Bba Marketing Notes 2018-19

MARKETING
Unit-I: Concept of marketing - Market, Marketing, Marketer - Selling concept,

marketing concept, Social marketing concept -Need of marketing in Business Sector
- Non-profit sector and Government sector-Marketing environment - Identifying
market segments
Unit-II: Product and Product lines Product hierarchy, Product classification,

Product mix decisions Product line decisions, Product attribute decisions, Product
life cycle, marketing strategies for different stages of the product life cycle.
Branding and Brand decisions, Packing and labeling decision
Unit-III: Pricing: Setting the price, Pricing process, Pricing methods. Price
discounts and allowances, Promotional pricing, Discriminatory pricing, Product mix
pricing.
Unit-IV: Marketing channels: The Importance of marketing channels, Channel

design decisions Channel management decisions Channel Conflict: Types, Causes
and managing the conflict.
Unit-V: Promotion mix Advertisement: - Meaning, Objectives Types of Media

Sales Promotion Objectives and Tools Public relation -Meaning and Tools Personal
selling -Process.
BBA IV SEMSETER MARKETING

Unit-I: Concept of marketing - Market, Marketing, Marketer - Selling concept, marketing
concept, Social marketing concept -Need of marketing in Business Sector - Non-profit sector and
Government sector-Marketing environment - Identifying market segments
Definitions of Marketing
"the activity, set of institutions, and processes for creating, communicating, delivering, and
exchanging offerings that have value for customers, clients, partners, and society at large."
– American Marketing Association
“Satisfying needs and wants through an exchange process.”-Phillip Kotler
“The management process responsible for identifying, anticipating and satisfying customer
requirements profitably.” -Chartered Institute Marketing
MARKET:
A market consists of all potential customers sharing particular need/ want who may be
willing and able to engage in exchange to satisfy need/ want.
Market Size = fn (Number of people who have need/ want; have resources that interest others,
willing or able to offer these resources in exchange for what they want).
In Marketing terms: Sellers – called as “INDUSTRY”. Buyers – referred to in a group as
“MARKET”.
Types of Markets:
- Resource Market,
- Manufacturing Market,
- Intermediary Market,
- Consumer Market,
- Government market.
The marketing concept underscores:
1. Identifying the market or targeting consumers;
2. Understanding the needs and wants of the consumers in the target market;
3. Creating products or services based on the consumers’ needs and wants;
4. Satisfying the needs of consumers better than competitors; and
5. Accomplishing all of these while earning a profit.

MARKETING AND SELLING CONCEPT
SELLING MARKETING
1 Emphasis is on the product 1 Emphasis on consumer needs wants
2 Company Manufactures the 2 Company first determines customers needs

product first and wants and then decides out how to deliver a
product to satisfy these wants
3 Management is sales volume 3.Management is profit oriented

oriented
4 Planning is short-run-oriented in 4 Planning is long-run-oriented in today’s

terms of today’s products and products and terms of new products,
markets tomorrow’s markets and future growth
5 Stresses needs of seller 5 Stresses needs and wants of buyers
6 Views business as a good producing 6 Views business as consumer producing

process process satisfying process
7 Emphasis on staying with existing 7 Emphasis on innovation on every existing

technology and reducing costs technology and reducing every sphere, on
providing better costs value to the customer by
adopting a superior technology
9 Cost determines Price 9. Consumer determine price, price determines

cost
10. Selling views customer as a last 10. Marketing views the customer last link in
link in business business as the very purpose of the business

SOCIETAL MARKETING CONCEPT
Philip Kotler introduced the concept of social marketing and societal marketing
The societal marketing concept holds “marketing strategy should deliver value to customers in a
way that maintains or improves both the consumer’s and society’s well-being”.
It calls for sustainable marketing, socially and environmentally responsible marketing that meets
the present needs of consumers and businesses while also preserving or enhancing the ability of
future generations to meet their needs.
The Societal Marketing Concept puts the Human welfare on top before profits and satisfying the
wants.
The global warming panic button is pushed and a revelation is required in the way we use our
resources. So companies are slowly either fully or partially trying to implement the societal
marketing concept.
Companies should balance three considerations in setting their marketing strategies: company
profits, the consumer wants, and society’s interests.
- Society (Human Welfare) Companies must make sure the products, services, actions,
investments innovations servers the society first.
- Consumers (Satisfaction) Products and services should be satisfying the consumer’s
needs.
- Company (Profits) Building long-term customer relationship, being socially responsible,
and providing satisfactory products are important for profit-making and wealth
maximization.
Objectives of Societal Marketing Concept
- To maintain a long-term relationship with customers.
- To create a better image in the society for the company than it’s competitors.
- To carry out its social responsibilities.
- Developing community awareness towards its brands.
- To carry out its social responsibilities.
- To increase the consumer base and market share.

MARKETING ENVIRONMENT
Philip Kotler, marketing environment refers to “external factors and forces that affect the
company’s ability to develop and maintain successful transactions and relationships with its target
customers”.
The marketing environment is made up of:
1. Micro-environment and 2. Macro-environment.
Concept of Micro and Macro Environment:
A marketing oriented company looks outside its premises to take advantage of the emerging
opportunities, and to monitor and minimize the potential threats face by it in its businesses. The
environment consists of various forces that affect the company’s ability to deliver products and
services to its customers.
1. Micro-environment:
The microenvironment of the company consists of various forces in its immediate environment
that affect its ability to operate effectively in its chosen markets.
This includes the following:
(a) The company
(b) Company’s Suppliers
(c) Marketing Intermediaries
(d) Customers
(e) Competitors
(f) Public

Seven types of public, as shown below surround every company:
1. Financial—banks, stockbrokers, financial institutions.
2. Media—Newspaper, magazines, TV.
3. Government—Government departments.
4. Citizen—Consumer Organizations; environment groups.
5. Local—neighborhood residents, community groups.
6. General—General Public, public opinions.
7. Internal—Workers, officers, Board of Directors.
Macro Environment:
The macro-environment consists of broader forces that not only affect the company and the
industry, but also other factors in the microenvironment.
The components of a macro-environment are:
(a) Demographic Environment
(b) Economic Environment
(c) Physical Environment
(d) Technological Environment
(e) Political Environment
(f) Legal Environment
(g) Social and Cultural Environment
(a) Demographic Environment (Income, age, sex, Life style, Education, Social class,
Occupation, Age)
(b) Economic Environment
(General Economic Conditions: Agricultural trends, Industrial output trends, Per capita
income trends, Pattern of income distribution, Pattern of savings and expenditures, Price
levels, Employment trends, Impact of Government policy, Economic systems.)
(Industrial Conditions: Market growth, Demand patterns of the industry, Its stage in product
life cycle.)
(Supply sources for production: Land, Labour, Capital, Machinery and equipment etc.)
(c) Physical Environment
(d) Technological Environment
(e) Political Environment

(f) Legal Environment ( Indian Contract Act 1872, Factories Act 1948, Minimum Wages Act
1948,Essential Commodities Act 1955,Securities Contracts Regulation Act 1956 (SEBI Act),The
Companies Act 1956,Trade and Merchandise Act 1958,Monopolies and Restrictive Trade Practice
Act 1969, The water (Prevention and Control of Pollution) Act 1974, The Air (Prevention and
Control of Pollution) Act 1981, Sick Industrial Companies (Special Provisions) Act 1985,
Environment Protection Act 1986,Consumer Protection Act 1986,Securities and Exchange Board
of India Act 1992, Different Taxation Laws.)
(g) Social and Cultural Environment
IDENTIFYING MARKET SEGMENTS
Segmentation, targeting, and positioning together comprise a three stage process.

(1) Determine which kinds of customers exist, then
(2) Select which ones we are best off trying to serve and, finally,
(3) Implement our segmentation by optimizing our products/services for that segment and
communicating that we have made the choice to distinguish ourselves that way.
Example: NESTLE MAGGI NOODLES

SEGMENTATION
The division of a broad market into small segments comprising of individuals who think on the
same lines and show inclination towards similar products and brands is called Market
Segmentation.
Market Segmentation refers to the process of creation of small groups (segments) within a large
market to bring together consumers who have similar requirements, needs and interests.
The individuals in a particular segment respond to similar market fluctuations and require identical
products. In simpler words market segmentation can also be called as Grouping.
Kids form one segment; males can be part of a similar segment while females form another
segment. Students belong to a particular segment whereas professionals and office goers can be
kept in one segment.
TARGETING
Once the marketer creates different segments within the market, he then devises various marketing
strategies and promotional schemes according to the tastes of the individuals of particular segment.
This process is called targeting. Once market segments are created, organization then targets them.
Targeting is the second stage and is done once the markets have been segmented. Organizations
with the help of various marketing plans and schemes target their products amongst the various
segments.
Nokia offers handsets for almost all the segments. They understand their target audience well and
each of their handsets fulfils the needs and expectations of the target market. Tata Motors launched
Tata Nano especially for the lower income group.
POSITIONING
Once the organization decides on its target market, it strives hard to create an image of its product
in the minds of the consumers. The marketers create a first impression of the product in the minds
of consumers through positioning.
Positioning helps organizations to create a perception of the products in the minds of target
audience.
Ray Ban and Police Sunglasses cater to the premium segment while Vintage or Fastrack
sunglasses target the middle income group. Ray Ban sunglasses have no takers amongst the lower
income group. Garnier offers wide range of merchandise for both men and women.
Each of their brands has been targeted well amongst the specific market segments. (Men, women,
teenagers as well as older generation)
Men - Sunscreen lotions, Deodorant

Women - Daily skin care products, hair care products
Teenagers - Hair colour products, Garnier Light (Fairness cream)
Older Generation - Cream to fight signs of ageing, wrinkles
A female would never purchase a sunscreen lotion meant for men and vice a versa. That’s brand
positioning.

