KARACHI UNIVERSITY BUSINESS

SCHOOL

NAME: SANIA HASHMI

CLASS: BBA (Sp)-SEMESTER –II

SECTION‘C’

PRINCIPLES OF MARKETING
ASSIGNMENT

SUBMITTED TO:
MA’AM SYEDA SABAHAT
SUMMARIES:
CHAPTER-I MARKETING
The first chapter mainly focuses on the basics of principles of marketing beginning
with the most common thought of what is marketing? Marketing could be defined as
the activity, set of institutions, and processes for creating, communicating, delivering,
and exchanging offerings that have value for customers, clients, partners, and society
at large, continuing with the definition of marketing it was discussed that what
motivates a customer to take the action? Here three concepts of needs wants and
demands was discussed. Wants are desires for goods and services we would like to
have but do not need. Many wants may seem like needs. Needs are a special kind of
want, and refer to things we must have to survive, such as food, water, and shelter.
Market demand is the total amount of goods and services that all consumers are
willing and able to purchase at a specific price in a marketplace. In other words, it
represents how much consumers can and will buy from suppliers at a given price
level in a market. After which it was discussed that what will satisfy consumer’s wants
and needs? Here we had discussed about the products and services, a product could
be defined as anything which is tangible durable or in durable offered in the market to
satisfy a want or need for example: A place, any grocery items etc. a service is a
transaction in which no physical goods are transferred from the seller to the buyer.
The benefits of such a service are held to be demonstrated by the buyer's willingness
to make the exchange. For example: Salon services, hotel services.

Then the attention was grabbed towards Customer value and customer satisfaction.
By customer value we means the perception of what the product is worth to the
customer as compared to the possible alternatives for what he/she has paid.
Customer satisfaction could be defined as if the satisfaction by consuming the product
or service has surpassed or lived up to the expectation of the customer or not.
Customer satisfaction is defined as a measurement that determines how happy
customers are with a company's products, services, and capabilities. Customer
satisfaction information, including surveys and ratings, can help a company determine
how to best improve or changes its products and services.
How do customers obtain products and services? To satisfy needs and wants
customers can obtain the products through exchange or transactions, it can also be
said from the other side that to sell the products and services sellers should build
good relationship with customers and with other business related authorities as these
authorities are also in contact with the competitors. There are 2 kinds of buyers who
purchases the products and services, potential buyers and actual buyers. Potential
buyers are those who might be in the market to review what is available at what prices
ranges, and something they might consider buying as soon as they decide on buying.
Actual buyer are those who makes the transaction and purchases the product.

MARKETING PHILOSOPHIES:

There are 5 Marketing Philosophies used by businesses to guide their marketing

efforts. There are five marketing concepts. A company should choose the right one
according to their and their customers’ needs.

Production Concept:
This concept works on an assumption that consumers prefer a product which is
inexpensive and widely available. A low price may attract new customers, but the
focus is just on production and not on product quality. This may result in a decrease in
sales if the product is not up to the standards.

Product Concept:
This concept works on the assumption that customers prefer products of ‘greater
quality’ and ‘price and availability’ doesn’t influence their purchase decision. Hence
the company devotes most of its time in developing a product of greater quality which
usually turns out to be expensive.

Selling Concept:
Selling Concept focuses on making every possible sale of the product, regardless of
the quality of the product or the need of the customer. The main focus is to make
money. This philosophy doesn’t include building relations with customers. Hence
repeated sales are very less. Companies following this concept may even try to
deceive the customers to make them buy their product. It says that to make the sales
possible promotion is the key.

Marketing Concept:
This concept works on an assumption that consumers buy products which fulfil their
needs. Businesses following the marketing concept conduct researches to know
about customers’ needs and wants and come out with products to fulfil the same
better than the competitors. By doing so, the business establishes a relationship with
the customer and generate profits in the long run.

Societal Marketing Concept:

This philosophy focuses on society’s well-being as well. The business focuses on how
to fulfil the needs of the customer without affecting the environment, natural resources
and focusing on society’s well-being. This philosophy believes that the business is a
part of the society and hence should take part in social services like the elimination of
poverty, illiteracy, and controlling explosive population growth etc.

