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Principles of Markerting
UNIT 1 : INTRODUCTION TO MARKETING AND
MARKETING ENVIRONMENT

Marketing is process of understanding customer needs and wants and creating

pricing, promoting and distributing goods and services to satisfy customer needs
and wants and building lasting relationship with them to generate revenues for
survivaland growth of business

Marketing is social and managerial process by which an individual and

organization obtain what they need and wantthrough creating and exchanging
value with others.

Market refers to a place where buyer and seller meet forexchange of goods and
services .

Marketer can be a person or organization who makes availablethe product and

service and offer them to customer with intention of satisfying their needs and
wants.

Nature of Marketing :
1. Customer focused : marketing intends to satisfy and delight
customer. The activities of marketing must be directed and focused at
customer. Marketing should startwith identification of customer needs
and wants.

2. Based on system approach : marketing system is basedon system

approach to marketing. It require intelligent coordination of 4 P’s of
marketing mix.
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3. Integrated process : Marketing is an integrated process.It is not just one

activity, it involve interaction of many activities such as product,
planning, pricing, promotion, packaging etc
4. Mutually benefit exchange : it means buyer get wantsatisfying goods
and services and seller gets value in exchange of goods and services
5. Interaction with external environment : marketing operates within
framework of external environment whichcomprise economical, social,
natural, legal forces. Change is environment influence market activities.
6. Creative : Marketing perform certain crucial function which create time,
place, possession utilities. Time utility created by preserving goods for use
in future. Place utilityis created by carrying goods to place where they
needed.

Scope of marketing :
Marketing is pervasive in nature as it applies to all types of organization. It is not
applicable to only business organizationbut also in educational, medical,
government organization

The scope of marketing is determined by market offering of an organization.

Market offering is combination of goods, service,idea, person, place, info etc
★Goods : An item is considered goods if it tangible. Theygenerally offer same
benefit each time.
★Services : these include services of profession like doctor,advocate, CA and
other services like banking, insurance, transport etc. The consistency of
benefit may vary over time to time.
★Ideas : An idea is mental concept and intangible in nature. A marketer market
an idea to change behavior of targetedpeople.
★Persons : marketing of persons refers experts areemployed to market
specific personalities.
★Organizations : many organizations market themselvesto build up their
reputation and to make people aware about their activities.
★Places : marketing of places involves when tour and travelagencies induce
people to visit various tourist and health resorts
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Importance Of Marketing :

1. Benefits to firms :
★Beating heart to business firm : marketing is sole revenueproducing activity
and considered most important functionof management.
★Give top priority to needs of customer : quality of goods,storage display,
advertisement, packaging all directed toward satisfaction of customer
★Help in creation of place, time, possession utilities : the significance of
marketing lies in creation of these utilities to satisfy the needs of these
customers and thereby earnprofit.

2. Benefits to customer :
★Provision of information : Marketers provide important information to
users about the availability of their productin market and their usefulness.
★Satisfaction of needs and wants : marketing helps the consumer in procuring
goods and services to satisfy theirneeds and wants
★Wider choice : Marketing helps in creating competition among the marketer
who come out with new and improvedproduct for customer.
★Improvement in standard of living : By providing a wide variety of product,
marketer helps in improving standardof living of customer.
★Time and place utility : Marketers create time utility by providing goods to
consumer when they need the same.

3. Benefits to Society :
★Satisfaction Of Society Needs : Marketing determine theneeds of society and
set out the pattern for production ofgoods and services.
★Improved Standard of living : Marketing help in improving standard of living
by offering a wide variety of product to society with freedom of choice.
★Generation of employment : Marketing generate employment for
people. A large number of people are employed by modern business
house to carry out thefunctions of marketing.
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★Better utilization of resources : marketing helps in betterutilization of

resources of society as each firm try to produce goods and services
economically and efficiently.

Concepts of marketing :

1. Production Concept : This concept is based on belief thathigh

production efficiency and mass distribution would sellproduct
offered to market. It will lead to economies of scale and decline
in cost per unit. Mass production and distribution are essence
of production concept.
2. Product concept : this concept believes that by producing
superior product and improving their feature over time they
would be able to attract more customer with assumption that
customer favour product quality, innovative feature.
3. Societal Marketing concept : This concept goes beyond
understanding customer needs and matching product
accordingly. This philosophy cares not only for consumerbut
also for social welfare.
4. Marketing Concept : It emphasis the determination of
requirement of potential customers and supplying productto
satisfy their requirements. The objective of firm is not
maximization of sale volume but profit through satisfaction of
customer.
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Marketing Mix
Every business has to determine its marketing mix for satisfaction of needs of
customer. It represent a blending ofdecision in 4 areas – product, price, promotion
and physical distribution.

It is a dynamic concept. It concentrate on how to satisfy needsof customers.

Importance of marketing mix :

1. Customer Satisfaction : It serve as link between business firm and its
customer. It focuses attention on satisfactionof customer
2. Balancing of marketing strategy : It give consideration to various
elements of marketing system, there is balanced relation between these
elements.
3. Integrated strategy : It signifies that its 4 elements are closely
interrelated. Decision or changes in one elementusually affect decision
or changes in other.
4. Facilitates Market segmentation : marketing mix facilitates meeting the
requirement of different segmentof customers. If requirement of
customer change the marketing mix also change to satisfy their
requirement.
5. Higher Sales Volume : marketing mix takes care of needs ofcustomer, it
helps in increasing sales and earning higher profit.
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Component Of marketing mix :

1. Product :
It involve planning, developing, and producing right types of product and
services to be marketed by firm. It deals with the product range,
durability and other qualities. Its emphasis also laid down on branding,
packaging, color andother features.

