Rajagopal. Marketing Dynamics: Theory and Practice
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Marketing Dynamics: Theory and Practice
MONITORING AND EVALUATION RESEARCH IN MARKETING
Monitoring and Evaluation in marketing is a new discipline, which may broadly be classified as a
component of development planning. It is an important tool for assessing, the physical and financial
progress of product marketing in developing markets where the product is relatively new and yet
to make customers familiar with its usage. Though ‘monitoring’ is an old concept, the ‘evaluation’
approach began with the new experiments in production and technology extension in the areas of
modern consumer products and services. Monitoring and evaluation studies helps us understand
the status of the product in the market and the prospect of cultivating better ways and means of
distribution, pricing, promotion and product-mix strategies for a company on the basis of the
consumer feedback. The monitoring and evaluation analysis helps in determining the trend of
consumer behavior, volume of sales and related variables. Behaviorally, monitoring and evaluation
may be defined as learning dynamics in the planning and management of marketing development
projects. Much of it is still undergoing the process of ‘trial and error’. Global concern for business
development has led to close competition of product standards and administering customer-oriented
strategies for accrediting the product and the company with the welfare business theory. In attempting
to establish such theories, one of the important factors to be considered is evolving an efficient
marketing-mix system which is a complex and important parameter that determines growth in
business. Thus, monitoring and evaluation studies have vital role to play in reconciling the business
administrative tasks within a competitive environment.
It has been observed through the market research studies
3
that value sales of toilet paper
increased by 1% in 2003, after experiencing five years of decline and despite Japan not
having recovered from the more than decade long recession. This growth was primarily due
to a price increase by the major manufacturers in autumn 2002. Although consumers spent
less on toilet paper during the economic downturn, it is difficult to minimize usage, thus
value sales rose. Most standard and luxury toilet papers also come in scented rolls.
Aromatherapy is a popular fashion in the home, encompassing bath and shower products,
body moisturizers and scented toilet paper. Manufacturers are also adding prints to toilet
paper, which consumers can use to brighten up their bathrooms. The Elleair range of toilet
paper from Daio is available in a number of different prints, such as rose or lavender, to match
the scents. Standard toilet rolls are also available in different colors, so that consumers can
match the color schemes of their bathrooms. It has been forecast that toilet paper value sales
will increase by 9% in real terms between 2003 and 2008. Major manufacturers raised toilet
paper prices in autumn 2002, and it is possible that further rises may follow before 2008.
Another major impetus to the growing interest in monitoring and evaluation is based on development
concerns in marketing management. It is used as a tool to probe the failure and success factors that
are responsible for successful/unsuccessful strategies. The flows in decision-making can be understood
from the marketing evaluation reports, which would help to draw lessons for the future and to build-
up appropriate alternative strategies. Marketing management is an interdisciplinary concept which
3 Leonie Tait : Luxury toilet paper growth in Japan, Euromonitor International, 22 October, 2004.
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needs integration, as very often, several distinct components are administered by separate agencies.
Monitoring and evaluation play a crucial role in the co-ordination of the marketing plan implementation.
Lessons drawn from monitoring and evaluation help in identifying the gaps in the existing approach
and aid the designing of alternative projects.
Structural Components
Monitoring and evaluation are the analytical methods applied to relevant data and information in
order to get feedback reports of the existing implementation pattern of the project or scheme. It is
sometimes essential to have a monitoring and evaluation unit, at various distribution points to monitor
demand and supply status, customer orientation and other behavior issues. The specific tasks of the
monitoring and evaluation unit are given below:
(i) To monitor the flow of goods and services to the terminals from production centers via
the established backward and forward linkages
(ii) To evolve accuracy in data and information flow to analyze the feedback and
(iii) To evaluate the marketing project and to study the impact thereof on the target group to
build up alternative approaches for better implementation and outcome.
Ideally, in a company, the monitoring and evaluation structure (with reference to marketing
management) should be situated at marketing regions under the charge of a monitoring and evaluation
manager vested with the task of periodical monitoring of demand, supply, pricing, quality, retailing and
other related matters. He should be assisted by a statistical assistant. However, this structure is
subject to the turnover and marketing research potential of the company. This unit is, by and large,
concerned with the data pertaining to physical and financial targets and achievement. However, the
feedback on marketing is also to be considered at the same time. Thus, a monitoring and evaluation
unit in a potential company would be very helpful to developing marketing plans for indigenous
products of the region, through effective monitoring and evaluation research. The monitoring and
evaluation unit in such agencies can be relatively small depending on the area of operation and of
location in the administrative hierarchy. In fact, the monitoring and evaluation unit should form an
integral part of the marketing research unit set up and should also serve as the Marketing Planning
Secretariat of the companies, individually or in a cluster. A small and compact team is preferable in
most cases when compared to large units as supervision would become a problem in the long run.
