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Principles of Marketing Unit 1 Introduction WHAT IS MARKETING? Marketing is managing profitable customer relationships.

. The twofold goal of marketing is to attract new customers by promising superior value and to keep and grow current customers by delivering satisfaction. For eg.: Wal-Mart and Big-Bazaar has become worlds largest retailer, and one of the worlds largest companies, by delivering on its promise, Always low prices, Always! DEFINITION The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. -By Philip Kotler Many people think of marketing only as selling and advertising. However, selling and advertising are only the tip of the marketing iceberg. Today, marketing must be understood not in the old sense of making a sale- telling and sellingbut in the new sense of satisfying customer needs. If the marketer understands consumer needs; develops products and services that provide superior customer value; and prices, distributes and promotes them effectively, these products will sell easily. THE MARKETING PROCESS The marketing process involves five steps. 1. Understand the market place and customer needs and wants. 2. Design a customer-driven marketing strategy. 3. Construct an integrated marketing program that delivers superior value. 4. Build profitable relationships and create customer delight. 5. Capture value from customers to create profits and customer equity. Under the market place and customer needs and wants Design a customer-driven marketing strategy Construct an integrated marketing program Build profitable relationships and create customer delight Capture value from customers to create profits and customer equity Create satisfied, loyal customers

Research Customers and the Market Place

Select customers to serve- market segmentation and targeting Decide on value propositiondifferentiation and positioning

Product and service designbuild strong brand Pricing- create real value Distributionmanage demand and supply chain Promotioncommunicate the value proposition

Manage Marketing Information and Customer Data

Customer relationship management (CRM): build strong relationship with chosen customers

Capture customer lifetime value Increase share of market and share of customer

Partner relationship management: build strong relationship with marketing partners


Understand the market place and customer needs and wants- (Core Concepts of Marketing) As a first step, marketers need to understand customer needs and wants and the market place
1. 2. 3. 4. 5. within which they operate which includes understanding of five core customer and market place conceptsneeds, wants and demands Market offerings- products, services and experiences Value and satisfaction Exchanges and relationships Markets.

Needs, Wants and Demands- Core Concepts of Marketing: Needs are states of felt deprivation which includes physical needs for food, clothing, warmth and safety, social needs for belonging and affection, and individual needs for knowledge and self expression. Wants are the form that human needs take as shaped by culture and individual personality. For e.g. one needs food but want hamburger, French fries and a soft drink. Demands are human wants that are backed by buying power. Given their wants and resources, people demand products with benefits that add up to the most value and satisfaction. Outstanding marketing companies go to great lengths to learn about and understand their customers needs, wants and demands. They conduct consumer research analyze mountains of customer data. Their peoples at all levels-including top management-stay close to customers. For eg. Banking industry. Market Offerings- Products, Services and Experiences Consumers needs and wants are fulfilled through a market offering. Market offering is nothing but some combination of products, services, information or experiences offered to a market to satisfy a need or want. Market offerings are not limited to physical products. They also include services, activities or benefits offered for sale that are essentially intangible and do not result in the ownership of anything. Eg. banking, airline, hotel, tax preparation and home repair services. However, many sellers make the mistake of paying more attention to the specific products they offer than to the benefits and experiences produced by these products i.e. they suffer from marketing myopia. Smart marketers look beyond the attributes of the products and services they sell. Value and Satisfaction Customers form expectations about the value and satisfaction that various market offerings will deliver and buy accordingly. Satisfied customers buy again and tell others about their good experiences. Dissatisfied customers often switch to competitors and disparage the products to others. Marketers must be careful to set the right level of expectations. If they set expectations too low, they may satisfy those who buy but fail to attract enough buyers. Whereas if they raise expectations too high, buyers will be disappointed. Customer value and customer satisfaction are key building blocks foe developing and managing customer relationships. Exchange and Relationships Marketing occurs when people decide to satisfy needs and wants through exchange relationships.

