UNIT - 3 Marketing Mix

UNIT – 2
Marketing Mix
Marketing Mix – Concept and definition
The marketing mix has been defined as the "set of marketing tools that the firm uses
to pursue its marketing objectives in the target market". Thus the marketing mix refers
to four broad levels of marketing decision, namely: product, price, promotion, and
place.
A combination of factors that can be controlled by a company to influence consumers

to purchase its products.
The marketing mix is one of the most famous marketing terms. The marketing mix is
the tactical or operational part of a marketing plan. The marketing mix is also called
the 4Ps and the 7Ps. The 4Ps are Product, Price, Promotion and Place. The services
marketing mix is also called the 7Ps and includes the addition
of process, people and physical evidence.
Fall_2019 UNIT - III Marketing Mix 2


Extended Marketing Mix
• Booms and Bitner included

three additional 'Ps' to
accommodate trends towards a
service or knowledge based
economy:
• People
• Process
• Physical Evidence

The Marketing Mix

The marketing mix is often referred to as the '4 Ps', i.e. product, price, place and
promotion.
• To meet customers' needs a business must develop products to satisfy them

• Charge the right price
• Get the goods to the right place
• And it must make the existence of the product known through promotion.

Understanding the “Marketing Mix”
1. Product
• This is either a service or a good that has been manufactured to meet specific
customer needs or demands.
• During development, products follow through a specific lifecycle and that’s why
it’s important for marketers to plan for the product every step of the way. This
starts by understanding what sort of problem the product is trying to solve.
• The potential and target customers need to be identified and understood
perfectly in order for the product to succeed.

2. Price
• This is the amount the consumer is expected to pay for using the product.
• The pricing of a product will impact greatly how the product sells in the market.
Basically, it’s the perceived value of any product to a customer rather than placing
any price on it and expecting it to sell.
• In most cases, if the product is priced according to customer value, it might even
sell higher than its obvious value. On the other hand, if the product is
undervalued by the customers, the price needs to be lower for the product to
sell.
• Other factors that affect the overall price of a product include value chain costs,
markups, distribution plans and also competitor pricing.

3. Promotion
• This involves all the marketing techniques and strategies out there. These include
sales promotions, advertising, public relations, special offers etc.
• Every marketing channel used needs to be suitable for the product, the price of
the product as well as the consumer the product is being marketed to.
• Basically, promotion is the communication part involved in the whole marketing
equation.

4. Place
• This refers to how the product is availed to the end consumer.
• A key element of placement is distribution of the product. A good placement
strategy will help you assess the most appropriate channel to be used for the
product. Depending on how a customer accesses the product, it will also
determine the entire marketing strategy.

Marketing Mix – Product/services
• What does the customer want from the product/service?
• What needs does it satisfy?
• What features does it have to meet these needs?
• Are there any features you've missed out?
• Are you including costly features that the customer won't actually use?
• How and where will the customer use it?
• What does it look like? How will customers experience it?
• What size(s), color(s), and so on, should it be?
• What is it to be called?
• How is it branded?
• How is it differentiated versus your competitors?
• What is the most it can cost to provide and still be sold sufficiently profitably?
Marketing Mix – Price
• What is the value of the product or service to the buyer?

• Are there established price points for products or services in this area?
• Are the customers price sensitive?
• Will a small decrease in price gain you extra market share? Or will a small
increase be indiscernible, and so gain you extra profit margin?
• What discounts should be offered to trade customers, or to other specific
segments of your market?
• How will your price compare with your competitors?

Marketing Mix – Place
• Where do buyers look for your product or service?

• If they look in a store, what kind? A specialist boutique or in a supermarket, or
both? Or online? Or direct, via a catalogue?
• How can you access the right distribution channels?
• Do you need to use a sales force? Or attend trade fairs? Or make online
submissions? Or send samples to catalogue companies?
• What do your competitors do, and how can you learn from that and/or
differentiate?

Marketing Mix – Promotion
• Where and when can you get your marketing messages across to your target
market?
• Will you reach your audience by advertising online, in the press, on TV, on radio,
or on billboards? By using direct marketing mailshots? Through PR? On the
Internet?
• When is the best time to promote? Is there seasonality in the market?
• Are there any wider environmental issues that suggest or dictate the timing of
your market launch or subsequent promotions?
• How do your competitors do their promotions? And how does that influence your
choice of promotional activity?

