Maharaja Surajmal Institute

(Affiliated to GGSIPU, Delhi)

Course: Bachelor of Business Administration

Subject Module
On

MARKETING MANAGEMENT
BBA Semester III
(Credit: 4)
(The study material/notes of this subject have been compiled from
various online sources/ websites/books/articles and is meant for
reference purpose for students only and is not meant for any kind
of commercial activity.)

Module Compiled by:

Dr. Rajeshwari Malik

Dr. Supriya Chaudhary
Dr. Sumita Kukreja
Dr. Anupama Sharma
Ms. Shikha Shokeen
Ms. Nisha Tokas
Dr. Anshu Lochab
Ms. Chetna Grewal
Dr. Jagbir Ahlawat

July, 2021

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 CONTENTS
Unit No. Unit Name Page Number
I Lesson-1: Introduction to Marketing: 5-37
Nature, Scope and Importance of Marketing,
Concept of Marketing, Characteristics, Nature,
Scope, Importance, Some Basic Concepts,
Marketing Philosophies, Marketing Management
Process.

Lesson-2. Marketing Mix

Concept Of Marketing Mix, The Marketing Mix:
From 4 P’S TO 7 P’S, 8th P of The Marketing Mix.

Lesson-3. Marketing Environment

Concept, Scanning environment, Importance of
environmental Analysis, Micro Environment,
Macro Environment.

Lesson-4. Consumer Behaviour

Consumer Decision Making concept and Steps,
Industrial markets, Features of Industrial
Marketing, Differences between Industrial and
Consumer Marketing.

Lesson-5. Market Segmentation, Targeting and

Positioning
Nature and Significance of Market Segmentation,
Segmentation Criteria, Bases for segmenting
markets, Segmentation Strategy, Market
Targeting, Target Market Strategies, Market
Positioning, Market Repositioning.
MCQs 38-42
Descriptive questions
Glossary/Key Words
References and Further Readings

II Lesson-6: Product & Pricing: Introduction of 43-61

Product, Dimensions /Levels of Product,
Classification of Products, Channel of
Distribution, Product Mix & Product Mix
Decisions, Product line & Product line
Modification, Factors Influencing Product Mix.

Lesson-7: New Product Development, The

Product Life Cycle, Brand Loyalty, Packaging and
Labelling.

Lesson-8: Pricing Policies and Strategies: Pricing

Objectives, Pricing Methods, Price Strategies.

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 MCQs 62-67
Descriptive questions
Glossary/Key Words
References and Further Readings

III Lesson-9: Place: Introduction to Managing 68-77

Marketing Channels, Role of Distribution
Channel, Channel of Distribution, Designing &
Managing Marketing Channel, Physical
Distribution, Retail Operations, Managing
Retailing,

Lesson-10: Wholesaling, Marketing Logistics,

JIT, Logistics and Supply Chain Management.
MCQs 78-82
Descriptive questions
Glossary/Key Words
References and Further Readings

IV Lesson-10: Promotion: Promotional Objectives; 83-116

Factors Influencing Choice of Promotional Mix;
Push vs. Pull Strategy.

Lesson-11: Advertising-Definition and

Importance; Comparison of Advertising Media;

Lesson-12: Personal Selling- Importance and

Process, Transaction versus Relationship Selling;
Sales Promotion - Purpose, Types, Limitations;
Publicity and Public Relations- Definition,
Importance and Tools; Direct Marketing;

Lesson-13: Digital Marketing-Types, Advantages

& Challenges.
MCQs 117-126
Descriptive questions
Glossary/Key Words
References and Further Readings

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 Syllabus

Marketing Management
Unit I

Introduction to Marketing: Nature, Scope and Importance of Marketing:

Basic Concepts, Marketing Philosophies; Marketing Management
Process-An Overview; Concept of Marketing Mix; Understanding
Marketing Environment; Steps in Consumer Decision Making,
Characteristics of Industrial Markets; Market Segmentation, Targeting
and Positioning.

Unit II

Product & Pricing: Product Levels, Product Mix, Product Lines, Product
Strategy, Branding Decisions, New Product Development, Product
Lifecycle; Pricing Decisions: Pricing Objectives, Pricing Methods, Price
Adjustment Strategies.

Unit III

Place: Role and Importance of Intermediaries, Types of Channels, Major

Channel Design. Decisions, Selecting, Motivating and Evaluating
Channel Intermediaries; Physical Distribution, Logistics and Supply
Chain Management.

Unit IV

Promotion: Promotional Objectives; Factors Influencing Choice of

Promotional Mix; Push vs. Pull Strategy: Advertising-Definition and
Importance; Comparison of Advertising Media; Personal Selling-
Importance and Process, Transaction versus Relationship Selling; Sales
Promotion - Purpose, Types, Limitations; Publicity and Public Relations-
Definition, Importance and Tools; Direct Marketing; Digital Marketing-
Types, Advantages & Challenges.

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 Unit-1
Introduction to Marketing: Nature, Scope and Importance of Marketing: Basic Concepts,
Marketing Philosophies; Marketing Management Process-An Overview; Concept of
Marketing Mix; Understanding Marketing Environment; Steps in Consumer Decision
Making, Characteristics of Industrial Markets; Market Segmentation, Targeting and
Positioning.

LESSON-1
NATURE, SCOPE AND IMPORTANCE OF MARKETING
Most of the people define marketing as selling or advertising. It is true that these are parts of
the marketing. But marketing is much more than advertising and selling. Infact marketing
comprises of a number of activities which are interlinked and the decision in one area affects
the decision in other areas.

The term “market” originates from the Latin word “Marcatus” which means “a place where
business is conducted.” A layman regards market as a place where buyers and sellers
personally interact and finalise deals. A market can be defined as the summation of all the
buyers and sellers in an area or region under consideration. The area may be a country, a
region, a state, a village or a city.

Marketing is the process of identifying needs and wants of target customers and delivering
the product and service to customer for earning profit. Marketing is the process of developing
and exchanging ideas, goods, and services that satisfy customer and organizational needs
with the help of pricing, promotion and distribution.
Marketing includes all those activities which starts before production and continues even
after selling goods to customers.
Marketing is defined as "the activity, set of institutions, and processes for creating,
communicating, delivering, and exchanging offerings that have value for customers, clients,
partners, and society at large." The American Marketing Association.

“Marketing is the process by which companies create value for customers and build strong
customer relationships in order to capture value from customers in return”.
-Philip Kotler

Marketing is the act of facilitating the exchange of a given commodity for goods, services,
and/or money to deliver maximum value to the consumer. From a societal point of view,
marketing is the link between a society’s material requirements and its economic patterns of
response. Marketing satisfies these needs and wants through both the exchange processes and
building long-term relationships.

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Marketing can be viewed as an organizational function and a set of processes for creating,
delivering, and communicating value to customers, and managing customer relationships in
ways that benefit the organization and its shareholders. Marketing is the science of choosing
target markets through market analysis and market segmentation, as well as understanding
consumer buying behavior and providing superior customer value.

The set of engagements necessary for successful marketing management include capturing
marketing insights, connecting with customers, building strong brands, shaping the market
offerings, delivering and communicating value, creating long-term growth, and developing
marketing strategies and plans.

CHARACTERISTICS OF MARKETING
The marketing Management refers to planning, organizing, directing, control of the activates
which facilitate the exchange of goods and services between the producers to end consumers.
Firms today need to spend money to create time, place and ownership utilities .The main
features of modern marketing are as follows:

1. Marketing is a science as well as art: Marketing has evolved from the economics
but it has a closer relationship with social and behavioral sciences. Marketing is closely
associated with streams of science as well humanities and subject lines such as Economics,
Law, Psychology, Anthropology, Sociology, Information Technology etc. Marketing heavily
depends upon the demographic features of the target market, political environment,
philosophy, mathematics, statistics etc.

2. Exchange is essence of marketing: Marketing revolves around commercial

exchange. This also involves exchange of technology, exchange of information and exchange
of ideas.

3. Marketing is Goal Oriented: The ultimate goal of marketing is to generate profits

through the satisfaction of the customer.

4. Marketing is a continuous process: marketing is not an isolated, static process but is

a complex, continuous and interrelated process. It involves continuous planning,
implementation and control. It is an important functional area of the management.

5. Marketing is Consumer Oriented: All firms exist because of their business to

satisfy the human needs, wants and demands. The ultimate objective of marketing is to find
out what the consumer wants and how to fulfill consumer need. This leads to production of
the goods and services as per the needs of the customer.

6. Marketing starts with consumer and ends with consumer: Marketing is consumer
oriented and it is very important to know what the consumer wants.

NATURE OF MARKETING
1. Marketing is both consumer oriented and competitor oriented. The consumer and
competitor orientations can be easily understood by the following diagram:

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 Competitor Emphasis
Customer Minor Major
Emphasis Minor Self-centred Competitor Oriented
Major Customer oriented Market driven

• Self-centred companies do not give any concern to the consumers and competitors.
This type of company can exist in the situation of monopoly. In the competitive economy,
these companies cannot remain in the business for long.

• Competitor oriented companies mainly focus on competitor’s activities, what the

competitors are doing and what they are likely to do the near future are the major areas of
concern. The companies can be either reactive or proactive. The reactive company will
follow the moves of competitors. For example, if the competitor reduce price of its product
or service then the reactive competitor-oriented company will also reduce its prices. Whereas
the proactive competitor-oriented company will try to identify what its major competitor is
going to do.

• Customer oriented companies believe in satisfying the customers at any cost. These
companies obtain inputs from the customers and then develop their product or service as per
customers’ requirements and then earn profit through customer satisfaction. The biggest
problem is that they don’t consider what their competitors are doing and in the long run it
might prove counter-productive.

• Market driven companies are concerned about customers as well as competitors.

These companies regularly interact with the customers to know about their satisfaction levels
and their future requirements and then try to develop the product or service which is better
than their competitors.

2. Marketing is a dynamic activity because a number of variables keep changing. For

example marketing environment, customer’s requirements, competitor’s reactions etc. keep
changing. The companies may have to modify their product, price, place or promotion due to
change in any of the numerous variables.

3. Long term objective of marketing is profit maximization through customer satisfaction.

This is because a satisfied customer will come back again for the same or different need to
the company.

4. Marketing is an integrated function and all the marketing decisions are linked with each
other. One decision will automatically lead to another decision. For example, if a company
has decided to launch a product for limited number of customers then its price will be high
and that product will be available through exclusive distribution system and promotion
strategy will depend on the media preferred by the target market.

5. Marketing is a core functional area of modern day organisations and is the driving force
behind every organisation. Marketing provides the vital input for corporate planning.

6. Marketing is interlinked with other functional areas of the organisation. Marketing people
collects the information regarding customer’s requirements and pass it to the research and
development and engineering people who will turn the customer requirements into the
product or service features.

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SCOPE OF MARKETING
Marketing is seen as the task of creating, promoting and delivering goods and services to
consumers and businesses. Marketers are skilled in stimulating demand for a company’s
products but this is too limited a view of the tasks marketers performs. Marketing people are
involved in marketing 10 types of entities: goods, services, experiences, events, persons,
places, properties, organizations, information and ideas.

• Goods: Physical goods constitute the bulk of most countries’ production and
marketing effort. In a developing country like India fast moving consumer goods and
consumer durables are produced and consumed in large quantities every year.

• Service: A service can be defined as any performance that one party can offer to
another that is essentially intangible and does not result in the ownership of anything. Many
market offerings consists of a variable mix of goods and services. At the pure science end
would be psychiatrist listening to a patient or watching movie in a cinema hall.

• Experience: By mixing several services and goods, one can create, stage and market
experiences. For example water parks, zoos, museums etc. provide the experiences which are
not the part of routine life. There is a market of different experiences such as climbing Mount
Everest or Kanchanjunga.

• Events: Marketers promote time based, theme based or special events such as
Olympics, company anniversaries, sports events (Samsung Cup-Indian Pakistan Cricket
Series), artistic performances (Lata Mangeshkar live concert, Jagjit Singh live concert)

• Persons: Celebrity marketing has become a major business. Years ago, someone
seeking fame would hire a press agent to plant stories in newspapers and magazines. Today
most of the cricket players like Sachin Tendulkar, Saurav Ganguly are drawing help from
celebrity marketers to get the maximum benefit. Even Star plus TV channel focussed more
on Sh. Amitabh Bachhan to promote their programme Kaun Banega Crorepati.

• Places: India and China are competing actively to attract foreign companies to make
their production hub. Cities like Bangalore, Hyderabad and Gurgaon are promoted as centre
for development of software. Bangalore is regarded as software capital in India and
Hyderabad is emerging as the hub of biotechnology industry.

• Properties: Properties are intangible rights of ownership of either real property(real

estate) or financial property(shares and debt, instruments). Properties are bought and sold and
this requires marketing effort. Properties dealers in India work for property owners or seekers
to sell or buy plots. In India some builders like Ansal, Sahara Group build and market their
residential commercial real estates.

• Organisations: Organisations actively work to build a strong, favourable image in

the mind of their publics. As see ads of Reliance Infocomm which is trying to provide
communication at lower rates. Dhirubhai Ambani Entrepreneur to promote entrepreneurship
amoung the Indians.

• Information: Information can be produced and marketed as a product. This is

essentially what schools, colleges and universities produce and distribute a price to parents,
students and communities. Magazines such as Fitness and Muscle provide information about
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staying healthy. Business India, Business Today and Business World provide information
about business activities that are taking place in various organizations.

• Ideas: Film makers, marketing executives and advertising continuously look for a
creative spark or an idea that can immortalise them and their work. Idea here means the
social cause or an issue that can change the life of many. Narmada Bachao Andolan was
triggered to bring the plight of displaced people and to get them justice. Endorsement by
Amitabh Bachhan to Pulse Polio Immunization drive and pledge by Aishwarya Rai to donate
her eyes after her death gave immense boost to these.

IMPORTANCE OF MARKETING

• To the Society
• To the firms/companies
• To the Consumers

(A) To the Society

1. It is instrumental in improving the living standards. Marketing continuously identifies the

needs and wants satisfying products or services which can propel the people to do an extra to
earn money which can be exchanged for the desired products or services. Thus marketing by
indirectly increasing the earning ability will help in improving the standard of living of the
customers.

2. Marketing generates gainful employment opportunities both directly and indirectly.

Directly, marketing provides employment to the people in various areas like in advertising
agency, in the company sales force, in the distributor ís sales force, in public relation firms
etc. Indirectly, marketing is responsible for selling the offerings of the organisation. If the
organisation’s products or services are able to satisfy the customers, then customers will
demand organisations products or services again and again, thereby sustaining the production
activities. Thus marketing indirectly provides employment in other functional areas like
finance, production, research and development, human resource management etc.

3. Marketing helps in stabilising economic condition in the sense that marketing helps in
selling the products or services, which keeps the various organizations functioning and
gainful employment is available to the people. With the earnings from the employment, the
people will purchase the products and/or services, thus sustaining the demand. This will
happen in all the industries, then gainful employment will be available throughout the time
period and economy will remain stable, healthy

(B)To the firm/companies

1. Marketing sustains the company by bringing in profits. Marketing is the only activity that
brings revenue to the firm, whereas other activities incur expenditure. If the company’s
products or services satisfy the customer’s requirements, then the satisfied customers will
keep the company in business by repeat orders and recommending other profitable
customers. Thus marketing is the driving force behind a successful company.

2. Marketing is the source of new ideas. New product or service ideas usually come from the
research laboratories, employees or from marketplace. It’ s the marketing people who are in
continuous touch with the consumers and marketing intermediaries.Interaction with them
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helps in identifying strong and weak points of company’s product or services as well as
competitor’s products or services.

3. Marketing provides direction for the future course. The marketing-oriented company
continuously brings out new product and service ideas which provide the direction for
corporate strategic planning for longer time horizon.

(C)To the Consumers

1. Meeting the unmet needs or wants. Marketing identifies those needs or wants which were
not satisfied and helps in developing the product or service which can satisfy those unmet
needs or wants of the people. For example a number of drugs were invented to treat various
physical problems of the people. Again the low cost formulations were developed to treat the
people who are unable to afford the expensive drugs.

2. Reducing the price of products or services. Marketing helps in popularising the product or
service which attracts the customers as well as competitors towards that product or service
categories. Due to increase in demand, the manufacturing capacity increase which brings
down per unit fixed costs of the product or service.

Furthermore, increase in competition led to decrease in the prices charged by the firm. Thus
the growing demand and increasing competition both help in bringing down the price of the
product or service. For example, price of both mobile phone handset and mobile phone
service are showing a continuous downward trend thereby making the mobile phone service
affordable to more and more people.

BASIC CONCEPTS

Marketing can be understood with the help of its core concepts

Needs, wants Product or Values and Exchange and Marketing &

and demands offering Satisfaction Marketing Transaction Management

Needs, Wants and Demands

The marketer must try to understand the target market’s needs, wants, and demands. Needs
describes basic human requirements. People need food, air, water, clothing and shelter to
survive. People also have strong needs for recreation, education, and entertainment. These
needs become wants when they are directed to specific object that might satisfy the need. An
Indian needs food but wants a rice, chhapati vegetable and dal. A person in Mauritius needs
food but wants a mango, rice, lentils and beans. Wants are shaped by one’s society. Demands
are wants for specific products backed by an ability to pay. Many people want a big and
beautiful house; only a few are able and willing to buy one. Companies must measure not
only how many people want their product but also how many would actually be willing and
able to buy it.

Product or Offering

People satisfy their needs and wants with products. A product is any offering that can satisfy
a need or want. A brand is an offering from a known source. A brand name such as
McDonald ís carries many associations in the minds of people: hamburgers, fun, children,

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fast food, Golden Arches. These associations make up the brand image. All companies strive
to build brand strength that is, a strong, favourable brand image.

Value and Satisfaction

The product or offering will be successful if it delivers value and satisfaction to the target
buyer. The buyer chooses between different offerings on the basis of which is perceived to
deliver the most value. We define value as a ratio between what the customer gets and what
he gives. The customer gets benefits and assumes costs. The benefits include functional
benefits and emotional benefits. The costs include monetary costs, time costs, energy costs,
and psychic costs.

Exchange and transactions

Exchange is only one of the four ways in which a person can obtain a product. The product
can self- produce the product or service as when a person hunts fishes or gathers fruit. The
person can use force to get a product as in a hold up or burglary. The person can beg, as
happens when a homeless person asks for food. Exchange which is the core concept of
marketing involves obtaining a desired product from someone by offering something in
return. For exchange, there should be at least two parties. Each party has something that
might be of value to the other party.

Marketing and Management

Marketing is a societal process by which individuals and groups obtain what they need and
want through creating, offering and freely exchanging products and services of value with
others.
Marketing (Management) is the process of planning and executing the conception, pricing,
promotion and distribution of ideas, goods, service to create exchanges that satisfy individual
and organizational goals.

However, there are six competing concepts/philosophies under which organizations conduct
marketing activities.

• The production concept

• The product concept
• The selling concept
• The marketing concept
• The societal marketing concept

Production Concept
Those companies who believe in this philosophy think that if the goods/services are cheap
and they can be made available at many places, there cannot be any problem regarding sale.
Keeping in mind the same philosophy these companies put in all their marketing efforts in
reducing the cost of production and strengthening their distribution system. In order to reduce
the cost of production and to bring it down to the minimum level, these companies indulge in
large scale production. This helps them in effecting the economics of the large scale
production. Consequently, the cost of production per unit is reduced.

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Product Concept
Those companies who believe in this philosophy are of the opinion that if the quality of
goods or services is of good standard, the customers can be easily attracted. The basis of this
thinking is that the customers get attracted towards the products of good quality. On the basis
of this philosophy or idea these companies direct their marketing efforts to increasing the
quality of their product. It is a firm belief of the followers of the product concept that the
customers get attracted to the products of good quality. This is not the absolute truth because
it is not the only basis of buying goods.
The customers do take care of the price of the products, its availability, etc. A good quality
product and high price can upset the budget of a customer. Therefore, it can be said that only
the quality of the product is not the only way to the success of marketing.

Selling Concept
Those companies who believe in this concept think that leaving alone the customers will not
help. Instead, there is a need to attract the customers towards them. They think that goods are
not bought but they have to be sold. The basis of this thinking is that the customers can be
attracted. Keeping in view this concept these companies concentrate their marketing efforts
towards educating and attracting the customers. In such a case their main thinking is ‘selling
what you have’. This concept offers the idea that by repeated efforts one can sell-anything to
the customers. This may be right for some time, but you cannot do it for a long-time. If you
succeed in enticing the customer once, he cannot be won over every time.

Marketing Concept
Those companies who believe in this concept are of the opinion that success can be achieved
only through consumer satisfaction. The basis of this thinking is that only those
goods/service should be made available which the consumers want or desire and not the
things which you can do. In other words, they do not sell what they can make but they make
what they can sell. Keeping in mind this idea, these companies direct their marketing efforts
to achieve consumer satisfaction.

Societal Marketing Concept

This concept stresses not only the customer satisfaction but also gives importance to
Consumer Welfare/Societal Welfare. This concept is almost a step further than the marketing
concept. Under this concept, it is believed that mere satisfaction of the consumers would not
help and the welfare of the whole society has to be kept in mind.

For example, if a company produces a vehicle which consumes less petrol but spreads
pollution, it will result in only consumer satisfaction and not the social welfare. Primarily two
elements are included under social welfare-high-level of human life and pollution free
atmosphere. Therefore, the companies believing in this concept direct all their marketing
efforts towards the achievement of consumer satisfaction and social welfare.

Difference between Marketing and Selling

Marketing Selling
Focus on Customer needs Focus on Seller’s needs
Begins before production Begins after production
Continues after sale Comes to an end with sale
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Profits through customer satisfaction Profit through sales volume
Let the seller be aware Let the buyer be aware
Integrated approach Fragmented approach
Long term perspective Short term perspective
Customer first then product Product first then customer

MARKETING MANAGEMENT PROCESS

The marketing management process goes through various stages to ensure the success of
a product in an organization. A company is generally in the blind about any new product. In a
tough business environment, with a customer who knows everything beforehand because of
the presence of online portals and websites, it is tough to plan and launch a new product or
a marketing strategy.

Just like movie stars waiting in anticipation for their movies to be released, companies wait
in anticipation when a new product is launched. This new product can rock or it can fail in
the market. The marketing management process ensures that whatever happens, the product
is given its best chance to survive and thrive in the market.

1) Conduct market research

The very first step in the marketing management process starts with conducting a market
research. As previously mentioned, if a product is a new launch, then the company is likely
to be in the blind for the future propects of the product. They do not know what product the
market needs, should they go for a new product or do a product extension, what will be the
expected turnover increase from the new product, etc. Such questions are answered by
market research. Thus, to even start thinking of launching a new product, market research is
necessary.

2) Develop a marketing strategy

Before making a marketing strategy, you need to know the market. As market research has
already been done, marketing strategy forms the second step in marketing management
process. The marketing strategy takes several points in consideration.

Simple things such as segmentation, targeting and positioning are a part of marketing
strategy. However, tough things like deciding the marketing mix as well as getting
the positioning strategy right are also involved. Core competencies like financials and
production are also to be analysed during the marketing strategy stage. Taking all these
things in consideration, a marketing strategy is formed.

Make a marketing plan

After marketing strategy, a written marketing plan is made. This is the third and a very
important step in marketing management process. A written marketing plan is made to
analyse where the company is and where it wants to reach in a given time period. The
marketing plan actually puts the plan on paper and the marketer can anytime refer to the
marketing plan to analyse whether he is on track or not. The marketing plan itself has some
pointers which are most important.

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 • Situation analysis: Business environment analysis, Internal analysis
(SWOT analysis), USP’s, core competencies.
• Strategic plan: A time related strategic plan outlining the pros and cons of the
strategy.
• Financials: Sales forecasts. Expenses forecast. Working capital etc.
• Implementation: Operations. Customer loyalty. Brand building. Consumer
behaviour. Product and pricing decisions.
• Follow up: After implementation, follow up is done to ensure marketing strategy is
on track.

3) Feedback and control

Once a product is in the market, customers might give further ideas for the improvement of
the product. These ideas are usually considered by the marketing department and a market
research is conducted to find the validity of the ideas. If the idea is valid, another product can
be developed or another marketing strategy implemented. On the other hand, if the product is
not received positively, then the control mechanism needs to fall in place and implement an
alteration process for the product or in the worst-case scenario – take the product out of the
market before it affects the brand.

The four steps above complete the marketing management process. With the world becoming
a small place due to the advent of the internet, the marketing management process has
become simpler. Feedback can be obtained online through simple questions; Marketing
strategy can be changed by keeping an online brand watch and market research can be done
through social networks. However, this does not change the gruelling process which
traditional marketing companies like FMCG, Electronics and Automobiles have to adopt.

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LESSON-2

MARKETING MIX

THE MARKETING MIX: CONCEPT

Simply put the Marketing Mix is a tool used by businesses and Marketers to help determine a
product or brands offering. The 4 Ps have been associated with the Marketing Mix since their
creation by E. Jerome McCarthy in 1960.

According to Borden, “The marketing mix refers to the appointment of efforts, the
combination, the designing and the integration of the elements of marketing into a
programme or mix which, on the basis of an appraisal of the market forces will best achieve
an enterprise at a given time”.

According to Stanton, “Marketing mix is the term used to describe the combination of the
four inputs which constitute the core of a company’s marketing system-the product, the price
structure, the promotional activities and the distribution system.”

Thus marketing mix is the combination of the product, the distribution system, the price
structure and the promotional activities. The term marketing mix is used to describe a
combination of four elements-the product, price, physical distribution and promotion. These
are popularly known as “Four Ps.”

These four elements or sub-mixes should be taken as instruments, by the management, when
formulating marketing plans. As such, marketing manager should have a thorough
knowledge about the four Ps. The marketing mix will have to be changed at the change of
marketing conditions like economic, political, social etc. Marketing mix is developed to
satisfy the anticipated needs of the identified markets.

THE MARKETING MIX – FROM 4 P’S TO 7 P’S

Marketing is a continually evolving discipline and as such can be one that companies find
themselves left very much behind the competition if they stand still for too long. One
example of this evolution has been the fundamental changes to the basic Marketing mix.
Where once there were 4 Ps to explain the mix, nowadays it is more commonly accepted that
a more developed 7 Ps adds a much-needed additional layer of depth to the Marketing Mix
with some theorists going even going further.