Exchange is the act of obtaining a desired object or response from someone by offering something in return. Marketers want to build strong relationships by consistently delivering superior customer value. Markets The concepts of exchange and relationships lead to the concept of a market. A market is the act of actual and potential buyers of a product or service. These buyers share a particular need or want that can be satisfied through exchange relationships. Sellers must search for buyers, identify their needs, design good market offerings, set prices for them, promote them and store and deliver them. Activities such as product development, research, communication, distribution, pricing and services are core marketing activities. Elements of a modern marketing system Although we normally think of marketing as being carried on by sellers, buyers also carry on marketing. Consumers do marketing when they search for the goods they need at prices they can afford. Company purchasing agents do marketing when they track down sellers and bargain for good terms. In the usual situation, marketing involves serving a market of final consumers in the face of competitors. The company and the competitors send their respective offers and messages to consumers, either directly or through marketing intermediaries. All of the actors in the system are affected by major environmental forces- demographic, economic, physical, technological, political/ legal and social/ cultural. Each party in the system adds value for the next level. All of the arrows represent relationships that must be developed and managed. Thus, a companys success at building profitable relationships depends not only on its own actions but also on how well the entire system serves the needs of final consumers. For eg. Wal-Mart cannot fulfill its promise of low prices unless its suppliers provide merchandise at low costs. And Ford cannot deliver high quality to car buyers unless its dealers provide outstanding sales and service. Step 2Designing a Customer-Driven Marketing Strategy Once it fully understands consumers and market place, marketing management can design a customer-driven marketing strategy. Marketing Management can be defined as the art and science of choosing target markets and building profitable relationships with them. The marketing managers aim is to find, attract, keep and grow target customers by creating, delivering and communicating superior customer value. To design a winning marketing strategy, the marketing manager must answer two important questions What customers will we serve? i.e. whats our target market? How can we serve these customers best? i.e. whats our value proposition? Selecting customers to serve The company must first decide who it wills serve. It does this by dividing the market into segments of customers (market segmentation) and selecting which segments it will go after (target marketing).

Some people think of marketing management as finding as many customers as possible and increasing demand. But marketing managers know that they cannot serve all customers in every way. By trying to serve all customers, they may not serve any customers well. Instead, the company wants to select only customers that it can serve well and profitably. Thus, marketing managers must decide which customers they want to target and the level, timing and nature of their demand. Simply put, marketing management is customer management and demand management. Choosing a Value Proposition The company must also decide how it will serve targeted customers- how it will differentiate and position itself in the marketplace. A companys value proposition is the set of benefits or values it promises to deliver to consumers to satisfy their needs. Such value propositions differentiate one brand from another. They answer the customers question- Why should I buy your brand rather than a competitors? Companies must design strong value propositions that give them the greatest advantage in their target markets. Eg. Fair & Lovelys punch line says Kale ko bhi gora bana de, Daag- the fireindicating that its an action movie, also kuch kuch hota hai.. with punch line someone somewhere is made for each otherstating that its a love story, move-aaahhh se aahhhhh taketc. Step 3Preparing an Integrated Marketing Plan and Program So, the companys marketing strategy outlines which customers the company will serve and how it will create value for these customers. Next, the marketer develops an integrated marketing program that will actually deliver the intended value to its target customers. The marketing program builds customer relationships by transforming the marketing strategy into action. It consists of the firms marketing mix, the set of marketing tools the firm uses to implement its marketing strategy. The major marketing mix tools are classified into four broad groups, called the four Ps of marketing: product, price, place and promotion. To deliver on its value proposition, the firm must first create a need-satisfying market offering (product). It must decide how much it will charge for the offer (price) and how it will make the offer available to its target consumers (place). Finally, it must communicate with target consumers about the offer and persuade them to its merits (promotion). Thus the firm must blend all these marketing mix tools into a comprehensive, integrated marketing program that communicates and delivers the intended value to chosen customers. Step 4Building Customer Relationships The first three steps in the marketing process- understanding the market place and customer needs, designing a customer-driven marketing strategy and constructing marketing programs- all lead up to the fourth and the most important step: i.e. building customer relationships. Customer relationship management (CRM) is perhaps the most important concept of modern marketing. Until recently, CRM has been defined narrowly as a customer data management activity.

