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Marketing Management Notes

By:
Harpreet Singh
Assistant Professor
Sun Institute of Management & Technology
Shahjahanpur
Unit 1
Definition of marketing:
According to American marketing Association, Marketing is an organizational function and
a set of processes for creating, communicating and delivering value to customers and foe
managing customer relationships in ways that benefit the organization and its stakeholders.

Nature of Marketing Management:


The nature of marketing is as follows:

I. Specialized Business Function: In early days, the selling function did not call for any
specialized skills as the sales could have been affected on production basis. But now the
business environment has undergone tremendous changes in social, economic, political,
and cultural aspects. Therefore the management of a firm has to develop a specialized
department with a view to absorbing new ideas, new approaches and new market
demands with the occurring and expected changes.
II. Socially desirable function: It requires constant interaction with various strata of
society. It is instrumental in manipulating the factors of production, distribution,
promotion and price.
III. Integrative function: It integrates and combines the other business functions like
production, finance, personnel, R&D etc with a view to accomplishing the organizational
goals.
IV. Reflects the business mission: Marketing reflects the business goals and aims of a firm
before the public and society.
V. Universal Function: It has a universality in the sense that it can be applied to both profit-
motive and non-profit motive organizations. A profit seeking business is essentially
dependent on marketing and institutions like hospital, schools, university also practice
marketing in popularizing the services offered by them
VI. Management Function: The business policies, strategies and programs related to
marketing are mostly of managerial functions. These are needed to be planned,
organized, directed, coordinated and controlled so as to achieve the marketing objectives
of the firm.

Scope of Marketing
The scope of marketing is as follows:

I. Goods: Physical good constitute the bulk of most countries production and marketing
effort. In developing nations, goods particularly food, commodities, clothing and housing
are the mainstay of the economy.
II. Services: Services include the work of airlines, hotel, car rentals, hospitals, schools, as
well as professional working within or for companies, such as accountants, lawyers,
engineers, doctors, software programmers and management consultants.
III. Experiences: By orchestrating several services and goods, one can create and stage
different market experience.
IV. Events: Marketers promote time-based events such as the Olympics, company
anniversaries, major trade shows, and sports events. There is a whole profession of event
planners who work out the details of an occasion and stage it come off perfectly.
V. Persons: Celebrity marketing has become a major business. Today every film star has an
agent, a personal manager and ties to a public relations agency. Cricketers, artists,
musicians, CEOs, Physicians, and other professionals are drawing help from celebrity
marketers.
VI. Places: Places- cities, states, regions, and whole nations- compete actively to attract
tourists, factories, company headquarters and new residents. Place marketers include
economic development specialists, real estate agents, commercial banks, local business
associations, and advertising and public relation agencies.
VII. Properties: Properties are tangible rights of ownership of either real property or financial
property. Properties are bought and sold, and this occasions a marketing effort. Real
estate agents work for property owners or seekers to sell or buy residential or commercial
real estate and arrange rental properties off-shore.
VIII. Organisations: Organisations are actively work to build a strong, favorable image in the
mind of their publics. We see corporate identity ads by companies seeking more public
recognition and acceptance.
IX. Information: Information can be produced and marketed as a product. This is essentially
what schools and universities produce and distribute at a price to parents, students and
communities.
X. Ideas: Every market offering includes a basic idea at its core. Products and services are
platforms for delivering some idea or benefit. Marketers search hard for the core need
they are trying to satisfy.

Importance of Marketing
The importance of marketing management is as discussed below:

Importance of Marketing to society: marketing can play a vital role for well being to society.
The importance of marketing to society may be summarized under following heads:
i. Delivery of standard of living to the society: Chief obligation of marketing is to
produce goods and services for the society according their needs and tastes at reasonable
price. Firms produce the goods and services according to the customers needs, create
demand for these goods and services, encourages customers to use them and thus
improves the standard of living of the society.
ii. Decrease 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.
iii. Increase in employment opportunities: Employment opportunities are directly affected
by the development of marketing. According to an estimate, about 40% of the labour
force in developed countries like U.S.A., Japan, Canada, Germany, France etc is engaged
in different activities of marketing such as marketing research, transport, communication,
storage, warehousing, publicity, wholesale and retail trade.
iv. Protection against business recession: Business slowdown causes unemployment,
slackness in productivity and great loss to the economy. Marketing helps in protecting
society against all the re-occurring problems.
v. Increase in National Income: Successful operation of marketing activities creates,
maintains and increases the demand for goods and services in the society. It results in the
increased level of production and utilization of services which in turn enhance the scope
of marketing.

Importance of marketing to the firm: Marketing plays an important role for the well being
of a firm. The importance of marketing to a business firm may be summarized under
following heads:

i. Helpful in business planning and decision making: Marketing is helpful in the


overall business planning and taking various decisions regarding production and other
activities in the business. A firm will produce what it can sell or as much quantity as
it can sell and not what and how much it can produce.
ii. Helpful in increasing profits: Every business is carried on with the profit motive.
Marketing helps in increasing the business profits by reducing the selling cost on the
one hand and by increasing the demand of the product through advertising and sales
promotion activities on the other hand
iii. Helpful in communication between firm and society: Business collects information
regarding consumers behavior and changes therein from time to time through
marketing. Marketing also provides information to the firm of the competitors, price
policies, production policies, advertising and sales promotion policies and distribution
policies. It helps the firm in framing its own policies or making necessary adjustments
therein accordingly.

Classification of Market
Markets have been classified on the basis of different approaches, in various ways as are
given below:

(1) On the basis of geographical area: There are four types of markets which are:
i. National Market: For certain types of commodities, a country may be
regarded as a market with the rapid speed of industrialization; it is called a
national market.
ii. International Market: world or international market comes up when buyers
and sellers of goods evolve trans-globally, i.e. involvement of buyers and
sellers beyond the boundaries of a nation
iii. Regional Market: A regional market covers a particular region of a country.
Such regional classification is found in a large country. For example India is
divided into four regions, east, west, north, and south for all practical
purposes.
iv. Local Market: A local market has a very limited area and exists generally for
daily necessary good perishable in nature like fish, vegetable etc.

(2) On the basis of Nature of Transaction: There are two types of markets:
i. Spot Market: In such a market, goods are exchanged and the physical delivery of goods
takes place immediately for all practical purposes.
ii. Future market: In such a market, contracts are made over the price for future delivery. The
dealing and settlement take place on different dates.

(3) Classification according to position of sellers: There are three types of


markets which are:
i. Primary Market: The agricultural or industrial goods are sold by the
producers to some middlemen like wholesalers. This is the primary market.
ii. Secondary market: In the secondary market, the middlemen like the
wholesalers sell the goods to another group of middlemen called the retailers.
iii. Terminal Market: Ultimately the goods are sold in the terminal market to the
actual consumers.
(4) On the basis of commodities/Goods : There are four types of market:
i. Produce Exchange Market: This type of market is found only in developed
industrial centres or cities. One market deals in one commodity only. For
Example: Wheat exchange market of Hapur and Cotton exchange market of
Mumbai.
ii. Manufactured Goods Market: Such type of market deals with manufactured
goods. For example: Leather goods, machinery etc.
iii. Bullion Market: This type of market deals with the purchase or sale of gold,
silver etc. Bullion markets of Mumbai, Kolkata, Kanpur etc are the example
of bullion market.
iv. Stock Market: It deals with the sale and purchase of equity shares,
debentures, bonds, mutual funds etc. This market is regulated through the
stock exchange such as NSE and BSE.

(5) On the basis of competition: There are two types of markets:


i. Perfect Market: A market is perfect market if there are large number of
sellers and buyers, the products of the sellers is identical, each buyer and
seller has perfect knowledge of the market etc.
ii. Imperfect market: When one or more of the above conditions are absent the
market is imperfect. Market can be further classified according to the degree
of imperfection. The worst situation is when there is a monopoly
(6) On the basis of volume of business transacted: There are three types of
markets:
i. Retail Market: In retail market goods are sold in small quantities directly to
the users or consumers in consumer market. The Consumer gets the goods for
consumption and not for profit-making.
ii. Wholesale market: In wholesale market, goods are supplied in bulk quantity
to dealers.
iii. Industrial Market: Here goods are bought in bulk quantity either for
Consuming or for reproducing process.

Marketing Functions
The functional approach of marketing consists of a number of activities called marketing
functions. These functions are:

i. Buying: it is the first step in the process of marketing. A manufacturer has to buy raw
materials for production. Buying involves transfer of ownership of goods from seller to
buyer.
ii. Assembling: Assembling means creation and maintenance of the stock of good,
purchased from different sources. In such a case the goods have to be collected and
assembled at one place.
iii. Selling: The primary objective of marketing is to sell the products at a profit. By selling,
the ownership is transferred to buyer.
iv. Transportation: products must be physically relocated to the locations where consumers
can buy them. This is a very important function. Transportation includes rail road, ship,
airplane, truck, and telecommunications for non-tangible products such as market
information.
v. Storage: products must be stored and protect ed until they are needed. This function is
especially important for perishable products such as fruits and vegetables.
vi. Distribution function: the function of distribution is to ensure that your product is easily
and effectively moved from the point of production to the target market, the kind of
transportation system to employ e.g. Road, rail, water or air, and ensures that the product
can be easily accessed by customers. You as a Marketer should also design the kind of
middlemen to engage in the channel of distribution, their incentives and motivations etc.
vii. Risk-Taking: insurance companies provide coverage to protect producers and marketers
from loss due to fire, theft, or natural disasters.
viii. Pricing function: you perform the function of pricing on your product offerings by
designing effective pricing systems base on your product stage and performance in the
product life cycle. Price is the actual value consumers perceive on your product, so you
as a marketer should ensure that your value of your product is not too high or too low to
that of your costumers.
ix. Market Information: information from around the world about market conditions,
weather, price movements, and political changes, can affect the marketing process.
Market information is provided by all forms of telecommunication, such as television, the
internet, and phone.
x. After sales-service: in a more complex and technical product, you as a marketer should
make provision in order to assist your customers after they have purchased your product.
In terms of machines or heavy equipment product that requires installation or
maintenance, most marketing organization renders such services like installing the
machine or maintaining it for stipulated periods on time for free or by a little service
charge.

Relevance of Marketing in Developing Economy


There are following major importance of marketing in developing countries given below?

1. Marketing Impact on people: There is no doubt all over the world that marketing
activities are affected by peoples beliefs, attitudes, lifestyles, consumption pattern,
purchase behavior, income etc.
2. Improved Quality of Life: The activities performed by marketers and others in the
economy of most countries, especially developed countries, help to identify and
satisfy consumers needs. Marketing improves the quality of life of people.
3. Improved Quality of Product: Firms and multinationals have now seen the need to
produce quality products. This is because they have really capitalized on quality
improvement in products to enhance the dynamic consumers quest for goods and
services.
4. Decrease in distribution cost: Second important liability of marketing is control the
cost of distribution. Through effective marketing the companies can reduce their
distribution costs to a great extent. Decrease in cost of distribution directly affects the
prices of products because the cost of distribution is an important part of the total
price of the product.
5. Contribution to Gross national product: Marketing is the pivot and life-wire of any
economy, because all other activities of an organization generates costs, and only
marketing activities bring in the much needed revenues. In this way marketing helps
in contribution of Gross national Product.
6. Acceleration of Economic Growth: Marketing encourages consumption by
motivating people in a country to patronize goods produced to meet their identified
needs. When people buy goods that are produced in a country, there is the tendency
that producers will equally increase production to meet-up with future demand.
7. Increasing employment opportunities: Marketing comprises of advertising, sales,
distribution, branding and many more activities. So the development of marketing
automatically gives rise to a need for people to work in several areas of marketing.
Thus the employment opportunities are born. Also successful operation marketing
activities requires the services of different enterprises and organization such as
wholesalers, retailers, transportation, storage, finance, insurance and advertising.
These services provide employment to a number of people.
8. Industrial and Entrepreneurial Growth: Many developing nations in their quest for
industrial growth have imported sophisticated intensive technology from the West.
This has put an enormous burden on the nation's scarce foreign exchange. In this
process the technological and capital needs of small industries have been largely
neglected. In this respect developing nations may take lesson from both Japan and the
United States where small businesses constitute a large part of their industry.
Marketing vs. Selling

Basis of Selling Marketing


difference
Emphasis Emphasis on product. Emphasis on consumer needs and wants.
Approach Company manufactures the product first Company first determines customers needs
and then decide to sell it and wants and then decides on how to deliver a
product to satisfy these wants.
Orientation Management is sales-volume oriented Management is profit- oriented
planning Planning is shot term oriented, in terms of Planning is long-term oriented, in terms of new
todays products and markets products, tomorrows markets, and future
growth
Need priority Stresses needs of a seller Stresses needs and wants of buyers.
Philosophy Views business as a goods producing Views business as a consumer satisfying
process process
Technology Emphasis on staying with existing Emphasis on innovation in every sphere, on
technology and reducing costs. providing better value to the customers by
adopting a superior technology.
Work Different departments work as highly All departments of a business operate in an
delegation separate watertight compartments. integrated manner, the sole purpose being
generation of consumer satisfaction.
Price Cost determines price. Consumers determine price, price determines
determination cost.
Customers Selling views customers as the last link in Marketing views the customers as the very
business. beginning of a business.

Marketing management
According to Philip Kotler: Marketing management is the process of planning and executing the
conception, pricing and promotion and distribution of goods, services and ideas to create
exchanges with target groups that satisfy customer and organizational objectives.

Objectives of marketing management


1. Creating New customers: The marketing manager should take all necessary steps such
as advertisement, sales promotion activities etc. to attract new customers for buying the
firms product.
2. Satisfying the needs of customers: The marketing manager should study the customers
demand before offering them any product or service as the modern marketing begins and
end with the customers.
3. Enhancing the profitability of the business: Since the marketing department is the only
department which generates the revenue for the firm. Thus marketing management aims
at enhancing the profitability of the firm through the sale of products.
4. Raising the standard of living of the people: Marketing facilitates the production of a
wide variety of goods and services for satisfying customers differentiated needs.
Therefore, it helps to raise the standard of living of people.
5. Determining the marketing mix: Here marketing management aims at proper planning
of marketing mix to meet the requirements of different kinds of customers. Marketing
mix refers to the combination of various elements such as product, price, place and
promotion.

