IMPORTANT QUESTIONS 1. Define the term marketing and marketing management. Explain various concept of marketing. 2.

Explain the demand related marketing task. 3. Explain factors affecting consumer behavior. 4. Explain the basis for market fragmentation. 5. explain product life cycle. . describe reasons for developing a ne! product. ". state and explain pricing method. #. give the idea of advertising media. $. explain the term personal selling and features of personal selling 1%. explain the tools of sales promotion 11. explain the concept of channels of distribution. &lso explain factors and types of channels of distribution. 12. give the meaning of marketing research. &lso explain the process of marketing research. SHORT NOTES 1. 2. 3. 4. 5. . ". difference bet!een selling and marketing. product line and product mix. consumer adoption process advertisement copy difference bet!een advertising and personal selling difference bet!een primary data and secondary data consumerism CHAPTER 1 INTRODUCTION TO MARKETING 'eaning of market (he term )market is derived from the *atin !ord )'ercatus+, !hich means to trade. 'arket means the center around !hich the buying and selling activities are undertaken. 'arket means a place or a geographical area !here buyers and sellers meet, function goods or services are offered for sale and transfer of o!nership occurs. 'eaning of marketing -n simple meaning, marketing means the art of selling. 'arketing means the skills to satisfy the human !ants. 'arketing means the human activity to satisfy the needs of consumers through exchange process. 'arketing means the business activity that directed the flo! of goods or services from producers to consumers. (hese are the points of marketing. / product, place, price, promotion. 'eaning of marketing management 'arketing management is a system to satisfy consumers !ants. 'arketing management is a system of various activities like product development, market research, distribution of goods, sales promotion, etc. 'arketing management is a social system !hich aims not only profit gain but also consumer satisfaction. )'arketing 'anagement is concerned !ith the purposeful activities for the achievement of sales.+ 01. Explain demand related marketing task. 1imp2 -ntroduction. / -t is generally believed that marketing is concerned only !ith increasing the demand for the product. (his is al!ays true. 3ut sometimes the ob4ect of marketing may also be that of maintaining the demand at its current level. (he nature of marketing is different under different demand situation !hich is as follo!s. /

1. 2. 3. 4. 5. . ". #.

negative demand no demand latent1hidden2 demand faltering1uncertain2 demand irregular demand full demand overfull demand un!holesome1unpleasant2 demand

1. 5egative demand. / 6or some products these may be negative feeling among some or all customers. (hey !ould al!ays try to avoid the product. (his is a situation of negative demand. -n other !ords, the market is in a situation of negative demand !hen the ma4or part of potential market dislikes the product. E.g. meat has negative demand among the vegetarians. 7imilarly for 7.(. buses, there is negative demand for some persons. -n this situation the main task of marketing !ould be converting negative demand into positive demand. (his is kno!n as )8onversional 'arketing+. 2. 5o demand. / 6or some products there is no negative feeling among the people but they are not interested to purchase the product. (his is the situation of no demand. -n other !ords no demand is a situation in !hich a large part of the potential market is indifferent to product. E.g. scrapes. 9ere the task of marketing is to create the demand. (his is kno!n as )7timulating 'arketing.+ 3. *atent demand. / -t refers to a situation in !hich people have a strong need !hich cannot be satisfied !ith any of the ne! product. 9ere the task of marketing is Development marketing. E.g. many people desire to have a speedier bike. 7ome people ask for edible oil free from cholesterol. -n this situation the marketers should concentrate on product development. 4. 6altering demand 1Decline Demand2. / &lmost every product passes through this stage !hen its demand declines. :hen the demand for a product is lo!er than before, it is called a situation of faltering demand. (he marketing task in this situation is );e/marketing+. E.g. decline in the demand of cinema, fall in the demand for admission in science faculty, etc. 5. -rregular demand. / (he average annual demand for a product may be satisfactory but its demand is irregular because of seasonal or other changes. (his is kno!n as the situation of irregular demand. E.g. there is a heavy rush for train during summer vacation !hile many of the trains run empty during monsoon period. (he marketing task in such a situation is )e<uali=e marketing+. E.g. attractive discount are offered by the fan dealers during !inter. . 6ull demand. / this is the most desirable situation !hen the demand for the product of a company is full. -n this situation demand is in desired level and it is e<ual to the supply. (his situation arises !hen the business enterprise functions most effectively. (he task of marketing in this situation is )'aintenance marketing+. (he marketer has to ensure that the current demand is maintained. ". >verfull demand. / sometimes demand for the product exists to supply. >verfull demand is a situation in !hich demand for the product is more than the supply that the business is not able to offer. >verfull demand arise because of product popularity. )De/marketing+ is the main task of the marketer. (his is something opposite to marketing. #. ?n!holesome demand. / (he people demand even those products !hich are against their interest or are harmful to the society. E.g. the consumption of cigarette, li<uor, is an example of un!holesome demand. 9ere the task of marketing is )8ounter/marketing+ that means to discourage the consumption of such products.