By this definition it involves managing detailed information about individual customers. In this broader sense, CRM is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. It thus deals with all aspects of acquiring, keeping and growing customers. Step 5Capturing Value from Customers The first four steps in the marketing process involve building customer relationships by creating and delivering superior customer value. The final step involves capturing value in return, in the form of current and future sales, market share and profits. By creating superior customer value, the firm creates highly satisfied customers who stay loyal and buy more. This in turn means greater long-term returns for the firm. So, what is marketing? Pulling it all together Simply put, marketing is the process of building profitable customer relationships by creating value for customers and capturing value in return. The first four steps of the marketing process focus on creating value for customers. The company first gains a full understanding of the market place by researching customer needs and managing marketing information. It then designs a customer-driven marketing strategy based on the answers to two simple questions: The first question is What consumers will we serve? (Market segmentation and targeting). Good marketing companies know that they cannot serve all customers in every way. Instead, they need to focus their resources on the customers they can serve best and most profitably. The second marketing strategy question is How can we best serve targeted customers? (Differentiation and positioning). Here, the marketer outlines a value proposition that spells out what values the company will deliver in order to win target customers. With its marketing strategy decided, the company now constructs an integrated marketing program- consisting of a blend of the four marketing mix elements or the four Ps- that transforms the marketing strategy into real value for customers. The company develops product offers and creates strong brand identities for them. It prices these offers to create real customer value and distributes these offers to make them available to target consumers. Finally, the company designs promotion programs that communicate the value proposition to target consumers and persuade them to act on the market offerings. Throughout the process, marketers practice CRM to create customer satisfaction and delight. In creating customer value and relationships, however, the company cannot do it alone. It must work closely with marketing partners both inside the company and throughout the marketing system. Thus, beyond practicing good CRM, firms must also practice good partner relationship management. Thus, in the first four steps the company creates value for customers and in the final step it reaps rewards of its strong customer relationships by capturing value from customers. This helps the company to capture customer lifetime value and greater share of customer. The result is increased long-term customer equity for the firm. MARKETING CONCEPTS Business enterprises conduct their marketing activity around these five concepts: 1. The Production Concept 2. The Product Concept

3. The Selling Concept 4. The Marketing Concept 5. The Societal Marketing Concept. The Production Concept The production concept emerges out of the production orientation of the firm. It is based on the idea that the more we make, the more profitable we become. So let us go out and make customers buy our products. The basic proposition is that customers will choose products and services that are widely available and are of low cost. So managers try to achieve higher volume by lowering production costs and following intensive distribution strategy. Application of this concept however leads to poor quality of service and higher level of impersonalization in business. This seems to be a viable strategy in a developing market where market expansion is the survival strategy for the business. The Product Concept The product concept has the proposition that consumers will favour those products that offer attributes like quality, performance and other innovative features. Managers focus on developing superior products and improving the existing product lines over a period of time. The problem with this orientation is that the managers forget to read the customers mind and launch products based on their own technological research and scientific innovations. Many times it is observed that innovations enter in the market before the market is ready for the product. Innovative products are launched without educating the customers about them and the probable benefit or value that the customer is likely to get by using the new products. The Selling Concept The selling concept proposes that customers, be the individuals or organizations will not buy enough of the firms products unless they are persuaded to do so through the selling effort. So companies should undertake selling and promotion of their products for marketing success. This approach is applicable in the cases of unsought goods like life insurance, vacuum cleaner, fire fighting equipments including fire extinguisher, etc. These industries are seen having a strong network of sales force Firms with high capacity apply this orientation, in which their goal is to sell what they produce than what the customer really wants. The problem with this approach is the assumption that the customer will certainly buy the product after persuasion and if dissatisfied will not complain. In reality this does not happen and companies pursuing this concept often fail in business. The Marketing Concept The marketing concept proposes that the reason for success lies in the companys ability to create, deliver and communicate a better value proposition through its marketing offer, in comparison to the competitors for its chosen target segment. Selling focuses on the needs of the seller and marketing focuses on the needs of the buyer. Selling is preoccupied with the sellers need to convert his product into cash whereas marketing deals with the idea of satisfying customer needs by offering a quality product and the whole cluster of things associated with creating, delivering and finally consuming it.

