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CHAPTER -1

Introduction.

In general sense, marketing means to sell product. But selling is only the part of marketing. This is the age of marketing. Marketing activities are the part of our daily life. All types of organization needs marketing. Organizational success depends upon the marketing. Marketing is the business activity which is directed at satisfying human needs. Marketing tries to identify human needs and produce product to satisfy them. Marketing matches products with consumer needs. Marketing means not only to buy and sell but it is moreover attracting costumer satisfying their needs for retaining them. Marketing always aims to develop long term relationship with the costumer. According to William Staton: Marketing is a total system of business activities designed to plan, price, promote and distribute want satisfying product to target market to achieve organizational objectives. According to Kotler and Armstrong : Marketing is the process by which individual and group obtain what they need and want by creating and exchanging products and values with others. Marketing thus is the system which follows a systematic process. It consists of set of activities like product development, modifying existing products, branding , packaging, labeling , quality control, setting pricing, objectives, distribution and channel management, promotional activities. Consumer's needs identification and satisfaction is the main theme of marketing and they are aimed to achieve organization objectives in a dynamic environment. Thus marketing process encompasses all activities aimed at identifying and satisfying costumer needs through exchange relationship to achieve organizational objectives in dynamic environment.

Importance of Marketing

Marketing has become the part of our everyday life. Marketing plays significant role for the organization,consumer and society. Its importance is increasing day by day. The following charts show the importance ...... of marketing to consumer, society and organization

To Consumer Standrad of living Value Addition Information Product Assortment Satisfaction

To Organization Demand Management Product distribution Coordinated usage of resources Objectives achievement

To Society Social well being Employment generate Meet community need Economic mgmt

Importance to Consumer: Marketing is importance to consumer in following ways

i) Standard of living: Marketing delivers standard of living to consumer. It offers product that satisfy their needs. Safe and hygiene product of high quality improve the quality of live as well as living standard.

ii) Value Addition: By delivery of products at right quantity at right time at right price , marketing adds value of products to consumer.

iii) Information: Marketing provides information to consumer about product, price, place and promotion. This promotes efficient buying for consumer.

iv) Product Assortment: Marketing provides all product at the convenient place. So they can exercise freedom of choice. v) Satisfaction: Better product performance provides satisfaction. Marketing provides satisfaction to consumer. By matching the product to consumer need, consumer get satisfaction. Importance to Organization

Marketing plays vital role in an organization. The importance of marketing to the organization can be classified in following ways. i) Demand Management: Through the various promotional tools of marketing stimulate demand. Such tool s inform, remind and encourage costumer to purchase product. ii) Product Distribution: Marketing distribute products manufactured by the organization. It distribute the product of right quality in right time to right place in right quantity. iii) Coordinated usage of resources: Marketing identifies market opportunity in target markets. Organization can choose the most profitable segment. Integrated approach to marketing facilitate the coordinated use of resources. Iv) Objectives achievement: The main target of marketing is to achieve organizational objectives. Marketing mix can be changed to meet competition and consumer need. v) Environmental Adaptation: Marketing monitors and identifies environmental changes to identify important trends. Changes in consumer preference resulting from technological, economic, poltical and socio-cultural forces can be monitored. This helps organization to adopt in dynamic environment. Importance to Society: i) Bears social responsibilities: Marketing bears social responsibility objectives along with its other objectives. Marketing concern for safe guarding about social needs. The societal interest to are protected through environmental quality < Natural resources are properly used. Pollution is controlled. Eco friendly products are made to promote social interest. Planting trees, reflecting used materials, and saving on energy use also enhances social well being. ii) Employment Generation: Marketing is an important source of generating employment opportunities. About 33% of people of world are engaged in marketing activities. iii) Economic development; Marketing activities accelerate business activities. It helps industrialization. It is the important tool for economic management. Most economic decision are affected by marketing. Approach to the study of Marketing a) Commodity approach to Marketing: This approach focuses on flow of commodity. According to this approach marketing is the function of flow of commodity from source of production to the place of consumption. It is concerned with demand, supply, channels and transportation. This approach is prevalent in agro- oriented economics. Advantage: i) this approach is concerned with flow of specific commodity from supplier to consumer. ii) This approach establishes marketing system for each commodity.

