WEEK-8

CONSUMER MARKETS

Dr. Philip Kotler and Dr. Gary Armstrong described consumer market as “all the individuals
and households that buy or acquire goods and services for personal consumption.” The products
that consumers utilize in their daily lives dominate this sector.

A consumer participates in a consumer market when he purchases an item for his own use.
The term "consumer market" refers to both products and services. Because the product or service
being acquired is for personal use, the consumer has a lot of decision-making authority.

The study of consumer buying behavior is crucial for marketers because it allows them to
understand what consumers expect. It aids in comprehending what motivates a customer to
purchase a product. It is critical to examine the types of products that consumers want before
releasing them onto the market.

FACTORS THAT INFLUENCE CONSUMER BUYER BEHAVIOR

Cultural, social, personal, and psychological factors all influence consumer buying behavior.
Although many of these variables are beyond the marketer's control, they can be beneficial in
identifying prospective consumers and modifying products and appeals to effectively satisfy their
needs.

A. Cultural Factors

Culture is the most fundamental influence of a person's desires and actions. Marketers are
constantly seeking for cultural developments in order to discover additional features and
products that may be preferred by customers.

McDonald's is the best example of culture's impact on customer behavior. In the United
States, the United Kingdom, India, and China, the same McDonald's serves a variety of burgers.
McDonald's would not have been able to expand outside of the United States if it had retained
the same taste in all of these countries.

The culture of a country can be understood at a macro level, however many countries are
also divided into subcultures. Religion and location are two factors that influence the formation of
subcultures. Marketers frequently create products and marketing programs suited to the needs of
various subcultures, which make up significant market segments.

Social classes are society's remarkably constant and orderly categories with people who have
similar beliefs, interest, and attitudes. Marketers are interested in social class because members
of the same social class have similar purchasing patterns. Social classes have a diverse range of
product and brand preferences in clothing, automobiles, travel and leisure activity and especially
financial services.

B. Social Factors

Product and brand selections are heavily influenced by a person's reference groups, which
include family, friends, social networks, and professional organizations. The family is society's
most significant consumer purchasing unit, and it has been extensively studied through the years.

A person is a member of a variety of groups, including family, clubs, organizations, and online
communities. For each group, a person's position can be characterized in terms of both role and
status. Someone who works as a manager is also a wife and a mother at home. Individuals'
purchasing habits are influenced by the role they play in society.

C. Personal Factors.

The products and brands that an individual chooses for himself or herself are directly
influenced by the nature of his or her work or occupation. Marketers aim to figure out which
occupations have a higher than average interest in their products and services.

Over the course of their lives, people modify the products and services they purchase. Food,
clothing, furniture, and recreational inclinations are frequently linked to age. A person's lifestyle
is reflected in his or her psychographics as a way of living. When utilized correctly, the lifestyle
concept can aid marketers in establishing a better understanding of evolving customer values and
how they affect purchasing behavior.

Personality refers to a person's or a group's distinct psychological traits. The concept is that
brands have personalities as well, and that consumers are more likely to choose businesses that
have personalities that are identical to their own. Marketers must first grasp the relationship
between customer self-concept in order to comprehend consumer behavior.
D. Psychological Factors

A motive is a compelling need that drives a person to seek fulfillment of a need. There are
many other elements that influence people's decisions to acquire goods and services. A thirsty
person would willingly spend money on soft drinks, bottled water, juice, and other beverages.

A person's perspective of a product or service is what he or she thinks about it. For some, a
Samsung phone may be the best android mobile phone available, while for others, it may simply
be one of the best brands. Due to differences in perception, people with identical needs may not
purchase similar items.

Learning comes only through experience. Only when a person uses a product or service does
he or she gain knowledge about it. When a person is pleased with a product or service, he or she
is more likely to purchase it again.

Marketers are interested in people's beliefs of certain products and services because these
beliefs shape product and brand images, which influence purchasing behavior. A person's
attitudes follow a pattern, and changing one may entail significant changes in many others. As a
result, rather than attempting to modify attitudes, a business should normally strive to fit its
products into established attitude patterns.

TYPES OF BUYING DECISION BEHAVIOR

There are four different types of consumer buying behavior based on the level of buyer
participation and the degree of brand differentiation. When customers are emotionally invested
in an expensive, infrequent, or risky purchase but see little difference between brands, they
engage in dissonance-reducing buying behavior.

When there is little consumer interaction and little substantial brand difference, habitual
buying behavior emerges. When consumers are emotionally invested in a purchase and perceive
significant differences between brands, they engage in complex buying behavior. Meanwhile,
when there is little customer involvement but large perceived brand differences, consumers
indulge in variety-seeking buying behavior.

THE BUYER DECISION PROCESS

 According to John Dewey, consumers go through five stages when they are considering a
purchase. These are need recognition, information search, evaluation of alternatives, the
purchase decision, and postpurchase behavior.

1. Need Recognition

This is the first stage of consumer decision process in which the consumer recognizes the
problem or need and, as a result, determines what product or type of product will best meet that
need. It is seen as the first and most important phase in the process, because if customers do not
identify a problem or need, they are unlikely to explore a solution.

Internal and/or external stimuli can elicit the drive. Internal stimuli refers to the consumer's
own personal views, such as hunger, thirst, and so on. External stimuli are outside influences such
as word-of-mouth or advertising. At this point, the marketer should conduct studies on customers
to determine what types of needs or issues they have, what caused them, and how they lead
them to this certain product.

2. Information Search

A prospective customer may or may not look for more information. When a consumer's need
is strong and a suitable product is close by, he or she is more likely to purchase it. If not, the
consumer can recall the need or conduct an information search connected to it.

Consumers have always acquired the most information about a product from commercial
sources—those under the control of the marketer. Personal sources, on the other hand, tend to
be the most effective. Personal sources (family, friends, neighbors, collegues, acquaintances)
validate or review products for the customer, whereas commercial sources usually inform the
client.
 The marketing mix must be designed in such a way that potential customers are aware of and
informed about the company's brand. It should thoroughly determine the information sources
accessed by customers, as well as the relevance of every source.

3. Evaluation of Alternatives

Next, marketers must understand alternative evaluation, or how customers analyze

information in order to pick between competing brands. In all purchasing contexts, customers do
not employ a straightforward and uniform evaluation method. Rather, a number of assessment
procedures are undertaken.

Consumers assess all of their product and brand alternatives on a degree of qualities that have
the potential to provide the value that the customer is searching for during this phase. Customers
should be analyzed by marketers to discover how they perceive product alternatives. Marketers
who understand the evaluating process can take actions to sway the purchaser's decision.

4. Purchase Decision

During this period, the consumer may decide to purchase the most desired brand after
weighing all of the options and determining the value it would provide. In most cases, the
consumer's purchasing decision will be to acquire the most favored brand, but there are two
aspects that can intervene between purchase intention and purchase decision.

5. Post-purchase Behavior

The final stage of the consumer decision process is post-purchase behavior, in which the
customer evaluates whether he is satisfied or dissatisfied with a purchase. The customer's
feelings about a purchase will have a massive impact on whether or not he orders the product
again or considers other products from the brand.

The relation between the consumer's expectations and the product's perceived performance
holds the key. The consumer feels dissatisfied if the product does not meet their expectations;
satisfied if it meets their expectations; delighted if it surpasses their expectations.

BUSINESS MARKETS

Companies selling to enterprises must attract business clients and establish successful
relationships with them by delivering superior customer value, just as they do when selling to
end-users.
 Entities that acquire products and services to use in the manufacture of other products and
services that are sold, rented, or supplied to other entities or consumers are known as business
markets. Marketers must mean making every effort to fully comprehend business markets and
buyer behavior. They must then approach business clients and create successful relationships
with them, similar to enterprises that sell to ultimate buyers.

MAJOR INFLUENCES ON BUSINESS BUYERS

Factors in the current and predicted economic environment, such as the level of primary
demand, the economic forecast, and the cost of money, have a significant impact on business
customers. Technological, political, and competitive developments in the environment also have
an impact on business customers. Finally, culture and customs can influence business buyer
reactions to marketer behavior and approaches.

Organizational factors play a role as well. Each buying company has its own goals, plans,
framework, methods, and operations, which the business marketer must fully comprehend. Since
the buying center generally comprises a lot of people who engage each other, interpersonal
issues have an impact on the business buying process. Members may influence the purchasing
process because they have control over rewards and punishments, are well-liked, have specialized
knowledge, or have a special relationship with other key players.

TYPES OF BUYING SITUATIONS

There are three different forms of buying situations. The customer reorders something
without applying any changes in a straight rebuy. Because the initial purchase of the product and
supplier has already occurred, these transactions are generally routine and can be managed fully
by the purchasing department.

The buyer seeks to change product details, prices, conditions, or providers in a modified
rebuy. A firm that is purchasing a product or service for the first time has a new challenge. In such
circumstances, the higher the cost or risk, the larger the number of decision makers and the
deeper the company's data gathering activities.

The greatest impact and challenge for marketers is the new task situation. Not only does the
marketer attempt to engage with as many key purchasing influences as possible, but he or she
also offers assistance and information. In the straight rebuy, the buyer makes the least decisions,
whereas in the new task decision, the buyer makes the most.
BUYING CENTER

The buying center is a purchasing organization's decision-making unit. It is made up of all the
people and units involved in the company purchase decision-making process. Members of the
organization who will consume the product or service are known as users. Users often begin the
purchasing proposal and assist in the definition of quality standards.

Influencers usually assist in the definition of requirements as well as the dissemination of

information for assessing potential alternatives. Influencers in the technical field are very crucial.
Buyers have formal authority to choose suppliers and negotiate purchasing conditions. Buyers
may assist in the development of product standards, but their primary responsibility is in supplier
selection and negotiations.

In more intricate transactions, purchasers may enlist high-ranking officers in the negotiation
process. The selected suppliers are chosen or approved by the deciders, who have formal or
informal authority. Buyers are frequently the decision-makers, or at the very least the validators,
in everyday purchases.

The dissemination of information to others is controlled by gatekeepers. Purchasing agents,

for example, frequently have the authority to restrict salespeople from visiting users or deciders.
Technical personnel and even personal secretaries are among the other gatekeepers.

THE BUSINESS BUYER DECISION PROCESS

According to Kotler and Armstrong (2019), there are eight stages of business buyer decision
process. Buyers who are confronted with a new project go through these stages of the buying
process. Modified or straight rebuys, on the other hand, may bypass a few of the steps.

Problem Recognition

When someone in the organization identifies an issue or need that could be met by
purchasing a certain product or service, the buying process commences. Internal or external
stimuli can lead to problem recognition.
 Internally, the firm may opt to release a new product that involves the purchase of new
manufacturing equipment and supplies. A machine may also break down and demand
replacements. Externally, the buyer might obtain various fresh concepts at a trade fair, read an
advertisement or website, or get a call from a salesman offering a superior product or a lower
cost.

General Need Description

Following the identification of a need, the buyer creates a general need description, which
details the attributes and amount of the required product. The group may choose to prioritize the
significance of the item's reliability, durability, pricing, and other desired features. The alert
company marketer can assist buyers in defining their needs and providing information about the
value of various product features during this stage.