The marketing concept is thus an elaborative attempt to explain the phenomenon that rests on four key issues like target market, customer need, integrated marketing communication and profitability. The Societal Marketing Concept The societal marketing concept proposes that enterprises task is to determine the needs, wants and intentions of the target market and to deliver the expected satisfaction more effectively and efficiently than the competitors in a way to preserve or enhance the consumers and societys well being. For eg.: the fruit juice companies like Tropicana, real, cloud 9, etc. takes into consideration the health of the consumers. They provide energy drinks which will help the consumers to quench their thirst as well as remain healthy whereas companies like coca-cola, Pepsi, etc provide soft drinks which are harmful for the health. So they lay focus only on the marketing aspect and not on the societal marketing aspects. The societal marketing concept is thus an extension of the marketing concept to cover society in addition to the consumers. SIGNIFICANCE/ IMPORTANCE OF MARKETING/ RELEVANCE OF MARKETING IN A DEVELOPING ECONOMYImportance of marketing is mainly attributed to the following category: A. Importance to society: 1. Delivery of goods as per standard of living- The main object of marketing is to provide goods and services to the society according to their needs and taste at reasonable and affordable prices. In order to satisfy the various wants of people new inventions are made. Marketing creates and increases demand for the new and existing products and thus raises the standard of living of the people. 2. Provides employment- Sound marketing system helps in providing employment in different marketing processes such as marketing research, retail and wholesale business, transport, storing and warehousing, publicity work, etc. 3. Reduction in distribution cost- Marketing aims at reducing the cost of distribution as far as possible, so that the commodities might be within the reach of maximum number of consumers. Marketers use marketing channels to reach its end users. 4. Increase in national income- Sound marketing system is associated with creation of increased demand for goods and services. An increased demand stimulates production activity in the country which in turn increases the national income. 5. Protection against business slump- Trade cycles causes fluctuations in prices. Sometimes there is a period of depression followed by a period of boom. A period of depression and low prices is very harmful to the economy. With the decrease in demand many small units stop production, leading to wide spread unemployment and a chain of other evils. A sound marketing system can give protection against business slump by discovering new markets, reducing cost of distribution, making it acceptable to customer, modifying or improving he existing product and suggesting alternative uses. B. Importance to the Firms: 1.Business planning and decision-making- Marketing is helpful not only to plan the production but also in business planning and taking various decisions regarding business. In todays economy, production is planned according to the sales forecasts and not according to the production capacity of the firm. All activities such as planning, production, purchase, finance or design revolve around the marketing decisions. Thus, marketing decisions influence the business decisions.

2. Increasing profits- Every business is carried on with the profit motive. Marketing helps in increasing the business profits by reducing the selling cost on one hand and increasing the demand of the product on the other hand through advertising and sales promotion activities. 3. Source of information- Business collects various information regarding customers changing behaviors from time to time through marketing. Marketing also provides information to the firm about the competitors, products, production, marketing and price policies. It helps the firm in framing its own policies or making necessary adjustments therein accordingly. C. Importance to underdeveloped economy- Marketing has a special significance in underdeveloped economies. A rapid development of the economy is possible only by adopting the modern methods of marketing. An effective marketing system will help mobilize modern and innovative techniques of marketing. D. Importance to Developed Economy- In developed countries, the volume of production with all its upto-date technology is generally more than the demand. In order to maintain the level of production, it is absolutely necessary that the quantity produced must be disposed off rapidly within the country itself or abroad which is possible only by a very sound and advanced Marketing System. E. Importance in Buyers and Sellers Market- When the supply of goods exceeds the demand, it is called buyers market. On the other hand when the demand for the goods and services exceeds supply, it is called sellers market. In such a situation only those firms succeed which adopts, Marketing System. FUNCTIONS OF MARKETING A. Exchange Functions: 1. Buying- Buying is the one part of exchange process, other being the selling. Buying is the first step in the process of marketing. A manufacturer has to buy raw materials for production, a wholesaler has to buy goods to sell to the retailer, and a retailer has to buy goods to be sold to the consumer. Buying involves transfer of ownership of goods. 2. Assembling- Assembling means creation and maintenance of the stock of goods, purchased from different sources. The goods have sometimes to be collected and assembled at one place. Buying and assembling are two distinct processes which involve elements such as kind, quality, and price, date of delivery and other terms and conditions. All this requires specialized knowledge on the part of the buyers. 3. Selling-Selling is important from the point of view of the seller as well as the consumer. The profit making object of a business concern is achieved only through the sale of goods. This function involves product planning and development, creation of demand, market research, selection of channel of distribution, negotiation of terms of sale such as quality, quantity and price of product, etc. B. Physical Supply Functions: 1. Transportation- Transportation is he movement of goods from the centre of production to the centre of consumption. Marketing system requires an economical and effective transportation system. A god system of transportation increases the value of goods by the creation of place utility. The opening of new markets have been possible by the quick transportation &communication. It has resulted in the extension of markets, regular supply, lower price and improved services to the consumers. 2. Storage and Warehousing- When production is seasonal but consumption is annual or when production is continuous but consumption is seasonal storage becomes necessary. Storage involves holding and preserving of goods between the time of their production to the time of their consumption. C. Facilitating Functions:

