A.

ANALYZE THE MARKET NEED

A market analysis is a quantitative and qualitative evaluation of a market. The goal is to look into
the size of the market both in volume and in value, the various customer segments and buying
patterns, the competition, and the economic environment in terms of barriers to entry and
regulation.
How to do a market analysis?
The objectives of the market analysis are to make sure that everything about the market is clear
and that the business if feasible and it is large enough to build a sustainable business.
These are the recommended items for market analysis:
• Demographics Segmentation
• Target Market
• Market Need
• Competition
1. Demographic Segmentation
Dividing the total people in the market based on the customer demographics. Demographic
segmentation portions the market on parameters like age of the customer, gender, income,
family life cycle, educational qualification, socioeconomic status, religion, etc. This helps in
creating groups exhibiting a similar need and want, and can be targeted in a much more better
way by companies.
2. Target Market
A target market is a group of customers that a business has decided to aim its marketing efforts
towards. As an entrepreneur, one should have a well-defined target market to be able to create
a strong marketing strategy. Product, price, promotion, and place are the four elements of a
marketing mix that has to be taken into consideration in defining the target market. It is proven
that a business must have a clear definition of its target market in order for it effectively provides
what they need.
A target market consists of customers that share similar characteristics, such as age, location,
income and lifestyle.
Target markets can be divided into primary and secondary target markets. Primary target
markets are those market segments to which marketing efforts are primarily directed and
secondary markets are less important.
3. Recognizing the Target Market
To build a solid foundation for a business, the entrepreneur must identify first the business’
target market. There is no such thing as “one size fits all” when it comes to recognizing a market
niche. The clearer the business can identify its target customer, the more effective it could
become in tailor-fitting its strategies in getting customers.
On the other hand, targeting a specific market does not mean excluding those who do not fit the
criteria. Target marketing focuses marketing budgets and brand message on a specific market,
therefore is more cost-effective and efficient way to reach customers to generate business.

4. Research the Competition

Competitors are like each companies enemies who always want bigger portion of the market
share. By knowing the competitor, an entrepreneur will be able to compare themselves to see
what things that are effective and works for the other companies in the industry. This can be
done by researching on several internet platforms like Google and Yahoo as well as social
media sites like Facebook, Twitter and YouTube. Few other ways to do research would include
asking customers, attending conferences, and even hiring or pirating key employees of a
competitor company

B. Identify the Market Needs

In starting a business, one good question to have in mind is if there is a consumer need for your
product. Unless it does, you may end up developing a plan, a product or solution that really
doesn't have a problem to solve, which also means there is no market to buy your product.
Importantly, businesses exist to give solution to customer's problems and meet their needs
better than the competitors in the marketplace, in a reasonable price.
A problem or need is a condition when consumers have the requirement for a solution that
either does not exist, or the available solution have some limitations or gaps that needs to be
filled. Successful businesses identify these opportunities to offer products or services and
attempt to fill them with a solution.
Examples:
1. YouTube becoming the second largest search engine, next to its own parent company
Google. There is a need for consumers who prefer video contents be played rather than
reading.
2. Podcasting gives opportunity to people who spends hours in driving and can now listen
to different audio programs.
3. Uber passengers save time in waiting in the taxi line.
The key point to think of is, as an aspiring entrepreneur, you want to identify what the market
(consumers) say is a problem, and not what you believe is the problem.
NEEDS – necessary or desired things. Needs encourage us to act. Maslow defined a Human
Needs Hierarchy which stated that the lower needs must be met before an individual can strive
to meet the higher needs.

Needs as the Motivation for Buying Products

Consumers buy products because of needs that requires satisfaction. Need is what propels
buyers to buy a product. Every need must be satisfied by a specific product. Knowing the needs
of the market is highly important in order for them become loyal and even stewards of
companies that they love and support due to the products that a valued company creates. A
famous determinant of human needs is the Maslow’s Hierarchy of Needs.

The Maslow’s Hierarchy of Needs

Physiological Needs - This is the first stage in the Maslow’s Hierarchy of Needs. Basic needs
are the requirements for human existence. If these requirements are not met, the human body
cannot function properly.Physiological needs are the most vital and therefore should be met first.
Examples include air, water, and food as requirements for survival in all animals, including
humans. Clothing and shelter provide necessary protection. While maintaining an adequate
birth rate shapes the intensity of the human sexual instinct, sexual competition may also shape
said instinct.
Safety needs - The second stage in the Maslow’s Hierarchy of Needs. Once physiological needs
are satisfied, safety needs take precedence and dictates behavior.
Example, in the absence of physical safety, people may experience post-traumatic stress
disorder or trauma. Safety needs include personal security, financial security, health and
wellbeing, safety net against accidents and illness and their adverse impacts.
Social Needs - Third stage in the Maslow's Hierarchy of Needs, also known as the stage for love
and belongingness.
Esteem Needs - The fourth stage of the Maslow's Hierarchy of Needs. Once basic needs have
been satisfied, esteem needs becomes essential to an individual. Once an individual
have adequately met their need for love and belonging, they can begin to cultivate positive
feelings of self-worth and self-esteem.
These needs include:
✔ Self esteem
✔ Respect
✔ Achievement
✔ Confidence
✔ Recognition
✔ Accomplishment
Self-actualization Needs - The fifth and the last stage of Maslow's Hierarchy, it is the highest
level of the Maslow’s hierarchy. This level pertains to what a person’s optimum potential is and
realizing that potential.
THE MASLOW’S HIERARCHY OF NEEDS

D. PRODUCT AND SERVICES

1. What are Products and Services?
“"A product is a tangible item that is put on the market for acquisition, attention, or consumption,
while a service is an intangible item, which arises from the output of one or more individuals.
Although it seems like the main distinction between the two concepts is founded on their
tangibility, that is not always the case. In most cases services are intangible, but products are
not always tangible.”

2. Sources of Business Ideas

Business ideas are thoughts that when implemented can lead to income generalization.
Entrepreneurs first come up with ideas from different sources that should lead them to starting a
well-planned business.
Here are some of the sources of business ideas:

1. Surveys - Business ideas can be generated from surveys. Through this type of data
generation method, entrepreneurs will have awareness of what customers are looking for and
therefore an opportunity of a business to innovate based on the responder’s answers.
2. Training - This is probably the most home-based business. For example, there are
seminar that conducts how to cook, bake, handcraft, and even repair things. Institutions such as
NegoEskwela and TESDA are some of the country’s institution that offers short courses and
trainings for aspiring entrepreneurs.
3. Experience - Probably the best and effective source of business idea is from experience.
This can be from work or even at school. As they say experience is the best teacher, which
means that good things as well as mistakes from experience can be valuable factors in creating
and growing a business.
4. Hobbies - This can be a good business idea because it is something that an
entrepreneur is fond of doing and can enjoy while doing the business. Most car enthusiasts for
example create business out of their own hobby as a way for them to enjoy while they operate
their business.
5. Talents - A talent is something that can be innate in a person, or that has been honed for
years.
Someone’s talent can be a good idea for business because like a hobby, it is something that can
be enjoyed, and entrepreneur will not have the feeling of working while doing it. For example, a
talented musician who has a passion of teaching and sharing his or her craft can teach and start
a talent school that help potential musician and artists improved their gift.
6. Market Gaps - Also known as “niche”, spotting a gap in the market can also form a great
business idea. A market gap can mean an important area in the market that is not occupied and
therefore is can be filled with product to satisfy the market.
7. Events - A business can also be created through attending events in which new ideas
are exchanged. It is also a venue where people with similar interests gather and where the birth
of new business can happen.
8. Media - An idea can also come from the media. Reading magazines, newspapers and
such published materials that contain business related issues can help one bring about.

Product Life Cycle

3. Life Cycle Through the Stages

1. At the Introduction stage the product comes to the market and the business looks to get a
foothold on the sales ladder by:
• Establishing branding and assuring the market of the quality of the new product.
• An initial low pricing policy to get into the market, though with little competition, price may
be high initially to recoup development costs.
• Selection of a distribution model to get the product onto the market.
• Promotion of the product through aiming it at specific target groups such as online
forums.
2. After successful Introduction comes the Growth stage. This will look to take developments at
the first stage up to another level by:
• Maintaining the quality of the product and adding any extra services or support that
becomes obvious during introduction.
• Keeping the price at a good level to maintain sales growth.
• Increasing distribution and sourcing new, faster ways of getting the product onto the
shelves.
• Marketing campaigns aimed at a broader audience and at growing market share for the
product.
3. With growth established, Maturity is the next stage of the life cycle. The business deals with
this by:
• Adding features that will make the product differ from the inevitable competitors that
enter the market.
• Cutting price to counter competition.
• Revising distribution channels and using incentives to encourage stores to stock the
original product in preference to newcomers.
• New promotions that aim to show differences between products.
4. When the Decline happens, the business will consider:
• Keeping the product on the market but adding or removing features or finding new uses
for it.
• Reducing costs and production and keeping it just for a niche segment of the market.
• Discontinuing the product or selling the production rights to another company.

VIABILITY, PROFITABILITY AND CUSTOMER REQUIREMENTS

1. How to Determine Market Viability for a Product or Service

Due diligence on the product is the approach used to determine the feasibility of a particular
product or service. Popular strategies include target market study, analysis of the industry and
analysis of the competitors. Before implementing a solution, it is also important to evaluate your
internal competences, along with potential threats.
a. Perform Market Research
Market research is an estimation of the possible size and characteristics of customers or firms
who could be buying your product. The market size is the cumulative number of potential
consumers who are under-represented or not covered by current solutions at all. Identifying
target markets' attributes and purchasing patterns helps paint the picture of the possible
advantages consumers are looking for. A sales forecast can be produced by combining the size
of the market with forecasts for the scope and frequency of transactions. Projecting sales helps
you know if you are going to make enough to cover expenses and earn a profit.
b. Analyze the Industry
The analysis of an industry is a study of an industry's current scope and the types of products
being provided. A brand new product means that in a new market, you will have the first-mover
advantages. This advantage offers you the ability to connect to the entire business potential. An
overview of the number of potential competitors, the solutions that they provide and their price
points is essential in an developed industry.
2. PESTEL: A powerful complement to SWOT
“PESTEL, a complementary tool to SWOT, expands on the analysis of external context by
looking in detail at specific types of issues that frequently have an impact on implementation of
project/ initiatives. The term ‘PESTEL’ refers to the domains it considers: Political, Economic,
Social, Technological, Environmental and Legal. PESTEL involves identifying the factors in each
of these six domains that are relevant for the project being considered.”

Analyze Competitors
Competitor analysis includes comparing the characteristics, strengths and weaknesses of the
product or service compared to those provided by the competitors. Sometimes, companies
create spreadsheets to map out the plans of any major competitor. You need courage before
entering a market that your intended solution provides strong advantages over the current
solutions. Superior performance, elite operation, reduced costs, exclusive features or natural
materials may be your advantages. Such advantages are important in order to create a market
place and to attract clients seeking your distinct advantages.
Conduct a SWOT Analysis
A SWOT analysis is used to determine your internal abilities as well as external factors that may
impact your performance. SWOT is an acronym of strengths, weaknesses, opportunities and
threats. Your strengths include the ammunition for creating, promoting and providing a distinct
quality approach from competitor companies. Your weaknesses, or vulnerabilities, give clear
insight into the hindrances to success. You may either build on or embrace shortcomings as
intrinsic to your business model. You can determine, in an honest evaluation, that your
weaknesses are too great for entering the market. Analyzing opportunities and threats lets you
plan for market penetration with a clear view of how to make money, and how to protect yourself
from future losses.

Strengths
Strengths are internal, positive attributes of your company. These are things that are within your
control.
• What business processes are successful?
• What assets do you have in your team, such as knowledge, education, network, skills,
and reputation?
• What physical assets do you have, such as customers, equipment, technology, cash,
and patents?
• What competitive advantages do you have over your competition?
Weaknesses
Weaknesses are negative factors that detract from your strengths. These are things that you
might need to improve on to be competitive.
• Are there things that your business needs to be competitive?
• What business processes need improvement?
• Are there tangible assets that your company needs, such as money or equipment?
• Are there gaps on your team?
• Is your location ideal for your success?
Opportunities
Opportunities are external factors in your business environment that are likely to contribute to
your success.
• Is your market growing and are there trends that will encourage people to buy more of
what you are selling?
• Are there upcoming events that your company may be able to take advantage of to grow
the business?
• Are there upcoming changes to regulations that might impact your company positively?
• If your business is up and running, do customers think highly of you?
Threats
Threats are external factors that you have no control over. You may want to consider putting in
place contingency plans for dealing them if they occur.
• Do you have potential competitors who may enter your market?
• Will suppliers always be able to supply the raw materials you need at the prices you
need?
• Could future developments in technology change how you do business?
• Is consumer behavior changing in a way that could negatively impact your business?
• Are there market trends that could become a threat?

IS PROFITABILITY OR GROWTH MORE IMPORTANT FOR A BUSINESS?

For a company to survive and remain attractive to investors and analysts, profitability and
growth are both critical and necessary to be profitable and stay in business. Profitability is
inevitably vital to the life of a corporation, but development is essential to long-term survival.
1. Profitability
The net profit of a corporation is the income after deducting all the expenditures related to the
manufacture, distribution, and selling of the goods. Profit is "money in the bank." This goes
directly to a company's owners or shareholders, or is reinvested in the business. Profit is the
primary aim for any company, and for a company that doesn't have investors or funding at first,
profit may be the sole resource of the business.
A income statement demonstrates not just the performance of a company but also its costs and
expenditures for a given period, usually over a year. The income statement is important to
calculate profitability in order to build a profitability ratio. One can measure several different
profitability ratios from which to assess the financial position of a business.

2. Growth
It is important to assess and concentrate a company's productivity at the beginning, or start-up.
At the other hand, demand and revenue growth is the way to attain the initial profitability.
Identifying opportunities for growth will become the next important thing on the target list of
every organization after a company moves past the startup process. Growth is basically an
expansion for a company, making the business larger, growing its demand, and eventually
making it more successful. It is possible to calculate growth by looking at certain specific figures,
such as total revenue, number of employees, market share and turnover.
3. The Bottom Line
When it comes to market success, productivity and development all go together. Income as a
corporate organization is vital to basic financial survival while growth is vital to income and
long-term success. Investors should consider any factor that relates to a company.

5. THE FOUR NEEDS OF A CONSUMER

We often think that all we must do to meet customer expectations is to provide our product or
service and they will be happy. This simply is not the case.
The aim of any business should be to have loyal trustworthy customers who continually use
your product or service.
The four crucial things customer needs are:
• Fair price
• Good service
• Good product
• Feel valued
1. Fair price
Pricing may be important to you, but it is also important to your clients. They need the fair
pricing. When determining if your price is fair, you can take advantage of looking at the
ecommerce stores of your competitor so you can calculate the expectations of your customers.
Although we agree that price anchoring is not always the most intelligent way to decide on
pricing, it is important to know where you stand when opposed to your competition. If you
charge a lot more than your rivals, then seriously question that your product is better than theirs.
It is okay to charge more to balance it with improved customer service, such as a loyalty plan or
incentive benefits to justify the higher price point. The main thing about pricing is accountability.
Whether you're above or below the market rate, let your customers know why, and exactly what
they're getting for their money.
2. Good service
Strong customer service has consistently been shown to encourage company to charge more.
Customers are constantly suggesting that they would be happy to pay more for a product if it
meant that customer service would improve. So, you have to think about how to fulfill customer
expectations.
Having a strong customer support team makes your customers more confident about you. They
understand that issues will be dealt with and fixed in a timely manner and they are more
receptive to when things end up wrong. However, good customer service isn't an excuse for
raising your prices. If you can afford your products and provide excellent customer service,
better still
3. Good product
Obviously, creating a solid product is a major consumer need, and a great need for you too.
Excessive processing costs do not make sense because no one is buying your bad product. Be
positive in the offering, be open to ideas for change and always try to give the consumer
precisely what they need, not what they think they need.

UNDERSTANDING THE MARKET

1. What is a Market?
• A environment in which two or more parties participate in the exchange of goods,
services, and information is called a market. Ideally a market is a place where two or more
people are interested in the buying and selling.
• The two parties involved in a transaction are called seller and buyer.
• In return for money the seller sells goods and services to the buyer. In the market to be
competitive, there needs to be more than one buyer and seller.
2. What is Segmentation?
“Segmentation refers to a process of bifurcating or dividing a large unit into various small units
which have similar or related characteristics.”
Market Segmentation
• Market segmentation is a marketing term dividing the entire market into smaller subsets of
customers with specific tastes, demands and expectations.
• A market segment is a small unit composed of likeminded individuals within a large market.
• One segment of the industry is absolutely different from the other.
• A market segment includes individuals with common preferences and thinking along the same
lines.
• Individuals from the same group react in a manner similar to market fluctuations.

Basis of Market Segmentation Gender

• Marketers are separating the market into smaller, gender-based divisions. Men and women
have different desires and expectations, and thus require segmentation.
• Companies need different marketing approaches for men which obviously will not work for
women.
• A woman does not buy a product intended for men and vice versa.
• Gender segmentation is significant in many industries such as cosmetics, clothing, jewelry.

Age Group
Division based on age group of the target audience is also one of the ways of market
segmentation.
• The products and marketing strategies for teenagers would obviously be different than
kids.
• Age group (0 - 10 years) - Toys, Nappies, Baby Food, Prams
• Age Group (10 - 20 years) - Toys, Apparels, Books, School Bags
• Age group (20 years and above) - Cosmetics, Anti-Ageing Products, Magazines,
apparels etc.

Income
Marketers divide the consumers into small segments as per their income. Individuals are
classified into segments according to their monthly earnings.
The three categories are:
• High income Group
• Mid Income Group
• Low Income Group

2. Types of Market Segmentation

Psychographic segmentation
• Individual behaviors are the basis for such segmentation. The attitude, interest, and value of
the individual enables marketers identify them into small groups.
Behavioral Segmentation
• Consumers' loyalties to a brand help advertisers divide them into smaller groups, each
category consisting of individuals loyal to a brand.
Geographic Segmentation
•
Geographic.segmentation.refers.to.the.classification.of.market.into.various.geographical.areas..
A.marketer.can.‘t.has.similar.strategies.for.individuals.living.at.different.places...

CONCEPT AND COMPONENTS OF MARKETING MIX

“Marketing includes a number of activities. To begin with, an organization will determine how to
serve its target group of customers. If the target group has been determined, the product shall
be placed on the market by offering the appropriate product, cost, distribution and promotional
effort. “These are to be combined or mixed in an appropriate proportion to achieve the
marketing goal. Such mix of product, price, distribution, and promotional efforts is known as
‘Marketing Mix’.”
According to Philip Kotler “Marketing Mix is the set of controllable variables that the firm can use
to
influence the buyer’s response”. “The controllable variables in this context refer to the 4 ‘P’s
[product, price, place (distribution) and promotion]. Each firm strives to build up such a
composition of 4‘P’s, which can create highest level of consumer satisfaction and at the same
time meet its organizational objectives. Thus, this mix is assembled keeping in mind the needs
of target customers, and it varies from one organization to another depending upon its available
resources and marketing objectives. Let us now have a brief idea about the four components of
marketing mix.”

“The marketing mix definition is simple. It is about putting the right product or a combination
thereof in the place, at the right time, and at the right price.”

1. Product
“Product refers to the goods and services offered by the organization. Product can also take the
form of a service like an air travel, telecommunication, etc. Thus, the term product refers to
goods and services offered by the organization for sale.”

CONCEPT OF PRODUCT AND ITS CLASSIFICATION

“As stated earlier, the product refers to the goods and services the company provides for sale.
Here advertisers have to understand that buyers are not only interested in a product's physical
characteristics, but a collection of tangible and intangible qualities that fulfill their needs. For
starters, when a customer buys a washing machine, he buys not just a machine but a gadget
that helps him wash his clothes. This should also be remembered that the word product refers
to something for consumption, purchase, or use which can be sold to a customer. The term
product is therefore described as "something that can be offered to a market in order to satisfy a
want." It normally has physical objects and services included. However, in a wider context it
covers not only physical products and services but also support services such as brand name,
packaging accessories, installation, after-sales service, etc.”

PRODUCT CLASSIFICATION
Product can be broadly classified based on
(1) use,
(2) durability, and
(3) tangibility.
Let us have a brief idea about the various categories and their exact nature under each head,
noting while in marketing the terms ‘product’ and ‘goods’ are often used interchangeably.

1. Based on use, the product can be classified as:

(a) Consumer Goods; and
(b) Industrial Goods.
(a) Consumer goods. “Goods meant for personal consumption by the households or
ultimate consumers are called consumer goods. This includes items like toiletries, groceries,
clothes etc. Based on consumers’ buying behavior the consumer goods can be further classified
as:”
(i) Convenience Goods;
(ii) Shopping Goods; and
(iii) Specialty Goods.
(i) Convenience Goods. Do you remember, the last time when did you buy a packet of
butter or a soft drink or a grocery item? Perhaps you do not remember, or you will say last week
or yesterday. Reason is these goods belong to the categories of convenience goods which are
bought frequently without much planning or shopping effort and are also consumed quickly.
Buying decision in case of these goods does not involve much pre-planning. Such goods are
usually sold at convenient retail outlets.
(ii) Shopping Goods. These are goods which are purchased less frequently and are used
very slowly like clothes, shoes, household appliances. In case of these goods, consumers make
choice of a product considering its suitability, price, style, quality and products of competitors
and substitutes, if any. In other words, the consumers usually spend a considerable amount of
time and effort to finalise their purchase decision as they lack complete information prior to their
shopping trip. It may be noted that shopping goods involve much more expenses than
convenience goods.
(iii) Specialty Goods. Because of some special characteristics of certain categories of goods
people generally put special efforts to buy them. They are ready to buy these goods at prices at
which they are offered and put in extra time to locate the seller to make the purchase. The
nearest car dealer may be ten kilometers away, but the buyer will go there to inspect and
purchase it. In fact, prior to making a trip to buy the product he/she will collect complete
information about the various brands.
Examples of specialty goods are cameras, TV sets, new automobiles etc.
(b) Industrial Goods. “Goods intended for consumption or use as inputs in the manufacture
of other products or the supply of some service are called 'industrial goods. These are meant for
non-personal and commercial use and include (i) raw materials, (ii) machinery, (iii) components,
and (iv) operating supplies (such as lubricants, stationery etc.).

2. Based on Durability, the products can be classified as:

(a) Durable Goods; and
(b) Non-durable Goods.
(a) Durable Goods: Durable goods are products which are used for a long period i.e., for
months or years together. Examples of such goods are refrigerator, car, washing machine etc.
(b) “Non-durable Goods: “Non-durable goods are products that are normally consumed in
one go or last for a few uses.” Examples of such products are soap, salt, pickles, sauce etc.”

3. Based on tangibility, the products can be classified as: (a) Tangible Goods; and (b) Intangible
Goods.
(a) “Tangible Goods: “Most goods, whether these are consumer goods or industrial goods
and whether these are durable or non-durable, fall in this category as they have a physical form,
that can be touched and seen.”Thus, all items like groceries, cars, raw-materials, machinery etc.
fall in the category of tangible goods.
(b) “Intangible Goods: Services are essentially intangible activities which provide want or
need satisfaction. Medical treatment, postal, banking and insurance services etc., all fall in this
category.”Intangible goods refer to services provided to the individual consumers or to the
organizational buyers (industrial, commercial, institutional, government etc.).

2. Price
The price is the amount paid in respect of a good or service. It is the second most significant
marketing mix item. It's a difficult job to set the commodity price. Many considerations, such as
demand for a commodity, costs involved, the willingness of customers to pay, costs paid by
competitors for similar goods, government regulations, etc., have to be kept in mind when
setting the price. In fact, pricing is a very crucial field of decision because it affects the demand
for the product as well as the company's profitability.
PRICING AND FACTORS AFFECTING PRICING DECISIONS
“As mentioned, price is the value he / she receives from buying the product / service, in terms of
money spent by customers for the benefits. This is in simple terms, in terms of money, the
exchange value of goods and services. The factors usually considered while determining the
price of a product can be broadly described as follows:”
(a) “Cost: No company will succeed unless their manufacturing and distribution costs are
covered. The retail prices are calculated in large quantities of goods by applying an appropriate
profit margin to the costs. Higher the rate, the higher the price is likely to be, the lower the price
is likely to be.
(b) “Demand: Demand also has a big influence on the price. If the availability of a product is
insufficient and the demand is high, people buy, even if the producer charges high prices. But
how high the price will be depends on the ability and willingness of prospective customers to
pay, and their desire for the product. “In this context, price elasticity, i.e. responsiveness of
demand to changes in price should also be kept in view.””
(c) “Competition: The price charged by the competitor for similar product is an important
determinant of price. A marketeer would not like to charge a price higher than the competitor for
fear of losing customers. Also, he may avoid charging a price lower than the competitor.
Because it may result in price war which we have recently seen in the case of soft drinks,
washing powder, mobile phone etc.””
(d) “Marketing Objectives: A firm may have different marketing objectives such as
maximization of profit, maximization of sales, bigger market share, survival in the market and so
on. The prices have to be determined accordingly. For example, if the objective is to maximize
sales or have a bigger market share, a low price will be fixed. Recently one brand of washing
powder slashed its prices to half, to grab a bigger share of the market.””
(e) “Government Regulation: Prices of some essential products are regulated by the
government under the Essential Commodities Act. For example, prior to liberalization of the
economy, cement and steel prices were decided by the government. Hence, it is essential that
the existing statutory limits, if any, are also kept in view while determining the prices of products
by the producers.””

3. Place
The products are made to sell to customers. These must be made available to customers at a
location where they can make transactions conveniently. The company has to determine
whether to sell to the retailer directly or through the distributors / wholesaler, etc. It might also
plan on selling it directly to customers. The option is directed by a number of factors you'll learn
about later in this chapter.
CHANNELS OF DISTRIBUTION
“You are aware that while a manufacturer of a product is located at one place, its consumers are
located at innumerable places spread all over the country or the world. The manufacturer must
ensure the availability of his goods to the consumers at convenient points for their purchase.
He may do so directly or, as stated earlier, through a chain of middlemen like distributors,
wholesalers, and retailers. The path or route adopted by him for the purpose is known as
channel of distribution. A channel of distribution thus, refers to the pathway used by the
manufacturer for transfer of the ownership of goods and its physical transfer to the consumers
and the user/buyers (industrial buyers).” Kotler, (2010).

Primarily a channel of distribution performs the following functions:

(a) It helps in establishing a regular contact with the customers and provides them the
necessary information relating to the goods.
(b) It provides the facility for inspection of goods by the consumers at convenient points to
make their choice.
(c) It facilitates the transfer of ownership as well as the delivery of goods.
(d) It helps in financing by giving credit facility.
(e) It assists the provision of after sales services, if necessary.
(f) It assumes all risks connected with the carrying out the distribution function.
TYPES OF CHANNELS OF DISTRIBUTION
Generally speaking, we are not purchasing products directly from the manufacturers. Typically
the producers / manufacturers use one or more middlemen 's services to supply their products
to consumers. But even with no intermediaries in between they have direct contact with the
customers. According to Philip Kotler (2010), the various channels used for distribution of
consumer goods can be described as follows:

(a) Zero stage channel of distribution

“Zero stage distribution channel exists where there is direct sale of goods by the producer to the
consumer. This direct contact with the consumer can be made through door to door salesmen,
own retail outlets or even through direct mail. Also, in case of perishable products and certain
technical household products, door-to-door sale is an easier way of convincing consumer to
make a purchase.” According to Kotler, (2010).

(b) One stage channel of distribution

Kotler (2010) “In this case, there is one middleman i.e., the retailer. The manufacturers sell their
goods to retailers who in turn sell it to the consumers. This type of distribution channel is
preferred by manufacturers of consumer durables like refrigerator, air conditioner, washing
machine, etc. where individual purchase involves large amount.”

(c) Two stage channel of distribution

“This is the most used channel of distribution for the sale of consumer goods. In this case, there
are two middlemen used, namely, wholesaler and retailer. This is applicable to products where
markets are spread over a large area, value of individual purchase is small, and the frequency
of purchase is high” Kotler, (2010).

(d) Three stage channel of distribution

“When the number of wholesalers used is large and they are scattered throughout the country,
the manufacturers often use the services of mercantile agents who act as a link between the
producer and the wholesaler. They are also known as distributors” Kotler, (2010).

FACTORS AFFECTING THE CHOICE OF DISTRIBUTION CHANNEL

Choosing a suitable distribution channel is very important, as both the pricing and promotion
strategy depend on the channel chosen. Not only this, the path that the product takes from the
producer to the customer often involves some costs. In addition, does not only affect the
product's quality but also the profits. Choosing inappropriate distribution channels will lead to
lower profits for the producer, and higher consumer prices. Therefore, when finalizing the
distribution channel to be used the producer must be careful. While also making his choice, he
should pay attention to the following factors.

(a) Nature of Market: There are many aspects of market which determine the choice of
channel of distribution. Say for example, where the number of buyers is limited, they are
concentrated at few locations and their individual purchases are large as is the case with
industrial buyers, direct sale may be the most preferred choice. But in case where number of
buyers is large with small individual purchase and they are scattered, then need may arise for
use of middlemen.
(b) Nature of Product: Nature of the product considerably affects the choice of channel of
distribution. In case the product is of technical nature involving a good amount of pre-sale and
after sale services, the sale is generally done through retailers without involving the
wholesalers. But in most of the consumer goods having small value, bought frequently in small
quantities, a long channel involving agents, wholesalers and retailers is used as the goods need
to be stored at convenient locations. Items like toiletries, groceries, etc. fall in this category. As
against this in case of items like industrial machinery, having large value and involving
specialized technical service and long negotiation period, direct sale is preferred.
(c) Nature of the Company: A firm having enough financial resources can afford to its own a
distribution force and retail outlet, both. But most business firms prefer not to create their own
distribution channel and concentrate on manufacturing. The firms who wish to control the
distribution network prefer a shorter channel.
(d) “Middlemen Consideration: If right kind of middlemen having the necessary experience,
contacts, financial strength, and integrity are available, their use is preferred as they can ensure
success of newly introduced products. Cost factors also have to be kept in view as all
middlemen add their own margin of profit to the price of the products. But from experience it is
learnt that where the volume of sales is adequate, the use of middlemen is often found
economical and less cumbersome as against direct sale.”

4. Promotion:
If the product is produced in accordance with the customer 's desires, is reasonably priced and
made available to them at convenient outlets, but the customer is not made aware of its price ,
features, availability, etc., their marketing campaign may not be effective. Promotion is therefore
an essential component of a marketing mix, as it refers to a process of educating, persuading
and motivating a customer to select the product to be purchased. Promotion is achieved by
means of promotion of personal sales, advertisement, publicity, and marketing. It is done
primarily with a view to providing knowledge about the quality, characteristics and uses of a
commodity to prospective consumers. It stimulates the interest of potential buyers in the
product, compares it with the product of the competitors and makes its decision.
Promotion refers to the process of informing and persuading the consumers to buy certain
product.
By using this process, the marketeers convey persuasive message and information to its
potential customers.
The main objective of promotion is to seek buyers’ attention towards the product with a view to:
– arouse his interest in the product;
– inform him about its availability; and
– inform him as to how is it different from others.
It is thus a persuasive communication and serves as a reminder. A firm uses different tools for
its promotional activities which are as follows:
– Advertising
– Publicity
– Personal selling
– Sales promotion
These are also termed as four elements of a promotion mix. Let us have a brief idea about
these promotion tools.
1. Advertising: Advertising is the most used tool for informing the present and prospective
consumers about the product, its quality, features, availability, etc. It is a paid form of
non-personal communication through different media about a product, idea, a service or an
organization by an identified sponsor. It can be done through print media like newspaper,
magazines, billboards, electronic media like radio, television, etc. It is a very flexible and
comparatively low-cost tool of promotion.
2. Publicity: This is a non-paid process of generating wide range of communication to
contribute a favorable attitude towards the product and the organization. You may have seen
articles in newspapers about an organization, its products, and policies. The other tools of
publicity are press conference, publication, and news in the electronic media etc. It is published
or broadcasted without charging any money from the firm. Marketeers often spend a lot of time
and effort in getting news items placed in the media for creation of a favorable image of the
company and its products.
3. Personal selling: You would have encountered representatives of numerous firms
knocking at your doorstep and persuading you to purchase their product. It is a direct
presentation to consumers or prospective purchasers of the product. It refers to the use of
salespeople to persuade consumers to act favorably and purchase the product. In the case of
industrial goods, it is most effective promotional tool.
4. Sales promotion: It applies to short-term and temporary opportunities to purchase new
products or to promote trials. The tool includes competitions, games, gifts, trade shows,
discounts, and so on. Sometimes, promotional advertising events are conducted at retail level.

The 3 further Ps of marketing

5. People
The team involved in the delivery of the project should possess the skills and qualities needed
to ensure its success (barring unforeseen mishaps).
This is perhaps especially true of customer-facing staff, whose communication and behavior will
greatly impact the audience’s perception of the brand. You could well have developed the best
product of its kind
The Importance of People within the Marketing Mix
People are one of the essential components of the marketing mix. This includes anybody
directly or indirectly involved in the product or service. Not all of these people are getting in
touch with the clients. But all of these people have their own roles to play in the production,
promotion, distribution and delivery to consumers of the goods and services.
People Who Make the Products
In addition to the executive team, there are people who are responsible for designing the
company's products and services. Companies will take time to hire people with skills and
experience in the field in which they work.
People Who Bring the Products to the Customers
They are the people who have to decide what their clients want and the best way for them to get
what they want. Marketing efforts concentrate on lead generation and prospects. These people
ensure that the products and services are available to them as conveniently and affordably as
possible if the prospects are ready for buying. If those people fail, the company will not be able
to create a substantial customer base for the profitability of their business.
People Who Talk to the Customers
Companies, no matter how small or large their products and services are, require customer
service. They can treat their customer contact points in the right way. This could make or break
an agreement for many customers. Customers are always keen to be assured of being able to
talk to people who are ready and able to help with problems or concerns about the products
they have purchased or services they have used. Companies should ensure that they have
customers ready to meet the needs of their customers.

6. Processes
The processes involved in a product’s delivery will significantly affect the customer’s experience,
level of satisfaction, and lifetime value to your business. These processes may include (and are
not limited to):
• Website user experience
• Delivery time
• Delivery methods and service
• In-store wait time
• Communicating with customer support
• Aftercare
They will need to provide protocols when something goes wrong as well as procedures used to
deliver a product or service – for example, the provision of sufficient compensatory fees to
consumers that have negative experiences.
7. Physical evidence
The final P refers to the physical context and paraphernalia (such as receipts, “thanks for
ordering” cards, confirmation emails and PDF invoices) that come along with the product. In
order to reinforce the product’s and the seller’s credibility, these components should exhibit the
qualities customers expect of them, based on up-todate industry standards.
For example, precious jewelry might be displayed within a locked cabinet; ethical supermarkets
might choose to use as little print as possible on their receipts (or offer digital receipts as an
alternative), and doctors’ surgeries should look suitably clinical. In a nutshell, “Physical
evidence” is all about ensuring every component involved with the product adheres to the same
brand values as the product itself. This creates a consistent, convincing experience for the
customer.
Brand Equity
• When you establish a name and it becomes a brand, it is said to have equity.
• It is said that the premium and reputable a brand can always command and dictate the
competition in the market.
• The Benefits of Creating a Power Brand
• Buyers will not change no matter what the others offer because they already put a lot of
trust in the brand.
• Buyers are satisfied and there’s no reason to change.
• Buyers are satisfied and would sacrifice just to get the brand Buyers value the brand
and see it as a companion
• Customer creates a strong relationship on the brand.
Competitive Advantages of Brand Equity
• It Reduces marketing costs and expenses
• Can easily charge a premium price.
• Can easily introduce brand extensions and new products
• Can compete with others when it comes to price competition.
Advantages of Branding
• Easy for the business to trace problems and process orders because of its identity or
attachment of brand in the product.
• It provide legal security to the product exclusivity offered by the company
• Provides an opportunity to develop loyal and profitable group of buyers
• It creates corporate image and identity.
• It reduces harm to company reputation if the brand fails due to its establish reputation.
How to measure brand?
The premium brand can command in the market and they usually dictate the level of
competition in the market arena. It also distinguish products and services away from others in
the market – Value proposition.
Brand reputation aligns what it says about the brand in advertising with what it actually delivers
and that’s how you will create a strong brand, delivering what you promise that lead to
generation of enormous profits and expanding future strategic opportunities.
Ex. SM because of how they created their brands they now expanded their operation to different
sectors of industry with a good record of profit like. SM Residences, BDO bank, Bonus products
available in the hyper market.
What do power brands have that others don’t?
• A distinctive product
• Delivering brand promise
• Personality and presence
• Personality
a. Emotional bond with the customer
b. Generates relationships measurably stronger than ordinary brands
• Presence
c. Seem to be present everywhere, enforcing distinctiveness
d. Successful brand extensions
Brand managers companies need:
• Superior insight into customer needs
• Ability to devise product/services that powerfully meet those needs
• Agility to redefine its offering as those needs change
• Creativity to produce exciting and compelling advertising
Tangibles of strong brand
• Shape
• Color
• Size
• Models
• Price
• Features
• Benefit
Intangibles of a strong brand
• Company name
• Brand name
• Slogan and its underlying associations Perceived quality
• Brand awareness
• Customer base
• Trademarks and patents
• Channel relationships
• Customer loyalty
• Customer confidence
• Competitive advantage