Marketing management Process


Steps in marketing management process are as follows:
1. Setting Marketing Objectives: The process of marketing management starts
with the activity of setting objectives. The organsational mission provides the
priorities for scanning the environment and finding out the opportunities.
2. Analyzing marketing opportunities: This involves analysis of opportunities in
the light of companys strength and weakness both internal and external. The
task may be to analyze long-run opportunities or short-run or even medium term.
3. Researching and Selecting target market: Now the firm is ready to research
the selected markets. It needs to know how to measure attractiveness of any given
market. Marketing people must understand the major technique for measuring
market potential and forecasting future demand.
4. Designing marketing Strategies: The marketing strategy spells out the game
plan for attaining the businesss objectives or products/markets objectives. The
company has also to decide how to divide the total marketing budget among the
various tools of the marketing mix.
5. Planning Marketing Programs: It is not enough to formulate only the broad
strategies by which the business expects to achieve its marketing objectives but
also plan the supporting marketing mix programs. Without such programs even
the best conceived marketing strategies may fail.
6. Organizing, implementing and controlling marketing effort: The final stage in
the marketing management process is organizing the marketing resources and
implanting and controlling the marketing plan. The company is required to design
a marketing organization that will be able to degenerate the marketing plan upto
work i.e. implementing its effort.
Marketing Concepts/Philosophies/Orientations
There are five competing concepts in marketing management which are:

1. Production Concept: Production concept is a concept where goods are produced without
taking into consideration the choices or tastes of the consumers. It is one of the earliest
marketing concepts where goods were just produced on the belief that they will be sold
because consumers need them.
The Salient Features of production concept are:
i. This concept is based on the belief that consumers needs can be satisfied with
reasonable quality and reasonably priced product.
ii. There is fair amount of competition and competing products are sold with
complete knowledge of the products available in the market.
iii. The manufacturer should maintain availability of sufficient quantity of products
and consistency in quality.
2. Product Concept: The product concept is management philosophy that consumers
generally prefer those products in the market which offer the best in terms of quality and
price and essentially all organizations in marketing business try to produce and provide
sustainable improved quality products.

The Salient features of product concept are:

i. Consumers generally look and prefer quality of the product.


ii. Consumers compare quality of products to competing product or brand on offer.
iii. Consumers generally buy products to meet their overall needs and not specific
needs.
iv. Consumers are aware of the product quality differences between competing
brands and they choose the quality which comes closest to their preferences and
their affordable price.
3. Selling Concept: Many organisations follow the selling concept, which holds that
consumers will not buy enough of the organizations products unless it undertakes a large
scale selling and promotion effort. The concept is typically practiced with unsought
goods- those that buyers do not normally think of buying, such as Encyclopedias or
Insurance.
The Selling concept is based on the following premises:
i. Consumers do not waste money in buying things which are not essential or
buying excess quantities then required.
ii. Consumers prefer to be motivated to buy things by use of selling efforts by
organisations.
iii. Consumers appreciate good selling techniques, efforts and good salesmanship.
Aggressive ill behaved salesmanship is not useful.
4. Modern Marketing Concept: Modern concept of marketing is a customer oriented
concept. This concept is based on the assumption that a business and industrial
enterprises can achieve its object of maximizing the profits only when it considers the
needs and wants of its consumers and make efforts for the satisfaction of these needs and
wants. Therefore, according to this concept, marketing starts with the discovery of needs
and wants of customers and ends with the satisfaction of these needs and wants.
The main premises on which the modern marketing concept is based are:
i. The customers needs and wants are varied and many. These must be understood
and suitable products and services offered to match the requirement.
ii. The market consists of different segments and these segments can be grouped
according to the customers characteristics.
iii. The Consumers in any market may not buy a product if they feel that it will not
serve the purpose of solving their needs and wants.
iv. The success of marketing concept lies in proper analysis of market research.

Factors influencing Modern Marketing Concept:

i. Population growth
ii. Increasing Households
iii. Disposal income
iv. Surplus income
v. Technological development
vi. Mass Communication media
vii. Credit Purchases

5. Societal Marketing Concepts: The societal marketing is an enlightened marketing


concept that holds that a company should make good marketing decisions by considering
consumers wants, the companys requirements, and societys long-term interests. It is
closely linked with the principles of corporate social responsibility and of sustainable
development.
The societal marketing concept holds that the organisation should determine the needs,
wants and interests of target markets.
Unit 2
Concept of Marketing Segmentation
The Concept of market segment is based on the fact that the markets of commodities are not
homogenous but they are heterogeneous. Market represents a group of customers having
common characteristics but two customers are never common in their nature, habits, hobbies,
Income and purchasing techniques. They differ in their behavior and buying decisions. On the
basis of these characteristics, customers having similar qualities are grouped in segments.

Market Segmentation means breaking-down the total market into self-contained and relatively
homogeneous sub-groups of customers, each possessing its own special requirements and
characteristics.

According to Philip Kotler, Market segmentation is sub-dividing a market into distinct and
homogeneous subgroups of customers, where any group can conceivably be selected as a target
market to be met with distinct marketing mix.

Need for Segmenting Markets


There are several important reasons why businesses should attempt their markets which are :

1. Better Matching of Customer needs: Customer needs differ. Creating separate offers
for each segment makes sense and provides customers with a better solution.
2. Enhanced Profits for Business: Customers have different disposable income. They are,
therefore, different in how sensitive they are to price. By segmenting markets, businesses
can raise average prices and subsequently enhance profits.
3. Better Opportunities for growth: Market segmentation can build sales.
4. Retain more customers: Customer circumstances change, for example they grow older,
form families, change jobs or get promoted, change their buying patterns. By marketing
products that appeal to customers at different stages of their life, a business can retain
customers who might otherwise switch to competing products and brands.
5. Target marketing Communications: Businesses need to deliver their marketing
message to a relevant customer audience. If the target market is too broad, there is strong
risk that key customers are missed and communication cost is too high.
6. Gain share of the Market Segment: Unless a business has a strong or leading share of a
market, it is likely to be maximizing its profitability. Minor brands suffer from lack of
scale economies in production and marketing, pressures from distributers and limited
space on the shelves.
Basis of Segmentation
Consumer market can be segmented into various segments by using different basis. Basis of
consumer market segmentation can be broadly divided into four broad categories which are as
follows:

1. Geographical Segmentation: Geographical segmentation refers to segmenting market


by region of a country or the world, market size, market density, or climate. Market
density means the number of people within a unit of land, such as a census tract. Climate
is commonly used for geographic segmentation because of its dramatic impact on
residents needs and purchasing behavior. Snow- blowers, water and snow skis clothing
and air conditioning and heating systems are products with varying appeal, depending on
climate.
2. Demographic Segmentation: The next commonly used basis for market segmentation is
the demographic characteristics of the market. In demographic segmentation, the market
is divided into groups on the basis of variable such as age, family size, family life-cycle,
gender, income, occupation. Education, religion, race, generation, nationality, and social
class. Demographic variables are the most popular bases for distinguishing customer
groups. Some of the demographic variables are:
i. Age and life cycle stage: Consumers wants and liabilities change with age. On
the basis of age, a market can be divided into four parts viz; children, young,
adult, and old.
ii. Gender: Males and females have distinct survival needs. The gender
segmentation is one of the most common forms of segmentation as around the
globe man and woman have always been vocal about their separate needs.
iii. Marital Status: Life style of a person depends on whether he is married or not.
An unmarried bachelor prefers to enjoy life and his purchase behavior will show
more of food and entertainment and less of furniture or household products. But a
married person purchase household products more.
iv. Income: Income varies along with the population in any country. In India it is as
diverse as from few hundred rupees a month to millions a month. Customers will
behave differently in terms of wants as per their income.
v. Social class: It has a strong influence on preference in cars, clothing, home
furnishing, reading habits etc. Many companies design products and services for
specific social classes.
vi. Occupation: Various occupations can influence the buying behavior. People in
sales and people in academic training will have different purchase behavior.
vii. Educational Level: The academic standard segments people with same income,
i.e. with similar ability to buy into their different likelihood to buy.
viii. Religion: Religious rituals, traditions and cultures also differentiate and segment
the market.
3. Psychographic Segmentation: Often it has seen that two consumers with the same
demographic characteristics may act in an entirely different manner. Even though the two
may be of the same age, from the same profession, with similar education and income,
each of the customers may have a different attitude towards risk-taking and new product
and stores. This is because of the following psychographic variables:
i. Life Styles
ii. Personality
iii. Values
iv. Beliefs
4. Behavioral Segmentation: In behavioral segmentation, buyers are divided into groups
on the basis of their knowledge, attitude, use, or response to a product. Many marketers
believe those behavioral variables- occasions, benefits, user status, usage rate, loyalty
status, and buyers readiness stages starting points for consulting market segments.
Buyers readiness or preparedness is one of the important variables used for segmenting
the market. There are unaware buyers, people who are aware but not interested, people
who are interested and are desirous to buy and lastly, those who will positively buy the
product.
The major behavioral variables used by marketers to segment the market are:
i. Occasions- Regular or Special
ii. Benefits- Quality, Service, Economy and Specially
iii. User status- Non-user, Potential user, First time user, Regular user, Ex-user
iv. Quantity consumed- Light, Medium, Heavy
v. Buyer readiness stage- Unaware, Aware, Informed, Interested, Desired, Intended
to buy.
vi. Loyalty Status- Hard core loyals, Soft core loyals, Split loyals, Switchers.
vii. Attitude- Enthusiastic, Positive, Indifferent, Negative, Hostile.

Factors Influencing Segmentation


The major factors which influence segmentation are as follows:

1. Size, Objectives and resources of the company: The size of the company and the resources
it has available will dictate to a great extent how it segments its market. For Example, the
Ford Motor Co. will want to sell the world and so segment on a global scale whilst the local
hairdresser will service a very small catchment area and segment accordingly.
2. Type of product and market: Some companies have a simple product portfolio that lends
itself to easy segmentation, e.g. bread, potatoes, petrol, industrial cleaning products, while
others have more complex product mix making it much harder.
3. Competitive structure of the industry: In the main, the more competitive the market the
more each organisation will look towards differentiating their product so as to gain
competitive advantage.
4. Nature of the market: nature of the market also influences the segmentation decision.
Segmentation strategies differ according to market such as segmentation strategies differ in
competitive market from non- competitive market.
5. Life cycle stage: Life cycle stage of a product also affects the segmentation decisions.
6. Competitive Strategy of Firm: Competitive strategy of a firm also has an influence on
segmentation. Organisations that choose to segment the consumers and focus on target
markets are more successful in highly competitive environments.

Importance of Market Segmentation


The key importance of market segmentation can be explained in following ways:

1. Adjustment of product and marketing appeals: Market segmentation presents an


opportunity to understand the nature of the market. The seller can adjust his thrust to
attract the maximum number of customers by various publicity media and appeals.
2. Better position to spot marketing opportunities: In the region where response of the
customers is poor, the strategy of approach can be readjusted accordingly to push the
sales on the basis of marketing research.
3. Allocation marketing budget: It is on the basis of market segmentation that marketing
budget is adjusted for a particular region or locality. In the place where the sales
opportunities are limited, it is of no use of allocating a huge budget there.
4. Fighting Competition effectively: The segmentation helps the producers to face the
competition of competitors effectively by making a deep study of the products, policies,
and strategies of competitors in all the segments.
5. Undertaking and meeting the needs of consumers: It helps the marketer to fully
understand the needs, behavior, habits, tastes and expectations of the consumers of
different segments so that precise and clear decisions can be taken to harness marketing
opportunities.
6. Minimizing aggregation risk: By dividing the market and designing specific marketing
mix to each segment, segmentation reduces the risk of aggregation, which is defined as
the risk of not being able to satisfy customer needs with one marketing mix to all
segments.
7. Targeted marketing: Targeted marketing plans for particular segments allow to
individually approach customer groups that otherwise would look out for specialized
niche players.
8. Filing gaps: Segmentation can help in finding-out the unfilled gaps in a market, which
can then be satisfied through unique product or promotional offerings.
9. Higher market shares: In contrast to an undifferentiated marketing strategy,
segmentation supports the development of niche strategies. Thus, marketing activities can
be targeted at highly attractive market segments in the beginning. By segmenting market,
organisations have better chances to increase their market shares in the overall market.
10. Better utilization of marketing resources: More resources can allocated to segments in
which there are more possibilities of selling the products and fewer resources may be
allocated to the segments in which there are fewer possibilities.

Market Targeting
Market targeting is a broad term that is used to describe the process of identifying groups of
consumers who are highly likely to purchase a specific good or service. There are several
different approaches to this process, with some of them allowing for a broad cultivation of a
market, while others are focused more on identifying markets that are small but somewhat
lucrative. Businesses of all size engage are some form of this marketing essential as part of their
efforts to secure and maintain customers.

Market targeting differs from target marketing in that a product is already established and
decisions must be made as to which market is most appropriate for it.

In target marketing, a company finds a market it wants to serve and then develops a product
appropriate for that market.

Market targeting requires carefully understanding consumer wants and needs, as well as having a
good grasp on how a given product or service can meet those consumer desires. Market
segmentation and targeting takes place with businesses ranging from local bookstores all the way
through to international conglomerates that have a worldwide consumer base.