1. Standardization- Standardization has now been accepted as an ethical basis of marketing. A standard is a measure that is generally recognized as a model for comparison. Standards are determined on the basis of colour, weight, quality and other factors of a product. It facilitates purchase and sale of goods. Goods are purchased by brand name. 2. Grading- Grading is the act of separating or sorting out goods into a number of grades according to established specifications, such as quality and size of the product. Grading is required for the products like food grains, fruits, cosmetics, etc. 3. Branding- Branding is the art of marketing. It is the measurement of giving a particular name, term, sign or symbol to a product/ service for specific identification of one seller or group of sellers. The identification creates consumer awareness, which in turn helps to build good product image and enhance chances of repeat purchases. A brand is essentially a sellers promise to provide specific features, benefits and services consistently to the buyers. 4. Packaging- Package is the external wrapper or container of the product. Packaging may be defined as the general group of activities which involve designing and producing the container or wrapper for a product. A good package protects the product against deterioration, preserves the freshness and flavor of the product, provides convenience to the customers, increases economy and communicates information about the product. A good package makes the handling of the product easier for both the consumer as well as the dealer. Good packaging also helps in inventory control. 5. Labelling- A label is a small slip placed on the product. It gives information regarding the nature, contents, price, batch no., ownership, etc. of the product. A label is medium through which the manufacturer gives necessary information to the consumer about the product. The label is usually affixed on the package. A label plays an important role in making the package and branding function meaningful. Labelling thus helps in the identification of the product. It stresses the features of the product which are advertised. And by mentioning the price of the product, labeling helps in curtailing defraudation of consumers by the retailers. DIFFERENT APPROACHES OF MARKETING 1. Commodity Approach 2. Institutional Approach 3. Functional Approach 4. Management Approach or Decision-Making Approach 5. Legal Approach 6. Economic Approach 1. Commodity Approach This approach studies marketing on the basis of commodity. The marketing situation of each product is studied as regards to its sources of supply, marketing organization and policies involvement of middlemen, extent of market, etc. This approach is also called as descriptive approach. In this method, commodity serves as a focus around which other aspects of marketing are studied. Its main defect is that it is repetitive and time consuming. Sometimes the classification of products also becomes difficult. 2. Institutional Approach Under this approach, the description and analysis of the different institutions engaged in marketing are undertaken. Here we not only study products but also analyze the various functions and activities of the producers, wholesalers, agents, retailers, transporters, etc.

The different institutions serve as separate cells of the marketing body and the functions
performed by each cell form part of whole marketing. This approach is also considered defective as it fails to bring out effectively the inter-relations of all the institutions. Here the marketing process is split up into three important factors i.e. Concentration In a highly developed and a large economy, many a times, particular products are produced at one place and customers may be located thousands of miles away, say at distant places. Then it becomes necessary to bring accessibility in making goods available for consumption as and when demanded by those ultimate consumers. Therefore, the product should be available at centre point from where the product can be purchased by the consumers. As countries develop and multinational trade increased due to globalization, then activities like storage, transportation, assembling, inventory management, standardization and grading and handling of customers order brings more importance in the marketing process. All these activities are included in the process of concentration including financing and riskbearing also. Equalization Equalization is the intermediate activity which occurs between the process of concentration and dispersion. The process of equalization involves proper adjustment of supply at all centers of distribution, where the supply of goods has to be balanced with the demand for goods on the basis of time, quality and quantity. Thus it can be said that equalization is the process of making available the goods in a particular place or market just in accordance to the actual demand so that the chances of loss might be minimized. The process involves storage and transportation of goods in required quantities, where transport equalizes supply place-wise and warehousing equalizes it time-wise. Dispersion Dispersion is that process through which goods and services produced are delivered to their real consumers at the right time and right place in the right quantity, through the most appropriate channels of distribution. The assembled stock of goods is sub divided into smaller lots required to meet the needs of buyers. The intermediaries like wholesalers, retailers, middlemen etc are engaged in this activity as the goods are distributed through these different channels for sale to consumers. 3. Functional Approach It splits down the field of marketing into separate functions. Specific functions are those concerned with buying, selling, transportations, storage, standardization, grading, financing, risk taking and marketing research etc. This approach is definitely an improvement over the former ones but not entirely free from defects. 4. Management Approach It combines certain features of the other earlier mentioned three approaches. The basis of this approach is that marketing is purely a management function. However changes in marketing are brought about by two types of factors i.e. controllable and uncontrollable.

