Market Environment | Sales Function & Marketing Mix Elements | Alison
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Sales Function and Marketing Mix Elements

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Welcome to this class, we will look at in this class the Sales Function with respect to two
Marketing Mix elements, in this particular slide. What we are looking at is the expenses
one company is going to incur on advertising and also on sales promotion. Two types of
graphs are presented here.
(Refer Slide Time: 01:09)

The graph here is an isometric view. If, you see there is A constant mixed line, there is A
constant budget line what does it indicate? Suppose, the budget you are asked to keep it
constant that is you cannot vary the budget, then what can you do as a marketing
manager? You can start in this constant budget to adjust the amounts spent on
advertising and the amount spent on sales promotion.
This graph which is in the isometric view that is the three dimensional graph, it presents
to you the constant budget line, it also presents to you the constant mixed line.

In this constant budget line if you see, you have an A 1 and then S 1, that is for the level
of A 1 that is a advertisement expenditure, you have these corresponding sales promotion
expenditure at S 1.
Similarly, with respect to A 2 and S 2, similarly with respect to A 2 and S 3. Depending
on what you are going to do as the adjustments for A and S you will have different
qualities of sales that is quantity of sales, you have it at Q 1 for A 1 S 1, Q 2 for A 2 S 2,
Q 3 for A 3 S 3.
You have 3 quantities of sales coming for different advertising and sales promotion
budgets. You can adjust your A 1 and S, you can adjust your A and SS in such a manner,
you can get slightly different quantities of sales. If, you see your Q 2 is higher compared
to Q 1 and Q 3, you are getting a slightly higher quantity of sales presented through Q 2.
A marketing mix manger is likely to adopt or go to this combination of Q 2 and A 1 A 2
and S 2 to get that Q 2. So, he may like to have his advertising expenditure at A 2, his
sales promotion expenditure at S 2 so, that you can realize this Q 2 sales. Now, all these
could also be represented by A 2 dimensional graph that is you have got advertising on
the Y axis and sales promotion on the X axis.
Now, you draw the 3 sales curves that is Q equal to 75, Q equal to 100 and Q equal to
150. Now, in order to get at the corresponding combination of AS and SS for getting this
sales quantity, what you are going to do is draw a tangent to each of these curves, that is
each of these ISO sales curves you draw a tangent. And, when you draw a tangent the
point at which this tangent cuts this ISO sales curves, it gives the constant budget line
where you can get the combination of A and S; the combination of A and S.
This is very useful to the marketing manager, because he has to make decisions, what is
he trying to get by doing this he is getting optimal marketing mix for a given marketing
budget. In this first diagram that is the three dimensional diagram, what we have looked
at is the relation of sales to different marketing mixes of advertising and promotion. what
we are looking at in the next diagram is finding the optimal marketing mix for a given
marketing budget.
Here you are representing it as A 3 dimensional diagram, here you are representing it as
A 2 dimensional graph and whichever is more understood by you can have, you can take

that particular method of representation if you think that, it is better for you to have A 2
dimensional graph, where you can see with reference to different sales curves, that is the
ISO sales curves. You can get a combination of the advertising and the sales promotion
expenditures.
In other words what we are trying to do in this is for the marketing manager creating
different scenarios ok. You take two elements advertising and sales promotion. And, now
you look at the constant your budget is constant you have the mix constant, mix line, you
find out how you can do different for different mixes of advertising and sales promotion,
what could be the sales?
Now, when your budget is constant here in the second graph, you can look at drawing a
tangent to each of the sales curves that is the ISO sales curves to get the optimal
marketing mix for a given marketing budget.
(Refer Slide Time: 08:13)

From this we move up further; why we are doing all these? This is the next question we
have to answer. We are doing all these to device different business unit strategies. And,
from the different business unit’s strategies, you go to the corporate strategy, but kindly
note that if there are 5 business units, if you summit that 5 business unit strategies, you
will not get the corporate strategy.