Basis for Identifying Target Market


1. Market Attractiveness: It is important to determine whether it would be profitable to
enter a market segment because a company has to expend huge amount of resources in
developing a particular marketing mix for the prospective target segment. Following
factors should be evaluated in finding-out whether a particular market segment is worth
pursuing:
i. Market Factors: Analysis of customers and industry dynamics are essential
while assessing the attractiveness of the market segment. Additionally, the
segment size and growth rate indicate the long-term feasibility of serving the
segment.
a. Segment size
b. Segment growth rate
c. Price Sensitivity
d. Bargaining power of customers
e. Bargaining power of suppliers
f. Barriers to market segment entry
g. Barriers to market segment exit
ii. Competitive factors: Competition in a segment determines the extent of
resistance faced by a company while entering the market. Well entrenched players
would have erected strong barriers to entry.
a. Nature of Competition
b. New Entrants
c. Competitive Differentiation
iii. Political, Social and Environmental Factors: The external environment
presents opportunities and threats for a firm. Changes in the regulatory
framework, economic policies, social values and lifestyles etc. can alter the
attractiveness of market segment.
a. Political Issue.
b. Social Trends.
c. Environmental Issues.
2. Firms capability to serve segments: A market segment may be attractive, but it may be
beyond the resources and competencies of the company to serve it profitably. Howsoever
attractive s segment may look to be, a company should not venture to serve it unless it is
certain that it has the required resources and competencies.
a. Exploitable marketing assets
b. Cost advantage
c. Technological Edge
d. Managerial Capabilities and Commitment

Types or Strategies of Marketing: After evaluating different segments, the company must
now decide which and how many segments to serve. This is the problem of target market
selection. A target market consists of a set of buyers who share common needs or
characteristics that the company decides to serve. Alternative segments targeting strategies or
types can be classified into two parts:

1. Limited coverage market targeting: When only one or few segments are selected as
market targets it is called limited coverage market segmentation. This strategy requires
fewer resources and therefore effective for small companies or in the introduction stage
of a company trying to compete against the giants of the industry.

Limited coverage market targeting can take any of the following forms:

a. Single segment concentration: Company may select a single segment. Through


concentrated marketing, the firm gains a strong knowledge of the segments needs and
achieve a strong. Furthermore, the firm enjoys operating economies through specializing
its production, distribution and promotion. If it captures segment leadership, the firm can
earn a high return on its investment.
P1

P2

P3

b. Selective Specialization: Here the firm selects a number of segments, each objectively
attractive and appropriate. There may be little or no synergy among the segments but
each segment promises to be a money-maker. This multi-segment coverage strategy has
the advantage of diversifying the firms risk.

c. Product Specialization: Here the firm specializes in making a certain product that it
sells to several segments. An example would be microscope manufacturer that sells
microscopes to university laboratories, govt. laboratories and commercial laboratories.

d. Market Specialization: Here the firm concentrates on serving many needs of a popular
customer group. An example would be a firm that sells assortment of products only to
university labs, including microscopes, Bunsen burners and chemical flasks.
Full Market Coverage Targeting
Here a firm attempts to serve all customer groups with all the products they might need.
Only very large firms can undertake a full market coverage strategy. Examples include
IBM (Computer Market) General Motors (Vehicle market) and coca-cola (drink market).

1. Undifferentiated Marketing: In undifferentiated marketing, the firm ignores


market-segment differences and goes after the whole market with one market offer. It
focuses on a basic buyer need rather than on difference among buyers. it designs a
product and a marketing program that will appeal to broadest number of buyers. It
uses the same communication, pricing and distribution strategies. The classical
example is soft drink firms like Coke and Pepsi, who retain the same flavor,
advertising, packaging etc across segments in different geographical areas.
Undifferentiated marketing is also known as mass marketing. In this strategy, an
organisation treats its total market as a single market.
2. Differentiated Marketing: In differentiated marketing, the firm operates in several
market segments and designs different programs for each segment. General Motors
does this when it says that it produces a car for every purse, purpose and
personality
This strategy is also known as selective marketing. This is just the opposite of the
above-mentioned strategy. Here the firm differentiates its products to suit different
segment needs and expectations. With this approach, the business will identify two or
more specific customers groups that are highly likely to become loyal customers.
For Example: An airline that differentiates its products in three classes- first class,
business class, and economy class. Each of these classes is targeted at a specific
segment whose needs are different from the other.
3. Concentrated Marketing: A third market-coverage strategy, concentrated
marketing, is especially appealing when company resources are limited. Instead of
going after a small share of a large market, the firm goes after a large share of one or
a few submarkets. Recycled paper Products concentrated on the market for alternative
greeting cards. This is also known as Focus marketing. This is a combination of
standardization and differentiation.

Positioning
Concept of Positioning: Positioning is a platform for the product or brand. It
facilitates the brand to get through to the target consumer. Positioning is the act of fixing
the locus of the product offer in the demands of the target consumers. In positioning, the
firm decides how and around what parameters, the product offer has to be placed before
the target consumers.
According to Kotler, Positioning is the act of designing the companys offering and
image to occupy a distinctive place in the target markets mind.

Importance of Positioning
1. Putting product in pre-determined orbit: positioning is the specific task of taking the
product to a chosen orbit in the minds of the target consumers. If the positioning decision
is faulty, the product suffers heavy losses. It may take a long time and enormous effort to
retrieve a wrongly positioned product.
2. Connects Product offerings with target market: While target market selection clarifies
for whom the product is intended, and marketing mix shows the way in which the 4Ps are
to be aligned in the offer to the target market, positioning acts as the bridge linking the
product offer with the target market.
3. Product cannot be Everything to Everyone: The need for positioning arises out of
the fact that a product cannot be everything to everyone and has to be something to
some segment. Normally, some unique feature of the product, some special needs of the
market or some noticeable gap in competing offers is picked-up and the product is
positioned around that feature/or a combination of features for a particular target
audience.
4. Brand seeks a locus in space through positioning: In positioning, the consumers mind
is viewed as a geometric perceptual space, with different product categories and brands
occupying certain positions.

Factors affecting Brand Positioning


1. Brand Attributes: What the brand delivers through features and benefits to consumers?
2. Consumer Expectations: What consumers expect to receive from the brand?
3. Competitor Attributes: What the other brand in the market offer through features and
benefits to consumers?
4. Price: Price is an easily quantifiable factor against competitors.
5. Consumer Perceptions: The perceived quality and value of your brand in consumers
mind.

Process of Positioning
The process of positioning takes the form of following stages:

1. Competitors Identification: This step requires broad thinking. Competitors may not be
just those, whose products and/or brands fall into our product class or with which we
compete directly.
2. Determining how competitors are perceived and evaluated: Once we define the
competitors, we must determine how they are perceived by consumers. Which attributes
are important to customers in evaluating a product and/or brand? Consumers are asked to
take part in focus groups and/or complete surveys indicating which attributes are
considered important to them in their purchase decisions.
3. Determining the Competitors position: We must determine how each competitor is
positioned with respect to each attributes. This will also show how the competitors are
positioned relative to each other. Consumer research is required to make this assessment.
4. Analyzing customers preferences: Segmentation distinguishes among groups of
consumers, including life styles; purchase motivations, demographic differences and so
on. One way to determine these differences is to consider the ideal brand or product,
defined as the object the consumer would prefer over all others, including objects that can
be imagined but do not exist.
5. Making the positioning decision: After going through the first four steps, the final
positioning decision is to be made. Such a decision is not always clear and well defined.
However, conducting research may provide only limited input; in that case, the marketing
manager must make some subjective judgment.
6. Monitoring the position: once a position has been established, it is necessary to monitor
how well this position is being maintained in the market place. Changes in consumers
perception can be determined with any slippage immediately noted and reacted to. At the
same time, the impact of competitors can be determined.

Requisites for Successful Positioning


1. Relevance: Positions that do not focus on benefits that are important to people or reflect
the character of the product will fail. Often in their search for differentiation, marketers
seize upon some attributes in their product which is different but in reality is of little
concern to customers.
2. Clarity: A position should be easy to communicate and quick to comprehend. Difficulty
in either suggests that a position is too fuzzy to be of value to the brand.
3. Distinctiveness: People have few needs that are unfulfilled, and they have many choices
to fill the needs they have. If a brands position lacks distinctiveness it will be forced to
compete on the bases of price or promotion.
4. Coherence: Speak with one voice through all the elements of the market mix to create a
strong position. If a brand positioned as premium quality and price appears in an end-
aisle sale display, its quality image will suffer.
5. Commitment: often people will get nervous when strong position threatens to ignore or
even alienate some segment of the population as a price of clearly communicating desired
target. Once a position is adopted, it takes commitment to see it through, in the face of
criticism and pot shots.
6. Patience: Crest has dominated its market for over thirty years. When it was first
introduced, positioned as a cavity fighter its share never rose above 13% for three years.
The ADA approval was the key to launching the brand to over 40% of the market. Had
P&G lost patience after two or three years, someone else would be enjoying the profits of
the powerful brand position.
7. Courage: It goes without saying that adopting a strong brand position requires bravery. It
is much easier to defend an appeal to everyone with rather generic sales pitch. It must be
believed that the position makes strategic sense for this brand and then stick to your guns.

Errors in Positioning
Positioning is undeniably a tough job, and if a marketer attempts to position a product
without careful planning, it becomes very difficult to sustain the product in the market and
derive a competitive advantage. There are certain errors that might creep up while
positioning a product:

1. Obvious aspects of the product features: Quite often, it happens that a product is
positioned on the basis of the obvious aspects of the product features; this become too
predictable and the charm in positioning is lost. However, many times, the obvious
aspects have to be used for positioning.
2. Living in the Future: Most companies try to live in future rather than position their
products based on their current capabilities.
3. Under Positioning: This occurs when buyers know much less about the brand or do not
know anything special about the brand. Marketers often commit the mistake of diluting
the positioning strategy to make it more attractive. Product should be positioned with
powerful ideas and communicated as they are.
4. Over Positioning: Just as under positioning of a brand is a possibility, there is also scope
for over positioning a brand. In this situation, buyers may have a very narrow image of
the companys brand. Over positioning is usually seen in cases where the firm initially
promotes its brand as a premium brand.
Example: Customers perceive the Tanishq jewellery brand to be very high priced, while
the reality is quite the opposite as Tanishq offers jewellery that suit every budget also.
5. Short-term gains: Companies often position their products such that it helps them
achieve short-term sales and profits. Positioning has to be done keeping in mind long-
term gains in the market and short-term gains.
6. Confused positioning: Another error is confused positioning. Marketers should not
confuse consumers by meddling too much with the positioning strategies of their
established brands.
7. Doubtful positioning: Sometimes companies try to create brand awareness among
customers even before positioning the brand clearly in the market. This type of
positioning generates a negative attitude towards the brand.
8. Positioning on the wrong attributes: Companies quite often do not realize what
customers expect from the product. As a result, they position the product based on the
wrong attributes or on attributes that are of no interest to the customers.

Repositioning
Repositioning involves changing the identity of a brand and product, relative to the identity of
competing products, in the collective minds of the target market. Repositioning is changing the
positioning of the brands. Sometimes certain positioning does not work for the brand and hence
the company tries to re-position it

Example: Cadburys Dairy Milk is a classical example of a re-positioning exercise where earlier
the chocolate was targeted at children. When the market got saturated it started targeting youth
with the Asli Swadh Zindgi ka campaign.

Reasons of Brand Repositioning


Brand repositioning exercise may be due to the following reasons:

1. Increasing market penetration: This happens when the brand wants to penetrate into
the market. That is, either it wants to increase its occasion of use or get new customers to
the brand.
Example: Moov a knee sprain healer was repositioned as a backache healing balm to
increase the occasion of use. The brand was repositioned for more purposes to increase
its uses and hence its sales.
2. Increasing relevance to customers: Sometimes, a product is launched with some initial
positioning. However, with time, the company realizes that the brand is not working may
be because its positioning is not right in the consumers mind. Alto is a classic example.
3. Making brand contemporary: As times change, brands have to change as well and so
has the position of the brand. Brands have repositioned themselves when they have been
termed old- fashioned or when they have tried to move with changing markets.
4. Change in market or market conditions: Sometimes when the market changes or the
company enters a new market, it has to reposition itself. Readers Digest too repositioned
itself from a non-Indian magazine to a general interest family magazine customized for
the needs of Indians.
5. Other reasons to reposition brand: Brand repositioning in necessary when one or more
of the following conditions exist:
a. The brand has a bad, confusing or non-existent image.
b. The primary benefit the brand owns has evolved from differentiating benefit to a
cost of entry benefit.
c. The organisation is significantly altering its strategic direction.
d. A new competitor with a superior value proposition enters the industry.
e. The organisation is entering new businesses and the current positioning is no longer
appropriate.
f. Competition has usurped the brands position or rendered it ineffectual.

Types of Repositioning Strategies in Indian marketing


There are seven kinds of repositioning strategies which have been adopted by various companies
in Indian marketing situation; these are as follows:

1. Value Oriented Repositioning: This strategy is useful in two situations:


a. When a brand offering values is competing against the unorganized sector.
b. When a brand has strongly established a value proposition.

Example: Reynolds is a brand of ball pen which was launched in India during the
eighties. It was nearly double the price of the other competitive offerings in the market.
These offering which were in the unorganized sector were of poor quality. Reynolds used
the skimming the price strategy and became a successful brand.

2. Segment oriented repositioning: This strategy is useful when a brand wants to change
the segment to which it is currently catering some.
3. Celebrity oriented brand enhancement repositioning: This strategy is useful when
brand uses imaginary (can even be a celebrity) to strengthen its association and makes an
attempt to enter new segment based on the strength of the same imaginary. This celebrity
had a charismatic appeal and would have been a good fit for the brand which is targeting
the rural Indian population.
4. Symbolism oriented repositioning: This strategy is useful when a brand with a strongly
entrenched functional image wants to expand its market using a symbolic positioning
without losing its earlier association.
5. Up market technology oriented repositioning: This kind of strategy is useful when a
down market brand attempts an upward stretch apart from continuing to serve its current
consumer segments.
6. Niche oriented market: This strategy is useful when a niche brand is interested in
expanding its consumer base after it has created brand awareness.
7. Change of image oriented repositioning: It is worthwhile to invest gate the impact of
marketing mix elements on positioning strategies. An interesting aspects is that the
environment can also influence the positioning of a brand along with its marketing mix
strategies.
Unit 3
Marketing Mix
The term marketing mix was first coined by the American Marketing expert James
Culliton. The description of the marketing Mix as four Ps was given by the well-
known American Professor Jerome McCarthy.