Controllable forces are those marketing forces which are within the control of the firm. These internal factors are adjustments in prices, advertising, personal selling, etc. Uncontrollable forces are those marketing forces which are beyond the control of a business firm unless it is forecasted well in advance. These are external environmental forces such as economic, social and political forces. 5. Legal Approach This approach is very narrow and it is a part of a political environment as it concentrates only on one aspect i.e. the effect of transfer of goods or title in a legal way. In India this aspect has a particular significance. There are many enactments past under legislation which regulates and controls the entire business activities. 6. Economic Approach Under this approach marketing is concerned with creation of value demand, demand, supply and price. Such an approach is incapable of giving the complete idea of marketing. Hence it requires market study from various points of views. One has to analyze the market from the consumers point of view such as their needs, taste, acceptability, purchasing power, etc. Also the business has to evaluate the product from the competitors point of view, how their marketing strategies are, their approach to customers; methods adopted, price policy, etc. It should try to understand its weaknesses, modify its strategies to pull the customers by creating greater demand. It may be possible by improving the utility of the product or with attractive and useful packaging and various other marketing gemics. Role of Marketing Manager: Formulation of marketing plans and policies in consultation with the chief executive or managing director. Development of marketing mix and marketing program for all products of the company. Supervision and control over sales manager, advertising manger, product manager and marketing services manager who are responsible for implementing marketing program. Development of new markets, new products, new channels and new innovations in the field of marketing. Growth of existing markets for companys products. Selection management and control of channels of distribution. Modification of marketing plans and programs on the basis of feedback of information from customers and channel members. Management of change due to changing customer needs, competition, etc. and maintaining good public relations. Functions of Marketing Manager: 1. Integrated Marketing- The marketing manager has to take decisions on the various elements of the marketing mix in an integrated way. For a customer does not purchase a product just because of its price or utility or appearance. Thus the marketing manager has to integrate all the elements of the marketing mix in such a way that the consumer finds the final deal very attractive. While doing this he should try to reduce the cost of marketing the products and at the same time win the goodwill of the customers. 2. Determining Objectives- It is the function of the marketing manager to determine the marketing objectives of the company. The marketing objectives must be fixed keeping in mind the overall objectives

of the firm. Not only does he have to fix the marketing objectives, but he has to crystallize the product objective, pricing objectives, promotion objectives and physical distribution objectives. He has to integrate and direct all these objectives towards the overall marketing objectives. 3. Product Policy- The marketing manager must be very clear as to the type of customer who will use his product. He should be clear on whether his company wants to produce a single product or a line of products. Thus his product policy objective must be consumer oriented and in keeping with the overall marketing objective. 4. Pricing Policy- It is the duty of the marketing manager to fix the pricing policy in keeping with the marketing and over all company policy. The pricing policy and product policy are interrelated. The marketing executive should fix the price in such a way that it results in maximum profit for the company from the volume of sales secured at that particular price. 5. Distribution Strategy- The marketing manager has to decide upon the distribution strategy that he has to adopt. Does he want a limited distribution or a widespread distribution, will have to be decided and then he will have to organize for the channels of distribution and will have to select the channel accordingly. 6. Advertising and Sales Promotion- The marketing executive has to decide upon the advertising and sales promotion policy as well. He will have to decide whether the advertising will be done by a separate department in his organization or it would be better to entrust the work of advertising to the outside professionals, or to use a combination of both these methods. 7. Proper Planning- Planning is deciding in advance what is to be done. All companies carry out planning for the smooth functioning of its organisation. The marketing manager has to plan as to how the objectives that have been determined will be implemented. For proper planning the marketing manager has to carry out functions like marketing research, planning the sales policies, planning the long term marketing programme, planning for product diversification, etc. 8. Selling- The marketing manager has to perform the following functions in regard to selling: to direct the sales manger to regulate sales, to organize sales territories and fix sales quotas, to select and train personnel for the sales department, to motivate the sales personnel and to organize and develop the channels of distribution. 9. Service- After sales service is regarded as an integral part of modern marketing management. In fact in todays competitive business world if a company has to survive, it has to be consumer oriented and has to take care to see maximum satisfaction is given to the customers. Thus a marketing manager must see to it that proper after sales services are given to the customers. Any complaints and problems of the customers are to be dealt with at once.

UNIT 3- MARKETING MIX Marketing Mix is a set of controllable variables and their levels that the firm uses to influence the target market. -Phillip Kotler Thus, according to this definition any variable under the control of the firm that can influence the customer demand is a marketing mix variable. The Marketing Mix has four main sub mixes. They are as follows: The Product Mix- product planning & development, branding, packaging & labeling. The Price Mix- price policies, discounts & credit facilities. The Place Mix or Physical Distribution Mix- channel of distribution, transportation & warehousing. The Promotion Mix- advertising, personal selling, sales promotion & publicity. IMPORTANCE/ ULITLITY OF MARKETING MIX Attracting customers-to face competition & to promote its companys sales it needs to attract customers by providing the best mix. Better use of resources- Marketing Mix promotes better utilization of limited resources as it helps the marketing manager to understand his customer and invest in the areas in which the customer is interested. Precision- Marketing Mix provides precision (accuracy) to the study of marketing.

