I.

INTRODUCTION TO MARKETING MANAGEMENT

'Marketing is so basic that it cannot be considered as separate function. It is the whole business seen
from the point of view of its final result, that is, from the customer's point of view'. - Peter Drucker.
Marketing is indeed an ancient art; it has been practiced in one form or the other, since the days of
Adam and Eve. Today, it has become the most vital function in the world of business. Marketing is the
business function that identifies unfulfilled needs and wants, define and measures their magnitude,
determines which target market the organization can best serve, decides on appropriate products,
services and programmes to serve these markets, and calls upon everyone in the organization to think
and serve the customer.

Marketing is the force that harnesses a nation's industrial capacity to meet the society's material wants.
It uplifts the standard of living of people in society. Marketing must not be seen narrowly as the task
of finding clever ways to sell the company's products. Many people confuse marketing with some of its
sub functions, such as advertising and selling. Authentic marketing is not the art of selling what you
make but knowing what to make.

It is the art of identifying and understanding customer needs and creating solutions that deliver
satisfaction to the customers, profit to the producers, and benefits for the stakeholders. Market
leadership is gained by creating customer satisfaction through product innovation, product quality,
and customer service. If these are absent, no amount of advertising, sales promotion, or salesmanship
can compensate.

William Davidow observed: 'While great devices are invented in the laboratory, great products are
invented in the marketing department'. Too many wonderful laboratory products are greeted with
yawns or laughs. The job of marketers is to 'think customer' and to guide companies to develop offers
that are meaningful and attractive to target customers. Already sea changes have been taking place in
the global economy. Old business road maps cannot be trusted. Companies are learning that it is hard
to build a reputation and easy to lose it. The companies that best satisfy their customers will be the
winners. It is the special responsibility of marketers to understand the needs and wants of the
marketplace and to help their companies to translate them into solutions that win customers approval.
Today's smart companies are not merely looking for sales; they are investing in long term, mutually
satisfying customer relationships based on delivering quality, service and
Value.

I.1. Definitions and terminology

There are as many definitions of marketing as many scholars or writers in this field. It has been defined
in various ways by different writers.
There are varying perceptions and viewpoints on the meaning and content of marketing. Some
important definitions are:
✓ Marketing is a social and managerial process by which individuals and groups obtain what they
need and want through creating, offering and exchanging products of value with others.
✓ Marketing is the process by which an organization relates creatively, productively and
profitably to the marketplace.
✓ Marketing is the art of creating and satisfying customers at a profit.
✓ Marketing is getting the right goods and services to the right people at the right places at the
right time at the right price with the right communication and promotion.

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 ✓ Much of marketing is concerned with the problem of profitably disposing what is produced.
✓ Marketing is the phenomenon brought about by the pressures of mass production and
increased spending power.
✓ Marketing is the performance of business activities that direct the flow of goods and services
from the producer to the customer.
✓ Marketing is the economic process by which goods and services are exchanged between the
maker and the user and their values determined in terms of money prices.
✓ Marketing is designed to bring about desired exchanges with target audiences for the purpose
of mutual gain.
✓ Marketing activities are concerned with the demand stimulating and demand fulfilling efforts
of the enterprise.
✓ Marketing is the function that adjusts an organization’s offering to the changing needs of the
marketplace.
✓ Marketing is a total system of interacting business activities designed to plan, promote, and
distribute need satisfying products and services to existing and potential customers.
✓ Marketing origination with the recognition of a need on the part of a consumer and termination
with the satisfaction of that need by the delivery of a usable product at the right time, at the
right place, and at an acceptable price. The consumer is found both at the beginning and at the
end of the marketing process.
✓ Marketing is a view point, which looks at the entire business process as a highly integrated
effort to discovery, arouse and satisfy consumer needs.

It is obvious from the above definitions of marketing that marketing has been viewed from different
perspective. Now it is imperative to discuss the important terms on which definition of marketing
rests: needs, wants, and demands; products; value, cost, and satisfaction; exchange, transactions and
relationships; markets; and marketers. These terms are also known as the core concepts in marketing.

I.2. Needs, wants and demands

Marketing starts with the human needs and wants. People need food, air, water, clothing and shelter
to survive. They also have a strong desire for recreation, health, education, and other services. They
have strong performances for particular versions and brands of basic goods and services. A human
need is a state of felt deprivation of some basic satisfaction. People require food, clothing, shelter,
safety, belonging, esteem and a few other things for survival. These needs are not created by their
society or by marketers; they exist in the very texture of human biology and the human condition.

Wants are desires for specific satisfiers of these deeper needs. For example, one needs food and wants
a pizza, needs clothing and wants a Raymond shirt. These needs are satisfied in different manners in
different societies. While people need are few, their wants are unlimited. Human wants are continually
shaped and reshaped by social forces and institutions. Demands are wants for specific products that
are backed up by an ability and willingness to buy them. For example, many people want to buy a
luxury car, but they lack in purchasing power. Companies must therefore measure not only how many
people want their products, but how many would actually be willing to buy and finally able to buy it.
Marketers do not create need, they simply influence wants. They suggest to consumers that a particular
product or brand would satisfy a person’s need for social status. They do not create the need for social
status but try to point out that a particular product would satisfy that need. They try to influence
demand by making the product attractive, affordable, and easily available.

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I.3. Products

People satisfy their needs and wants with products. Product can be defined as anything that can be
offered to someone to satisfy a need or want. The word product brings to mind a physical object, such
as T.V., Car, and Camera etc. The expression products and services are used distinguish between
physical objects and intangible ones. The importance of physical products does not lie in owning them
rather using them to satisfy our wants. People do not buy beautiful cars to look at,
but because it supply transportation service. Thus, physical products are really vehicles that deliver
services to people.

Services are also supplied by other vehicles such as persons, places, activities, organizations and ideas.
If people are bored, they can go to a musical concert (persons) for entertainment, travel to beautiful
destination like Shimla (place), engage in physical exercise (activity) in health clubs, join a laughing
club (organization) or adopt a different philosophy about life (idea). Services can be delivered through
physical objects and other vehicles. The term product covers physical products,
service products, and other vehicles that are capable of delivering satisfaction of a need or want.

The other terms also used for products are offers, satisfiers, or resources. Manufacturers pay more
attention to their physical products than to the services produced by these products. They love their
products but forget that customers buy them to satisfy their need. People do not buy physical object
for their own sake. A tube of lipstick is bought to supply a service: helping the person to look better. A
drill is bought to supply a service: producing holes. The marketer’s job is to sell the benefits or services
built into physical products rather than just describe their physical features.

I.4. Value, cost, and satisfaction

How do consumers choose among the various products that may satisfy a given need is very interesting
phenomenon. If a student needs to travel five kilometers to his college every day, he may choose a
number of products that will satisfy this need: a bicycle, a motorcycle, automobile and a bus. These
alternatives constitute product choice set. Assume that the student wants to satisfy different needs in
traveling to his college, namely speed, safety, ease and economy. These are called the need set. Each
product has a different capacity to satisfy different needs. For example, bicycle will be slower, less safe
and more effortful than an automobile, but it would be more economical.
Now, the student has to decide on which product delivers the most satisfaction. Here comes the
concept of value. The student will form an estimate of the value of each product in satisfying his needs.
He might rank the products from the most need satisfying to the least need satisfying. Value is the
consumer’s estimate of the product’s overall capacity to satisfy his or her needs.

The student can imagine the characteristics of an ideal product that would take him to his college in a
split second with absolute safety, no effort and zero cost. The value of each actual product would
depend on how close it came to this ideal product. Assume the student is primarily interested in the
speed and case of getting to college. If the student was offered any of the above-mentioned products at
no cost, one can predict that he would choose an automobile. Here comes the concept of cost. Since
each product involves a cost, the student will not necessarily buy automobile. The automobile costs
substantially more than bicycle or motorcycle. Therefore, he will consider the product’s value and
price before making a choice. He will choose the product that will produce the most value per rupee.

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I.5. Exchange, transactions and relationships

The fact that people have needs and wants and can place value on products does not fully explain the
concept of marketing. Marketing emerges when people decide to satisfy needs and wants through
exchange. Exchange is one of the four ways people can obtain products they want. The first way is self-
production. People can relieve hunger through hunting, fishing, or fruit gathering. In this case there is
no market or marketing. The second way is coercion. Hungry people can steal food from others. The
third way is begging. Hungry people can approach others and beg for food. They have nothing tangible
to offer except gratitude. The fourth way is exchange. Hungry people can approach others and offer
some resource in exchange, such as money, another food, or service.
Marketing arises from this last approach to acquire products. Exchange is the act of obtaining a desired
product from someone by offering something in return. For exchange to take place, five conditions
must be satisfied:

✓ There are at least two parties.

✓ Each party has something that might be of value to the other party.
✓ Each party is capable of communication and delivery.
✓ Each party is free to accept or reject the offer.
✓ Each party believes it is appropriate or desirable to deal with the other party.

If an agreement is reached, we say that a transaction takes place. Transactions are the basic unit of
exchange. A transaction consists of a trade of values between two parties. A transaction involves
several dimensions; at least two things of value, agreed upon conditions, a time of agreement, and a
place of agreement. Usually a legal system arises to support and enforce compliance on the part of the
transaction.

Transaction marketing is a part of longer idea, that of relationship marketing. Smart marketers try to
build up long term, trusting, ‘win-win’ relationships with customers, distributors, dealers and
suppliers. This is accomplished by promising and delivering high quality, good service and fair prices
to the other party over time. It is accomplished by strengthening the economic, technical, and social
ties between members of the two organizations. The two parties grow more trusting, more
knowledgeable, and more interested in helping each other. Relationship marketing cuts down on
transaction costs and time. The ultimate outcome of relationship marketing is the building of a unique
company asset called a marketing network. A marketing network consists of the company and the
firms with which it has built solid, dependable business relationships.

I.6. Markets

A market consists of all the potential customers sharing a particular need or want who might be willing
and able to engage in exchange to satisfy that need or want. The size of market depends upon the
number of persons who exhibit the need, have resources that interest others, and are willing to offer
these resources in exchange for what they want. Originally the term market stood for the place where
buyers and sellers gathered to exchange their goods, such as a village square. Economists use the term
market to refer to a collection of buyers and sellers who transact over a particular product or product
class; i.e. the housing market, the grain market, and so on. Marketers, however, see the sellers as
constituting the industry and the buyers as constituting the market.

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I.6.1. Marketing, marketers, and marketing management

Marketing means human activities taking place in relation to markets. Marketing means working with
markets to actualize potential exchanges for the purpose of satisfying human needs and wants. If one
party is more actively seeking an exchange than the other party, we call the first party a marketer and
the second party a prospect. A marketer is someone seeking a resource from someone else and willing
to offer something of value in exchange. The marketer is seeking a response from the other party, either
to sell something or to buy something. Marketer can be a seller or a buyer.

