Marketing Management Assignments
ASSIGNMENT ON MARKETING MANAGEMENT
- one or few products, relatively undifferentiated
- Generally high, assuming a skim pricing strategy for a high profit margin asthe early adopters buy the product and the firm seeks to recoup development costsquickly. In some cases a penetration pricing strategy is used and introductory pricesare set low to gain market share rapidly.
- Distribution is selective and scattered as the firm commencesimplementation of the distribution plan.
- Promotion is aimed at building brand awareness. Samples or trialincentives may be directed toward early adopters. The introductory promotion alsois intended to convince potential resellers to carry the product.
The growth stage is a period of rapid revenue growth. Sales increase as more customers become aware of the product and its benefits and additional market segments are targeted.Once the product has been proven a success and customers begin asking for it, sales willincrease further as more retailers become interested in carrying it. The marketing team mayexpand the distribution at this point. When competitors enter the market, often during thelater part of the growth stage, there may be price competition and/or increased promotionalcosts in order to convince consumers that the firm's product is better than that of thecompetition. During the growth stage, the goal is to gain consumer preference and increasesales. The marketing mix may be modified as follows:
- New product features and packaging options; improvement of productquality.
- Maintained at a high level if demand is high, or reduced to capture additionalcustomers.
- Distribution becomes more intensive. Trade discounts are minimal if resellers show a strong interest in the product.
- Increased advertising to build brand preference.
The maturity stage is the most profitable. While sales continue to increase into thisstage, they do so at a slower pace. Because brand awareness is strong, advertisingexpenditures will be reduced. Competition may result in decreased market share and/or prices. The competing products may be very similar at this point, increasing the difficulty of differentiating the product. The firm places effort into encouraging competitors' customersto switch, increasing usage per customer, and converting non-users into customers. Sales promotions may be offered to encourage retailers to give the product more shelf space over competing products.
RAHUL GUPTA, MBAHCS (2
SEM), SUBJECT COCE- MB0030, SET-2Page 3
1.1 Purpose and Scope
This paper deals with Social Marketing. It means application of commercial marketing concepts, tools, resources, skills and technologies to encourage socially beneficial behavior among those segments of the population not adequately served by existing public and private systems. Studies reveal that most of the unmarried young people who have sex do not use condoms. For example, in survey on African youth, the percentage of unmarried sexually active women ages 15 to 19 who reported using condoms in their most recent sexual encounter ranged from 2% to 18%. In Colombia, Peru, and Kazakhstan from one-fifth to about one-third used condoms. Here we have discussed the marketing strategy adopted by PSI to introduce condoms in rural areas. Various marketing conditions to be faced for such an introduction of product and suggested future strategies are also discussed here.
2. PLANNING PRINCIPLES AND PROCESSES
Planning of any Social Marketing Program requires maintaining a consumer focus by addressing the different elements of the "marketing mix", which are more commonly known as the "six Ps" : (i) a Product, (ii) its Price, (iii) its Place (or distribution), (iv) its Promotion (v), the Partnership involved, and (vi) the Policy environment.
Key concept in marketing of such a product is to use a ‘Whole Market Approach’. Such an approach includes following important points:
- Use of population based segmentation research to identify client segments. This is done according to socio-economic level, contraceptive used, willingness and/or ability to pay, etc.
- Analyze current market trends so as to evaluate the incentives or lack of incentives for private players in such a product.
- Develop and promote policies so as to increase the participation of private sector in product supply.
- Provide a proper framework defining clearly the role of public, Non-governmental organizations and commercial sectors in identifying and developing strategies for contraceptive markets.
Enson (2004) described the strategy of whole market as the one which can lead to greater sustainability, increased demand for product, increased number of people with contraceptive access and achievement of National Planning Goal.
2.1 Principles forming the base of Whole Market Approach
Evaluate the capacity of Private Sector: The very first step is to evaluate what current segment private sector is serving, what are its incentives, what are its limitations and their effect on functioning of the sector. Such analysis help in determining the extent to which private sector may be involved in the approach.
Developing Rational Targeting Strategies: While planning to market contraceptives the Public sector must assume the challenge of developing effective strategies to target those segment which are not addressed by commercial or NGO sectors.
Improve the opportunity for choice: Government can provide training and can generate demand through IEC campaigns. This will help in building a market for the product beyond public service delivery outlets, and will motivate private sector to offer a greater choice of brands and services.
