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JEROME’S 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.
cosmetics and magazines. the market is divided into groups on the basis of variables such as age . Another is that demographic variables are easier to measure. preferences. Need. some manufacturers are designing features to appeal to women. . People need air. gender . One reason is that consumer wants. taking care of older parents. occupation .family life cycle . Delight need (The customer would like the dealer to include an onboard navigation system) f. generation . i) Age and Life-Cycle Stage: Consumer wants and abilities change with age. education . DEMOGRAPHIC SEGMENTATION: In demographic segmentation . and so on. or neighborhoods. CONCEPTS OF MARKETING: 1. a. and usage rates are often associated with demographic variables. For example consumer is US needs food but may want a hamburger. food water. since there are now more women car owners.In Export trade and services like tourism and baking marketing plays eminent role in order to grow the economy. Gender differentiation has long been applied in clothing. wants and demand: Need is the basic human requirement. regions. although they stop short of advertising the cars as women’s cars. ii) Life Stage: Person in the same part of the life cycle may differ in their life stage. states. Johnson and Johnson soap for babies. and social class. The needs become wants when they are directed to a specific object that might satisfy the need. The automobiles industry is beginning to recognize gender segmentation. countries. cities. going into a second marriage. Demands are wants for specific products backed by an ability to pay. based partly on genetic makeup and partly on socialization practices. iii) Gender: Men and women tend to have different attitudinal and behavioral orientations. Stated need (The customer wants to buy an inexpensive car) c. GEOGRAPHIC SEGMENTATION: Geographic segmentation calls for dividing the market into different geographical units such as nation. deciding to buy a new home. clothing and shelter to survive. b. religion . race . Life stage defines a person’s major concern. Secret need (The customer wants his friends to see him as royal consumer) 2. Demographic variables are the most popular bases for distinguishing customer groups. a. hairstyling. Unstated need (The customer expects good service from the dealer) e. such as going through a divorce. nationality . So it’s better if the market is segmented properly. deciding to cohabit with another person. Real need (The customer wants a car whose mileage is high) d. Segmentation: Markets are not homogenous & they are made of several segments. income . b. A market is the aggregate of consumers of a given product and consumers vary in their characteristics buying behavior.
Each generation is profoundly influenced byte times in which it grows up. People of India will have only vegetarian food. iv) Usage Rate: Markets can be segmented into light. interest. reading habits. People within the same demographic group can exhibit very different psychographic profiles. and regular users of a product. and these affect the goods and services they consume. and travel. people’s choices and desires over the long term. politics. purchase a product. and determine. buyerreadiness stage. v) Loyalty Status: Consumers have varying degrees of loyalty to specific brands. The company utilizes product features.standing practice in such products and services categories as automobiles. furnishings. and companies. leisure activities. Heavy users are often a small percentage of the market but account for high percentage of total consumption. activities. attitude toward. Occasions segmentation can help firms expand product usage. clothing. cosmetics. Market-share leaders tend to focus on attracting potential users because they have the most to gain. income does not always predict the best customers for given product. They endow their products with a “brand personality” that corresponds to a target consumer personality. Buyers can be divided into four groups according to brand loyalty status: . ex-users. use of. medium. loyalty status. ii) Benefits: Buyers can be classified according to the benefits they seek. and image making to transmit the product’s personality. movies. at a basic level. c. i) Lifestyle: People exhibit many more lifestyles than are suggested by the seven social classes. However. or use a product.iv) Income: Income segmentation is long. boats. iii) Values: Some markers segment by core values. or response to a product. Many marketers believe that behavioral variables-occasions. i) Occasions: Buyers can be distinguished according to the occasions when they develop a need. benefits. and attitude—are the best starting points for constructing market segments. v) Generation: Many researchers are now turning to generation segmentation. first time users. buyers are divided into different groups on the basis of lifestyle or personality or values. Smaller firms focus on trying to attract current users away from the market leader. services. PSYCHOGRAPHIC SEGMENTATION: In psychographic segmentation. but lifestyle segmentation does not always work. BEHAVIORAL SEGMENTATION: In behavioral segmentation. user status. d. and heavy product users. Many companies design products and services for specific social classes.(Soap + freshness + medicine + beauty care) iii) User Status: Markets can be segmented into nonuser. ii) Personality: Markers have used personality variables to segment markets. clothing. and defining events of that period. people vary considerably in the benefits they seek from the same product. and retailers. Core values go much deeper than behavior or attitude. stores. vi) Social Class: Social class has a strong influence on preference in cars. Companies making cosmetics and furniture are always seeking opportunities in lifestyles segmentation. usage rate. home. buyers are divided into groups on the basis of their knowledge of. People differ in attitudes.the music. potential users.
MARKET TARGETING: Once the firm has identified its market-segment opportunities. d. the seller engages in mass production. they reinforce those who are positively disposed. Ultimately every individual has a unique set of wants and preferences. * Shifting loyal: Consumers who shift from one brand to another. * Switchers: Consumers who show no loyalty to any brand. . negative. and hostile. some are aware.* Hard-core loyal: Consumers who are buy one brand all the time. profit & growth potential. Evaluating and selecting the market segments: In evaluating different market segments. and some intend to buy. * Split loyal: Consumers who are loyal to two or three brands. they try to win the votes of indifferent voters. indifferent.” or “one-to-one marketing”. Marketers usually identify niches by dividing a segment into sub segments.” “customized marketing. Having evaluated different segments. mass distribution & mass promotion of one product for all buyers. some desire the product. the niche is not likely to attract other competitors & the niche has size. Segment Marketing: A market segment consists of a group of customers who share a similar set of needs & wants. individual) a. vii) Attitude: Five attitude groups can be found in a market: enthusiastic. vi) Buyer-readiness stage: A market consists of people in different stages of readiness to buy a product. local. b. Many banks in India have specialized branches that cater to the needs of corporate customer. company can consider five patterns of target market selection. Individual Consumer Marketing: The ultimate level of segmentation leads to “segments of one. LEVELS OF MARKET SEGMENTATION: In mass marketing. it has to decide how many and which one to target. Door-to-door workers in political campaign use the voter’s attitude to determine how much time to spend with that voter. Some are unaware of the product. the firm must look at two factors: the segment’s overall attractiveness and the company’s objective and resources. In past centuries. producers customized their offerings to each customer: the tailor fitted a suit and a cobbler made shoes for each individual 3. Local Marketing: Target marketing is leading to marketing programs tailored to the needs & wants of local customers groups. they will pay a premium to the firm that best satisfies their needs. Niche Marketing: A niche is a narrowly defined customer group seeking a distinctive mix of benefits. The customers in the niche have distinctive sets of needs. They thank to enthusiastic voters and remind them to vote. Micro Marketing: (Segment. positive. they spend no time trying to change the attitudes of negative and hostile voters. niche. some are interested. Television channels particularly focusing on religion & spirituality c. The relative numbers make a big difference in designing the marketing program. some are informed.