SEGMENTATION OF CONSUMER MARKET
SEGMENTATION OF INDUSTRIAL MARKET

SEGMENTATION OF CONSUMER MARKET
MAIN CATEGORY SEGMENTATION BASE EXAMPLE/S
GEOGRAPHIC Country/continent England, UK, Europe
Region/area of the country North India, West India, South India
City New York, Los Angeles, Dallas, Chicago
Urban/rural Measured by the area’s population density
Climate Tropical, arid, alpine
Coastal/inland Measured by distance to the coast
DEMOGRAPHIC Age group Pre-teens, teens, young adults, older adults
Generation Baby boomers, Gen X, Gen Y
Gender Male, female
Marital status Married, single, widowed
life cycle Young married no kids, married young kids
Family size Couple only, small family, large family
Occupation Professional, trade, unskilled
Education High school, university, vocational
Ethnic background African-American, Hispanic, Asian
Religion Christian, Jewish, Hindu, Muslim
PSYCHOGRAPHIC Lifestyle Family, social, sporty, travel, education
Values (VALS) VALS = values and lifestyles
Social class Upper class, middle class, lower class
Personality/self-concept Ongoing, creative, innovator, serious
Activities, interests, opinions (AIO) various hobbies, sports
BENEFITS SOUGHT Needs/motivations Convenience, value, safety, esteem
BEHAVIORAL Occasion Birthday, anniversary, Valentine’s Day
Buying stage Ready to buy, gathering information only
User status Regular, occasional, never
Usage rate heavy, light
Loyalty status Loyal, occasional switcher, regular switcher
Brand knowledge Strong, some, none
Shopping style enjoys shopping, functional, avoids
Involvement level High, medium, low

BASIS FOR MARKET SEGMENTATION FOR INDUSTRIAL MARKET
1. Demographics: industry, company size, customer location
2. Operating variables: company technology, product/brand use status, customer
capabilities
3. Purchasing approaches: purchasing function, power structure, buyer-seller
relationships, purchasing policies, purchasing criteria
4. Situational factors: urgency of order, product application, size of order
5. Buyers’ personal characteristics: character, approach

MARKETING ORIENTATION
The concept of marketing is a fundamental piece of the marketing arrangements.
1. Production era: ‘Cut costs. Profits will take care of themselves’ The mantra for
marketing success was to “Improve production and distribution”. The rule was “availability
and affordability is what the customer wants
2. Product era: consumers favor products that offer the most quality, performance and
innovative features and the mantra for marketers was ‘A good product will sell itself’, so does
not need promotion.
3. Sales era: “Consumers will buy products only if the company promotes/ sells these
products”. This era indicates rise of advertising and the mantra for marketers was “Creative
advertising and selling will overcome consumers’ resistance and convince them to buy”.
‘Selling is laying the bait for the customer’
4. Marketing era: Marketing Era which focused on the “needs and wants of the customers”
and the mantra of marketers was” ‘The consumer is king! Find a need and fill it’

MARKETING MIX
"set of marketing tools that the firm uses to pursue its marketing objectives in the target"
In the 1940s, James Culliton portrayed the marketing manager as a mixer of ingredients.
In 1964, Neil Borden published an article whose title was “The Concept of the Marketing Mix”,
from which the marketing mix concept started gaining popularity.
Borden outlined these ingredients among many others as product, distribution, planning, price,
branding, advertising, packaging, promotions display, and personal selling.
E. Jerome McCarthy (McCarthy, J. 1960), was the first person to suggest the four P's of
marketing – price, promotion, product and place (distribution) – which constitute the most
common variables used in constructing a marketing mix
Product: refers to the item actually being sold. The product must deliver a minimum level of
performance; otherwise even the best work on the other elements of the marketing mix won't do
any good
Price: refers to the value that is put for a product. It depends on costs of production, segment
targeted, ability of the market to pay, supply - demand and a host of other direct and indirect
factors. There can be several types of pricing strategies, each tied in with an overall business plan.
Pricing can also be used a demarcation, to differentiate and enhance the image of a product.
Place: refers to the point of sale. In every industry, catching the eye of the consumer and making
it easy for her to buy it is the main aim of a good distribution or 'place' strategy. Retailers pay a
premium for the right location. In fact, the mantra of a successful retail business is 'location,
location, location'.
Promotion: this refers to all the activities undertaken to make the product or service known to the
user and trade. This can include advertising, word of mouth, press reports, incentives,
commissions and awards to the trade. It can also include consumer schemes, direct marketing,
contests and prizes.

NEED of marketing in
o Business Sector
o Non-profit sector and
o Government sector
REASONS WHY THE PUBLIC SECTOR NEEDS MARKETING
Engage your team

Marketing is a companywide initiative; it is a mind-set. It does not start and stop with the
marketing department. All employees are brand ambassadors.
Predictably, marketing in the public sector should be focused on determining the stakeholders’
interests and painstakingly delivering strategies that address them. Envision your mission,
establish the values and communicate it effectively. This is the foundation for the organization’s
culture.
Focus on the community
Social marketing principles and methods can be used to benefit society as a whole. Additionally,
it can pinpoint the needs of a specific target audience. Your marketing efforts should not be a one-
size-fits-all approach. Develop a strategy to create value for different organizational stakeholders.
Experts say that one of the biggest trends in marketing was the fact that customers (stakeholders)
look for interaction — a way to get involved with the brands they use. They expect a more
personalized encounter and want a unique experience.
Business 2 Community is an open community of contributors of news and trends in social media,
digital marketing, etc. reported “a survey of 745 marketers, a quarter of respondents are devoting
more than 50 percent of their budgets to content.”
Measure your ROI
Marketing has time-tested strategies that work and it delivers social, financial and environmental
good. Bang the Table offers strategies, case studies and research citing the data. Government
agencies and other public service organizations need to acknowledge the role of social trends.
They affect significant economic indicators. Reaching specific demographic groups is pivotal.
Increased Revenue and Balance the Budget
Marketing in the public sector generates profits. Branding a municipality increases tourists with
money to spend at local businesses. Increasing revenue through non-tax programs like
sponsorships is a winning proposition for all parties. Executing social change programs that
promote health or safety results in statewide savings.

NEED OF MARKETING FOR AN NGO (Non-Profit Organization)
Marketing is important for just any brand. All of them have to serve their target markets. When it
comes to the NGOs, you know how important it is for them to build trust. Therefore, marketing
for them can be a lifesaver. NGOs are also brands and like the big brands, they too need a definite
marketing strategy. Marketing works to increase your market share. Another area where marketing
works in the favour of NGOs is competition. The competition is intense for every rupee being
donated. Being a well-known brand helps them find sources of donation easily. Marketing’s
power is unlimited. Some of the world’s biggest NGO’s are as influential because they have
marketed themselves well. Even the NGOs need to expand their influence. Many of them serve
in cross border territories. However, the kind of services they provide also requires investment.
The well-known NGOs are well known for they have marketed their brand well. Imagine an NGO
in a dark corner where few people know of its existence and purpose. Such a brand cannot exist
for long unless it is fully self-dependent in terms of resources. Even then, there are regulatory and
legal requirements which require the brand to market itself properly. An NGO can become
influential by marketing its brand rightly. Being influential means not just being well known but
also inspiring people to support. Support can also come in other forms than only financial.
Today, marketing may have become easier with the rise of Information technology but still a clear
cut and well planned marketing strategy is essential for an NGO trying to grow its presence. There
are several tools that can help NGOs advertise and market themselves without major financial
investment. Social media is the best tool for low cost advertising. NGOs can gain access to a very
large pool of fans and followers and that too without any financial investment. Social media
engagement is a very good method for NGOs to create brand awareness and grow market presence.
Facebook, Twitter, Instagram and YouTube can help them grow the awareness about their brands
among the common public and also find prospective donors easily. Apart from it a website and
email marketing also provides a cost free method of advertising and promotion. However, nothing
big can be achieved without creating trust.
Therefore, NGOs must focus upon the quality of their marketing messages. However, NGOs must
avoid unethical tactics at every cost because in their case image and reputation matter more than
the common business brands. Once spoilt it will be difficult to rebuild their reputation.

The Importance of Marketing: 10 Reasons You Can’t Afford Not to Market Your Business
1. You’ll make more sales
“No sales, no company.” – Mark Cuban
2. You’ll increase awareness
“More contact means more sharing of information, gossiping, exchanging, engaging – in short,
more word of mouth.” – Gary Vaynerchuk
3. You’ll learn your metrics
“What gets measured, gets managed.” – Peter Drucker
4. You’ll make consumers trust you
“People share, read and generally engage more with any type of content when it’s surfaced
through friends and people they know and trust.” – Malorie Lucich, Facebook
5. You’ll build a social asset
“One way to sell a consumer something in the future is simply to get his or her permission in
advance.” – Seth Godin
6. You’ll learn your marketplace
“Understand why and how your audience uses technology and then start trying to align your
communications efforts.” – Brian Reich and Dan Solomon
7. You’ll discover what works
“Give them quality. That’s the best type of advertising.” – Milton Hershey
8. You’ll develop an ‘ideal customer’ profile
“You can’t just ask customers what they want and then try to give that to them. By the time you
get it built, they’ll want something new.”– Steve Jobs
9. You’ll learn how to test and optimize
“In the modern world of business, it is useless to be a creative, original thinker unless you can
also sell what you create.” – David Ogilvy
10. You’ll build a powerful brand
“A brand for a company is like a reputation for a person. You earn reputation by trying to do
hard things well.” – Jeff Bezo

Unit-II: Product and Product lines Product hierarchy, Product classification,
Product mix decisions Product line decisions, Product attribute decisions, Product
life cycle, marketing strategies for different stages of the product life cycle.
Branding and Brand decisions, Packing and labeling decision
In marketing, a product is anything that can be offered to a market that might satisfy a want or
need. In retailing, pro ducts are called merchandise. In manufacturing, products are bought as raw
materials and sold as finished goods. Commodities are usually raw materials such as metals and
agricultural products, but a commodity can also be anything widely available in the open market.
A good, idea, method, information, object or service created as a result of a process and serves a
need or satisfies a want. It has a combination of tangible and intangible attributes (benefits,
features, functions, uses) that a seller offers a buyer for purchase. For example a seller of a
toothbrush not only offers the physical product but also the idea that the consumer will be
improving the health of their teeth.
PRODUCT LEVELS:
Theodore Levitt proposes that in planning its market offering, the marketer needs to think through
5 levels of the product. Each level adds more customer value and taken together forms Customer
Value Hierarchy.
i. Core Benefit or Product: This is the most fundamental level. This includes the fundamental
service or benefit that the customer is really buying. For example, a hotel customer is actually
buying the concept of “rest and sleep”
This is the basic product and the focus is on the purpose for which the product is intended. For
example, a warm coat will protect you from the cold and the rain.

ii. Basic or Generic Product: The marketer at this level has to turn the core benefit to a basic
product. The basic product for hotel may include bed, toilet, and towels.
This represents all the qualities of the product. For a warm coat this is about fit, material, rain
repellent ability, high-quality fasteners, etc.
iii. Expected Product: At this level, the marketer prepares an expected product by incorporating
a set of attributes and conditions, which buyers normally expect they purchase this product. For
instance, hotel customers expect clean bed, fresh towel and a degree of quietness.
This is about all aspects the consumer expects to get when they purchase a product. That coat
should be really warm and protect from the weather and the wind and be comfortable when riding
a bicycle.
iv. Augmented product: At this level, the marketer prepares an augmented product that exceeds
customer expectations. For example, the hotel can include remote-control TV, fresh, flower room
service and prompt check-in and checkout. Today’s competition essentially takes place at the
product-augmentation level. Product augmentation leads the marketer to look at the user’s total
consumption system i.e. the way the user performs the tasks of getting, using fixing and disposing
of the product.
This refers to all additional factors which sets the product apart from that of the competition. And
this particularly involves brand identity and image. Is that warm coat in style, its colour trendy
and made by a well-known fashion brand? But also factors like service, warranty and good value
for money play a major role in this.
v. Potential Product: This level takes into care of all the possible augmentations and
transformations the product might undergo in the future. This level prompts the companies to
search for new ways to satisfy the customers and distinguish their offer. Successful companies add
benefits to their offering that not only satisfy customers, but also surprise and delight them.
Delighting is a matter of exceeding expectations.
This is about augmentations and transformations that the product may undergo in the future. For
example, a warm coat that is made of a fabric that is as thin as paper and therefore light as a feather
that allows rain to automatically slide down

PRODUCT CLASSIFICATION
Product Classification Schemes
 Durability
 Tangibility
 Use
Classification based on durability and tangibility

1. Nondurable goods.
2. Durable goods
3. Services
Classification based on use
1. Consumer goods
2. Industrial goods
Product can be classified into three group, according to their durability or tangibility
as shown below:
a. Non durable goods: Non durable goods are tangible goods that are normally consumed in one
or few uses. Examples are Beer, Toothpaste, Sugar, Soap and Salt. These goods are consumed fast
and purchased frequently by the consumers. Many fast foods fall into this category.
b. Durable Goods: These tangible goods normally survive many uses. Goods that fall under this
category include, Furniture, Refrigerator, Clothing, Rug etc. They are not frequently purchased as
non-durable goods because they are used up slowly.
c. Services: These are activities, benefits or satisfaction that are offered for sale. Examples are
Haircuts, Repairs, Banking Services and Dry cleaning. Services are intangible. They are usually
produced and consumed in the same time frame unlike durable goods or non-durable goods that
can be produced and shelved. The producer of goods may be far away from consumers, but service
providers often work in the presence of the customers.

