Marketing
Management
BC2C02 MARKETING MANAGEMENT
Objectives:
To provide basic knowledge about the
concepts, principles, tools and techniques of
marketing.
To impart necessary knowledge which help
the student to choose a career in the field of
marketing.
To expose the students to the latest trends in
marketing.
Module I
Marketing: Meaning and definition - Scope
and importance - Evolution of marketing
concepts -Modern concept of marketing Marketing mix - Marketing environment Consumer behaviour -Buying motives Consumer buying process Factors
influencing consumer buying decision
-Market segmentation - Basis-target
marketing - Product positioning - Importance
and bases
Module II
Product: Meaning and importance
Classification - Concept of product mix
Packaging - Branding - Brand loyalty and
brand equity Labeling - Product life cycle New product development Pricing - Factors
influencing product price - Pricing policies
and strategies
Module III
Physical distribution: Meaning and
importance - Levels of marketing channels Wholesaling and retailing - Types of retailing Factors influencing choice of distribution
channel
Module IV
Promotion: Meaning and importance Promotion mix Advertising - Personal
selling Sales promotion - Public relation Factors affecting promotion mix decisions
Module V
Rural Marketing : Growing importance Unique features of rural markets - Market mix
planning for rural market - Service marketing
Vs. product marketing - Green marketing Social marketing - Relationship marketing Niche marketing
Module VI
E-Marketing: Traditional marketing Vs. Emarketing - Internet marketing - Eadvertising - New trends in internet marketing
E-branding - E-payment systems and
security features in internet.
Marketing
Marketing:
Meaning and definition
Scope and importance
The Hindu
08/12/2015
Marketing has been defined by different authors
differently.
marketing is the performance of business activities that
direct the flow of goods and services from producer to
consumer or user. AMA 1960.
Marketing is getting the right goods and services to the
right people at the right place at the right time at the right
price with the right communication and promotion. Dr.
Philip Kotler
marketing is a social process by which individuals and
groups obtain what they need and want through creating
and exchanging products and values with others. Dr.
Philip Kotler
This definition of marketing
rests on the following
(i)
Needs, wants and demands;
concepts:
(ii) Products;
(iii) Value and satisfaction;
(iv) Exchange
(v) Markets.
NEEDS, WANTS AND
DEMANDS
A human need is a state of felt deprivation of some basic
satisfaction. People require foods, clothing, shelter,
safety, belonging, esteem etc. these needs exist in the
very nature of human beings.
Human wants are desires for specific satisfiers of these
needs. For example, cloth is a needs but Raymonds
suiting may be want. While peoples needs are few, their
wants are many.
Demands are wants for specific products that are backed
up by an ability and willingness to buy them. Wants
become demands when backed up by purchasing power.
Products, Value and
Satisfaction
Products are defined as anything that can be
offered to some one to satisfy a need or
want.
Consumers choose among the products, a
particular product that give them maximum
value and satisfaction.
Value is the consumers estimate of the
products capacity to satisfy their
requirements.
Exchange and Transactions
Exchange is the act of obtaining a desired
product from someone by offering something
in return.
A transaction involves at least two thing of
value, conditions that are agreed to, a time of
agreement and a place of agreement.
Market
Market is derived form Latin Marcatus means
merchandise, trade or a place.
Place were goods are bought and sold.
Advent of internet & e-commerce made marketing a
virtual world. Set of customers, potential customers,
past customers, sellers, re-sellers, intermediaries who
are involved in the process of exchange or are in the
process of getting involved in the exchange process.
Market = People x Purchasing power x willingness to
buy.
Classification of Markets
Area : Local (perishable), National (industrial and durable), world
Time: very short (perishable, no change in supply),
short(durable, some change in SS), Long (durable, time to
change in response to SS and DD)
Transactions: spot (immediately), future (future contracts)
Volume: retail, wholesale
Goods: Commodity (Product exchange, manufactured goods,
bullion) Capital (money market, stock exchange, foreign
exchange)
Competition: Perfect, imperfect
DD and SS: sellers Market , buyers market
09/12/2015
STATE OF DEMAND AND MARKETING
Marketing task
TASK
Conversional Mktg.
State of demand
Negative Demand
No Demand
Latent Demand
Falling Demand
Irregular Demand
Full Demand
Overfull Demand
Un-wholesome Demand
to +
Stimulational Mktg.
Developmental Mktg.
Remarketing
Synchro-marketing
Maintenance Mktg.
De marketing
Counter-marketing
Nature of marketing
Goal oriented process
Deals with products, distribution, promotion, and
pricing
Creation of utilities
Satisfy and delight the customer
Focuses on delivering value to the customer
Process of exchange
Surrounded by needs
Universal function
Some important definitions
Marketing is a social and managerial process by which individuals
are:
and groups obtain what they need and want through creating,
offering and exchanging products of value with others.
Marketing is the process by which an organization relates creatively,
productively and profitably to the market place.
Marketing is the art of creating and satisfying customers at a profit.
Marketing is getting the right goods and services to the right people
at the right places at the right time at the right price with the right
communication and promotion.
Much of marketing is concerned with the problem of profitably
disposing what is produced.
Marketing is the phenomenon brought about by the pressures of mass
production and increased spending power.
Meeting needs profitably
Definitions.. (Product, customer,
Marketing is the economic process by which goods and services are
value
) between the maker and the user and their values determined in
exchanged
terms of money prices.
Marketing is designed to bring about desired exchanges with target audiences
for the purpose of mutual gain.
Marketing activities are concerned with the demand stimulating and
demand fulfilling efforts of the enterprise.
Marketing is the function that adjusts an organizations offering to the changing
needs of the market place.
Marketing is a total system of interacting business activities designed to plan,
promote, and distribute need satisfying products and services to existing and
potential customers.
Marketing origination with the recognition of a need on the part of a
consumer and termination with the satisfaction of that need by the delivery of a
usable product at the right time, at the right place, and at an acceptable price.
The consumer is found both at the beginning and at the end of the marketing
process.
Marketing is a view point, which looks at the entire business process as a
highly integrated effort to discovery, arouse and satisfy consumer needs.
A SIMPLE MARKETING SYSTEM
Communication
Goods & Services
Market
Industry
Money
Information/Feedback
WHAT IS MARKETING
MANAGEMENT ?
Marketing Management is the analysis, planning,
implementation and control of programs designed to
create, build and maintain beneficial exchanges and
relationships with target markets for the purpose of
achieving Organizational objectives.
Marketing management is demand management or it
involves the task of influencing the level, timing and
composition of demand. At times the actual demand
level may be below, equal to, or above the desired
demand level and the major task of marketing
management is to regulate the level of demand.
EVOLUTION OF MARKETING
CONCEPT
Marketing management has evolved through
following stages :
Stage of economic self sufficiency
Stage of primitive communism
Simple barter
Local markets
Money economy
Early capitalization (merchant and labour )
Mass production
The stage of Affluent society
Stage of value based marketing
Question 1
You are trying to cook an egg for exactly fifteen
minutes, but instead of a timer, you are given
two ropes which burn for exactly 1 hour each.
The ropes, however, are of uneven densities
(ie, half the rope length-wise might take only
two minutes to burn.) How can you cook the
egg for exactly fifteen minutes?
MARKETING CONCEPTS
Concepts are different philosophies in
relation to marketing of goods and
services.
Old concept was simply selling but
modern does no confine to selling only. In
general, there are:
Traditional concepts
Modern Concepts
Traditional concepts
Exchange Concept
Production concept
Product concept
Selling concept
(1)Exchange Concept
It considers the exchange of product between
the buyer and seller is the central idea of
marketing.
Exchange of product or service
Exchange of money
Exchange of information
(2) THE PRODUCTION CONCEPT
Company
Produce more & more
Produce
Sell
Practically sells itself
Consumers
THE PRODUCTION CONCEPT
Consumers will favour those products
that are widely available and low in cost.
Therefore increase production and cut
down costs.
And build profit through volume.
(3) THE PRODUCT CONCEPT
Produce
Quality
Products
Sell
Practically sells itself,if
it gives most quality
for money
Consumers
Buyers admire well-made products and can
appraise product quality and performance.
THE PRODUCT CONCEPT
Consumers will favour those products
that offer the most quality, performance,
or innovative features.
Therefore, improve quality, performance
and features.
This would lead to increased sales and
profits.
(4) SELLING CONCEPT
Consumers have normal tendency to resist.
Produce
Sell it
Aggressive selling &
promotion efforts
Consumers
Making sales becomes primary function and
consumer satisfaction secondary .
THE SELLING CONCEPT
Consumers , if left alone , will not buy
enough of companys products.
Therefore, promote sales aggressively.
And, build profit through quick
turnover.
Modern Concepts
Marketing concept
Societal concept
Total access concept
Holistic marketing concept
(1) MARKETING CONCEPT
LOVE THE CUSTOMER , NOT THE
PRODUCT
Learn what they
want(MR)
Consumers
Produce it
Market it
Sell what they want(Satisfy
needs of customers)
THE MARKETING CONCEPT
The key to achieving organizational goals
consist in determining the needs and
wants of target markets and delivering the
desired satisfactions more effectively and
efficiently than competitors.
And build profit through customer
satisfaction and loyalty.
Customer is the key
Dual objective
(2) THE SOCIETAL MARKETING
CONCEPT
It is Marketing Concept (+) Societys well
being.
Balancing of following three considerations
while setting marketing policies :
-Customers want satisfaction
-Societys well being
-Companys profits
THE SOCIETAL MARKETING
CONCEPT
The societal marketing concept holds that the
organizations task is to determine the needs,
wants, and interests of target markets and to
deliver the desired satisfactions more effectively
and efficiently than competitors in a way that
preserves or enhances the consumers and
the societys well being.
It addresses conflicts between consumers and
firms short run wants and long term welfare.
(3)Total Access concept
Evolving concept.
Advancement of Information technology
Connect people and increase interaction
Consumers can compare offerings, contribute
towards product offerings
E-commerce, m-commerce, interactive
advertisement,
(4) STRATEGIC (HOLISTIC )CONCEPT
Shifted the focus of Marketing from Product or
customer to the CUSTOMER IN THE CONTEXT
OF THE BROADER EXTERNAL
ENVIRONMENT.
To succeed, marketers must know the customer
in a context including the competition, Govt.
Policy& regulation and the broader economic,
social and political macro forces that shape the
evolution of market.
Everything Matters
STRATEGIC CONCEPT OF
MARKETING
Shifted the Marketing Objectives from
PROFIT TO STAKEHOLDER BENEFITS.
Stakeholders are individuals or groups who
have an interest in the activity of a company .
They include:
The employees and management, Customers, Society,
Shareholders, Financiers/ Bankers, Government etc.
Factors responsible for growth of
Modern marketing concept
Population growth
Increased disposable income
Change in attitude towards life
Technological development
Growth in marketing channels
Demand for luxury
Desire for quality products
Objectives of Marketing
Management
Increasing consumption
Creating goodwill
Cost reduction
Profit through customer satisfaction
Ensure growth
Providing wide choice of goods
Improve quality of life
Retaining customers
Advantages of marketing
To society
To companies
Provides employment
Rises living standard
Creates utilities
Reduce costs
Solves social
problems
Income generation
Planning and decision
making
Distribution
Exchange information
Earn goodwill
Global presence
Advantages of marketing
To customers
Quality products
Variety of products
Knowledge of
products
Helps in selection
Consumer satisfaction
To economy
Saves from depression
National income
Economic growth
Marketing Process
Concentration -
Dispersion - The products meant for ultimate users
Concentration aims at the collection
of products at a central place.
are subdivided into small lots required to meet the final
consumption.
Equalisation - It implies the reconciliation between
demand and supply through storage and transportation,
in needed quantity and quality at the required time and
place.
Each process is not independent, but mutually
interdependent and equally important.
7 8 9 13 24 26 31 40 43 45 47 53 54 61 62 64
Areas of applicability
Goods
Services
Experience
Events
Persons
Places
Property
Organizations
MARKETING SYSTEM
Marketing is concerned with the flow of
goods and services from the points of
production to the points of consumption.
There is a systematic arrangement of
these functions of marketing to move the
goods and services to the needy persons.
This system is essential to the creation of
time, place and possession utilities.
MARKETING SYSTEM
A dynamic marketing system must be willing
to undertake the following specific activities :
1. Define market area.
2. Research consumer wants and needs.
3. Develop and redevelop product / service.
4. Select, train, motivate and control human
resources.
5. Develop sales approach and advertising
support.
GOALS OF THE MARKETING
SYSTEM
(1)
(2)
(3)
(4)
MAXIMIZE CONSUMPTION
MAXIMIZE CONSUMER SATISFACTION
MAXIMIZE CHOICE
MAXIMIZE LIFE QUALITY
VALUE MAP
CONSUMER DELIGHT
Value
Disadvantaged Area
Perceived
Price
C
B D
E
A
Value Advantaged Area
Customer Perceived Benefits
CUSTOMER AS THE CONTROLLING
FUNCTION
Production
Finance
CUSTOMER
Marketing
Personnel
THREE LEVELS OF MARKETING
Responsive Marketing
Anticipative Marketing
Need Shaping Marketing
RESPONSIVE MARKETING
It is the form of marketing when some
company defines an existing clear need
and prepare an affordable solution.
(Recognizing that women wanted to spend
less time for cooking and cleaning, led to
the invention of modern washing
machine, microwave oven etc.)
ANTICIPATIVE MARKETING
It is a form of marketing when a company
recognize an emergent or latent need, and
come out with an affordable solution.
Evian, Perrier anticipated growing market for
bottled drinking water as the quality of water
deteriorated in many places.
Anticipative marketing is more risky than
responsive marketing; companies may come
into market too early or too late, or may even
be totally wrong about thinking that such a
market would develop.
NEED SHAPED MARKETING
The broadest level of marketing occurs when
a company introduces product that nobody
asked for and often could not even conceive
of. (e.g. Sony Walkman, Sony Compact Disc )
Late Akio Morita, founder and chairman of
Sony, who introduced these and many other
new products, summarized his marketing
philosophy in these words: I dont serve
markets. I create them.
MARKET- DRIVEN AND MARKETDRIVING COMPANY
Market-driven companies focus on researching
current customers to identify their problems, gather
new ideas, develop products that result in
incremental improvements, not radical innovations.
Market-driving companies generate significantly new
products, services, business formats and raise our
sights and our civilization. These companies are
much more than customer-led. They lead customer
where they want to go, but dont know yet.
Account-based Marketing
Affiliate Marketing
Affinity Marketing
Agricultural Marketing
Alliance Marketing
Ambush Marketing
Analytical Marketing
Article Marketing
B2B Marketing
B2C Marketing
B2P Marketing
Behavioral Marketing
Blackhat Marketing
Brand Marketing
Brick and Mortar Marketing
Buzz Marketing
Call Center Marketing
Campus Marketing
Catalog Marketing
Cause Marketing
Celebrity Marketing
Channel Marketing
Close Range Marketing
Closed Loop Marketing
Cloud Marketing
Communal Marketing
Community Marketing
Computational Marketing
Consumer-Generated Marketing
Content Marketing
Contextual Marketing
Conversion Rate Marketing
Cooperative Marketing
TYPES OF MARKETING
TYPES OF MARKETING
Relationship Marketing: Focus on building relationships with you
customers instead of always exclusively trying to sell them
something (called transactional marketing). Customers who love
your brand more will also spend more money with your brand.
Digital Marketing: Use various digital devices like smartphones,
computers, tablets, or digital billboards to inform customers and
business partners about your products.
Scarcity Marketing: Where appropriate, consider making your
products accessible to only a few customers.
Word-of-Mouth Marketing: Create authentic word of mouth for
your company and the products you represent. Word-of-mouth
Marketing is the passing of information from person to person by
oral communication.
Diversity Marketing: Take into account the different
diversities in a culture in terms of beliefs, expectations, tastes, and
needs. Then, create a customised marketing plan to target those
consumers effectively.
Undercover Marketing: Hide some of your products and
services best features.
Mass Marketing
De marketing
Meta marketing beyond, widen to non business
Mega marketing entering into unreceptive/blocked
Reciprocal
Green,
Event
Word of mouth
Guerrilla Marketing
Guerrilla Marketing is an advertising strategy
that focuses on low-cost unconventional
marketing tactics that yield maximum results.
The original term was coined by Jay Conrad
Levinson in his 1984 book Guerrilla Advertising.
The term guerrilla marketing was inspired by
guerrilla warfare which is a form of irregular
warfare and relates to the small tactic strategies
used by armed civilians.
Market Segmentation
Introduced by Wendell R Smith 1956
Too many customers, widely scattered, different needs
and wants
Market segmentation is a marketing strategy which
involves dividing a broad target market into subsets
of consumers, businesses, or countries that have, or are
perceived to have, common needs, interests, and
priorities, and then designing and implementing strategies
to target them.
Market segmentation strategies are generally used to
identify and further define the target customers, and
provide supporting data for marketing plan elements such
as positioning to
achieve
certain
marketing
plan
objectives.
Market Segmentation
Philip Kotler Market segmentation is the
subdividing of market into homogeneous
subsections of customers, where any subsection
may conceivably be selected as target market to
be reached with a distinct marketing mix.
Assumptions of market segmentation
Markets are heterogeneous
Different market segments respond differently
MS is consistent with marketing concept.
Market Segmentation
Process
Establish overall strategy or objective
Decide the basis of segmenting the
market
Select segmentation variables
Profile the segments
Evaluate segment attractiveness
Select segments
Total Number of tigers = 625 + 125 = 750.
So Number of legs for all the tigers is;
750 x 4 = 3000.(a)
Then, do not forget the legs of the soldiers. There are 5 soldiers and
each soldier has two legs so that gives you additional 10 legs.
Number of Legs of Soldiers = 5 x 2 = 10. (b)
As you are standing in the palace we will have to count them too.
So Your Legs = 2 (c)
So to get total number of legs we add (a), (b) and (c).
Total Number of Legs = 3000 + 10 + 2
Total Number of Legs = 3012
Patterns of Market
Segmentation
Undifferentiated marketing
Differentiated marketing
Concentrated marketing
Customised or personalised marketing
each customer
Niche Market
A niche market is the subset of the market
on which a specific product is focused. The
market niche defines as the product features
aimed at satisfying specific market needs, as
well as the price range, production quality
and the demographics that is intended to
impact. It is also a small market segment.
For example, sports channels like STAR
Sports, ESPN, STAR Cricket, and Fox
Sports target a niche of sports enthusiasts.
Basis of Market
Segmentation
Demographic segmentation
Age
Gender
Family life cycle childhood, bachelorhood,
honeymooners, parenthood, post parent hood,
dissolution
Religion
Income
Occupation
Family size
Basis of Market
Geographic segmentation
Segmentation
Area
Climate
Population density
Behavioural segmentation
Attitude - thinking or feeling
Occasion
Product type product characteristics
Benefit segmentation utility provided by pdt
Volume qty of purchase
Loyalty degree of loyalty
Basis of Market
Segmentation
Psychographic segmentation
Life style way one lives
Personality personal traits, attitudes, believes
Social class- lower, middle, upper; income,
occupation, education
Hybrid segmentation
VALS Values and Life Style
Psycho-Demographic
Geo- demographic
Limitations of market
segmentation
Cost of production is high because a variety
of pdts to be produced for each segment.
Promote separate brand, heavy advt. and
other promotional expenses
More working capital and storage expenses
required
Administration expenses are also higher
Difficult to get skilled and experienced
marketing researchers.
Market Mapping
A study of various market conditions that is
plotted on a map to identify trends and
corresponding variables between consumers an
d products.
Market mapping can help companies locate
problem areas and figure out
the source of problems by examining related
variables.
Market mapping helps in tackling the complexity
of market segmentation
Target marketing (Targeting)
Difficulty in Mass marketing
Target market is a group of existing or potential
customers within a particular product market towards
which an organization directs its marketing efforts.
Approaches:
Total market
Concentration
Multi segment
Steps in Target marketing
Market segmentation
Product positioning
The act of creating an image about a product or brand in
the customers mind is called as positioning.
Find some unique features or attributes in the product in
relation to other products
Kotler Positioning is the act of designing the companys
offer and image so that it occupies a distinct and valued
place in the target customers minds
Elements :
product,
company,
competitors,
customer
Re-positioning : Change the positioning
Steps in product positioning
Identifying potential competitive advantages
Identifying the competitors positions
Using the right competitive advantages
Monitoring the positioning strategy
Factors considered while
selecting the target market
Overall objectives of the company
Resources
Profitability
Segment growth
Competition
Techniques of product
positioning
Positioning by corporate identity
Brand endorsement
Product attributes and benefits
use, occasion and time
price and quality
product category
product user
competitor
The answer is 28.
Consumer Behaviour
Consumer and customer
Walters and Paul CB is the process whereby individuals
decide what, when, where, how and from whom to
purchase goods and service.
Characteristics of consumer behaviour:
CB is the process by which individuals decide what, when, from
whom, how much to buy.
CB comprises both mental and physical activates
CB is an integral part of human behaviour
CB is very complex and dynamic and therefore constantly
changing
CB starts before buying and goes on even after buying
CB involves both Psychological and social process.
Type of CB:
Complex Buying Behaviour aware of difference
among brands, rational /logical thinking
Dissonance reducing BB - see little difference.
Cognitive Dissonance (-ve feeling, alternate brand )
Variety seeking BB - variety satisfaction, have
switching behaviour,
Habitual BB knowledge not important, regular basis,
brand switching is very common here.
Buying motives
Buying motives are those influences or
considerations which provide the impulse to
buy, induce action or determine choice in the
purchase of goods and service
MOTIVES AND INSTINCTS
Motive is a reason for a particular behaviour
but instincts are pre-programmed responses
inborn in the individual.
Types of buying motives
Product or patronage motive :
Emotional or Rational motives
Product (primary, selective)
Patronage (where or from whom) price, quality,
location, variety, services, personality of salesman
Emotional (love, social acceptance, recreation,
curiosity motive, comfort)
Rational (Monetary, efficiency, dependability)
Inherent and learned
Psychological (internal) and social(society)
motives
Consumer
buying/Consumer decision
making
Recognitionprocess
of an unsatisfied need
Identification of alternatives
Evaluation of alternatives
Purchase decision
Post purchase behaviour
Factors
influencing/Determines
of
Psychological factors
consumer
Consumer needs behaviour
& motivation
Perception individuals view. Interpret Stimuli
Learningacquiring knowledge. Listening, reading, observation,
experience
Beliefs & attitudes believes: descriptive thought. Attitudes: a
persons feeling towards an object
Cultural Factors
Culture vales and believes in which one is born and brought up
Subculture - culture within a culture
Social class- group of people having similar values, interests within
society
Maslows Need hierarchy 1954
Social factors
Reference group group of people with whom
the individual associates
Role and status set of activities a person
expected to perform
Family association established by nature:
dominant
Personal Factors
Age
Stages of family life cycle
Economic factors
Personal income
Family income
Income expectations
Savings
Liquidity position
Consumer credit
Environmental factors
Political situation
Legal forces
Technological advancement
Consumer Ambivalence
Cele Otnes Al in 1997
Ambivalence means The coexistence of
opposing attitudes or feelings, such
as love and hate, toward a person,
object, or idea.
Multiple emotion state, bcz of internal or
external, pre-purchase/ post-purchase
attitudes and behaviour.
Consumer satisfaction
Consumer satisfaction means a function of
the products perceived performance and the
consumers expectation.
Tools for Tracking /measuring consumer
satisfaction:
Complaint and suggestion system
Consumer satisfaction survey
Ghost shopping hiring persons pose as potential customers
Lost customer analysis
Customer contact or front line employees.
Customer delight
The excess of actual performance over the
expectations is called consumer delight.
Philip Kotler, satisfy customers using 4Ps,
but delight customers using 4Cs- customer
value, cost, communication, convenience.
Ladder of Customer Loyalty
Marketing Mix
The term 'marketing mix' was first used in 1953
when Neil Borden, in his American Marketing
Association presidential address, took the
recipe idea one step further and coined the term
"marketing-mix".
A prominent marketer, E. Jerome McCarthy,
proposed a 4 Ps classification in 1960, which
has seen wide use.
Robert F. Lauterborn proposed a four Cs
classification in 1993
The marketing mix refers to the set of actions, or tactics, that a
company uses to promote its brand or product in the market.
A mixture of several ideas and plans followed by a marketing
representative to promote a particular product or brand is called
marketing mix.
Marketing Mix is a and achieving organizational goals. McCarthy
classified all these marketing tools under four broad categories:
Product
Price
Place
Promotion
These four elements are the basic components of a marketing plan
and are collectively called 4 Ps of marketing.
4Ps & 4Cs
The 4 Ps
The 4 Cs
Organisation Facing
Product =
Customer Facing
Customer/ Consumer
Price =
Cost
Place =
Convenience
Promotion =
Communication
4 P's
All marketing decision-making can be classified into four
strategy elements, sometimes referred to as the
marketing mix or the four Ps.
Product: What are the benefits of this product and
service to its customers?
Price: Should a price be charged to cover costs only?
Should the price allow for a profit?
Place: What can be done to make this product and
service more accessible and available?
Promotion: What can be done to increase the visibility
of this product and service? What can be done to
increase its usage or exposure?
Value
perceived in
the mind of the
consumer
Marketing
communications
Cover location,
distribution,
channels and
logistics
Collection of features
and benefits that
provide customer
satisfaction
Product
Product is the actually offering by the company to its targeted
customers which also includes value added stuff. Product may be
tangible (goods) or intangible (services).
For many a product is simply the tangible, physical entity that they may
be buying or selling.
While formulating the marketing strategy, product decisions include:
What to offer?
Brand name
Packaging
Quality
Appearance
Functionality
Accessories
Installation
After sale services
Warranty
Price
Price includes the pricing strategy of the company for its products.
How much customer should pay for a product? Pricing strategy is not only
related to the profit margins but also helps in finding target customers.
Pricing decision also influence the choice of marketing channels.
Price decisions include:
Pricing Strategy (Penetration, Skim, etc)
List Price
Payment period
Discounts
Financing
Credit terms
Using price as a weapon for rivals is as old as mankind, but its risky too.
Consumers are often sensitive for price, discounts and additional offers.
Another aspect of pricing is that expensive products are considered of
good quality.
Place (Placement)
It not only includes the place where the product is placed, all those
activities performed by the company to ensure the availability of the
product tot he targeted customers. Availability of the product at the right
place, at the right time and in the right quantity is crucial in placement
decisions.
Placement decisions include:
Placement
Distribution channels
Logistics
Inventory
Order processing
Market coverage
selection of channel members
There are many types of intermediaries such as wholesalers, agents,
retailers, the Internet, overseas distributors, direct marketing (from
manufacturer to user without an intermediary), and many others.
Promotion
Promotion includes all communication and selling activities to pursuade
future prospects to buy the product. Promotion decisions include:
Advertising
Media Types
Message
Budgets
Sales promotion
Personal selling
Public relations/publicity
Direct marketing
Sponsorship
The elements of the promotions mix are integrated to form a coherent
campaign. As with all forms of communication.
As these costs are huge as compared to product price, So its good to
perform a break-even analysis before allocating the budget. It helps in
determining whether the new customers are worth of promotion cost or not.
7 P's
Marketing mix (4 Ps) was more useful in early
90s when production concept was in and
physical products were in larger proportion.
Today, with latest marketing concepts,
marketing environment has become more
integrated.
So, in order to extend the usefulness of
marketing mix, some authors introduced a fifth
Ps and then seven Ps (People, Packaging,
Process).
But the foundation of Marketing Mix still stands
on the basic 4Ps.
7Ps
Factors influencing
Marketing mix
Marketing Factors
Marketing planning
Brand policy
Package policy
Advt. policy
Distribution policy
Pricing policy
Market research
Product life cycle
Market segmentation
Market Factors
Consumer behavior
Competition
Government control
Patterns of distribution
Module II
Product: Meaning and importance
Classification - Concept of product mix
Packaging - Branding - Brand loyalty and
brand equity Labeling - Product life cycle New product development Pricing - Factors
influencing product price - Pricing policies
and strategies
Product
What Is a Product?
Product, the first of the four Ps of marketing mix
A Product Defined
A good, a service, or an idea received in an
exchange
It can be tangible (a good) or intangible (a service
or an idea) or a combination of both.
It can include functional, social, and psychological
utilities or benefits.
Everything the purchaser get in exchange of
money
11125
Levels of products: Formal, core and
augmented
products
The formal product
The core product
What the customer is
actually buying
Defined in terms of benefits
for the customer
Is often described through
abstract, intangible terms
i.e. a quiet, hassle-free,
successful meeting
What customers think they are
buying
Tangible and intangible
attributes that are easy to
articulate
i.e. a meeting room with seating
capacity
The augmented product
The totality of all benefits received or
experienced by customers
Includes tangible and intangible elements,
attributes that are easily to articulate as well
as abstract ones
Can comprise everything from a comfortable
bed cover, guest amenities, to the sound of
the sea
11127
Classifying Products
Consumer Products
Products purchased to satisfy
personal and family needs
Business Products
Products bought to use in an
organizations operations,
to resell, or to make
other products
(raw materials and
components)
11128
Characteristics of consumer
goods
Final consumption
Finished products
Utility
Associated services
Brand name
Communication packages
Numerous buyers
Small quantity purchase
Consumer Products
Convenience Products
Relatively inexpensive, frequently purchased
items for which buyers exert minimal purchasing
effort. Eg. Magazines, salt, rice, sweets
Characteristics
Marketed through many retail outlets
Relatively low per-unit gross margins
Little promotional effort at the retail level
Packaging is important marketing mix element
11130
Consumer Products (contd)
Shopping Products
Items for which consumer buys after making
comparison between price, quality, suitability.
Eg: clothing furniture, shoes,
Characteristics
Expected to last a long time; less frequently purchased
Do not have brand loyalty appeal
Require fewer retail outlets
Inventory turnover is lower
Gross margins are higher
Supported (servicing and promoting the product) by both the
producer and channel members
11131
Consumer Products (contd)
Specialty Products
Items with unique characteristics that buyers are
willing to make special efforts to buy them.
Specialist retailers. Buyer is reluctant to accept
substitute.
Characteristics
Are preselected by the consumer
Have no close substitutes or alternatives
Are available in a limited number of retail outlets
Purchased infrequently and represent a significant
and expensive investment
Have high gross margins
and low inventory
turnover
11132
Consumer Products (contd)
Unsought Products
Products purchased to solve a sudden problem,
products of which the customers are unaware,
and products that people do not necessarily think
about buying. Eg. Medicine, insurance
Characteristics
Speed and problem resolution of the utmost importance
Price and other features not considered
No consideration of substitutes
or alternatives
Purchased infrequently
11133
Consumer Products (contd)
Staple goods : regular, toothpaste, soaps
Impulse goods : without plan or effort,
newspaper, magazines, chocolates
Emergency goods: fulfill urgent need.
Brown goods entertainment
White goods AC, washing machine
Red goods FMCG
Orange Goods Clothing
Yellow Goods - Expensive, infrequent
11134
Industrial Products:
Industrial products are used as input or raw
material to produce consumer goods for
example, tools, machinery, etc.
Number of Buyers: limited
Channel of Distribution: Shorter channel.
Geographical Concentration: not scattered
Derived Demand: demanded to produce
Technical Consideration: more technical
consideration of these products.
Reciprocal Buying:
Leasing:
Business Products
Installations
Facilities and non portable major equipment
Office buildings, factories and warehouses,
production lines, very large machines
Accessory Equipment
Equipment used in production
or office activities
File cabinets, small motors,
calculators, and tools
11137
Business Products (contd)
Raw Materials
Basic natural materials that become part of a
physical product such as ores, water, grains, and
eggs
Component Parts
Items that become part of the physical product
Finished items ready for assembly
Items needing little processing
before assembly
Computer chips, engine blocks,
and paints
11138
Business Products (contd)
Process Materials
Materials that are not readily identifiable when
used directly in the production of other products
such as screws, knobs, and handles
MRO Supplies
Maintenance, repair, and operating items that
facilitate production and do not become part of the
finished product such as cleaners, rubber bands,
and staples
11139
Business Products (contd)
Business Services
The intangible products that many organizations
use in their operations such as cleaning, legal,
consulting, and repair service.
11140
Product policy
Product policy is concerned with defining the
type, volume ad timing of products of the
company offered for sale.
It covers the following aspects or activities:
Product planning and development
Product line
Product mix
Product standardization
Product branding
Product positioning
Product packaging
Product planning
According to Stanton Product planning
embraces all activities which enable producer
and middleman to determine what should
constitute a companys line of products
Starting point of entire marketing programme
What to do in different stages of product life cycle
Eliminates unsatisfactory product line
Modify product attributes
Produce quality products
Ensures profitability of the product
Helps in meeting competition
Product development
Product development means the introduction
of new products in the existing market.
It includes technical activities of product
research, engineering and design.
Product mix & Product line
Product mix - The complete range of
products present within a company is known
as the product mix. It is a combination of total
product lines within a company.
Product line The product line is a subset of
the product mix. The product line generally
refers to a type of product within an
organization.
Product Mix decisions
Product line length- Total Number of items in
the product line.
Product line depth- A product line contains a
number of versions of items, this number being
called product line depth.
Product mix width- An organization creates a
number of product lines. The total number of their
product line is called product mix width.
Consistency refers to how closely related the
product lines are in terms of end use, production
requirements, distribution channels or any other
way.
Factors determining product line
decisions
Consumers preferences
Strategies and tactics of competitors
Firms cost structure
Change in demand
Buying habits and patterns
Company objectives
Product specialization
Line modernization
Product line modification
Product line contraction : reducing the
product items in the line, simplification.
Making product line thinned out, unprofitable.
Product line expansion: adding new
product to the product line, diversification.
Changing models or styles of the existing
products, product modification.
Quality variation
Trading up higher quality, higher price
Trading down lower quality, lower price
Product cannibalisation
cannibalization refers to a reduction
in sales volume, sales revenue, or market
share of one product as a result of the
introduction of a new product by the same
producer.
Product simplification
When a manufacture produces products of a
similar nature.
Means limiting the number of products the
dealer deals with.
Stop unprofitable products.
Product Diversification
Diversification means adding a new product
or products to the existing product mix
Expanding length and breadth of product mix.
The added items can b related or unrelated
to existing items.
Product differentiation
Developing and promoting awareness among
the customers that the company is producing
products differ from the products of
competitors.
Kotler differentiation is the act of designing a
set of meaningful differences which
distinguish the company's offer from
competitors offer.
Factors influencing Product
mix
Change in Demand
Change in population
Change in consumers income
Change in consumer behavior
Marketing influences
Product efficiencies
Financial influences
Use of waste
Competitors strategy
Profitability
Product standardization
Product standardization is the
homogenization of items available to
consumers that reduces the variety of
products that fall under similar descriptors.
This process is intended to help shoppers make
up their minds more easily and create informed
decisions.
Product standardization also is meant to make
consumers safer by creating technical standards
and guidelines for what manufacturers must
create in order to qualify for sale
Answers
Wallet
Tissue napkin/ Napkin tissue
Notebook
Tablespoon
Bathroom
Charger
Wash basin
Mobile phone
Handsoap
Newspaper
Product Branding
Views on Brands
A name, logo, or symbol that
evokes in customers a
perception of added value for
which they will pay a premium
price.
AJohn
product
with
a Winters
personality.
Torella,
J.C.
Group
Chris Staples
Marketing communications in any form has an impact
on customers perceptions.
What is a brand ?
Branding is a combined effort of the company which is projected to
the consumer.
Marketing
Company
Design
Brand
Consumer
What is a brand ?
(1) Products and services have become so alike that
they fail to distinguish themselves by their quality,
efficacy, reliability, assurance and care. Brands add
emotion and trust to these products and services,
thus providing clues that simplify consumers choice.
(2) These added emotions and trust help create a
relationship between brands and consumers, which
ensures consumers loyalty to the brands.
(3) The combination of emotions, relationships,
lifestyles and values allows brand owners to charge a
price premium for their products and services, which
otherwise are barely distinguishable from generics.
Essentials of a brand
Word used must be Simple and easy to
pronounce
Simple and memorable
Attractive to eyes and pleasing to ears
It must provide necessary suggestion bout
product benefits
Suitable for product
Illustrative and distinctive from other brands
Brand Loyalty
The degree of consumer attachment
to a brand.
Recognition
Recognition
Awareness of name,
benefit and package
Preference
Preference
Is useful, consumer
will buy if available.
Insistence
Insistence
Will search for; must
have
Loyalty and satisfaction
Loyalty is not repeat purchase
Satisfied customer comes again and again
and buys from us until they get a better offer
Loyal customers have emotional engagement
with the organization and its product.
The Role of Brands
Identify the maker
Simplify product handling
Organize accounting
Signify quality
Create barriers to entry
Serve as a competitive advantage
Secure price premium
What is Branding?
Branding
is endowing products
and services with the power of
the brand
What is Brand Equity?
Brand equity is the added value
endowed on products and services,
which may be reflected in the way
consumers, think, feel and act with
respect to the brand.
Types of brands
Manufacturer brands : initiated by the
manufacturer
Private distributer brand: initiated and owned
by retailer or wholesaler
Generic brand: brand indicate a product
category. Not a company name or others
Family brand: single brand name for closely
related items
Individual brand : each product have special
Co-brand : two individual brand on a single
product
Advantages of Strong Brand
Improved perceptions of product
What is a Brand Promise?
A
brand promise is the marketers
vision of what the brand must be
and do for consumers
Integrity of Brand
Product Packaging
Product A
Company
Websites
logo
Product B
Advertisements
A brand is a promise. A promise to achieve certain results, deliver a
certain experience, or act in a certain way. A promise that is conveyed by
everything people see, hear, touch, taste or smell about your business.
Drivers of Brand Equity
Brand elements
Marketing Activities
Meaning transference
Brand Recognition - awareness, loyalty, quality, emotion
Brand Preference / Loyalty - the degree to which
customers are committed to further purchases eg. I will
always buy Reebok (Brand Insistence)
________________________________________________
Brand Awareness -your product is the first that comes to
mind in a certain product category
eg. Snapple ice tea, jeans-Levis, walkman - SONY
Brand Association - the link to favourable images,
celebrities, geographic regions
ie. Red Strip - Jamaica, VW - Germany, Screech - NFLD
Baileys - Eire
Brand Association - the link to favourable
images, celebrities, geographic regions
ie. Red Strip - Jamaica, VW - Germany,
Screech - NFLD
Baileys - Eire
Paul Hogan - Subaru
James Earl Jones (voice of CNN)
Chihuahua - Taco Bell
Jordan - Nike
Julia Louis Dryfuss - Nice and Easy
Candice Bergen - Sprint Canada
Not in the text
THE PRODUCT LIFE CYCLE
A product life cycle consists of the aggregate demand for
all brands comprising a generic product category over
time.
A PLC consists of four stages:
Introductionmost risky and expensive.
Growthboth sales and profits rise, often rapidly.
Maturitysales increase at a decreasing rate and
profits decline.
Saturation
Declinedemand drops, often because of another
product development.
Termination
11178
LENGTH OF PRODUCT LIFE CYCLE
Ranges from a few weeks to decades.
Length of individual stages varies from one product
category to the next.
Stages of any given life cycle usually last for different
periods.
11179
The Four Stages of the Product Life Cycle
11180
FIGURE 10.2
Product Life Cycles and Marketing
Strategies
Product Life Cycle
The progression of a product
through four stages: introduction,
growth, maturity, and decline.
MP3s
DVDs
CDs
Cassettes
LP records
11181
The Product Life Cycle
Introduction
The initial stage of a products life cycleits first
appearance in the marketplacewhen sales start
at zero and profits are negative
Why new products fail
Lack of resources, knowledge, and marketing skills to
successfully launch the product
High pricing to recoup research and development costs
11182
The Product Life Cycle
(contd)
Growth
The stage of a products life cycle when sales rise
rapidly and profits reach a peak and then start to
decline
More competitors enter the market
Product pricing is aggressive
Brand loyalty becomes important
Gaps in market coverage are filled
Promotion expenditures moderate
Production efficiencies lower costs
11183
The Product Life Cycle
Maturity
(contd)
The stage of a products life cycle when the sales
curve peaks and starts to decline and profits continue
to fall
Intense competition
Emphasis on improvements and differences in competitors
products
Weaker competitors lose interest and exit the market
Advertising and dealer-oriented promotions predominate
Distribution sometimes expands to the global market
11184
11185
Product Life Cycle (contd)
Decline
The stage of a products life cycle when sales fall
rapidly
Pruning items from the product line
Cutting promotion expenditures
Eliminating marginal distributors
Planning to phase out the product
Strategic choices
Harvesting the products remaining value
Divesting the product when losses are
sustained and a return to profitability
11186
is unlikely
THE NEW-PRODUCT DEVELOPMENT PROCESS
A new product is best developed through a series of six
stages:
The first two stages provide a focus for generating
new-product ideas and a basis for evaluating them.
The first three stages deal with ideas and are the least
expensive.
In their haste, some companies skip stages the
most common omission being market tests.
11187
Identify
Identify
the
thestrategic
strategic
role
roleof
ofnew
new
products,
products,
then...
then...
1.
2.
1.
2.
Idea
Screening
Idea
Screening
generation
generation of
ofideas
ideas
3.
4.
5.
3.
4.
5.
Business
Market
Business Prototype
Prototype
Market
analysis
analysis development
development Tests
Tests
11188
6.
6.
CommerCommercialization
cialization
ADOPTER CATEGORIES
Researchers have identified five categories of individual
adopters for new products:
Innovators 3% of the market.
Early adopters 13% of the market.
Early majority 34% of the market.
Late majority 34% of the market.
Laggards 16% of the market.
In addition, some individuals nonadopters never
accept the innovation.
11189
Product Adoption Process
Categories of Product Adopters
(contd)
Innovators
Early adopters
Those adopting new products just
before the average person
Late majority
Careful choosers of new products
Early majority
First adopters of new products
Skeptics who adopt new products
when they feel it is necessary
Laggards
The last adopters, who distrust new products
11190
Product Line and Product
Mix
Product Item
A specific version of a product
Whole
Milk
Product Line
A group of closely related product items
viewed as a unit because of marketing,
technical, or end-use considerations
Whole
Milk
Skim
Milk
2%
Milk
11191
Product Line and Product Mix
Product Mix
(contd)
The total group of products that an organization
makes available to customers
Width of product mix
The number of product lines a company offers
Depth of product mix
The average number of different products in each
product line
11192
PRODUCT MIX AND PRODUCT LINE
The product mix is the set of all products offered for sale
by a company.
A product mix has two dimensions:
Breadth - the number of product lines carried.
Depth - the variety of sizes, colors, and models offered
within each product line.
A product line is a broad group of products, intended for
similar uses and having similar characteristics.
11193
Product line modification
Product line concentration
Product line expansion
Product modification
Quality variation
Trading up
Trading down
Product simplification produces products of
similar nature
Product differentiation-
Packaging
Marketing myopia
Marketing Myopia is a term used
in marketing as well as the title of an
important marketing paper written by Theodore
Levitt. This paper was first published in 1960 in
the Harvard Business Review, a journal of which
he was an editor.
A short-sighted and inward looking approach
to marketing that focuses on the needs of the
company instead of defining the company and
its products in terms of the customers' needs
and wants.
Brand
Brand = A name, term, symbol, or design or a combination of them that is
intended to identify the goods or services of one seller or group of sellers
and to differentiate them from products of competitors
Brand equity = The value of a brand, based on the extent to which it has
high brand loyalty, name awareness, perceived quality, strong brand
associations, and other assets such as patents, trademarks, and channel
relationships
Brand extension = Using a successful brand name to launch a new or
modified product in a new category
Co-branding = The practice of using the established brand names of two
different companies on the same product
Brand development index (BDI) = An index that is calculated by taking the
percentage of a brands total sales that occur in a given market as
compared to the percentage of the total population in the market
Brand..
Brand extension strategy = The strategy of applying an existing
brand name to a new product
Brand loyalty = Preferences by a consumer for a particular brand
that results in continual purchase of it
Evoked set = The subset of available brands of a product class
which a consumer considers appropriate alternatives, and from
which a choice is made
Family brands = The assignment of the same or similar names to
multiple products made by the same company in which the name of
the company is often employed
Brand manager = The individual in an organisation responsible for
planning, implementing, and controlling the marketing program for a
particular brand. Brand managers are sometimes referred to as
product managers
Trademark =
Brand competitors = Other companies which also manufacture the same
product
Brand image = The overall concept of the product as perceived by
consumers
Brand insistence = The phenomenon that occurs when consumers demand
a certain product and will go out of their way to get it
Brand mark = The part of a brand which can be recognised but is not
utterable
Brand name = The part of a brand which can be vocalised-the utterable
Brand non-recognition = The fact that people do not know the existence of
the brand
Brand recognition = The simple awareness that a product exists, apart from
competing products
Brand preference = The attitude taken by consumers who have tried a
brand and have at least moderately positive attitudes toward it
Brand rejection = The rejection of a brand by a consumer who has negative
experience with it
Individual brands = Brands which have no obvious connection with the
parent company
Pricing
The Price of a Product or Service
is the number of monetary units a
person pays to obtain one unit of
the product or service
A Manager should possess a
certain level of ingenuity,
sufficient skills and sometimes, he
has to use his sixth sense while
fixing a suitable price for a
product or a service
Factors to be considered
before adopting a Pricing
Strategy
The demand for the Product/Service in the
market
Customers perception
Margin adequate to sustain in the market
The image of the company in the market
The expenditure incurred for producing the
goods
Intensity of competition
Price and Non Price
Competition
A Marketer who resorts to Price
competition will compete with the
competitors on the price front by offering
his product or service at the same price or
at a lower price than that of the
competitor
Non Price competition arises when
marketers focus on factors other than the
price such as Product features, Quality of
the product/service being offered,
Packaging, Promotions.
THE PROCESS OF SETTING
PRICES
SETTING PRICING OBJECTIVES
Survival, Profit, Return on Investment, Market share, Status quo,
Product Quality
FACTORS AFFECTING DEMAND DETERMINATION
Price Sensitivity, Demand Curve, Price Elasticity of Demand (%
change in Quantity Demanded/% change in Price)
ANALYSING COMPETITORS PRICING
SELECTION OF A PRICING METHOD
Mark up pricing (Mark up/cost, Mark up/selling price), Target Return
Pricing- Unit cost+ (Desired cost x invested capital)/Unit sales ,
Perceived value pricing, Going rate pricing, Sealed bid pricing,
Differentiated pricing (different prices for the same products at
different locations), Value pricing (offers low prices for high quality
products), Market skimming, Market penetration
SELECTION OF A PRICING
POLICY
Psychological pricing, Influence of other
marketing mix variable, Transfer pricing
(when one division of an organization
transfers or sells goods or services to another
division, happens in MNC), Pricing impact on
other parties (on suppliers, distributors,
producers, government, customers)
APPROACHES TO PRICE
ADJUSTMENT
Geographical pricing
Promotional pricing (general perception that a
price reduction or promotional deal will attract
customers)
Discriminatory pricing (different customers are
charged differently for the same product on the
basis of their paying capacity and value of
customers)
Discounts and Allowances
Experience curve pricing (new products are
introduced at a low price)
Product mix pricing (demand patterns and market
segments vary significantly from product to product)
Different methods
Different methods are...
Product line pricing (price fixed for product lines and not
products),
Optional feature pricing (separate price for accessories
that come along with a product eg: car),
Captive product pricing (manufacturers price the
auxiliary products or spare parts relatively higher
than the basic product to overcome the low profit
earned on the basic product),
Two- part pricing (fixed price for an initial service and
subsequent charges for over and above the minimum
service consumed),
By-Product pricing (setting prices for by products
obtained from the original product which sets a way
to sustain competitive pressure on the original
product),
Product bundling pricing (manufacturer provides a set of
related products at a price eg :PC manufacturers
bundles free software (antivirus, office suites)
Pricing strategies
1} cost-plus pricingthis pricing method assumes that no
product is sold at a loss since the price
covers the full cost incurred
2} Rate of Return or Target pricing
method/:
under this method, first of all , an arbitrary
desired rate of profit on the capital
employed/invested is determined by the
enterprise. The total desired profit is then
calculated on the basis of this rate of return.
total desired profit is then added to the total
cost of production and thus , the price per
unit of the product is determined.
3} break-even pricing : it is a point where
there is neither loss nor profit, found out
by dividing total fixed cost with total no of
units produced. This method is good when
there is no competition in the market .
4} marginal cost or incremental cost
pricing : in this method, the price is fixed
on the basis of additional variable cost
associated with an additional out put.
5} purchasing power pricing : here the price
of the product is determined on the basis
of what the purchasers can bear or pay.
6} Competition oriented pricing :here price
is fixed after carefully considering the
competitors price structure.
7. Skim the cream pricing : it uses a
very high introductory price to skim
the cream of demand.
8. Market penetration pricing : this is
just opposite to the Skim the cream
pricing . It offers a very low
introductory price to speed up the
sales and therefore widening the
market base.
9. Follow the leader pricing : in a
competitive market, some big firms
assume the role of a leader pricing.
When a company starts production in
such competitive market, it follows
the pricing of policy of such leader
firms.
CHANNELS OF
DISTRIBUTION
MEANING
A channel of distribution or trade channel is the route or path
along which products flow from the point of production to the
point of ultimate consumption or use.
It starts with the producer and ends with the consumer . In
between there may be several intermediaries or middlemen
who operate to facilitate the flow of the physical product or its
ownership from the producer to the consumer.
In the words of STANTON A distribution channel consists of the
set of people and firms involved in the transfer of title to a
product as the product moves from the producer to the
ultimate consumer.
A channel of distribution shows three types of flows:
a) Products flow downwards from the producer to the
consumers.
b) Cash flows upwards from customers to the producer as
Elements of distribution mix
Channels of distribution
Warehousing
Transportation
Inventory
IMPORTANCE
Important element of marketing mix
Influences sales volume and profits
Determines where and when the
product will be available to users
Helps in reducing the effects of
fluctuations in production
TYPES (Length )
1) Manufacturer-consumer (Direct selling):
Shortest and simplest channel
No middleman between the producer and consumer
Producers sell directly to customers through door-todoor salesmen , direct mail , own retail stores, e.g..
BATA India Ltd.
Used generally for selling shoes , clothes , books,
etc.
Very fast and economical
Expert services of middlemen are not available
Large investment is required
2) Manufacturer-retailer-consumer:
Manufacturer sells to one or more retailers who sell
to consumers
This channel is popular when retailers are big and
buy in large quantities ,e.g. departmental stores ,
super markets.
3) Manufacturer-wholesaler-retailer-consumer:
Traditional or normal channel
Suitable where producers have limited finance and
narrow product line
Channel used in case of consumer durables which
are not subject to frequent changes in fashion.
4) Manufacturer-agent-retailer-consumer:
Used when retailers are few or geographically
concentrated
Commonly used to sell agricultural products,
machinery and equipment, etc.
5) Manufacturer-agent-wholesaler-retailerconsumer:
Longest channel
Producer hands over entire output to the agent who
sales them to wholesalers
In case of cloth this channel is widely used
METHODS OF DIRECT SELLING
Door to door
salespersons
Catalogue Selling
Retail outlets
On Line Marketing
or Internet marketing
Telemarketing
CHOICE OF CHANNEL OF DISTRIBUTION
1. PRODUCT CONSIDERATIONS
(a) Unit Value
(b) Perishability
(c) Size, Bulk &
Weight
(d) Standardisation
3. COMPANY CONSIDERATIONS
2. MARKET CONSIDERATIONS
(a) Consumer or Industrial
Market
(b) Number & Location of
Buyers
(c) Size & Frequency of Order
(d) Buying Habits
4. MIDDLEMEN CONSIDERATIONS
(a) Market Standing
(a) Availability
(b) Financial Resources
(b) Attitudes
(c) Management
(c) Services
(d) Volume of Production
(d) Sales Potential
Information
Negotiation
Promotion
Functions of
Distribution
Middlemen
Risk-taking
Ordering
Financing
Wholesaling and
Retailing
WHOLESALING
According to PHILIP KOTLER:
Wholesaling includes all activities involved in
selling goods or services to those who buy for
resale or business use. Wholesaling excludes
manufacturers and farmers because they are
engaged primarily in production and it excludes
retailers.
The middlemen who are engaged in wholesaling
or wholesale trade are known as wholesalers. A
wholesaler is a trader who buys goods in large
quantities from manufacturers and resells them to
retailers in small lots.
FUNCTIONS OF WHOLESALERS
Buying and Sorting
Selling and Promotion
Bulk Breaking
Storage
Transportation
TYPES OF
WHOLESALERS
Manufacturer
Wholesaler
Pure
Wholesaler
Limited Service
Wholesaler
Full Service
Wholesaler
Industrial
Wholesaler
Retailer
Wholesaler
Wholesaler
Merchants
WHOLESALERS
MARKETING
DECISIONS
Target market selection
Pricing Decisions
Promotion Decisions
Place Decisions
Retailing
Types of retailers
hire
Market
days
Franchising: product, manufac., business
format,
Direct marketing :
Types:
Catalogue
Television
Kiosk
Telemarketing
SMS marketing
Social marketing
Automating vending
E-commerce
M-Commerce
Multi Level Marketing
Promotion
PROMOTION
DEFINITION :Promotion involves disseminating information
about a product, product line, brand, or
company. It is one of the four key aspects of the
marketing mix. (The other three elements are
product marketing, pricing, and distribution.)
To generate sales and profits, the benefits
of products have to be communicated to
customers. In marketing this is commonly known
as promotions.
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Promotion Techniques
Promoting your business can take many different forms. You can
promote it online and offline. Promotion is a very important part of
every business imaginable. If you don't promote it, how are
customers supposed to know about it? Here are some very
effective ways to promote your product or service.
BUSINESS CARDS
PRESS RELEASES
ORGANIZATIONS
NEWS LETTERS
FREE STUFF
WEBSITE
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PROMOTION MIX
DEFINITION :Specific combination of promotional methods
such as print or broadcast advertising,
direct marketing, personal selling,
point of sale display, merchandising, etc.,
used for one product or a family of products.
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Six main Promotion Tactics
1.
2.
3.
4.
5.
6.
ADVERTISING
SALES PROMOTION
PUBLIC RELATIONS
PERSONAL SELLING
PUBLICITY
DIRECT MARKETING
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The factors that guide a marketers
decision in selecting a promotion mix are : Nature of the product market.
Overall marketing strategy.
Buyer readiness stage.
Product life cycle stage.
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ADVERTISING
The means of providing the most persuasive possible
selling message to the right prospects at the lowest
possible cost".
Kotler and Armstrong provide an alternative definition:"Advertising is any paid form of non-personal
presentation and promotion of ideas, goods and
services through mass media such as newspapers,
magazines, television or radio by an identified sponsor".
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Kinds of advertising
Product advt.
Institutional advt.
Advocacy Advt. (view/ philosophy)
Comparative advt.
Reinforcement advt.(right choice)
Shortage advt
Co-opertive advt.
Commercial/ non-commercial
Surrogate advt. (substitute)
Advt. copy
Word message/ written matter of the
advertisement
Elements
Headline
Theme
Artwork
Subheading
Body copy
Signature
Qualities of good Advt. copy
Attention value
Suggestion value
Retention
Conviction
Educational
Sentimental
Instinctive appeal
USP
The unique selling proposition
(USP) or unique selling point is a marketing
concept first proposed as a theory to explain a
pattern in successful advertising campaigns of
the early 1940s. The USP states that such
campaigns made unique propositions to
customers that convinced them to switch
brands. The term was developed by
television advertising pioneer Rosser Reeves of
Ted Bates & Company.
SALES PROMOTION
An activity designed to boost the sales of a product or
service. It may include an advertising campaign, increased
PR activity, a free-sample campaign, offering free gifts or
trading stamps, arranging demonstrations or exhibitions,
setting up competitions with attractive prizes, temporary
price reductions, door-to-door calling, telemarketing,
personal letters on other methods.
More than any other element of the promotional mix, sales
promotion is about action. It is about stimulating customers
to buy a product. It is not designed to be informative a role
which advertising is much better suited to.
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Kinds of sales promotion
Samples
Consumer
promotion
Coupons
Rebates
Money refund orders
Price packs
Premium offer
Buyback allowance
Free trials
Prizes
Demonstration
Dealer
promotion
Price deals
Free goods
Advt. Materials
Allowance
contests
PUBLIC RELATIONS
The planned and sustained effort to establish
and maintain goodwill and mutual
understanding between an organisation and
its publics.
Public relations activities include, press
releases. company literature, videos,
websites and annual reports.
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PERSONAL SELLING
Personal selling is oral communication with potential
buyers of a product with the intention of making a sale.
The personal selling may focus initially on developing a
relationship with the potential buyer, but will always
ultimately end with an attempt to "close the sale
Personal selling is one of the oldest forms of promotion. It
involves the use of a sales force to support a push
strategy (encouraging intermediaries to buy the product)
or a pull strategy (where the role of the sales force may
be limited to supporting retailers and providing aftersales service).
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PUBLICITY
Publicity refers to nonpersonal communi-cations
regarding an organization , product , service , or
idea not directly paid for or run under identified
sponsorship .it usually comes in the form of
news story , editorial , or announcement about
an organization and/or its products and services.
Techniques used to gain publicity include news
releases , press conferences , feature articles ,
photographs , films , and videotapes.
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DIRECT MARKETING
Direct marketing is concerned with establishing an individual
relationship between the business offering a product or service and
the final customer.
Direct marketing has been defined by the Institute of Direct Marketing
as:
The planned recording, analysis and tracking of customer
behaviour to develop a relational marketing strategies.
The process of direct marketing covers a wide range of promotional
activities, These include:
Direct-response adverts on television and radio
Mail order catalogues
E-commerce
Magazine inserts
Direct mail
Telemarketing
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OBJECTIVES FOR
PROMOTION
BUILD AWARENESS.
CREATE INTEREST.
PROVIDE INFORMATION.
STIMULATE DEMAND.
REINFORCE THE BRAND.
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Remember Models of
Consumer Buying Behaviour
Awareness
Mass communication sources - television,
press/magazines, radio
Interest
Mass communication sources - press/
magazines television, radio
Evaluation
Personal sources - relatives, friends,
colleagues
Trial
Adoption
Personal sources - sales people, relatives
friends
Personal sources and mass media
communication (for re-assurance).
Promotional Tools
Personal Selling
Branding
Advertising
Sales Promotion
Sponsorship
Public relations
The
Customer
Packaging
Merchandising
Corporate Image
Direct Marketing
Internal Marketing
Exhibitions
Word of Mouth
Marketing Communications
Decisions
Identification of target audience
Determination of response sought
Choice of message
AIDA model
A - Attention (Awareness): attract the attention of the customer.
I - Interest: raise customer interest by demonstrating features, advantages,
and benefits.
D - Desire: convince customers that they want and desire the product or
service and that it will satisfy their needs.
A - Action: lead customers towards taking action and/or purchasing.
Message content What to say?
Rational appeals
Emotional appeals
Moral appeals
Message structure and format How to say it
ENCODING
ENCODINGTHE
THE
MESSAGE
MESSAGE
Create
Createan
anad,
ad,
display,
display,or
orsales
sales
presentation
presentation
MESSAGE
MESSAGEAS
AS
INTENDED
INTENDED
AApromotional
promotionalidea
ideain
in
marketers
marketersmind
mind
MESSAGE
MESSAGE
CHANNEL
CHANNEL
Select
Selectthe
themedia
media
or
orother
othervehicle
vehicle
to
tocarry
carrythe
themessage
message
NOISE
Competing ads,
other
distractions
FEEDBACK
FEEDBACK
Impact
Impactmeasured
measured
using
usingresearch,
research,sales,
sales,
or
oranother
anothermeasure
measure
DECODING
DECODING
THE
THEMESSAGE
MESSAGE
Receiver
Receivercompares
compares
message
messageto
to
frame
frameof
ofreference
reference
MESSAGE
MESSAGE
AS
ASRECEIVED
RECEIVED
Knowledge,
Knowledge,beliefs,
beliefs,
or
orfeelings
feelingsof
of
receiver
receiverchanged
changed
RESPONSE
RESPONSE
Ranges
Rangesfrom
fromsimple
simple
awareness
awarenessto
to
purchase
purchase
Figure 16.2 The communication process
Source
Coded
message
Medium of
transmission
Decoded
message
Receiver
or
audience
Feedback
NOISE
NOISE
Selling process
Prospecting
Preparing
Approaching
Presentation and demonstration
Overcoming objectives
Closing the sale
Market Research
MkIS Marketing Information system
Methods of research
International marketing
MNC/ TNC / SNC
GATT
WTO
TRIPS
TRIMS
Consumer protection
Sale of goods act 1930
Drug and cosmetics act 1940
Prevention of food adulteration act 1954
Essential commodities act 1955
MRTP act 1969
Packaged commodities order 1975
Standards of weights and measurement act
1976
BIS 1986
Consumer protection act 1986
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