CHAPTER-II SETTING PRODUCT

STATEGIES:
A product can be physical or virtual. Physical products include durable goods (such
as cars, furniture, and computers) and nondurable goods (such as food and
beverages). Virtual products are offerings of services or experiences (such as
education and software). A product may be a hybrid and include both physical and
virtual elements. Hybrid products are becoming more common, as traditionally analog
products are incorporating digital technology as a way to better reach and serve
customers.
5 Basic Levels Of Product:
1. Core benefit:
The fundamental need or want that consumers satisfy by consuming the
product or service. For example, the need to process digital images.
2. Basic product:
A version of the product containing only those attributes or characteristics
absolutely necessary for it to function. For example, the need to process digital
images could be satisfied by a generic, low-end, personal computer using free
image processing software or a processing laboratory.
3. Expected product:
The set of attributes or characteristics that buyers normally expect and agree to
when they purchase a product. For example, the computer is specified to
deliver fast image processing and has a high-resolution, accurate color screen.
4. Augmented product:
The inclusion of additional features, benefits, attributes or related services that
serve to differentiate the product from its competitors. For example, the
computer comes pre-loaded with a high-end image processing software for no
extra cost or at a deeply discounted, incremental cost.
5. Potential product:
This includes all the augmentations and transformations a product might
undergo in the future. To ensure future customer loyalty, a business must aim
to surprise and delight customers in the future by continuing to augment
products. For example, the customer receives ongoing image processing
software upgrades with new and useful features.

BROAD CLASSIFICATION OF PRODUCTS:

CONSUMER PRODUCT:
Consumer products, also referred to as final goods, are products that are bought by
individuals or households for personal use. In other words, consumer products are
goods that are bought for consumption by the average consumer. From a marketing
perspective, there are four types of consumer products, each with different marketing
considerations.

BUSINESS PRODUCTS:
Business products on the other hand help companies create their own products or
operate their business. Examples of business products include raw materials,
equipment, component parts, supplies, and business services. Business software is
used by companies to support key business functions.

CONSUMER PRODUCT CLASSIFICATION:

CONVINIENCE PRODUCT:
Convenience products are bought the most frequently by consumers. They are
bought immediately and without great comparison between other options.
Convenience products are typically low-priced, not-differentiated among other
products, and placed in locations where consumers can easily purchase them. The
products are widely distributed, require mass promotion, and are placed in convenient
locations.

 STAPLE GOODS: or staples as they are referred too, are those consumer
goods which are consumed on a regular basis and are bought often or
regularly. Staple goods are mostly food items like milk, wheat, sugar etc.

 IMPULSE GOODS: are products that people buy on impulse, i.e., without
planning to do so. Retailers commonly place these items near the checkout
counters of supermarkets, filling stations, and other retail outlets. Products
such as chocolate, snacks, chewing gum, and candy, for example, are impulse
goods.
 EMERGENCY GOODS: are those products which a customer buys in case of
an emergency or an absolute urgent requirement and for which he / she had
not done any planning.

SHOPPING PRODUCTS:
A shopping product is a type of product that requires consumer research and
comparison of brands. There are two types of shopping products
 HOMOGENOUS PRODUCTS

Homogeneous products are perceived by consumers as very similar in nature

and the final purchase is usually determined on the lowest price.

 HETEROGENOUS PRODUCTS

Heterogeneous products are products with attributes that are significantly

different from each other, which makes it difficult to substitute one product for
another. An example of a heterogeneous product is a computer. You really
can't substitute a PC for a Mac, because each computer platform is too
different.

SPECIALTY PRODUCTS:

Specialty goods have particularly unique characteristics and brand identifications for
which a significant group of buyers is willing to make a special purchasing effort.
Examples include specific brands of fancy products, luxury cars, professional
photographic equipment, and high-fashion clothing.

UNSOUGHT PRODUCTS:

Unsought Goods are goods that the consumer does not know about or does not
normally think of buying, and the purchase of which arises due to danger or the fear
of danger and lack of desire. The classic examples of known but unsought goods are
funeral services, encyclopedias, fire extinguishers and reference books.