the firm enjoys operating economies through specializing its production. If it captures segment leadership. the firm ignores segment differences and goes after the whole market with one offer. Large firms can cover a whole market in two broadways: * In undifferentiated marketing. Substantial: The segments are large and profitable enough to serve. The downside risk is that the customer group may suffer budget cuts. and commercial laboratories. A segment should be the largest possible homogeneous group worth going after with a tailored marketing program. The firm gains a strong reputation in serving this customer group and becomes a channel for additional products the customer group can use. they do not constitute separate segments. If married and unmarried women respond similarly to a sale on perfume. General Motors (vehicle market). Selective specialization: The firm selects a number of segments. EFFECTIVE SEGMENTATION: a. purchasing power. Cost is high in differentiated marketing. b. Full market coverage: The firm attempts to serve all customer groups with all the products they might need. brand. the firm gains a strong knowledge of the segment’s needs and achieves a strong market presence. the firm can earn a high return on its investment. Through concentrated marketing. Differentiable: The segments are conceptually distinguishable and respond differently to different marketing-mix elements and programs.a. Single-segment concentration: Suzuki concentrates on the small-call market and Honda on the family car market. e. d. The downside risk is that the product may be supplanted by an entirely new technology. or organization. d. each objectively attractive and appropriate. b. Only very large firms such as IBM (computer market). * Differentiated marketing typically creates more total sales than undifferentiated marketing. and promotion. Product specialization: The firm makes a certain product that it sells to several segments. Market specialization: The firm concentrates on serving many needs of a particular customer group. e. government. Furthermore. and characteristics of the segment can be measured. Accessible: The segments can be effectively reached and served. distribution. This multi segment strategy has the advantage of diversifying the firm’s risk. An example would be a microscope manufacturer who sells to university. c. Measurable: The size. An example would be affirmed that sells an assortment of products only to university laboratories. Positioning: is the process by which marketers try to create an image or identity in the minds of their target market for its product. but each promises to be a moneymaker. . Actionable: Effective programs can be formulated for attracting and serving the segments 5. There may be little or no synergy among the segments. and Coca-Cola (drink market) can undertake a full market coverage strategy. c. The firm makes different microscopes for the different customer groups and builds a strong reputation in the specific product area.
customers. population shifts etc. Macro: are uncontrollable factors which directly or indirectly affect the companies’ ability to operate in the market effectively. a. 11. Several factors relating to population. regional characteristics. > Social Class: Social class is one important concept in socio cultural environment. i) Demographic: Demographic is a major element to be studied in environment analysis. 8. language. Culture. Distribution channels are used to deliver the physical products. traditions. religious composition. The intangible value proposition is made physical by an offering. Each class has its own standards with respect to lifestyle. household patterns. services. COMPETITION: Competition includes all the actual and potential rival offerings and substitutes a buyer might consider. location. MARKETING CHANNELS: Communication channels deliver and receive messages from target buyers. A social class is determined by income. competitors and public. A brand is an offering from a known source. behaviors etc > Economic Environment: The factors to be considered under economic environment are General Economic conditions. b. * Culture: Culture is the combined result of factors like religion. Micro: It implies the factors and forces in the immediate environment which affects the companies’ ability to serve the market. which can be a combination of products. and experiences. SUPPLY CHAIN: is a longer channel stretching from raw materials to components to final products that are carried to final buyer. also need to be studied as they are a part of demographic environment. occupation. 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. of residence etc. such as size. VALUE AND SATISFACTION: The offering will be successful if it delivers value and satisfaction to the target buyer. Aspects such as composition of workforce. 7. * Socio-cultural Environment: Socio-cultural environment is another important component of the environment. It consists of suppliers. Economic conditions of different segments of the population. Satisfaction reflects person’s judgments of a product’s perceived performance in relationship to the expectations. Value reflects the sum of the perceived tangible and intangible benefits and costs to customers. education & upbringing. need to be studied. growth rate. 9. If the performance is low the customer is dissatisfied. information. 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. beliefs. age distribution. 10. Value increases with quality and price and decreases with price.6. their disposable . values & lifestyles of the people in a given society constitute the sociocultural environment. market intermediaries.
b. c.order to maintain their status. a. 2. Apart from this political stability. all the producers advertise their products with the help of these popular personalities. * 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. Rational Buying Motives: Rational buying motives are those which are based on sound judgment. * Political Environment: Industrial growth depends to a great extent on the political environment. Fashion: It is an important motive that can change the mind of the customers. the customer prefer that products which are more economy or cheap in price. They purchase the goods through proper testing. a. rate of growth of each sector of the economy and inflation rate. Utility: Customers want to purchase those goods which have more or higher utility. customers purchase such goods. customers try to copy particularly the movie stars. purchasing power and Rate of growth of the economy. Love and affection: It is an important buying motive which includes the buyers to purchase the goods. comparing and observing the goods on the basis of price. Emotional Buying Motives: Buying motives based on feelings or passions are known as emotional buying motives. So. Due to love and affection to the children. durability etc. They purchase toyota car. Karizma motorcycle. wealth and life. Generally.income. Economy: Under this motives. To get more profit and discount. f. Thus. customers purchase expensive and luxuries goods in. form of govt. dress biscuits etc. b. sportsmen and athletes etc. Curiosity: Curiosity is the desire for new experience which motivates the people to buy the specific goods. * Legal Environment: Business has to operate within the framework of prevailing legal environment. because raw materials are very important for a company. we buy toys. Utility satisfies the wants of the customers. elements like social & religious organizations. it motivates to purchase the goods such as insurance policy. fifty-nine inch colour television etc. These goods or services help them to avoid their fear. to get the high position in the society. Fear: People are generally afraid of losing their health. media & pressure groups & lobbies of various kinds also form the part of political environment. d. hiring lockers in bank and membership of health club etc. Pride and prestige: Due to the pride and prestige in the society. . * Natural Environment: Companies should consider natural factors like natural resources and climatic conditions. quality.