The monitoring and evaluation head should preferably be a senior-level manager in the management
hierarchy. The task of designing a monitoring and evaluation system for a marketing project should
start in the embryonic stage itself.
SWOT ANALYSIS
It is observed that no product marketing is effective in the long run unless the modifications in
marketing approaches are properly carried out. There is a need to develop self-appraisal mechanisms
within the product - marketing system to acquaint oneself with the existing strength, weakness;
opportunities and threats (SWOT) of the product in the market. Such analysis has to be done with
reference to prevailing market conditions for the product. The Table 7.2 explains the areas of SWOT
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analysis for achieving better marketing efficiency. The companies may restructure the production
and marketing design for their products on the basis of weaknesses and threats in order to explore
better opportunities and to achieve more strength in the product market.
Table 7.2 Areas of SWOT Analysis
Strength Weakness Opportunities Threats
• Production • Product • Uninterrupted entry • Neck competition
recognition Recognition • Weak competition • Fashion
• Long standing in • Short span • Substitutes and advertisements
market • Pricing mismatch complementary • Contemporary
• Consistency in • Product design products marketing mechanism
price, quality and • Product • Access for MIS • Frequent shifts
supply transformation and CAS in demand
• Effective system • High density • High cost
distribution network • Risk marketing area of marketing
• Strong Market • Low market • Political and
Information System investment technological threats
(MIS) and • Poor
Consumer accessibility to market
Awareness System
(CAS)
Product marketing has a tertiary environment comprising of the Social, Technological, Economic
and Political sectors (STEP) which affect the marketing of products indirectly. These factors together
with vested interests provide scope for developing a capitalist environment by interrupting the inflow
of products to potential markets which in turn provides an opening for the products to capture these
markets through the STEP approaches. The STEP effect is common for the new product entries that
put the customers into indecisiveness often. The power structure of capitalist industries operates
with a strong resistance in competitive markets and even dilutes state intervention to a large extent.
It would help to protect the consumer system within the framework of STEP to avoid marketing
interruption at the premature and mature stage of product cycle.
QUALITATIVE MARKET RESEARCH
There are many forms of conducting qualitative research in marketing. Of these, focus group analysis
and exploratory research are commonly used by the international market research firms. In foreign
markets, focus groups have the advantage of being relatively inexpensive, can be completed quickly,
and can reach local pockets of the total market. Unfortunately, they can also constitute a non-
representative sample because the typical screening criteria are incorrect in the new environment or
are not implemented correctly. Generally the non-random sample sizes of focus groups are best fit to
discuss the issues of common interests. The participants of the focus groups are paid for their time
investment, usually a small amount. The compensation to the focus groups participants are typically
US $2.5 in the United States, about the same in Europe. However, the amount varies by city and by
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respondents’ occupation, more than by country. It is necessary to provide all freedom to the participants
of the focus group during the process of discussion on the predetermined issues and the role of
moderator should be minimized. Such open house situation would provide an unbiased environment
to the participants for holding discussion on the given issue. A French company sent the videotapes of
five focus groups to a Latin American client, who was surprised to observe the dominating attitude of
the moderator toward his respondents. The moderator, not without pride, explained to the perplexed
sponsor that he usually dealt with corporate customers for industrial products, not teenagers discussing
audio tape design.
There are many cultural aspects affecting the application of the kind of direct questioning involved
in the typical consumer survey. In high context cultures the idea that one can understand consumers
from their responses to a formal survey is naive. Open ended questions are often left blank by
respondents in hierarchical cultures who are not used to explaining their reasoning or are afraid of
being too transparent. The response pattern and the data reliability factor vary in many countries as
the way respondents generally behave indifferently to a stranger (interviewer). Another type of
qualitative research may be conducting a general survey through an open ended questionnaire and
make a contents analysis at the end of the survey. Surveys of relatively large random samples drawn
from a sampling frame of representative product users constitute the “meat and potatoes” on descriptive
market research. Whether administered by mail, phone, or in person, such surveys are used for a
variety of marketing purposes, including segmentation and positioning, concept testing, and customer
satisfaction and competitive product evaluation. But the problems with survey research methods in
certain markets have been well documented. A major problem associated with surveys may be
towards the attitude of the respondents toward the study. In Latin American and East-Asian societies,
there will be prospective respondents who refuse to divulge any opinions simply because they “do not
want to be taken advantage of,” distrusting the function of market research. In more risky cases
people will consent to participate only to fake their responses so as to distort findings. To handle
these problems of the non-cooperation of respondents, the firm needs to thoroughly understand the
general sentiments of the respondents in the local market and frame the questionnaire accordingly.