PRODUCT

Product – concept & definition
• In a marketing, a product is anything that can be offered to a market that might
satisfy a want or need. In retailing, products are called merchandise.
In manufacturing, products are bought as raw materials and sold as finished
goods.
• A product is the item offered for sale. A product can be a service or an item. It can
be physical or in virtual or cyber form.
• Every product is made at a cost and each is sold at a price.
• The price that can be charged depends on the market, the quality, the marketing
and the segment that is targeted.
• Each product has a useful life after which it needs replacement, and a life cycle
after which it has to be re-invented.

Product – Types

Types of product
The two major types of products are consumer products and business products;
1. Consumer products
• Consumer products are products purchased for personal, family, or household use.
• They are often grouped into four subcategories on the basis of consumer buying
habits: convenience products, shopping products, specialty products and unsought
products.
• Consumer products can also be differentiated on the basis of durability.
• Durable products are products that have a long life, such as furniture and garden tools.
• Non-durable products are those that are quickly used up or worn out, or that become outdated,
such as food, school supplies, and disposable cameras.

Consumer Products
A. Convenience products
• Convenience products are items that buyers want to purchase with the least amount
of effort, that is, as conveniently as possible.
• Most are non-durable products of low value that are frequently purchased in small
quantities.
• These products can be further divided into three subcategories: staple, impulse, and
emergency items;
• Staple convenience products are basic items that buyers plan to buy before they enter a store, and include
milk, bread, and toilet paper.
• Impulse items are other convenience products that are purchased without prior planning, such as candy bars,
soft drinks, and tabloid newspapers.
• Emergency products are those that are purchased in response to an immediate, unexpected need such as
ambulance service or a fuel pump for the car.

Consumer Products
• Since convenience products are not actually sought out by consumers, producers
attempt to get as wide a distribution as possible through various marketing
channels—which may include different types of wholesale and retail vendors.
• Convenience stores, vending machines, and fast food are examples of retailer
focus on convenience products.

Consumer Products
B. Shopping products
• Shopping products are purchased only after the buyer compares the various
products and brands available through different retailers before making a deliberate
buying decision.
• These products are usually of higher value than convenience goods, bought less
frequently, and are durable.
• Price, quality, style, and color are typically factors in the buying decision. Televisions,
computers, lawn mowers, bedding, and appliances are all examples of shopping
products.
• As the customers are going to shop for these products, a fundamental strategy in
establishing stores that specialize in shopping products is to locate near similar
stores in active shopping areas.

Consumer Products
• Promotion for shopping products is often done cooperatively with the

manufacturers and frequently includes the heavy use of advertising in local
media, including newspapers, radio, and television.

Consumer Products
C. Specialty Products
• Specialty products are items that consumers seek out because of their unique
characteristics or brand identification.
• Buyers know exactly what they want and are willing to exert considerable effort to
obtain it.
• These products are usually, but not necessarily, of high value. This category includes
both durable and non-durable products.
• Specialty products differ from shopping products primarily because price is not the
chief consideration. Often the attributes that make them unique are brand
preference (e.g., a certain make of automobile) or personal preference (e.g., a food
dish prepared in a specific way).
• Other items that fall into this category are wedding dresses, antiques, fine jewelry,
medicines, alcohol beverages

Consumer Products
• Producers and distributors of specialty products prefer to place their products
only in selected retail outlets. These outlets are chosen on the basis of their
willingness and ability to provide an image of status, targeted advertising, and
personal selling for the product. Consistency of image between the product and
the store is also important.

Consumer Products
D. Unsought products
• Unsought products are those products that consumers are either unaware of or
have little interest in actively pursuing.
• Examples are new innovations, life insurance, smoke detectors and preplanned
funeral services. Because of the lack of awareness of these products or the need
for them, heavy promotion is often required.

Industrial/Business Products
2. Business Products
• Are products and services that companies purchase to produce their own
products or to operate their business.
• Unlike consumer products, business products are classified on the basis of their
use rather than customer buying habits.
• These products are divided into six subcategories: installations; accessory
equipment; raw materials; component parts and processed materials;
maintenance, repair, and operating supplies; and business services.

A. Installations
• Installations are major capital items that are typically used directly in the production
process of products. Some installations, such as conveyor systems, robotics
equipment, and machine tools, are designed and built for specialized situations.
• Other installations, such as stamping machines, large commercial ovens, and
computerized axial tomography scan machines, are built to a standard design but
can be modified to meet individual requirements.
• The purchase of installations requires extensive research and careful decision making
on the part of the buyer.
• Manufacturers of installations can make their availability known through advertising.
Actual sale of installations, however, requires the technical knowledge and assistance
that can best be provided by personal selling.