02. Explain the various concepts of marketing (he various concepts of marketing are as follo!s. / 1. @roduction 8oncept. / (his concept holds that buyers !ould purchase !hatever products. -t is not necessary to identify their needs and preferences. (he production concept holds that consumers !ill favor those products that are available. (his concept is based on the follo!ing assumptions. / a. 8onsumers have kno!ledge of the prices charged by the competitors. b. 8onsumers are interested in the goods that are available to them. c. Except price consumer do not take into account other factors. d. 'anagement should concentrate only on production at lo! price. @roduction concept of marketing may be proper in underdeveloped countries because goods are in short supply in these countries. 9ence buyers are in a hurry to buy !hatever is available. 2. @roduct 8oncept. / (his concept holds that consumes !ill favor those products !hich are best in <uality management in this product oriented organi=ations focus their energy on marketing good products and improving them over time. E.g. the -ndian rail!ays holds that they provide the best services and people cannot do !ithout these services. (he product concept is based on the follo!ing assumptions. / a. 8onsumers purchase <uality products. b. 8onsumes have kno!ledge of difference in <uality of different products. c. @roducers concentrate only on improvement of <uality of their product. 3. 7elling 8oncept. / &ccording to this concept sales can be raised if sufficient selling and promotion efforts are made by the producers. (his concept stresses on the sales promotion efforts and not on the needs of the consumers. -n short this concept represents a sales oriented approach. (he selling concept is based on the follo!ing assumptions. / a. (he consumers can be induced to buy more through various sales promotion efforts. b. (he main function of a firm is to make its sales organi=ation strong. 4. 'arketing 8oncept. / -n this concept all company find out !hat the customers !ant and then satisfying those !ants, !hile still moving !ith profit. 'arketing concept is a business philosophy that is based on appreciation of consumer needs and preferences. 7ome important characteristics of marketing concept are as follo!s. / a. -t is a consumer oriented philosophy. b. (he marketing policy of the business should be based on marketing research about consumerAs needs and preferences. c. 'arketing concept is consistent !ith both profit and !ealth. 03. Difference bet!een selling and marketing 1'ost -.'.@2 (he term selling is used to mean exchange of goods against money, but this interpretation is too restricted to convey a broader meaning for the !ord marketing. 'arketing implies not only exchange of goods against money but also includes advertisement, publicity, marketing research, sales, promotion, etc. 7elling 1. (his term is used in a narro! sense. -t is a part of marketing. 2. (he product and its production are given prime importance 3. 9o! to sale and make profit is the only issue !hich is considered. 'arketing 1. (his term is used in a broader sense. -t is only one activity of marketing 2. 8ustomer satisfaction is of prime importance 3. 8onsideration is given to satisfy customers and production is priced according to their needs

4. 7elling is a routine activity !ith short term ob4ective. 5. (he expense of selling is conversation of commodity in cash.