In other words, corporate strategy is not the summation of the individual business
strategies, that formula does not work there. When, we are looking at strategic
marketing, we are looking at the business unit strategy. When we are looking at the
corporate strategy, we are looking at the strategy of the company as a whole.
The business unit strategy looks at the individual business units, the corporate strategy
looks at the company as a whole. There are few things which are very critical to any
company; one is what is called the strategic decision. What is the strategic decision? This
decision is likely to have a long term effect, it is not that you took this decision today and
tomorrow you can reverse this decision it is not possible.
Compare it with the tactical decision; tactical decision is in order to achieve the strategic
marketing objectives, you will make some adjustments in the operational strategy. Those
decisions can be dynamic in nature you can take it on a data to day basis and when you
take it on a day to day basis, along with those decision you will have different budgets
scenarios coming in, you will have different mixes scenarios coming, but all with the
ultimate objective of achieving this strategic objective with respect to the business unit.
When you are looking at a business unit you are looking at strategic marketing with
respect to the business unit, when you are looking at the company as a whole you are
looking at corporate strategy. A strategic decision cannot be reversed a tactical decision
is dynamic in nature, and it depends on the situation that is prevalent in the market.
Depending on what type of situation comes in the market you keep sometimes
proactively acting to that or reactively responding to that.
It is a dynamic decision which is taken to achieve the strategic objectives which you had
earlier envisaged with respect to the business unit. So, in this slide here what we have
tried to present is; one is the business unit strategy, second is the what strategic
marketing is concerned with, third is the difference between the strategic decision and
the tactical decision.

(Refer Slide Time: 12:35)

Let us look at the silent features of strategic marketing; what is that we are trying to do,
when we are looking at strategy in when we are looking at strategic marketing. The
important aspect that we are looking at is emphasis of long-term implications. As a
marketing manager you may have to take decisions, which are spur of the movement,
that spur of the movement decisions are not coming into strategic decisions kindly note.
You might have one customer might bring to your knowledge that a particular product is
available at a much lower price then is being sold in your store. Then, you may have to
take a decision to decrease the price of the product in your store, that is a reaction to
what is happening in the market place. Kindly note that this is not a strategic decision,
this is a tactical decision where you are saying as a marketing manager I have taken the
decision to decrease the price of this product.
You can see in a place like big bazaar, take these vegetables. The price of vegetables are
constantly changing, today you may have 1 price for tomatoes tomorrow it may be
increasing or it may be decreasing depending on the supply that is coming in. A very
good example could be your onion a few days back the price of onion had shot up to
more than 60 rupees per kg. Now, with the supplies increasing due to several
government measures like putting a ban on export of onions, and also taxing the import
of onions what has happened is you have a higher supply of onions to the market.

If you looked at the price of onion, today you are getting it around 30 to 35 rupees per
kg. What was some 60 plus rupees per kg, you are getting it at 30 to 35 the indications
are that it is slightly to come down further. As a marketing manager if you are in charge
of this unit that is the vegetables unit, you have to be always on the go; on the go
meaning that you have to keep a watch on what your competitors are selling, at what
price they are selling?
When you are doing this, when you are taking this type of decision there are some
implications. You reacted to a situation by saying since the other competitor is offering
at a lower price, I am trying to match his price at best or even offer lower, but you have
to look at what is going to be the long term implications of such decision making.
If you take an outlet like Big Bazaar, on Wednesdays he offers many of these vegetables
at a much lower price compare to his competitors. He puts the condition that one can
pick up only 2 kgs or 3 kgs of onions.
What does the usual cart vendors or others who do business of these onions or different
vegetables do? They come to this big bazaar in large numbers that is their own group
comes, and takes these 2 kgs, 3 kgs at a much lower price, and he will sell that good at a
much higher price in his own cart or anywhere in this open market.
This type of implication also the marketing manager has got to study. Suppose the price
of a particular good is at x, for a particular day if you say I am going to reduce it by 0.5
x, it becomes instead of x 0.5 x, what are the long term implications, what is going to
happen? So, many of these vegetables may be perishable in nature and these vegetables
have to be sold during a particular time frame.
You may be at an advantage or disadvantage with respect to the pricing decisions, which
the marketing manager has to watch very closely. In other words, the job of the strategic
marketing manager is a tough job, it is not an easy job. One is, he has to be constantly
looking at, what is happening in the market place. Second is whatever decisions he is
going to take, it will have implications. Implications with respect to the company as a
whole and he has the obligation to explain, why he took this decision if asked by the
management.

