CHAPTER 1: INTROUDCTION TO MARKETING

INTROUDCTIONTO SERVICE MARKETING:-

Marketing developed initially I connection with selling physical products such as toothpaste, cars,
steel and equipment. The major trends in many parts of the world are the phenomenal of service.
“Service are deeds, performance and processes. Service include all economic activity whose
output is not physical product or construction, is generally consumed at the time it is produced
and provides added values in forms of the essentially intangible concern of the its first purchaser.

DEFINITION:-

1 a) MARKETING:
“It is a process of communicating the value of a product or service to customer for the
purpose of selling that product or service”.

b) P. KOTLER:
It is science and art of exploring, creating and delivering value to satisfy the needs of a target
market a profit. Marketing identifies unfulfilled needs desire. It defines measure and quantifies
the size of the identified market and the profit potential. It pinpoints which segments the
company is capable of serving best and it design and promotes the appropriate product and
service.

2. SALES:
It is a act of selling a product or service in return for money or other compensation. Signaling
completion of the prospective stage, it is the beginning of an engagement between customer and
vendor or the extension of that engagement.

3. HOSPITALITY PRODUCTS:
It is the relationship between the guest and the host or the act or practice of being hospitable.
This includes the reception and entertainment of guest, visitor or stranger.

4. SERVICE
Service deeds process and performance. It includes all economic activities whose outputs is not a
physical product or construction is generally consumed at the time it is produced and provide
added values in forms that are essentially intangible. Service is more.
DISTINGUISH BETWEEN:

MARKETING SALES

1. Determine future needs and has a 1 makes customer demand match the product
strategy in place to meet those needs company currently offers.
for the long term relationship.

2. One to many process. 2. Usually one to one process.

3. Fulfill customer’s wants and needs 3. Fulfill sales values.

through products and or service the
company can offer.

4. Identifying customer needs creating 4. Once a product has been created for a
product to meet those needs promotion customer needs to persuade the customers to
to advertise said product. purchase the product to fulfill their needs.

5. Pull 5. Push

6. It is a wider concept. 6. It s a narrower concept.

7. It shows how to reach to the customer 7 selling is the ultimate result of marketing.
and build long lasting relationship.

GOODS SERVICE
 1. Goods possess tangible form at the 1. Service are intangible at the point of
point of sales and can be inspected sale often cannot be inspected other
prior t use. than virtually.
2. Homogenous 2. Heterogeneous
3. Production and distribution are 3. Production, distribution and
separated from consumption. consumption are simultaneous process.
4. Core value is produced in factory. 4. Core value is produced in buyer seller
5. Customers do not participate in the interaction.
production process. 5. Customer participate in the production
6. Can be kept in stock so that consumed process
in future point of time. 6. Cannot be kept in stock immediately
7. Transfer of ownership. consumed.
7. No transfer of ownership.

1.6 CHARACTERISITIC OF SERVICE MARKETING:

Service marketers must be concerned with four characteristic of service:-

INTANGIBITY:
Unlike physical products, services cannot be seen, tasted, felt, heard or smelled before they are
purchased
E.g.:- Prior to boarding an airplane, airline passengers have nothing to show bit an airline ticket
and the promise of safe delivery to their destination.
Robert Lewis has observed that someone who purchases a service may go away empty handed,
but they do not go away empty handed. They have memories that can be shared with others.
To reduce uncertainty caused by service intangibility, buyers look for tangible evidence that will
provide information and confidence about the service. The intangibility of service holds much
special implication in marketing. The implication mostly hovers around the quality aspect. The
customer relies more on subjective impression and less on concrete evidence in assessing the
quality of a service. It also implies that the customers has a faith in the person providing the
service and has to go by the trust to a large extent in judging the in advance by the customer and
hence he cannot judge its quality and value in advance. As a combined result of all these factors,
assuring quality and creating customer satisfaction in a service situation becomes more difficult.

INSEPARABILITY:-
The inseparability factor tends to localize the production and marketing of services. The
distribution reach of the service offer is limited. The inseparability factor impacts the mode of
customer while receiving the service has direct interaction with the service personnel. The
quality of this interaction will have a major say in the final experience of the customer. The
customer also from their impression based on the physical surrounding in which they receive the
service. The ambience of the service delivery location influences the overall assessment.
VARIABILITY:-
This factor often leaves the customer confused. He feels that service performance is a non-
standard affair varying widely and dependent on who actually performs the service. This gives a
challenge as well as an opportunity for the service marketers to prescribe his own unique service
feature and enjoy the advantage of a good differentiator. Because of inseparability, it is not
possible to produce a service in advance according to specified standard. Both production and
consumption being a service as experienced may vary in quality. The employee delivering the
service frequently is the service in the eyes of the customer and people may differ in their
performance from day to day or even hour to hour. The variability connected with service is
largely the result of human interaction.

PERISHABILITY:-
It refer to the fact that service cannot be saved, stored, resold or returned if the service or sub-
product does not generate revenue by being used over a given period, it perishes. The service
may be available at, of later time. The revenue originally lost can never be regained.
E.g. An aircraft takes off with 30 empty seat the revenue lost from these seats is said to have
perished forever. The implication of this concept is that marketer of service have to ensure that
service produced in utilized on a continuous basis, otherwise revenue lost is uncovereable.

1.7. SERVICE GAPS:-

Its quality shortfalls arise where gaps occurs, such as between guest expectation and service
received, or between management and guest perception. The following discussion pinpoints
where hospitability service gaps tend to occur.

THE GAPS BETWEEN GUEST EXPECTION AND MANAGEMENT PERCEPTIONS:-

The hospitality manager are too remote from guest or front line service providers, lack of
research data about guest needs and rely heavily on their personal experiences and observation
into an over emphasis on certain hospitality factors, such as costs, and the neglect of other that
are important to guest. An airline management in an effort to reduce costs, stopped carrying
aspirin on its flight, saving an estimated cost a year. Customer complaint, however were so
numerous that the decision was reversed. “when management accurately understand the service
expectation of guest in a specific service chain the resulting gap will be small.

THE GAP BETWEEN MANAGEMENT PRECEPTION AND THE SPECIFICATION OF

SERVICE QUALTIY STANDARD:-
Simply understanding guest interest desire and priorities is not enough. That understanding must
be translated into clear specification of service quality standard. Difficulties ensure when
management fails to specify its expectation. Problem may also arise when the existing resource
are inadequate to deliver the service quality specified.
e.g. Lack of parking space, not enough staff, inadequately trained staff, inadequate security and
so, on. Technology may be helpful in both setting and applying appropriate standards.
THE GAP BETWEEN SPECIFICATION OF SERVICE QUALITY AND THE SERVICE
ACTUALLY DELIVERED:-
Specifying service quality is one thing, delivering it is quite another, where as staffs are
unwilling or unable to meet management service quality specification a gap occurs in service
performance. The causes may include such factors as lack of training, misunderstanding,
conflicting or unrealistic staff expectations, poor staff selection, poor supervision and lack of
empowerment. Service quality specification must be based on realistic service
deliverycapabilities.

THE GAP BETWEEN SERIVCE DELIVERED AND SERVICE PROMISED:-

Hospitality manager are challenged t give up to the service levels promised give up to the service
levels promised. An over enthusiastic sales campaign can cause such a gap. Part of marketing
task is to manage guest desire and expectation so as to meet or exceed them. This task should
bring marketing consideration and activities directly into daily involvement with each of the
service delivery issues at each stage of service delivery process.

1.8. SERVICE ENCOUNTER AND SERVICE CHAIN, MOMENT OF TRUTH:-

The building blocks for customer perception are service encounter or moment of truth where the
most impression of service occurs. Service encounter are where promises are kept or broken and
what is sometime called “real time marketing”. Service encounter or moments of truth occur
when the customer interact with the service firm.
E.g. Service encounter that a hotel guest experiences are :-during check-in, in being, shown the
room by a bell person, eating in the hotel’s restaurant, requesting a wakeup call, using hotel’s spa
service and checking out.
Thus, “service chain” is formed. It is formed through these encounter contributes to the guest’s
overall satisfaction and willingness to do business. Marketers need a systematic way to identify
critical component of each encounter in a service chain. This means raising question and
gathering information with service situation more effectively.

SERVICE CHAIN:-
Service encounter presents an opportunity to prove its potential as quality service provider and to
increase customer loyalty. Some service have few service encounter and other have many. Any
encounter is critical in determining customer satisfaction and loyalty. For a new customer
interaction with an organization for the first time, the initial encounter creates first impression of
the organization and the initial phone contact or face-to- face experience with a firm’s
representative the customer’s perception of quality. When a customer has had multiple
interactions with an organization, each encounter is important in creating a composite image of
the firm in the customer’s memory. Positive encounter add up to a composite image of high
quality, whereas negative interaction will leave the customer feeling unsure of the firm’s quality,
doubtful of its consistency in service delivery and vulnerable to the appeals of the competitor.
For every organization, certain encounters are the key to customer satisfaction. Apart from these
key encounters, there are some momentous encounters that may ruin all the positive encounter
and drive the customer to an organization forever.
For guests, hospitality enterprises stands or fall on the cumulative impact of the many service
encounters in the course of a visit. The perspective of marketing touches almost every aspect of
the business through its fundamental concern with the success of each service encounter. Service
providers throughout an organization are challenged to ensure that every service encounter is a
winner for both customer and providers. The important point is that hospitality marketing is
indeed everyone’s concern. Successful marketing of service requires careful planning and
proper implementation of each service encounter in the total sequence of activities and system
that each service provider deals with. The conventional perception of a hospitality property is to
consider the building its site, furnishing and specific feature. The tangible visible assess as the
business. But, the physical features of hospitality offering however, distinctive provide only the
context within which service are rendered.

1.9. SERVICE ENCOUNTER ANALYSIS:- THE “SIX S’s “

To improve service chain we suggest gathering organizing and analyzing pertinent data
according to the “Six S”

SPECIFICATION:-
It means clearly describing the what, when, where, and how of service encounter. It require
careful thought about the links between particular service encounter analysis begins by
specifying clearly the overall service-strategy and what it is designed to achieve. Does it focus on
cost or service quality leadership? Does it aim to provide unique service values, customized or
standardized, complex or simple frequent or occasional? Is the goal to provide service limited to
luxury package or does it include budget travelers?

STAFF:-
Which staff members are involved in providing the service? What skills do they need? What
training has been provided? How committed are they to service goals? Is team cooperation or
individual empowerment required? What attitude are appropriate-friendly open, helpful, warm
services or efficient, unobtrusive, uninvolving, non-threating service? What staff member deal
with guests? How close are the backroom staff to guest? Are staff presentation and appearance
appropriate? To what extent are guest? Are staff presentation and appearance skill, knowledge,
information or experience do guest need t fulfill their roles? What are likely guest expectation?
What communication occurs between guest and service provider? Do the dynamic of the
exchange proceed smoothly? Do any language and cultural barrier exist?

3. SPACE
Where will be the service encounter occur? Is the space appropriately designed to facilitate the
service encounter? Is there adequate space to handle each activity such as waiting, completing
forms, storing or handling luggage and assembling tours? Is signage appropriate? Is the decor
attractive to guest and supportive of necessary activities that have to be carried out?

4. SYSTEM
Is the information necessary to respond effective ly to guests needs readily availabl? Is the
appropriate technology being fully used? Are the interface between different functions such as
housekeeping, sales and the front office fully operation? what measures of quality or
performance are used? Are they the most helpful for both service providers and manager? Are
the criteria for success clearly defines? Is everyone involved aware of guest needs ad concern?
5. SUPPORT
Are the service provider given then facilities and financial and human support needed to do the
job? Is the technology appropriate? Have employees been given the training they need? Are
incentive and reward system geared to the tasks to be performed? Is supervision? Does the
organisation structure help or hinder performance? Are the suggested procedure appropriate?

6. STYLE
How should the service encounter be conducted, given the organisation culture? Are the
management style and marketing orientation appropriate for the task? Do service provider have
the appropriate? Is thenright emphasis being packed on service quality?
Mangers should develop their own checklist to guide adjust assess performance within specific
service chain. These service chains should be considered from the perspective of major guest
categories because the relevance and importance of specific factor jay differ by group of guests.
A challenging practical concern is how finely to deconstruct service chain into its separate
components howmuch details is needed? Too much detail not only takes excessive time and
resources, but results in confusion rather than clarity conversely when activity categories are too
broad, they can minimize important problem. Achieving the right balance is a thing task.
As a general guideline, analyses the service chain to the extent that service encounter of
operational and strategic significance are highlighted. Four criteria may be used:

● VALUE CREATION
value creation relates to the perceived importance of service encounter to actual and potential
guests. Where an activity create significant aspect to total guest value, it should be treated as a
separate encounter in a servkce chain.
E.g. The failure to provide covered parking for more than one car and the absence of a door
attendant would have become quite dissatisfying if the weather had been inclement.

● FACTOR DRIVING COST

In a possible service encounter include what it costs to get the service encounter right and
whether the cost is reasonable. Relevant cost factor should be analyzed Separately when some
element are reasonable and other are prohibitive.