REWARD (or Reinforcement). c. . Subliminal Perception: It suggests that peoples' thoughts. customers are motivated to purchase the goods e. a. become a drive or a need can be aroused by external stimuli.c.. PERCEPTION: is the process by which we select. earthquakes. d. 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. Security: People are not feeling secure from the floods. in the society. Problem Recognition: The buying process starts when the buyer recognizes a problem or need. A visual or auditory message that is allegedly perceived psychologically. CONSUMER DECISION MAKING PROCESS: a. a person must want something. Selective Retention: We remember good points about a product we like and forget good points about competing products. b. 3. CUE (or Stimulus). you'll get caught LEARNING: induces changes in behavior arising from experience. Since we can’t attend all these ads. Due to the durability of the products. feelings and actions are influenced by stimuli that are perceived without any awareness of perceiving. Example Buy now and don't take it. So. An advertising message presented below the threshold of consciousness. open the bank A/c and keep the watchman etc to be secured. Location. a person must do something. Selective attention: Normally a person is exposed to 1500 ads a day. and interpret information inputs to create meaningful picture of the world. but not consciously. Friendliness behavior motivates a buyer. we screen them by a process called selective attention. DRIVE (or Motivation). With an internal stimulus. a shopkeeper or an outlet for purchase. Selective Distortion: is the tendency to interpret information in a way that fits our preconceptions. RESPONSE. theft etc. a person must get something that is wanted. Quality. organize. Patronage Buying Motive: Patronage motives speak of the choice of a particular person. a person must notice something. The need can be triggered by internal or external stimulus. one of the person’s normal needs hunger thirst etc. d. Store loyalty. the customers purchase the key lockers. Durability: It is another element of rational buying motive.
At this stage. he may seek further information regarding the product or attempt to assess the information already available. Purchase Decision: The buyer must be convinced that the purchase of the product is the legitimate course of action. the consumers is disappointed. Evaluation of Alternatives: The consumer will evaluate the alternate products which can satisfy his needs and wants. phoning friends. usually it creates some restlessness in the mind of the individual. the consumer is satisfied. Post Purchase Behavior: The purchase leads to specific post purchase behavior. c. it is exceeds expectations. If the performance of the product falls short of expectations. He is not sure about the product. He may feel that the other brand would have been better. . Information Search: An aroused consumer will be inclined to search for more information. These feelings make a difference in whether the customer buys the product again & talks favorably or unfavorably about it to others. It can be defined in terms of satisfaction. the consumer is delighted.b. going online etc. A person at times simply becomes receptive to information about a product or he may enter looking for a reading material. if it meets expectations. e. d.
It includes physical objectives. machinery. use or consumption that might satisfy a want or need. acquisition. a. machine tools. legal advice and appliance repair. Fuel. b. radio. organizations and ideas. * 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. * Materials entering into the product: This category of industrial goods include raw materials. c. and perishable products.UNIT – II PRODUCT: A product is anything that can be offered to a market for attention. Examples are TV. oil. * Shopping Goods: Goods which consumer selects and buy only after making comparisons on such bases as suitability. PRODUCT CLASSIFICATION: Based on Durability and Tangibility. coal. persons. and building come under this category. Grocery products are best example. Durable goods: are tangible goods that normally survive for a long period. places. Consumer Goods: are those goods which are designed for final consumption by individuals and households. Examples are haircuts. Examples are Refrigerators. such as soft drinks and soap. semi manufactured goods and fabricating parts. quality. price and style are called as shopping goods. Eg: cars. services. inseparable. shoes. * Speciality Goods: Goods for which significant number of buyers is habitually willing to make a special purchasing effort are known as specialty goods. . * Unsought goods: are those the consumer does not know about or does not normally think of buying. 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. Services: are intangible. They require more quality control. such as insurance. Eg: Furniture’s. variable. and clothing. * Equipment and physical facilities: Major capital assets such as plant. Nondurable goods: are tangible goods normally consumed in one or a few uses. bikes. 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. Eg.
* Drop error: Occurs when the company dismisses an otherwise good idea. Many companies also encourage employees particularly those on production line to come forth with ideas. 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. scientists. A policy sets the objectives to be achieved and also the limits within which the management has to operate. and calculators. * Go error: Mean adoption of poor ideas The purpose of screening is to drop poor ideas as early as possible. Idea generation: The new product Development process with the search for ideas. In screening ideas the company must avoid two types of error. Scope of Product Policies: The Company’s total use of financial and man power resources. typewriters. These resources have to be planned to meet both short – term and long – term objectives. take them a part and build better ones. It involves the innovation of new products. Product Planning and development: Product planning is the starting point of the overall marketing program of the firm. New product ideas also come from inventors. The kinds of consumers or market areas at which products are aimed. The promotional markets to be used. New product ideas comes through interacting with various group of people . From this they can find out what the customers like and dislike about competitors’ products. Idea screening: Idea screening is second stage in new product development once a large pool of ideas has been generated by whatever their means. competitors . Areas covered by Product Policy: 1. one will sprat another.* Management Materials: This category covers both office equipment’s and office supplies. employees and top management. and within a short time hundreds of new ideas may be brought to surface. 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. Examples are stationery. The reputation of the company. a. advertising agencies. ii. their number have to be pruned to manageable level. such as customer. volume and timing of the product a company offer for sale. As the ideas start to flow. Companies can also find good ideas by searching competitor’s products and services. New Product development: A new product is best developed through a series of eight stages. often offering cash reward for good suggestion. They can buy their competitors’ products. university and commercial laboratories. improvement in the existing product line or dropping the uneconomic products from the product line. i. Many companies require their executives to write up new product on a standard form that can be received by a new product . Product policy is concerned with defining the type. The company’s position as a leader or follower.
Marketing Strategy: Following the successful concept test. Business Analysis: The next step in new product development is business analysis. the planned product positioning and sales. vi. product price. The company will determine whether the product idea can be translated into a technically and commercially feasible product. vii. iii. .committee. v. the idea is given in a concrete or tangible form. marketers can use existing sales data to guide themselves. The second part outlines the planned price. This step involves a large investment. the new product manager will develop a preliminary marketing strategy plan for introducing the new product into market. Up to now. profit goals sought in the first few years. Concept development involves many questions: Who will buy the new product? What is the primary benefit of new product? Under what circumstances. the product has existed only a word description. Product Development: If the result of business analysis is favorable then a prototype of the product is developed. Throughout the stages of idea generation and screening. general concept of what product might be. the product is ready to be dressed up with a brand name and packaging and put into a market test. The write up describes product idea. A product concept is an elaborated version of ideas expressed in a meaningful consumer terms. a drawing or a prototype. structure and behavior. market share. for which sales data does not exist. In development stage. It makes some rough estimate of market size. only estimation can be used. distribution strategy and marketing budget for first year. 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. But with a product. profit and return on investment for the new product if it were placed in market. development cost and rate of return. The first part describes the target market size. Concept development and testing: A product idea is possible product the company might offer to the market. The third part of marketing strategy plan describes the long run sales and profit goals and marketing strategy overtime. Test marketing: After management is satisfied with functional and psychological performance. For some products such as another candy bar. The market must project costs. iv. The plan consists of three parts. the new product may be used? * Concept testing: Concept testing involves presenting the product concept to appropriate target consumers and getting their reactions. the developers are only with the product idea. target market and competition.