The Marketing Mix 4 Ps:

• Product - The Product should fit the task consumers want it for, it should work and it
should be what the consumers are expecting to get.

• Place – The product should be available from where your target consumer finds it
easiest to shop. This may be High Street, Mail Order or the more current option via e-
commerce or an online shop.
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• Price – The Product should always be seen as representing good value for money.
This does not necessarily mean it should be the cheapest available; one of the main tenets of
the marketing concept is that customers are usually happy to pay a little more for something
that works really well for them.

• Promotion – Advertising, PR, Sales Promotion, Personal Selling and, in more recent
times, Social Media are all key communication tools for an organisation. These tools should
be used to put across the organisation’s message to the correct audiences in the manner they
would most like to hear, whether it be informative or appealing to their emotions.

In the late 70’s it was widely acknowledged by Marketers that the Marketing Mix should be
updated. This led to the creation of the Extended Marketing Mix in 1981 by Booms & Bitner
which added 3 new elements to the 4 Ps Principles. This now allowed the extended
Marketing Mix to include products that are services and not just physical things.

The extended 7 Ps:

• People – All companies are reliant on the people who run them from front line Sales
staff to the Managing Director. Having the right people is essential because they are as much
a part of your business offering as the products/services you are offering.
• Processes –The delivery of your service is usually done with the customer present so
how the service is delivered is once again part of what the consumer is paying for.
• Physical Evidence – Almost all services include some physical elements even if the
bulk of what the consumer is paying for is intangible. For example, a hair salon would
provide their client with a completed hairdo and an insurance company would give their
customers some form of printed material. Even if the material is not physically printed (in the
case of PDFs) they are still receiving a “physical product” by this definition.

16
Though in place since the 1980’s the 7 Ps are still widely taught due to their fundamental
logic being sound in the marketing environment and marketers’ abilities to adapt the
Marketing Mix to include changes in communications such as social media, updates in the
places which you can sell a product/service or customers’ expectations in a constantly
changing commercial environment.

Is there an 8th P?
In some spheres of thinking, there are 8 Ps in the Marketing Mix. The final P is Productivity
and Quality. This came from the old Services Marketing Mix and is folded in to the Extended
Marketing Mix by some marketers so what does it mean?

The 8th P of the Marketing Mix:

• Productivity & Quality - This P asks “is what you’re offering your customer a good
deal?” This is less about you as a business improving your own productivity for cost
management, and more about how your company passes this onto its customers.

17
LESSON 3

MARKETING ENVIRONMENT

Concept
Marketing activities are influenced by several factors inside and outside a business firm.
These factors or forces influencing marketing decision-making are collectively called
marketing environment. It comprises all those forces which have an impact on market and
marketing efforts of the enterprise. According to Philip Kotler, marketing environment
refers to “external factors and forces that affect the company’s ability to develop and
maintain successful transactions and relationships with its target customers”.
The marketing programme of a firm is influenced and shaped by a firm’s inwardly need to
begin its business planning by looking outwardly at what its customers require, rather than
inwardly at what it would prefer to produce. The firm must be aware of what is going on in
its marketing environment and appreciate how change in its environment can lead to
changing patterns of demand for its products.

SCANNING THE ENVIROMENT:

Marketing activities do not take place in a vacuum, isolated from all external forces. In fact
all marketing operations are conducted in a highly complex, dynamic and changing
environment. According to Philip Kotler, “A company’s marketing environment consists of
the factors and forces outside marketing that affect management’s ability to build and
maintain successful relationships with target customers”.

The marketing environment offers both opportunities and threats. Successful companies
know the vital importance of constantly watching and adapting to the changing environment.
A company’s marketers take the major responsibility for identifying significant changes in
the environment. More than any other groups in the company, marketers must be the trend
trackers and opportunity seekers.

IMPORTANCE OF ENVIROMENTAL ANALYSIS:

1. It helps in marketing analysis.

2. It can assess the impact of opportunities and threats on the business.
3. It facilitates the company to increase general awareness of environmental changes.
4. It is possible to develop effective marketing strategies on the basis of analysis.
5. It helps to capitalize the opportunities rather than losing out to competitors.
6. It facilitates to understand the elements of the environment.
7. It helps to develop best strategies, in the light of analyzing “what is going around the
company”.

The marketing environment is made up of:

Companies get resources from the environment and supplies goods and services to the
environment. There are different environmental factors that affect a business ability to serve

18
its customers. These marketing environmental factors provide opportunities or threats to a
particular business. Every company or organization tries to grasp the available opportunities
and face the threats that emerge from the environmental forces. The term “business” actually
applied to those economic activities whose primary purpose is to provide goods and services
for society in an effective manner. Now there are two types of forces which affect an
organization to serve its customers.

• Micro Environment
• Macro Environment

MICRO ENVIRONMENT
Micro environments are those that are distinct and individual, such as customers, producers,
marketing intermediaries, public entities and the company itself.

Company
Every marketer must work with people in the organization who perform non-marketing tasks.
For example, in a large manufacturing company, manufacturing, engineering, purchasing,
accounting, finance, and personnel are all part of the internal company environment. These
functional activities, the level of technology, and the people who perform them have an
impact on marketing. Marketers, for example, work within the framework of the corporate
mission set by top managers who are responsible for the company’s operations. Companies
like 3M, Sony, and Disney have several divisions and market many different goods and
services. The way one product is marketed often affects the marketing of other company
products.

Collaborators/Market intermediaries
Collaborator: A person or company that works with a marketing company. Collaborators
help the company run its business but are not actually part of the company. For an
organization, buying materials and supplies, hiring an advertising agency, or getting a loan
from a bank requires that one company work with another company. These companies are
collaborators. A collaborator is a person or a company that works with your company.
Collaborators help a company run its business but they are not part of the company. They are
often specialists who provide particular services or supply raw materials, component parts, or
production equipment.

Customers
Customer: One who buys a company’s goods or services? Customers are the lifeblood of
every company. A company that does not satisfy its customer’s needs will not stay in
business over the long run. It is difficult to think of a more direct influence on marketing than
the gaining or losing of customers.

Competitors
Competitor: One of two or more rival companies engaged in the same business. For example,
Hero Honda and Yamaha are competitors. So are two general stores in your neighbourhood.
Competitors are rival companies engaged in the same business. The marketer does this by
analyzing product classes, product categories, and brands.

Suppliers

19
In selling their products and services to your company’s customers and potential customers.
One of the fundamental marketing tasks is identifying and understanding the competition.
Regarding the suppliers, the organisation can think of availing the required material or labour
according to its manufacturing programme. It can adopt such a purchase policy which gives
bargaining power to the organisation.

According to Michael Porter, “the relationship between suppliers and the firm epitomises a
power equation between them. This equation is based on the industry conditions and the
extent to which each of them is dependent on the other.”

Public
Literally word ‘public’ refers to people in general. According to Philip Kotler, “A public is
any group that has an actual or potential interest in or impact on a company’s ability to
achieve its objectives.” The environmentalists, consumer protection groups, media persons
and local people are some of the well-known examples of publics.

The company has a duty to satisfy the people at large along with competitors and the
consumers. It is an exercise which has a larger impact on the well-being of the company for
tomorrow s stay and growth. Create goodwill among public, help to get a favourable
response for a company. Kotler in this regard has viewed that.

“Companies must put their primary energy into effectively managing their relationships with
their customers, distributors and suppliers. Their overall success will be affected by how
other publics in the society view their activity. Companies would be wise to spend time
monitoring all their public understanding their needs and opinions and dealing with then
constructively.”

MACRO ENVIRONMENT
Every business is affected by macro environmental forces. They can increase or decrease the
need for your product, or create entirely new product needs. Raw material costs might be
driven up or down. New target markets might be created or old ones changed. What’s
important for a company is to identify those macro environmental forces that directly affect
their business, which means understanding the nature of those forces and how to identify and
analyze them.

Demographics
Businesses need to be aware of changes in the general population. Is the age distribution
changing? Are household patterns changing? Major changes in ethnicity are critical to
identify. Watch population shifts to see if the populations in cities, suburbs or rural area are
changing to determine if segments of the population are leaving one area for another. The
same holds true for geographic areas. Are people leaving one region of the country for
another? Past demographic trends would include the shift from cities to suburbs in the 50s
and 60s, the aging of the Baby Boomer generation currently, the growth of the Hispanic
population over the last 20 years and the growing acceptance of the gay community recently.

Economics
In a recession, people lose jobs, or worry about that happening to them. This makes
consumers less willing to spend their disposable income. However, in an economic
expansion, job security makes people more willing to spend their disposable income. If your
20
customers use disposable income to buy your product, knowing where you are in the
economic cycle helps you plan production. Look at income distribution to see if certain
segments of the population are growing wealthier and acquiring new needs. For example, a
major reason that China is seen as an attractive market is a rapidly growing Chinese middle
class that desires an increasing range of consumer goods.

Social and Cultural

Every nation has a set of core cultural beliefs that are passed from generation to generation.
Changes in these core beliefs affect consumer purchases. Once taboo, single-parent families
are now considered mainstream and are growing, creating a whole new set of product needs.
Preferences for music, entertainment, exercise, eating habits or leisure time activities change
with time, creating new needs or lessening past needs.

Technological
The development of new technology can dramatically affect needs and wants. For example,
the Internet completely changed the way people communicate. If you walk into any
electronics retailer or department store, you will literally see hundreds of new products that
were directly tied to the growth of the Internet. That shift to the Internet resulted in new
consumer needs and wants, opening the door for smart companies to take advantage of that
opportunity. Today, the pace of technological change constantly provides opportunities for
new products.

Political Environment
It includes Government actions, Government legislations, public policies and act which
affect the operations of a company or business. These forces may affect an organization on
local, regional, national or international level. So marketers and business management pay
close attention to the political forces to judge how government actions which will affect their
company.

Natural Environment
Natural forces are related with natural resources that are vital as inputs by marketers or that
are affected by marketing activities. Weather conditions and Global warming are the example
of natural forces. So, marketer should be are of several trends in the natural environment.

Legal Environment
The legal environment is also referred to as public policy environment. The vast
governmental network of laws and regulations, policy decisions, government bureaucracy,
and the legislative processes have raised impact on Business decisions.

Business law is the complex system of regulation that forms the legal environment of
business. Knowledge of business law is necessary for many management decisions.
However, the legal environment is becoming so complex that many laws are only partially
understood.

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LESSON - 4

CONSUMER BEHAVIOUR
CONSUMER DECISION MAKING
Consumer decision making process involves the consumers to identify their needs, gather
information, evaluate alternatives and then make their buying decision. The consumer
behavior may be determined by economic and psychological factors and are influenced by
environmental factors like social and cultural values.

The consumer decision making behavior is a complex procedure and involves everything
starting from problem recognition to post-purchase activities. Every consumer has different
needs in their daily lives and these are those needs which make than to make different
decisions.

Decisions can be complex, comparing, evaluating, selecting as well as purchasing from a

variety of products depending upon the opinion of a consumer over a particular product. This
renders understanding and realizing the basic problem of the consumer decision making
process for marketers to make their products and services different from others in the
marketplace.

Consumer decision making process

Generally speaking, the consumer decision-making process involves five basic steps.

1. Problem recognition

The first step of the consumer decision-making process is recognizing the need for a service
or product. Need recognition, whether prompted internally or externally, results in the same
response: a want. Once consumers recognize a want, they need to gather information to
understand how they can fulfil that want, which leads to step 2.

But how can you influence consumers at this stage? Since internal stimulus comes from
within and includes basic impulses like hunger or a change in lifestyle, focus your sales and
marketing efforts on external stimulus.

Develop a comprehensive brand campaign to build brand awareness and recognition - you
want consumers to know you and trust you. Most importantly, you want them to feel like
they have a problem only you can solve.

A person who buys water or cold drink identifies their need as thirst. Here; however,
searching for information and evaluating alternatives is missing. These consumer decisions
making steps are considered to be important when an expensive brand is under buying
consideration such as cars, laptops, mobile phones, etc.
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Example: Winter is coming. This particular customer has several light jackets, but she’ll
need a heavy-duty winter coat if she’s going to survive the snow and lower temperatures.

2. Information search

When researching their options, consumers again rely on internal and external factors, as
well as past interactions with a product or brand, both positive and negative. In the
information stage, they may browse through options at a physical location or consult online
resources, such as Google or customer reviews.

Your job as a brand is to give the potential customer access to the information they want,
with the hopes that they decide to purchase your product or service. Create a funnel and plan
out the types of content that people will need. Present yourself as a trustworthy source of
knowledge and information.

Another important strategy is word of mouth––since consumers trust each other more than
they do businesses, make sure to include consumer-generated content, like customer reviews
or video testimonials, on your website.

Thus, Information for products and services can be obtained through several sources like:

▪ Commercial sources: advertisements, promotional campaigns, sales people or

packaging of a particular product.
▪ Personal sources: The needs are discussed with family and friends who provided
product recommendations.
▪ Public sources: Radio, newspaper and magazines.
▪ Experiential sources: The own experience of a customer of using a particular brand.

Example: The customer searches “women’s winter coats” on Google to see what options are
out there. When she sees someone with a cute coat, she asks them where they bought it and
what they think of that brand.

3. Alternative’s evaluation

At this point in the consumer decision-making process, prospective buyers have developed
criteria for what they want in a product. Now they weigh their prospective choices against
comparable alternatives.

Alternatives may present themselves in the form of lower prices, additional product benefits,
product availability, or something as personal as colour or style options. Your marketing
material should be geared towards convincing consumers that your product is superior to
other alternatives. Be ready to overcome any objections––e.g., in sales calls, know your
competitors so you can answer questions and compare benefits.

Example: The customer compares a few brands that she likes. She knows that she wants a
brightly coloured coat that will complement the rest of her wardrobe, and though she would
rather spend less money, she also wants to find a coat made from sustainable materials.

4. Purchase decision

23
This is the moment the consumer has been waiting for: the actual purchase. Once they have
gathered all the facts, including feedback from previous customers, consumers should arrive
at a logical conclusion on the product or service to purchase. If the job is done correctly, the
consumer will recognize that your product is the best option and decide to purchase.

Example: The customer finds a pink winter coat that’s on sale for 20% off. After confirming
that the brand uses sustainable materials and asking friends for their feedback, she orders
the coat online.

5. Post-purchase evaluation

This part of the consumer decision-making process involves reflection from both the
consumer and the seller. As a seller, you should try to gauge the following:

• Did the purchase meet the need the consumer identified?

• Is the customer happy with the purchase?
• How can you continue to engage with this customer?

Remember, its seller’s job to ensure that customer continues to have a positive experience
with the product. Post-purchase engagement could include follow-up emails, discount
coupons, and newsletters to entice the customer to make an additional purchase. You want to
gain life-long customers, and in an age where anyone can leave an online review, it’s more
important than ever to keep customers happy.

INDUSTRIAL MARKETS
Consider the differences between a candy store selling a chocolate bar to a single customer,
and a chocolate manufacturer selling thousands of chocolate bars to a single candy store.
While selling candy to an individual customer might rely on salesmanship and knowledge
about individual tastes and cravings, selling candy to a store takes more than attractive
packaging. Rather, the manufacturer must ensure a safe, profitable agreement between the
two organizations. The manufacturer will market the quality, cost, and customer appeal of its
chocolate bars to convince the candy store it will have an easy time selling them.

The industrial market (also called the producer market or business market) is the set of
all individuals and organizations that acquire goods and services that enter into the
production of other products or services that are sold, rented, or supplied to others. The major
types of industries making up the industrial market (business market) are agriculture,
forestry, and fisheries; mining; manufacturing; construction and transportation;
communication and public utilities; banking, finance, and insurance; and services.

Industrial marketing, also known as business-to-business (B2B) marketing, is a branch of

communications and sales that specializes in providing goods and services to other
businesses, rather than to individual customers. Because industrial marketing often involves
large orders and long-term relationships between the producer and client, the process from
first pitch to close of sale is often more complex than the process between a business and a
private customer.

While B2C sales might focus on one-on-one interactions between two parties, businesses are
usually made up of a number of individuals. Before the product appears on the other store's
shelves, the two businesses must reach a deal that will involve the manufacture, purchase,
and shipping of thousands of products.
24
Industrial marketing/business marketing is to market the products and services to business
organizations: manufacturing companies, government undertakings, private sector
organisations, educational institutions, hospitals, distributors, and dealers. The business
organizations, buy products and services to satisfy many objectives like production of goods
and services, making profits, reducing costs, and, so on. In contrary, marketing of products
and services to individuals, families, and households is made in consumer marketing. The
consumers buy products and services for their own consumption. Further, industrial
marketing consists of all activities involved in the marketing of products and services to
organizations that use products and services in the production of consumer or industrial
goods and services, and to facilitate the operation of their enterprises. The companies/selling
organizations that sell steel, machine tools, computers, courier services, and other goods and
services to business firms/buying organizations need to understand the buyers ‘needs,
purchasing power/resources, policies, and buying procedures. They have to create value
(benefit) for the buying organizations (customers) with products and services and focus on
buying organizational needs and objectives. For example, a company manufacturing and
marketing precision steel tubes to bicycle, a manufacturer is doing business marketing.
Industrial marketer of the precision steel tube company must understand the needs of bicycle
manufacturers such as Hero Cycle and Atlas Cycle, in terms of their quality requirements,
applications of tubes, availability or delivery on daily or weekly basis, and so on. Similarly, a
small and proprietary firm, giving technical advice (or services) to paint manufacturers is
also doing business marketing.

Distinctive Features of Industrial Marketing

1. It’s extremely complex.
A great analogy for industrial marketing follows; consumer marketing is a candy shop selling
candy to a single customer. Industrial marketing is a candy manufacturer selling thousands of
pieces of candy to a candy store. Obviously, the latter is much more appealing, but this
obviously means that it is a little more complicated.
Industrial marketing requires large orders, long-term relationships which makes the first pitch
and sale often more complex. This revolves around the simple fact that businesses are made
up of several individuals, which means you have to impress multiple people, with numerous
different bits of information.

2. Longer sales cycle

A result of industrial marketing being more complicated is a longer sales cycle. When you
pitch to a business, the whole process revolves around calculated decisions, reviewing,
analysing. This shouldn’t be seen as a negative, the outcome of industrial marketing, as you
probably imagined, is worth any complexity or lengthy process.

3. The variety of marketing

Industrial marketing can mean that you have a wide range of products. Every single product
requires a different marketing strategy; sometimes the difference can be extreme.
To put this into perspective, it is much different to sell, say, a standard motor to a known
business, compared to selling capital equipment to various companies.
The strategies that you may use for the motors won’t be successful in selling large custom
machines. Ultimately, the variety of marketing can be boundless.

4. Low market information

25
Consumer products have a lot of database information available for them, including customer
demographics. In comparison, information revolving around industrial market niches are
hard to come by. It actually requires a considerable amount of industrial experience to gather
useful market information.

That being said, it isn’t impossible; to gather the information you will need to analyse the
niche in-depth. Information like the number of employees, line speeds, shifts, sizes, and so
on, will all be acquired and you will be able to discover prospective buyers.

6. Advertising generally doesn’t follow trends

When it comes to industrial marketing, advertising and promotion are a bit different. You
see, in the grand scheme of things, it is comparatively simple to develop newspaper adverts,
billboards, and videos for impulsive consumers.
“With industrial marketing, because of the lengthy sales cycle, advertisements can’t be
focused on trends. Instead, they have to address the product’s benefits and applications
directly.” - Jennifer Watts, CMO at The Word Point.

7. The buyers and their behaviours

As mentioned earlier, industrial marketing is aimed at a team of people, rather than an
individual. Thus, the behaviours are varied, follows a specific process and, ultimately, you
need to impress multiple people, all of which may have different opinions.
Communication with your potential buyers is crucial; email, phone, and one-to-one
conversations help to secure a business relationship. This relationship will be long-term,
rather than a one-time buy relationship.

7. Bidding is customary
An individual consumer will buy, or they won’t. Bidding isn’t a daily scenario in for the
average consumer. On the other hand, industrial marketing rarely doesn’t revolve around
quotes and bids. Quotations and specifications can sometimes be hundreds of pages long,
specifying the product and the prices right down to the itty-bitty details. This will ultimately
help secure a deal.

8. The geographical and demographical distribution

The average consumer market research generally doesn’t work for industrial markets, purely
because the samples are just too small. Industrial market research almost has to be
simultaneously niche and broad.
The most important part of industrial market research is to acquire information on market
shares and market sizes. These can be found using qualitative techniques, unstructured
interviewing techniques, and field research.

Suffice to say, industrial marketing is hard work but has high rewards. Once you secure a
client/customer, it’s a long-term, secure relationship. There’s a tiny bit of a knowledge gap
when it comes to industrial marketing, which makes the process more challenging, but
completely worth it.

The needs and objectives of industrial buyers are satisfied through the following exchange
processes.

1 Product Exchange. The features of a product or service involved have a significant impact
on the industrial exchange process. The ease of exchange depends upon the ability of the
26
seller to identify the buyer‘s needs and the product‘s potential to satisfy those needs. If the
exchange is good in terms of price, quality, quantity, and after sale services then it will give a
positive symbol for the customer loyalty in terms of product/service loyalty.

2 Information Exchange. The information consists of technical, economic, and

organisational questions: pre and post-sale maintenance and servicing must be exchanged to
the participants of business organisations. Products and services must be planned and
designed to serve customers efficiently. To achieve it, buyers and sellers tend to work
together, exchanging product specific information over long periods of time.

3 Financial Exchange. The granting of credit or the need to exchange money from one
currency to another at the time of dealing with foreign buyers/customers are included in this
exchange.

4 Societal Exchange. Societal exchange is important to reduce uncertainty between buyer

and seller, avoiding short-term difficulties, and maintaining the long-term exchange
relationship to one another. A number of aspects of an agreement between buyers and sellers
in the industrial market are based on arbitration and mutual trust, not fully formalized or
based on legal criteria until the end of the transaction period.

Differences between Industrial and Consumer Marketing

S.No Basis Industrial Markets Consumer Markets
1 Market Geographically concentrated, Geographically disbursed,
characteristics relatively fewer buyers Mass markets
2 Product Technical complexity, Standardised
characteristics Customised
3 Service Service, timely delivery and Service, delivery, and
characteristics availability very important availability somewhat
important
4 Buyer behavior Involvement of various Involvement of family
functional areas in both members Purchase decisions
buyer and supplier firms, are mostly made on
Purchase decisions are physiological/social/
mainly made on psychological needs, Less
rational/performance basis, technical expertise, Non-
technical expertise, Stable personal relationship
interpersonal relationship
between buyers and sellers
5 Decision making Observable stages, Distinct Unobservable, Mental stages
6 Channel Shorter, More direct, Fewer Indirect, Multiple layers of
Characteristics intermediaries/middlemen intermediaries
7 Promotional Emphasis on personal selling Emphasis on advertising
Characteristics
8 Price Competitive bidding and List prices or maximum retail
Characteristics negotiated prices, List prices price (MRP)
for standard products

27
LESSON-5

MARKET SEGMENTATION, TARGETING AND POSITIONING

NATURE AND SIGNIFICANCE OF MARKET SEGMENTATION

Market segmentation strives for successful attainment of organizational objectives by

identifying and serving groups of people with similar wants. It is a compromise between the
inefficiency of treating all consumers alike and the inefficiency of treating each one
differently. Whenever a market for product or service consists of two or more buyers the
market is capable of being segmented. Market segmentation is the subdividing of a market
into homogeneous subsets of customers, where any subset may conceivably be selected as a
market target to be reached with a distinct marketing programme. The power of this concept
is that in an age of intense competition for the mass market, individual sellers may prosper
through creatively serving specific market segments whose needs are imperfectly satisfied by
the mass market offerings.

The concept of market segmentation is based on the fact that markets, rather than being
homogenous, are really heterogeneous. No two buyers or potential buyers of a product are
ever identical in all respects. However, large groups of potential buyers share certain
characteristics of distinctive significance to marketing, and each such group constitutes a
market segment. Existence of a group of individuals with common characteristics, however,
does not in itself constitute a market segment. Only when they have common characteristics
as buyers then it constitutes a market segment. By grouping such individuals into market
segments, a degree of homogeneity is attained, making it possible to tailor optimal marketing
strategies to each segment.

Segmentation Criteria
Segmentation strategy uses the following four criteria:

(a) Identity: The marketing manager interested in segmentation must have, first of all, some
means of identifying members of the segment—some basis for classifying an individual as
being or not being a member of the segment. That is, there must be some evident want or
desire, or at least some common characteristic or behavior pattern.

(b) Accessibility: Once a segment has been identified, the next question is : Can we
communicate with them ? The organization must be able to focus its marketing efforts on the
chosen segment.

(c) Responsiveness: If the segment can be identified and communicated with then the next
criterion to consider is whether or not the segment will respond to marketing effort. For
example, certain product features, a lower price or more service, may more precisely satisfy
the needs of a given segment than would a general marketing effort.

(d) Significance: Suppose that a segment meets the first three criteria i.e. it can be identified,
reached with marketing effort, and would respond to that effort. The last and the most crucial
28
question from marketing management’s point of view is: Is it really significant? The segment
must possess sufficient buying power (willingness and ability to buy) to make a worthwhile
contribution to the marketing organization’s objectives.

Benefits of Segmentation
The seller who is alert to the needs of different market segments may gain in three ways;

1. He is in a better position to spot and compare marketing opportunities. He can examine the
needs of each segment against the current competitive offerings and determine the extent of
current satisfaction. Segments with relatively low levels of satisfaction from current offerings
represent excellent marketing opportunities.

2. The seller can use his knowledge of the marketing response differences of the various
market segments to guide the allocation of his total marketing budget. The ultimate bases for
meaningful segmentation are differences in customer response to different marketing tools.
These response differences become the basis for deciding on the allocation of company
marketing funds to different customers.

3. The seller can make finer adjustments of his product and marketing appeals. Instead of one
marketing programme aimed to draw-in all potential buyers, the seller can create separate
marketing programmes aimed at the needs of different buyers.