4. 'arketing is a flexible activity !ith long term ob4ective. 5. 'arketing consist of sales promotion, advertising, publicity, marketing research, etc. . 7elling !as the main activity during the . 'arketing came into focus after 1$5%. period bet!een 1#"5 and 1$45. CHAPTER-2 CONSUMER BEHAVIOUR 'eaning. / )3uyer 3ehavior is a systematic process in !hich buying decisions are made.+ )8onsumer behavior is the process !hereby individuals decide !hether !hat, !hen, !here, ho! and from !hom to purchase goods and services.+ 6actors affecting buyer behavior. / Different theories and models are developed to kno! ho! an individual behaves as a buyer. 3uyer behavior is the result of a large no. of distinct factors. (he main factor affecting buyerAs behavior is as follo!s. / a. Economic factor b. @sychological factor c. 7ocial factor d. 8ultural factor e. @ersonal factor 1. Economical factor. / 1. Disposable income. / (he basis of purchase by the buyer depends on disposable income of buyer. 3y disposable income means the income left !ith the buyer after payment of tax from his gross income. & part of disposable income is saved and the rest is spent. 2. 7i=e and income of the family. / (he si=e and income of the family determine the amount of expenditure. (he large the si=e and income of a family, the greater !ill be its expenditure. 8onse<uently, the smaller the si=e and income of a family, the smaller !ill be its consumption expenditure. 3. Expectation of income. / -f buyers expect their income to increase, they !ill spend more out of their current income. (hey !ill induce to purchase comforts of life such as furniture, scooter, (B, etc. -n short expectation of income decrease or increase in future directly affects the current purchase. 4. 8redit facility. / -f goods can be purchased on credit, consumption expenditure tends to rise. (he commercial banks also offer loan to the consumers for the purchase of refrigerator, tv, flats, etc. (he consumer credit in the form of installment payments has played an important role in expanding the market. 5. 8ondition of *i<uidity. / (he assets !hich can be easily converted into cash are kno!n as li<uid assets. (he greater the amount of li<uid assets a person has, the greater !ill be his consumption expenditure. (he examples are bank deposits, shares, etc. 2. @sychological factor. / 1. 3asic 5ecessity. / (he basic necessities such as food, shelter, clothing, etc. are the needs !hich are most important. @eople try to satisfy these needs by any means. 'a4ority of the people spend most of their time in meeting these necessities of life. 2. *earning. / buyers decide to behave in a particular !ay in a particular situation on the basis of their past experience. (his is called learning. *earning is the name given to the changes in an individual behavior arising from experience. E.g. if a person buys a product that fulfills his desires satisfactory, he !ill repeat his behavior of purchasing it again. 3. >ccupation. / an individual purchases his goods according to his occupation. E.g. the mechanic prefers dark colored clothes, executive people go for a better <uality cloth. 4. *ife style. / the life style differs from individual to individual. (he lifestyle of a rich person is different from that of a middle class person. 7ometimes, individuals