Product Specification

Following that, the purchasing organization creates the technical product requirements for
the item, sometimes with the assistance of a value analysis engineering team. The team chooses
the best product features and specifies them precisely. Value analysis can also be used by sellers
to assist them establish a new account. External sellers can convert straight rebuy situations into
new task situations, offering a chance to acquire new business, by teaching consumers a better
way to produce a product.

Supplier Search

To spot the finest suppliers, the buyer now does conducts a supplier search. By browsing
through trade directories, conducting web searches, or approaching other businesses for advice,
the buyer can develop a brief list of qualified suppliers.

The buyer will spend more time looking for distributors. the newer the buying task is and the
more sophisticated and expensive the item is. The objective of the supplier is to get included in
key directories and establish a positive image in the industry. Salespeople should keep an eye out
for organizations who are looking for suppliers and ensure that their company is considered.

Proposal Solicitation
 The buyer requests prospective suppliers to present proposals during the proposal
solicitation stage of the business buying process. Some suppliers will respond by directing the
customer to their website or promotional materials, or sending a salesperson to the prospect.

In response to buyer proposal solicitations, business marketers must be capable of

researching, developing, and presenting proposals. Proposals should not only be technical
documents, but also marketing documents. Presentations should instill trust in the audience and
distinguish the marketer's company from the competitors.

Supplier Selection

Buying centers frequently create a list of desirable supplier qualities and their relative
relevance during supplier selection. Product and service quality, reputation, on-time delivery,
ethical business behavior, honest communication, and competitive prices are examples of such
characteristics. Members of the buying center will evaluate suppliers based on these criteria and
select the best providers.

Before making final decisions, buyers may try to negotiate better rates and terms with
selected suppliers. They may choose a single supplier or a group of providers in the end. Many
purchasers want various sources of supplies to avoid being completely limited to a single supplier
and to compare pricing and performance over time.

Order-routine Specification

The client is now starting on a regular order specification. It covers technical parameters,
quantity required, projected delivery schedule, refund policy, and warranties, as well as the final
order with the preferred supplier or suppliers.

Performance Review

The buyer evaluates the performance of the provider at this stage. Users may be contacted
by the buyer and asked to rate their experience. The buyer may decide to keep, alter, or
terminate the agreement based on the performance assessment. The seller's role is to keep track
of the same criteria that the buyer uses to ensure that the seller is providing the required
standard of service.

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WEEK-9

MARKET SEGMENTATION

Kotler and Armstrong (2019) stated that market segmentation entails “dividing a market
into diverse groups of customers with different needs, attributes, or behaviors and who may
require separate marketing methods or mixes.” The business analyzes various market
segmentation strategies and generates profiles for the resulting market niches.

Customers vary in their demands, capabilities, locations, purchasing habits, and buying
behaviors in any market. Market segmentation allows businesses to break down broad,
diversified markets into smaller groups that may be targeted more efficiently and effectively with
product and service offerings matched to their specific requirements.

Organizations that divide their markets effectively get tremendous benefits. According to a
Bain & Company survey, 81% of employers believe segmentation is vital in increasing revenues.
Over a 5-year period, Bain revealed that companies with successful segmentation strategy made a
10% higher profitability than firms with ineffective segmentation methods. Nike, Mercedes-Benz,
and Coca-Cola have all used segmentation to boost sales, manufacture superior products, and
communicate more effectively with their potential consumers.

BENEFITS OF MARKET SEGMENTATION

According to Thakur (2021), the following are the benefits that market segmentation brings
to the company:

A. Creates and Provides Market Opportunities

Market segmentation aids in the search and development of significant market prospects.
Market segments where consumers are dissatisfied with rival brands provide opportunities for
the company to specialize and create its brand. Companies can act in these categories to supply
customers with a superior product than what is already available on the market, earning the
consumer's trust.

B. Effective Market Campaigning

Since the company understands its customers and their demands, the marketing team can
proceed to the modification or personalization of their campaigns as well as coordination of their
plans to satisfy those needs, which is highly related to the company's performance.

C. Higher Customer Satisfaction

Market segmentation organizes or steers a firm's marketing activities in a certain market

segment to be more customer and market-oriented, allowing businesses to effectively serve its
customers and boost customer satisfaction, which is the ultimate objective of the firm.

D. Customer Retention

When a company gets to know its customers, it can better respond to their needs, and the
customer's experience with the market brand can encourage them to connect with the
product/service. Consumers, particularly in the case of airlines and hospitals, favor
products/services that they have previously enjoyed.

E. Increases Competitiveness

The marketing team will come up with new ground-breaking concepts to enhance their
product effectively in order to stand out among the competitors as the intended audience
becomes more known to the company. Several deals and promotions can assist the marketing
team in attracting more customers, and a deeper understanding of them will serve in establishing
brand loyalty.

F. Wise and Efficient Use of Resources

Market segmentation and effective market research can help the firm save a lot of time,
money, and resources in their marketing strategy. Also, because customers are grouped according
to their needs, commonalities, preferences, statuses, and other variables, marketers can more
easily target their audience. As a result of market segmentation, the campaign management
method is streamlined and effective.
G. Increases Profitability

It enables a company to target specific market segments and, as a result, identify better
commercial prospects within that market segment. Marketers can then organize their campaigns
based on the demands and needs of the chosen market segment, resulting in increased business
profitability.

H. Higher Rate of Success

Market segmentation entails studying market. It aids in the division of a broader market
into smaller units and informs marketers of the market's/consumers' capabilities, reducing the
risk of loss and increasing the likelihood of company success.

TYPES OF MARKET SEGMENTATION

There are four main customer segmentation models that should form the focus of the
marketing approaches and strategies. These are demographic, psychographic, geographic, and
behavioral.

A. Demographic Segmentation: The Who

The most common basis for dividing customer groups is demographic variables. Consumer
needs, demands, and consumption rates are frequently linked to demographic factors. Age, life-
cycle stage, gender, income, occupation, education, religion, ethnicity, and generation are all
parameters that are used to segment the market.

Other types of factors are more complex to assess than demographic variables. Marketers
need to identify a segment's demographic features to determine the size of the target market and
approach it successfully, even if they first create segments based on other criteria such as benefits
sought or behavior.

B. Psychographic Segmentation: The Why

Psychographic segmentation classifies customers into groups based on their lifestyle or

personality traits. This can be a more difficult set to identify compared to demographic
segmentation. Psychographic attributes of people in the same demographic category might vary
immensely. People's purchases are a reflection of their lifestyles and personalities.
 As a result, marketers frequently segment their markets based on these and develop
marketing techniques to appeal to those potential consumers whose lifestyles and personalities
may be catered by the product and service offerings of the firm. Good research and customer
study is crucial. Psychographic segmentation, when performed correctly, may result in very
compelling marketing that customers feel appeals to them on a much deeper level.

C. Geographic Segmentation: The Where

Geographic segmentation is the process of dividing a market into different geographical

units, such as countries, regions, states, counties, cities, and even neighborhoods. A firm may
choose to operate in just one or a few geographical locations, or it may choose to engage in all
areas while taking into account regional variances in needs and preferences.

Since the products and services that consumers buy, how they use them, and how much
they are prepared to invest on them are typically depending on their demographic profiles,
demographic segmentation is one of the basic and most widely utilized methods of segmentation.

D. Behavioral Segmentation: The How

Buyers are divided into groups based on their knowledge, attitudes, uses, or responses to a
product in behavioral segmentation. Many marketers believe that the best place to start when
creating market segments is with behavior variables.

For example, younger customers may prefer to purchase body wash, whilst older customers
may prefer soap bars. Marketers can establish a more targeted strategy by segmenting markets
based on buying behaviors.

REQUIREMENTS FOR EFFECTIVE SEGMENTATION

Measurable: Measurable segmentation variables are those that are directly associated to a
product purchase. The business should be able to predict or calculate how much their target
market will spend on their product offering. The segments' size, purchasing power, and profiles
must all be measured.
Accessible: Market segments can be accessed and served efficiently. It's one thing to understand
the customers and another to be able to communicate with them. The features and behavior of
the segment should assist the firm in determining the best approach to accommodate their needs.

Substantial: The market segments must be relatively large or economical to cover. A segment
should be the largest homogeneous set of people worth engaging with a targeted marketing
campaign. It must also have the ability to purchase the firm’s product and/or service offerings.

Differentiable: The segments must be fundamentally diverse and respond to various marketing
mix elements and strategies in various ways. Men and women do not form discrete categories if
they react comparably to soft drink marketing activities.

Actionable: When introduced to the market offering, the market segment must exhibit a
differentiated response. This demands that each of the company's divisions be unique and
distinguishable from the others.

MARKET-TARGETING STRATEGIES

The organization must select which and how many segments it will target after assessing
various segments. Market targeting can take place on a variety of levels. According to Kotler and
Armstrong (2019), businesses can target very broadly (undifferentiated marketing), very narrowly
(micromarketing), or somewhere in between (differentiated or concentrated marketing).

A. Undifferentiated (mass) Marketing

A company may choose to disregard market segment differences and target the whole
market with a single offer. Instead of focusing on what is unique about consumers' needs, such an
approach centers on what they have in similar. The business creates a product and a marketing
strategy that will interest to the widest possible audience.

B. Differentiated (segmented) Marketing

A business aims to target various market segments and creates distinct offerings for each
using a differentiated marketing (or segmented marketing) strategy. Firms strive to boost sales
and strengthen their position within each market segment by providing product and marketing
variations to divisions. More overall sales are generated by establishing a stronger position within
various segments than undifferentiated marketing.
C. Concentrated (niche) Marketing

Instead of aiming after a limited portion of a vast market, a company employs a

concentrated marketing (or niche marketing) strategy to go after a significant share of one or a
few smaller segments or niches.

Because of its superior awareness of consumer needs in the niches it covers and the unique
reputation it creates, the company achieves a strong market position through concentrated
marketing. It can promote more effectively by tailoring its products, prices, and programs to the
needs of specific customer categories. It may also advertise more effectively by focusing its
products, channels, and communications campaigns on only the customers it can best serve and
most profitably.

D. Micromarketing (local or individual marketing)

Micromarketing is the process of customizing marketing strategies to the preferences of

particular individuals and customer segments in a local market. Micromarketers see the person in
every customer rather than a customer in every person. Micromarketing encompasses both local
and individual marketing.

Local marketing entails customizing brands and promotions to local customers' needs and
demands, which might be from cities, neighborhoods, and even specific stores. Micromarketing
can become individual marketing when products and marketing campaigns are tailored to the
needs and preferences of specific customers. One-to-one marketing, mass customization, and
markets-of-one marketing are all terms used to describe individual marketing.
WEEK-11

PRODUCT

Kotler and Armstrong (2019) defined product in their book Principles of Marketing as
“anything that can be offered to a market for attention, acquisition, use, or consumption that
might satisfy a want or need.” Products do not only include tangible objects. Services, events and
experiences, persons, organizations, places, information and ideas, as well as a combination of
these, are all considered products. It's a broad term for anything a company intends to market to
their customers (an individual consumer or another business). The item that satisfies a customer's
need and demand is referred to as a product.

PRODUCTS, SERVICES, AND EXPERIENCES

Services also play an important role in the world economy. It is defined as a form of product
that primarily comprises of intangible activities, utilities, or satisfactions that are provided but do
not end in ownership of anything. The American Marketing Association also defines services as
“activities, benefits and satisfactions which are offered for sale or are provided in connection with
the sale of goods.”

