CH 11 Marketing

chapter
11
Marketing
Learning Objectives Where do Companies do their Business?
In the Markets or in the Society?
After studying this chapter, It is an undisputed fact that a company’s survival
you should be able to: does not depend upon its consumers alone, but a
diverse set of stakeholders like the government,
¾¾ explain the meaning of religious leaders, social activists, NGOs, media,
‘marketing’; etc. Hence, earning the satisfaction of these
segments is also as imperative as they add to the
¾¾ distinguish between power of the brand by word of mouth.
‘marketing’ and The social concern adds to the strength of the
‘selling’; brand. Corporates that embraced the deepest
social values, have been successful in building
¾¾ l i s t o u t i m p o r t a n t powerful brand, and, eventually, robust customer
functions of marketing; relationship. The area of corporate social justice
fall under two broad categories. The issues such
¾¾ examine the role of as the nutrition of children, child care, old-age
marketing in the homes, amelioration of hunger, offering aid to
those affected by natural calamities, etc. needing
development of an
instant attention with humanitarian perspective,
economy in a firm,
comes under the first category.
to the society and to The issues that contribute to making society a
consumers; pleasant place to live in the long run, may be grouped
under the second category. The issues which come
¾¾ explain the elements of under this category are health awareness and aid,
marketing-mix; education, environmental protection, women’s
employment and empowerment, preventing unjust
¾¾ classify products into discriminations (on the basis of caste, community,
different categories; religion, ethnicity, race, and sex), eradication
of poverty through employment, preservation
¾¾ analyse the factors of culture, values, and ethics, contribution to
affecting price of a research, etc.
product; Procter and Gamble’s (P&G) philosophy is that it
should lead the industry in implementing a global
¾¾ l i s t o u t t h e t y p e s environmental programme. P&G is one of the
of channels of first companies in the world to actively study the
distribution; and influence of consumer products on the environment
and introduce concentrated products, recycled
¾¾ e x p l a i n t h e m a j o r plastic bottles, and refill packages to the industry.
tools of promotion, viz. P&G contributes to sustainable development
advertising, personal and addresses environmental and social issues
connected with its products and services.
selling, sales promotion
and publicity. Source: Adapted from ‘Effective Executive’,
Feb. 2006
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Let us consider a typical day in our products. These activities are referred
life. Right from the time we get up in to as marketing activities.
the morning to the time we go to bed, For a proper understanding of
we use number of products to satisfy marketing, number of questions need
our different needs. Beginning with the to be answered. These include: What
breakfast, we take such items as bread, do we mean by a market? What can be
butter, milk, and rice, to satisfy our marketed? Is it products or services or
hunger; use the services of a bus or an something more? Who is a marketer?
auto or a cycle to reach to our school or What is marketing management?
place of work; read books, magazines These points have been taken up for
and newspapers, to keep ourselves discussion in the following sections.
informed and acquire knowledge; use
What is a Market
computers, cell phone, television and
other gadgets for communication/ In the traditional sense, the term
entertainment; and purchase many ‘market’ refers to the place where
other products like gifts, shoes, buyers and sellers gather to enter into
clothing, furniture, etc., from market transactions involving the exchange
to satisfy our different needs. of goods and services. It is in this
Who makes these products and sense that this term is being used
why? These products are manufactured in day to day language, even today.
and marketed by different firms. For The other ways in which this term
example, Lifebouy soap, Closeup is being used is in the context of a
toothpaste, Surf detergent powder are product market (cotton market, gold
manufactured by Hindustan Lever; or share market), geographic market
(national and international market),
Ariel detergent powder by Procter
type of buyers (consumer market and
and Gamble, Dairy Milk Chocolate
industrial market) and the quantity of
by Nestle, Atlas Cycles by Atlas
goods transacted (retail market and
cycle company, Kwality Ice-creams
wholesale market).
by Kwality Walls, LG Televisions by But in modern marketing sense, the
LG Electronics and so on. These term market has a broader meaning. It
firms are called marketers. These refers to a set of actual and potential
firms undertake various activities buyers of a product or service. For
to stimulate the demand for their example, when a fashion designer
products and earn profit by satisfying designs a new dress and offers it for
customer’s needs and wants. People exchange, all the people who are willing
purchase products because these to buy and offer some value for it can be
satisfy some of their needs. stated to be the market for that dress.
Number of activities are performed Similarly, market for fans or bicycles
by the marketers to facilitate exchange or electric bulbs or shampoos refers to
o f go o ds a nd services b etw een all the actual and potential buyers for
producers and the users of such these products.
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“Business is not financial science, it’s about trading, buying and selling. It’s about
creating a product or service so good that people will pay for it.”
— Anta Roddick
“Marketing takes a day to learn. Unfortunately it takes time to master.”
— Philip Kotler
What is Marketing selling, advertising and pricing are

required. All these activities are
The term marketing has been described
referred to as marketing activities.
by different people in different ways.
Thus, ‘merchandising’, ‘selling’ and
Some people believe that marketing is
distribution are all parts of a large
same as ‘shopping’. Whenever they go
number of activities undertaken by
out for shopping of certain products or
services, they describe it as marketing. a firm, which are collectively called
There are some other people who marketing.
confuse marketing with ‘selling’ and It may be noted here that
feel that marketing activity starts marketing is not merely a post-
after a product or service has been production activity. It includes many
produced. Some people describe it to activities that are performed even
mean ‘merchandising’ or designing a before goods are actually produced,
product. All these descriptions may be and continue even after the goods have
partly correct but marketing is a much been sold. For example, activities such
broader concept, which is discussed as identification of customer needs,
as follows: collection of information for developing
Traditionally, marketing has been the product, designing suitable product
described in terms of its functions or package and giving it a brand name are
activities. In this respect, marketing performed before commencement of
has been referred to as performance of the actual production. Similarly, many
business activities that direct the flow follow up activities are required for
of goods and services from producers maintaining good customer relations
to consumers. for procuring repeat sale.
As we know, most of the In modern times, emphasis is
manufacturing firms do not produce placed on describing marketing as a
goods for their own consumption but social process. It is a process whereby
for the consumption or use by others. people exchange goods and services
Therefore, to move the goods and for money or for something of value to
services from the producer to consumers, them. Taking the social perspective,
a number of activities, such as product Phillip Kolter has defined marketing as,
designing or merchandising, packaging, “a social process by which individual
warehousing, transportation, branding, groups obtain what they need and want
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through creating offerings and freely A marketer’s job in an organisation

exchanging products and services of is to identify needs of the target
value with others”. customers and develop products and
Thus, marketing is a social process services that satisfy such needs.
where in people interact with others, 2. Creating a Market Offering: On
in order to persuade them to act in the part of the marketers, the effort
a particular way, say to purchase involves creation of a ‘market offering.
a product or a service, rather than Market offering refers to a complete
forcing them to do so. A careful analysis
offer for a product or service, having
of the definition shows the following
given features like size, quality, taste,
important features of marketing:
etc; at a certain price; available at a
1. Needs and Wants: The process given outlet or location and so on. Let
of marketing helps individuals and us say the offer is for a cell phone,
groups in obtaining what they need available in four different versions,
and want. Thus, the primary reason or on the basis of certain features such
motivation for people to engage in the as size of memory, television viewing,
process of marketing is to satisfy some internet, camera, etc., for a given price,
of their needs or wants. In other words, say between Rs. 5,000 and Rs. 20,000
the focus of the marketing process is
(depending on the model selected),
on satisfaction of the needs and wants
available for sale at say firm’s exclusive
of individuals and organisations.
shops in and around all metropolitan
A need is a state of felt deprivation
cities in the country. A good ‘market
or feeling of being deprived of
offer’ is the one which is developed after
something. If unsatisfied, it leaves a
analysing the needs and preferences of
person unhappy and uncomfortable.
the potential buyers.
For example, on getting hungry, we
become uncomfortable and start 3. Customer Value: The process
looking for objects that are capable of of marketing facilitates exchange of
satisfying our hunger. products and services between the
Needs are basic to human beings buyers and the sellers. The buyers,
and do not pertain to a particular however, make buying decisions on
product. Wants, on the other hand, their perceptions of the value of the
are culturally defined objects that are product or service in satisfying their
potential satisfiers of needs. In other need, in relation to its cost. A product
words, human needs shaped by such will be purchased only if it is perceived
factors as culture, personality and to be giving greatest benefit or value
religion are called wants. A basic need for the money. The job of a marketer,
for food, for example, may take various therefore, is to add to the value of the
forms such as want for dosa and rice product so that the customers prefer it
for a South Indian and chapatti and in relation to the competing products
vegetables for a North Indian person. and decide to purchase it.
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4. Exchange Mechanism: The process are not able to communicate with

of marketing works through the each other or if they can not deliver
exchange mechanism. The individuals something of value to the other.
(buyers and sellers) obtain what they (iv) each party should have freedom to
need and want through the process of accept or reject other party’s offer.
exchange. In other words, the process
(v) the parties should be willing to enter
of marketing involves exchange of
into transaction with each other.
products and services for money or
Thus, the acceptance or rejection
something considered valuable by
of the offer takes place on voluntary
the people. basis rather than on the bases of
Exchange refers to the process any compulsion.
through which two or more parties
come together to obtain the desired The points listed above are the
product or service from someone, necessary conditions for an exchange
offering the same by giving something to take place. Whether the exchange
in return. For example, a person actually takes place or not depends on
the suitability of the act of exchange
feeling hungry may get food by offering
to both the parties, whether it makes
to give money or some other product
the parties better off or at least not
or service in return to someone who
worse off.
is willing to accept the same for food.
Another important point to be
In the modern world, goods are
noted is that Marketing is not merely a
produced at different places and are
business phenomena or confined only
distributed over a wide geographical
to business organisations. Marketing
area through various middlemen, activities are equally relevant to non-
involving exchanges at different levels profit organisations such as hospitals,
of distribution. Exchange is, therefore, schools, sports clubs and social and
referred to as the essence of marketing. religious organisations. It helps these
For any exchange to take place, it is organisations in achieving their goals
important that the following conditions such as spreading the message of
are satisfied: family planning, improving the literacy
(i) involvement of at least two parties standards of people and providing
viz., the buyer and the seller. medication to the sick.
(ii) each party should be capable of
offering something of value to the What can be marketed?
other. For example, the seller offers The question commonly coming to the
a product and the buyer, money. mind is what can be marketed. Is it a
(iii) each party should have the ability product or service or something else. Let
to communicate and deliver the us first tunderstand what is a product?
product or service. No exchange can A product is a ‘bundle of utilities’
take place if the buyers and sellers or ‘source of satisfaction’, that can
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be used to satisfy human needs and and touched physically such as a

wants. It is not confined to physical pencil, a cycle or an intangible such
objects, such as motor cycle, biscuit, as services rendered by a doctor,
bulb and pencil but also refers to hairdresser or a lawyer.
other things of value such as services, Apart from the product, what can
ideas, places, etc., that can be offered be marketed is a service or a person
to the potential buyers for their use. (say political parties persuading to vote
In the marketing literature, anything for a particular candidate) or an idea
that can be of value to the buyer can (say Red Cross persuading to donate
be termed as a ‘product’. It can be blood) or a place (say Kerala Tourism
tangible, i.e., which can be felt, seen persuading people to visit Kerala for
What can be Marketed?