Four Ps of Marketing Mix


1. Product: The product itself is the first element. Products satisfy consumer needs. The
management must decide the products to be produced by knowing the needs of the
consumers. The product mix combines the physical product, product services, brand and
package.
2. Price: The second element to affect the volume of sales is the price. The marked or
announced amount of money asked from a buyer is known as basic price-volume placed
on a product. There may be basic price alterations may be made in the form of discount,
allowances etc. Apart from this, the term of credit, liberal dealings will also boost sales.
3. Place: The third element of the marketing mix is place. Place refers to having the right
product, in the right location, at the right time to be purchased by consumers. This proper
placement of products is done through middle people called the channel of distribution.
4. Promotion: Promotion is the persuasive communication about the products by the
manufacturer to the public. Firms must undertake the promotion work like advertising,
publicity, personal selling etc., which are the major activities. Thus the public may be
informed of the product and be persuaded by the firms.

Utility of Marketing Mix


The utility of marketing mix can be understood as under:

1. Attracting Customers: The 4Ps are the tools of the marketing manager and manager has
to use these tools for attracting customers, facing marketing competition, and for
promoting sales.
2. 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 consumer is interested. With limited components at its disposal, it attempts to
gain the best possible results.
3. Balanced approach: Marketing mix is an effective tool for solving the problems. It
keeps the marketing manager to be on the right track. It reminds him, on the one hand
manager should be careful to consider the market forces and on the other hand think of a
total program instead of relying on any particular aspect.
4. Significance of marketing mix lies in the mix or blend: The components of marketing
mix are individually important but their significance lies in the mix or blend. It is
necessary to combine them properly.
5. Applicable to business as well as Non-Business organizations: The concept of
marketing mix is applicable to business as well as non-business organisations such as
clubs, colleges, associations etc.

Factors affecting Marketing Mix


Factors affecting marketing mix can be divided into the category of controllable and
uncontrollable factors as given below:

1. Controllable factors: There are certain factors, which can be controlled by the
marketing management. Some of them are as follows:
a. Product Planning: The product of the company must have the quality of satisfying
the needs of the customers and it should plan and develop its products accordingly.
b. Brand Policy: It includes decisions regarding trademarks and brand name because it
influences the sale volume of the product of the company. He may decide one brand
name for the different products of the company or different brand may be used for
different qualities of the product.
c. Packaging Policy: Packaging also has an important effect on sales. The marketing
manager is to decide whether product should be sold loose or packs. If he decides to
sell the product in packs then size, quality and getup of packing should be considered
very carefully.
d. Personal selling: Personal selling is good to increase the sale and the same time to
know the consumers needs and desires.
e. Special sales promotion policy: Apart from personal selling and general
advertisement policy, the business should provide for the special sales promotion
campaigns as a part of its sales promotion policy to increase its sales.
f. Physical distribution: All the above variables create demand but creation of demand
is not sufficient. The marketing manager must plan to supply the product in
accordance with the needs of the public of the different markets.
g. Market Research: Market research is a system by which one can analyze the market
conditions. It helps a marketer in formulating the policies by which the product
reaches in an efficient way in the hands of the consumers.
2. Uncontrollable Factors: Uncontrollable factors are also known as external factors. These
factors can be classified under four heads:
a. Consumers Buying Behavior: Consumers buying behavior is affected by buying
habits, purchasing power, motivation in buying, living standard, social environment,
technological changes.
b. Competition: marketing manager should also study the competitive conditions in the
market. For this purpose, he should take into account basis of competition, the
number of competitors, the viewpoint towards the consumers, quality and
characteristics of competitors product.
c. Pattern of Distribution system: The marketing manager should consider the various
forms of distribution system and the nature and behavior of distributors before
deciding upon the marketing mix of his company.
d. Government Control: The marketing manager should consider the rules and
regulations of the government in respect of products, pricing, competitive practices,
advertising etc.

Product
Product is anything that can be offered to a market that might satisfy a want or need.

According to Philip Kotler, A product is a bundle of physical services and symbolic particular
expected to yield satisfactions or benefits to the buyers.

Characteristics of Product
1. Tangibility: It should be perceptible by the touch. An item to be called a product should
have a tangibility character- touch, seen of feeling.
2. Intangible Attributes: The product may be intangible in the form of services, for
example, banking, insurance services, repairing etc.
3. Associated Attributes: Such attributes may be brand, package, warranty etc. For
example Hindustan Levers Vanaspati Ghee has a brand name Dalda and with its
package it can be identified by the consumers.
4. Exchange value: Whether the product is tangible or intangible, it should have exchange
value and must be capable of being exchanged between seller and buyer for mutually
agreed prices.
5. Consumer Satisfaction: Products should have the ability to offer value satisfaction to
the consumer. The satisfaction must be both real and psychological.

Types of Product
There are different approaches and parameters to differentiate products which are as follows:

1. Based on the Nature: based on nature, product can be classified into ten types. These
are
a. Goods: These are intangible performances where the consumption and production point
is the same.
b. Ideas: Every market offering includes the basic idea at its core. For example,
Consultancy firm, Ad agency.
c. Experiences: By orchestrating several services and goods, one can create stage and
market experiences. For example: Science City, Aquatica Theme park and water world.
d. Events: Marketers promote time based events such as Olympics or Movie Awards.
e. Persons: Celebrity marketing has become a major business .Different film stars and
sportsperson have their own publicity and endorsement agents.
f. Places: Places can be marketed to attract tourist industries etc. For example: Kerala-
Gods Own Country Campaign.
g. Properties: Properties are intangible rights of ownership of either real property of
financial property such as Maruti or TCS IPO campaign.
h. Organisations: Organisations actively work to build a strong favorable image in the
mind of their customers. For example: Philips uses a tagline Lets make things Better.
i. Information: Information can be produced and marketed as a product. For example,
Dictionaries, Encyclopedias, Schools etc.
2. Based on Consumers Intentions: Products can be classified into two broad categories
based on who will use them and how they will be used. These are:
I. Consumer Products: Consumer products are those bought by final consumers
for personal consumption. Marketers usually classify these goods further based on
how consumers go about buying them. Consumer products include convenience
products, shopping products, specialty products and unsought products.
Examples: Newspapers, drugs, grocery products, prescription medicines, a
lawyers services etc.
II. Industrial Goods: A product bought for use in the production of other products
or in an Organizational operation is an industrial product. Business products are
intended for resale, for further processing in producing other products, or for use
in conducting business. Industrial goods include raw materials, capital equipment,
Component parts, Supplies and industrial services etc.
Example: Grains, fruits, minerals, products from forests and seas, machineries,
cranes, motors, hand tools, paints, office stationeries, financial, legal, marketing
services.
3. Based on Social Benefits: From the social aspects, we can differentiate the products
depending on long-term and short-term advantages:
i. Pleasing Products: These give high immediate satisfaction, but do harm to
consumers in the long run. For example: Pan Masala, cigarettes, alcohols etc.
ii. Deficient Products: These have neither immediate appeal nor long-term run benefits.
Firms are not interested in such products as there is no chance to make any profit at
all. For example, Typewriter or pager.
iii. Salutary Products: They have long run advantages but have no immediate appeal to
consumers. Hence firms are not primarily interested in such products. For example:
Soyabean chips (diet chips).
iv. Desirable Products: These have a happy combination of high immediate satisfaction
and high long run consumer welfare. Tasty, nutritious, ready- made food products are
the examples of such desirable products.

Product mix
Product Mix is the composite of products offered for sale by a firm or a business unit. A product
mix is the combination of products that a company offers. The greater the number of offerings,
derives the greater the chance of satisfying a customer.

Example: If an enterprise manufactures or deals with different varieties of soap, oil, toothpaste,
toothbrush etc. the group of all these products is called Product Mix.

Product Mix Decisions


An Organisation with several product lines has a product mix. A product mix consists of all the
product lines and items that a particular seller offers for sale.

A companys product mix has a certain width, length, depth and consistency which are described
below:

1. Product Mix Length: The length of a product mix refers to the total number of items in
the mix. HUL carries many brands within each line. For example, it sells six laundry
detergents, ten soaps, four shampoos and two toothpastes etc.
2. Product Mix Width: The width of a product mix refers to how many different product
lines the company carries. For example, HUL markets a fairly wide product mix
consisting of many product lines, including paper, food, household cleaning, medicinal,
cosmetics, and personal care products.
3. Product Mix Depth: The depth of a product mix refers to how many variants are offered
of each product in the line. In other words, product mix depth refers to the number of
versions offered of each product in the line. If Close-up comes in 5sizes and three
formulation (red, green, blue), Close-up has depth of 15.
4. Product Mix Consistency: The consistency of the product mix refers to how closely
relate the various product lines are in the end use, production requirements, distribution
channels, or some other way. HUL product lines are consistent in so far as they are
consumer goods that go through the same distribution channels.

Factors Influencing Change in Product Mix


1. Change in Market Demand: The change in the demand of a product affects the decision
of product mix.
2. Cost of Production: If the company can develop a new product with the help of the same
labour force, plant and machinery and techniques, it can decide to start the production of
that product at lower cost.
3. Quantity of Production: If the production of a new product is considered to be at a large
scale and the company can add one more item to its product line just to get economies of
large scale production.
4. Advertising and Distribution Factors: Advertising and distribution factors may be the
one of the reasons for the changes in production mix.
5. Use of residuals: If residuals can be used gainfully, the company can develop its by
products into the main products. For example, a sugar mill can profitably develop the
production of paper, card board or wine from bagasse.
6. Change in Company Desire: Keeping in mind the objectives of the firm i.e. maintaining
or increasing the profitability of the concern, the firm may eliminate some of its
unprofitable processes or may start a new more profitable product.
7. Competitors Actions and Reactions: The decision of adding or eliminating the product
may be the reaction of competitors actions. If the company thinks that it can meet the
competitions well by making necessary changes in the size, color, packing or price, it can
make such changes.
8. Change in Purchasing Power or behavior of the customers: If the number of
customers are increased with the increase in their purchasing power or with the change in
their buying habits, fashion etc. the company may think of adding one or more products
keeping mass-production or increase in profitability in the mind.
9. Full utilization of marketing capacity: if the company is not getting the desired result
from the market, it can decide to stop the production of such a product and divert its
resources to produce a new product or improve the existing product.
10. Financial resources: Finance is the life blood of a firm. Availability of finance may
necessitate some changes in the product of the company. If the company is short of
finance or if the product is continuously going into loss the company may decide to drop
the production of such product.

New Product Development


A new product is one which is really innovative which is significantly different from existing
and imitative products that are new to the company.

Once a company has carefully segmented the market, chosen its target customers, identified
their needs, and determined its market positioning, it is better able to develop new products.

Factors Contributing to New Product Development


Several factors contribute to new product development, while most are related to external
environmental variables, the most important internal factors in the product development is
the surplus capacity that a firm may have at any given time.

1. Changing Customer Preferences: The driving force in new product development is


changing customer life styles, leading towards a change in the customers preferences
and expectations.
2. Technological Changes: Another factor is the technological change in the industry and
the market. For example: If Mrs. Indira Gandhis government had not decided to expand
the television network to cover 70% of the Indian population, launched its own satellite
INSAT IB and started color telecast in 1982. It is extremely doubtful if many of todays
products would have seen the light of the day in the Indian market.
3. Government Policy: Government policy can also encourage or foster new product
development processes. For example, a government policy encouraging competition and
entrepreneurship can motivate firms to launch new products.
4. Product Life Cycle (PLC): In order to maintain growth in sales and profits firms decide
to drop or modify or develop new products when the existing products reach maturity or
decline stages in product life cycles.

New Product Development Process


There are eight steps of NPD Process comprising the key elements of a new product
development. These steps are discussed below:

1. Idea generation: The first step of NPD requires gathering ideas to be evaluated as
potential product options. For many companies idea generation is an ongoing process
with contributions from inside and outside the Organisation. Idea generation includes
customer comments and suggestions via toll free telephone numbers and website forms
etc.
2. Screening of Idea: In step 2 the idea generated in step 1are critically evaluated by
company personnel to isolate the most attractive options. Depending on the number of
ideas, screening may be done in rounds. Only those ideas are selected which are feasible
and workable to develop. Non feasible ideas can clearly be costly for the company.
Acceptable ideas move on the next step.
3. Concept Development and Testing: With a few ideas in hand the marketer now
attempts to obtain initial feedback from customers, distributers and own employees. Ideas
are presented to a group in the form of concept and not in actual working form.
4. Marketing Strategy and Development: How will the product/service idea be launched
within the market? A proposed marketing strategy will be written laying out the
marketing mix strategy of the product, the segmentation, targeting and positioning
strategy sales and profits that are expected. After testing, the new-product manager must
develop a preliminary marketing-strategy plan for introducing the new product into the
market.
5. Business Analysis: At this point in the NPD process the marketer has reduced a
potentially large number of ideas down to one or two options. Now in this step the
process becomes very dependent on market research as efforts are made to analyse the
viability of the product ideas. The key objective at this stage is to obtain useful forecasts
of market size, operational costs and financial projections. Organisation must determine
if the product will fit within the companys overall mission and strategy.
6. Product and Marketing Mix Development: Finally it is at this stage that a prototype is
finally produced. The prototype will clearly run through all the desired tests, and be
passing through business analysis are given serious consideration for development. Once
the prototype is ready the marketer seeks customer input. However, unlike the concept
testing stage where customers were only exposed to the idea, in this step the customer
gets to experience the real product as well as other aspects of the marketing mix.
7. Test marketing: Test marketing means testing the product within a specific area. The
product will be launched within a particular region so the marketing mix strategy can be
monitored and if needed, be modified before national launch.
8. Commercialization- Launching the Product: If the test marketing stage has been
successful and displays promising results then the product will go for national launch.
There are certain factors that need to be taken into consideration before a product is
launched nationally. These are timing, how the product will be launched, where the
product will be launched, will there be a national roll out or will it be region by region?