PRODUCT CLASSIFICATION: CONSUMER GOODS
Edward and Richard (1971) identified four classes of consumer goods namely convenience,
shopping, specialty, and unsought goods. These categories were identified based on consumer
buying patterns.
1. Convenience goods are those that are regularly consumed and are readily available for
purchase. These goods are mostly sold by wholesalers and retailers and include items such
as milk and tobacco products. Convenience goods can be further segmented into staple
convenience goods (fulfilling basic customer necessities) and impulse convenience
goods (non-priority goods, such as cigarettes).
2. Shopping goods are those in which a purchase requires more thought and planning than
with convenience goods. Shopping goods are more expensive and have more durability
and longer lifespans than convenience goods. Shopping goods include furniture and
televisions.
3. Specialty consumer goods are rare and often considered luxurious. The purchase of
specialty goods is reserved for an elite class of shoppers with the financial means to
conduct the purchase. Marketing efforts are geared to a niche market, usually the upper
class. These products include furs and fine jewelry.
4. Unsought consumer goods are readily available but are purchased by a few members of
the available market. These items are not usually purchased repeatedly and usually serve
specific needs, such as life insurance, fire extinguisher, Coffin box

PRODUCT CLASSIFICATION: INDUSTRIAL GOODS
This classification is based on relationship of the goods to the organisation’s production process
and cost structure. Industrial goods are intermediate goods and can be classified into three
categories below:
(a) Classification of Industrial Products:

Types of Industrial Product are as follows:
1. MATERIALS AND PARTS:
These refer to the goods that completely enter into the manufacture of a product.
These are of two types:

(a) Raw Material:
These are of two types (i) agricultural products like sugar cane, wood, rubber etc. and (ii) natural
products like iron ore, crude petroleum etc.
(b) Manufactured Materials and Parts:

These are of two types (i) component material like glass, iron, plastic etc. and (ii) component parts
like steering, battery, bulb etc.
2. CAPITAL ITEMS:
These goods are used in producing finished goods. They include tools, machines, computer etc.
Capital items are classified into (a) installations like elevators, mainframe computers etc. and (b)
equipment’s like hand tools, fax machine etc.
3. SUPPLIES AND BUSINESS SERVICES:

These include goods like paints, lubricants, computer stationary etc., which are required for
developing or managing the finished products. These are classified into (a) maintenance and repair
items like paints, nails, solutions etc. and (b) operating supplies like oils, lubricants, ink etc.

COMPANY’S DECISION MAKING ON PRODUCT RELATES TO:
 Product Mix Decisions.
 Product line Decisions.
 Individual product/brands decisions.
1. PRODUCT MIX DECISIONS (PRODUCT PORTFOLIO OR PRODUCT

ASSORTMENT)
Product mix or product assortment refers to the number of product lines that an organisation
offers to its customers. Product line is a group of related products manufactured or marketed by
a single company. Such products function in similar manner, sold to the same customer group,
sold through the same type of outlets, and fall within a same price range .
The Product Mix as defined by AMA is “the full set of products offered for sale by an
organization. It includes all product lines and categories. It may be defined more narrowly in
specific cases to mean only that set of products in a particular product line or a particular market.

 Product Width – It refers to how many different product lines the company carries. The chart
above shows that the product-mix width of Cadbury is 4.
 Product Length – It refers to the total number of items in the mix. Here it is 16.
 Product Depth – It refers to how many variants are offered of each product in the product line
 Product Consistency – It describes how closely related the product lines are in end use, production
requirements, distributional channels, or some other way. The lesser the variations between the
products, the more is the product line consistency. Cadbury’s product lines are consistent as they
are consumer products and go through the same distribution channels. These lines are less
consistent in terms of the function and value they perform for the buyers.

2. PRODUCT LINE DECISIONS:
• Product line group of products that are closely related because:

 They perform a similar function.
 Are sold to the same customer groups.
 Are marketed through same channels.
 Fall within given price range.
• Normally a product line is managed by a group of persons/ one person (product manager) to
manage product line, starting point is product line analysis.
Based on product line decisions to be taken could be on:
1. Product Line Length (Line enlargement)
2. Line Modernization
3. Line Featuring
4. Line Pruning
1. PRODUCT LINE LENGTH (LINE ENLARGEMENT):

Product line is too short if profits can be increased by adding items to product line. Product line
is too long if profit can be reduced by dropping items from product line.
• Company’s objectives also influence product line length.
1. If objective is increased market share: Longer product line length.

2. If objective is increased profit: Shorter product line.
• Product line may be enlarged through:

1.1 Line Stretching. 1.2 Line Filling.
1.1 Line Stretching:
• Every product line covers a certain /full part of total possible range.
• Line stretching occurs when a company lengthens its product line beyond its current range.
• Line stretching could be:
1.1. A.Downward Stretch: Moving from upper market to segment below.
Example: Splendor to CD Dawn.

Reasons could be:
• Growth is slow at higher end.
• Initial highly priced product stability.
• Quality image & stretch decreases brings in volume.
• To counter competition.
• New low end product may cannibalize current product to some extent but this is
preferable than move out of competition.
1.1. B.Upward Stretch: Moving from low priced product to upper end/ premium products.
Example: HLL’s Lifebuoy/ Lux: Dove.

Reasons could be:
 Higher margins at premium Product levels.
 Increased growth rate.
 Positioning as full line manufacturers.
1.1. c Two Way Stretch: Companies serving middle market may stretch up & down.
Example: HLL’s Surf/RIN to Surf Excel/ Wheel.
1.2 Line Filling: Product line may be lengthened by adding products /items within lines present
range. This is called line filling.
• Example: Colgate Herbal/ Maruti swift, Getz.
• Reasons could be:
1. Reaching for incremental profits.
2.Satisfy dealers/distribution who complains of lost sales due to missing products.
3. Utilization of excess capacity.
4.Keep out competition/ increased competitiveness.
5.To be leading full line company:
6.Each item should posses a just notable difference.
Normally customers are more attentive to relative differences rather than absolute difference.

2.LINE MODERNISATION: Product line modernization refers to:
- Change in product with technology.
-Change in looks/ style of product.
Example: Intel: Continuously change PC chips.
Maruti: Change in style of 800 cc car.
Hero Honda: Splendor to Splendor +
• In Line Modernization, new products are launched and old are discontinued.
• In Line Enlargement, new products are in market along with old products.
• Timing of line Modernization is important:
If it is too soon : current product line may get damaged.
If it is too late : competition may have already reached.
3. LINE FEATURE: Product line manager may select one/few items in the line to feature i.e. to
be
considered as Traffic Builders/ Flagship products.
• This could be done:
By a premium marketer with a low price but quality product.
• Example: Mercedes Benz economy at Rs. 18 Lakhs.
By a mass marketer to lend prestige to product line.
• Example: Bajaj Eliminator.
4. LINE PRUNING: Product line needs to be reviewed periodically for pruning/ dropping
markets.
• Pruning could be due to:
-Dead products that depress profits.
-Company being short production capacity in this case, company should concentrate on
higher margin products.
• In general:
If Demand is slow: Product line is lengthened to increase customer base.
If Demand is high: Product line is shortened to earn maximum profits.

PRODUCT ATTRIBUTE DECISIONS
Attributes of a product are the various components that make up the product. Usually product
attributes extend to actual features, as well as uses and benefits. But it is probably easiest to
think of attributes as the actual features of the product.
PRODUCT ATTRIBUTES – STAGE ONE OF INDIVIDUAL PRODUCT
DECISIONS
When making product attribute decisions, a firm faces three main decision areas, namely:
- Product quality
- Product features
- Product design
a) Product Attributes
Developing a product or service involves defining the benefits that it will offer. These benefits are
communicated to and delivered by product attributes such as quality, features, style and design.
i. Product Quality
Quality is one of the marketer's major positioning tools.
Product quality has two dimensions--level and consistency.
In developing a product, the marketer must first choose a quality level that will support the
product's position in the target market. Here, product quality means performance quality--the
ability of a product to perform its functions beyond quality level, high quality also can mean high
levels of quality consistency. Here, product quality means conformance quality—freedom from
defects and consistency in delivering a targeted level of performance. All companies should strive
for high levels of conformance quality.
ii.Product Features
A product can be offered with varying features. A stripped-down model, one without any extras,
is the starting point. The company can create higher-level models by adding more features.
Features are a competitive tool for differentiating the company's product from competitors'
products. Being the first producer to introduce a needed and valued new feature is one of the most
effective ways to compete.
How can a company identify new features and decide which ones to add to its product?
The company should periodically survey buyers who have used the product and ask these
questions
 How do you like the product?

 Which specific features of the product do you like most?
 Which features could we add to improve the product?