● DIFFERENTIATELY
Differentiate one's service encounter from those of competitors may be very important. when a
hospitality business does things that can be differentiated particularly well, or when its service
encounter are unique and differentiable assets, they should be analyzed separately.

● COMPETITOR
In performing the service may be analyzed. If one or more competitors have found particularly
attractive or low-cost ways of handling a certain service, then it is worthwhile to examine that
service encounter as a separate element.
 SERVICE MARKETING CONCEPT

INTROUDCTION
SEGMENTATION
Gaining and maintaining a competitive advantage in the board consumer market for hospitality
and product is avery difficult task. Market were viewed as single homogenous entities but the
next of people varies. Itis much easier to reach consumer when a firm tries to carve out a smaller
segment of the market.
"Market segmentation is defined as pursuing a marketing strategy whereby the total potential
market is divided into homogenous subset of customer each of which responds differently to the
marketing mix of the organization."
or many years, most hospitality organisation attempted to serve the needs of a fairly wide variety
of market. All customers are not alike whether it is about their demography capacity. a wise
person once said that you can please some people all of the time and all people some of the time,
butyou cannot please all people all the time.
DEFINE: SEGMENTATION of market is homogeneous no group of customer each of them
reacting differently on promotion,communication, pricing and other variable of the marketing
mix.
Market segmentation is the process through which market segment are decided. A market
segment can be defined as "a group of individuals, group or organisation who share at least one
causes them to have similar need and want for product or service. There are two different steps in
segmentation:
1. Dividing the whole market into group (market segment) with common characteristics using
specific segmentation bases.
2. Selecting those market segments that the organisation is best able to serve (using set of
segmentation criteria). This is known as “market segmentation analysis".

TARGET MARKET
Target market is a customer centric business philosophy. An organisation trying to sell a product
needs to understand their customer and match their preferences and expectation. Throughmarket
segmentation,manymarket segmentation identified, but the primary task of the organisation is to
identify the right customer segment from several segment which are similar or unique in nature.
Organisation needs to select the target market carefully to match specific consumer requirement.
Target market is "defined as selecting specific market segment to target and designing
thenproduct or service to meet their specific needs and wants".(shoemaker and Shaw 2009)
According to Kolter, "Marketing targeting is the process of evaluating each segment,
attractiveness and selecting one or more market segment”.
Target marketing is about selecting the best suited market segment for organization. It is
important to know that no one segment can be best for organisation in all dimensions therefore
an organisation identifies market segment that best fits the organization’s business strength.
TYPES OF SEGMENTATION
When the term market segmentation is used most of us immediately think of demographic,
psychographic lifestyle, values, behavior and multivariate cluster analysis routines. Market
segmentation is a much broader concept and the practice of business throughtout the world. At
the basic level the term, “market segmentation” refers to subdividing a market along some
commonality similarity. The purpose of segmentation is the concentration of marketing energy
and force on the subdivision to gain a competitive advantage within the segment.

1. GEOGRAPHIC SEGMENTATION
This is the most common form of market segmentation wherein companies segment the market
by attacking a restricted geographic area.
E.g. Corporation may choose to market their brands in certain countries. A brand could be sold
only in one market, one state, or one region. Many restaurants chain focuses on a limited
geographic area to achieve concentration of force. Regional difference in consumer preference
exist and this provides a basis for geographic specialization.
In geographic segmentation the market is divided into group of customers, who share the same
geographic location implies, relates to the consumers geographic area of residence. Geographic
variable are used extensively by the print and broadcast media to describe their reader and
audience.

2. DEMOGRAPHIC SEGMENTATION
Market are often segmented based on demographic variable such as age, gender, income,
expenditure patterns, family size, stage in the family life education level are achieved and
occupation. Some brands are targeted only women, others only to men. The demographic
segmentation based on population statistic such as; Age, Family size and composition, gender,
occupation, Income, Educational level, religion, race or ethnic origin and Family life cycle.
The family life cycle provides a good example of how variable can be used for segmentation.
Segmentation using demographic is very common, as information is easy to collect and
comprehend.

3. PSYCHOGRAPHIC SEGMENTATION
Psychographic variable are commonly used to segment market. Psychographics refers to
segmentation based on lifestyle, attitude and personality. The development of psychographic
segmentation is based on lifestyle profile normally from survey.

▪ ACTIVITIES
The manner how people spend their time, work, hobbies, social events, vacation, community,
sports, entertainments.

▪ INTERSTS
Things they consider important- Family, Job, Home, Achievements and community.

▪ OPINIONS
How they think or feel about themselves and the world around themselves, social issues, politics,
business, education, culture, future products etc,.
POISITIONING
A products position is the way the product is defined by consumers on important attributes the
place, the product occupies in consumers mind relative to competing products. To simplify
buying decision making consumer organize product into categories- they “position” products and
companies in their mind.
Marketers do not want to leave their product’s position to chance. They plan position that will
give their product the greatest advantage in selected target market and then design marketing
mixes to create the planned position.
“A hotel brandsposition can be viewed from two perspectives-that of the brands management
must have a firm’s concept of the hotel’s intended position and its promotional efforts must
articulate not only what the brand offers but how its offering is different from those of others.
In the final analysis however, a brands position is determined by its customers.
They can position their products bases on “specific product attributes”. Product can also be
positioned on the “needs they fill or the benefits they offers. Marketers can also position for
certain classes of user. A product can be positioned against existing competitors.

COMPONENNTS OF MARKETING PLAN

1. MARKET RESEARCH
Collect organize and record information pertinent to the market you want to target, include noth
the controllable and uncontrollable variable that influence this market.

2. TARGET MARKET
Understand where your product/service fits in the market and describe who you want to reach,
why this is important and how you’re going to do it. The best approach is to find a gap where
there is customer demand and where your competitors are not satisfying this demand as well as
you could do it.

3. PRODUCT/ SERVICE
Describe your product. How does your product relate to the marker? What does your market
need, what do they currently use, what do they need above and beyond current use? What added
value can you offer that can over meet customer expectation?

4. COMPETITION
Describe your competition. Develop your “unique selling proposition? What is your competition
doing better the same or worse than you and where is the gap?

5. YOUR OVERALL BUSINESS STRATEGY AND STATEMENT OF INTENT

Write a few sentences that state who you’re selling to, what you’re selling and what makes you
distinct challenge your business concept across all the areas of your business to ensure it holds
up under scrutiny.
 6. MARKET STRATEGIES
Write down the marketing and promotion strategies that you want to use or at least consider
using to include Partnering and Networking
• External communication-Advertising, publicity, promotion, sales collateral, online
media.
• Internal Communication-Staff and partner.
• Training programmers

7. PRICING, POSITIONING AND BRANDING

From the information you’ve collected establish strategies for determining the price of your
product, where your product will be positioned in the market and how you will achieve brand
awareness.

8. BUDGET
Match strategies to budget. What strategies can you afford?

9. MARKETING GOAL
Establish quantifiable marketing goals. This means goals that you can trun into number.

10. MONITOR YOUR RESULT

Test and analyze. Identify the strategies that are working through customer feedback.
• Surveys
• Online polls
• Blog
• Database management tools.
 P’s OF MARKETING

PRODUCT/ SERVICE MIX

DEFINE:
A product is a good a service, or an idea received in an exchange. It can be either tangible
or intangible and include functional, social, and psychological utilities or benefits. It also
include supporting services such as installation, guarantees, product information and
promises of repair or maintenance. A good is a tangible physical entity, such as a DELL
personal computer or a Big

3.1 LEVELS OF PRODUCT AND NEW PRODUCT DEVELOPMENT

A product is a good, a service, or an idea received in an exchange. It can be either
tangible or intangible and include functional, social and psychological utilities or benefits.
It also includes supporting services, such as installation guarantee, product information
and promises of repair or maintenance. A good is a tangible physical entity such as Dell
personal computer, etc. A service in contrast, is intangible, it is the result of the
application of human and mechanical efforts to people or object. An idea is a concept,
philosophy image or issue. Ideas provide the psychological stimulation that aids in
solving problem or adjusting to the environment. When buyer purchase a product they are
really buying the benefits or satisfaction they think the product will provide. Service in
particular are purchased on the basis of expectation.

NEW PRODUCT DEVELOPMENT

A firm develops new products as a means of enhancing its product mix and adding depth
to a product line. Developing and introducing new product is frequently expensive and
risky. New product failures are not uncommon. They can create major financial problems
for organization. Sometime even causing them to go out of business. Failure to introduce
is also risky. The term new product can have more than one meaning. A genuinely new
product offer innovative benefits. But product that are different and distinctly better are
often viewed as a new. A new product can be an innovative product that has never been
sold by an organization such as digital camera when it was introduced for the first time. A
radically new product involves a complex development process including an extensive
business analysis to determine the possibilities of success. Finally a product can be
viewed as new when it is brought to one or more market from another market.
Before a product is introduced , it goes through the seven phases of new product
development process.
 1. IDEA GENERATION
In this you are basically involved in the systematic search for new product Ideas. A co
mpany has to generate many ideas in order to find one that is worth pursuing. The Ma
jor sources of new product ideas include internal sources, customers, competitors, dist
ributors and suppliers. Almost 55% of all new product ideas come from internal sourc
es according to one study. Companies like 3M and Toyota have put in special incentiv
e programs or their employees to come up with workable ideas.
Almost 28% of new product ideas come from watching and listening to customer. Custo
mers: even create new products on their own, and companies can benefit by finding these produc
ts and putting them on the market like Pillsbury gets promising new products from its annual Bak
e-off. One of Pillsbury’s four cake mix lines and several variations of another came directly from
Bake-Off winners’ recipes.
2. Idea Screening: -The second step in New product development is Idea
screening. The purpose of idea generation is to create a large pool of ideas. The purpose of this st
age is to pare these down to those that are genuinely worth pursuing. Companies have different
methods for doing this from product review committees to formal market research. It, is helpful a
t this stage to have a checklist that can be used to rate each idea based on the factors required for
successfully launching the product in the marketplace and their relative importance. Against thes
e, management can assess how well the idea fits with the company’s marketing skills and experie
nce and other capabilities. Finally, the management can obtain an overall rating of the company’s
ability to launch the product successfully.
3. Concept Development and Testing – The third step in New product developmen
t is Concept Development and Testing. An attractive idea has to be developed into
a Product concept. As opposed to a product idea that is an idea for a product that t
he company can see itself marketing to customers, a product concept is a detailed
version of the idea stated in meaningful consumer terms. This is different again fr
om a product image, which is the consumers’ perception of an actual or potential
product. Once the concepts are developed, these need to be tested with consumers
either symbolically or physically. For some concept tests, a word or a picture may
be sufficient, however, a physical presentation will increase the reliability of the c
oncept test. After being exposed to the concept, consumers are asked to respond to
it by answering a set of questions designed to help the company decide which co
ncept has the strongest appeal. The company can then project these findings to the
full market to estimate sales volume.
4. BUSNIESS ANALYSIS: During the business analysis stage, the product idea is e
valuate to determine its potential contribution to the firms sales, cost and profits. I
n course of analysis, evaluators ask a variety of question. Does the product fit in
with the organization existing product mix? Is demand strong enough to justify en
tering the market and will the demand endure? What type of environmental and c
ompetitive changes can be excepted and how will these changes affect the product
’s future sales, cost and profit? Are the organization’s research developmen
t, engineering and production capabilities are adequate to develop the product? If
new facilities must be construction how quickly can they be built? How much will
they cost? Is the necessary financing for development and commercialization on
hand or obtainable at term consistent with a favorable return on investment? In
the business analysis stage, firms seeks market information. The result of
consumer polls, along with secondary data, supply the specific needed to estimate
potential sales, costs and profit. Evidence indicate that future marketing research
and market tests must reflect the interest and preference of diverse potential
market.
For many product in this stage (when they are still just product idea), forecasting
sales accurately is difficulty. This is especially true for innovative and completely
new product organization sometime employ breakeven analysis to determine how
many unit they would have to still being marking profit. At times an organization
also uses payback analysis, in which marketer compute the time period required
to recover the funds that would be invested in developing the new product.
Because breakeven and payback analyses are based on estimate they are usually
viewed as useful but not particular precise during this stage.

5. PROUDCT DEVELOPMENT:-
It is the phase in which the organization determines if it is technically feasible to
product and if it can be produced at costs low enough to make the final price
reasonable. To test its acceptability, the idea or concept is converted into a
prototype or working model. The prototype should reveal tangible and intangible
attribute associated with the product in consumer’s mind. The product design
mechanical features and intangible aspects must be linked to wants in the market
place. Through marketing research and concept testing, product attributes
important to buyer’s are identified. After a prototype is developed, its overall
 functioning must be tested. Its performance, safety, convenience and other
functional qualities are tested both in a laboratory a in the field. Functional testing
should be rigorous and lengthy enough to test the product thoroughly.
A crucial question that arises during product development is how much quality to
build into the product. Higher quality often calls for better material and more
expensive processing which increases production costs and ultimately, the product
price. In determining the specific level of quality, a marketer must ascertain
approximately what price the target market view as acceptance. A marketer
usually tries to set a quality level consistent with that of the firms other product.
The quality of competing brands is also been considered.
The development phase of a new product is frequently lengthy and expensive ;
thus a relatively small number of product ideas are put into development. If the
product appears sufficiently successful during this stage to merit test marketing
then, during the latter part of the development stage, marketer begins to make
decision regarding branding, packaging, labeling, pricing and promotion for use
in the test marketing stage.