belonging to some group have different lifestyle. E.g. the advertisement of ;aymondAs and demand can impress the rich class persons only. 5. &ttitude. / an attitude describes a persons feeling or tendency to!ards some products. E.g. some people !ere of the opinion that gas cylinders !ere risky and hence their attitude to!ards this product !as negative. (hus attitude creates likes or dislikes among consumers. 3. 7ocial factor. / 1. ;eference group. / reference groups are those social groups !hich directly or indirectly influence the behavior of individuals. Croups have a direct influence on a person are called primary groups. 7uch as family, close friend, neighbors and co/!orkers. Croups such as religious organi=ations, professional association and trade unions are secondary groups. &ll these groups influence a personAs behavior and determine the product that he !ill purchase. E.g. !hen a ne! product is introduced, the primary group, i.e. !ife and children are affected more than other groups. 2. 8ontribution of the family. / the family memberAs contribution in the purchase of a product is very important. Cenerally, a husband makes purchases for the family. (he !ife is the main purchasing agent for the family especially in the field of food, cloth, soap, po!der, etc. in the case of furniture, house, entertainment appliances, etc. husband and !ife !ill 4ointly take decision. (he chocolate, biscuit, toy and book purchases are according to the choice of the children. 3. 7ocial groups. / the society is made up of different groups of people. (he classification of people into different groups on the basis of social class can be done as follo!s. / a. upper class. / this is a small class of the extremely rich person !ho are economically most po!erful, interested in expensive 4e!ellery, modern furniture, etc. b. middle class. / it includes those !ho !ant to live a comfortable life, interested in good home, best furniture, fine cloths, etc. c. poor class. / they are the persons !hose income is uncertain and inade<uate to make both ends meet. 4. 8ultural factor. / 1. 8omfortable life. / the goods and services they buy. -n their early years they eat baby food, in their maturity years they eat spicy food and in their later years they are on a special diet. @eople taste in cloth also change according to their age. 'arketers should identify their target markets according to their life cycle and develop appropriate products and marketing plans. 2. >ccupation. / a personAs occupation effects his purchasing decision. E.g. !orkers !ill buy !ork clothes, !ork shoes, lunch box, etc. marketers should identify such occupational groups and speciali=e in making products re<uired by a given occupational group. 3. Economic 8ircumstances. / personAs consumption pattern is influenced by his economic circumstances. @ersonAs economic circumstances consists of his spend able income, saving, assets, borro!ing po!er, etc. 4. *ife 7tyle. / Every personAs life style !ould be different. *ife style of rich person !ill be different from that of middle class people !hile preparing marketing strategy the producers !ill search for relationships bet!een their products and life style group. 0. Explain buying decision process. 1. 2. 3. 4. 5. (he stages in the buying decision process are as follo!s. / 5eed reorgani=ation information research evaluation of alternatives purchase decision post purchase decision

1. 5eed ;ecognition. / necessity is the mother of all purchases. (he purchase process begins !hen the buyers recogni=e his needs. E.g. in the summer, a person

2.

3.

4. 5.

fills that he canAt do !ith the air conditioner. (his is the starting point of the buying process. -nformation search. / the buyer tries to collect information about the commodity during the time interval bet!een the emergence of need and purchasing of the commodity to satisfy that need. E.g. he tries to kno! !hich commodity is capable to satisfy his needs, !hat are the different prices of those brands, !hat are the opinions about that commodity. Evaluation of alternative. / on the basis of the information a buyer has, he !ill choose a particular brand. 3ut before he makes choice, he has to evaluate different brands. (he choice set includes 3 or 4 brands. (he buyer has to choose any one of these brands. 9e !ill have to find out through a comparative evolution !hich brands !ill give him maximum satisfaction. @urchase decision. / in the third stage of buying decision process, the buyer decides to buy a particular brand belonging to the choice set on the basis of evaluation process. (his is the intention of the buyers. @ost purchase behavior. / the 4ob or the producer or dealers does not end once his product is sold to the buyer. 9e must kno! !hether the buyer feels satisfied !ith the product. 9o! does he react after purchasing the productD CHAPTER-3 MARKET FRAGMENTATION

-ntroduction. / 'arket segmentation is the sub dividing of a market into various sub groups. 'arket is basically a group of buyers but these buyers differ in terms of need, urgency, preference, buying motives, etc. 'eaning of 'arket segmentation. / )'arket segmentation may be define as a process of dividing a market into different sub markets on the basis of some different criteria+ 3asis for market segmentation 1-'@2. / @hilip 8otter has classified the basis for segmenting the markets into four groups. 1. geographic basis 2. demographic basis 3. psychographic basis 4. behaviorasitic basis 1. Ceographic basis. / here, markets are divided into different groups on such basis as city, state, etc. market can be divided into. / / local market / city market / village market / regional market / national market / international market (he )7abrang+ cold drinks market is a local market as its products sell in ra4kot city only. (heir is a regional market for )Badilal+ ice/cream because they are in demand in big cities of !estern -ndia. (he products such as 3a4a4 scooter, Bimal cloths, Eishan tomato catch/up, etc. en4oy national market as they sell all over -ndia. (he precious metals like 4e!ellery of silver and gold has an international market. 2. Demographic basis. / demographic variables are most important basis for market segmentation. 1. 7ex. / significant differences are observed in the preferences and buying behavior bet!een male and female. (he sex is an important variable for the products like cloth, shoes, cosmetics, maga=ines, bicycle, etc. in some cases a clear and sharp segmentation of market is getting mixed due to change in fashion. E.g. 4eans pant are no! purchased by girls also. (he scooter and car is not limited to males only no!/a/days. (he producers are re<uired to take into account the modern age. 2. &ge. / age is an important criterion for market segmentation. (here are differences in the preference of the customers of different age. (he proportion of children

to total population is considerable high and for this group goods such as toy, chocolates, readymade clothes, milk po!der etc. are produced on a large scale. (he fashionable readymade garments, shoes !ith attractive design and color, ne! motorbike, etc. are made for young generation. 'arket segmentation is based on age is not rigid, e.g. chocolates are made for children but &mul and dairy/milk chocolates are advertising to attract young generation. 3. 7i=e of the family. / (he family si=e can also be used as a criterion for market segmentation. (he buyer can be divided into different groups according to the members of family members such as family !ith t!o or less member, families !ith three to four members, and families !ith more than five members. (he family si=e is an important criteria for production like toothpaste, !ashing po!der, hair oil, biscuit, soap, etc. 4. -ncome. / 8ustomers purchasing po!der depends on their income. -t can be 4udged !hich goods they !ill buy and ho! much to buy from their income. (he lo! income group spends a large portion of their income on primary necessities such as food and cloth. (he goods like refrigerator and television are beyond their reach. (he producers have to ad4ust production to needs of different income groups. (he reducer must be a!are of the income group to !hich he !ants to serve e.g. the ;eliance co. feeling Bimal brand cloth !hich afforded almost all income groups. (he ;aymond makes cloth !hich is afforded by only high income group people. 5. >ccupation. / >n the basis of this criteria, customers can be divided into such groups as salaried person, businessman, farmer, professional like doctors, etc. these groups differ in terms of income, social status, needs and preference. 'ost of the salaried person age moped or scooter, most of the businessman use bike or car, !hile the farmers prefer tractors. -t is essential therefore the producers of each product are able to clearly identify various occupational groups of buyers. . ;eligion. / -n countries like -ndia, there are many religious groups of people, each having a distinct set of economic re<uirements. E.g. the dress style of 9indus is different from that of 'uslims. & producer can prepare an effective marketing statorgy if he is a!are of the types and <uantities of goods purchased by different religious community in different markets. 3. @sychographic basis. / 1. 7ocial class. / -t is easy to distinguish bet!een social classes as very rich, rich, upper middle class, lo!er middle class and poor class. (hey buy different products. & person born in a rich family !ill purchase expensive products. &n upper middle class includes such professionals as advocates. @rofessors !ho believe in maintaining a higher standard of living, hence refers to purchase comforts of life. &ny person belonging to lo!er middle class strives to live a systematic life at lo! cost. 6inally, the poor class !ho are highly price conscious prefers only lo! priced products. 2. *ife style. / life style refers to the !ay of living. (he buyer can be grouped according to their life style. E.g. a manufacturer of !omen cloth has to design different cloth for simple !oman, fashionable !omen, etc. the lifestyle changes !ith time and producers must keep an eye on these changes. (he change is clearly visible in case of dressing no!/a/days. (he young boys prefer 4eans and t/shirt, !hile the matured prefers formals. 3. @ersonality. / personality is an important determinant of a buyerAs behavior. 9ence it is also used as a variable for market fragmentation. Cenerally, every person tries to express his or her personality through the purchase of certain products. 4. 3ehaviorastic basis. /

CHAPTER-4 PRODUCT -ntroduction. / 'arketing has its origin in product. -n absence of product !hat is to be soldD -t is the product !hich gives utility to the consumers and profit to the producers. (he general belief is that a product is something tangible, !hich means it can be touched and seen. E.g. radio, (B, machine, etc. -nfact, the concept of product is very !ide because it includes services also. E.g. Electricity 8ompany provides services to its consumers. (hese services are also included in the definition of product. -n short, anything that satisfies human needs is product !hether it is tangible or intangible. 'eaning. / )&nything that is capable of satisfying human needs is a product.+ )@roduct is !hat a seller has to sell and !hat a buyer has to buy.+ 6eatures of product. / (he main features are as follo!s. / 1. 8reation of utility. / & product is a result of the transformation activity. ?tility is created by changing the form of an article and it satisfies the human needs. 2. &ddition of value. / :hen ra!/material is transformed into a final product, it becomes consumable. E.g. value of cloth is greater than the value of its ra! material. 3. ?se of factor of production. / 3y the factor of production are main resources !hich are used in making a final product. (hese factors are divided into four groups. i.e. land, labor, capital and entrepreneur. 4. 8ommodity or service. / @roduct is either material or immaterial. -n other !ords, goods and services both are included in the definition of product. E.g. the services supplied by electricity company, gas company and post and television department are also regarded as products. 5. @rocess. / @roduction is a process !hich is divided into various stages. (he input has to pass from a no. of stages before it turns into output. E.g. ra! cotton and cotton shirt in bet!een that there are such processes as spinning, drying, stitching, etc. 'eaning of product line. / )& product line is a group of products that are closely related either because they satisfy the class needs, are used together, are sold to the same customer group, are marketed through the same types of outlets or fall !ithin the same price range. E.g. the Badilal co. offers different ice/creams such as Eeshar @ista, Ea4udraksh, etc. (hese are the product line of Badilal. (he main features of product line are as belo!. / 1. -t satisfies the needs of same class of consumers. 2. they are marketed through the same type of outlet 3. they are closely interrelated 4. they fall !ithin a given price range 5. they are mutually competitive. @roduct 'ix. / 'eaning. / @roduct mix refers to the collection of products produced and sold by a firm. E.g. the 8olgate company produces 8olgate toothpaste, tooth po!ders, tooth brush, etc. together they constitute the product mix of the company. (he nature of the product mix problem can be better understood by considering the problem of depth, !idth and consistency. E.g. @hilips 1-ndia2 ltd. 'akes models of transistor, 4 models of radios and 5 types of bulbs. 9ere, the product mix of @hilips 1-ndia2 ltd. consists of 3 product lines. -ts total product items are 15. 9ence, on an average each product line contains 5 products. (his is called the depth of the product mix. @roduct mix refers to the average no. of products items offered by a firm !ithin a particular product line.

&s said above, the @hilips 1-ndia2 ltd. has 3 products lines. (his is called the product !idth of product mix. (hat refers to the no. of products lines offered by a firm. (he consistency of product mix refers to ho! closely relate the various product lines are in one !ay or another. E.g. in above example there is a consistency so far as all consume electricity. 3ut if a company makes chemicals o 4ournals there is no consistency. 6actor affecting decisions about product mix. / 1. @rofitability. / @rofitability is the most important factor affecting the decision of product mix. 7ince every firm is interested in maximi=ing its profit it !ill naturally to produce and sell that product !hich is expected to give higher profit. 2. @roduction capacity of machine. / -f same machinery can be used for the production of various products, the firm !ill take into account its productive capacity, before taking decisions about product mix. (he product mix !ill be so designed that machines are fully utili=ed. 3. 'arket. / (he market demand also plays an important role in deciding product mix. 7ome products of a firm may be in high demand, !hile some other products at the same time may be getting out of fashion and their market may be declining. 4. @roduction cost. / (he cost of production in relation to revenue also influences the decisions about product mix. Different products involve different cost of production and therefore they differ in profitability. & product !ith high production cost !ill be less profitable !hile a product !ith lo! production cost !ill be more profitable. 5. 8hange in demand. / 8hanges in demand for products influence a firmAs to make ad4ustments in product mix. a2 population gro!th brings a change in the pattern in the demand. b2 change in peoples income also affects the pattern of demand. c2 a change in consumers behavior !ill also affect the demand pattern 8ontinue. / 5. @ersonnel factor. / a2 &ge of life cycle stage. / During their lifetime people change the goods and services they buy. -n their early years, they eat baby food, in their mature years they eat spicy food and in their later years they are on special diet. @eoples taste in cloth also changes according to the change in their age. 'arketer should identify their target markets according to their life cycle and develop appropriate marketing plans. b2 >ccupation. / & personAs occupation affects the buyers purchasing decision. E.g. !orkers !ill buy !ork cloths, !ork shoes, lunch box, etc. marketers should identify such population groups and speciali=e in a marketing product re<uired by a given occupational group. c2 Economic circumstances. / @ersons consumption pattern is influenced by his economic circumstances. @ersonAs economic circumstances consist of his spend able income, savings, assets, etc. d2 *ifestyle. / Every personAs life style could be different from that of other class people. :hile preparing marketing stat orgy the producer !ill search for relationships bet!een their product and lifestyle group. 8ontinuity overF. @;>D?8( *-6E8G8*E. / 1'. -'@2 (he lifecycle of a product is similar to the lifecycle of a human being. (he product life a human being is born, gro!s, attains maturity and then enters into decline stage. ?ltimately it disappears from the market. &ll these stages together constitute a lifecycle of a product. )(he lifecycle is an attempt to recogni=e a distinct stage in the sales history of the product.+ (here are four ma4or stages of a life cycle of a product. 1. -ntroduction stage. / (his is the stage in !hich a ne! product is first time available in the market. -n the introduction stage customers are fe!, competition is less, sales are lo!, risk is high and profit is lo! or nil. (here are heavy distribution and promotional expenses. (his stage is full of risk and uncertainties. (here are cases of untimely death of the product in the introduction stage. E.g. rishi ghee a ne! product failed to attract

buyers. (his is the product of 9.*.*. thus even the most experienced companies sometimes fails. 5otable features of the introduction stage are as follo!s. / /promotional exposes are very high /prices are also high /the introduction stage has !ideness in production techni<ues. 2. Cro!th stage. / During this stage !hen buyers are satisfied !ith the product, sales start rising rapidly. & large no. of ne! buyers begins purchasing the product. (he main features of the gro!th stage are as follo!s. / /their is increasing degree of competition during this stage /profit margin is high during this stage because expenses are lo! /!ith the increasing degree of competition ne! features are added to the product /prices tend to fall slightly during this stage 3. 'aturity stage. / -n this stage stabili=e at a definite level. (he buyers !ho are satisfied !ith the product continue purchasing in definite amount. 'ain features are as follo!s. / /leading companies get established in the market and their brands gain popularity. /the sales promotion expenses stabili=e at their normal level. /prices also stabili=e at a certain level /producers think of a product development at this stage 7ome authors divide this stage into criteria vi=. maturity stage and saturation stage. 4. Decline stage. / Every product ultimately enters the decline stage. (he decline stage may be slo! for some products and may be rapid for some products. (he current products loose buyers a no. of firms !ithdra! from the market, some companies strive to hold on and they succeed in the market. 'ain features. / /sales decline rapidly /profit also declines more than the stage /the producers think more about product development /they are eager to clear their stock as early as possible -'@. >6 @;>D?8( *-6E 8G8*E. / 7ome people are of the opinion that the concept is useless because the time periods of different stage are different for different products. -t is difficult to dra! a clear line among these stages. -t is also difficult to 4udge in !hich stage, the stage of its life cycle a particular product is at present. 3ecause of all this difficulties the concept has loosed its practical utility. 7ome people on the other end hold the vie! that the concept of the product life cycle is useful for the follo!ing reasons. / /its serves as a tool for forecasting the sales /it servers as a !arning to the firm that after reaching the saturation point the product !ill enter into the decline stage. /it is useful for the advance planning /the concept is useful in anticipating profit /the concept of lifecycle serves as an instrument of control 89&@(E;/5 @;-8E 'eaning of price. / it is difficult to give the meaning of the term price. Cenerally it is interpreted to mean )'oney value received against exchange of goods or services.+ (he term price indicates buyerAs intensity of desire to purchase the product. -n other !ords it may mean the price !hich the buyers are !illing to pay for the product. @ricing ob4ective. / 1. ;eturn on investment. / -n many of the firms this is the main ob4ective of pricing. (hey try to fix the price such that a definite return is obtained on the investment on different products as the overall profit gets the targeted rate of return on total investment.

2. 7tability. / 7ome of the leading firms !hich care for the long term interest of business aim at price stability. (heir attempt is not to decrease price during depression neither to increase it during inflation. 3. (o meet competition. / Every manufacturer has to adopt a price policy that helps him to meet the competition successfully. (his ob4ective compels a manufacturer not to charge a price higher than the competitorAs price. 4. (o maximi=e the profit. / @rice policy of the ma4ority firms aimed at maximi=ation of profit. >f course, they are not in the interest of public because generally profit maximi=ation is believed to be associated !ith exploitation. 3ut if profit maximi=ation is in the long run than it is beneficial to the public. 6&8(>;7 &66E8(-5C @;-8-5C. / (here are a number of factors !hich affect the pricing as follo!s. / 1. 8ost of product. / cost of product is an imp factor affecting price of a product. (he production cost includes expenses such as cost of ra! materials, salary, tax, depreciation, etc. a definite amount of risk must also be included in the production cost. (hus, the production cost must be taken properly. 2. 8ompetitors price. / (he nature of competition depends mainly on the nature of business. 7ome businesses are highly competitive !hile some are least competitive. Cenerally it may be said that it is not desirable to charge a higher than the competitor. :ell established firm can charge slightly higher than the competition. 3. 0uality of the product. / -f the product is of better <uality, higher price can be charged. 7ometimes, higher price can be obtain only by creating an impression on the buyers that product is of better <uality. 4. 7ervice. / 'any buyers give imp. to the sellers service as much as to the <uality of the product. -f the sellerAs services are satisfactory, the buyers are ready to pay a higher price. 5. Demand and supply. / @rice of any product is determined by the market forces of demand and supply. -f the demand for a product is excess of its supply, its producers can easily increase the price but if tits total demands is less than its total supply, its manufacturers !ill have to reduce its price. 'E(9>D7 >6 @;-8-5C. / 1'. -'@2 & company formulates a definite price policy in accordance !ith its ob4ectives. (he follo!ing are the basic pricing methods. / 1. 8ost oriented pricing 2. Demand oriented pricing 3. 8ompetition oriented pricing -f price is fixed on the basis of cost, it is called cost oriented pricing. -f the price is fixed on the basis of level of demand it is kno!n as demand oriented pricing. -f price is fixed on the basis of competitors prices, it is kno!n as competition oriented pricing. 1. 8>7( >;-E5(ED @;-8-5C. / a2 6ull cost pricing. / (his is a popular method of pricing in !hich price is determined over a fixed margin over cost of production is to!n. (he problem that comes under this method is !hether cost of production should be calculated including fixed cost or !ithout fixed cost. &nother problem is that !hat margin of profit must be added. (here is no satisfactory standard of profit margin that is to be added to the cost.