Disadvantage: i) this approach results in duplication of marketing efforts. ii) It is time consuming and costly. b) Functional Approach to Marketing: This approach focuses on different functions of marketing. It is concerned with the following functions of marketing. i)Exchange Function: This is the primary function of marketing. It is related with the buying and selling function. Buying function involves demand forecast, identification of supply sources, purchase of raw material, machinery and IT. Where as selling function involves identification of costumer, demand stimulation, price fixation and promotion. It is the key function of marketing. ii) Distribution Function: This is the supporting function of marketing. It covers the area of transportation and storage. Finished products are transported to the consumer through the means of transportation and storage is related with inventory management. iii) Facilitating Function: This is the auxiliary function of marketing it involves standardization, finished goods are standardized and graded. Financing needed financial resources can be fulfilled by loan. All types of marketing risk are managed and insurance. All the information are flowed and gathered and research and development are done about new trade, competitors and environmental dynamics. Advantages; This approach is concerned both with flow of commodity and institutions in the movement of goods. It gives emphasis on the function of marketing. Disadvantages: This approach gives more emphasis to the marketing function where as it ignores costumer needs. c) Institutional Approach: This approach focuses on various institutional involved in marketing. They can be related to product, price and promotion. There are several institution related to marketing. Producer and manufacturers: Produce raw material, manufacturer convert raw material into finished goods. Middleman: Wholesaler, Resellers, Agents etc. Facilitating institution: transportation agencies, public warehouses( provides facilities for storage of goods.) , Advertising agencies, financial institution, Research and consultancy firms( solves marketing problems) Advantage: the understanding of institutions helps marketing and its cost can be reduced through proper selection of institution. Disadvantage: This approach does not provide a total view of marketing and its also ignores costumer needs.

d) System Approach to Marketing: This approach is system oriented. A marketing system is collection of interrelated and interaction parts to achieve objectives. Marketing system consists of input, processing, output, and feedback components that operates in a dynamic environment. a) Input: It includes the marketing mix element: product, price, place and promotion. b) Processing: It consists of environmental influences and buyer decision for purchase c) Output: It consists of objectives achievement in terms of profit, service, growth, survival, leadership. d) Feedback: It provides information to redesign inputs and processing. e) Environment: These components as well as the whole system are affected by dynamic environment. This may be the internal environment and external environment. Advantages: i) Synergy: In this approach marketing does not give undue importance to any one element of marketing mix. It looks at the total pictures. ii) Marketing effectiveness: Marketing objectives are effectively achieved. Marketing resources are efficiently utilized. iii) Changing forces in the environment are carefully considered in designing the marketing mix. Disadvantages: It ignores costumer needs. It is difficult to implement. e) Environmental Approach to Marketing: This approach is concentrated to the environment within which it operates. Marketing operates in a dynamic environment. It should continiousualy monitor and adopt to the changing environment to achieve objectives. There are mainly two forces of environment which affects the marketing , they are internal forces and external forces. f) Managerial Approach to Marketing: This approach is management oriented. It focuses on managerial decisions related to marketing. It emphasizes achievement of goals by getting marketing jobs done through people. This concept basically gives emphasis on following managerial means: i) Marketing Planning: It is the process of setting marketing goals and choosing future marketing action to achieve these goals. It includes the SWOT analysis, establishment of marketing goals., selecting marketing action to achieve goals, designing marketing mix, co-ordination of marketing activities etc. ii) Marketing Implementation: Implementation means assignment and direction of human resource to carry out the marketing plan in a co-ordinated manner. In this phase human resources are hired, channel for distribution are selected, physical and financial resources are provided. Organization climate is created by improving the quality of work environment.