Balanced Approach- Marketing Mix helps in reminding the marketing manager that on one hand,
he should be careful to consider the market forces and on the other hand think of a total marketing program instead of relying on any one aspect. Collectively Effective- The components of marketing mix are individually important but their significance lies in the mix or blend so as to make them collectively effective in the dynamic marketing environment. Applicable to business as well as non-business organization- Marketing Mix is applicable to business as well as non-business organisation, such as clubs, colleges, associations, etc. FACTORS AFFECTING MARKETING MIX MARKET FACTORS-

1. Consumer Behavior 2. Competition 3. The Pattern of Distribution System 4. Government Control MARKETING FACTORS1. The 4 Ps- Product, Price, Place & Promotion Planning. 2. Market Research. PRODUCT MIX Definition- Product is a bundle of utilities consisting of various product features and accompanying services. By-W. Alderson. A product is anything that can be offered to a market to satisfy a want or need. Products that are marketed includes physical goods, services, events, people, ideas, information, places, properties and organizations. Products are tangible, intangible or both. In fact a product means not just the physical product but includes all the services before and after sales service, and the prestige that is felt upon the ownership of the product. Thus a product is a bundle of all kinds of satisfaction both material and non-material ranging from economic utilities to socio-psychological satisfaction. In simple words, a product is anything that can be offered to a market to satisfy a want or a need. PRODUCT LEVELS- The Customer Value Hierarchy In planning its market offering, the marketer needs to address five product levels. Each level adds more customer value and all five constitute a customer value hierarchy. The fundamental level i.e. the 1st level is the core benefit i.e. the service or the benefit the customer is really buying. For eg. A hostel guest buys rest and sleep. At the second level, the marketer has to turn the core benefit into a basic product. Thus a hotel room includes a bed, bathroom, towels, desk, dresser and closet (a small cupboard). At the third level, the marketer prepares an expected product, a set of attributes and conditions which buyers normally expect when they purchase a product. Eg. Hotel guest expects a clean bed, fresh towels, working lamps and a relative degree of quiet. At the fourth level, the marketer prepares an augmented product that exceeds customer expectation i.e it tries to offer customer delight. However it should be noted that each augmentation adds cost and augmented benefits soon become expected benefits. At the fifth level, stands the potential product which encompasses all the possible augmentations and transformations the product or offering might undergo in the future. Here is where companies search for new ways to satisfy customers and distinguish their offer. PRODUCT CONCEPT- Consists of 3 dimensions Managerial Dimension- It includes the related product features and services i.e. the brand name, package, type, safety components, delivery, installation, maintenance and repair, warranty, etc. Consumer Dimension- A product conveys a message indicating a bundle of expectations to a buyer. It the expectations are fulfilled its repeat demand is the result. Social Dimension- These presume that the society too is offered desirable or salutary product which brings not only an immediate satisfaction but also yields in the long run consumer welfare and best use of scanty resources, safety to users, quality of life, concern for a cleaner and better environment, etc. PRODUCT CLASSIFICATION

On the basis of Durability & Tangibility: 1. Durable Goods- gds which are long lasting-clothes, electronic items, etc. 2. Non-durable Goods- gds which are not long lasting-vegetables, eatables, drinks, cosmetics, day to day usage items like soap, paste etc. 3. Services- gds which are intangible, inseparable, variable and perishable- haircuts, legal advice, appliance repairs, etc. Consumer Goods Classification: 1. Convenience Goods- gds purchased without any planning or search effort- chocolates, biscuits, etc. Also emergency gds like umbrella, raincoat, sweaters, etc. 2. Shopping Goods- gds purchased after enough search on such basis as suitability, quality, price, style, fashion, etc. 3. Speciality Goods- gds having unique characteristics or brand identification for which buyers are willing to make special purchasing effort. Eg. Mercedes Benz. 4. Unsought Goods- gds about which the consumer is not much aware of or does not normally think of buying- life insurance, encyclopedia, smoke detectors, etc. 1. 2. 3. Industrial Goods Classification: Raw MaterialUnfinished GoodsFinished Goods-

