When we are in the realm of advertising so many models come into place. We call them
by this response hierarchy models this title given for that is called response hierarchy.
Every consumer goes through three stages one is a cognitive stage, second is effective
stage, third is a behavior stage depending on what stage he is these models will elicit
different types of response.
One is called the AIDA model where in the cognitive stage you bring the product
awareness to the consumer. This can be the second stage is where after the product
awareness, it creates interest, then it creates a desire that is in the effective stage, then it
creates an action, this action can be in terms of, the action can be in terms of the
purchase of your product.
The second is what is called the hierarchy of effects the hierarchy of effects model will
give you first the awareness, second the knowledge, third the liking for your product,
fourth the preference, fifth the conviction, second the final one is a purchase. Customer
prefers your product over the other products. This is called the hierarchy of effects
The next one is innovation adoption where you bring it to the notice of the consumer that
is the attention of the consumer that this product is available, this is an innovative
product out for adoption. The consumer expresses interest shows a desire then wants a
trial of the product then goes to adopt. Suppose, it is an innovative this is a very
important thing which you should note an innovative product, you should be prepared to
allow it to go for trial and then adoption.
Now, in the communications model you are exposing the consumer, then when you are
exposing the consumer there is a certain amount of reception which is coming in results
in a cognitive response, results in an attitude maybe favorable or not favorable then if it
is favorable goes to intention then goes to behavior.
(Refer Slide Time: 03:49)
This is the way a working gives with respect to models. This is what is represented in a
matrix like this. It can be a familiarity favorability analysis, your product is having low
familiarity or high familiarity then elicits an unfavorable attitude or a favorable attitude
depending on the quadrant you are in.
Suppose it is a low familiarity unfavorable at for a product coming from C that is here in
this particular case three hospitals taken low familiarity, but a favorable attitude coming
for hospital B then when you look at these high familiarity again it can be for different
hospitals unfavorable attitude or the favorable attitude.
What is it that we have done here? If you look at these hospitals, these hospitals are
evaluated on a semantic differential scale 7 points scale a small hospital to a large
hospital and when it is a small hospital to a large hospital, you can go from research
oriented to community oriented and interpersonal service to friendly service, dated
facilities to modern facilities, a specialized hospital to full service hospital, from an
inferior medical care to superior medical care.
You plot these three hospitals A B and C on this. Find out where do they really come, if
you really see some of these hospitals with the a you are getting it a better ranking
compared to B and C. So, maybe it is a large hospital giving you superior medical care
going towards that all that.
You are going to get high familiarity and favorable attitude or low familiarity and
unfavorable attitude depending upon where you figure in these differential scales. The
images of these hospitals can bring you to familiarity and favorability depending on
where you are.
(Refer Slide Time: 06:20)
The advertisement program which you are adopting should give you what is called the 5
Ms an advertisement program should have a mission, should have a money that is a
budget. What is affordable percentage of sales, percentage of competitors should carry a
message that is you must generate a correct message and able to evaluate and select and
then execute it effectively. You should also take the right media depending on the reach
frequency and the impact that it is going to create.
And the last one is measurement, what is the sales effect before your ad during the ad
and after the ad all these represented by 5 Ms. The sales promotion management now has
been accepted by top management as an effective sales tool for all almost all
organizations. The budgets are said to be yes; give a particular budget for this. What is
the whole aspect?.
Sometimes it is characterized by this statement free sample stimulates sales - avail a free
management advisory cements long term relationship with a retailer and consumer. You
must consider it as an investment. Consumer promotion tools could be your samples,
coupons, cash refund offers, price pack, premiums, prices, patronage rewards, free trials,
product – warranty, Tie- in- promotions, etcetera which are being practiced by many
You go through this different pay options, whether it is a PhonePe or the Paytm they say
recharge your phone, if you recharge your phone so, much cash back, recharge for 100
rupees, you will get a message that you have got 10 rupees back that is cash back. That
10 rupees can be made use of in your next transaction.
Sometimes they say 35 rupees recharge will be done for 28 rupees on this particular
service provider through this particular Paytm or PhonePe or Amazon pay, whatever they
are giving it. In the market you have this is what the digital marketing has done in the
present-day markets. You can make use of trade promotion tools, this press trade
promotion tools could be price off advertising and display alliances.
Price off meaning it was let us say priced at that 35 for this particular date is now price
at 30. This is what you see with respect to an outlet like reliance fresh or big bazaar, big
bazaar saying Wednesday market, Wednesday market price off that is earlier it was at 32
for this vegetable. On this particular day we are selling it at 24 rupees he is prepared to
take a cut of nearly one fourth.