iii) Marketing Control: It ensures that the right things are done in the right manner and at the right time. Marketing control is the measurement and correction of marketing performance to achieve planned goals. This process includes the establishing standards, measuring actual performance, finding deviation( difference between actual performance and standard performance.) and taking the corrective action. Advantages: This approach uses both qualitative and quantitative techniques for marketing decision making. Timely decision making helps marketing to achieve objectives. Disadvantages: This approach ignores costumer and the environmental dynamics. g) Economic Approach to Marketing: According to this approach marketing is the process of buying and selling of goods and services. Wants are unlimited but resources to fulfill those needs are scarce. Marketing helps to make effective use of scarce resources. The assumption of this approach are: - There are many individual firms in the market. - The objectives of these firms is to maximize profit. - The buyer wants to get maximum satisfaction. - both the buyer and seller have complete information about market. - Price is determined by the interaction between demand and supply. Advantages: this approach is well developed and popular among economists.

Disadvantages: This approach is based on various assumption and has no relevance in

the world of marketing.

Chapter-2 Marketing Environment

Marketing environment refers to those factors, forces, which influence the exchange relationship of marketing with target costumers. Marketing environment can be classified into two category. One is 'Micro' and another is 'Macro'.

Define Micro environment of marketing and describes its factors.

Micro environment refers to all those internal forces of the organization which influence the marketing activities. The area of micro environment is within the territory of the organization itself, which consist of organizational activities, scope and stakeholder. It provides strength and weakness to marketing. Micro environment of marketing consist the following factors: 1) Organizational Activities: a) Production: production is directly related with marketing which directly influence the marketing activities. Product need to be produced before they can be marketed. The expansion or reduction in the production directly affect the marketing activities.

b) Finance: The proper financial competitiveness is needed to accomplish all marketing activities. New product development, additional production facilities and promotional activities need finance. Thus this directly influence the marketing activities.

c) HRM : Qualified and capable HR is needed to carry out marketing activities effectively.

d) Research and Development: research and development play ......... a significant role in marketing. It facilitates organization to match marketing mix to costumer needs.

2) Organizational Scope: It include the organization's objectives, organization structure, Organizational Resources, Organizational culture(value, norms etc.) 3) Stakeholder: the stakeholder are the foundation to the organization from which the organization taken place and organization's objectives are targeted. Micro environment is made up of stakeholder. They may be the outside organization or group who affect the activities of marketing and are affected by marketing. They have a stake in the performance of marketing. The stakeholder include Costumer, Suppliers, Competition etc.

4) Marketing Intermediaries: i) Middleman ( wholesaler, retailer)

ii) facilitators: ( facilitate physical movement of product, Transporters, warehouse, clearing and forwarding agents) iii) Market service Agencies: ( advertising agencies, credit information agencies, marketing research and consulting firms.) which helps in promoting products. iv) financial institution v) Labour Union vi) Pressure group.

Macro Environment of Marketing Define Macro environment with its forces . Micro environment can be defined as the set of external condition and forces that influence the performance and outcomes of marketing. It provides opportunities and threat for marketing. It is out of the control of the organization. The following are the component/ forces of macro environment. i) Political Forces: The political environment consist all those factors of public affairs such as political system, political institution etc. ii) Legal forces: It refers to rules of conduct enforced by the state. Legal environment of marketing refers to all the legal surrounding that affect marketing activities. It protects the right and interest of marketers, consumer, employees and the society. It consist of business law related with marketing activities , courts of law and law administration. 2) Economic forces: Economic forces refers to economic surrounding that influence marketing .activities. They consist of economic parameters that provide the climate for survival and growth of marketing. They ultimately influence resource allocation, cost, profit, and consumer spending. It consist of: i) Economic System: ( free market economy, Centrally planned economy, Mixed economy) ii) Economic policies: ( Monetary policies, fiscal policies and industrial policies.) iii) Economic condition: ( Business cycle, Income, Inflation, Natural resources, Globalization) 3) Socio- Cultural Forces:

Social forces refers to social surrounding that influence marketing. It consist of factor related to human relationship. There are many social factors that affect the marketing activities they are given below: i) Demographics: (Concerned with human population and its distribution)Population size, population growth, Age mix, Urbanization, Distribution and Migration. ii) Social Institution: ( Family, reference group, Social class) iii) Social changes and life style. 4) Cultural forces: (Knowledge, customs, traditions, values, religion, language, symbols , works, art and architecture which is created by society.) It include Attitudes, values and beliefs and types of product. 5) Technological Forces: technology refers to the means or method of converting resources into product. It consist of skill, methods , system and equipment. Technology influence marketing by bringing changes in jobs, skill, life style, product, production methods and processes. Hence technology directly influence the marketing activities.