Benefits of New Product Development


Some of the benefits of the new product introduction include:

1. Product Introduced on Time:


a. Shorten the time from a products concept initiation to its release to manufacturing,
b. Plan and manage overall duration of the NPI process and each of its phases,
c. Manage change and lifecycle for various deliverables, and
d. Standardise format and attributes for different deliverables.
2. Higher Productivity:
a. Capture and automate company specific NPI process steps,
b. Incorporate a best-practice project plan, document templates and metrics,
c. Identify and reduce time spent on non-value add activities,
d. Focus effort and increase R&D throughout.
3. Lower Project Cost:
a. Define, plan track, and manage project cost,
b. Increase the number of projects completed on-budget
c. Quickly identify, capture, and resolve action items and risks,
d. Identify and eliminate repeating activities and
e. Speed adoption, and improve consistency of process execution.
4. Greater Revenue from New Products:
a. Provide process visibility to management, accelerating benefit of implementation,
b. Improve quality of metrics, and reduce collection time,
c. Focus on the most critical quality initiative and
d. Achieve timely market introduction of the complete product.

Product Life Cycle


Like a human being, all products have certain length of life during which they pass through
certain identifiable stages. Through the conception of the product, during its development and
upto the market introduction, product remains in pre-initial stage. Its life begins with its market
introduction, then goes through a period during which its market grows rapidly, eventually, it
reaches at maturity and then stands saturated. Afterwards its market declines and finally its life.

Most product life cycle curves are portrayed as bell-shaped. This curve is typically divided into
four stages:

1. Introduction: A period of slow sales growth as the product is introduced in market.


Profits are nonexistent in this stage because of the heavy expenses incurred with product
introduction.
2. Growth: A period of rapid market acceptance and substantial profit improvement.
3. Maturity: A period of slowdown in sales growth because the product has achieved
acceptance by most potential buyers. Profits stabilize or decline because of increased
competition.
4. Decline: The period when sales show a downward drift and profits erode.

Characteristics of PLC
The life cycle is nothing but the pattern of demand for a product over time.

1. No every product goes through every stage. Infact, many products never get past the
introduction stage.
2. The length of time a product spends in any one stage may vary.
3. Some products may move through the entire cycle in weeks.
4. Repositioning of a product can lead to a, new life cycle. Repositioning is basically
changing the image or perceived uses of the product.

Assumptions of PLC
The following points are to be assumed in studying the product life cycle concept:

1. Products have a limited life.


2. Product sales pass through distinct stages, each posing different challenges, opportunities,
and problems to the seller.
3. Profits rise and fall at different stages of the product life cycle.
4. Products require different marketing, financial, manufacturing, purchasing, and human
resources strategies in each stage of their life cycle.

Product Life Cycle Strategies


Products typically go through four stages during their lifetime. Each stage is different and
requires marketing strategies unique to the stage.

1. Introduction Stage This stage involves introducing a new and previously unknown
product to buyers. Sales are small, the production process is new, and cost reductions
through economies of size or the experience curve have not been realized. The promotion
plan is geared to acquainting buyers with the product. The pricing plan is focused on
first-time buyers and enticing them to try the product.
2. Growth stage: In this stage, sales grow rapidly. Buyers have become
Acquainted with the product and are willing to buy it. So, new buyers enter the market
and previous buyers come back as repeat buyers. Production may need to be ramped up
quickly and may require a large infusion of capital and expertise into the business. Cost
reductions occur as the business moves down the experience curve and economies of size
are realized. Profit margins are often large. Competitors may enter the market but little
rivalry exists because the market is growing rapidly. Promotion and pricing strategies are
revised to take advantage of the growing industry.
3. Maturity Stage: In this stage the market becomes saturated. Production has caught up
with demand and demand growth slows precipitously. There are few first-time buyers.
Most buyers are repeat buyers. Competition becomes intense, leading to aggressive
promotional and pricing programs to capture market share from competitors or just to
maintain market share. Although experience curves and size economies are achieved,
intense pricing programs often lead to smaller profit margins. Although companies try to
differentiate their products, the products actually become more standardized.
4. Decline Stage: In this stage buyers move on to other products and sales drop. Intense
rivalry exists among competitors. Profits dry up because of narrow profit margins and
declining sales. Some businesses leave the industry. The remaining businesses try to
revive interest in the product. If they are successful, sales may begin to grow. If not, sales
will stabilize or continue to decline.

Factors affecting the Life Cycle of a Product


1. Rate of technical change: Life cycle of a product is affected by the rate of technical
change in the country. If the rate of technical change in the country is very high, the life
of the product is limited.
2. Rate of man at acceptance: The rate of customer acceptance also affects the life cycle
of products. If the rate of market acceptance is high, the life cycle of products in that
country is limited.
3. Ease of Competitive Entry: The situation of competition in the market also affects the
life cycle of the products. If the entries of competitors are easy and unchecked, the life of
the products will be shorter as the new and new products will enter the market.
4. Risk bearing capacity: The risk bearing capacity of the enterprise also decides the life
cycle of its products. If the enterprises have risk bearing capacity, they can keep their
product alive in the market for a long period as they can face the challenges of the market
very effectively.
5. Economic and managerial force: Enterprise having strong economic and managerial
forces, can keep their products standing in the market and the life cycle of their product
will be longer that of the life cycle of the products of those enterprises having weal
economic and managerial forces.
6. Protection of patents: The life cycle of the products is fairly long if their patents have
got registered. On the other hand, if the products are not patented, their life is out short.
7. Goodwill of the Enterprise: If the goodwill of the enterprise is good in the market as the
producer of good quality products, its product will last long in the market as compared to
the products of those enterprises whose goodwill is not good or which are not known to
the public.
Branding
The term branding refers to the entire process involved in creating a unique name and image
for a product in the consumers mind, through advertising campaigns with a consistent theme.

In marketing, a brand is the symbolic embodiment of the information connected with a product
or service. A brand typically includes a name, logo, and other visual elements such as images,
fonts, colour schemes, or symbols.

Characteristics of Successful Brands


1. Superior Product Quality: Examples are Sony and BMW, which has developed a very
strong brand image in the market because their products are known world-wide for their
excellent quality. A strong brand image goes automatically with quality and consistency.
2. Additional Services: Maruti has service stations almost in every spot in India, giving it
an edge over other players. This gives Maruti customer preference. This is because
customer known that whenever and wherever they have a problem with their Maruti cars,
a Maruti service station is never far away as the slogan says. Similarly, Apollo Tyres
conducts a free check-up for all its customers for the first year and even replaces the
tyres, if required.
3. Differentiation from Competition: Organisations need to differentiate their offerings
from that of competitors, to develop successful brands. The distinction must be clear in
the minds of customers. If this is accomplished, customer will recognise and appreciate
the unique aspect of the product. Bose speakers use the highest quality woofer
components, making their product outstanding.

Functions of a Brand
1. To consumer: A brand perform the following functions for consumers:
a. Identification of source of product: Brands identify the source or maker of a
product.
b. Assignment of Responsibility to product-maker: Brand allows consumers to assign
responsibility to a particular manufacturer or distributor.
c. Risk Reducer: brands can reduce the risks in product decisions. Consumers may
perceive many different types of risks in buying and consuming a product.
d. Search cost reducer: Brand allows consumers to lower search costs for products
both internally and externally.
e. Promise, Bond, or Deal with maker of Product: The relationship between a brand
and the consumer can be seen as a type of bond or deal. Consumers offer their trust
and loyalty with the implicit understanding that the brand will behave in certain ways
and provid them utility through consistent product performance and appropriate
pricing, promotion and distribution programs.
f. Symbolic Device: Brands can serve as symbolic devices allowing consumers to
project their self-image. Certain brands are associated with being used by certain
types of people and thus reflect different values or traits.
g. Signal of Quality: Brands can also play a significant role in signalling certain
products characteristics to consumers.
2. To manufacturers: Brands perform the following functions for manufacturers:
a. They serve an identification purpose to simplify product handling or tracing for the
firm.
b. A brand also offers firm legal protection for unique features or aspects of the product.
c. Brands can signal certain level of quality so that satisfied buyers can easily choose the
product again.
d. Investments in the brand can endow a product with unique associations and meanings
that differentiate it from other products.
e. A brand helps the firm to face competition effectively.
f. A brand is source of financial returns for the firms.

Factors to be considered in Branding


Professor David Jobber identifies seven main factors in building successful brands are given
below:

1. Quality: Quality is a vital ingredient of a good brand. Remember the core benefits- the
things consumers expect. These must be delivered well, consistently. The branded
washing machine that leaks, or the training shoe that often falls apart when we will never
develop brand equity.
2. Positioning: Positioning is about the position a brand occupies in a market in the minds
of consumers. Strong brands have a clear, often unique position in the target market.
3. Repositioning: Repositioning occurs when a brand tries to change its market position to
reflect a change in consumers tastes. This is often required when a brand has become
tired, perhaps because its original market natured or has gone into decline.
4. Communications: Communications also play a key role in building a successful brand.
It was suggested that brand positioning is essentially about customer perceptions-with the
objective to build a clearly defined position in the minds of the target audience.
5. First-Mover Advantage: In terms of brand development, by first-mover they mean
that it is possible for the first successful brand in a market to create a clear positioning in
the minds of target customers before the competition enters the market.
6. Long-Term Perspective: This leads onto another important factor in brand building: the
need to invest in the brand over the long-term. Building customer awareness,
communicating the brands message and creating customer loyalty takes time. This
means that management must invest in brand, perhaps at the expenses of short term
profitability.
7. Internal marketing: Internal marketing means it is meant that the whole business should
understand the brand values and positioning. This is particularly important in service
businesses where a critical part of the brand value is the type and quality of service that a
customer receives.

Significance of Branding
The significance of branding to producers, middlemen and consumers are:

1. Significance to Producers:
I. Easy to Advertise: With a particular brand, it makes very easy for the enterprise to
advertise its products because the enterprise can use the name of brand in its
advertisement messages.
II. Easy to identify the products: The producers can advertise their products with their
brand and consumers can identify such product easily.
III. Creation of Separate Market: Producers can create a separate market for their
products if they use a particular brand because the use of a particular brand
differentiates these products from others.
IV. To get more prices: When consumers like a brand and they start to use the product
of that brand, they do not mind a little increase in the prices of such products.
V. Easy to Expand the product mix: If the brand of a producer is very popular in the
market and the demand of such products is quite encouraging, the producer may
decide to expand his product mix. He can add new product lines to his product mix.
VI. Personal Contacts with Consumers: When the brand of a producer becomes
popular among consumers, it becomes very easy for the producer to eliminate the
middlemen or to reduce the number of middlemen because he is in a position to sell
his products directly to the consumer.
2. Significance to Middlemen:
I. Easy to understand the needs and wants of consumers: Use of brand makes it
very easy for the middlemen to understand the needs, wants, preferences, and
requirements of consumers because the consumers ask a particular brand.
II. Less Risk: As the demand of the products of a famous brand already exists in the
market, the middlemen have no risk in keeping the products of these brands.
III. No need of advertisement and sales promotion: As the demand for the products
is already exists in the market and the customers knows these product by name,
there is no need for the middlemen to advertise such products.
IV. Increase in Sales: Middlemen can easily increase their sales, if they deal in
products of famous brand because the market for such products alrady exists.
V. Increase in Profits: As the sales of products of famous brand are high, profits of
the middlemen also increase substantially.
VI. Increase in Goodwill: If a middlemen deals in the products of a famous brand it
increases his goodwill.
3. Significance to Consumers:
I. Easy to Recognise: Use of a particular brand of a producer makes it very easy for
the consumers to recognise the product of such producer because almost all the
products of a producer are of the same brand, packing, design, colour etc.
II. Availability of Quality products: The producers, who use a particular brand for
their products, always, keep themselves busy on improving the quality of their
products because they want that the demand for their products should be on
increasing.
III. Minimum Fluctuations in Price: It has been the experience that the prices of the
products of standard brands fluctuate very rarely. It brings certainly in the prices
of these products.
IV. Improved Packing: The packing of the products of standard brands is always of
high quality. The name of the brand and all the relevant particulars about the
product are printed in packing itself.
V. Mental Satisfaction: The use of the products of a standard brand provides mental
satisfaction to the consumers that they are using the goods of high quality and
paying reasonable price for these products.

Packaging
Packing means wrapping of goods before they are transported or stored or delivered to a
consumer. On the other hand, packaging is the sub-division of the packing function of marketing.
Packaging has been defined as an activity which is concerned with protection, economy,
convenience and promotional considerations.

Purposes of Packaging
1. Product Protection: The most obvious purpose of packaging is to physically protect the
product inside. Package protects the products and is fundamental in idea. Their journey
from manufacturer to consumer is facilitated. Packaging protects the products from
various types of damages.
2. Product Containant: Package means using just the space in which a product will be
contained. Ordinary packing is in the form of throw-away containers.
3. Product Attractiveness: The size and shape of the package, its colour, printed matter on
it etc, must make the package attractive to look at.
4. Product Identification: Packages differentiate similar products. Packaging and labelling
are inseparable and are closely related to branding. Package has more significance, when
the product cannot be seen by the buyer packed milk, fruit juice etc.
5. Product Convenience: The purpose of packaging is not merely confined to consumer
service. The design and size of the package must be in accordance with the contents i.e.
product; must be convenient to ultimate customers.
6. Segmentation: Packaging can be tailor-made for a specific market group. If a firm offers
two or more package shapes, sizes, colours, or designs it may employ differentiated
marketing.
7. Channel Co-operation: Packaging can address wholesaler and retailer needs with regard
to shipping, storing, promotion, and so on.
8. New Product planning: New packing can be a key innovation for a firm and stimulate
sales.
9. Increase marketing: Attractive packaging will helps to draw more customers and will
encourage more purchases of the product.
10. Self-service and Supermarket: Self-service on any large scale is completely dependent
on packaging; although it is also true to say that the growth of self service in
departmental store and supermarkets has had a corresponding great impact on packaging
developments.