The market offering of a business typically involves both tangible and intangible goods and
services. At one extreme, the market offer can be a mere tangible good like shampoo, sugar and
soap with no accompanying services. Pure services, on the other hand, have a market offer that is
primarily comprised of a service. A doctor's check-up and management consultation services are
examples of this. Many goods-and-services pairings are also available between these two
extremes.

As products and services are becoming more decentralized, many businesses are stepping
up their efforts to provide value to their customers. They are establishing and managing
consumer experiences with their brands or firms to distinguish their offers beyond merely
manufacturing items and providing services. Experiences are planned events that engage
consumers in the brand by stimulating their senses, resulting in a strong, emotional bond with the
firm. For some businesses, experiences have long been a key aspect of their marketing strategy.
Currently, a wide range of businesses are recasting their traditional goods and services in order to
generate experiences.

LEVELS OF PRODUCT AND SERVICES

Products are perceived by consumers as intricate bundles of benefits that meet their needs.
Since each consumer is unique and seeks distinct benefits from items, firms should personalize
their offerings to meet each customer's needs and expectations. Many organizations, however,
are unable to do this, and as a result, they require a method of categorizing products in a
structure that is linked with client segments as described by their wants and needs.

Philip Kotler developed a model that recognizes five levels of customer need, ranging from
functional or basic needs to emotional needs. The model also recognizes that products are only a
means to meet the diverse needs and wants of the customers. Product designers must consider
products and services from three levels: core customer value, actual product, and augmented
product.

The Core Customer Value

The most fundamental level is core customer value, which answers the question: What
exactly is the buyer buying? Marketers must first determine the key, problem-solving benefits or
services that consumers seek before developing goods.

A customer who buys a nutritious snack bar, for example, may be looking for health,
convenience, or just hunger alleviation. A student who buys low-cost, durable sneakers may
simply be looking for shoes. Since it is so customized and often unclear, the core product is
complex. In order to effectively identify the core product, the marketer must have a thorough
grasp of the target consumer (and the various segments of target customers).

The Tangible/Actual Product

The tangible product becomes vital once the core product has been determined. The
tangible components of a product are those that can be felt and held. This concept can be
broadened to encompass product attributes that have a direct impact on the buyer's purchasing
decision. The product features, quality level, brand name, styling, and packaging are the product
elements that the customer will employ to assess and create decisions. These elements are
present in every product to some degree, and they are what the consumer considers when
comparing options.

The Augmented Product

The tangible products along with all of the services that support it comprise the augmented
product. Oftentimes, the buyer anticipates these benefits and services and will discard the
tangible product if they are not provided. If you purchase at a shopping mall, for example, you're
probably focused on a core and tangible product that centers on the products, but you'll also
expect the mall to have restrooms, escalators or elevators, and other amenities.

PRODUCT AND SERVICE CLASSIFICATIONS

Consumer products and industrial products are divided into two categories depending on
the sort of individuals that utilize them. Other marketable elements, such as experiences,
organizations, people, places, and ideas, are included in the broad definition of products.

Consumer Products

Consumer products are goods and services purchased by average end users for
consumption or personal use. Consumer products, also known as final goods, are the end product
of production and manufacturing and are what a customer will see on the store shelf.

Marketers frequently divide these items and services into subcategories based on how
customers purchase them. Convenience products, shopping products, specialty products, and
unsought products are all examples of consumer products. These products differ in terms of how
people purchase them and, as a result, in terms of how they are marketed.
Convenience products are goods and services that people purchase on a regular basis and with
little effort in price comparisons and purchase. People frequently choose a brand once and then
stick with it without question. Laundry detergent, candy, magazines, and fast food are just a few
examples. Convenience items are typically low-cost with little brand differentiation, and
marketers distribute them widely to ensure that they are there when consumers need or want
them.

Consumers intending to buy shopping products, on the other hand, are more ready to conduct
study and consider various product alternatives. The rationale for this is that shopping goods are
higher-priced or more significant items in a person's life; therefore, comparing products is a more
efficient use of customers' time.

Extremely significant purchases, such as houses and cars, as well as more modest expenditures,
such as apparel, are examples. Take automobiles for instance: individuals are ready to spend a
large amount of time and money searching online, visiting many dealerships, and test-driving
various vehicles in order to identify the finest car for the cheapest rates.

Specialty goods are things that are so one-of-a-kind or have such a wide interest that customers
will go to great efforts to acquire them. Rather than comparing brands in search of a good deal,
consumers of specialty goods concentrate on finding the one unique item they're looking for.
Lamborghini, GoPro cameras, and iPhones are just a few examples.

A Lamborghini automobile, for instance, is a specialty item since customers are typically willing to
travel long distances to acquire one. Typically, buyers do not compare speciality products. They
merely devote the time necessary to identify merchants who carry the desired brands.

The last type of product is unsought goods, which are things that buyers are either unaware of or
would never consider purchasing. Life insurance and fire extinguishers are examples of products
that individuals purchase out of fear or danger. Another example is batteries as no one considers
purchasing a battery until their old ones die and need to be replaced.

Industrial Products

Industrial goods are items that businesses buy to employ in other products or in their
activities. Industrial items are purchased by manufacturers, commercial firms, non-profit
organizations, and government agencies. The distinction between a consumer product and an
industrial product is based on the product's intended use. Materials and parts, capital items, and
supply and services are the three types of industrial products and services.

Through subsequent processing, materials and parts become part of the buyer's product. Raw
materials, as well as manufactured materials and parts, are included. Farm and natural goods
such as jute, cotton, wheat, fruits, crude petroleum, coal, iron ore, and natural gas are examples
of raw materials.

Component materials like iron, yarn, cement, and cables, as well as component parts like small
motors, tires, and casting, are examples of manufactured materials and parts. Component
materials are frequently further processed.

Industrial products that are directly employed in manufacturing are referred to as capital items.
Installations and associated equipment are considered capital items. Installations include
structures, plants, and machinery. Workman's tools and office equipment, such as calculators and
fax machines, are examples of accessory equipment.

Supplies and services make up the final category of industrial products. Operating supplies
(lubricants, coal, paper, pencils) and repair and maintenance items are among the supplies (paint,
nails, brooms). Supplies are the industrial field's convenience products since they are typically
acquired with little effort or evaluation.

NEW PRODUCT DEVELOPMENT STRATEGY

There are two ways for a company to obtain new products. One way is to purchase a firm, a
patent, or a license to manufacture someone else's product. The other is through the company's
own efforts in new product development. Original products, product upgrades, product
adaptations, and new brands that the company generates via its own product development are all
examples of new products.
 Customers and the marketers that serve them value new products because they provide
specific solutions and variety to their lives, as well as being a vital source of growth for businesses.
Many organizations rely on new goods for the majority of their growth in today's fast-changing
economy. However, innovation may be both costly and dangerous.

New items are up against a lot of competition. Although a brilliant idea may emerge, a
company's market size may be overestimated. It's possible that the final product isn't well-
designed. It could also be overlooked, released at the unsuitable moment, priced too costly, or
badly publicized. Despite unsatisfactory marketing research findings, a high-level executive might
pursue a favored notion.

Product development costs might frequently be more than anticipated, and competitors can
sometimes be more aggressive than anticipated. They need to create new products, but the odds
are stacked against them. A corporation must analyze its customers, markets, and competitors in
able to manufacture effective new products that provide superior value to customers.

THE NEW PRODUCT DEVELOPMENT PROCESS

Idea Generation

Idea creation, or the methodical search for new product ideas, is the first step in new
product development. To uncover a few brilliant ideas, a business often creates hundreds, if not
thousands, of concepts. Internal and external sources, including buyers, competitors, marketing
intermediaries, and others, are vital contributors of new product suggestions.

Idea Screening

The first stage of idea reduction is idea screening, which helps identify good ideas and
discard bad ones as early as possible. Because the costs of product development escalate
dramatically as the project progresses, the firm wants to pursue only those product concepts that
will turn into successful items. Many organizations ask their CEOs to write up new product ideas
in a standardized manner that may be assessed by a new public relations representative.

The product or service is described, as well as the suggested customer value proposition, the
target market, and the competition. It calculates market size, product pricing, development time
and costs, production costs, and return on investment. The committee then analyzes the proposal
using a set of broad parameters.

Concept Development and Testing

After that, an engaging concept must be transformed into a product concept. It's essential
to understand the differences between a product concept, a product image, and a product idea. A
product idea is a concept for a product that a company might consider launching into the market.
A product concept is a more thorough version of the idea expressed in consumer-friendly terms.
The way buyers view an actual or potential product is referred to as product image.

Concept testing entails putting new product concepts to the test with groups of potential
customers. Consumers may be shown the concepts symbolically or physically. Many companies
do consumer testing of new product concepts before trying to turn them into real new products.

Marketing Strategy Development

The next phase is to build a marketing strategy for presenting a product to the market,
which entails creating an initial marketing strategy. There are three sections to the marketing
strategy statement. The first section covers the value proposition, target market, sales, market
share, and profit targets for the first few years.

The product's projected pricing, distribution, and marketing budget for the first year are
outlined in the second portion of the marketing strategy statement. The intended long-run sales,
profit goals, and marketing mix strategy are described in its third part.
Business Analysis

Management can assess the proposal's business attractiveness once it has agreed on its
product concept and marketing approach. A business analysis examines a new product's sales,
costs, and profit estimates to determine whether they meet the company's goals. If they do, the
product can continue on to the next stage of development.

The business may undertake market surveys and examine at the sales history of previous
products to estimate sales. It can then calculate the minimum and maximum sales to determine
the risk range. Management can predict the projected expenses and profits for the product after
preparing the sales projection, covering marketing, R&D, operations, accounting, and finance
costs. The company then makes use of the sales and marketing data.

Product Development

A product may just emerge as a word description, a picture, or a poor mock-up for many
new product concepts. If the product concept succeeds the business test, it will be developed
further. R&D or engineering is responsible for turning the product concept into an actual product.
However, the product development stage now necessitates a significant increase in investment. It
will reveal whether the product concept is viable.

Test Marketing

When the product passes concept and product tests, the next phase is test marketing, which
involves putting the product and its proposed marketing plan through their paces in real-world
scenarios. Test marketing allows a marketer to gain expertise with marketing a product before
investing heavily in a full launch.

Commercialization

Test marketing provides management with the data they need to decide whether or not to
launch the new product. The business will incur significant costs if it proceeds with
commercialization (putting the new product on the market). The corporation may, for example,
need to construct or rent a manufacturing facility. In the event of a large new consumer product,
advertising, sales promotion, and other marketing initiatives could cost significant amount of
marketing resources in the first year.
WEEK-12

PRICE

Companies that are effective in generating consumer value through other marketing mix
efforts should still retain some of that value in their prices. According to Kotler and Armstrong
(2019), the price of a product or service is the amount of money charged for it. A piece of apparel,
for example, costs a specific amount of money. Alternatively, a computer specialist may charge a
fee to repair a computer.

It's also the total of all the values people forego in exchange of the advantages of owning
or using a product or service. Price may not always imply monetary value. Bartering is the practice
of exchanging commodities or services in exchange for other goods or services.
 The single aspect of the marketing mix that generates income is price; all other elements
are costs. It's also one of the most flexible aspects of the marketing mix. Prices, unlike product
features and distribution channels, may be easily modified and copied. It is also a vital factor in
determining a company's market share and profitability. A small percentage change in pricing
might result in a significant boost of earnings.