Physical Products : DVD player, Motor cycle, ipods, Cell phone, Footwear,
Television, Refrigerator.
Services : Insurance, Health Care, Business Process Outsourcing,
Security, Easy Bill service, Financial Services
(Investment),Computer Education, Online Trading.
Ideas : Polio Vaccination, Helpage, Family Planning, Donation of
Blood (Red cross), Donation of money on Flag Day (National
Foundation for Communal Harmony).
Persons : For Election of Candidates for Certain Posts.
Place : ‘Visit Agra – ‘City of Love’, ‘Udaipur – ‘The City of Lakes’,
‘Mysore – The City of Gardens’, ‘When Orisa celebrates,
Eleven the God Join In’.
Experience : Customised Experiences as Dinner with a cricketer (say
Dhoni); Lunch with a celebrity (say Bill Gates or Aishwarya
Roy) or experience of Baloon Riding, mountaineering, etc.
Properties : Intangible rights of ownership of real estate in financial
property (Shares, Debentures).
Events : Sports events (say Olympics, Cricket series), diwali mela,
fashion show, music concert, film festival, elephant race
(Kerala Tourism).
Information : Production packaging and distribution of information by
organisations such as by universities, research organisation,
providing information as market information (marketing
research agencies), technology information.
Organisations : For boosting their public image organisations such as
Hindustan Lever, Ranbaxy, Dabur, Proctor and Gamble,
communicate with people. Example, Phillips says, Let’s make
Things Better’.
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health tourism). Thus, anything that is the activities which facilitate exchange
of value to the other can be marketed. of goods and services between
It can be a product or a service or a producers and consumers or users
person or a place or an idea or an event of products and services. Thus the
or an organisation or experience or focus of marketing management is on
properties. (see box) achieving desired exchange outcomes
Who is a marketer? Marketer refers with the target markets. Taking a
to any person who takes more active management perspective, the term
part in the process of exchange. marketing has been defined as “the
Normally it is the seller who is more process of planning and executing
active in the exchange process as he/ the conception, pricing, promotion
she analyses the needs of the potential and distribution of ideas, goods and
services to create exchanges that
buyers, develops a market offering
satisfy individual and organisational
and persuades the buyers to buy the
goals” by American Management
product. However, there may be certain
Association, similarly Philip Kotler
situations where the buyer may be
has defined Marketing management as
taking more active role in the exchange
the art and science of choosing target
process. Let us say in situations of
markets and getting, keeping and
rare supply, the buyer may be taking
growing customers through creating,
extra efforts in persuading the seller
delivering and communicating superior
to sell the product to him/her. This
customer values of management.
may be happening in defence deals
A careful analysis of the definition
or take a situation where a country reveals that the process of management
having installed a nuclear plant needs of marketing involves:
the supply of nuclear fuel or ‘Heavy
Water’. It may need to convince the (i) C hoosing a target market, say a
supplier of the products to supply the manufacturer may choose to make
readymade garments for children
same to it, by promising that it will
up to the age of 5 years;
be used for peaceful purposes only.
In this case, the buyer will be treated (ii) In respect of the target market
as the marketer. Thus, any body, who chosen, the focus of the process of
takes more active role in the exchange management is on getting, keeping
process will be taken as the marketer. as well as growing the customers.
That means the marketer has to
Marketing Management create demand for his products so
that the target customers purchase
Marketing management means the product, keep them satisfied
management of the marketing with the firm’s products and also
function. In other words, marketing attract more customers to the
management refers to planning, firm’s products so that the firm can
organising, directing and control of grow; and
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(iii) The mechanism for achieving seasonal products, (say fans, woollen
the objective is through creating, clothes) the marketer’s job is to change
developing and communicating the time pattern of demand through
superior values for the customers. such methods as providing short-term
That means, the primary job incentives, to the buyers. Thus, the
of a marketing manager is to marketing management in not only
create superior values so that concerned with creating demand but
the customers are attracted to with managing the demand effectively,
the products and services and as per the situation in the market.
communicate these values to the
prospective buyers and persuade Marketing and Selling
them to buy these products.
Many people confuse ‘selling’ for
Marketing management involves ‘marketing’. They consider these two
performance of various functions terms as one and the same. Marketing
such as analysing and planning the refers to a large set of activities of which
marketing activities, implementing selling is just one part. For example, a
marketing plans and setting control marketer of televisions, before making
mechanism. These functions are the sale, does a lot of other activities
to be performed in such a way that such as planning the type and model
organisation’s objectives are achieved of televisions to be produced, the
at the minimum cost. price at which it would be sold and
Marketing management generally selecting the distribution outlets at
is related to creation of demand. which the same would be available,
However, in certain situations, the etc. In short, marketing involves whole
manager has to restrict the demand. range of activities relating to planning,
For example, if there is a situation of pricing, promoting and distributing the
‘overfull demand’, i.e., the demand products that satisfy customer’s needs.
being more than what the company The function of selling, on the other
can or want to handle, (like what hand, is restricted to promotion of goods
the situation in our country was and services through salesmanship,
before the adoption of policies of advertising, publicity and short-term
liberalisation and globalisation, in incentives so that title of the product
early 90’s, in most consumer products is transferred from seller to buyer or
be it automobiles or electronics goods in other words product is converted
or other durable products. The job of into cash.
marketing mangers, in these situations The major differences between
would be to find ways to reduce the selling and marketing are listed as
demand temporarily by say reducing below:
the expenditure on promotion or (i) Part of the Process vs Wider Term:
increasing the prices. Similarly, if the Selling is only a part of the process
demand is ‘irregular’, such as in case of of marketing and is concerned
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with promoting and transferring continue even after the product has
possession and ownership of been sold.
goods from the seller to the buyer. (v) Difference in the Emphasis: In
Marketing is a much wider term selling, the emphasis is on bending
consisting of number of activities the customer according to the
such as identification of the product while in marketing, the
customer’s needs, developing the attempt is to develop the product
products to satisfy these needs, and other strategies as per the
fixing prices and persuading the customer needs.
potential buyers to buy the same. (vi) Difference in the Strategies: Selling
Thus, selling is merely a part of involves efforts like promotion
marketing. and persuasion while marketing
(ii) T ransfer of T itle vs Satisfying uses integrated marketing efforts
Customer Needs: The main focus involving strategies in respect of
of selling is on affecting transfer product, promotion, pricing and
of title and possession of goods physical distribution.
from sellers to consumers or
users. In contrast, marketing Marketing Management Philosophies
activities put greater thrust on In order to achieve desired exchange
achieving maximum satisfaction of outcomes with target markets, it is
the customer’s needs and wants. important to decide what philosophy
(iii) Profit through Maximising Sales vs or thinking should guide the marketing
Customer Satisfaction: All selling efforts of an organisation. An
activities are directed at maximising understanding of the philosophy or
sales and, thereby, the profits of the the concept to be adopted is important
firm. In other words, the emphasis as it determines the emphasis or the
is on profit maximisation through weightage to be put on different factors, in
maximisation of sales. Marketing, achieving the organisational objectives.
on the other hand, is concerned For example, whether the marketing
with customer satisfaction and efforts of an organisation will focus on
thereby increasing profit in the long the product—say designing its features
run. A marketing organisation, etc or on selling techniques or on
thus, attaches highest importance customer’s needs or the social concerns.
to customer satisfaction as a route The concept or philosophy of
to profit maximisation. marketing has evolved over a period
of time, and is discussed as follows.
(iv) Start and End of the Activities:
Selling activities start after the
The Production Concept
product has been developed while,
marketing activities start much During the earlier days of industrial
before the product is produced and revolution, the demand for industrial
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goods started picking up but the became the key to profit maximisation
number of producers were limited. of a firm, under the concept of product
As a result, the demand exceeded orientation.
the supply. Selling was no problem.
Anybody who could produce the goods The Selling Concept
was able to sell. The focus of business With the passage of time, the marketing
activities was, therefore, on production environment underwent further
of goods. It was believed that profits change. The increase in the scale of
could be maximised by producing business further improved the position
at large scale, thereby reducing the with respect to supply of goods,
average cost of production. It was resulting in increased competition
also assumed that consumers would among sellers. The product quality
favour those products which were and availability did not ensure the
widely available at an affordable price. survival and growth of firms because
Thus, availability and affordability of the large number of sellers selling
of the product were considered to quality products. This led to greater
be the key to the success of a firm. importance to attracting and persuading
Therefore, greater emphasis was customers to buy the product. The
placed on improving the production business philosophy changed. It was
and distribution efficiency of the assumed that the customers would
firms. not buy, or not buy enough, unless
they are adequately convinced and
The Product Concept motivated to do so. Therefore, firms
As a result of emphasis on production must undertake aggressive selling
capacity during the earlier days, the and promotional efforts to make
position of supply increased over customers buy their products. The
period of time. Mere availability and use of promotional techniques such as
low price of the product could not advertising, personal selling and sales
ensure increased sale and as such promotion were considered essential
the survival and growth of the firm. for selling of products. Thus, the focus
Thus, with the increase in the supply of business firms shifted to pushing
of the products, customers started the sale of products through aggressive
looking for products which were selling techniques with a view to
superior in quality, performance and persuade, lure or coax the buyers
features. Therefore, the emphasis to buy the products. Making sale
of the firms shifted from quantity of through any means became important.
production to quality of products. The It was assumed that buyers can be
focus of business activity changed to manipulated but what was forgotten
bringing continuous improvement in was that in the long run what matters
the quality, incorporating new features most is the customer satisfaction,
etc. Thus, product improvement rather than anything else.
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The Marketing Concept want. If the customers want features

like double door in a refrigerator or a
Marketing orientation implies that
separate provision for water cooler in
focus on satisfaction of customer’s
needs is the key to the success of any it, the organisation would produce a
organisation in the market. It assumes refrigerator with these features, would
that in the long run an organisation can price it at a level which the customers
achieve its objective of maximisation are willing to pay and so on. If all
of profit by identifying the needs of marketing decisions are taken with
its present and prospective buyers this prospective, selling will not be any
and satisfying them in an effective problem. It will automatically follow.
way. All the decisions in a firm are The basic role of a firm then is to
taken from the point of view of the ‘identify a need and fill it’. The concept
customers. In other words, customer’s implies that products ad-services are
satisfaction become the focal point of bought not merely because of their
all decision making in the organisation. quality, packing or brand name, but
For example, what product will be because they satisfy a specific need
produced, with what features and at of a customer. A pre-requisite for the
what price shall it be sold, or where success of any organisation, therefore,
shall it be made available for sale will is to understand and respond to
depend on what do the customers customer needs.
Differences in the Marketing Management Philosophies
Philosophies/ Production Product Selling Marketing Societal
Bases Concept Concept Concept Concept Concept
1. Starting Factory Factory Factory Market Market,
Point Society
2. Main Quantity of Quality, Existing Customer Customer
Focus product performance, product needs needs and
features of society’s
product well being
3. Means Availability Product Selling Integrated Integrated
and improve- and marketing marketing
affordability ments promoting
of product
4. Ends Profit through Profit through Profit Profit Profit
volume of product through through through
production quality sales customer customer
volume satisfaction
satisfaction
and social
welfare
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To sum up, the marketing concept is to identify the needs and wants
is based on the following pillars: of the target market and deliver the
(i) I d e n t i f i c a t i o n o f m a r k e t o r desired satisfaction in an effective
customer who are chosen as the and efficient manner so that the long-
target of marketing effort. term well-being of the consumers and
the society is taken care of. Thus,
(ii) Understanding needs and wants
the societal marketing concept is the
of customers in the target market.
extension of the marketing concept
(iii) Development of products or as supplemented by the concern for
services for satisfying needs of the the long-term welfare of the society.
target market. Apart from the customer satisfaction,
(iv) Satisfying needs of target market it pays attention to the social, ethical
better than the competitors. and ecological aspects of marketing.
(v) Doing all this at a profit. There are large number of such issues
that need to be attended.
Thus, the focus of the marketing
concept is on customer needs and the
customer satisfaction becomes the
Functions of Marketing
means to achieving the firms’ objective Marketing is concerned with exchange
of maximising profit. The purpose of of goods and services from producers
marketing is to generate customer to consumers or users in such a way
value at a profit. that maximises the satisfaction of
customers’ needs. From the view point
The Societal Marketing Concept of management function, number of
The marketing concept, as described activities are involved, which have
in the preceeding section cannot be been described as below:
considered as adequate if we look 1. Gathering and Analysing Market
at the challenges posed by social Information: One of the important
problems like environmental pollution, functions of a marketer is to gather
deforestation, shortage of resources, and analyse market information. This
population explosion and inflation. It is is necessary to identify the needs
so because any activity which satisfies of the customers and take various
human needs but is detrimental to the decisions for the successful marketing
interests of the society at large cannot of the products and services. This
be justified. The business orientation is important for making an analysis
should, therefore, not be short-sighted to of the available opportunities and
serve only consumers’ needs. It should threats as well as strengths and
also consider large issues of long-term weaknesses of the organisation and
social welfare, as illustrated above. help in deciding what opportunities
The societal marketing concept can best be pursued by it. For example,
holds that the task of any organisation rapid growth is predicted in several
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areas in the Indian economy, say in 3. Product Designing and

the use of the Internet, market for cell Development: Another important
phones and several other areas. Which marketing activity or decision area
of these areas a particular organisation relates to product designing and
should enter, or in which area should development. The design of the product
it expand, requires a careful scanning contributes to making the product
of the strengths and weaknesses of the attractive to the target customers. A
organisation, which is done with the good design can improve performance of
help of careful market analysis. a product and also give it a competitive
With the growth of computers, advantage in the market. For example,
a new trend has emerged in the when we plan to buy any product say a
collection of market information. motorbike, we not only see its features
More and more companies are using like cost, mileage, etc. but also the
interactive sites on the internet, to design aspects like its shape, style, etc.
gather customer views and opinions, 4. Standardisation and Grading:
before taking important business Standardisation refers to producing
decisions. One of the popular TV goods of predetermined specifications,
News Channel (in Hindi) seeks viewers which helps in achieving uniformity
choice (through SMS) on which of the and consistency in the output.
given four or five main news stories Standardisation ensures the
of the day would be broadcasted as buyers that goods conform to the
detailed story at the prime time, to predetermined standards of quality,
ensure that the viewers get to listen to price and packaging and reduces
the story of their own choice. the need for inspection, testing and
2. Marketing Planning: Another evaluation of the products.
important activity or area of work of Grading is the process of
a marketer is to develop appropriate classification of products into different
marketing plans so that the marketing groups, on the basis of some of its
objectives of the organisation can be important characteristics such as
achieved. For example a marketer of quality, size, etc. Grading is particularly
colour TV, having 10 per cent of the necessary for products which are not
current market share in the country, produced according to predetermined
aims at enhancing his market share specifications, such as in the case
to 20 per cent, in the next three years. of agricultural products, say wheat,
He will have to develop a complete oranges, etc. Grading ensures that
marketing plan covering various goods belong to a particular quality
important aspects including the plan and helps in realising higher prices for
for increasing the level of production, high quality output.
promotion of the products, etc. and 5. Packaging and Labelling: Packaging
specify the action programmes to refers to designing and developing the
achieve these objectives. package for the products. Labelling
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refers to designing and developing the Selection of the brand name plays
label to be put on the package. The an important role in the success
label may vary from a simple tag to of a product.
complex graphics. 7. Customer Support Services: A very
Packaging and labelling have important function of the marketing
become so important in modern day management relates to developing
marketing that these are considered customer support services such as
as the pillars of marketing. Packaging after sales services, handling customer
is important not only for protection complaints and adjustments, procuring
of the products but also serves as credit services, maintenance services,
a promotional tool. Sometimes, the technical services and consumer
quality of the product is assessed by information. All these services aim
the buyers form packaging. We have at providing maximum satisfaction
seen that in the success of many of the to the customers, which is the key to
consumer brands in recent times such marketing success in modern days.
as Lays or Uncle Chips potato wafers Customer support services are very
Clinic Plus shampoos, and Colgate effective in bringing repeat sales from
Toothpaste, etc., packaging has played the customers and developing brand
an important role. loyality for a product.
6. Branding: A very important decision 8. Pricing of Product: Price of
area for marketing of most consumer product refers to the amount of money
products is whether to sell the product customers have to pay to obtain a
in its generic name (name of the product. Price is an important factor
category of the product, say Fan, Pen, affecting the success or failure of a
etc.) or to sell them in a brand name product in the market. The demand
(such as Pollar Fan or Rottomac Pen). for a product or service is related to
Brand name helps in creating product its price. Generally lower the price,
differentiation, i.e., providing basis for higher would be the demand for the
distinguishing the product of a firm product and vice-versa. The marketers
with that of the competitor, which in haveto properly analyse the factors
turn, helps in building customer’s determining the price of a product and
loyality and in promoting its sale. take several crucial decisions in this
The important decision areas in respect, including setting the pricing
respect of branding include deciding objectives, determining the pricing
the branding strategy, say whether strategies, determining the price and
each product will be given a separate changing the prices.
brand name or the same brand name 9. Promotion: Promotion of products
will be extended to all products of the and services involves informing the
company, say Phillips bulbs, tubes customers about the firm’s product,
and television or Videocon washing its features, etc. and persuading them
machine, television, and refrigerator. to purchase these products. The four
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important methods of promotion Jammu and Kashmir and Haryana,