The answers provide the company with a rich list of feature ideas. The company can then assess
each feature's value to customers versus its cost to the company.
Features that customers value little in relation to costs should be dropped; those that customers
value highly in relation to costs should be added
iii. Product Style and Design
Another way to add customer value is through distinctive product style and design. Some
companies have reputations for outstanding style and design. Design is a larger concept than style.
Style simply describes the appearance of a product. Styles can be eye catching or yawn producing.
A sensational style may grab attention and produce pleasing aesthetics, but it does not necessarily
make the product perform better.
Unlike style, design is more than skin deep--it goes to the very heart of a product. Good design
contributes to a product's usefulness as well as to its looks. Good style and design can attract
attention, improve product performance, cut production costs, and give the product a strong
competitive advantage in the target market
Overall product attributes decision
The three elements of product attributes – the overall product quality, the actual product features
included, and how the features are integrated together and how product looks – are very important
decisions to guide the success of the product. Ideally, we are looking for a product that in
combination of these attribute decisions meet the needs of the target market, while providing some
form of differentiation against their key competitors
BRANDING – STAGE TWO OF INDIVIDUAL PRODUCT DECISIONS
• A Brand is a name/ term/ sign/symbol design or combination of them intended to Identify the
good/services/ ideas of one seller /group of sellers & to differentiate them from these of
competition.
The word "brand" derives from the Old Norse "brandr" meaning "to burn" - recalling the practice
of producers burning their mark (or brand) onto their products.
Branding is the set of activities designed to create a brand and position it in the minds of
consumers.
BRAND ELEMENTS
Brands typically comprise various elements, such as:
Name: the word or words used to identify a company, product, service, or concept
Logo: the visual trademark that identifies a brand
Tagline or catchphrase: “Boost is the secret of our energy”
Graphics: the "dynamic ribbon" is a trademarked part of Coca-Cola's brand
Shapes: the distinctive shapes of the Coca-Cola bottle and of the Volkswagen Beetle are
trademarked elements of those brands
Sounds: a unique tune or set of notes can denote a brand. AIRTEL Jingle provide a famous
example.
Tastes: Hyderbad Dum Briyani has trademarked its special recipe
Scents: the rose-jasmine-musk scent of Chanel No. 5 is trademarked.
Movements: Lamborghini has trademarked the upward motion of its car doors

BRAND DECISIONS
1. Brand Positioning – Branding Decisions
A brand must be positioned clearly in target customers’ minds. Brand positioning can be done at
any of three levels:
1. on product attributes
2. on benefits
3. on beliefs and values.
2. Brand Name Selection – Branding Decisions
When talking about branding decisions, the brand name decision may be the most obvious one.
The name of the brand is maybe what you think of first when imagining a brand – it is the base of
the brand
3. Brand Sponsorship – Branding Decisions
Branding decisions go beyond deciding upon brand positioning and brand name. The third of our
four branding decisions is the brand sponsorship. A manufacturer has four brand sponsorship
options.
4. Brand Development – Branding Decisions
Branding decisions finally include brand development. For developing brands, a company has four
choices: line extensions, brand extensions, multibrands or new brands.

PACKAGING – STAGE THREE OF INDIVIDUAL PRODUCT DECISIONS
Packaging refers to activities of designing and producing the wrapper or container for a product.
The packaging of a product is a more important decision than you would expect it to be.
Traditionally, the primary function of a package was to hold and protect the product.
However, packaging is nowadays an important marketing tool, too. This is a result of increased
competition and offer of products. Packaging must now perform many tasks, which include
attracting attention, describing the product, and even making the sale.
Packaging decisions are important for several reasons including:
Protection – Packaging is used to protect the product from damage during shipping and handling,
and to lessen spoilage if the protect is exposed to air or other elements.
Visibility – Packaging design is used to capture customers’ attention as they are shopping or
glancing through a catalogue, website or smartphone app. This is particularly important for
customers who are not familiar with the product or in situations where a product must stand out
among thousands of other products, such as those found in grocery stores. Packaging designs that
stand out are more likely to be remembered on future shopping trips.
Added Value – Packaging design and structure can add value to a product. For instance, benefits
can be obtained from package structures that make the product easier to use while stylistic designs
can make the product more attractive to display in the customer’s home (e.g., design of plug-in air
fresheners).
Distributor Acceptance – Packaging decisions must not only be accepted by the final customer,
it may also have to be accepted by distributors who sell the product for the supplier. For instance,
a retailer may not accept packages unless they conform to requirements they have for storing
products on their shelves (e.g., fits maximum height or weight requirements).
Cost – Packaging can represent a significant portion of a product’s selling price. For example, it
is estimated that in the cosmetics industry the packaging cost for some products may be as high as
40% of a product’s selling price. Smart packaging decisions can help reduce costs and possibly
lead to higher profits.
Expensive to Create – Developing new packaging can be extremely expensive. The costs
involved in creating new packaging include: graphic and structural design, production, customer
testing, possible destruction of leftover old packaging, and possible advertising to inform customer
of the new packaging.
Long-Term Decision – When companies create a new package it is most often with the intention
of having the design on the market for an extended period of time. In fact, changing a product’s
packaging too frequently can have negative effects since customers become conditioned to locate
the product based on its package and may be confused if the design is altered.
Environmental or Legal Issues – Packaging decisions must also include an assessment of its
environmental impact especially for products with packages that are frequently discarded.
Packages that are not easily bio-degradable could draw customer and possibly governmental
reaction. Also, caution must be exercised in order to create packages that do not infringe on another
firm’s intellectual property, such as copyrights, trademarks, or patents.

LABELLING – STAGE FOUR OF INDIVIDUAL PRODUCT DECISIONS
Labels perform several functions and are therefore one of the important individual product
decisions. The most straightforward function is to identify the product or brand. But the label can
also describe several things about the product: who made it, where and when was it made, the
contents, how it is to be used etc. Finally, the label can promote a brand. It supports the
brand’s positioning and may help to connect with customers. By a brand logo, the label can add
personality to a brand and contribute to the brand identity.
However, a label should only show and state what is true and what the customer can rely upon.
Misleading or deceptive labels must be seen as unfair competition. If labels mislead customers,
fail to describe important ingredients or even fail to mention required safety warnings, legal
consequences are likely to follow.
Labelling has also been affected recently by unit pricing (the price per unit of standard measure
must be stated), open dating (the expected shelf life of the product must be mentioned) and
nutritional labelling (the nutritional values in the product must be shown). Law requires these
elements.
Most packages, whether final customer packaging or distribution packaging, are imprinted
with information intended to assist the customer. For consumer products, labeling decisions are
extremely important for the following reasons.
Captures Attention – Labels serve to capture the attention of shoppers. The use of catchy words
and eye-catching graphics may cause strolling customers to stop and evaluate the product.
Offers First Impression – The label is likely to be the first thing a new customer sees and thus
offers their first impression of the product.
Provides Information – The label provides customers with product information to aid their
purchase decision or help improve the customer’s experience when using the product (e.g.,
recipes).
Aids Purchasing – Labels generally include a universal product codes (UPC) ,that make it easy
for resellers, such as retailers, to checkout customers and manage inventory.
Addresses Needs in Global Markets – For companies serving international markets or diverse
cultures within a single country, bilingual or multilingual labels may be needed.
Meets Legal Requirements – In some countries, certain products, including food and
pharmaceuticals, are required by law to contain certain labels such as listing ingredients, providing
nutritional information or including usage warning information.

PRODUCT SUPPORT SERVICES – STAGE FIVE OF INDIVIDUAL
PRODUCT DECISIONS
Individual product decisions also include product support services. Usually, the company’s offer
includes some form of customer service, of product support services. This can be a minor part of
the product or a major part of the total offering.
Product support services contribute to the augmented product, as defined by the three levels of
product. Without doubt, support services do also belong to the significant individual product
decisions because they contribute to the customer’s overall brand experience. The key is to keep
customers happy after the sale in order to build lasting relationships.
Besides these individual product decisions, many other choices need to be made. However, these
five individual product decisions built the base for the product development and marketing. If
individual product decisions are made carefully in accordance with consumer needs and wants,
the product can become a success.

PRODUCT LIFE CYCLE
All products and services have a certain life span, which is measured by the chronological history
of sales from the launch of the product until its withdrawal from the market.
Stage 1. Market Introduction
This is when a new product is first brought to market, before there is a proved demand for it, and
often before it has been fully proved out technically in all respects. Sales are low and creep along
slowly.
Stage 2. Market Growth
Demand begins to accelerate and the size of the total market expands rapidly. It might also be
called the “Takeoff Stage.
Stage 3. Market Maturity
Demand levels off and grows, for the most part, only at the replacement and new family-formation
rate.
Stage 4. Market Decline
The product begins to lose consumer appeal and sales drift downward, such as when buggy whips
lost out with the advent of automobiles and when silk lost out to nylon

Introduction Stage
In the introduction stage, the firm seeks to build product awareness and develop a market for the
product. The impact on the marketing mix is as follows:
 Product branding and quality level is established, and intellectual property protection
such as patents and trademarks are obtained.
 Pricing may be low penetration pricing to build market share rapidly, or high skim
pricing to recover development costs.
 Distribution is selective until consumers show acceptance of the product.
 Promotion is aimed at innovators and early adopters. Marketing communications seeks to
build product awareness and to educate potential consumers about the product.
Growth Stage
In the growth stage, the firm seeks to build brand preference and increase market share.
 Product quality is maintained and additional features and support services may be added.
 Pricing is maintained as the firm enjoys increasing demand with little competition.
 Distribution channels are added as demand increases and customers accept the product.
 Promotion is aimed at a broader audience.
Maturity Stage
At maturity, the strong growth in sales diminishes. Competition may appear with similar
products. The primary objective at this point is to defend market share while maximizing profit.
 Product features may be enhanced to differentiate the product from that of competitors.
 Pricing may be lower because of the new competition.
 Distribution becomes more intensive and incentives may be offered to encourage
preference over competing products.
 Promotion emphasizes product differentiation.
Decline Stage
As sales decline, the firm has several options:
 Maintain the product, possibly rejuvenating it by adding new features and finding new
uses.
 Harvest the product - reduce costs and continue to offer it, possibly to a loyal niche
segment.
 Discontinue the product, liquidating remaining inventory or selling it to another firm that
is willing to continue the product.
The marketing mix decisions in the decline phase will depend on the selected strategy. For
example, the product may be changed if it is being rejuvenated, or left unchanged if it is being
harvested or liquidated. The price may be maintained if the product is harvested, or reduced
drastically if liquidated.

Example of the Product Life Cycle
1. Introduction – Self-driving cars. Self-driving cars are still at the testing stage, but firms hope
to be able to sell to early adopters relatively soon.
2. Growth – Electric cars. For example the Tesla Model S is in its growth phase. Electric cars still
need to convince people that it will work and be practical. As there are more electric charging
points and more people adopt, it becomes easier to sell to those who are more sceptical of new
technology like electric cars.
3. Maturity – Ford Focus. The Ford Focus is a well-established car. It has a good brand reputation
and has reached its peak level of market penetration. It would be difficult to gain a significantly
greater market share. The product life cycle of the Ford Focus has been extended by constant
upgrades and redesigns to keep the car on top of the market.
4. Decline – Diesel cars. Since governments have expressed concern at the level of pollution from
diesel cars. Some cities have threatened to ban diesel cars within a few years. Sales have fallen
considerably and the market for diesel cars may be in terminal decline.