Despite the fact that the question "How much?" may be rephrased as "How much does it
cost?" The terms price and cost are not interchangeable. Whereas the price of a product is the
amount the customer, must pay to receive it, the cost is the amount the company must pay to
manufacture it. When someone inquires about the price of a product or service, the person is
really asking how much he or she will have to give up in acquiring it.

IMPORTANCE OF PRICE

Price is significant to marketers because it reflects their evaluation of the value customers
see in a product or service and their willingness to pay for it. Although the other aspects of the
marketing mix (product, place, and promotion) may appear to be more attractive and thus
receive more attention, choosing the price of a product or service is one of the most critical
management choices.

Although product, place, and promotion have an impact on costs, price is the sole factor that has
an impact on revenues and, thus, profits. Price can determine whether a company thrives or falls.

Changing the price has a significant effect on marketing approach, and based on the product's
price elasticity, it can also alter demand and sales. Both an excessively high and an excessively low
price might stifle growth. The inappropriate price might also have a negative impact on cash flow
and sales.

Price influences how customers view a product or service, therefore if the marketer fails to
choose a price that fits the other aspects of the marketing mix and the business goals, problems
might arise. A high price denotes a high level of quality. The word "luxury" springs to mind. A
company that wants to promote itself as a low-cost provider, on the other hand, will charge
cheap rates. Consumers know exactly what to assume when they see cheap prices, just as they do
with high-end providers.

FACTORS AFFECTING PRICING

A. Cost of Production

The fundamental component of price is the cost of production. No business may sell its
goods or services for less than what it costs to make them. Thus, prior on a price decision process,
information on the cost of production must be gathered and taken into account.

There are two main types of costs: Fixed costs (such as building rent, permanent
employee salaries, etc.) and Variable costs (e.g., Material, Labour, etc.). At the very least, the
pricing should be able to recover the variable cost, given the fixed cost is incurred regardless of
whether or not manufacturing occurs.

B. Demand for Product

Before deciding on a price, an in-depth analysis of market demand for products and
services should be undertaken. Higher prices can be established if demand is greater than the
supply.

C. Price of Competitors

Prior to deciding on a pricing, it is crucial to acknowledge and analyze the prices of rival
firms' products. When there is fierce competition, it is preferable to keep prices low.

D. Purchasing Power of Customers

What is the customer's purchasing power, and how much and at what price can they buy?
These should be taken into account as well.

E. Government Regulation

It should also be considered whether the price of the item and services is to be set
according to government regulations.

F. Company’s Objectives

A specific amount of profit is generally added to the cost of manufacturing at the stage of
price fixation. If the company's goal is to generate more revenue, it may increase the amount of
money it invests.
G. Marketing Method Used

Price is also determined by the company's marketing strategy; for example, commission
paid to middlemen for the selling of items is reflected in the price. Similarly, if consumers are to
be supplied with "after-sale service," those costs are included in the price.

MAJOR PRICING STRATEGIES

The company must designate a price for each product. However, determining the price
can be done in a range of techniques. Above all, it should adhere to a predetermined approach.
The company's price will be somewhere between one that is too low to earn a profit and one that
is too expensive to generate any demand.

Customers’ perceptions of the product’s value set the price ceiling. They will not purchase
a product if they believe the price is higher than the value they will obtain from buying it. On the
other extreme, product costs set the price floor. If a business sells a product for less than it costs,
its profits will decline.

Kotler and Armstrong state three major pricing strategies namely: customer value–based
pricing, cost-based pricing and competition-based pricing. These will assist the company in finding
the most suitable price between these two extremes.
Customer Value–Based Pricing

Pricing considerations, like the rest of the marketing mix, must begin with customer value.
When customers purchase goods, they are trading something of value (the price) in exchange for
something of value (the advantages of owning or utilizing the product). Determining how much
value customers place on the advantages they acquire from a product and setting a price that
conveys that value is key to successful customer-oriented pricing.

Customer value–based pricing focuses price on the buyers' perceptions of value. Value-
based pricing implies that a marketer cannot create a product and marketing strategy before
deciding on a price.

Customer demands and value perceptions are first evaluated by the organization. The
target price is then determined based on customer perceptions of value. Judgements on what
costs can be incurred and the final product design are driven by the targeted value and price. As a
result, pricing begins with an examination of consumer demands and value perceptions, with the
price determined to correspond to perceived value.

Customers' perceived value for a company's product is often difficult to quantify.

Calculating the cost of ingredients in a dinner at a fine restaurant, for example, is relatively simple.
Other aspects of satisfaction, such as flavor, atmosphere, relaxation, conversation, and status, are
more difficult to value. Such worth is subjective; it fluctuates depending on the consumer and the
context.
There are two types of value-based pricing: good-value pricing and value-added pricing.

Good-value pricing is providing the right combination of quality and outstanding service at a
reasonable price. In many cases, this has meant introducing lower-cost versions of well-known
brand names or new lower-price lines. In other situations, good-value pricing entails restructuring
pre-existing brands in order to provide better quality for a set rate or the same quality for a lower
price. Some businesses flourish by providing less value at a lower price.

Value-based pricing does not merely mean charging what customers desire or setting cheap
prices to compete. Rather, many businesses use value-added pricing techniques. Rather than
decreasing prices to match competitors, they distinguish their offerings by adding quality, services,
and value-added features, which helps to justify their higher prices.

For products with a high added value, customer value-based pricing works quite
effectively. There are numerous examples of this sort, particularly among manufacturers who sell
their products online and have a strong brand (iPhone, for example), a large following (All Star or
Levi's), etc.

Cost-based pricing

The most basic pricing technique is cost-based pricing. Cost-based pricing entails
determining prices based on the product's production, distribution, and selling expenses, as well
as a reasonable rate of return for the company's effort and risk. The costs of a firm may play a
significant role in its pricing strategy.

Cost-plus pricing is popular since it's simple to compute and involves minimal information. It's
especially beneficial when demand and cost data aren't readily available. This additional data is
required to develop accurate marginal cost and revenue estimations.

To get at the selling price, a company assesses the cost of creating the goods and then
adds a percentage (profit) to it. Essentially, this strategy establishes prices that cover the
expenses of manufacturing while also allowing the company to achieve its target rate of return.
It's a method for businesses to figure out how much profit they'll make.
Break-even pricing (or a variation known as target return pricing) is another cost-oriented pricing
strategy. The company determines a price at which it will break even or achieve the desired
return on product development and marketing costs. At a given level of production, it is the price
that generates enough income to cover all costs. There is no profit or loss at the break-even point.

Competition-Based Pricing

Competition-based pricing is a pricing strategy in which the company determine its prices
in reference to its competitors' prices. This contrasts with other pricing systems such as value-
based pricing or cost-plus pricing, in which prices are established by assessing other factors such
as consumer demand or manufacturing costs. Competition-based pricing is primarily based on
publicly available information regarding competitor prices, rather than consumer value.
Customers’ assessments of a product’s worth depend on the prices charged by competitors for
similar goods.

The business can charge a higher price if customers trust that the company's product or
service is of better value. If customers perceive less value in comparison to competitors' items,
the firm must either drop the price or change consumer attitudes in order to support a higher
price.

If the firm is up against a slew of smaller competitors that are charging excessive prices for
the value they provide, it may reduce its prices to push weaker competitors out of the market. If

the market is dominated by larger, lower-cost competitors, a company may choose to target
underserved market niches by delivering higher-priced value-added product and service offerings.

The objective is not to match or beat the prices of competitors. The purpose is to set
prices based on the relative value created in comparison to competitors. Higher prices are
reasonable when a company provides more value to its customers.
WEEK-13

DISTRIBUTION CHANNELS
 Most businesses do not sell their products directly to their end-users or consumers. Rather,
they employ various intermediaries in order to introduce their products to the market and make
their goods accessible. These are called distribution channels. Distribution channel, as defined by
Kotler and Armstrong (2019), refers to a set of interdependent organizations that help make a
product or service available for use or consumption by the consumer or business user as well as
providing a payment mechanism for the provider.

Some significant aspects of the channel are implied by this definition. To begin, the
channel is made up of organizations, some of which are within the manufacturer's control and
others are not. All must, nevertheless, be identified, approved, and incorporated into an effective
channel structure.

Secondly, channel management is a continual process that involves constant monitoring

and evaluation. The channel operates 24 hours a day, 7 days a week, and functions in an ever-
changing setting. Finally, channels' operations should be guided by precise distribution goals. The
marketing channel's structure and management are thus influenced by a company's distribution
objectives. It's also an element of the marketing goals, particularly the aim to generate a
reasonable profit. The most expensive part of promoting a product is usually the channels.

The channel selections made by a firm have a significant impact on all other marketing
decisions. Whether a business works with national franchises, employs high-quality niche retailers,
or sells directly to consumers online, pricing varies. The sales department and marketing decisions
of the company are based on the amount of persuasion, training, incentive, and assistance
required by its intermediaries. Thus, the management must strategically plan its channels, taking
into account both today's and tomorrow's expected selling circumstances.

FUNCTIONS OF DISTRIBUTION CHANNELS

 Intermediaries are used by producers because they increase the efficiency of getting
commodities to target markets. Intermediaries generally provide a firm with more than it can
attain on its own due to their relationships, expertise, specialization, and scope of operations.
Channel members contribute value by bridging the crucial period, place, and ownership gaps that
divide goods and services from individuals who utilize them while making them accessible to
customers. Many vital functions are undertaken by members of the marketing channel.

Information. One of the most significant tasks of the distribution channel is that it gathers and
disseminates information about consumers, producers, and other actors and forces in the
marketing environment critical for planning and aiding exchange.

Promotion. The aim of the distribution channel is to develop and spread persuasive
communications about an offer as well as determine which product to advertise at a given time.
Other items are no longer available, and buyers are forced to utilize a specific product. This is how
they exploit their power.

Contact. In the distribution chain, contacts are essential. Keeping a list of all the necessary
connections is beneficial to a company. It's because if it chooses the wrong personnel to handle
distribution, the product will be delayed. This also includes searching and interacting with
customers and prospective buyers.

Matching. The key to a business's success is selecting the optimal distribution channel that
complements and satisfies the buyer’s needs, including activities such as manufacturing, sorting,
assembling, and packaging.

Negotiation. Distribution channels would, on behalf of the business, negotiate the prices of the
product with providers. The completion of a price agreement and other conditions would assist in
the transfer ownership or ownership.

Physical Distribution. This includes assembling, storing, managing, and transporting the finished
product from the manufacturers to the end users.

Financing. When wholesalers and retailers acquire a large quantity of a company's inventory,
that's how long the distribution channel enables the product to be as cost-effective as possible.
These funds can be utilized to pay for the channel design.
Risk-Taking. Distributors are often forced to incur the risk of purchasing a company's product
without knowing whether or not it will sell. Thus, it includes assuming the risks of carrying out the
channel work.

CHANNEL STRUCTURES

Direct Channel

The direct channel is the most basic of the four. The producer sells directly to the
consumer in this situation. Manufacturers that sell in minimal quantities are the most apparent
examples. One can make purchases directly from the farmer or craftsman if he/she visits a
farmer's market. There are many cases of huge organizations that efficiently employ the direct
channel, particularly for B2B transactions.