iv. the video cassette recorder. but at a decreasing rate. A better or less expensive product is developed to fill the same need. The entire product may be new. i. Deal about when where and how the product is delivered. prices typically decline gradually during this stage. The primary reason increase price competition. sales and profit rise frequently at a rapid rate.Test marketing involves how large the market is and how consumers and dealers react to handling. 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. market share. Maturity: During the first part of the maturity stag. 2. it will face its largest costs to date. iii. Introduction: During introduction stage. It has gone through product development. Commercialization: As the company goes ahead with commercialization. as gauged by sales volume for the total category is inevitable for one of the following reason. length and consistency. including idea screening. Growth: In the growth stage or market acceptance stage. That has occurred with digital TV. The product life cycle consist of four stages. viii. using and repurchasing the product. etc for a new product there is very little competition. 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. and market test. Mostly as a result of competition profit start to decline nears the end of the growth stage. Another major cost is marketing. ii. sometimes called pioneering stage. often in large number if the profit outlook is particularly attractive. b. Competitors enter the market. sales continue to increase. People simply grow tired of a product so disappear from the market. As a part of firm’s efforts to build sales and in turn. if the product has tremendous promise. During the latter part of this stage marginal producers those with high cost or no differentiate advantage drop out to the market. Profits of both producers and middle-man decline. other come up with a new improved version of their primary brand. However. . The need for product disappears. introduced in 1988. prototype. depth. Product mix and Product line: A product mix is the set of all the products offered for sale by a company. They do so because the lack sufficient customers or profit. often because of other product development. Some firms extends their product lines with new models. Decline: For most products a decline stage. a product is launched into the market in a full scale of marketing program. numerous companies may enter into the industry early on. The company will have to contract for manufacturing facility. The structure of product mix has width. The amount of test marketing is influenced by investment cost and risk on one hand and time pressure and research cost on the other. such as the zipper.
* Positioning in relation to a competitor: Position is directly against the competition. For example P&G product lines are consistent insofar as they are consumer products that go through the same distribution channels. * Positioning by product attribute: The Company associates its product with some product features. management should take a fresh look at the company’s existing products. The shift from fat and long lines to thin and short lines. Depth: The depth of the product mix refers to how many varieties are offered of each product in the line. For material goods. particularly in consumer products. b. Often. mechanical. 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. Consistency: The consistency of the product mix refers to how closely relate the various product lines are in end-use. high quality or low price. For example P&G Crest tooth paste comes in three sizes and two formulations (paste. renaissance packaging has been a very popular area for product alteration. production requirements. six shampoos. * Positioning by price and quality: To position on high price. either by eliminating entire line or by simplifying the assortment with in a line. & four dish washing detergents. c. Product-Mix Strategy: Manufacturers we several major strategies in managing their product mix. cleaning. distribution channels or in some other way. d. d. household. six hand soaps. Width: The width of the product mix refers to how many product lines the company carries. A product position is the image that the product projects in relation to competitive product and to other products marketed by the same company. gel) c. Length: The length of the product mix refers to the total number of items in its product mix. is designed to eliminate low-profit products and to get more profit from fewer products. low quality basis. Now lines may be related or unrelated to the present products. Contraction of product mix: Another product strategy is to thin out the product mix. especially. Alteration of existing product: In spite of developing a complete new product. The lines are less consistent insofar they provide different functions for buyers. The company may also increase the number of items in its product mix. improving established product can be more profitable and less risky than developing a completely new one. For Example proctor & gamble markets a fairly wide product mix consisting of many product lines including food. For example P&G typically carries many brands within each line it sells eight laundry detergents. Positioning the product: Positioning of product in the market is a major determinant of company profits. a. cosmetics and personal care products b.a. redesigning is often the key to products. .
Positioning in relation to product use. It includes introduction of new product or adding different sizes to the existing product. technical or end-use consideration. disappointing future sales. it is known as product diversification. at least two ways are open with respect to promotional emphasis. Functional change: are changes which make the product work better or satisfy additional needs. ii. The company wants to sale its products rapidly. It’s also known as line expansion. Trading up means adding a higher priced prestige product to a line in the hope of increasing the sales of existing lower priced products. Positioning in relation to product class: . Products will get terminated because of declining volume of sales. lower-priced product for the bulk of the sales volume and promote it heavily or * The seller may gradually. iii. Product Line: A product line includes a group closely related products that are considered a unit because of marketing. b. Product Diversification: When a manufacturer or a distributor deals in more than one product. Style Change: means changes in appearance. A company is said to be trading down when it adds a lower priced item to its line of prestige products. form or design of the existing products so that it may look almost a new product.(Associating the Product) a class of product e. promote the new product and expect it to share a major sales volume. 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. The right change can produce a big jump in the product sales. d. 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. Product Modification: consists of improvements in the existing quality. Product Elimination: Process of terminating a product effectively. an expansion of the product line and a change in product positioning. a. Environmental impact changes: To improve product’s safety or its impact on the environment. Product Line Strategy: i. size. Positioning in relation to a target market (Market Segmentation). When a company is going on a policy of trading up. essentially. * The seller may continue to depends upon the older. . very low return level and consistent need to lower price to maintain sales. trading up and trading down involves. decreasing market share. 3. Trading up & trading down: As product strategies.