Types of Packaging
The most important kinds of packaging are as follows:

1. Consumer Package: It is a kind of package which holds the required volume of product
for the household consumption. For example, Toothpaste, shoe polish etc.
2. Family Package: When products are related in use and are of similar quality, the firm
makes the packages identical for all products by using common feature on all the
packages.
3. Re-use package: It is also known as dual package. A producer sells the contents in such
a package, which can be re-used for other purposes after the product is consumed. For
example: the glass jar of Nescafe Instant coffee, and many other products are packed in
such a way that the package can be put into many uses.
4. Multiple Packages: The practice of placing several units in one-container is known as
multiple packaging. For example, Make-up set, babys care etc.
5. Transit packaging: Transit packaging is that kind of packaging which keeps the product
safe from production to consumption in the process of distribution. Materials used for this
type of packaging are wooden containers, drums, tins, sacks etc.

Factors Influencing Packaging Decisions


There are a number of factors that influence decisions in respect of packaging features like size,
shape, design, surface graphics, colour schemes, labelling materials etc.
1. Physical Characteristics: packaging decisions are influenced by certain physical
characteristics of the product like the physical state, weight, stability, rigidity, surface
finish etc.
2. Economy: While packaging is very important in marketing, it is costly too. Indeed, there
are a number of cases where the cost of packaging is more than the cost of the content.
Every effort should be made to reduce the cost of packaging.
3. Convenience: Packaging should also necessarily possess the quality of convenience from
the point of view of consumers, distributors and producers. Hence, apart from the
functional needs, a good package should possess certain features like ease to open and
close, ease to dispense and ease to dispose-of etc.
4. Miscellaneous factors: Apart from the factors mentioned above, packaging decisions
may be influenced by a number of other factors. Statutory regulations and socio-cultural
factor also influence packaging decisions.

Distribution Channels
The path between producers and users that goods & services follow is called Distribution
Channel or Marketing Channel or a trade Channel.

The Distribution Channel is the movement of goods and services between the point of production
and the point of consumption through organisations that performs a variety of marketing
activities. The major participants in the distribution channel are; producers, intermediaries and
consumers.

Characteristics of Channel of Distribution


1. Route or Pathways: Channel of distribution is a route or pathway through which goods
and services flow from the manufacturers to consumers.
2. Flow: The flow of goods and services is smooth and sequential and usually
unidirectional.
3. Composition: It is composed of intermediaries such as wholesalers, retailers, agents,
distributors etc.
4. Remuneration: The intermediaries are paid in the form of commission for the services
rendered by them.
5. Time Utility: As they bring goods to the consumers when needed;
6. Convenience value: As they bring goods to the consumers in convenient shape, unit,
size, style, and package.
7. Possession Value: As they make it possible for the consumers to obtain goods with
ownership title.
8. Marketing Tools: As they serve as vehicles for viewing the marketing Organisation
in its external aspects and for bridging the physical and non-physical gaps which
exist in moving goods from the producers to the consumers.
9. Supply-Demand Linkage: As they bridge the gap between the producers and consumers
by resolving geographical distance and relating to time discrepancies in supply and
demand.
Objectives of Distribution Channels
1. To make the product readily available to the market consumers at which it is aimed.
2. To enhance the prospect of sales being made.
3. To achieve cooperation with regard to any relevant distribution factors.
4. To achieve a given level of service.
5. To minimize logistics and total costs.
6. To receive fast and accurate feedback of information.

Functions of Distribution Channel


1. Information Provider: Middlemen have a role in providing information about the
market to the manufacturers. Since middlemen are present in the market place and
close to the customer they can provide information related to customer preferences,
customer demography, media habits and the entry of new competitors at no additional
cost.
2. Matching Buyers and Sellers: The most crucial activity of the marketing channel
members is to match the needs of buyers and sellers.
3. Time and Place Utility: Channels of distribution help the consumers to buy goods at
the time and place they need them. They create time and place utilities to the buyer.
4. Assortment of Products: This activity leads to the customer convenience because
channels of distribution help the consumers to buy goods in convenient units, lots,
packs, and assorted varieties of the products.
5. Price Stability: Maintaining price stability in the market is another function a
middlemen performs. Many a time the middlemen absorb an increase in the price of
the products and continue to charge the customer the same old price.
6. Promotion: Promoting the products in his territory is another function that
middlemen perform. Many of them design their own sales incentive programs, aimed
at building customers traffic at other outlets.
7. Financing: Middlemen finance manufacturers operation by providing the necessary
working capital in the form of advance payments for goods and services.
8. Help in Production Function: The producer can concentrate on the production
function leaving the marketing problem to middlemen who specialise in this
profession. Their services can be best utilised for selling the product.
9. Matching Demand and Supply: The chief function of intermediaries is to assemble
the goods from many producers in such a manner that a customer can affect purchases
with ease.
10. Pricing: In pricing a product, the producer should invite the suggestions from the
middlemen who are very close to the ultimate users and know what they can pay for
the product.
Importance of Distribution Channel
1. Time and Place utility,
2. Assortment of products.
3. Relieve from marketing problems.
4. Information to the producer
5. Stability in Prices
6. Promotional Activities
7. Storage of finished goods
8. Break the bulk
9. Finance the producer
10. Fixing the price

Types of Distribution Channel


1. Direct Marketing Channel: This is the shortest channel a producer can adopt for
distribution of goods or services. In this system, goods move directly from the producers
to the consumers without any middleman or a merchant.
Under direct channel of distribution, the manufacturer can adopt one of the following
methods of selling:
a. Selling at manufacturers Plant: Under this system, goods are sold by the producers
directly to the consumers. Direct selling is generally preferred in case of perishable
products like bread, milk, ice cream, fish, meat, egg, vegetables and agricultural
products etc.
b. Door to Door Sales: Salesmen employed by the manufacturers call at the door of
customers. This system works better when a new product is introduced into market.
c. Sales by Mail Order method: It is a system by which products are sold to
consumers. The post-office plays an important role. For example, Books, drugs,
watches, toys etc.
d. Sales by Opening Own Shops: It is very common and producers of perishables and
non-perishable goods sell their products to customers by opening their own retail
shops.
2. Indirect Marketing Channel: It means distribution of goods through middlemen or
intermediaries. Either, in the channel there is one middleman like a sole selling agent who
distributes the goods through a number of middlemen subsequently or, there may be a
number of middlemen when the producer distributes the products through a number of
agents or wholesalers or even retailers.
a. One-Level Channel: In this type of channel there is only one intermediary between
producer and consumer. This intermediary may be a retailer or a distributor.
If the intermediary is a distributor, this type of channel is used for specialty products
like washing machines, refrigerators or industrial products.
b. Two-Level Channel: This type of channel has two intermediaries, namely,
wholesaler/distributor and retailer.
c. Three-Level Channel: This type of channel has three intermediaries, namely,
distributor, wholesaler and retailer. This pattern is also used for convenience
products.
d. Four-Level Channel: This type of channel has four intermediaries, namely, agent,
distributor, wholesaler and retailer. This channel is similar to the previous two. This
type of channel is used for consumer durable products also.

Factors Affecting Channels of Distribution


There are number of factors which affect the channel of distribution which are:

1. Industrial or Consumer Product: In case of industrial product, direct channel of


distribution is used because of the relatively small number of customers. In case of
consumer products, indirect channel of distribution such as wholesaler, retailer, is most
suitable.
2. Perishability: Perishable goods such vegetables, milk, butter, bakery products, fruits, sea
foods etc. require direct selling as they must reach the consumers as easily as possible
after production.
3. Weight and Technicality: When the products are bulky, large in size and technically
complicated, it is useful to choose direct channel of distribution.
4. Financial Strength: A company which is financially sound may engage itself in direct
selling. On the contrary, a company which is financially weak has to depend on
intermediaries and therefore, has to select indirect channel of distribution.
5. Size of the Company: A large-Sized company handling a wide range of products would
prefer to have a direct channel of distribution. On the contrary, a small-sized company
would prefer indirect selling by appointing wholesalers, retailers etc.
6. Location of the Market: When the consumers are spread over a wide geographical area,
the long channel of distribution is most suitable. On the other hand, if the customers are
concentrated and localised, direct selling would be beneficial.
7. Availability of Middlemen: The Company should make efforts to select aggressively
oriented middlemen. In case they are not available, it is desirable to wait for some time
and then to pick up. In such cases, the company should manage its own channel so long
the right types of middlemen are not available.
8. Cost of Channel: Direct selling generally is costlier and thus distribution arranged
through middlemen is more economical.
9. Competitors Channel: This also influences the channel choice decision. Mostly, in
practice, similar types of channels of distribution used by the competitors are preferred.
10. Services provided by Middlemen: If the nature of product requires after-sale services,
repairs etc. such as automobiles, cars, scooters etc, only those middlemen should be
appointed who can provide such services, otherwise the company wil adopt direct selling
channel.
Unit 4
Pricing and Promotion Decisions
Meaning of Pricing: pricing is the function of determining the product or service or idea
value in monetary terms by the marketing manager before it is offered to the target consumers
for sale.

Objectives of Pricing
A firm may choose its objectives from any of the following are as follows:

1. To maximise the profits: The primary objective of the pricing decision is to maximise
profits for the concern and therefore pricing policy should be determined in such a way
so that the company can earn the maximum profits.
2. Price Stability: As far as possible, the prices should not fluctuate too often. A stable
price policy above can win the confidence of the consumers. For this purpose, the
concern should consider long-run and short run elements.
3. Competitive situation. ONE OF HE OBJECTIVES Of the price decision is to face the
competitive situation in the market. Prices of the commodities should be fixed in the
keeping in the mind the competitive situation.
4. Achieving a Target-Return. This is a common objective of well-established and reputed
firm in the market to fix a certain rate of return on investment. The prices of the product
are so calculated as to earn that rate of return on investment.
5. Capturing the Market. One of the objectives of pricing decision may be capturing the
market. A company especially a big company, at the time of introducing the product in
the market fixes comparatively lower prices for its products, keeping in view the
competitive position with an objective of capturing a big share in the market.
6. Ability to Pay: Price decisions are sometimes taken according to the ability of customers
to pay, i.e. more prices can be charged from persons having capacity to pay.
7. Long-run Welfare of the Firm: The main aim of some concerns is to fix the price of the
product which is in the best interest of the firm in the long run keeping the market
conditions and economic situations in mind.
8. Margin of profit to Middlemen: Pricing of the product should be made keeping in view
that middlemen get a fair return on the sale of companys product.
9. Resources Mobilisation: Under this objective, the firm fixes the prices of its products in
such a way that it can accumulate sufficient resources for its expansion.

Importance of Pricing
Pricing is one of the important elements of the marketing mix, but lately, it has come to occupy
the centre stage in marketing wars. The reasons for this are as follows:
1. Product Differentiation Getting Blunted: As technologies get standardised,
differentiation among firms on the basis of the product is going to get blunted. More
products and brands will transcend to a commodity situation.
2. Inter-Firm Rivalry: The intensity in inter-firm rivalry increases as the entry and exit
barriers in the industry are lowered. With an increase in rivalry, marketers find that a
firms cost of operation also increases, as it now has to spend more money to lure
customers and middlemen.
3. Mature products and markets: When the products enter the maturity stage and the
markets are also mature, the only way to differentiate the various offers is on the basis of
augmented service or price cut.
4. Customers value perception: Another factor contributing to the importance of pricing
decisions is the customers perception of the products current and potential value. To a
customer, price always represents the products value.
5. Inflation in the economy: Pricing decisions become important in the inflationary
economy. Inflation affects pricing in two ways:
a. It lowers the purchasing power of the customer and hence a search for low priced
substitutes,
b. It increases a firms cost because of the inputs costing more, thus forcing the price of
the product upwards.
6. Firm now finds itself in a Dilemma: If it passes the increase in input costs to the
customer in the form of a price increase, and there are equally attractive alternatives at
lower prices available to him, the firm may lose the customer and if it does not increase
the price, it incurs a loss. This is a challenge for firm to decide.

Factors Influencing Pricing


The pricing decisions are influenced by many factors. There are internal as well as external
factors which are discussed below:

1. Internal Factors: These factors are as follows:


a. Organisational Factors: Pricing decisions occur on two levels in the organisation.
Overall price strategy is dealt with by top executives. The actual mechanics of pricing
are dealt with at lower levels in the firm and focus on individual product strategies.
b. Marketing Mix: Marketing experts view prices as only of the many important
elements of the marketing mix. A shift in any one of the elements has an immediate
effect on the other three i.e. product, promotion and place.
c. Product Differentiation: The price of the product also depends upon the
characteristics of the product. In order to attract the customer, different characteristics
are added to the product such as quality, size, colour etc.
d. Cost of the Product: Cost and price of a product are closely related. The most
important factor is the cost of production. The price of the product fixed after
considering the cost of production of the product.
e. Objectives of the Firm: Objectives of the firm also affects the price of a product.
Firms may pursue a variety of value-oriented objectives, such as maximising sales
revenue, maximising market share, maximising customer volume, maintaining an
image, maintaining stable price.
2. External Factors: These factors are as follows:
a. Demand: The market demand for a product or service has big impact on pricing. If
the demand for a product is high then company can fix a high price for its product and
vice versa.
b. Competition: Competition is a crucial factor in price determination. A firm can fix
the price equal to or lower than that of the competitors, provided that quality of
product, in no case, be lower than that of the competitors.
c. Suppliers: Suppliers of raw materials and other goods can have a significant effect
on the price of a product. If the price of cotton goes up, the increase is passed on by
suppliers to manufacturers. Manufacturers, in turn, pass it on the consumers.
d. Economic Conditions: The inflationary or deflationary tendency effects pricing. In
recession period, the prices are reduced and in inflation prices are increased.
e. Buyers: Buyers nature and behaviour for the product of a particular product, brand
or service, etc. affect pricing when their number is large.
f. Government: Price discretion is also affected by the price-control by the government
through element of legislation. The prices cannot be fixed higher, as government
keeps a close watch on pricing in the private sector.