Unit-III: Pricing: Setting the price, Pricing process, Pricing methods. Price
discounts and allowances, Promotional pricing, Discriminatory pricing, Product mix
pricing.
Price is the quantity of payment or compensation given by one party to another in return
for goods or services.
In commerce, what determine price is
(1) a buyer is willing to pay,
(2) a seller is willing to accept, and
(3) the competition is allowing to be charged.
Price is the value that is put to a product or service and is the result of a complex set of
calculations, research and understanding and risk taking ability.
Pricing is the process of determining what a company will receive in exchange for its product or
service. Pricing factors are manufacturing cost, market place, competition, market condition,
brand, and quality of product
A Pricing strategy takes into account segments, ability to pay, market conditions, competitor
actions, trade margins and input costs, amongst others. It is targeted at the defined customers and
against competitors.
SETTING PRICE/PRICING PROCESS

STEP 1: SELECTING THE PRICING OBJECTIVE – The firm first decides where
it wants to position its market offering. The five major pricing objectives are
• Survival: Companies pursue survival if they are plagued with over-capacity, intense
competition, or changing consumer wants.
• Maximum current profit: Many firms try to set a price that maximises their current profits
and delivers a high return on investment.
• Maximum market share: Here, firms believe that a higher sales volume will lead to lower unit
costs and higher long-run profits and thereby maximise their market share.
• Maximum market skimming: Companies offering new technologies often set high prices
initially in order to gain high profits from various segments of the market early on.
• Product-Quality Leadership: Many firms aspire to be the product-quality leader in the market.
STEP 2: DETERMINING DEMAND – Each price leads to a different level of

demand and therefore has a different impact on a company’s marketing objectives. The factors
entailing this are
• Price Sensitivity: The relation between price and demand, i.e. the demand curve can be
analysed to determine the market’s probable purchase quantity at various prices. This helps a
firm to maximise its profits.
• Estimating Demand Curves: Most companies use the following methods to estimate demand
curves: Market Surveys, Price Experiments, Statistical Analysis, etc.
• Price Elasticity: Marketers need to know how responsive, or elastic, the demand would be, to
a change in price. If the price elasticity is high, increasing prices would lead to a great reduction
in demand, while decreasing prices would lead to increase in demand. Hence, marketers prefer
inelastic markets where price changes do not elicit great shifts in demand.
STEP 3: ESTIMATING COSTS – While demand sets a ceiling on the range of

price a firm can charge for its product, costs determine the floor.
• Types of Costs and Levels of Production: Costs are classified as Fixed costs and Variable
costs. Fixed costs include salaries, electricity bills, etc. which do not depend upon quantity
produced. Variable costs include processing costs, packaging costs, shipping costs, etc. which
depend upon quantity produced. Hence, companies must decide on a level of production which
will more or less guarantee no losses on the cost of production.

• Accumulated Production: As firms gain experience in production of a good, the costs involved
begin to decline. This is due to various factors such as workers finding shortcuts, smoother flow
of materials, etc. This decline in cost with production experience is called experience curve.
• Target Costing: Other than production scale and experience, costs also change a result of
concentrated efforts by designers, engineers, purchase agents etc. They examine each cost
component and try to find ways to reduce the costs involved in each of these.
STEP 4: ANALYSING COMPETITORS – The introduction of any change in

price, cost, offers given by any seller can elicit a response in the market. A firm must analyse
the value offered by a competitor to a customer in terms of prices, addons, post-sale services,
etc. and thereby modify its own price in order to be competitive in the market.
STEP 5: SELECTING PRICING METHODS – There are six major pricing

methods:
• Mark-up Pricing: The most elementary pricing method is to add a standard mark-up to the
producer’s cost.
• Target-return Pricing: In target-return pricing, the firm determines the price that would yield
its target return on investment.
• Perceived-value Pricing: Perceived-value pricing is made up of several factors like the
buyer’s image of the product, the channel deliverables, warranty quality, customer support,
supplier’s reputation, etc.
• Value Pricing: Here, high quality products are assigned a fairly low price. The basic aim here
is to attract a value-conscious customer base by reengineering the company to become a low-
cost producer without sacrificing quality.
• Going-rate Pricing: Here, firms base their prices largely on competitors’ prices, charging
nearly the same as major competitors in the market do.
• Auction-type Pricing: There are three types in this pricing method –
English Auctions (Ascending bids): Here, the seller puts up an item and the bidders raise the
price until the top price is reached.
Dutch Auctions (Descending bids): Here, the seller announces a high price and then goes on
lowering the price until a bidder accepts it. Or, a buyer announces his desire for a
product and sellers compete to offer him the lowest price.
Sealed-bid Auctions: Here, potential suppliers submit their bids without knowledge of other
bids made and the best bid is selected.

STEP 6: Selecting the Final Price – After the pricing methods have narrowed the
range of the price, the company selects the final price by taking into account factors as listed
below:
• Impact of other marketing activities: The final price must take into account the brand’s
quality and advertising relative to the competition.
• Company Pricing Policies: The final price must be compliant with the company’s pricing
policies.
• Gain-and-Risk-sharing Pricing: Buyers may resist accepting a supplier’s proposal because
of a high perceived level of risk. Hence, the seller has the option of offering to absorb part or
all of the risk if the promised value is not delivered.
• Impact of price on other parties: The final price’s effect on other parties such as distributors,
dealers, competitors, government should also be taken into account by the management.
METHODS OF PRICING:
1. COST-ORIENTED METHOD AND
2. MARKET-ORIENTED METHOD
The two methods of pricing are as follows: A. Cost-oriented Method B. Market-oriented Methods.
There are several methods of pricing products in the market. While selecting the method of fixing
prices, a marketer must consider the factors affecting pricing. The pricing methods can be broadly
divided into two groups—cost-oriented method and market-oriented method.
A. Cost-oriented Method:
Because cost provides the base for a possible price range, some firms may consider cost-oriented
methods to fix the price.
Cost-oriented methods or pricing are as follows:
1. Cost plus pricing:

Cost plus pricing involves adding a certain percentage to cost in order to fix the price. For instance,
if the cost of a product is Rs. 200 per unit and the marketer expects 10 per cent profit on costs,
then the selling price will be Rs. 220. The difference between the selling price and the cost is the
profit. This method is simpler as marketers can easily determine the costs and add a certain
percentage to arrive at the selling price.
2. Mark-up pricing:
Mark-up pricing is a variation of cost pricing. In this case, mark-ups are calculated as a percentage
of the selling price and not as a percentage of the cost price. Firms that use cost-oriented methods
use mark-up pricing.
Since only the cost and the desired percentage markup on the selling price are known, the
following formula is used to determine the selling price:
Average unit cost/Selling price

3. Break-even pricing:
In this case, the firm determines the level of sales needed to cover all the relevant fixed and variable
costs. The break-even price is the price at which the sales revenue is equal to the cost of goods
sold. In other words, there is neither profit nor loss.
For instance, if the fixed cost is Rs. 2, 00,000, the variable cost per unit is Rs. 10, and the selling
price is Rs. 15, then the firm needs to sell 40,000 units to break even. Therefore, the firm will plan
to sell more than 40,000 units to make a profit. If the firm is not in a position to sell 40,000 limits,
then it has to increase the selling price.
The following formula is used to calculate the break-even point:

Contribution = Selling price – Variable cost per unit
4. Target return pricing:

In this case, the firm sets prices in order to achieve a particular level of return on investment (ROI).
The target return price can be calculated by the following formula:
Target return price = Total costs + (Desired % ROI investment)/ Total sales in units
For instance, if the total investment is Rs. 10,000, the desired ROI is 20 per cent, the total
cost is Rs.5000, and total sales expected are 1,000 units, then the target return price will be
Rs. 7 per unit as shown below: :
5000 + (20% X 10,000)/ 7000

Target return price = 7
The limitation of this method (like other cost-oriented methods) is that prices are derived from
costs without considering market factors such as competition, demand and consumers’ perceived
value. However, this method helps to ensure that prices exceed all costs and therefore contribute
to profit.
5. Early cash recovery pricing:

Some firms may fix a price to realize early recovery of investment involved, when market forecasts
suggest that the life of the market is likely to be short, such as in the case of fashion-related
products or technology-sensitive products.
Such pricing can also be used when a firm anticipates that a large firm may enter the market in the
near future with its lower prices, forcing existing firms to exit. In such situations, firms may fix a
price level, which would maximize short-term revenues and reduce the firm’s medium-term risk.
B. MARKET-ORIENTED METHODS:
1. Perceived value pricing:
A good number of firms fix the price of their goods and services on the basis of customers’
perceived value. They consider customers’ perceived value as the primary factor for fixing prices,
and the firm’s costs as the secondary.
The customers’ perception can be influenced by several factors, such as advertising, sales on
techniques, effective sales force and after-sale-service staff. If customers perceive a higher value,
then the price fixed will be high and vice versa. Market research is needed to establish the
customers’ perceived value as a guide to effective pricing.

2. Going-rate pricing:
In this case, the benchmark for setting prices is the price set by major competitors. If a major
competitor changes its price, then the smaller firms may also change their price, irrespective of
their costs or demand.
The going-rate pricing can be further divided into three sub-methods:
a. Competitors ‘parity method:

A firm may set the same price as that of the major competitor.
b. Premium pricing:
A firm may charge a little higher if its products have some additional special features as compared
to major competitors.
c. Discount pricing:
A firm may charge a little lower price if its products lack certain features as compared to major
competitors.
The going-rate method is very popular because it tends to reduce the likelihood of price wars
emerging in the market. It also reflects the industry’s coactive wisdom relating to the price that
would generate a fair return.
3. Sealed-bid pricing:
This pricing is adopted in the case of large orders or contracts, especially those of industrial buyers
or government departments. The firms submit sealed bids for jobs in response to an advertisement.
In this case, the buyer expects the lowest possible price and the seller is expected to provide the
best possible quotation or tender. If a firm wants to win a contract, then it has to submit a lower
price bid. For this purpose, the firm has to anticipate the pricing policy of the competitors and
decide the price offer.
4. Differentiated pricing:
Firms may charge different prices for the same product or service.
The following are some the types of differentiated pricing:
a. Customer segment pricing:

Here different customer groups are charged different prices for the same product or service
depending on the size of the order, payment terms, and so on.
b. Time pricing:
Here different prices are charged for the same product or service at different timings or season. It
includes off-peak pricing, where low prices are charged during low-demand tunings or season.
c. Area pricing:
Here different prices are charged for the same product in different market areas. For instance, a
firm may charge a lower price in a new market to attract customers.
d. Product form pricing:

Here different versions of the product are priced differently but not proportionately to their
respective costs. For instance, soft drinks of 200,300, 500 ml, etc., are priced according to this
strategy.