However, it is also a good idea to monitor the process by observing some pilot interviews if at all
possible.
World Bank research project
4
was aimed at studying the Vietnam’s recent success in promoting
economic growth, reducing poverty, and raising living standards with the aim of providing
policy lessons for other low-income countries. Most economists and other social scientists
would agree that economic growth is essential for improving household welfare and that the
form of that growth has important implications for poverty reduction. Yet this consensus still
leaves many questions unanswered. Two stand out: What policies promote broad-based
economic growth? And what policies should countries adopt to ensure that economic growth
quickly reduces poverty—both raising income and consumption and improving other
4 The World Bank : Economic Growth and Household Welfare in Vietnam-Policy Lessons from Vietnam,
World Bank, 2001
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indicators of living standards? These questions are difficult ones, and more empirical evidence
is needed to provide recommendations sufficiently precise to guide policymakers. A recent
example of success is Vietnam and the World Bank attempted to address the following
questions:
• What policies led to Vietnam’s high rate of economic growth and allowed it to
continue that growth (though at a lower rate) during the recent economic crises
in East Asia and elsewhere?
• Which Vietnamese households experienced growth in their incomes and expenditures,
and which components of their incomes increased most quickly? What public policies
brought about these changes in household incomes?
• How have increases in income affected other aspects of living standards in Vietnam,
such as child nutrition, school enrollment, adult health, fertility, child labor, and infant
and child mortality? What has played a more important role in these socioeconomic
outcomes towards income or the more direct affects of such public policies as social
safety nets?
Growth in Vietnam has averaged about 8 percent a year since around 1988, while the incidence
of poverty declined from about 75 percent in 1988 to 55 percent in 1993 and 37 percent in 1998. The
research addresses the first question by using macroeconomic data and cross-country data analysis,
and the second and third by using data from the 1992–93 and 1997–98 Vietnam Living Standards
Surveys.
Faster, cost effective and most commonly used method for learning about customers in a market
is to do a trade survey, interviewing people in the distribution channels and trade associations. In the
trade surveys type of buyers, the type of buying processes used, and the sources of buyer information
are clearly defined. These professional market research firms can also provide a solution to the
multinational companies seeking trade surveys as who should be the respondents, when to administer
the questionnaires, what should be the nature of questions and the number of questions to be used in
the trade surveys. These market research firms provide a good starting point for further data gathering
and analysis. The market research also involves direct observation on customers buying and using
this method to know the consumer behavior towards existing products can be very beneficial. The
behavior of consumers towards the existing products gives important clues to customer preferences,
especially in mature markets. In markets where access is free and the customers have well-developed
preferences, the sales records of the various products constitute, in fact, a shortcut to understanding
customer preferences. This method is very useful during the pre-launch stage for the foreign firms to
develop an appropriate launch of their products in the segmented markets. The method of observation
also faces some practical difficulties if certain assumptions are made to interpret the observed issues.
A firm may assume that current products reflect customer preferences and such assumption is likely
to hold only in mature markets with no entry barriers. However, where customers have been deprived
of products because of trade barriers, consumer preferences might well display a desire for something
different. Such latent preferences can’t be uncovered through observation. On the other hand, the
causal marketing research involves experimental methods of research and causal models. The aim
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of such research may be to determine the extent to which a causal variable such as price or advertising
has an effect on variables such as brand preference or purchase. There are typical research designs
that may be used in such experimental methods and towards the estimation of links in causal models.
The problems addressed in the casual market researches tend to be about the fine-tuning of price
levels, testing of alternative advertising copy and visuals, and the link between post-sales service and
customer satisfaction. The basic notion underlying the research is that a multinational company
needs to understand precisely, which of the contemplated marketing activities will have an appropriate
bearing on the results.
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SELECTED READINGS
Arnold E Amstunz, Computer Simulation of Competitive Market Response, Mot Press, Cambridge,
1967, also see Kotler Philip, op cit, p. 124 – 128
Breen, George Edward, Do it yourself Marketing Research, McGraw-Hill, New York, 1977.
Buell Victor P. Handbook of Marketing Management, McGraw-Hill, New York, 1986, p. 32 - 2 to
39-12.