Packaging: Packaging is defined as all the activities of designing and producing the container for a product. convenience. letters and numbers that can be vocalized. common identification. Trademark is a brand that has been adopted by a seller and given legal protection. And a brand mark is the part of brand that appears in the form of symbol. design or distinctive color. . Used for protection.A brand name consists of words. product differentiation and helps in selling. A brand mark is recognized by sight but cannot be expressed.
and marketing is also essential. b. Estimated Price: can be anticipated on the basis of the relative importance of the product to the consumers in their budget estimates. producer. promotion should be considered as a next step. It depends on various factors such as present production capacity. Selecting a suitable price strategy: Various price strategies such as skimming. 4. 2. Product mix should also be considered. middlemen and consumer should be considered. 5. METHODS OF PRICE DETERMINATION: 1. BASIC PRICING POLICIES: 1. low penetration. The price should be fixed in such a fashion to give a fair return to the producer. Anticipating Competition: Once the demand is estimated. the next step is anticipating competition. Estimated demand for the product at different price level: can be fixed on the basis of elasticity of demand of the product. 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.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. Cost oriented pricing policy: a. interest of various parties namely. following the competition can be followed. This type of price is used by retail traders and by the manufacturers. In case of inelastic demand. channels of distribution. . finance. a good profit margin to the middlemen and a nominal price to the consumers. Fixing the Price: While fixing the price for any product. cost of extension programs. Competition from the producers of similar product and from the substitutes of the product should be determined. Estimating Demand for the Product: The first step in determining the price of the product is estimating the demand for the product. 3. prices may be fixed higher and in case of elastic demand. cost of production and competition etc. Consultation with the various departments such as production. the prices may be lower. Marketing policies of the company: Policies regarding production. a. 6. Determining Expected Share for Market: Next step is to determine the market share which a company will try to capture.
The automobile buyer can order electric window controls. Target Pricing: Another common method adopted under cost oriented pricing is known as target pricing. NEW PRODUCT PRICING: 1. Example is all electronic goods. 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. Deliberate policies may be framed with a view to sell below or above or in line with competition. 2. Market Skimming Pricing: Companies that invent new products set high prices in the beginning to skim the market. and light dimmers. Competition Oriented Pricing Policy: Many concerns fix prices only after having considered the competitive price structure. Product Line Pricing: Companies normally develop product lines rather than single products. Operational Product Pricing: Many companies offer to sell optional products along with their main product. b. PRODUCT MIX PRICING: 1. Target pricing is invariably followed by manufacturers who fix a target return on the total cost. As per this method. When the demand is greater. Pricing an Imitative Product: A company that plans to develop an imitative product faces a product positioning problem. 3. If sales volume goes beyond this point. Demand Oriented Pricing Policy: In this method demand is the important factor. 3. Management must decide on the price steps to establish between the various cameras. each sale before reaching this point is at a loss. 2.b. Captive products are razor blades and cameras. Market Penetration Pricing: Some companies set a relatively low price on their innovative product. c. hoping to attract a large number of buyers and win a large market share. 2. Break even pricing: Breakeven point occurs at the place where total costs equal sales revenue. The new comer should produce high quality product and charge low price. . Pricing an innovative product: a. Captive Product Pricing: Companies in certain industries produce products that must be used with the main product. each additional unit sold brings in some profit. a low price is charged. Price is fixed making adjustment in it to the market condition. Each product in the line offers some additional features. there cannot be any rigid relation between the price of a product and the firm’s own cost or demand. a high price is charged and when the demand is low.
These price adjustments are called discounts and allowances. Allowances: Allowances are other types of reduction from the list price. Customer Basis: different customers will pay different amount for the same product or service. This discount must be given to all buyers who are meeting these terms. As we have stated already. Such method is called discriminatory pricing. Seasonal discounts allow the seller to maintain steadier production during the year. Even small variations in price can communicate product differences to consumers. Sellers should give due consideration to the psychology of prices and not simply the economies. Quantity Discounts: A quantity discount is a price reduction given to buyers who buy goods in a large quantity. By-Product Pricing: If the byproducts have no value and disposing of them is in fact costly. 1. many consumers consider price as an indicator of quality. This will enable the seller to reduce the main product’s price to make it more competitive. 2. and buying off season. volume purchases. Place Basis: different locations are priced differently even though the cost of offering each location is the same. by the day. 4. A cricket stadium varies its seat prices because of audience preferences for certain locations. 3. 5. products. 4. PRICE DISCOUNTS: Most of the companies will reward customers for certain acts like early payment of bills. 1. Trade Discounts: are offered by the manufacturer to trade channel members who perform certain functions like selling. storing. Concessions will be given in museums for students. Public utilities vary their prices to commercial users by the time of day and week end versus week day. DISCRIMINATORY PRICING: Companies will often modify their basic prices to accommodate differences in customers.4. 2. and locations. PSYCHOLOGICAL PRICING: Price communicates something about the product. Cash Discounts: A cash discount is a price reduction to buyers who pay their bills promptly. this will affect the pricing of main product. and record keeping. Trade in allowances is price reductions granted for turning in an old item when buying a new one. Time Basis: prices are varied seasonally. . and even by the hour. Seasonal Discounts: A seasonal discount is a price reduction to buyers who buy goods or services out of season. 3. Product – Form Basis: Different versions of the product are priced differently but not proportionately to their respective costs.
FOB Origin Pricing: Under this method. Zone Pricing: firm establishes two or more zones. The company charges the same price plus freight to all customers irrespective of their location. 2. All customers within a particular zone will pay the same price and this price is higher for more distant zones. . 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. Uniform Delivered Pricing: is just opposite to the FOB origin pricing.GEOGRAPHICAL PRICING: The Company must decide how to price its products to customers located in different parts of the country. who pays the freight from the factory to the destination. 4. goods are placed free on board a carrier at which point the title and responsibility passes to the customer. 3. 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. Freight Absorption Pricing: the seller absorbs all or part of the actual freight charges so as to get the business.
1) Distribution of channel goods: There are five channels are used for distribution of tangible goods to ultimate consumer. It is short and direct method. newspapers. gasoline etc. who in turn call on with wholesales that sell to small . simplest channels of distribution for distributing gods are from producer to consumer. hardware and many food items are distributed in such channel process. e) ProducerAgentWholesalerRetailerConsumer: To reach small retailers. Distribution is not simply a matter of moving products into the hands of consumers. The producer may sell from door to door or by mail. The products such as drugs. d) ProducerAgentsRetailersConsumers: Instead of using wholesaler many producers prefer to use manufacturer’s agents. clothing. lumber. In this case manufacturers keep contact with retailers. Types of channels & distribution: Common channels for distribution of consumer goods. c) ProducerWholesalerRetailerConsumer: This type of channel mostly used by small manufacturers and small retailers to distribute such things that have a large market need. It involves no middle man. a) ProducerConsumer: The shortest. Door to Door: In these channels companies use their representatives to sell their gods from door to door such as insurance magazines. a broker or some other agent’s middleman to reach the retail market. A farmer sells their fruit and Vegetables directly to consumer at road are also using this method. b) ProducerRetailerConsumer: Many large retailers buy directly from manufacturers and agricultures’ large no. take purchase orders. business goods and services are discussed below. A glass marker selected a food broker to reach store market. through manufacturing to final sales. milk etc. of our purchases are mad through this channel such as automobiles. By Mail: Some companies also sell their products by mails. the producers often use agent middleman. it involves a products movement throughout all stages of development from finding resources. The retailers then sell to ultimate consumers.IV CHANNELS OF DISTRIBUTION: Distribution involves the physical movement of products to ultimate consumers.UNIT .