2. Price :
It involve establishing policies regarding credit and discount. Firm should
determine the price in such a waythat it able to sell product successfully.
Pricing decision have direct influence on sales volume andprofit of firm.

3. Promotion :
It deals with informing and persuading the customer regarding the firms
product. It involve decision about advertising, giving free article on
purchase of particularcommodity, other promotion techniques.
It help in fighting with competition in market.
A mix of advertising, personal selling, sales promotion andpublic relation
used for promotion of firm and its goals.

★Advertising It is a tool marketing manager use to communicate a

message to customer through newspaper,magazine etc
★Personal selling It is another means of communicating customer and
consist of direct person to person interactionbetween salesman and
customer. It is necessary where target consumer are industrial
organizations
★Sales Promotion It involve communicating with target customer through
various techniques such as free samples,premium on sale contest, display,
shows and exhibition.
This has arisen because of large scale competition andwiden market.
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4. Place :
It entails activities that are necessary to transfer ownership of goods to
customer and to make good available at right time and place. Thus it
include decision like channel of distribution and the place at which
productshould displayed and made available to customer

Marketing Mix For Services :

1. People : People constitute an important dimension in marketing of
services in their role both as performer ofservice or as customer
Process : It refers to a process by which a customer is served wit desired
product. The process of delivery become important in service
organization. It refers to routine, procedure, mechanism, followed by
organization to render services
2. Physical Ambience : A Customer needs the services but itis also
important how the service is offered.

Marketing Environment

All External factors and forces that affects a firms ability to develop and maintain
successful transaction and relationshipwith the target customer

It includes all factors that affect marketing policies, decision and operation of
firm. The external factors consist micro and macro factors.

Environmental Scanning involve environmental monitoringand

evaluating changes and trends in marketing environment

Benefits of scanning Marketing Environment :

★Identification of opportunities : Opportunities refers to positive or

favourable external factors that are likely tohelp a firm to increase its
business. By keeping in touch with changes in external environment an
enterprise can identify opportunities and design strategies to capitalize
strategy.
★Identification of threat or warning signals : Threatrefers to negative or
unfavourable external factors that
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★Identification of threat or warning signals : Threatrefers to negative or

unfavourable external factors that are likely to create hurdles for firm. It
helps to identifypossible threat in future.
★Helps management to Cope with rapid change : A keen watch on trends in
environment would help to sensitise the firms management to changing
technology,competition, government policies and changing needs of
customer.
★Formulation of strategy and policies : Environmental analysis help in
identifying threat and opportunities in market. They can serve as basis of
formulation of strategies to counter threat and capitalize an opportunitiesin
market.
★Image Building : if a firm is sensitive to external environment, it will come
out with new product and services to meet the requirement of customer.
This wouldbuild the image or reputation of firm in eyes of customerand
general public.
★Continuous Learning : Strategy formulation is a continuous process that
involve keeping in touch with external environment. Manager continue to
understand environment change and act on basis of such information.

Micro Environment :-
It implies the force in immediate environment which affect marketing manager
ability to serve the customer. It includeboth internal and external forces. Internal
factors includescompany top management and its departments. External
factors includes suppliers, intermediaries, customers andgeneral public etc.
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1. Suppliers : Suppliers include those business firms that provide raw

material for production of goods and services.The buyer supplier
relationship is one of mutual economicindependence, unexpected
development in supplier environment have immediate effect on firms
operation.

2. Intermediaries : Normally, not all manufacturers are able to sell their

products or services to customers directly. To get their goods to
customers, producers employ a variety of intermediaries. . Intermediaries:
Normally, not all manufacturers are able to sell their products or services to
customers directly. To get their goods to customers, producers employ a
variety of intermediaries. These peopletypically favour trusted brands. It
could be very challengingfor newcomers to locate a dealer who will stock
their goods.

3. Competitors: Competitors present a challenge to a business. Marketing

choices are also influenced by competitors’ strategies. Competition is a
scenario in whichnumerous businesses provide comparable goods and
compete for market share using various marketing tactics.

Customers: Numerous different types of customers exist inthe market. A

business might offer products or services directly to consumers, resellers,
businesses, the government or foreign consumers. The reputation a business
has established can sometimes persuadeconsumers to become its client or
customer.
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Macro Environment :
A group of environmental variables known as the macro environment are out of
an organization’s control. These elements have a considerable impact on the
organisationaloperations. The macro environment is constantly changing

1. Political Environment : Political changes result in new laws and policies that
affect business. Government regulations continues in various ways, and
the laws and regulations formed under them grow more complex. The
expenses and pricing of the goods and services marketed are directly
influenced by tax legislation, such as sales tax,excise duty, octroi, income
tax, etc.

2. Economic Environment : The economic environment isdetermined by the

state of the economy as measured by the Gross National Product (GNP),
per capita income, andthe favourable or unfavourable position of the
trade balance.

