ST.

JEROMES COLLEGE MARKETING MANAGEMENT NOTES IIIrd Year BBA

Marketing Management Unit I

DEFINITION: Marketing is identifying and meeting human and social needs or meeting the needs profitably. American Marketing Association: Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and stake holders. Social Definition: Marketing is a social process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others. Marketing Management: It is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior value to the customers. SCOPE OF MARKETING: The scope of marketing really is related to the old and new concept of marketing. Formerly the scope of marketing used to remain very much limited since the wants of the consumers too were quite limited. The competition was almost equivalent to nil. In the marketing, the satisfaction of the consumers was not at all con-sidered. The marketing was commodity based and immediately after the sale of the products, the marketing process was over. Nowa-days, the scope of marketing has become quite extensive, and the satisfaction of the customers too is kept in view. The process of marketing continues even after the sales have been affected. Today, the function of conforming the product, in accordance with the changing wants, habits and fashions of people, is undertaken by the process of marketing. Within the scope of marketing, -the following activities are covered: 1. Decisions and Researches Pertaining to Customers: Now-a-days, the customer is considered to be the crownless ruler of the market. Every producer or manufacturer or business concern in-tends to know as to what is the interest, fashion, economic position, of the customers; where do they live, what is their paying capacity, etc. Taking decisions on the basis of all these things, the producers bring their products to the customers accordingly and by means of their satisfaction, earn the maximum profits. 2. Decisions Regarding the Commodity: Before manufac-turing the product, various decisions have to be taken up, for in-stance, the size of the product, its shade or colour, design and brand, packing, etc. These all are equally the main components forming the marketing process. 3. Decisions Regarding Price-Determination: Every produ-cer or manufacturer, while deciding the price of the product, the paying capacity of the customer and the cost of production has to be borne in mind. 4. Decisions Regarding the Medium of Distribution: The manufacturer or the business concern has also to determine as to what shall remain the medium of distribution of the commodity and how much long shall be its chain, requiring how much of expenditure. While taking the decision of the means of distribution, various matters have also to be borne into mind.

5. Decisions Regarding Sales Promotion and Advertise-ments: In this age of stiff competition, the sales promotion and ad-vertisements have become almost an inseparable part of the marketing. There are various media of sales promotion and advertisements taking the decisions about which is also an indispensable part of the sphere of marketing management. In the sales promotion, various decisions are required to be taken regarding the training of the sales representatives, their emoluments and the relevant incentives, etc. 6. Decisions Regarding After-Sales Service: For the satis-faction of the customers, the provision of after-sales service is very necessary. Within the after-sales service, are included the free repairs, the return or exchange of the product during the guarantee period if the product proves defective or worthless, etc. In it is in-cluded the decision that for how much period, what type of service has to be extended to the customers, and through whom. NATURE OF MARKETING: With regard to the nature of marketing, it is observed as to whether the marketing is a science or an art or both. 1.Marketing As a 'Science: Marketing proves to be the most effective in the form of a science since it has some of its own principles and rules, and in it are used the scientific methods like those of other social sciences. Today, before undertaking the manufacturing of a product, the producer tries to collect various kinds of researches and knowledge for instance, marketing research, purchaserbehavior research, etc. All these facts prove the marke-ting to be a science. 2. Marketing as an Art: Along with a special qualification and ability, if some work is undertaken, it is known as 'art'. Within the marketing itself, is covered the salesmanship. On the basis of sales-manship, some of the shopkeepers extend their sales too much in comparison to that of their other contemporary sellers. Marketing too is an art which is acquired by studies and ability and by the proper training this art is led to perfection. The various problems of marketing are solved by a special art only. ROLE OF MARKETING IN INDIA: Marketing plays a vital role in economic growth in the present global world. It ensures the planned economic growth in the developing economy where the scarcity of goods, services, ideas and excessive unemployment, thereby marketing efforts are needed for mobilization of economic resources for additional production of ideas, goods and services resulting in greater employment. Marketing stimulates the aggregate demand thereby enlarges the size of market. Marketing in basic industries, agriculture, mining and plantation industries helps in distribution of output without which there is no possibility of mobilization of goods and services which is the key point for economic growth. These industries are the back bone of economic growth. It also accelerates the process of monetizing the economy which in turn facilitates the transfer of investible resources. It helps in discovery of entrepreneurial talent. Intermediate industrial goods and Semi-industrial products etc. essentially marketed for industrial purpose in order to develop the industrial sector with a view to economic growth.

In Export trade and services like tourism and baking marketing plays eminent role in order to grow the economy. CONCEPTS OF MARKETING: 1. Need, wants and demand: Need is the basic human requirement. People need air, food water, clothing and shelter to survive. The needs become wants when they are directed to a specific object that might satisfy the need. For example consumer is US needs food but may want a hamburger. a. Demands are wants for specific products backed by an ability to pay. b. Stated need (The customer wants to buy an inexpensive car) c. Real need (The customer wants a car whose mileage is high) d. Unstated need (The customer expects good service from the dealer) e. Delight need (The customer would like the dealer to include an onboard navigation system) f. Secret need (The customer wants his friends to see him as royal consumer) 2. Segmentation: Markets are not homogenous & they are made of several segments. A market is the aggregate of consumers of a given product and consumers vary in their characteristics buying behavior. So its better if the market is segmented properly. a. GEOGRAPHIC SEGMENTATION: Geographic segmentation calls for dividing the market into different geographical units such as nation, states, regions, countries, cities, or neighborhoods. b. DEMOGRAPHIC SEGMENTATION: In demographic segmentation , the market is divided into groups on the basis of variables such as age ,family life cycle , gender , income , occupation , education , religion , race , generation , nationality , and social class. Demographic variables are the most popular bases for distinguishing customer groups. One reason is that consumer wants, preferences, and usage rates are often associated with demographic variables. Another is that demographic variables are easier to measure. i) Age and Life-Cycle Stage: Consumer wants and abilities change with age. Johnson and Johnson soap for babies. ii) Life Stage: Person in the same part of the life cycle may differ in their life stage. Life stage defines a persons major concern, such as going through a divorce, going into a second marriage, taking care of older parents, deciding to cohabit with another person, deciding to buy a new home, and so on. iii) Gender: Men and women tend to have different attitudinal and behavioral orientations, based partly on genetic makeup and partly on socialization practices. Gender differentiation has long been applied in clothing, hairstyling, cosmetics and magazines. The automobiles industry is beginning to recognize gender segmentation, since there are now more women car owners, some manufacturers are designing features to appeal to women, although they stop short of advertising the cars as womens cars.

iv) Income: Income segmentation is long- standing practice in such products and services categories as automobiles, boats, clothing, cosmetics, and travel. However, income does not always predict the best customers for given product. v) Generation: Many researchers are now turning to generation segmentation. Each generation is profoundly influenced byte times in which it grows up- the music, movies, politics, and defining events of that period. vi) Social Class: Social class has a strong influence on preference in cars, clothing, home, furnishings, leisure activities, reading habits, and retailers. Many companies design products and services for specific social classes. c. PSYCHOGRAPHIC SEGMENTATION: In psychographic segmentation, buyers are divided into different groups on the basis of lifestyle or personality or values. People within the same demographic group can exhibit very different psychographic profiles. i) Lifestyle: People exhibit many more lifestyles than are suggested by the seven social classes. People differ in attitudes, interest, activities, and these affect the goods and services they consume. Companies making cosmetics and furniture are always seeking opportunities in lifestyles segmentation, but lifestyle segmentation does not always work. ii) Personality: Markers have used personality variables to segment markets. They endow their products with a brand personality that corresponds to a target consumer personality. The company utilizes product features, services, and image making to transmit the products personality. iii) Values: Some markers segment by core values. Core values go much deeper than behavior or attitude, and determine, at a basic level, peoples choices and desires over the long term. People of India will have only vegetarian food. d. BEHAVIORAL SEGMENTATION: In behavioral segmentation, buyers are divided into groups on the basis of their knowledge of, attitude toward, use of, or response to a product. Many marketers believe that behavioral variables-occasions, benefits, user status, usage rate, loyalty status, buyerreadiness stage, and attitudeare the best starting points for constructing market segments. i) Occasions: Buyers can be distinguished according to the occasions when they develop a need, purchase a product, or use a product. Occasions segmentation can help firms expand product usage. ii) Benefits: Buyers can be classified according to the benefits they seek; people vary considerably in the benefits they seek from the same product.(Soap + freshness + medicine + beauty care) iii) User Status: Markets can be segmented into nonuser, ex-users, potential users, first time users, and regular users of a product. Market-share leaders tend to focus on attracting potential users because they have the most to gain. Smaller firms focus on trying to attract current users away from the market leader. iv) Usage Rate: Markets can be segmented into light, medium, and heavy product users. Heavy users are often a small percentage of the market but account for high percentage of total consumption. v) Loyalty Status: Consumers have varying degrees of loyalty to specific brands, stores, and companies. Buyers can be divided into four groups according to brand loyalty status:

* Hard-core loyal: Consumers who are buy one brand all the time. * Split loyal: Consumers who are loyal to two or three brands. * Shifting loyal: Consumers who shift from one brand to another. * Switchers: Consumers who show no loyalty to any brand. vi) Buyer-readiness stage: A market consists of people in different stages of readiness to buy a product. Some are unaware of the product, some are aware, some are informed, some are interested, some desire the product, and some intend to buy. The relative numbers make a big difference in designing the marketing program. vii) Attitude: Five attitude groups can be found in a market: enthusiastic, positive, indifferent, negative, and hostile. Door-to-door workers in political campaign use the voters attitude to determine how much time to spend with that voter. They thank to enthusiastic voters and remind them to vote; they reinforce those who are positively disposed; they try to win the votes of indifferent voters; they spend no time trying to change the attitudes of negative and hostile voters. LEVELS OF MARKET SEGMENTATION: In mass marketing, the seller engages in mass production, mass distribution & mass promotion of one product for all buyers. Micro Marketing: (Segment, niche, local, individual) a. Segment Marketing: A market segment consists of a group of customers who share a similar set of needs & wants. b. Niche Marketing: A niche is a narrowly defined customer group seeking a distinctive mix of benefits. Marketers usually identify niches by dividing a segment into sub segments. The customers in the niche have distinctive sets of needs, they will pay a premium to the firm that best satisfies their needs, the niche is not likely to attract other competitors & the niche has size, profit & growth potential. Television channels particularly focusing on religion & spirituality c. Local Marketing: Target marketing is leading to marketing programs tailored to the needs & wants of local customers groups. Many banks in India have specialized branches that cater to the needs of corporate customer. d. Individual Consumer Marketing: The ultimate level of segmentation leads to segments of one, customized marketing, or one-to-one marketing. Ultimately every individual has a unique set of wants and preferences. In past centuries, producers customized their offerings to each customer: the tailor fitted a suit and a cobbler made shoes for each individual 3. MARKET TARGETING: Once the firm has identified its market-segment opportunities, it has to decide how many and which one to target. Evaluating and selecting the market segments: In evaluating different market segments, the firm must look at two factors: the segments overall attractiveness and the companys objective and resources. Having evaluated different segments, company can consider five patterns of target market selection.

a. Single-segment concentration: Suzuki concentrates on the small-call market and Honda on the family car market. Through concentrated marketing, the firm gains a strong knowledge of the segments needs and achieves a strong market presence. Furthermore, the firm enjoys operating economies through specializing its production, distribution, and promotion. If it captures segment leadership, the firm can earn a high return on its investment. b. Selective specialization: The firm selects a number of segments, each objectively attractive and appropriate. There may be little or no synergy among the segments, but each promises to be a moneymaker. This multi segment strategy has the advantage of diversifying the firms risk. c. Product specialization: The firm makes a certain product that it sells to several segments. An example would be a microscope manufacturer who sells to university, government, and commercial laboratories. The firm makes different microscopes for the different customer groups and builds a strong reputation in the specific product area. The downside risk is that the product may be supplanted by an entirely new technology. d. Market specialization: The firm concentrates on serving many needs of a particular customer group. An example would be affirmed that sells an assortment of products only to university laboratories. The firm gains a strong reputation in serving this customer group and becomes a channel for additional products the customer group can use. The downside risk is that the customer group may suffer budget cuts. e. Full market coverage: The firm attempts to serve all customer groups with all the products they might need. Only very large firms such as IBM (computer market), General Motors (vehicle market), and Coca-Cola (drink market) can undertake a full market coverage strategy. Large firms can cover a whole market in two broadways: * In undifferentiated marketing; the firm ignores segment differences and goes after the whole market with one offer. * Differentiated marketing typically creates more total sales than undifferentiated marketing. Cost is high in differentiated marketing. EFFECTIVE SEGMENTATION: a. Measurable: The size, purchasing power, and characteristics of the segment can be measured. b. Substantial: The segments are large and profitable enough to serve. A segment should be the largest possible homogeneous group worth going after with a tailored marketing program. c. Accessible: The segments can be effectively reached and served. d. Differentiable: The segments are conceptually distinguishable and respond differently to different marketing-mix elements and programs. If married and unmarried women respond similarly to a sale on perfume, they do not constitute separate segments. e. Actionable: Effective programs can be formulated for attracting and serving the segments 5. Positioning: is the process by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization.

6. Offerings and Brands: Companies address needs by putting forth a value proposition, a set of benefits that they offer to customers to satisfy their needs. The intangible value proposition is made physical by an offering, which can be a combination of products, services, information, and experiences. A brand is an offering from a known source. 7. VALUE AND SATISFACTION: The offering will be successful if it delivers value and satisfaction to the target buyer. Value reflects the sum of the perceived tangible and intangible benefits and costs to customers. Value increases with quality and price and decreases with price. Satisfaction reflects persons judgments of a products perceived performance in relationship to the expectations. If the performance is low the customer is dissatisfied. 8. MARKETING CHANNELS: Communication channels deliver and receive messages from target buyers. Distribution channels are used to deliver the physical products. 9. SUPPLY CHAIN: is a longer channel stretching from raw materials to components to final products that are carried to final buyer. 10. COMPETITION: Competition includes all the actual and potential rival offerings and substitutes a buyer might consider. 11. MARKETING ENVIRONMENT: It refers to external factors and forces that affect the companies ability to develop and maintain successful transactions and relationships with its target customers. a. Micro: It implies the factors and forces in the immediate environment which affects the companies ability to serve the market. It consists of suppliers, market intermediaries, customers, competitors and public. b. Macro: are uncontrollable factors which directly or indirectly affect the companies ability to operate in the market effectively. i) Demographic: Demographic is a major element to be studied in environment analysis. Several factors relating to population, such as size, growth rate, age distribution, religious composition, need to be studied. Aspects such as composition of workforce, household patterns, regional characteristics, population shifts etc. also need to be studied as they are a part of demographic environment. * Socio-cultural Environment: Socio-cultural environment is another important component of the environment. Culture, traditions, beliefs, values & lifestyles of the people in a given society constitute the sociocultural environment. * Culture: Culture is the combined result of factors like religion, language, education & upbringing. > Social Class: Social class is one important concept in socio cultural environment. A social class is determined by income, occupation, location, of residence etc. Each class has its own standards with respect to lifestyle, behaviors etc > Economic Environment: The factors to be considered under economic environment are General Economic conditions, Economic conditions of different segments of the population, their disposable

income, purchasing power and Rate of growth of the economy, rate of growth of each sector of the economy and inflation rate. * Political Environment: Industrial growth depends to a great extent on the political environment. Apart from this political stability, form of govt. elements like social & religious organizations, media & pressure groups & lobbies of various kinds also form the part of political environment. * Natural Environment: Companies should consider natural factors like natural resources and climatic conditions, because raw materials are very important for a company. * Legal Environment: Business has to operate within the framework of prevailing legal environment. * Technology Selection: Firms have to scan the technology environment & select technologies that will be appropriate for the firm & the given product market situation BUYING MOTIVES: 1. Emotional Buying Motives: Buying motives based on feelings or passions are known as emotional buying motives. a. Love and affection: It is an important buying motive which includes the buyers to purchase the goods. Due to love and affection to the children, we buy toys, dress biscuits etc. b. Curiosity: Curiosity is the desire for new experience which motivates the people to buy the specific goods. c. Fashion: It is an important motive that can change the mind of the customers. Generally, customers try to copy particularly the movie stars, sportsmen and athletes etc. So, all the producers advertise their products with the help of these popular personalities. d. Pride and prestige: Due to the pride and prestige in the society, customers purchase expensive and luxuries goods in- order to maintain their status. They purchase toyota car, Karizma motorcycle, fifty-nine inch colour television etc. to get the high position in the society. f. Fear: People are generally afraid of losing their health, wealth and life. Thus, it motivates to purchase the goods such as insurance policy, hiring lockers in bank and membership of health club etc. These goods or services help them to avoid their fear. 2. Rational Buying Motives: Rational buying motives are those which are based on sound judgment. They purchase the goods through proper testing, comparing and observing the goods on the basis of price, quality, durability etc. a. Economy: Under this motives, the customer prefer that products which are more economy or cheap in price. To get more profit and discount, customers purchase such goods. b. Utility: Customers want to purchase those goods which have more or higher utility. Utility satisfies the wants of the customers.

c. Comfort and convenience: Every people have the desire to live in comfort and convenient way as a result they get motivated to purchase such goods which provide comfort and convenience.. d. Durability: It is another element of rational buying motive. Due to the durability of the products, customers are motivated to purchase the goods e. Security: People are not feeling secure from the floods, earthquakes, theft etc. in the society. So, the customers purchase the key lockers, open the bank A/c and keep the watchman etc to be secured. 3. Patronage Buying Motive: Patronage motives speak of the choice of a particular person, a shopkeeper or an outlet for purchase. Quality, Location, Store loyalty, Friendliness behavior motivates a buyer. PERCEPTION: is the process by which we select, organize, and interpret information inputs to create meaningful picture of the world. a. Selective attention: Normally a person is exposed to 1500 ads a day. Since we cant attend all these ads, we screen them by a process called selective attention. b. Selective Distortion: is the tendency to interpret information in a way that fits our preconceptions. c. Selective Retention: We remember good points about a product we like and forget good points about competing products. d. Subliminal Perception: It suggests that peoples' thoughts, feelings and actions are influenced by stimuli that are perceived without any awareness of perceiving. An advertising message presented below the threshold of consciousness. A visual or auditory message that is allegedly perceived psychologically, but not consciously. Example Buy now and don't take it, you'll get caught LEARNING: induces changes in behavior arising from experience. DRIVE (or Motivation); a person must want something. CUE (or Stimulus); a person must notice something. RESPONSE; a person must do something. REWARD (or Reinforcement); a person must get something that is wanted. CONSUMER DECISION MAKING PROCESS: a. Problem Recognition: The buying process starts when the buyer recognizes a problem or need. The need can be triggered by internal or external stimulus. With an internal stimulus, one of the persons normal needs hunger thirst etc. become a drive or a need can be aroused by external stimuli.

b. Information Search: An aroused consumer will be inclined to search for more information. A person at times simply becomes receptive to information about a product or he may enter looking for a reading material, phoning friends, going online etc. c. Evaluation of Alternatives: The consumer will evaluate the alternate products which can satisfy his needs and wants. d. Purchase Decision: The buyer must be convinced that the purchase of the product is the legitimate course of action. At this stage, he may seek further information regarding the product or attempt to assess the information already available. e. Post Purchase Behavior: The purchase leads to specific post purchase behavior; usually it creates some restlessness in the mind of the individual. He is not sure about the product. He may feel that the other brand would have been better. It can be defined in terms of satisfaction. If the performance of the product falls short of expectations, the consumers is disappointed, if it meets expectations, the consumer is satisfied, it is exceeds expectations, the consumer is delighted. These feelings make a difference in whether the customer buys the product again & talks favorably or unfavorably about it to others.

UNIT II
PRODUCT: A product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. It includes physical objectives, services, persons, places, organizations and ideas. PRODUCT CLASSIFICATION: Based on Durability and Tangibility. a. Nondurable goods: are tangible goods normally consumed in one or a few uses, such as soft drinks and soap. b. Durable goods: are tangible goods that normally survive for a long period. Examples are Refrigerators, machine tools, and clothing. c. Services: are intangible, inseparable, variable, and perishable products. They require more quality control. Examples are haircuts, legal advice and appliance repair. Consumer Goods: are those goods which are designed for final consumption by individuals and households. Examples are TV, radio, shoes. Classification of consumer goods are explained below * Convenience Goods: goods which consumer buys frequently immediately and with minimum shopping effort are classified as convenience goods. Grocery products are best example. * Shopping Goods: Goods which consumer selects and buy only after making comparisons on such bases as suitability, quality, price and style are called as shopping goods. Eg: Furnitures. * Speciality Goods: Goods for which significant number of buyers is habitually willing to make a special purchasing effort are known as specialty goods. Eg: cars, bikes. * Unsought goods: are those the consumer does not know about or does not normally think of buying, such as insurance. Industrial Goods: goods which are for use in the commercial production or other goods or for use in connection with carrying on of some business or institutional activity are known as industrial goods. They are classified as follows. * Equipment and physical facilities: Major capital assets such as plant, machinery, and building come under this category. * Materials entering into the product: This category of industrial goods include raw materials, semi manufactured goods and fabricating parts. * Manufacturing or Service Supplies: These are products that are essential to the business operations of the industrial users but do not become part of the finished product. Eg. Fuel, oil, coal.

* Management Materials: This category covers both office equipments and office supplies. Examples are stationery, typewriters, and calculators. PRODUCT POLICIES: The term policy refers to a principle of operation adopted by the management to guide those who perform the functions of the management. A policy sets the objectives to be achieved and also the limits within which the management has to operate. Product policy is concerned with defining the type, volume and timing of the product a company offer for sale. Thus product policy is concerned with the objectives and guidelines that determine the nature and extent of the product or service which a firm decides to market to its target customers. Scope of Product Policies: The Companys total use of financial and man power resources. These resources have to be planned to meet both short term and long term objectives. The kinds of consumers or market areas at which products are aimed. The promotional markets to be used. The reputation of the company. The companys position as a leader or follower. Areas covered by Product Policy: 1. Product Planning and development: Product planning is the starting point of the overall marketing program of the firm. It involves the innovation of new products, improvement in the existing product line or dropping the uneconomic products from the product line. a. New Product development: A new product is best developed through a series of eight stages. i. Idea generation: The new product Development process with the search for ideas. New product ideas comes through interacting with various group of people , such as customer, scientists, competitors , employees and top management. Companies can also find good ideas by searching competitors products and services. From this they can find out what the customers like and dislike about competitors products. They can buy their competitors products, take them a part and build better ones. Many companies also encourage employees particularly those on production line to come forth with ideas, often offering cash reward for good suggestion. New product ideas also come from inventors, university and commercial laboratories, advertising agencies. As the ideas start to flow, one will sprat another, and within a short time hundreds of new ideas may be brought to surface. ii. Idea screening: Idea screening is second stage in new product development once a large pool of ideas has been generated by whatever their means, their number have to be pruned to manageable level. In screening ideas the company must avoid two types of error. * Drop error: Occurs when the company dismisses an otherwise good idea. * Go error: Mean adoption of poor ideas The purpose of screening is to drop poor ideas as early as possible. Many companies require their executives to write up new product on a standard form that can be received by a new product

committee. The write up describes product idea, target market and competition. It makes some rough estimate of market size, product price, development cost and rate of return. iii. Concept development and testing: A product idea is possible product the company might offer to the market. A product concept is an elaborated version of ideas expressed in a meaningful consumer terms. Throughout the stages of idea generation and screening, the developers are only with the product idea, general concept of what product might be. Concept development involves many questions: Who will buy the new product? What is the primary benefit of new product? Under what circumstances, the new product may be used? * Concept testing: Concept testing involves presenting the product concept to appropriate target consumers and getting their reactions. iv. Marketing Strategy: Following the successful concept test, the new product manager will develop a preliminary marketing strategy plan for introducing the new product into market. The plan consists of three parts. The first part describes the target market size, structure and behavior, the planned product positioning and sales, market share, profit goals sought in the first few years. The second part outlines the planned price, distribution strategy and marketing budget for first year. The third part of marketing strategy plan describes the long run sales and profit goals and marketing strategy overtime. v. Business Analysis: The next step in new product development is business analysis. The market must project costs, profit and return on investment for the new product if it were placed in market. Business analysis is not a short process; it is a detailed realistic projection of both maximum and minimum sales and their impact on economy or company. For some products such as another candy bar, marketers can use existing sales data to guide themselves. But with a product, for which sales data does not exist, only estimation can be used. vi. Product Development: If the result of business analysis is favorable then a prototype of the product is developed. In development stage, the idea is given in a concrete or tangible form. Up to now, the product has existed only a word description, a drawing or a prototype. This step involves a large investment. The company will determine whether the product idea can be translated into a technically and commercially feasible product. vii. Test marketing: After management is satisfied with functional and psychological performance, the product is ready to be dressed up with a brand name and packaging and put into a market test.

Test marketing involves how large the market is and how consumers and dealers react to handling, using and repurchasing the product. The amount of test marketing is influenced by investment cost and risk on one hand and time pressure and research cost on the other. viii. Commercialization: As the company goes ahead with commercialization, it will face its largest costs to date. The company will have to contract for manufacturing facility. Another major cost is marketing. Deal about when where and how the product is delivered. b. Product life cycle: A product life cycle consists of the aggregate demand over an extended period of time for all brands comprising a generic product category. The product life cycle consist of four stages. i. Introduction: During introduction stage, sometimes called pioneering stage, a product is launched into the market in a full scale of marketing program. It has gone through product development, including idea screening, prototype, and market test. The entire product may be new, such as the zipper, the video cassette recorder, etc for a new product there is very little competition. However, if the product has tremendous promise, numerous companies may enter into the industry early on. That has occurred with digital TV, introduced in 1988. Introduction is the most risky and expensive stage because substantial dollars must be spent not only to develop the product but also to seek consumer acceptance of the offering. ii. Growth: In the growth stage or market acceptance stage, sales and profit rise frequently at a rapid rate. Competitors enter the market, often in large number if the profit outlook is particularly attractive. Mostly as a result of competition profit start to decline nears the end of the growth stage. As a part of firms efforts to build sales and in turn, market share, prices typically decline gradually during this stage. iii. Maturity: During the first part of the maturity stag, sales continue to increase, but at a decreasing rate. Profits of both producers and middle-man decline. The primary reason increase price competition. Some firms extends their product lines with new models, other come up with a new improved version of their primary brand. During the latter part of this stage marginal producers those with high cost or no differentiate advantage drop out to the market. They do so because the lack sufficient customers or profit. iv. Decline: For most products a decline stage, as gauged by sales volume for the total category is inevitable for one of the following reason. A better or less expensive product is developed to fill the same need. The need for product disappears, often because of other product development. People simply grow tired of a product so disappear from the market. 2. Product mix and Product line: A product mix is the set of all the products offered for sale by a company. The structure of product mix has width, depth, length and consistency.

a. Width: The width of the product mix refers to how many product lines the company carries. For Example proctor & gamble markets a fairly wide product mix consisting of many product lines including food, household, cleaning, mechanical, cosmetics and personal care products b. Depth: The depth of the product mix refers to how many varieties are offered of each product in the line. For example P&G Crest tooth paste comes in three sizes and two formulations (paste, gel) c. Length: The length of the product mix refers to the total number of items in its product mix. For example P&G typically carries many brands within each line it sells eight laundry detergents, six hand soaps, six shampoos, & four dish washing detergents. d. Consistency: The consistency of the product mix refers to how closely relate the various product lines are in end-use, production requirements, distribution channels or in some other way. For example P&G product lines are consistent insofar as they are consumer products that go through the same distribution channels. The lines are less consistent insofar they provide different functions for buyers. Product-Mix Strategy: Manufacturers we several major strategies in managing their product mix. a. Expansion of product mix: -A firm may decide to expand its present mix by increase the number of lines or the depth with in the lines. Now lines may be related or unrelated to the present products. The company may also increase the number of items in its product mix. b. Contraction of product mix: Another product strategy is to thin out the product mix, either by eliminating entire line or by simplifying the assortment with in a line. The shift from fat and long lines to thin and short lines, is designed to eliminate low-profit products and to get more profit from fewer products. c. Alteration of existing product: In spite of developing a complete new product, management should take a fresh look at the companys existing products. Often, improving established product can be more profitable and less risky than developing a completely new one. For material goods, especially, redesigning is often the key to products; renaissance packaging has been a very popular area for product alteration, particularly in consumer products. d. Positioning the product: Positioning of product in the market is a major determinant of company profits. A product position is the image that the product projects in relation to competitive product and to other products marketed by the same company. * Positioning in relation to a competitor: Position is directly against the competition. * Positioning by product attribute: The Company associates its product with some product features. * Positioning by price and quality: To position on high price, high quality or low price, low quality basis.

Positioning in relation to product use. Positioning in relation to a target market (Market Segmentation). Positioning in relation to product class: - (Associating the Product) a class of product e. Trading up & trading down: As product strategies, trading up and trading down involves, essentially, an expansion of the product line and a change in product positioning. Trading up means adding a higher priced prestige product to a line in the hope of increasing the sales of existing lower priced products. When a company is going on a policy of trading up, at least two ways are open with respect to promotional emphasis. * The seller may continue to depends upon the older, lower-priced product for the bulk of the sales volume and promote it heavily or * The seller may gradually, promote the new product and expect it to share a major sales volume. A company is said to be trading down when it adds a lower priced item to its line of prestige products. The company wants to sale its products rapidly. Product Line: A product line includes a group closely related products that are considered a unit because of marketing, technical or end-use consideration. Product Line Strategy: i. Product Modification: consists of improvements in the existing quality, size, form or design of the existing products so that it may look almost a new product. a. Functional change: are changes which make the product work better or satisfy additional needs. The right change can produce a big jump in the product sales. b. Quality Change: The quality of a product can be upgraded or downgraded either by changing the materials from which it is constructed or by modifying the engineering process c. Style Change: means changes in appearance. d. Environmental impact changes: To improve products safety or its impact on the environment. ii. Product Diversification: When a manufacturer or a distributor deals in more than one product, it is known as product diversification. Its also known as line expansion. It includes introduction of new product or adding different sizes to the existing product. iii. Product Elimination: Process of terminating a product effectively. Products will get terminated because of declining volume of sales, decreasing market share, disappointing future sales, very low return level and consistent need to lower price to maintain sales. 3. Branding: A brand is a name and a mark intended to identify the product of one seller or groups of sellers and differentiating the product from competing products.

A brand name consists of words, letters and numbers that can be vocalized. And a brand mark is the part of brand that appears in the form of symbol, design or distinctive color. A brand mark is recognized by sight but cannot be expressed. Trademark is a brand that has been adopted by a seller and given legal protection. Packaging: Packaging is defined as all the activities of designing and producing the container for a product. Used for protection, common identification, convenience, product differentiation and helps in selling.

Unit III
PRICING: is the amount of money which is needed to acquire in exchange of some combined assortment of a product and its accompanying services. METHODS OF PRICE DETERMINATION: 1. Estimating Demand for the Product: The first step in determining the price of the product is estimating the demand for the product. a. Estimated Price: can be anticipated on the basis of the relative importance of the product to the consumers in their budget estimates. b. Estimated demand for the product at different price level: can be fixed on the basis of elasticity of demand of the product. In case of inelastic demand, prices may be fixed higher and in case of elastic demand, the prices may be lower. 2. Anticipating Competition: Once the demand is estimated, the next step is anticipating competition. Competition from the producers of similar product and from the substitutes of the product should be determined. 3. Determining Expected Share for Market: Next step is to determine the market share which a company will try to capture. It depends on various factors such as present production capacity, cost of extension programs, cost of production and competition etc. 4. Selecting a suitable price strategy: Various price strategies such as skimming, low penetration, following the competition can be followed. 5. Marketing policies of the company: Policies regarding production, channels of distribution, promotion should be considered as a next step. Product mix should also be considered. 6. Fixing the Price: While fixing the price for any product, interest of various parties namely, producer, middlemen and consumer should be considered. The price should be fixed in such a fashion to give a fair return to the producer, a good profit margin to the middlemen and a nominal price to the consumers. Consultation with the various departments such as production, finance, and marketing is also essential. BASIC PRICING POLICIES: 1. Cost oriented pricing policy: a. Cost plus Pricing: Cost of production is taken as a starting point and then a fixed percentage is added to it so as to fix price for that product. This type of price is used by retail traders and by the manufacturers.

b. Target Pricing: Another common method adopted under cost oriented pricing is known as target pricing. Target pricing is invariably followed by manufacturers who fix a target return on the total cost. c. Break even pricing: Breakeven point occurs at the place where total costs equal sales revenue, indicating that this is the number of units of product which must be sold at a particular price for the seller to barely cover his total costs. If sales volume goes beyond this point, each additional unit sold brings in some profit, each sale before reaching this point is at a loss. 2. Demand Oriented Pricing Policy: In this method demand is the important factor. Price is fixed making adjustment in it to the market condition. When the demand is greater, a high price is charged and when the demand is low, a low price is charged. 3. Competition Oriented Pricing Policy: Many concerns fix prices only after having considered the competitive price structure. Deliberate policies may be framed with a view to sell below or above or in line with competition. As per this method, there cannot be any rigid relation between the price of a product and the firms own cost or demand. NEW PRODUCT PRICING: 1. Pricing an innovative product: a. Market Skimming Pricing: Companies that invent new products set high prices in the beginning to skim the market. Example is all electronic goods. b. Market Penetration Pricing: Some companies set a relatively low price on their innovative product, hoping to attract a large number of buyers and win a large market share. 2. Pricing an Imitative Product: A company that plans to develop an imitative product faces a product positioning problem. The new comer should produce high quality product and charge low price. PRODUCT MIX PRICING: 1. Product Line Pricing: Companies normally develop product lines rather than single products. Each product in the line offers some additional features. Management must decide on the price steps to establish between the various cameras. 2. Operational Product Pricing: Many companies offer to sell optional products along with their main product. The automobile buyer can order electric window controls, and light dimmers. 3. Captive Product Pricing: Companies in certain industries produce products that must be used with the main product. Captive products are razor blades and cameras.

4. By-Product Pricing: If the byproducts have no value and disposing of them is in fact costly, this will affect the pricing of main product. This will enable the seller to reduce the main products price to make it more competitive. PRICE DISCOUNTS: Most of the companies will reward customers for certain acts like early payment of bills, volume purchases, and buying off season. These price adjustments are called discounts and allowances. 1. Cash Discounts: A cash discount is a price reduction to buyers who pay their bills promptly. This discount must be given to all buyers who are meeting these terms. 2. Quantity Discounts: A quantity discount is a price reduction given to buyers who buy goods in a large quantity. 3. Trade Discounts: are offered by the manufacturer to trade channel members who perform certain functions like selling, storing, and record keeping. 4. Seasonal Discounts: A seasonal discount is a price reduction to buyers who buy goods or services out of season. Seasonal discounts allow the seller to maintain steadier production during the year. 5. Allowances: Allowances are other types of reduction from the list price. Trade in allowances is price reductions granted for turning in an old item when buying a new one. DISCRIMINATORY PRICING: Companies will often modify their basic prices to accommodate differences in customers, products, and locations. Such method is called discriminatory pricing. 1. Customer Basis: different customers will pay different amount for the same product or service. Concessions will be given in museums for students. 2. Product Form Basis: Different versions of the product are priced differently but not proportionately to their respective costs. 3. Place Basis: different locations are priced differently even though the cost of offering each location is the same. A cricket stadium varies its seat prices because of audience preferences for certain locations. 4. Time Basis: prices are varied seasonally, by the day, and even by the hour. Public utilities vary their prices to commercial users by the time of day and week end versus week day. PSYCHOLOGICAL PRICING: Price communicates something about the product. As we have stated already, many consumers consider price as an indicator of quality. Sellers should give due consideration to the psychology of prices and not simply the economies. Even small variations in price can communicate product differences to consumers.

GEOGRAPHICAL PRICING: The Company must decide how to price its products to customers located in different parts of the country. Should the company charge higher prices to distant customers to cover the higher transportation costs or should the company charge the same to all customers regardless of location? 1. FOB Origin Pricing: Under this method, goods are placed free on board a carrier at which point the title and responsibility passes to the customer, who pays the freight from the factory to the destination. 2. Uniform Delivered Pricing: is just opposite to the FOB origin pricing. The company charges the same price plus freight to all customers irrespective of their location. 3. Zone Pricing: firm establishes two or more zones. All customers within a particular zone will pay the same price and this price is higher for more distant zones. 4. Basing Point Pricing: some city is designated as a basing point an all customers are charged the freight cost from that city to the location of the customer irrespective of the city from which the goods are actually transported. 5. Freight Absorption Pricing: the seller absorbs all or part of the actual freight charges so as to get the business.

UNIT - IV CHANNELS OF DISTRIBUTION: Distribution involves the physical movement of products to ultimate consumers. Distribution is not simply a matter of moving products into the hands of consumers, it involves a products movement throughout all stages of development from finding resources, through manufacturing to final sales.