Marketing management takes place when at least one party to a potential exchange gives thought to
objectives and means of achieving desired responses from other parties. According to American
Marketing Association, ‘Marketing Management is the process of planning and executing the
conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that
satisfy individual and organizational objectives’. This definition recognizes that marketing
management is a process involving analysis, planning, implementation, and control; that it covers
ideas, goods and services; that it rests on the notion of exchange; and that the goal is to produce
satisfaction for the parties involved.

I.6.2. Marketing concepts

Firms vary in their perceptions about business, and their orientations to the market place. This has led
to the emergence of many different concepts of marketing. Marketing activities should be carried out
under some well-thought out philosophy of efficient, effective, and responsible marketing. There are
six competing concepts under which organizations conduct their marketing activity.

a. Production concept

It is one of the oldest concepts guiding sellers. The production concept holds that customers will favour
those products that are widely available and low in cost. Managers of production-oriented
organizations concentrate on achieving high production efficiency and wide distribution coverage. The
assumption that consumers are primarily interested in product availability and low price holds in at
least two types of situations. The first is where the demand for a product exceeds supply. Here
consumers are more interested in obtaining the product than in its fine points. The suppliers will
concentrate on finding ways to increase production. The second situation is where the product’s cost
is high and has to be brought down through increased productivity to expand the market.

The product concept

The product concept holds that consumers will favor those products that offer quality or performance.
Managers in these product-oriented organizations focus their energy on making good products and
improving them over time. These managers assume that buyers admire well-made product and can
appraise product quality and performance. These managers are caught up in a love affair with their
product and fail to appreciate that the market may be less “turned on” and may even be moving in
different direction.

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 b. The selling concept
The selling concept holds that consumers, if left alone, will ordinarily not buy enough of the
organization’s products. The organization must therefore an aggressive selling and promotion effort.
The concept assumes that consumers typically show buying inertia or resistance and have to be coaxed
into buying more, and that the company has available a whole battery of effective selling and
promotion tools to stimulate more buying. The selling concept is practiced most aggressively with
“sought goods”, those goods that buyers normally do not think of buying, such as insurance,
encyclopedias, and funeral plots. These industries have perfected various sales techniques to locate
prospects and hard-sell them on the benefits of their product. Hard selling also occurs with sought
goods, such as automobiles. Most firms practice the selling concept when they have overcapacity. Their
aim is to sell what they make rather than make what they can sell.

Thus selling, to be effective, must be preceded by several marketing activities such as needs
assessment, marketing research, product development, pricing, and distribution. If the marketer does
a good job of identifying consumer needs, developing appropriate products, and pricing, distributing,
and promoting them effectively, these products will sell very easily. Indeed, marketing based on hard
selling carries high risks. It assumes that customers who are coaxed into buying the product will like
it; and if they don’t, they won’t bad-mouth it to friends or complain to consumer organizations. And
they will possibly forget their disappointment and buy it again. These are indefensible assumptions to
make about buyers. One study showed that disappointed customers bad-mouth the product to eleven
acquaintances, while satisfied customers may good-mouth the product to only three.

c. The marketing concept

The marketing concept holds that the key to achieving organizational goals consists in determining the
needs and wants of target markets and delivering the desired satisfactions more effectively and
efficiently than competitors.

Theodore Levitt drew a perceptive contrast between the selling and marketing concepts. Selling
focuses on the needs of the seller; marketing on the needs of the buyer. Selling is preoccupied with the
seller’s need to convert his product into cash; marketing with the idea of satisfying the needs of the
customer by means of the product and the whole cluster of things associated with creating, delivering
and finally consuming it.

Market focus: No company can operate in every market and satisfy every need. Nor can it even do a
good job within one broad market: Even mighty IBM cannot offer the best customer solution for every
computer need. Companies do best when they define their target markets carefully. They do best when
they prepare a tailored marketing program for each target market.

Customer orientation: A company can define its market carefully and still fail at customer-oriented
thinking. Customer-oriented thinking requires the company to define customer needs from the
customer point of view, not from its own point of view. Every product involves tradeoffs,
and management cannot know what these are without talking to and researching customers. Thus a
car buyer would like a high-performance car that never breaks down, that is safe, attractively styled,
and cheap. Since all of these virtues cannot be combined in one car, the car designers must make hard
choices not on what pleases them but rather on what customers prefer or expect. The aim, after all, is
to make a sale through meeting the customer’s needs. Why is it supremely important to satisfy the
customer? Basically because a company’s sales each period come from two groups: customers and

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repeat customers. It always costs more to attract new customers than to retain current customers.
Therefore customer retention is more critical than customer attraction.

Coordinated marketing: Unfortunately, not all the employees in a company are trained or motivated
to pull together for the customer. Coordinated marketing means two things. First, the various
marketing functions-sales-force, advertising, product management, marketing research, and so on-
must be coordinated among themselves. Too often the sales-force is mad at the product managers for
setting “too high a price” or “too high a volume target”, or the advertising director and a brand manager
cannot agree on the best advertising campaign for the brand. These marketing functions must be
coordinated from the customer point of view. Second, marketing must be well coordinated with the
other departments. Marketing does not work when it is merely a department; it only works when all
employees appreciate the effect they have on customer satisfaction.

Profitability: The purpose of the marketing concept is to help organizations achieve their goals. In the
case of private firms, the major goal is profit; in the case of non-profit and public organizations, it is
surviving and attracting enough funds to perform their work. Now the key is not to aim for profits as
such but to achieve them as a byproduct of doing the job well. This is not to say that marketers are
unconcerned with profits. Quite the contrary, they are highly involved in analyzing the profit potential
of different marketing opportunities. Whereas salespeople focus on
achieving sales-volume goals, marketing people focus on identifying profit-making opportunities.

d. The societal marketing concept

In recent years, some people have questioned whether the marketing concept is appropriate
organizational philosophy in an age of environmental deterioration, resource shortages, explosive
population growth, world hunger and poverty, and neglected social services. The question is whether
companies that do an excellent job of sensing, serving, and satisfying individual consumer wants are
necessarily acting in then best long-run interests of consumers and society.

The societal marketing concept holds that the organization’s task is to determine the needs, wants, and
interests of target markets and to deliver the desired satisfactions more effectively and efficiently than
competitors in a way that preserves or enhances the consumer’s and the society’s well-being. The
societal marketing concept calls upon marketers to balance three considerations in setting their
marketing policies, namely, company profits, consumer want satisfaction, and public interest.
Originally, companies based their marketing decisions largely on immediate company profit
calculations. Then they began to recognize the long-run importance of satisfying consumer wants, and
this introduced the marketing concept. Now they are beginning to factor in society’s interests in their
decision-making. The societal marketing concept calls for balancing all three considerations. A number
of companies have achieved notable sales and profit gains through adopting and practicing the societal
marketing concept.

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 II. MARKET SEGMENTATION, TARGETING AND POSITIONING

A sound marketing program starts with identifying the differences that exist within a market, a
process called, market segmentation, and deciding which segments will be treated as target markets.
Market segmentation is customer oriented and consistent with the marketing concept. It enables a
company to make more efficient use of its marketing resources.

After evaluating the size and potential of each of the identified segments, it targets them with a unique
marketing mix. The marketer must somehow persuade the members of each segment that its product
will satisfy their needs better than competitive products. To do so, marketers attempt to develop a
special image for their products in the consumer's mind relative to competitive products: that is, it
positions its product as filling a special niche in the market place. The marketing environment is the
set of conditions within which the company must start its search for opportunities and possible
threats. It consists of all the actors and forces that affect the company's ability to transact effectively
with its target market. The company's micro-environment consists of the actors in the company's
immediate environment that affect its ability to serve its markets; specifically, the company itself,
suppliers, market intermediaries, customers, competitors, and publics. The company's macro-
environment consists of six major forces: demographic, economic, natural, political, technological, and
cultural.

II.1. Segmentation

Market segmentation is defined as "the process of taking the total, heterogeneous market for a product
and dividing it into several submarkets or segments, each of which tends to be homogeneous in all
significance. The markets could be segmented in different ways. For instance, instead of mentioning a
single market for 'shoes', it may be segmented into several sub-markets, e.g., shoes for executives,
doctors, college students etc.

II.2. Requirements for markets segmentation

For market segmentation to become effective and result oriented, the following principles are to be
observed:
(1) Measurability of segments,
(2) Accessibility of the segments, and
(3) Represent ability of the segments.
The main purpose of market segmentation is to measure the changing behaviour patterns of
consumers. It should also be remembered that variation in consumer behavior are both numerous and
complex. Therefore, the segments should be capable of giving accurate measurements. But this is often
a difficult task and the segments are to be under constant review.

The second condition, accessibility, is comparatively easier because of distribution, advertising media,
salesmen, etc. Newspaper and magazines also offer some help in this direction. For examples, there
are magazines meant exclusively for the youth, for the professional people, etc. The third condition in
the represent ability of each segment. The segments should be large and profitable enough to be
considered as separate markets. Such segments must have individuality of their own.
The segment is usually small in case of industrial markets and comparatively larger in respect of
consumer products.

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II.3. Benefits of segmentation

1. The manufacturer is in a better position to find out and compare the marketing potentialities of his
products. He is able to judge product acceptance or to assess the resistance to his product.
2. The result obtained from market segmentation is an indicator to adjust the production, using man,
materials and other resources in the most profitable manner. In other words, the organization can
allocate and appropriate its efforts in a most useful manner.
3. Change required may be studied and implemented without losing markets. As such, as product line
could be diversified or even discontinued.
4. It helps in determining the kinds of promotional devices that are more effective and also their
results.
5. Appropriate timing for the introduction of new products, advertising etc., could be easily
determined.

II.4. Basis for segmenting markets

Market segmentation consists in identifying a sufficient number of common buyer characteristics to

permit subdivision of the total demand for a product into economically viable segments. These
segments fall between two extremes of total homogeneity and total heterogeneity. The various
segments that are in vogue are as follows:

a. Geographic segmentation: Chronologically this kind of segmentation appeared first, for

planning and administrative purposes. The marketer often fined it convenient to sub-divide the
country into areas in a systematic way. The great advantages of adopting this scheme are that
standard regions are widely used by Government and it facilitates collection of statistics. Most
of the national manufacturers split up their sales areas into sales territories either state-wise
or district-wise.

b. Demographic segmentation: Under this method, the consumers are grouped into
homogeneous groups in terms of demographic similarities such as age, sex, education, income
level, etc. This is considered to be more purposeful since the emphasis ultimately rests on
customers. The variables are easy to recognize and measure than in the case of the first type, as
persons of the same group may exhibit more or less similar characteristics.

c. Socio-psychological segmentation: The segmentation here is done on the basis of social class,
viz., working class, middle income groups, etc. Since marketing potentially is intimately
connected with the "ability to buy", this segmentation is meaningful in deciding buying patterns
of a particular class.

d. Product segmentation: When the segmentation of markets is done on the basis of product
characteristics that are capable of satisfying certain special needs of customers, such a method
is known as product segmentation. The products, on this basis, are classified into:

✓ Prestige products, e.g. automobiles, clothing.

