Marketing Management Assignment 1

AIOU BBA
Ateeq Ur Rehman Roll No. 408071991
Marketing Management (190) Autumn 2009

Q1 (a)
The Marketing Concept
The marketing concept is the philosophy that firms should analyze the needs of their customers
and then make decisions to satisfy those needs, better than the competition. Today most firms have
adopted the marketing concept, but this has not always been the case.

The Production Concept
The production concept prevailed from the time of the industrial revolution until the early 1920's.
The production concept was the idea that a firm should focus on those products that it could produce most
efficiently and that the creation of a supply of low‐cost products would in and of itself create the demand
for the products. The key questions that a firm would ask before producing a product were:
• Can we produce the product?
• Can we produce enough of it?

At the time, the production concept worked fairly well because the goods that were produced were
largely those of basic necessity and there was a relatively high level of unfulfilled demand. Virtually
everything that could be produced was sold easily by a sales team whose job it was simply to execute
transactions at a price determined by the cost of production. The production concept prevailed into the
late 1920's.

Product Concept
The product concept includes everything from the decision to make a product to the final
packaging and branding.
Under this concept, the first thing that is considered is the function that the product is going to
serve. It is also reviewed as to how many models or sizes or variants the product is going to have. This
product can be a physical good or a service.
After the product has been manufactured, the quality assurance is done and the packaging is done.
The warranty period is also determined and the repair and support system is also considered.
The term "product" refers to tangible, physical products as well as services. Here are some
examples of the product decisions to be made:
• Brand name
• Functionality
• Styling
• Quality
• Safety
• Packaging
• Repairs and Support
• Warranty
• Accessories and services

The Sales Concept
By the early 1930's however, mass production had become commonplace, competition had
increased, and there was little unfulfilled demand. Around this time, firms began to practice the sales
concept (or selling concept), under which companies not only would produce the products, but also would
try to convince customers to buy them through advertising and personal selling. Before producing a
product, the key questions were:
• Can we sell the product?
• Can we charge enough for it?

CIT (Centre Of Information Technology)
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The sales concept paid little attention to whether the product actually was needed; the goal simply was
to beat the competition to the sale with little regard to customer satisfaction. Marketing was a function
that was performed after the product was developed and produced, and many people came to associate
marketing with hard selling. Even today, many people use the word "marketing" when they really mean
sales.

The Marketing Concept
After World War II, the variety of products increased and hard selling no longer could be relied
upon to generate sales. With increased discretionary income, customers could afford to be selective and
buy only those products that precisely met their changing needs, and these needs were not immediately
obvious. The key questions became:
• What do customers want?
• Can we develop it while they still want it?
• How can we keep our customers satisfied?

In response to these discerning customers, firms began to adopt the marketing concept, which
involves:
• Focusing on customer needs before developing the product
• Aligning all functions of the company to focus on those needs
• Realizing a profit by successfully satisfying customer needs over the long‐term

When firms first began to adopt the marketing concept, they typically set up separate marketing
departments whose objective it was to satisfy customer needs. Often these departments were sales
departments with expanded responsibilities. While this expanded sales department structure can be found
in some companies today, many firms have structured themselves into marketing organizations having a
company‐wide customer focus. Since the entire organization exists to satisfy customer needs, nobody can
neglect a customer issue by declaring it a "marketing problem" ‐ everybody must be concerned with
customer satisfaction.

Societal Concept
The societal marketing concept can be defined as the organizations task which tries to identify the
needs and interests of the consumers and delivers quality services or products as compared to its
competitors and in a way that consumer's and society's well being is maintained. In other words
organizations have to balance consumer satisfaction, company profits and long term welfare of society.
This is a new marketing philosophy and tries to reduce the inequalities at various levels. This theory
emphasizes that organizations should not only think of cut‐throat policies to achieve targets and jump
ahead of competitors but should have ethical and environmental policies and then back them up with
action and regulation.
Societal marketing can be achieved by following a few principles. It should always be remembered
that consumer's needs are of paramount interest. Improvements in products which are both real and
innovative should be carried out to give long term value to the product; do what is good for the society
with a sense of mission and trust. In this way the focus shifts from transaction to relationships. If a client
'repeats business' a bond is created between him and the product and is worth its while for the
organization to nurture this bond.
It may sound appropriate and ethical, but societal marketing concept is hard to implement as not
all companies have a social conscience. Whether it is legal and essential in industries like the tobacco and
liquor industry needs analysis as they have a tremendous influence on consumer welfare.
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Q3

