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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