He wants to make it up by increased sales margins then advertising and display alliances,
free goods then push money. You take this so, the company is prepared to push money
on this particular product, you take this product. Then this next product you will get it at
a much lower price all these types of incentives to make sales coming in and specialty
advertising item. If you are a business promotion tool could be your conventions trade
shows contests and games.
(Refer Slide Time: 10:51)
The traditional view of marketing was looking at organizations that is R and D as to
come out with ideas gives to design and engineering hope execute that then goes to
purchase, goes to manufacturing, then to marketing, then to consumer.
(Refer Slide Time: 11:18)
But what is the present day? The present day is you are looking at R and D giving it to D
and E. But essentially you are looking at marketing giving a feedback to R and D. Then
R and D coming out with ideas giving it to design and engineering then this idea
selection and development takes place in this particular block R and D, D and E
purchasing manufacturing marketing, all are involved. And coming to this you are
getting the consumer manufacturing and marketing here. This is the market oriented
view of the organization.
(Refer Slide Time: 12:00)
You have different concepts coming in whether it is the zero customer feedback time,
Japanese concepts, zero production improvement time, zero purchasing time, zero setup
time and zero defects all these to help your production lines to become market effective.
(Refer Slide Time: 12:22)
All this gives you whether you should go in for sales and market separate departments or
working closely, reporting to the head of the organization so, but wherever it might be,
whatever you might be adopting you must keep four basic dimensions. What are the
functions? The geographical areas and the customer markets you are satisfying with the
through this organization.
Depending on that you can have a functional organization with a marketing chief on the
top at the top, then having a marketing administration manager, then an advertising and
sales promotion manager, then a sales manager, a marketing research manager and a new
products manager, all these contributing to this marketing organization. This is a
wonderful way of looking at sales and marketing in an organization.
Both of them getting combined reporting to the marketing head and looking at so many
dimensions whether it is, but you should accommodate this four basic dimensions, the
functions they are doing the geographical areas products and the customer markets. We
stop here, we will continue in the next class.
The product manager does plan products, that is the product planning he takes care of,
then implementation then results monitoring. In other words, he does the planning for the
product introduction, then implementation then he also deserves the monitoring, whether
the product launch has been successful or not successful what corrective actions required
to be taken.
Suppose, he is a consumer product manager he will be dealing with fewer products then
he will have more time on advertising and sales promotion. This is required very strongly
with respect to a consumer product because many times you may have to give incentives
impromptu to promote sales. The job of the consumer product manager is to constantly
monitor what is happening to the sales and take immediate actions as maybe called for.
Suppose, he is an industrial product manager then his job concerns mainly to go into
technical aspects of the product, then the design inputs. He has to spend more time with
the lab and engineering personnel, that is what I mentioned the job of the product
manager is highly challenging, it also affords the person an opportunity to interact with
many departments. He has the access to any department in the company he can ask for
information from any department, but he cannot dictate the line functions how it should
be done as I said earlier.
He can ask for information get the information from the different departments, but does
not have authority to change the course of action of the functional areas. The advantage
of having a product manager as I said earlier could be to get a cost-effective marketing
mix. You have your 4 P’s this person can do a cost-effective job of those 4 P’s. He can
provide a quicker reaction to market problems because he is day in and day out
concentrating on those products and also he is addressing those market problems.
He is grappling with them day in and day out; if it he calls for immediate action on sales
promotion, he can do that provide incentives to increase sales, if it calls for inputs from
the lab and engineering personnel he can again interact with them to get that. The great
advantage of having is product manager is your small brands become less neglected, so
that they do not get neglected. Suppose, you are a young executive who is entering the
company this is a wonderful opportunity for him to get trained in all the areas of
Many youngsters especially the MBA’s coming out from reputed institutions, they would
aspire to become product managers in companies because they can get a wonderful
training in all the areas of the company operations. But, there are some minuses also with
respect to the product manager which we have discussed, but again a recap. They are not
given enough authority they cannot change the course of functioning of a functional area,
they can for information, but no authority given to them to change the course of action in
a functional area.
They become experts in their product, but rarely in any functions, that is they become
experts with respect to their products, they do product planning, they do implementation,
they do results monitoring, but in any of the functional areas their role is limited to
getting information only kindly note that.
For an organization, they become a costly exercise because the greater number of
product managers you have, the more expensive it becomes you have to incur
considerable cost on them. Now, because they get training in all areas of company
operations, they are sought after in the market the result is that they hold on for a short
time, they may jump from one job to the other fast.
In order to provide a buffer against all this attrition if you want to call that way, many
organizations go from product managers to product team approach. There you can have a
vertical product team where you have the product manager at the top, you can have one
more person under him as an assistant product manager, then a project product assistant
at under him.
You have three people working in this vertical product team if the product manager
wants to jump from your organization to some other organization still you have the
buffer of the two other people. You can also follow what is called the triangular product
team approach where you have the product manager at the top of this triangle, under him
you have a market research person and a communication specialist very closely working
with him. So, again used as a buffer till a new product manager is brought in.
If you have this type of buffers, it reduces the impact of leaving of this product managers
in a short time. You can adopt the other approach of the horizontal product team where
you have the product manager one compartment here under him you have the research,
you have the communication, you have the sales manager, you have the distribution
specialist, you have the finance man, you have the engineering persons.
All these are to what do you call withstands; the sudden shocks if the product manager
were to hop from your organization to some other organization so as they say, in seeking
greener pastures suppose he wants to do that. There is very good possibility he may do it
because, he is young, he may be having ambitions and when he has ambitions, he always
looks for greener pastures. Nothing wrong with the whole list thing from his point of
view; from the organizations point of view, when he wants to exit the organization he
should be prepared for that scenario by creating buffers.
(Refer Slide Time: 10:19)
Let us look at a few points about the industrial buying. When you are looking at
industrial buying, you are looking at a few important things; you are surveying the
intentions of industrial buying. Why do you want to go in for this industrial buying? The
second one is you want to find out from the sales force opinions what is going to be the
demand for this industrial product?
Suppose it is a welding machine and you are producing this welding machine, you want
to know what will be the type of impact this welding machine can have in the
marketplace that is what will be the demand for this welding machine. Now gone are the
days where you had welding machines big in size; now, the present-day welding
machines are small you do not require an auto to bring that welding machine you can
bring it on your motorbike or the two wheelers.
This welding machine its size has come down so drastically that it can be just brought by
a two-wheeler to the workplace and then the work done and he goes away with the
welding machine which was unthinkable a few years back. This is how technology has
developed; the developments in technology they have contributed to terrific
improvements in products. This can be witnessed with respect to many of the
manufacturing equipments, it can be seen very strongly in the field of electronics, it can
be seen very strongly in the field of medical electronics also.
They have developed such a sophisticated catheter in the medical field that it can destroy
the blocks without going in for a surgery, and this type of instrument this catheter
instrument has come to India also, it is available in the JJ hospital in Bombay, now
Mumbai. The result is this is the type of developments which are taking place in products
due to changes in our technology or advances in technology.
This big welding machine is now a product of the bygone area, it has become obsolete
you do not require such big welding machine now. Suppose you were still in that old
times, you are likely to be swamped by the market forces. This is what market does when
you are not keeping yourself abreast of what is happening on the technological front.
In order to update yourself on the technological front you must always go in for the
expert opinion. In other words, you may be the producer of these industrial products you
must go in for expert opinions to find out what is likely to come about that is what are
the types of changes that you can expect in the coming days or months or the next few
years and how you should be prepared for that. You should try to get yourself advance
The very hallmark of a good manager is that he should not get caught unawares, that is
he should not get caught unawares by the market developments. He must be able to
anticipate what is going to come about and accordingly he should brace himself to the
One very good method of bracing himself to the situations he has to constantly have
expert opinions in his field of action that is in his product development field what is
going to happen. Besides these expert opinions he must also show some ingenuity that is
he must do some market testing, put one product for not into the launch mode, but the
trial mode find out what will be how will the market react.
This is what is called the market test method; so, make use of the market test method to
find out how the market reacts for the changes in technology resulting in changes in the
products which is being offered to the market by the company, put some products even
though they may be industrial products for trial in the market.
In other words, you do require some investment to do that and that should be budgeted in
the market budget. The marketing budget should provide for some of these types of
expenses. One of the methods of doing these types of market tests method statistically is
to go in to a time series analysis, to find out what is likely to be the trends which you can
If you really see these times series analysis is likely to tell you how your sales is going to
get influenced, then only you can understand how the developments in technology are
having effect on the sales. The four components of these past sales major components are
one the trend. What is the type of developments it may be developments in your say
Maybe your product was catering to your particular age group, it might now be catering
to that age group might not be interested in your product for some reason that is a market
age group might have really shifted away from your product. Maybe it is due to the
developments in technology that has taken place and the technology developments that
has taken place has given rise to new products which are launched by your competitors
all those types of things. Then the result is you are not able to keep abreast of all these
things which are happening in the market since you are not having adequate capital let us
say that is this capital formation ability is not that strong in the company.
This is a reason for keeping strong reserve base. This reserve basis you should cash upon
depending on what the market is wanting to come about. If it wants you to invest in
technology to develop new products you should fall back on your reserves and see how
our R and D can be braced to meet this situation.
This trend can be fitted by a straight line or a curved line through past sales, you can fit
this through a straight line or a curved line through past sales. If it is a straight line it
becomes linear, if it is curved line also still it can be analyzed without very strong
The next one is what is happening in the economic activities so sometimes you may find
that the economy is booming, sometimes you find that the economy is under recession if
you really see this is a debate which is going on with respect to the Indian economy now.
Day in and day out if you see the media channels they are highlighting the effect of this
economic activities so many people saying that economies is an a downward trend, your
GDP estimates are revised.
First, it was that is a country’s GDP estimates were revised first by the RBI then it has
been lately revised by the international monetary fund also. India wanted to grow at more
than 7 percent; now, the latest figures which the IMF predicts for the country is just
about 6.1 percent. The RBI was saying that it will be about 6.8 percent, the IMF has
trimmed it down again to 6.1 percent.
This swing in economic activity maybe due to so many reasons, if you really see in the
Indian scenario, the type of reasons that are being given, one is a markets’ sluggish. This
is especially the reason with respect to the automobile market, if you really see the sales
of automobiles over the last so many months, it has been constantly dipping. And even a
very strong player a market leader like the Maruti’s sales has also dipped.
The result is many of these companies are not able to have full production schedules.
You are not for going to produce to stock the products that is a stock you are automobiles
that will be a very dangerous precedent. Many times you may have the car of 19 that is
you are likely to run into November very shortly.
You produce the car in November you are not able to sell the car even by December,
then what will happen you may be able to sell that car in February of next. When you sell
the car in February of next your registration gets done for 2020, but the model of the car
The model of the car is 2019 before it has come to your hand itself it has got depreciated,
kindly note that. Suppose you want to sell your car your model goes has 2019 model, it
does not go has 2020 model. Before you can think of selling this car you be prepared for
nearly between 10 to 20 percent cut on this value which you are paid for the car. Then
the third impacting event could be the seasons it can be due to recurrent hourly, weekly,
monthly, quarterly sales.
The job of the marketing man is to keep get reports from the sales team on a continuous
basis, it can be with respect to your consumer products he gets his reports on an hour to
hour basis what does happen, you can see big outlets. Like, your reliance fresh or big
bazaar there the sales managers job is to keep on constantly getting this outputs. How is
the sale going this hour, next hour like that so by the end of the day he would like to have
a firm opinion on what will be the next day going to be how much stock of which
product to be in increased to be reduced all those types of things.
After these are some things under the control of the firm, the fourth one is not under the
control of the firm; this is what is called the erratic events. Suppose there is a strike you
do not know when there will be a strike. Sometimes the strike can disrupt the economy in
a very harsh manner, there can be riots also or some other issue. Some people antisocial
elements take advantage of the issue cause riots so, in political parties also come made
into the trouble. The result is your business gets hit; your business gets maybe hit other
than this strikes and riots due to other disturbances these are all some things beyond your
Many times’ you find that in a place like Japan earthquake itself is unpredictable today
you may be having a normal day, tomorrow all of us sudden you may find that economic
activity has suffered due to these certain earthquakes in the region. And this tsunami, the
tsunamis can really impact the economy or your first your business then the economy
These are the types of things over which company does not have any control. If it is a
strike in your company maybe you may try to avoid it by having discussion or dialogue
or trying to have negotiations with the employees, suppose it is getting affected due to
some other strikes then you do not have any control.
These are the four components which are likely to impact the past sales, you can just get
an idea of how your new products or the changes in products are likely to come about in
the next two seasons due to this, that is the trend, the cycle, the season and the erratic
events. I would just illustrate to you all this by taking an example of an insurance
Suppose these insurance companies sold 12000 policies last year and your job is to
project the next years December sales. Then, the long-term trend some indicators are
given to you the long term trends are just, let us say there will be a 5 percent sales
growth in policies that is in the sale of the policies. If you had sold 12000 policies last
year, you can expect 12600 policies to be sold this year, but you are also getting inputs
that the economy is going into recession next year. Recession has already set in; the
result is the predictions suggest that only 90 percent of the trend adjusted sales probably.
You are not likely to have 5 percent over the sales growth, but only 90 percent of the
trend adjusted sales possible that is 12600 into 0.9 giving you 11340.
Now, suppose you want to get this monthly sales keeping the sales per month to be the
same over the entire year, every month you should get 945 sales of the each policies, but
normally an insurance company finds that in December above average monthly sales can
be expected, that is you can expect a 30 percent rise in December. So, at that rate you are
likely to get 1.3 that is 945 into 1.3 giving you 1228.5 as the policies that may be sold.
Suppose, there are no erratic events expected that is your strikes riots or this other types
of disturbances, then you can predict your December sales to be around 1228.5 or 1229
as the case may be, but this is subject to this last trend that is that fourth trend this erratic
event does not come about. If it does not come about you can say the number of sales
policies that are likely to be sold in next December will be 1228 or 1229.