Chapter-4

Marketing Information System

Define MKIS .

Information is the proocessed data derived through data analysis. Organization need information to respond to environmental changes as well as to make decision. So in order to collect updated, reliable information regularly, organization need to design and use an effective marketing information system (MKIS). Thus a MKIS is a unified system of interrelated parts to provide information support to achieve marketing objectives. It consist of input- processing- output and feedback components.

According to Philip Kotler MKIS consist of people, equipment and procedures to gather, sort,analyze, evaluate, and distribute needed, timely and accurate information to marketing decision makers.

The MKIS components are given below:

i) Input: It consist of data generated from internal and external sources. ii) Processing: It consist of activities related to data sorting, analysis, evaluation, storage, retrieval and dissemination.

iii) Output: It consist of regular and special report needed for marketing decision making.

iv) Feedback: It provides information to redesign input and processing to meet changing need of marketing.

Features of MKIS

i) Inter-related components: MKIS is a set of inter-related components which consist of people, equipment and procedures. Information and communication technology is used to deliver it.

ii) Processing: MKIS collects, processes, analyses, stores, retrieves, and disseminates information for decision making and control.

iii) Timeline: MKIS provides right information to right people at right time.

iv) Accuracy: It provides accurate and reliable information.

v) Consistency: It provides consistent information based on same definition, assumption and time period.

vi) Accessibility: The information is easily available to authorized person through communication technology.

Importance of Marketing Information System

(IQ)

a) Marketing Planning: MKIS provides updated, reliable, and accurate information which helps marketing to predetermine future courses of action. It also helps to set objectives and standrads of performance for marketing planning. Marketing oppertunities can be identified and strategies can be formulated in order to achieve them.

b) Marketing performance Implementation: MKIS helps to analyze various information such as sales trends, stage of product life cycle, pricing and non- pricing strategies of compititors, changing preference of consumer. Marketer design and impliment marketing mix on the basis of such information.

c) Marketing control: MKIS facilitates continuous monitoring of marketing performance for timely corrective action. Deviation between standard and actual performance can be analysed and corrected with the environmental dynamics.

d) Marketing Coverage: MKIS provides information to increase market coverage. It can be single or multiple segment coverage. Marketing information also helps to create demand.

e) Environmental Adaptation: The major function of MKIS is to provide information about changing needs and preference, innovation and external changes. This helps organization to identify oppertunities and face threats. New startegies can be made to adapt in changing environment.

f) Marketing Decision making: Marketing decision making is based on marketing information provided by MKIS. Its help them to understand the problem, identify and evaluate alternatives and to make a choice, through which the decision can be easily made.

Components of Marketing Information System

1) Internal Record System: Every organization keep records of all transectional and non- transectional data such as: order, shipping, annual report, sales trends, financial statement etc. The system which keep such internal record is called internal record system. They consit of:

i) Customer related records: It includes order, invoices, shipping documents, inventory records, payment records, customer demands and their profile.

ii) Sales Report: Sales reports submitted by sales force provide information about performance of brands, sales trends and customers expectation.

iii) Other Report: It includes annual reports, finanicial statement, audit report, and other special report as per requirement which provede useful information.