Bases for segmenting markets

A large number of variables can be used to segment a market. We can classify them into four
categories:

(A) Geographic variables.

(B) Demographic variables.
(C) Psychographic variables.
(D) Buyer- behavior variables.

On the basis of these variables, we can have the following forms of segmentation:

(1) Geographic segmentation. (2) Demographic segmentation. (3) Psychographic

segmentation. (4) Benefit segmentation. (5) Volume segmentation. (6) Marketing factor
segmentation. (7) Product space segmentation.

(1) Geographic segmentation: In this form of segmentation, sellers distinguish carefully

among the regions in which they can operate and choose those in which they can enjoy a
comparative advantage. A small retailer may distinguish between neighbourhood customers
and more distant customers. A local fertilizer salesman may distinguish between city
customers and rural customers. A national manufacturer can classify his customers by sales
territory and each state like U.P., M.P. and H.P. may represent one sales territory. In all these
cases, the geographical units become the basis of differentiated marketing effort.

(2) Demographic segmentation: In this form of segmentation, sellers attempt to distinguish

different groups on the basis of demographic variables such as age, sex, family, size, income,
Occupation, education, family life cycle, region, nationality, or social class. Demographic
variables have long been the most popular bases for distinguishing significant groupings in

29
the market. One reason is that these variables correlate well with the sales of many products;
another is that they are easier to recognize and measure than most other types of variables.

(3) Psychographic Segmentation: In this form of segmentation, the basic idea is that buyer’s
needs may be more differentiated along life-style or personality lines than along straight-
forward demographic lines. Thus, there are the swingers, who seek up-to-date foods and fast
paced, hedonistic living. Status seekers, who try to buy goods that will get them a high status
in society, and plain and simple people, who seek ordinary, untitled goods that do their job-
one implication of differentiating buyers along personality is that they can be reached with
different marketing programmes, and further the organizational objectives can better be
served in the wake of serving their needs with the required attention and care. For example,
because of their unique features swingers will respond to costlier goods more favourably than
the ordinary people. Various research studies have been conducted in the U.S.A. and other
advanced nations to test the validity of this psycho-segmentation. These studies have been
directed from time to time at whatever different consumer formalities are attached to
different products which have different images. Each product needs to be studied separately
for the possible strength of personality factors in the purchase behavior. The theoretical
connections between product images and personality types remain to be worked out better.
Even where evidence is found of personality differences in the purchase behavior, the
implications for marketing strategy are far from clear.

(4) Benefit segmentation: In this form of segmentation, buyers are sub-divided in relation to
the various benefits which they expect from a particular product. A sample of consumers is
interviewed for this purpose. In the case of toothpaste, for example, there are customers who
seek decay prevention, bright teeth, taste or low price. The idea behind benefit segmentation
is very simple —the company can choose the benefit it wants to emphasize, create a product
that delivers it, and direct a message to the group seeking that benefit. For example in our
country, makers of Colgate have repeatedly been emphasizing that 7 out of 10 users of
Colgate benefited (avoided tooth decay). At the same time we also find that Colgate makers
have been emphasizing the importance of bright teeth, when they show an advertisement on
TV about a young unmarried couple—before use and after use. So the idea is that by
choosing different benefits, which potential buyers of a particular product expect from that
product, the company in the ultimate analysis can have a larger volume of sales.

(5) Volume segmentation: In this form of segmentation, seller distinguishes the heavy,
medium, light and non-users of his product. Then he accepts to determine whether these
groups differ in demographic or psychographic ways. In particular, he is interested in the
characteristics of the heavy-user group. But he should give thought to other volume groups
also, because they may present different opportunities. So the idea behind these volume
segmentations is quite simple, though the actual attempt to identify different volume groups
may be a bit complicated and difficult. This is a general remark and can practically be taken
for almost every form of segmentation.

An important implication of volume segmentation for marketing management is that by

identifying volume groups, the seller can approach each volume group with a distinct
marketing programme and thereby increase the total satisfaction provided by his product to
different buyers. Needless to say that it will result in increased sales and profits.

(6) Marketing-factor segmentation: In this form of segmentation, the seller attempts to

subdivide the market into groups responsive to different marketing factors, such as price and
price deals, product quality, retail advertising, and so on. The idea is that if a manufacturer,
for example, knows that one identifiable group of his customers was more responsive to
30
changes in advertising expenditures than others, he might find it advantageous to increase the
amount of advertising expenditures than others, he might find it advantageous to increase the
amount of advertising aimed at them. The same sort of tailoring might also not be appropriate
if it was found that customers reacted differently to changes in pricing, packaging, product
quality and like.

(7) Product space segmentation: In this form of segmentation, buyers are asked to compare
existing brands according to their perceived similarity and in relation to their ideal brands.
Through non-metric multidimensional scaling, the analyst infers the latest attributes that
consumers are using to perceive the product class. Next, through cluster analysis, the
respondents are classified into different clusters, internally homogeneous but quite different
from cluster to cluster. Each cluster of respondents perceives the product in a distinct way or
has a distinct ideal brand. Then the analyst sees whether the different clusters have distinctive
demographic or psychographic characteristics. If so, he has found ‘natural’ segments based
on different product perceptions or preferences.

The main conclusion from this discussion of market segmentation is that the seller may
proceed to segment his market in many different ways. His goal is to determine the most
decisive mode of segmentation—that is, the differences among buyers that may be the most
consequential in choosing among them or marketing to them.

Segmentation Strategy
Segmentation strategy begins with the selection of the target market. The term target market
refers to those segments upon which the marketing effort will be found. This involves
matching the characteristics of both the segment and the marketing organization. Once the
target market is selected, a marketing programme for reaching this market is formulated in
terms of marketing mix decisions and the integration of these decisions. Then the programme
is implemented in the market place and control procedures are instigated.

Alternative Strategies of Market Segmentation

Every market can be segmented, to some extent, since the buyers who compose it are never
alike. However, a firm may or may not wish to shape its marketing strategies around these
differences.

In fact, three different strategies are available. The firm may put out only one product and try
to draw in all buyers with one marketing programme. This can be called undifferentiated
marketing. Or it may design separate products and/or the marketing programmes for each
segment. This can be caned as differentiated marketing. Finally, it may concentrate all its
efforts in one or a few lucrative segments of the market. This can be called concentrated
marketing.

(A) Undifferentiated Marketing: Under this strategy the firm chooses not to recognize the
different demand curves that make up the market. Instead, it treats the market as an
aggregate, focusing on what are commonly the needs of people rather than on what is
different. Examples are Coco Cola and cigarettes.

Under this strategy, the firm tries to design a product and a marketing programme that appeal
to the broadest number of buyers. It relies upon the mass channels, mass advertising media,
and universal channels.

31
Undifferentiated marketing is primarily defended on the grounds of cost economies. The
undifferentiated advertising programme enables the firm to enjoy media discounts through
large usage. The absence of segmental marketing research and planning lowers the costs of
marketing research and executive overhead. On the whole, undifferentiated marketing results
in keeping down several costs of doing business.

(B) Differentiated Marketing: Under this strategy, a firm decides to operate in several or all
segments of the market but designs separate product and/or marketing programmes for each.
A firm following this strategy tries to produce a product for every purse, purpose and
personality, for example General Motors in U.S.A. By offering product and marketing
variations, the firm hopes to obtain higher sales and a deeper position within each market
segment. It hopes that a deep position in several segments will strengthen the customer’s
overall identification of the company in the product field. Furthermore, it hopes for greater
loyalty and repeat purchasing, because the firm’s offerings have been bent to the customer’s
desire rather than the other way round.

Today cigarettes are manufactured in a variety of lengths and filter types. The consumer
often has the option of buying his favourite brand filtered or unfiltered, or long or short.
Earlier, when cigarette manufacturers adopted undifferentiated marketing, the question of
customer’s choice simply did not arise. The net effect of differentiated marketing is to create
more total sales than undifferentiated marketing. But one thing should be kept in mind, that
is, differentiated marketing is likely to produce more company sales but at the price of
creating higher company costs. Therefore, nothing can be said in advance regarding the
relative optimality of this strategy. Yet the literature is full of implications that differentiated
marketing is more nearly optimal. All that can be said is that differentiated marketing is
sales-oriented, and this explains why marketing men like this strategy. But whether it is profit
oriented depends upon whether it can cause sales to rise more than the costs.

(C) Concentrated Marketing: Both undifferentiated and differentiated marketing imply that
the firm goes after the whole market. However, many firms see a third possibility, one that is
especially appealing when the company’s resources are limited. Instead of going after a small
share of a large market, the firm goes after a large share of one or a few sub-markets.
Through concentrated marketing the firm achieves a strong market position in the particular
segment it serves, owing to its greater knowledge of the segment’s needs and the special
reputation it acquires. Furthermore, it enjoys many operating economies because of
specialization in production, distribution, and promotion. If the segment of the market is well
chosen, then the firm can earn high rates of return on its investment. Concentrated marketing,
however, involves company’s future growth to one segment of the market and this carries
obvious risks. One possible risk is that demand may continue but other companies enter the
same segment and cause a decline in the profits.

Selecting a Marketing Strategy

Among other things, the most important characteristics for selecting a strategy are the
following:

(a) Company resources: If the firm’s resources are too limited to permit complete coverage
of the market, its only realistic choice is concentrated marketing. But where resources permit,
the firm can have a choice between differentiated and undifferentiated marketing.

(b) Product homogeneity: Product homogeneity refers to the invariance of the product’s
characteristics. Most consumers do not perceive differences in such basic commodities as
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salt, grape fruit or steel. An undifferentiated marketing strategy for such products is,
therefore, more natural than a differentiated or concentrated marketing strategy. On the other
hand, products that are capable of great variation, such as cameras and automobiles, are more
naturally suited to differentiation or concentration.

(c) Product stage in the life cycle: This factor makes a difference, especially at the extreme
stages of market introduction and market situation. When a firm introduces a new product
into the market place it usually does not find it practical to introduce more than one, or, at the
most, a few product versions.

Its interest is to develop primary demand, and undifferentiated marketing strategy seems the
suitable strategy. The firm may alternatively develop the product for a particular segment of
the market and concentrate its efforts there. As the product moves through its life cycle
towards the saturation stage, the firm starts to search harder for new and untapped needs in
order to maintain or increase sales. Thus in the mature phase of the product life cycle, firms
tend to pursue a strategy of differentiated marketing.

(d) Market homogeneity: This refers to the degree to which customers are alike in their
needs, preferences, and characteristics. In such markets segmentation would be some-what
forced. Thus, the firm could try to stimulate customers to have more diverse preferences, but,
in general, homogenous markets are best tapped by an undifferentiated marketing strategy.
Conversely, heterogeneous markets can be tapped by either differentiated marketing or
concentrated marketing.

(e) Competitive marketing strategies: This factor refers to what competitors are doing when
competitors are practicing active segmentation; it is hard for a firm to compete through
undifferentiated marketing. It would lose most of the battles. On the other hand, when
competitors are practicing undifferentiated marketing, a firm can often gain by practicing
active segmentation.

Conclusion: The conclusion of the foregoing discussion is that no particular strategy is

superior to others in all circumstances. There can be under-differentiation, over-
differentiation, or over- concentration. Much depends on factors such as company resources,
product homogeneity, product stage in the life cycle, market homogeneity and competitive
marketing strategies.

MARKET TARGETING
This is the evaluation of the various segments identified during segmentation and deciding
how many and which ones to serve.

Evaluating the Market Segments

In evaluating different market segments, the firm must look at the following factors

1) Segment size and growth: Marketing segment has to be ‘right size’. Size can be
measured in terms of sales volume. Companies should not only concentrate on sales volume
but also on the growth potential of the segment.

33
2) Segments structural attractiveness – Using Porter’s Five Forces Analysis: A
segment might have desirable size and growth characteristics and still not profitable. The
company should evaluate the long-run profitability of the market segment.

Michael Porter has identified five forces that determine the intensive long-run
attractiveness of the whole market or any other segment within it. These five forces
are:-

➢ Threat of intense segment rivalry -A segment is unattractive if it already contains

strong or aggressive competitors.
➢ Threat of new entrants -A segment is unattractive if it is likely to attract new
competitors who will bring in new capacity, substantial resources and a drive for market
share growth.
➢ Threats of substitute products -A segment is unattractive if there exists actual or
potential substitutes for the product.
➢ Threats of growing bargaining powers of buyers - A segment is unattractive if the
buyer’s posses strong or increasing bargaining power. Interested in low prices but high
quality.
➢ Threat of growing bargaining power and suppliers -A segment is unattractive if the
suppliers posses a strong or increasing bargaining power. They can raise prices or reduce the
quality and quantity of products and services offered.

▪ Even if the segment has positive size and growth and it is attractive, the company has
to consider its own objectives and resources.
▪ The segment can be dismissed because it does not fit in the company’s long-run
objectives.
▪ Even if segments fit the company’s objectives, it must consider whether it has the
required skills and resources to succeed in that segment.

3) Segment interrelationships
Segments selected should be inter-related in terms of costs, performance and technology for
effectiveness.

Target Market Strategies

There are several different target-market strategies that may be followed. Targeting strategies
usually can be categorized as one of the following:

• Single-segment strategy - also known as a concentrated strategy. One market

segment (not the entire market) is served with one marketing mix. A single-segment
approach often is the strategy of choice for smaller companies with limited resources.
• Selective specialization- this is a multiple-segment strategy, also known as a
differentiated strategy. Different marketing mixes are offered to different segments. The
product itself may or may not be different - in many cases only the promotional message or
distribution channels vary.
• Product specialization- the firm specializes in a particular product and tailors it to
different market segments.
• Market specialization- the firm specializes in serving a particular market segment
and offers that segment an array of different products.
• Full market coverage - the firm attempts to serve the entire market. This coverage
can be achieved by means of either a mass market strategy in which a single undifferentiated

34
marketing mix is offered to the entire market, or by a differentiated strategy in which a
separate marketing mix is offered to each segment.

A firm that is seeking to enter a market and grow should first target the most attractive
segment that matches its capabilities. Once it gains a foothold, it can expand by pursuing a
product specialization strategy, tailoring the product for different segments, or by pursuing a
market specialization strategy and offering new products to its existing market segment.
Another strategy whose use is increasing is individual marketing, in which the marketing mix
is tailored on an individual consumer basis. While in the past impractical, individual
marketing is becoming more viable thanks to advances in technology.

MARKET POSITIONING
Market Positioning refers to the ability to influence consumer perception regarding a brand
or product relative to competitors. The objective of market positioning is to establish the
image or identity of a brand or product so that consumers perceive it in a certain way.

For example:

• A handbag maker may position itself as a luxury status symbol

• A TV maker may position its TV as the most innovative and cutting-edge
• A fast-food restaurant chain may position itself as the provider of cheap meals

Market Positioning is the act of designing a company’s offering and image to occupy a
distinctive place in the target market’s mind. I.e. The act of creating a difference between a
company’s offer from those of competitors. Positioning is the process of establishing and
maintaining a distinctive place in the market for the organizations’ product or
brands. Positioning starts with the product, but positioning is not what you do to a product.
Positioning is what you do to the mind of the customer. You should concentrate on the
perception of the customer and not the reality of the product. Positioning then is how the
product is perceived and evaluated by the target market, relative to competing products. To
the consumer perception is reality. That is why it is said that a marketing battle is fought in
the minds of consumers. Marketers who attain a superior position in customers’ minds have
won the marketing battle.

A difference is worth establishing to the extent that it satisfies the following criteria.
1) Important: The difference delivers a highly valued benefit to a sufficient number of
buyers.
2) Distinctive: The difference is delivered in a distinctive way
3) Superior: The difference is superior to other ways of obtaining the benefit.
4) Pre-emptive: The difference cannot be easily copied by competitors.
5) Affordable: The buyer can afford to pay for the difference.
6) Profitable: The Company will find in profitable to introduce the difference.

Positioning strategies: -
1) Attribute positioning -A company positions itself on an attribute e.g. size, number of
years in existence.
2) Benefit positioning -The product is positioned as the leader in a certain benefit.
3) Use or application positioning -Positioning a product as the best for some use or
application.
35
4) User positioning -Positioning a product the best for some user group e.g. Bic pen, food
for consumption.
5) Competitor positioning -The product claims to be better in some way then a named
competitor.
6) Product category positioning -The product is positioned as the leader in a certain
product category
7) Quality or price positioning -The product is positioned as offering the best value

As companies increase their number of claims for their brands, they risk disbelief and loss of
clear positioning. Companies must avoid four major positioning errors.

1. Under Positioning -When buyers have only a vague idea of the brand. The brand is seen
as just another entry in a crowded marketplace. E.g. When Pepsi introduced its clear crystal
Pepsi in 1993 (U.S.A.) customers were distinctively unimpressed. They didn’t see ‘clarity’ as
an important benefit of a soft drink.
2. Over Positioning -Buyers may have too narrow a image of the brand. These buyers might
think that suits at Sir Henry’s start at 15000/= when in fact it offers affordable suits started at
3000/-
3. Confused Positioning -Buyers might have a confused image of the brand resulting from
the company making too many claims or changing the brands positioning too frequently e.g.
Zain
4. Doubtful Positioning -Buyers might find it hard to believe the brand claims in view of the
products features, price or manufacturers.

How to Create an Effective Market Positioning Strategy?

Create a positioning statement that will serve to identify your business and how you want the
brand to be perceived by consumers.

For example, the positioning statement of Volvo: “For upscale American families, Volvo is
the family automobile that offers maximum safety.”

1. Determine company uniqueness by comparing to competitors

Compare and contrast differences between your company and competitors to identify
opportunities. Focus on your strengths and how they can exploit these opportunities.

2. Identify current market position

Identify your existing market position and how the new positioning will be beneficial in
setting you apart from competitors.

3. Competitor positioning analysis

Identify the conditions of the marketplace and the amount of influence each competitor can
have on each other.

4. Develop a positioning strategy

Through the preceding steps, you should achieve an understanding of what your company is,
how your company is different from competitors, the conditions of the marketplace,
opportunities in the marketplace, and how your company can position itself.

What is Market Repositioning?

36
Market repositioning is when a company changes its existing brand or product status in the
marketplace. Repositioning is usually done due to declining performance or major shifts in
the environment.

Many companies, instead of repositioning, choose to launch a new product or brand because
of the high cost and effort required to successfully reposition a brand or product.

Example of Market Repositioning

The example below describes Coca-Cola’s repositioning of Mother Energy Drinks:

The Coca-Cola Company launched Mother Energy Drinks in 2006 into the Australian
market. The launch campaign was professionally executed, and Coca-Cola was able to
leverage its distribution channels to get the product into major retailers. However, the taste of
Mother Energy Drink was subpar and repeat purchases were very low. Coca-Cola was faced
with a decision: to improve and reposition the product or withdraw it and introduce a new
brand and product. The company ultimately decided to reposition the product due to already
high brand awareness. The biggest challenge faced by Coca-Cola was to persuade consumers
to try the product again. The company changed the packaging, increased the size of the can,
and improved the taste of the product. The relaunch of the product featured a new phrase –
“New Mother, tastes nothing like the old one.” Ultimately, Coca-Cola was able to
successfully reposition Mother Energy Drinks and the brand today competes with the two
leading energy drinks in the market – V and Red Bull.

37
MULTIPLE CHOICE QUESTIONS
1. _____ is the father of Modern Marketing.
a. Abraham Maslow
b. Lester Wunderman
c. Peter Drucker
d. Philip Kotler

2. Marketing is a process which aims at ________

a. Production
b. Profit-making.
c. The satisfaction of customer needs
d. Selling products

3. The term marketing refers to _______

a. Advertising, Sales Promotion, Publicity and Public Relational activities
b. A new product needs ideas, Developments, concepts and improvements.
c. Sales Planning, Strategy and Implementation
d. A philosophy that stresses customer value and satisfaction.

4. Marketing is the activity, set of ___________ & processes for creating,

communicating, delivering & exchanging offerings that have value for customers,
clients, partners & society.
a. Institutions
b. Organizations
c. Companies
d. Enterprises

5. Select an appropriate definition of ‘Want’.

a. More consumer Needs
b. Needs backed by buying power
c. Needs directed to the product
d. Basic human requirements
6. _______ is the act of obtaining a desired object from someone by offering something
in return.
a. Marketing Myopia
b. Selling
c. Exchange
d. Delivery

7. ______ are the form of human needs take as shaped by culture & individual
personality.
a. Wants
b. Demands
c. Needs
d. Social Needs

8. Marketing segmentation is useful for___________

a. Prospects Identification
b. To know the customer’s tastes and preferences
c. To target current clients
38
d. All of the above

9. Which of the following is not an Exchange function of Marketing?

a. Product Planning & Development
b. Buying function
c. After-sales service
d. Selling Function

10. If the focus is on social and ethical concerns in marketing’ is characteristic of the
_________ period.
a. Production
b. Sales
c. Marketing
d. Societal marketing

11. A firm has decided to localize its products and services to meet local market
demands. Which one of the following approaches is a good approach for this
segmentation?
a. Geographic
b. Demographic
c. Psychographics
d. Behavioural

12. Marketing mix is suggested by______.

a. Philip Kotler
b. Neil Borden
c. Peter Drucker
d. Neil Armstrong

13. _____ are the key elements of promotion mix.

a. Advertising and Sales Promotion
b. Publicity and Public Relations
c. Direct Marketing and Personal Selling
d. All of the above

14. Newsletters, catalogues and invitations to organisation sponsored events are most
closely to ______.
a. Product
b. Price
c. Place
d. Promotion

15. The term marketing mix refers to________

a. An analysis of micro and macro environment of the organization
b. A mixture of various decisions to sell more products at any cost
c. A customer relationship for long term profit and gain
d. A combination of strategic elements to satisfy market needs
16. In effective target market, marketers should focus on:

a. Market segmentation
b. Market Targeting
c. Market positioning
39
d. All of the above

17. ________________ factors or variables are generally easier to measure than most of
the other types of variables or factors.
a. Geographic
b. Demographic
c. Psychographic
d. Behavioral

18. Dividing the consumer market into domestic users and foreign users is an example
of
A. Undifferentiated marketing
b. market segmentation
c. custom marketing
d. benefit segmentation.

19. Good marketing is no accident, but a result of careful planning and _____________.
a. Execution
b. Selling.
c. Research.
d. Strategies.

20. ______________ is the collection and interpretation of information about forces,

events, and relationships that may affect the organization.
a. Environmental scanning
b. Stakeholder analysis
c. Market sampling
d. Opportunity analysis.

21. When companies make marketing decisions by considering consumers' wants and
the long-run interests of the company, consumer, and the general population, they are
practicing which of the following principles?
a. Innovative marketing
b. Consumer-oriented marketing
c. Value marketing
d. Societal marketing

22. _____________ is the concept under which a company carefully integrates and
coordinates its many communications channels to deliver a clear, consistent, and
compelling message about the organization and its products.
a. The promotion mix
b. Integrated international affairs
c. Integrated marketing communications
d. Integrated demand characteristics

23. The ______________ holds that consumers will favor products that are available
and highly affordable (therefore, work on improving production and distribution
efficiency).
a. Product concept
b. Production concept
c. Production cost expansion concept
d. Marketing concept
40
24. The term "marketing mix" describes:
a. A composite analysis of all environmental factors inside and outside the firm
b. A series of business decisions that aid in selling a product
c. The relationship between a firm's marketing strengths and its business weaknesses
d. A blending of four strategic elements to satisfy specific target markets

25. Segmentation is the process of:

a. Dividing the market into homogenous groups
b. Selecting one group of consumers among several other groups
c. Creating a unique space in the minds of the target consumer
d. None of these

Answers:
1(d) 2(c) 3 (d) 4(a) 5(c) 6.(c) 7(d) 8(d) 9(c) 10(d) 11(a) 12(b)
13(d) 14(d) 15(d) 16(d) 17(b) 18(b) 19(a) 20(a) 21(d) 22(c) 23(a) 24(d)
25(a)

PRACTICAL QUESTION FOR STUDENT

Pick an Industry of your choice and present their STP Strategies followed in last ten
years.

LONG ANSWER QUESTIONS:

1. Briefly explain the concept of marketing. Also explain marketing philosophies or concepts
that have evolves after the advent of modern factory system?
2. Define marketing mix? What are the various components of marketing mix of a business
concern? Why it is important to have a right marketing mix?
3. What is meant by marketing environment? Distinguish between macro and micro
environment of a firm, giving suitable examples.
4. Critically examine the macro and macro environment variables of an organisation which
affect the decisions taken by its marketing department?
5. What is consumer behaviour? Why is there a need for marketers to study consumer’s
behaviour?
6. Discuss in detail the different stages through which a consumer goes through while buying
a consumer durable product? (Hint: Explain by taking any example Computer, LCD TV,
Refrigerator etc.)
7. “We are to produce what people want and not what we can sell.” Explain this statement
highlighting the difference between marketing and selling.
8. Why is it necessary for a marketer to scan marketing environment? How changes in
cultural environment affect marketing decisions?

Glossary/Key Words
Marketing, Management, Marketing Mix, Environment, Micro Environment, Macro
Environment, Consumer Behaviour, Scanning, Consumer Decision Making, Industrial
Marketing, Segmentation, Targeting, Positioning, Strategies.

41
Suggested Readings:
1. Kotler,P., Keller, K.L., Marketing Management, Pearson Education.
2. Ramaswamy, V.S and Namakumari, S., Marketing Management: A Strategic Decision-
Making Approach Global Perspective Indian Context, Mc Graw Hill Education.
3. Lamb, C.W, Hair, J.F, Sharma, D. & Mc Daniel C., Marketing- A South Asian Perspective
Edition, Cengage India Pvt. Ltd, Delhi
4. Baines, P., Fill, C., Page, K., Sinha, P.K., Marketing: Asian Edition, Oxford University
Press, New Delhi.
5. Walker O. C., Mullins J. & Boyd Jr. H. W., Marketing Strategy: A Decision Focused
Approach, Mc Graw Hill Education.
6. Saxsena, R., Marketing Management, Mc Graw Hill Education.
7. Pickton, David & Broderick, Amanda, Pickton, David & Broderick, Amanda: Integrated
marketing communications, 2. edition, pp.371-398
8. Chhabra, T.N., Chhabra Ankur (Latest Edition), An Introduction to Marketing
Management, Sun India Publications.