The cost of living, minimum wage, working hours, local andnational

unemployment, interest rates, currency rates, inflation, and pay rates are all
considered economic issues.

These variables affect a company immediately and havelong-lasting

impact on the success of the economy.

3. Socio-Cultural Environment : The socio-cultural environment is influenced

by factors like societal norms, attitudes, perceptions and actions. These
factors assist inunderstanding the types of things that customers prefer,
what influences their attitude toward or choice of purchases, which brand
they favour, and when they acquire products.
Hence, the society’s culture has a good amount of influenceon how people’s
consumption and buying patterns.
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4. Socio-Cultural Environment : The socio-cultural environment is influenced

by factors like societal norms, attitudes, perceptions and actions. These
factors assist inunderstanding the types of things that customers prefer,
what influences their attitude toward or choice of purchases, which brand
they favour, and when they acquire products.
Hence, the society’s culture has a good amount of influenceon how people’s
consumption and buying patterns.

5. Demographic Environment : Age, race, wealth, and other variables are only
a few examples of the many characteristics of the people in a certain area
that are covered by demographics. these characteristics might havean
impact on a business’s ability to expand and succeed, most firms find the
information about them through survey of the population.

6. Technological Environment : The term “technological environment” refers

to the country’s current status of science and technology as well as related
elements like thespeed of technological development, institutional setups
for the creation and use of new technology, etc. The use of technology in
marketing and advertising hasgreatly changed.

7. Environmental Factors : Natural resources are found in the environment

and are used by the company as raw materials to produce products. These
natural resources areharmed by marketing efforts, such as the ozone layer
beingdestroyed due to use of certain chemicals in the products.It should be
the duty of the manufacturer and marketer to opt for eco friendly processes
to manufacture or promote aproduct and make sure that the harm on
environment canbe minimized.

8. Ethical Factors : The term “ethical” refers to both moral or ethical issues
that could develop in a business as well as ethical standards. It takes into
account issues like fair trade, acts of slavery, and child labour, as well as
CorporateSocial Responsibility (CSR), in which a firm supports regional or
societal objectives by participating in volunteer work or other
philanthropic, activist or charity endeavours.
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UNIT2 : CONSUMER BEHAVIOUR ANDMARKET SELECTION

(PART 1 : CONSUMER BEHAVIOUR)

Introduction :

Consumer behaviour is the study of how different consumers, groups,

or organisations choose, purchase, utilise, and dispose of concepts,
products, and services to meet their needs and desires.

All marketing decisions are founded on presumptions about customer

behaviour, which includes communicating, purchasing, and consuming.

“consumer behaviour is the actions and decision processes of people

whopurchase goods and services for personal consumption.”

“Consumer behaviour is the process whereby individuals decide what,

when, where, how and from whom to purchase goods and services.”

Customer :- A customer is someone who consistently purchases goods

andservices from a supplier and pays for it to meet their requirements.

Consumers are those who buy products for their own needs and use
them.Although a consumer cannot resell the commodity or service,
but can consume it. The final user of the products or services is
referred to as a consumer.
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Nature of Consumer behavior :

1. Dynamic in nature: Consumer behaviour changes throughout life.

Depending on the nature of the products, it changes graduallyover time.
2. Varies from customer to customer: Not all consumers act inthe same
way. Distinct shoppers exhibit different behaviours. Individual
characteristics including consumer nature, lifestyle, and culture are to
blame for the variations in consumer behaviour.
3. Leads to purchase decision: A choice to buy is influenced by
favourable consumer behaviour. A consumer’s decision to purchase
a product may be influenced by a variety of factors
4. Varies from product to product: Different products possessdifferent
consumer behaviour. Some customers might purchaselarger
quantities of some products while purchasing little to no amounts of
others.
5. Complex in nature: Because everyone has different requirements
and goals, consumer behaviour is complex. Each person behaves
differently in the market since they each havespecific wants.

Need for Studying Consumer Behaviour :

1. To satisfy customer needs: Consumers respond favourably whileexamining

the products that best suit their demands. . It involves examining what
people purchase, when they do so, where they do it, and how frequently
they utilise it. Therefore, understanding
consumer behaviour will be crucial to the marketer’s ability to meet
customers’ requirements.
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2. Helps to understand consumer psychology: Marketing professionals

can better grasp consumer psychology by studyingconsumer
behaviour. Based on his knowledge, attitude, intention,and motive,
consumer psychology is used.

3. Helps to understand consumer motives: To comprehend a consumer’s

motivations for making purchases, consumer behaviourmust be studied. A
Consumer has several motives, It’s possible that not all of these reasons/
motives for buying are equally strong.

4. Helps to understand consumer choices and preferences: Understanding

how consumers make decisions is crucial for the marketer. Most of the
time, people are pretty rational. Before making a purchase, individuals
systematically use the informationavailable in the market.

5. Consumer Differentiation: There are significant differentiations in the

market. Different products are needed and desired by differentgroups.

6. Creation and retention of customers: A ready market is available for the

products of marketers who build their offerings onan understanding of
customer wants.

7. Development of new products: New products are created withthe target

market’s demands and preferences in mind.
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Factors Influencing Consumer Buying Decisions :

1. Psychological Factors : Consumer preferences, likes and dislikesfor a
given product and set of services are heavily impacted by human
psychology. Psychological factors include motivation, perception,
Attitudes and beliefs and learning.