2) Marketing Intelligence System: Marketing intelligence system is a set of procedures and sources used by managers to obtain everyday information about pertinent developments in.... the marketing environment. It provides information about everyday happening in the marketing environment. The information derived from MIS are collected from the following sources:

i) Marketing Managers: They read books, newspaper, trade publication and even talk with customers, suppliers, distributors to gather information.

ii) Sales force: They find and report new development in the market place and motivate the organization for marketing intilligence purpose.

iii) Middlemen: They handle several product and usually know in advance about competitors move.

iv) Specialists: They are appointed to gather marketing intillegence.

v) Outsourcing: Commercial detectives are hired to gather specific information. Data can be purchased from research firm.

vi) Marketing Information section: It is a special section which scan the environment and surf internet to gather information.

3) Decision Support System: A DSS is a procedure that allows a manager to interact with data and methods of analysis to gather, analyze, and interpret information. It helps marketing manager s to make better decision. It does not collect information rather it stores, analyses and synthesizes the collected information. It has the following components:

i) Data Bank: It stores different types of data collected from varous sources such as internal reports, market intelligence and market research which are about cfustomers, competitors, environmental trends and organizations performance.

ii) Method Bank: DSS consist of set of different statistical tools ranging from simple procedure to sophiscated methods. They help mangers to analyze the information and make decision. It consist of following staistical tool:

Multiple Regression Discriminate Analysis Factor Analysis Cluster Analysis Conjoint Analysis

Multidimensioanal Scaling.

iii) Model Bank: It consist of interrelationship between different variables that help decision makers to understand, predict and control marketing problems. Model bank consist of :

Model

Markov model Queuing Model New product pretest Models Sales Response Models

Optimization Routinee

Differential Calculus Mathematical programming Game theory Heuristics

4) Marketing Research: Marketing research is the systamatic design, collection, analysis, and reporting of data and finding relevant to a specific marketing situation facing the company. It helps organization to resolve the marketing proble through different alternatives. It is a tool for identifying market oppertunities and to minimize threats.

The features of marketing research are given below:

i) Systamatic: Marketing research is a systamatic process which is properly planned and implimanted

ii) Objective: It is objecticve in collecting, analyzing, interpreting and reporting data.

iii) Problem oriented: It deals with specific marketing problems.

iv) Decision Making: Marketing research ultimetely aimed at helping the marketing managers for decision making.

(note: features may not be included for the answer)

Very important question

Define marketing research , describes the various process include in marketing research.

Marketing research is the systamatic design, collection, analysis, and reporting of data and finding relevant to a specific marketing situation facing the company. It helps organization to resolve the marketing proble through different alternatives. It is a tool for identifying market oppertunities and to minimize threats.

Process of Marketing research:

1) Define the problem: Problem provides the foundation to marketing research, it determines the scope of research. Thus it should be defined carefully neither too broadly nor too narrowly. It should be defined in such a way, in which the researcher can find out the core of the problem easily and the problem should not be mixed with symtoms. For example: If the sales of Nepali garments decline due to high price, sales decline is a symtoms and high price is the problem. Problem identification can be based on:

a) Literature review b) Experience survey: Conversation with qualified persons inside and outside the organization who possess knowledge and experience.

c) Case Study: Exploratory study of the organization to identify the problem.

d) brainstroming: Ideas are generated spontaneously through group creativity. Free wheeling is encouraged but criticism is disallowed.

2) Stating Research Objectives: Objectives of research is the important phenomenon which specify the information required for research. Thus it should be stated clearly. They also determine the research design. Objecitve should follow from the problem defined for research hypothesis can be posed.

3) Developing Research plan: It is the research methodology for gathering the needed information. It deals with the decision on:

a) Data Sources: It may be the primary and secondary data. Secondary data are collected earlier for other purpose. It includes internal report of organization, book, government publication etc. while primary data refers to data collected for the first time for a specific purpose.

b) Research Method; They are used for collecting primary data: they are:

Survey: It involves direct questioning of people to gather facts, opinion and other information. Observation: It is the process of collecting information by watching the action of people on setting.

Focus group research: It is the method of collecting information by gathering of small group of 6 to 10 people who are invited to spend a few hours with a skilled moderator to discuss the research problem. Experiment: It is the method of collecting data by lab or field experiment.

Consumer panel: In such method a panel of group of people serves as subject of survey.

c) Research Instrutment: It may be the questionnaire or Mechanical instruments.

d) Sampling plan: Sampling is the process of selecting small units from the total population for collecting data. It includes sampling unit, sample size and sampling procedure.

e) Contact Method: This is the method of contact to respondent. This can be mail method, interview or computer.

f) Analytical tool: It include the statical tools such as mean, regression, correlation, variance for analyzing information.

4) Collection of Needed data: Collection of primary data involves field study. Skilled personnel are used to collect data. Information are collected with recording the response of interview questionnaires. The information should be usable and relevant.

5) Analysis of Data: It involves coding, tabulating and statical analysis to analyze and interpret the collected data objectively. Now a days computer technology is used to interpret the data effectively.

6) Report Finding : research finding are reported to the relevant clints in the form of written report and oral presentations.

Chapter- 6

Product Decision
Product is the core element of marketing mix. A product is anything that satisfies a need of customer. It can be goods, services, idea, events, person, places, organization , information etc. According to Philip Kotler : a product is anything that can be offered to a market to satisfy a want or need.

The components of product are: i) Design : shape, color and look of product. ii) Quality: standardization and grading of product. iii) Variety : lines and item of product. iv) Features: size, style, physical features. v) Brand: Name, mark, sign, symbol of product. vi) Packaging: Container or wrapper of the product vii) Services: pre-sale or after sales services for the product.

Stages of product Life Cycle All the product have their life. Certain factors such as technology, competition, and performance of consumer etc. determine the life of product. Thus all product have life cycle. All the products are introduced, grow, get maturity and die or become out of market. There are mainly four stages are included in product life cycle as introduction, growth, maturity and decline. According to Philip Kotler The product life cycle is an attempt to recognize distinct stages in the sales history of the product. Product life cycle is the total sales during entire history of a product over time. It is a bell- shaped curve It assumes/ indicate that: - Every product has a limited life. It differs from product to product. - product sales pass through different stages and profit rise and fall at different stages of product life cycle. - Marketing strategies should differ in each stage of product life cycle.

1) Introduction stage: this is the first step of product life cycle in which the new product is launched in the market. The marketing objectives is to crate product awareness and induce trial purchase among consumer . The characteristics of this step are as follows: i) Slow sales growth (Due to) : unaware about the product, reluctant to change their brand, distribution channels are inadequate, technical problems in production. ii) Negative or low profit. Iii )Innovator customer iv) No competitors v) High price. 2) Growth stage: This stage is the period of market acceptance. The marketing objectives is to increase market share. The characteristics of this stage are: i) Rapid sales growth: Innovator customers continue to buy product acceptance increase, new segment start buying the product. ii) Rising profit: High sales at high price, decrease in production. iii) Early adaptor customer: They are opinion leader and they start buying the product. iv) Growing competition: new competitors are entered v) slightly lower price. 3) Maturity stage: this stage is the period of defending market share. The rate of sales growth slows down. The marketing objective is to stabilize profit and defend market share. The characteristics of this stage are: i) slow down in sales growth ii) stable profit and high iii) Middle majority customers: low price attract the middle majority customers to buy product. iv) Intense competition vii) Lowest price. 4) Decline Stage: This is the stage when sales decline and profit also decline. The marketing objectives is to survive and eventually withdraw from the market. Characteristics of this step are : i) Declining profit ( reach to zero or negative) ii) declining sales

iii) Laggard (late comers) customers, hard core loyal customers continue to buy product. iv) Declining competition v) Increased price because loyal customer are willing to pay higher price.

New Product
Product that are new to the organization and market place can be regarded as new product. Organization develop new product because of change in technology , competition, customer preference and environmental forces. It is the life sources of an organization. According to Philip Kotler New product include original products, improved products , modified products, and new brands that the firm develops. Process of New product Development The process of new product development involves seven stages. At each stage, decision should be made regarding whether to proceeds to next stage or abandon the product. The seven stage of new product development are given below: 1) Idea Generation : Product development starts from idea generation. It can be defined as an imagination of product. Organization should develop good product ideas which should target more customers. The product ideas can be generated through different techniques like marketing research, attribute listing, morphological analysis , forced relationship, need problem identification, brainstorming etc. 2) Idea screening : All the idea may not be feasible. So, unfeasible idea should be eliminated to choose best idea. The ideas are screened in terms of organizations objectives, policies, resources and technical compatibilities. The total idea are classified into : i) promising ideas: they are evaluated for consideration in the next stage. ii) Marginal ideas: they are stored for future stage. iii) Rejected ideas. 3) Concept development and Testing: Ideas screeing committee selects four or five ideas for consumer level testing. This is commonly known as concept testing. Product concept is elaborated version of the ideas expressed in customers terms. Promising ideas are turned into product concept in order to find precise(alternative detail) description the product with its use and benefits as well as to prepare physical prototype of drawing of how the products look like.

A concept testing is asking potential customer to evaluate the product concept. It judges whether the product can satisfy customers desire along with organizational objectives. Product concept and prototype are used to get customers reaction on : Uniqueness of the concept Clarity of the concept Need satisfaction attributes of the concept Buying intent Price- value perception Frequency of potential use.

4) Marketing Strategy and Business Analysis: At this stage, after selecting the suitable product concept, organization has to develop preliminary marketing strategy for the success of product concept such strategy covers target market of the product, product positioning strategy, estimates of market share and marketing mix. Business analysis involves drawing a sketch of a product compability with market including specific estimates of sales, cost and profit with environmental reaction. It involves competitor analysis, demand forecast, cost statement and break even analysis and profit projection. 5) Product Development: In this step, the product concept is developed into physical product. R&D departments develop physical version of the product which are generally known as product prototype. The functional tests are conducted to know if the product performs safely and effectively. When the organization is satisfied with functional test it takes the product for customer level test in order to find out customers like and dislikes over the product. 6) Test Marketing : After developing product, a limited scale of product is manufactured and placed on sale in a test market in order to test the product in customer setting. By doing this, trial, first repeat, adaption and purchase frequency are monitored and correction on marketing mix are done based on test marketing result. 7) Commercialization: It is the commercial launching of the product in the target market. The organization does as full fledge marketing plan and program for the product. The major decision made on this stage are: - time for launching product. - geographical area for the market of the product - Target market of product - marketing strategy and action plan for launching the product.

Product Line Strategies ( most IQ)

Product line is a group of closely related products in terms of their function, customer group, channels and their price range. For example, glucose, slated, coconut, cracker etc. is the product line of biscuits. It denotes the leanth of total product similar in features and price range. It is very important that the product line should not be either too long or too short. Product line strategies consist of : 1) Product Line leanth strategy 2) Line modernization strategy 3) Line featuring strategy

1) Product Line leanth strategy (IQ) : it includes total items in a product line. Organization seeking market share carry longer line where as those seeking profit carry shorter product line. It involves the line expansion and line contraction strategy. a) Line expansion strategy : It is the strategy of adding new product in same product line. Line stretching strategy and product filling strategy are two method of product line expansion. i) Line Stretching: line stretching is the strategy of lengthening the line beyond the current price range. It is also known as trading up and trading down strategies. - Trading up ( upward stretch) : It means adding a higher price item to the product line to enhance image and increase sales. There are some risk as well as trading up strategy. When the organization concentrates on the promotion of new product of high price , it may result lost the customer in its low prices product -Trading down (downward stretch) : It means adding a lower price item to the line to meet the demand of economy class consumer and to check the competition at the low price segments. Trading down strategy is also a risky strategy because it encourages competitors to attract on the low price segments. This may decrease the image of organization because of production of low priced product. This may results lower the sale of high priced product of same product line. ii) Line filling: it means to add more items within the current price range to discourage competition and to make profit. If an organization is a full time manufacturer, it adopts line filling strategy. The line stretching strategy can be view in figure given below: Here, A = existing product , B &C are new product , both ways means adding high price and low price item to the line.

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