Business Plan Essentials
When you're about to embark on developing a business plan, remember this: Form follows
function, so you want a plan that fits your exact business needs. The emphasis should change depending
on whether it's a plan for starting a company, raising investment money, supporting a business loan or
managing an existing business.
In most cases, your plan will be a 20‐ to 30‐page document written in simple business language so
it's easy to read with the main points highlighted and lots of bullets, and some tables and charts to
highlight the most important financial projections. A standard plan includes seven sections:
1. The Executive Summary. Write this summary last, and make sure it contains the highlights of your plan.
Assume your most important readers will read only this section.
Content Continues Below
2. The Company. A plan for a startup describes your strategy for creating the legal entity and how the
initial ownership will be divided among the founders. It should also include a table that lists startup costs
and initial funding. A plan for an ongoing or already existing company should describe the legal form of the
business, the company history and the business's past performance.
3. What You Sell. Describe the products or services you offer. Emphasize why buyers purchase those
things, what benefits they get, and what pain points they have before they buy. Show how much it costs to
deliver what you're selling.
4. Your Market. Describe your target market, including market demographics, market growth and trends.
Include a table that shows a market forecast. Describe the nature of your industry and the competition you
have.
5. Strategy and Implementation. Strategy is all about focus. So focus on certain target market segments,
certain products or services, and specific distribution avenues. Forecast your sales and the cost of sales.
Define your milestones with dates, budgets and specific responsibilities.
6. Management Team. Name and describe the key members on your team. Include a table that shows
personnel costs. List the gaps in the management team‐‐if any‐‐and show how they're being addressed.
7. Financial Projections. Describe your financial strategy and how it supports your projected growth.
Include a break‐even analysis that shows risk as a matter of fixed vs. variable costs. Include projected profit
or loss, cash flow and balance sheets.
As you deal with these standard sections, remember that this is your plan and not a classroom
assignment, which means you should ignore anything that doesn't fit your needs. For example, if you're
developing a business plan for internal use only that won't be read by anybody outside the company, you
don't need to describe your company history. You might want to include management team gaps and a
personnel plan, but you probably don't need to describe the background of your key management team
members.
Making your plan fit your needs means you might add some things, too, beyond the standard
outline. For example, a plan for investors should include the investment offering‐‐how much equity for
how much money‐‐as well as a discussion of exit strategy, use of funds and return on investment. A plan
supporting a bank loan application needs to describe the loan requirements, intended use of funds,
collateral and repayment plans.
So what should every plan include no matter what? There are three essentials:
1. Specific milestones, with deadline dates, spending budgets and a list of the people responsible for
them. I've seen this called "weaving a MAT," with MAT standing for "milestones, assumptions and tasks."
That normally goes into Section 5, Strategy and Implementation. Make the responsibilities specific for
specific people, and make sure every task gets assigned to a single person with a name and a face. This
section must describe how these different milestones are going to be tracked and measured.
2. Real cash flow. Your plan should show cash flow‐‐either projected or actual or both‐‐month by month
for at least 12 months. Show where you're getting money and how much, and show what you're spending
the money on. This is cash flow, not just profit and loss, and you have to understand how different cash
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flow is from profits. Profitable companies go under all the time, but companies with positive cash flow can
pay their bills.
3. Focus. A business plan should establish your company's priorities. Don't try to do everything, and don't
try to please everybody.
Tim Berry is the "Business Plans" coach at Entrepreneur.comand is the president of Palo Alto
Software Inc.,which produces the industry's leading business planning software, Business Plan Pro®, as well
as other popular planning applications for businesses.

Q4
The BCG Growth‐Share Matrix
The BCG Growth‐Share Matrix is a portfolio planning model developed by Bruce Henderson of the Boston
Consulting Group in the early 1970's. It is based on the observation that a company's business units can be
classified into four categories based on combinations of market growth and market share relative to the
largest competitor, hence the name "growth‐share". Market growth serves as a proxy for industry
attractiveness, and relative market share serves as a proxy for competitive advantage. The growth‐share
matrix thus maps the business unit positions within these two important determinants of profitability.
BCG Growth‐Share Matrix