✓ Maturity products, e.g. cigarettes, blades.
✓ Status products, e.g. most luxuries.
✓ Anxiety products, e.g. medicines, soaps.
✓ Functional products, e.g. fruits, vegetables.

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The argument in favor of this type of product segmentation is that it is directed towards differences
among the products which comprise markets. Where the products involved show great differences,
this method is called a rational approach.

e. Benefit segmentation: Russell Hally introduced the concept of benefit segmentation. Under this
method, the buyers form the basis of segmentation but not on the demographic principles mentioned
above. Here consumers are interviewed to learn the importance of different benefits they may be
expecting from a product. These benefits or utilities may be classified into generic or primary utilities
and secondary or evolved utilities.
f. Volume segmentation: Another way of segmenting the market is on the basis of volume of
purchases. Under this method the buyers are purchasers, and single unit purchasers. This analysis is
also capable of showing the buying behavior of different groups.
g. Marketing-factor segmentation: The responsiveness of buyers to different marketing activities is
the basis for these types of segmentation. The price, quality, advertising, promotional devices, etc., are
some of the activities involved under this method. This is explained by R.S. Frank as follows:
"If a manufacturer knew that one identifiable group of his customers was more responsive to changes
in advertising expenditures than others, he might find it advantageous to increase the amount of
advertising aimed at them. The same sort of tailoring would also be appropriate if it was found that
customers reacted differently to changes in pricing, packaging, product, quality etc.

II.5. Markets on the basis of segmentation

It is now certain that any market could be segmented to a considerable extent because buyers'
characteristics are never similar. This, however, does not mean that manufacturers may always try to
segment their market. On the basis of the intensity of segmentation, marketing strategies to be adopted
may be classified into:
a. Undifferentiated marketing: When the economies of organization do not permit the division of
market into segments, they conceive of the total market concept. In the case of fully standardized
products and where substitutes are not available, differentiation need not be undertaken. Under such
circumstances firms may adopt mass advertising and other mass methods in marketing, e.g., Coca Cola.

b. Differentiated marketing: A firm may decide to operate in several or all segments of the market
and devise separate product-marketing programmes. This also helps in developing intimacy between
the producer and the consumer. In recent years most firms have preferred a strategy of differentiated
marketing, mainly because consumer demand is quite diversified. For example, cigarettes are now
manufactured in a variety of lengths and filter types. This provides the customer an opportunity to
select his or her choice from filtered, unfiltered, long or short cigarettes. Each kind offers a basis for
segmentation also. Though the differentiated marketing is sales-oriented, it should also be borne in
mind that it is a costly affair for the organization.
c. Concentrated marketing: Both the concepts explained above imply the approach of total market
either with segmentation or without it. Yet another option is to have concentrated efforts in a few
markets capable of affording opportunities. Put in another way, 'instead of spreading itself thin in
many parts of the market, it concentrates its forces to gain a good market position in a few areas. Then
new products are introduced and test marketing is conducted, and this method is adopted. For a
consumer product 'Boost' produced by the manufacturers of Horlicks, this method was adopted. The
principle involved here is 'specialization' in markets which have real potential. Another notable feature
of this method is the advantage of one segment is never offset by the other. But in the case of the first
two types, good and poor segments are averaged.

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c.1.Targeting

Market segmentation reveals the market-segment opportunities facing the firm. The firm now has to
evaluate the various segments and decide how many and which ones to serve.

c.2. Evaluating the market segments

In evaluation different market segments, the firm must look at three factors, namely segment size and
growth, segment structural attractiveness and company objectives and resources.

(a) Segment size and growth: The first question that a company should ask is whether a potential
segment has the right size and growth characteristics. Large companies prefer segments with large
sales volumes and overlook small segments. Small companies in turn avoid large segments because
they would require too many resources. Segment growth is a desirable characteristic since companies
generally want growing sales and profits.
(b) Segment structural attractiveness: A segment might have desirable size and growth and still not
be attractive from a profitability point of view. The five threats that a company might face are:

(i) Threat from industry competitors: A segment is unattractive if it already contains numerous and
aggressive competitors. This condition may lead to frequent price wars.
(ii) Threats from potential entrants: i.e. from new competitors who, if enter the segment at a later stage,
bring in new capacity, substantial resources and would soon steal a part of the market share.
(iii) Threat of substitute products: A segment is unattractive if there exists too many substitutive
products because it would result in brand switching, price wars, low profits etc.
(iv) Threat of growing bargaining power of buyers: A segment is unattractive if the buyers possess
strong bargaining power. Buyers will try to force price down, demand more quality or services, all at
the expense of the seller's profitability.
(v) Threat of growing bargaining power of suppliers: A segment is unattractive if the company's
suppliers of raw materials, equipment, finance etc., are able to raise prices or reduce the quality or
quantity of ordered goods.

(c) Company objectives and resources: Even if a segment has positive size and growth and is
structurally attractive, the company needs to consider its own objectives and resources in relation to
that segment. Some attractive segments could be dismissed because they do not match with the
company's long-run objectives. Even if the segment fits the company's objectives, the company has
to consider whether it possesses the requisite skills and resources to succeed in that segment. The
segment should be dismissed if the company lacks one or more necessary competences needed to
develop superior competitive advantages.

II.6. Selecting the market segments

As a result of evaluating different segments, the company hopes to find one or more market segments
worth entering. The company must decide which and how many segments to serve. This is the problem
of target market selection. A target market consists of a set of buyers sharing
common needs or characteristics that the company decides to serve. The company can consider five
patterns of target market selection.

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a. Single segment concentration: In the simplest case, the company selects a single segment. This
company may have limited funds and may want to operate only in one segment, it might be a segment
with no competitor, and it might be a segment that is a logical launching pad for further segment
expansion.
b. Selective specialization: Here a firm selects a number of segments, each of which is attractive and
matches the firm's objectives and resources. This strategy of 'multi-segment coverage' has the
advantage over 'single-segment coverage' in terms of diversifying the firm’s risk i.e. even if one
segment becomes unattractive, the firm can continue to earn money in other segments.
c. Product specialization: Here the firm concentrates on marketing a certain product that it sells to
several segments. Through this strategy, the firm builds a strong reputation in the specific product
area.
d. Market specialization: Here the firm concentrates on serving many needs of a particular customer
group. The firm gains a strong reputation for specializing in serving this customer group and becomes
a channel agent for all new products that this customer group could feasibly use.
e. Full market coverage: Here the firm attempts to serve all customer groups with all the products
that they might need. Only large firms can undertake a full market coverage strategy. e.g. Philips
(Electronics), HLL (Consumer non-durables).

Large firms going in for whole market can do so in two broad ways— through undifferentiated
marketing or differentiated marketing.

❖ Positioning

Communicating the Company's positioning: The Company must not only develop a clear positioning
strategy, it must also communicate it effectively. Suppose a company chooses the "best in quality"
positioning strategy. It must then make sure that it can communicate this claim convincingly. Quality
is communicated by choosing those physical signs and cuts that people normally use to judge quality.
Quality is often communicated through other marketing elements. A high price usually signals a
premium-quality product to buyers. The product's quality image is also affected by the packaging,
distribution, advertising and promotion. The manufacturer’s reputation also contributes to the
perception of quality. To make a quality claim credible, the surest way is to offer "satisfaction or your
money back". Smart companies try to communicate their quality to buyers and guarantee that
this quality will be delivered or their money will be refunded.

Positioning refers to how the firm wants its consumers to see its product. And a positioning strategy
results in the image the firm wants to draw in the mind of it customers, the picture it wants the
customers to visualize of the firm’s offer, in relation to the market situation, and any competition that
the firm may have.
There are different positioning themes:

✓ Attribute positioning: The message highlights one or two of the attributes of the
product Benefit positioning: The message highlights one or two of the benefits to
the customer Use/application positioning: Claim the product as best for some
application
✓ User positioning: Claim the product as best for a group of users

✓ Competitor positioning: Claim that the product is better than a

competitor

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 ✓ Product category positioning: Claim as the best in a product
category

❖ Quality/Price positioning: Claim best value for price

II.7. Marketing environment

A company's marketing environment consists of the factors and forces that affect the company's ability
to develop and maintain successful transactions and relationships with its target customers. Every
business enterprise is confronted with a set of internal factors and a set of external factor. The internal
factors are generally regarded as controllable factors because the company has a fair amount of control
over these factors, it can alter or modify such factors as its personnel, physical facilities, marketing-
mix etc. to suit the environment. The external factors are by and large, beyond the control of a
company. The external environmental factors such as the economic factors, sociocultural factors,
government and legal factors, demographic factors, geophysical factors etc. As the environmental
factors are beyond the control of a firm, its success will depend to a very large extent on its adaptability
to the environment, i.e. its ability to properly design and adjust internal variables to take advantages
of the opportunities and to combat the threats in the environment.

II.7.1. The microenvironment

The microenvironment consists of the actors in the company's immediate environment that affects the
ability of the marketers to serve their customers. These include the suppliers, marketing
intermediaries, competitors, customers and publics.

a. Suppliers: Suppliers are those who supply the inputs like raw materials and components etc. to the
company. Uncertainty regarding the supply or other supply constraints often compels companies to
maintain high inventories causing cost increases. It has been pointed out that factories in India
maintain indigenous stocks of 3-4 months and imported stocks of 9 months as against on average of a
few hours to two weeks in Japan. It is very risky to depend on a single supplier because a strike, lock
out or any other production problem with that supplier may seriously affect the company. Hence,
multiple sources of supply often help reduce such risks.
b. Customers: The major task of a business is to create and sustain customers. A business exists only
because of its customers and hence monitoring the customer sensitivity is a prerequisite for the
business to succeed. A company may have different categories of consumers like individuals,
households, industries, commercial establishments, governmental and other institutions etc.
Depending on a single customer is often too risky because it may place the company in a poor
bargaining position. Thus, the choice of the customer segments should be made by considering a
number of factors like relative profitability, dependability, growth prospects, demand stability, degree
of competition etc.
c. Competitors: A firm's competitors include not only the other firms which market the same or
similar products but also all those who compete for the discretionary income of the consumers. For
example, the competition for a company making televisions may come not only from other TV
manufacturers but also from refrigerators, stereo sets, two-wheelers, etc. This competition among
these products may be described as desire competition as the primary task here is to influence the
basic desire of the consumer. If the consumer decides to spend his disposable income on recreation,
he will still be confronted with a number of alternatives to choose from like T.V., stereo, radio, C.D.

13
player etc. the competition among such alternatives which satisfy a particular category of desire is
called generic competition. If the consumer decides to go in for a T.V. the next question is which form
of T.V. - black and white, color, with remote or without etc. this is called 'product form competition'.
Finally, the consumer encounters brand competition, i.e. competition between different
brands like Philips, B.P.L., Onida, Videocon, Coldstar etc. An implication of these different brands is that
a marketer should strive to create primary and selective demand for his products.’

d. Marketing intermediaries: The immediate environment of a company may consist of a number of

marketing intermediaries which are "firms that aid the company in promoting, selling and distributing
its goods to final buyers. The marketing intermediaries include middlemen such as agents and
merchants, who help the company find customers or close sales with them; physical distribution firms
which assist the company in stocking and moving goods from their origin to their
destination such as warehouses and transportation firms; marketing service agencies which assist the
company in targeting and promoting its products to the right markets such as advertising agencies;
consulting firms, and finally financial intermediaries which finance marketing activities and insure
business risks. Marketing intermediaries are vital link between the company and final consumers. A
dislocation or disturbance of this link, or a wrong choice of the link, may cost the company very heavily.

e. Public: A company may encounter certain publics in its environment. "A public is any group that has
actual or potential interest in or impact on an organization’s ability to achieve its interests". Media,
citizens, action publics and local publics are some examples. Some companies are seriously affected by
such publics, e.g. one of the leading daily that was allegedly bent on bringing down the
share price of the company by tarnishing its image. Many companies are also affected by local publics.
Environmental pollution is an issue often taken up by a number of local publics. Action by local publics
on this issue has caused some companies to suspend operations and/or take pollution control
measures. However, it is wrong to think that all publics are threats to business. Some publics are
opportunity for business. Some businessmen e.g. regard consumerism as an opportunity for their
business. The media public may be used to disseminate useful information. Similarly, fruitful symbiotic
cooperation between a
company and the local publics may be established for the benefit of
the company and the local community.

II.7.2. Macro environment

A company and the forces in its micro environment operate in larger macro environment of forces that
shape opportunities and pose threats to the company. The macro forces are, generally, more
uncontrollable than the micro forces. The macro environmental forces are given below:

b. Economic environment: Economic conditions, economic policies and the economic system are the
important external factors that constitute the economic environment of a business. The economic
conditions of a country e.g., the nature of the economy, the stage of development of the economy,
economic resources, the level of income, the distribution of income and assets etc. are among the very
important determinants of business strategies. In a developing economy, the low income may be the
reason for the very low demand for a product. In countries where investment and income are steadily
and rapidly rising, business prospects are generally bright, and further investments are encouraged.
The economic policy of the government, needless to say, has a very strong impact on business.

14
b. Political and Government environment: Political and government environment has a close
relationship with the economic system and economic policy. In most countries, there are a number of
laws that regulate the conduct of the business. These laws cover such matters as standards of product,
packaging, promotion etc. In many countries, with a view to protecting consumer interests, regulations
have become stronger. Regulations to protect the purity of the environment and preserve the
ecological balance have assumed great importance in many countries. In most nations, promotional
activities are subject to various types of controls. Media advertising is not permitted in Libya. Recent
changes in the statutes and policies have had a profound and positive impact on business. Thus,
marketing policies are definitely influenced by government policies and controls throughout the
world.
d. Socio-cultural environment: The socio-cultural environment includes the customs, traditions,
taboos, tastes, preferences etc. of the members of the society, which cannot be ignored at any cost by
any business unit. For a business to be successful, its strategy should be the one that is appropriate in
the socio-cultural environment. The marketing-mix will have to be designed as to suit the
environmental characteristics of the market. Nestle, a Swiss multinational company, today brews more
than forty varieties of instant coffee to satisfy different national tastes. Even when people of different
cultures use the same basic product, the mode of consumption, conditions of use, purpose of use or the
perceptions of the product attributes may vary so much so that the product attributes, method of
presentation, or promotion etc. may have to be varied to suit the characteristics of different markets.
The differences in language sometimes pose a serious challenge and even necessitate a change in the
brand name. The values and beliefs associated with color vary significantly across different cultures
e.g. white is a color which indicates death and mourning in countries like China, Korea and India but in
many countries it is a color expressing happiness and often used as a wedding dress color. While
dealing with the social environment, it is important to remember that the social environment of
business also encompasses its social responsibility, alertness or vigilance of the consumers and the
society's interests and well-being at large.
d. Demographic environment: Demographic factors like the size, growth rate, age composition, sex
composition, family size, economic stratification of the population, educational levels, language, caste,
religion etc. are all factors relevant to business. All these demographic variables affect the demand for
goods and services. Markets with growing population and income are growth markets. But the decline
in birth rates in countries like United States, etc. has affected the demand for baby products. Johnson
and Johnson had to overcome this problem by repositioning their products like baby shampoo and
baby soaps, and promoting them to the adult segment particularly females. A rapidly increasing
population indicates a growing demand for many products. High population growth rates also indicate
an enormous increase in labor supply. Cheap labor and a growing market have encouraged many
multinational corporations to invest in developing countries like India.

e. Natural environment: Geographical and ecological factors such as natural resources endowments,
weather and climate conditions, topographical factors, location aspects in the global context, port
facilities etc. are all relevant to business. Geographical and ecological factors also influence the location
of certain industries, e.g. industries with high material index tend to be located near the raw material
sources. Climate and weather conditions affect the location of certain industries like the cotton textile
industry. Topographical factors may affect the demand pattern, e.g. in hilly areas with a difficult
terrain, jeeps may be in greater demand than cars. Ecological factors have recently assumed greater
importance. The depletion of natural resources, environmental pollution and the disturbance of the
ecological balance has caused great concern. Government policies aimed at the preservation of
environmental purity and ecological balance, conservation of non-replenishable

15
resources etc. have resulted in additional responsibilities and problems for business, and some of these
have the effect of increasing the cost of production and marketing.

f. Physical facilities and technological environment: Business prospects depend on the availability
of certain physical facilities. The sale of television sets e.g. is limited by the extent of coverage of
telecasting. Similarly, the demand for refrigerators and other electrical appliances is affected by the
extent of electrification and the reliability of power supply. Technological factors sometimes pose
problems. A firm which is unable to cope with the technological changes may not survive. Further, the
different technological environment of different markets or countries may call for product
modifications, e.g. many appliances and instruments in the U.S.A. are designed for 110 volts but this
needs to be converted into 240 volts in countries which have that power system.

7. International environment: The international environment is very important from the point of
view of certain categories of business. It is particularly important for industries directly depending on
exports or imports. E.g. a recession in foreign markets or the adoption of protectionist policies may
help the export-oriented industries. Similarly, liberalization of imports may help some industries
which use imported items but may adversely affect import-competing industries.

III. MARKETING INFORMATION SYSTEMS, MARKETING INTELLIGENCE AND RESEARCH

III.1. Defining marketing information systems

Kotler defines, marketing information systems as follows: "A marketing information system is a
continuing and interacting structure of people, equipment and procedures to gather, sort, analyze,
evaluate, and distribute pertinent, timely and accurate information for use by marketing decision
makers to improve their marketing planning, implementation, and control.”
Major component
The major components of the Marketing Information Systems include:

✓ Internal report system

✓ Marketing intelligence system
✓ Marketing research system
✓ Marketing models
The figure below illustrates the major components, and other factors that constitute the
marketing information systems and its subsystems

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III.2. The Marketing information systems and the subsystems

III.2.1 Internal reporting systems

The internal records that are of immediate value to marketing decisions may include orders received,
stockholdings, sales invoices, product type, product size, and type of account, volume of sales,
product type and size by customer.

III.2.2. Marketing research systems

Marketing research is a proactive search for information.

Marketing research is the function that links the consumer, customer, and public to the marketer
through information--information used to identify and define marketing opportunities and
problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and
improve understanding of marketing as a process. Marketing research specifies the information
required to address these issues, designs the method for collecting information, manages and
implements the data collection process, analyzes the results, and communicates the findings and
their implications.
Marketing r es e ar ch s u p p o r t s a challenge to face competitive pressure, to meet customer
expectation, the demand of expanding market and to reduce the cost of a mistake.

III.2.3. Marketing research process

✓ Defining marketing problems

✓ Defining the objectives of the marketing research
✓ Formulating the hypothesis or the research questions
✓ Designing the research to collect and analyze data

17
 ✓ Collecting the data
✓ Analyzing the data
✓ Interpreting the results
✓ Reporting the findings, including the recommendations

III.2.4. Sources of data

Sources of data can be primary data or secondary data or both.

a. Primary data are the new data gathered specifically for the research project at
hand.

b. Secondary data are available data, already gathered for some purpose. It is common to refer to
published authoritative documents, reports, journals, and books to collect data as the secondary
data. Methods of collecting sources of Primary data are:

• Survey
• Interviews
• Telephone survey
• Mail survey
• Observation method
• experimental method
III.2.4. Marking intelligence systems
A marketing intelligence system is a set of procedures and data sources used by marketing managers
to sift information from the environment that they can use in their decision making.
Marketing intelligence involves scanning newspaper, trade magazines, business journals and reports,
economic forecasts and other media. In addition, it involves management in talking to producers,
suppliers and customers, as well as to competitors. Nonetheless, it is a largely informal process of
observing and conversing.

Marketing models

Within the Marketing Information System there has to be the means of interpreting information.
Marketing models can be useful in that case. Some of the common models used are:
Time series models, brand switching models, regression and correlation model

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 IV. BUYER/CONSUMER BEHAVIOUR

IV.1. Defining Consumer Behavior

Consumer behavior is the decision processes an individual or group involving evaluating,
acquiring, using or consuming goods and services. A firm needs to analyze buying behavior for:

a) Buyers reactions to a firms marketing strategy has a great impact on the firm’s success

b) The marketing concept stresses that a firm should create a marketing mix that satisfies
customers, therefore need to analyze the what, where, when and how consumers buy
c) Marketers can better predict how consumers will respond to marketing strategies of they
understand the buying behavior

To understand, the buyer decision-making process, the general model of the buyer decision
process serves as a tool. This model consists of these five steps or stages, including the post-
Purchase step or stage:

1. Problem recognition
2. Information search
3. Evaluation of alternatives
4. Purchase decision
5. Post-purchase behavior

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IV.2. Models of the buyer decision
process
The Figure below shows the common general model of the decision process.

IV.3. The buyer decision process

Let us briefly look at the steps, as they are also called stages, of the model.
Actual purchasing is only one stage of the process. Not all decision processes lead to a purchase.
All consumer decisions do not always include all stages.

1. Problem Recognition: the first step is to recognize that there is a need, for instance,
the need for food since the buyer feels hungry; and hunger stimulates the need to eat. That
again triggers the need to search information for food.
2. Information search: information search leads to internal search, from memory or to
the external search (from media, friends, shopping, internet, etc.,), or from both internal
and external search. This stage may lead the stage of evaluating the alternatives. Which
type of food to eat? At what price? Where? And when? And how?
3. Evaluation of Alternatives: depending on criteria for evaluation and features the buyer
wants or does not want, the buyer chooses the food to buy.
4. Purchase: purchase may differ from decision, for instance, time of purchase and product
availability.
5. Post-Purchase behavior: this may be satisfaction or dissatisfaction after purchase. There
is a concept called Cognitive Dissonance- the situation of doubt about whether the right
decision to purchase was made. This can be reduced by warranties, after sales
communication and supportive measures.
Factors affecting the consumer behavior
The factors that affect the characteristics of consumer behavior:

20
 1. Cultural factors
2. Social factors
3. Personal factors
4. Psychological factors

1. Cultural Factors
Consumer behavior is deeply influenced by cultural factors such as: buyer culture, subculture,
and social class.

•Culture
Basically, culture is the part of every society and is the important cause of person wants and
behavior. The influence of culture on buying behavior varies from country to country therefore
marketers have to be very careful in analyzing the culture of different groups, regions or even
countries.

•Subculture

Each culture contains different subcultures such as religions, nationalities, geographic regions,
racial groups etc. Firms can use these groups by segmenting the market into various small
portions, for example, by designing products according to the needs of a particular geographic
group.

•Social Class
Every society possesses some form of social class which is important, because the buying
behavior of people in a given social class is similar. In this way marketing activities could be
tailored according to different social classes. Here we should note that social class is not only
determined by income but there are various other factors as well such as: wealth, education,
occupation etc.

2.Social Factors

Social factors also impact the buying behavior of consumers. The important social factors are:
reference groups, family, role and status.

-Reference groups
Reference groups have potential in forming a person attitude or behavior. The impact of
reference groups varies across products and brands. For example, if the product is visible such as
dress, shoes, car etc then the influence of reference groups will be high. Reference groups also
include opinion leader (a person who influences other because of his special skill, knowledge or
other characteristics).

- Family
Buyer behavior is strongly influenced by the member of a family. Therefore, marketers are trying
to find the roles and influence of the husband, wife and children. If the buying decision of a
particular product is influenced by wife then the marketers will try to target the women in their
advertisement. Here we should note that buying roles change with change in consumer lifestyles.

-Roles and Status

Each person possesses different roles and status in the society depending upon the groups, clubs,
family, organization etc. To which he belongs. For example, a woman is working in an

21
organization as finance manager. Now she is playing two roles, one of finance manager and
other of mother. Therefore her buying decisions will be influenced by her role and status.

3.PersonalFactors

Personal factors can also affect the consumer behaviour. Some of the important personal factors
that influence the buying behaviour are: lifestyle, economic situation, occupation, age, personality
and self concept

• Age

Age and life-cycle have potential impact on the consumer buying behaviour. It is obvious that the
consumers change the purchase of goods and services with the passage of time. Family life-cycle
consists of different stages such young singles, married couples, unmarried couples etc which
help marketers to develop appropriate products for each stage.

•Occupation
The occupation of a person has significant impact on his buying behaviour. For example a
marketing manager of an organization will try to purchase business suits, whereas a low level
worker in the same organization will purchase rugged work clothes.

•Economic Situation

Consumer economic situation has great influence on his buying behaviour. If the income and
savings of a customer is high then he will purchase more expensive products. On the other hand,
a person with low income and savings will purchase inexpensive products.

• Lifestyle

Lifestyle of customers is another import factor affecting the consumer buying behaviour. Lifestyle
refers to the way a person lives in a society and is expressed by the things in his/her
surroundings. It is determined by customer interests, opinions, activities etc and shapes his whole
pattern of acting and interacting in the world.

•Personality

Personality changes from person to person, time to time and place to place. Therefore it can
greatly influence the buying behaviour of customers. Actually, Personality is not what one wears;
rather it is the totality of behaviour of a man in different circumstances. It has different
characteristics such as: dominance, aggressiveness, self-confidence etc which can be useful to
determine the consumer behaviour for particular product or service.

4.Psychological Factors

There are four important psychological factors affecting the consumer buying behaviour. These
are: perception, motivation, learning, beliefs and attitudes.

•Motivation

The level of motivation also affects the buying behaviour of customers. Every person has different
needs such as physiological needs, biological needs, social needs etc. The nature of the needs is

22
that, some of them are most pressing while others are least pressing. Therefore, a need becomes
a motive when it is more pressing to direct the person to seek satisfaction.

•Perception

Selecting, organizing and interpreting information in a way to produce a meaningful experience

of the world is called perception. There are three different perceptual processes which are
selective attention, selective distortion and selective retention. In case of selective attention,
marketers try to attract the customer attention. Whereas, in case of selective distortion,
customerstry to interpret the information in a way that will support what the customers already
believe. Similarly, in case of selective retention, marketers try to retain information that
supports their beliefs.

•Beliefs and Attitudes

Customer possesses specific belief and attitude towards various products. Since such beliefs and
attitudes make up brand image and affect consumer buying behaviour therefore marketers are
interested in them. Marketers can change the beliefs and attitudes of customers by launching
special campaigns in this regard.

IV.5. Types of consumer buying behavior

Types of consumer buying behavior are determined by:
✓ Level of Involvement in purchase decision, importance and intensity of interest in a
product in a particular situation
✓ Buyers level of involvement determines the reasons for m o t i v a t i o n to seek
information about a certain products and brands but virtually ignores others
The four type of consumer buying behavior are:
✓ Routine response/programmed behavior: buying low involvement frequently
purchased low cost items; need very little search and decision effort; purchased
almost automatically. Examples include soft drinks, and milk.
✓ Limited decision making buying product occasionally. Requires a moderate amount of
time for information gathering. Examples include clothes to know product class but not
the brand.
✓ Extensive decision making/complex high involvement, unfamiliar, expensive
and/or infrequently bought products. High degree of economic/performance/
psychological risk
Examples i n c l u d e c a r s , h o m e s , a n d e d u c a t i o n . It i n v o l v e s a l o t o f t i m e
s e e k i n g information and deciding

✓ Impulse buying, no conscious planning. The purchases o f t h e s a m e p r o d u c t

d o e s n o t a l w a y s e l i c i t the same buying behavior. Product can shift from one
category to the next

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 V. MARKETING MIX

The term marketing mix refers to the tactical elements of the marketing strategy. It is the
blending of product, price, promotion and place.

V.1. Product
Product refers to anything that can be offered to a market for attention, use, or consumption
that might satisfy a want or need. It includes any tangible item, services, ideas, concepts, or a
person.
Product classification
A product can classify as tangible and intangible:
✓ Tangible product is a physical product, such as mobile handset, cars and the TV set.
✓ Intangible product is a product that cannot be touched or felt such software, ideas, and
services.
V.2. Consumer goods and industrial goods product

✓ Industrial goods are consumed as raw materials or inputs by businesses to produce

other products, for example, wheat to produce flour.
✓ Consumer products are consumed by final consumers for their own interests (individuals
and households), and not for commercial purposes like in the industrial goods product
case. Consumer goods generally can be classified into four types, namely consumer goods,
commercial goods, specialty goods, and goods Unsought. This classification is based on
buying habits of consumers, as evidenced by the following three aspects (effort) of
consumers to reach a purchase decision, the attributes that consumers use in a purchase,
and the frequency of purchases
✓ Convenience products are goods that have generally high frequency of purchase (often
purchased), take the time soon, and require only minimal effort (very small) in comparison
and purchase. Examples include cigarettes, soap, toothpaste, batteries, candy, letters and
news. Convenience products themselves can be further grouped into three categories,
namely, staples, impulse goods and goods emergencies.
✓ Shopping goods are purchased by consumers in different alternatives that are available.
Comparison criteria include price, quality, and model of each item. Examples are
household equipment, clothing and furniture.
✓ Specialty goods Specialist shops are goods which have characteristics and / or
identification of a single brand in which a group of consumers are willing to make a special
effort to buy it.

General types of specialized products branded luxury products and a specific model, such as
Lamborghini cars, the clothes designed by famous designers

✓ Unsought goods are goods that are not known to consumers or are already known, but
are not generally thought of buying it.eg Insurance
V.3. Product mix and product lines

A product mix (or product assortment) refers to all the product lines and items that a particular
firm offers for sale. Say, a manufacturing firm may have a capacity to produce, kitchen appliances,
cars, and mobile handsets. These are examples of a product mix. Product mix consists of
a number of product lines. That is various models of cars, mobile handsets and kitchen
appliances produced by the firm. These various models, for examples, various models under car,
mobile handsets and kitchen appliances are product lines. Product lines are group of products
manufactured by a firm that are closely related in use and in production and marketing

24
requirements. The depth of the product line refers to the number of different products offered
in a product line.
The manufacture’s product mix has four important dimensions: width, length, depth, and
consistency.

✓ Product mix width refers to the number of different product lines the company carries.
✓ Product mix length refers to the total number of items the company carries within its
product lines.
✓ Product line depth refers to the number of versions offered of each product in the line.
✓ The consistency of the product mix refers to how closely related the various product
lines are in end use, production requirements, distribution channels, or some other way.

The three levels of a product:

This is a total product concept where a product is understood as a bundle of physical, service,
and symbolic attributes designed to satisfy a customer's wants and needs. For instance, if a
product is a tangible product, this product still can be understood as a product with three
levels. Let us say that product is a computer to be purchased for primary school teaching.
This computer, as a product, has three levels which are a bundle of physical, service and symbolic
attributes:

a) Level one: Core product is the benefit the product gives as a value such as convenience,
speed and efficiency to the user. In this sense, the core product is intangible.

b) Level two: Actual product is the physical product that comes as branding, color,
quality, style and fashion
c) Level three: Augmented product is the non-physical part of a product which includes
installation, delivery, warranties, customer care and finance.
V.4. New Product development

New product development is a strategy for a firm growth by offering modified or new product to
a market segment. The process of new product development has various steps:
1. Idea generation looking for all possible ideas that may help to develop a new product

2. Idea screening i s the step of eliminating u n s o u n d ideas prior to devoting resources

to them
3. Concept development and testing, the step of developing the marketing and engineering
details
4. Business analysis is the step of estimating likely selling price, sales volume, break-
even point and profitability
5. Product development

6. Market testing is the step of producing a physical prototype, making adjustment where
necessary and determining customer acceptance
7. Commercialization is the step of launching the product for the market

Once the new product is launched for the market, the remaining main task is the adoption of this
new product, which is an innovation, by customers. This will take us to the next topic.
New product adoption process

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In adopting process of the new product, customers differ according to the timing of their
adoption of the innovation. One of the common models used is the diffusion model. The model
groups the adopters of the new product as innovators, early adopters, early majority, late
majority and laggards.
✓ Innovators are understood as well-informed and risk-takers who are willing to try the
new product. They represent the smallest percentage of the market.
✓ Early adopters are those, based on the positive response of innovators, begin to
purchase the product. Early adopters tend to be educated and opinion leaders. They are
more in numbers than the innovators.
✓ Early majority are careful consumers who tend to avoid risk; they adopt the product once
it has been proven by the early adopters. They rely on recommendations from others who
have experience with the product.
✓ Late majority are sceptical in nature and acquire a product only after it has become
common in the market.
✓ Laggards avoid change and may not adopt a new product until traditional alternatives no
longer are available.

V.5. The new product adoption process

The new product adoption process suggests the need for the firms to pay attention to help
customers so as to go through the stages smoothly and adopt the new product.

The potential buyer of the new product, from first hearing the product to the final adapting
it goes through the following five stages of the adoption process:
1. Awareness: getting information about the new product

2. Interest : seeking more information about the product

3. Evaluation: checking its benefits and cost

4. Trial: based on the evaluation to buy to estimate the value of using it
5. Adoption: if the trial is favourable, adopt the new product and it use regularly

V.6.Product Life Cycle

With the change in marketing environment, intense competition, customer’s preferences and
tastes, product life also changes. Product also passes through four product phases:

1. Introduction
2. Growth
3. Maturity
4. Decline

✓ Introduction: in this stage product is relatively undifferentiated; sales are low; price
generally high; distribution is selective; increasing brand awareness is the aim of
promotion; almost no profit and competitor on site. The strategy is to establish market.

✓ Growth: in this stage there may be increase in sales growth; profit begins to rise; there is
differentiation in form of new product features; distribution becomes intense; there is
improvement in quality of product; price can be maintained or reduced; competitors begin

entering into the product production as to seize the opportunities. The strategy is market
penetration.

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 ✓ Maturity: in this stage, there is product differentiation and modification; competition is
intense; price reduction is likely; likely there are new distribution channels; there is
emphasis on building brand loyalty; profit goes down ; market saturation is reached; the
strategy is here is differentiation , diversification and to maintain market share and extend
the product life.
✓ Decline: in this stage, the approach is to reduce cost and to harvest it; profits diminish; the
option may include to discontinue the product or to find new use for it.

V.7.Branding

Branding is the entire process involved in creating a unique brand for a product.
Brand is the identity of a product; it is a product’s personality. A name, sign, term, design,
slogan, symbol or a combination these are forms of a brand. Through brand, a firm intends to
identify its goods and services and differentiate itself and its product from those of other sellers.
Brand connects target segment emotionally; it delivers the message clearly; it also confirms
credibility; it motivates the buyer; it consolidates user loyalty.

Let us define these two concepts: brand equity and brand evaluation.
✓ Brand equity is the positive differential effect that knowing the brand name has on
customer response to the product. A measure of a brand’s equity is the extent to which
customers are willing to pay more for the brand.
✓ Brand evaluation is the process of estimating the total financial value of a brand.

V.7.1. Major brand strategies

To build strong brand, here are major brand strategy decisions:

1. Brand positioning: focusing on attributes, benefits, beliefs, and values

2. Brand name selection: selection of the name; protection of the name
3. Brand sponsorship: it can be manufacture’s, private, licensing or co-branding
V.8. Service marketing

Service is defined as any activity or benefit that one party can offer to another that is essentially
intangible and does not result in the ownership of anything.

Service marketing is influenced by the service characteristics which are listed below:

1. Intangibility, for example, the service of car repairers; doctors consulting

2. Variability: depending on various factors, the service quality car repairer varies
3. Inseparability: for example, the service of a haircut and a barber
4. Perishability: example, a service of a seat booked to fly to Mombasa tomorrow on local
airlines, if not used will perish
Unlike the tangible product, service marketing also has a unique marketing mix. The service mix
includes: the common 4Ps (product, price, promotion and place) and people, process, physical
presence, and productivity.

❖ PRICE
Price is the sum of the values that consumers exchange for the benefits of having or using the
product or services.

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Types of cost
Types of costs are;
✓ fixed costs the type of costs which occur at the establishment of the organization and
relatively not replenished routinely. The fixed costs are not affected with the production
or sales level.
✓ Variable costs that type of costs which occur with each extra unit produce or sale. Variable
costs are directly related with the level of production.
✓ Total costs are the sum of the fixed and variable costs.
❖ Factors affecting pricing decision

These are the factors that affect pricing decision:

✓ Internal factors of the firm such as marketing objectives; marketing mix strategy; cost;
organizational consideration.
✓ External factors such as the market; demand; competition, and environment.
❖ General pricing approaches

This can be cost -based price:

✓ Cost-plus pricing, adding a standard mark-up to the cost of the product and breakeven
pricing.
✓ Value -based pricing: setting price based on buyer’s perceptions of value rather than on
the seller’s cost.
✓ Competition-based pricing. This is setting prices based on the prices that competitors
charge for similar products.

V.9. New Product Pricing Strategies

This is market skimming pricing and market penetration pricing.

✓ Market skimming pricing is setting a high price for a new product to skim maximum
revenues from the segments willing to pay the high price.
✓ Market penetration pricing is setting a low price for a new product in order to attract a
large number of buyers and a large market share.

V.9.1.Product Mix Pricing Strategies

This includes product line pricing, optional product pricing, captive product pricing, and product
bundle pricing.
Price Adjustment Strategies

a. Discount and allowance pricing which includes cash discount for those customers who pay
their bills punctually or in advance; quantity discount for those customers who purchases in
bulk Quantity; functional discount for the member of the trade channel who performs certain
function for seller, such as selling, storing, and record keeping; seasonal discount for those
buyers, who purchase merchandise or services out of season; allowance , the promotional
money paid by the manufacturers to the retailers against a performance or as per agreement.

b. Segmented pricing is selling a product or service at two or more prices, where the difference
in prices is based on the differences in the environment of the segment.

c. Psychological pricing: price is based on the perceptions of the consumer for the product.

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 d. Reference price is price that buyers carry in their minds and refer to when they look at a
given Product

e. Promotional pricing is temporarily pricing products below the list price, and sometimes
even below cost, to increase short-run sales.

f. Geographical Pricing is in which goods are placed free on board a carrier and the customer
pays the a c t u a l f r e i g h t f r o m t h e factory to the destination. Uniform-delivered
p r i c i n g i s a geographical pricing strategy, in which the company charges the same price
plus freight to all customers, regardless of their location. Zone zoning is a geographical pricing
strategy, in which the firms divide their clients’ location in different zones as per distance
with the production house and fix charges for each zone. All customers within a zone pay the
same price.

g. dazing point pricing is a geographical pricing strategy in which the seller designates some
city as a basing point and charges all customers the freight cost from that city to the
customer location, regardless of the city far from the production house. Freight-absorption
pricing is also a geographical pricing strategy in which the company absorbs all or part of the
actual freight charges in order to get the business.

V.10. Promotion
Promotion refers to communicating with the public in an attempt to influence them toward
buying a product. Promotion is also coordination of individual methods of promotions such as
advertising, personal selling and sales promotion. Promotion has three specifics purposes:

1. It communicates marketing information to consumers, users, and prospects

2. Besides just communication, promotion persuades and convinces the buyers
3. Promotional efforts act as powerful tools of communication.

Providing the cutting edge to its entire marketing programmed.

Thus, promotion is a form of non-price competition.

V.10.1.Promotion Mix

Promotion mix consists of these elements:

1. Advertising
2. Personal selling
3. Sales promotion
4. Public relations

✓ Advertising is any paid form of non-personal presentation and promotion of ideas,

goods, or services by an identified sponsor.
Advertisement is important for standardized products; products aimed at large markets;
products that have easily communicated features; products low in price; and products sold
through independent channel members and/or are new products.
Use of advertising is for promoting products or organizations; stimulating primary and selective
demand; offsetting competitor advertising; making salespersons more effective; increasing use of
product; reminding and reinforcing customers; and, reducing sales fluctuations.

Types of Advertising Agencies

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The objective of advertising is to create awareness within a specific target audience during a
specific period of time. Types of the advertising agencies that carry out the objectives of
advertising are creative Agency; Media Buying Houses; Public Relations; Offline Advertising
Agency and Production Houses

✓ Personal selling

Personal selling is a persuasive communication between a representative of a firm and one or

more potential buyer of a product. It is a face to face communication with an aim to sell a
product.
The advantages of personal selling are freedom to adjust a message to satisfy customer’s
informational needs, dynamic; precision, enabling marketers to focus on most promising leads.
give more information; two way flow of information, interactivity; discover the strengths and
weaknesses of new products and pass this information on to the marketing department. Its minus
is high cost.

Forms of personal selling (types of salespersons): These are the types of salespersons:
✓ order taker seeks to have repeat sales.
✓ order getter identifies potential customers who will buy a product;

The sales management process

1. Sales plan formulation – setting the objectives; organizing sales force

2. Sales plan implementation – sales force recruitment, selection, training, motivation and
compensation
3. Evaluation and control of the sales force, including quantitative and behavioral
assessment

Sales plan formulation

1. Setting objectives – this is specifying what to achieve

2. Organizing the sales force – taking into consideration various organizing structure:
geographical structure, customer structure, product structure,

Steps in personal selling process

Prospecting and qualifying this identify potential customers and screening them

1. Pre-approach: learning about a customer before making a call

2. Approach: knowing how to meet the buyer
3. Presentation: showing the product benefits
4. Handling objections: overcoming buyer objections
5. Closing: ask the buyer for order
6. Follow-up: ensuring customer satisfaction and repeat business
Types of sales force structure

1. Territorial: in this case the sales force can have exclusive territory to sell the product
line of the firm
2. Product: the sales force is structured along the product lines
3. Customer: the sales force is structured along the customers’ type
4. Complex: it can combine territory, product and customer

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Public Relations is building good relations with the firm’s various publics and corporate clients
by publicity and interacting in favorable moods and media, as well as handling unfavorable
rumors, stories and events are also the part of public relations.

To achieve its objectives, public relations make use of methods that include the press conference,
press release, event sponsorships, publicity event, letter to editor, media tours, articles

Steps to develop public relations strategy,

to:

1. Define objectives for publicity and media plan

2. Define the specific, measurable, actionable, realistic and time-bound objectives
3. Determine the target audience
4. Develop a schedule for public relations campaign
5. Develop plan of “attack”
6. Put to measure to track the results of the campaign

Direct marketing can also be understood as part of promotion mix. Direct marketing is
communications with targeted individual consumer to obtain an immediate response and
development of long-term relationship.
Direct marketing involves direct communications with targeted individual consumers to achieve
an immediate response and develop long lasting customer relationships. Direct marketing can be
done through E-mail, Direct mail, Telephone, Catalogues, and Fax. That is, forms of Direct
marketing includes face to face marketing ;telemarketing; direct mail marketing; Catalogue
marketing; direct response television marketing and kiosk marketing.

Developing effective communication

To facilitate the objectives of the promotion, effective communication needs to be developed.

To develop effective communication,
- Identify the target audience
- Define objective
- Design a message
- Determine message contents
- Determine message structure
- Choose Media
- Decide on personal communication channel
- Decide on non-personal communication channel
- Select the message source.

Sales

Promotion

Sales promotion is the short-term incentives to encourage the purchase or sale of a product or
service for a limited time period. The main objective of sales promotion is to build relationship
between consumer and the brand as well as creating short term sales or temporary brand
witching.
To carry out the objectives of sales promotion, the salesperson is a representative of a firm, who
performs one or more works in terms of vision, communicating, servicing, and information
gathering.

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Sales promotion tools

The salesperson has various sales promotion tools such as consumer promotion tools ; sample -
small amount of a product offers free to the consumer for trial; coupon; cash refund offer; price
pack; premium; advertising specialties – items printed with an advertiser’s name, given as a gift
to consumers; patronage reward; point of purchase display of products; contests and games.

Promotion Mix Strategies

There are push strategy and pull strategy

Push strategy is a promotion strategy in which the seller pushes the product through distribution
channels to final consumer.
Pull strategy is in which the seller directly hit the final consumer to induce them to buy the
product. Consumer will demand the product from channel members, if the pull strategy effect
successfully.
Place (Distribution channels)

Place , which is also known as the distribution channels, is a set of interdependent organizations
involved in the process of making a product or service available for use or consumption by the
consumer or business user. The distribution channels can be:
- Direct channel (from producer to a consumer)
- Indirect channel (from producer through intermediaries to a consumer)

Through distribution producer’s (manufacture’s) product can pass to a wholesaler, then to a

retailer before finally reaching a consumer. Or it may go first to a retailer finally to reach a
consumer.
In these cases, there are intermediaries between the producer and the finally consumer. But
the producer can sell directly to the final consumer. In this case, there is no intermediary. The
intermediaries may be short or long. It is long, for instance, when the product passes through an
agent, a wholesaler, retailer, and short when it only passes through a retailer to reach a consumer.
Intermediaries, such as retailers and wholesalers, tend to add efficiency because they can do
specialized tasks better than the consumer or the manufacturer.

Intermediaries add efficiency by

1. Breaking bulk – the final consumer buys only the small quantity; quantities are
gradually broken down to reach a consumer
2. move goods efficiently
3. Consolidation and distribution – the final consumer can access a product easily
as in the supermarket
4. Carrying inventory less costly to the holding of inventory
5. Financing – wholesaler and retailer may negotiate for lower prices
Determining on need and the nature of distribution channel involves making decisions on
location of the consumer, cost of distribution, type of product and the strategy of distribution.

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 VI. STRATEGIC MARKETING

A marketing plan establishes the goals and tactics of every marketing campaign. It keeps everyone
in your organization on the same page about the direction and purpose of your marketing efforts.
A marketing plan also provides a way for you to measure your success. Without a plan, you won’t
really know whether you’re succeeding.

While every individual campaign should have a plan, your company also needs a strategic
marketing plan to guide your overall efforts. A strategic plan identifies your business goals, the
marketplace in which you compete, your target audience, the ways you want to reach them, and
how you will evaluate your success. It integrates everything you say and do to grow your company.
A strategic marketing plan is not a static document that gets tossed in a drawer once it’s written.
Instead, a plan is a living document that guides your work and is regularly updated to reflect
changes in your business, your customers, and your competition.

The process of developing a strategic marketing plan is crucial to your business. You cannot create
strategic marketing without strategic thinking. This planning helps you clarify your goals and
identify where you see your business in the future, which ultimately strengthens your strategy. A
strategic marketing planning process also helps with:

• Providing a clear map of your company’s goals and how to achieve them.
• Getting all stakeholders to share a common goal and a have a common understanding of
your company’s opportunities and challenges.
• Identifying and meeting customer needs with the right products in the right places.
• Growing your market share and product lines, leading to more revenue.
• Enabling smaller companies to compete with bigger firms.

One caution: A strategic marketing plan focuses on your goals for your products and customers.
The overall business plan, which outlines all of your company’s goals, should support the
marketing plan. If they don’t work together, neither plan will succeed.

What Problems Should You Anticipate in the Strategic Marketing Process?

Every manager knows to expect the best but plan for the worst. In the marketing planning process,
here are some challenges you may face:

• Confusing Strategy with Tactics: A strategic marketing plan outlines your larger goal.
Sometimes, this can be confused with a tactical marketing plan. The difference between the
two is that the strategy identifies your goals and objectives and the tactical marketing plan
outlines the details for how you’ll reach those goals. Your strategy may be a larger goal, such
as increasing your market share. Tactics are the action steps, such as lowering your prices, so
more people buy your product. A successful plan needs both, implemented at the proper stage
of the process.
• Lack of Resources: Maybe your goal is to increase sales, but you don’t have the workforce to
meet all the incoming orders. Perhaps you don’t have the resources to hire experienced
people who can adequately staff the marketing pipeline. The strategic planning process will
help you identify the resources you have and the best way to put them to work for the good
of the company.
• Assumptions about Your Customers: Market research can help you identify your target
audience. Sometimes the audience changes, and your planning process should include steps
for adjusting to the evolving tastes of consumers.

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5 Essential Steps for a Successful Strategic Marketing Process

The strategic marketing process is a deliberate series of steps to help you identify and reach your
goals. Even more, you’ll discover what your customers want and develop products that meet those
needs. Here are the steps to a successful strategic marketing process.

1. Mission
2. Situation Analysis
3. Marketing Strategy/Planning
4. Marketing Mix
5. Implementation and Control

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Strategic marketing planning involves setting goals and objectives, analyzing internal and
external business factors, product planning, implementation, and tracking your progress.
Consider the example of Apple, winner of the CMO Survey Award for Marketing Excellence for the
past seven years. Here’s an example of the strategic marketing plan for one of the most successful
companies in the world.

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Mission: Apple is dedicated to making innovative, high-quality products.

Situation Analysis: Apple’s competitive advantage is driven by its commitment to understanding

customer needs, focusing on the products that are core to its mission, and fostering a collaborative
work culture.

Marketing Strategy: Apple usually is first to the marketplace with new products and the company
relies on brand loyalty from existing customers as a strategy when launching new products and
services.

Marketing Mix: While Apple offers a range of products, it values premium pricing and relies on
strict guidelines for distribution.

Implementation and Control: Each Apple product complements the others and work within the
same ecosystem, so customers tend to stay with the brand, creating loyal consumers.

The strategic marketing process puts all the pieces together so that everything you do contributes
to the success of your business. Rather than executing haphazard activities and ideas, developing a
solid plan that weaves goals and tactics into a seamless experience is essential. You can follow these
steps to create products and services that will delight your customers and beat out your
competitors.

VI.1.MARKETING PLAN
A marketing plan:–Is part of a business plan and is the foundation for identifying your market,
attracting prospects, converting them into customers, and retaining them as customers.–Usually
operates at two levels, strategic and tactical. Strategic to identify the overall market play and
tactical to execute on the marketing plan. –Does not need to be long or expensive to put together. If
it is carefully researched, thoughtfully considered, and evaluated, it will help your firm set goals,
implement strategies, and measure results.
A good marketing plan details what you want to accomplish and helps you meet your objectives. It
should:–Explain (from an internal perspective) the impact and results of past marketing decisions.
–Explain the target market in which your business is competing. –Set goals and provide direction
for future marketing efforts that are attainable. –Set clear, realistic, and measurable targets. –
Include deadlines for meeting those targets. –Provide a budget for all marketing activities. –Specify
accountability and measures for all activities. –Be a fluid document that is used, maintained, and
updated as your business grows and succeeds.
A good marketing plan includes these 10 elements:
1. Business Description
2. Market Research and Analysis
3. Pricing Analysis
4. Customer Profiling
5. Competitive Analysis
6. Marketing Goals and Objectives
7. Marketing Strategies
8. Marketing Methods

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9. Marketing Budget
10. Success Measurements
Every business has marketing challenges and opportunities.
A marketing plan:
- Allows you to analyze your current situation, describe your business, and define your
customer base.
- Helps you to strategize your market entry, identify your marketing strategies, and integrate
your marketing methods for maximum efficiency. –Gives you a means of evaluating your
progress.

VI.2. DEVELOP A MARKETING STRATEGY

Effective marketing starts with a considered, well-informed marketing strategy. A good marketing
strategy helps you define your vision, mission and business goals, and outlines the steps you need
to take to achieve these goals.

Your marketing strategy affects the way you run your entire business, so it should be planned and
developed in consultation with your team. It is a wide-reaching and comprehensive strategic
planning tool that:

• describes your business and its products and services

• explains the position and role of your products and services in the market
• profiles your customers and your competition
• identifies the marketing tactics you will use
• Allows you to build a marketing plan and measure its effectiveness.

A marketing strategy sets the overall direction and goals for your marketing, and is therefore
different from a marketing plan, which outlines the specific actions you will take to implement your
marketing strategy. Your marketing strategy could be developed for the next few years, while your
marketing plan usually describes tactics to be achieved in the current year.

A successful marketing strategy

Your well-developed marketing strategy will help you realize your business's goals and build a
strong reputation for your products. A good marketing strategy helps you target your products and
services to the people most likely to buy them. It usually involves you creating one or two powerful
ideas to raise awareness and sell your products.

Developing a marketing strategy that includes the components listed below will help you make the
most of your marketing investment, keep your marketing focused, and measure and improve your
sales results.

a. Identify your business goals

To develop your marketing strategy, identify your overarching business goals, so that you can then
define a set of marketing goals to support them. Your business goals might include:

• increasing awareness of your products and services

• selling more products from a certain supplier
• Reaching a new customer segment.

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When setting goals it's critical to be as targeted as possible so you can effectively measure the
outcomes against what you set out to achieve.

A simple criteria for goal-setting is the SMART method:

• Specific - state clearly what you want to achieve

• Measurable - set tangible measures so you can measure your results
• Achievable - set objectives that are within your capacity and budget
• Relevant - set objectives that will help you improve particular aspects of your business
• Time-bound - set objectives you can achieve within the time you need them.

b. State your marketing goals

Define a set of specific marketing goals based on the business goals you listed above. These goals
will motivate you and your team and help you benchmark your success.

Examples of marketing goals include increased market penetration (selling more existing products
to existing customers) or market development (selling existing products to new target markets).
These marketing goals could be long-term and might take a few years to successfully achieve.
However, they should be clear and measurable and have time frames for achievement.

Make sure your overall strategies are also practical and measurable. A good marketing strategy will
not be changed every year, but revised when your strategies have been achieved or your marketing
goals have been met. Also, you may need to amend your strategy if your external market changes
due to a new competitor or new technology, or if your products substantially change.

c. Research your market

Research is an essential part of your marketing strategy. You need to gather information about your
market, such as its size, growth, social trends and demographics (population statistics such as age,
gender and family type). It is important to keep an eye on your market so you are aware of any
changes over time, so your strategy remains relevant and targeted.

d. Profile your potential customers

Use your market research to develop a profile of the customers you are targeting and identify their
needs.

The profile will reveal their buying patterns, including how they buy, where they buy and what they
buy. Again, regularly review trends so you don't miss out on new opportunities or become
irrelevant with your marketing message.

While you try to find new customers, make sure your marketing strategy also allows you to
maintain relationships with your existing customers.

e. Profile your competitors

Similarly, as part of your marketing strategy you should develop a profile of your competitors by
identifying their products, supply chains, pricing and marketing tactics.

Use this to identify your competitive advantage - what sets your business apart from your
competitors. You may also want to identify the strengths and weaknesses of your own internal
processes to help improve your performance compared with your competition.

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f. Develop strategies to support your marketing goals

List your target markets and devise a set of strategies to attract and retain them. An example goal
could be to increase young people's awareness of your products. Your corresponding strategies
could be to increase your online social media presence by posting regular updates about your
product on Twitter and Facebook; advertising in local magazines targeted to young people; and
offering discounts for students.

Use the '7 Ps of marketing'

Identify your tactical marketing mix using the 7 Ps of marketing. If you can choose the right
combination of marketing across product, price, promotion, place, people, process and
physical evidence, your marketing strategy is more likely to be a success.

Test your ideas

In deciding your tactics, do some online research, test some ideas and approaches on your
customers and your staff, and review what works. You will need to choose a number of tactics in
order to meet your customers' needs, reach the customers within your target market and improve
your sales results.

VI.3. INTERNATIONAL MARKETING

Definition: International Marketing is the application of marketing principles to satisfy the

varied needs and wants of different people residing across the national borders.

Simply, the International Marketing is to undertake the marketing activities in more than one
nation. It is often called as Global Marketing, i.e. designing the marketing mix (viz. Product, price,
place, promotion) worldwide and customizing it according to the preferences of different nation
people.

The foremost decision that any company has to make is whether to go international or not, the
company may not want to globalize because of its huge market share in the domestic market and
do not want to learn the new laws and rules of the international market.

But however, there are following reasons that attract the organization to be global:

• Increased Economies of Scale

• High-profit opportunities in the international market than the domestic market
• Huge Market Share
• Elongated life of the product
• Untapped International Market

How to Enter the International Market

The following are ways through which companies can globalize:

1. Exports: The easiest way to enter the market is through exports that can be indirect or
direct. In Indirect Exports, the trading companies are involved that facilitates the buying and
selling of goods and services abroad, on the behalf of the companies.

Whereas in Direct exports, the company itself manages to sell the goods and services abroad,
by opting one of the following ways:

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 • By setting Domestic based Export Department, working as an independent entity
• Through Overseas sales branch, that carries out the promotional activities and facilitates
sales and distribution.
• The sales representatives traveling abroad
• The distributors or agents in abroad working exclusively on the behalf of the company

2. Global web Strategy: Nowadays, companies need not go to the international trade shows
to show their products, they can very well create the awareness among the customers
worldwide through an electronic media i.e. internet. Through the company website,
customers can read the detailed information, generally written in different languages, about
the product and can order online.
3. Licensing and Franchising: One of the ways to globalize is through licensing, wherein the
domestic company issues the license to the foreign company to use the manufacturing
process trademark, patent, name of the domestic company while facilitating the sales. In
licensing, the domestic company has a less control over the licensee.

But, in the case of franchising, the domestic company enjoys the higher control as it allows
the franchise to function on its behalf, and in line with the terms and conditions of the
domestic company.

4. Joint Ventures: The companies can go international by joining hands with other country
based companies with the intention to monetize their existing relationships with the local
customers.

5. Direct Investment: Ultimately, the firms can establish their own business facilities or own
a part of the local company to facilitate the sale of goods and services.

The companies go international with the objective to have an increased sales along with the huge
market share. But certain things such as political, social, technological, cultural situations should be
kept in mind while designing the marketing principles since these are different for the different
nations.

VI.4.HOW BUSINESS PRACTICES ARE CHANGING

The change in technology and economy are eliciting a new set of beliefs and practices on the part
of business firms.
1. From organizing by product units to organizing by customer segments.
2. From focusing on Profitable transactions to focusing on customer lifetime value.
3. From focusing on Just the financial scorecard to focusing also on the marketing scorecard.
4. From focusing on shareholders to focusing on stakeholders.
5. From marketing does the marketing to everyone does the marketing. Every employee has an
impact on the customer and must see the customer as the source of company’s prosperity.
6. From building brands through advertising to building brands through performance.
7. From focusing on customer acquisition to focusing on customer retention.
8. From no customer satisfaction measurement to in-depth customer satisfaction measurements.
9. From over-promise, under-deliver to under promise, over-deliver.

VI.5. HOW MARKETING PRACTICES ARE CHANGING

E-business describes the use of electronic means and platform to conduct a company’s business.
The advent of Internet has greatly increased the ability of companies to conduct their business
faster, more accurately, more timely with reduced cost, and with the ability to customize and
personalize customer offerings.

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E-commerce and E-marketing are new strategies to meet the demand of consumers in new
economy.
E-commerce is more specific than e-business, it means that in addition to providing information
to visitors about the company, its history, philosophy, product and job opportunities, the company
or site offers to facilitate the selling of product and services online.
E-purchasing means companies decide to purchase goods, services and information from various
online suppliers.
E-marketing describes company efforts to inform, communicate, promote and sell its products and
services over the internet. There are four major internet domains through which E-business take
place.
1. Business to consumer ( B2C)
2. Business to Business (B2B)
3. Consumer to Consumer (C2C)
4. Consumer to Business (C2B)

SETTING UP WEB SITES

A key challenge is designing a site that is attractive on first viewing and interesting enough to
encourage repeat visit. Early test-based web sites have increasingly been replaced by sophisticated
sites that provide text, sound and animation.

7 Cs as essential elements of effective web site

1. Context-layout and design
2. Content – Text, picture, sound, and video
3. Community – How the site enables user-to-user communication
4. Customization – site’s ability to tailor itself to different users or to allow users to personalize the
site.
5. Communication – site to user, user to site communication
6. Connection – degree to site is linked to other site
7. Commerce – capability to enable commercial transactions.

VI.5. CUSTOMER RELATIONSHIP MARKETING (CRM)

In addition to e-marketing, CRM is used to improve quality of service and to meet the requirement
of consumer successfully. CRM enables company to provide excellent real-time customer service
by developing a relationship with each valued customer through the effective use of individual
account information. Customer relationship marketing holds that a major driver of company
profitability is the aggregate value of the company’s customer base winning companies are more
productive in acquiring, keeping and growing customers through various strategies as:
- reducing the rate of customer defection
- increasing the longevity of the customer relationship
- enhancing the growth potential of each customer through share-of wallet, cross-selling and
up-selling.
- Making low profit customers more profitable
- focusing disproportionate effort on high value customers.

ONE-TO-ONE MARKETING

Don Peppers and Martha Rogers have popularized the concept of one to- one marketing. In
rationalizing their approach, they cite a number of trends in the marketing environment such as
shift from transaction-based marketing to relationship marketing, advances in communication
technologies and a continued fragmentation of mass media.
One-to-One marketing is based on several fundamental concepts:

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 ✓ Focus on individual consumers through consumer data base
✓ Response to consumer dialogue via interactivity
✓ Customize products and services

PERMISSION MARKETING

The practice of marketing to consumers only after gaining their express permission, is gaining
popularity as a tool with which company can break through the clutter and build customer loyalty.
Today consumers are bombarded with large number of marketing communications every day,
marketers wants to get a attention of consumer, they first need to get his/her permission with some
kind of inducement like a free sample, sales promotion or discount, a contest, and so on. By eliciting
consumer cooperation in this manner, marketers can potentially develop stronger relationships
with consumers so as they will wish to receive further communication in future.

These various new approaches help to reinforce a number of important marketing concept and
techniques. From a brand point of view, they are particularly useful means of thinking how to both
elicit positive brand responses and create brand resonance to built customer based brand equity.
One-to-One, permission and experiential marketing are all potentially effective means of getting
consumers more actively involved with a brand.

EXPERIANTIAL MARKETING

This new marketing mix is trying to bring brands to life through experience. Experiential marketing
is to stimulate in active manner, to engage consumer in a personal life experience, to allow them to
be receptive with the brand in a personalized environment. Experiential marketing is to create and
add the value of life; they are to be involved in the product development process. We have seen lots
of marketers are doing this experience like, Pepsodent , Pepsi. Experiential marketing is also about
choosing customers, selling your dreams. Here dreams are not a product it is about experience.
Take the case of PEPSI they are in business of creating experiences for consumers through events,
everything. Experience marketing is having mind shift approach in its delivery system it has
creative rules and frame work. It has to be viewed as scientifically.

It has the following objectives, these objectives can be used as new marketing mix strategy:

a) The company's core business activity

b) Marketing communication strategy
c) Consumer research
d) Promotional strategy
e) Integrated marketing strategy
f) All marketing tools, Advertising, Media interactive, Promotion,

On site promotion, direct response from consumers. Experiential marketing focuses on customer
experiences. Traditional marketing fails to gauge sensory, motional, Cognitive behavioral
relationship needs.

A Holistic Approach

The key is to integrate many of these approaches. One good example of this is the Volkswagen
Beetle. With the Beetle, it all starts with the product. Now, this is not your typical car. It's not just
about the features and benefits of this car, which are probably not much better than a Hyundai,
maybe a little bit better, but not enough to justify the price premium. What is so unique about the
product? It's the shape--very unusual in the entire car industry. It's the colors; it's the flower vase
that they have in the front. These individual symbols come together in a theme. Maybe the theme

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is professionalism.

INTEGRATED MARKETING

When all the company’s departments work together to serve the customer’s interests, the result is
“integrated marketing.” Integrated marketing works on two levels.
1. The various marketing functions like sales force, advertising, customer service, product
management, marketing research must work together.
2. Marketing must be embraced by the other departments, they must also “think customer”.
According to David Packard of Hewlett-Packard,
“Marketing is far too important to be left only to the marketing department!” To foster teamwork
among all departments, the company carries out internal marketing as well as external marketing.
Internal marketing is marketing of the task of hiring, training and motivating able employees who
want to serve consumers well. External marketing. Internal marketing is marketing directed at
people outside the company. Infect, internal marketing must precede external marketing.

INTEGRATED MARKET COMMUNICATION

The wide range of communication tools, message and audiences makes it imperative that
companies move towards integrated marketing communication (IMC)”. As defined by American
Association of Advertising Agencies, IMC is a concept of marketing communications planning that
recognizes the added value of a comprehensive plan. Such a plan evaluates the strategic role of a
variety of communications disciplines- for example, general advertising, direct response, sales
promotion and public relations and combines these disciplines to provide clarity, consistency and
maximum impact. Today however a few large agencies have substantially improved their
integrated offerings. Many international clients have opted to put a substantial portion of their
communications work through one agency. It forces management to think about every way the
customer comes in contact with the company, how the company communicates its positioning. It
will improve the company’s ability to reach the right customer with the right message at right time
and in the right place.

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