Introduce mid-priced product: In highly subsidized markets one strategy is to introduce commercially sustainable mid-prices products. These can be marketed to middle-income niche. For example: In 2006 same was done in Nigeria market as there was an absence of affordable commercial brands
2.2 Techniques used by PSI
PSI used a proper mix of Product, Packaging, Price, Distribution and Promotion. Of these three are discussed as follows:
While preparing a strategy for marketing of contraceptives the main consideration was proper pricing of the product. PSI adopted aimed at introducing a mid-priced product so that more and more people could afford it. Here demand was elastic and lower pricing of product helped increasing the attractiveness of the product. Also such a strategy allowed PSI to provide more incentives to distributors and retailers.
At the same time it is necessary to reevaluate such a policy as with the progression of product life cycle there will be a change in demand curve and cost.
For Example: When a product is in introduction phase penetration pricing will help in attracting customers but as the product reaches maturity stage price may need to be further reduce so as to fight competition. When it reached decline stage prices may be maintained for continued products in niche markets.
PSI followed a proper promotional and advertising strategy so as to create awareness about the product. Although such a strategy proved to be costly for PSI it gave them a long term benefit of fully aware consumer which helped in penetration in the market. It concentrated on large shops in order to allow better staff-counter education and point of purchase display.
The most important benefit of this approach is that the producer can choose the best performing outlets and focus on training and preparing them.
For Example: If a company wants to sell its product to high income class customers it can concentrate on selling through shopping malls and exclusive shops selling a particular class of products.
PSI used education and awareness based promotion system for introducing contraceptive in markets. It focused on product incentive promotion tactics, distribution of free samples, leaflets, pamphlets, etc in village.
The promotion strategy adopted need to be reevaluated at various stages of Product life cycle. When the product is in maturity stage promotional efforts would require a revamping of strategy and product differentiation has to be introduced.
For Example: In declining stage of a product life cycle one need to move the top sales people to be shifted to new product promotional needs and maintenance sales people would need to concentrate on declining products.
3. OPTIONAL MARKETING STRATEGIES
Apart from the strategy used by PSI for marketing of contraceptive certain other strategies can also be used. Some of these are discussed as follows:
Community Based Distribution
This is the method of distribution and promotion where non professional sale persons are recruited from some particular groups within the general population. The individual receive basic training in sales and is given certain amount of incentives from small margins in their sales. This approach is beneficial to be used in rural areas and villages as these areas are difficult to access.
Advantage of this model is that the sales person is aware of the understanding level and temperament of general public of the region and thus it is easy to penetrate in the market without much of resistance on part of consumers.
The main disadvantage of this approach is that much of the effort is to be done to train local people and also cost of such training is high.
Ensor(2004) explained that in this approach even after training one cannot except very high sales as such people lack professional attitude.
This approach of marketing is only useful when creating awareness is the basic aim of the company.
For Example: Such an approach was used in promoting and selling condoms in markets of Haiti and Mozambique. In Haiti the mountainous terrain served by a precarious transportation infrastructure, was a key factor in the decision to recruit sales agents from the communities through existing local NGO’s. In Mozambique many years of civil war had devastated the national infrastructure for transportation and communication. Standard distribution of products was therefore difficult and thus community based distribution was implemented.
Public-Private Partnership Model
Another option available to PSI is to join hands with private sector to distribute its product efficiently. Here PSI can use private hospitals, doctors and overall private healthcare infrastructure for increasing the awareness and accessibility of contraceptives. This helps in cost reduction as public sector does not have to set up any infrastructure for its product distribution or marketing. This model illustrates innovative ways that public sector can utilize to improve coverage for distinct segments of the population. However in such an approach Private sector may not be willing to offer low-price products outside government procurement programs.
Targeted Service Delivery Model
This approach involves planning appropriate social marketing activities, through which the product can reach to specific target group. Such groups are generally inadequately served by other delivery mechanism.
Drummond (2005) said that this strategy of Targeting Service Delivery leads to market segmentation which makes proper distribution easy.
For Example: In Cameron PSI used this strategy from 1996 to 1997. The project integrated a youth-targeted intervention within nationwide PSI social marketing program. PSI program mainly targeted low-income, high risk population groups of both the sexes. In a relatively short period the project has a positive impact on several areas of young people’s beliefs. However this model emphasize on only a particular group in market. Overall coverage of market does not take place which affects the penetration of market adversely. Also a lot of people remain unaware of the new product which may lead to misuse of contraceptives.