References:
http://www.dobney.com/Research/segmentation.htm
http://www.kommunikationsforum.dk/default.asp?articleid=11929
http://www.tetrad.com/demographics/usa/ags/agsmosaic.html

(The study material/notes of this subject have been compiled from various online
sources/ websites/books/articles and is meant for reference purpose for students
only and is not meant for any kind of commercial activity.)
With courtesy and thanks of all online sources/ websites/books/articles.

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 Unit-II
Product & Pricing: Introduction of Product, Dimensions /Levels of Product, Classification
of Products, Channel of Distribution, Product Mix & Product Mix Decisions, Product line &
Product line Modification, Factors Influencing Product Mix. New Product Development, The
Product Life Cycle, Brand Loyalty, Packaging and Labelling. Pricing Policies and Strategies

LESSON-6

PRODUCT

Introduction: This unit basically covers Product, different dimensions and levels
of Product. This also focuses on classification of products and also provides valuable
information about Product Mix and Product Line. Product Mix decisions including Product
line decisions, Line stretching decisions, & Line filling decisions etc. also has been
elaborated in this unit. This unit also throws lights on different stages of Product life cycle,
Packaging & Labeling & Pricing.

Meaning & Concept of Product

The marketing mix, which is the means by which an organization reaches its target market, is
made up of product, pricing, distribution, promotion decisions. These are usually acronymed
as the "4P's".
Product decisions revolve around decisions regarding the physical product (size, style,
specification, etc.) and product line management.

PRODUCT
A product can be defined as a collection of physical, service and symbolic attributes which
yield satisfaction or benefits to a user or buyer. A product is a combination of physical
attributes say, size and shape; and subjective attributes say image or quality. A customer
purchases on both dimensions. According to Jobber (2004), “A product is anything that has
the ability to satisfy a consumer need.”

The term product is all inclusive as it covers goods, services, events, experience, place,
person, etc.

43
DIMENSIONS/LEVELS OF PRODUCT

CLASSIFICATION OF PRODUCTS

Products fall into two broad classes based on the extent of shopping effort made by
consumers in buying these:

i) CONSUMER PRODUCT: “Product bought by final consumer for personal

consumption”. Consumer products divided into four classes.

a. Convenience product - Consumer product that the customer usually buys frequently,

44
 immediately, and with a minimum of comparison and buying effort consumer products
can be divided further into staples, impulse products, and emergency products.
i. Staples Products are those product that consumers buy on a regularbasis, such as
ketchup, tooth path etc.,
ii. Impulse products are those product that purchased with little planningor search effort,
such as Candy bar, and magazine
iii.Emergency product is those when consumer need is urgent, e.g.umbrellas during a
rainstorm etc.
b. Shopping Product:-Consumer good that the consumer, in the process of selection and
purchase, characteristically compares as such bases as suitability, quality, price, and
style. Example: Furniture, clothing, used cars, major appliances and hotel and motel
services.
c. Specialty Products:-Consumer product with unique characteristics or brand
identification for which a significant group of buyers is willing to make a special
purchase effort. e.g. Specific brands and types of cars, high-priced photographic
equipment, designer clothes etc.
d. Unsought Products:-Unsought products are consumer products that the consumer either
does not knows about or knows about but does not normally think of buying. Most
major new inventions are unsought until the consumer become aware of them through
advertising. E.g. Life Insurance and blood donations to the Red Cross.

ii) INDUSTRIAL GOODS – these are meant for use in the production of other goods
orfor some business or institutional purposes. Industrial goods are classified into four-

a. production facilities and equipments,

b. production materials,
c. production supplies and
d. Management materials.

PRODUCT MIX
It is the set of all the product items that a company offers to its customers for sale.
Product Item is a specific version of a product that is designated as a distinct offering by the
company.

PRODUCT LINE
A product line is a group of product items or brands that are closely related in terms
of theirfunctions and benefits.

Product lining is the marketing strategy of offering for sale several related products. Unlike
product bundling, where several products are combined into one, lining involves offering
several related products individually.
A product line can comprise related products of various sizes, types, colors, qualities, or
prices.

Dimensions of product mix

• The number of different product lines sold by a company is referred to as width of
product mix.
• The total number of products sold in all lines is referred to as length of product mix.
• Line depth refers to the number of product variants in a line.
• Line consistency refers to how closely related the products that make up the line are.

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PRODUCT MIX DECISIONS
Major product mix decisions are as follows:

1. Product line decisions

2. Line stretching decisions
3. Line filling decisions
4. Line modernization, featuring & pruning

PRODUCT LINE MODIFICATION

i) When you add a new product to a line, it is referred to as a line extension.
ii) When you add a line extension that is of better quality than the other products in the
line, this is referred to as trading up or brand leveraging.
iii) When you add a line extension that is of lower quality than the other products of the
line, this is referred to as trading down. When you trade down, you will likely reduce
your brand equity. You are gaining short-term sales at the expense of long term sales.

a. Product Line Contraction

b. Product Line Expansion
c. Changing Models or Styles of the Existing Products

PRODUCT SIMPLIFCATION -

Product Simplification means limiting the number of products a dealer deals. Sometimes it
becomes necessary for a company to stop the production of unprofitable products.

PRODUCT DIVERSIFICATION -

Product diversification means adding a new product or products to the existing product. It is
a strategy for growth and survival in the highly complexmarketing environment.

PRODUCT DIFFERENTIATION -

46
Product differentiation involves developing and promoting awareness in the minds of
customers that the company’s products differ from the products of competitors. This is made
by using trade mark, brand name, packaging, labeling etc

PRODUCT MIX
It is the set of all the product items that a company offers to its customers for sale. The
number of different product lines sold by a company is referred to as width of product mix.
The total number of products sold in all lines is referred to as length of product mix.

FACTORS INFLUENCING PRODUCT MIX

i) Change in demand.
ii) Marketing influences.
iii) Production efficiencies.
iv) Financial influence.
v) Use of waste.
vi) Competitor’s strategy.
vii) Profitability.

Product strategies for growth

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LESSON-7
NEW PRODUCT DEVELOLOPMENT
New product development tends to happen in stages. Although firms often go back and forth
between these idealized stages, the following sequence is illustrative of the development of a
new product:-

Different firms will have different strategies on how to approach new products. Some firms
have stockholders who want to minimize risk and avoid investing in too many new
innovations. Some firms can only survive if they innovate frequently and have stockholders
who are willing to take this risk.

For example, Hewlett-Packard has to constantly invent new products since competitors learn
to work around its patents and will be able to manufacture the products at a lower cost.

i) Idea Generation. Firms solicit ideas as to new products it can make. Ideas might
come from customers, employees, consultants, or engineers. Many firms receive a
large number of ideas each year and can only invest in some of them.
ii) Screening and Evaluation: Some products that after some analysis are clearly not
feasible or are not consistent with the core competencies of the firm are eliminated.
iii) Business Analysis. Ideas are now exposed to more rigorous analysis. Profit
projections, risks, market size, and competitive response are considered. If
promising, market research may be done.
iv) Development: The product is designed and manufacturing facilities are planned.
v) Market Testing: Frequently, firms will try to “test” a product in one region to see if it
will sell in reality before it is released nationally and internationally. There is a lesser
risk if the firm only commits money to advertising and other marketing efforts in one
region. Retailers will also be more receptive in other parts of the country and world
if it has been demonstrated that the product sold well in one region. The firm may
alsoexperiment with different prices for the product.

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 vi) Commercialization: Facilities to manufacture the product on a larger scale are now
put into operation and the firm starts a national marketing campaign and distribution
effort.

THE PRODUCT LIFE CYCLE

Products often go through a life cycle. Initially, a product is introduced. Since the product is
not well known and is usually expensive (e.g., as microwave ovens were in the late 1970s),
sales are usually limited. Eventually, however, many products reach a growth phase— sales
increase dramatically. More firms enter with their models of the product. Frequently,
unfortunately, the product will reach a maturity stage where little growth will be seen.

For example, in the United States, almost every household has at least one color TV set.
Some products may also reach a decline stage, usually because the product category is being
replaced by something better. For example, typewriters experienced declining sales as more
consumers switched to computers or other word processing equipment.

The product life cycle is tied to the phenomenon of diffusion of innovation. When a new
product comes out, it is likely to first be adopted by consumers who are more innovative than
others— they are willing to pay a premium price for the new product and take a risk on
unproven technology. It is important to be on the good side of innovators since many other
later adopters will tend to rely for advice on the innovators who are thought to be more
knowledgeable about new products for advice.

At later phases of the PLC, the firm may need to modify its market strategy. For example,
facing a saturated market for baking soda in its traditional use, Arm & Hammer launched a
major campaign to get consumers to use the product to deodorize refrigerators. Deodorizing
powders to be used before vacuuming were also created.

i) Product Introduction/ Development Stage- This is the first stage in product life cycle.
Before a new product is introduced in the market place, it should be created first. The

49
processes involve in this stage include generation of idea, designing of the new product,
engineering of its details, and the whole manufacturing process. This is also the phase where
the product is named and given a complete brand identity that will differentiate it from the
others, particularly the competitors. Once all the tasks necessary to develop the product is
complete, market promotion will follow and the product will be introduced to the consumers.
Product development is a continuous process that is essential in maintaining the product’s
quality and value to consumers. This means that companies need to continuously develop or
innovate their products to out ride new and existing competitors.

ii) Product Growth Stage - This is a period where rapid sales and revenue growth is
realised. However, growth can only be achieved when more and more consumers will
recognize the value and benefits of a certain product. In most cases, growth takes several
years to happen, and in some instances, the product just eventually died without achieving
any rise in demand at all. Hence, it is important that while the product is still in the
development and introduction stages, a sound marketing plan should be put in place and a
market and primary demand should be established.

iii) Product Maturity and Saturation Stage - In the maturity stage, the product reaches its
full market potential and business becomes more profitable. During the early part of this
stage, one of the most likely market scenarios that every business should prepare for is fierce
competition. As business move to snatch competitor’s customers, marketing pressures will
become relatively high. This will be characterised by extensive promotions and competitive
advertising, which are aimed at persuading customer to switch and encouraging
distributors to continue sell the product. In the middle and late phases of the maturity stage,
the rate of growth will start to slow down and new competitors will attempt to take control
of the market. In most cases, many businesses falls and lose money in these stages as they
focus more on increasingadvertising spending in hope of maintaining their grip of the market.

iv) Product Decline Stage - The decline stage is the final course of the product life cycle.
This unwanted phase will take place if companies have failed to revitalize and extend the life
cycle of their products during the maturity stage’s early part. Once already in this phase, it is
very likely that the product may never again recover or experience any growth, eventually
dying down and be forgotten.

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BRANDING
Branding means giving a name to the product by which it could become known and familiar
among the public. When a brand name is registered and legalised, it becomes a Trade mark.
All trademarks are brands but all brands are not trademarks. Brand, brand name, brand mark,
trade mark, copy right are collectively known as the language of branding.

TYPE OF BRANDS

In many markets, brands of different strength compete against each other. At the top level are
national or international brands. A large investment has usually been put into extensive brand
building— including advertising, distribution and, if needed, infrastructure support.
Although some national brands are better regarded than others—e.g., Dell has a better
reputation than e-Machines—the national brands usually sell at higher prices than to regional
and store brands.

Regional brands, as the name suggests, are typically sold only in one area. In some cases,
regional distribution is all that firms can initially accomplish with the investment capital
and other resources that they have. This means that advertising is usually done at the regional
level.

Store, or private label brands are, as the name suggests, brands that are owned by retail store
chains or consortia thereof. (For example, Vons and Safeway have the same corporate parent
and both carry the “Select” brand). Typically, store brands sell at lower prices than do
national brands.

Co-branding involves firms using two or more brands together to maximize appeal to
consumers. Some ice cream makers, for example, use their own brand name in addition to
naming the brands of ingredients contained. Sometimes, this strategy may help one brand at
the expense of the other. It is widely believed, for example, that the “Intel inside” messages,
which Intel paid computer makers to put on their products and packaging, reduced the value
of the computer makers’ brand names because the emphasis was now put on the Intel
component.

In order for a business organisation to successfully create an effective brand that is capable of
enhancing a product’s value, it needs to understand how the delivery of value differs across
different types of brands. This means that a company has to know the kind of brand suitable
for its offering. So what are the different kinds of brand?

They are the following:

• Manufacturer Brands: These are developed and owned by the producers, who are
usually involved with distribution, promotion and pricing decisions for the brands.
For example, Apple computers.
• Dealer Brands: These are brands initiated and owned by wholesalers or retailers.
• Generic Brands: It indicates only the product category and do not includes the
company name or other identifying terms.
• Family Brands: A single brand name for the whole line closely related items. For
example, Amul for milk products.
• Individual Brands: Each product has a special brand name such as surf etc.
• Co-Brands: It uses two individual brands on a single product.

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 • Licensed Brands: It involves licensing of trade marks. For example, P&G licensed its
camay brand of soap in India to Godrej for a few years.

BRAND LOYALTY
It simply means loyalty of a buyer towards a particular brand. Wilkie defined loyality as, “A
favourable attitude and consistent purchase of a particular brand.” For example, If a customer
has a brand loyality towards ‘Pears’, he will buy and use only that soap. There are
threelevels of Brand Loyality:-

1. Brand Recognition: This means that people are familiar with the product and
they arelikely to buy it.
2. Brand Preference: At this level people adopt the product- that is, they habitually
buy it if it is available.
3. Brand Insistence: It is the stage at which people will not accept any substitute.

BRAND EQUITY
It simply refers to value associated with a brand. It is the Marketing and financial value
associated with a brand’s strength in a market. According to Aaker, “Brand equity is a set of
assets and liabilities linked to a brand’s name and symbol that add to or subtract from the
value provided by a product or service to a firm or that firm’s customers”.

PACKAGING AND LABELLING

Packaging and Labelling are among the most important areas in product management.
Packing means putting article into small packets, boxes or bottles for sale to ultimate
consumers or for transport. Labelling is defined as a slip or tag attached with the product or
with its package which provides necessary information about the product and its producer.

Contrary to common perception that these two processes are all about creating an image and
decent presentation of a product, packaging and labelling have more relevant purpose and
objectives. These include physical protection of product from destructive things that
may spoil or ruin it, e.g. temperature, shock, vibration, etc. Other purposes include
containment convenience, marketing, security, and dissemination of information about the
use, transportation, storage or disposal of the product. Designing the labels and packages of
products require careful planning. Moreover, there are consumer safety regulations that every
businesses should follow. It is the responsibility of every product manufacturer to respects
these rules. Thus, before you start designing product labels and packaging, it makes good
business sense to know what laws will affect you and what kind of materials will best suit
your product.

TYPES OF PACKAGING
Consumer packaging-
There is no focus on logistics. Importance is given to marketing appeal and packaging the
finished product. Packaging is designed for consumer convenience and appeal, marketing
consideration and display. The main emphasis is in marketing. The marketing manager is
more concerned with the consumer packaging because it provides information important
in selling the product in motivating the customer t buy the product or giving the product
maximum visibility when it competes with others on retail shelves.
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Industrial packaging

It focuses on the handling convenience and protection during transportation, material

handling and storage. This packaging protects the goods that a company will move and store
in the warehouse and also permits the company the effective use of transportation vehicle
place. It also has to provide information and handling ease. Industrial packaging is performed
at various stages. The first stage is packaging for the product itself. For example soft drinks
are packed in cans. The next stage involves packaging these products into larger
cartons for enabling quantity handling. The carton is referred as Master cartons. The next
step of packaging involves unitization. In this case the master carton is consolidated into a
single large unit to facilitate handling, transportation, storage and protection. The next is
containerization, here the unit loads are placed in rigid containers for protection and handling
facilitation. This enables efficiency in transport.

Functions
1. Protection: Protection from damage, contamination, physical effects and
environmental conditions. Packaging design and material utilized is a balancing of
economic consideration and adequate protection. The higher the value of product the
more protection it deserves and more expensive the packaging. Packaged product can
be damaged during transportation, handling and storage due to vibration, piercing,
crushing, temperature, humidity etc. packaging provides a protection against all this
adds and makes the product available to theconsumer in the right condition.

2. Utility: packaging the product in the form of master cartons, unit loads and
containers promotes handling, transportation and storage efficiencies by speeding up
handling higher quantities to be transported, more quantity storage in the same space
and faster retrieval from storage. Packaging facilitates securing and stacking during
transportation, storage andhandling

3. Facilitating handling & using: fruit juices in tetra packs, handling and
consumption byusers.

4. Facilitating storage & reuse: ink cartridges for printers, floppies, CDs, reusable
corrugated boxes, bottles and refill packs.

5. Grouping goods into convenient unit for distribution: mangos in boxes, milk
bags incrates, cola bottles in crates.

6. Communication

i. Content identification- what does this contain? Product, manufacturer, universal

code etc. with high visibility
ii. Tracking: bar codes and scanners
iii. Handling instructions: fragile, which side up? Temperature restrictions, environme
ntconcerns, potential dangers etc

KINDS OF LABELS
There are four kinds of labels:

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1. Brand Label: It gives the brand name or mark. For example, Britannia Biscuits,
VicksVaporub etc.

2. Grade Label: It gives grade or quality of the product by a number, letter or

words. Forexample, A grade, B grade or 1and 2 category based on quality.

3. Descriptive Label: It gives details of product, its functions, price, warnings etc.

4. Information Label: It provides maximum information about the product. It contains

fullerinstructions on the use and care of the product.

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LESSON-8

Pricing
Pricing is the process whereby a business sets the price at which it will sell its products and
services, and may be part of the business's marketing plan. In setting prices, the business will
take into account the price at which it could acquire the goods, the manufacturing cost, the
market place, competition, market condition, brand, and quality of product.

Pricing is a fundamental aspect of financial modeling and is one of the four Ps of

the marketing mix. (The other three aspects are product, promotion, and place.) Price is the
only revenue generating element amongst the four Ps, the rest being cost centers. However,
the other Ps of marketing will contribute to decreasing price elasticity and so enable price
increases to drive greater revenue and profits.

Pricing can be a manual or automatic process of applying prices to purchase and sales orders,
based on factors such as: a fixed amount, quantity break, promotion or sales campaign,
specific vendor quote, price prevailing on entry, shipment or invoice date, combination of
multiple orders or lines, and many others. Automated systems require more setup and
maintenance but may prevent pricing errors. The needs of the consumer can be converted
into demand only if the consumer has the willingness and capacity to buy the product. Thus,
pricing is the most important concept in the field of marketing, it is used as a tactical decision
in response to comparing market situations.

Objectives of pricing
The objectives of pricing should consider:

• the financial goals of the company (i.e. profitability)

• The fit with marketplace realities (will customers buy at that price?)
• the extent to which the price supports a product's market positioning and be
consistentwith the other variables in the marketing mix

Objectives of Pricing-
The pricing objectives reflect overall goal of the organization. It describes what an
organization wants to achieve through pricing. All the pricing policies and strategies are
determined by the parameter of pricing objectives. So, pricing objective provides the
guideline-setting the pricing policies and strategies. Moreover, the pricing objectives
determine the overall objectives of the organization.

The pricing objectives are as follows:

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1. Profit Oriented Objectives

Profit oriented objectives focus on profit. This objective can be profit maximization
and achieve target return.

• To maximize profit:

One of the objectives of pricing is to maximize the profit. It is very important to

maximizethe profit to run the organization.Some company set price to their products
or services with a view of maximizing profit. It is very important to focus on profit
maximization.

• Achieving target return:

Another objective of pricing is to achieve target return.Some company may

determine the price of their goods or services to achieve a certain return on
investment or on sales. This is the desired profit. It is necessary to have target return
in the pricing process.

• Achieving target return on sales:

It is necessary to achieve target return on sales in pricing.Mostly resellers manage

their pricing to achieve a target return on sales. For example, 10% of sales. If there is
not more competition this objectives can be used.

• Achieving target return on investment:

Pricing should focus on achieving target return on investment too.Manufacturing

company manages pricing in order to achieve specified return on investment in
manifesting, research and development, establishment and commercialization. For
example, 5% on investment.

2. Sales Oriented Objectives

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 Sales oriented pricing objectives focus on sales volume rather than on profit. The
profit can be to gain sales volume and market share.

• Sales volume increase:

One of the pricing objectives may be determined in terms of increasing sales

volumes over the certain period of time. For example, 10% increase annually. This
does not mean that profit should be avoided. Organization believes that higher sales
volume will lead to lower unit costs and higher long run profit. It is necessary to
focus in the increment in sales volume of the company.

• Maintain market share:

Pricing should have the basic objectives in maintaining market share.Market share is
really a meaningful measure of the success of a firm's marketing strategy. A market
share price objective can be either to maintain the market share, to increase it or
sometimes to decrease it. The company uses the price as an input to enjoy a target
market share. This market share is normally expressed as a percentage of the total
industry sales.

3. Status Oriented Objectives

Status oriented pricing focus on maintaining the current position. This objective can
be described as “Don’t Rock the Boat” objective. The large companies in order to
minimize the risk of loss and maintain their status adopt this objective. Organization
does not take any initiative in the price change. These objectives are as follows:

• Stabilization of price:

Pricing should have the objectives in stabilizing the price of a product.Some

organizationmay set their pricing objective in order to maintain or stabilize price and
prevent from market uncertainty. These objectives are adopted for minimizing the
risk of loss. Small organizations in market adopt these objectives. These objectives
build up their status and goodwill.

• Meet competition:

The objective of pricing is to meet the competition in the market. Now there is big
competition in the market. In highly competitive market some organization may set
the meet competition. Under this objective organization set the prevailing market
price. It is important to meet the competition in the market. Without it, market
cannot achieve its objectives.

Importance of Pricing
The importance of pricing has been increasing substantially in the recent years. The
role of the price is crucial not only in the national economy but also in the marketing
sector, especially to the marketing organization or executives. Pricing is important
to the economy, to the organization and to the customers.Some of the importances of
the pricing in the business can be :

57
 • Profit Margin
• Sales Volume
• Position
• Market share

Factors Affecting Pricing Product: Internal Factors and External Factors

The pricing decisions for a product are affected by internal and external factors.

A. Internal Factors:

1. Cost:
While fixing the prices of a product, the firm should consider the cost involved in
producing the product. This cost includes both the variable and fixed costs. Thus,
while fixing the prices, the firm must be able to recover both the variable and fixed
costs.

2. The predetermined objectives:

While fixing the prices of the product, the marketer should consider the objectives
of the firm. For instance, if the objective of a firm is to increase return on
investment, then it may charge a higher price, and if the objective is to capture a
large market share, then it may charge a lower price.

3. Image of the firm:

The price of the product may also be determined on the basis of the image of the firm
in the market. For instance, HUL and Procter & Gamble can demand a higher price
for their brands,as they enjoy goodwill in the market.

4. Product life cycle:

The stage at which the product is in its product life cycle also affects its price. For
instance, during the introductory stage the firm may charge lower price to attract the
customers, and during the growth stage, a firm may increase the price.

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5. Credit period offered:
The pricing of the product is also affected by the credit period offered by the
company. Longer the credit period, higher may be the price, and shorter the credit
period, lower may be the price of the product.

6. Promotional activity:
The promotional activity undertaken by the firm also determines the price. If the firm
incurs heavy advertising and sales promotion costs, then the pricing of the product
shall be kept highin order to recover the cost.

B. External Factors:

1. Competition:
While fixing the price of the product, the firm needs to study the degree of
competition in the market. If there is high competition, the prices may be kept low to
effectively face the competition, and if competition is low, the prices may be kept
high.

2. Consumers:
The marketer should consider various consumer factors while fixing the prices. The
consumer factors that must be considered includes the price sensitivity of the buyer,
purchasing power, and so on.

3. Government control:
Government rules and regulation must be considered while fixing the prices. In
certain products, government may announce administered prices, and therefore the
marketer has to consider such regulation while fixing the prices.

4. Economic conditions:
The marketer may also have to consider the economic condition prevailing in the
market while fixing the prices. At the time of recession, the consumer may have less
money to spend, so the marketer may reduce the prices in order to influence the
buying decision of the consumers.

5. Channel intermediaries:
The marketer must consider a number of channel intermediaries and their
expectations. The longer the chain of intermediaries, the higher would be the prices
of the goods.

Pricing Policies
Marketers develop an overall pricing strategy that is consistent with the
organisation's mission and values. This pricing strategy typically becomes part of the
company's overall long -term strategic plan. The strategy is designed to provide
broad guidance to price-setters and ensures that the pricing strategy is consistent
with other elements of the marketing plan. While the actual price of goods or
services may vary in response to different conditions, the broad approach to pricing
(i.e., the pricing strategy) remains a constant for the planning outlook period which
is typically 3–5 years, but in some industries may be a longer period of 7–10 years.

59
 Broadly, there are six approaches to pricing strategy mentioned in the marketing
literature:

• Operations-oriented pricing: where the objective is to optimise productive

capacity, to achieve operational efficiencies or to match supply and demand through
varying prices. In some cases, prices might be set to de-market.
• Revenue-oriented pricing: (also known as profit-oriented pricing or cost-based
pricing) - where the marketer seeks to maximise the profits (i.e., the surplus income
over costs) or simply to cover costs and break even. For example, dynamic pricing
(also known as yield management is a form of revenue oriented pricing.
• Customer-oriented pricing: where the objective is to maximise the number of
customers; encourage cross-selling opportunities or to recognise different levels in
thecustomer's ability to pay.
• Value-based pricing: (also known as image-based pricing) occurs where the
company uses prices to signal market value or associates price with the desired value
position in the mind of the buyer. The aim of value-based pricing is to reinforce
the overall positioning strategy e.g. premium pricing posture to pursue or
maintain aluxury image.
• Relationship-oriented pricing: where the marketer sets prices in order to build
ormaintain relationships with existing or potential customers.
• Socially-oriented pricing: Where the objective is to encourage or discourage
specificsocial attitudes and behaviours. e.g. high tariffs on tobacco to discourage
smoking.