Crisp R.D. ‘Marketing Research Organization and Operation, Research Study 35’, American
Marketing Association, 1958, pp. 39-47, quoted in Tom Cannon: Basic Marketing Principles and
Practices, Holt, Rinehart and Winston, London, 1980, p. 62.
Kotler Philip, Marketing Management: Analysis, Planning, Implementation and Control, Practice
Hall, New Delhi, 1988
Rajagopal, Project Formulation and Analysis: Participative Constraints, Working Paper, National
Institute of Rural Development, Hyderabad, 1992.
Rajagopal, Organizing Rural Business: Policy, Planning and Management, Sage, New Delhi,
Chapter 4, 1995.
Ralph S. Alexander, Marketing Definitions, The American Marketing Association. Chicago, 1960,
p. 16.
Weiers, Ronald M. Marketing Research, Practice Hall, Englewood Chiffs, New Jersey, 1984, p.
278 - 288.
William R. Dillon, Matthew Goldstein and Leon G Schittman, Appropriateness of Linear Discriminent
and Methodological Classification Analysis of Marketing Research, Journal of Marketing Research,
Feb. 1978, p. 103 - 112.
Susan P. Douglas and Samuel Craig C. International Marketing Research, Prentice Hall, New
Jersy, 1983.
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Case 7.1
CADBURY SCHWEPPES : POSITIONING IN LATIN AMERICA
5
Jean Jacob Schweppes, a German born Swiss entrepreneur had started commercial production of
synthetic carbonated water in 1783, following the method devised by J B Priestly, an English scientist
in Geneva. In 1792, Schweppes shifted hid fuzzy water business to England and built the brand on his
name considering the poetic touch in its pronunciation ( the first three letter of his brand name
schw…e gives the sound of bottle being uncapped ). In 1969, this soft drink manufacturing company
merged with a leading confectionery of UK Cadbury and became Cadbury Schweppes plc. This
company has put together a pointed portfolio of beverage brands to emerge as the global leader for
non-cola drinks. This company with its base in London has earned revenue of 4 billion by its world-
wide sales claiming thus to be the undisputed global leader in non-cola soft drinks.
THE PRODUCT LINE
J Schweppes and Co.’s aerated water made instant success in British markets right from its beginning
in 1972. The company launched its next product Schweppes Aerated Lemonade in 1835 followed by
a product Indian tonic water, a drink which was used as a diluting agent for Gin and Vodka. From this
originated the British habit of mixing quinine with water to prevent malaria in the tropical climate of
India during the colonial period. This product had a slight bitter taste which appealed to its western
consumer. Later the company, in 1870 added ginger to its product ginger ale using the technology
developed for extracting flavor from the fruits and vegetables. In 1900, the company had gone public
and launched series of fruit beverages. During 1955-62, the company diversified its product line and
spent 5 million dollars for entering into global market with processed fruits and vegetables products
like marmalades, jams, canned fruits. However, these product were given-up by the company in
latter years. It concentrated again on soft drinks and ventured into expanding its market for soft
drinks by prominent brands tie-ups. In 1969, the Schweppes & Co. merged with Cadbury but did not
make any significant changes in the soft drink product line. In order to expand its market in US, it
bought Canada Dry in 1986 and in 1993 the company introduced low sugar citrus drinks to suit to the
tastes of American buyers. The merger with Cadbury in 1969, has enabled Schweppes & Co. to
diversify its product line to confectionery products also. In 1994, it became the third major player for
confectionery products in the world market.
5 Professor of Marketing, Business Division, ITESM, Mexico City Campus, Mexico 14380 DF (E-mail :
rajagopal@itesm.mx)
This case has been written as the basis for class discussion rather than to illustrate either effective or
ineffective handling of an administrative situation of the company.
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MODES OF ENTRY
For long time Schweppes plc. had operated in the market with its headquarters at London for its
manufacturing distribution and marketing activities. During the late 18
th
century, the company entered
the international marketing avenue by setting-up its subsidiaries and bottling plants across Africa,
Australia, North and Latin America, New Zealand and the European mainland. Despite other
companies entering the international markets, Cadbury Schweppes Plc. claims that it has set-up
bottling operations in 15 countries apart from licensees in 85 countries. The confectionery division
which market chocolates and assorted candies has manufacturing plants in 23 countries and marketing
offices in more than 100 countries. The company has entered the Indian market by setting-up Cadbury
Schweppes Beverages India Pvt Ltd. (CSBIL), a total subsidary of Cadbury Schweppes plc in 1994.
