be able to:

Marketing has a direct influence on the profit margins of an organisa-

in optimum profit for the organisation. This also helps in maintaining

The chapter begins by explaining the concept of marketing at length.

1.2 DeFining marketing

pectations, offering products that satisfy those needs, communicating

According to the American Marketing Association, “Marketing is the

According to Giancarlo Pallavicini, an Italian economist, “Marketing

According to the marketing guru Philip kotler, “Marketing is typical-

The main aim of marketing efforts is to entice the target audience by

ers. In a nutshell, it can be said that marketing addresses three ma-

1.2.1 eVOlUtiOn OF marketing

Traditionally, organisations believed in the production of goods on a

Therefore, the focus of organisations gradually shifted from mass pro-

SELF ASSESSMENT QUESTIONS

1.3 essential COnCePts OF marketing

Marketing includes various key concepts that a marketer needs to

cipal concepts of marketing are based on the product created by the

1.3.1 neeDs, Wants anD DemanDs

Needs and wants refer to an individual’s basic requirements, such as

Demand means a want for specific products supported by an ability

A market refers to a place where a business is carried out or where ac-

Exchange refers to the act of obtaining a product or service from

of a value. Marketing creates an environment for the sellers and buy-

1.3.4 ValUe anD satisFaCtiOn

The concept of value in marketing relates to the benefits derived by

Satisfaction in marketing measures how much does the products and

implementation of a product with respect to the consumer expecta-

What is market differentiation?

Integrated Marketing | What is Inte-

The Marketing Mix and 4 Ps: Understanding

What is Marketing? and Basic Marketing

Marketing Concept & Marketing Orientation

Self Assessment Questions

2.3.1 Four perspectives in Strategic Mapping

strategies FOllOWeD at Walmart

with sales revenue of $218 billion. In 2010, Walmart became

Walmart offers products at a cheaper price than its competi-

Because of its highly efficient supply chain and centralised buy-