4. CHANGES IN MARKETING ENVIRONMENT
PSI introduced a campaign to create awareness for contraceptives in rural Kenya. This initiative on part of PSI created an environment in which a greater recognition of family planning, risk of acquiring HIV, a stronger belief in the efficacy of condoms and a higher level of personal efficacy. However, still the continuity of usage of condoms in rural areas is limited.
Increased knowledge about the pill and IUD was relatively modest because there was a greater awareness of these methods at the outset. During the course of year condom become the second preference as compared to pills. Men do not continue the use of condoms for long and still preferred pills. Also there was no significant change in attendance at family planning clinics of Meru.
During the course of the project both test and control areas showed a slight downward shift in desired number of children. There was also a slight increase in number of families not wanting more children. However these changes were not statistically significant. Rather they indicate a general shift in community attitudes.
Now the above mentioned changes in marketing environment require certain new strategies to be implemented by PSI so as to further penetrate into the market. Also for a better awareness and popularity of condoms PSI need to take action so as to expand demand and expand market for its product.
4.1 Functional Areas to be developed by PSI
Various functional areas which need special attention on part of PSI so as to ensure the achievements of its objectives are:
- Expansion of Demand
- Expansion of Product Range
- Expansion of Market
- Using Government Subsidies
- Efficient Program Management
Operational Strategies required to cover the above mentioned Functional Areas are discussed as follows:
4.1.1 Operational strategy for expanding demand
Effective communication is the key to any social marketing intervention which aim at encouraging the adoption of a socially beneficial health seeking behavior. PSI has been successful in promoting behavior change to a great extent in rural Kenya. To further increase the demand for its product PSI need to conduct a detailed consumer research to identify the change in consumer behavior and preferences. Next is to assign communication to professional agencies and develop innovative regional specific campaigns. Also now PSI should involve local authorities into the awareness program so as to develop and organize regular local promotional programs. For this purpose NGO’s can be contracted and efforts should be focused on sales of both contraceptives and other health care products. Special sales booth scan be set up in collaboration with NGO’s and other social marketing organizations so as to maintain an easy accessibility of the products.
4.1.2 Operational Strategy for expanding the basket of products
PSI must innovate and provide multiple choices through multiple products and services through multiple distribution channels. Also special courses for retailers/vendors must be organized to refresh and update their knowledge and skills.
According to study some social marketing programs have successfully focused on adolescents, including the Social Marketing for Adolescent Sexual Health (SMASH) which initiated projects in Botswana, Cameroon, Guinea, and South Africa. This program used radio and television messages, designating youth-friendly outlets where people could buy condoms and receive counseling. As a result of this SMASH project, awareness of condoms increased, while personal barriers to condom use diminished in all the four countries.
4.1.3 Operational Strategies for expanding the market
PSI must develop strategies for more cost-effective distribution of products to reach various household levels. Such coverage should not be limited to marginally rural areas. Also partnership with more and more private organizations must be there to ensure better visibility and accessibility of the product.
Social Franchising is one way of achieving this purpose. It refers to developing networks of private sector and NGO run clinics, contracted to offer health information, products, and health care services. Such programs have successfully been implemented in south-east Asia: Blue Circle and Gold Circle in Indonesia, Blue Star clinics in Bangladesh, Green Star clinics in Pakistan, and the Integrated Maternal Child Care Service Development project in the Philippines.
4.1.4 Operational strategies for aligning government subsidy to program objectives
Any Social marketing program must emphasize on more equitable penetration to reach out to all under-served segments of the population, i.e. the urban slums, rural areas, tribal population and the hill areas also. Government subsidies will aim to increase the coverage, introduction of new products and generic promotion of products and services. Sales-based promotion subsidies can be replaced by individual promotion subsidies, which will be based on annual promotion plans submitted by PSI.
4.1.5 Operational Strategies to Improve Program Management
One of the major steps to be taken by PSI is a proper and controlled management of its program. There must be a complete transparency in procurement of condoms, pricing, reimbursement of subsidy amount, etc. Proper reporting at regular intervals must be done as to the performance of the program which will ensure the efficiency and effectiveness of whole strategy.
In addition to its complexity and cost, healthcare also changes rapidly. Technology, demographics, economics, and politics drive the change, not only as individual factors but also by interacting with each other to make the rate of change faster. This proves to be true even in rural markets and in case of marketing of contraceptives. In marketing such a product special consideration has to be given to consumer’s beliefs and preferences as it requires a lot of awareness and a positive bent of mind to accept such a product for long term continuous use. Thus social marketing is more of an education campaign rather than a marketing effort.
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