The popular brand of the company in the carbonated beverages is Crush.
BRAND MANAGEMENT
Schweppes & Co. has reserved its brand, since its inception, on all the products it has manufactured
and marketed internationally. The brand game began after the company had a shock and had to
withdraw its diversified fruit-processed product during the early sixties. The big merger happened in
1969 with the UK based major confectionery player Cadbury plc. The idea after such a merger was
more to use both strong brands for enhancing the marketing horizon of American and Australian
markets. The company bought Canada Dry in 1986, in order to enter the American markets. The
competition however, increased in the late 80’s with other US based soft drinks like Red Cheek
Mott’s apple juice and Crush International and the English goodies labeled Basset foods. In 1993, the
company brought A&W Brands Inc., the US based manufacturer of A&W root beer and Squirt - a
long sugar citrus fruit drink. Schweppes acquired Dr Pepper/Seven up Inc., America biggest non-
cola soft drinks by investing 2.5 billion in 1994. CSBIL has already launched Crush, Canada Dry,
Soda Water, Bitter Lemonade and Schweppes Tonic Water in the Indian market. Even though other
brands have come up in the international market, Cadbury Schweppes plc has acquired enough
consumer strength to sustain itself in the global brand race where soft drinks and confectionery
products are concerned.
CORPORATE GROWTH
Cadbury Schweppes plc has accounted for 55 percent turnover in total beverages sale in the UK
with sales of 2.2 billion during 1994 ( up by 7 percent compared to its performance in 1993 ). The
company in the US market leaped from 5 to 16.5 percent augmenting its overall beverages volumes
by 75 percent more than the pre-acquisition figures of the big US brands Dr Pepper and Seven Up.
The combined statistics for beverages and confectionery during 1994, for the company account for
42 percent of sales in UK, 19 percent in North America and 13.5 percent from Australia and Asia.
Dr Pepper and Seven Up brands have higher sales in north America when compared to any other
market. The company stood at 11.2 percent in world-wide sales in 1994.
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BRAND PROMOTION
Schweppes name flavored the brand to expand geographically even though production was clamped
during the second world-war period. The brand’s humorous one liners made the consumers recall the
brand often. This paid off well after the war was over. The creative language used throughout the
global market was very convincing, emotional and promising. “Thirsty, take the necessary Schweppes
“ was a memorable phrase in the UK media. The direct marketing advertisement made “ Schweppes
essence” a common household term in the whole England. Later the brand’s characteristic “ Schhh….
“ was exploited by advertising agencies for launching a mass campaign. It was woven around the
mystery of the sound of the first three letters of the brand - “ the secret of schhh”. The brand was
defined as a way of life “ Schwepping “ and as a series of legends set in an imaginary English country
called “ Schweppshire “.
BUSINESS THREATS
Major marketing challenge before the company was to expand the non-cola segment, to replace the
major international cola drink players like Pepsi, Coke and Thumps-up (Indian Market). The aggressive
marketing of cola based companies have overshadowed, the market for non-cola drinks simply
because of their strict quality check, their stronghold in the distribution network and their effective
monitoring of market trends. Coca-cola, the US based soft drinks company has emerged as a major
competitor for Cadbury Schweppes & Co. with its performance in 195 countries generating a gross
revenue of 16.2 billion and profit worth 2.6 billion during 1994. In the international market, Coca-Cola
has acquired 46 percent share of cola drinks. It has become the second top international company in
the soft drinks market. This company has about a hundred brands in its portfolio, of which Coke, Diet
Coke, Fanta and Sprite account for the major share in sales among the other brands of the company.
ISSUES OF CONCERN
Majority of international marketing companies dealing with consumer products keep watch on the
spatial expansion of the business of Cadbury’s Schweppes. In order to implement such an expansion
strategically the companies make an entry into the selected country as a distribution agency or as a
production firm. However, in business economy the mode of entry for an international marketing firm
has always been a debatable issue on account of the cost of production versus the cost of marketing.
Further, the optimum product line to be handled to sustain the company in the international brand race
markets has also become a prime concern for developing firms with indigenous product brands.
International business decisions are by take independently by any firm or through its strategic
alignments. The viability of owning a large number of subsidiaries, joint ventures and production units
in different countries needs to be assessed on the scale of economy for an international marketing or
production company. Above all, effective advertising and publicity tops the concern of an international
marketer in order to realize higher revenues and profit from the sales of the product. In this process,
owning an universal brand and using a multi-lingual advertising and publicity approach may prove
worthy in the long run. However, in a developing country, a specific or regional brand and promotional