6. TEST MARKETING
A limited introduction of a product in geographic areas chosen to represent the
intended market is called “ test marketing”. Its aim is to determines the extent to
which potential customers will buy the product. Test marketing is not an extension
of the development stage, it is a sample launching of the entire marketing mix.
Test marketing should be conducted only after the product has gone through
development and initial plans regarding the other marketing the other marketing
mix variable have been made.
Test marketing provides several benefits. It lets marketing environmental to
measure its sales performance. While the product is being marketed in a limited
area, the company can strive to identify weaknesses in the product or in other
parts of marketing mix. Selection of appropriate test areas is very important
because the validity of test market result depends heavily on selecting test sites
that provides accurate representation of the intended target market. The criteria
used for choosing test cities depend on the product’s attributes, the firm’s
objective and resources.
Test marketing is not without risk. It is expensive and competitors may try to
interfere. A competitor may attempt to “jam” the test program by increasing its
 own advertising or promotion, lowering price and offering special incentives, all
to combat the recognition and purchase of the new brand sometimes, competitors
copy the product in the test stage and rush to introduce a similar product. It is
therefore, desirable to move to commercialization phase as soon as possible after
successful testing. When the product introduction is delayed to the point where
the public begins to doubt its existence such products may become known as
“VAPORWARE” particularly in the computer software industry.
Because of these risk many companies use alternative method to measure
customer preference.

7. COMMERCIALIZATION
In this phase, plans for full-scale manufacturing and marketing must be refined
and settled and budget for the project prepared. Early in the commercialization
phase, marketing management analyzes the result of test marketing mix are
needed before the product is introduced. The result of test marketing may tell
marketer to change one or more of the product’s physical attributes and modify
the distribution plans to include more retails outlet, alter promotional efforts or
change the product’s price. However, as more and more changes are based on test
marketing findings, the test marketing projection may become less valid.
During the early part of this stage, marketer must not only gear up for larger-scale
production but also make decision about warranties repair and replacement parts.
The type of warranty a firm provides can be a critical issue for buyers, especially
when expensive technically complex goods like appliance are involved.
Establishing an effective system for providing repairs service and replacement
parts is necessary to maintain favorable customer relationship. The product enters
the market during the commercialization phase. When introducing a product, a
firm, may spend enormous sums for advertising personal selling and other type of
promotion, as well as plant and equipment, such expenditure may not be
recovered for several year. Smaller organizations may find commercializing of a
product especially difficult. Product are not usually launched nationwide
overnight but are introduced through a process called a roll-out. Through a roll-
out, a product is introduced in stages, starting in one set of geographic areas and
gradually expanding into the adjacent areas. It may take several years to market
the product nationally. Sometimes the test cities are used as initial marketing areas,
and the introduction of the product becomes a natural extension of test marketing.
After the stage1 introduction is complete stage 2 could include market coverage
of the states where the test cities are located. In stage 3 marketing efforts might
be extended into adjacent states. In stage 4 gradually product introduction do not
always occur state b state, other geographic combinations, such as groups of
countries that overlap across state borders are sometimes used.

3.2 PROUDCT LIFE CYCLE AND MARKETING STRETEGIES FOR

DEVELOPEMNT OF PROUDCT LIFE CYCLE

Product life cycle is the ‘life span of a product from development, through testing,
promotion, growth and maturity, to decline and perhaps regeneration. After
launching a product in the market, every company wants it have a long and
lucrative product life. Though it is not possible to sell any product forever, the
company wants to earn maximum possible profit to compensate for the effort put
in and the risk involved. The companies often make changes to the current
marketing strategies for maximizing the profit. The changing market and
environment condition are responsible for strategic changes as the product moves
through the product life cycle. The product life cycle can be short or long based
on the nature of the product and its acceptance in the market. The working of the
product and market can also described smoothly with the help of this concept. It is
very difficult to forecast the sales, length and shape of the curve at each stage of
the life.
The product life cycle is not a predictive tool to determine the length of a
product’s life in the market. In reality it is a means of conceptualizing the effect of
the market, the environment, competition and understanding how that product
may react to various stimuli.
 The progression of a product through four stages:-

1. INTROUDCUTION
The introduction stage of the product life cycle begins at a product’s first appearance in the
marketplace when sales starts at zero and profit are negative. Profit are below zero because initial
revenues are low and the company generally must cover large expenses for promotion and
distribution.
Developing and introducing a new product can mean an outlay of price or more. The importance
of new products is significant, the risk of new-product failure is quite high, depending on the
industry and how product failure are defined. Because of high risk and costs few product
introduction represent revolutionary inventions. More typically product introduction involves a
new packaged convenience food, a new model of automobile or a new fashion in clothing rather
than a major product innovation.
Potential buyers must be made aware of the new product’s features uses and advantages. Two
difficulties may arise at a point. First sellers may lack the resources, technological knowledge
and marketing know how to launch the product successfully. Second the initial product price
may have to be high to recover expensive marketing research or development costs. Surprising
that may product never get beyond the introduction stage.
Most new product start off slowly and seldom generate enough sales to bring about the new
product, marketer should be alert for product weaknesses and make correction quickly to prevent
the product’s early demise. Marketing strategy should be designed to attract the segment that is
most interested and has the fewest objection. As the sales curves moves upward and the
breakeven point is reached the growth stage begins.

2. GROWTH
During the growth stage sales rise rapidly and profit reach a peak and then start to decline. The
growth stage is critical to a product survival because competitive reactions to the product success
during this period will affect the product’s life expecting. Profit begins to decline late in the
growth stage as more competitors enter the market driving price down and creating the need for
heavy promotional expenses. A typical marketing strategy encourages strong brand loyalty and
competes with aggressive emulators of the product. During the growth stage, the organization
tries to strengthens its market share and develop a competitive role by emphasizing the product
benefits. Aggressive pricing, including price cuts is also typical during this stage.
As sales increases management must support the momentum of adjusting the maturity strategy.
The goal is to establish and fortify the product’s market position by encouraging brand loyalty.
To achieve greater market penetration, segmentation may have to be used more intensely. That
would require developing product variation to satisfy the needs of people in several different
market segment.
Gaps in geographic market coverage should be filled during the growth period. As a product
gains market acceptance, new distribution outlets usually become easier to obtain. Marketer
must also made sure the physical distribution system is running efficiently so that customers
order are processed accurately and delivered on time.
Promotion expenditure may be slightly lower during the introductory stage, but are still quite
substantial. As sales increases, promotion cost should drop as a percentage of total sales. A
falling ratio between promotion expenditure and sales should contribute significantly to
increased profit. The advertising message should stress brand benefits. Coupons and samples
may be able to increasing efficiencies in production can result in lower cost. These saving may
be passed on to buyers. If demand remain strong and there are few remain stable. If price cut are
feasible, they can help a brand gain market share and discourage new competitors from entering
the market.

3. MATURITY
During this stage the sales curve peaks and starts to decline and profit continue to fall. The stage
is characterized by intense competition as many brands are now in the market. Competitors
emphasize improvement and difference in their version of the product. As a result during the
maturity stage, weaker competitors are squeezed out or lose interest in the product. During the
maturity phase the producers who remain in the market are likely to change their promotional
and distribution efforts. Advertising and dealer oriented promotion are typical during this stage
of product life cycle. Marketer must also take into account that as the product reaches maturity
buyer’s knowledge of it attain a high level. Consumers of the product are no longer
inexperienced instead they are experienced specialists. Marketer of mature products sometimes
expands distribution into global market. Many products are in the maturity stage of their life
cycle marketer known how to deal with these products and be prepared to adjust their marketing
strategies. To increase the sales of mature product marketer may suggest new uses for them. As
customers become more experienced and knowledgeable about brand product during the
maturity stage, the benefit they seek may change as well, necessitating product modification.
 I. GENERATE CASH FLOW
This is essential for recovering the initial investment and generating excess cash to support new
product.
II. MAINTAIN SHARE OF MARKET
Companies with marginal market share must decide whether they have a reasonable chance to
improve their position or whether they should drop out.
III. INCREASE SHARE OF CUSTOMER
It refers to the percentage of total customers held by a firm, share of customer relates to the
percentage of each customer needs beings met by the firm.
During the maturity stage, marketers actively encourage dealers to support the product. Dealers
may be offered promotional assistance in lowering their inventory costs. Marketers go to great
length of serve dealers and to provide incentives for selling their brands. Maintaing market share
during the maturity stage require moderate and sometime large promotion expenditure.
Advertising message foucs on differentiating a brand from the field of competitors and sales
promotion efforts are aimed at both consumer and resellers.

IV. DELINE
In this stage sales fall rapidly this happens when the marketer consider reduce item from the
product line to eliminate those not earning a profit. An organisation can justify maintaining a
product as long as it contributes to profit or enhance the overall effectiveness of a product mix.
The firm believes too many choice can frustrate consumers.
In this stage marketer must determine whether to elimate the product or try to reposition it to
extend its life. Usually a declining product has lost its distinctiveness because similar competing
engenders increased substitution and brand switching as buyer become insensitive to minor
product difference. For these reason, marketer do little to change a product’s style design or other
attributes during its decline. New technology or social trends product substitute or environmental
consideration may also indicate that the time has come to delete the product.
During a products decline outlet with strong sales volume are maintained and unprofitable
outlets are prepared out. An enter marketing channel may be eliminated if it does not contribute
adequately to profit.
Spending on promotion efforts is usually considerably reduced. Advertising of special offers may
slow the rate of decline sales promotion, such as coupons and premiums may temporarily regain
buyer’s attention. As the product continues to decline the sales staff shift its emphasize to more
profitable products.
The marketing manager has two options during the decline stages:
1. THE HARVESTING APPROACH
In harvesting approach employes a gradual reduction in marketing expenditure and less resource
intensive marketing mix.
2. THE DIVESTING APPROCACH
A company adopting the divesting approach withdraws all marketing support from the declining
product. It may continue to sell the product until losses are sustained or arrange for another firm
to acquire the product. A composite of life cycle pattern forms when various product in the mix
are at different cycle stages. As one product decline other product are in the introduction, growth
or maturity stage. Marketer must deal with the dual problem of prolonging the lives of existing
product and introducing new product to meet organizational sales goals.

BRANDING
A brand is the idea or image of a specific product or service that consumer connect with by
identifying the name, logo and slogan or design of the company who owns the idea or image. It
help in providing an identity to the product and build loyal customers. A brand name is the part
of a brand that can be spoken including letters, words and number such as 7up. A brand name is
often a products only distinguishing characteristic. To consumer’s a brand name is as
fundamental as the product.
The American Marketing Assoication (AMA) defines a ‘brand as a name, term, design,
symbol or any other feature that identifies one sellers good or service as distinct from those
of sellers.
The element of a brand that is not made up of words often a symbol or design is a brand mark.
The legal term for brand is trade mark. A brand can identify one item, a family of item or all
items of a particular seller. If used for the firm as a whole the preferred term is trade name. This
process of branding has various advantage or disadvantage are:-
ADVANATAGE
1. It helps inn identifying the good and service
2. It stimulates the purchase decision of the consumer.
3. It helps in creating customers loyalty.
DISADVANTAGE
1. It requires a huge investment
2. An unsuccessful brand will bring forth a negative image to the company.

BRAND LOYALTY
Creating and maintaining customer loyalty towards a brand is a major benefit of branding. Brand
loyalty is a customer’s favorable attitude toward a specific brand. It brand loyalty is strong
enough, customers may consistently purchase this brand when they need a product in that
product category. Brand loyalty may result in a customer’s purchasing a specific brand all the
time, the brand is at least viewed as a potentially viable choice in the set of brand being
considered for purchase. The degree o f brand loyalty for product varies from one product
category to another.
Brand recognition occurs when a customer is aware that the brand exist and view it as an
alternative purchase if the preferred brand is unavailable or if the other available brands are
unfamiliar. This is the mildest form of brand are unfamiliar. One of the initial objective of a
marketer introducing brand is to create wider spread awareness of the brand to generate brand
recognition.
Brand preference is a stronger degree of brand loyalty: a customer definitely prefers one brand
over competitive offering and will purchase this brand if available.
The brand is not available, the customer will accept a substitute brand rather than expending
additional effort finding and purchasing the preferred brand.
When brand insistence occurs, a customer strongly prefers a specific brand, will accept no
substitute and is willing to spend a great deal of time and effort to acquire that brand. Brand
insistence is the strongest degree of brand loyalty; it is a brander’s dream. However, it is the least
common type of brand loyalty. Customers vary considerably regarding the product categories for
which they may be brand insistent.
A well managed brand is an asset to an organization. The value of this assesst is often referred to
as brand equity. Brand equity is the marketing and financial value associated with a brand’s
strength in a market. Being aware of a brand leads to brand familiarity, which in turn results in a
level of comfort with the brand. Brand loyalty is an important component of brand equity
because it reduces a brand’s vulnerability to competitor’s actions. Brand loyalty allows an
organization to keep its existing customers and avoid spending an enormous amount of
resources gaining new ones. Customers expect their brands to be available when and where they
shop, retailers strive to carry the brand known for their strong customer following.
Customer associates a particular brand with a certain level of overall quality. A brand name may
be used as substitute for actual judgment of quality. Customers can’t actually judge the quality of
the product for themselves and instead must rely on the brand as a quality indicator.