★Motivation: It is the positive force that influences an individual toperform a

certain action.. A consumer’s motivation to purchase goods and services
can be influenced by their physiological (necessities) and security needs.
★Perception: Perception means gathering information about something
and then forming one’s own views on a particular domain. If a
consumer forms a positive perception about a brand,it will surely
influence his buying decision.
★Learning: A person gains greater knowledge about a product whenthey
purchase it. Learning is dependent on a consumer’s abilitiesand
knowledge.
★Attitudes and Beliefs: If a consumer has a positive attitude towards
certain brands or manufacturers there is a very highchance that he will
buy things from them. Therefore, attitudesplay a very significant role in
influencing a purchase decision.

2. Social Factors : Due to their social nature, humans are constantly

surrounded by people who can affect their purchasing decisions. The
purchase decisions of humans are influenced by people around them in
many ways, these ways are regarded as social elements. Several societal
factors include:

★Family: Family and its members are the most influential group ofpeople
who motivate our purchase decision.
★Reference groups: A person’s “reference group” is a collection ofpersons
associates himself. The reference group’s members
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typically have similar purchasing habits and have mutuallybeneficial

effects.

3. Cultural Factors : A collection of individuals is connected to a certain

community’s beliefs and ideologies. A person’s behaviour isgreatly
influenced by the culture associated with the community from which
they originally belong.

4. Personal Factors : Consumers’ personal circumstances have an impact on

what they buy. These individual characteristics vary fromperson to
person, resulting in various views and purchasing patterns.

★Age: Age affects the purchase preferences of individuals.

★Income: A person’s purchasing behaviour may be influenced by their
income. Individuals with high disposable income spend moreon goods
and services as compared to individuals with lower incomes.
★Occupation: A consumers purchase decision also depends on his orher
occupation.
★Lifestyle: A person’s lifestyle is their attitude and how they interact with
others in society. The lifestyle of a consumer has asignificant impact on
their purchasing habits.

5. Economic factors : The consumer buying habits and decisionsmainly

depend on the economic status of a country or a market.When a
country is rich, its economy is powerful, which results inmore money
available on the market and better consumer purchasing power.

★Personal Income: A person’s purchasing power rises parallel with their level
of disposable income. The money that is left over after
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meeting a person’s fundamental necessities is referred to asdisposable

income
★Family income: The income of all the family members when combined
together forms family income. It is therefore said thatwhen a family has
more bread earners they will spend more ondaily and extra goods
whereas a family with low income will spend less on these.
★Savings: It is that amount from the income that is set aside for apurpose
or future uncertainties. It holds a specific place in purchase decision of
a customer. When a consumer makes his mind to do more saving his
purchases decline whereas when he iswishing to save less, his
purchases increase
★Consumer Credit: Easy credit options for consumers who want to buy
items encourage greater expenditure. Consumers tend to buymore
luxuries and comforts when credit is more readily available

Consumer Buying Decision Process :

Understanding the purchase decision process enables marketers to build
marketing campaigns that are distinctive and identifiable by customers,
allowing them to recall the product in times of need.

Five Steps in the Purchasing Decision Process :

The purchase process consists of five steps. It begins with pre-purchase and
concludes with post-purchase. The following steps comprise the buyerchoice
process:

1. Need recognition

2. Information search

3. Evaluation of options

4. Purchase decision
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5. Post-purchase evaluation

1. Stage of Recognition: The initial step in the buyer decision process is need
recognition. The buyer detects a need or learns that a product or service
they require is absent at this step.

Marketers must use campaigns to raise brand recognition and

guarantee that customers remember the brand when they are in need.
The brand must be distinctive and trustworthy in the eyes ofthe target
audience.
2. Stage of Information Gathering: When a consumer is prompted by an
internal or external stimulus, they begin gathering informationabout
potential solutions from numerous sources.

A brand must successfully give all of the information that its clientsrequire.
Customers should be able to communicate with a brand

3. Stage of Alternative Evaluation: Customers analyse their options in this

step; different companies offer ways to satisfy theirneeds. Marketers
must persuade customers that their product is better than competitors’.

This decision may be influenced by pricing, additional features, orother

aspects of the product or service.

4. Stage of Purchase Decision: Once the customer gets all of the information,
they will choose one of the possibilities. This decision isinfluenced by two
major components: attitudes and unanticipated situational factors.
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5. Stage of Post-Purchase Behaviour: It is incorrect to believe thata marketer’s

duty is complete after a customer makes a purchase. It is also critical to
know whether the buyer was satisfied or dissatisfied with the purchase.

It is critical to ensure that the customer is satisfied with the performance of

the product because this is the key to establishingtrust and a loyal customer
base for the brand.

PART 2 : MARKET SELECTION

Introduction :

Market segmentation, is the process of breaking down a large, heterogeneous

market into smaller and more manageable groups. Thesebases may range from
geographical to demographic, cultural, psychographic, etc.

Segmentation Criteria :

(a) Identity: The marketing manager interested in segmentation must have,

first of all, sonic means of identifying members of the segment
– some basis for classifying an individual as being or not being amember of
the segment.