Pricing Strategies
Cost-Oriented Pricing-
In cost-oriented pricing, marketers first calculate the costs of acquiring or making a
product and their expenses of doing business, then add their projected profit margin to arrive
at a price. Two common methods are markup pricing and cost-plus pricing.

Penetration pricing

Penetration pricing is an approach that can be considered at the time of market entry. In this
approach, the price of a product is initially set low in an effort to penetrate the market
quickly. Low prices and low margins also act as a deterrent, preventing potential rivals from
entering the market since they would have to undercut the low margins to gain a foothold.

Price skimming

Price skimming, also known as skim-the-cream pricing is a tactic that might be considered at
market entry. The objective is to charge relatively high prices in order to recoup the cost of
product development early in the life-cycle and before competitors enter the market.

Premium pricing

Premium pricing (also called prestige pricing) is the strategy of consistently pricing at, or
near, the high end of the possible price range to help attract status-conscious consumers. The
high pricing of a premium product is used to enhance and reinforce a product's luxury image.
Examples of companies which partake in premium pricing in the marketplace

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include Rolex and Bentley. As well as brand, product attributes such as eco-labelling and
provenance (e.g. 'certified organic' and 'product of Australia') may add value for consumers
and attract premium pricing.

Differential pricing

Differential pricing is also known as flexible pricing, multiple pricing or price

discrimination is where different prices dependent on the service provider's assessment of the
customer's willingness or ability to pay. There are various forms of price difference
including: the type of customer, quantity ordered, delivery time, payment terms, etc.

High-low pricing

High-low pricing refers to the practice of offering goods at a high price for a period of time,
followed by offering the same goods at a low price for a predetermined time. This practice is
widely used by chain stores selling homewares. The main disadvantage of the high-low tactic
is that consumers tend to become aware of the price cycles and time their purchases to
coincide with a low-price cycle.

Price discrimination

Price discrimination is also known as variable pricing or differential pricing.

Price lining

Price lining is the use of a limited number of prices for all product offered by a business.
Price lining is a tradition started in the old five and dime stores in which everything cost
either 5 or 10 cents. In price lining, the price remains constant but quality or extent of
product or service adjusted to reflect changes in cost. The underlying rationale of this tactic is
that these amounts are seen as suitable price points for a whole range of products by
prospective customers. It has the advantage of ease of administering, but the disadvantage of
inflexibility, particularly in times of inflation or unstable prices. Price lining continues to be
widely used indepartment stores where customers often note racks of garments or accessories
priced at predetermined price points e.g. separate racks of men's ties, where each rack is
priced at Rs.10, Rs.20 and Rs.40.

Psychological pricing is a collective term that refers to a range of tactics designed to have a
positive psychological impact. Price tags using the terminal digit "9", (Rs.9.99, Rs.19.99 or
Rs.199.99) can be used to signal price points and bring an item in at just under the
consumer's reservation price. Psychological pricing is widely used in a variety of retail
settings.

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MULTIPLE CHOICE QUESTIONS
Q1 New product development starts with which one of the following steps of new
product development?
A. Idea screening
B. Idea generation
C. Test marketing
D. Concept testing
Answer B

Q2 What does the term PLC stands for?

(A) Product life cycle

(B) Production life cycle
(C) Product long cycle
(D) Production long cycle
(E) None of these
Answer A

Q3 PLC in marketing represents two main challenges. 1st an organization must be good at
developing new product to replace old ones and 2nd it must be good at _________________.

(A) Functioning
(B) Marketing
(C) Selling
(D) Adapting
(E) Testing
Answer D

Q4 Which of the following is not a characteristic of “Market Introduction Stage” in PLC?

(A) Demands has to be created

(B) Costs are low
(C) Makes no money at this stage
(D) Slow sales volume to start
(E) There is little or no competition
Answer B

Q5 Developing a unique superior product with high quality, new features, and high value in
use is ______________________ in new product development strategy.
(A)New product development process
(B) Typical reasons for failure
(C) Success factors
(D) Product concept
(E) Develop superior product
Answer C

Q6 According to whom “ a product lifecycle is very much similar to human life cycle.”
(A) Arch Paton
(B) Stanton
(C) Neil Borden
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(D) Philip Kotler
(E) Nielson
Answer A

Q7 Increased competition leads to price decrease, increasing public awareness, sales volume
increase significantly are the characteristics of ______________ in PLC.

(A) Mature stage

(B) Decline stage
(C) Growth stage
(D) Market introduction stage
(E) None of these.
Answer C

Q8 __________________________ includes review of sales, profit projections and cost for

a new product, to find out whether it satisfied the company objective or not.

(A) Product Development

(B) Business Analysis
(C) Marketing Strategy
(D) Test Marketing
(E) Idea Screening
Answer B

Q9 In _______________________ all the augmentations and transformations of a product

might undergo in the failure.
(A) Generic Product
(B) Expected Product
(C) Augmented Product
(D) Potential Product
(E) None of these
Answer D

Q10 Which concept is useful for a family of products who shares similar technology?

(A) Product Platform

(B) Pricing Platform
(C) Process Platform
(D) Distribution Platform
(E) None of these
Answer A

Q11 A true definition of a product is the detailed version of the product only if it is stated in
(A) Meaningful marketer view
(B) Meaningful supplier view
(C) Meaningful consumer view
(D) Meaningful Manager view
Answer C

Q12 The most important performance dimension for product development project is
(A) Time to market
(B) Time to target
63
(C) Time to consumer
(D) Time to seller
(E) Time to manager
Answer A

Q13 In marketing ________________________introduces new product so radically that it

changes the way people live.
(A) Marketing strategy
(B) Quality function deployment
(C) Discontinuous innovation
(D) Differentiation strategy
Answer C

Q14 Surveying market opinion and looking at the sales history of similar products are tools
used at which stage of “New Product Development Process”?
(A) Marketing strategy
(B) Product development
(C) Business analysis
(D) Tele marketing
(E) Idea generation
Answer C

Q15 While setting the price, marketers

(A) Select the pricing objective
(B) Estimate demand
(C) Analysis competitors cost, offers and prices
(D) All of the above
Answer D

Q16 Market-penetration pricing strategy can be adopted when

(A) Market is highly price sensitive

(B) Low price stimulates market growth
(C) Both a & b
(D) None of the above
Answer C

Q17 The airline and hospitality industry uses:

(A) Customer segment pricing
(B) Time pricing
(C) Yield pricing
(D) Channel pricing
Answer C

Q18 When higher priced peers match the lower prices and have longer staying power
due to deeper cash reserves is known as
(A) Fragile market share trap
(B) Shallow pockets trap
(C) Price war trap
(D) None of the above
Answer B

64
Q19 When a marketer plans its offering and addresses five key product levels forming a
________

(A) Customer value hierarchy

(B) Company value hierarchy
(C) Market value hierarchy
(D) None of the above
Answer A

Q20 When an organization doesn't decides a final price until the product is delivered or
finished is known as
(A) Delayed quotation pricing
(B) Anticipatory pricing
(C) Planned pricing
(D) None of the above
Answer B

Q21. In market skimming, high initial prices do not fetch more competitors to the
market.

(A) True
(B) False
Answer A

Q22 ._______________ helps in identifying the product or brand and describe several things
about the product.
(A) Labeling
(B) Packaging
(C) Store branding
(D) Supplying
(E) None of these
Answer A

Q23 When a company elaborates its product line beyond its current range is called
(A) Customer line stretching
(B) Product line stretching
(C) Sales line stretching
(D) Marketing line stretching
Answer B

Q24 If any customer is feeling that the company is delivering the product as its brand
promises is called
(A) Brand elements
(B) Brand bonding
(C) Brand awareness
(D) Brand portfolio
(E) Brand equity
Answer B

Q25 Doordarshan, Close-up, Frooti, Olay, Lotus, Surf are the example of

(A) Brand Equity

65
(B) Free standing brand name
(C) Descriptive brand name
(D) Trademark
Answer C

LONG ANSWER QUESTIONS

Q1. State the important of product innovation. Discuss various stages of new product
Development?
Q2. Explain the major factors which you will take into account while pricing a product.
Explain the various methods of pricing.
Q3. Define a Product. Explain the concept of Product mix.
Q4. Write an essay on New product development process.
Q5. What do you mean by Product policy? State its objectives and significance.
Q6. Define Product life cycle. Explain its importance in marketing.
Q7. Discuss the various stages of PLC. State suitable marketing strategies for each stage.
Q8. Discuss the important pricing objectives of marketing companies.
Q9. Explain the major factors which you will take into account while pricing a product.
Q10. Explain the various methods of pricing.
Q11. What is the relationship between the product life cycle and the value chain and value
added concepts?
Q12. What are the stages of the product life cycle (PLC) in terms of the marketing or
revenue producing perspective?
Q13. Is the length and sequence of each of these stages predictable in terms similar to
biological organisms?
Q14. What are the stages of the PLC from the production perspective?
Q15. Describe the steps involved in the Product Positioning-
Q16. Explain the term Product Mix?
Q17. What is Product Simplification- What are its objectives?
Q18. Explain product diversification, in which situation product diversification is helpful?
Q19. What is pricing- What are the needs, scope, and importance of pricing strategy?
Q20. Explain various factors influencing the Pricing? Describe methods of Pricing.
Q21. What is the meaning of the term technological risk and what type of investment
strategy creates the greatest amount of this type of risk?
Q22. Why would forward pricing be used in the startup stage of the PLC?
Q23. What is the main objective of PLC analysis from:
1) the producer’s perspective?
2) the customer’s perspective and
3) from society's (government’s) perspective?

Q24. Write short notes on the following-

a) Globalization of Management.
b) Challenges before Marketing Manager.
c) Changes in the technology.
Q25. What is the relationship between the product life cycle and the value chain and value
added concepts?

66
Suggested Readings:
1. Kotler,P., Keller, K.L., Marketing Management, Pearson Education.
2. Ramaswamy, V.S and Namakumari, S., Marketing Management: A Strategic
Decision-Making Approach Global Perspective Indian Context, Mc Graw Hill
Education.
3. Lamb, C.W, Hair, J.F, Sharma, D. & Mc Daniel C., Marketing- A South Asian
Perspective Edition, Cengage India Pvt. Ltd, Delhi
4. Baines, P., Fill, C., Page, K., Sinha, P.K., Marketing: Asian Edition, Oxford
University Press, New Delhi.
5. Walker O. C., Mullins J. & Boyd Jr. H. W., Marketing Strategy: A Decision Focused
Approach, Mc Graw Hill Education.
6. Saxsena, R., Marketing Management, Mc Graw Hill Education.
7. Pickton, David & Broderick, Amanda (2013), Pickton, David & Broderick,
Amanda: Integrated marketing communications, 2.edition, pp.371-398
8. Chhabra, T.N., Chhabra Ankur (Latest Edition),An Introduction to Marketing
Management, Sun India Publications.

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67
 Unit-III
Place: Introduction to Managing Marketing Channels, Role of Distribution Channel, Channel
of Distribution, Designing & Managing Marketing Channel, Physical Distribution, Retail
Operations, Managing Retailing, Wholesaling, Marketing Logistics, JIT, Logistics and
Supply Chain Management.

LESSON- 9
Introduction to Managing Marketing channels:
The prime of object of production is its consumption. The movement of product from
producer to consumer is an important function of marketing. It is the obligation of the
producer to make goods available at right place, at right time right price and in right quantity.
The process of making goods available to the consumer needs effective channel of
distribution. Therefore, the path taken by the goods in its movement is termed as channel of
distribution. The goods may be sent to the consumer directly or indirectly through
middlemen.

Objectives: -

• Placing the right goods to the right places at the right time, at the least cost.
• Maximum customer service implies large inventories, premium transportation
&multiple warehouses, all of which arise distribution cost.
• Minimum distribution cost implies cheap transportation, low stocks and few
warehouses.

Distribution channel functions:

• Information: Gathering and distributing marketing research and intelligence

information about actor and faces in the marketing environment immediate for planning and
aiding exchange.
• Promotion: Developing and speeding persuasive communication about an offer.
• Contact: Finding and communication with prospective buyers.
• Negotiation: Reaching an agreement on price and other terms of the offer so that
ownership or possession can be transferred.
• Physical distribution: Transporting and storing goods.
• Matching: Shaping and fitting the offer to the buyer’s needs, including activities
such as manufacturing, grading, assembling and packing.
• Financing: Acquiring and using funds to cover the cost of the channel work.
• Risk taking: Assuming the risks of carrying out the channel work

68
Factors of distribution channel:
1. Nature of market
2. Nature of product
3. Buying habits of the customer
4. Competition
5. Financial resources
6. Channel cost.

Role of Distribution channel:

Besides making the product available to the customer, middlemen perform several other roles
and functions. Some of these key roles are summarized below.

1. Information: Middlemen have a role in providing information about the market to

the manufacturer. Developments like changes in customer demography, psychograph, media
habits and the entry of a new competitor or a new brand and changes in customer preferences
are some of the information that all manufacturer’s want. Since these middlemen are present
in the market place and close to the customer they can provide this information at no
additional cost.

2. Price stability: Maintaining price stability in the market is another function a

middlemen performs. Many a time the middlemen absorbs an increase in the price of the
products and continues to charge the customer the same old price. This is because of the intra
middlemen competition. The middlemen also maintains price stability by keeping his
overheads low.

3. Promotion: Promoting the product/s in his territory is another function that

middlemen perform. Many of them design their own sales incentive programmes, aimed at
building customer traffic at their outlets.

4. Financing: Middlemen finance manufacturer’s operations by providing the necessary

working capital in the form of advance payments for goods and services. The payment is in
advance even though credit may be extended by the manufacturer, because it has to be made
even before the products are bought, consumed and paid for by the ultimate customer.

5. Title: Most middlemen take the title to the goods, services and trade in their own
name. This helps in diffusing the risks between the manufacturer and middlemen. This
also enables middlemen to be in physical possession of the goods, which in turn enables them
to meet customer demand at the very moment it arises.

Channel of distribution
The channel of distribution may be classified as:

Selling through direct channels

This is the oldest, shorter and the simple channel of distribution. The producer sells the
product directly without involvement of any middle man. The sale can be made door to door
through salesman, retail stores and direct mail. Certain industrial and consumer goods such
as clothes,
69
Shoes, books, hosiery goods, cosmetics, household appliances, electronic goods etc., may be
sold through direct contact. Perishable goods such as vegetable and fruits can also be sold
directly.

Advantage of selling through direct channels

• It is simple and fast.

• It is economical.
• The producer has full control over distribution.
• Satisfies the desire to reduce dependence on middle men.
• Cash sales.

Disadvantages of selling through direct channels

• Non-availability of expert services of middle man.
• Large investment is required.
• Unsuitable for small producers.

Methods of selling through direct channels

• Selling goods through own retail outlets.

• Selling goods through postal services.
• Selling goods through courier services.
• Selling goods against orders received, by telephone, email and fax is known as
telemarketing.
• This method is being used by Asian Sky Shop. The product is delivered to the
customer through
• Producer’s own vehicles, V.P.P. or courier.

Suitability of selling through direct channels

• Costly industrial goods such as computer, aircraft, heavy machinery etc.
• Perishable gods like fruits, vegetables, eggs, butter, milk etc.
• Household appliances.
• If customers purchase large quantities.
• In case the number of suppliers is small.

Selling through indirect channel

According to this method of indirect selling, product is passed on to the customers through
intermediaries, known as wholesalers, retailers and agents. These channels may be as under:

• Producer -> Retailer -> Customer or one level Channel: Under this channel the
producer sells goods to retailers, who sell the goods to customers. This channel is popular
with the departmental stores, chain stores and supermarkets etc., because these are large scale
retailers.
Generally readymade garments, shoes home appliances and automobiles are sold through this
70
channel.

• Producers -> Wholesalers -> Retailers -> Customer Two level Channel: It is
commonly used channel of distribution. It is also known as traditional or normal channel of
distribution. This channel is useful for small producers for small means. The channel is used
for consumer goods.
The common practice is that the manufacturer sells goods in large quantity to wholesalers,
who sell goods to retailers in small quantity. Finally goods are sold to customers in pieces.

• Producer -> Agent -> Retailer -> Consumer or Two levels Channel: The common
practice in this two level channel is that the goods are sold to the agent in bulk. The agent
sells goods to retailer, who sells goods to customers in pieces. This channel is suitable where
the retailers are few and geographically centered. This channel is commonly used in textile,
machinery, equipment and agricultural products.

• Producer -> Agent -> Wholesaler -> Retailer -> Customer or Three levels
Channel: The common practice in this three level channel is that goods are sold by the
producer to the agent, who sells it to the wholesaler, who sells to the retailers who finally
sells goods to customers. This is the longest channel of distribution. This practice is useful,
when the producer wants to the relieved of the problem of distribution. This channel is
popularly used in textile.

Designing & Managing Marketing Channel

Marketing channels are sets of interdependent organizations involved in the process of
making product or service available for use or consumption.

• Wholesalers and Retailers-Buy take title to and resell the merchandise; they are
called Merchants.
• Other-brokers, manufactures’ representatives, sales agent-Search for customers and
may negotiate on the producer’s behalf but don’t take title to the goods; they are called
Agents.
• Still others-Transportation companies, ware houses, banks, advertising agencies
assist in the distribution process but neither takes title to goods nor negotiates purchases or
sales; they are called Facilitators.

Role of Middlemen or Intermediaries

• Information
• Price Stability
• Promotion
• Financing
• Title Factors determining length of the channel-
• Size of the market
• Order lot size
• Service requirement
• Product variety

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Channel Design Decision

• Analyzing customer needs

• Establishing channel objectives
• Identifying major channel alternatives
• Evaluating major channel alternatives

1. Analysing customer needs

The marketer must understand the service output levels desired by the target customer.
Channel produces 5 service outputs:

• Lot Size
• Waiting & Delivery time
• Spatial convenience
• Product variety
• Service backup.

2. Establishing channel objectives

• Channel objective vary with the product characteristics.

3. Identifying major channel alternatives

• The types of available business intermediaries.
• The no. of intermediaries needed- Exclusive distribution, Selective distribution,
Intensive distribution. The terms & responsibility of each channel members-price policies,
conditions of sale, territorial rights

4 Evaluating the major alternatives

• Economic criteria.
• Control & adaptive criteria

Physical distribution

Physical distribution involves planning implementing and controlling the physical flows of
materials and final goods from points of origin to points of use to meet customer needs at a
profit.

The main elements of total physical distribution costs of a product are transportation,
warehousing inventory carrying receiving and shipping packaging administration and other
processing. Experts believe that substantial savings can be affected in the physical
distribution area, which has been described, as “the last frontier for cost economic” and “the
economy’s dark continent.

Components of physical distribution: -

1. Order processing: - Processing deals receiving, recording, filling & assembling of

product for dispatch. The possible time required from the data of receipt of an order up to the
data of dispatch of goods most be reasonable & as start as possible. Order cycle time must
not exceed & days.
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2. Inventory management: - Inventories are reservoirs of goods held in anticipation
promptly, inventories are kept to meet market demands promptly, inventory means, money is
held temporarily in the form of raw materials component parts supplies in process goods and
finished goods, 20% to 30% of the total assets of a firm are locked up-inventory.

3. Location of warehouses: -Storage means holding the stock of goods for a relatively
longer period as the goods are not immediately in demand warehouses also provide the
following services breaking bulk, dispatch of smaller consignments to retailers, holding the
stocks for retailers, regulating the goods.

4. Determining material handling system: - once the layout for the factories design
the next task is to develop efficient material handling system to move the material from are
stage of production to another stage. Little handling involves moving, packaging, storing, all
the materials used by the firm with the development of technology a variety of material
handling requirements have been developed to economic the cost reduce the effort of
workers improve the safety for men & materials.

5. Selecting of a method of transport system: - Marketers need to take an interest in

their company’s transportation decisions. The choice of transportation carries affects the
pricing of products, delivering performance and condition of the goods when they arrive all
of which will affect customer satisfaction. In shipping goods to its ware houses, dealers and
customers. The company can choose among 5 transportation models: trail, truck, water,
pipeline and air.

Physical distribution involves the handling, movement, and storage of goods from the point
of origin to their point of consumption or use, via various channels of distribution. Logistics
management involves the management of these operations for efficient and cost effective
physical distribution. It should be clear the last 50 meters are becoming more and more
dominant in these types of supply chains. On the other hand, we observe that this last link in
the supply chain is also the weakest in terms of operational performance. Although
manufacturers manage to deliver with over 99% reliability to the retailer's distribution centre
or the stores, the on-shelf availability in many cases does not even reach 90%. Studies report
that approximately 40-50% of total retail logistics costs are due to transportation.

Besides these internal costs incurred by the retailer, the resulting external costs, measured by
the congestion pressure on the road network also needs to be considered. Almost one quarter
of all road freight movements (measured in tonne-kms) are due to the retail sector and this
share is still growing due to the increasing demands of the customers. Moreover, in 22% of
all cases the trucks were running empty and the average truck utilization was only around
75%, demonstrating the potential operational improvements in transportation.

Now we explore the modeling and optimization issues that are faced by the relevant decision
makers in the last part of the supply chain. We observed that these last links in the supply
chain are the weakest in terms of operational performance. It is split up in two large areas:
retail operations and transportation planning under uncertainty. Typical problem under
these are listed below.

Retail Operations

73
1. Efficient Inventory Replenishment: we quantify the advantages which can be
gained When a new inventory replenishment strategy is used. We study the inventory
Replenishment for both perishable and non-perishable items.

2. Out-of-stocks reduction through effective backroom management or promotion

forecasting: A large part of the out-of-stocks in retail is caused by backrooms which are not
managed properly or by poor demand forecasting when a product is on promotion. For this
environment we develop rules to reduce the number of out-of-stocks.

3. The link between marketing and operations: Current model-based research on

retail Operations is primarily focused on either inventory/logistics or marketing. The idea is
However that when looking to the same reality (retail chain) both marketing and Operations
take a different angle. As such, an integral view is necessary.

4. The interaction between inventory, dispatching policies and routing decisions in

a retail environment: The main objective is to assess and analyze the specific interaction
between retail inventory replenishment policies, dispatching policies and truck routing
decisions. It is argued that many important interactions exist between each of these
components that cannot be ignored. Both from a practice point of view and from an academic
point of view, in-depth knowledge of these interactions is missing, leading to suboptimal
decision making.

Transportation planning under uncertainty

• Real-life variants of routing problems: Many more variants of routing problems

need to be considered in a real-life environment setting considering dynamics.
• Green logistics: Different alternatives need to be explored on how to consider the
Emissions in the VRP modeling framework. One of the challenges in this research
• Question is to incorporate the external costs models into the optimization problems
faced both by the company decision makers and by public sector decision makers.
• Online routing problems: The only certain thing is that any plan, once realized, goes
wrong. No matter how good we can make the offline schedule, the realization will still be
Different. Moreover, not everything can or should be taken into account in the offline
Schedule. It is thus important, given the potential future realizations, to determine the Right
reaction or repair policies.

Managing Retailing
The act through which goods and services reach the end customer for individual or business
usage is known as retailing. The players involved in this act are known as retailers. Retailers
can be manufactures, distributors or wholesalers. They can reach the end customer through
the internet or physical stores. Retail organizations are divided into three categories store
retailers, non-store retailers and retail organization. Store retailing, the best example is the
department store like Macy or Sears. Store retailers are further divided on the service level
with self service, self selection, limited service and full service stores. Store retailing
comprises over 90% in way products reach the end customer.

Over the years non-store retailing has garnered a market share. Non-store retailing includes
direct selling, direct marketing, automatic vending and buying service. Avon is an example
of direct selling. Internet retail giant Amzon.com is an example of direct marketing. Soft
drink vending machines are a form of automatic vending.
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Retail organizations are retailing stores under direct ownership of corporate. Customer
Satisfaction and brand management becomes easier through retail organizations. Corporate
chain store like Old Navy and Franchises like McDonald’s are good examples of retail
organizations.

Every retailer needs to have a business or marketing strategy for success. Retailer needs to
analyze its target market and customers for an in-store promotion and product assortment.

Services form a big part of retailing business, so retailers have to finalize level of service.
Services include pre-purchase, post purchase and supporting services. With the advent of
technology and unprecedented economic growth, retailing has its own share of change in
business ways.

75
LESSON- 10
Wholesaling
The act of purchasing goods for consumer and industry for further resale is referred to as
wholesaling. Here, manufactures and farmers are not considered as wholesalers.
Wholesaler is an important part of the marketing channel. Wholesaler increases reach of the
company products and the risk of selling to the customers. Wholesaler can store inventory of
various assortment of product thus helping cost for company and time for customers.
Wholesaler can serve as ears and eyes for the company in understanding competition and
customer.

Marketing Logistics
The supply chain management is essential for companies to improve productivity and reduce
costs. The purpose of marketing logistic is to design and implement infrastructure, which will
deliver goods from the point of origin to point of sell in an effective and least cost manner.
This objective mix of high customer satisfaction and lowest cost possible are asymmetrical.
The major decision involved with marketing logistic relate to order processing, warehousing,
inventory and transportation. Companies look forward to shortening order to payment cycle.
A long cycle will lead to decrease in customer satisfaction and company’s profit. Companies
have to set benchmarks at each level from sales people receiving orders to receiving payment
from creditors.

Warehousing for finished goods is another important hub for companies. There has to be a
right balance between sales order and quantity of finished goods. Warehousing at strategic
locations increases timely delivery of goods and reducing in inventory. Technology has
helped in improving warehousing standards.Piled up inventory is not a good sign for the
company. Inventory management involves making decision with time and quantity of raw
materials for matching customer requirements.

Management principle like Just in Time (JIT) is used for better inventory management. In
JIT focus is to develop well time flow of raw materials and finished goods.
Transportation and freight cost plays an important role in final pricing, delivery and
condition of raw materials as well as finished products. Here companies need to make the
decision, whether to use a private carrier (company ownership), contractual (Outside agency)
or common carrier (service shared at standard rates).
Retailing, wholesaling and logistic decision are very important to deliver value to end
customers.