He has to convince the management as to why these decisions are taken from his side. In
other words, this strategic marketing manager always has to be very objective in his
decision making. Clarity in decision making is called for.
In order to enable him to do this he may get inputs from the corporate also, that is the
company might provide him lot of inputs saying that take example of Big Bazaar. They
may provide him reliance fresh is pricing this product at this rate, Wal-Mart is pricing at
this rate all those types of things might be, these inputs might be provided to him from
the corporate body of this big bazaar itself.
Depending on the type of inputs that he is getting, he may have to change the roles for
different products and markets. For different products and markets, you may have to
change adopt different roles for a perishable market a different role, for a durable market
a different role. Consumer durables may call for a different pricing strategy, consumer
perishables may call for a different pricing strategy. In other words, this marketing
mangers job that is the strategic marketing mangers job is extremely challenging and he
has to be watch full always.
The business landscape in which he is operating is poses for him so many challenges on
an hour to hour basis, when this challenges are coming to him on an hour to hour basis,
he has to many times act pro actively or reactively. When you go to many of these stores
you may find so, many sales people also there, you may also find so, many middle level
managers also being there assisting the sales people. Why they are assisting the sales
people? They are helping them with many decision making inputs.
Whenever they are suppose some supply of some material is not there the job of this
middle level manager is to find out how can this supply get augmented or immediately
replenished. All these types of decisions are taken by middle level marketing managers.
This is in other words, strategic marketing and corporate strategy, they are intertwined;
you cannot separate, but as I mentioned earlier when you are looking at a strategic
marketing you are looking at a business unit, by just summating this strategies of the
different business units you are not going to get the corporate strategy, that is just the
some are not going to result in the corporate strategy.

When you are looking at the corporate strategy you look at a more holistic picture,
compared to what you are looking at with respect to the business unit. So, this is how the
strategic marketing and the corporate strategy are linked and also slightly different.
(Refer Slide Time: 23:17)

What are the strategic implications of all these? When you are looking at strategic
implications, you are looking at from marketing aggregation to targeting. You may like
to aggregate different market segments, saying for this particular product we can look at
so, many segments 1 2 3 4 5.
Take for example, the washing machine. You may have different models of washing
machines; one could be semiautomatic, second could be fully automatic, one could be
semiautomatic with not full drying semi drying, a fully automatic not with full drying,
but 80 percent drying, then there could be a separate drying unit itself. So, you may take
the cloths which are dried to get into 100 percent drying by putting into this drying unit.
There may be suppose it is a cold region you may like to opt or the consumer might like
to opt for this drying unit also, because there is he may not have place, or he may not get
that sun shine, to get that remaining 20 percent drying. He may say I am using this
washing machine here and I am putting it also to the drying, you find this very
commonly in place in most of the western countries you have a drier. And, that drier
makes it 100 percent dry your cloths are 100 percent dried in this.

When you are looking at segments, you are looking at market aggregation unto targeting.
That drying unit may be very useful in the western context, it may not be so, useful in the
Indian context. You may you may find that the Indian consumer is quite happy or
contented with the washing machine. He may not require the drying unit separately. He
may be happy with his 70 percent or 80 percent drying, which the washing machine
gives, he puts it for drying outside and in a few hours this gets dried fully.
That what is the this is the first implication he has to get from market aggregation to
targeting markets, that is segmenting the markets according to particular targets. All
these terminologies are becoming or is getting used differently in the market now, you
call it a niche market segment. When you say it is a niche market segment, you have to
find out what is this niche which this particular product is targeting on.
Take the example of this Nirma washing powder. So, it is it was concentrating on a niche
marketing, that is it was concentrating on a market which was highly susceptible to price.
That is people whole could not afford your surf, but wanted to use a washing powder at a
much lower price, that is the lower income strata of the Indian society, the Nirma was
targeting. He was targeting such that this section could afford this particular washing
powder.
But, since this particular segment the sales in this particular segment of this Nirma
washing powder increased to such a level, it became a threat to surf only. The result was
Hindustan lever had to come out with promotional campaigns as to differentiate the
cloths, which were washed by Nirma and that by surf. This advertising or promotion
helped to find surf it is due recognition in the market place.
The second one is what are we trying to do - what is the strategic marketing manager
trying to do? He is with respect to the organization or the brand or the product he is
putting a positioning map in the intended customers mind. He is saying- take the same
example which I gave you Nirma, a middle class user or a higher income segment user,
would never look at Nirma. He would look at surf only or products in that range, why he
would look at it because the attributes of surf (Refer Time: 29:06) Nirma, they are
different according to him in his intended mind set.
Similarly, if you look at different brands with respect to TVs you may say LG is at this
level compared to that your Panasonic is at a different level, compared to that the Sony is

at a different level. Which one you can afford LG may be available to you at a lower rate
Panasonic, a little higher Sony much higher which one do you want to take. Depends on
the customer’s budget and where he wants to get associated the brand; the brand
positioning.
In this whole scenario what it implies is the brand equity of a product? So, a brand equity
of a product comes into play and that brand equity gets depending on the value of the
brand a higher or a lower value to your product. In order to get to this positioning in the
intended customers mind, you many times marketing managers make use of symbolism,
that is strategic use of symbolism.
If you see the mobile phones now, the latest version of the android phone, you get a
symbol suppose your phone is not answered you get a symbol where a figure comes
saying that your contact may be out of reach. So, he shows by a symbol. You do not have
to really look at what is the voice which is coming in the symbolism is enough to tell
you, you are not able to reach your the person to whom you phoned.
The implications of all this is terrific with respect to product innovations and value
decisions. Keep on innovating your products. In other words, what is happening is in a
competitive market scenario, there is a lot of value which gets which gets attached to the
feedback of the customer. And, depending on the type of feedback which comes from the
customer side the product innovations start coming into play.
You start innovating on your product continuously this is not a onetime process. It is a
continuous process and where this value decisions come into play suppose, I innovate
like this what is going to be the effect on price that is the impingement on the price of the
product. Now, what is happening in the present market scenario? The markets have
become digital online.
Two things are happening here; one is your e shopping is becoming more pronounced,
but many times in e shopping you may not get the feel of the product. The consumer
might like to have a feel of the product, then sometimes he may say I would like to go to
store physically and feel the product before making a decision to buy the product. Then
e-shopping fails to address that particular criterion.

Now, what are you seeing with respect to all these digital marketing and other types of
online marketing? You are seeing a terrific spurt with respect to business to business
markets and also consumer markets. You may your seeing so, many online marketing
companies, catering to different consumer needs, even your whether it is your
vegetables, or your groceries, or many other items like your cloths. The online market is
coming in straightly to your house and telling this is available to you, why do not you
order.
e-shopping, B to B markets and consumer markets have changed the scenario, in which
the present marketing is operating. You have a lot of changes which has come into the
market place. The result is you have tremendous opportunities, if you are able to adapt to
this situation. Tremendous opportunities are getting open for you if you are able to adapt
to this change as a player, we stop here we will continue in the next class.

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