include advertising, Personal Selling, Rajasthan, where it is consumed.
Publicity and Sales Promotion. A A marketing firm has to analyse
marketer has to take several crucial, its transportation needs after taking
decisions in respect of promotion of into consideration various factors
the products and services such as such as nature of the product, cost
deciding the promotion budget, the and location of target market and
promotion mix, i.e., the combination take decisions in respect of mode of
of the promotional tools that will be transportation to be chosen and other
use, the promotion budget, etc. related aspects.
10. Physical Distribution: Managing 12. Storage or Warehousing: Usually
physical distribution is another very there is a time gap between the
important function in the marketing production or procurement of goods
of goods and services. The two major and their sale or use. It may be
decision areas under this function because of irregular demand for the
include (a) decision regarding channels products such as in the case of woollen
of distribution or the marketing garments or Raincoats or there may be
intermediaries (like whole salers, irregular supply because of seasonal
retailers) to be used and (b) physical production such as in the case of
movement of the product from where it is agricultural products (sugarcane,
produced to a place where it is required rice, wheat, cotton, etc.). In order to
by the customers for their consumption maintain smooth flow of products in
or use. The important decision areas the market, there is a need for proper
under physical distribution include storage of the products. Further, there
managing inventory (levels of stock of is a need for storage of adequate stock
goods), storage and warehousing and of goods to protect against unavoidable
transportation of goods from one place delays in delivery or to meet out
to the other. contingencies in the demand. In the
11. Transportation: Transportation process of marketing, the function
involves physical movement of goods of storage is performed by different
from one place to the other. As generally agencies such as manufacturers,
the users of products, particularly wholesalers and retailers.
consumer products are wide spread
and geographically separated from Role of Marketing
the place these are produced, it is
necessary to move them to the place All marketing organisations operate
where it is needed for consumption either to earn profit or pursue some
or use, For example, tea produced other goals such as community
in Assam has to be transported not service, improvement of quality of life
only within the state but to other far or promotion of a cause, say UNICEF
off places like Tamil Nadu, Punjab, working for the welfare of children
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or ‘Helpage’ working for the cause can afford. In other words, marketing
of senior citizens. Whether it is a as a business philosophy helps in
profit organisation or a non-profit serving the customers by satisfying
organisation, marketing plays their needs. It is a well known fact
an important role in achieving its that a satisfied customer is the most
objectives. It helps the individual valuable asset of any firm. Thus,
consumers in raising their standard of marketing plays a crucial role in the
living by making available the products survival and growth of a firm.
and services that satisfy their needs
and wants. It also plays a significant Role in the Economy
role in the economic development of Marketing plays a significant role in the
a nation. The role of marketing in development of an economy. It acts as
different situations may be described a catalyst in the economic development
in brief as follows. of a country and helps in raising the
standards of living of the people.
Role in a Firm Development of a nation can be
The modern concept of marketing judged by the level of standard of
plays a significant role in achieving living of its people. Another important
the objectives of a firm. It emphasises criteria, which is related to the first one,
that customer satisfaction is the is the per capita income of an average
key to the survival and growth of an citizen of a country. On this basis,
organisation in the contemporary an underdeveloped country may be
competitive marketing environment. stated to be one which is characterised
By adopting marketing orientation, by factors like poverty, scarcity of
an organisation whether profit making goods and services, predominance of
or non-profit making, can achieve its agriculture, etc.
goals in the most effective manner. It Marketing can play a significant
helps in focusing the activities of an role in the economic development
organisation on the needs and wants of a nation. It can inspire people to
of the customers. For example, what undertake new activities and to set
products or services will be marketed up enterprises for producing goods
by a firm will depend upon what do its that are needed by the customers.
customers need. Thus, an analysis of Marketing can help in overcoming
the needs of the customers shall be obstacles posed by high prices due to
undertaken in order to decide what imbalances in the levels of production
to produce and sell. The product will and consumption. It can also ensure
then be designed according to the smooth flow of goods through efficient
needs of the potential buyers and be physical distribution arrangements.
made available through the outlets In other words, marketing can
convenient to customers and be priced help in finding out right type of
at a level which the target customers products and services that a firm
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should manufacture, the places be the name (brand name) of the drink;
where it should make such products at what price it will be sold, (at par with
available for sale, the price at which the price at which other competitive
the products should be sold and the brands are sold or below it or above
channels that should be used for it); what distribution network will be
moving the products to the ultimate used to make the product available
place of consumption or use. This (e.g., hotels, restaurants, groceries
linkage between the business and shops, kiosks selling cigarette, paan,
consumption centres, accelerates the etc.) to the buyers whether the new
economic activity leading to higher soft drink will be promoted by putting
incomes, more consumption and up advertisements in newspaper or
increased savings and investment. magazine or on radio or television; or
say if newspaper, whether in a local
Marketing Mix newspaper or a national daily; whether
As stated in an earlier section, the in a paper of regional language or an
process of marketing involves creating English daily, etc. is decided at the
a market offering, to satisfy the needs level of marketing manager of the firm.
and wants of the present and potential However, there are certain other
buyers. The real question is how to factors which affect the decision but
create a market offering. Let us say a are not controllable at the firm’s
profitable business opportunity is seen level. These are called environmental
by some firm in the field of producing variables. For example, the political
soft drinks. To develop and market a factors such as the government policy
new brand of soft drinks, a number on whether to allow any technical or
of important decisions will have to financial collaboration in the area of
be taken for example whether to go soft drinks, production or economic
for any collaboration with a foreign factors such as rate of inflation
manufacturer of soft drinks, whether prevailing in a given period or a credit
to produce for the local market or for a policy of the central bank affecting
wider market, what will be the features the total availability of money in the
of the new product, and so on. market, all of which affect the sale
There are large number of factors of a particular product but can not
affecting marketing decisions. These be controlled or influenced by the
can broadly be divided into two decisions at the level of a firm. To be
categories: (i) controllable factors, and successful, the decisions regarding
(ii) non-controllable factors. Controllable ‘controllable factors’ are to be taken
factors are those factors which can be keeping the environmental variables
influenced at the level of the firm. In into consideration.
the previous illustration, for example, The controllable variables become
whether the drink will be packed in marketing tools, which are constantly
glass bottles or plastic cans; what will shaped and reshaped by marketing
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managers, to achieve marketing Elements of Marketing Mix

success. For example, a firm can
The marketing mix consists of various
reshape a market offering by bringing elements, which have broadly been
in a change in any of the variable classified into four categories, popularly
under its own control, say introducing known as four Ps of marketing. These
a change in the price or promotion offer are: (i) Product, (ii) Price, (iii) Place,
or product features or channel used to and (iv) Promotion. These are briefly
make the product available to buyers. discussed as follows:
Thus, from a number of alternatives
1. Product: Product means goods
available a firm chooses a particular or services or ‘anything of value’,
combination to develop a market which is offered to the market for
offering. The combination of variables sale. For example, Hindustan lever
chosen by a firm to prepare its market offers number of consumer products
offering is also called marketing mix. like toiletries (Close-Up toothpaste,
Thus, marketing mix is described as Lifebuoy soap, etc.), detergent powder
the set of marketing tools that a firm (Surf, Wheel), food products (Refined
uses to pursue its marketing objectives Vegetable Oil); Tata offers Tata Steel,
in a target market. Trucks, Salt and a large number
Marketing Mix: Elements
Product Price
Product Mix Price Level
Product Quality Margins
New Product Pricing Policy
Design and Development Pricing Strategies
Packaging Price Change
Labelling
Branding
Place Promotion
Channel Strategy Promotion Mix
Channel Selection Advertising
Channel Conflict Personal Selling
Channel Cooperation Sales Promotion
Physical Distribution Publicity
Public Relations
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of other products; LG Electronics 3. Place: Place or Physical Distribution

offers televisions, refrigerators, colour include activities that make firm’s
monitors for computers, etc; Amul products available to the target
offers a number of food products customers. Important decision areas
(Amul milk, ghee, butter, cheese, in this respect include selection of
chocolates, etc.). dealers or intermediaries to reach the
The concept of product relates customers, providing support to the
to not only the physical product as intermediaries (by way of discounts,
mentioned in the above examples but promotional campaigns, etc.). The
also the benefits offered by it from intermediaries in turn keep inventory
customer’s view point (for example of the firm’s products, demonstrate
toothpaste is bought for whitening them to potential buyers, negotiate
teeth, strengthening gums, etc.). price with buyers, close sales and
The concept of product also include also service the products after the
the extended product or what is sale. The other decision areas relate
offered to the customers by way to managing inventory, storage and
of after sales services, handling warehousing and transportation of
complaints, availability of spare parts goods from the place it is produced to
etc.These aspects are very important, the place it is required by the buyers.
particularly in the marketing of 4. Promotion: Promotion of products
consumer durable products (like and services include activities that
Automobiles, Refrigerators, etc.). The communicate availability, features,
important product decisions include merits, etc. of the products to the
deciding about the features, quality, target customers and persuade them to
packaging, labelling and branding of buy it. Most marketing organisations,
the products. undertake various promotional
2. Price: Price is the amount of money activities and spend substantial
customers have to pay to obtain amount of money on the promotion
the product. In case of most of the of their goods through using number
products, level of price affects the level of tools such as advertising, personal
of their demand. The marketers have selling and sales promotion techniques
not only to decide about the objectives (like price discounts, free samples,
of price setting but to analyse the etc.). A large number of decisions
factors determining the price and fix a are to be taken in each of the area
price for the firm’s products. Decisions specified above. For example, in the
have also to be taken in respect of respect of advertising it is important
discounts to customers, traders and to decide about the message, the
credit terms, etc. so that customers media to be used (example, print-
perceive the price to be in line with the media–newspaper, magazines, etc. the
value of the product. objections of customers, etc.).
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The success of a market offer will customer needs. Besides physical

depend on how well these ingredients objects, we also include services, ideas,
are mixed to create superior value for persons, and places in the concept of
the customers and simultaneously product. Thus, product may be defined
achieve their sale and profit objectives. as anything that can be offered to a
Let us say a firm would like to achieve market to satisfy a want or need. It is
necessary volume of sale at a cost that offered for attention, acquisition, use
will permit a desired level of profit. or consumption.
But so many alternative mixes can From the customer’s point of view,
be adopted by a firm to achieve this a product is a bundle of utilities, which
objectives. The issue before a firm then is purchased because of its capability
is to decide what would be the most to provide satisfaction of certain need.
effective combination of elements to A buyer buys a product or service for
achieve the given objectives. what it does for her or the benefit it
provides to her. There can be three
Product types of benefits a customer may
seek to satisfy from the purchase of a
In common parlance, the word
product, viz., (i) functional benefits, (ii)
‘product’, is used to refer only to the
psychological benefits, and (iii) social
physical or tangible attributes of a
benefits. For example, the purchase of
product. For example, we say we have
a motorcycle provides functional utility
bought a car or a pen or a Cell phone
of transportation, but at the same
or a tractor.
time satisfies the need for prestige and
Our decision to buy a product
esteem and provides social benefit by
is not only affected by its physical
the way of acceptance from a group,
qualities, but also by certain non-
by riding a motorbike. Thus, all these
tangible and psychological factors, e.g.,
aspects should be considered while
brand name, reputation, guaranty,
planning for a product.
packaging etc. Let us say, when a
It is customer for companies to
person buys a car, he/she is not
review the progress of their present
just buying a few nuts and bolts,
products and constantly look for
an engine, four wheels and so on.
opportunities of diversifying into
Rather he/she is buying a means of
never areas.
transport, a status symbol, guarantees
and warranties accompanying the
Let Us Do It
product, image of the company and
many other such attributes. Thus, Enlist the functional, psychological
in marketing, product is a mixture and social benefits that can
of tangible and intangible attributes, be achieved by the purchase of
which are capable of being exchanged (i) Personal computer, (ii) Colour
for a value, with ability to satisfy television, (iii) Wrist watch.
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Classification of Products important factors: (A) the extent of

shopping efforts involved, and (B)
Products may broadly be classified
durability of the product. These have
into two categories — (i) consumers’
been explained as below:
products, and (ii) industrial products.
The consumer products may further A. Shopping Efforts Involved
be classified into different groups, as On the basis of the time and effort
detailed below: buyers are willing to spend in the
purchase of a product, we can classify
Consumer Products the consumer product into the following
Products, which are purchased by three categories as here under:
the ultimate consumers or users for 1. Convenience Products: Those
satisfying their personal needs and consumer products, which are
desires are referred to as consumer purchased frequently, immediately and
products. For example, soap, edible with least time and efforts are referred
oil, eatables, textiles, toothpaste, fans, to as convenience goods. Examples
etc. which we use for our personal and of such products are cigarettes,
non-business use are consumer goods. ice creams, medicines, newspaper,
The consumer products have stationery items toothpaste. etc. These
been classified on the basis of two products have low unit-value and are
Products
Consumer Products Industrial Products
Durability Basis Shopping Efforts Involved
Non- Durable Services Conven- Shopping Speciality

Durable ience Products Products
Products
Classification of Products
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bought in small qualities. Some of (e) The competition in these products

the important characteristics of such is high as the supply is greater
products are: than the demand. The marketers
(a) These products are purchased at have, therefore, to heavily advertise
convenient locations, with least for these products; and
efforts and time; (f) Sales promotion schemes or short-
(b) Convenience products have a term incentives such as sales
regular and continuous demand, contests, discount offers, etc play
as these generally come under the an important role in the marketing
category of essential products; of such products.
(c) These products have small unit 2. Shopping Products: Shopping
of purchase and low prices. For products are those consumer goods, in
example the eggs are sold at Rs. the purchase of which buyers devote
28 per dozen and the customers considerable time, to compare the
purchase them in small numbers; quality, price, style, suitability, etc.,
(d) C o n v e n i e n c e p r o d u c t s h a v e at several stores, before making final
standardised price as most of these purchase. Some of the examples of
products are branded products; shopping products are clothes, shoes,
Convenience Products
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jewellery, furniture, radio, television, persuasive effort is needed to

etc. The important characteristics of convince the buyers to purchase
shopping products are as below: them.
(a) T h e s h o p p i n g p r o d u c t s a r e 3. Speciality Products: Speciality
generally of durable nature, i.e., products are those consumer goods
they normally survive many uses; which have certain special features
(b) The unit price as well as profit because of which people make special
margin of shopping products is efforts in their purchase. These
generally high; products are such, which have reached
(c) As these products have high unit a brand loyalty of the highest order,
price, customers compare the with a significant number of buyers.
products of different companies The buyers are willing to spend a lot
before making selection; of time and efforts on the purchase of
Shopping Products
(d) Purchases of shopping products such products. For example, if there

are generally pre-planned and is a rare collection of artwork or of
there is little degree of impulse antiques, some people may be willing to
buying in these products; and spend a lot of shopping effort and travel
(e) R e t a i l e r s g e n e r a l l y p l a y a n long distance to buy such products. In
important role in the sale our day-to-day life, we see people going
of shopping products as lot of to a particular hair-cutting saloon or
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restaurant, or a tailor. The demand B. Durability of Products

for these goods is relatively inelastic, On the basis of their durability,
i.e., even if the price is increased, the the consumer products have been
demand does not come down. Some classified into three categories—
of the important characteristics of the Durable, Non-durable and Services.
speciality products may be summed 1. N o n - d u r a b l e P r o d u c t s : The
up as follows: consumer products which are normally
(a) The demand for speciality products consumed in one or few uses are
is limited as relatively small number called non-durable products. For
of people buy these products; example, we purchase products like
(b) These products are generally costly toothpaste, detergents, bathing soap
and their unit price is very high; and stationary products etc. From
the marketing point of view, these
(c) These products are available for products generally command a small
sale at few places as the number of margin, should be made available in
customers is small and are willing many locations and need to be heavily
to take extra efforts in the purchase advertised.
of these products;
2. Durable Products: Those tangible
(d) An aggressive promotion is required consumer products which normally
for the sale of speciality products, survive many uses, for example,
in order to inform people about refrigerator, radio, bicycle, sewing
their availability, features, etc.; and machine and kitchen gadgets are
(e) After sales services are very referred to as durable products. These
important for many of the speciality goods are generally used for a longer
products. period, command a higher per unit
Speciality Products
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margin, require greater personal- other products. The examples of such