Methods of Pricing
There are various pricing policies which are discussed below:

1. Mark-up pricing or Cost plus Pricing Method: In this method, the marketer estimates the
total cost of producing or manufacturing the product and then adds a fixed percentage of
margin or profit that the firm wants. This is indeed the most elementary pricing method
and many of services and projects are priced accordingly.
2. Full Cost Pricing: The method uses standard costing techniques and works out the
variable cost and fixed cost of manufacturing, selling and administrating the product.
After adding variable and fixed cost, firm arrives at fixed. Selling price is fixed after
adding a fixed margin or profit to total cost.
3. Marginal Cost or Incremental Cost Pricing Method: Here, the company may work on to
recover its marginal cost and getting a contribution towards its overheads. This method
works well in a market already dominated by giant firms.
4. Break Even Point Pricing Method: Break-even point is the point where company neither
makes any profit nor incurs any loss. This method is also known as No Profit No Loss
Method. In this method company fixes price in such a way that it can reach the Break-
even point.
5. Skimming the cream Pricing: This refers to the policy of charging high prices in the
initial stages of the life of a product. The initial high prices serve to skim the cream of the
inelastic market and the initial investment is recovered quickly. This pricing policy is
useful in the case of new and speciality products.
6. Penetrating Pricing: This pricing policy involves setting a low initial price to attract as
many buyers as possible. Prices are fixed below the competitive level to maximize the
market share and to make the brand popular quickly. When brand is established, the
marketer increases the price of the product.
7. Competitive Pricing: Competitive pricing implies selling a product at the going market
rate. When the market is highly competitive and the product is not differentiated and the
product is not differentiated significantly from the competitive products, this policy is
quite useful. Every firm tends to follow the current market prices because products are
standardised in perfect competition.
8. Follow the Leader Pricing: In some industries, there are a few firms but one out of them
controls so large a share of the market that a change in its supply will affect the market
price. The leader sets the price of the product and all other firms follow that price.
9. Price Discrimination: Discrimination pricing or charging what the traffic will bear means
charging different prices from different customers according to their ability to pay. The
policy of price discrimination is popular among professionals like doctors and lawyers
who render specialized services.
10. Psychological Pricing: A seller has to decide whether to charge even price e.g. Rs. 100 or
odd prices e.g. Rs. 99. Odd prices have a favourable psychological influence on the
buyers. They give an impression of accurate pricing and provide an illusion of a bargain.
11. Prestige or Premium Pricing: Rich buyers are not price conscious and are willing to pay a
high price provided the product is of premium quality. When the product has unique
features and is of superior quality, premium pricing policy can be adopted.

Promotion
Meaning of Promotion
Promotion is a communication process, by which the producers of the products or services draw
attention of the consumers or prospective consumers towards their products and services.
Consumers are informed and reminded about the products and are requested and persuaded to
purchase their products.
Characteristics of Promotion
Characteristics of promotion are as follows:

1. Constant Activity: Marketing communication is a constant activity. It is a universal and


essential feature of human expression and organisation.
2. Information Transaction: Marketing communication is concerned with sending and
receiving knowledge, ideas, facts, figures, goals, emotions and values.
3. Differentiating Act: Marketing communication try to exclude competing products from
consumers decision-making by making promoted products more attractive and a closer
match to their needs.
4. Reminding Act: marketing communication ensures that when options for consumption
are being assessed, promoted product is included. Reminding is simply to trigger the
customers memory.
5. Informing Act: Providing data into the consumers mindful and appreciation thought
processes to endure that promoted product is considered as an attractive option in
consumption.
6. Persuading Act: Effort to induce desired favourable behaviour from the consumer. At
growth stage the target market should have general product awareness and some
knowledge of how the product is fulfilling wants. Therefore promotional nature switches
from informing consumers about the product category to persuading them to purchase.
7. Human Skill: Marketing communication is also a human skill, so it is concerned with
the state of mind of the communicator, and with the state of mind of the person intended
to receive the communication.
8. Interpersonal Element: Marketing communication is also a central element of the way
in which people relate to and cooperate with each other and attending the interpersonal
event which is the building block of society.
9. Marketing Tool: communication can be viewed as neutral and compassionate, a form of
human interaction which helps society and the organisations within it to work well, and
which can only benefits those who take part in it.

Objectives of Promotion
Promotion constitutes very important role in fulfilling the different marketing objectives of a
firm by concentrating on the following key objectives:

1. Leads to Behaviour Modification: Promotion seeks to modify behaviour and thoughts


(e.g. persuading to drink Coca Cola rather than Pepsi), Reinforces existing behaviour
(e.g. persuading to continue Coca Cola once customer began to take).
2. Objective to inform: All promotional communications are designed to inform the largest
market about the firms product or services. Informative promotion is more prevalent in
the early stages of product life cycle of a product or service.
3. Objective to persuade: Persuasion objective is the main objective when the product
reaches to the growth stage of its product life cycle because at that time the consumer
formation objective and consumer retention objective both has to be taken
simultaneously.
4. Objective to Remind: It is used to keep the product brand name in the publics mind and
is used in the maturity stage of the product life cycle.
5. Specific Objectives: Broadly speaking the goal of promotion is to change the pattern of
demand for a product by behaviour modification, informing, persuading and reminding.

Importance of Promotion
The importance of promotion in the present marketing context is as follows:

1. Consistency of Message Delivery: By approaching the planning process in a holistic


manner, companies can ensure that all components of the communications program
deliver the same message to the target audience.
2. Corporate Cohesion: For the company, promotion can be used as a strategic tool in
communicating its corporate image and product/services benefits. This has important
consequences both on an internal and external level. As consumers increasingly gravitate
towards companies with whom they feel comfortable, it becomes important to ensure that
the overall image projected by the organisation is favourably received.
3. Client Relationship: For the agency, it provides the opportunity to play a significantly
more important role in the development of the communications program and to become a
more effective partner in the relationship.
4. Interaction: Promotion ensures better communication between agencies and creates a
stringer bond between them and the client company. By providing a more open flow of
information it enables the participants in the communication program to concentrate on
the key areas of strategic development, rather than pursue individual and separate
agendas.
5. Motivation: Promotion offers the opportunity to motivate agencies. The combined
thinking of a team is better the sum of the parts.
6. Participation: Everyone owns the final plan, having worked together on the
brainstorming and implementation, avoiding any internal politics. This can overcome the
divisive nature of the individual departments.
7. Measurability: Perhaps the most important benefit is the delivery of better measurability
of response and accountability for the communication program.

Promotional Mix
Promotion mix refers to the combination of various promotional elements vis. Advertising,
personal selling, publicity and sales promotion techniques used by a business firm to create,
maintain and increase demand of the product.
According to Philip Kotler, A companys total marketing communication mix also called
promotion mix consists of specific blends of advertising, personal selling, sales promotion,
public relations and direct marketing tools that the company use to pursue its advertising and
marketing objectives.

Tools of Promotion Mix


1. Advertising: Advertising includes any informative or persuasive message carried by a
non-personal medium and paid for by a sponsor whose product is some way identified in
the message. Traditional mass media, such as Television and magazines are mostly used.
2. Sales Promotion: It includes activities other than advertising, personal selling, publicity
and public relations which are used in promoting sales of the product. Distribution of
samples, premium coupon, off-price selling etc. is the examples of sales promotion.
3. Personal Selling: Personal selling is a person-to-person dialogue between buyer and
seller. Personal selling can be face-to-face or over the phone, to convince the buyer to
purchase a product or service.
4. Publicity: Publicity is a non-personal not paid stimulation of demand of the product or
services or business units by planting commercially significant news or editorial
comment in the print media or by obtaining a favourable presentation of it upon radio,
television or stage.
5. Public Relations: Most firms in todays environment are not only concerned to
customers, suppliers, and dealers but also concerned about the effect of their actions on
people outside their target markets. It is a planned effort by an organisation to influence
the attitudes and opinions of a specific group by developing a long-term relationship.
6. Direct Marketing: In Direct marketing, organisations communicate directly with target
customers to generate a response and/or a transaction.
7. Word-of-Mouth: Word of mouth is a reference to the passing of information from
person-to-person in oral or written form. An organisations image can be projected
through channels other than the formal communication process. Of course, positive word-
of-mouth recommendation is generally dependent on customers having good experiences
with the organisation,
8. Online Marketing: Unlike traditional forms of marketing communications such as
advertising, which are one-way in nature, the new media allow users to perform a variety
of functions such as receive and alter information and images, make inquiries, respond to
questions and, of-course, make purchases. The interactive medium that is having the
greatest impact on marketing is the Internet, especially through the component known as
WWW i.e. World Wide Web.
Factors Affecting Promotional Mix
1. Type of Product: The promotion task depends on the type of product marketed. Low-
priced, frequently purchased consumer goods like toilet soap, toothpaste, soft drinks, etc.
will need frequent repeat messages to influence and remind the existing consumers about
the brand and to persuade new consumers to buy.
2. Nature of market: The intensity of competition in the market, locational characteristics
of the consumers, and the requirement of channel members also influence the
promotional mix decision. If the target audience is large and widely spread-out in
different parts of the country, advertising and sales promotion will be effective and
economical.
3. Stage in the PLC: Product Life Cycle also affects the promotional mix. Based on the
stage at which the product is in the PLC the promotion mix has to change. Each stage of
PLC requires different type of promotional mix.
4. Budget Availability: Using each promotion tool adds to the cost. Hence, the budget
availability with a company has to be considered while deciding the promotion mix.
5. Company Policy: All the considerations given above should fit in with the overall
marketing and promotion policy of the company, while deciding the promotion mix.
6. Type of Product market: Communications-mix allocations vary between consumer and
business markets. Consumer marketers tend to spend comparatively more on sales
promotion and advertising; business marketers tend to spend more on personal selling.
7. Buyer-Readiness Stage: Communication tools vary in cost-effectiveness at different
stages of buyer readiness. Advertising and publicity play the most important role in the
awareness-building stage. Customer comprehension is primarily affected by advertising
and personal selling.

Sales Promotion
Sales Promotion is another important component of the marketing communications mix. It is
essentially a direct and immediate inducement. It is essentially a direct and immediate
inducement. It adds extra value to the product and hence prompts the dealer /consumer to buy
the product.

According to American Marketing Association, These marketing activities, other than


personal selling, advertising, and publicity that stimulate consumers purchasing and dealer
effectiveness such as display shows and exhibition, demonstration and various non- recurrent
selling efforts not in the ordinary routine.

Characteristics of Sales Promotion


The major characteristics of sales promotion can be understood by the following points:
1. Irregular / Non-Recurring Activity: Sales promotion is an irregular and non- recurring
activity to increase the sales; and this techniques is used for specific situations only such
as decline in demand, fall in profit, acute competition in market or during the introduction
of new product in the market.
2. Target Action: Sales promotion can be targeted to three distinct audiences. The first is
internal and is usually the marketers own salespeople. There may, however, be other
employees targeted such as technical sales support people or marketers.
3. Action Focused: There seems to be no doubt that sales promotion is action focused.
While advertising may be designed to build a brand image and personal selling may be
designed to build long-term relationships.
4. Motivation and Extra Incentives: Sales promotion involves some type of incentives
that offer a reason to buy. This incentive is usually the key element in a promotional
program and is an effort by which consumers, traders, and sales-force are motivated
towards maximum sales.
5. Acceleration Tool: Sales promotion is designed to speed-up the selling process and
maximises sales volume. Sales promotions offer an incentive to buy now.
6. Non-Media Activity: In sales promotion there is no media used like in advertising and
publicity.
7. Means of Marketing Communication: It is an important means of communication by
which views and ideas of consumers about the products and services are exchanged with
the producers regularly.
8. Element of Promotion Mix: Sales promotion is one of the important elements of
promotion-mix, other than advertising, personal selling, and publicity.
9. Universal Activity: It is a universal activity adopted by all the economies of the world in
their sales efforts.

Objectives of Sales Promotion


The various objectives of sales promotion are as follows:

1. To introduce new products: To induce buyers to purchase a new product, free samples
may be distributed or money and merchandise allowance may be offered to business to
stock and sell the product.
2. To attract new customers: New customers may be attracted through issue of free
samples, premiums, contests and similar devices.
3. To induce present customers to buy more: Present customers may be induced to buy
more by knowing about a product, its ingredients, and uses.
4. To help firm remain competitive: Sales promotion may be undertaken to meet
competition from a firm.
5. To increase sales in Off Season: Buyers may be encouraged to use the product in off
seasons by showing them the variety of uses of the product.
6. To Increase the Inventories of Business Buyers: Retailers may be induced to keep in
stock more units of a product so that more sales can be affected.
7. To Educate customers: Educating customers/dealers and salesmen simplifies the efforts
of sales-force and motivate them for larger purchases.
8. To stimulate sales: Sales promotion can promote larger sales in certain specified
segments of market. To stimulate maximum sales on special occasions such as Diwali,
religious festivals, and other such occasions.
9. To facilitate coordination: sales promotion can be easily used to facilitate coordination
and proper link between advertising and personal selling.