3.2 PRICE MIX

PRICING OBJECTIVE
Pricing objective are goals that describe what a firm want to achieve through pricing. Pricing
objective is an important task because pricing objective form the basis for decision about other
stages should include the time frame for accomplishing them.
Marketer must make sure the pricing objective are consistent with the organization’s marketing
objectives and with its overall objective because pricing objective influence decision in many
functional areas, including finance, accounting and production. A marketer can use both short-
and long-term pricing objective and can employ one or multiple pricing objective.
1. SURVIVAL
A fundamental pricing objective is survival. Most organizations will tolerate difficulties such as
short-run losses and internal upheaval if necessary for survival. Because price is a flexible
variable, it is sometimes used to keep a company afloat by increasing sales volume to level that
match expenses.

2. PROFIT
A business may claim its objective is to maximize profit for its owners, the objective of profit
maximization is rarely operational because its achievement is difficulty, profit objective tend to
be set at levels that the owners and top-level decision maker view as satisfactory. Specific profit
objective may be stated in term of percentage of sales revenues.

3. SALES
Sales oriented pricing objectives seek to boost volume or market share. A volume increase is
measured against a company’s own sales across specific time period. A company’s market share
measures its sales against the sales of other companies in the indufustry. Volume and market
share are independent of each other, as a change in one doesn’t necessarily encourage a change
in the other.

4. IMAGE- DIFFERENATION
Differentiate the product in some way in order to compete successfully. A differentiation strategy
is appropriate where the target customer segment is not price- sensitive, the market is
competitive or saturated, customer have very specific needs which are possibly under-served,
and the firm has unique resource and capabilities which enable it to satisfy these needs in ways
that are difficult to copy. Successful differentiation is displayed when a company accomplishes
either a premium price for the product or service, increased revenue per unit, or the consumers’
loyalty to purchase the company’s product or service.

3.2.1 FACTORS AFFECTING PRICING DECISION

Pricing decision can be complex because of the number of factor to be considered. There is
considerable uncertain about the reaction to price among buyers, channel members, and
competitors. It is also an important consideration in marketing planning, market analysis and
sales forecasting. Most factors that affect pricing decision can be grouped into one of the eight
categories.

ORGANISATIONAL AND MARKETING OBJECTIVE

Marketer should set prices that are consistent with the organization’s goals and mission.
Eg. A retailer trying to position itself as value oriented may wish to set price that are quite
reasonable relative to product quality. Pricing decision should also be compatible with the
organization’s marketing objective. Assuming, increasing the price or setting a price above the
average market price would not be in line with this objectives.

TYPES OF PRICING OBJECTIVES

The type of pricing objective a marketer uses obviously has considerable bearing on the
determination of price. An organization that use pricing to increase its market share would likely
set the brand’s price below competing brands of similar quality to attract competitors’ customer.
A marketer uses temporary price reduction in the hope of gaining market share. A business needs
to raise cash quickly, it will likely use temporary price reductions such as sales, rebates and
special discount.
 1. COSTS
Cost must be an issue when establishing price. A firm may temporarily sell products below cost
to match competition, to generate cash flow, or even to increase market share, but in the long run
it cannot survive by selling its products below cost. Even when a firm has a high volume
business, it cannot survive if each item is sold slightly below what it costs. To maintain market
share and revenue in an increasingly price sensitive market many marketers have concentrated
on reducing costs.
Labor-saving technologies, a focus on quality and efficient manufacturing processes have
brought productivity gains that translate into reduced cost and lower price for customers.
Besides considering the costs associated with a particular product, marketers must take into
account the costs the product share with others in the product line. Product often share some
costs, particularly the costs of research and development, production and distribution. Most
marketers view a products cost as a minimum or floor below which the product cannot be priced.

1. OTHER MARKETING MIX VARIABLE

All marketing mix variables are highly interrelated. Pricing decision can influence decision and
activities associated with product, distribution and promotion variable. A product’s price
frequently affects the demand for that item. A high price, for instance, may result in low unit
sales, which in turn may lead to higher production costs per unit. Conversely lower per unit
production costs may result from a low price. For many products, buyers associate better product
quality with a high price and poorer product quality with a low price. This quality relationship
influences customers overall image of product or brand. Individuals who associate quality with a
high price are likely to purchase product with well-established and recognizable brand names.
The price of a product is linked to several dimensions of its distribution. Premium priced product
are often marketed through selective or exclusive distribution, lower-priced products in the same
product category may be sold through intensive distribution. When setting a price, the profit
margins of marketing channel members, such as wholesalers and retailers, must be considered.
Price may determine how a product is promoted. Bargain prices are often included in
advertisement. Premium prices are less likely to be advertised, though they are sometimes
included in advertisements for upscale items. Higher priced product are more likely than lower
priced ones to require personal selling. The price structure can affect a salesperson’s relationship
with customers. A complex pricing structure takes longer to explain to customers, is more likely
to confuse potential buyers and may cause misunderstanding that result in long term customer
dissatisfaction.
 1. CHANNEL MEMBER EXPECTATIONS
When making price decision a producer must consider what member of the distribution channel
expect. A channel member certainly expects to receive a profit for the functions it performs. The
amount of profit expected depends on what the agents could make if it were handling a
competing product instead. The amount of time and the resources required to carry the product
influence intermediaries’ expectation.
Channel member often expect producers to give discount for large orders and prompt payment.
Resellers expect producers to provide several support activities such as sales training, repair
advisory service, cooperative advertising, sales promotion and perhaps a program for returning
unsold merchandise to the produce.

2. CUSTOMERS’ INTERPRETATIONAND RESPONSE

When making pricing decisions, marketer should be concerned with a vital question: How will
our customer interpret our prices and respond to them? Interpretation in this context refers to
what the price means or what it communicates to customers. Does the price means “high quality”
or “low quality” or “great deal,” “fair price”or“rip-off”? Customer response refer to whether the
price will move customers closer to the purchase of the product and the degree to which the price
enhance their satisfaction with the purchase experience and with the product after purchase.
Customers’ interpretation of and response to a price are to some degree determined by their
assessment of what they receive compared with what they give up to make the purchase. In
assessing the cost of the product customers will consider its price, the amount of time and effort
required to obtain it and perhaps the resource required to maintain it after purchase.
At times, customers interpret a higher price as higher product quality. They are especially likely
to make this price quality association when they cannot judge the quality of the product
themselves. Marketer that rely on customers making a price quality association and that provide
moderate-or-low-quality products at high price will be unable to build long term customer
relationship.
When interpreting and responding to price, how to customers determine if the price is too high,
too low, or about right? They compare price with internal or external reference price. An internal
reference price is a price developed in the buyer’s mind through experience with the product. As
consumer our experiences have given each of us internal reference prices for a number of
products. An external reference price is a comparison price provided by other such as retailers
or manufacturers. When attempting to establish a reference price in customers’ mind by
advertising a higher price against which to compare the company’s real price, a marketer must
make sure the higher price is realistic, because if it is not customers will not use this price when
establishing or altering their reference price. Customers perception of price are also influenced
by their expectation about future price increase by what they paid for the product recently and by
what they would like to pay for the product.
Buyers perceptions of a product relative to competing products may allow the firm to set a price
that differs significantly from rivals prices. If the product is deemed superior to most of the
competition, a premium price may be feasible. Products with superior quality can be overpriced.
Strong brand loyalty sometime view a product less than favorably, a lower price may generate
sales.
The buyer can be characterized according to their degree of value consciousness, price
consciousness and prestige sensitivity. Marketers who understand these characteristics are better
able to set pricing objectives and policies. Value conscious consumers are concerned about both
price and quality of a product. Price-conscious individuals strive to pay low price. Prestige-
sensitive buyers focus on purchasing product that signify importance and status.

3. COMPETITION
A marketer needs to know competitors price so it can adjust its own prices accordingly. This does
not mean a company will necessarily match competitors, matching competitors prices is an
important strategy for survival.
When adjusting price a marketer must assess how competitors will respond. Will competitors
change their price and if so will they raise or lower them?
When an orgainsation operates as a monopoly and is unregulated it can set whatever prices the
market will bear. However, the company may not price the product at the highest possible level
to avoid government regulation or to penetrate a market by using a lower price. If the monopoly
is regulated it normally has less pricing flexibility; the regulatory body lets it set prices that
generate a reasonable but not excessive returns. A government owned monopoly may price
products below cost to make them accessible to people who otherwise could not afford them.
Companies in such industries can raise their price hoping competitors will do the same. When an
organization cuts its price to gain a competitive edge, other companies are likely to follow suit.
Thus very little advantage is gained through price cuts in an oligopolistic (a situation in which a
particular market is controlled by a small group of firms) market structure.
A market structure characterized by monopolistic competition has numerous sellers with product
offering that are differentiated by physical characteristic features, quality and brand images.
Buyers view all sellers product as the same. All firms sell their product at the going market price
and buyers will not pay more than that. This type of market structure then gives a market no
flexibility in setting price.

4. LEGAL AND REGULATORY ISSUES

Legal and regulatory issues influence pricing decision. To curb inflation the federal government
can invoke price controls, freeze price at certain levels or determine the rates at which price may
be increased. In some states, regulatory agencies set price on such product as insurance, dairy
product and liquor.
Regulation and laws affect pricing decision and activities. Marketer must refrain from fixing
prices by developing independent pricing policies and setting prices in ways that do not even
suggest collusion. Both the Federal Trade Commission act and the Wheeler-Lea Act prohibit
misleading pricing. The practice of providing price differentials that tend to injure competition
by giving one or more buyers a competitive advantage over other buyers is called price
discrimination and prohibited by law.

SKIMMING
Price skimming occurs in mostly technological markets as firms set a high price during the first
stage of the product life cycle. The top segment of the market which are willing to pay the
highest price are skimmed of first. When the product enters maturity the price is then gradually
lowered. Companies like BMW , Mercedes , Samsung , Sony do this mostly in all of their new
launches
Price skimming is a pricing strategy in which a marketer sets a relatively high price for
a product or service at first, then lowers the price over time.[1] It is a temporal version of price
discrimination/yield management. It allows the firm to recover its sunk costs quickly before
competition steps in and lowers the market price.
Price skimming is sometimes referred to as riding down the demand curve. The objective of a
price skimming strategy is to capture the consumer surplus early in the product life cycle in order
to exploit a monopolistic position or the low price sensitivity of innovators.[2]

• Price skimming is a product pricing strategy by which a firm charges the highest initial price
that customers will pay. As the demand of the first customers is satisfied, the firm lowers the
price to attract another, more price-sensitive segment.
Therefore, the skimming strategy gets its name from skimming successive layers of "cream," or
customer segments, as prices are lowered over time.
LIMITATION OF PRICE SKIMMING
There are several potential problems with this strategy.
• It is effective only when the firm is facing an inelastic demand curve. If the long run demand
schedule is elastic (as in the diagram to the right), market equilibrium will be achieved by
quantity changes rather than price changes. Penetration pricing is a more suitable strategy in
this case. Price changes by any one firm will be matched by other firms resulting in a rapid
growth in industry volume. Dominant market share will typically be obtained by a low cost
producer that pursues a penetration strategy.
• A price skimmer must be careful with the law. Price discrimination is illegal in many
jurisdictions, but yield management is not. Price skimming can be considered either a form
of price discrimination or a form of yield management. Price discrimination uses market
characteristics (such as price elasticity) to adjust prices, whereas yield management uses
product characteristics. Marketers see this legal distinction as quaint since in almost all cases
market characteristics correlate highly with product characteristics. If using a skimming
strategy, a marketer must speak and think in terms of product characteristics to stay on the
right side of the law.
• The inventory turn rate can be very low for skimmed products. This could cause problems
for the manufacturer's distribution chain. It may be necessary to give retailers higher margins
to convince them to handle the product enthusiastically.
• Skimming encourages the entry of competitors. When other firms see the high
margins available in the industry, they will quickly enter.
• Skimming results in a slow rate of stuff diffusion and adaptation. This results in a high level
of untapped demand. This gives competitors time to either imitate the product or leap frog it
with an innovation. If competitors do this, the window of opportunity will have been lost.
• The manufacturer could develop negative publicity if they lower the price too fast and
without significant product changes. Some early purchasers will feel they have been ripped
off. They will feel it would have been better to wait and purchase the product at a much
lower price. This negative sentiment will be transferred to the brand and the company as a
whole.
• High margins may make the firm inefficient. There will be less incentive to keep costs under
control. Inefficient practices will become established making it difficult to compete on value
or price.
PENETRATION
Penetration pricing is a pricing strategy where the price of a product is initially set low to
rapidly reach a wide fraction of the market and initiate word of mouth. The strategy works on the
expectation that customers will switch to the new brand because of the lower price. Penetration
pricing is most commonly associated with marketing objectives of enlarging market share and
exploiting economies of scale or experience.
The advantages of penetration pricing to the firm are:

• It can result in fast diffusion and adoption. This can achieve high market penetration rates
quickly. This can take the competitors by surprise, not giving them time to react.
• It can create goodwill among the early adopters segment. This can create more trade
through word of mouth.
• It creates cost control and cost reduction pressures from the start, leading to greater
efficiency.
• It discourages the entry of competitors. Low prices act as a barrier to entry
• It can create high stock turnover throughout the distribution channel. This can create
critically important enthusiasm and support in the channel.
• It can be based on marginal cost pricing, which is economically efficient.
The main disadvantage with penetration pricing is that it establishes long term price expectations
for the product, and image preconceptions for the brand and company. This makes it difficult to
eventually raise prices. Some commentators claim that penetration pricing attracts only the
switchers (bargain hunters), and that they will switch away as soon as the price rises. There is
much controversy over whether it is better to raise prices gradually over a period of years (so that
consumers don’t notice), or employ a single large price increase. A common solution to this
problem is to set the initial price at the long term market price, but include an initial discount
coupon (see sales promotion). In this way, the perceived price points remain high even though
the actual selling price is low.
Another potential disadvantage is that the low profit margins may not be sustainable long enough
for the strategy to be effective.
Price penetration is most appropriate where:

• Product demand is highly price elastic.

• Substantial economies of scale are available.
• The product is suitable for a mass market (i.e. enough demand).
• The product will face stiff competition soon after introduction.
• There is not enough demand amongst consumers to make price skimming work.
• In industries where standardization is important. The product that achieves high market
penetration often becomes the industry standard (e.g. Microsoft Windows) and other
products, whatever their merits, become marginalized. Standards carry heavy momentum.
A variant of the price penetration strategy is the bait and hook model (also called the razor and
blades business model), where a starter product is sold at a very low price but requires more
expensive replacements (such as refills) which are sold at a higher price. This is an almost
universal tactic in the desktop printer business, with printers selling in the US for as little as $100
including two ink cartridges (often half-full), which themselves cost around $30 each to replace.
Thus the company makes more money from the cartridges than it does for the printer itself.
Taken to the extreme, penetration pricing is known as predatory pricing, when a firm initially
sells a product or service at unsustainably low prices to eliminate competition and establish
a monopoly. In most countries, predatory pricing is illegal, although it can be difficult to
differentiate illegal predatory pricing from legal penetration pricing.

3.3 DISTRIBUTION MIX/PLACE

Different types of channel of distribution are as follows:

3.3.2 TYPES OF DISTRIBUTION CHANNELS

Manufacturers and consumers are two major components of the market. Intermediaries perform
the duty of eliminating the distance between the two. There is no standardised level which proves
that the distance between the two is eliminated.

Based on necessity the help of one or more intermediaries could be taken and even this is possibl
e that there happens to be no intermediary. Their description is as follows:

(A) Direct Channel or Zero Level Channels:

When the manufacturer instead of selling the goods to the intermediary sells it directly to the con
sumer then this is known as Zero Level Channel. Retail outlets, mail order selling, internet sellin
g and selling

(B) Indirect Channels:

When a manufacturer gets the help of one or more middlemen to move goods from the productio
n place to the place of consumption, the distribution channel is called indirect channel. Following
are the main types of it:

1. One Level Channel:

In this method an intermediary is used. Here a manufacturer sells the goods directly to the retaile
r instead of selling it to agents or wholesalers. This method is used for expensive watches and oth
er like products. This method is also useful for selling FMCG (Fast Moving Consumer Goods). T
his channel is clarified in the following diagram:

2. Two Level Channel:

In this method a manufacturer sells the material to a wholesaler, the wholesaler to the retailer and
then the retailer to the consumer. Here, the wholesaler after purchasing the material in large qua
ntity from the manufacturer sells it in small quantity to the retailer.
Then the retailers make the products available to the consumers. This medium is mainly used to s
ell soap, tea, salt, cigarette, sugar, ghee etc.

3. Three Level Channel:

Under this one more level is added to Two Level Channel in the form of agent. An agent facilitat
es to reduce the distance between the manufacturer and the wholesaler. Some big companies who
cannot directly contact the wholesaler, they take the help of agents. Such companies appoint thei
r agents in every region and sell the material to them.
Then the agents sell the material to the wholesalers, the wholesaler to the retailer and in the end t
he retailer sells the material to the consumers.

PUSH AND PULL STRATEGY

The business terms push and pull originated in logistics and supply chain management, but are
also widely used in marketing. Wal-Mart is an example of a company that uses the push vs. pull
strategy. A push–pull system in business describes the movement of a product or information
between two subjects. On markets the consumers usually "pull" the goods or information they
demand for their needs, while the offer s or suppliers "push" them toward the consumers. In
logistics chains or supply chains the stages are operating normally both in push - and pull-
manner. Push production is based on forecast demand and pull produc tion is based on actual or
consumed demand. The interface between these stages is called the push–pull
boundary or decoupling point.

PUSH STRATEGY
Another meaning of the push strategy in marketing can be found in the communication
between the seller and buyer. Depending on the medium used, the communication can be
either interactive or non-interactive. For example, if the seller makes his promotion by
television or radio, it's not possible for the buyer to interact. On the other hand, if the
communication is made by phone or internet, the buyer has possibilities to interact with the
seller. In the first case information is just "pushed" toward the buyer, while in the second case it
is possible for the buyer to demand the needed information according to the ir requirements.
• Applied to that portion of the supply chain where demand uncertainty is relatively small
• Production and distribution decisions are based on long term forecasts
• Based on past orders received from retailer's warehouse (may lead to Bullwhip effect)
• Inability to meet changing demand patterns
• Large and variable production batches
• Unacceptable service levels
• Excessive inventories due to the need for large safety stocks
• Less expenditure on advertising than pull strategy...

In a marketing "pull" system, the consumer requests the product and "pulls" it through the
delivery channel. An example of this is the car manufacturing company Ford Australia. Ford
Australia only produces cars when they have been ordered by the customers.

• Applied to that portion of the supply chain where demand uncertainty is high
• Production and distribution are demand driven
• No inventory, response to specific orders
• Point of sale (POS) data comes in handy when shared with supply chain partners
• Decrease in lead time
• Difficult to implement

Pull marketing is any method a company uses to generate demand for a product. This is
contrasted with “push” ma rketing, which is a strategy intended to sell out an existing supply of
a product.
Modern pull marketing uses various media channels to generate interest about a product or
company, encouraging customers to seek out the product or company on their own. Thi s is
especially popular and effective within Internet marketing, because pull marketing benefits
greatly from independent social behavior like word -of-mouth and the “viral” content effect.

Companies that produce or sells goods can use pull marketing to raise awareness about a
product before it becomes available for purchase. Though the results of the marketing
campaign are not certain until the product is made available, the manufacturer can save money
on production costs by producing fewer units of the product prior to launch, and using the
money they save to invest in pull advertising.
Ideally, the demand will exceed the supply, and the company will be able to set a higher price
because of this. This is exactly what happened with Tickle Me Elmo. Tyco p roduced only a small
number of dolls to start, but spent more time and money on market research and advertising.
The demand for the toy resulting from this advertising allowed Tyco to set higher prices for
their product simply because people were willing t o pay more to acquire the limited number of
dolls available.
Service industry companies use pull marketing to generate interest in new services or to create
positive feedback about the company. If a massage clinic, for example, wanted to increase its
business, it could use social media sites to encourage their customers to share information
about the clinic with their friends. People are much more likely to buy a product or visit a
business on the recommendation of a friend. Through social networking, the m assage clinic can
rely on some of its existing customers to “advertise” for the clinic through recommendations.

NEED AND ROLE OF DISTRIBUTION CHANNEL

A channel of distribution serves as the connecting link between the producer and consum ers. It
creates t ime and place utilities by bridging the gap between the time and place of produc tion
and those of consumption.

Channels of distribution increase the efficiency of marketing because the middlemen are
specialised agencies of distribution. They help to reduc e the cost of transactions and smoothen
the flow of goods and services.

Distribution agents facilitate search for buyers and sellers by keeping in touch with both. They
are in direct touch with consumers and understand the needs and preferences of consumer s. In
the absence of middlemen producers may be required to keep larger stock of goods.

Marketing intermediaries play a vital role in the distribution of goods and services. These
intermediates have wide contacts, expert knowledge and trade experience.

Therefore, they can achieve more efficient distribution than producers. Many producers do not
have the financial resources and expertise required for direct distribution. Manufactures
generally produce a large quantity of a limited variety of goods.

On the other hand, consumers generally desire only a limited quantity of a wide variety of
goods. Marketing intermediaries bridge the discrepancy between the assortment of goods and
services generated by the producer and assortment de manded by the consumers.

They smoothen the flow of goods and services. The role of intermedi aries has become
important due to increasingly wider markets and growing complexities of distri bution.

A channel of distribution performs the work of moving goods and services from producers t o
consumers. It overcomes the place, time and possession gaps that separate producers from
consumers. Marketing intermediaries perform following important functions.
i. Promotion:

Marketing intermediaries attract customers and persuade them to buy goods a nd services.
These intermediaries undertake sales promotion activities through media and personal
contacts.

ii. Negotiation:

Intermediaries or middlemen negotiate prices and other terms and condi tions between buyer
and seller. No sale can take place without an agreement on prices and other terms and
conditions.

iii. Information:

Middlemen collect information about demand, competition, etc., from con sumers and pass on
to manufacturers. They also provide information to consumers about new products, changes in
design, style, prices, etc., of existing products.

iv. Ordering:

Intermediaries collect small orders from consumers and on that basis place large orders with
manufacturers.

v. Physical possession:

Middlemen take possession of goods from producers and pass on possession to consumers.

vi. Transfer of title:

Middlemen transfer ownership of goods from producers to consumers.

vii. Financing:

Intermediaries provide financial, assistances at different stages of the market ing channel. They
buy goods in cash from producers and sell them to consumers on credit.

viii. Risk taking:

Intermediaries assume most of the risks involved in the distribution of goods. They relieve
producers from these risks and enable them to concentrate on pro duction.
PROMOTION/COMMUNICATION MIX

Communication is essentially the transmission of information. For communication to take place

both the sender and receiver of information must share some common ground. They must have a
common understanding of the symbols, words and picture used to transmit information.

A source is a person, group or organization with a meaning it attempts to share with an audience.
A source could be a salesperson wishing to communicate a sales message or a organization
wanting to send a message to thousands of customers through an advertisement.
A receiver is the individual, group or organisation that decodes a coded message, and a audience
is two or more receivers.
To transmit meaning a source must convert the meaning into a series of signs or symbols
representing ideas or concept. This is called the coding process or encoding. When coding
meaning into a message the source must consider certain characteristic of the receivers or
audience. Marketer who understand this realize the importance of knowing their target market
and ensuring that an advertisement. Feedback does exist for mass communication in the form of
measure of change in sales volume or in consumers’ attitude and awareness level. Each
communication channel has a limit on the volume of information it can handle effectively. This
limit called channel capacity is determined by the least efficient component of the
communication process. Communication that depends on speech. And individual source can
speak only so fast, and there is a limit to how much an individual receiver can take in aurally.
Eg:- A radio announcer can read several hundred words a minute a one minute advertising
message should not exceed 150 words because most announcers cannot articulate word into
understandable message at a rate beyond 150 word per minute.
Channel capacity can also relate to the types and amounts of information that can be
communicated over the Internet. Broadband connections through cable modem, DSL, or satellite
can increase the amount of information that can be sent and received.

TYPES OF MEDIA

Several promotional methods can be used to communicate with individuals, groups and
organizations. When an organization combines specific methods to manage the integrated
marketing communication for a particular product that combination constitute the promotion mix
for that product. The four possible elements of a promotion mix are as follows:

1. ADVERTISING
Advertising is a paid non personal communication about an organization and its product
transmitted to a target audience through mass media, including television, radio, the Internet,
newspapers, magazine, direct mail, outdoor display and signs on mass transit vehicles. Individual
and organization use advertising to promote goods services, ideas, issues, and people. Being
highly flexible advertising can reach an extremely large target audience or focus on a small,
precisely defined segment.
Advertising offers several benefits. It is extremely cost efficient when it reaches a vast number of
people at a low cost per persons. Advertising also lets the source repeat the message several
times. Advertising repetition has been found to be especially effective for brand name extension
beyond the original product category. Advertising a product certain way can add to its value, and
the visibility an organization gains from advertising can enhance its own or its image by image
by including celebrity endorsers in advertisements. Advertising has disadvantage the cost per
person reached may be low the absolute outlay can be extremely high, especially for
commercials during popular television shows. High costs can limit, and sometimes prevent, use
of advertising in a promotion mix. Advertising rarely provides rapid feedback. The time available
to communicate a message to customer is limited to seconds, since people look at a print
advertising for only a few seconds and most broadcast commercials are 30 seconds or less.