selling efforts, guarantees and after products are raw materials, engines,
sales services, on the part of the seller. lubricants, machines, tools, etc. In
3. Services: The durable and non- other words, industrial products are
durable goods are tangible in the sense meant for non-personal and business
that these have a physical existence use for producing other products.
and can be seen and touched. Services The market for industrial products
are intangible in form. By services consists of manufacturers, transport
we mean those activities, benefits or agencies, banks and insurance
satisfactions, which are offered for companies, mining companies
sale, e.g., dry cleaning, watch repairs, and public utilities. The important
hair cutting, postal services, services characteristics of industrial products
offered by a doctor, an architect and are given below:
a lawyer. Some of the distinguishing 1. Number of Buyers: As compared to
characteristics of services are as the consumer products, the numbers
follows: of buyers of industrial products are
(a) By their very nature, services are limited. For example, sugarcane is
intangible, i.e., we can not see, feel purchased by few producers of sugar,
or touch them; but sugar, which is a consumer
(b) A service is inseparable from its product, is purchased by crores of
source. That means we cannot people in our country.
separate the service from the 2. Channel Levels: Because of
person providing the service; limited number of buyers, the sale of
(c) The services cannot be stored. They industrial products is generally made
are highly perishable. For example, with the help of shorter channels of
if a tailor does not work for one distribution, i.e., direct selling or one
week, the services he would have level channel.
provided during such period go 3. Geographic Concentration:
waste; and Because of location of industries at
(d) Services are highly variable as certain points or regions, industrial
their type and quality depends on markets are highly concentrated,
the person providing them. That geographically. For instance, the
is why, there is a difference in the demand for power loom comes from
extent of satisfaction we get from Bombay, Sholapur, Bangalore,
the services provided by different etc. where the textile industry is
people. concentrated in our country.
4. Derived Demand: The demand for
Industrial Products industrial products is derived from the
Industrial products are those products, demand for consumer products. For
which are used as inputs in producing example, the demand for leather will
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be derived from demand for shoes and Classification

other leather products in the market.
The industrial goods are classified into
5. Role of Technical Considerations: the following major categories:
Technical considerations assume
(i) Materials and Parts: These
greater significance in the purchase
include goods that enter
of industrial products because these
the manufacture’s products
products are complex products, bought
completely. Such goods are of
for use in business operations.
two types: (a) Raw material:
6. Reciprocal Buying: Some big including farm products like
companies from basic industries like cotton, sugar cane, oil seed
oil, steel, rubber, and medicines resort and natural products such as
to the practice of reciprocal buying. minerals (say crude petroleum,
For example, Ashok Leyland may buy iron ore), fish and lumber; and
tyres and tubes from MRF, which in (b) manufactured material and
turn may buy trucks from Leyland, parts. These are again of two
whenever it feels the need for the types – component materials
same. like glass, iron, plastic and
7. Leasing Out: A growing trend in component parts such as tyre,
industrial product market is to lease electric bulb, steering, and
out rather than to purchase the battery.
products on outright basis because of (ii) Capital Items: These are such
the heavy price of these products. goods that are used in the
Industrial Goods
Materials and Capital Items Supplies and

Parts Business Services
Raw Manufactured Installations Equipments Maintanence Operating

Material Material and Parts and Repair Supplies
items
Farm Natural Component Component

Products Products Material Parts
Classification of Industrial Goods
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production of finished goods. products will be marketed under a

These include: (a) installations brand name or a generic name. Generic
like elevators, mainframe name refers to the name of the whole
Computers, and (b) equipments class of the product. For example, a
like Hand Tools, Personal book, a wristwatch, tyre, camera, toilet
Computer, Fax Machines, etc. soap, etc. We know that a camera is
(iii) Supplies and Business Services: a lens surrounded by plastic or steel
These are short lasting goods from all sides and having certain other
and services that facilitate features such as a flash gun and so on.
developing or managing Similarly book is a bunch of papers,
the finished product. These which are in a bound form, on which
include: (a) maintenance and some useful information about a
repair items like Paint, Nails, subject is printed. Thus, all products
etc., and (b) operating supplies having these characteristics would be
like Lubricant, Computer called by the generic name such as
Stationary, Writing Paper, etc. camera or book.
If products were sold by generic
The difference in the nature of names, it would be very difficult for the
consumer products and industrial marketers to distinguish their products
products is important because of the from that of their competitors. Thus,
fact that the buyers of the two sets most marketers give a name to their
of products have different buying product, which helps in identifying and
motives and have different attitudes distinguishing their products from the
and use different approaches in the competitors’ products. This process of
purchase of the products. For example, giving a name or a sign or a symbol
an industrial buyer is expected to etc., to a product is called branding.
be more rational who will study the The various terms relating to branding
cost of different available brands, are as follows:
their technical specifications and the
1. B r a n d : A b r a n d i s a n a m e ,
goodwill of the supplier. Whereas, the
term, sign, symbol, design or some
buyer of a consumer product may be
combination of them, used to identify
more impulsive and emotional who is
the products—goods or services of
susceptible to advertising and various
one seller or group of sellers and to
sales promotion schemes.
differentiate them from those of the
competitors. For example, some of the
Branding common brands are Bata, Lifebuoy,
One of the most important decisions Dunlop, and Parker. Brand is a
that a marketer has to take in the area comprehensive term, which has two
of ‘product’ is in respect of branding. components—brand name and brand
He has to decide whether the firm’s mark.
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2. Brand Name: That part of a brand, Though branding adds to the cost
which can be spoken, is called a brand e.g., to the cost of packaging, labelling,
name. In other words, brand name is legal protection, and promotion, it
the verbal component of a brand. provides several advantages to the
3. Brand Mark: That part of a brand sellers as well as the consumers.
which can be recognised but which
Advantages to the Marketers
is not utterable is called brand mark.
It appears in the form of a symbol, (i) E n a b l e s M a r k i n g P r o d u c t
design, distinct colour scheme or Differentiation: Branding helps a
lettering. firm in distinguishing its product
4. Trade Mark: A brand or part of a from that of its competitors. This
brand that is given legal protection is enables the firm to secure and
called trademark. The protection is control the market for its products.
given against its use by other firms. (ii) Helps in Advertising and Display
Thus the firm, which got its brand Programmes: A brand aids a firm
registered, gets the exclusive right for in its advertising and display
its use. In that case, no other firm can programmes. Without a brand
use such name or mark in the country. name, the advertiser can only
Perspectives of Brands and Branding

Branding is creating a corporate brand identity for consumer, and getting that
brand identity imprinted on the minds of consumer, and this requires brand
positioning and brand management.
A brand today is an entity (product. service, company, person, technology, etc.),
that offers a set of value exchange measures between what the owner/market
seeks and the price he is willing to pay for.
It has always seemed to me that your brand is formed primarily, not by what your
company says about itself, but what the company does.
— Jeff Bezos
A product is something made in a factory; a brand is something that is bought
by the customer. A product can be copied by a competitor; a brand is unique. A
product can be quickly outdated; a successful brand is timeless.
— Stephen King
Your brand’s power lies in dominance. It is better to have 50% of one market,
instead of 10% of five markets.
— Al Ries
Your brand image is primarily an emotional construct. Emotion is probably
always more powerful in swaying people than reason. but people like to be able
to rationalise their choices.
— Drayton Bird
Source: Adopted from Effective Executive, 2006
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create awareness for the generic example, if a person is satisfied with

product and can never be sure of a particular brand of a product, say
the sale for his product. tea leaves or detergent soap, he
(iii) Differential Pricing: Branding need not make a close inspection
enables a firm to charge different every time, he has to buy that
price for its products than that product. Thus, branding greatly
charged by its competitors. This is facilitates repeat purchase of the
possible because if customers like products.
a brand and become habitual of (ii) Ensures Quality: Branding ensures
it, they do not mind paying a little a particular level of quality of the
higher for it. product. Thus, whenever there is
(iv) Ease in Introduction of New Product: any deviation in the quality, the
If a new product is introduced customers can have recourse to
under a known brand, it enjoys the manufacturer or the marketer.
the reflected glory of the brand and This builds up confidence of the
is likely to get off to an excellent customers and helps in increasing
start. Thus, many companies with his level of satisfaction.
established brand names decide (iii) Status Symbol: Some brands
to introduce new products in the become status symbols because
same name. For example, Food of their quality. The consumers of
Specialties Ltd. had a successful those brands of products feel proud
brand Maggie (Noodles), it extended of using them and adds to the level
this name to many of its new of satisfaction of the customers.
products introduced such as Tomato
Ketchup, Soups, etc. Similarly Characteristics of Good Brand Name
Samsung extended the brand name Choosing the right brand name is
of its Television to Washing Machines not an easy decision. What makes
and other durable products, like this decision important is the fact
Microwave oven. that once a brand name is chosen
and the product is launched in the
Advantages to Customers
market, changing the brand name is
(i) Helps in Product Identification: very difficult. So, getting it right the
Branding helps the customers first time is very essential. Following
in identifying the products. For are some of the considerations, which
Activity
Visit a retail store in your locality and prepare a list of the (i) number of brands
available, (ii) the price of each brand, and (iii) most selling brand in respect of any
three consumer non-durable products such as Toilet Soap, Detergent Powder,
Cooking, Oil, Toothpaste, Tea, etc. used in your family. Which brand of each of
the product selected is used in your family? Give reasons.
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should be kept in mind while choosing are added to the product line.
a brand name. (vi) It should be capable of being
(i) The brand name should be registered and protected legally.
short, easy to pronounce, spell,
(vii) C h o s e n n a m e s h o u l d h a v e

recognise and remember e.g.,
staying power i.e., it should not
Ponds, VIP, Rin, Vim, etc.
get out of date.
(ii) A brand should suggest the
product’s benefits and qualities. Packaging
It should be appropriate to the
product’s function. One of the most important
developments affecting the business
(iii) A b r a n d n a m e s h o u l d b e

world in recent years has been in the
distinctive.
area of packaging. Many products,
(iv) The brand name should be which we thought could never lend
adaptable to packing or labelling themselves to packing because of
requirements, to different their nature, have been successfully
advertising media and to different packed e.g., Pulses, Ghee, Milk, Salt,
languages. Cold Drinks, etc. Packaging refers to
(v) T h e b r a n d n a m e s h o u l d the act of designing and producing
be sufficiently versatile to the container or wrapper of a product.
accommodate new products, which Packaging plays a very important role
Levels of Packaging
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in the marketing success or failure Importance of Packaging

of many products, particularly the
Packaging has acquired great
consumer non-durable products. In
significance in the marketing of goods
fact if one makes an analysis of the
and services, because of following
reasons for the success of some of reasons:
the successful products in the recent
past, it can be noted that packaging (i) R i s i n g S t a n d a r d s o f H e a l t h
and Sanitation: Because of the
has played its due role. For example,
increasing standards of living
it was one of the important factors in
in the country, more and more
the success of products like Maggie’s
people have started purchasing
Noodles, Uncle Chips or Crax wafers.
packed goods as the chances of
adulteration in such goods are
Levels of Packaging
minimised.
There can be three different levels of (ii) Self Service Outlets: The self-service
packaging. These are as below: retail outlets are becoming very
1. Primary Package: It refers to the popular, particularly in major cities
product’s immediate container. In and towns. Because of this, some
some cases, the primary package is of the traditional role assigned
kept till the consumer is ready to use to personal selling in respect of
the product (e.g., plastic packet for promotion has gone to packaging.
socks); whereas in other cases, it is (iii) Innovational Opportunity: Some
kept throughout the entire life of the of the recent developments in the
product (e.g., a toothpaste tube, a area of packaging have completely
match box, etc.). changed the marketing scene
2. Secondary Packaging: It refers to in the country. For example,
additional layers of protection that are milk can now be stored for 4-5
kept till the product is ready for use, days without refrigeration in
e.g., a tube of shaving cream usually the recently developed packing
comes in a card board box. When materials. Similarly, in the area of
consumers start using the shaving pharmaceuticals, soft drinks, etc.,
cream, they will dispose off the box lots of new innovations have come
but retain the primary tube. in respect of packaging. As a result,
3. Transportation Packaging: It refers the scope for the marketing of such
to further packaging components products has increased.
necessary for storage, identification (iv) Product Differentiation: Packaging
or transportation. For example a is one of the very important means
toothpaste manufacturer may send the of creating product differentiation.
goods to retailers in corrugated boxes The colour, size, material etc., of
containing 10, 20, or 100 units. package makes real difference
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in the perception of customers than advertising. In self-service

about the quality of the product. stores, this role of packaging
For example, by looking at the becomes all the more important.
package of a product say Paint
or Hair Oil, one can make some Labelling
guess about quality of the product A simple looking but important task
contained in it. in the marketing of goods relates to
designing the label to be put on the
Functions of Packaging package. The label may vary from a
As stated above, packaging performs a simple tag attached to the product
number of functions in the marketing (such as in case of local unbranded
of goods. Some of the important products like sugar, wheat, pulses,
functions are as follows: etc.) indicating some information
about the quality or price, to complex
(i) Product Identification: Packaging
graphics that are part of the package,
greatly helps in identification of the
like the ones on branded products.
products. For example, Colgate in
Lables are useful in providing detailed
red colour, or Ponds cream jar can
information about the product, its
be easily identified by its package.
contents, method of use, etc. The
(ii) Product Protection: Packaging various functions performed by a label
protects the contents of a product are as follows:
from spoilage, breakage, leakage, 1. Describe the Product and Specify
pilferage, damage, climatic effect, its Contents: Let us look at some of
etc. This kind of protection the labels of the products used by us
is required during storing, in our day to day life. The label on
distribution and transportation of the package of a local tea company
the product. describes the company as ‘Mohini
(iii) Facilitating Use of the Product: Tea Company, an ISO 9001:200C
The size and shape of the package Certified Company’; a popular brand
should be such that it should be of Prickly Heat Powder, describes
convenient to open, handle and how the product provides relief from
use for the consumers. Cosmetics, prickly heat and controls bacterial
medicines and tubes of toothpastes growth and infection, giving caution
are good examples of this. forbidding its application on cuts
(iv) Product Promotion: Packaging is and wounds. Package of fast food
also used for promotion purposes. products like ready to eat Dosa, Idli
A startling colour scheme, or Noodles, describe the procedure of
photograph or typeface may be cooking these products; the Package of
used to attract attention of the a toothpaste brand lists the ‘Ten Teeth
people at the point of purchase. and Gum Problems’, which the product
Sometimes it may work even better claims to fight with its ‘Complete
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Germicheck Formula’; the Package attention and give reason to purchase.

of a brand of Coconut Oil describes We see many product labels providing
the product as pure coconut oil with promotional messages for example, the
Heena, Amla, Lemon and specifies how pack of a popular Amla Hair Oil states,
these are good for Hair. Thus, one of ‘Baalon mein Dum, Life mein Fun’.
the most important functions of labels The label on the package of a brand
is to describe the product, its usage, of Detergent Powder says, ‘Keep cloth
cautions in use, etc. and specify its look good and your machine in top
contents. condition’. Labels play important role
2. Identification of the Product or in sales promotional schemes launched
Brand: The other important function by companies. For example the label
performed by labels is to help in on the package of a Shaving Cream
identifying the product or brand. mentions, ‘40% Extra Free’ or package
For example, the brand name of any of a toothpaste mentioning, ‘Free
product, say Biscuits or Potato Chips Toothbrush Inside’, or ‘Save Rs15’.
imprinted on its package helps us to 5. Providing Information Required
identify, from number of packages, by Law: Another important function
which one is our favourite brand. Other of labeling is to provide information
common identification information required by law. For example,
provided by the labels include name packaged food articles must have list
and address of the manufacturer, net of ingredients declaration regarding
weight when packed, manufacturing vegetarian or non-vegetarian food
date, maximum retail price and Batch additives and date of manufacturing or
number. packing on the label. Such information
3. Grading of Products: Another is required on processed foods, drugs
important function performed by and tobacco products. In case of
labels is to help grading the products hazardous or poisonous material,
into different categories. Sometimes appropriate safety-warning need to be
marketers assign different grades to put on the label.
indicate different features or quality
Thus, labels perform number
of the product. For example, a popular
of important functions relating to
brand of Hair Conditioners comes in
communicating with the potential
different categories for different hair,
buyers and promoting the sale of the
say for ‘normal hair’ and for other
products.
categories. Different type of tea is sold
by some brands under Yellow, Red and
Green Label categories. Pricing
4. Helps in Promotion of Products: When a product is bought, some
An important function of label is to money is paid for it. This money
aid in promotion of the products. A represent the sum of values that
carefully designed label can attract consumers exchange for the benefit
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of having or using the prdocut and is This includes the cost of producing,
referred to as the price of the product. distributing and selling the product.
Similarly, money paid for the services The cost sets the minimum level or the
such as fare for the transport service, floor price at which the product may
premium for an insurance policy, and be sold. Generally all marketing firms
fee to a doctor for his medical advise strive to cover all their costs, at least
represent the price of these services. in the long run. In addition, they aim
Price may therefore be defined as the at earning a margin of profit over and
amount of money paid by a buyer (or above the costs. In certain circumstance,
received by a seller) in consideration of for example, at the time of introducing
the purchase of a product or a service. a new product or while entering a new
Pricing occupies an important market, the products may be sold
place in the marketing of goods and at a price, which does not cover all
services by a firm. No product can the costs. But in the long run, a firm
be launched without a price tag or cannot survive unless at least all its
at least some guidelines for pricing. costs are covered.
Pricing is often used as a regulator of There are broadly three types of
the demand of a product. Generally, if costs: viz., Fixed Costs, Variable Costs
the price of a product is increased, its and Semi Variable Costs. Fixed costs
demand comes down, and vice-versa. are those costs, which do not vary with
Pricing is considered to be an the level of activity of a firm say with
effective competitive weapon. In the the volume of production or sale. For
conditions of perfect competition, example, rent of a building or salary
most of the firms compete with each of a sales manager remains the same
other on the basis of this factor. It is whether 1000 units or 10 units are
also the single most important factor produced in a week.
affecting the revenue and profits of a Those costs which vary in direct
firm. Thus, most marketing firms give proportion with the level of activity
high importance to the fixation of price are called variable costs. For example,
for their products and services. the costs of raw material, labour and
power are directly related with the
Factors Affecting Price quantity of goods produced. Let us say,
Determination if the cost of wood for manufacturing
one chair comes to Rs.100 the cost of
There are number of factors which wood for 10 chairs would be Rs. 1000.
affect the fixation of the price of a Obviously, there will be no cost of wood
product. Some of the important factors if no chair is produced.
in this regard are discussed as below: Semi variable costs are those costs
1. Product Cost: One of the most which vary with the level of activity
important factor affecting price but not in direct proportion with it.
of a product or service is its cost. For example, compensation of a sales
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person may include a fixed salary of better position to fix higher prices.
say Rs. 10,000 plus a commission of 3. Extent of Competition in the
5 per cent on sales. With an increase Market: Between the lower limit and
in the volume of sales, the total the upper limit where would the price
compensation will increase but not in settle down? This is affected by the
direct proportion with the change in nature and the degree of competition.
the volume of sale. The price will tend to reach the upper
Total Costs are the sum total of the limit in case there is lesser degree of
fixed, variable and semi-variable costs competition while under conditions of
for the specific level of activity, say free competition, the price will tend to
volume of sales or quantity produced. be set at the lowest level.
2. The Utility and Demand: While Competitors’ prices and their
the product costs set the lower limits anticipated reactions must be
of the price, the utility provided by the considered before fixing the price
product and the intensity of demand of of a product. Not only the price but
the buyer sets the upper limit of price, the quality and the features of the
which a buyer would be prepared competitive products must be examined
to pay. In fact the price must reflect carefully, before fixing the price.
the interest of both the parties to the 4. Government and Legal Regulations:
transaction—the buyer and the seller. In order to protect the interest of public
The buyer may be ready to pay up to against unfair practices in the field of
the point where the utility from the price fixing, Government can intervene
product is at least equal to the sacrifice and regulate the price of commodities.
made in terms of the price paid. The Government can declare a product
seller would, however, try to at least as essential product and regulate its
cover the costs. According to the law of price. For example, the cost of a drug
demand, consumers usually purchase manufactured by a company having
more units at a low price than at a monopoly in the production of the same
high price. come to Rs 20 per strip of ten and the
The price of a product is affected buyer is prepared to pay any amount
by the elasticity of demand of the for it, say Rs 200. In the absence of any
product. The demand is said to be competitor, the seller may be tempted to
elastic if a relatively small change in extort the maximum amountof Rs 200
price results in large change in the for the drug and intervene to regulate
quantity demanded. Here numerically, the price. Usually in such a case, the
the price elasticity is greater than one. Government does not allow the firms to
In the case of inelastic demand, the charge such a high price and intervene
total revenue increases when the price to regulate the price of the drug. This can
is increased and goes down when the be done by the Government by declaring
price is reduced. If the demand of a the drug as essential commodity and
product is inelastic, the firm is in a regulating its price.
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5. Pricing Objectives: Pricing objectives 6. Marketing Methods Used: Price

are another important factor affecting fixation process is also affected by
the fixation of the price of a product or a other elements of marketing such
service. Generally the objective is stated as distribution system, quality of
to be maximise the profits. But there salesmen employed, quality and
is a difference in maximising profit in amount of advertising, sales promotion
the short run and in the long run. If efforts, the type of packaging, product
the firm decides to maximise profits in differentiation, credit facility and
the short run, it would tend to charge customer services provided. For
maximum price for its products. But if example, if a company provides free
it is to maximise its total profit in the home delivery, it has some of flexibility
long run, it would opt for a lower per in fixing prices. Similarly, uniqueness
unit price so that it can capture larger of any of the elements mentioned
share of the market and earn greater above gives the company a competitive
profits through increased sales. freedom in fixing prices of its products.
Apart from profit maximisation,
the pricing objectives of a firm may Physical Distribution
include:
(a) Obtaining Market Share Leadership: The fourth important element
If a firms objective is to obtain larger of marketing mix is the physical
share of the market; it will keep the distribution of products and services.
price of its products at lower levels It is concerned with making the goods
so that greater number of people are and services available at the right
attracted to purchase the products; place, so that people can purchase
(b) Surviving in a Competitive Market: the same. There are two important
If a firm is facing difficulties in decisions relating to this aspect—
surviving in the market because of one regarding physical movement of
intense competition or introduction goods from producers to consumers
of a more efficient substitute or users and two, regarding the
by a competitor, it may resort channels or using intermediaries in
to discounting its products or the distribution process. These are
running a promotion campaign to described as follows:
liquidate its stock; and
Channels of Distribution
(c) A t t a i n i n g P r o d u c t Q u a l i t y
Leadership: In this case, normally In case of large number of consumer
higher prices are charged to cover products, the potential buyers are
high quality and high cost of scattered over a wide geographical
Research and Development. area. In order to contact these
Thus, the price of a firm’s products people efficiently and effectively, it is
and services is affected by the pricing important to take the help of number
objective of the firm. of intermediaries as contacting them
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Channels of Distribution used for a Consumer Product
directly may not be cost effective and goods or services as it moves from
may be difficult even otherwise. For the producers to the consumers. In
example, a manufacturer of detergent other words, channel refers to a team
powder in Gujarat would find it very of merchants, agents, and business
difficult to directly approach customers, institutions that combine physical
say in Delhi, Thiruvananthapuram, movement and title movement of
Bhuvaneshwar, Hyderabad Srinagar products to reach specific destinations.
and other far off places. Therefore, Mostly goods and services are
he/she would supply a large quantity distributed through a network of
of his/her product to a big merchant, marketing channels. For example we
say in Hyderabad. This big merchant buy merchandise of our need such
would then supply detergent powder as salt, bulb, tea, sugar, soap, paper,
to relatively small sellers in various books, flour, etc., from retail sellers.
towns of Hyderabad. These sellers The channels bring economy of
would, in turn, resell the goods to effort. This can be better understood
customers. In this manner, goods with the help of an example. Let us
are distributed from the place of say you have to buy four things,
production to the place of consumption. viz., Sugar, Bulb, Coffee and Ink.
These people, institutions, merchants, Most probably you would walk into a
and functionaries, who take part General Merchant’s Shop and buy all
in the distribution function, are the articles form one place. Imagine
called ‘Channels of Distribution’. what would happen if there were no
(see figure on channels) middlemen or general merchants
Channels of Distribution are set of available. In that case you would have
firms and individuals that take title, or to buy directly from the manufacturers
assist in transferring title, to particular of these products. You will have to
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make four contacts, each with the Functions of Distribution

producer of Sugar, Bulb, Coffee and Channels
Ink. Compared to this, there was Channels of distribution smoothen the
only one contact when all the things flow of goods by creating possession,
were bought from the same general place and time utilities. They facilitate
merchant. Now let us assume that movement of goods by overcoming
there are four customers needing various time, place and possession
the same four articles. In all sixteen barriers that exist between the
contacts would have to be made. In manufacturers and consumers. The
case middleman are used, as shown important functions performed by
in the part II of the figure, only eight middlemen are as follows:
contacts could be needed. Thus, use
1. Sorting: Middlemen procure
of middlemen brings economy of effort.
supplies of goods from a variety of
This situation is illustrated in the
sources, which is often not of the same
preceeding figure.
quality, nature, and size. For example,
Apart from the economy of
a wholesaler of cashew nuts may
effort, middlemen help to cover large
procure a large quantity from different
geographical area and bring efficiency
cashew nut producing areas, which
in distribution, including transportation,
would contain nuts of varied quality
storage and negotiation. They bring
and sizes. He/She then sorts the nuts
convenience to customers as they
into homogenous groups on the basis
make various items available at one
of the size or quality.
store and also serve as authentic
source of market information as they 2. Accumulation: This function
are in direct contact with the customer. involves accumulation of goods into
Economy of Efforts with the use of Channels
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larger homogeneous stocks, which price, quality, guarantee and other

help in maintaining continuous flow related matters with customers so
of supply. that transfer of ownership is properly
3. Allocation: Allocation involves affected.
breaking homogenous stock into 7. Risk Taking: In the process of
smaller, marketable lots. For example, distribution of goods the merchant
once cashew nuts are graded and large middlemen take title of the goods
quantities are built, these are divided and thereby assume risks on account
into convenient packs of say 1 kg, of price and demand fluctuations,
500 gms and 250 gms, to sell them to spoilage, destruction, etc.
different types of buyers.
Types of Channels
4. Assorting: Middlemen build
assortment of products for resale. There A manufacturer may choose from
is usually a difference between the direct distribution to indirect
product lines made by manufacturers distribution and from a short channel
and the assortment or combinations consisting of few intermediaries to a
desired by the users. For example, a long channel of distribution consisting
cricket player may need a bat, a ball, of large number of middlemen. Each
wickets, gloves, helmet, a T-shirt, form of channel network differs in
and a pair of shoes. Perhaps no number and type of middlemen
one manufacturer produces these involved. The major types of channels
products in desired combination. are as follows:
Middlemen procure variety of goods
Direct Channel (Zero Level)
from different sources and deliver
them in combinations desired by The most simple and the shortest mode
customers. of distribution is direct distribution,
where in the goods are made directly
5. Product Promotion: Mostly
available by the manufacturers to
advertising and other sales
customers, without involving any
promotion activities are organised
intermediary. This is also called zero
by manufacturers. Middlemen also
level channel. A straight and direct
participate in certain activities such
relationship is established between
as demonstrations, special displays, the manufacturer and the customer.
contests, etc., to increase the sale of For example, when a manufacturer
products. sells his goods through his own retail
6. Negotiation: Channels operate outlets (e.g., Mc Donald, Bata); it is
with manufacturers on the one hand referred to as direct channel. Similarly,
and customers one, the other. Arriving mail order selling, internet selling and
at deals that satisfy both the parties selling through own sales force, (e.g.,
is another important function of Eureka Forbes) are example of direct
the middlemen. They negotiate the selling or zero level channel.
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(i) Direct Channel (zero level)
Manufacturer Customer
Indirect Channel
(ii) One level Channel
Manufacturer Retailer Customer
(iii) Two level Channel
Manufacturer Wholesaler Retailer Customer
(iv) Three level Channel
Manufacturer Agent Wholesaler Retailer Customer
Types of Channels
Indirect Channels 2. Manufacturer-Wholesaler-