Methods/Tools of Sales Promotion


The various sales promotion devices can be broadly classified in two ways:

1. Consumer Promotion: Forms of consumer promotion are:


a. Free distribution of samples: It involves free distribution of samples to ultimate
consumers. The samples may be distributed door to door, or may be offered in a retail
store, or with the purchase of any particular product.
b. Coupons: A coupon is a certificate that entitles the consumer to a specified saving on the
purchase of a specified product.
c. Premiums or bonus offers: An offer of a certain amount of product at no cost of
consumers who buy a stated amount of a product or a special pack thereof is called
premium offer or bonus offer.
d. Money refund offer: This offer is generally stated in media advertising that the
manufacturer will return the price if the product is not to the satisfaction of the consumer
within a stated period.
e. Contests or sweepstakes: At times, contests are arranged with a view to attract new users
to the companys product. An opportunity under this device is given to consumer to
contest with a chance to win cash prizes, free air trips or goods.
f. Bonus Stamps: Such bonus stamps are issued to the consumers by the retailers or
manufacturer in proportion to their purchases. The consumers go on collecting stamps
until he has sufficient quantity to obtain desired merchandise in exchange of the stamps.
g. Draw: Under this system, every purchaser making a purchase of certain specified amount
is offered a coupon during a certain period. After the expiry of the period a draw is made
and attractive prizes are given to the winners.
h. Cheap Bargain or Self Liquidating Premium: Under this method, the consumers are
offered another product at a cheaper rate along with the purchase of companys product.
2. Middleman Promotion: there are different types of deals and the most common among
them are described below:
a. Buying Allowance Discount: The buying allowance or discount is offered to the dealer to
induce him to buy the manufacturers product.
b. Buy-Back Allowance: Under this method, the manufacturer offers a certain amount of
money for additional new purchases based on the quantity of purchases made on the first
trade deal.
c. Display and Advertising Allowance: The allowance is offered to the dealer to display the
manufacturers product. The allowance is given on the basis of space provided to display
the manufacturers product in the shop.
d. Dealer-listed Promotion: Under this method dealer name and address is given on the
advertisement and other publicity material as calendars, diaries etc.
e. Push Money: This is an incentive payment in cash or in kinds to the retailer or salesman
to push the sale at a fixed rate for each article sold.
f. Advertising material: The advertising materials such as calendars, New Year diaries,
literature, sign boards, packing bags, posters etc. are supplied by the producer of the
product to the dealer or middlemen for advertisement.
g. Credit Facility: The producers allow credit to their dealers, based on the quantity
purchased by them. This enables them to purchase bulk quantity.

Personal Selling
Personal selling is a highly distinctive word and the only form of direct sales promotion
involving face-to-face relationship between sellers and potential customers. Personal selling is a
two-way communication or mutual communication.

Characteristics of Personal Selling: Characteristics of personal selling are as


follows:

1. Personal contacts with customers: Under personal selling there established of personal
contact between buyers and salesman are practised. Both parties face each other.
2. Oral Conversation: There is oral conversation between the sales person and the buyer
regarding the features of the product i.e. price, colour, shape, design, methods of use etc.
3. Quick Solution of Queries: The prospective buyer can make inquiries regarding the
product. Salesman answers these queries quickly and removes any doubts in the mind of
the buyer.
4. More Expensive Approach: Personal selling is more expensive as compared to other
methods.
5. More Flexible: Personal selling is a flexible medium of providing information about
goods and services. While conversing with the customers, the salesman can read the mind
of the customers and acts accordingly.
6. Slow Speed of Sales: Under this, the speed of sales is very slow. Sales persons have to
move from door to door and more than once. This requires a lot of time and consequently
speed of sales slows down.
7. Receipt of Additional Information: Normally, before introducing its product, a
company is aware of the preferences of the probable buyers. Nevertheless, during the
course of personal selling, when the sales person is in direct contact with the buyers he
gathers additional informations regarding their tastes and likings.
8. Real Sale: Under personal selling, the buyers are not only informed about the product but
the goods are actually sold to them.
9. Maintaining the Sales Records: Sales person maintains proper sales records in respect
of the goods sold and the orders secured.

Publicity
Publicity is any unpaid form of non-personal presentations of the ideas, goods, or services. Of-
course, publicity people are paid. But they try to attract attention to the firm and its offering
without having to pay media costs.

For Example: Movie studios try to get celebrities on TV talk shows because this generates a lot
of interest and sells tickets to new movies without the studio paying for TV time.

According to the American Marketing Association, Publicity is, any form of non-paid
commercially significant news or editorial comment about ideas, products or institutions.

Characteristics of Publicity
The characteristics of Publicity are:

1. Credible Message: The message has high credibility than advertising as it appears to the
reader to have been written independently by a media person than by an advertiser.
2. No Media Cost: Since space or time in a media is not bought there is no direct media
cost; but someone has to write the news release, take part in interviews or organise the
news conference.
3. Loss of Control of Publication: In Publicity there is no control over publication of news
item like in advertising. The decision is in the hands of the editor and not with the
organisation.
4. Loss of Control of Content: There is no way of ensuring that the viewpoint of the
company is reflected in the published article.
5. Loss of Control of Timing: An ad campaign can be coordinated to achieve maximum
impact. The timing of publication of news item cannot be controlled.

Objectives of Publicity
1. The major goals of publicity are to stimulate business activity, enhance profits and
increase public awareness of a product.
2. The purpose of publicity is to draw favourable attention to a company and/or its products
without having to pay media for it.
3. Another goal of publicity is to reach the target audience in right time with the right
capsule of message to create the desired perceptions.
4. To increase the awareness of the retailer and his strategy mix and thereby maintaining or
improving companys image.
5. To demonstrate innovativeness in front of the target market as a whole and create the
magical widespread scene of promotion.
6. To minimise total promotion costs by utilising the economies of scope.

Strengths of Publicity
1. Low Cost: The advantages of publicity are low cost, and credibility as it is a non-paid
form of media.
2. Prevent Crisis Situations: A bad day can turn into a media nightmare for otherwise
obscure companies. Getting frequent and positive news coverage for luxury products is
the best way to protect the brand from unpredictable crisis situations.
3. Increase Visibility: As business gain media coverage-whether in print, broadcast, or
online- the brand integrity grows. Eventually luxury products will be recognised as an
industry leader in public opinion.
4. Get Product Reviews: Whether its a product placement in a national magazine, book
review, or a feature article on service, nothing beats objective reviews by independent
third parties for credibility.
5. Building Sales: Media exposure helps to build awareness for business, and products and
services.

Weaknesses of Publicity
1. Lack of Control: The lack of control over the specific content, the timing, and the
amount of coverage.
2. Community Concerns: Publicity campaign displaces crime to an unprotected area and
raising community concerns.
3. Unpredictable: Content of publicity is always unpredictable. Every marketer leave some
type of contingency to negative publicity.
4. Biased: Publicity always talk about good not about errors and mistakes.
5. Repetition: Stories are not likely to be repeated; advertising can be repeated as often as
needed.
6. Negative: The story can be altered so it is not positive.
Public Relations
Most firms in todays environment are not only concerned to customers, suppliers and dealers
but also concerned about the effect of their actions on people outside their target markets. It is a
planned effort by an organisation to influence the attitude and opinions of a specific group by
developing a long-term relationship.

According to Indian Institute of Public Relations, Public relations practice is the planned and
sustained effort to establish and maintain goodwill and mutual understanding between an
organisation and its public.

Characteristics of Public Relations


The characteristics of public relations are:

1. Relatively Low Cost: The major advantage of public relations is that it tends to be much
cheaper, in terms of cost per person reached, than any other type of promotion.
2. Can be targeted: Public relations activities can be targeted to a small specialised
audience if the right media vehicle is used.
3. Credibility: The result of public relation activity often has a high degree of credibility,
compared with other promotional sources such as advertising.
4. Relatively Uncontrollable: A company can exercise little direct control over how its
public relations activity is subsequently handled and interpreted. If successful, a press
release may be printed in full, although there can be no control over where or when it is
printed.
5. Saturation of Effort: The fact that many organisations complete for a finite amount of
media attention puts pressure on the public relations effort to be better than that of
competitors. There can be no guarantee that PR activity will have any impact on the
targets at whom it is aimed.

Objectives of Public Relations


The objectives of public relations are as follows:

1. Building Product Awareness: When introducing a new product or re-launching an


existing product, marketers can use a PR element that generates consumer attention and
awareness through media placements and special events.
2. Creating Interest: Whether a PR placement is a short product article or is included with
other products in round-up article, stories in the media can help to entice a targeted
audience to try the product.
3. Providing Information: PR can be used to provide customers with more in depth
information about products and services.
4. Stimulating Demand: A positive article in a newspaper, on a T.V. news show or
mentioned on the Internet, often results in a discernable increase in product sales.
5. Reinforcing the Brand: In many companies the public relations function is also
involved with brand reinforcement by maintaining positive relationship with key
audiences, and thereby aiding in building a strong image.

Media Management
The Advertising Media can be defined as the communication channels used for advertising,
including television, radio, the printing press, and outdoor advertising etc.

According to Philip Kotler, The communication channels through which message moves from
sender to receiver is called media.

Major types of Advertising Media


1. Newspaper Media: It is the most frequently used medium by a marketers. Newspapers
are locally based, and hence, they have a strong influence on people in the local trade
areas of the marketers.
2. Television Media: Advertising through the television has been a powerful tool for
generating sales volumes. Also, the constantly expanding cable television is becoming an
attractive medium for many small marketers. Although advertising on the Television is
more effective than any other method, it has its own limitations.
3. Radio Media: Some of the marketers use radio as their advertising medium because of
its ability to transmit the marketers messages to a selected audience. Most regions
generally have 5 to10 radio channels, each of which is targeted to customers in various
demographic categories.
4. Outdoor Advertising Media: Outdoor advertising is one of the oldest means of
communications. It was initially used as an effective generative medium in the semi-
urban and rural areas where the reach of other media was negligible.
Examples of outdoor advertising are:
a. Billboard
b. Posters
c. Railway stations
d. Vehicular advertising
e. Field signs
f. Electric light signs
g. Neon signs
h. Sandwich-men
i. In-Flight advertising
5. Direct Mail/ Direct Marketing Media: Direct marketing is regarded as the most
powerful tool in a marketers promotion mix. Direct mailing is more expensive than
media in terms of the cost per contact. Also, it is the quality of the direct mail that
determines its ability to reach the target audience.
6. Web/Internet Advertising Media: With the number of Internet users increasing
phenomenally across the globe, the Internet is likely to emerge as a powerful advertising
media in the near future.

Media Selection or Choice


Media selection or media choice is the process of choosing the most cost- effective media for
advertising, to achieve the required coverage and number of exposure in a target audience. The
purpose of media choice is to transmit the message of advertising to the target audience
effectively and economically.

The key criteria for media selection may be described as follows:

1. Communication Effectiveness: It is the ability of the media to create the desired impact
on the target audience. The print media use pictures and words for the target customers to
see and read. Radio advertising helps the target customers hear the message. Television
enables the target customers to watch and listen to the marketers message.
2. Geographic Selectivity: It is the ability of the media to appeal to particular geographic
area. As the target customers of a majority of marketers come from a particular trading
area, the media should be able to create a significant impact on the target customers in
that particular area, depending on the characteristics of their viewers or readers.
3. Audience Selectivity: It is the ability of the media to convey the message to a specific
target audience within a larger population. Advertising in special magazines target a
specific audience with special interest.
4. Flexibility: This pertains to the ability of the media to allow the advertiser perform
several functions simultaneously. For example, using direct mail will allow the marketer
to send coupons, gifts, and postage paid envelope to the customer, along with the actual
message.
5. Impact: The media can stimulate certain behavioural responses in its target customers.
For example, television and magazines are the most preferred media for building store
image.
6. Prestige: Media advertisements help marketers establish themselves as prestigious firms.
Consumers generally perceive ads in the print media as high status symbol rather than the
electronic media.
7. Immediacy: This is related to the ability of the media to convey messages on time. For
example, advertisement messages can be prepared and aired within a day on the radio.
However, the lead time is generally high in case of magazine and television
advertisements.
8. Message life: This is the duration that the message is available for the target customers.
The duration of television advertisements is generally 10seconds and hence, they should
be repeated frequently for building a store recall.
9. Coverage: This is the percentage of a specific target market that the media is able to
reach. For example, the coverage of a particular magazine can be 55%.
10. Cost: This pertains to the ability of a particular media to reach a particular market in the
most cost-effective manner.
UNIT 5
Marketing Research and Consumer Behaviour
Meaning of Marketing Research: Marketing research is defined as the objective and formal
process of systematically obtaining, analysing and interpreting data for actionable decision
making in marketing.

According to Philip Kotler, Marketing research is the systematic design, collection, analysis
and reporting of data relevant to a specific marketing situation facing an organisation.

Objectives of Marketing Research


1. Discovering the New Markets: The first important objective of marketing research is to
discover the new market for the product. These can be discovered by advertising, market
survey, effective salesmanship etc.
2. Capturing the Greater Market Share: The second objective of marketing research is to
enable the organisation to capture greater market share.
3. Analysing Tastes and Preferences of Customers: An important objective of marketing
research is to analyse tastes and preferences of customers. Marketing research assists in
determining the likings and disliking of the consumers.
4. Anticipating the Future Sales Volume: Marketing research is aimed at studying and
understanding the consumer behaviour. It facilitates in determining the probable future
sales volume that can be achieved either by creating new markets or by adding new lines
of production.
5. Reducing the Cost of Marketing: An important objective of marketing research is to
reduce the cost of marketing. The cost of marketing includes selling, advertising,
promotion and distribution of products.
6. Improving the Quality of Product: Another important objective of marketing research
is to improve the quality of the product. It is the quality of the product which creates
loyalty among consumers for the product of the organisation.
7. Facing cut throat competition: In modern time, no firm can survive without facing
competition in the market. Firm should take proper actions in response to the strategy of
competitors.
8. Making liaison with ultimate consumers: Consumers are neither so simple that they do
not require to be studied, nor so complex that their study is not possible. Marketing
research helps the firm to be in touch with the consumers.
9. Studying the external environment: External environment refers to the present
government policies and regulations. It also provides information regarding the probable
development in the foreign markets, new products and substitutes, emergence of new
competitors and their future impact on firms output.
Importance of Marketing Research
1. Importance to Business and Industry
a. Decision making tool: Marketing research is useful for taking marketing
management decision. It provides necessary information and data in analysed and
processed forms for making marketing decisions