(b) Accessibility: Once a segment has been identified, the nextquestion is: Can
we communicate with them? The organisation mustbe able to focus its
marketing efforts on the chosen segment.
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(c) Responsiveness: If the segment can be identified and communicated with

the next criterion to consider is whether or notthe segment will respond
to marketing effort.

(d) Significance: The last and the most crucial question form marketing
management’s point of view is : Is it really significant? Thesegment must
possess buying power (willingness and ability to buy) to make a worthwhile
contribution to the organisation & objective.

Benefits of Segmentation :

1. Facilitates Proper Choice of Target Marketing: Segmentation helps the

marketers to distinguish one customer group from anotherwithin a given
market and thereby enables him to decide which segment should form his
target market.

2. Higher Profits: It is often difficult to increase prices for the wholemarket.

Nevertheless, it is possible to develop premium segments inwhich
customers accept a higher price level.

3. Facilitates Tapping of the Market, Adapting the offer to theTarget:

Segmentation also enables the marketer to crystallize the needs of target
buyers. It also helps him to generate an accurate prediction of the likely
responses from each segment of the target buyer. Moreover, when buyers
are handled after careful segmentation, the responses for each segment
will be homogeneous.

4. Stimulating Innovation: An undifferentiated marketing strategy that targets

at all customers in the total market necessarily reduces customers’
preferences to the smallest common basis.
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Segmentations provide information about smaller units in the totalmarket

that share particular needs.

5. Makes the Marketing Effort more Efficient and Economic: Segmentation

ensures that the marketing effort is concentrated onwell-defined and
carefully chosen segments. After all, the resources of any firm are limited
and no firm can normally afford to attack andtap the entire market
without any delimitation whatsoever

Bases for Segmenting Markets :

(1) Geographic Segmentation: In this form of segmentation, sellersdistinguish
carefully among the regions in which they can operate and choose those
in which they can enjoy a comparative advantage.

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

distinguish different groups on the basis of demographic variables such
as age, sex, family, size income, occupation, education, family life cycle,
region, nationality, or social class.

(3) Psychographic Segmentation: In this form of segmentation, the basic idea is

that buyer’s needs may be more differentiated along lifestyle or
personality lines than along straight
– forward demographic lines.

(4) Benefit Segmentation: In this form of segmentation, buyersare subdivided

in relation the various benefits which they expect
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from a particular product. A sample of consumers are interviewed forthis

purpose

(5) Volume Segmentation: In this form of segmentation, sellerdistinguishes the

heavy, medium, light and non-users of his product.Then he accepts to
determine whether these groups differ in demographic or psychographic
ways.

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

attempts to subdivide the market into groups responsive to different
marketing factors, such as price and price deals, productquality, retail
advertising, and so on

(7) Product Space Segmentation: In this form of segmentation,buyers are

asked to compare existing brands according to theirperceived
similarity and in relation to their ideal brands.

Targeting :

Market targeting is the name of this technique. A target market is a group of

customers with whom a business chooses to do business andwho have similar
wants or traits.

“a target market as a well-defined set of customers whose needs the

organization plans to satisfy.” He further suggests that the target market
may be the total focus of the organization or it may be viewedas only a starting
point for later expansion to other market segments
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Factors Considered before Selecting a Target Market :

1. Size of the market or segment: The market should be large enough to
make sales and earnings from the same. Small segmentsgenerally have
less consumers and it is not easy to derive profits from the same.

2. Accessibility: The segment that is chosen by the marketing

department should be within the reach of the firm and should beeasy
to accessible.

3. Growth: The chosen segment should also have growth prospects, inabsence
of these opportunities the profit will be limited to a particular time
period.

4. Measurable: The results of the targeted segment should be

measurable so, analysing results become an easy process

Positioning :

Product positioning refers to how consumers describe a product based onkey

characteristics and the position it holds in comparison to rival items intheir minds.
Therefore, a product’s ranking indicates significant qualities that customers
assign to it.

Bases of Positioning :

1. Top of the range: This is the product that consumers consider to be“the
best” or “the most expensive” one. It is usually considered premium when
compared to other products available in the market.
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2. Value for money: The extent to which the benefits of the productare a fair
trade-off for the price being requested.

3. Reliability and quality: Products are frequently advertised asbeing

more (or less) reliable and trustworthy than those of their rivals.

4. Country of origin: Some nations are known for creating the topproducts
in particular product categories.

5. Brand name: Branding is a crucial component of positioning since itserves

to identify the product and project an image of its quality.
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UNIT 3 : PRODUCT DECISION AND NEWPRODUCT DEVELOPMENT

PART 1 : PRODUCT DECISION

Concept of Product:

A product is simply a set of tangible, physical and chemical attributesassembled in

an identifiable form.

A product “is a combination of tangible and intangible attributes,

including packaging, colour, price, manufacturer’s prestige, retailer’s prestige and
manufacturer’s and retailer’s services, which the buyer mayaccept as offering
satisfaction of wants of needs”.

“A product is anything that can be offered to a market for attention,acquisition or

consumption; it includes physical objects, services, personalities, places,
organizations and ideas.”

Levels of Product :

1. Core Product: It represents the basis features and aspects of the product.
Core product is the bundle of tangible and intangible features that
sellers offer in the marketplace. It represents the essential utility or
benefit that is being offered to, or sought by thebuyer
The core product goes beyond the physical attributes and features; it
focuses on the emotional, psychological and functional benefits.
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2. Basic Product: The basic product includes the core benefit along with the
essential features and attributes that allow the product to function. It
includes the tangible elements of the product required todeliver the core
benefit

3. Expected Product: The expected product incorporates features and

attributes that customers expect as standard in a product category.
These features fulfil customer expectations and are oftenbased on
industry norms and competitors’ offerings.

4. Augmented Product: The fourth level of product is known as augmented

level. At this level additional features benefits, and services that enhance
the product’s value are in focus. The manufacturer tries to differentiate his
product from the competitors.

5. Potential Product: This covers all future enhancements and modifications

a product might experience. A company must continueto enhance its
products in order to not only satisfy the current customer base but also
surprise them with their transformations.

Classification of Product :

(1) Consumer Products:

★Convenience Products: Everyday items that customers purchase
frequently with minimal effort, such as snacks, toiletries and softdrinks.
★Shopping Products: Products consumers buy less frequently andoften
after comparing different options for features, quality, price, etc., such
as electronics, clothing and furniture.
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★Specialty Products: Unique or highly specific products that consumers

are willing to put effort into finding, like luxury cars,designer clothing
and high-end electronics.
★Unsought Products: Products that consumers may not activelyseek out,
such as life insurance or burial plots, and require marketing efforts to
generate interest.

(2) Industrial Products:

★Materials and Parts: Raw materials or components used in the production
of other goods, like steel, plastic and electronic chips
★Capital Items: Products that aid in the production or operations ofa
business, such as machinery, equipment and vehicles.
★Supplies and Services: Consumable items used in day-to-dayoperations,
like office supplies, maintenance services and cleaning products.

(3) Product by Use or Application:

★Consumer Durables: Products intended for long-term use byconsumers, like
appliances, electronics and furniture.
★Consumer Non-Durables: Products meant for immediateconsumption, like
food, beverages and toiletries.
★Industrial Durables: Products used in the production process, like
machinery and equipment.
★Industrial Non-Durables: Consumable items used in productionand
operations, like lubricants and chemicals.

(4) Product by Tangibility and Intangibility:

★Tangible Products: Physical products that can be touched and felt,such as
cars, clothes and smartphones.
★Intangible Products: Services or experiences that lack physicalform, like
banking services, education and entertainment.
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(5) Product by Durability:

★Durable Products: Products that have a longer lifespan and can beused
multiple times, such as appliances and automobiles.
★Non-Durable Products: Products that are used up or worn outquickly, like
food and beverages.

(6) Product by Price and Quality:

★Premium Products: High-quality products with premium pricing,often
associated with luxury and exclusivity.
★Economy Products: Products offered at lower prices, targetingprice-
sensitive consumers.

(7) Product by Branding and Differentiation:

★Branded Products: Products associated with a specific brand,carrying the
brand’s reputation and identity.
★Generic Products: Unbranded or less-known products often sold atlower
prices

(8) Product Line and Product Mix:

★Product Line: A group of related products offered by a company,such as a
line of smartphones with varying features.
★Product Mix: The complete set of products offered by a company,including
all product lines.
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Product Mix :
“A product mix is the set of all product lines and items that a particularseller
offers for sale to buyers”

A product line is a collection of connected goods sold by the same businessand

marketed under a single brand. It makes the selling of products easy

Importance of Product mix :

★Ensures low risk: A wider range of products can give the businessthe
opportunity to meet the wants or desires of various customers, hence
reducing risk.
★Better catering of demands: The company may be able to betterserve its
present consumers by increasing the depth of the product mix.
★Wide Choice: A company having a wide variety of products in theirproduct
mix offers customers with a wider choice.
★ Helps in creating trust: When a particular brand becomes known in the
market, customers trust it because of its popularity. More and more
people are ready to own it and use it.
★Promotes cost effectiveness: Developing a product mix helps insaving a lot
of promotion cost, as the brand under which a new product is being
launched already exist in the market and is known to the customers.

Branding :
A brand is a name, term, symbol, or special design, or some combination ofthese
elements, that is intended to identify the goods or services of one seller or a group
of sellers.

Brand name: A brand name consists of words, letters, and/or numbersthat can be
vocalized or pronounced.
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Brand Mark: A brand mark is the part of the brand, that appears in theform of a
symbol, design, or distinctive colouring or lettering.

Trademark: When a brand name or brand mark is registered andlegalized it

becomes a trademark.

Product Branding : Branding means giving a name to the product by which it

should be known in the market and differentiated from rivalryproducts.

Functions of Branding :
1. It helps in product identification and gives distinctiveness to product.

2. It is indicative of the quality or standard of a product.

3. It puts a check on imitation products.

4. It ensures legal rights on the product.

5. It helps in advertising & packaging.

6. It tends to ease the selling process and thus leads to larger sales.

7. It helps to create and sustain brand loyalty to particular products.

8. It helps in price differentiation of products.

9. It reduces price flexibility. This in turn reduces the risk in business.

Quality of a Good brand name :

1. Simple and easy to pronounce: The key quality of a good brand name is
simplicity. For a product that is to be used by all types of customersand is to
be pronounced by them, a simple and easy-to-pronounce brand name
should be chosen.
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2. Short and concise: A short brand name is considered as the ideal one.A
brand that looks short can be printed in less space and is easy to
remember and pronounce.
3. Reflect nature of product: A good brand name need to be able to convey
the characteristics of the product. Such a brand name canhelp
customers remember about the nature of the goods.
4. New and attractive: Any product having a brand name that is freshand
appealing can easily capture the minds of the customers. Thebrand
name chosen should be original and not in use already.
5. Legal: It is a crucial component of a strong brand name. The chosenbrand
name should be legally occupied and not be stolen from any other brand.
6. Flexible: The brand name is established just once and then all
products are introduced under this umbrella term. Therefore, it
should be flexible enough to denote and represent all products
launched under its name

Types of Branding :
1. Product branding: This is the most common branding that all the
customers witness on a daily basis. We are surrounded by products,each of
which has its own identity, personality and function. The goalof product
branding is to impact perception in the marketplace and in the minds of
consumers by using interesting names, slogans, bright colours and even
mascots.

2. Personal branding: When you think of branding, you often think of goods or
services, but human beings may also be viewed as a distinctive brand, this
is known as personal branding. A Personal branding helps in developing
an ability to differentiate yourself fromthe competition and gain a
competitive advantage.
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3. Service branding: Just like products, services are also known by its brand
name. We all must have known the name of “HDFC”, this groupoffers a lot of
services like banking, insurance and loan, etc

4. Geographical branding: Geographic branding as the name suggests is a

branding for cities, states, regions and even countries. This also hasa second
definition that explains promotion of products coming from a specific
location.

5. Online branding: The term “online branding” describes how a

business promotes itself in the market via websites, social media
platforms, and everything else that happens online and using
internet.

6. Offline branding: As the name suggests this type of branding happensin a

offline mode. It can promote products, persons, services, places, etc. by using
offline tools.

7. Co-branding: Co-branding is the process through which two (or more)brands

collaborate strategically to raise the profit of each partner’sbrand. It is
also known as brand partnership or collaboration.

Packaging :
Packing is the process of covering, wrapping or crating goods into a package for
the purpose of delivering the articles to the consumers or forthe purpose of
transport. Therefore, packaging is a broader term and packing is a narrower
term.

Purpose of Packaging :

A. Protection from Damages:

★Damage by mechanical handling. The products are exposed to therisk of
damage in the process of handling during transportation
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★Loss of product if it is exposed

★Pilferage which is easier if the product is not properly packed.
★Contamination by dirt, dust, water, etc.
★Moisture gain or loss to unpacked products.

B. Convenience: Properly packed goods are convenient to store as they

require less space. Also, it is quite convenient to take goods from a right
pack and keep the balance intact.
C. Economy: Packing and packaging provide a number of economies tothe
trades as well as the consumers.
D. Promotion. The marketing activities of packing and packaging seekto
perform promotional function in respect of the product. A nicely made
package attracts attention

Types of Packaging :
1. Primary Packaging: This is the nearest and the most crucial typeof
packaging needed for a product. It involves Laminations, tubes, glass jars,
tin cans, bubble wrap, and other materials for the packaging of the
product. Removing the primary packaging can affect the quality and life of
a product.

2. Secondary Packaging: The second packing layer, which customers typically

don’t observe, is formed by secondary packaging. In order totransport large
quantities of the product to the point of sale, it is primarily used to bundle
and hold together individual pieces of the product. The quality or
characteristics of the product are unaffectedby removing secondary
packaging.
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3. Tertiary Packaging: This packaging’s primary goal is to facilitate simple

storage and handling while permitting secure transportationof high
quantities or huge numbers of a product.

4. Ancillary Packaging: The aim is to protect the finished packed items, by

using certain materials such as labels, tapes, padding, foammaterial, bubble
wraps, adhesives, etc.

Labelling :
Labelling is the process of identifying a product by attaching a label thatcontains
information about it to the product or its container.

“Label is the part of a product that carries verbal information and

manufacture’s identification.”

“Labelling is an information tag, wrapper or seal attached to a product orproduct’s

package.”

Types of Labelling :
1. Brand Label: The brand name, trademark, or logo is provided on thebrand
label. It does not offer sufficient details on the product. It just helps us know
the brand name.

2. A Descriptive Label: Explains how to use, operate, maintain, and use other
aspects of the product. Date and storage details are included on a
descriptive label for food products. On non-food items,there are
instructions for proper application and product care, customer care
numbers, etc.
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3. A grade label: Identifies the commodity’s anticipated quality. Afterusing

the goods, the purchaser can anticipate this. Product may be classified of
grade A, B, or C.

Labelling can also be classified with respect to the purpose it serves to the
customers as:

1. Usage Labelling: Usage labels offer instructions on how to use or

assemble a product. They ensure safe and effective product use.
2. Environmental Labelling: Environmental labels convey information
about a product’s environmental impact or eco-friendliness. They cater to
environmentally conscious consumers.
3. Warning Labelling: Warning labels provide safety information,
cautioning consumers about potential hazards or risks associatedwith
the product. They ensure user safety and prevent misuse.
4. Promotional Labelling: Promotional labels highlight special offers,
discounts, contests, or other promotional activities. They attract
attention and encourage purchases.
5. Private Labelling: Private labels are used by retailers to market
products under their own brand name. They offer exclusivity to the
retailer and build customer loyalty.
6. Nutritional Labelling: Nutritional labels provide information about the
product’s nutritional content, including calories, nutrients, and serving
sizes. They help consumers make informed dietary choices.
7. Barcode Labelling: Barcode labels contain machine-readable codes used
for inventory tracking, pricing, and point-of-sale transactions.
8. QR Code Labelling: QR code labels contain Quick Response codes thatcan be
scanned with a smartphone to access additional informationor
promotions.