When a manufacturer employs one or Retailer-Consumer (Two Level
more intermediary to move goods from Channel): This is the most commonly
adopted distribution network for
the point of production to the point of
most consumer goods like soaps, oils,
consumption, the distribution network
clothes, rice, sugar and pulses. Here
is called indirect. This may take any of
the wholesaler and retailer function
the following forms: as connecting links between the
1. Manufacturer-Retailer Consumer manufacturer and consumer. Use of
(One Level Channel): In this form two middlemen in the channel network
of arrangement one intermediary enables the manufacturer to cover a
i.e., retailers is used between the larger market area.
manufacturers and the customers. That 3. Manufacturer-Agent-Wholesaler-
is, goods pass from the manufacture Retailer-Consumer (Three Level
to the retailers who, in turn, sell them Channel): In this case, manufactures
to the final users. For example, Maruti use their own selling agents or brokers
Udyog sells its cars and vans through who connect them with wholesalers
company approved retailers. This type and then the retailers. Thus, one more
of distribution network enables the level is added to the levels discussed in
manufacturers to cover wide area of the proceeding arrangement. It is done
market while retaining control over particularly when the manufacturer
the Channels. carries a limited product line and has
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to cover a wide market. An agent in like toiletry products (e.g., soap,

each major area is appointed, who in toothpaste, hair oil etc.), groceries
turn contact the wholesalers. (vegetable oil, tea leaf etc.), fabrics
require longer channels to reach wide
Factors Determining Choice of spread consumers.
Channels If the unit value of a product is low as
Choice of appropriate channel in case of most convenience products,
of distribution is a very important long channels are preferred while in
marketing decision, which affects case of high value products, shorter
the performance of an organisation. channels may be used. Similarly, in
Whether an organisation will adopt direct case of complex products requiring
marketing channels or long channels technical details as in case of most
involving number of intermediaries industrial or engineering products,
is a strategic decision. The choice of short channels are preferred but if
channels depends on various factors, the product is a non-complex one, it is
which are discussed as follows: sold through long channels, involving
1. Product Related Factors: number of intermediaries.
The important product related 2. Company Characteristics: The
considerations in deciding the important company characteristics
channels include whether the product affecting the choice of channels of
is an industrial or a consumer product, distribution include the financial
whether it is a perishable or a non- strength of the company and the
perishable product, what is the unit degree of control it wants to hold
value of the product and the degree of on other channel members. Direct
complexity of the product. selling involves lot of funds to be
Industrial products are usually invested in fixed assets say for starting
technical, made to order and expensive own retail outlets or engaging large
products purchased by few buyers. number of sales force. Indirect selling
These products require short channels through intermediary does not involve
i.e., direct channel or involving few deployment of huge funds on these
middlemen. aspects. Thus, if the firm has plenty of
Consumer products, on the other funds it may go for direct distribution.
hand, are usually standardised, less If spare funds are not available, it may
expensive, less bulky, non-technical go for indirect channels.
and frequently bought products. These Similarly if the management want
can be better distributed by long to have greater control on the channel
network of channels, involving many members, short channels are used but
middlemen. Perishable products like if the management do not want more
fruits, vegetables, and dairy products control over the middlemen, it can go
are best sold through short channels, in for longer channel or large number
while non-perishable products of intermediaries.
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3. Competitive Factors: The choice large number of intermediaries may be

of channel is also affected by the used. But if the size of order is large,
channel selected by competitors in direct channels may be used.
the same industry. If the competitor’s 5. Environmental Factors: Other
have selected a particular channel say important factors affecting the choice
Chemist shops for the sale of toiletry of channels of distribution include
products like hair oil, the other firm environmental factor such as economic
may also like to select the similar condition and legal constraints. In a
channel. In some cases producers depressed economy marketers use
may want to avoid the channels used shorter channels to distribute their
by competitors. For example if other goods in an economical way.
cosmetic producers have chosen
big retail stores for the sale of their Physical Distribution
products, a particular firm may like
Once goods are manufactured,
to adopt door to door selling. Thus,
packaged, branded, priced, and
it will depend upon the policy of the
promoted, these must be made
firm –whether it wants to go with
available to customers at the right
the competitors or be different from
place, in right quantity and at the
them. The changing global marketing
right time. For example, a person
environment has lead to adoption of
convinced about the quality etc. of a
newer channels.
product, say, a detergent bar, wants to
4. Market Factors: Important market purchase the same. He/She goes to a
factors affecting the choice of channel retail outlet and asks for the product.
of distribution include size of market, If that product is not available in that
geographical concentration of potential shop, he/she may purchase some of
buyers and quantity purchased. In the alternative brand available. This
case the number of buyers is small, way a sure sale is lost because goods
like for most industrial products, were not available at the place where
short channels are used. But if the the customer wanted to purchase.
number of buyers is large, as in case Thus, it is an important responsibility
of most convenience products like of the marketers to make the product
soft drink, toothpaste etc., longer physically available at a place where
channels involving large number of the customers would like them to buy.
intermediaries are used. The physical handling and movement
If the buyers are concentrated in of goods from place of production to
a small place, short channels may the place of distribution is referred to
be used but if the buyers are widely as physical distribution, which is a very
dispersed over a large geographical important element of marketing mix.
area, longer channels may be used. Physical distribution covers all
Similarly if the size of order is small, the activities required to physically
as in case of most consumer products, move goods from manufacturers to
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the customers. Important activities warehousing activities is to arrange

involved in the physical distribution placement of goods and provide
include transportation, warehousing, facilities to store them. The need for
material handling, and inventory warehousing arises because there
control. These activities constitute may be difference between the time a
major components of physical product is produced and the time it is
distribution. required for consumption. Generally
the efficiency of a firm in serving its
Components of Physical customers will depend on where these
Distribution warehouses are located and where are
The main components of physical these to be delivered.
distribution are explained as follows: Generally larger the number of
warehouses a firm has, lesser would be
1. Order Processing: In a typical buyer-
the time taken in serving customers at
seller relationship order placement
different locations but greater would be
is the first step. Products flow from
the cost of warehousing and vice-versa.
manufacturers to customers via
Thus the firm has to strike a balance
channel members while orders flow in
between the cost of warehousing and
the reverse direction, from customers
the level of customer service.
to the manufacturers. A good physical
For products requiring long-
distribution system should provide for
term storage (such as agricultural
an accurate and speedy processing of
products) the warehouses are
orders, in the absence of which goods
located near production sites. This
would reach the customers late or helps in minimising the charges on
in wrong quantity or specifications. transportation of the goods. On the
This wo uld resu lt in cu sto mer other hand, the products which are
dissatisfaction, with the danger of loss bulky and hard to ship (machinery,
of business and goodwill. automobiles) as well as perishable
2. Transportation: Transportation products (bakery, meat, vegetables)
is the means of carrying goods and are kept at different locations near
raw materials from the point of the market.
production to the point of sale. It 4. Inventory Control: Linked to
is one of the major elements in the warehousing decisions are the
physical distribution of goods. It is inventory decisions which hold key
important because unless the goods to success for many manufacturers,
are physically made available, the sale especially those where the perunit cost
cannot be completed. is high. A very important decision in
3. Warehousing: Warehousing refers respect of inventory is deciding about
to the act of storing and assorting the level of inventory. Higher the level
products in order to create time of inventory, higher will be the level
utility in them. The basic purpose of of service to customers but the cost
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Nothing Beats Word of Mouth in India

Nothing sways an Indian buyer’s choice more than a word of reassurance from the
people he knows. Even for the purchases like cars, mobile phones and home loans,
majority of the consumers in India rely on the references from their friends and
relatives while making their decisions.
The story is different in developed economies. Take the case of automobiles. In
markets like the US, Canada and Japan, more people are influenced by conventional
advertising by automobile companies, in developing markets like India, Malaysia and
Thailand it’s the neighbour or the colleague who tips the scales one way or the other.
“In case of luxury goods, the psyche of Indians has always been different. Buying a
car is a family decision, so it is only natural that all the members of the family will
talk to all the other users of a similar products, who they know”, General Motors
India director P Balendran said.
When the whole world is going crazy with Internet and mobile marketing, it is
interesting that for Indians it’s still conventional advertising and word of mouth
campaigns that sways their choices. Unlike in the West, Indians come from a very
closely-knit society where people get influenced by their peers, relatives and local
celebrities. People are more than willing to accept a brand if it’s endorsed by their
favourite superstar or is recommended by their close associates.
of carrying the inventory will also be The major factors determining

high because lot of capital would be inventory levels include:
tied up in the stock. Thus, a balance (a) firm’s policy regarding the level
is to be maintained in respect of the of customer service to be offered.
cost and customer satisfaction. With Higher the level of service greater
advancements in computers and will be the need to keep more
information technology the need for inventories;
keeping higher inventory is reducing (b) degree of accuracy of the sales
and the new concept of Just-in-
forecasts. In case more accurate
Time-Inventory decision is becoming
estimates are available, the need
popular in an increasing number of
for keeping very high level of
companies.
inventory can be minimised;
The decision regarding level of
inventory involves prediction about (c) responsiveness of the distribution
the demand for the product. A correct system i.e., ability of the system to
estimate of the demand helps to hold transmit inventory needs back to
inventory and cost level down to a the factory and get products in the
minimum. This not only helps the market. In case the time required to
firm in terms of the cash flows but respond to the additional demand
also in terms of its ability to maintain for the products is high there is a
production at a consistent level. need to maintain higher inventory.
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But if the additional demand can of various tools of communication

be met in less time, the need for to encourage exchange of goods and
inventory will also be low; and services in the market.
(d) cost of inventory, which includes
holding cost such as cost of Promotion Mix
warehousing, tied up capital, etc Promotion mix refers to combination
and the manufacturing cost. of promotional tools used by an
organisation to achieve its
Promotion communication objectives. Various
A company may produce a good quality tools of communication are used by
product, price it appropriately and make the marketers to inform and persuade
it available at the selling points, which customers about their firm’s products.
are convenient to customers. But in These include: (i) Advertising, (ii)
spite of all this, the product may not Personal Selling, (iii) Sales Promotion,
sell well in the market. There is a need and (iv) Publicity. These tools are also
for developing proper communication called elements of promotion mix and
with the market. In the absence of can be used in different combinations,
communication, the customers would to achieve the goals of promotion.
not be able to know about the product For example consumer goods firms
and how it can satisfy their needs and may use more of advertising through
wants or may not be convinced about mass media while the industrial
its utility and benefits. goods firms may be using more of
Promotion refers to the use of personal selling. What combination
communication with the twin objective of these elements is used by a firm
of informing potential customers will depend upon various factors such
about a product and persuading them as nature of market, nature product,
to buy it. In other words, promotion the promotions budget, objectives of
is an important element of marketing promotion, etc. Let us first know about
mix by which marketers makes use these elements in some details.
M C
A U
R
ADVERTISING PERSONAL SELLING
S
K T
E O
PUBLIC RELATIONS SALES PROMOTION
T M
E E
R R Promotion Mix
Marketing Communications
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Advertising number of people can be reached

over a vast geographical area.
We generally come across hundreds of
For example, an advertisement
advertising messages everyday, which
message placed in a national daily
tell us about various products such
reaches lakhs of its subscribers.
as toilet soaps, detergent powder, soft
drinks and services such as hotels, (ii) Enhancing Customer Satisfaction
insurance policies, etc. and Confidence: A d v e r t i s i n g
Advertising is perhaps the most creates confidence amongst
commonly used tool of promotion. It is prospective buyers as they feel
an impersonal form of communication, more comfortable and assured
which is paid for by the marketers about the product quality and
(sponsors) to promote some goods hence feel more satisfied.
or service. The most common modes (iii) E x p r e s s i v e n e s s : W i t h t h e
of advertising are ‘newspapers’, developments in art, computer
‘magazines’, ‘television’, and ‘radio’. designs, and graphics, advertising
The important distinguishing has developed into one of
features of advertising are as follows: the most forceful medium of
(i) Paid Form: Advertising is a paid communication. With the special
form of communication. That is, effects that can be created, even
the sponsor has to bear the cost of simple products and messages can
communicating with the prospects. look very attractive.
(ii) Impersonality: There is no direct (iv) Economy: Advertising is a very
face-to-face contact between the economical mode of communication
prospect and the advertiser. It is if large number of people are to be
therefore, referred to as impersonal reached. Because of its wide reach,
method of promotion. Advertising the overall cost of advertising
creates a monologue and not a gets spread over numerous
dialogue. communication links established.
(iii) Identified Sponsor: Advertising is As a result the per-unit cost of
undertaken by some identified reach comes low.
individual or company, who makes
the advertising efforts and also Limitations of Advertising
bears the cost of it. The following are the major limitations
of advertising as a tool of promotion:
Merits of Advertising
(i) Less Forceful: Advertising is an
Adver t isi ng, as a medium of impersonal form of communication.
communication, has the following It is less forceful than the personal
merits: selling as there is no compulsion
(i) Mass Reach: Advertising is a on the prospects to pay attention
medium through which a large to the message.
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(ii) Lack of Feedback: The evaluation 1. Adds to Cost: The opponents of

of the effectiveness of advertising advertising argue that advertising
message is very difficult as there unnecessarily adds to the cost of
is no immediate and accurate product, which is ultimately passed
feedback mechanism of the on to the buyers in the form of high
message that is delivered. prices. An advertisement on TV, for
(iii) I n f l e x i b i l i t y : A d v e r t i s i n g i s a few seconds, for example, costs the
less flexible as the message is marketers several lakhs of rupees.
standardised and is not tailor made Similarly an advertisement in print
to the requirements of the different media say in a newspaper or a magazine
customer groups. costs the marketers a large amount of
money. The money spent adds to the
(iv) Low Effectiveness: As the volume cost, which in an important factor in
of advertising is getting more and fixation of the price of a product.
more expanded it is becoming True, advertisement of a product
difficult to make advertising costs lot of money but it helps to
messages heard by the target increase the demand for the product
prospects. This is affecting the as large number of potential buyers
effectiveness of advertising. come to know about the availability
of the products, its features etc. and
Objections to Advertising are persuaded to buy it. The increased
In the proceeding sections, you have demand leads to higher production,
noted the merits and limitations which brings with it the economies
of advertising. Though advertising of scale. As a result, the per unit cost
is one of the most frequently used of production comes down as the
medium of promotion of goods and total cost is divided by larger number
services, it attracts lot of criticism. of units. Thus, the expenditure on
The opponents of advertising say advertisement adds to the total cost
that the expenditure on advertising but the per unit cost comes down
is a social waste as it adds to the which in fact lessens the burden of
cost, multiplies the needs of people consumers rather than adding to it.
and undermines social values. 2. Undermines Social Values: Another
The proponents, however, argue important criticism of advertising
that advertising is very useful as it is that it undermines social values
increases the reach, brings the pay and promotes materialism. It breeds
unit cost of production down and discontent among people as they come
adds to the growth of the economy. It to know about new products and feel
is therefore, important to examine the dissatisfied with their present state
major criticisms against advertising of affairs. Some advertisements show
and see the extent to which these are new life styles, which don’t find social
true. This is taken up as follows: approval.
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This criticism is not entirely true. 4. Encourages Sale of Inferior