agreement on terms for transfer of ownership or possession (negotiation). CHANNEL FUNCTIONS: In order to deliver the optimal level of service outputs to their target consumers. 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. Agents frequently assist a service without producer. or marketing flows. storage and . Agent can be especially useful for making contacts and bringing buyers and sellers together. The typical marketing flows. b) ProducerAgentConsumer: While direct distribution is often necessary for a service to be performed. Many services as travel. There are only two common channels. or participate in. d) ProducerAgentIndustrial DistributersUsers: This channel to similar to previous one. care. acquisition and allocation of funds (financing). 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. 2) Channels for Distribution of Business Goods: a) ProducersIndustrial Users: This direct channel is used for most expensive products. legal advice and personal services as hair cutting etc. generators etc use this channel.stores. Manufacturers of large installations such as air planes. loading. where they are called “food brokers”. intentions to buy (ordering). 3) Distribution of Services: The intangible nature of services creates special distribution requirements. It is used when it is not possible to sell through agents directly to business users. advertising media and insurance use agents. assumption of risks (risk taking). producer consumer contact may not be required for key distribution activities. or activities. listed in the usual sequence in which they arise. as for many professional services such as health. As any marketing channel moves goods from producers to consumers. Thus direct channel is used. a number of marketing flows. a) ProducerConsumer: As service is intangible so it requires direct contact b/w consumer and producer. development and dissemination of persuasive communications (promotion). are collection and distribution of marketing research information (information). manufacturers are willing to allocate some of their tasks. They are common in food industry. to intermediaries. the marketing intermediaries perform.
in overseas markets it may be difficult for an exporter to establish contact with end users. Direct selling is not economical for a single product firm. But if the distribution costs are high. or scale of operation.movement of product (physical possession). First. The nature of the market: when the market is very small and located within a narrow area. Producers delegate these flows for a variety of reasons. perishable goods are sold directly or through a short channel. Availability of storage facilities: if the producer. Cost of distribution: when the distribution costs are low. Each of these flows must be performed by a marketing intermediary for any channel to deliver the goods to the final consumer. or middlemen. wholesaler and retailer have good storage facilities. an entrepreneur can use direct selling. For instance. a longer distribution channel can be used. direct selling is the best since it reduces costs to the final consumer. through specialization. Finally. each producer must decide who will perform which of these functions in order to deliver the service output levels that the target consumers desire. Because an intermediary typically focuses on only a small handful of specialized tasks within the marketing channel. buyers paying sellers (payment). the customers can buy from any depending on his/her convenience. bulky or heavy products are distributed directly to reduce on the costs of transport. Reliability of the channel: a reliable channel is able to provide goods/services to customers on whenever they need them. and various kinds of agents must therefore be employed. the long channel of distribution is preferred since the producer can pass on the cost of distribution to the middlemen. can offer a producer greater distribution benefits. Second. intermediaries. each intermediary. they may lack the financial resources to carry out the intermediary activities themselves. In case of a mass market where customers are scattered geographically. experience. FACTORS TO BE CONSIDERED IN CHANNEL SELECTION: The nature of the product: in general. Thus. 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. and transfer of ownership (title). The nature of the business: direct selling is only possible for a manufacturer who is financially strong and possesses marketing expertise. . offer superior efficiency in making goods and services widely available and accessible to final users.
Availability of middlemen: when the middlemen are available. e. The value of the product: if the product can easily break. Rewards power gives better results than coercive power. b. Degree of competition: if there is high competition. Desire to control the product market and prices: when the producers want to control the prices of their product. then a short channel will be used and vice-versa. The producer must continue to develop new expertise so that intermediaries will want to continue cooperating. Number and location of production units: if the production units are many and not established very far. RETAILING: Retailing includes all activities associated with selling goods and services to ultimate consumers for personal or non-business use. Expert Power: The producer has special knowledge the intermediaries’ value. direct selling can be the best channel. then middlemen would be the best. d. but if they are produced far away. Coercive Power: A producer threatens to withdraw a resource or terminate a relationship if intermediaries fail to cooperate. It may be done through retail stores. c. the long channel of distribution is the best but if not available. Referent Power: The producer is so highly respected that intermediaries are proud to be associated with it. . direct selling is the best. Legitimate Power: The producer request a behavior that is warranted under the contract. Reward Power: The producer offers intermediaries an extra benefit for performing specific acts or functions. direct selling is preferred since middlemen can cause price fluctuations. The company should plan proper training programs for them. direct selling is the best and this reduces on the risks. MOTIVATION FOR CHANNEL MEMBERS: Channel member can be motivated by identifying the needs and wants of the members. a.
equipment and material. In spite of the population boom and raising consumer incomes over the past three decades. 1) Size OF Retail Market: There is a large no. By Product Line 3. Financing . Promotional. Classification of Retailers: There are four classifications of retailers. profession or line of business.s due to increase in per capital income. Wholesaling expenses are estimated at about 8% of wholesaling sales. Many under formed and poorly qualified people enter in the field and son fail. Retailers cost and profit very depending on the type of operation and major product line. no exams are required and necessary business licenses are easy to acquire. By Method Of Operation 1) By sales volume: Sale volume is useful basis for classifying retail stores. of retail stores in the world. Retailer: It is business enterprise that sells primarily to household consumers for nonbusiness use. Secondly role is to serve producer and wholesaler. 2) Cost and Profit of Retailers: The total average operating expenses for al retailers combined are about 25% to 27% of retail sales. in spite of increase in price goods. To start a Manufacturing firm one must have money to acquire a plant. because stores of different sizes present different management problems. These are 1. 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. 3) Economic Justification for Retailing: To get into retailing is easy but to force out is just as easy. a company must perform its primary role i-e to provide gods and services to customer.s to early 1990. Higher retail costs are generally related to the expense of dealing directly with ultimate consumer. Sales through retail store increased from late 1960. By Sale-Volume 2. the justification for retailing and key to success in retailing.Retail Sales: Any firm manufacturers retailer or wholesaler that sells something to ultimate consumer for their personal use is called retail sale. there has been no appreciable change in the number of retail stores. Thus to survive to retailing. This dual responsibility is both. Buying. But to Operate a retail store. total sales and per capital retail sales have increased. By Fore of Ownership 4.