Types of channels & distribution: Common channels for distribution of consumer goods, business goods and services are discussed below. 1) Distribution of channel goods: There are five channels are used for distribution of tangible goods to ultimate consumer. a) ProducerConsumer: The shortest, simplest channels of distribution for distributing gods are from producer to consumer. It involves no middle man. The producer may sell from door to door or by mail. Door to Door: In these channels companies use their representatives to sell their gods from door to door such as insurance magazines, newspapers, milk etc. By Mail: Some companies also sell their products by mails. A farmer sells their fruit and Vegetables directly to consumer at road are also using this method. It is short and direct method. b) ProducerRetailerConsumer: Many large retailers buy directly from manufacturers and agricultures large no. of our purchases are mad through this channel such as automobiles, clothing, gasoline etc. In this case manufacturers keep contact with retailers, take purchase orders. The retailers then sell to ultimate consumers. c) ProducerWholesalerRetailerConsumer: This type of channel mostly used by small manufacturers and small retailers to distribute such things that have a large market need. The products such as drugs, lumber, hardware and many food items are distributed in such channel process. d) ProducerAgentsRetailersConsumers: Instead of using wholesaler many producers prefer to use manufacturers agents, a broker or some other agents middleman to reach the retail market. A glass marker selected a food broker to reach store market. e) ProducerAgentWholesalerRetailerConsumer: To reach small retailers, the producers often use agent middleman, who in turn call on with wholesales that sell to small

stores. Agent can be especially useful for making contacts and bringing buyers and sellers together. They are common in food industry, where they are called food brokers. 2) Channels for Distribution of Business Goods: a) ProducersIndustrial Users: This direct channel is used for most expensive products. Manufacturers of large installations such as air planes, generators etc use this channel. b) ProducerIndustrial DistributionUsers: Producers of operating supplies and small accessory equipment frequently use industrial distributors to reach their market. c) ProducerAgentUser: Firms without their own marketing department find this channel. Also a company that wants to introduce a new product or enter a new market may prefer to use agents rather than its own sales force. d) ProducerAgentIndustrial DistributersUsers: This channel to similar to previous one. It is used when it is not possible to sell through agents directly to business users. 3) Distribution of Services: The intangible nature of services creates special distribution requirements. There are only two common channels. a) ProducerConsumer: As service is intangible so it requires direct contact b/w consumer and producer. Thus direct channel is used, as for many professional services such as health, care, legal advice and personal services as hair cutting etc. b) ProducerAgentConsumer: While direct distribution is often necessary for a service to be performed, producer consumer contact may not be required for key distribution activities; Agents frequently assist a service without producer. Many services as travel, loading, advertising media and insurance use agents. CHANNEL FUNCTIONS: In order to deliver the optimal level of service outputs to their target consumers, manufacturers are willing to allocate some of their tasks, or marketing flows, to intermediaries. As any marketing channel moves goods from producers to consumers, the marketing intermediaries perform, or participate in, a number of marketing flows, or activities. The typical marketing flows, listed in the usual sequence in which they arise, are collection and distribution of marketing research information (information), development and dissemination of persuasive communications (promotion), agreement on terms for transfer of ownership or possession (negotiation), intentions to buy (ordering), acquisition and allocation of funds (financing), assumption of risks (risk taking), storage and

movement of product (physical possession), buyers paying sellers (payment), and transfer of ownership (title). Each of these flows must be performed by a marketing intermediary for any channel to deliver the goods to the final consumer. Thus, each producer must decide who will perform which of these functions in order to deliver the service output levels that the target consumers desire. Producers delegate these flows for a variety of reasons. First, they may lack the financial resources to carry out the intermediary activities themselves. Second, many producers can earn a superior return on their capital by investing profits back into their core business rather than into the distribution of their products. Finally, intermediaries, or middlemen, offer superior efficiency in making goods and services widely available and accessible to final users. For instance, in overseas markets it may be difficult for an exporter to establish contact with end users, and various kinds of agents must therefore be employed. Because an intermediary typically focuses on only a small handful of specialized tasks within the marketing channel, each intermediary, through specialization, experience, or scale of operation, can offer a producer greater distribution benefits. FACTORS TO BE CONSIDERED IN CHANNEL SELECTION: The nature of the product: in general, bulky or heavy products are distributed directly to reduce on the costs of transport; perishable goods are sold directly or through a short channel. The nature of the market: when the market is very small and located within a narrow area, an entrepreneur can use direct selling. In case of a mass market where customers are scattered geographically, a longer distribution channel can be used. The nature of the business: direct selling is only possible for a manufacturer who is financially strong and possesses marketing expertise. Direct selling is not economical for a single product firm. Cost of distribution: when the distribution costs are low, direct selling is the best since it reduces costs to the final consumer. But if the distribution costs are high, the long channel of distribution is preferred since the producer can pass on the cost of distribution to the middlemen. Availability of storage facilities: if the producer, wholesaler and retailer have good storage facilities, the customers can buy from any depending on his/her convenience. Reliability of the channel: a reliable channel is able to provide goods/services to customers on whenever they need them.

Availability of middlemen: when the middlemen are available, the long channel of distribution is the best but if not available, direct selling is the best. The value of the product: if the product can easily break, direct selling is the best and this reduces on the risks. Desire to control the product market and prices: when the producers want to control the prices of their product, direct selling is preferred since middlemen can cause price fluctuations. Number and location of production units: if the production units are many and not established very far, direct selling can be the best channel, but if they are produced far away, then middlemen would be the best. Degree of competition: if there is high competition, then a short channel will be used and vice-versa. MOTIVATION FOR CHANNEL MEMBERS: Channel member can be motivated by identifying the needs and wants of the members. The company should plan proper training programs for them. a. Coercive Power: A producer threatens to withdraw a resource or terminate a relationship if intermediaries fail to cooperate. b. Reward Power: The producer offers intermediaries an extra benefit for performing specific acts or functions. Rewards power gives better results than coercive power. c. Legitimate Power: The producer request a behavior that is warranted under the contract. d. Expert Power: The producer has special knowledge the intermediaries value. The producer must continue to develop new expertise so that intermediaries will want to continue cooperating. e. Referent Power: The producer is so highly respected that intermediaries are proud to be associated with it. RETAILING: Retailing includes all activities associated with selling goods and services to ultimate consumers for personal or non-business use. It may be done through retail stores.

Retail Sales: Any firm manufacturers retailer or wholesaler that sells something to ultimate consumer for their personal use is called retail sale. Retailer: It is business enterprise that sells primarily to household consumers for nonbusiness use. The word Dealer is also used for retailer Nature of Retail: 1) Easy Entry into Retailing 2) It is easier to go into retailing than any other trade, profession or line of business. To start a Manufacturing firm one must have money to acquire a plant, equipment and material. But to Operate a retail store, no exams are required and necessary business licenses are easy to acquire. Many under formed and poorly qualified people enter in the field and son fail. 3) Economic Justification for Retailing: To get into retailing is easy but to force out is just as easy. Thus to survive to retailing, a company must perform its primary role i-e to provide gods and services to customer. Secondly role is to serve producer and wholesaler. This dual responsibility is both, the justification for retailing and key to success in retailing. 1) Size OF Retail Market: There is a large no. of retail stores in the world. In spite of the population boom and raising consumer incomes over the past three decades, there has been no appreciable change in the number of retail stores. Sales through retail store increased from late 1960,s to early 1990,s due to increase in per capital income, in spite of increase in price goods, total sales and per capital retail sales have increased. 2) Cost and Profit of Retailers: The total average operating expenses for al retailers combined are about 25% to 27% of retail sales. Wholesaling expenses are estimated at about 8% of wholesaling sales. Retailers cost and profit very depending on the type of operation and major product line. Higher retail costs are generally related to the expense of dealing directly with ultimate consumer. Classification of Retailers: There are four classifications of retailers. These are 1. By Sale-Volume 2. By Product Line 3. By Fore of Ownership 4. By Method Of Operation 1) By sales volume: Sale volume is useful basis for classifying retail stores, because stores of different sizes present different management problems. Buying, Promotional, Financing

personal relations and expense control al influenced significantly by, whether a store sales volumes large or small. On this basis relating is both a large scale and small scale operation. 2) By product line: We can group them into two categories a) General Merchandized Store: General Merchandized store carry a large no. of product lines. Departmental store are type of general merchandized store with largest sale volume. b) Limited Line Store: Limited line store is considerable assortment of goods but in only one or few related lines. We identify these stores by the name of the product. Examples are Food store, shoe store, furnitures store, and ladies ware store and so on. 3) By form of ownership: Another useful way of classifying retail stores is based on ownership. Thus a retailer may operate the business independently or may be part of chain. The major store ownership categories are a) Independent Store: In an independent store, there are close personal relationship b/w customers and retailers. About 90% of operations fall into this category. Flower shop, tobacco shop, booth store fall in this category. b) Corporate Chain Stores: A corporate chain store is an organization of two or more stores, centrally owned and managed, that generally handle the same line of products on the same level in distribution structure. 4) By method of operation: The four types of retailers, classified by method of operation. a) Full Service Retailing: Full service retailing is stick quite prevalent, although its used has declined during the last 30 years, while the super market discount retailing, non-retailing store has increased during the last 3 decades. b) Super Market Retailing: Super market will be defined as a large scale retailing institutions offering a variety of merchandize including (meat and dairy products). c) Telephone Retailing: Telephone retailing involves the sales of goods and services over the telephone. It is a growing form of retailing. Telephone orders are published by advertisement in newspapers, magazines and on radio and on TV. d) Vending Machine Retailing: Retailing is non-personal form of selling in which customers buy products directly form conveniently located machinist.

WHOLE SELLING: Definitions: Whole selling includes all sales made to any person or organization other than the ultimate consumers, who use the product for personal non business purpose. Any transaction from one producer to another producer is a whole selling exchange. Whole selling and whole sell trade consists of the sale, and al activities directly related to sale of goods and services to parties for resale, use in producing other goods or service or operating an organization. Classification of whole seller: There are three categories of whole sale 1); Merchant Whole Seller 2; Agent and Broker 3): Manufacturer Whole Selling 1) Merchant Whole Seller: These are sometimes called jobbers and distributors. They are the largest single group of whole seller which is measured either by sale or by no. of establishments. There are two types of merchant whole sellers a) Full Service Whole Selling b) Limited Service Whole Selling a) Full Service Whole Selling: Full service whole service almost all the service that a whole seller can provide such a carrying stock can provide such a carrying stock using a sale force, offering a credit, making deliveries and providing management assistance. They are divided into two groups. 1) General Merchandise Full Services: They handle a broad line of nonperishable items such as drugs, cosmetics, hardwares etc. They provide full range of services a) Limited Line Full Service Whole Selling: Limited line service whole seller carry out a few product lines but offer a full range of service. They are also called industrial distributors. b) Limited Service whole selling: Limited service whole selling offer service to their suppliers and customers. There are several types of limited service whole selling. 1) Cash and Carry Whole Selling: Cash and whole sellers have a limited line of fast moving goods and sell to small retailers for cash and normally do not dollars. 2) Drop Shipping Whole Selling: Drop shipper whole sellers operate in bulk industries such as coal and heavy equipment. They do not physical possession products.

3) Truck/Wagon Whole Sellers: These are also called truck jobbers. They perform a selling or delivering function. They carry a limited line of semi-perishable merchandise (milk, breads, and snacks) which they sell for cash as they make their rounds to supermarkets, small groceries, hospital, hotels and cafeteria etc. 4) Material Order Whole Selling: Male order whole sellers send catalogue to retailer, industrial and institutional customers, generally for cosmetics, specially food and other small items. Orders are filled and sent by mail, truck or other means of transport. 2) Agents and brokers: These middlemen never own the products. Their activity is bringing buyers and sellers together and facilitating the sale. Brokers are paid by the party who hire them. They do not involve in financing. Agents and brokers work on commission basis, ranging from 2 to 6% of the selling price. They perform useful function for small producers who cannot afford the high cost of hiring, training and paying their own sales force. 3) Inside or manufacturing whole selling: This type of whole selling consists of whole selling operations conducted by buyers and sellers themselves rather than through independent whole seller. There are two types of whole selling. a) Sale Branches and Offices: Manufacturers often set up their sales branches and offices improve inventory control, selling and promotion. b) Purchasing Offices: Many whole sellers set their offices in market centers such as Lahore and Karachi. These purchasing offices perform a role similarly to that of agent or brokers but are the part of organization.

UNIT V
ADVERTISING: Advertising is an art of influencing the customers through paid nonpersonal presentation to purchase and possess a product. It can also be defined as any paid form of non-personal presentation and promotion of ideas goods or services by an identified sponsor. The two main objectives of advertising are to expose a product to a large market and to encourage the buyer to accept the product. Nature Objectives of advertising: Establish advertising objectives to optimize performance of the product or service, and Meet advertiser needs. 1) Communication effects are analyzed and assessed for their ability to achieve Specified responses. 2) Brand awareness objectives that enhance buyer empathy with the product or service are developed, evaluated, and determined. 3) Brand attitude objectives that enhance positive buyer brand evaluation and distinguish rational and emotional responses to brand attitude are developed, evaluated, and determined. 4) Brand purchase intention objectives that encourage buyer purchase action are developed, evaluated, and determined. 5) Objectives that achieve the required effects for the product or service are developed and integrated to meet overall brand strategy and advertising objectives. 6) Proposed advertising objectives are assessed for their compatibility with advertiser needs for the development and execution of effective messages and advertisements that achieve advertising and marketing objectives. 7) Provisions are made for monitoring, evaluating, and adjusting advertising responses to ensure that these continue to meet brand strategy and advertising objectives. Importance of advertising: Advertising is of great importance in our world of competition. It is important for both seller and buyer. Even the government cannot do without it. First, of all, advertising introduces new products to general public. For example, the public come to know about useful new medicines for some diseases. We often learn about new machines for agriculture and industry for ads.

Secondly: Advertising introduces different brands of same product. Advertisement tells about qualities of each brand and we can easily select. For example: There are three different brands of bicycle produced by same company. Thirdly: Government can very profitably advertise its schemes and policies. It can tell general public what it might do for good of nation. Fourthly: It is through advertisements that we come to know of new service jobs. Qualified people apply for them and get adjusted in life. Fifthly: Advertisement is a dependable and effective means of expanding education and of bringing students to educational institutions. Schools, colleges and universities advertise their classes, courses, and fees and attract students for admission. Advertising can also be harmful. When advertisement misstates qualities of their products, they misguide public. When manufacturers advertise harmful products like cigarettes, they do a disservice. Advertising is useful a\within proper limits. These limits Cleary lay down by religion, law and our traditions. TYPES OF ADVERTISING: Mentioned below are the various categories or types of advertising: Print Advertising Newspapers, Magazines, Brochures, Fliers The print media have always been a popular advertising medium. Advertising products via newspapers or magazines is a common practice. In addition to this, the print media also offers options like promotional brochures and fliers for advertising purposes. Often the newspapers and the magazines sell the advertising space according to the area occupied by the advertisement, the position of the advertisement (front page/middle page), as well as the readership of the publications. For instance an advertisement in a relatively new and less popular newspaper would cost far less than placing an advertisement in a popular newspaper with a high readership. The price of print ads also depend on the supplement in which they appear, for example an advertisement in the glossy supplement costs way higher than that in the newspaper supplement which uses a mediocre quality paper. Outdoor Advertising Billboards, Kiosks, Tradeshows and Events Outdoor advertising is also a very popular form of advertising, which makes use of several tools and techniques to attract the customers outdoors. The most common examples of outdoor advertising are billboards, kiosks, and also several events and tradeshows organized by the company. The billboard advertising is very popular however has to be really terse and catchy in order to grab the attention of the passersby. The kiosks not only provide an easy outlet for the company products but also make for an effective advertising tool to