Advertisement in fact helps buyers Products: Advertising does not
by informing them about the new distinguish between superior and
products, which may be improvement inferior products and persuade people
over the existing products. If the to purchase even the inferior products.
buyers are not informed about these In fact superiority and inferiority
products, they may be using inefficient depends on the quality, which is
products. Further, the job of an a relative concept. The desired
advertisement is to inform. The final level of quality will depend on the
choice to buy or not to buy anyway economic status and preferences of
rests with the buyers. They will buy if the target customers. Advertisements
the advertised product satisfies some sell products of a given quality and
of their needs. They may be motivated the buyers will buy if it suits their
to work harder to be able to purchase requirements. No advertisement
these products. should however, make false claim
3. Confuses the Buyers: Another about the quality of a product. If a
criticism against advertisement is that firm makes a false claims it can be
so many products are being advertised prosecuted for the same.
which makes similar claims that the 5. Some Advertisements are in
buyer gets confused as to which one Bad Taste: Another criticism against
is true and which one should be advertising is that some advertise-
relied upon. For example, we may ments are in bad taste. These show
note similar claims of whiteness or something which in not approved
stain removing abilities in competing by some people say advertisements
brands of detergent powder or claims showing women dancing when not
of whiteness of tooth or ‘feelings required or running after a man because
of freshness’ in competing brands he is wearing a particular suit or using
of toothpaste that it is sometimes a particular perfume are certainly not
confusing to us as to which one good. Some advertisements distort the
to buy. relationship like employer employee
The supporters of advertisement, and are quite offensive.
however, argue that we are all rational We have seen the views of the
human beings who make our decisions opponents and the proponents of
for purchase of products on factors advertising. There may be some
such as price, style, size, etc. Thus the chances of misuse of advertising as a
buyers can clear their confusion by tool, which can be properly safeguarded
analysing the information provided on by the law or by developing a code
the advertisements and other sources of conduct by the advertisers, for
before taking a decision to purchase a their self regulation. However, most
product. However, this criticism cannot of the criticism against advertising
be completely overruled. are not entirely true. In the changed
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economic environment of globalisation, salesperson to develop personal

advertising is considered as an relationships with the prospective
important tool of marketing. It helps customers, which may become
a firm in effectively communicating important in making sale.
with its target market, increasing the
sale and there by reducing the per unit Merits of Personal Selling
cost of production. It is not a social (i) Flexibility: There is lot of flexibility
waste, rather it adds value to the social in personal selling. The sales
cause by giving a boost to production
presentation can be adjusted to fit
and generating employment.
the specific needs of the individual
customers.
Personal Selling
(ii) Direct Feedback: As there is direct
Personal selling involves oral face-to-face communication in
presentation of message in the form personal selling, it is possible
of conversation with one or more to take a direct feed back from
prospective customers for the purpose the customer and to adapt the
of making sales. It is a personal form presentation according to the
of communication. Companies appoint
needs of the prospects.
salespersons to contact prospective
buyers and create awareness about (iii) Minimum Wastage: The wastage of
the product and develop product efforts in personal selling can be
preferences with the aim of making sale. minimised as company can decide
the target customers before making
Features of Personal Selling any contact with them.
(i) Personal Form: In personal selling
a direct face-to-face dialogue takes
Role of Personal Selling
place that involves an interactive Personal selling plays a very important
relationship between the seller and role in the marketing of goods and
the buyer. services. The importance of personal
(ii) Development of Relationship: selling to businessmen, customers
Personal selling allows a and society may be described as below.
Personal Selling
‘Most people think ‘selling’ is the same as ‘talking’. But the most effective
salespeople know that listening is the most important part of their job.’
—Roy Bartell
‘You don’t close a sale, you open a relationship if you want to build a long-term,
successful enterprise.’
—Patricia Fripp
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Importance to Businessmen (vi) Personal Rapport: Development of

personal rapport with customers
Personal selling is a powerful tool
increases the competitive strength
for creating demand for a firm’s
of a business organisation.
products and increasing their sale.
The importance of personal selling (vii) Role in Introduction Stage: Personal
to a business organisation may be selling plays very important role
described as follows: in the introduction stage of a new
product as it helps in persuading
(i) E ff e c t i v e P r o m o t i o n a l T o o l : customers about the merits of the
Personal selling is very effective product.
promotional tool, which helps in
( viii) Link with Customers: Sales people
influencing the prospects about
play three different roles, namely
the merits of a product and
persuasive role, service role and
thereby increasing its sale.
informative role, and thereby link
(ii) Flexible Tool: Personal selling is a business firm to its customers.
more flexible than other tools of
promotion such as advertising and Importance to Customers
sales promotion. It helps business
persons in adopting their offer in This role of personal selling becomes
varying purchase situations. more important for the illiterate and
rural customers, who do not have
(iii) Minimises Wastage of Efforts: many other means of getting product
Compared with other tools of information.
promotion, the possibility of The customers are benefited by
wastage of efforts in personal personal selling in the following ways:
selling is minimum. This helps
the business persons in bringing (i) Help in Identifying Needs: Personal
economy in their efforts. selling helps the customers in
identifying their needs and wants
(iv) Consumer Attention: There is an
and in knowing how these can
opportunity to detect the loss of
best be satisfied.
consumer attention and interest
in a personal selling situation. (ii) L a t e s t M a r k e t I n f o r m a t i o n :
This helps a business person Customers get latest market
in successfully completing the information regarding price
sale. changes, product availability
(v) Lasting Relationship: Personal and shortages and new product
selling helps to develop lasting introduction, which help them in
relationship between the sales taking the purchase decisions in
persons and the customers, which a better way.
is very important for achieving the (iii) Expert Advice: Customers get
objectives of business. expert advice and guidance in
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purchasing various goods and (v) Product Standardisation: Personal

services, which help them in selling increases product
making better purchase. standardisation and uniformity in
(iv) Induces Customers: Personal consumption pattern in a diverse
selling induces customers to society.
purchase new products that
satisfy their needs in a better way Sales Promotion
and thereby helps in improving Sales promotion refers to short-
their standards of living. term incentives, which are designed
to encourage the buyers to make
Importance to Society immediate purchase of a product or
Personal selling plays a very productive service. These include all promotional
role in the economic progress of a society. efforts other than advertising,
The more specific benefits of personal personal selling and publicity, used
selling to a society are as follows: by a company to boost its sales. Sales
(i) Converts Latest Demand: Personal promotion activities include offering
selling converts latest demand into cash discounts, sales contests, free gift
effective demand. It is through this offers, and free sample distribution.
cycle that the economic activity in Sales promotion is usually undertaken
the society is fostered, leading to supplement other promotional
to more jobs, more incomes and efforts such as advertising and
more products and services. personal selling.
That is how economic growth is Companies use sales promotion
influenced by personal selling. tools specifically designed to promote
to customers (e.g., free samples,
(ii) Employment Opportunities: Personal discounts, and contests), tradesmen
selling offers greater income and or middlemen (e.g., cooperative
employment opportunities to the advertising, dealer discounts and dealer
unemployed youth. incentives and contests) and to sales
(iii) Career Opportunities: Personal person (e.g., bonus, salesmen contests,
selling provides attractive career special offers). Sales promotions
with greater opportunities for include only those activities that are
advancement and job satisfaction used to provide short term incentives
as well as security, respect, to boost the sales of a firm.
variety, interest and independence
to young men and women. Merits of Sales Promotion
(iv) Mobility of Sales People: There is a (i) Attention Value: Sales promotion
greater degree of mobility in sales activities attract attention of
people, which promote travel and the people because of the use of
tourism in the country. incentives.
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(ii) Useful in New Product Launch: 50%’ or a shirt marketer’s offer of

Sales promotion tools can be very ‘50+40% Discount’.
effective at the time of introduction 3. Refunds: Refunding a part of price
of a new product in the market. It paid by customer on some proof of
induces people to break away from purchase, say on return of empty foils
their regular buying behaviour and or wrapper. This is commonly used
try the new product. by food product companies, to boost
(iii) Synergy in Total Promotional their sales.
Efforts: Sales promotion activities 4. Product Combinations: Offering
are designed to supplement the another product as gift along with the
personal selling and advertising purchase of a product, say offer of a
efforts used by a firm and add to pack of ½ kg of rice with the purchase
the over all effectiveness of the of a bag of Aatta (wheat flour), or
promotional efforts of a firm. ‘Get 128 KB Memory Card Free with
a Digicam’ or Buy a TV of 25+ and
Limitation of Sales Promotion
Get a Vacuum Cleaner Free’ or ‘100
(i) Reflects Crisis: If a firm frequently Gm Bottle of Sauce Free With 1 kg
rely on sales promotion, it may give Detergent.’
the impression that it is unable to 5. Quantity Gift: Offering extra
manage its sales or that there are quantity of the product commonly
no takers of its product. used by marketer of toiletry products.
(ii) Spoils Product Image: Use of sales For example, a shaving cream’s offer of
promotion tools may affect the ‘40% Extra’ or A Hotel’s offer of “Take
image of a product. The buyers a 2 Night 3 Days Package At the Hotel
may start feeling that the product and Get an Extra Night Stay At Just
is not of good quality or is not Rs 500” or ‘Buy 2 Get 1 Free’ offer of
appropriately priced. a marketer of shirts.
6. Instant Draws and Assigned
Commonly used Sales Promotion Gift: For example, ‘Scratch a Card’ or
Activities ‘Burst a Cracker’ and instantly win a
1. Rebate: Offering products at special Refrigerator, Car, T-shirt, Computer,
prices, to clear off excess inventory. with the purchase of a TV.
Example, a car manufacturer’s offer 7. Lucky Draw: For example, the offer
to sell a particular brand of car at a of a bathing soap to win a gold coin
discount of Rs 10,000, for a limited on lucky draw coupon for free petrol
period. on purchase of certain quantity of
2. Discount: Offering products at petrol from given petrol pump or lucky
less than list price. Example, a shoe draw coupon on purchase of easy
company’s offer of ‘Discount Up to undergarment and win a car offer.
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8. Usable Benefit: ‘Purchase goods Electronic goods, automobiles etc offer

worth Rs 3000 and get a holiday easy financing schemes such as ‘24
package worth Rs 3000 free’ or ‘Get easy instalments, Eight Up Front and
a Discount Voucher for Accessories 16 To Be Paid as Post Dated Cheques’.
on Apparel Purchase of Rs 1000 and However, one should be careful about
above.’ the file charges, which sometimes
9. Full finance @ 0%: Many marketers is nothing but interest recovered in
o f c o n s u m e r d u r a b le s s u c h a s advance.
Sales Promotion
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10. Sampling: Offer of free sample of source, e.g., the press in the form of
a product, say a detergent powder or news stories and features, the message
tooth paste to potential customers at has more credibility than if that comes
the time of launch of a new brand. as a sponsored message in advertising.
11. Contests: Competitive events Also, as the message goes in the
involving application of skills or luck, form of a news rather than direct sales
say salving a quiz or answering some communication, it can reach even to
questions. those persons who otherwise may not
pay attention to paid communication.
Publicity However, an important limitation
of publicity is that as a medium of
Publicity is similar to advertising, in promotion, it is not within the control
the sense that it is a non-personal of a marketing firm. The media would
form of communication. However, as cover only those pieces of information,
against advertising it is a non-paid which are news worthy and which
form of communication. Publicity symbolise some achievement in the
generally takes place when favourable field. Thus, a firm can’t use publicity
news is presented in the mass media to actively promote its products.
about a product or service. For
example, if a manufacturer achieves Public Relations
a breakthrough by developing a car
Managing public opinion of an
engine, which runs on water instead
organisation is an important task which
of petrol, and this news is covered by
can be performed by the marketing
television or radio or newspapers in
department. The business needs to
the form of a news item. It would be
communicate effectively to customers,
termed as publicity because the engine
suppliers, and dealers, since they are
manufacturer would benefit from such
instrumental in increasing the sales
dissemination of information about its
and profit. Besides those who come into
achievement by the media but would
direct contact with the organisation or
not bear any cost for the same. Thus,
its products, there are other members
the two important features of publicity
of the general public whose voice
are that:
or opinion is equally important.
(i) P ublicity is an unpaid form of This public may be interested in the
communication. It does not involve company and its product and have
any direct expenditure by the an impact on the business ability to
marketing firm; and achieve its objectives. Thus, it becomes
(ii) There is no identified sponsor for imperative to manage public opinion
the communication as the message and the company’s relation with the
goes as a news item. public on a regular basis. Therefore,
In publicity, as the information public relations involve a variety of
is disseminated by an independent programmes designed to promote or
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BUSINESS STUDIES
334
protect a company’s image and its Role of Public Relations

individual products in the eyes of the The role of public relations can be
public. discussed with respect to the functions
The business relates with a which the department performs.
number of groups including suppliers, Public relations itself is an important
shareholders, intermediaries, activist tool in the hands of the marketing
groups, and the government. For department, which can be used to the
example, active support of middlemen advantage of the business. The public
is needed if the firm wants to survive relations department performs five
in a competitive selling environment. functions:
Similarly, consumer activist groups 1. Press relations: Information
need to be satisfied because they can about the organisation needs to
impose restriction on the sales of the be presented in a positive manner
firm’s products directly by urging in the press. Generating news
customers to refrain from buying them requires skill in developing and
or through the imposition of laws. Most researching a story and getting the
organisations, business or otherwise media to accept press releases is a
nowadays, have a separate department difficult task. The public relations
to manage public relations. They may department is in contact with the
also utilize the services of any outside media to present true facts and a
public relations agency. correct picture about the company.
Their main task is to disseminate Otherwise news can get distorted
information and build goodwill about if taken from other sources.
the business. Concrete steps are to be 2. Product publicity: New products
taken to monitor the attitude of the require special effort to publicise
general public and generate positive them and the company has to
publicity. They are especially useful sponsor such programmes. The
when there is negative publicity public relations department
about the company or its products. manages the sponsoring of such
At that time, the situation has to be events. The company can draw
tackled like an emergency to improve attention to new products by
public image. The public relations arranging sports and cultural
department then has to do something events like news conferences,
drastic so that damage to company’s seminars and exhibitions.
images is controlled and minimised. 3. Corporate Communication:
They also advise top management to The image of the organisation
adopt certain programmes which will needs to be promoted through
add to their public image and ensure communicat-ing with the public
that negative publicity does not take and the employees within the
place at all. organisation. This is usually done
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Marketing
335
with the help of newsletter, annual wildlife, children’s rights, education,

reports, brochures, articles and etc. Such cause-related activities
audio-visual materials. Companies help in promoting public relations
rely on these materials to reach and building goodwill.
and influence their target markets. In addition, maintaining good
Speeches by the company’s public relations also helps in achieving
executives at a meeting of trade the following marketing objectives:
associations or trade fairs can (a) B u i l d i n g a w a r e n e s s : Public
really boost the company’s image. relations department can place
Even interviews with TV channels stories and dramatise the product
and responding to queries from the in the media. This will build
media go a long way in promoting marketplace excitement before
public relations. the product reaches the market
4. Lobbying: The organisation has or media advertising takes place.
to deal with government officials This usually creates a favourable
and different ministers in charge of impression on the target customer.
corporate affairs, industry, finance (b) Building credibility: If news about
with respect to policies relating a product comes in the media
to business and the economy. whether print or electronic it
The government also seeks to always lends credibility and people
maintain a healthy relationship believe in the product since it is in
with associations of commerce the news.
and industry and solicits the (c) Stimulates sales force: It becomes
opinion of major stakeholders while easier for the sales force to deal
formulating industrial, telecom, with the retailers and convince
taxation policies, etc. The public dealers if they have already heard
relations department then has to about the product in the news
be really proactive in promoting before it is launched. Retailers
or decoding regulations that affect and dealers also feel it is easier
them. to sell the product to the ultimate
5. C o u n s e l l i n g : T h e p u b l i c consumer.
relations department advises the (d) L o w e r s p r o m o t i o n c o s t s :
management on general issues Maintaining good public relations
which affect the public and the costs much less than advertising
position the company would like and direct mail. However, it
to the take on a particular issue. requires a lot of communication
The company can build goodwill and interpersonal skills to convince
by contributing money and time to the media to give space or time for
certain causes like environment, the organisation and its product.
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336
The major differences between advertising and personal selling are as follows:
Difference between Advertising and Personal Selling
S. Advertising Personal Selling