The Product Mix- product planning & development, product design, branding, packaging & labeling. Product Planning & Development- It includes proper market research and understanding the consumer needs and then designing the product accordingly. Product Design- Another way to add customer value is through distinctive product design. Good design can attract attention, improve product performance, cut production cost and give the product a strong competitive advantage in the target market. Branding- Perhaps the most distinctive skill of professional marketers is their ability to create, maintain, protect and enhance brands of its products and services. A brand is a name, term, sign, symbol or design or a combination of these that identifies the maker or seller of the product or service. Branding has become so strong that hardly anything goes without branding. Eg. White Linen perfume, fruits, vegetables. Packaging- It includes the activities of designing and producing the container or wrapper for a product. The package may include the products primary container ( the tube holding the toothpaste), a secondary package that is thrown away when the product is about to be used ( cardboard box containing the tube) and shipping package to store, identify and ship the product. Labelling- Labels may range from simple tags attached to the products to complex graphics that are part of the package. Labelling gives information regarding the nature, name, content, MRP, etc. Product Support Services- Customer service is another element of product strategy. A companys offer to the market place usually includes some services which can be a minor or a major part of the total offer. Product support services are the ones that augment actual products. A company should therefore design its products and support services in such a way as to profitably meet the needs of target customers. It can then develop a package that will both delight customers and yield profits to the company. PRODUCT MIX DECISSIONS

An organization with several product lines has a product mix. A product mix consists of all product lines and items that a particular seller offers for sale. Eg. Wipro is into food, household items, bulbs, furniture, computer solutions, etc. A companys product mix has 4 dimensions- width, length, depth and consistency. Product Mix width refers to number of different product lines the company carries. Eg. Width of colgate- Palmolive is fairly narrow with only oral care, personal care. Product Mix length refers to the total no. of items the company carries within its product lines. Eg. Colgate has a big product mix length with almost 12 toothpastes and 8 toothbrushes. Product Mix depth refers to the no. of versions offered of each product in the line. Eg. Colgate Max Fresh comes in 3 flavours and 3 sizes. Finally the consistency of the product mix refers to how closely related the various product lines are in end use, production requirement, distribution channels or some other way. Eg. Colgate Palmolive have consistency where distribution channels are same. PRODUCT LIFE CYCLE INTRODUCTION STAGE- In this stage the product is new and distinctive. Here, a new product means a product that opens upon entirely new market, replaces an existing product or significantly broadens the market for an existing product. This stage is characterised by: slow rise in sales and profit margins limited competition high income group buyers (innovators) frequent product modifications high production and marketing costs narrow product line high prices limited distribution and primary demand cultivation. GROWTH- In this stage, the product achieves considerable and widespread approval in market. Sales increases sharply and at an increasing rate. The number of competitors increase considerably. This stage is characterised by: Increase in competition Increased volume of sales Improvement in the quality of the product Price reduction Reduction in the promotional expenditure to sales ratio. MATURITY- In this stage, the maturity of product is reflected in terms of its capacity to face competition. In this stage, sales do rise but at a decreasing rate, profit margins however decline. This stage is characterised by: Increase in sales at a decreasing rate Cut throat competition Exit of poor competitors New changes in the product Increase in promotional efforts. DECLINE STAGE- This is the phase when sales decline because customer preferences have changed in favour of more efficient and better products. The number of competing firms also gets reduced and generally the industry now has limited product versions available to the customer. This stage is characterised by:

A drastic reduction in sales Decline in profits Exit of the product from the market. IMPORTANCE OF PLC 1. Predictive Tool- Since a product has a predictive life pattern and the problems likely to be encountered in different stages of PLC are known, the management is pre-warned of the likely changes in the product position. For eg., behaviour patterns of sales, profits, dealers, competitors, in different stages are known. Although it is difficult to forecast these changes with any degree of exactness, it undoubtedly provides a preview of the broad spectrum of product events likely to occur. 2. 2. Planning Tool- Once product life pattern and behaviour of forces lying on it are known, management is better placed to plan its strategy in advance so as to fully exploit the product potential. Product modification, promotion and pricing strategies and dealer motivation program may be planned much earlier than the market conditions warrant. 3. 3. Control Tool- In case of a multi-product company when a number of products are simultaneously offered in the market, not all of them fair identically. Some fare better, some not. When their position in the PLC is monitored, it may indicate the types of changes required in the marketing strategy so as to fully exploit their potential and attain maximum market share. Thus, it serves as an important market tool.