classified by method of operation. although its used has declined during the last 30 years. . a) Full Service Retailing: Full service retailing is stick quite prevalent. Thus a retailer may operate the business independently or may be part of chain. We identify these stores by the name of the product. 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. and ladies ware store and so on. On this basis relating is both a large scale and small scale operation. b) Corporate Chain Stores: A corporate chain store is an organization of two or more stores. Flower shop. tobacco shop. 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). that generally handle the same line of products on the same level in distribution structure. 2) By product line: We can group them into two categories a) General Merchandized Store: General Merchandized store carry a large no. shoe store. while the super market discount retailing. It is a growing form of retailing. booth store fall in this category. Examples are Food store. 4) By method of operation: The four types of retailers. of product lines. About 90% of operations fall into this category. Departmental store are type of general merchandized store with largest sale volume. Telephone orders are published by advertisement in newspapers.personal relations and expense control al influenced significantly by. centrally owned and managed. non-retailing store has increased during the last 3 decades. furniture’s store. b) Limited Line Store: Limited line store is considerable assortment of goods but in only one or few related lines. The major store ownership categories are a) Independent Store: In an independent store. 3) By form of ownership: Another useful way of classifying retail stores is based on ownership. there are close personal relationship b/w customers and retailers. c) Telephone Retailing: Telephone retailing involves the sales of goods and services over the telephone. whether a store sales volumes large or small.
Agent and Broker 3): Manufacturer Whole Selling 1) Merchant Whole Seller: These are sometimes called jobbers and distributors. hardware’s etc. 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. They do not physical possession products. They are divided into two groups. There are several types of limited service whole selling. Any transaction from one producer to another producer is a whole selling exchange. . of establishments. Whole selling and whole sell trade consists of the sale. offering a credit. Classification of whole seller: There are three categories of whole sale 1). b) Limited Service whole selling: Limited service whole selling offer service to their suppliers and customers. cosmetics. making deliveries and providing management assistance. 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. Merchant Whole Seller 2. 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. who use the product for personal non business purpose. 2) Drop Shipping Whole Selling: Drop shipper whole sellers operate in bulk industries such as coal and heavy equipment. They are also called industrial distributors. 1) General Merchandise Full Services: They handle a broad line of nonperishable items such as drugs.WHOLE SELLING: Definitions: Whole selling includes all sales made to any person or organization other than the ultimate consumers. They are the largest single group of whole seller which is measured either by sale or by no. 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.
training and paying their own sales force. Brokers are paid by the party who hire them. selling and promotion. There are two types of whole selling. small groceries. 4) Material Order Whole Selling: Male order whole sellers send catalogue to retailer. They perform useful function for small producers who cannot afford the high cost of hiring. 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. They carry a limited line of semi-perishable merchandise (milk. hotels and cafeteria etc. truck or other means of transport. They perform a selling or delivering function. generally for cosmetics. and snacks) which they sell for cash as they make their rounds to supermarkets. hospital. Their activity is bringing buyers and sellers together and facilitating the sale. ranging from 2 to 6% of the selling price. They do not involve in financing. 2) Agents and brokers: These middlemen never own the products.3) Truck/Wagon Whole Sellers: These are also called truck jobbers. a) Sale Branches and Offices: Manufacturers often set up their sales branches and offices improve inventory control. . industrial and institutional customers. Orders are filled and sent by mail. These purchasing offices perform a role similarly to that of agent or brokers but are the part of organization. b) Purchasing Offices: Many whole sellers set their offices in market centers such as Lahore and Karachi. Agents and brokers work on commission basis. specially food and other small items. breads.
The two main objectives of advertising are to expose a product to a large market and to encourage the buyer to accept the product. the public come to know about useful new medicines for some diseases. evaluated. It can also be defined as “any paid form of non-personal presentation and promotion of ideas goods or services by an identified sponsor. We often learn about new machines for agriculture and industry for ads. 1) Communication effects are analyzed and assessed for their ability to achieve Specified responses. and determined. evaluated. 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. and adjusting advertising responses to ensure that these continue to meet brand strategy and advertising objectives. advertising introduces new products to general public. 4) Brand purchase intention objectives that encourage buyer purchase action are developed. For example. 3) Brand attitude objectives that enhance positive buyer brand evaluation and distinguish rational and emotional responses to brand attitude are developed. evaluated. evaluating.UNIT – V ADVERTISING: Advertising is an art of influencing the customers through paid nonpersonal presentation to purchase and possess a product. It is important for both seller and buyer. Nature Objectives of advertising: Establish advertising objectives to optimize performance of the product or service. and determined. Even the government cannot do without it. and determined. of all. and Meet advertiser needs. . First. 2) Brand awareness objectives that enhance buyer empathy with the product or service are developed. 5) Objectives that achieve the required effects for the product or service are developed and integrated to meet overall brand strategy and advertising objectives. Importance of advertising: Advertising is of great importance in our world of competition. 7) Provisions are made for monitoring.
the print media also offers options like promotional brochures and fliers for advertising purposes. Kiosks. kiosks. and also several events and tradeshows organized by the company. Outdoor Advertising – Billboards. When advertisement misstates qualities of their products. Qualified people apply for them and get adjusted in life. which makes use of several tools and techniques to attract the customers outdoors. Fliers The print media have always been a popular advertising medium. Tradeshows and Events Outdoor advertising is also a very popular form of advertising. The kiosks not only provide an easy outlet for the company products but also make for an effective advertising tool to . 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. In addition to this. the position of the advertisement (front page/middle page). Often the newspapers and the magazines sell the advertising space according to the area occupied by the advertisement. 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. Magazines. they do a disservice. Fifthly: Advertisement is a dependable and effective means of expanding education and of bringing students to educational institutions. TYPES OF ADVERTISING: Mentioned below are the various categories or types of advertising: Print Advertising – Newspapers.Secondly: Advertising introduces different brands of same product. they misguide public. law and our traditions. Advertising is useful a\within proper limits. Advertisement tells about qualities of each brand and we can easily select. Advertising can also be harmful. and fees and attract students for admission. Schools. It can tell general public what it might do for good of nation. For example: There are three different brands of bicycle produced by same company. courses. Fourthly: It is through advertisements that we come to know of new service jobs. Brochures. These limits Cleary lay down by religion. When manufacturers advertise harmful products like cigarettes. colleges and universities advertise their classes. Thirdly: Government can very profitably advertise its schemes and policies. The billboard advertising is very popular however has to be really terse and catchy in order to grab the attention of the passersby. Advertising products via newspapers or magazines is a common practice. as well as the readership of the publications. The most common examples of outdoor advertising are billboards.