promote the companys products. Organizing several events or sponsoring those makes for an excellent advertising opportunity. The company can organize trade fairs, or even exhibitions for advertising their products. If not this, the company can organize several events that are closely associated with their field. For instance a company that manufactures sports utilities can sponsor a sports tournament to advertise its products. Broadcast advertising Television, Radio and the Internet Broadcast advertising is a very popular advertising medium that constitutes of several branches like television, radio or the Internet. Television advertisements have been very popular ever since they have been introduced. The cost of television advertising often depends on the duration of the advertisement, the time of broadcast (prime time/peak time), and of course the popularity of the television channel on which the advertisement is going to be broadcasted. The radio might have lost its charm owing to the new age media however the radio remains to be the choice of small-scale advertisers. The radio jingles have been very popular advertising media and have a large impact on the audience, which is evident in the fact that many people still remember and enjoy the popular radio jingles. Covert Advertising Advertising in Movies Covert advertising is a unique kind of advertising in which a product or a particular brand is incorporated in some entertainment and media channels like movies, television shows or even sports. There is no commercial in the entertainment but the brand or the product is subtly (or sometimes evidently) showcased in the entertainment show. Some of the famous examples for this sort of advertising have to be the appearance of brand Nokia which is displayed on Tom Cruises phone in the movie Minority Report, or the use of Cadillac cars in the movie Matrix Reloaded. Surrogate Advertising Advertising Indirectly Surrogate advertising is prominently seen in cases where advertising a particular product is banned by law. Advertisement for products like cigarettes or alcohol which are injurious to heath are prohibited by law in several countries and hence these companies have to come up with several other products that might have the same brand name and indirectly remind people of the cigarettes or beer bottles of the same brand. Common examples include Fosters and Kingfisher beer brands, which are often seen to promote their brand with the help of surrogate advertising. Public Service Advertising Advertising for Social Causes Public service advertising is a technique that makes use of advertising as an effective communication medium to convey socially relevant messaged about important matters and social welfare causes like AIDS, energy conservation, political integrity, deforestation, lliteracy, poverty and so on. David Oglivy who is considered to be one of the pioneers of

advertising and marketing concepts had reportedly encouraged the use of advertising field for a social cause. Oglivy once said, "Advertising justifies its existence when used in the public interest - it is much too powerful a tool to use solely for commercial purposes.". Today public service advertising has been increasingly used in a non-commercial fashion in several countries across the world in order to promote various social causes. In USA, the radio and television stations are granted on the basis of a fixed amount of Public service advertisements aired by the channel. Celebrity Advertising Although the audience is getting smarter and smarter and the modern day consumer getting immune to the exaggerated claims made in a majority of advertisements, there exist a section of advertisers that still bank upon celebrities and their popularity for advertising their products. Using celebrities for advertising involves signing up celebrities for advertising campaigns, which consist of all sorts of advertising including, television ads or even print advertisements. BUDGETING METHODS: There are several allocation methods used in developing a budget. The most common are listed below: Percentage of Sales method Objective and Task method Competitive Parity method Market Share method Unit Sales method All Available Funds method Affordable method PERCENTAGE OF SALES METHOD: Due to its simplicity, the percentage of sales method is the most commonly used by small businesses. When using this method an advertiser takes a percentage of either past or anticipated sales and allocates that percentage of the overall budget to advertising. Critics of this method, though, charge that using past sales for figuring the advertising budget is too conservative and that it can stunt growth. However, it might be safer for a small business to use this method if the ownership feels that future returns cannot be safely anticipated. OBJECTIVE AND TASK METHOD: Because of the importance of objectives in business, the task and objective method is considered by many to make the most sense, and is therefore used by most large businesses. The benefit of this method is that it allows the advertiser to correlate advertising expenditures to overall marketing objectives. This correlation is important because it keeps spending focused on primary business goals.

COMPETITIVE PARITY METHOD: While keeping one's own objectives in mind, it is often useful for a business to compare its advertising spending with that of its competitors. The theory here is that if a business is aware of how much its competitors are spending to inform, persuade, and remind (the three general aims of advertising) the consumer of their products and services, then that business can, in order to remain competitive, either spend more, the same, or less on its own advertising. However, as Alexander Hiam and Charles D. Schewe suggested in The Portable MBA in Marketing, a business should not assume that its competitors have similar or even comparable objectives. While it is important for small businesses to maintain an awareness of the competition's health and guiding philosophies, it is not always advisable to follow a competitor's course. MARKET SHARE METHOD: Similar to competitive parity, the market share method bases its budgeting strategy on external market trends. With this method a business equates its market share with its advertising expenditures. Critics of this method contend that companies that use market share numbers to arrive at an advertising budget are ultimately predicating their advertising on an arbitrary guideline that does not adequately reflect future goals. UNIT SALES METHOD: This method takes the cost of advertising an individual item and multiplies it by the number of units the advertiser wishes to sell. ALL AVAILABLE FUNDS METHOD: This aggressive method involves the allocation of all available profits to advertising purposes. This can be risky for a business of any size, for it means that no money is being used to help the business grow in other ways (purchasing new technologies, expanding the work force, etc.). Yet this aggressive approach is sometimes useful when a start-up business is trying to increase consumer awareness of its products or services. However, a business using this approach needs to make sure that its advertising strategy is an effective one, and that funds which could help the business expand are not being wasted. AFFORDABLE METHOD: With this method, advertisers base their budgets on what they can afford. Of course, arriving at a conclusion about what a small business can afford in the realm of advertising is often a difficult task, one that needs to incorporate overall objectives and goals, competition, presence in the market, unit sales, sales trends, operating costs, and other factors. MEDIA SCHEDULING: Once a business decides how much money it can allocate for advertising, it must then decide where it should spend that money. Certainly the options are many, including print media (newspapers, magazines, direct mail), radio, television (ranging

from 30-second ads to 30-minute infomercials), and the Internet. The mix of media that is eventually chosen to carry the business's message is really the heart of the advertising strategy. SELECTING MEDIA: The target consumer, the product or service being advertised, and cost are the three main factors that dictate what media vehicles are selected. Additional factors may include overall business objectives, desired geographic coverage, and availability (or lack thereof) of media options. SCHEDULING CRITERIA: As discussed by Hiam and Schewe, there are three general methods advertisers use to schedule advertising: the Continuity, Flighting, and Massed methods Continuity: type of scheduling spreads advertising at a steady level over the entire planning period (often month or year, rarely week), and is most often used when demand for a product is relatively even. Flighting: type of scheduling is used when there are peaks and valleys in product demand. To match this uneven demand a stop-and-go advertising pace is used. Notice that, unlike "massed" scheduling, "flighting" continues to advertise over the entire planning period, but at different levels. Another kind of flighting is the pulse method, which is essentially tied to the pulse or quick spurts experienced in otherwise consistent purchasing trends. Massed: type of scheduling places advertising only during specific periods, and is most often used when demand is seasonal, such as at Christmas or Halloween. SALES PROMOTION: are essential to the proper marketing of products and companies. There are many variations of sales promotions and listed below are the 3 kinds of Sales Promos based on target market. By identifying these types of sales promotions, you can develop a more defined campaign with higher chances of success. For these examples, we will use Uprinting.com promos as a basis. Consumer Market Directed: Possibly the most common and popular of sales promotions, consumer marketing directed sales promos are those intended to appeal to the end consumer. Consumers are exposed to sales promotions nearly every day. Recent studies have shown that sales promos do play a conscious role in the buying decision process. For example, Uprinting promotions can offer discounts on all its products to print material end users to influence their purchasing habit.

Business Market Directed: This type of sales promotion marketing is targeted at other business entities. It is a sales promo that may propose a certain level of distributorship and other trade functions to companies. Often formal and less creative than a Consumer Market Directed Sales Promo, it works well in Business-to-business dealings. This type of sales promo can also be limiting due to the marketers personal network. For example, Uprinting promotions business market directed campaign can tap into its suppliers and offer them the opportunity to carry uprinting products for a share in the profits. Government Market Directed: Due to the wide nature of marketing communications target market, sales promos can span the identification of the Government as part of our market. Dealings with government agencies and other state related offices will require a separate marketing plan and a government market directed communications campaign for your sales promotion will best suit the project. For example, Uprinting promotions will direct its sales promo to government units to gain favorable branding and image enhancing advantages. Uprinting can tap into the consumer market after establishing its connections with the local governing body. More variations of sales promotions can be found using different means of measurement and definition. To learn more about the Uprinting promotions visit them online.