Logistics and Supply Chain Management

Logistics and supply chain management play an essential part, within Operations, Marketing
76
and Sales, After Sales and across the entire organization. We manufacture our trucks
according to the build-to-order principle. DAF also works with direct line feeding, where
parts are delivered in the order in which they are required in the production process. All of
this puts significant demands on the organization of our logistics - a challenge for logistics
professionals.

Sophisticated logistics is important not only for the production of our trucks, but also for
their distribution. Every day, dozens of truck combinations with DAFs start their journey to
customers.

All over the world, an operation that requires considerable planning and organizational skills,
and where a flexible attitude is a primary requirement. Logistics and supply chain
management play an essential role within PACCAR Parts Europe.

From advanced parts distribution centers in Europe, this organization sends almost 400,000
parts shipments each year across the whole of Europe and beyond. All of this is done with
just one goal: maximum availability of the customers’ trucks. We use DAF’s sophisticated
stock planning processes and intelligent IT systems, which are often developed in-house, to
achieve this.

Are you ready for a logistical challenge? Then apply directly. Examples of positions within
Logistics:

Materials Planner Production Planner Logistics Engineer

Materials Management Manager Logistics Manager

Supply chain management (SCM) is the management of an interconnected or interlinked

between network, channel and node businesses involved in the provision of product and
service packages required by the end customers in a supply chain.[2] Supply chain
management spans the movement and storage of raw materials, work-in-process inventory,
and finished goods from point of origin to point of consumption.

Another definition is provided by the APICS Dictionary, which defines SCM as the "design,
planning, execution, control, and monitoring of supply chain activities with the objective of
creating net value, building a competitive infrastructure, leveraging worldwide logistics,
synchronizing supply with demand and measuring performance globally."

SCM draws heavily from the areas of operations management, logistics, procurement, and
information technology, and strives for an integrated approach.

77
MULTIPLE CHOICE QUESTIONS
1. In marketing, ‘place’ is another term for location. True or false?
• True
• False

2. A supply chain is a network of businesses and organisations through which goods pass to
get to their final destination. True or false?
• True
• False

3. The Internet has opened up new channels of distribution. True or false?

• True
• False

4. One of the primary functions of packaging is to protect goods in transit. True or false?
• True
• False

5. Services cannot be exported. True or false?

• True
• False

6. What is an alternative term for a distribution channel?

a. marketing channel
b. supply chain
c. marketing chain
d. place
e. distribution depot

7. What is a distribution channel?

a. a group of distributors
b. a shop or other retail outlet
c. a product’s route through the supply chain
d. an electronic network
e. a means of transporting goods (e.g. lorry or train)

8. Rolex sells its watches through a number upmarket retail partners (e.g. department stores
and jewellers) with comparatively few stores. What is this type of distribution strategy
called?
a. agents
b. exclusive distribution
c. marketing distribution
d. mass distribution
e. prestige distribution
78
9. What kind of intermediary is Tesco?
a. wholesaler
b. supplier
c. distributor
d. reseller
e. retailer

10. What is a warehouse club?

a. a storage facility rented out to small traders
b. a large store offering wholesale prices to members only
c. an online trading house
d. a social club for members of the distribution trade
e. a loyalty scheme for small retailers

11. What are businesses that represent, and sell goods on behalf of, other businesses in a
specified market called?
a. resellers
b. traders
c. agents
d. stockists
e. legal representatives

12. What does EPOS stand for?

a. easy purchasing and ordering system
b. electronic purchase operating system
c. estimated product order shipment
d. exclusive products’ organisational standing
e. electronic point of sale

13. In operations & supply chain management, Kaizen is a Japanese term meaning
__________.
o Change for the better
o Continuous Performance
o Top-level quality
o Use of Kaizala app

14. How many levels of intermediaries are there in a direct sales channel?
a. 0
b. 1
c. 2
d. 3
e. 4

15. Luxury goods such as high fashion and designer clothing would normally have very few,
(possibly only one), distribution outlets. What is the term for this?
a. exclusive distribution
b. prestige distribution
c. selective distribution
d. unique distribution
e. targeted distribution

79
16. Tucker’s foods buy their fruit straight from the farm. They then make it into jam and
other products and sell it on to wholesalers who in turn sell to retailers such as Sainsbury’s.
How many levels are there in this supply chain?
a. 0
b. 1
c. 2
d. 3
e. 4

17. Dombey and Sons produce a sparkling drink from apples grown on their own farm. They
employ a small French firm to sell the drink to wholesalers in France. This French firm is
acting as:
a. a franchisee
b. a retailer
c. an agent
d. a warehouse
e. a logistics firm

18. Dizzy Designs make their clothes in the UK and then ship them to their own retail outlets
in France, Spain and Germany. What kind of operation is this?
a. indirect export
b. direct export
c. home shipment
d. overseas manufacture
e. contract manufacture

19. According to many retailers, what are the three secrets to their business success?
a. product, price and place
b. product, product and product
c. location, location and location
d. service, smile and sizzle
e. people, process and physical evidence

20. What is the function of transporting and storing physical goods for the various members
of the supply chain known as?
a. the buying centre
b. merchandising
c. traffic
d. inventory
e. logistics

21. The use of different types of channel (e.g. high street stores as well as the internet) to
reach the same potential target market is known as _____ distribution.
Ans. Multichannel

22. The initial stage of the supply chain process is the _____________.
A. Sourcing Stage
B. Organizing Stage
C. Planning stage
D. Directing Stage

23. The term supply chain management was first coined by ______.
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A. Frankel & Paulraj
B. Peter Drucker
C. Keith Oliver
D. Philip Kotler

24. In supply chain management, after planning, the next step involves ______________.
A. Developing
B. Building a strong relationship with suppliers
C. Sourcing
D. All of the above

25. In Supply Chain Management, ATP stands for _________.

A. Acquire Track & Perform
B. Available To Promise
C. Active Transport Protocol
D. Access to Point.

26. The purpose of supply chain management is to_______.

A. increase the production level
B. manage and integrate supply and demand management
C. enhance the quality of a product and services
D. provide satisfaction to the customer

27.________is the primary activity of supply chain management.

A. Demand Management
B. Supply Planning i.e matching assets with demand
C. Analytics Workbench
D. All of the above

28.Another important purpose of supply chain management is to ___________.

A. make inventory readily available
B. delight customers and suppliers
C. create warehouses at various locations
D. to promote supply chain process

29.________is mainly deals with all activities associated with the flow and transformation
and information of goods from the stage of raw material to the end user i.e. consumption.
A. Production Line
B. Supply Chain
C. Inventory management
D. Marketing Channel

30. In supply chain management, Inspection, scrap and repair are examples of ________.
A. Societal Costs
B. External Costs
C. Costs of dissatisfaction
D. Internal Costs

31. EOQ stands for ____

o Electronic Obtained quantity
o Electronic Ordered Quantity
o Economic Order Quality
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o Economic Order Quantity

32. Organisations or companies manage their supply chains through _______.

o Transportation modes
o The internet
o Information
o Skilled Operators

33. The concept and philosophy of supply chain management evolved or emerged in
_______
o The 1960s
o The 1970s
o The 1980s
o The 1990s

34. Full form of MRP in operations and SCM is ___________

o Material Return Process
o Material Requirement Planning
o Machinery Repairing Planning
o Material Retention Planning

35. The concept of supply chain management originated in ________________ discipline.

o Production Management
o Logistics Management
o Marketing
o Operations Management

Descriptive Questions: -
1. What is the “Push” and “Pull” supply chain management strategies?
2. Explain in brief some logistics and supply chain trends?
3. How is e-Commerce changing logistics?
4. Describe international distribution and international logistics.
5. What three distribution intensity strategies can marketers employ?
6. What factors influence the choice of international distribution systems?

Suggested Readings:
1. Kotler, Philip & Keller, Kevin Lane (2015) Marketing Management, Pearson
Education International, 14. Edition.
2. Pickton, David & Broderick, Amanda (2013), Pickton, David & Broderick, Amanda:
Integrated marketing communications, 2.edition, pp.371-398

References:
http://www.dobney.com/Research/segmentation.htm
http://www.kommunikationsforum.dk/default.asp?articleid=11929
http://www.tetrad.com/demographics/usa/ags/agsmosaic.html

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 Unit-IV
Promotion: Promotional Objectives; Factors Influencing Choice of Promotional Mix; Push
vs. Pull Strategy: Advertising-Definition and Importance; Comparison of Advertising Media;
Personal Selling- Importance and Process, Transaction versus Relationship Selling; Sales
Promotion - Purpose, Types, Limitations; Publicity and Public Relations- Definition,
Importance and Tools; Direct Marketing; Digital Marketing-Types, Advantages &
Challenges.

LESSON- 10
Meaning of Promotion:

“What is Promotion?” Promotion is a marketing tool, used as a strategy to communicate

between the sellers and buyers. Through this, the seller tries to influence and convince the
buyers to buy their products or services. It assists in spreading the word about the product or
services or company to the people. The company uses this process to improve its public
image. This technique of marketing creates an interest in the mindset of the customers and
can also retain them as a loyal customer. The promotional mix refers to one of marketing
mix’s 4Ps and consists of advertising, public relations, personal selling, and sales promotion.
It is defined as all the forms of communication that an organization uses to establish
meaning for its product, or service, as well as a way to influence the buying behavior of
targeted customers. A promotional mix should be designed in a way that informs the target
market audience about the values, and benefits, of the product or service, offered.

Promotion is an important part of marketing mix of a business enterprise. Once a product is

developed, its price is determined the next problem comes to its sale i.e., creating demand for
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the product. It requires promotional activities. The activities are techniques which bring the
special characteristics of the product and of the producer to the knowledge of prospective
customers.

Promotion is a fundamental component of the marketing mix, which has 4 Ps: product, price,
place, and promotion. It is also an essential element promotional plan or mix, which includes
advertising, self and sales promotion, direct marketing publicity, trade shows, events, etc.,
Some methods of this procedure contain an offer, coupon discounts, free sample distribution,
trial offer, buy two items in the price of one, contest, festival discounts, etc. The promotion
of a product is important to help companies improve their sales because customers reaction
towards discounts and offers are impulsive. In other words, promotion is a marketing tool
that involves enlightening the customers about the goods and services offered by an
organization.

Types of Promotion:
Advertising-

It helps to outspread a word or awareness, promote any newly launched service, goods or an
organization. The company uses advertising as a promotional tool as it reaches a mass of
people in a few seconds. An advertisement is communicated through many traditional media
such as radio, television, outdoor advertising, newspaper or social media. Other
contemporary media that supports advertisement are social media, blogs, text messages, and
websites.

Direct Promotion-

It is that kind of advertising where the company directly communicates with its customers.
This communication is usually done through various new approaches like email marketing,
text messaging, websites, fliers, online adverts, promotional letters, catalog distributors, etc.

Sales Promotion-

This utilizes all sorts of a marketing tool to communicate with the customers and increase
sales. However, it is for a limited time, used to expand customers demand, refresh market
demand and enhance product availability

Self-promotion-

It is a process where the enterprises send their agents directly to the customers to pitch for
their product or service. Here, the response for the feedback of the customer is prompt and
therefore, easy to build trust.

Public Relation-

It is exercised to broadcast the information or message between a company (NGO,

Government agency, business), an individual or a public. A powerful PR campaign can be
valuable to the company.

Online Promotion-

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This includes almost all the elements of the promotion mix, starting from the online
promotion with pay per click in advertising and through direct marketing by sending
newsletters or emails.

Key Points of Promotion

• It is a communication tool that incorporates all the elements used to spread awareness
and convince customers to buy goods and services
• It is applicable only for short term sales
• It is one of the variables of the marketing mix
• The effect of promotion is short term
• The result or outcome of the promotion is immediate
• It is an economic marketing tool as compared to advertising
• It can be used for all sorts of businesses irrespective of the size, brand of a company

Elements of promotional mix

There are five main aspects of a promotional mix:

Elements of promotional mix are also called as tools, means, or components. Basically, there
are five elements involved in promotional mix. Some authors have considered more
elements, too. However, we will consider five elements as shown in Figure-1: -

1. Advertising
2. Personal selling,
3. Sales promotion,
4. Public relations,
5. Direct marketing.

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1. Advertising:
Advertising is defined as any paid form of non-personal presentation and promotion of ideas,
goods, and services by an identified sponsor. It is a way of mass communication. It is the
most popular and widely practiced tool of market promotion. Major part of promotional
budget is consumed for advertising alone. Various advertising media – television, radio,
newspapers, magazines, outdoor means and so forth – are used for advertising the product.

Characteristics of advertising are as follow:

i. Advertising is non-personal or mass communication. Personal contact is not possible.

ii. It is a paid form of communication.
iii. It is a one-way communication.
iv. Identifiable entity/sponsor-company or person gives advertising.
v. It is costly option to promote the sales.
vi. It can be reproduced frequently as per need.
vii. Per contact cost is the lowest.
viii. Various audio-visual, print, and outdoor media can be used for advertising purpose.
ix. It is a widely used and highly popular tool of market promotion.

2. Sales Promotion:
Sales promotion covers those marketing activities other than advertising, publicity, and
personal selling that stimulate consumer purchasing and dealer effectiveness. Sales
promotion mainly involves short-term and non-routine incentives, offered to dealers as well
consumers. The popular methods used for sales promotion are demonstration, trade show,
exhibition, exchange offer, seasonal discount, free service, gifts, contests, etc.

Characteristics of sales promotion are as follows:

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 i. The primary purpose of sales promotion is to induce customers for immediate buying or
dealer effectiveness or both.
ii. Excessive use of sale promotion may affect sales and reputation of a company adversely.
iii. It is taken as supplementary to advertising and personal selling efforts.
iv. It involves all the promotional efforts other than advertising, personal selling, and
publicity.
v. It consists of short-term incentives, schemes, or plans offered to buyers, salesmen, and/ or
dealers.
vi. It involves non-routine selling efforts.

3. Personal Selling:
Personal selling includes face-to-face personal communication and presentation with
prospects (potential and actual customers) for the purpose of selling the products. It involves
personal conversation and presentation of products with customers. It is considered as a
highly effective and costly tool of market promotion.

Characteristics of personal have been listed below:

i. Personal selling is an oral, face-to-face, and personal presentation with consumers.
ii. Basic purpose is to promote products or increase sales.
iii. It involves two-way communication.
iv. Immediate feedback can be measured.
v. It is an ability of salesmen to persuade or influence buyers.
vi. It is more flexible way of market communication.
vii. Per contact cost is higher than advertising.
viii. It involves teaching, educating, and assisting people to buy.

4. Publicity:
Publicity is also a way of mass communication. It is not a paid form of mass communication
that involves getting favourable response of buyers by placing commercially significant news
in mass media. William J. Stanton defines: “Publicity is any promotional communication
regarding an organisation and/or its products where the message is not paid for by the
organisation benefiting from it.”

It is the traditional form of public relations. Publicity is not paid for by the organisation.
Publicity comes from reporters, columnists, and journalists. It can be considered as a part of
public relations. Publicity involves giving public speeches, giving interviews, conducting
seminars, charitable donations, inauguration by film actor, cricketer, politician or popular
personalities, stage show, etc., that attract mass media to publish the news about them.

Main characteristic of publicity include:

i.Publicity involves obtaining favourable presentation about company or company’s offers
upon radio, television, or stage that is not paid for by the sponsor.
ii.It is a non-paid form of market promotion. However, several indirect costs are involved in
publicity.
iii.It may include promotion of new product, pollution control efforts, special achievements of
employees, publicizing new policies, etc., for increasing sales. It is primarily concerns with

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 publishing or highlighting company’s activities and products. It is targeted to build
company’s image.
iv.Mostly, publicity can be carried via newspapers, magazines, radio or television.
v.Company has no control over publicity in terms of message, time, frequency, information,
and medium.
vi.It has a high degree of credibility. Publicity message is more likely to be read and reacted by
audience.
vii.Publicity can be done at a much lower cost than advertising. Company needs to spend a little
amount to get the event or activity publicized.
viii.Frequency or repetition of publicity in mass media depends upon its social significance or the
values for news. Mostly, it appears only once.

5. Public Relations:
The public relations is comprehensive term that includes maintaining constructive relations
not only with customers, suppliers, and middlemen, but also with a large set of interested
publics. Note that public relations include publicity, i.e., publicity is the part of public
relations.

William Stanton defines:

“Public relations activities typically are designed to build or maintain a favourable image for
an organisation and a favourable relationship with the organization’s various publics. These
publics may be customers, stockholders, employees, unions, environmentalists, the
government, and people in local community, or some other groups in society.” Thus, public
relations include organization’s broad and overall communication efforts intended to
influence various groups’ attitudes toward the organisation. Some experts have stated that the
public relations are an extension of publicity.

Main characteristic of publicity is as under:

i. Public relations are a paid form of market promotion. Company has to incur
expenses.
ii. Public relations activities are designed to build and maintain a favourable image for
an organisation and a favourable relationship with the organization’s various publics.
iii. It is an integral part of managerial function. Many companies operate a special
department for the purpose, known as the public relations department.
iv. It involves a number of interactions, such as contacting, inviting, informing,
clarifying, responding, interpreting, dealing, transacting, and so forth.
v. Public relations covers a number of publics – formal and informal groups. These
publics may be customers, stockholders, employees, unions, environmentalists, the
government, people of local community, or some other groups in society.
vi. Public relations activities are undertaken continuously. It is a part of routine activities.
vii. All the officials, from top level to supervisory level, perform public relations
activities.
viii. In relation to modern management practices, the public relations is treated as the
profession.

Thus, there are five major elements or promotion mix. Each tool/element has its advantages,
limitations, and applicability. Depending upon company’s internal and external situations,
one or more tools are used. Mostly, company’s promotional programme involves more
elements, each element supplements others.

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Promotional Objectives / Objectives of Promotion
Market promotion is an integral part of marketing strategy. It is a powerful weapon used
excessively by today’s’ marketers to achieve marketing goals in a competitive environment.
Market promotion is essentially a way to communicate with the target market. Since the
modern market is characterized by over-informed consumers, over-flooded products, cut-
throat competition, and rapid changes, the market promotion has a crucial role to play.

In nutshell, main objectives of market promotion can be described with reference to

below stated points:

1. To Stimulate Demand:

It is the primary objective of market promotion. Through the use of appropriate means of
market promotion, such as advertising, sales promotion, personal selling, and so forth, the
company can stimulate demand for the product. Market promotion efforts convert potential
buyers into actual buyers. Company, by highlighting product benefits, tries to match the
product with needs, wants, and expectations of buyers. As per need, various means of market
promotion are used to establish the information link with the target customers.

2. Increase Business:

Marketing promotions are used primarily to attract new customers to a business. This can be
done through a variety of promotional actions, such as running targeted advertising
campaigns, holding special events, or launching a social media blitz. The objective is to
reach potential new customers and give them an incentive to patronize your business.

3. To Inform Consumers:

Promotion is aimed at informing consumers about features, qualities, performance, price, and
availability of firm’s products. Market promotion is also a valuable means to inform
consumers the changes made in the existing products and introduction of new products. In
the same way, market promotion, by various tools of market communication, is used for
communicating the special offers, price concession, utility of products, and incentives offered
by the company.

4. To Persuade Consumers:

Market promotion is an effective way to persuade consumers the superiority of product over
competitors. A firm can communicate competitive advantages the product offers to
distinguish it from competitors’ products. Obviously, market promotion can assist the firm to
convince buyers that the firm’s product is the best solution to their unmet needs and wants.
Advertising is one of the most effective tools to distinguish the product from competitors’
products.

5. To Promote a New Product:

In a large and decentralized market, market promotion is an inevitable medium to promote a

new product. By suitable promotional strategies, a company can successfully introduce a new
product in the market as against existing products. Company can inform about availability,

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distinct features, and price of newly launched product. In every stage of consumer adoption
of a new product, market promotion has critical role to play.

6. To Face Competition:

Market promotion enables the firm to face competition effectively. In today’s market
situation, it is difficult to stand without the suitable promotional efforts. In short, it can be
said that marketer can fight with competitors effectively, can prevent their entry, or can
throw the competitor away from the market by formulating and implementing effective
market promotion strategies.

7. Brand Awareness

To keep its name in front of consumers and reinforce its image, a small business should have
a marketing objective of building brand awareness. This can be accomplished in part by
being consistent in all marketing messages and using inexpensive promotional products. An
example: give-away items such as refrigerator magnets, ink pens, coffee cups and calendars
imprinted with the company logo or image. People who take these items have a constant
message in front of them, bolstering brand awareness of the business.

8. To Create or Improve Image:

Advertising, personal selling, and publicity and public relations – all promotional tools – are
capable to create or improve image and reputation of the firm. Many companies have become
popular in the market due to effective market promotion. Company can reach the customers
at every corner of the world through market promotion.
Brand image is purely an outcome of promotional efforts. For example, Hindustan Unilever,
Colgate Palmolive, Sony, Philips, Hero Honda, Ambuja Cement, and many national and
multinational companies have made their permanent place in the market due to successfully
launching of market promotion programmes.

Factors Influencing choice of Promotional Mix

Main factors influencing promotion mix has been briefly discussed as under:

1. Type of Product:
Type of product plays an important role in deciding on promotion mix. Product can be
categorized in terms of branded products, non-branded products, necessity products, luxury
products, new products, etc. All these types of products need different promotional tools. For
example, advertising is suitable for the branded and popular products. Personal selling may
be fit for non-branded products. Advertising, personal selling, sales promotion and publicity
– all four tools – are used for a newly launched product to get a rapid consumer acceptance.

2. Use of Product:
Product may be industrial product, consumable and necessity product, or may be luxurious
product that affects selection of promotion tools and media. For example, advertising and
sales promotion techniques are widely used for consumer goods while personal selling is
used for industrial goods.

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3. Complexity of Product:
Product complexity affects selection of promotional tools. Personal selling is more effective
for complex, technical, risky, and newly developed products as they need personal
explanation and observation. On the other end, advertising is more suitable for simple and
easy-handled products.

4. Purchase Quantity and Frequency:

Company should also consider purchase frequency and purchase quantity while deciding on
promotion mix. Generally, for frequently purchase product, advertising is used, and for
infrequently purchase product, personal selling and sales promotion are preferred. Personal
selling and advertising are used for heavy users and light users respectively.

5. Fund Available for Market Promotion:

Financial capacity of company is a vital factor affecting promotion mix. Advertising through
television, radio, newspapers and magazines is too costly to bear by financially poor
companies while personal selling and sales promotion are comparatively cheaper tools. Even,
the company may opt for publicity by highlighting certain commercially significant events.

6. Type of Market:
Type of market or consumer characteristics determines the form of promotion mix.
Education, location, income, personality characteristics, knowledge, bargaining capacity,
profession, age, sex, etc., are the important factors that affect company’s promotion strategy.

7. Size of Market:
Naturally, in case of a limited market, personal selling is more effective. When market is
wide with a large number of buyers, advertising is preferable. Place is also an important
issue. Type of message, language of message, type of sales promotion tools, etc., depend on
geographical areas.

8. Stage of Product Life Cycle:

Product passes through four stages of its life cycle. Each stage poses different threats and
opportunities. Each stage needs separate marketing strategies. Each of the promotional tools
has got different degree of suitability with stages of product life cycle.

It can be concluded that, in normal situations:

(1) Advertising, personal selling, and, even, sales promotion are used during the
introduction stage. However, advertising is given more priority,
(2) More intensive advertising and sales promotional techniques are used during the
second stage,
(3) More rigorous advertising along with personal selling are followed in the third stage,
and
(4) Company prefers to curb the expenses in forth stage, and promotional efforts are
reduced.

9. Level of Competition:
Promotional efforts are designed according to type and intensity of competition. All
promotional tools are aimed at protecting company’s interest against competition. Level of
promotional efforts and selection of promotional tools depend on level of competition.

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10. Promotional Objectives:
It is the prime factor affecting promotional mix. Different objectives can be achieved by
using different tools of promotional mix. If company’s objective is to inform a large number
of buyers, advertising is advisable. If company wants to convince limited consumers, it may
go for personal selling. Even, when company wants to influence buyers during specific
season or occasion, the sales promotion can be used. Some companies use publicity to create
or improve brand image and goodwill in the market.

11. Other Factors:

Over and above these factors, there are certain minor factors that affect promotion mix.
These factors may include:

1. Price of Product
2. Type of Marketing Channel
3. Degree of Product Differentiation
4. Desire for Market Penetration, etc.

Promotional strategy should be formulated only after considering the relevant factors.
Marketing manager must be aware of these variables. Note that these factors affect different
firms in varying degree depending upon its internal and external marketing environment.

Push & Pull Strategy

Promotion is an important part of any marketing strategy. You can have the best product or
service out there, but unless you promote it successfully, no one will know about it. There are
three basic types of promotional strategies – a push strategy, a pull strategy or a combination
of the two. In general, a push strategy is sales oriented, a pull strategy is marketing-oriented
and a push-pull strategy is a combination of the two.

Push Strategy
The strategy wherein marketing channels are used to push the product or service to sales
channel is called push strategy. It explains the movement of products & services and
information through intermediaries to the final consumer. In this strategy, the company takes
their product to the customers, who are neither aware of it nor seeking it but the product is
introduced to them, through various promotional activities.

A push promotional strategy works to create customer demand for your product or service
through promotion: for example, through discounts to retailers and trade promotions.
Appealing package design and maintaining a reputation for reliability, value or style are also
used in push strategies. One example of a push strategy is mobile phone sales, where
manufacturers offer discounts on phones to encourage buyers to chose their phone. Push
promotional strategies also focus on selling directly to customers, for example, through point
of sale displays and direct approaches to customers.

The strategy uses trade show promotion, the point-of-sale display, direct selling,
advertisement on radio, television, emails etc. to make an impact on consumers mind and
reducing the time between discovery of product and purchasing it.

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Pull Strategy
The business strategy which aims at generating interest or demand for a particular product or
service of the target audience, in a way that they demand the product or service from the
channel partners, is called pull strategy. In this strategy, the consumer demands are
intensified by directing marketing strategies on them, which results in the ‘pulling’ of
products. Pull strategy uses methods like social networking, blogging, word of mouth,
strategic placement of a product, media coverage and so on, for reaching a large audience.

In finer terms, any methods which are used for creating consumer demand for the product is
called Pull strategy. It is one such strategy, in which customers actively seek products of a
particular brand, due to its goodwill, quality, reliability and reputation.

For example, advertising children's toys on children's television shows is a pull strategy. The
children ask their parents for the toys, the parents ask the retailers and the retailers the order
the toys from the manufacturer. Other pull strategies include sales promotions, offering
discounts or two-for-one offers and building demand through social media sites such as :
YouTube.

Combination Strategies

Some companies use a combination of both push and pull strategies. For example, Texas-
based textile producer Cotton Incorporated uses a push/pull promotional strategy. They push
to create customer demand through constantly developing new products and offering these
products in stores; and pull customers towards these products through advertising and
promotion deals. According to marketing expert Blair Entenmann, there is no single correct
combination of push and pull. The amount spent on each type of strategy will depend on
factors such as budget, the type of product, the target audience and competition.

When to Use
Push promotional strategies work well for lower cost items, or items where customers may
make a decision on the spot. New businesses use push strategies to develop retail markets for
their products and to generate exposure. Once a product is already in stores, a pull strategy
creates additional demand for the product. Pull strategies work well with highly visible
brands, or where there is good brand awareness. This is usually developed through
advertising.

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Comparison Chart

BASIS FOR
PUSH STRATEGY PULL STRATEGY
COMPARISON
Push strategy is a strategy that Pull strategy is a strategy that
Meaning involves direction of marketing involves promotion of marketing
efforts to channel partners. efforts to the final consumer.
A strategy in which customers
A strategy in which third party
What is it? demand company’s product from
stocks company’s product.
sellers.
To make customer aware of the To encourage customer to seek
Objective
product or brand. the product or brand.
Sales force, Trade promotion, Advertising, Promotion and other
Uses
money etc. forms of communication.
Emphasis on Resource Allocation Responsiveness
Suitability When the brand loyalty is low. When the brand loyalty is high.
Lead Time Long Short

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LESSON- 11
Advertising
Meaning of Advertising – Advertising is an activity of attracting public attention to a
product, service, or business as by paid announcements in the print, broadcast,
or electronic media.

Definition of Advertising – “Advertising is the non-personal communication of information

usually paid for and usually persuasive in nature about products, services or ideas by
identified sponsors through the various media.”

Characteristics of Advertising
1. Non-personal:

Basically, sales are done either personally or non-personally. Personal selling requires the
seller and buyer to get together. Personal selling has its own advantages and disadvantages.
Whereas advertising is a non-personal selling. Personal selling has many advantages over
advertising like direct communication, bargaining, enough time to discuss in detail about the
product, seller can easily locate potential buyer. Advertising has none of the advantages of
personal selling, very little time to present sales message, message is cannot be changed
easily.

But advertising has its own advantages which are not found in personal selling: advertising
has comparatively speaking, all the time in the world. Unlike personal selling, the sales
message and its presentation does not have to be created on the spot with the customer
watching. It can be created in as many ways as the writer can conceive, be rewritten, tested,
modified, injected with every trick and appeal known to affect consumers.

Advertising covers large groups of customers and to make it effective proper research about
customer is done to identify potential customers, to find out what message element might
influence them, and figure out how best to get that message to them.

Thus, it appears that advertising is a good idea as a sales tool. For small ticket items, such as
chewing gum and guitar picks, advertising is cost effective to do the entire selling job. For
large ticket items, such as cars and computers, advertising can do a large part of the selling
job, and personal selling is used to complete and close the sale. Advertising is non personal,
but effective.

2. Communication:

Communication means passing information, ideas, or feelings by a person to another.

Communication uses all the senses like smell, touch, taste, sound, sight. Only two senses -
sound and sight are really useful in advertising. In advertising, what appears is everything the
writer thinks the customer needs to know about the product in order to make a decision about
the product. That information will generally be about how the product can benefit the
customer.

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3. Paid For:
Advertiser has to pay for the creation of ad and for placing it in the media. Cost of ad
creation and cost of time/space in the media must be paid for. Cost of advertising depends on
TRP of media, reach of media, and frequency of ad to be displayed.

4. Persuasive:
"Persuasive" stands to reason as part of the definition of advertising. The basic purpose of
advertising is to identify and differentiate one product from another in order to persuade the
consumer to buy that product in preference to another.

5. Identified Sponsors:
An identified sponsor means whoever is putting out the ad tells the audience who they are.
There are two reasons for this: first, it's a legal requirement, and second, it makes good sense.
Legally, a sponsor must identify himself as the sponsor of ad. By doing so the sponsor not
only fulfills the legal requirements, but it also makes a good sense, if the sponsor doesn't do
so, the audience may believe that the ad is for any competitor's product, thus wasting all the
time and money in making and placing the advertisement.

Importance of Advertising
Advertising plays a very important role in today’s age of competition. Advertising is one
thing which has become a necessity for everybody in today’s day to day life, be it the
producer, the traders, or the customer. Advertising is an important part. Let’s have a look on
how and where is advertising important:

1. Advertising is important for the customers

Just imagine television or a newspaper or a radio channel without an advertisement! No, no
one can any day imagine this. Advertising plays a very important role in customer’s life.
Customers are the people who buy the product only after they are made aware of the products
available in the market. If the product is not advertised, no customer will come to know what
products are available and will not buy the product even if the product was for their benefit.
One more thing is that advertising helps people find the best products for themselves, their
kids, and their family. When they come to know about the range of products, they are able to
compare the products and buy so that they get what they desire after spending their valuable
money. Thus, advertising is important for the customers.

2. Advertising is important for the seller and companies producing the products
Yes, advertising plays very important role for the producers and the sellers of the products,
because:

• Advertising helps increasing sales

• Advertising helps producers or the companies to know their competitors and plan
accordingly to meet up the level of competition.
• If any company wants to introduce or launch a new product in the market,
advertising will make a ground for the product. Advertising helps making people aware of
the new product so that the consumers come and try the product.
• Advertising helps creating goodwill for the company and gains customer loyalty
after reaching a mature age.
• The demand for the product keeps on coming with the help of advertising and
demand and supply become a never ending process.

3. Advertising is important for the society

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Advertising helps educating people. There are some social issues also which advertising
deals with like child labor, liquor consumption, girl child killing, smoking, family planning
education, etc. thus, advertising plays a very important role in society.

Objectives of Advertising
The real objective of advertising is effective communication between producers and
consumers with the purpose to sell a product, service, or idea. The main objectives of
advertising are as follows:

1. Informative:
Objective of advertising is to inform its targeted audience/customers about introduction of
new product, update or changes in existing products or product related changes, information
regarding new offers and schemes. Informative advertising seeks to develop initial demand
for a product. The promotion of any new market entry tends to pursue this objective because
marketing success at this stage often depends simply on announcing product availability.
Thus, informative advertising is common in the introductory stage of the product life cycle.

1. Persuasive:
Objective of advertising is to increase demand for existing product by persuading new
customer for first time purchase and existing customers for repurchases. Persuasive
advertising attempts to increase demand for an existing product. Persuasive advertising is a
competitive type of promotion suited to the growth stage and the early part of the maturity
stage of the product life cycle.

2. Reminder:
The objective of advertising is to remind customers about existence of product, and ongoing
promotional activities. Reminder advertising strives to reinforce previous promotional
activity by keeping the name of a product before the public. It is common in the latter part of
the maturity stage and throughout the decline stage of the product life cycle.

Mathews, Buzzell, Levitt and Frank have listed some specific objectives of advertising:

▪ To make an immediate sale.

▪ To build primary demand.
▪ To introduce a price deal.
▪ To build brand recognition or brand insistence.
▪ To help salesman by building an awareness of a product among retailers.
▪ To create a reputation for service, reliability or research strength.
▪ To increase market share.

Functions of Advertising
Following are the basic functions of advertising:

1. To distinguish product from competitors' products

There are so many products of same category in the market and they compete with each
other, advertising performs the function of distinguishing advertiser's product from
competitors.

2. To communicate product information

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Product related information required to be communicated to the targeted customers, and
advertisement performs this function.

3. To urge product use

Effective advertisement can create the urge within audience for a product.

4. To expand product distribution

When the market demand of a particular product increases, the number of retailer and
distributor involved in sale of that product also increases, hence product distribution get
expanded.

5. To increase brand preference

There are various products of different bands are available, the brand which is effectively and
frequently advertised is preferred most.

6. To reduce overall sale cost

Advertising increases the primary demand in the market. When demand is there and the
product is available, automatically the overall cost will decrease, simultaneously the costs of
sales like distribution cost, promotional cost also get decreased.

Classifications of Advertising
Advertising can be classified on the basis of Function, Region, Target Market, Company
demand, desired response, and Media.

A) Classification on the basis of function

▪ Advertisement informs the customers about a product
▪ Advertisement persuades the consumers to buy a products
▪ Advertisement reminds existing customers about the presence of the product in the
market.

Let us discuss some important types of advertising based on the functional aspect of
advertising.

Informative advertising: This type of advertising informs the customers about the products,
services, or ideas of the firm or organization.

Persuasive advertising: This type of advertising persuades or motivates the prospective

buyers to take quick actions to buy the products or services of the firm. Example: “Buy one,
get one free”.

Reminder advertising: This genre of advertising reminds the existing customers to become
medium or heavy users of the products or services of the firm that have been purchased by
them at least once. This type of advertising exercise helps in keeping the brand name and
uses of the products in the minds of the existing customers.

B) Classification on the basis of region

Advertisements can also be classified on the basis of the region, say:

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Global advertising: It is executed by a firm in its global market niches. Reputed global
magazines like Time, Far Eastern Economic Review, Span, Fortune, Futurist, popular
Science. Cable TV channels are also used to advertise the products throughout world.
Supermodels and cinema stars are used to promote high-end products Examples: Sony,
Philips, Pepsi, Coca Cola, etc.
National advertising: It is executed by a firm at the national level. It is done to increase the
demand of its products and services throughout the country. Examples: BPL (Believe in the
best). Whirlpool Refrigerator (Fast Forward Ice Simple) etc.

Regional advertising: If the manufacturer confines his advertising to a single region of the
country, its promotional exercise is called Regional Advertising. This can be done by the
manufacturer, wholesaler, or retailer of the firm. Examples: Advertisements of regional
newspapers covering those states or districts where these newspapers are circulated. Eg. The
Assam Tribune (only for the NE region) etc.

Local advertising: When advertising is done only for one area or city, it is called Local
Advertising. Some professionals also call it Retail Advertising. It is sometime done by the
retailer to persuade the customer to come to his store regularly and not for any particular
brand. Examples: Advertisements of Ooo la la, Gupshup (Local FM channels) etc.

C) Classification on the basis of target market

Depending upon the types of people who would receive the messages of advertisements, we
can classify advertising into four subcategories:

Consumer product advertising: This is done to impress the ultimate consumer. An ultimate
consumer is a person who buys the product or service for his personal use. This type of
advertising is done by the manufacturer or dealer of the product or service. Examples:
Advertisements of Intel, Kuttons (shirt), Lakme (cosmetics) etc.

Industrial product advertising: This is also called Business-to-Business Advertising. This

is done by the industrial manufacturer or his distributor and is so designed that it increases
the demand of industrial product or services manufactured by the manufacturer. It is directed
towards the industrial customer.

Trade advertising: This is done by the manufacturer to persuade wholesalers and retailers to
sell his goods. Different media are chosen by each manufacturer according to his product
type, nature of distribution channel, and resources at his command. Hence, it is designed for
those wholesalers and retailers who can promote and sell the product.

Professional advertising: This is executed by manufacturers and distributors to influence

the professionals of a particular trade or business stream. These professionals recommend or
prescribe the products of these manufacturers to the ultimate buyer. Manufacturers of these
products try to reach these professionals under well-prepared programmes.
Doctors, engineers, teachers, purchase professionals, civil contractors architects are the prime
targets of such manufacturers.

Financial advertising: Banks, financial institutions, and corporate firms issue

advertisements to collect funds from markets. They publish prospectuses and application
forms and place them at those points where the prospective investors can easily spot them.

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D) Classification on the basis of desired responses
An ad can either elicit an immediate response from the target customer, or create a
favourable image in the mind of that customer. The objectives, in both cases, are different.
Thus, we have two types of advertising under this classification.

Direct action advertising: This is done to get immediate responses from customers.
Examples: Season’s sale, purchase coupons in a magazine.

Indirect action advertising: This type of advertising exercise is carried out to make a
positive effect on the mind of the reader or viewer. After getting the advertisement he does
not rush to buy the product but he develops a favourable image of the brand in his mind.

Surrogate advertising: This is a new category of advertising. In this type of promotional

effort, the marketer promotes a different product. For example: the promotion of Bagpiper
soda. The firm is promoting Bagpiper Whisky, but intentionally shows soda. They know that
the audience is quite well aware about the product and they know this fact when the actor
states, “Khoob Jamega Rang Jab Mil Baithenge Teen Yaar Aap Main, Aur Bagpiper”).

E) Classification on the basis of the media used in advertisement

The broad classification based on media is as follows:

1. Audio advertising: It is done through radio, P A systems, auto-rickshaw promotions, and

four-wheeler promotions etc.

2. Visual advertising: It is done through PoP displays, without text catalogues, leaflets,
cloth banners, brochures, electronic hoardings, simple hoardings, running hoardings etc.

3. Audio-visual: It is done through cinema slides, movies, video clips, TV advertisements,

cable TV advertisements etc.

4. Written advertising: It is done through letters, fax messages, leaflets with text, brochures,
articles and documents, space marketing features in newspapers etc.

5. Internet advertising: The World Wide Web is used extensively to promote products and
services of all genres. For example Bharat Matrimony, www.teleshop.com,
www.asianskyshop.com etc.

5. Verbal advertising: Verbal tools are used to advertise thoughts, products, and
services during conferences, seminars, and group discussion sessions. Kinesics also plays an
important role in this context.

Media Decisions in Advertising

Advertising media selection is the process of choosing the most efficient media for an
advertising campaign. To evaluate media efficiency, planners consider a range of factors
including: the required coverage and number of exposures in a target audience; the relative
cost of the media advertising and the media environment. Media planning may also involve
buying media space. Media planners require an intricate understanding of the strengths and
weaknesses of each of the main media options. The media industry is dynamic - new

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advertising media options are constantly emerging. Digital and social media are changing the
way that consumers use media and are also having an impact on how consumers acquire
product information.

Media decisions in advertising can take many different directions depending on the product
being sold. There are many different types of media that can be used. You have magazine,
newspaper, billboard, web-site, TV, and radio only to mention a few. If you want your
product out there you have to figure out where you market is and what media would be the
best to reach that medium.

Types of Advertising Media

The selection of advertising media for a given campaign requires a deep and rich
understanding of the media options available.

1. Television advertising

Television advertising offers the benefit of reaching large numbers in a single exposure. Yet
because it is a mass medium capable of being seen by nearly anyone, television lacks the
ability to deliver an advertisement to highly targeted customers compared to other media
outlets. Television networks are attempting to improve their targeting efforts. In particular,
networks operating in the pay-to-access arena, such as those with channels on cable and
satellite television, are introducing more narrowly themed programming (i.e., TV shows
geared to specific interest groups) designed to appeal to selective audiences. However,
television remains an option that is best for products that targeted to a broad market. The
geographic scope of television advertising may vary, from local or regional advertising
through to national coverage, depending on whether public broadcasting or subscriber-based
cable services are used.

Television advertising, once seen as the mainstay of media advertising, is facing numerous
challenges from alternative media, especially interactive and social media. Technological
innovations, especially the advent of ad blocking and zapping, have eroded TV's immediacy
and relevance for some audiences.

2. Radio advertising

Promotion through radio has been a viable advertising option for over 80 years. Radio
advertising is mostly local to the broadcast range of a radio station, however, at least three
options exist that offer national and potentially international coverage. First, in many
countries there are radio networks that use many geographically distinct stations to broadcast
simultaneously. In the United States such networks as Disney (children’s programming) and
ESPN (sports programming) broadcast nationally either through a group of company-owned
stations or through a syndication arrangement (i.e., business agreement) with partner stations.
Second, within the last few years the emergence of radio programming delivered via satellite
has become an option for national advertising. Finally, the potential for national and
international advertising may become more attractive as radio stations allow their signals to
be broadcast over the Internet.
In many ways radio suffers the same problems as television, namely, a mass medium that is
not highly targeted and offers little opportunity to track responses. But unlike television,
radio presents the additional disadvantage of limiting advertisers to audio-only advertising.
For some products advertising without visual support is not effective.

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3. Print publications advertising

Print publications such as magazines, books, newspapers and Special Issue publications
(such as annuals) offer a variety of advertising opportunities:

Magazines, especially those that target specific niche or specialized interest areas, are more
tightly targeted compared to broadcast media. Additionally, magazines offer the option of
allowing marketers to present their message using high quality imagery (e.g., full color) and
can also offer advertisers the ability to integrate interactive, tactile experiences through the
use of scratch-it papers impregnated with scents (e.g., perfume).

Newspapers have also incorporated color advertisements, though their main advantage rests
with their ability to target local markets. For advertisers, the ability to insert catalogs or
special promotional material into the newspaper is an advantage.
Special Issue publications can offer very selective targeting since these often focus on
extremely narrow topics (e.g., auto buying guide, tour guides, college and university ratings,
etc.).

4. Internet advertising

The Internet is the fastest growing advertising media. Compared to spending in other media,
the rate of spending for Internet advertising is experiencing tremendous growth. Internet
advertising’s influence continues to expand and each year more major marketers shift a
larger portion of their promotional budget to this medium. Two key reasons for this shift rest
with the Internet’s ability to: 1) narrowly target an advertising message and, 2) track user
response to the advertiser’s message.

The Internet offers many advertising options with messages delivered through websites or by
email:
• Email advertising - also known as internet direct marketing. Using email to deliver
an advertisement affords marketers the advantage of low distribution cost and potentially
high reach. In situations where the marketer possesses a highly targeted list, response rates to
email advertisements may be quite high. This is especially true if those on the list have
agreed to receive email, a process known as “opt-in” marketing. Email advertisement can
take the form of a regular email message or be presented within the context of more detailed
content, such as an electronic newsletter. Delivery to a user’s email address can be viewed as
either plain text or can look more like a website using web coding (i.e., HTML). However, as
most people are aware, there is significant downside to email advertising due to highly
publicized issues related to abuse (i.e., spam).
• Social media advertising - a collective term used to describe forms of online
advertising that focus on social networking services such as Facebook, Twitter, Instagram.

Online advertising has spawned a range of new segmentation and targeting approaches
including Affinity targeting, Behavioral targeting, Contextual targeting and Geographic
targeting and Purchase-based category targeting.

5. Out-of-home media

The use of signs to communicate a marketer’s message places advertising in geographically

identified areas in order to capture customer attention. The most obvious method of using
signs is through billboards, which are generally located in high traffic areas. Outdoor
billboards come in many sizes, though the most well-known are large structures located near
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transportation points intending to attract the interest of people traveling on roads or public
transportation. Indoor billboards are often smaller than outdoor billboards and are designed
to attract the attention of foot traffic (i.e., those moving past the sign). For example, smaller
signage in airports, train terminals and large commercial office space fit this category.

6. Mobile device advertising

The growth of hand-held devices is changing the way that consumers consume media and
search for product information. Handheld devices, such as cellphones, smartphones, portable
computers and other wireless devices, make up the growing mobile device market. Such
devices allow customers to stay informed, gather information and communicate with others
without being tied to a physical location. While the mobile device market is only beginning
to become a viable advertising medium, it may soon offer significant opportunity for
marketers to reach customers at anytime and anywhere.

7. Print Media

• Circulation: the number of copies of an issue sold (independently accessed via a

circulation audit)
• Readership: the total number of people who have seen or looked into a current edition
of the a publication (independently measured via survey)
• Readership profiles: Demographic/ psychographic and behavioural analysis of
readership (sourced from Readership surveys)

Comparison of Advertising Media

It is important to note that the one disadvantage that virtual tours are burdened with is
actually a key advantage that is often overlooked. While other advertisement media are
frequently viewed as silos that operate independently, Exposure Elements virtual tours offer
the distinct ADVANTAGE of being able to mix well with other types of advertising and in
fact, thrive when integrated into other types of advertisement.

Virtual Tour – Interactive Internet Media

Virtual tours use Social Networking or your company’s website and other distribution
channels such as e-mail list, print media and internet search engines to distribute your virtual
tour.

Advantages:
• Viral distribution through Social Networks.
• Integrates and extends the value of other advertising media.
• Coverage all day / 7 days a week.
• Long shelf life.
• Extensive message customization.
• Extensive measurement capabilities.
• Sight, sound and motion and elements of interactive engagement.
• Strong branding capabilities.
• Lowest cost per impression.
• Easily accessible for repeat impressions.
• Mobility – works well for on the go mobile device users.

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Disadvantages:
• Works best when integrated with other programs

Newspapers
One of the oldest forms of mass media, newspapers can reach a loyal audience, nationally or
locally.

Advantages:

• Immediate reach.
• Allows for in-depth product explanation.
• Variety of creative commercial sizes and coloration.
• Ads can be targeted to certain demographic groups through placement in specific
sections.
• Tangible.
• Good for co-op advertising for local/national promotion.
• Easily available for repeated impressions.

Disadvantages:

• Declining Circulations.
• High out-of-pocket pricing.
• Readers rarely look at all sections.
• Difficult to reach younger audiences.
• Visual only, non-intrusive.
• Questionable measurement.
• Clutter.
• Poor shelf life.

Radio
Radio is a “portable” medium that reaches its peak audience during the morning and evening
rush hours.

Advantages:

• Targeted.
• Copy change flexibility.
• Low out-of-pocket pricing.
• Mobility (i.e. in the car listening).
• Low production costs.
• Promotions, tie-ins.

Disadvantages:

• Lack of visual.
• Poor measurement.
• Difficult to build audience reach.

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• High commercial clutter.
• Audience is not actively engaged.
• Time spent listening declines each year.
• Poor shelf life.
• Repeated impressions to be successful.

Local Broadcast Television

Local broadcast television provides mass-market coverage and the opportunity for advertisers
to run commercials during the local news and popular network and syndicated programs.

Advantages:

• Broad reach.
• Buzz-worthy programs.
• Full DMA coverage.
• Intrusive/immediate impact.
• Sight, sound and motion.
• Strong branding capabilities.

Disadvantages:

• Declining ratings.
• High out-of-pocket cost.
• Weak summer ratings/programming.
• High production costs.
• No ability to target specific areas within a DMA (i.e. wasted reach).
• Poor shelf life.
• Repeated impressions to be successful.
• Poor mobility – no “on the go” access.

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LESSON- 12
PERSONAL SELLING
Personal selling happens when companies and business firms send out their salesmen to use the
sale force and sell the products and services by meeting the consumer face – to – face. The
salesmen aim to inform and encourage the customer to buy, or at least try the product. For
example, salesmen go to different societies to sell the products. Another example is found in
department stores on the perfume and cosmetic counters, wherein agents of the company try to
sell their products. A customer can get advice on how to apply the product and can try different
products. Products with relatively high prices, or with complex features, are often sold using
personal selling. Great examples include cars, office equipment (e.g. photocopiers) and many
products that are sold by businesses to other industrial customers.

Advantages of Personal Selling

• It is two-way communication. So the selling agent can get instant feedback from the
prospective buyer. If it is not according to plan he can even adjust his approach or sales
presentation accordingly.
• Since it is an interactive form of selling, it helps build trust with the customer. When
you are selling high-value products like cars, it is important that the customer trusts not only
the product but the seller also. This is possible in personal selling.
• It also is a more persuasive form of marketing. Since the customer is face to face with
the salesperson it is not easy to dismiss them. The customer at least makes an effort to listen.
• Finally, direct selling helps reach the audience that we cannot reach in any other form.
There are sometimes customers that cannot be reached by any other method.
•
Disadvantages of Personal Selling
• It is a relatively expensive method of selling. There is a requirement of high capital
costs.
• Also, it is an extremely labour intensive method because a large sales force is required
to carry out personal selling successfully.
• The training of the salesperson is also a very time consuming and costly process.
• And the method can only reach a limited number of people. Unlike TV or Radio ads it
does not cover a huge demographic.

Personal Selling Process: Steps and Stages

Personal Selling Process – Identifying the Prospective Buyer, Pre-Approach, Approach,
Presentation, Demonstration, Overcoming Objection, Closing and a Few Others
This process involves identifying the prospective buyer, establishing a contact and
relationship with the buyer, presentation of the product to the buyer and demonstrating its
uses and benefits, convincing the customers about the product by efficiently handling
objections from the customers, negotiating the price and terms of payment and finally getting
the orders.

1. Identifying the Prospective Buyer (Prospecting and Qualifying):

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The first stage of personal selling process involves identifying potential customers. All
prospects identified may not turn out to be actual customers. Hence identifying the right
prospect is essential as it determines the future selling process. Marketers tap different
sources to identify the prospective customers. Marketers search for prospects in directories,
websites and contact through mail and telephone.
Marketers establish booth at trade shows and exhibitions, get the names of the prospects from
existing customers, cultivate referral sources such as – dealers, suppliers, sales
representatives, executives, bankers etc. After identifying the prospect the sales person
qualifies the prospects on the basis of their financial ability, needs, taste and preferences.

2. Pre-Approach:

The next step to prospecting and qualifying is pre-approach. At this stage the salesperson
needs to decide as to how to approach the prospective customer. The salesperson may make a
personal visit, a phone call or send a letter, based on the convenience of the prospects.

3. Approach:

At this stage the salesperson should properly approach the prospects. He should properly
greet the buyer and give a good start to the conversation. The salesperson’s attitude,
appearance, way of speaking matters most at this stage.

4. Presentation and Demonstration:

At this stage the salesperson provides detailed information about the product and benefits of
the product. The salesperson narrates the features of the product, explains the benefit and the
worth of the product in terms of money.

5. Overcoming Objections:

After presentation and demonstration, when customers are asked to place order, they are
reluctant to buy and raise objection. Customers give importance to well-established brands,
show apathy, impatience, reluctance to participate in the talk etc. Customer may raise
objection with regard to price, delivery schedule; product or company characteristics, etc.
Salesperson handles such objections skillfully by clarifying their objections and convinces
the customer to make purchase.

6. Closing:

After handling objections and convincing customers to buy the product, the salesperson
requests the customer to place order. The salesperson assists the buyer to place order.

7. Follow-Up and Maintenance:

Immediately after closing the sale, the salesperson should take some follow up measures. The
sales person assures about delivery at right time, proper installation, after sales service. This
ensures customer satisfaction and repeat purchase.
In case of newly introduced product and product that requires demonstration and
presentation, personal selling is effective.

TRANSACTION VS RELATIONSHIP SELLING

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Comparison Chart
BASIS FOR TRANSACTIONAL RELATIONSHIP
COMPARISON MARKETING MARKETING

Meaning Transactional Marketing is a Relationship Marketing is

marketing strategy used by a form of marketing whose
the firms to target customers primary aim is to retain
so as to make one-off sale and satisfy customers, by
transactions. providing value to
customers.

Time Orientation Short term Long term

Customer Contact Low Frequent

Stresses on Gaining new customers Customer Retention

Objective To make the sale or get the To become the sole or

order. preferred supplier in the
market.

Centers on Undertaking transaction Building trust

Nature of Short and Intermittent Long and Strong

Relationship

Customer Low High

Commitment

Sales Promotion:
It refers to short term incentives which are offered to the ultimate customers to encourage
them to make immediate purchase of the product or service.

Following are the merits of sales promotion:

(a)Attention value • Its purpose is to draw the attention of prospective

customers to make them buy the products.
• Example: “Buy 1 Get 1 free” offer, draws the
attention of the customers.

(b) Useful in new • It is used mainly when the new products are launched
product launch in the market so that the attention of the prospects can be
drawn towards new products.
• Example: Offers given by Reliance at the time of
launch of Jio.

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 (c) Synergy in • It helps to supplement the efforts made in personal
total promotional selling and advertisement.
efforts • It adds to overall effectiveness to the promotional
efforts.
• Example: Sales promotion by domino’s “Buy 1 Get 1
free” helps to make TV advertisements hit leading to more
sales.

Following are the limitations of sales promotion:

(a) Reflects crisis • A firm cannot remain too much dependent upon sales
promotions.
• It may otherwise leave the impression that the
company is not doing good business.

(b) Spoils product • Too much dependence on sales promotion techniques

image gives the impression in the mind of customers that perhaps the
product falls short of quality and is not saleable.

Publicity

The word publicity is derived from the French word ”publicité”. It is the movement of
information to the general public from the media. The subjects of publicity include people (for
example, politicians and performing artists), goods and services, organizations, and works of art
or entertainment.

Publicity is gaining public visibility or awareness for a product, service or your company via the
media. It is the publicist that carries out publicity, while PR is the strategic
management function that helps an organization communicate, establishing and maintaining
communication with the public. This can be done internally, without the use of media.

Direct Marketing
Direct marketing is a form of marketing in which a single customer is approached for
advertisement of the product.

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It attempts to acquire and retain customers by contacting them without the use of an
intermediary. The objective of direct marketing is to garner a direct response, which may
take one of the following forms –

• A purchase over the telephone or by post

• A request for a catalogue or sales literature
• An agreement to visit a location / event (e.g., an exhibition)
• Participation is some form of action (e.g., joining a political party)
• A request for a demonstration of a product
• A request for a sales person’s visit.

Forms of Direct Marketing

The following are the different forms of direct marketing –

• Catalogue marketing
• Direct mail marketing
• Telemarketing
• Teleshopping /home shopping
• Database marketing
• Kiosk marketing

In these methods, the product is advertised directly to the potential customers by approaching
them.

Direct Marketing
Direct marketing is a type of advertising campaign that seeks to achieve a specific
action in a selected group of consumers (such as an order, store or website visit, or a
request for information) in response a communication action done by the marketer. This
communication can take many different formats, such as postal mail, telemarketing, point
of sale, etc. One of the most interesting methods is direct email marketing.

An essential aspect of direct marketing is that the consumer response is measurable: for
example, if you offer a discount for an online store, you should include some kind of
cookie or pixel to let you know if the user has used of the code.

Benefits of Direct Marketing

Direct marketing allows you to promote your product or service directly to your
target audience and measure results quickly, but the benefits don't stop there. Here are 6
benefits of digital direct marketing:

1. High segmentation and targeting. One of the great advantages of this type of
marketing is that you can reach your specific audience segments with personalized
messages. If you want to succeed, you should invest time to research and identify the
consumers most likely to convert and thus direct your efforts to actions that really work.

2. Optimize your marketing budget. Addressing online direct marketing to a

specific audience allows you to set realistic goals and improve your sales on a tight

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budget. If you properly optimize your direct campaign, you will achieve results with only
a small percentage of the cost of traditional advertising.

3. Increase your sales with current and former clients. Digital direct
marketing lets you communicate with your current customers to keep the relationship alive
while continuing to bring value. It also allows you to get back in touch with old customers
and generate new sales opportunities.

4. Upgrade your loyalty strategies. Direct contact with your customers allows you
to customize your promotions, emails, and offers to create an instant bond. To maximize
results, you can combine your direct marketing methods with your loyalty program.

5. Create new business opportunities. Direct marketing allows you to adapt to

market demands at all times and respond more effectively.

6. Tests and analyses the results. Direct response campaigns give you the
opportunity to directly measure your results. Take the opportunity to squeeze the most of
your tests and make decisions in real time.

Examples of Direct Marketing

The most powerful and innovative direct marketing strategies want to elicit a reaction
in the target audience using content delivered directly to the consumer, both physically
and through the email marketing. A very striking graphic design, a surprising product, or a
video that touches the heartstrings of the listener, can elicit a direct response from the
consumer.

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LESSON- 13
Digital Marketing?

Digital technology and marketing are inseparable, combined and came over as a digital
marketing technology.
Digital marketing is defined as, “digital marketing is the use of digital channels to promote or
market products and services to targeted consumers to grow business.”

It is the best substitute to the traditional marketing platform to promote our brand on daily
basis through digital content. Unlike traditional marketing it is having more advantages and
more affordable. As the technology advancing & enlarging day by day and have moved to
the handy devices it is very easy to reach a larger audience in a shorter time-period.

Advantages And Disadvantages of Digital Marketing

Digital marketing benefits businesses of all sizes by giving access to the mass market at an
affordable price. Unlike tv or print advertising, it allows truly personalized marketing. The
main advantage of digital marketing is that a targeted audience can be reached in a cost-
effective and measurable way.

Advantages and disadvantages of digital marketing are very necessary information for
today’s modern world. Nowadays social media affects us in all the aspects of our life. With
real-time communication and sharing, the world of social media marketing can have a lot of
advantages and opportunities to and for your business that previously could not have been
viable or even possible. As mentioned in previous article, digital marketing is so important
and gives you so many benefits.

Advantages of Digital Marketing

Importance- Helps you generate better revenues. Along with better conversion rates
created by successful digital marketing strategies, digital marketing also ensures
great revenues. It conveys heaps of gainful advantages for you and your business
appreciates better and higher incomes.

· Brand development – presence on the internet can help the improvement of the
organization from any provincial market to across the nation and overall commercial
centers simultaneously, giving practically boundless development openings.

· Accessible 24/7: the world wide web never rests thus does online advancement,
empowering business with little sources to keep up physical 24-hour capacities to
fight in the electronic business utilizing online advancement assets that can run just
about 24 hours every day and 7 days per week. So, this is likewise one of the upsides
of digital marketing.

· Easy to measure: internet everything can be determined, in this way it’s less

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complex for the associations to know immediately if their technique is working or
not, what association or client is eager about their things, from what spots or
countries are they, and so on.

· Reduced cost: it enables the associations to spare money, a component that is

truly considered by the associations since the digital showcasing techniques don’t
require a lot of budgetary responsibility.

· Extremely lower risk.

· Reduction in costs through automation and use of electronic media.

· Faster response to both marketers and the end user.

· Increased ability to measure and collect data.

· Opens the possibility to a market of one through personalization.

· Increased interactivity.

· Increased exposure of products and services.

· Boundless universal accessibility.

· Real-time customer advertising and feedback.

· Real-time social sharing and exposing of promotional or another media content.

· Complimenting existing digital infrastructure like websites etc. Through social

media.

· Targeted exposure in the networks you choose.

· Increased likelihood of free advertising (word of mouth, verbally and digitally).

· Increased traffic to a targeted page by easy navigation and sharing of the link to
said page.

· More accurate tracking and monitoring of your efforts and campaigns.

· Potential for business in previously non-explored communities and target

markets.

· Demographically targeted exposure in new and existing target markets.

· Broadening of overall business potential and increase in exposure.

· Better pr and business relations.

· Better market research and analysis.

Disadvantages of digital marketing

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· Advanced strategy can be copied: one of the risks in internet advertising is that
a specific system can without much of a stretch be replicated by an adversary. Also,
many have done as such with completion disregard for the legal repercussions their
activities may convey.

· Pictures or pictures can be utilized to deceive clients and remove a significant

business from you. Not just that, these can likewise be utilized for executing
antagonistic and erroneous data about your item, items or administrations that will
hurt your online notoriety – and diminish valuable centered clients.

· Computerized marketing includes too much competition: much the same as the
development of online advertisements, internet advancement is knowledgeable about
an incredible procedure of such a large number of contenders.

· Computerized advertisers are not fit for getting into an all the more dominant
spot for the most ideal presentation for their advancement and advancement
undertakings, and with the utilization of an excessive number of contenders, will
make it considerably progressively troublesome and costly to get the enthusiasm of
focused watchers.

· Security issue: web showcasing has its very own weaknesses which are not
perceptible on its experience esteem. Along these lines, for an individual or customer
who questions online for items or administrations.

· There is an alert not to uncover all the private data as it may be utilized against
them by unidentified individuals. So, this is likewise one of the inconveniences of
digital marketing.

· Absence of trust: one of the huge disadvantages might be an inadequacy of

putting stock in of the clients. Due to could be restrictive unique offers that give off
an impression of being tricksters.

· In this way, this is a section that decays the image and reliability of value and
true organizations.

· Requires more initial investment: playing digital promoting contains different

confinements like creating fragile and expert searching for your site and arranging a
viable strategy.

· In this way, paid showcasing like search motor, search motors ads, and social
media marketing is very costly.

· Dependability on technology

· Security, privacy issues

· Maintenance costs due to a constantly evolving environment.

· Higher transparency of pricing and increased price competition.

· Worldwide competition through globalization.

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· Real-time customer complaints and feedback.

· Customer complaints and feedback visible and open for scrutiny from the
public.

· Increased usage of business and personal resources to manage and control your
social media campaign.

· Training and expertise necessary to manage social media to the optimum.

· Your digital footprint becomes too much to handle – turn to negative online
reputation.

· Negative employee influence – internally and externally to your business.

· Not enough roi for the amount of risk and effort.

· Not enough knowledge to take the right steps and follow an optimized process.

Promotional methods – "above and below the line"

The way in which promotion is targeted is traditionally split into two types:
Above the line promotion – paid for communication in the independent media e.g.
advertising on TV or in the newspapers. Though it can be targeted, it could be seen by
anyone outside the target audience. Advertising is the main methods of above-the-line
promotion.
Below the line promotion – promotional activities where the business has direct control e.g.
direct mailing and money off coupons. It is aimed directly at the target audience.

RECENT TRENDS IN MARKETING: -

The new trends in marketing as follows:

1. Globalization
Globalization is an emerging trend in marketing. It refers to free flow of ideas, goods and
services all over the world. Effect of globalization is increasing in marketing. Increasing
globalization is crating both opportunities and challenges for marketers. It is also creating
international competition.

2. Changing technology
Changing technology is also an emerging trend in marketing. Development in information
and communication technology, electronics, new materials and nano-
technology development advances are opening many new opportunities for marketing.

3. Direct marketing
Direct marketing is also increasing. Direct mail, catalogue, telephone, television etc. are used
in direct marketing. Now-a-days Internet and websites are also using and e-commerce is
getting popular. Business-to-business purchasing is growing fast on the Internet.

4. Service marketing
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The role of service products to satisfy needs, wants and demand of customers.

5. Outsourcing
An emerging trend in marketing is outsourcing. It is the process by which marketers purchase
inputs such as capital, human resources, technology, machines, raw materials, technical
know-how, skills, services from other organizations throughout the world. Outside suppliers
are playing greater role in supply of goods and services.

6. Relationship marketing
Relationship marketing is also the emerging trend in marketing. It is concerned with building
long-term mutually satisfying relationship with customers. Marketers focus on managing
their customers as well as their products and series. They also focus on quality,
value, customer satisfaction, customer loyalty and partnership with customers.

7. Quality marketing
Quality marketing is concerned with customer satisfaction. In order to
deliver customer satisfaction, marketers have to offer ‘quality’ in their goods and services.
Now-a-days total quality management (TQM) is getting popular.

8. Growth of global brands

Global companies, with very large size and scale of activities, have now been growing. These
companies are able to establish their brands in global markets. Global brands in electronics,
foods, clothing, autos, intellectual property etc. are becoming popular all over the world. Due
to the practices of licensing and franchising strategies global brands are increasing.

9. Global life style

Advances in global communication, television networks, transportation, technology, cross
cultural exchange, flow of tourists across the globe etc. are promoting global life styles.
Global life style is providing added opportunities for marketers.

High-tech industries: Now-a-days high-tech industries also growing. Mechanization,

automation, computerization, robotics, information technology, biotechnology, nano-
technology, new materials and artificial intelligence are getting popular. Marketers can
achieve gain economies of scale by using high-tech.

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MULTIPLE CHOICE QUESTIONS
Q1: -The advantages of audience selectivity, no ad competition, and personalization apply to
which type of media?
A. Newspapers
B. Television
C. Direct mail
D. Radio
Answer: C

Q2: - ______________ is short-term incentives to encourage purchase or sales of a product

or service.
A. Advertising
B. Sales promotion
C. Online advertising
D. Public relations
Answer: B

Q3. Which of the following consumer-promotion tools is the most effective, but most
expensive, way to introduce a new product?
A. Coupons
B. Price packs
C. Contests
D. Samples
Answer: D

Q4. Which type of promotion uses buying allowances, push money, and free goods?
A. consumer promotion
B. trade promotion
C. sales force promotion
D. place promotion
Answer: B

Q5. Despite its potential strengths, public relations is often described as as:
A. Unethical business.
B. Marketing stepchild.
C. Corrupt practice.
D. Cost drain that is not fruitful.
Answer: B

Q6. Which tool of the promotional mix consists of short-term incentives to encourage the
purchase or sale of a product or service?
A. Advertising
B. Public relations
C. Direct marketing
D. Sales promotion
Answer: D

Q7. The personal presentation by the firm's sales force for the purpose of making sales and
building customer relationships is called:

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A. Personal selling.
B. Public relations.
C. Direct marketing.
D. Sales promotion.
Answer: A

Q8. For many years mass-media advertising was king among promotion variables. today, this
form of advertising appears to be giving way to:
A. Product differentiation.
B. Other elements of the promotion mix.
C. No manipulative variables.
D. A move away from promotion.
Answer: B

Q9. The concept of ______________ suggests that the company must blend the promotion
tools carefully into a coordinated promotion mix.
A. Public relations
B. Integrated market planning
C. Integrated marketing communications
D. Global cultural imperatives
Answer: C

Q10. No matter which form of direct marketing might be used by a promotional manager, all
of the forms have several characteristics in common. Which of the following WOULD NOT
be among those characteristics?
A. Non-public
B. Immediate
C. Producer controlled
D. Interactive
Answer: C

Q11. Which of the following strategies is usually followed by B2B companies with respect
to promotion strategy?
A. Push strategy
B. Pull strategy
C. Blocking strategy
D. Integrated strategy
Answer: A

Q12. ______________ is used heavily when introducing a new product category.

A. Persuasive advertising
B. Inferential advertising
C. Reminder advertising
D. Informative advertising
Answer: D

Q13. Advertising aims at ______________

A. Product selling
B. Marketing
C. Customer relation
D. Mass communication
Answer: D
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Q14. The inner urge that prompts a person to buy a product is known as ______________
A. Buying motive
B. Inspiration
C. Influence
D. Desire
Answer: A

Q15. Evaluation of an ad before it is transmitted to the audience is known as

______________
A. Pre testing
B. Post testing
C. Concurrent testing
D. Advertising research
Answer: A

Q16. Promotions that are aimed at intermediary in the distribution channel are known as
A. Trade promotions
B. Sales promotion
C. Consumer promotion
D. Sale force promotion
Answer: A

Q17. Evaluation of an ad before it is transmitted to the audience is known as

______________
A. Pre testing
B. Post testing
C. Concurrent testing
D. Advertising research
Answer: A

Q18. Advertisement that uses the fame of popular person is known as

A. Celebrity Ad
B. Customer Ad
C. Publicity
D. None of these
Answer: A

Q19. The ______________ is the specific mix of advertising, personal selling, sales
promotion, public relations, and direct marketing tools that the company uses to pursue its
advertising and marketing objectives.
A. value mix
B. integrated dealer mix
C. marketing communications mix
D. marketing control mix
Answer: C

Q20. Although the promotion mix is the company's primary communication activity, the
______________ must be coordinated for greatest communication impact.
A. organizational culture
B. entire marketing mix
C. demand mix
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D. profit variables in a company
Answer: B

Q21. Current trends in communications and promotions indicate that companies are doing
less:
A. marketing and more promotion.
B. broadcasting and more narrowcasting.
C. selling and more advertising.
D. communication and more manipulation.
Answer: B

Q22. Which of the following promotional forms is often described as being too impersonal
and only a one-way communication form?
A. advertising
B. personal selling
C. public relations
D. sales promotion
Answer: A

Q23. ______________ is well suited to highly targeted marketing efforts and to building
one-to-one customer relationships.
A. Advertising
B. Public relations
C. Sales promotion
D. Direct marketing
Answer: D

Q24. The first step in developing an advertising program should be to:

A. Set advertising objectives.
B. Set the advertising budget.
C. Evaluate advertising campaigns.
D. Develop advertising strategy.
Answer: A

Q25. After determining its advertising objectives, a company next sets its ______________
for each product.
A. Advertising strategy
B. Advertising budget
C. Advertising goals
D. Advertising format
Answer: B

Q26. No matter how big the advertising budget, advertising can succeed only if commercials:
A. Are economically feasible.
B. Gain attention and communicate well.
C. Are acceptable on a global level.
D. Are artistically pleasing.
Answer: B

Q27. In terms of execution styles, which type of advertising might show how a product
contributes to a person's workout and health regime?
A. Slice of life
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B. Lifestyle
C. Mood or imagery
D. Personality symbol
Answer: B

Q28. ______________ has the advantage of being high in selectivity, low cost, immediacy,
and interactive capabilities.
A. Direct mail
B. Outdoor
C. Online
D. Radio
Answer: C

Q29. All of the following are considered to be consumer-promotion tools EXCEPT:

A. Samples.
B. Push money.
C. Coupons.
D. Patronage reward.
Answer: B

Q30. ______________ is defined as being cash or gifts to dealers or their sales forces to
"push" the manufacturer's goods.
A. A display allowances
B. A price-off
C. A spiff
D. Push money
Answer: D

Q31. If an advertiser were to use corporate stationery, brochures, signs, and business cards to
advance the public relations interests of the company, they would be using which of the
following forms of PR?
A. Slick-back materials
B. Audio-visual materials
C. Corporate identity materials
D. Public service materials
Answer: C

Q32. If a company wants to build a good "corporate image," it will probably use which of the
following marketing communications mix tools?
A. Advertising
B. Public relations
C. Direct marketing
D. Sales promotion
Answer: B

Q33. Two major factors are changing the face of today's communications. One of these
factors is the fact that:
A. Costs of promotion are rising.
B. Mass markets are fragmented and marketers are shifting away from mass Marketing.
C. Global communications are not growing rapidly enough.
D. Marcom managers have achieved more power and control.
Answer: B
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Q34. ______________ is the concept under which a company carefully integrates and
coordinates its many communications channels to deliver a clear, consistent, and compelling
message about the organization and its products.
A. The promotion mix
B. Integrated international affairs
C. Integrated marketing communications
D. Integrated demand characteristics
Answer: C

Q35. Which of the following promotional tools is often the most effective tool at certain
stages in the buying process, particularly in building up buyers' preferences, convictions, and
actions?
A. Advertising
B. Personal selling
C. Public relations
D. Sales promotion
Answer: B

Q36. Some of the earliest traces of what could be called advertising were found in:
A. Colonial New York.
B. 16th century England.
C. 2nd century China.
D. Ancient Rome.
Answer: D

Q37. If Sony tries to convince consumers that its brand of computer disks is the best quality
for the money, it is using which of the following forms of advertising?
A. Informative advertising
B. Psychological advertising
C. Reminder advertising
D. Persuasive advertising
Answer: D

Q38. Current trends in communications and promotions indicate that companies are doing
less:
A. Marketing and more promotion.
B. Broadcasting and more narrowcasting.
C. Selling and more advertising.
D. Communication and more manipulation.
Answer: B

Q39. Which of the following promotional tools is thought to be the most expensive to use?
A. Advertising
B. Personal selling
C. Public relations
D. Sales promotion
Answer: B

Q40. Which of the following WOULD NOT be one of the primary advertising objectives as
classified by primary purpose?
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A. To inform
B. To persuade
C. To remind
D. To make profits
Answer: D

Q41. Building selective demand is the objective of which type of advertising?

A. Informative advertising
B. Persuasive advertising
C. Reminder advertising
D. Demand-driven advertising
Answer: B

Q42. Advertising is considered as a ______________ form of communication

A. Personal
B. Non personal
C. Inter personal
D. Intra personal
Answer: B

Q43. Advertising research tries to avoid ______________ ads

A. In effective
B. Effective
C. Expensive
D. Unappealing
Answer: A

Q44. Advertising is an important source of revenue to ______________

A. Advertisers
B. Advertising company
C. Media
D. Government
Answer: C

Q45. The word advertising is means turning of ______________ to something

A. Desire
B. Attraction
C. Attention
D. Interest
Answer: C

Q46. Incentives offered to the consumer to buy the product is known as

A. Publicity
B. Advertisement
C. Media
D. Sales promotion
Answer: B

Q47. Another name for a company's marketing communications mix is:

A. the advertising program.
B. the sales force.
C. the image mix.
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D. the promotion mix.
Answer: D

Q48. The personal presentation by the firm's sales force for the purpose of making sales and
building customer relationships is called:
A. personal selling.
B. public relations.
C. direct marketing.
D. sales promotion.
Answer: A

Q49. Which of the following promotional tools is thought to be the most expensive to use?
A. advertising
B. personal selling
C. public relations
D. sales promotion
Answer: B

Q50. ______________ is direct communications with carefully targeted individual

consumers to obtain an immediate response.
A. Personal selling
B. Public relations
C. Direct marketing
D. Sales promotion
Answer: C

Q51. If a company's objective were to reach masses of buyers that were geographically
dispersed at a low cost per exposure, the company would likely choose which of the
following promotion forms?
A. Advertising
B. Personal selling
C. Public relations
D. Sales promotion
Answer: A

Q52. A ______________ is a promotion strategy that calls for spending a lot on advertising
and consumer promotion to build up consumer demand. If the strategy is Successful,
consumer demand will move the product through the channel.
A. Push strategy
B. Pull strategy
C. Blocking strategy
D. Integrated strategy
Answer: B

Q53. The strategy that encourages dealers and distributors to sell a product is known as
A. Push
B. Pull
C. Combination
D. Marketing
Answer: A

Q54. Publicity s simply defined as a ______________ advertisement

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A. Free
B. Paid
C. Local
D. None of these
Answer: A

Q55. Which of the following major promotional tools use press relations, product Publicity,
corporate communications, lobbying, and public service to communicate Information?
A. Advertising
B. Public relations
C. Direct marketing
D. Sales promotion
Answer: B

Descriptive Questions: -

Q1: Explain types, advantages and challenges in digital marketing. Give example.

Q2: Differentiate between:

(a) Push and Pull strategy
(b) Transactional and Relationship Selling

Q3: Write short notes on the following: -

(a) Sales promotion techniques aimed at consumers
(b) Factors influencing media selection
(c) Explain the members of a typical supply chain. Objectives of an effective logistics
system.
(d) Sales promotion
(e) Public Relations
(f) Personal selling
(g) Media Decisions

Q4: Discuss the advantages and limitations of personal selling as a promotional tool. In
which situations would you recommend its use?

Q5: Is advertising a waste of consumer’s money? Justify your answer.

Q6: What is promotion mix? Which promotion mix you suggest for detergent manufacturer
when marketing in urban area vis-à-vis in rural areas? Which strategy push v/s pull is
recommended for urban and rural areas. Justify your answer with example.

Q7: Discuss the major contributions that advertising makes to marketing strategy.

Q8: Discuss any 4 sales promotion activities aimed at consumers.

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Suggested Readings:
1. Kotler,P., Keller, K.L., Marketing Management, Pearson Education.
2. Ramaswamy, V.S and Namakumari, S., Marketing Management: A Strategic Decision-
Making Approach Global Perspective Indian Context, Mc Graw Hill Education.
3. Lamb, C.W, Hair, J.F, Sharma, D. & Mc Daniel C., Marketing- A South Asian Perspective
Edition, Cengage India Pvt. Ltd, Delhi
4. Baines, P., Fill, C., Page, K., Sinha, P.K., Marketing: Asian Edition, Oxford University
Press, New Delhi.
5. Walker O. C., Mullins J. & Boyd Jr. H. W., Marketing Strategy: A Decision Focused
Approach, Mc Graw Hill Education.
6. Saxsena, R., Marketing Management, Mc Graw Hill Education.

Key words: Promotion, Promotional Mix, Push & Pull Strategy, Advertising, Personal
Selling, Sales Promotion, Publicity, Public Relations, Direct Marketing, Digital Marketing.

Note: - (The study material/notes of this subject have been compiled from various
online sources/ websites/books/articles and is meant for reference purpose for students
only and is not meant for any kind of commercial activity.)
With courtesy and thanks of all online sources/ websites/books/articles.

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