and of course the popularity of the television channel on which the advertisement is going to be broadcasted.promote the company’s products. Television advertisements have been very popular ever since they have been introduced. 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. There is no commercial in the entertainment but the brand or the product is subtly (or sometimes evidently) showcased in the entertainment show. Broadcast advertising – Television. Surrogate Advertising – Advertising Indirectly Surrogate advertising is prominently seen in cases where advertising a particular product is banned by law. The company can organize trade fairs. For instance a company that manufactures sports utilities can sponsor a sports tournament to advertise its products. lliteracy. political integrity. 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. 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. the company can organize several events that are closely associated with their field. The radio jingles have been very popular advertising media and have a large impact on the audience. energy conservation. 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. David Oglivy who is considered to be one of the pioneers of . television shows or even sports. the time of broadcast (prime time/peak time). deforestation. radio or the Internet. which are often seen to promote their brand with the help of surrogate advertising. which is evident in the fact that many people still remember and enjoy the popular radio jingles. Organizing several events or sponsoring those makes for an excellent advertising opportunity. poverty and so on. If not this. Common examples include Fosters and Kingfisher beer brands. or the use of Cadillac cars in the movie Matrix Reloaded. The cost of television advertising often depends on the duration of the advertisement. Some of the famous examples for this sort of advertising have to be the appearance of brand Nokia which is displayed on Tom Cruise’s phone in the movie Minority Report. Radio and the Internet Broadcast advertising is a very popular advertising medium that constitutes of several branches like television. or even exhibitions for advertising their products.
Critics of this method.it is much too powerful a tool to use solely for commercial purposes. there exist a section of advertisers that still bank upon celebrities and their popularity for advertising their products. though. Oglivy once said.". the radio and television stations are granted on the basis of a fixed amount of Public service advertisements aired by the channel. OBJECTIVE AND TASK METHOD: Because of the importance of objectives in business. . "Advertising justifies its existence when used in the public interest . In USA. The benefit of this method is that it allows the advertiser to correlate advertising expenditures to overall marketing objectives. However.advertising and marketing concepts had reportedly encouraged the use of advertising field for a social cause. Using celebrities for advertising involves signing up celebrities for advertising campaigns. charge that using past sales for figuring the advertising budget is too conservative and that it can stunt growth. 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. the percentage of sales method is the most commonly used by small businesses. 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. This correlation is important because it keeps spending focused on primary business goals. which consist of all sorts of advertising including. 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. 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. BUDGETING METHODS: There are several allocation methods used in developing a budget. it might be safer for a small business to use this method if the ownership feels that future returns cannot be safely anticipated. television ads or even print advertisements. and is therefore used by most large businesses. the task and objective method is considered by many to make the most sense.
However. in order to remain competitive. MARKET SHARE METHOD: Similar to competitive parity.COMPETITIVE PARITY METHOD: While keeping one's own objectives in mind. etc. sales trends. unit sales. Schewe suggested in The Portable MBA in Marketing. expanding the work force. magazines. presence in the market. then that business can. This can be risky for a business of any size. arriving at a conclusion about what a small business can afford in the realm of advertising is often a difficult task. However. a business using this approach needs to make sure that its advertising strategy is an effective one. including print media (newspapers. either spend more. While it is important for small businesses to maintain an awareness of the competition's health and guiding philosophies. or less on its own advertising. television (ranging . the same. advertisers base their budgets on what they can afford. and other factors. it is often useful for a business to compare its advertising spending with that of its competitors. as Alexander Hiam and Charles D. Of course. 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. and that funds which could help the business expand are not being wasted. and remind (the three general aims of advertising) the consumer of their products and services. The theory here is that if a business is aware of how much its competitors are spending to inform. it must then decide where it should spend that money. operating costs. the market share method bases its budgeting strategy on external market trends. radio. Certainly the options are many. one that needs to incorporate overall objectives and goals. a business should not assume that its competitors have similar or even comparable objectives. MEDIA SCHEDULING: Once a business decides how much money it can allocate for advertising. direct mail). AFFORDABLE METHOD: With this method.). persuade. 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. competition. for it means that no money is being used to help the business grow in other ways (purchasing new technologies. ALL AVAILABLE FUNDS METHOD: This aggressive method involves the allocation of all available profits to advertising purposes. With this method a business equates its market share with its advertising expenditures. it is not always advisable to follow a competitor's course. Yet this aggressive approach is sometimes useful when a start-up business is trying to increase consumer awareness of its products or services.
Massed: type of scheduling places advertising only during specific periods. By identifying these types of sales promotions. and the Internet. Another kind of flighting is the pulse method. there are three general methods advertisers use to schedule advertising: the Continuity.com promos as a basis. desired geographic coverage. There are many variations of sales promotions and listed below are the 3 kinds of Sales Promos based on target market. Notice that. Flighting: type of scheduling is used when there are peaks and valleys in product demand. and is most often used when demand for a product is relatively even. For example. unlike "massed" scheduling. . Consumers are exposed to sales promotions nearly every day. but at different levels. you can develop a more defined campaign with higher chances of success. consumer marketing directed sales promos are those intended to appeal to the end consumer. and cost are the three main factors that dictate what media vehicles are selected. Uprinting promotions can offer discounts on all its products to print material end users to influence their purchasing habit. which is essentially tied to the pulse or quick spurts experienced in otherwise consistent purchasing trends. Consumer Market Directed: Possibly the most common and popular of sales promotions. Additional factors may include overall business objectives. SALES PROMOTION: are essential to the proper marketing of products and companies. Flighting. For these examples. the product or service being advertised. SELECTING MEDIA: The target consumer. The mix of media that is eventually chosen to carry the business's message is really the heart of the advertising strategy. SCHEDULING CRITERIA: As discussed by Hiam and Schewe. To match this uneven demand a stop-and-go advertising pace is used. such as at Christmas or Halloween. and Massed methods Continuity: type of scheduling spreads advertising at a steady level over the entire planning period (often month or year.from 30-second ads to 30-minute infomercials). Recent studies have shown that sales promos do play a conscious role in the buying decision process. and is most often used when demand is seasonal. "flighting" continues to advertise over the entire planning period. and availability (or lack thereof) of media options. we will use Uprinting. rarely week).
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. Uprinting can tap into the consumer market after establishing its connections with the local governing body. This type of sales promo can also be limiting due to the marketer’s personal network. To learn more about the Uprinting promotions visit them online. More variations of sales promotions can be found using different means of measurement and definition. . 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.Business Market Directed: This type of sales promotion marketing is targeted at other business entities. For example. 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. For example. Uprinting promotions will direct its sales promo to government units to gain favorable branding and image enhancing advantages.
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