This framework assumes that an increase in relative market share will result in an increase in the
generation of cash. This assumption often is true because of the experience curve; increased relative
market share implies that the firm is moving forward on the experience curve relative to its competitors,
thus developing a cost advantage. A second assumption is that a growing market requires investment in
assets to increase capacity and therefore results in the consumption of cash. Thus the position of a
business on the growth‐share matrix provides an indication of its cash generation and its cash
consumption.
Henderson reasoned that the cash required by rapidly growing business units could be obtained
from the firm's other business units that were at a more mature stage and generating significant cash. By
investing to become the market share leader in a rapidly growing market, the business unit could move
along the experience curve and develop a cost advantage. From this reasoning, the BCG Growth‐Share
Matrix was born.
The four categories are:
• Dogs ‐ Dogs have low market share and a low growth rate and thus neither generate nor consume
a large amount of cash. However, dogs are cash traps because of the money tied up in a business
that has little potential. Such businesses are candidates for divestiture.
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• Question marks ‐ Question marks are growing rapidly and thus consume large amounts of cash,
but because they have low market shares they do not generate much cash. The result is a large net
cash comsumption. A question mark (also known as a "problem child") has the potential to gain
market share and become a star, and eventually a cash cow when the market growth slows. If the
question mark does not succeed in becoming the market leader, then after perhaps years of cash
consumption it will degenerate into a dog when the market growth declines. Question marks must
be analyzed carefully in order to determine whether they are worth the investment required to
grow market share.
• Stars ‐ Stars generate large amounts of cash because of their strong relative market share, but also
consume large amounts of cash because of their high growth rate; therefore the cash in each
direction approximately nets out. If a star can maintain its large market share, it will become a cash
cow when the market growth rate declines. The portfolio of a diversified company always should
have stars that will become the next cash cows and ensure future cash generation.
• Cash cows ‐ As leaders in a mature market, cash cows exhibit a return on assets that is greater than
the market growth rate, and thus generate more cash than they consume. Such business units
should be "milked", extracting the profits and investing as little cash as possible. Cash cows provide
the cash required to turn question marks into market leaders, to cover the administrative costs of
the company, to fund research and development, to service the corporate debt, and to pay
dividends to shareholders. Because the cash cow generates a relatively stable cash flow, its value
can be determined with reasonable accuracy by calculating the present value of its cash stream
using a discounted cash flow analysis.
Under the growth‐share matrix model, as an industry matures and its growth rate declines, a business
unit will become either a cash cow or a dog, determined soley by whether it had become the market leader
during the period of high growth.
While originally developed as a model for resource allocation among the various business units in a
corporation, the growth‐share matrix also can be used for resource allocation among products within a
single business unit. Its simplicity is its strength ‐ the relative positions of the firm's entire business
portfolio can be displayed in a single diagram.
Limitations
The growth‐share matrix once was used widely, but has since faded from popularity as more
comprehensive models have been developed. Some of its weaknesses are:
• Market growth rate is only one factor in industry attractiveness, and relative market share is only
one factor in competitive advantage. The growth‐share matrix overlooks many other factors in
these two important determinants of profitability.
• The framework assumes that each business unit is independent of the others. In some cases, a
business unit that is a "dog" may be helping other business units gain a competitive advantage.
• The matrix depends heavily upon the breadth of the definition of the market. A business unit may
dominate its small niche, but have very low market share in the overall industry. In such a case, the
definition of the market can make the difference between a dog and a cash cow.
While its importance has diminished, the BCG matrix still can serve as a simple tool for viewing a
corporation's business portfolio at a glance, and may serve as a starting point for discussing resource
allocation among strategic business units.

Q5
(i) Attracting & Retaining Customers
By carefully studying the attributes and techniques used by suc cessful sales representatives from a cross‐
section of industries and professions, you can determine what it really takes to sell your products or
services, maintain high quality customer or client relationships, and upgrade your organization's present
base of business. Once you really understand the motivation and methods used by top sales professionals,
you will be in a better position to consistently generate more sales for your firm or company.

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Findings from the daily sales activities at The Selling Edge®, Inc., and extensive research by others into
successful sales promotions, have identified three underlying attributes or success factors that assist top
sales professionals in building and maintaining a profitable customer or client base. As you set out to
attract new business and increase the profitability of those customers or clients you presently serve, these
three factors must become the foundation on which you build every promotional activity.

I. EFFECTIVE COMMUNICATIONS
Developing effective and consistent two‐way communication skills is the first component in
establishing and maintaining a selling edge and developing long‐term customer or client relationships. It is
accomplished through practice and constant exchange of thoughts, feelings, and reactions with those
customers, clients or prospects who have a distinct need and ability to acquire the products or services
that you provide.
A prospect's or customer's thoughts and feelings can easily be discerned by talking to him‐‐asking
open‐ended questions and really listening to what he has to say about his family, background,
employment, goals, hobbies, and interests. Then you can use what you have learned to create a long‐term,
mutually profitable working relationship.

II. ACHIEVEMENT DRIVE
The right attitude‐‐a strong, overpowering will to succeed (success motivation) is the second key to
achieving consistent sales. Studies show that top sales people from every field of endeavor have more
desire to achieve than the vast majority of their peers. They also gain personal satisfaction in helping other
people make sound buying decisions. This gives them the energy, stamina, enthusiasm, and compelling
motivation to attain the edge that produces higher rates of sales and high quality customer service levels.

To success fully sell your products or services, you need to develop a strong desire to succeed. Our
research reveals that success motivation can be learned and heightened with a positive attitude about
yourself, your products, and services through creative mental imagery, and by developing specific, written
sales and promotional goals.

III. DAILY PLANNING AND PERSONAL MANAGEMENT
“The mere possession of selling techniques does little to insure success. It is the person's attitude
and work habits that are important.”
Dr. Richard H. Buskirk

The third concept to be mastered, if you are to achieve success in selling, lies in your ability to
schedule your time wisely and work effectively during the periods you allocate to your sales promotional
activities. Major studies have conclusively demonstrated that sales profession als are successful not
because of any special or unique selling techniques they use or a sales personality, but they succeed
because of the positive disciplined approach they bring to their work.

(ii) Marketing decision support systems
MarKeting decision support systems (MKDSS) is an Information system that helps with decision‐
making in the formation of a marketing plan. The reason for using an MKDSS is because it helps to support
the software vendors’ planning strategy for marketing products; it can help to identify advantageous levels
of pricing, advertising spending, and advertising copy for the firm’s products (Arinze, 1990). This helps
determines the firms marketing mix for product software.

This model, from Arinzes’ paper, is an example of market response model for a product manufacturer of
expert system shells which uses only direct marketing for sales (so no retailers are included) (1990). The
boxes represent sources of information with overlapping boxes representing many. The arrows represent
data flows and are labeled with the specific type. This model helps to predict the actions of customers
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which good to know to increase you marketing efficiency. Models like this are used to construct an MKDSS
by providing an illustration of the analysis that it contains; included are two sub‐models for advertising
copy and spending, and price which use calculus for computation. (Arinze, 1990) Both methodological and
technological options are available in an MKDSS such as statistical science models, managerial models, and
decision‐making support for managers. (Arinze, 1990) It includes information from customer analysis and
industry analysis as well as general market conditions. This decision support system combines external data
obtained from market analysis with internal data to form a comprehensive marketing plan of action for
advertising and price setting.

To get a better idea of how an MKDSS is constructed, a low‐level meta‐model of the process was
constructed for the data flows. This lists the steps of the process in boxes and the arrows refer to data
flows. The previous figure shows the actual application of the first step of modeling the market response
structure for a particular business. There are other ways that this step could have been done, just like
many different sub‐models could be used for different calculations. The arrow going from the create
recommendations to the gather information is used when there was not enough information available
before to come to sufficient recommendations.

(iii) The Product Life Cycle (PLC) and Strategies at different stages
Advertising strategies change with the change in stages of a product life. i.e. PLC This article focuses on
changes in way of advertising when PLC stages changes.
Every product goes through a series of stages, namely the introduction, growth, maturity, decline.
After a period of development it is introduced or launched into the market; it gains more and
more customers as it grows; eventually the market stabilises and the product becomes mature; then after
a period of time the product is overtaken by development and the introduction of superior competitors, it
goes into decline and is eventually withdrawn. However, most productsfail in the introduction phase.
Others have very cyclical maturity phases where declines see the product promoted to regain customers.
Thus in this case, a suitable advertising and promotion campaign is required to be identified and followed.
Strategies for the differing stages of the PLC

Introduction stage of PLC
The need for immediate profit is not a pressure. The product is promoted to create awareness. If
the product has no or few competitors, a skimming price strategy is employed. Limited numbers of product
are available in few channels of distribution. Advertising differentiates the product.
Print ad of a Printer giving details about its specifications

Growth stage of PLC
Competitors are attracted into the market with very similar offerings. Products become more
profitable and companies form alliances, joint ventures and take each other over. Advertising spend is
high and focuses upon building brand. Market share tends to stabilise. Advertising establishes
participation with the marketplace.

Maturity stage of PLC
Those products that survive the earlier stages tend to spend longest in this phase. Sales grow at a
decreasing rate and then stabilise. Producers attempt to differentiate products and brands are key to this.
Price wars and intense competition occur. At this point the market reaches saturation. Producers begin to
leave the market due to poor margins. Promotion becomes more widespread and use a greater variety of
media. Advertising puts price ahead of the competition.

Decline stage of PLC
At this point there is a downturn in the market. For example more innovative products are
introduced or consumer tastes have changed. There is intense price‐cutting and many more products are
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withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting.
Defensive advertising or for revitalization.
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