NEW MODELS OF PRICING
Absorption pricing Method of pricing in which all costs are recovered. The price of the product
includes the variable cost of each item plus a proportionate amount of the fixed costs.
Decoy pricing Method of pricing where the seller offers at least three products, and where two
of them have a similar or equal price. The two products with the similar prices should be the most
expensive ones, and one of the two should be less attractive than the other. This strategy will
make people compare the options with similar prices, and as a result, sales of the most attractive
choice will increase.
Freemium Freemium is a revenue model that works by offering a product or service free of
charge (typically digital offerings such as software, content, games, web services or other) while
charging a premium for advanced features, functionality, or related products and services. The
word "freemium" is a combining the two aspects of the business model: "free" and "premium".
It has become a highly popular model, with notable success.
Pay what you want Pay what you want is a pricing system where buyers pay any desired amount
for a given commodity, sometimes including zero. In some cases, a minimum (floor) price may
be set, and/or a suggested price may be indicated as guidance for the buyer. The buyer can also
select an amount higher than the standard price for the commodity. Giving buyers the freedom
to pay what they want may seem to not make much sense for a seller, but in some situations, it
can be very successful. While most uses of pay what you want have been at the margins of the
economy, or for special promotions, there are emerging efforts to expand its utility to broader
and more regular use.
Penetration Pricing: Here the organisation sets a low price to increase sales and market share.
Once market share has been captured, the firm may well then increase their price.
Skimming Pricing: The organisation sets an initial high price and then slowly lowers the price to
make the product available to a wider market. The objective is to skim profits of the market layer
by layer.
Competition Pricing : Setting a price in comparison with competitors. Really a firm has three
options and these are to price lower, price the same or price higher
Psychological Pricing: The seller here will consider the psychology of price and the positioning
of price within the market place
Premium Pricing: The price set is high to reflect the exclusiveness of the product.
Optional Pricing: The organisation sells optional extras along with the product to maximise its
turnover.
Cost Based Pricing: The firms takes into account the cost of production and distribution, they
then decide on a mark up which they would like for profit to come to their final pricing decision.
Cost Plus Pricing: Here the firm add a percentage to costs as profit margin to come to their final
pricing decisions

Unit-IV: Marketing channels: The Importance of marketing channels, Channel
design decisions Channel management decisions Channel Conflict: Types, Causes
and managing the conflict.
Product distribution (or place) is one of the four elements of the marketing mix. Distribution is the
process of making a product or service available for use or consumption by a consumer or business
user, using direct means, or using indirect means with intermediaries.
Philips Kotler defines channel of distribution as “a set of independent organisations involved in

the process of making a product or service available for use or consumption”.
Functions of a Distribution Channel
1. Sorting: Middlemen obtain the supplies of goods from various suppliers and sort them out into
similar groups on the basis of size, quality etc.
2. Accumulation: In order to ensure a continuous supply of goods, middlemen maintain a large
volume of stock.
3. Allocation: It involves packing of the sorted goods into small marketable lots like 1Kg, 500
gms, 250 gms etc.
4. Assorting: Middlemen obtain a variety of goods from different manufacturers and provide them
to the customers in the combination desired by them. For example, rice from Dehradun & Punjab.
5. Product Promotion: Sales promotional activities are mostly performed by the producer but
sometimes middlemen also participate in these activities like special displays, discounts etc.
6. Negotiation: Middlemen negotiate the price, quality, guarantee and other related matters about
a product with the producer as well as customer.
7. Risk Taking: Middlemen have to bear the risk of distribution like risk from damage or spoilage
of goods etc. when the goods are transported from one place to another or when they are stored in
the god-owns.

Channel design
A firm can design any number of channels they require. Channels are classified by the number
of intermediaries between producer and consumer. A level zero channel has no intermediaries. This is
typical of direct marketing. A level one channel has a single intermediary. This flow is typically from
manufacturer to retailer to consumer.
Channel Strategies/Types/Policies
Category Definition
The producer's products are stocked in the majority of outlets.

Intensive
This strategy is common for basic supplies, snack foods, magazines
distribution
and soft drink beverages.
Means that the producer relies on a few intermediaries to carry

Selective their product. This strategy is commonly observed for more
distribution specialized goods that are carried through specialist dealers,
for example, brands of craft tools, or large appliances.
Means that the producer selects only very few intermediaries.

Exclusive distribution is often characterized by exclusive dealing
Exclusive
where the reseller carries only that producer's products to the
distribution
exclusion of all others. This strategy is typical of luxury goods
retailers such as Gucci.

1. Zero-Level Channel:
When the distribution of the product is direct from the producer to the consumer or the user. This is
also called direct selling.
Direct Selling:
This method is also referred to as producer to consumer channel. Under this channel, the producer of
goods attempts to make a direct contact with the ultimate user of goods by several methods of selling
including door-to-door sales-persons. This method is most common in industrial marketing particularly
in respect of capital goods like industrial chemicals, heavy equipment’s, etc.
Direct selling offers the following advantages to the producers:
(i) Close relationship to the consumers makes the producer constantly aware of changes and other
consumer’s needs.
(ii) Profit does not go to the middle-man.
(iii) Goods get to the consumer more quickly because they do not have to travel through the
intermediaries or middlemen.
Despite these apparent advantages, direct selling has not become a powerful channel. According to an
estimate, even less than 3 per cent of total consumer sales are made in this channel .
This is due to the following reasons:
(a) The producer has to spend a handsome amount in the training, maintaining and supervising large
number of sales staff.
(b) It involves cumbersome difficulties in providing and maintaining inventories of goods at many
locations to assure prompt delivery to the customers.
2. One-Level Channel:
When the product is not sent directly from the producer to the consumer but the producer sells the
product to the retailer who, in turn, sells to the consumer. This channel is also known as distribution
through retailers.
Producer to Retailer to Customer Channel:
This is a kind of indirect selling. This channel avoids wholesalers. It is suitable when products are
perishable and speed in distributions is extremely essential. The goods that are frequently sold in this
channel are fashion merchandise, products requiring installation, high value goods, etc.

3. Two-Level Channel:
When there are two levels of different kinds of intermediaries between the producer and the consumer.
In other words, under this channel, the manufacturer sells the product to the retailer and who finally
sells to the consumer. This is also called as distribution through wholesalers and retailers.
Producer to Wholesaler to Retailer to Consumer Channel:

This channel is also known as the traditional channel. This is also the most common method of
distribution under which the producer sells to the wholesaler who, in turn, sells to the retailer, who
finally sells to the consumer. In this system, the wholesaler is granted a certain portion of the total
profit, in turn for which he or she buys stores, sells, delivers and extends credits. This channel is
invariably used in respect of groceries, drugs, drug goods, etc.
This channel option is particularly suitable to the following types of producers:
1. Who lack in financial resources;
2. Whose product line is narrow; and
3. Whose products are not subject to fashion changes and physical deterioration but are durable.

ROLE OF INTERMEDIARIES IN DISTRIBUTION
Wholesalers
Wholesalers typically are independently owned businesses that buy from manufacturers and take title
to the goods. These intermediaries then resell the products to retailers or organizations.
If they are full-service wholesalers, they provide services such as storage, order processing and
delivery, and they participate in promotional support. They generally handle products from several
producers but specialize in particular products.
Limited-service wholesalers offer few services and often serve as drop shippers where the retailer
passes the customer's order information to the wholesaler, who then packages the product and ships it
directly to the customer.
Role And Functions Of Wholesalers
1. Bulk buying
2. Mass Selling
3. Dividing or bulk breaking
4. Transportation
5. Warehousing
6. Financing
7. Risk bearing
8. Market information
Retailers
Retailers work directly with the customer. These intermediaries work with wholesalers and distributors
and often provide many different products manufactured by different producers all in one location.
Customers can compare different brands and pick up items that are related but aren't manufactured by
the same producer, such as bread and butter.
Purchasing bread or medications directly from a manufacturer or pharmaceutical company would be
time-consuming and expensive for a customer.
But buying these products from a local retail "middleman" is simple, quick and convenient.
Functions of Retailer in the Distribution Channel :

 Providing Assortments:
 Breaking Bulk:
 Holding Inventory:
 Providing Convenient Locations and Timings:
 Providing Services:
 Recording and Providing Feedback:
 Increasing the Value of Products and Services:

Agents and Brokers
Agents and brokers sell products or product services for a commission, or a percentage of the sales
price or product revenue. These intermediaries have legal authority to act on behalf of the manufacturer
or producer. Agents and brokers never take title to the products they handle and perform fewer services
than wholesalers and distributors.
Their primary function is to bring buyers and sellers together. For example, real estate agents and
insurance agents don’t own the items that are sold, but they receive a commission for putting buyers
and sellers together.
Manufacturers’ representatives that sell several non-competing products and arrange for their delivery
to customers in a certain geographic region also are agent intermediaries.
Distributors
Distributors are generally privately owned and operated companies, selected by manufacturers, that
buy product for resale to retailers, similar to wholesalers. These intermediaries typically work with
many businesses and cover a specific geographic area or market sector, performing several functions,
including selling, delivery, extending credit and maintaining inventory.
Although main roles of distributors include immediate access to goods and after-sales service, they
typically specialize in a narrower product range to ensure better product knowledge and customer
service.

CHANNEL CONFLICT occurs when a business sells products or services to the same set
of customers through a variety of distribution channels that conflict with each other.. A decade
ago, it was foolhardy for a computer manufacturer such as IBM, Apple, or Hewlett-Packard to sell
computer products direct to the end user; by doing so, they risked losing the retailers who bought
their products either directly from them or from distributors. If the manufacturers sold their wares
directly to consumers, retailers would see the computer companies as direct competitors.
Channel conflict occurs when manufacturers (brands) disintermediate their channel partners, such
as distributors, retailers, dealers, and sales representatives, by selling their products directly to
consumers through general marketing methods and/or over the Internet.
Types of Channel conflict
Conflict in distribution channels can occur in different forms as follows:
1. Vertical Channel Conflict: This type of conflict arises between the different levels in the same
channel.
E.g.The conflict between the manufacturer and the wholesaler regarding price, quantity, marketing
activities, etc.
2. Horizontal Channel Conflict: This type of conflict arises between the same level in the same
channel.
E.g. The conflict between two retailers of the same manufacturer faces disparity in terms of sales
target, area coverage, promotional schemes, etc.
3. Multichannel Conflict: This type of conflict arises between the different market channels
participating in the common sale for the same brand.
E.g. If a manufacturer uses two market channels, first is the official website through which the
products and services are sold. The second channel is the traditional channel i.e. through
wholesaler and retailer. If the product is available at a much lower price on a website than is
available with the retailer, the multichannel conflict arises.