Functions of Labelling :

1. Identification: A product’s label provides it a unique identity that setsit

apart from competing products on the market. Due to the label
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that is attached to the product, customers can instantly recognisethe

goods.

2. Promotion: The use of labels in product marketing is crucial. By

highlighting important elements, it enhances the product’s appealand grabs
consumers’ attention. Labels make persuasive claims about items to
persuade consumers to buy them.

3. Grading: Things are categorised into distinct grades through labelling.

One type of product, for instance, can be categorised as A,B, C, or D.

4. Promotes consumer protection: Consumers are safeguarded by labels

against truth modification or manufacturer’s dishonesty. Customersmay
make knowledgeable selections about what to buy because to the reliable
information it provides about the products.

5. Helps to create compliance with law: It enables the business to adhere

to all legal requirements by including all required warningson product
packaging.

Product Support Services :

Customer service is a mindset that encourages all employees to feel andact

responsible for generating happy customers. All employees of the company are
accountable for providing value-added customer services.

After purchasing a product, a customer could have a number of questions about

it, all of which should be addressed by the product support services offered by
the business.
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Classification of Product Support Services :

1. Information: To decide on a product, potential customers and newbies

require a lot of information. They are interested in learningwhich product
will best satisfy their demands.

2. Consultations entail conversation to discover customer requirements

before creating a customised solution. Consulting services include
guidance, auditing, personal counselling, tutoring,product usage training,
management, and technical consulting.

3. Ordering: After the selling process is done, order taking follows, it

includes accepting applications, orders, and making reservations.

4. Hospitality: Some services require the consumers to visit a premiseand

stay till the service delivery process is complete. When the customer is
waiting for his/ her turn they should be offered a good hospitality via,
greeting them well, offering water or other beverages, providing them a
proper waiting area

5. Billing: Billing is the end of receiving a service. Bills that are

inaccurate, unreadable, or incomplete give you the chance to let
customers down.

6. Payments: When buying items, customers demand a simple and

convenient payment method, including credit. Self-service, pay
directly to payee or intermediary

7. Exceptions: It includes a collection of services that aren’t often

provided as part of standard service delivery.
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PART 2 : NEW PRODUCT DEVELOPMENT

Product Life Cycle :

The product life cycle refers to stages a product progress through while on the
market. Specifically, the concept of product life cycle seeks to describe a product’s
sales, profits, customers, competitors and marketing emphasis from its beginning
until it is removed from the market.

The life of a product begins with its introduction to the market, followed by its
growth, maturity, decline and finally its death (abandonment)

Stages in Product Life Cycle :

1. Introduction: The introductory stage of product life cycle begins when the
new product first becomes available for sale, and it ends when sales start
picking up. During this stage, the product is launched into the market in a
full-scale production and marketing programme. The objective during this
stage is to develop a customer-market for the product.

Marketing Strategies :
★A Rapid-Skimming Strategy: It means launching the new product with a
high price and high promotion. High price is set inorder to recover as
much gross profit per unit as possible.
★Slow-Skimming Strategy: It implies Launching the new productwith a high
price and low promotion. (This combination, is expected to draw a lot of
profit from the market.)
★A Rapid-Penetration Strategy: It consists of launching the product with a
low price and heavy promotion. This strategy aimsat bringing the
fastest rate of market penetration and largest market share for the
company.
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★A Slow-Penetration Strategy: It consists of launching the newproduct with

a low price and low level of promotion. The purpose is to realize more
net profit.

2. Growth stage : It is a period of rapid market acceptance andsubstantial

profit improvement. Thus, both the sales and profit curves rise at a
rapid rate.

Marketing strategies to sustain rapid market growth as long aspossible:-

1. Improve product quality and add new features and models.
2. Search out new market segments to enter.
3. Finding new distribution channels to gain additional product
exposure.
4. Shifting some advertising copy from creating product awareness totrying
to bring about product acceptance and purchase.
5. Deciding the right time to lower prices in order to attract price
sensitive buyers into the market.

3. Maturity Stage : Maturity is a period of a slowdown in sales growth

because the product has achieved acceptance by most of thepotential
buyers. Profits peak in this period and start to decline because of
increased marketing outlays in order to maintain the product’s position
against competition.

Marketing Strategies :
★Marketing Modification: Here, the product manager looks foropportunities
to find new buyers for the product. There are manypossibilities. One is
that the manager looks for new markets Another possibility is that he
may look at various ways to stimulate increased usage among present
customers
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★Product Modification: Managers, here, try to increase the salesby initiating

changes in the product’s characteristics that will attract new users or
more usage from current users.
★Marketing Mix Modification: Here, the product managershould consider
the possibility of stimulating sales throughchange one or more
elements of the marketing mix.

4. Decline stage : Decline is the period when sales continue to decline

strongly, and profits decrease toward the zero point. