CHA PTER 3 & 4

MARKETING MIX
 Marketing mix:
2

 Marketing mix is one of the major concepts in modern

marketing.

 It is a mixture of all marketing ingredients.

 It offers an optimum combination of all marketing

ingredients in order to achieve objectives of the
organization.

 Marketing mix is the combination of the four controllable

variables.
 Marketing mix:
3

 4 P’s of marketing mix:

 Product

 Price

 Place

 Promotion

Definitions:
 According to Philip Kotler:
 MARKETING MIX IS THE SET OF CONTROLLBALE
MARKETING VARIABLES THAT THE FIRM BLENDS TO
PRODUCE THE RESPONSE IT WANTS IN THE TARGET
MARKET.
IMPORTANCE OF MARKETING MIX:
4

 Useful for achieving marketing targets

 Consumer oriented activity
 Attracting customers
 Better use of resources
 Balanced approach
 Perfect blend
 Application to business as well as non business
organizations
 Elements of marketing mix:
5

 Product mix:
 Product innovation

 Product planning and development

 Product features: size,shape,weight,design,color,quality

 Packaging and labelling of a product

 Brand name

 After sales service

 Guarantee

 warranty
Scope or elements of marketing mix:
6

 Price mix:

 Pricing policies
 Cost of production
 Credit policy
 Discounts, rebates
 Terms of delivery
 Installments
Scope or elements of marketing mix:
7

 Place mix:

 Types of middlemen : wholesalers, dealers,retailers

 Transportation

 Warehousing

 Inventory control
Scope or elements of marketing mix:
8

 Promotion mix:

 Advertising
 Publicity
 Personal selling
 Sales promotion
 Public relations techniques
 Trade fair and exhibitions
Product mix:
9

 Concept of a product:

 Product is the starting point of all

marketing activities.
 It is a bundle of satisfaction ranging
from economic utilities to socio-
psychological satisfaction.
 A product is anything that can be
offered to a market to satisfy a want
or need.
 Products are tangible. intangible or
both.
FACTORS AFFECTING SELECTION OF MEDIA:
10

 NATURE OF PRODUCT

 POTENTIAL MARKET

 TYPE OF DISTRIBUTION STRATEGY

 OBJECTIVE OF ADVERTISING

 TYPE OF SELLING MESSAGE

 BUDGET

 COMPETITIVE ADVERTISING

 MEDIA AVAILABILITY

 MEDIA PLANNING
 Product mix:
11

 Definitions of product:
 According to Prof. Harry Hanson:
“ a product is the sum total of three things – THE INTRINSIC
CHARACTERISICS: its material and construction, its ability to
perform, THE EXTRINSIC CHARACTERISTICS its packaging
,brand or trade mark and THE INTANGIBLES associated with it.”

 Philip Kotler:
“ A product is anything that can be offered to a market for attention,
acquisition or consumption that might satisfy a want or need and
includes physical objects, services,persons,places,organizations and
ideas.”
 Product characteristics:
12

 Explicit characteristic:
 Generally perceived almost uniformly by
observers.
 Physical configuration:
 Size, shape , color, odor, texture ,taste ,material used
 Associated services:
 After and before sales service
 Package and brand name:
 Colgate- toothpaste , ceat – tyres
 Product mix:
Relationship of a product to other products sold or made by the firm
 PLC:
 4 stages: intro, growth, maturity and decline
 Product characteristics:
13

 Implicit characteristic:
 There is a disagreement amongst the consumers about the
existence and features of a product.
 Product symbolism:
 May be symbol of status,economy,performance,boldness etc.
 Communication media:
 Every product says something about itself.
 The product perception:
 Perception is physio-psychological process.
 The product evaluation:
 To determine expected satisfaction
 Comparing efforts involved and rewards received
Product life cycle:
14

 Product life cycle is the

extension of the human
life cycle to the product.
 Definition:
 The product life cycle is an
attempt to recognize
distinct stages in the sales
history of the product.”
 4 stages:
 Introduction stage
 Growth stage
 Maturity stage
 Decline stage
 1. Introduction stage:
15

 It starts with the launch of the new product .

 Features:
 Low sales
 High cost per unit
 Absence of or low competition
 Loss or negligible profit
 High investment in promotional expenditure
 2. Growth stage:
16

 In this stage, product gets recognition in the market and its

market share increases.

 Features:
 Steady increase in the sales
 Growing profits
 Increase in competition
 Improvement in quality of the product
 Price reduction
 Reduction in the promotional expenditure
 3. Maturity stage:
17

 The product is well settled in the market and is ready face

intense competition.

 Features:
 Saturation of demand
 Entry of new sellers resulting in declining sales
 Less profit due to high promotional expenditure
 Efforts are made to modify the product
 Cut throat competition
 4. Decline stage:
18

 Sales decline due to the entry of new improved products.

 Features:
 Entry of new product with improved features
 Rapid decline in sales
 Rapid fall in profit
 Exit of product from the market
 Concept of product mix:
19

 Product mix usually refers to :

 The length : no. of products in the product line
 The breadth : no. of product lines that a co. Offers
 The depth : the different varieties product in a product line

 Product mix is the composite of products

offered for sales by a firm or business unit.
Product mix of hindustan lever ltd.
20

Product mix :
width
Bath detergents beverages cosmetics
soaps
dove surf bru

Product liril Rin Red label

line-
length
pears wheel Green label

rexona sunlight taaza

Hamam Taj mahal

moti
 Product diversification:
21
 It means adding on a new product, a new market, new technologies or even a
new company to the existing line or the product mix.
 Any modification of a current product that serves to expand the potential
market implies product diversification.
 It can take place in two ways:
 Existing product line

 By adding another product line

 Advantages:
1. To ensure survival, stability and growth of business
2. To ensure future growth of company by exploiting new markets
3. To meet competition and prevents new entrants
4. Changes in taste and fashion of consumers
5. Utilization of by products
6. Full utilization of capacity
7. Reputation of the company
 Product simplification:
22

 Product simplification means limiting of the number of sizes, models

and styles.
 Also known as “ product line contraction.”
 It means removal or elimination of product items from the product line
that are unprofitable or unsatisfactory.
 Avoiding or stopping the production of a particular product.
 Advantages:
1. Reduction in cost
2. Increases profits
3. Specialization
4. Skilled personnel resulting in improved efficiency
5. Market control
 Product elimination:
23

 The process of withdrawal of a product from the market is

know as “product elimination.”

 Indicators of product elimination:

1. Continuous fall in the sale
2. Defects in product
3. Higher cost of production
4. Inadequate and inefficient sales force
5. Failure to estimate the strength of market competition
6. Failure to adjust to the changing mktg. environment
 Ne w Product Development
24

 It is of utmost importance to plan and develop right kind of a product.

 Product planning and developments is a continuous process and
involves various factors and elements such as :

 Research before production

 Possibility of production method
 Modification of existing lines
 Elimination of a product
 Improvements in existing products
 Price determination
 Commercialization of product
 Product planning
25

 Product planning is the act of making out and supervising the search,
screening, development and commercialization of new products, the
modifications of existing lines and discontinuation of marginal or
unprofitable items.”

 Product planning includes three major types of decisions:

 Development and introduction of new products

 Modification of existing products

 Elimination of unprofitable or obsolete products.

Steps of new product development process
26

Idea Screening of Business

Generation New products Analysis

Test Product
commercialization
Marketing development
Price:
27

 Price is the exchange value of a

goods and services expressed in
terms of money.
 It is the perceived value of the
product or service including
warranty,guarranty,delivery of
products, disc, etc. that are the
part of the conditions of sale
and are not paid for separately.
 To the buyer : a package of
expectations and satisfaction
 To the seller : source of revenue
 Elements of price mix:
28

 Pricing policies and strategies

 Discounts
 Quantity discount
 Trade discounts
 Cash discount
 Seasonal discount

 Terms of credit

 Resale price maintenance

 Objectives of pricing:
29

 To earn proper return on investment

 To earn maximum profits by maximizing sales
 To bring price stability
 To face the competition
 To increase market share
 To determine the prices of products as per the capacity of
consumers
 To attract new customers, distributors and agents
 Long life of the company
 Need and importance of pricing:
30

1. Essential to marketing
2. Allocates resources
3. Determines the general standard of living
4. Regulates demand
5. Competitive weapon
6. Determinant of profitability
7. Achieving objectives
8. Develops brand loyalty
9. Reflects the quality of a product
 Factors influencing
31 pricing:
 Internal factors:

 Organizational factors
 Marketing mix
 Product differentiation
 Product cost
 PLC
 Length of channel of distribution
 Factors influencing pricing:
32

 External factors:

 Product demand
 Competition
 Economic condition
 Government regulations
 Ethical considerations
 Suppliers
 Buyers’ behavior
Pricing methods/pricing strategies:
33

1. Cost oriented pricing

strategy

2. Demand oriented
pricing

3. Competition oriented
pricing
 Cost oriented pricing stategy:
34

 Cost plus pricing:

 Following items are considered:
 Cost of producing or acquiring the goods.
 Cost of operating expenses
 Interest, depreciation etc
 Expected profit margin

 Target return pricing:

 Following items are considered:
 The price of the product with profit
 Fixed cost
 Variable cost
 BEP (break even point)
 Demand oriented pricing:
35

 Perceived value pricing

 Demand differential pricing

 In one of the following forms:
 Customer basis
 Product form basis
 Place basis
 Time basis
 Competition oriented pricing:
36

 Skimming pricing strategy:

 A company charges very high price initially to recover the cost

incurred in promotion and R & D.

 penetration pricing strategy:

 A company charges low price initially to get hold of the market

and drive away competitors.
MARKETING CHANNEL:
37

 Concept:

 The channels or routes or

pathways to connect the
producers with the
consumers.
 The producers and final
consumers are linked by a
bridge of intermediaries.
 These intermediaries are
wholesalers, retailers,
agents.
 Channels can be short,
long, direct and indirect.
 Definitions:
38

 According to William Stanton:

 Channel of distribution or a channel for a product is the route
taken by the title of the goods as they come from the producer to the
ultimate consumers or industrial users.”

 According to PHILIP KOTLER:

 A set of independent organizations involved in the process of
making a product or service available for use or consumption.”
Types of middlemen or intermediaries:
39

• Wholesalers
Merchant • Retailers
middlemen

• Commission agent
• Brokers
• Auctioneers
Agent • Selling agents
middlemen • Forwarding and clearing
agent
Wholesalers:
40
 Wholesalers are individuals
or business firms .

 Acts as a first link in

channel of distribution .

 Usually specialized in one or

a group of allied products.

 They sell the products for

resale or for industrial use.
 Types of wholesalers:
41

 Full function wholesaler:

 Buys the goods form the manufacturer and sells it to retailers
or other traders.
 He provides wide range of functions and services.

 Converter wholesaler:
 He buys products and sells them to other channel members
after processing it.
 Drop shipper wholesaler:
 He neither stores the products nor delivers the products to the
buyer but places orders with the manufacturer and directs him
to supply the goods directly to the retailer .
 Retailer:
42

 A retailer is one who sells a wide variety of goods to final

consumers in required quantities.

 He is the last link in the channel of distribution.

 Definition:
“Retailing includes all activities directly related to the sale of
goods and services to the ultimate consumers for personal or
business use.”
 Types of retailers:
43

Small scale Large scale

retailers retailers
• Unit stores • Departmental store
• Street traders • Super market
• Hawkers and peddlers • Hyper market
• Cheap jacks • Chain store
• Mail order house
• Consumer cooperative
• Specialty stores
• Franchisee
 Departmental stores:
44

 Also know as shop - in- shop or store – in –store.

 The concept is to provide all goods and services
under a single roof.
 It is an organization of several shops under one
central mgmt.
 Features:
 Central location
 Selling of wide range of variety
 Emphasis on customer services
 Extensive use of advt.
 High cost of operation

 E.g. Central, shoppers’ stop

45
 Chain store:
46

 Chain store is a group of two or more outlets carrying the

same merchandise, owned and controlled jointly and
usually supplied from one or more central warehouse.
 Centrally managed and engaged in common purchasing
and decision making.
 It is also termed as “ mass merchandising.”

 E.g. Archie's, big bazaar , Lifestyle, NIIT,

Subhiksha, Westside, CCD etc.
Features of chain stores:
47

 Cash n carry
 Limited items
 Standardized
appearance, prices
and products
 Centralized purchase
 Decentralized sale
 Large an quick
turnover
Consumer co-operatives:
48
 Owned and managed by its
customer members.
 A group of interested members
start retail outlets by investing
money, elect members to run
day to day activities and share
the profits on the basis of
investments made.
 Stores are run by local residents
of society colony or apartment
residents.
 E.g. Kendriya bhandaars ;
apana bazaar,; super
bazaar; Janata bazaar ,
Priyadarshni etc.
 Super markets:
49

 One of the fastest growing segment.

 It comprises of grocery store with a wide variety of
dairy products and household items .
 A large variety available under same roof at low
prices situated near residential areas.

 Selling theme is “every day low pricing.”

 E.g. Reliance fresh ; Spencer's daily

 Features:

1. Dealing in basic needs

under one roof

2. Cash trading

3. Self service

4. Packing service

5. Freedom of choice

50
 Mail order house:
51
 Mail order business is done by retailing units engaged in
carrying business through post or mail.
 The seller contacts the buyer through some media of advt. and
customer do not visit the sellers’ business premises and do not
make a personal examination of goods before buying.
 The unit running this business is called mail order house.
 Thus a mail order house is a retail trade unit doing business by
mail wherein orders are received by post and goods are
dispatched by post parcel or railway and payments are made
through post.
 Agent middlemen:
52

 Agent middlemen are those channel components who help

in the transfer of goods from the producers to the ultimate
users without acquiring the ownership of the goods.

 They do not assume any risk involved in marketing goods

and they operate for a commission and act on behalf of
their principal.
 Types of agent middlemen:
53
 Commission agent:
 He may or may not buy goods in this name.
 He does not assume any risk.
 He gets a fixed rate of commission.

 Brokers
 He is an gent who is employed to make bargains & contracts.
 He gets brokerage .
 He gives valuable advice to both the parties as per their interest.
 Types of agent middlemen:
54
 Auctioneers:
 He is the legal agent of the seller.
 His dealings are mostly on cash basis.
 Auction sale is always open to public through wide publicity.
 E.g. jewelleyy,tobacco,tea,art piece, land and building,antiques etc.

 Selling agents:
 He has given the exclusive franchise only for a limited market segment.
 He performs functions of and independent middlemen.
 He has full authority and control over prices and terms of conditions to sale.

 Forwarding and clearing agent:

 Forwarding agent: receives goods from the exporters and arranges for shipment
of goods to their destinations.
 Clearing agent: receives goods from abroad from importers at port and arrange
for their clearance.
 Types of channels of distribution:
55

 Manufacture -------- consumer

 Manufacturer--------retailer------consumer

 Manufacturer ----- wholesaler----user

 Manufacturer ----- wholesaler---retailer-----consumer

 Manufacturer---- agent------ wholesaler----consumer

 Manufacturer ----- agent----- retailer----consumer

Factors influencing selection of channel:
56

Related
to
product

Related
Related to
middlemen Factors to
company

Related
to market
&
Consumers
 Factors influencing selection of channel:
57

 Factors related to product:

 Industrial or consumer product
 Perishability

 Purchase frequency

 New products with high degree of market acceptance

 Seasonal products

 Factors related to company:

 Financial strength

 Marketing policies

 Size of the company

 reputation
 Factors influencing selection of channel:
58

 Factors related to Market or Consumers:

 Location of the market
 Number of customers
 Size of orders

 Factors related to Middlemen:

 Sales volume potential
 Availability of middlemen
 Services provided by middlemen
 Cost of channel
Promotion mix:
59

 Promotion is marketing
communication with an
element to accept ideas,
products and services.

 It is process of communication
to inform ,persuade, remind
and influence consumers or
users in favor of the products
and services of the
organization.
Elements of promotion mix:
60
 Personal selling:
It is an oral presentation in a
conversation with one or more
prospective consumers for the
purpose of effective sales,
especially in case of technical
products.

 Sales promotion:
it is a short term incentives
offered to encourage sale of a
product or a service. It includes
displays,shows,exibitions,demos
etc.
Elements of promotion mix:
61
 Advertising:
Any paid form of non-personal
presentation and promotion of
ideas, goods and services by an
identified sponsor. It’s
salesmanship in print.

 Publicity:
It is non-personal stimulation of
demand for a product, service or
a business. It is giving news and
information about the product
or service to the customers. And
it is not paid for sponsor ,so
unpaid form of advt.
Factors influencing promotion mix:
62

 Product:
 Toys, toilet soap, cosmetics: TV
 Industrial and specialty goods : technical journals
 Buyer:
 Up to date information about the buyers needs and wants
 Company:
 Promotional mix of a company should match the corporate
reputation
 Channel choice:
 Push strategy: producer directs all promotional efforts mainly on
middlemen. The product is pushed through the channel.
 Pull strategy: advt. is on a large scale by the company directly
towards the consumers.
Elements of promotion mix:
63

 Advertising:
Any paid form of non-
personal presentation and
promotion of ideas, goods
and services by an
identified sponsor.

 It’s salesmanship in print.

Elements of promotion mix:
64

 Sales promotion
techniques and methods:
 Premiums
 Contests
 Price deals
 Other sales promotion
techniques:
 Exchange melas
 Competitions
 Scratch cards
 Finance at low rates of
interest
 Sometimes zero rate of
interest
 FEATURES OF ADVERTISING :
65

 Paid form
 Any form
 Non personal
 Promotes goods, services and ideas
 Identified sponsor
 Information
 Persuasion
 Target market
 Creativity
 Psychological, social and economic force
 A discipline
 Part of marketing
 Need of advertisement:
66
 To announce new product
 To expand the market to new business
 To announce modifications
 To announce a price change
 To make special offers
 Direct sell
 To announce location of stockiest
 To obtain stockiest
 To educate customers
 To maintain sales
 To remind
 To attract investors
 To export
 To get back lost sales
 Importance of advertising:
67

 Benefits to manufacturers

 Benefits to consumers

 Benefits to the society

 Benefits to the society:
68

 Increases national income

 Improves standard of living

 Education to public

 Provides employment
 Benefits to manufacturers:
69

 Large scale production and distribution

 Introduction of new products

 Builds brand image

 Promote healthy competition

 Quick sales turnover

 Benefits to salesman:
70

 Creates good background for salesman

 Makes the salesman’s job easier

 Builds confidence tin the salesman

 Benefits to consumers:

71

 Provides information

 Improves standard of living

 Reduced price

 Improved quality of gods

 Provides entertainment

 Educated the public

 Limitations of advertising:
72

 Limited capacity to reach a selected audience

 Rigidity

 Sometime not believable

 Can not conflict with the cultural values of society

 Can not compel people to buy a product

 Successful only of properly coordinated

Advertising media:
73

 It is a vehicle or device
that carries the message
to the advertiser to the
target consumer.
 Definition:
 “The physical means
whereby a manufacturer
of goods or utilities or a
supplier of services tells
the consumer about his
product or a service.”
 Classification of media:
74
 Indoor advertising media:
 Press or print
 news paper
 magazines

 Outdoor advertising media:

 Posters
 Displays
 Sky balloons
 Neon signs
 Sandwich man
 Transit advt.
 Classification of media:
75
 Direct advertising media:
 Post cards
 Envelops
 Book lets
 Catalogues
 Sales letters
 Electronic media:
 T.V.
 Radio
 Internet
 Miscellaneous advertising:
 Window display
 Show rooms
 Exhibitions
 Trade fairs
Press/print media:
76

 It includes newspapers and

magazines.
 Newspaper:
 Merits:
 Local coverage
 Lengthy
 Cheap
 Ease of release
 Wide reach
 Demerits:
 Short life span
 Chances of unnoticed
 Different rates
 Press/print media:
77

 Magazines:
 Merits:
 longer life
 visual display
 Selective leadership
 Geographical flexibility
 Demerits:
 Inflexibility
 Waste in circulation
 Costly
 Restricted frequency
 Outdoor advertising media:
78

 It is the oldest form of advertising.

 It is out of door i.e. out of the home or place of
business.
 Various vehicles of outdoor media:
 Posters: message should be simple brief & attractive.
 Painted displays: wall paintings or hoardings
 Neon signs: use of elaborate light and action effects.
 Transit advt. : used in trains,buses,cars,trams autos etc.
 Sky balloons: novel medium to catch attention of the people.
 Sandwich men: oldest and funniest medium for outdoor
a person carries the posters (message) both in front and
back.
to attract people he can shout slogans or play instrumental
music also.
Merits of Outdoor advertising media:
79

 Offers a long life.

 Offers geographical
selectivity
 Includes the name and
address of local dealers or
agents
 Offers an attractive display of
the product trademark and
slogan
 Attract the attention of the
people
 Demerits of Outdoor advertising media:

80

 Too brief

 No selectivity of a particular type of audience

 Expensive

 Difficult to measure the effectiveness of this media

 Difficult to get reliable data

Direct advertising media:
81
 Direct advertising:
 All forms of printed
advertising delivered
directly to prospective
customer.

 Direct mail
advertising:
 Through the post to
customer.

 Direct approach may be

through sales
letters,circulars,leaflets,f
olders and brochures.
 Direct advertising media:
82

 Merits:
 PERSONAL TOUCH
 DEEP IMPACT
 MEASUREMENT OF EFFECTIVENESS

 DEMERITS:
 HIGHER COST
 LOW INTEREST OF READERS
 NEEDS SPECIAL SKILLS
ELECTRONIC MEDIA:
83

 RADIO MEDIA:
 MERITS
 SELECTIVITY
 FLEXIBLE
 HUMAN TIOUCH
 MASS COVERAGE
 ECNOMY

 DEMERITS:
 LACK OF ILLUSTRATION
 PERISHABLIITY
 LIITED TIME
ELECTRONIC MEDIA:
84

 TELEVISION:
 MERITS:
 Deep impact
 Mass communication media
 Live experience
 Image building
 DEMERITS:
 TIME CONSUMING
 SHORT LIFE
 COSTLY
 IMMOBILE
FILM ADVERTISING MEDIA:
85

 MERITS:
 CAPTURES AUDIENCE
 IDEAL FOR NICHE
MKTG.
 ECONOMICAL

 DEMERITS:
 LIMITED COVERAGE

 RESENTMENT FORM
VIEWERS
DISPLAY ADVERTISING MEDIA:
86

 DISPLAYS:
 WINDOW DISPLAY

 COUNTER DISPLAY

 SHOWROOMS

 TRADE SHOWS

 EXIBITIONS

 FAIRS
FACTORS AFFECTING SELECTION OF MEDIA:
87

 NATURE OF PRODUCT

 POTENTIAL MARKET

 TYPE OF DISTRIBUTION STRATEGY

 OBJECTIVE OF ADVERTISING

 TYPE OF SELLING MESSAGE

 BUDGET

 COMPETITIVE ADVERTISING

 MEDIA AVAILABILITY

 MEDIA PLANNING
 Question bank:
88

 Long answer questions:

1. What is marketing mix? Explain the scope or elements of marketing mix with suitable
examples.
2. What is a product? Explain the various characteristics of a product.
3. Explain various stages of PLC by giving suitable examples.
4. Explain the following concepts:
1. Product Simplification , Product Diversification and Product Elimination
5. What is a new product development? Explain the process of new product
development.
6. What is price mix? What are the objectives and importance of pricing?
7. Define Price. Explain various factors influencing pricing.
8. Define price. Describe the various methods of pricing.
9. Define Channel of Distribution. Explain types of middlemen.
10. Who is a Retailers? Explain various types of retailers.
 Question bank:
89

 Long answer questions:

11. Explain various factors influencing selection of channels.
12. What is Promotion Mix? What are the elements of promotion mix?
13. Define Advertising. What is the importance and limitations of advertising?
14. What do you mean by ad media? Explain classification of media with its merits and
demerits.

 Short notes on:

 Marketing mix
 Importance of Marketing mix
 Elements of product mix
 Product diversification
 Product simplification
 Product elimination
 Elements of price mix
 Write Short notes on :
90

 Factors of new product development

 Elements of price mix
 Importance of pricing
 Objectives of pricing
 Types of wholesalers
 Small scale retailers
 Large scale retailers
 Departmental stores
 Consumer cooperatives
 Super markets
 types of agent middlemen
 Types of channels of distribution
 Elements of promotion mix
 Features of advertising
 Need of advertising
 Write Short notes on :
91

 Indoor advertising media

 Outdoor advertising media
 Direct advertising media
 Factors affecting selection of media