No.
1. Advertising is an impersonal form of Personal selling is a personal form of

communication. communication.
2. Advertising involves transmission of In personal selling, the sales talk is
standardised messages, i.e., same adjusted keeping view customer’s
message is sent to all the customers background and needs.
in a market segment.
3. Advertising is inflexible as the message Personal selling is highly flexible. as
can’ t be adjusted to the needs of the the message can be adjusted.
buyer.
4. It reaches masses, i.e., a large number Only a limited number of people can
of people can be approached. be contacted because of time and cost
considerations.
5. In advertising the cost per person The cost per person is quite high in
reached is very low. the case of personal selling.
6. Advertising can cover the market in a Personal selling efforts take a lot of
short time. time to cover the entire market.
7. Advertising makes use of mass media Personal selling makes use of sales
such television, radio, newspaper, and staff, which has limited reach.
magazines.
8. Advertising lacks direct feedback. Personal selling provides direct and
Marketing research efforts are needed immediate feed back. Sales persons
to judge customers’ reactions to come to know about the customers’
advertising. reactions immediately.
9. Advertising is more useful in creating Personal selling plays important role
and building interest of the consumers at the awareness stage of decision
in the firms products. making.
10. Advertising is more useful in marketing Personal selling is more helpful in
to the ultimate consumer’s who are selling products to the industrial
large in numbers. buyers or to imtermediaries such as
dealers and retailers who are relatively
few in numbers.
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Key Terms
Marketing Brand Mark Market Packaging
Marketing Management Labelling Marketing Mix
Channels of Distribution Marketing Offering Physical Distribution
Consumer Product Promotion Industrial Product
Promotion Mix Convenience Product Advertising
Shopping Product Personal Selling Speciality Product
Publicity Generic Name Sales Promotion
Brand Brand Name Trade Mark
Summary
In the traditional sense, the term ‘market’ refers to the place where buyers
and sellers gather to enter into transactions involving the exchange of goods
and services. But in modern marketing sense, it refers to a set of actual and
potential buyers of a product or service.
What is Marketing: The term marketing has been described as performance
of business activities that direct the flow of goods and services from producers
to consumers. Marketing is not merely a post-production activity. It includes
many activities that are performed even before goods are actually produced
and continue even after the goods have been sold.
In Modern Times: Marketing is described as a social process by which
individual groups obtain what they need and want through creating offerings
and freely exchanging products and services of value with others. Marketing is
not merely a business phenomena or confined only to business organisations.
Marketing activities are equally relevant to non-profit organisations.
What can be Marketed: Anything that is of value to the other can be marketed.
It can be a product or a service or a person or a place or an idea. It can also be
an experience, properties, events, information or organisation.
Marketing management means management of the marketing function. It refers
to ‘The art and science of choosing target markets and getting, keeping and
growing customers through creating, delivering and communicating superior
customer value of management.’
Marketing and Selling: Many people confuse ‘selling’ for ‘marketing’. However,
selling is only a part of the process of marketing. The main focus of selling
is on affecting transfer of title and possession of goods from sellers to users.
Marketing activities put greater thrust on maximising customer’s satisfaction.
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Marketing Management Philosophies: The different business philosophies or

concepts guiding the marketing efforts are: (i) Production Concept which assumes
that availability and affordability of the product are the key to the success of a
firm and puts greater emphasis on improving the production and distribution
efficiency of the firms. (ii) Product Concept assumes that product improvement
is, the key to profit maximisation of a firm; (iii) Sales Concept assumes that
the customers would not buy, or not buy enough, unless they are adequately
convinced and motivated to do so, It is believed that aggressive selling and
promotional efforts are important to make customers buy their products. (iv)
Marketing Concept implies that focus on satisfaction of customer’s needs is the
key to the success of any organisation in the market. (v) The Societal Marketing
Concept is the extension of the marketing concept as supplemented by the
concern for the long-term welfare of the society.
Functions of Marketing: The important functions of marketing include
Gathering and Analysing Market Information, Marketing Planning, Product
Designing and Development, Standardisation and Grading, Packaging and
Labelling, Branding, Customer Support Services, Pricing of Products, Promotion,
Physical distribution, Transportation, Storage or Warehousing.
Role of Marketing: By adopting marketing orientation, an organisation whether
profit making or non-profit making, can achieve its goals in the most effective
manner. Also marketing acts as a catalyst in the economic development of a
country and helps in raising the standards of living of people.
Marketing Mix is a set of marketing tools that the firm uses to pursue its
marketing objectives in a target market. The variables or elements of marketing
mix have been classified in to four categories, popularly known as four Ps
of marketing viz., Product, Price, Place and Promotion. These elements are
combined to create an offer.
Product: In common parlance, the word ‘product’, is used to refer only to the
physical or tangible attributes of a product. In marketing, product is a mixture
of tangible and intangible attributes, which are capable of being exchanged
for a value, with ability to satisfy customer needs. It is anything that can be
offered to a market to satisfy a want or need. Products may broadly be classified
into two categories—industrial products and consumers’ products. Products,
which are purchased, by the ultimate consumers or users for satisfying their
personal needs and desires are referred to as consumer products. On the
basis of shopping efforts involved, the products are classified as Convenience
Product, Shopping Products and Speciality Products. On the basis of their
durability, consumer products have been classified into categories—Durable,
Non-durable and Services.
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Those activities, benefits or satisfactions, which are offered for sale, e.g., dry
cleaning, watch repairs, hair cutting, are called services.
Industrial products are those products, which are used as inputs in producing
other products. These are broadly classified in to (i) Materials and Parts, (ii)
Capital Items, and (iii) Supplies and Business Services.
Generic name refers to the name of the whole class of the product. For example,
a book, a wristwatch, and tyre. A brand is a name, term, sign, symbol, design
or some combination of them, used to identify the products—goods or services
of one seller or group of sellers and to differentiate them from those of the
competitors. That part of a brand, which can be spoken, is called a brand name.
That part of a brand which can be recognized but which is not utter able
is called brand mark. Brand mark appears in the form of a symbol, design,
distinct colour scheme or lettering. Brand or part of a brand that is given legal
protection is called trademark.
A good brand name should be short, easy to pronounce, spell, recognize and
remember; Should suggest the product’s benefits and qualities; be distinctive;
be adaptable to packing or labelling requirements; be sufficiently versatile to
accommodate new products; be capable of being registered and protected legally
and have staying power i.e. it should not get out of date.
Packaging: The act of designing and producing the container or wrapper
of a product is referred as packaging. There can be three different levels of
packaging. viz Primary package, Secondary packaged, Transport package.
Packaging performs a number of functions in the marketing of goods. Some
of the important functions, include Product identification; Product protection;
Facilitating the use of the product and Promotion of goods and services.
Labelling: A simple looking but important task in the marketing of goods
relates to designing the label to be put on the package. The label may vary
from a simple tag attached to the product to complex graphics that are part
of the package. The most important functions of labels include i) describing
the product ii) help in identifying the product or brand; iii) help in grading the
products into different categories; and aids in promotion of the products.
Pricing: Price may be defined as the amount of money paid by a buyer or
received by a seller in consideration of the purchase of a product or service.
Generally, if the price of a product is increased, its demand comes down, and
vice-versa. Pricing is considered to be an effective competitive weapon. It is also
the single most important factor affecting the revenue and profits of a firm.
The factors affecting price determination are (i) Product Cost (ii) The Utility
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340
and Demand (iii) Competition (iv) Government and Legal Regulations and v)
Marketing Methods Used.
Physical Distribution: There are two important decisions relating to this aspect-
one regarding physical movement of goods and two, regarding the channels.
Channels of Distribution are set of firms and individuals that take title, or
assist in transferring title, to particular goods or services as it moves from the
producers to the consumers. Channels of distribution smoothen the flow of
goods by creating possession, place and time utilities. The important functions
performed by middlemen are: (i) Sorting; (ii) accumulation; (iii) allocation; (iv)
assorting; (v) product promotion; (vi) negotiation; and (vii) risk taking:
Types of Channels: (I) Direct distribution channels are those where in the
goods are made directly available by the manufacturers to customers, without
involving any intermediary; include (II) Indirect Distribution Channels include
i. Manufacturer - Retailer – Consumer (One Level Channel) ii. Manufacturer -
Wholesaler - Retailer- Consumer (Two Level Channel) iii. Manufacturer - Agent
- Retailer- Consumer (Three Level Channel) Factors Determining Choice of
Channels include i. Product Related Factors; ii. Company Characteristics iii.
Competitive Factor iv. Market Factor; and v. Environmental Factor.
Physical Distribution Covers all the activities required to physically move
goods from manufacturers to the customers. The main component of physical
distribution are. i. Order Processing; ii. Transportation; iii. Warehousing; and
iv. Inventory Control: Just-in-Time-Inventory.
Promotion: Promotion refers to the use of communication with the twin
objective of informing potential customers about a product and persuading them
to buy it. There are four major tools, or elements of promotion mix, which are —
(i) Advertising, (ii) Personal Selling, (iii) Sales Promotion, and (iv) Publicity. These
tools are used in different combinations to achieve the goals of promotion.
Advertising is the most commonly used tool of promotion. It is an impersonal
form of communication, which is paid for by the marketers (Sponsors) to
promote some goods or service. The merits of advertising, as a medium of
communication, include (i) Mass reach; (ii) Enhancing customer satisfaction
and confidence iii. Expressiveness; and iv. Economy.
The limitations of advertising are that it is (i) less forceful (ii) lacks Feedback (iii)
inflexibility (iv) low effectiveness The most common Objections to Advertising are
that it (i) adds to cost; (ii) undermines social Values; iii. confuses the buyers;
and iv. encourages sale of Inferior Products:
Most of the criticisms against advertising are not fully true. Advertising is
therefore considered an essential function of marketing.
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Marketing
341
Personal Selling involves oral presentation of message in the form of

conversation with one or more prospective customers for the purpose of making
sales. Personal Selling plays important role for the business persons as well
as for the society.
Sales Promotion refers to short-term incentives, which are designed to
encourage the buyers to make immediate purchase of a product service.
These include promotional efforts other than advertising, personal selling and
publicity, used by a company to boost its sales. Commonly used Sales Promotion
Activities include Rebate, Discount, Refunds, Product Combinations, Quantity
Gift, Instant Draws and Assigned Gift, Lucky Draw, Usable Benefit, Full Finance
@ 0%, sampling, and contests.
Publicity is similar to advertising, in the sense that it is a non-personal form
of communication. However, as against advertising it is a non-paid form
of communication. In publicity, as the information is disseminated by an
independent source. However, an important limitation of publicity is that as a
medium of promotion, it is not within the control of a marketing firm.
Exercises
Very Short Answer Type

1. State any two advantages of branding to marketers of goods and services?
2. How does branding help in differential pricing?
3. What is the societal concept of marketing?
4. List the characteristics of convenience products.
5. Enlist the advantages of packaging of consumer products.
6. What are the limitations of advertising as a promotional tool? Enlist.
7. List five shopping products purchased by you or your family during the
last few months.
8. A marketer of colour TV having 20% of the current market share of the
country aims at enhancing the market share to 50 per cent in next three
years. For achieving this objective he specified an action programme. Name
the function of marketing being discussed above. (Ans. Marketing planning.)
Short Answer Type

1. What is marketing? What functions does it perform in the process of
exchange of goods and services? Explain.
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342
2. Distinguish between the product concept and production concept of

marketing.
3. Product is a bundle of utilities. Explain.
4. What are industrial products? How are they different from consumer
products? Explain.
5. Distinguish between convenience product and shopping product.
6. Describe the functions of labeling in the marketing of products.
7. Discuss the role of intermediaries in the distribution of consumer
non-durable products.
8. Explain the components of physical distribution.
9. Define advertising? What are its main features? Explain.
10. Discuss the role of ‘sales promotion’ as an element of promotion mix.
11. As the marketing manager of a big hotel located at an important tourist
destination, what societal concerns would be faced by you and what steps
would you plan to take care of these concerns? Discuss.
12. What information is generally placed on the package of a food product?
Design a label for one of the food products of your choice.
13. For buyers of consumer durable products, what ‘customer care services’
would you plan as a manager of a firm marketing new brand of motorcycle.
Discuss.
Long Answer Type

1. What is marketing concept? How does it help in the effective marketing
of goods and services.
2. What is marketing mix? What are its main elements? Explain.
3. How does branding help in creating product differentiation? Does it help
in marketing of goods and services? Explain.
4. What are the factors affecting determination of the price of a product or
service? Explain.
5. What do you mean by ‘channels of distribution’? What functions do they
play in the distribution of goods and services? Explain.
6. Explain the major activities involved in the physical distribution of
products.
7. ‘Expenditure on advertising is a social waste.’ Do you agree? Discuss.
8. Distinguish between advertising and personal selling.
9. Explain the factors determining the choice of channel of distribution.
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What is Marketing selling, advertising and pricing are

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through creating offerings and freely A marketer’s job in an organisation

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4. Exchange Mechanism: The process are not able to communicate with

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be used to satisfy human needs and and touched physically such as a

What can be Marketed?

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The Marketing Concept want. If the customers want features

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areas in the Indian economy, say in 3. Product Designing and

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important methods of promotion Jammu and Kashmir and Haryana,

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managers, to achieve marketing Elements of Marketing Mix

Marketing Mix: Elements

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of other products; LG Electronics 3. Place: Place or Physical Distribution

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The success of a market offer will customer needs. Besides physical

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Classification of Products important factors: (A) the extent of

Consumer Products Industrial Products

Durability Basis Shopping Efforts Involved

Non- Durable Services Conven- Shopping Speciality

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bought in small qualities. Some of (e) The competition in these products

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jewellery, furniture, radio, television, persuasive effort is needed to

(d) Purchases of shopping products such products. For example, if there

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restaurant, or a tailor. The demand B. Durability of Products

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margin, require greater personal- other products. The examples of such

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be derived from demand for shoes and Classification

Materials and Capital Items Supplies and

Raw Manufactured Installations Equipments Maintanence Operating

Farm Natural Component Component

Classification of Industrial Goods

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production of finished goods. products will be marketed under a

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Perspectives of Brands and Branding

Source: Adopted from Effective Executive, 2006

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create awareness for the generic example, if a person is satisfied with

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in the marketing success or failure Importance of Packaging

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