Direct channels can also be used to sell services, and the same concept applies: an
individual purchases a service directly from the supplier who provides it. Examples of this channel
structure include the previously mentioned farmer’s markets as well as Etsy.com online
marketplace and bake sales.

Retail Channel

Retailers are businesses in the channel that specialize in selling to consumers directly.
Everybody is certainly involved in the retail channel on a daily basis. In comparison to the direct
channel, the retail channel differs in that the store does not manufacture the product. On behalf
of the manufacturer, the retailer promotes and sells the goods.
 Consumers benefit from retailers because they create a single area where they may buy a
range of items. Products may be sold in a store, online, or even on the doorstep by retailers. The
focus is on selling directly to the consumer, not on a specific place. Examples of retailers include
Walmart discount stores and Amazon online store.

Wholesale Channel

The wholesale channel appears to consumers to be quite similar to the retail channel, but
it also involves a wholesaler. A wholesaler's primary function is to purchase, store, and physically
handle huge amounts of commodities, which are then redistributed (typically in lesser quantities)
to retailers or industrial or business users. The vast bulk of goods produced in a developed
economy are distributed through wholesaling.

Manufacturers who run sales offices to fulfill wholesale services, as well as retailers who
run warehouses or engage in wholesale activities, are all part of the wholesale channel. Examples
are restaurant food suppliers and clothing wholesalers who sell to retailers.

Agent Channel

One more intermediary is involved in the broker or agent channel. The difference between
agents and brokers and wholesalers is that agents and brokers do not take ownership to the item.
To put it another way, they don't own the item because they don't buy or sell it. Instead, brokers
put buyers and sellers together and discuss the terms of the transaction: agents serve either the
buyer or the seller on a long-term basis, whereas brokers bring parties together on a short-term
basis.

Consider a real-estate agent. They don't buy the house and then sell it to someone else;
instead, they promote and coordinate the transaction. Buyers and sellers are linked by agents and
brokers, who also provide experience to make the process more efficient. Examples include an
export broker, who negotiates and manages transportation requirements, shipping, and customs
clearance on behalf of a purchaser or producer.

DISTRIBUTION STRATEGIES

For different types of products, a business may need to employ different distribution
strategies. The following are three basic methods that can be used:

Intensive Distribution
 Intensive distribution companies strive to sell their products in as many locations and
outlets as possible. Convenience offerings—items that clients buy on the spot without having to
shop around—often employ intensive distribution techniques. This method could be used to
distribute low-cost items that are likely to be impulse purchases.

Items such as mints, gum, and sweets, as well as essential supplies and necessities, are
available at a range of areas. Redbox, which rents DVDs through vending machines, has made
strides thanks to a more aggressive distribution approach than Blockbuster's: the machines are
situated in fast-food restaurants, grocery stores, and other popular locations.

Selective Distribution

Selective distribution, on the other hand, entails selling products at a limited number of
stores in certain areas. These could include valuable items like computers or household
appliances that need to be widely available in order for a consumer to compare them. Sony TVs,
for example, are available at a variety of stores such as Circuit City, Best Buy, and Walmart,
although not all models are available at all stores.

The cheapest Sony TVs may be obtained at Walmart, while the nicer Sony models can be
found at Circuit City or specialty electronics stores. A manufacturer can appeal to a wider
audience by selling several models with different features and pricing points at different locations.

Exclusive Distributio

Exclusive distribution refers to the sale of a product through only one or a few sources.
The majority of people believe that exclusive means expensive, however this is not always the
case. Exclusive simply refers to restricting distribution to only one location in a certain area, and it
might be a deliberate decision based on the scarcity principle. Rooms To Go, for example, is the
sole retailer of supermodel Cindy Crawford's furniture collection. Michael Graves offers a range of
goods that are just available at Target. One must visit one of those retailers in order to purchase
those products. In many cases, retailers are collaborating with these companies to generate a
feeling of scarcity-based quality, a perception of quality that extends beyond the brand to the
store.

SUPPLY CHAIN AND SUPPLY CHAIN MANAGEMENT

The significance of managing distribution channel partners has long been acknowledged
by marketers. Organizations have realized that they need to govern more than just channel
partners as networks have become more complicated and the flow of business has become more
globalized. They must oversee the entire chain of organizations and operations, from raw
materials through ultimate distribution to the customer, or the supply chain.

The supply chain refers to the network of institutions, people, operations, information,
and resources involved in delivering a product or service from the supplier to the customer.
Natural resources, raw materials, and components are transformed into a finished product that is
provided to the end customer through supply chain activities.

The marketing channel focuses on how to provide more value to customers by having the
suitable product in the right location at the right time when they want to acquire. The focus is on
delivering value to the customer, and marketing objectives are typically centered on what is
required to do so.

The Council of Supply Chain Management Professionals (CSCMP) defines supply chain
management as follows:

“Supply chain management encompasses the planning and management of all activities
involved in sourcing and procurement, conversion, and all logistics management activities.
Importantly, it also includes coordination and collaboration with channel partners, which can be
suppliers, intermediaries, third-party service providers, and customers.”

SUPPLY CHAIN VS. MARKETING CHANNELS

Marketing and supply chain teams must work together effectively and responsibly in order
for a company to succeed. When the supply chain team knows market dynamics and product and
pricing areas of flexibility, they can better optimize the distribution process.

Greater value is provided to customers when marketing has the advantage of excellent
supply chain management, which involves analyzing and optimizing distribution both within and
outside of marketing channels. The following are some approaches to distinguish the supply chain
and marketing channels:

Marketing channels are only one part of the supply chain. It starts with raw materials and goes
into great detail about manufacturing processes and inventory management. Marketing channels
are aimed at bringing together partners that can offer the proper marketing mix to the client in
the most effective way possible in order to optimize value. Within the supply chain, marketing
channels provide a more focused focus.

Marketing channels are purely customer facing. Supply chain management aims to improve the
way items are delivered, as well as a number of financial and efficiency goals that are more
internal in nature. Marketing channels highlight a more comprehensive understanding of
customer expectations and market dynamics.

Marketing channels are part of the marketing mix. Professionals in the supply chain specialize in
the delivery of products. Along with product, price, and promotion, marketers consider
distribution to be part of the marketing mix. The most efficient delivery partner is more likely to
be identified by supply chain management. A marketer is more likely to weigh a channel partner's
strengths against the value provided to the customer. It can make sense, for example, to keep a
channel partner who is less efficient but contributes significantly to the promotional plan.
WEEK-14

PROMOTION MIX

Even a superior product doesn't sell itself. Customers need information about certain
products or services before they buy it. The art and science of communicating about and
marketing a product is known as promotion. The "promotion mix" is a range of activities and
media channels utilized by marketers to advertise and inform about a product offering. It is a set
of marketing strategies developed to maximize promotional activities and attract a larger
audience. The job of the marketer is to determine the best promotion mix for a specific brand.

Personal selling, advertising, sales promotion, direct marketing, and publicity are
examples of these elements. A promotional mix outlines how much attention each of the five
subcategories should receive, as well as how much funds should be allocated to each. A
promotional plan might have a variety of goals, such as increasing sales, gaining new product
acceptability, building brand equity, positioning, minimizing competitive backlash, or establishing
a company identity. However, there are three primary aims of promotion:

To present information to consumers as well as others

To increase demand
To differentiate a product from others in the marketplace

Creating a promotion mix involves marketing knowledge and expertise. To come up with a
successful marketing mix, marketers must conduct several research studies and collect a large
amount of information on a specific organization.

FACTORS AFFECTING PROMOTIONAL MIX

A marketing manager from Company A may choose to center her efforts on television
advertisements, whereas a marketing manager from Company B may opt to put her efforts on
social media platforms. Both strategies could be used by the marketing manager of Company C.
Why do businesses use multiple types of media for what seems to be the same message? The
following are some of the criteria that influence promotion mix element selection.

A. Stage in the Product Life Cycle

The type and extent of promotion employed depends on where the product is in its life
cycle. In order to raise market recognition, products in the early phases usually require a lot more
promotional funds. Consumers and organizations will not purchase a product if they are unaware
of it. To increase knowledge and trials, more promotion is required at the start of the product life
cycle.

B. Budget Available

The budget available to market a product determines what elements of the promotion
mix are utilized. The budget has an impact on the range (the number of individuals who are
exposed to the message) and duration as well as frequency of a campaign (how often people are
exposed). Many smaller businesses, for example, may not have the financial resources to make
and air advertising on popular television shows. As a result, they may not receive the exposure
they require to succeed. Other companies, such as Jollibee, may design innovative methods to
engage diverse target markets.

C. Type of Product and Type of Purchase Decision

Diverse products demand various strategies of promotion. Professional selling is

sometimes required for highly complex and expensive products (high involvement) so that the
consumer appreciates how the product works and its various attributes. By contrast, advertising is
usually depended upon to promote convenience goods and products purchased on a regular basis
(low involvement) since customers are familiar with the products and they invest relatively little
time making buying decisions.
D. Consumers’ Preferences for Various Media

Multiple categories of customers favor various sorts of media. High school students may
prefer web, cell phones, mobile marketing, and social media to older customers in terms of target
markets. Academics, marketing research firms, and businesses have all conducted considerable
research to determine how consumers were more likely to be approached.

E. Target Market Characteristics and Consumers’ Readiness to Purchase

Companies must know what forms of media various target markets use, how often they
make purchase decisions, where they end up making purchases, and what their preparedness to
purchase is, as well as attributes such as age, gender, and lifestyle, in order to identify the best
methods to approach different target markets.

Some people are early adopters, eager to try new things as soon as they become available,
while others prefer to wait until products have been on the market for some time. Some
customers may not have the financial means to acquire a variety of products, even if they will
require them in the future.

F. Availability of Media

Organizations must also organize their promotions in accordance with media availability.
The most popular television shows frequently sell out. Because magazines have a longer lead time,
companies must plan ahead of time for certain of them. Organizations, on the other hand, may
often place radio commercials the same day they want them to appear due to the large number
of radio stations and the nature of the medium. Although social media and internet media are
instantaneous, users must be cautious about what they post and how they protect their privacy.

G. Regulations, Competitors, and Environmental Factors

Regulations might have an impact on the sort of promotion that is utilized. In the United
States, for example, tobacco goods are not allowed to be advertised on television. In certain Asian
countries, contentious products like alcohol are not allowed to be marketed on television during
peak time. The assumption is that by promoting late at night, small children will be oblivious to
the ads. The state of the economy can also have an impact. In a down economy, some businesses
rely more heavily on sales promotions such as coupons to entice customers into their
establishments. Consumers may come to expect coupons and will refuse to purchase things
without a special offer.

IMPORTANCE OF PROMOTIONAL MIX

A. Helps in market segmentation

A corporation must first define its target audience in order to create an appealing
promotion mix. Various groups of people who share something in common, such as age, gender,
or tastes, may be potential subscribers, and each requires a unique approach. A promotion mix is
a critical approach for providing an appropriate marketing content to each segment through the
most effective channels.

B. Increases the effectiveness of marketing campaigns

Businesses create a promotion mix, investing all of their efforts into providing promotions
at the right place, at the right time, and to the right audience since promotion is such an essential
component of the business. It allows one to get the most out of their promotional tools while also
saving time and costs.

C. Encourages client communication

Companies create a promotion mix in an attempt to communicate with their customers. It

can assist in establishing trust between a brand and its customers if it is well designed. Lead
nurturing and customer retention are both dependent on this. Automated email campaigns, for
example, aid in the achievement of these objectives by immediately responding to people's
activities.

D. Stands out from the crowd

At every move, people are flooded with various forms of advertising. It is essential to
stand out from the crowd without causing confusion in your buyers' minds by using a promotion
mix. Successful businesses prioritize quality over quantity, promoting their product or service at
the right time and in the right place.

PROMOTIONAL MIX TOOLS

A company's overall promotion mix, also known as its marketing communications mix, is
the distinct combination of advertising, public relations, personal selling, sales promotion, and
direct marketing tools that it employs to interact with customers, persuade them of their value,
and establish good customer relationships.

1. Advertising
“Coca Cola advertising alongwith McDonalds”

Advertising is any sort of nonpersonal presentation and promotion of ideas, goods, or

services by a known sponsor for a charge. Advertisement is an important tactic used by marketers
to raise brand awareness. It is the process of paying for the distribution of a message that
identifies a brand (product or service) or an organization to a large number of individuals at once.
Television, magazines, newspapers, the Internet, direct mail, and radio are all examples of
common advertising medium used by businesses. Mobile devices and social media platforms such
as Facebook, blogs, and Twitter are also used by businesses to promote.

2. Direct Marketing

Direct marketing entails sending individualized and frequently interactive promotional

materials to specific customers via mail, catalogs, the Internet, e-mail, telephone, and direct-
response advertising. Organizations attempt to evoke action from consumers by targeting them
personally.

This is when a sale professional and a potential customer have a one-on-one discussion.
Because the sales professional can target the promotion to individuals who are most likely to
make a purchase, it is one of the most effective means of promoting business. On the other hand,
since corporations must pay for one person's time, this is the most expensive type of sales.
 Nestlé came up with a fine example of direct mail marketing — a free bar – to advertise
their chocolate bar, Kit Kat Chunky. The campaign urged customers to pick up their free chocolate
bar from the newsagent by placing a Royal Mail-style "we're sorry we couldn't deliver your item"
note through targeted customer doors under the guise that "it was too chunky to fit through the
letterbox."

3. Sales Promotion

This is a set of short-term activities aimed at promoting immediate purchases. Sales

promotions are a type of marketing campaign that employs time-sensitive incentives such as sales,
discounts, and coupons to entice existing customers and attract new ones. Customers are
attracted to acquire things more rapidly and in larger quantities as a result of these incentives.
Sales promotions are typically transitory, but when the economy is bad, they become even more
popular among consumers and are used by businesses more frequently.

Many businesses include this as a key part of their marketing strategy, despite the fact
that it can be the most annoying form of communications for some consumers. Moreover, since
promotions decrease their impact rapidly, it is crucial for the firm to avoid getting reliant on them
to drive sales.

3. Public Relations
 Public relations (PR) is a form of communication that aims to improve and boost a
company's image and products. Organizations that use public relations strive to establish a strong
and appealing brand image by planting intriguing news articles about their operations in the
media. However, the firm does not have complete control over public relations, as some reviews
and webpages may cast a poor light on the brand. As a result, PR is frequently regarded as more
objective and unbiased than other forms of promotion.

The public will reward a business with positive word-of-mouth consideration if it

successfully resolves these difficulties. Traditional press releases, unconventional marketing
campaigns, special events, and sponsorships are all examples of public relations approaches and

WEEK-16

MARKET ANALYSIS

(Reference: klaxoon.com)
 When it comes to making a significant business decision or implementing a strategic
approach, businesses frequently resort to a toolbox of materials to assist them identify the best
possible alternatives. The market analysis is one of the most significant tools in this box, since it is
an evaluation that utilizes both quantitative and qualitative data to provide a comprehensive view
of the concrete and intangible forces at play in a sector.

A market analysisis a comprehensive quantitative and qualitative evaluation of a market.

It investigates the dynamics of the market, such as market size (both in terms of volume and
value), prospective consumer segments and purchasing habits, competition, and other significant
factors such as the economic climate (in terms of entry restrictions and regulations).

Market analysis offers a detailed, or all-encompassing, view of the markets the business
wants to engage within. Various assessment methods are included in the report, as well as a
review of the industry and its market forecast. It also performs a competitive evaluation and
examines cultural and legal restrictions.

A marketing analysis can aid to manage risk, spot developing trends, and forecast income.
The business may utilize a marketing analysis at its various stages, and is recommended to do one
once a year to stay on top of any significant market shifts.

Market analysis is an integral aspect of market research and is also a crucial part of a
business plan since it enables the business gain a better understanding of its target audience and
competitors, allowing it to develop a more focused marketing approach. The owners of a
company put down their business idea in this blueprint. During the market analysis, a certain
market is taken into consideration. Companies can assess the opportunities and threats of a
certain market using the information presented. The market analysis is established around the
target group.

7 MAIN DIMENSIONS OF MARKET ANALYSIS

Market analysis is a useful tool for determining the attractiveness of a market that a firm
intends to engage in the near future. This tool is designed to nalyse the existing market pattern,
assess future opportunities or risks, and determine whether or not it is profitable to enter that
market. A firm’s investment plans are supported by the findings of this analysis.
According to David A. Aaker, a market analysis has the following dimensions:

(Reference: sketchbubble.com)

Market Size

The current and potential volume of a market is referred to as market size. The company
examines a market's growth potential and decides to penetrate the market only if the outcomes
meet their expectations.

The increased demand for Smartphones, for example, has boosted various product
development firms in the electronics industry. The number of smartphone owners and the
purchasing power of buyers from various places are two significant metrics used by firms to
assess the industry's potential. The insights gathered from this data can be employed by the
company to estimate market size and determine whether or not to enter the market.

It is obtained through searching over information from a multitude of sources. An initial

list of possible sources is as follows:

Government data

Trade associations

Financial data from major players

Customer surveys

Market Growth Rate

 Market growth rate in an organization can be calculated by extending previous data into
the future. This is a fairly basic method of estimating market growth rate since it does not account
for fluctuations or variations in growth patterns that may occur in the future due to changes in
any component or factors that may impact market growth.

Many market growth drivers exist, such as demographic trends, development in income
level, complementary product sales, shifting lifestyles of product and service users, evolving
customer tastes and preferences, and so on.

Market Profitability

Profitability levels in any business are heavily influenced by the market. In distinct market
situations, companies may have varying levels of profitability, depending on a variety of criteria.
Michael Porter taught how to assess market conditions using his five competitive forces. The
market profitability is heavily influenced by this system of competing pressures. The said
competitive forces are as follows:

Bargaining power of buyers

Bargaining power of suppliers

Entry barriers

Availability of substitutes

Rivalry

Industry Cost Structure

The aim of this dimension is to cut expenses by recognizing and removing non-value-
added activities. Value chain analysis can be used to identify non-value contributing operations.
When a company concentrates and engages solely in activities that are necessary for value
generation, it can gain a competitive advantage over its market competitors.

Distribution Channels

Distribution channels make it possible to distribute products to end-users in real

time. The following are some of the distribution systems that firms should consider when
conducting market analysis:

Understanding Existing Distribution Channels: This enables us to determine how products are
delivered to customers.

Trends and Emerging Channels: This allows businesses to evaluate to what extent new channels
can assist the firm stay ahead of the competition.
Power Structure of Channels: Assessing the power structure of channels is a fundamental part of
market analysis. Organizations with strong brand equity have the ability to undercut the channels'
power by setting their conditions. Likewise, the channel partners have more power in the reverse
scenario.

Market Trends

Market trends may be both a source of opportunity and a source of risk for a company.
Market trends might be unique to a particular industry or they can be more general. Industry-
specific market trends have an impact on businesses in the same industry sector. General market
trends, on the other hand, influence all businesses, regardless of their industry. Price sensitivity,
demand nature, and even geographical variations are examples of such trends.

Key Success Factors

The key success drivers are those that assist a company in achieving its market goals. It's
also a major element of market analysis. The following are some of the most important success
factors:

Accessibility to essential and unique resources

Competence to reach economies of scale

Accessibility to channels of distribution

Accessibility to the state-of-the-art technology

Patents, technological superiority, channel partners, and resource accessibility may be

some of an organization's assets. To take advantage of potential and stay competitive, these
success criteria must be recognized.

BENEFITS OF MARKET ANALYSIS

Risk reduction: Understanding the market can help decrease business risks since the
business will have a better knowledge of essential market trends, key industry players, and what
it takes to succeed, all of which to support business decisions.

Targeted products or services: When the company knows exactly what its customers want
from it, it will be in a far better position to serve them. It may utilize this information to adjust
business's offerings to the customers' demands once it knows who they are.
 Emerging trends: Being the first to discover a new opportunity or trend is a key part of
staying ahead in business, and employing a marketing analysis to remain on top of industry trends
is a wonderful way of a company to position itself to take advantage of this knowledge.

Market forecasts: A market prediction is an important part of most marketing

assessments since it predicts future proportions, attributes, and trends in a business's target
market. This provides an estimate of how much money it will make, allowing it to change the
business plan and budget accordingly.

Benchmarks for evaluation: Measuring the company's success outside of basic numbers
might be tough. A market analysis gives standards against which the firm can be assessed and
how well it is performing in comparison to others in the sector it belongs.

Context for past mistakes: Market analysis can provide context for prior blunders and
industry abnormalities in the company. In-depth analytics, for example, can explain what factors
influence a product's sales or why a certain statistic performed the way it did. Since it will be able
to examine and define what went wrong and why, the business will be able to prevent repeating
the same mistakes or encountering such irregularities in the future.

Marketing optimization: An annual marketing analysis can help the company with this
because it can guide its continuing marketing efforts and show which elements of the marketing
require improvement and which are functioning well in comparison to other companies in its
sector.

MARKETING IMPLEMENTATION

According to Kotler and Keller (2016), “Marketing implementation is the process that
turns marketing plans into action assignments and ensures they accomplish the plan’s stated
objectives. If the company's strategic marketing plan isn't executed properly, it would be
ineffective and irrelevant. The what and why of marketing efforts are covered by strategy, while
the who, where, when, and how are managed by the implementation.

Today's businesses are seeking to improve their marketing performance better and their
marketing investment's return on investment more quantifiable. Marketing expenses can
consume up to a quarter of a company's overall financial plan. Marketers require enhanced
marketing process frameworks, improved marketing asset management, and better marketing
resource allocation.
MARKETING CONTROL

Marketing control is a process on which the various marketing approaches and strategies
utilized by the company are evaluated according to their effectiveness on the firm’s marketing
department as well as overall growth, and further perform the required actions with regards to
necessary changes and adjustments. (Kotler & Keller, 2016). There are four types of marketing
control needed to be employed by the company. These are the plan control, profitability control,
efficiency control, and strategic control.

Annual-plan control guarantees that the organization meets its sales, profit, and other objectives.
Management by objectives is at its core. To begin, management establishes monthly or quarterly
objectives. Second, it keeps track of market performance. The third step is for management to
figure out what's causing major performance variances. Fourth, it takes corrective action to
bridge the gap between objectives and results.

Profitability Control assesses the profitability of the company's products, territories, client groups,
segments, trade channels, and order quantities in order to evaluate whether any items or
marketing efforts should be expanded, reduced, or eliminated.

Efficiency Control is the study of profit plans' compliance in order to assist brand managers in
budgeting, measuring promotion efficiency, analyzing media production costs, evaluating
customer and geographic profitability, and educating marketing team on the financial
consequences of marketing decisions.

Strategic Control is when a firm employs a comprehensive marketing audit to reevaluate its
strategic approach to the marketplace on a regular basis. Marketing excellence assessments and
ethical/social responsibility reviews are also alternatives for businesses.

WEEK-17

MARKETING AUDIT

Kotler and Keller (2016) defined marketing audit as a “comprehensive, systematic,

independent, and periodic examination of a company’s or business unit’s marketing environment,
objectives, strategies, and activities, with a view to determining problem areas and opportunities
and recommending a plan of action to improve the company’s marketing performance.”

This procedure is designed to present a comprehensive review of an organization's tools

and competencies, as well as to uncover points of weaknesses and implement strategies for
continuous improvement. In most cases, a marketing audit is carried out by a third party who is
not a member of the company.
 A market audit can assist the company to streamline its marketing activities while
reconnecting with its brand, products, and services. It can also be employed to inform the
organization of its initial goals and objectives, as well as to fine-tune continuing efforts to
guarantee that they are on track. It may also be able to determine what is and is not working in
terms of marketing and re-energize its operations.

MARKETING AUDIT CHARACTERISTICS

Comprehensive

A marketing audit examines all of a company's primary marketing efforts, which involves
everything from identifying a customer's need to satisfying that demand, particularly starting with
a new product development process, not just a few problematic points like a functional audit.
Then there are product plans and price strategies, and the complete process should be converted
from a firm's vision mission to sales force evaluation or customers’ satisfaction.

Although functional audits are beneficial, they can occasionally result to management
errors. Excessive sales force turnover, for example, could be a sign of bad firm products and
promotion rather than poor sales force training or pay. In most cases, a full marketing audit is
more accurate in identifying the true causes of issues.

Systematic

The marketing audit is a systematic evaluation of the macro- and micromarketing

environments, marketing objectives and strategies, marketing systems, and particular operations
in an organization.. It determines the most essential enhancements and integrates them into a
contingency plan with immediate and long-term objectives.
Independent

It must be impartial and unaffected by the auditor or other members of the business,
which is why it is preferable that the audit be conducted by a third party rather than by internal
employees. Outside consultants provide the required neutrality, wide industry knowledge,
expertise with the audited sector, and undivided time and attention. The impartiality and
independence of self-audits, in which managers score their own operations, are lacking.

Periodical

Marketing audits are often initiated only after a company has failed to assess its
marketing operations during good times, resulting in difficulties. Companies in excellent health as
well as those in difficulties can benefit from a periodic marketing audit.

TYPES OF MARKETING AUDIT

EXTERNAL ENVIRONMENT

I. Macro-Environment Audit

Macro-environment audit examines the external elements that influence a company's

marketing performance, encompassing economic, social, technological, cultural, demographic,
political, and environmental audits. The auditor should look at the demographics of the people,
for whom these items were manufactured, such as age, gender, and so on.

A. Demographic: What significant demographic shifts and trends this company should be aware
of? What steps has the organization taken to address these changes and trends?
B. Economic: What key changes in income, prices, savings, and credit will have an impact on
the business? What steps has the company taken in light to these trends and advancements?

C. Environmental: What is the projection for the company's natural resource and energy costs
and provision? What has been said regarding the firm's position in pollution and conservation,
and what efforts has it made to address these issues?

D. Technological: What are the most significant advances in product and process technology?
What is the standing of the organization in these technologies? What are the most common
generic alternatives to this product? What are the digital consequences of the company's
business and marketing practices?

E. Political: What legal and regulatory developments might have an impact on marketing
strategy and tactics? What's going on in terms of sustainability, equal employment opportunity,
product safety, advertising, pricing control, and so on, that has an impact on marketing strategy?

F. Cultural: What is the general public's opinion of business and the company's products?
What impact can changes in customer lifestyles and values have on the business?

II. Task Environment Audit

Task environment audit centers on external elements that are still directly related to the
company's marketing efforts and operational processes.

A. Markets: It considers the size and other unique characteristics of the markets and industries
in which the company operates. The type of segmentation, targeting, and positioning, as well as
whether the company conforms to them, are some of the factors evaluated.

B. Customers: Customers have a tremendous influence on a company's marketing success, so

it's only natural to include them in the audit. This entails looking into customers' requirements
and how they try to meet them, as well as their consumer behavior and what drives their
purchasing decisions. It's also crucial to learn how people feel about the company's brand and
how much loyalty they have for it.
C. Competitors: The audit goes beyond simply identifying competitors and calculating their
number or market concentration. The level of growth and profitability of competitors, their
strengths and limitations, and their marketing techniques are all factors considered when
examining the competitive landscape.

D. Distributors and Dealers: What are the most common trade channels for getting products to
the consumers? What are the various trade channels' efficiency levels and growth potentials?

E. Suppliers: What are the chances of vital supplies utilized in production becoming available?
What are the current supplier trends?

F. Facilitators and Marketing Firms: What are the expected costs and availability of
transportation services, warehouse facilities, and financial resources? How effective are the
advertising agency and market research organizations employed by the business?

G. Publics: Which publics give the organization with unique opportunities or challenges? What
steps has the firm adopted to address each public effectively?

INTERNAL ENVIRONMENT

I. Marketing organization audit: The company's employees or labor force are reviewed on
their performance in relation to their jobs and functions, as well as their position in the corporate
structure.

II. Marketing function audit: The marketing department will be audited, and the company's
fundamental competencies will be examined. It will have to examine the company's products,
price policies, distribution networks, marketing communication methods, and sales force's
responsibilities. In the case of the product, for example, the audit will focus on determining how it
compares to the competitors. It will also examine into the product's price ranges and how they
compare to competitors' price levels.

III. Marketing systems audit: The examination of the company's present marketing systems is
known as a marketing systems audit. A marketing information system, a marketing control system,
and even a new product development system are all examples of marketing systems.
CURRENT MARKETING STRATEGY

I. Marketing strategy audit: The company's mission and vision, marketing goals and objectives,
and marketing strategies created with the goal of improving the company's overall marketing are
all revisited. One of the primary concerns that must be answered after the audit is if the present
marketing tactics developed and executed by the company are suitable and adequate in light of
the marketing resources and organization's assets.

II. Marketing productivity audit: The effectiveness of marketing activities that have been – or
are being – conducted or carried out will be evaluated by the auditors during a marketing
productivity audit. Cost-effectiveness and profitability are the most commonly utilized
benchmarks.

SWOT ANALYSIS

SWOT analysis is a comprehensive assessment of a company's strengths, weaknesses,

opportunities, and threats. It's a method of keeping a check on both the external and internal
marketing environment.

It's a method for assessing a company's competitive situation and developing strategic
plans. It also guarantees that a project's objectives are accurately stated and that all project-
related aspects are correctly identified.

Internal capabilities, resources, and favorable situational elements are all strengths that
can help the organization better serve its customers and achieve its goals. Internal constraints and
negative situational elements that may impede the company's performance are examples of
weaknesses. Opportunities are beneficial conditions or trends in the external environment that
the business can take advantage of. External variables or trends that pose a threat to
performance are referred to as threats.

EXTERNAL FACTORS AND ENVIRONMENT (OPPORTUNITY AND THREAT) ANALYSIS

A company's potential to generate revenue is influenced by major macro environmental

and micro environmental factors. It should incorporate a marketing intelligence system to keep
check of trends and major advancements, as well as any opportunities and risks that may arise.

External factors are elements that the firm has no control over, such as:

Demographics

Relationships with suppliers and partners

Funding (donations, legislation, and other funding)

Market trends (new products, technological developments, and audience demand shifts)

Economic trends (financial trends on a local, national, and international scale)

Political, environmental and economic regulations

INTERNAL FACTORS AND ENVIRONMENT (STRENGTHS AND WEAKNESSES) ANALYSIS

What happens within the organization is a valuable source of information for the SWOT
analysis' strengths and weaknesses sections? Financial and human capital, tangible and intangible
(brand name) assets, and operational efficiencies are all examples of internal factors.

The following are some of the most widely considered internal factors:

Financial resources (financing, income sources, and investment options)

Human resources (employees, volunteers and target audiences)

Current processes (employee programs, organizational structures, and software systems)

Physical resources (site, amenities, and equipment)

Access to natural resources, trademarks, patents and copyrights

BENEFITS OF SWOT ANALYSIS

A. Cost-effective

Conducting a SWOT analysis does not necessitate substantial training or technical

competence on the part of the firm. Furthermore, it does not necessitate the use of an outside
expert. All it needs is a member of staff with past business experience.

B. Encourages Discussion

SWOT analysis encourages discussion. It is critical that all of the employees are on the
same page. Every single employee performs a crucial part in the advancement of a company.
Addressing a company's basic strengths and weaknesses aids in identifying threats and seizing
opportunities.

C. Provides Visual Overview

Typically, a SWOT analysis is portrayed as a square, with each quadrant representing a

different component. This visual representation gives a clear summary of the company's position
while also encouraging discussion. While each quadrant may not be equally important, the fast
overview aids in determining an organization's performance and advancement by optimizing
strengths and minimizing shortcomings.

D. Wide Range of Applications

SWOT analysis can be utilized in a variety of situations, including competitive analysis,

strategic planning, and other research. This is because a SWOT analysis allows a company to
determine any environmental aspect that plays a positive or negative effect in achieving a specific
goal.

E. Offers Insight

SWOT analysis can be utilized to obtain market knowledge and a better understanding of
the competitors. This allows the company to design a strategy for establishing a consistent and
competitive market position.

F. Integration and Synthesis

SWOT analysis allows the analyst to incorporate and analyze a variety of data, regardless
of whether it is qualitative or quantitative. It pulls together data that is already known as well as
data that has just been collected or found. It also takes into account a wide range of data sources.
This makes it easier for a business to turn information diversity from a risk into an asset.
G. Fosters Collaboration

SWOT analysis facilitates open exchange of information and interaction between a range
of specialized departments of a company that would not otherwise collaborate or interact. When
analysts comprehend what their counterparts know, believe, feel, and do, it benefits the
organization. This enables the analyst to solve problems, resolve conflicts, and improve the
working environment.

WEEK-18

TARGET MARKET
 The marketing plan lays out how the business meets its customers’ needs and conveys the
advantages of its products or services to them. Customers should be at the forefront of the
marketer’s mind when making decisions about market positioning, price, promotions, and sales. It
should include how to segment the target market, how to position the products or services
against the competitors, how the firm will price them, and how it will effectively connect and
persuade its customers.

Small business owners must deliberately adapt and advertise their product in a
competitive industry, and target marketing is a vital element in this strategy. While the concept of
a target market is simple, identifying a target market and connecting with it can be challenging.
Determining a target market is essential since it not only assists the firm tailor its advertising, but
it also helps assess whether there is sufficient demand for its offering in the first place. As a result,
one of the first phases in the business start - up process should be defining the firm's target
market.

Kotler and Armstrong (2019) define target marketas “a set of buyers who share common
needs or characteristics that a company decides to serve.” As an organization designs, packages,
and distributes its product, defining the target market influences the decision-making process on
which the firm undergoes. Market targeting can be carried out in different levels such as in means
that are very broadly (undifferentiated marketing), very narrowly (micromarketing), or
somewhere in between (differentiated or concentrated marketing) which were already
mentioned in the previous modules.

Along with production, distribution, price, and promotion planning, selecting the target
market is a crucial aspect of a product development strategy. Significant features of the product
are influenced by the target market. A firm may modify specific design elements of a product to
cater to customers and its intended audience.

Due to the scarcity of resources such as time and monetary funds, the company cannot
reach to the whole population of consumers. To effectively engage with them and persuade them
to try its product or service offerings, the company needs to segment its intended audience into
different units on which they can focus their marketing efforts on.

It's important to note that identifying the target market does not limit the size of the firm's
overall market or potential consumer base. Instead, it is the most cost-effective approach to
design, modify, and advertise products. Instead of spending a lot of resources in advertising to
everyone who might purchase the item, it's much more effective for a company to focus its
marketing efforts to those who are most likely to buy.

To effectively identify the suitable target market, the company must clarify the
characteristics of its customers, their needs that must be catered as well as the reason why they
are interested in purchasing products or acquiring services. The organization can also segment its
target market according to different factors such as demographic, geographic, and psychographic.
It can also state in its marketing plan the following:

1. Demographic: This includes the description of the company’s customers according to their:

Age

Gender

Occupation

Income

Education

Religion

Nationality

Ethnicity

For many organizations, demographic segmentation is the most essential basis for
selecting target audiences, which means that demographic data is essential. A liquor store, for
example, could seek to tailor its marketing efforts to the findings of Gallup polls, which show that
beer is the preferred beverage among individuals under the age of 54, particularly those aged 18
to 34, while wine is preferred by those 55 and older.

2. Geographic: Where do they live? Include details about:

City and density (rural, urban)

Their country

Region
Climate

Geographic segmentation is based on the idea that certain groups of consumers in a given
location may have specific product or service requirements. A lawn care firm, for example, could
choose to focus its marketing efforts on a town or subdivision with a large population of senior
citizens.

3. Psychographic: Why do they buy? Include information such as the customers’

Social class (lower, middle, upper)

Personality

Lifestyle

Psychographic segmentation divides the target market based on socioeconomic class or

lifestyle preferences. It is predicated on the assumption that people's purchase decisions reflect
their lifestyle preferences or socioeconomic status.

To be effective, a target market should use a blend of these criteria. Let's say a catering
company provides food services at a client's home. Rather than advertising in a newspaper
feature that is sent to everyone, the caterer would first determine its target market. It might then
target the intended market with a direct mail campaign, flyer distribution in a specified residential
neighborhood, or a Facebook ad focused at customers in that area, boosting its marketing ROI
and drawing in more customers.

Facebook, LinkedIn, Twitter, and Instagram, for example, give extensive tools for
businesses to target consumers based on market categories. A bed-and-breakfast, for instance,
may advertise a romantic weekend trip package to married Facebook followers. LinkedIn, on the
other hand, is more B2B focused, allowing to target businesses based on a range of factors such
as staff count, industry, and geographical region.

MARKET POSITIONING

Consumers are overwhelmed with product and service information. They won't be able to
reassess things every time they make a purchase. The intricate combination of beliefs,
impressions, and attitudes that customers have for a product in comparison to rival items is
known as its position.
 After the company has identified market segments, it will need to evaluate them to see
how appealing they are. Consider purchasing power, the cost of researching and reaching a
specific segment, the level of competition in that niche, and other cost-effective factors. After it
examined the categories, it can choose its target markets and start positioning itself to approach
them. The business must settle on a value proposition—how it will provide differentiated value
for targeted segments and what positions it wants to hold in those sectors—in addition to
selecting which parts of the market it will pursue.

A product position is the way consumers perceive a product in terms of key qualities
mental space the product fills in comparison to rival goods. Products are manufactured in
facilities, but brands are established in buyers' minds.

POSITIONING MAPS

Marketers frequently create perceptual positioning maps to show consumer impressions

of their brands versus those of competitor products on major purchase parameters as part of
their differentiation and positioning strategy.

Perceptual or positioning maps are utilized by businesses to aid in the development of a

market positioning plan for their product or service. The maps are frequently referred to as
perceptual maps because they are based on the buyer's perception. Positioning maps illustrate
where existing products and services are located in the market, allowing a company to decide
where they want to place (position) its own product. Firms have two choices: they can place their
product to fill a market gap or, if they want to compete against their rivals, they can position it
where other products have set their product.

Position maps and market maps are other terms for perceptual maps. It can be any of the
following:

Quality vs Price

Functionality vs Price

Price vs Performance

Healthiness vs Tastiness
Price vs Safety & Reliability

Some businesses find deciding on a differentiation and positioning simple. For example, if
there are enough customers pursuing quality in a new category, a company known for quality in
other segments will go after this position. However, in many circumstances, two or more firms
will compete for the same position. Then each will have to uncover new methods to differentiate
itself. Each company must set itself apart by putting together a unique package of benefits that
appeal to a large segment of the market.

A brand's positioning must cater to well-defined target markets' needs and wants.
Although both Dunkin' Donuts and Starbucks provide coffee and snacks, their consumers are
considerably diverse and expect very distinct things from their favorite coffee shop. Starbucks'
high-brow positioning caters to upscale professionals. Dunkin' Donuts, on the other hand, caters
to the masses with a decidedly low-brow, "everyman" positioning. Nonetheless, each brand
succeeds because it delivers the ideal value proposition for its own target base.

MARKETING MIX

Consumers position products on their own. Marketers, on the other hand, do not want to
take chances with their products' placements. They must establish positions in selected target
markets that will provide their products the maximum benefit, and they must devise marketing
mixes to achieve these intended positions.

This combination effectively positions a company in the market and can be utilized at
multiple stages of force. This is done to guarantee that the target audience is satisfied, that the
value perception is appropriate, and that the company stands out from the rivals. Implementing
seven P's in the optimal way possible for the business can be tremendously advantageous, but it
must first fully comprehend each piece of the 7 P's puzzle.

a) Product

This refers to the goods or services that a company provides. The purpose of a product or
service, how it appears, packaging, any warranties, and other factors are all considered in this
section. In addition, when concentrating on the first P, the company must think carefully about its
customers. Consumers want to know what's included, what they can get out of it, what need or
desire it addresses, and why the product or service is superior to the competitors. The service or
product the business is offering should be at the heart of every component of its marketing
strategy.

Influencing every component of the marketing mix, no matter how a company portray
itself as a brand. Consider elements such as product quality, specialized features, packaging, and
the problem that it will solve for the clients while developing the product. While customer service
is essential, the product, or what the consumer receives, is primarily what they will be concerned
about. Of course, if it buyer is not satisfied with what it is selling, they won't buy from them again.
However, if the product is of good quality and addresses their problem, it will sell itself.

b) Price

Price refers to a product's or service's overall price methodology as well as how customers
will react to it. Furthermore, this section delves further than just selling prices. Discounts, terms,
and fees are all included in the price. When it comes to price, the company should think about
where it stands in relation to its competition. If it promotes that it has a high-quality product, it
should price it accordingly.

The price it establishes should represent its customer's perception of its product's value,
be in line with the budget, and ensure that it makes a profit. Pricing has a significant impact on
the business's success, since it influences its marketing strategy, sales, and product demand.
Businesses today employ a variety of pricing strategies, each with its own set of benefits,
downsides, and purposes. And the one it selects will be influenced by what it is offering as well as
its brand's image.

6 common pricing strategies:

Price skimming - setting a high price for the products and eventually lowering it over time

Competition-based pricing - entails analyzing market competitors' prices and setting the
company’s price significantly higher or lower than theirs.

Economy pricing - setting prices that appeal to buyers looking for a discount or a good deal.

Premium Pricing - setting a high price for products. This method requires verifying that the
product or service is of excellent quality prior to labeling it as "luxury."

Value-based Pricing - determining the price based on what consumers are willing to pay - what
they perceive the brand and products are worth.

Cost-plus Pricing - this strategy is primarily based on the cost of making the goods, with a mark-up
added to ensure businesses are not selling at a loss.
c) Promotion

The process of marketing directly to consumers is known as promotion. This refers to the
process of promoting the goods or service to the general public. This could also take the form of
numerous advertisements, SEO, SEM, sponsorship, and so on.

Promotion means raising awareness of a brand, product or service within a market; telling
a story to encourage consumer engagement. Promotional strategies work on multiple levels. They
raise brand awareness, increase sales and generate revenue. Why should someone purchase from
the company over its competitor? How will it solve their problem or enhance their life?

For marketers, there are two types of common promotional methods; traditional and
digital. Print media, broadcasting, direct mail, billboards and posters, and referral, i.e. word of
mouth, are all examples of traditional marketing. Email marketing, social media promotion,
content marketing, search engine optimization (SEO), mobile marketing, and paid advertising are
examples of digital techniques.

d) Place

This P refers to the several locations where a product is manufactured, advertised,

transported, and sold. The business must ensure that clients can easily locate its goods or service.
It also has to be available to customers at the correct time and in the right place. This phase can
be used to investigate selling products via e-commerce, in-store, or third-party channels.

It could entail selling through a website, catalog, social media, trade shows, and, of course,
physical storefronts. Every distribution channel is included in the term 'Place.' Most businesses
can't or won't set up shop everywhere.

e) People

People aren't just the ones that firms sell to or advertise to. Staff, salespeople, customer
service teams, and anybody else involved in the marketing and sales operations are all included.
The business wants its employees to be productive and have an advantageous impact on the
customers.
 Anyone directly or indirectly involved in the business side of the organization is referred to
as "people" in the marketing mix. That includes anybody involved in selling, designing, promoting,
managing teams, representing customers, recruiting, and training for a product or service.

People who represent the firm (including chatbots) must be pleasant, professional,
knowledgable, and well trained if it wants its brand to succeed and customers to be satisfied.
Employees must be able to address customer complaints, thus as a firm, it must provide training,
excellent working conditions, and everything else that will ensure its employees' satisfaction.

f) Process

It includes aspects like as how the company operates, how services are supplied, how
products are packed, how customers progress through the sales funnel, checkout, shipping, and
delivery, and so on. In essence, the process outlines the sequence of events or key elements
involved in delivering a product or service to a consumer.

The distribution of the goods or service to a consumer is the subject of this marketing mix.
Functions, activities, tasks, and processes must all be mapped out. This ensures that the
procedures run smoothly and efficiently. The company must check its procedures on a regular
basis to ensure that they are straightforward and effective in generating revenue. This process
could involve a lot of trial and error.

g) Physical Evidence

To authenticate their purchase, customers should always receive something physical.

Consider how braces straighten teeth, hairstylists give a fresh style, and receipts serve as
evidence of a purchase. Even if it's only a receipt, people like to receive something that recalls
their senses to affirm that they've received a product or service. This tangible thing verifies the
purchasing process and instills a sense of worth in the transaction.

Physical evidence entails more than just receipts. Physical evidence includes not only this
vital feature, but also the overall existence of the brand. Consider website, branding, social media,
the logo on the building, the decor in the store, the packaging of products, and the thank-you
email the business sends after a sale. All of these factors provide customer with the actual proof
they require to be confident in the company's viability, dependability, and legitimacy.