B. Accessory equipment
• Products that fall into the subcategory of accessory equipment are less expensive
and have shorter lives than installations.
• Examples include hand tools, computers, desk calculators, and forklifts. While some
types of accessory equipment, such as hand tools, are involved directly in the
production process, most are only indirectly involved.
• The relatively low unit value of accessory equipment, combined with a market made
up of buyers from several different types of businesses, dictates a broad marketing
strategy.
• Sellers rely heavily on advertisements in trade publications and mailings to
purchasing agents and other business buyers.
• When personal selling is needed, it is usually done by intermediaries, such as
wholesalers.

C. Raw materials
• Raw materials are products that are purchased in their raw state for the purpose
of processing them into consumer or business products.
• Examples are iron ore, crude oil, diamonds, copper, timber, wheat, and leather.
Some (e.g., wheat) may be converted directly into another consumer product
(cereal).
• Others (e.g., timber) may be converted into an intermediate product (lumber) to
be resold for use in another industry (construction).

D. Component parts and Processed materials
• Component parts are items that are purchased to be placed in the final product
without further processing.
• Processed materials, on the other hand, require additional processing before being
placed in the end product.
• Many industries, including the auto industry, rely heavily on component parts.
Automakers use such component parts as batteries, sunroofs, windshields, and spark
plugs. They also use several processed materials, including steel and upholstery
fabric.
• Buyers of component parts and processed materials have well-defined specifications
for their needs. They may work closely with a company in designing the components
or materials they require, or they may invite bids from several companies. I

Levels of products

Levels of products
1. Core product
• The CORE product is NOT the tangible physical product. You can’t touch it. That’s
because the core product is the BENEFIT of the product that makes it valuable to
you.
• So with the car example, the benefit is convenience i.e. the ease at which you can
go where you like, when you want to. Another core benefit is speed since you can
travel around relatively quickly.
• Thus the core product in case of Tata cars will be convenience and value for
money whereas in case of BMW it will be Status symbol.

Levels of products
2. Actual product
• The actual product is the tangible, physical product. You can get some use out of
it. Again with the car, it is the vehicle that you test drive, buy and then collect. You
can touch it. The actual product is what the average person would think of under
the generic banner of product.
• It involves features, designs, brand name, packaging and quality level, etc.,
• Thus, from the above example, if your core product is a status symbol, your actual
product will be a very high quality product with high pricing. On the other hand if
the product is a convenience product, the production would be on the basis of
Value for money.

Levels of products
3. Augmented Product
• The augmented product is the non-physical part of the product. It usually consists of
lots of added value, for which you may or may not pay a premium.
• So when you buy a car, part of the augmented product would be the warranty,
the customer service support offered by the car’s manufacturer and any after-sales
service.
• The augmented product is an important way to tailor the core or actual product to
the needs of an individual customer. The features of augmented products can be
converted in to benefits for individuals.
• Again taking the above example, if you are manufacturing a car, it needs regular
servicing, warranty etc

Levels of products
For example – all three levels of product
If an IT company makes a software, the core product could be better operations
and management for their customers.
The actual product may be dedicated to multiple facets of the organization for
which the software needs to be programmed, and the augmented product may be
the maintenance of this software and regular up gradation. Thus even the service
products have their own three levels.

Product Life Cycle - PLC
The product life cycle has 4 very clearly defined stages, each with its own
characteristics that mean different things for business that are trying to manage the
life cycle of their particular products.

PLC – in terms of sales and profits

1. Introduction Stage –
• This stage of the cycle could be the most expensive for a company launching a new
product.
• The size of the market for the product is small, which means sales are low, although they
will be increasing.
• On the other hand, the cost of things like research and development, consumer testing,
and the marketing needed to launch the product can be very high, especially if it’s a
competitive sector.
2. Growth Stage –
• The growth stage is typically characterized by a strong growth in sales and profits, and
because the company can start to benefit from economies of scale in production, the
profit margins, as well as the overall amount of profit, will increase.
• This makes it possible for businesses to invest more money in the promotional activity to
maximize the potential of this growth stage.

3. Maturity Stage –
• During the maturity stage, the product is established and the aim for the
manufacturer is now to maintain the market share they have built up.
• This is probably the most competitive time for most products and businesses
need to invest wisely in any marketing they undertake.
• They also need to consider any product modifications or improvements to the
production process which might give them a competitive advantage.

4. Decline Stage –
• Eventually, the market for a product will start to shrink, and this is what’s known
as the decline stage.
• This shrinkage could be due to the market becoming saturated (i.e. all the
customers who will buy the product have already purchased it), or because the
consumers are switching to a different type of product.
• While this decline may be inevitable, it may still be possible for companies to
make some profit by switching to less-expensive production methods and
cheaper markets.

Product Innovation
• Product innovation is the creation and subsequent
introduction of a good or service that is either new, or
an improved version of previous goods or services.
• Examples of product innovation by a business might
include a new product's invention; technical
specification and quality improvements made to a
product; or the inclusion of new components,
materials or desirable functions into an existing
product.

Product Development
• Product development, also called new product
management, is a series of steps that includes the
conceptualization, design, development and
marketing of newly created or newly rebranded goods
or services.

New Product Development Process:

Stage 1: Idea Generation :
Idea Generation the starting stage for new product
development in which typically an organization develop
a number of ideas for new product Such types of
alternatives idea are develop into a meeting called brain
storming session
Sources for idea generation, the organization takes new
ideas from two sources:
• Internal sources : R&D Cell, Employees feed backs
(e.g. 3M)
• External Sources : Customer Questions & Complaints,
Distributor Feed backs, and Compotators activates e.g.
their Ads as a clue

 Stage 2: Idea Screening:
 In this step one idea is selected from the alternative
idea of the first stage
 The basis for best idea are:
• Utilization: How much that product will be able by
the Target customer with the sense of that product
utilization.
• Resources: Which type, quality and at which price
that resources will be available.
• Ethical Aspect: What will be the responses of the
society to whom that product will launch.

 Stage 3: Product Concept Development:
Once the idea is selected in the idea screening stage
,then in this stage the concept of product is developed.
Some time alternative concept of the same product are
developed according to customer needs ,wants etc.

Stage 4: Marketing Strategy Development:
Developing strategy that how to introduce the product
into market.
Marketing strategy consisting 3 statements:
• Described the target market Price
• Channel of distribution and
• Profit Goal of the organization

Stage 5: Business Analysis:
Analyze the product with the business point of view.
This analysis involve a review of the sales, cost ,profit.
The main aim of business analysis is to find out
whether the product satisfies the company objective or
not.

Stage 6: Product Development:
 In this stage the product concept comes into its
physical form, then this product is presented to the
market for testing.
Test Marketing help the organization in creating
financial decision about whether to launch that
product in the market or not.

Stage 7: Commercialization:
After successful passing the product from the “testing
market” then the firm properly introduce that product
into market.
After commercialization Stage then that product’s life
cycle ( PLC) begin.

Product Diffusion
Diffusion is the process by which a new idea or new
product is accepted by the market. The rate of
diffusion is the speed that the new idea spreads from
one consumer to the next.
Consumers can be grouped according to how quickly
they adopt a new product.
 On the one extreme, some consumers adopt the
product as soon as it becomes available. On the other
extreme, some consumers are among the last to
purchase a new product.

Product Diffusion Curve:

Innovators:
• well-informed risk-takers who are willing to try an
unproven product. Innovators represent the first 2.5% to
adopt the product.
Early adopters:
• based on the positive response of innovators, early
adopters then begin to purchase the product. Early
adopters tend to be educated opinion leaders and
represent about 13.5% of consumers.
Early majority:
• careful consumers who tend to avoid risk, the early
majority adopts the product once it has been proven by
the early adopters. They rely on recommendations from
others who have experience with the product. The early
majority represents 34% of consumers.
Late majority:
• somewhat skeptical consumers who acquire a product
only after it has become routine. The late majority
represents about 34% of consumers.
Laggards:
• those who avoid change and may not adopt a new
product until traditional alternatives no longer are
available. Laggards represent about 16% of
consumers.

PRICING

Pricing – Concept & Definition
Concept
The price of a product is influenced by a number of factors, such as manufacturing
cost, competition, market conditions, and quality of the product.
An organization, while setting the prices of its products, needs to ensure that prices
must cover costs incurred for producing products and profit margins.
If the price of a product does not cover costs, then financial resources of the
organization would exhaust, which would ultimately result in the failure of business.
Definition
The amount of money charged for a product or service, or the sum of the value that
consumers exchange for the benefits of having or using the product or service.
Or
Pricing can be defined as a process of determining the value that is received by an
organization in exchange of its products or services. It acts as a crucial element of
generating revenue for an organization.

Pricing objectives
a. Maximizing Profit:
One of the objectives of pricing is to maximize current profits. This objective is aimed
at making as much money as possible. Company tries to set its price in a way that
more current profits can be earned. However, company cannot set its price beyond the
limit. But, it concentrates on maximum profits.
b. Achieving a Target Return:

Refers to earning an adequate rate of return on the investment done by an
organization in manufacturing a product.
The main focus of marketers is on maintaining a specific return on sales or investment.
This is done by adding extra cost to the product for earning a desired profit.

Pricing objectives
c. Sales Growth:
Company’s objective is to increase sales volume. It sets its price in such a way that
more and more sales can be achieved. It is assumed that sales growth has direct
positive impact on the profits.
So, pricing decisions are taken in way that sales volume can be raised. Setting price,
altering in price, and modifying pricing policies are targeted to improve sales.
d. Increase in Market Share:

Sometimes, price and pricing are taken as the tool to increase its market share. When
company assumes that its market share is below than expected, it can raise it by
appropriate pricing; pricing is aimed at improving market share.

Pricing objectives
e. To Face Competition:
Pricing is primarily concerns with facing competition. Today’s market is characterized by
the severe competition.
Company sets and modifies its pricing policies so as to respond the competitors strongly.
Many companies use price as a powerful means to react to level and intensity of
competition.
f. To Keep Competitors Away:
To prevent the entry of competitors can be one of the main objectives of pricing. The
phase ‘prevention is better than cure’ is equally applicable here.
If competitors are kept away, no need to fight with them. To achieve the objective, a
company keeps its price as low as possible to minimize profit attractiveness of products.
In some cases, a company reacts offensively to prevent entry of competitors by selling
product even at a loss.

Stages for establishing Price
Setting a pricing policy for your products/services for the first time when you
develop it or when you introduce your product / service into a new geographical
area, can be a big head ache.
Reason being, that price is not just a tag on the product or service, it communicates
to your customers your business’s intended value positioning and also determines
your profitability.

When setting a pricing strategy you have to consider the following 6 factors;

1. Selecting the pricing objectives
The company first decides where it wants to position its marketing offering. The
clearer a firm’s objectives, the easier it is to set price.
A company can pursue any of 5 major objectives through pricing: profit oriented
objectives, sales related objectives, competition related objective, customer related
objectives and other objectives.
Whatever the specific objective, businesses that use price as a strategic tool will
profit more than those who simply let costs or the market determine their pricing

2. Determining the demand
Following the identification of objectives , the firm needs to determine demand.
Each price will lead to a different level of demand and therefore have a different
impact on a company’s marketing objectives.
In the normal case, demand and price are inversely related: the higher the price,
the lower the demand .In the case of prestige goods, the demand curve sometimes
slopes upward.
E.g. Perfume Company raised its price and sold more perfume rather
than less! Some consumers take the higher price to signify a better product.
However if the price is too high, the level of demand may fall.

3. Estimating Costs
Demand sets a ceiling on the price the company can charge for its product. The
company wants to charge a price that covers its cost of producing, distribution and
selling the product, including a fair return for its effort and risk.
A company’s cost take two forms, fixed and variable.
Fixed costs (also known as overhead) are costs that do not vary with production or
sales revenue. A company must pay bills each month for rent heat, interest, salaries
and so on. , Regardless of output.
Variable costs vary directly with the level of production. These costs tend to be
constant per unit produced. They are called variable because their total varies with
the number of units produced. Total costs consists have the sum of the fixed and
variable costs for any given level of production. Average cost is the cost per unit at
the level of production; it is equal to total costs divided by production.

4. Analyzing competitor’s costs, prices and offers
Within the range of possible prices determined by market demand and company
costs, the firm must take the competitor’s costs, prices and possible price reactions
into account.
Acquire competitors’ price lists and buy competitors’ products and analyze them.
Also ask customers how they perceive the price and quality of each competitor’s
product or service.
If your product or service is similar to a major competitor’s product or service, then
you will have to price close to the competitor or lose sales.
If your product or service is inferior, you will not be able to charge as much as the
competitor. Be aware that competitors might even change their prices in response
to your price.

5. Selecting a pricing method
The product pricing is very crucial and a difficult task for the producer since the
pricing is determined by the nature of the product and the type of market
situation. The following are the different pricing strategies that the marketer need
to implement while launching a product/service;
1. Pricing at a premium
2. Pricing for market penetration
3. Economy pricing
4. Price skimming
5. Psychology pricing
6. Bundle pricing

6. Selecting the final Price
Pricing methods narrow the range from which the company must select its final
price. In selecting that price, the company must consider additional factors,
including psychological pricing, gain and risk pricing, the influence of other
marketing -mix elements on price, company -pricing policies, and the impact of
price on other parties.

Pricing strategies
Premium Pricing
• Premium pricing strategy establishes a price higher than the competitors. It's a
strategy that can be effectively used when there is something unique about the
product or when the product is first to market and the business has a distinct
competitive advantage.
• Premium pricing can be a good strategy for companies entering the market with a
new market and hoping to maximize revenue during the early stages of the
product life cycle.
Penetration Pricing
• A penetration pricing strategy is designed to capture market share by entering
the market with a low price relative to the competition to attract buyers. The idea
is that the business will be able to raise awareness and get people to try the
product.
• Even though penetration pricing may initially create a loss for the company, the
hope is that it will help to generate word-of-mouth and create awareness amid a
crowded market category.
Pricing strategies
3. Economy Pricing
• Used by a wide range of businesses including generic food suppliers and discount
retailers, economy pricing aims to attract the most price-conscious of consumers.
• With this strategy, businesses minimize the costs associated with marketing and
production in order to keep product prices down. As a result, customers can
purchase the products they need without frills.
4. Price Skimming
• Designed to help businesses maximize sales on new products and services, price
skimming involves setting rates high during the introductory phase. The company
then lowers prices gradually as competitor goods appear on the market.
• One of the benefits of price skimming is that it allows businesses to maximize
profits on early adopters before dropping prices to attract more price-sensitive
consumers.
Pricing strategies
5. Psychology pricing
• It refers to techniques that marketers use to encourage customers to respond on
emotional levels rather than logical ones.
• For example, setting the price of a watch at $199 is proven to attract more
consumers than setting it at $200, even though the true difference here is quite
small.
• One explanation for this trend is that consumers tend to put more attention on
the first number on a price tag than the last. The goal of psychology pricing is to
increase demand by creating an illusion of enhanced value for the consumer

Pricing strategies
6. Bundle Pricing
• With bundle pricing, small businesses sell multiple products for a lower rate than
consumers would face if they purchased each item individually.
• Not only is bundling goods an effective way of moving unsold items that are
taking up space in your facility, but it can also increase the value perception in the
eyes of your customers, since you’re essentially giving them something for free.
• Bundle pricing is more effective for companies that sell complimentary products.
For example, a restaurant can take advantage of bundle pricing by including
dessert with every entrée sold on a particular day of the week.
• Small businesses should keep in mind that the profits they earn on the higher-
value items must make up for the losses they take on the lower-value product.

Pricing strategies
7. Loss Leader
• Also known as a promotional pricing strategy, the goal of the loss leader pricing
strategy is to get new customers even if you do not make a profit from the initial
sale. By taking a loss on the first sale, businesses can offer related products or
upsells at normal prices.
• Despite loosing profits on the promotional product or loss leader, enough profits
are normally made from the additional regular-priced products and services to
sustain the strategy for the long term.
• Grocery store sales utilize the loss leader pricing strategy on a regular basis. They
discount one or more items on their shelves to the point of taking a loss of profit,
with the intention of getting customers into their stores. Once there, the
customers are likely to buy more than just those products that are on sale.

PLACE/DISTRIBUTION

Place – Concept & definition
Place/distribution –
Marketing place has a number of names. Place is also known as channel,
distribution or intermediary. It is the mechanism through which goods and/or
services are moved from the manufacturer/ service provider to the user or
consumer.
Place in the marketing mix refers to the channel, or the route, through which goods
move from the source to the final user. Place could be the intermediaries,
distributors, wholesalers and retailers.

Objectives of effective distribution channels
A distribution channel is a network of firms that are interconnected in their quest
to provide sellers a means of infusing the marketplace with goods and buyers a
means of purchasing those goods, doing all as efficiently and profitably as possible.
The channels of distribution are designed to achieve following objectives:
1. Product Availability:
2. Meeting Customers’ Service Requirements:
3. Promotional Support:
4. Market Information:
5. Cost-Effectiveness:
6. Flexibility:

1. Product Availability:
The first objective is to make available the product to the consumer who wants to
buy it. The availability has two aspects – the desired level of coverage in terms of
appropriate retail outlets and secondly, the positioning of the product within the
store.
2. Meeting Customers’ Service Requirements:
To meet the service requirements and create differentiation over competitors,
channels become critical.
Some of the service requirements may include –
 order cycle time (how long it takes to receive,
 process and deliver an order),
 dependability (consistency and reliability of delivery),
 communication between buyer and seller (to sort out problems spontaneously),
 convenience (to accommodate the special needs of different customers),
 and post-sale (installation, user training, help lines, repair, and spare parts availability).

3. Promotional Support:
• It includes strong support from the channel member for the firm’s product,
including the use of local media, in-store displays, and cooperation in special
promotion events.
• This kind of support is especially important in case of highly competitive market
phenomenon, complex and expensive consumer durables or industrial goods.
4. Market Information:
Since intermediaries are in the marketplace and near to consumers they are the
best and first hand source of getting feedback with regard to sales trends, inventory
levels, competitors’ moves and customers’ reactions.

5. Cost-Effectiveness:
Costs to be incurred to attain the firm’s channel objectives should not be too much
in relation to gains.
There is often a trade off between channel costs, associated with physical
distribution activities such as transportation and inventory storage, and achieving
high levels of performance on many other objectives.
6. Flexibility:
A flexible channel is one where it is relatively easy to switch channel structures or
add new types of middlemen without generating costly economic or legal conflicts
with existing channel members.

Types of marketing channel/distribution
A marketing channel is a set of practices or activities necessary to transfer the
ownership of goods, and to move goods, from the point of production to the point
of consumption and, as such, which consists of all the institutions and all the
marketing activities in the marketing process.
There are basically 4 types of marketing channels:

• Direct selling
• Selling through intermediaries
• Dual distribution
• Reverse channels

Direct selling
• Direct selling is the marketing and selling of products directly to consumers away
from a fixed retail location. Peddling is the oldest form of direct selling.
• Modern direct selling includes sales made through the party plan, one-on-one
demonstrations, personal contact arrangements as well as internet sales.
• consumers benefit from direct selling because of the convenience and service
benefits it provides, including personal demonstration and explanation of
products, home delivery, and generous satisfaction guarantees.
• Direct selling is different from direct marketing in that it is about individual sales
agents reaching and dealing directly with clients while direct marketing is about
business organizations seeking a relationship with their customers without going
through an agent/consultant or retail outlet.

Selling through intermediaries
• A marketing channel where intermediaries such as wholesalers and retailers are
utilized to make a product available to the customer is called an indirect channel.
• The most indirect channel you can use (Producer/manufacturer --> agent -->
wholesaler --> retailer --> consumer) is used when there are many small
manufacturers and many small retailers and an agent is used to help coordinate a
large supply of the product.

Dual distribution
• Dual distribution describes a wide variety of marketing arrangements by which
the manufacturer or wholesalers uses more than one channel simultaneously to
reach the end user.
• They may sell directly to the end users as well as sell to other companies for
resale. Using two or more channels to attract the same target market can
sometimes lead to channel conflict.
• An example of dual distribution is business format franchising, where the
franchisors, license the operation of some of its units to franchisees while
simultaneously owning and operating some units themselves.

Reverse channels
• All the above three channels have one thing in common -- the flow.
• Each one flows from producer to intermediary (if there is one) to consumer.
• Technology, however, has made another flow possible. This one goes in the
reverse direction and may go -- from consumer to intermediary to beneficiary.
Think of making money from the resale of a product or recycling.

Kinds of middlemen in the distribution channel
The various kinds of middlemen in the market are:
1. Wholesalers: They are the people who buy in bulk from the producers and sell in
small quantities to the retailers.
2. Retailers: They are the people who buy in small quantities from the wholesalers
and sell to the ultimate consumers.
3. Agents: They are the middlemen who do not take any title to goods. They render
all services required in marketing. They represent either the seller or the buyer.
They receive commission for their work.
4. Brokers: Like agents, brokers also represent either the buyer or the seller. They
do not usually have physical control over the goods in which they deal. Example:
share brokers. They get ‘brokerage’ for their work.
5. Dealers: They are the business houses that resell goods.

Kinds of middlemen in the distribution channel
6. Distributors: They are the same as wholesalers.
7. Jobbers: They are associated with stock exchanges. A jobber deals in certain
securities. He transacts only with a broker and does not deal directly with the
public.
8. Branches: These are establishments maintained by manufacturers at different
places to promote sales. Example: Bata Shoe company.
9. Consumer Co-operatives: These are owned and managed by the ultimate
consumers. Such cooperatives buy and distribute goods mainly to the members.
10. Company show room: A company may run its own show room to sell its goods.
Example: Philips, BPL and Thomson have their own showrooms in Chennai.
11. Facilitating Agencies: These agencies are directly or indirectly involved in the
performance of certain marketing functions. These are transport organizations,
warehouses, banks, insurance companies and so on
PROMOTION

Promotion – concept & definition
Promotions refer to the entire set of activities, which communicate the product,
brand or service to the user. The idea is to make people aware, attract and induce
to buy the product, in preference over others.
Business promotion is communicating with the public in an attempt to influence

them toward buying your products and/or services.
You might communicate in person through direct selling or in a retail store, via the
internet through a website or social media platform, electronically through email or
text messaging (SMS marketing), just to name a few of the more popular business
communication channels, but it's the intention to influence the consumer that
defines promotion and sets it apart from other communication with customers
and/or clients.

Objectives of Promotion
1 .To Stimulate Demand:
It is the primary objective of market promotion. Through the use of appropriate
means of market promotion, such as advertising, sales promotion, personal selling,
and so forth, the company can stimulate demand for the product.
Market promotion efforts convert potential buyers into actual buyers.
2. To Inform Consumers:
Promotion is aimed at informing consumers about features, qualities, performance,
price, and availability of firm’s products.
Market promotion is also a valuable means to inform consumers the changes made
in the existing products and introduction of new products.
In the same way, market promotion, by various tools of market communication, is
used for communicating the special offers, price concession, utility of products, and
incentives offered by the company.

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

In a large and decentralized market, market promotion is an inevitable medium to
promote a new product. By suitable promotional strategies, a company can
successfully introduce a new product in the market as against existing products.
Company can inform about availability, distinct features, and price of newly
launched product.
5. To Face Competition:
Market promotion enables the firm to face competition effectively. In today’s
market situation, it is difficult to stand without the suitable promotional efforts.
In short, it can be said that marketer can fight with competitors effectively, can
prevent their entry, or can throw the competitor away from the market by
formulating and implementing effective market promotion strategies.
6. To Create or Improve Image:
Advertising, personal selling, and publicity and public relations – all promotional
tools – are capable to create or improve image and reputation of the firm.
Many companies have become popular in the market due to effective market
promotion. Company can reach the customers at every corner of the world through
market promotion.

Types of promotion
Advertising is the paid presentation and promotion of ideas, goods, or services by
an identified sponsor in a mass medium.
Examples include print ads, radio, television, billboard, direct mail, brochures and
catalogs, signs, in-store displays, posters, mobile apps, motion pictures, web pages,
banner ads, emails.
Personal selling is the process of helping and persuading one or more prospects to
purchase a good or service or to act on any idea through the use of an oral
presentation, often in a face-to-face manner or by telephone.
Examples include sales presentations, sales meetings, sales training and incentive
programs for intermediary salespeople, samples, and telemarketing.

Types of promotion
Sales Promotion is media and non-media marketing communication used for a pre-
determined limited time to increase consumer demand, stimulate market demand
or improve product availability.
Examples include coupons, sweepstakes, contests, product samples, rebates, tie-
ins, self-liquidating premiums, trade shows, trade-ins, and exhibitions.
Public relations or publicity is information about a firm's products and services

carried by a third party in an indirect way. This includes free publicity as well as
paid efforts to stimulate discussion and interest.
It can be accomplished by planting a significant news story indirectly in the media,
or presenting it favorably through press releases or corporate anniversary parties.
Examples include newspaper and magazine articles, TVs and radio presentations,
charitable contributions, speeches, issue advertising, seminars.

Types of promotion
Direct Marketing is a channel-agnostic form of advertising that allows businesses
and nonprofits to communicate directly to the customer, with methods such as
mobile messaging, email, interactive consumer websites, online display ads, fliers,
catalog distribution, promotional letters, and outdoor advertising.
Sponsorship of an event or contest or race is a way to generate further positive
publicity.
Guerrilla marketing tactics are unconventional ways to bring attention to an idea or
product or service, such as by using graffiti, sticker bombing, posting flyers, using
flash mobs, doing viral marketing campaigns, or other methods using the Internet
in unexpected ways.
Product placement is paying a movie studio or television show to include a product
or service prominently in the show.

PEOPLE

People represent the business:-
The image they present can be important
First contact often human – what is the lasting image
they provide to the customer?
Extent of training and knowledge of the
product/service concerned
Mission statement – how relevant?
Do staff represent the desired culture of the business?

PROCESS

PROCESS
• How do people consume services?
• What processes do they have to go through to acquire
the services?
• Where do they find the availability of the service?
• Contact
• Reminders
• Registration
• Subscription
• Form filling
• Degree of technology

PHYSICAL EVIDENCE

• The ambience, mood or physical presentation of the
environment
• Smart/shabby?
• Trendy/retro/modern/old fashioned?
• Light/dark/bright
• Romantic/loud?
• Clean/dirty/unkempt/neat?
• Music?
• Smell?

END OF UNIT II

UNIT - 3 Marketing Mix

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UNIT - 3 Marketing Mix

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UNIT – 2

A combination of factors that can be controlled by a company to influence consumers

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• Booms and Bitner included

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• To meet customers' needs a business must develop products to satisfy them

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• What is the value of the product or service to the buyer?

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• Where do buyers look for your product or service?

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• Promotion for shopping products is often done cooperatively with the

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b. Achieving a Target Return:

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d. Increase in Market Share:

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