INDUSTRIAL PRODUCTS CLASSIFICATION:

There are 5 major classes of Industrial products

1. Natural Materials & Parts

2. Manufactured materials and parts
3. Capital items
4. Supplies &
5. Business services
After the classification of products, the differentiation of products and services were
discussed, the differentiation of products includes product form, performance,
conformance, durability, reliability, repair ability, style etc. The differentiation of
services includes ordering ease, delivery, installation, customer consulting,
maintenance and repair and return.

Marketing jargons such as products mix and line stretching was discussed. A product
mix also known as product assortment, refers to the total number of product lines a
company offers to its customers. The four dimensions to a company's product mix
include width, length, depth and consistency. Line stretching could be defined as an
expanding strategy by a company where the new products are launched in the same
product line but beyond the current product range with some additional or different
features. Line stretching can be done down market, up market or both ways.

CHAPTER III – PRICE STRATEGY:

Price is the value that is put to a product or service and is the result of a complex set
of calculations, research and understanding and risk taking ability. A price has many
names such ass rent, fees, dues, interest, donation, fare, commission, and wage. 6
steps in pricing strategy was discussed:

 Selecting the pricing objectives: pricing of goods and services is often a critical
factor in the successful operation of business organizations. The manager’s job is
to develop and implement a pricing strategy that meets a particular company’s
needs at a certain point in time.
 Determining demand: The level of demand for a product depends on the price set
levels, thus having different impacts on the concerned firm’s marketing objectives.
We can understand the relationships between price and demand through the
demand schedule.
 Estimating cost: In setting prices, a company considers its production, distribution,
and other costs as demand elasticity. To stay in business, a company has to set
prices that cover all its costs.1)types of costs,2)cost behavior at different levels of
production per period,3)cost behavior as a function of accumulated
production,4)cost behavior as a function of the differentiated marketing offer,
and,5)target costing, in understanding how costs are estimated
 Evaluating competitor’s prices, cost and offers: To set prices appropriately, a
company should have a clear picture of competitors’ cost, prices, and reactions
against the possible range of prices determined by market demand and cost. It is
also imperative to know in detail about competitors’ offers regarding quality, price,
and other variables.
 Selection of a pricing method: In selecting a price, a company has to select a
particular pricing method, including cost considerations, competitors’ prices, prices
of substitutes; and, customers’ assessment of unique product features.
 Selecting the final price: The final price may be selected easily based on the
pricing methods discussed earlier. To select the final price, a few additional factors
to be taken into consideration by a company. These are psychological pricing,
influences of other marketing mix elements on price, company pricing policies, and
price impact on other parties.

NEW PRODUCT PRICING STRATEGIES:

 Pricing strategies tend to change as a product goes through its product life cycle.
One stage is particularly challenging: the introductory stage. This is called New
Product Pricing. When companies bring out a new product, they face the
challenge of setting prices for the very first time. Two new product pricing
strategies are available: Price-Skimming and Market-Penetration Pricing.

PRICE SKIMMING: Price-skimming (or market-skimming) calls for setting a high

price for a new product to skim maximum revenues layer by layer from those
segments willing to pay the high price. This means that the company lowers the
price stepwise to skim maximum profit from each segment. As a result of this new
product pricing strategy, the company makes fewer but more profitable sales.

MARKET PENETRATION PRICING: The opposite new product pricing strategy of

price skimming is market-penetration pricing. Instead of setting a high initial price
to skim off each segment, market-penetration pricing refers to setting a low price
for a new product to penetrate the market quickly and deeply. Thereby, a large
number of buyers and a large market share are won, but at the expense of
profitability. The high sales volume leads to falling costs, which allows companies
to cut their prices even further.

PRODUCT MIX PRICING STRATEGY:

Most products are part of a broader product mix. Consequently, they must be
priced accordingly. Product Mix Pricing Strategies address this issue. Such as
product line pricing, optional product pricing, captive product pricing, product
bundle pricing.