2. PERSONAL SELLING
Personal selling is a paid personal communication that seeks to inform customers and persuade
them to purchase product in an exchange situation. The phrase purchase product is interpreted
broadly to encompass acceptance of ideas and issues. Telemarketing described as direct selling
over the telephone, relies heavily on personal selling. However negative consumer attitude and
pending legislation restricting telemarketing have lessened as a personal selling technique.
Personal selling has both advantage and limitation when compared with advertising. Advertising
is general communication aimed at a relatively large target audience, whereas personal selling
involves more specific communication directed at one or several person. Reaching one person
through personal selling costs considerably more than through advertising but personal selling
effort often have greater impact on customers. Personal selling also provide immediate feedback
allowing marketers to adjust their message to improve communication. It helps them determine
and respond to customers information needs.
When a salesperson and a customer meet face to face they use several types of interpersonal
communication. A salesperson and customer frequently use kinesic communication or
communication through the movement of head, eyes, arms, hands, legs, or torse. Winking, head
nodding, hand gesture and arm motion are forms of kinesic communication. Proxemic
communication a less obvious form of communication used in personal selling situation occurs
when either person varies the physical distance separating them. Touching or tactile
communication is also a form of communication.
Management of salespeople is very important in making this component of promotion effective.
Salespeople who are directly involved in planning sales activities develop greater trust in their
firm and have increased sales performance. More than any other aspect of promotion the hiring,
training, and motivation of the people involved determine its success. Satisfaction with assigned
sales territories has also been linked to improved attitude, motivation and performance of
salespeople.
 3. PUBLIC RELATION
While many promotional activities are focused on a firm’s customers other stakeholder-suppliers,
employees, stockholders, the media, educators, potential investors, government officials and
society in general-are important to an organization.
Public relation is a broad set of communication efforts used to create and maintain favorable
relationship between an organization and its stakeholders. Public relation uses a variety of tools
including annual reports, brochures, event sponsorship and sponsorship of socially responsible
programs aimed at protecting the environment or helping disadvantaged individuals. Publicity is
nonpersonal communication in news story form about an organization or its products, or both
transmitted through a mass medium at no charge.
Public relations efforts may be the responsibility of an individual or of a department within the
organization or the organization may hire an independent public relation agency. Unpleasant
situation and negative events such as product tampering or an environmental disaster may
provoke unfavorable coverage effective marketers have policies and procedures in place to help
manage any public relation problems. Public relation should not be viewed as a set tools to be
used only during crises. An organization should have someone responsible for public relation
either internally or externally and should have an ongoing public relations program.

4. SALES PROMOTION
Sales promotion is an activity or material that acts as a direct inducement offering added value or
incentive for the product to reseller, salespeople or consumers. Marketer spend more on sales
promotion than on advertising and sales promotion appears to be a faster-growing area than
advertising. Coupons are especially important. When companies employ advertising or personal
selling they depend on them continuously or cyclically. However, a marketer’s use of sales
promotion tends to be irregular. Marketers frequently rely on sales promotion to improve the
effectiveness of other promotion mix ingredients, especially advertising and personal selling.
Decision to cut sales promotion can have significant negative effects on a company. Advertising
agencies assist business in several ways. An agency, especially a large one, can supply the
service of highly skilled specialists- not only copywriters, artists, and production coordinators,
but also media experts, researchers, and legal advisers. Agency personnel often have broad
advertising experience and are usually more objective than a firm’s employees about the
organization’s product.
Because an agency traditionally receivers most of its compensation from 15% commission paid
by the media from which it makes purchases, firm can obtain some agency services at low or
moderate costs.

PUBLIC RELATIONS AND PUBLICITY

Public relation is a broad set of communication efforts used to create and maintain favorable
relationship between an organization and its stakeholder. An organization communicates with
various stakeholders, both internal and external and public relation efforts can be directed
towards any and all of these. A firm’s stakeholder can include customers supplier, employees,
stockholders, the media, educators, potential investors, government officials and society.
Public relation can be used to promote people, places, ideas, activities and even countries. It
focuses on enhancing the image of the total organization. Assessing public attitude and creating
a favorable image are no less important then direct promotion of the organization product. The
public’s attitude towards a firm are likely to affect the sales of its product it is very important for
firm to maintain positive public perception.
Companies use a variety of public relations tools to convey messages and create images. Public
relations professionals prepare written material such as brochures, newsletters ,company
magazines, news releases and annual reports that reach and influence their various stakeholder.
Public relations personnal also create corporate identity material such as logos, business cards,
stationary, and sign that make firms immediately recognizable. Speeches are another public
relation tool. Event sponsorship in which a company pays for part or all of a special event such
as a benefit concert or a tennis tournament is another public relation tool.
Publicity is a part of public relations. Publicity is communication in news story form about the
organization, its products or both transmitted through a mass medium at no charge. Public
relation has a larger, more comprehensive communication function than publicity, publicity is a
very important aspect of public relation. Publicity can be used to provide information about
goods or services to announce expansions, acquisitions, research or new product launches; or to
enhance a company’s image.
The most common publicity based public relation too is the news release, sometimes called a
press release, which is usually a single page of typewritten copy containing fewer than 300
words and describing a company event or product. A news release gives the firm’s or agency’s
name, phone number, and contact person.
Eg: when Wal-Mart made a special effort to carry environmentally safe product and packaging,
its public relations department sent out news releases to newspaper, magazine, television
contacts, and suppliers, resulting in public relations in the form of magazine articles, newspaper
acknowledgment and television coverage. A feature article is a manuscript of upto 3,000 words
prepared for a specific publication. A captioned photograph is a photograph with a brief
description explaining the picture’s content. A press conference is a meeting called to announce
major news events. Media personnel are invited to press conference and are usually supplied
with written material and photographs. Letters to the editor and editorials are sometimes
prepared and sent to newspaper, magazine. Videos and audiotapes may be distributed to
broadcast stations in the hope that they will be aired.
Publicity-based public relations tools offer several advantages including credibility, news value,
significant word of mouth communication and a perception of being endorsed by the media.
Publicity-based-public relation tools have some limitations. Media personnel must judge
company messages to be newsworthy if the messages are to be published or broadcast at all.
Messages must be timely interesting, accurate, and in the public interest. Many communications
do not qualify. It may take a great deal of time and effort to convince media personnel of the
news value of publicity releases. Public relations personnel usually encourage the media to air
publicity release at certain times they control neither the content nor the timing of the
communication. Media personnel alter length and content of publicity release to fit publishers or
broadcasters requirement and may even delete the part of message that company personnel view
as most important. Messages sometimes appear in location or at times that may not reach the
firm’s target audience. These limitation can be frustrating, properly managed publicity-based-
public relation tool offer an organization substantial benefits.
STAGES AND TECHIQUE OF PERSONAL SELLING

1. PROSPECTING

Developing a list of potential customers is called prospecting. Salespeople seek names

of prospect from company sales records, trade shows, commercial databases, newspaper
announcements, public records, telephone directories, trade association directories and
many other sources. Sales personnel also use responses to advertisement that encourage
interested persons to send in information request forms. Seminars and meeting targeted at
particular types of client such as attorneys or accountants, may also produce leads.
A number of salesperson prefer to use referrals- recommendation from current customers
the sales person have a good relationship with the current customer and so must have
performed well before asking the customer for help. Sales expert indicate that the
advantages of using referrals are the resulting sales leads are highly qualified the sales
rates are higher initial transactions are larger and the sales cycles is shorter. Sales people
must actively search the customer base for qualified prospects who fit the target market
profile. After developing the prospect list, a sales person evaluates whether each prospect
is able willing and authorized to buy the products

2. PREAPPROACH

Before contacting acceptable prospects, a salesperson finds and analyzes information

about each prospect’s specific product needs, current use of brands feeling about
available brands and personal characteristic. The most successful salespeople are
thorough in their preapproach which involves identifying key decision makers, rev,
account histories and problems, preparing sales presentation, identifying product needs,
and obtaining relevant literature.

3. APPROACH

The approach the manner in which a salesperson contacts a potential customer, is a

critical step in the sales process. Creating a favorable impression and building rapport
with prospects first impression of the salesperson are usually lasting ones. During the
initial visit, the salesperson strives to develop a relationship rather than just push a
product. The salespersons may have t call on a prospect several times before the product.
The approach is inappropriate; the salesperson efforts are likely to have poor result.
Approach is based on referral: the salesperson approaches the prospect and explains that
an acquaintance, associate, or relative suggested the call. The salesperson who uses the
“cold canvass” approach calls on potential customers without prior consent. Repeat
contact is another common approach: when making the contact, the salesperson mentions
a previous meeting.
4. MAKING THE PRESENTATION

During the sales presentation, the salesperson must attract and hold the prospect’s
attention, stimulate interest and spark a desire for the product. The salespersons should
demonstrate the product. Audiovisual equipment and software may also enhance the
presentation. During the presentation the salesperson must not only talk but also listen.
The sales presentation gives the salesperson the greatest opportunity to determine the
prospect specific needs by listening to question and comment and observing responses.
The salesperson plans the presentation in advance, she or he must be able to adjust the
message to meet the prospect informational needs.

5. OVERCOMING OBJECTIONS

An effective salesperson usually seeks out a prospect objections in order to address them.
If they are not apparent the salesperson cannot deal with them and the prospect may not
buy. One of the best ways to overcome objections is to anticipate and counter them before
the prospect raises them. The approach can be risky because the salesperson may mention
objection that the prospect would not have raised. If possible the salesperson should
objections as they arise. They also can be addressed at the end of the presentation.

6. CLOSING THE SALE

Closing is the stage of the selling process when the salesperson asks the prospect to buy
the product. During the presentation the salesperson may use a “trail close” by asking
question that assume the prospect will buy the product. The salesperson might ask the
potential customer about financial terms, desired colors or sizes or delivery arrangement.
Reaction to such question usually indicate how close the prospect is to buying. One
questioning approach uses broad question(what, how, why) to probe or gather
information and focused question (who, when, where) to clarify and close the sales. A
trial close allow prospects to indicate indirectly that they will buy the product without
having to say those sometimes difficult words, “I” ll take it.
A salesperson should try to close at several points during the presentation because the
prospect may be ready to buy. One closing strategy involves asking the potential
customer to place a low-risky tryout order. An attempt to close the sale may result in
objections. Thus, closing can uncover hidden objections, which the sales person can then
address.

7. FOLLOWING UP

After a successful closing, the salesperson must follow up the sales. In the follow up
stage the salesperson determine whether the order was delivered on time and installed
properly, if installation was required. He or she should contact the customer to learn if
any problem or question regarding the product have arisen. The following stages is also
used to determined customer’s future product needs.
TYPES OF SALESPERSON

To develop a sales force, a marketing manager decides what kind of salesperson will sell
the firms product most effectively. Most business organisation use several different kinds
of sales personnel. Based on the functions performed salesperson can be classified into
three group: order getter, order taker, and support personnel.

ORDER GETTER
To obtain orders, a salesperson inform prospects and persuades them to buy the product.
The order getter’s job is to increase sales by selling to new customer and increasing
sales to present customer. This task sometimes is called creative selling. It requires that
salesperson recognize potential buyer’s needs and give them necessary information.
Order getting is sometimes divided into two categories: current-customer sales and new-
business sales.

CURRENT –CUSTOMER SALES

Sales personnel who concentrate on current customers call on people and organization
that have purchased products from the firm. These salespeople seek more sales from
existing customers by following up previous sales. Current customers can also sources of
leads for new prospect.

NEW-BUSINESS SALES
Business organization depends to some degree on sales to new business sales personnel
locate prospect and convert them into buyers. In many organizations, salespeople help
generate new business but organization that sell real estate, insurance, appliance, heavy
industrial machinery, and automobile depends in large part of new-customer sales.

ORDER TAKER
Taking orders is a repetitive task salespeople perform to perpetuate long lasting,
satisfying customer relationships. Order taker seek repeat sales. One major objective is t
be certain customers have sufficient product quantities where and when needed. Most
order taker handle orders for standardized product purchased routinely and not requiring
extensive sales effort. The role of order takers is changing, however. There are two
groups of order takers: inside order takers and field order takers.

INSIDE ORDER TAKERS

In many business inside order takers who work in sales offices, receive order by mail,
telephone and the Internet. Certain producers, wholesalers and retailer have sales
personnel who sell from within the firm rather than in the field. This does not mean that
inside order taker never communicate with customer face to face.
Eg:- retail salespeople are classified as inside order taker. As more are placed through
the Internet, the role of the inside order taker will continue to change.