CAUSES OF CHANNEL CONFLICT
Following are some of the causes that give birth to the channel conflict:
 Goal incompatibility: Different partners in the channel of distribution have different goals that
may or may not coincide with each other and thus result in conflict.
E.g. The manufacturer wants to achieve the larger market share by adopting the market
penetration strategy i.e. offering a product at low price and making the profits in the long run,
whereas the dealer wants to sell the product at a high cost i.e. market skimming strategy and
earn huge profits in the short run.
 Ambiguous Roles: The channel partners may not have a clear picture of their role i.e. what
they are supposed to do, which market to cater, what pricing strategy is to be adopted, etc.
E.g. The manufacturer may sell its products through its direct sales force in the same area where
the authorized dealer is supposed to sell; this may result in the conflict.
 Different Perceptions: The channel partners may have different perceptions about the market
conditions that hampers the business as a whole thereby leading to the conflict.
E.g. The manufacturer is optimistic about the change in the price of the product whereas the
dealer feels the negative impact of price change on the customers.
 Manufacturer dominating the Intermediaries: The intermediaries such as the wholesaler,

distributor, retailer, etc. carry the process of distribution of goods and services for the
manufacturer. And if the manufacturer makes any change in the price, product, marketing
activity the same has to be implemented with an immediate effect thereby reflecting the huge
dependence of intermediaries on the manufacturer.
E.g. If the manufacturer changes the promotional scheme of a product with the intention to cut
the cost, the retailer may find it difficult to sell the product without any promotional scheme
and hence the conflict arises.
 Lack of Communication: This is one of the major reasons that lead to the conflict among the
channel partners. If any partner is not communicated about any changes on time will hamper
the distribution process and will result in disparity.
E.g. If retailer urgently requires the stock and the wholesaler didn’t inform him about the
availability of time may lead to the conflict between the two.

MANAGING THE CHANNEL CONFLICT
In order to overcome the destructive channel conflict some solutions are listed below:
 Subordinate Goals: The channel partners must decide a single goal in terms of either increased
market share, survival, profit maximization, high quality, customer satisfaction, etc. with the
intention to avoid conflicts.
 Exchanging employees: one of the best ways to escape channel conflict is to swap employees
between different levels i.e. two or more persons can shift to a dealer level from the
manufacturer level and from wholesale level to the retailer level on a temporary basis. By doing
so, everyone understands the role and operations of each other thereby reducing the role
ambiguities.
 Trade associations: Another way to overcome the channel conflict is to form the association
between the channel partners. This can be done through joint membership among the
intermediaries. Every channel partner works as one entity and works unanimously.
 Co-optation: Under this, any leader or an expert in another organization is included in the
advisory committee, board of directors, or grievance redressal committees to reduce the
conflicts through their expert opinions.
 Diplomacy, Mediation and Arbitration: when the conflict becomes critical then partners have
to resort to one of these methods.
In Diplomacy, the partners in the conflict send one person from each side to resolve the conflict.
In Mediation, the third person is involved who tries to resolve the conflict through his skills of
conciliation.
In Arbitration, when both the parties agree to present their arguments to the arbitrator and agree
to his decision.
 Legal resource: When the conflict becomes crucial and cannot be resolved through any above
mentioned ways, the channel partners may decide to file a lawsuit.

Unit-V: Promotion mix: - Meaning, Objectives, Promotion Mix, Sales Promotion
Objectives and Tools, Public relation -Meaning and Tools, Personal selling -
Process.
PROMOTION
Promotion is one of the marketing mix element. Promotion is communicating with the public in
an attempt to influence them toward buying your product or service. An activity such as a sale or
advertising campaign, designed to increase visibility or sale of a product is called promotion.
Promotion is a tool used by business (both large and small) to inform, persuade and remind
customers about the products and services they have to offer.
Promotion refers to raising customer awareness of a product or brand, generating sales, and
creating brand loyalty.
To communicate with individuals, groups or organizations to directly or indirectly facilitate
exchanges by informing and persuading one or more audiences to accept an organization's
products.
Promotion is also defined as one of five pieces in the promotional mix or promotional plan. These
are personal selling, advertising, sales promotion, direct marketing, and publicity.A promotional
mix specifies how much attention to pay to each of the five factors, and how much money to
budget for each.
Fundamentally, there are three basic objectives of promotion. These are:
 To present information to consumers and others.
 To increase demand.
 To differentiate a product.
The aims of promotion
1.To inform people about particular issues.

2. To introduce new products to the market.
3. To compete with competitors’ products.
4. To improve the company/brand image.
5. To increase sales.

There are five main elements in a promotional mix. They are:
 Advertising
 Personal selling
 Sales promotion
 Publicity
 Direct Marketing
 Advertising is the paid

presentation and promotion of ideas, goods, or services by an identified sponsor in a mass
medium. Examples include print ads, radio, television, billboard, direct mail, brochures
and catalogs, signs, in-store displays, posters, mobile apps, motion pictures, web pages,
banner ads, emails.
 Sales Promotion is media and non-media marketing communication used for a pre-
determined limited time to increase consumer demand, stimulate market demand or
improve product availability. Examples include coupons, sweepstakes, contests, product
samples, rebates, tie-ins, self-liquidating premiums, trade shows, trade-ins, and
exhibitions.
 Public relations or publicity is information about a firm's products and services carried
by a third party in an indirect way. This includes free publicity as well as paid efforts to
stimulate discussion and interest. It can be accomplished by planting a significant news
story indirectly in the media, or presenting it favorably through press releases or corporate
anniversary parties. Examples include newspaper and magazine articles, TVs and radio
presentations, charitable contributions, speeches, issue advertising, seminars.
 Personal selling is the process of helping and persuading one or more prospects to
purchase a good or service or to act on any idea through the use of an oral presentation,
often in a face-to-face manner or by telephone. Examples include sales presentations, sales
meetings, sales training and incentive programs for intermediary salespeople, samples, and
telemarketing.
 Direct Marketing is a channel-agnostic form of advertising that allows businesses and

nonprofits to communicate directly to the customer, with methods such as mobile
messaging, email, interactive consumer websites, online display ads, fliers, catalog
distribution, promotional letters, and outdoor advertising.

Advantages and Disadvantages of the Promotional Mix
Mix Advantages Disadvantages

Element
Advertising Good for building awareness Impersonal - cannot answer all a
Effective at reaching a wide audience customer's questions
Repetition of main brand and product Not good at getting customers to make a
positioning helps build customer trust final purchasing decision
Personal Highly interactive - lots of Costly - employing a sales force has many
Selling communication between the buyer and hidden costs in addition to wages
seller
Excellent for communicating complex / Not suitable if there are thousands of
detailed product information and important buyers
features
Relationships can be built up - important
if closing the sale make take a long time
Sales Can stimulate quick increases in sales by If used over the long-term, customers may
Promotion targeting promotional incentives on get used to the effect
particular products
Good short term tactical tool Too much promotion may damage the
brand image
Public Often seen as more "credible" - since the Risk of losing control - cannot always
Relations message seems to be coming from a control what other people write or say
third party (e.g. magazine, newspaper) about your product
Cheap way of reaching many customers

- if the publicity is achieved through the
right media

SALES PROMOTION
1) Rebate:
Under it in order to clear the excess stock, products are offered at some reduced price. For example,
giving a rebate by a car manufacturer to the tune of 12,000/- for a limited period of time.
(2) Discount:
Under this method, the customers are offered products on less than the listed price. For example,
giving a discount of 30% on the sale of Liberty Shoes. Similarly giving a discount of 50% + 40%
by the KOUTONS.
(3) Refunds:
Under this method, some part of the price of an article is refunded to the customer on showing
proof of purchase. For example, refunding an amount of 5/- on showing the empty packet of the
product priced 100/-.
4) Product Combination:
Under this method, along with the main product some other product is offered to the customer as
a gift.
(5) Quantity Gift:
Under this method, some extra quantity of the main product is passed on as a gift to the customers.
For example, 25% extra toothpaste in a packet of 200 gm tooth paste. Similarly, a free gift of one
RICH LOOK shirt on the purchase of two shirts.
(6) Instant Draw and Assigned Gift:
Under this method, a customer is asked to scratch a card on the purchase of a product and the name
of the product is inscribed thereupon which is immediately offered to the customer as a gift. For
example, on buying a car when the card is scratched such gifts are offered – TV, Refrigerator,
Computer, Mixer, Dinner Set, Wristwatch, T-shirt, Iron Press, etc.
(7) Lucky Draw:
Under this method, the customers of a particular product are offered gifts on a fixed date and the
winners are decided by the draw of lots. While purchasing the product, the customers are given a
coupon with a specific number printed on it.
On the basis of this number alone the buyer claims to have won the gift. For example, ‘Buy a
bathing soap and get a gold coin’ offer can be used under this method.

8) Usable Benefits:
Under this method, coupons are distributed among the consumers on behalf of the producer.
Coupon is a kind of certificate telling that the product mentioned therein can be obtained at special
discount(It means that if a customer has a coupon of some product he will get the discount
mentioned therein whenever he buys it. Possession of a coupon motivates the consumer to buy the
product, even when he has no need of it. Such coupons are published in newspapers and
magazines. Some companies distribute coupons among its shareholders. Sellers collect the
coupons from the customers and get the payment from the company that issues the same.
(9) Full Finance @ 0%:
Under this method, the product is sold and money received in installment at 0% rate of interest.
The seller determines the number of installments in which the price of the product will be
recovered from the customer. No interest is charged on these installments.
(10) Samples or Sampling:
Under this method, the producer distributes free samples of his product among the consumers.
Sales representatives distribute these samples from door-to-door.
This method is used mostly in case of products of daily-use, e.g., Washing Powder, Tea,
Toothpaste, etc. Thus, the consumers willy-nilly make use of free sample. If it satisfies them, they
buy it and in this way, sales are increased.
(11) Contests:
Some producers organize contests with a view to popularizing their products. Consumers taking
part in the contest are asked to answer some very simple questions on a form and forward the same
to the company. The blank form is made available to that consumer who buys the product first.
Result is declared on the basis of all the forms received by a particular date. Attractive prizes are
given to the winners of the contest. Such contests can be organized in different ways.

PERSONAL SELLING is where businesses use people (the "sales force") to sell the
product after meeting face-to-face with the customer.
The sellers promote the product through their attitude, appearance and specialist product
knowledge. They aim to inform and encourage the customer to buy, or at least trial the product.
A good example of personal selling is found in department stores on the perfume and cosmetic
counters
Personal selling or salesmanship are synonymous terms; with the only difference that the former
term is of recent origin, while the latter term has been traditionally in usage, in the commercial
world.
Since a salesman, in persuading a prospect to buy a certain product, follows a personal approach;
salesmanship, in the present-day-times in often popularly called as personal selling.
Features of Personal Selling:
(i) Personal selling involves a face-to-face contact between the salesman and the prospect.
(ii) It is an art of persuading the prospect, to appreciate the need for the product canvassed
by the salesman, in a democratic, cordial and social manner. This, then, requires
outstanding qualities in a salesman; specially the proficiency in selling skills and
techniques.
(iii) In personal selling, the emphasis is on the development of permanent and lasting
relations with prospects If a prospect is won; a sales transaction might materialize with
him subsequently in future. Obtaining an immediate sale may be the natural ambition
of a salesman; it should never be his target.
(iv) A salesman sells product, by first selling his own idea or viewpoint to the prospect.
Personal selling, therefore, is the art of convincing the prospect and influencing his
mind, in a favourable way.
(v) Personal selling requires a flexible approach; on the part of the salesman i.e. the
salesman should modify his approach in persuading the prospect, in view of the
psychology, needs and resources of the prospect.
(vi) The ultimate goal of personal selling is mutual satisfaction of the interests of both –
the salesman and the prospect.