PRICE ADJUSTMENT STRATEGY:

Companies must adjust their basic prices to account for differences in customers
and situations. Ad. There are seven price adjustment strategies: Discount and
allowance pricing, segmented pricing, psychological pricing, promotional pricing,
geographical pricing, dynamic pricing and international pricing.

 DISOUNT AND ALLOWANCE PRICING: Reducing prices to reward customer

responses such as paying early or promoting the product.
 SEGMENTED PRICING: Adjusting prices to allow for differences in customers,
products or locations.
 PSYCHOLOGICAL PRICING: Adjusting prices for psychological effect.
 PROMOTIONAL PRICING: Temporarily reducing prices to increase short-run sales.
 GEOGRAPHICAL PRICING: Adjusting prices to account for the geographic location
of customers.
 DYNAMIC PRICING: Adjusting prices continually to meet the characteristics and
needs of individual customers and situations.
 INTERNATIONAL PRICING: Adjusting prices for international markets.

PRICE CHANGES:
Companies are bound to face market situations where they are required to initiate
price changes. It means, either they are to cut the prices or increase the present
prices to survive, maintain status quo or further growth. Initiating price changes
involves two possibilities of price cuts and price increases. A price cut occurs
either due to excess capacity or increased market share and the prices increased
either due to increased demand decreased supply or cost inflation.

PUBLIC POLICY AND PRICING:

There are specific pricing strategies that companies can use to cause an unfair
market price on a product to increase profits or harm competitors. These include
two specific channel flows: pricing within and across the channels levels. A pricing
channel level is the two forces affecting a pricing trend such as the supply and
demand and when one force is stronger it causes the price trend.

PRICE FIXING:

Price fixing occurs when companies conspire to set the price of products or
services instead of allowing the free market to set the prices naturally.

PREDATORY PRICING:
Predatory pricing is the illegal act of setting prices low in an attempt to eliminate the
competition. Predatory pricing violates antitrust law, as it makes markets more vulnerable to
a monopoly.
 CHAPTER-IV PROMOTION:
Promotions refer to the entire set of activities, which communicate the product, brand
or service to the user. The idea is to make people aware, attract and induce to buy
the product, in preference over others.

According to Philip Kotler ‘promotion compasses all the tools in marketing mix whose
major role is persuasive communication.’

There are three main objectives of promotion, Increase demand: These strategies are
used during the product life cycle in order to increase sales. Eventually a product will
reach its saturation point, at which time investing in sales will decrease as the
company focuses its attention on a new product. Present information about the
product: In order for customers and consumers to want the product they need to
understand what the product is and how it benefits them. Information about the
product will differ depending on the specific target market. Differentiate a product:
This is especially important if there are multiple competitors in the same market. For
example, Apple was able to differentiate itself in the computer industry. The Role of
promotion includes creating an image of prestige, low prices, innovation, information
about the product and its characteristics, preservation of the popularity of goods
(services),change the way you use the product, the creation of enthusiasm among
market participants, convince buyers to move to more expensive goods, answers to
consumer questions, favorable information about the company . There are 5
components of promotion which includes Advertising, sales promotion, personal
selling, pubic relation, direct marketing.

Advertising is a marketing tactic involving paying for space to promote a product,

service, or cause. The actual promotional messages are called advertisements, or
ads for short. The goal of advertising is to reach people most likely to be willing to pay
for a company's products or services and entice them to buy. The major advantages
of advertising are:
 Introduces a new product in the market
 Expansion of the market
 Increased sales
 Fights competition
 Enhances good-will
 Educates the consumers
  Elimination of middlemen
 Better quality products
 Supports the salesmanship
 More employment opportunities
 Reduction in the prices of newspapers and magazines
 Higher standard of living

There are 7 steps involved in creating a message:

 Identifying the targeted audience.

 Set the objectives for advertising.
 Decide the budget
 Design the message
 Evaluate and select the medium
 Create an advertisement
 Measure the impact

There are three steps involved in creating an advertising message:

 Message strategy
 Creative concept
 Message execution

Sales promotion is a marketing strategy where the product is promoted using short-
term attractive initiatives to stimulate its demand and increase its sales. This strategy
is usually brought to use in the following cases – To introduce new products, To sell
out existing inventories