FIELD ORDER TAKERS

Salespeople who travel to customer are outside or field order taker. Often customer and
field order taker develop interdependent relationship. The buyer relies on the salesperson
to take orders periodically. The salesperson counts on the buyer to purchase a certain
quantity of product periodically. Use of small computers has improved the field order
takers inventory and order tracking capabilities.
Field and inside order taker are not passive functionaries who simply record orders in a
machine like manner. Order takers generate the bulk of many organization total sizes.

SUPPORT PERSONNEL
Support personnel facilitate selling but usually are not involved solely with making sales.
They are engaged primarily in marketing industrial product, locating prospects, educating
customers, building goodwill, and providing service after the sale. There are many kinds
of sales support personnel: the three most common are missionary, trade, and technical
salespeople.

MISSIONARY SALESPEOPLE
It is usually employed by manufacture assist the producer’s customers in selling to their
own customers. Missionary salespeople may call on retailers to inform and persuade
them buy the manufacturer’s product. When they succeed, retailers purchase product
wholesalers, who are the producer’s customer. Manufacturers of medical supplies and
pharmaceutical often use missionary salespeople, called detail reps to promote their
product to physicians, hospitals and retail druggists.

SALES PROMOTION TYPES AND TECHNIQUES

Sales promotion is an activity or material or both that acts as a direct inducement,

offering added value or incentive for the product to reseller, salespeople or consumer. It
encompasses all promotional activities and materials other than personal selling,
advertising and public relations. The use of sales promotion has risen dramatically over
last few years, primilary at the expense of advertising. An organization often uses sales
promotion to facilities personnal selling, advertising or both. Companies also use
advertising and personal selling to support sales promotion activities.

TYPES OF SALES PROMTION

Most sales promotion and trade sales promotion. Consumer sales promotion methods
encourage or stimulate consumer to patronize specific retail stores or try particular
product. Trade sales, promotion methods stimulate wholesales and retailers to carry a
producer’s product and market those products more aggressively. They must consider
both product characteristic (size, weight, costs, durability, uses, features, and hazards)
and target market characteristic (age, sex, income, location, density, usage rate and
shopping pattern). How products are distributed and the number and types of resellers
may determine the type of method used. The competitive and legal environment may also
influence the choice.
1. COUPONS
It reduces a products price and are used to prompt customers to try new or established
products, increase sales volume quickly, attract repeat purchasers or introduce new
package sizes or features. Saving may be deducted from the purchase price or offered
as cash. The coupons should be easy to recognize and state the offer clearly. Coupons
are the most widely used consumer sales promotion technique. Paper coupons are
distributed on and in packages, trough free-standing inserts, in print advertising and
through direct mail. Electronic coupons are distributed, online, via in store- kiosks,
through shelf dispensers in stores and at checkout counters. The coupons distribution
and redemption arena had become very competitive. To draw customers to their stores,
grocers double and sometimes even triple the value of customers coupons.
Coupons offer several advantages. Print advertisements with coupons are often more
effective at generating brand awareness than are print ads without coupons. The larger
the coupons cash offer the better the recognition generated. Coupons reward present
product users win back former users and encourage purchases in larger quantities.
The advantages of using electronic coupons over paper coupons include lower cost
per redemption greater targeting ability improved data gathering capabilities and
improved experimentation capabilities to determine optimal face values and
expiration cycles.
Drawbacks of coupon use include fraud and misredemption which can be expensive
for manufacturers. Disadvantage according to some experts, is that coupons are losing
their value; because so many manufacturers offer them, consumers have learned not
to buy without some incentive, whether it is a coupon, rebate or refund. Brand loyalty
among heavy coupon users had diminished and many consumer redeem coupons only
for product they normally buy. The coupons have questionable success as an incentive
for consumers to try a new brand or product. An additional problem with coupons is
that stores often do not have enough of the coupons item in stock.

DEMONSTRATION
Demonstrations are excellent attention getter. Manufacturers offer them temporarily
to encourage trial use and purchase of a product or to show how a product works.
Labor costs can be extremely high, demonstration are not used widely. They can be
highly effective for promoting certain types of product such as appliance, cosmetic
and cleaning supplies.

FREQUENT-USER INCENTIVE
Do you have a “Sub Club Card” from Subways? Many firms develop incentive progr
ams to reward customer who engage in repeat purchases. Frequent-user incentives fos
ter customer loyality to a specific company or group of cooperating companies. They
are favored by service business such as airlines, auto rental agencies.

POINT OF PURCHASE DISPLAY

Point of purchase materials include outdoor signs, window displays counter peicesm
display racks and self-service cartons. Innovation in P-O-P display include sniff-tease
rs, which give off a product’s aroma in the store as consumers walk within a radius of
four feet and computerized interactive display. These item often supplied by producer
s, attract attention, inform customers and encourage retailers to carry particular produ
ct.

FREE SAMPLES
Marketer use free samples to stimulate trial of a product, increase sales volume in the
early stages of a product’s life cycle and obtain desirable distribution. Sampling is th
e most expensive sales promotion method because production and distribution-local e
vents by mail or door-to-door delivery, online, in stores and on packages entail high c
ost. In designing a free sample marketers should consider factor such as seasonal de
mand for the product, market characteristic and prior advertising. Free samples usuall
y are not appropriate for slow-turnover products. Consumers choose the free sample t
hey would like to receive and reqest delivery. The online company manages the packa
ging and distribution of the samples.

MONEY REFUNDS AND REBATES

With money refunds consumers submit proof of purchase and are mailed a specific a
mount of money. Manfactures demand multiple product purchases before consumers
quality for refunds. Rebates, the customer is snet a specified amount of money for ma
king a single purchase. Money refunds, used primarily to promote trial use of a produ
ct, are relatively low in cost, but because they sometimes generate a low response rate
, they have limited impact on sales.
One problem with money refunds and rebates is that many people perceive the redem
ption process as too complicated. Only about half of individual who purchase rebated
product actually apply for the rebates. Consumer pereceptions of manufacturers reaso
ns for offering rebates.

PREMIUMS
Premiums are item offered free or at minimal cost as a bonus for purchasing a product
. They are used to attract competitor customers, introuduce different sizes of establish
ed products add variety to other promotional efforts and stimulate consumer loyalty.
Creativity is essential when using premiums to stand out and achieve a significant nu
mber of redemptions the premium must match both the target audience and the brand’
s image. Premiums must also be easily recognizable and desirable. Premiums are plac
ed on or in package and can also be distributed by retailers or thorugh the mail.

CENTS-OFF OFFERS
With a cents-off offer, buyers pay a certain amount less than the regular price shown o
n the label or package. Similar to coupons, this method can be strong incentive for try
ing products. It can stimulate products sales, yield short-lived sales increases and pro
mote products in off seasons. It is an easy method to control and is often used of speci
fic purpose. However, if used on an ongoing basis, cents-off offers reduce the price fo
r customers who would buy at the regular price and amy also cheapen a product imag
e. In addition the method often require special handling by retailsers.
CONSUMER CONTEST AND GAMES
In consumer contest and games, individuals compete for prize based on analytical o
r creative skills. This can be used to generate retail traffic and frequencey of exposure
to promotional messages. Marketer should exercise care in setting up a contest or ga
me. Problems or error may anger customers or even result in lawsuits. Contestants are
usually more involved in consumer contest and games than in sweepstakes, even tho
ugh total participation amy be lower. Contests and game may be used in conjuncton
with other sales promotion methods, such as coupons.
 CONSUMER BEHAVIOUR

INTRODUCTION
Consumer behaviour is the study of individuals, groups, or organizations and the processes they
use to select, secure, and dispose of products, services, experiences, or ideas to satisfy needs and
the impacts that these processes have on the consumer and society.[1] It blends elements from
psychology, sociology, socialanthropology and economics. It attempts to understand the
decision-making processes of buyers, both individually and in groups. Customer behavior study
is based on consumer buying behavior, with the customer playing the three distinct roles of user,
payer and buyer.
Relationship marketing is an influential asset for customer behavior analysis as it has a keen
interest in the re-discovery of the true meaning of marketing through the re-affirmation of the
importance of the customer or buyer. A greater importance is also placed on consumer retention,
customer relationship management, personalization, customization and one-to-one marketing.

Who is a Consumer?
Any individual who purchases goods and services from the market for his/her end-use is called a
consumer.
In simpler words a consumer is one who consumes goods and services available in the market.
Example - Tom might purchase a tricycle for his son or Mike might buy a shirt for himself. In the
above examples, both Tom and Mike are consumers.
What is consumer Interest ?
Every customer shows inclination towards particular products and services. Consumer interest is
nothing but willingness of consumers to purchase products and services as per their taste, need
and of course pocket.

DEFINITATION OF CONSUMER BEHAVIOUR

Consumer behaviour is the study of individuals, groups, or organizations and the processes they
use to select, secure, and dispose of products, services, experiences, or ideas to satisfy needs and
the impacts that these processes have on the consumer and society
Factors Affecting Consumer Behavior
Consumer behavior refers to the selection, purchase and consumption of goods and services for
the satisfaction of their wants. There are different processes involved in the consumer behavior.
Initially the consumer tries to find what commodities he would like to consume, then he selects
only those commodities that promise greater utility. After selecting the commodities, the
consumer makes an estimate of the available money which he can spend. Lastly, the consumer
analyzes the prevailing prices of commodities and takes the decision about the commodities he
should consume. Meanwhile, there are various other factors influencing the purchases of
consumer such as social, cultural, personal and psychological. The explanation of these factors is
given below.
1. Cultural Factors
Consumer behavior is deeply influenced by cultural factors such as: buyer culture, subculture,
and social class.
Culture
Basically, culture is the part of every society and is the important cause of person wants and
behavior. The influence of culture on buying behavior varies from country to country therefore
marketers have to be very careful in analyzing the culture of different groups, regions or even
countries.
Subculture
Each culture contains different subcultures such as religions, nationalities, geographic regions,
racial groups etc. Marketers can use these groups by segmenting the market into various small
portions. For example marketers can design products according to the needs of a particular
geographic group.
Social Class
Every society possesses some form of social class which is important to the marketers because
the buying behavior of people in a given social class is similar. In this way marketing activities
could be tailored according to different social classes. Here we should note that social class is not
only determined by income but there are various other factors as well such as: wealth, education,
occupation etc.
2. Social Factors
Social factors also impact the buying behavior of consumers. The important social factors are:
reference groups, family, role and status.

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

Family
Buyer behavior is strongly influenced by the member of a family. Therefore marketers are trying
to find the roles and influence of the husband, wife and children. If the buying decision of a
particular product is influenced by wife then the marketers will try to target the women in their
advertisement. Here we should note that buying roles change with change in consumer lifestyles.
Roles and Status
Each person possesses different roles and status in the society depending upon the groups, clubs,
family, organization etc. to which he belongs. For example a woman is working in an
organization as finance manager. Now she is playing two roles, one of finance manager and other
of mother. Therefore her buying decisions will be influenced by her role and status.

3. Personal Factors
Personal factors can also affect the consumer behavior. Some of the important personal factors
that influence the buying behavior are: lifestyle, economic situation, occupation, age, personality
and self concept.
Age
Age and life-cycle have potential impact on the consumer buying behavior. It is obvious that the
consumers change the purchase of goods and services with the passage of time. Family life-cycle
consists of different stages such young singles, married couples, unmarried couples etc which
help marketers to develop appropriate products for each stage.
Occupation
The occupation of a person has significant impact on his buying behavior. For example a
marketing manager of an organization will try to purchase business suits, whereas a low level
worker in the same organization will purchase rugged work clothes.
Economic Situation
Consumer economic situation has great influence on his buying behavior. If the income and
savings of a customer is high then he will purchase more expensive products. On the other hand,
a person with low income and savings will purchase inexpensive products.
Lifestyle
Lifestyle of customers is another import factor affecting the consumer buying behavior. Lifestyle
refers to the way a person lives in a society and is expressed by the things in his/her surroundings.
It is determined by customer interests, opinions, activities etc and shapes his whole pattern of
acting and interacting in the world.
Personality
Personality changes from person to person, time to time and place to place. Therefore it can
greatly influence the buying behavior of customers. Actually, Personality is not what one wears;
rather it is the totality of behavior of a man in different circumstances. It has different
characteristics such as: dominance, aggressiveness, self-confidence etc which can be useful to
determine the consumer behavior for particular product or service.

5 stages of purchase behavior

A buying decision process (or cost–benefit analysis) describes the process a customer goes
through when buying a product. This buying decision model has gone through lots of
interpretation by scholars Although the models vary, there is a common theme of five stages in
the decision process.
These stages were first introduced by John Dewey (1910).The stages are:
Problem/Need recognition
Information search
Evaluation of alternatives
Purchase decision
Post-purchase behavior

These five stages are a good framework to evaluate customers' buying decision process.
However, it is not necessary that customers get through every stage, nor is it necessary that they
proceed in any particular order. For example, if a customer feels the urge to buy chocolate, he or
she might go straight to the purchase decision stage, skipping information search and evaluation

Problem/need-recognition
Problem/Need-recognition is the first and most important step in the buying decision. Without
the recognition of the need, a purchase cannot take place. The need can be triggered by internal
stimuli (e.g. hunger, thirst) or external stimuli (e.g. advertising). Maslow held that needs are
arranged in a hierarchy. According to Maslow's hierarchy, only when a person has fulfilled the
needs at a certain stage, can he or she move to the next stage.

Information search
The information search stage is the next step that the customers may take after they have
recognized the problem or need in order to find out what they feel is the best solution. This is the
buyers' effort at searching the internal and external business environments to identify and
observe sources of information related to the focal buying decision. Consumers can rely on print,
visual, and/or voice media for getting information.

Evaluation of alternatives
At this stage, consumers evaluate different products/brands on the basis of varying product
attributes, and whether these can deliver the benefits that the customers are seeking. This stage is
heavily influenced by one's attitude, as "attitude puts one in a frame of mind: liking or disliking
an object, moving towards or away from it". Another factor that influences the evaluation
process is the degree of involvement. For example, if the customer involvement is high, then
he/she will evaluate a number of brands; whereas if it is low, only one brand will be evaluated.

Purchase decision
This is the fourth stage, where the purchase takes place. According to Kotler, Keller, Koshy and
Jha (2009), the final purchase decision can be disrupted by two factors: negative feedback from
other customers and the level of motivation to comply or accept the feedback. For example, after
going through the above three stages, a customer chooses to buy a Nikon D80DSLR camera.
However, because his good friend, who is also a photographer, gives him negative feedback, he
will then be bound to change his preference. Secondly, the decision may be disrupted due to
unanticipated situations such as a sudden job loss or the closing of a retail store.

Post-purchase behavior
These stages are critical to retain customers. In short, customers compare products with their
expectations and are either satisfied or dissatisfied. This can then greatly affect the decision
process for a similar purchase from the same company in the future mainly at the information
search stage and evaluation of alternatives stage. If customers are satisfied, this results in brand
loyalty, and the information search and evaluation of alternative stages are often fast-tracked or
skipped completely. As a result, brand loyalty is the ultimate aim of many companies.
On the basis of either being satisfied or dissatisfied, a customer will spread either positive or
negative feedback about the product. At this stage, companies should carefully create positive
post-purchase communication to engage the customers.
Also, cognitive dissonance (consumer confusion in marketing terms) is common at this stage;
customers often go through the feelings of post-purchase psychological tension or anxiety.
Questions include: "Have I made the right decision?", "Is it a good choice?” etc.
 CHAPTER 5: E-MARKETING FOR SERVICE

E-marketing refers to the use of the Internet and digital media capabilities to help sell your
products or services. These digital technologies are a valuable addition to traditional marketing
approaches regardless of the size and type of your business. E-marketing is also referred to as
Internet marketing (I-marketing), online marketing or web-marketing.

As with conventional marketing, e-marketing is creating a strategy that helps businesses deliver
the right messages and product/services to the right audience. It consists of all activities and
processes with the purpose of finding, attracting, winning and retaining customers. What has
changed is its wider scope and options compared to conventional marketing methods.

E-marketing is deemed to be broad in scope, because it not only refers to marketing and
promotions over the Internet, but also includes marketing done via e-mail and wireless media. E-
marketing also embraces the management of digital customer data and electronic customer
relationship management (ECRM) and several other business management functions.

E-marketing joins creative and technical aspects of the Internet, including: design, development,
advertising and sales. It includes the use of a website in combination with online promotional
techniques such as search engine marketing (SEM), social medial marketing, interactive online
ads, online directories, e-mail marketing, affiliate marketing, viral marketing and so on. The
digital technologies used as delivery and communication mediums within the scope of e-
marketing include:

• Internet media such as websites and e-mail

• Digital media such as wireless, mobile, cable and satellite.

Electronic marketing is directly marketing a commercial message to a group of people using

email. In its broadest sense, every email sent to a potential or current customer could be
considered email marketing. It usually involves using email to send ads, request business, or
solicit sales or donations, and is meant to build loyalty, trust, or brand awareness. Email
marketing can be done to either sold lists or current customer database. Broadly, the term is
usually used to refer to:

• Sending email messages with the purpose of enhancing the relationship of a merchant
with its current or previous customers, to encourage customer loyalty and repeat business.
• Sending email messages with the purpose of acquiring new customers or convincing
current customers to purchase something immediately.
• Adding advertisements to email messages sent by other companies to their customers
Types of email marketing

Email marketing can be carried out through different types of emails:

Transactional emails

Transactional emails are usually triggered based on a customer’s action with a company.
Triggered transactional messages include dropped basket messages, purchase or order
confirmation emails and email receipts.

The primary purpose of a transactional email is to convey information regarding the action that
triggered it. But, due to its high open rates (51.3% compared to 36.6% for email newsletters)
transactional emails are a golden opportunity to engage customers; to introduce or extend the
email relationship with customers or subscribers, to anticipate and answer questions or to cross-
sell or up-sell products or services.

Many email newsletter software vendors offer transactional email support, which gives
companies the ability to include promotional messages within the body of transactional emails.
There are also software vendors that offer specialized transactional email marketing services,
which include providing targeted and personalized transactional email messages and running
specific marketing campaigns (such as customer referral programs).

Direct emails

Direct email involves sending an email solely to communicate a promotional message (for
example, an announcement of a special offer or a catalog of products). Companies usually collect
a list of customer or prospect email addresses to send direct promotional messages to, or they can
also rent a list of email addresses from service companies.

OBJECTIVES

E-marketing objectives define what you want to achieve through your e-marketing campaign.
They set the reasons why your business wants to go online and allow you to estimate and
monitor the progress of your online marketing activities. They also provide an incentive to focus
on critical areas and formulate strategies to help achieve intended objectives.

Different businesses may develop different e-marketing objectives depending on their individual
circumstances. A useful framework for developing effective e-marketing objectives is the five S’s
framework, which includes:

1. Sell – using the internet to sell products and services

2. Serve – using the internet to serve customers
3. Speak – using the internet to communicate with customers (both existing and potential)
4. Save – using the internet to save/ reduce cost
5. Sizzle – using the internet to build brand identity
When setting your e-marketing objectives, you need to make sure that they are:

• Specific – specify what is to be achieved

• Measureable – expressed in measurable terms such as key performance indicators,
outcomes, numbers, percentage, dollars, etc.
• Action-oriented – state which actions need to be taken and who will take them
• Realistic – achievable with the resources available
• Time Specific – establish specified time frames.

Examples of some typical e-marketing objectives could be:

• To achieve 20% online sales within the first year of launching online marketing
campaigns.
• To increase online sales for all products by 15% in 2011.
• To grow email coverage to 50% of the current customer base by the end of next year.
• To reduce the annual cost of direct marketing by 20% through e-mail marketing.
• To improve brand awareness, brand favorability and purchase intent by surveying 300
online customers each month.

WAYS TO CONDUCT ON-LINE MARKETING ACTIVITIES

In today’s internet age, building an online presence is imperative for all businesses to be
competitive. E-marketing provides businesses with access to mass markets at an affordable price
and allows them to undertake a personalized marketing approach. The flexible and cost-effective
nature of e-marketing makes it particularly suitable for small businesses.

Following are some of the benefits of e-marketing for small businesses:

• Wider prospect reach – the internet has become part of everyone’s life. So for whatever
products you offer, there is already an existing market on the World Wide Web. With e-
marketing, it allows you to find new markets and potentially compete worldwide with
only a small investment.

• Cost-effective approach – A properly planned and effectively targeted e-marketing

campaign can help your business reach target customers at a much lower cost compared
to traditional marketing methods.

• Reduction in costs through automation and use of electronic media – e-marketing

presents a strong business case in cost savings, particularly in the areas of transactional
costs, customer service, digital media channels, print and distribution.

• 24/7 marketing - with a website your customers can find out about your products and
make purchases even if your physical (bricks & mortar) premises are closed or you don’t
have physical premises at all.
 • Personalized one-on-one marketing - e-marketing allows you to reach people who want
to know about your products and services instantly. For example, many people take
mobile phones and PDAs wherever they go. By combining this with personalised e-
marketing, you can create very influential and targeted campaigns.

• Increased interactivity – e-marketing allows you to create interactive campaigns using

music, graphics and videos. Through two-way communications, interactive games or
quizzes, you can engage your audience and give them greater involvement and control
over their web experience.

• Increased ability to track results – e-marketing makes it easier to measure how effective
your campaigns are. It allows you to obtain detailed information about customers'
responses to your advertising, through the use of methods such as pay per click or pay per
action, etc.

However, before you get started with your e-marketing, it is very important to have some skills
and know-how in order to run an e-campaign effectively. If not, you run the risk of wasting your
valuable resources with a poor campaign.

E-commerce can be divided into:

• E-tailing or "virtual storefronts" on websites with online catalogs, sometimes gathered

into a "virtual mall"
• Buying or Selling on various websites and/or online marketplaces
• The gathering and use of demographic data through Web contacts and social media
• Electronic Data Interchange (EDI), the business-to-business exchange of data
• E-mail and fax and their use as media for reaching prospective and established customers
(for example, with newsletters)
• Business-to-business buying and selling
• The security of business transactions

BENEFITS OF E-MARKETING

The internet has changed customer shopping habits and with rapid technological developments
accessing the internet has become easier than ever. People can access the internet whenever and
wherever they like. Why do people like using the internet? Listed below are some of the benefits
of the internet for the customer.

Customers Stay Updated

The internet keeps customers updated through websites, emails, online adverts and social
networking sites. Many customers can access the internet on the move through things technology
such as smart phones and tablets. Manufacturers and retailers can instantly update their
customers through the internet.
Customers Can Compare Online

One of the greatest advantages for the customer is that they can compare products or services
they wish to purchase from the comfort of their own homes. Instead of having to visit a number
of different retail outlets, the user simply has to open different internet window tabs to compare
prices or features of the product/service they wish to purchase. Many retailing websites offer the
facility where different products they sell can now be easily compared. There is also price
comparison websites that customers can use to get the best possible price for their products.

Clear Product Information For the Customer

Websites offer clear and consistent product information to all internet users. There is little
chance of misinterpretation or mishearing what the sales person said as in a retail store. The
internet has comprehensive product information whereas in a shop the customer is reliant in the
knowledge of their sales advisor.

Transparent Pricing

Pricing online is very clear and transparent for the customer; customers can access pricing
information from a range of sellers with a few internet clicks. Customers can take advantages of
pricing that may change regularly or take advantages of special offers that last for a limited
period as they can access pricing information 24 hours a day/7 days a week. Whereas prices for
products offered for sale in retail premises can only be accessed whilst the store (or store
telephone lines are) open.

E-commerce

Electronic commerce, commonly known as e-commerce or eCommerce, is a type of industry

where the buying and selling of products or services is conducted over electronic systems such as
the Internet and other computer networks. Electronic commerce draws on technologies such as
mobile commerce, electronic funds transfer, supply chain management, Internet marketing,
online transaction processing, electronic data interchange (EDI), inventory management systems,
and automated data collection systems. Modern electronic commerce typically uses the World
Wide Web at least at one point in the transaction's life-cycle, although it may encompass a wider
range of technologies such as e-mail, mobile devices, social media, and telephones as well.

Electronic commerce is generally considered to be the sales aspect of e-business. It also consists
of the exchange of data to facilitate the financing and payment aspects of business transactions.
This is an effective and efficient way of communicating within an organization and one of the
most effective and useful ways of conducting business.
 Benefits Of A Virtual Tour
There are various reasons why adding a Virtual Tour to your (online) marketing can improve
your business. In general these benefits rely on the fact that 360 degree panoramic photography
greatly enhances location and product understanding and improves marketing
through visualisation.

Research which was done by some major real estate companies show the benefits of a Virtual
Tour with actual statistics.

• Visualization Benefits
Benefits For Real Estate: Potential customers can view a property in a much better way then
through traditional photography. Because a virtual tour makes a location more easy to understand,
clients that contact the real estate owner/seller are better informed and generally higher quality
contacts. Property has a virtual open-house 24/7 without the need to arrange catering and cleanup
of the place every time a group want to see the property.

Benefits For Hotels/Resorts

People decide quicker to book your hotel/resort when they can form a good impression through a
Virtual Tour. It is proven that 73% of the people who research their holiday accommodation
online visit two or more websites before making a booking. When your website provides these
potential visitors with good visualization, the customer can form a better and faster decision to
book.
• Exposure Benefits

The location or place you present with a Virtual Tour will get additional exposure. People are
more likely to visit your website again just to experience the virtual immersive effect and enjoy
the views. There is a higher chance that visitors of your website will refer the virtual experience
to family and friends.

• Benefits Compared To Competition

An online Virtual Tour makes your website and location/property undoubtedly stand out between
your competitors. Standing out between competitors generally means a better business.