Personal Selling Process
Step-1: Prospecting
The first step of the personal selling process is called ‘prospecting’. Prospecting refers to locating
potential customers. There are many sources from which potential customers can be found:
observation, social contacts, trade shows, commercially-available databases, commercially-
available mail list and cold calling.
Step-2: Pre-Approach
The nest step in the personal selling process is called the ‘pre-approach’. The pre-approach
involves preparation for the sales presentation. This preparation involves research about the
potential customers, such as market research. Research is useful in planning the right sales
presentation. During the pre-approach the salesperson may also plan and practice their sales
presentation.
Step-3: The Approach

The next step in the personal selling process is called the ‘approach’. The approach refers to the
initial contact between the salesperson and the prospective customer. During this stage the sales
person takes a few minutes for “small talk” and get to know the potential customer. The goal of
the approach is to determine the specific needs and wants of the individual customer, as well as
allowing the potential customer to relax and open up.
Step-4: Sales Presentation

The next step in the personal selling process is called the ‘sales presentation’. The sales
presentation involves the salesperson presenting the product or service, describing its qualities and
possibly demonstrating features of the product. Ideally the sales presentation will be individualized
to match the needs and desires of the potential customer.
Step-5: Handling Objectives

In some cases, after receiving the sales presentation, the potential customer will have some
questions or concerns. In order to secure a sale, the salesperson must address these questions or
concerns; this step is referred to as ‘handling objectives.’
Step-6: Closing the sale

The next step in the personal selling process is referred to as ‘closing the sale’. ‘Closing the sale’
refers to finalizing the sale and persuading the potential customer to make the purchase. During
the ‘closing the sale’ step, prices and payment options may be negotiated.
Step-7: Follow up
The final step in the personal selling process is referred to as the ‘follow up.’ The follow up
involves the salesperson contacting the customer after the sale to ensure that the customer is
satisfied. If the customer has any existing issues with the product, the salesperson will address
them. A successful follow up stage of personal selling can be very effective in ensuring repeat
sales, evaluating the effectiveness of the salesperson, and obtaining additional referrals from the
satisfied customer.

DIRECT SELLING
Direct selling refers to selling products directly to the consumer in a non-retail environment.
Instead, sales occur at home, work, or other non-store location. This system often eliminates
several of the middlemen involved in product distribution, such as the regional distribution center
and wholesaler. Instead, products go from manufacturer to the direct sales company, to the
distributor or rep, and to the consumer.
The history of direct selling is as old as civilisation itself. As early as 2000 BC, the Code of
Hammurabi, a Babylonian law, protected the welfare and integrity of the Babylonian direct seller
known then as a ‘peddler’.
Types of Direct Selling

There are a variety of ways business owners can sell directly to consumers through direct selling.
Single-level direct sales: This type of sales is done one-on-one, such as through door-to-door or
by doing in-person presentations. Sales can be done online or through catalogs, as well. Generally
income is earned on sales commissions, with possible bonuses.
Hostess or Party Plan: This type of sales is done in a group setting, usually involving the
distributor or rep doing a presentation in her or in another person's home or other location. In some
cases, a company might sell to individuals in a business. For example, a real estate software sales
rep might do a group sales presentation to a group of Realtors (R). Income can come from
commissions from sales, and sometimes through the recruitment of other reps (see Multilevel
marketing below).
Multilevel Marketing (MLM): Sales in multi-level marketing are made in a variety of ways,
including single or party presentations, but also through online stores and catalogs. Income earned
through MLM is commission on sales, and the sales made by other business partners the distributor
recruits into the company.
Direct Selling Companies in India

1. Mi Lifestyle Marketing Global Private Limited 2.Amway
3. Herbalife 4.Forever Living Products
5. Vestige 6.Naswiz Retails
7. Win Nature International Pvt Ltd 8.Tupperware
9. Modicare 10.Oriflame
Avon was one of the first direct selling companies that presented a fully coordinated earning
opportunity to its representatives. Their first consultant joined in 1886, Mrs P.F.E. Albee. She
launched her career selling perfumes door-to-door.
In 1910 in the US, the first version of the Direct Selling Association (DSA) was set up to look
after the companies that were joining the industry — it was called The Agents Credit
Association.

Public Relations (PR) are any purposeful communications between an organisation and
its publics that aim to generate goodwill. Edward Louis Bernays -"the father of public relations"
Key figures from within an organisation will write speeches to be delivered at corporate events,
public awards and industry gatherings. Publics, put simply, are its stakeholders. PR is proactive
and future orientated, and has the goal of building and maintaining a positive perception of an
organisation in the mind of its publics. This is often referred to as goodwill.
Public relationship represent communication of company and establishment of relationship with

different stakeholder groups: consumers, employees, shareholder, government and different social
groups.
There are four core elements to public relations:
 Retain and create goodwill

 First do good, then take credit for it
 Identify and effectively communicate varying points of view and needs to well-defined
targets
 It is a planned activity
The medias for public relationship communication are:
 Newspaper & magazine Articles

 Press conferences
 Sponsored events
 Press releases
 Animation of Experts for purposes of PR
Key Points
 Public relations is communicated through the media in the form of publicity events,
speaking opportunities, press releases including video and audio news releases, newsletters,
blogs, social media, press kits, and outbound communication to members of the press.
 The ideal end result of public relations is for the information to serve both the source and
the public interest.
 All audiences or publics are stakeholders, groups or individuals that can affect or be affected
by the actions of the business as a whole, but not all stakeholders are audiences.
Example: Red Bull: Stratos Space Jump
In 2012, Felix Baumgartner became the first person to break the sound barrier (without the help
of a machine) by falling 23 miles from the Earth’s stratosphere. The stunt, which was conceived,
produced and broadcast by Red Bull, captured the world’s attention and pulled in 8m live views
on YouTube.
KINGFISHER –VIJAY MALYA- Calendar Girls

ADVERTSING: Advertising can be defined as a non-personal presentation and promotion of
ideas, goods or services paid by an identified sponsor. It is non-personal mass communication,
which has become a potent means of education and mass selling. In Latin, advertere means, "to
turn towards".
American Marketing Association, “Advertising is any paid form of non-personal presentation

and promotion of ideas, goods, and services of an identified sponsor.”
Traditional advertising outlets include newspapers, magazines, TV and radio stations. Today,
however, advertisements are placed nearly everywhere and anywhere, including:
Roadside billboards Sides of buildings Websites Electronic newsletters

Print newsletters Inside bills Product packaging Restaurant placemats
Event bulletins Store windows The sides of cars and trucks Subway car walls
Airport kiosks Sporting arenas YouTube videos
There are certain benefits of advertising.
1. It helps to reach out to make people
2. Advertising promotes the value and utility of the brand to customers
3. Good advertisements help build a strong community and induce brand loyalty
4. Companies who focus on advertising are also perceived as big brands, which pushes customers
to believe that products and services are also good
5. Creative teams form advertising agencies give good inputs about a brand
6. Helps sales force, retailers, and shop owners to promote the products in a much better way
7. Advertising helps build trust between customers, retailers, suppliers and manufacturers
Despite all the benefits, there are some critical disadvantages of advertising for a business:
1. Advertising means that the company has to do a lot of spending
2. Extremely time consuming process
3. Only advertising cannot help build a good business. Unless the product, services and customer
service are good, advertising can only bring in customers but cannot retain them.
Advertising- Insights
Famous Personalities in Advertising: "Albert Lasker and Alyque Padamsee are known as the
father of modern advertising respectively in the world and in India" . Piyush Pandey- Famous for
Vodafone ZooZoos, Pug, Fevicol, Cadbury
Book: Confessions of Advertisers- David Ogilvy (Father of Advertising)
Advertising Agencies: Ogilvy & Mather, McCann Erickson India, Lowe Lintas, JWT, Leo
Burnett, Mudra Communications, Saatchi & Saatchi

Bba Marketing Notes 2018-19

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Bba Marketing Notes 2018-19

Uploaded by

Copyright:

Available Formats

MARKETING

Unit-I: Concept of marketing - Market, Marketing, Marketer - Selling concept,

Unit-II: Product and Product lines Product hierarchy, Product classification,

Unit-IV: Marketing channels: The Importance of marketing channels, Channel

Unit-V: Promotion mix Advertisement: - Meaning, Objectives Types of Media

BBA IV SEMSETER MARKETING

BBA IV SEMSETER MARKETING

1 Emphasis is on the product 1 Emphasis on consumer needs wants

2 Company Manufactures the 2 Company first determines customers needs

3 Management is sales volume 3.Management is profit oriented

4 Planning is short-run-oriented in 4 Planning is long-run-oriented in today’s

5 Stresses needs of seller 5 Stresses needs and wants of buyers

6 Views business as a good producing 6 Views business as consumer producing

7 Emphasis on staying with existing 7 Emphasis on innovation on every existing

9 Cost determines Price 9. Consumer determine price, price determines

BBA IV SEMSETER MARKETING

BBA IV SEMSETER MARKETING

BBA IV SEMSETER MARKETING

BBA IV SEMSETER MARKETING

Segmentation, targeting, and positioning together comprise a three stage process.

BBA IV SEMSETER MARKETING

Men - Sunscreen lotions, Deodorant

BBA IV SEMSETER MARKETING

SEGMENTATION OF INDUSTRIAL MARKET

BBA IV SEMSETER MARKETING

Shopping style enjoys shopping, functional, avoids

Involvement level High, medium, low

BBA IV SEMSETER MARKETING

BBA IV SEMSETER MARKETING

BBA IV SEMSETER MARKETING

REASONS WHY THE PUBLIC SECTOR NEEDS MARKETING

Engage your team

BBA IV SEMSETER MARKETING

BBA IV SEMSETER MARKETING

1. You’ll make more sales

“No sales, no company.” – Mark Cuban

2. You’ll increase awareness

3. You’ll learn your metrics

“What gets measured, gets managed.” – Peter Drucker

4. You’ll make consumers trust you

5. You’ll build a social asset

6. You’ll learn your marketplace

7. You’ll discover what works

8. You’ll develop an ‘ideal customer’ profile

9. You’ll learn how to test and optimize

10. You’ll build a powerful brand

BBA IV SEMSETER MARKETING

BBA IV SEMSETER MARKETING

BBA IV SEMSETER MARKETING

Classification based on durability and tangibility

BBA IV SEMSETER MARKETING

BBA IV SEMSETER MARKETING

(a) Classification of Industrial Products:

These are of two types:

(b) Manufactured Materials and Parts:

3. SUPPLIES AND BUSINESS SERVICES:

BBA IV SEMSETER MARKETING

1. PRODUCT MIX DECISIONS (PRODUCT PORTFOLIO OR PRODUCT

BBA IV SEMSETER MARKETING

BBA IV SEMSETER MARKETING

• Product line group of products that are closely related because:

1. PRODUCT LINE LENGTH (LINE ENLARGEMENT):

1. If objective is increased market share: Longer product line length.

• Product line may be enlarged through: