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MARKETING MIX
Dr.Bharath V MFM., M.Com., Ph.D
Assistant Professor
Department of Management
Kristu Jayanti College (Autonomous)
Bengaluru

[email protected]
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Marketing Mix
• Marketing information is needed to assess the marketing
situation and need specific marketing targets in form of
market segments.

• Each market segment has types of marketing activities

that integrate into single market.

• Combination of all marketing methods or devices are

called as Marketing mix. For ex. 4Ps
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Definition
• Marketing Mix is the combination of product offerings
used to reach a target market for the organization
• It is a mix of controllable marketing variables like 4Ps that
best meet the needs of targeted customers
• Marketing mix offers an optimum combination of all
marketing ingredients so that we can have realization of
company goals like profit, sales volume, market share and
role and so on.
• It is changing according to changes in marketing
conditions with changes in external environmental factors
like technical, social, economic and political which affects
the market.
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Feature of an effective Marketing Mix.

• It should match customer needs

• It should give competitive advantage to the company.

• It should match corporate resources.

• All the elements of marketing mix should reinforce each

other to support positioning of the product.
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Marketing mix
• Marketing mix is a combination of factors that a company
controls when creating a marketing strategy.
• Product: The goods and services offered to customers
• Price: The amount of money customers pay to purchase
the product
• Place: The activities that make the product available to
consumers, such as distribution through retail stores,
online platforms, or partnerships with resellers
• Promotion: The activities that communicate the product's
features and benefits, and persuade customers to
purchase it
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Marketing mix
• The 4 Ps have been important to the marketing industry
for over 70 years, since they were established by Harvard
University marketing professor James Culliton in 1948
and expanded upon by Jerome McCarthy.

• The theory has since been expanded into the "7 Ps" of
marketing, which add people, packaging, and process to
the mix.
•
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Product
• What does your customer gain from your product?

• How do its features meet consumer needs?

• How is the product used?

• How does it compare to competitors?

• Are there any missing or unnecessary features?

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Price
• How much does it cost to make the product?

• How does your pricing compare to competitors?

• What is the customer’s perceived value of the product?

• Does your pricing match your branding and value

proposition?
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Place
• Where can your customers find your products?

• Where do your customers prefer to shop?

• What is your distribution strategy?

• How does this compare to your competitors?

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Promotion
• Where are your ideal customers most active?

• Which combination of promotional channels would be

best suited to your audience?

• Do you have a mix of paid, earned and owned media?

• This is where your communications mix comes in.

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New Product Development Strategy

• Why do so many new products fail?
• An idea may be good, the company may overestimate market
demand.
• The actual product may be poorly designed.
• it might be incorrectly positioned, launched at the wrong time,
• priced too high, or poorly advertised.
• A high-level executive might push a favorite idea despite
downbeat marketing research findings.
• The costs of product development may be higher than
expected.
• The company may run out of money in its effort to widely
market the product
• Competitors may fight back harder than expected.
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New Challenges for Companies

• New Product development

• Marketing strategies: changing testes, technologies, and

competitors
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New product
• To create successful new products, a company must
understand its consumers, markets, and competitors and
develop products that deliver superior value to customers.

• New product development

• New to the world.

• New to the product lines.

• Additions to the existing product line

• Improvement and revisions of existing products.

• Repositioning

• Cost reductions.
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Idea Generation
• Internal Idea Sources
• Establishing R&D Research Centres
• Harnessing Internal Creativity
• Conducting Focused Hackathons
• Sponsoring research projects.

• External Idea Sources

• Seeking Insights from Suppliers and Distributors.
• Learning from Competitors.
• Learning from Innovation Leaders outside the Industry.
• Learning from Customers.
• Crowdsourcing
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Idea Screening
• Screening new product ideas to spot good ones and drop
poor ones.

• General criteria (product or the service, customer value

proposition, target market, and competition)

• Screening framework
• Is it real?
• Need and desire, buy it, satisfy the market?
• Can we win?
• Sustainable competitive advantage, feasibility to make, success in the
market
• Is it working doing?
• Growth, profit potential
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Concept Development and Testing

• A product idea is an idea for a possible product that the
company can see itself offering to the market.

• A product concept is a detailed version of the idea stated

in terms that are meaningful to the consumer.

• A product image is the way consumers perceive an

actual or potential product.
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Concept Development
• Honda’s HondaJet Elite business jet

• World’s largest manufacturer of motorcycles and internal

combustion engines.

• Eighth-largest automobile manufacturer.

• Honda Aircraft Company (HondaJet) 2006

• HondaJet launched its first aircraft in 2015.

• Striking HondaJet Elite is the world’s most popular dual

engine business jet aircraft.

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Challenges and opportunities for HondaJet.

• Concept 1. Serve the traditional corporate executive jet
market with the existing HondaJet Elite. This represents
“business as usual.”
• Concept 2. Serve the multinational corporate executive
jet market with a larger, longer-range jet capable of
intercontinental travel.
• Concept 3. Serve wealthy individuals and families who
increasingly distrust commercial air transportation with a
luxury version of the HondaJet Elite.
• Concept 4. Serve the growing air taxi market with a no-
frills, efficient aircraft, which could be either a redesigned
HondaJet Elite or an entirely new aircraft design.
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Marketing Strategy Development

• The target market, the planned value proposition; and the
sales, market-share, and profit goals for the first few years.

• Target market: high-income individuals, couples, or families

seeking efficient, quick, and luxurious transportation.

• Targeted customers will have a net worth exceeding $25

million or regular annual incomes of more than $5 million.

• Market positioned as a platform that provides efficient,

flexible, time-saving, and luxurious transportation on demand.

• Profit goals: The company will aim to sell 20 aircraft in the first
year, at a loss of not more than $5 million. In the second year,
the company will aim to sell 50 aircraft at a profit of $35 million.
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• Product’s planned price, distribution, and marketing

budget for the first year.
• Regular-range version
• Sales force (high quality customer prospect database)
• Marketing budget (high-end magazines, local event, online and
social media)
• Marketing research and customer satisfaction.
• Planned long-run sales, profit goals, and marketing mix
strategy.
• ROI
• Price will be raised in the second and third years if competition and
the economy permit.
• Increase marketing budget every year.
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Business Analysis
• Business analysis involves a review of the sales, costs,
and profit projections for a new product to find out
whether they satisfy the company’s objectives.

• Estimate likely selling price based upon competition and

customer feedback.
• Estimate sales volume based upon size of market.
• Estimate profitability and break-even point.
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Product Development

Conduct
Produce a
Test the focus Make
physical
product group adjustment
prototype
customer
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Marketing Testing
• It involves placing a product for sale in one or more
selected areas and observing its actual performance
under the proposed marketing plan.

• Controlled testing marketing, simulated test, sales wave

research.
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Commercialization
• Production of new product on a commercial basis is
rapidly built up and implementing a total marketing plan.

• Launching a new product,

• When to launch?
• Where to launch?
• To whom?
• How to Launch?
 Product Life Cycle

Sales and
Profits ($)

Sales

Profits

Time
Product Introduction Growth Maturity Decline
Develop-
ment

Losses/
Investments ($)
 Introduction Stage of the PLC
Sales Low sales

Costs High cost per customer

Profits Negative
Create product awareness
Marketing Objectives and trial

Product Offer a basic product

Price Use cost-plus

Distribution Build selective distribution

Advertising Build product awareness among early

adopters and dealers
 Growth Stage of the PLC
Sales Rapidly rising sales

Costs Average cost per customer

Profits Rising profits

Marketing Objectives Maximize market share

Offer product extensions, service,
Product warranty
Price Price to penetrate market

Distribution Build intensive distribution

Advertising Build awareness and interest in the

mass market
 Maturity Stage of the PLC
Sales Peak sales

Costs Low cost per customer

Profits High profits

Marketing Objectives Maximize profit while defending

market share
Product Diversify brand and models

Price Price to match or best competitors

Distribution Build more intensive distribution

Advertising Stress brand differences and benefits

 Decline Stage of the PLC
Sales Declining sales

Costs Low cost per customer

Profits Declining profits

Marketing Objectives Reduce expenditure

Product Phase out weak items

Price Cut price

Go selective: phase out unprofitable
Distribution outlets
Advertising Reduce to level needed to retain
hard-core loyal customers
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Product Life Cycle: Finding New

Life for Mature and Declining Brands
• Marvel Entertainment Company

• Marvel was founded in 1939 by Martin Goodman as

Timely Comics, and by 1951 had generally become
known as Atlas Comics.
• 1990s, Marvel was the undisputed superhero of
superhero comics. Comic book industry fell, filed
bankruptcy.

• Sony had the chance to buy all the Marvel

characters($25MM), only buying the rights of spider-man
($7mm) 1999)

• The Walt Disney Company (2009)

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• Marvel decided to focus on Marvel’s iconic characters but

to target a new generation through a new industry—
movies.

• Marvel Cinematic Universe (MCU) is the highest grossing

film franchise ever, with more than $25 billion in box office
sales. That’s more than any other film franchise including
James Bond, and The Fast and the Furious.

• Its characters have found new life through full-length

movies and are also featured in numerous TV series.

• Marvel’s movie success has also put its comic book

business back into the growth stage of the product life
cycle.
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Classification of products
• By Durability and Tangibility

• Consumer Products

• Durable Goods: Products that have a long lifespan and are used
over an extended period (e.g., appliances, cars).

• Nondurable Goods: Products that are consumed quickly and

need to be purchased frequently (e.g., food, toiletries).
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Industrial Products
• Capital Goods: Long-lasting goods used in the
production process (e.g., machinery, equipment).

• Production Goods: Items used in the production of other

products (e.g., raw materials, components).

• Supplies and Services: Goods and services that support

operations but are not directly part of the final product
(e.g., office supplies, maintenance services).
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Consumer Product Classification

• Convenience Products: Items that are purchased
frequently with minimal effort (e.g., groceries,
newspapers).
• Shopping Products: Products that consumers spend
time comparing on attributes like quality, price, and style
(e.g., clothing, electronics).
• Specialty Products: Unique items with significant brand
loyalty or unique features, requiring special purchasing
effort (e.g., luxury cars, designer clothes).
• Unsought Products: Products that consumers do not
think about frequently or may not know they need until a
situation arises (e.g., insurance).
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Industry Classification
• Primary Sector: Products derived from natural resources
(e.g., agriculture, mining).

• Secondary Sector: Products created from raw materials,

including manufacturing and construction (e.g., steel,
furniture).

• Tertiary Sector: Services and products that facilitate the

consumption of goods or provide services (e.g., retail,
education).
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Product Characteristics
• Functional Products: Products defined by their practical
uses and benefits (e.g., tools).

• Aesthetic Products: Products valued for their design,

style, and emotional appeal (e.g., art, fashion items).
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Customization
• Standard Products: Mass-produced items with little to no
customization (e.g., basic household items).

• Customized Products: Items tailored to individual

customer specifications (e.g., custom-made furniture,
personalized gifts).
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Product Mix
• The product mix refers to the complete set of products
and services that a company offers to its customers. It
encompasses all product lines and items available for
sale.
• Components of Product Mix:
• Product Lines: A group of related products that fall under
a single brand or category.
• Product Items: Individual products within a product line.
• Product Categories: Broader groupings that may
encompass several product lines.
• Product Assortment: The variety and range of products
offered within each product line and category.
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Key Aspects
• Width: The number of different product lines a company
offers (e.g., a company selling electronics, clothing, and
home appliances).
• Length: The total number of products within all product
lines (e.g., a smartphone manufacturer offering 10
different models).
• Depth: The number of variations of each product within a
line (e.g., different sizes, colors, or features of a
smartphone).
• Consistency: How closely related the product lines are in
terms of use, production, and distribution (e.g., a
company specializing in only electronic devices versus a
diversified conglomerate).
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Product Line
• A product line is a group of related products that are
marketed under a single brand and are sold by the same
company. These products typically fulfill a similar function
or target a similar customer base.

• Types of Product Lines:

• Single-Line Product Line: Focuses on a specific
category (e.g., a company specializing in only digital
cameras).
• Multiple-Line Product Line: Includes various categories
of products (e.g., a company offering a range of home
appliances, from refrigerators to washing machines).
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Key Aspects
• Line Length: The total number of products within a
product line.
• Line Depth: The number of variations of each product
within the line.
• Line Extension: Adding new products to an existing
product line (e.g., introducing a new flavor of an existing
snack).
• Line Filling: Adding more variants within the existing
range to cover gaps (e.g., offering different sizes or
configurations of an existing product).
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Product Decisions
Product Strategy:
• Innovation: Introducing new products to the market to meet
emerging needs or leverage new technologies.
• Modification: Updating or improving existing products to maintain
relevance and competitiveness.
• Product Design:
• Features: Deciding on the attributes and functionalities of the
product.
• Quality: Determining the level of quality and performance
standards.
• Branding:
• Brand Name: Choosing a name that resonates with the target
audience and aligns with the brand’s image.
• Brand Positioning: Defining how the product will be perceived in
the market relative to competitors.
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• Packaging:
• Design: Creating packaging that is visually appealing and
functional.
• Information: Providing necessary product information, such as
ingredients, usage instructions, and benefits.
• Pricing:
• Pricing Strategy: Setting a price that reflects the product’s value,
market demand, and competitive positioning (e.g., premium pricing,
penetration pricing).
• Discounts and Offers: Implementing promotional pricing
strategies to attract customers or clear inventory.
• Distribution:
• Channels: Deciding where and how the product will be sold (e.g.,
online, in retail stores, through distributors).
• Logistics: Managing the supply chain and ensuring efficient
distribution to reach the target market.
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• Promotion:
• Advertising: Creating campaigns to raise awareness and generate
interest in the product.
• Sales Promotion: Offering temporary incentives to boost sales
(e.g., discounts, coupons).

• Product Lifecycle Management:

• Introduction: Strategies for launching new products.
• Growth: Managing the product as it gains market acceptance and
sales increase.
• Maturity: Strategies to sustain sales and market position as the
product matures.
• Decline: Decisions regarding the product’s phase-out or
discontinuation.
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Product Line Addition or Deletion

• It involves strategic decisions regarding the expansion or
reduction of a company’s product lines.
• These decisions significantly impact the company’s
market presence, brand identity, and overall business
performance.
• Ex. A Tech Company launching a new line of smart
home devices (e.g., smart thermostats, smart lights)
alongside its existing range of consumer electronics.
• A Beverage Brand introducing a new line of health drinks
or flavored waters to complement its traditional soft drink
offerings.
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Product Line Addition

• Reasons for Adding a Product Line:
• Market Demand: To address new customer needs or
preferences identified through market research.
• Growth Opportunities: To tap into new markets or
customer segments and expand the company’s reach.
• Diversification: To reduce dependency on existing
product lines and spread business risk.
• Competitive Advantage: To strengthen market position
by offering a broader range of products.
• Innovation: To leverage new technologies or trends and
stay ahead of competitors.
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Process for Adding a Product Line

• Market Research: Conduct thorough research to identify
opportunities, understand customer needs, and evaluate potential
demand.
• Concept Development: Develop product concepts and prototypes
that align with market needs and company capabilities.
• Business Case Analysis: Assess the financial viability, including
costs, expected revenue, and return on investment.
• Product Development: Design and develop the new product line,
ensuring it meets quality standards and regulatory requirements
• .Marketing Strategy: Create a plan for launching and promoting the
new product line, including branding, advertising, and sales
strategies.
• Distribution Channels: Determine how and where the new products
will be sold and set up the necessary distribution infrastructure.
• Launch: Introduce the new product line to the market, monitor its
performance, and make adjustments as needed.
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Product Line Deletion

• Declining Sales: Products that no longer generate
sufficient revenue or have seen a consistent decline in
demand.
• Profitability Issues: Products that are not meeting profit
margins or have high production and maintenance costs.
• Market Changes: Shifts in market trends or customer
preferences that render the product line obsolete or less
relevant.
• Strategic Focus: Refocusing the company’s resources
and efforts on more profitable or strategically aligned
product lines.
• Regulatory Compliance: Products that no longer meet
regulatory standards or face legal issues.
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Process for Deleting a Product Line

• Performance Review: Evaluate the performance of the
product line, including sales data, profitability, and market
share.
• Customer Feedback: Gather input from customers regarding
their satisfaction and the impact of the product line on their
purchasing decisions.
• Impact Assessment: Analyze the impact of the deletion on the
company’s overall product mix, brand identity, and supply
chain.
• Communication Plan: Inform stakeholders, including
customers, distributors, and retailers, about the discontinuation
and provide any necessary support.
• Inventory Management: Manage existing inventory to
minimize losses, and plan for the disposal or sale of remaining
stock.
• Transition Strategy: Offer alternatives or replacements to
customers affected by the deletion and ensure a smooth
transition.
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Strategic Considerations
• 1.Brand Impact: Ensure that additions or deletions align with the
company’s brand image and overall strategy. Adding or deleting
product lines can affect brand perception and customer loyalty.
• 2. Financial Implications: Carefully analyze the financial impact,
including costs associated with adding or deleting product lines,
and the potential effect on revenue and profitability.
• 3. Customer Impact: Consider how changes will affect existing
customers. Product deletions may lead to dissatisfaction if
customers are left without viable alternatives, while additions
should address genuine customer needs and preferences.
• 4. Operational Considerations: Evaluate the impact on
production, supply chain, and distribution networks. Adding a new
product line may require adjustments in manufacturing processes,
while deleting a line may affect inventory and logistics.
• 5. Market Positioning: Ensure that the changes support the
company’s market positioning and competitive strategy. Product
line additions and deletions should reinforce the company’s value
proposition and target market focus.
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Product Planning
• Product planning is the process of searching ideas for
new products, screening them systematically, converting
them into tangible products and introducing the new
product in the market. It also involves the formation of
product policies and strategies.

• Immediate objectives include satisfaction of immediate

needs of consumers, increasing sales, utilizing idle plant
capacity, etc.
• Permanent or ultimate objectives consist of reduction in
production costs, creation of brand loyalty, monopolizing
the market, etc.
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Product Diversification
• Product diversification is a business strategy that involves
adding new products or services to a company's
portfolio. It's a common strategy that companies use to
increase sales, profitability, and growth.

• Reach new markets

• Reduce risk:
• Stay competitive
• Increase customer loyalty
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Market Penetration Diversification

• Increasing market share within existing markets by expanding
the product range or improving existing products.
• Product Improvements: Enhancing existing products to
increase their appeal (e.g., adding new features or improving
quality).
• Promotional Strategies: Implementing aggressive marketing
campaigns to boost sales of current products (e.g., special
discounts, loyalty programs).
• Bundling: Offering product bundles or packages to encourage
customers to buy more (e.g., a technology company offering a
bundle of gadgets at a reduced price).
• Benefits:
• Increased Market Share: Drives higher sales within existing
markets.
• Customer Retention: Enhances customer loyalty through
improved product offerings and promotions.
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Product Line Extension

• Introducing new products that are variations of existing
products within the same category.
• Techniques:
• New Flavors or Variants: Adding new flavors, sizes, or
versions of existing products (e.g., a snack company
introducing new flavors of chips).
• Seasonal Products: Launching seasonal or limited-edition
products to attract interest (e.g., holiday-themed items).
• Benefits:
• Enhanced Brand Loyalty: Leverages existing customer
loyalty to drive sales of new variants.
• Increased Market Penetration: Attracts different customer
preferences within the same market.
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Brand Extension
• Using an established brand name to enter a new product
category that is different from the company’s existing products.
• Techniques:
• Related Categories: Introducing products that are related to
the existing product line but in a different category (e.g., a
sports apparel brand launching a line of fitness equipment).
• Lifestyle Products: Expanding into products that align with the
brand’s lifestyle image (e.g., a wellness brand introducing a line
of organic skincare products).
• Benefits:
• Brand Recognition: Capitalizes on existing brand equity and
recognition.
• Market Expansion: Opens new markets and revenue streams.
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Geographic Expansion
• Entering new geographic markets with existing or new
products.
• Techniques:
• International Markets: Expanding product offerings into
international markets (e.g., a domestic beauty brand launching
in Europe or Asia).
• Regional Variants: Adapting products to meet local tastes and
preferences (e.g., a fast-food chain offering region-specific
menu items).
• Benefits:
• Revenue Growth: Access to new customer bases and market
opportunities.
• Risk Diversification: Reduces dependence on the home
market and mitigates local economic risks.
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Vertical Diversification
• Expanding into new stages of production or distribution related
to the company’s current operations.
• Techniques:
• Backward Integration: Acquiring or developing capabilities
related to raw materials or components (e.g., a clothing brand
opening its own textile manufacturing unit).
• Forward Integration: Moving into distribution or retail (e.g., a
cosmetics company opening branded retail stores).
• Benefits:
• Control: Enhances control over the supply chain and
distribution channels.
• Cost Efficiency: Potential for cost savings through improved
operational efficiencies.
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Horizontal Diversification
• Introducing new products that are not directly related to the
existing product line but cater to the same customer base.
• Techniques:
• Complementary Products: Adding products that complement
existing offerings (e.g., a coffee shop introducing a line of
branded mugs and accessories).
• New Product Categories: Exploring entirely new product
categories that appeal to the current customer base (e.g., a
home appliance brand starting a line of home furnishings).
• Benefits:
• Customer Retention: Offers additional value to existing
customers and meets a broader range of their needs.
• Cross-Selling Opportunities: Encourages customers to
explore and purchase additional products.
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Conglomerate Diversification
• Entering completely unrelated industries or markets with new
products.
Techniques:
• Unrelated Investments: Investing in businesses or industries
that are completely different from the company’s core
operations (e.g., a technology company investing in the
entertainment industry).
• New Ventures: Launching new product lines that have no
direct connection to the existing business (e.g., a food
company starting a tech venture).
Benefits:
• Risk Reduction: Spreads business risk across different
industries.
• New Revenue Streams: Provides access to new opportunities
and revenue streams.
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Strategic Partnerships and Alliances

• Collaborating with other companies to develop and market new
products.
• Techniques:
• Joint Ventures: Forming joint ventures to co-develop products
(e.g., a tech firm partnering with a design company to create
new consumer electronics).
• Licensing Agreements: Licensing products or technologies
from other companies (e.g., a toy company licensing popular
movie characters for new toys).
• Benefits:
• Resource Sharing: Shares expertise, resources, and market
access with partners.
• Accelerated Market Entry: Speeds up the development and
launch process.
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Product Positioning
• Product positioning is a marketing strategy that defines
how a product or service is perceived in the marketplace,
and how it's different from competitors' offerings.

• It's based on the needs and wants of the target market,

and aims to create a unique brand identity that's positive
and desirable.
•
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Differentiation-Based Positioning
• Unique Features: Highlight distinctive features or
attributes that set the product apart from competitors.
• Example: Dyson vacuum cleaners emphasize their advanced
cyclonic technology and powerful suction.

• Quality or Performance: Position the product as superior

in quality or performance.
• Example: Rolex positions its watches as symbols of high quality
and luxury.
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Value-Based Positioning

• Cost-Effectiveness: Focus on delivering value at a lower

cost compared to competitors.
• Example: More/smart positions itself as a provider of low prices on
a wide range of products.

• Premium Pricing: Emphasize exclusivity and premium

quality, justifying higher prices.
• Example: Tesla positions its electric vehicles as premium, high-
performance cars.
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Benefit-Based Positioning
• Functional Benefits: Highlight the practical benefits and
functionality of the product.
• Example: Gillette focuses on the close, comfortable shave provided
by its razors.

• Emotional Benefits: Address emotional needs or

desires, such as happiness.
• Example: Coca-Cola positions itself as a brand that brings joy and
refreshment.
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Usage-Based Positioning

• Situational Use: Position the product based on its ideal

use case or occasion.
• Example: Red Bull is positioned as an energy drink for people
needing a boost during intense activities or long work hours.

• Frequency of Use: Emphasize how frequently the

product can or should be used.
• Example: Starbucks positions its coffee as a daily ritual or treat.
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Competitor-Based Positioning
• Against Competitors: Position the product directly in
contrast to major competitors.
• Example: Pepsi often positions itself as a more youthful and fun
alternative to Coca-Cola.

• Niche Positioning: Focus on a specific segment of the

market that is underserved by competitors.
• Example: Kapiva Ayurvedic products positions itself as a lifestyle
store specializing in natural herbs for healthy skin, hair and body.
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Customer-Based Positioning
• Target Audience: Position the product to meet the
specific needs and desires of a particular customer
segment.
• Example: Nike positions its athletic wear as designed for serious
athletes and fitness enthusiasts.

• Lifestyle Alignment: Align the product with the lifestyle or

values of the target audience.
• Example: ORA positions uses plant-based fabrics to make
handmade, slow-fashion clothing for men and women. Their
products are unique and beautiful.
•
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Innovation-Based Positioning
• Cutting-Edge Technology: Emphasize the advanced
technology or innovation behind the product.
• Example: Intel positions its processors as state-of-the-art and
crucial for high-performance computing.

• Novelty: Position the product as new and unique, offering

something not available elsewhere.
• Example: OnePlus positioned itself as a brand offering high-quality
smartphones with flagship features at a mid-range price.
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Geographic or Cultural Positioning

• Local Relevance: Position the product to appeal to
specific geographic regions or cultures.
• Example: McDonald’s tailors its menu to local tastes, such as
offering the McVeggie burger in India.

• Cultural Fit: Align the product with cultural norms or

values.
• Example: Haldiram’s position their snacks as authentic
representations of Indian flavors and recipes, appealing to the taste
preferences of Indian consumers who value traditional food
experiences.
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Branding Strategy: Building Strong Brands

• Brand: A brand represents everything that a product or
service means to consumers.

• “If every asset we own, every building, and every piece of

equipment were destroyed in a terrible natural disaster,
we would be able to borrow all the money to replace it
very quickly because of the value of our brand”.

• The brand is more valuable than the totality of all these

assets
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Brand Equity
• The value of a brand to a company, based on consumer
perceptions and how positive they are.

• Brand equity is a factor that influences brand value, and

it's more difficult to measure than brand value because it's
based on consumer opinions and behaviors.

• Brand equity is a collection of assets and liabilities that

includes consumer perceptions, brand connections, and
loyalty.
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 81

Brand Value
• Brand value refers to the financial worth of a brand, often
measured in monetary terms. It can be determined
through various methods, including market capitalization,
financial performance, and valuation models.

• Financial Worth: In 2023, Brand Finance estimated

Apple's brand value to be over $612 billion. This valuation
takes into account its revenue, market presence, and
consumer loyalty.
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83
 84

Brand Positioning
• Brand positioning involves creating a unique space in the
market for a brand, highlighting its distinct attributes and
benefits in relation to competitors.

• Example: Tesla
• Tesla positions itself as a leader in sustainable energy
solutions, emphasizing innovation, luxury, and high-
performance electric vehicles.

• Tesla’s branding focuses on cutting-edge technology,

environmental consciousness, and a futuristic lifestyle,
differentiating it from traditional automakers.
 85

Brand Name
Selection
• Choosing a brand name involves selecting a memorable
and meaningful name that resonates with the target
audience and aligns with the brand's values.

• Example: Google
• The name "Google" is a play on "googol," a mathematical
term representing a vast number (10 to the power of 100),
suggesting the company's mission to organize vast
amounts of information.
• The unique and catchy name has become synonymous
with online search, contributing significantly to brand
recognition and recall.
 86

Brand Sponsorship

• Brand sponsorship refers to the relationship a brand has

with other brands or events, often through partnerships,
endorsements, or co-branding strategies.
• Example: Nike and Michael Jordan
• Nike partnered with basketball legend Michael Jordan to
create the Air Jordan brand.
• This collaboration not only elevated Nike’s brand status in
sports but also created a cultural phenomenon, leading to
a profitable line of footwear and apparel that resonates
with both athletes and fashion-conscious consumers.
 87

Brand Development
• Line Extensions: Line extensions involve introducing
additional items under an existing brand name within the
same product category. This strategy aims to capture
different market segments or consumer preferences.

• Example: Coca-Cola
• Coca-Cola has expanded its product line with various
flavors such as Diet Coke, Cherry Coke, and Vanilla
Coke.
 88

Brand Extensions
• Brand extensions occur when a company uses its
established brand name to launch products in different
categories. This approach leverages the existing brand
equity to enter new markets.
• Example: Apple
• Apple successfully extended its brand from computers
(Mac) to various product categories, including
smartphones (iPhone), tablets (iPad), and wearables
(Apple Watch).
• The strong brand reputation for innovation and quality
facilitated Apple’s entry into these new categories,
significantly boosting its overall revenue.
 89

Multi-brands
• Multi-branding involves launching multiple brands within
the same product category, allowing a company to target
different market segments without diluting the original
brand.

• Example: Procter & Gamble (P&G)

• P&G offers several brands in the laundry detergent
category, including Tide, Ariel, Gain, and Cheer.
 90

New Brands
• Developing new brands involves creating entirely new
brand names and identities, often to enter a new market
or segment that is distinct from the company's existing
offerings.

• Example: Nestlé
• Nestlé launched the brand "Nespresso" to cater
specifically to the coffee market, separate from its other
food and beverage products.

• Nespresso has become a leading brand in the premium

coffee segment, allowing Nestlé to target a different
consumer demographic and establish a strong presence
in that market.
 91

Packaging
• It refers to the process of designing and producing the
container or wrapper for a product.

• It serves multiple functions, including protection,

containment, information dissemination, branding, and
user convenience.

• Effective packaging not only safeguards the product but

also enhances its demand and promotes brand identity.
 92

Importance of Packaging
• Protection: Packaging safeguards products from damage
during transportation and storage, as well as from
environmental factors like moisture, light, and air.

• Information: Packaging provides essential information

about the product, including ingredients, usage
instructions, expiration dates, and nutritional information.

• Branding: Well-designed packaging reinforces brand

identity and helps differentiate products from competitors.
It can convey brand values and personality through
colors, shapes, and graphics.
 93

• Consumer Appeal: Attractive packaging can capture

consumer attention on store shelves, influencing
purchasing decisions. Unique and visually appealing
designs can make a product stand out.

• Convenience: Packaging can enhance user experience

by being easy to open, resealable, or portable, making it
more user-friendly.

• Sustainability: Increasingly, consumers are looking for

eco-friendly packaging options. Brands that adopt
sustainable practices can appeal to environmentally
conscious consumers.
 94

Components of Packaging
• Material: The choice of materials (plastic, glass, metal,
cardboard) affects durability, cost, and environmental
impact.
• Design: This includes the shape, color scheme, and
overall aesthetics, which contribute to the brand's visual
identity.
• Labeling: Labels convey important product information,
branding elements, and compliance with regulatory
requirements.
• Size and Shape: The dimensions and form of the
packaging can influence storage, transport, and shelf
presence.
 95

Distribution
 96

What is a distribution channel?

• A distribution channel is the network of individuals and

organizations involved in getting a product or service from
the producer to the customer.

• Distribution channels are also known as marketing

channels or marketing distribution channels.
 97

Importance of Distribution Channels

• Market Reach: Effective distribution channels expand the
reach of products, ensuring they are available where
customers want to buy them.
• Customer Convenience: Proper distribution improves
accessibility, enhancing customer satisfaction by making
products easier to find.
• Cost Efficiency: Well-planned distribution can lower
costs associated with logistics, storage, and
transportation, leading to better pricing for consumers.
• Brand Image: The choice of distribution channels can
influence the brand’s image. For example, exclusive
distribution often positions a brand as premium or luxury.
 98

Components of distribution channels

• Producers/Manufacturers

• Intermediaries

• Logistics

• Channel partners

• Customers

• Information and communication

• Payment
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Direct distribution
channels

• Direct distribution channels refer to the method of selling

products directly from the producer or manufacturer to the
end consumer without the involvement of intermediaries.

• In this channel, the producer takes on the responsibility of

marketing, sales, and distribution.
 101

Advantage
• Greater control: The producer has direct control over
branding, pricing, and customer interactions, allowing for
better brand management.

• Higher profit margins: Eliminating intermediaries can

lead to higher profit margins as there are no middlemen to
share the revenue.

• Direct customer feedback: Direct channels enable direct

communication and feedback from customers, facilitating
product improvement and personalized customer service.
 102

Disadvantages

• Increased responsibilities: The producer must handle

all aspects of marketing, sales, and distribution, which can
be resource-intensive and time-consuming.

• Limited market reach: Direct channels may have

limitations in reaching a broader customer base,
especially in geographically dispersed markets.

• Higher upfront costs: Setting up and managing direct

channels may require significant investments in
infrastructure, technology, and marketing.
 103

Indirect
Channels

• Indirect distribution channels refer to the method of selling

products where intermediaries, such as wholesalers, retailers,
distributors, agents, or brokers, are involved in the distribution
process between the producer and the consumer.

• These intermediaries handle tasks like warehousing,

transportation, marketing, and selling the products to the end
customers.
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Advantage
• Market expertise: Intermediaries possess in-depth
knowledge of the market, consumer preferences, and
distribution networks, enabling producers to leverage their
expertise for effective product placement and promotion

• Expanded market reach: By partnering with

intermediaries, producers can access a broader customer
base, especially in markets where intermediaries have an
established presence

• Cost efficiency: Intermediaries can consolidate orders,

handle logistics, and provide marketing support, resulting
in cost savings for producers
 106

Disadvantages
• Reduced control: Producers have less control over
product positioning, pricing, and customer interactions as
intermediaries are involved in the distribution process

• Profit sharing: Producers may need to share profits with

intermediaries, reducing overall profit margins

• Communication challenges: Managing communication

and maintaining consistent branding and messaging
across multiple intermediaries can be complex
 107

Hybrid distribution channels

• Hybrid distribution channels combine elements of both

direct and indirect channels.

• It involves a combination of selling products directly to

consumers while also utilizing intermediaries to distribute
and sell products on behalf of the producer.
 108

Advantages
• Increased market coverage: Hybrid channels provide
access to a wider customer base by combining direct and
indirect distribution methods.

• Control over branding and customer

experience: Direct channels allow producers to maintain
control over branding, pricing, and customer interactions.

• Leveraging intermediaries’ expertise: Indirect channels

enable the use of intermediaries’ knowledge and
resources to expand market reach and improve
distribution efficiency.
 109

Disadvantages
• Increased complexity: Managing multiple distribution
channels and coordinating activities between direct and
indirect channels can be complex and challenging.

• Potential channel conflicts: Conflict may arise between

company-owned channels and intermediaries, particularly
in terms of pricing, competition, and customer
relationships.

• Higher costs: Maintaining and managing a hybrid

distribution strategy may involve higher costs compared to
relying solely on direct or indirect channels.
 110

Factors affecting the distribution channels

• Nature of the Product (based on characteristics)
• Perishable goods (e.g., fruits, dairy) require a direct and fast
distribution channel to ensure freshness, often using local markets
or quick delivery services.

• Market Characteristics
• demographics, preferences, and behaviors of the target market
affect distribution choices.

• Cost Considerations
• A startup may choose direct-to-consumer sales through an online
platform to avoid the costs associated with intermediaries, allowing
them to price products more competitively.
 111

• Competition
• If a competitor uses extensive retail distribution, a new entrant
might also adopt a similar strategy to ensure visibility and
competitiveness in the market.

• Legal and Regulatory Environment

• Pharmaceutical companies must comply with strict regulations
regarding distribution channels to ensure products reach licensed
pharmacies, impacting their distribution choices.

• Technological Advancements
• E-commerce platforms allow businesses to reach consumers
directly without the need for physical retail stores, expanding
market access.
 112

• Customer Service Requirements

• A high-end electronics brand may opt for selective distribution
through specialized retailers to provide superior customer service
and expert advice.

• Inventory Management
• Companies with sophisticated inventory systems may use a just-in-
time distribution model, minimizing stock levels while ensuring
product availability.
 113

Promotion
• Promotion refers to the activities and strategies used by
businesses to communicate with their target audience
about their products or services.

• It aims to inform, influence, and remind consumers,

ultimately encouraging them to make a purchase or take a
desired action.

• Promotion can encompass various methods and

channels, including advertising, public relations, sales
promotions, and personal selling.
 114

Importance of Promotion
• Increases Awareness:
• Promotion helps create awareness about products or
services among potential customers, informing them
about their availability and benefits.

• Stimulates Demand:
• By highlighting the features and advantages, promotion
can stimulate consumer interest and increase demand for
the product.
 115

• Differentiates from Competitors:

• Effective promotional strategies help differentiate a brand
from its competitors, emphasizing unique selling
propositions (USPs).

• Builds Brand Image:

• Consistent and strategic promotion contributes to building
a strong brand image and reputation, fostering customer
loyalty.
 116

• Informs and Educates:

• Promotion provides valuable information to consumers,
helping them make informed purchasing decisions by
explaining product features, uses, and benefits.

• Encourages Repeat Purchases:

• Promotions can incentivize repeat purchases through
loyalty programs, discounts, and special offers.
 117

Advertising- introduction
• Advertising is the process of creating and delivering
messages to promote products, services, or brands
through various media channels. Its primary goal is to
inform, persuade, and remind consumers about offerings,
ultimately influencing their purchasing decisions.
• Advertising is an industry used to call the attention of the
public to something, typically a product or service.

• Advertisement is the means of communication in which a

product, brand or service is promoted to a viewership in
order to attract interest, engagement, and sales.
 118

Importance of Advertising
• Brand Awareness:
• Advertising helps create and enhance brand recognition
among consumers, making it easier for them to recall and
prefer a brand when making purchasing decisions.

• Informs Consumers:
• It educates consumers about products, services, and
features, helping them make informed choices.
 119

• Stimulates Demand: Effective advertising can create

interest and demand for products, encouraging
consumers to try or buy them.
• Competitive Advantage:
• Advertising allows businesses to differentiate themselves
from competitors by highlighting unique selling
propositions (USPs).
• Supports Sales Promotions: Advertising can enhance
the effectiveness of sales promotions by informing
consumers about special offers and driving traffic.

• Builds Brand Loyalty: Consistent and engaging

advertising helps in nurturing brand loyalty, encouraging
repeat purchases.
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Methods of Advertising
• Television Advertising: Commercials aired on TV,
reaching a broad audience.
• Example: A Super Bowl ad promoting a new car model to
millions of viewers.

• Print Advertising:Ads in newspapers, magazines,

brochures, and flyers.
• Example: A local restaurant running an advertisement in
a city magazine to attract diners.
 122

• Online Advertising: Digital ads displayed on websites,

social media, or search engines.
• Example: Google Ads targeting specific keywords related
to a business’s offerings.

• Outdoor Advertising: Billboards, transit ads, and other

large-format advertisements placed in high-traffic areas.
• Example: A billboard advertising a new movie on a busy
highway.

• Radio Advertising: Commercials broadcast on radio

stations.
• Example: A local car dealership promoting a sales event
through radio spots.
 123

• Social Media Advertising: Ads on platforms like

Facebook, Instagram, and Twitter that target specific
demographics.
• Example: Sponsored posts showcasing a clothing line
targeted at young adults.

• Direct Mail Advertising: Physical promotional materials

sent directly to consumers' mailboxes.
• Example: A discount coupon booklet mailed to local
residents.

• Influencer Advertising: Collaborating with social media

influencers to promote products or services.
• Example: A beauty brand partnering with a popular
makeup influencer to showcase its new products.
 124

Advertising Strategies
• Digital and Social Media Advertising: Brands are
increasingly leveraging platforms like Instagram,
Facebook, and TikTok to reach audiences where they
spend their time. This includes influencer partnerships
and engaging content that encourages interaction.

• Personalization: Using data analytics, advertisers can

create personalized ads based on consumer behavior,
preferences, and demographics, making the message
more relevant.
 125

• Content Marketing: Instead of direct selling, brands are

focusing on providing valuable content (blogs, videos,
podcasts) that informs and entertains, building trust and
engagement.

• Video Marketing: Short-form videos (e.g., Instagram

Reels, youtube) are gaining popularity, with brands using
storytelling and visual appeal to capture attention quickly.

• Programmatic Advertising: Automated ad buying using

algorithms to target specific audiences in real-time has
become more prevalent, optimizing ad spend and
improving efficiency.
 126

• Sustainability and Social Responsibility: Many brands

are incorporating sustainability messages into their
advertising to resonate with socially conscious
consumers, promoting eco-friendly practices and
corporate social responsibility.

• Augmented Reality (AR) and Virtual Reality (VR):

Brands are using AR and VR experiences to engage
consumers in innovative ways, allowing them to visualize
products in their own environments.

• Interactive Ads: Engaging consumers through quizzes,

polls, and interactive content helps to create a more
immersive advertising experience.
 127

Sales Promotion
• Sales Promotion refers to a variety of marketing
strategies and tactics aimed at increasing short-term
sales of a product or service. These strategies often
include special offers, discounts, contests, and other
incentives to encourage customers to make a purchase.

• Ex: A popular beverage company might offer a "buy one,

get one free" (BOGO) promotion on its drinks during the
summer months to boost sales.
 128

Sales Promotion Techniques

• Discounts and Coupons: A grocery store might provide
digital coupons that customers can use at checkout.
• Free Samples: A cosmetics brand giving out free samples
at a beauty counter to entice customers to purchase full-
sized products.
• Contests and Sweepstakes: A soft drink company might
run a contest where customers can win cash or
merchandise by entering a code found under bottle caps.
• Loyalty Programs: Emirates Airlines often have frequent
flyer programs where customers earn points for each
flight, which can be redeemed for future travel.
• Bundling: A fast-food chain might offer a meal deal that
includes a burger, fries, and a drink at a discounted rate.
 129

Merits of Sales Promotion

• Increased Sales:A clothing retailer might offer a 50% off
sale, attracting more customers and increasing base
traffic.

• Market Penetration: A new snack brand may offer free

samples in grocery stores to encourage trial.

• Inventory Management: A tech company might discount

older models to clear out stock for new releases.

• Customer Loyalty:A coffee shop offering a loyalty card

where customers receive a free drink after a certain
number of purchases can encourage repeat visits.
 130

Demerits of Sales Promotion

• Short-Term Focus:If a restaurant frequently offers
discounts, customers may wait for the next deal rather
than visit at full price.
• Brand Perception:A luxury brand that frequently
discounts its products may lose its status among high-end
consumers
• Profit Margin Erosion:A retailer that relies on frequent
sales may find that its overall profitability decreases..
• Competitor Response: If one airline offers a fare sale,
others may quickly follow , reducing profitability across the
industry.
 131

Public Relations
• PublicRelations (PR) refers to the strategic
communication process that builds mutually beneficial
relationships between organizations and their publics. PR
aims to create a positive image and manage the reputation
of an organization through various communication
strategies.

• Example: A tech company launches a new product and

hosts a press event where journalists and influencers are
invited to learn about the product's features. The company
provides product demonstrations and facilitates interviews
with key executives, generating media coverage and
positive publicity.
 132

Tools of Public Relations

• Press Releases: A company issues a press release
announcing a significant partnership or a new product
launch. This document is sent to media outlets to inform
the public and generate media coverage.
• Media Kits: A movie studio creates a media kit for an
upcoming film, including press releases, high-resolution
images, cast bios, and behind-the-scenes information to
distribute to journalists.
• Social Media: Organizations use platforms like Twitter,
Facebook, and Instagram to engage with the public, share
news, and respond to inquiries, creating an interactive
communication channel.
 133

• Publicity Events: A nonprofit organization hosts a fundraising

gala, inviting community leaders and influencers to raise
awareness and support for their cause, generating media
coverage and public interest.
• Newsletters: A company sends out a monthly newsletter to its
subscribers featuring updates on products, industry news, and
company achievements, keeping stakeholders informed and
engaged.
• Community Relations: A corporation sponsors local events,
such as charity runs or community clean-up days, to build
goodwill and strengthen relationships within the community.
• Crisis Management: A company facing a scandal or negative
publicity engages in crisis management by holding a press
conference to address concerns, explain actions taken, and
restore public trust.
 134

Direct selling
• Direct selling is an effective way to build long-lasting customer
relationships and grow a flexible, low-cost business.
Independent sales people use direct selling to sell their
products and services directly to customers in meeting places
such as homes, offices and cafes, instead of in retail outlets.
• Direct selling allows you to avoid expensive overheads, reduce
advertising costs and run your businesses flexibly. Customers
also benefit from the convenience and personal attention they
receive from direct salespeople. However, there are
disadvantages to direct selling.
• Direct salespeople can find it hard to reach new customers and
can spend a lot of time on customer interactions to make sales.
Without the use of a retail outlet, you also need to carefully
consider storage and delivery logistics.
 135

Types of direct selling

• Person-to-person sales — arranging individual
appointments with customers to make presentations,
demonstrate new products or arrange product tests or
fittings

• door-to-door sales — approaching homes and

businesses by appointment or unannounced to leave
catalogues and offer products or product demonstrations

• in-home presentations — arranging parties and at-home

gatherings to present products (often called 'party plan')
 136

• online shopping — using websites and email lists to

build customer networks and offer online ordering facilities

• venue sales — setting up booths or kiosks at events to

generate new leads and promote and sell products

• Network marketing — recruiting other sellers into a

network to 'duplicate' your product sales role, earning a
percentage of their sales revenue and expanding your
product reach. Eg : Amway, Modicare, Tupprrware
 137

Publicity
• Publicity is also a way of mass communication. It is not a
paid or not form of mass communication that involves
getting favorable response of buyers by placing
commercially significant news in mass media.

• Publicity is not /paid for by the organisation. Publicity

comes from reporters, columnists, and journalists. It can
be considered as a part of public relations.
 138

Example
• An example of publicity is a company launching a new
product and hosting a press conference.

• If a tech company, such as Apple, announces a new

iPhone and invites journalists to a launch event, media
coverage from various outlets will likely follow, discussing
features, pricing, and consumer reactions.

• This coverage serves to promote the product without

direct advertising costs, leveraging the credibility of the
media.
 139

Pricing
• Price is he mechanism or device for translating into quantitative

terms the perceived value of the product to the customer at a

point of time.

• Price must be equal to the total amount of benefits (physical,

economic, social and psychological benefits)

• Price is the only criteria for consumer for comparing alternative

items and making the final choice.

• Price is equivalent to total product offering includes brand

name, package, benefits, service after sale, delivery, etc.

 140

• Definition
• Price is defined as the amount of money charged for a
product or service”
• Price is defined as the amount of money expected, required
or given in payment of something or product or service”
• Importance of Pricing
• It denotes the value of the product or service expressed in
money.
• Price is determined by free play of demand and supply.
• Market price acts as basis for fixing the sale price.
• Price regulates business profits, allocates the economic
resources for optimum production.
• Price is prime regulator of production, distribution and
consumption of goods.
 141

Important marketing variable influenced

by pricing decisions are
• Sales volume

• Profit margins.

• Rate of return on investment

• Trade margins

• Advertising and sales promotion

• Product image

• New product development.

 142

Objective of pricing
Growth in Sales

Market share

Predetermined profit level

Meet or follow competition

Control cash flow

 143

Factors influencing pricing policy

• Cost of Production

• Fixed Costs: These are constant regardless of output,

such as rent, salaries, and insurance.
• Variable Costs: These fluctuate with production levels,
including materials, labor, and energy costs.
• Break-even Analysis: Calculating the minimum sales
volume needed to cover costs impacts pricing decisions.
 144

• Market Demand
• Customer Demand: Strong demand may allow higher
pricing, while low demand might require lower prices.
• Elasticity of Demand: Products with inelastic demand (less
sensitive to price changes) can often sustain higher prices,
while elastic demand requires competitive pricing.

• Competition
• Competitive Landscape: In highly competitive markets,
companies might price aggressively to capture market share,
while in monopoly situation, prices might be set higher.
• Competitors’ Pricing: Monitoring competitors' prices helps
determine a suitable pricing strategy, whether matching,
undercutting, or differentiating with premium pricing.
 145

• Target Customer Profile

• Buying Behavior: Understanding whether customers are
price-sensitive or quality-conscious influences price setting.
• Customer Segmentation: Different customer segments (e.g.,
budget-conscious vs. luxury buyers) may justify different pricing
for similar products.

• Company Objectives
• Profit Maximization: Some companies set prices to maximize
short-term profits.
• Market Penetration: Pricing can be set low initially to capture
market share.
• Survival: In difficult times, prices may be set low to maintain
cash flow.
• Brand Image and Positioning: Premium pricing may be used
to reinforce a luxury or high-quality brand image.
 146

• Economic Conditions
• Inflation and Deflation: Rising costs due to inflation often lead
to higher prices, while deflation might pressure companies to
lower prices.
• Consumer Purchasing Power: Economic downturns
generally reduce purchasing power, leading to a shift toward
more affordable pricing strategies.
• Interest Rates: High-interest rates can increase costs,
potentially leading to higher prices.

• Legal and Regulatory Factors

• Price Controls and Regulations: Government regulations
may impose price floors or ceilings.
• Tax Policies: Taxes on certain products, like luxury items or
imports, affect final pricing.
• Environmental and Trade Policies: Compliance with
regulations like carbon taxes or tariffs can impact costs and
thus pricing.
 147

• Distribution Channels
• Channel Structure: Direct-to-consumer models may allow for
lower prices by cutting out intermediaries.
• Channel Margins: Wholesalers, retailers, and distributors each
add their margins, which influences the final retail price.
• Logistics Costs: Shipping, warehousing, and handling costs
impact the price, especially in industries with high
transportation needs.

• Product Life Cycle Stage

• Introduction Stage: Prices may be set lower to penetrate the
market or higher to recoup development costs.
• Growth Stage: Increasing demand may support stable or
premium pricing.
• Maturity Stage: Competitive pricing may be needed to
maintain market share.
• Decline Stage: Prices are often reduced to clear out inventory
as demand wanes.
 148

Pricing Methods
• Cost-Plus pricing: Set the price at the production cost
plus a certain profit margins

• Target return pricing: set the price to achieve a target

ROI.
• Ex: suppose a pen manufacturer has invested 1mm and
wants to earn 20% ROI. Cost of pen is Rs.16. assuming
that the sales can reach 50k units,
• Target return price= 16 + 4= Rs. 20
 149

• Value-based pricing:

• Value-based pricing is a strategy where a company sets

its prices primarily on the perceived value of a product or
service to the customer, rather than on the cost of
production or historical prices.

• Examples of Value-Based Pricing

• Luxury Goods: Brands like Rolex and Gucci use value-
based pricing to set premium prices due to their brand
image, exclusivity, and perceived luxury.

• Technology Products: Apple often uses value-based

pricing for products like the iPhone by leveraging its brand
prestige and innovation.
 150

Psychological pricing
• Psychological pricing is a strategy that aims to influence
customers' perceptions of price to make products appear
more attractive.

• It leverages consumer psychology to make prices seem

lower, increase the perception of value, or prompt quicker
buying decisions.

• Ex. Using prices ending in 0.99 or 0.95 to make them

appear lower.
 151

Skimming price
• Skimming pricing, or price skimming, is a strategy where
a company sets a high initial price for a new or unique
product and gradually lowers it over time.

• This approach is commonly used for innovative products

or products with little competition, allowing the company
to "skim" the maximum profit from early adopters who are
willing to pay a premium for being the first to own the
product.

• Ex. Apple
 152

Penetration pricing
• Penetration pricing is a strategy where a company sets a
low initial price for a new product or service to attract
customers quickly and gain market share.

• The goal is to “penetrate” the market by appealing to

price-sensitive consumers and building a customer base
rapidly. Once the product has gained traction, the price
may be gradually increased.

• Ex. Streaming Services (e.g., Netflix, Disney+)

 153

Price Determination Process

• Define Pricing Objectives

• Profit Maximization: Setting prices to achieve maximum

profit.
• Market Share Growth: Pricing competitively to increase
market share.
• Survival: Setting prices to cover costs, especially in
competitive or downturn markets.
• Image and Brand Positioning: Pricing to establish or
maintain a premium brand image
 154

• Estimate Costs
• Fixed Costs: Constant expenses regardless of production,
such as rent and salaries.
• Variable Costs: Costs that vary with production levels, like
materials and direct labor.
• Total Cost Calculation: Summing fixed and variable costs to
understand break-even points.
• Cost-Plus Pricing: Often, companies add a markup to their
total cost to determine the base price.

• Analyze Competitors' Pricing

• Competitor Analysis: Assessing competitors' pricing
strategies and positioning.
• Benchmarking: Identifying competitive price points in the
market for similar products.
• Strategic Positioning: Deciding whether to price above,
below, or at par with competitors based on company goals.
 155

• Evaluate Market Demand

• Demand Forecasting: Estimating potential demand at

various price points.
• Price Elasticity of Demand: Assessing how sensitive
customers are to price changes.
• Customer Willingness to Pay: Understanding the
maximum price customers are willing to pay based on
perceived value.
 156

• Choose a Pricing Strategy

• Cost-Plus Pricing: Adding a standard markup to the cost.

• Value-Based Pricing: Setting a price based on the
product’s perceived value to the customer.
• Penetration Pricing: Setting a low initial price to attract
customers and gain market share.
• Skimming Pricing: Setting a high initial price and then
gradually lowering it as the product lifecycle advances.
• Competitive Pricing: Setting prices based on
competitors’ pricing for similar products.
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• Consider External Factors

• Economic Conditions: Evaluating inflation, consumer

purchasing power, and interest rates.
• Legal and Regulatory Environment: Adhering to price
controls, tax implications, and regulations.
• Channel and Distribution Costs: Factoring in margins
and costs of distribution channels.
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• Determine the Final Price

• Markups and Discounts: Deciding on any additional

markups or discounts for promotions.
• Psychological Pricing: Setting prices that appeal to
customer psychology, like 99 instead of 100.
• Geographical Pricing: Adjusting prices based on the
location or region of sale if necessary.
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• Test the Price

• Market Testing: Introducing the price in a test market to
gauge customer reaction.
• Customer Feedback: Gathering feedback to understand
if the price meets customer expectations.
• Adjustments: Making modifications if initial price testing
suggests poor customer response.

• Monitor and Adjust the Price

• Sales Performance Analysis: Regularly reviewing sales
data and profitability.
• Competitive Reactions: Adjusting prices based on
competitor moves.
• Market Changes: Adapting pricing for changing costs,
demand shifts, or economic changes.
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Case Study: EcoSmart Home Products

- "Green Living Campaign"
• Background

• EcoSmart Home Products is a company dedicated to

providing sustainable and eco-friendly home products,
including energy-efficient appliances, biodegradable
cleaning supplies, and reusable kitchenware.

• Despite a growing interest in green products, EcoSmart

struggled to effectively communicate its brand message
and differentiate itself in a competitive market.
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Objective
• To boost brand awareness and increase sales by 30%
over six months, EcoSmart aimed to launch a
comprehensive promotional campaign called the "Green
Living Campaign.

• " The goal was to educate consumers about the benefits

of sustainable living while showcasing EcoSmart's
products.
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Promotional Strategy
• Target Audience:
• Eco-conscious consumers aged 25-45, including young families and
environmentally aware millennials.

• Integrated Marketing Approach:

• The campaign combined various promotional tools:
• Social Media Marketing: Engaging content, including tips on
sustainable living and product features, was shared on platforms
like Instagram, Facebook, and Pinterest.
• Email Marketing: A newsletter was created to educate
subscribers about eco-friendly practices and highlight special
promotions.
• Influencer Partnerships: Collaborations with eco-friendly
influencers to review and promote products.
• Public Relations: Press releases sent to relevant publications
about the campaign launch and EcoSmart’s commitment to
sustainability.
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Promotional Events
• Green Living Workshops: Hosted in local communities,
these workshops offered hands-on demonstrations of
EcoSmart products and provided practical tips on
reducing carbon footprints.

• Pop-Up Shops: Temporary storefronts in high-traffic

areas to showcase products and interact directly with
potential customers.

• Incentives: Discounts and promotional offers, such as

"buy one, plant one," where for every product sold, a tree
was planted in partnership with a local environmental
organization.
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Execution
• The campaign launched in March, coinciding with Earth
Month, to leverage heightened public interest in
environmental issues.

• Social media content was scheduled weekly, focusing on

different themes, such as sustainable cooking, energy-
saving tips, and the importance of biodegradable
products.

• Workshops were organized in collaboration with local

community centers, attracting participants interested in
learning about eco-friendly practices.
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Results
• Increased Brand Awareness:
• Social media engagement rose by 150%, with followers
increasing significantly as content was shared and
discussed among eco-conscious communities.
• Media coverage of the campaign appeared in several local
newspapers and eco-friendly blogs.

• Sales Growth:
• EcoSmart experienced a 35% increase in sales over the
six-month campaign period, surpassing the initial goal.
• The most popular products were reusable kitchenware and
biodegradable cleaning supplies, which saw a notable
spike in purchases.
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• Community Engagement:
• The workshops attracted over 500 participants, fostering a
sense of community and brand loyalty among attendees.
• The "buy one, plant one" initiative resulted in over 1,000
trees being planted, enhancing the company's reputation
as a socially responsible brand.

• Customer Feedback:
• Positive feedback from customers highlighted the value of
education on sustainable practices, with many expressing
gratitude for the practical tips shared during workshops.
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• Scenario:

• EcoWave, an eco-friendly skincare brand, is launching a

new product line targeting environmentally conscious
millennials and Gen Z.

• They plan to differentiate through sustainable packaging

and natural ingredients. However, they face competition
from other established brands in the eco-friendly space.
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• Which pricing strategy should EcoWave consider to

attract price-sensitive, eco-conscious consumers who
are willing to pay a premium for sustainable
products?

• A) Cost plus pricing

• B) Value-based pricing
• C) Penetration pricing
• D) Skimming pricing
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• If EcoWave wants to ensure product availability to

their target audience and increase accessibility, which
distribution channels are most suitable?

• A) Specialty eco-stores and direct-to-consumer website

• B) High end department stores
• C) Local farmers' markets only
• D) Exclusive boutique outlets
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• EcoWave wants to create strong brand recognition and

trust among environmentally conscious young
consumers. Which promotional strategy would be the
most effective?

• A) Print advertising in local newspapers

• B) Direct mail flyers
• C) Partnering with eco-conscious influencers on social
media
• D) Sponsoring large-scale in-person events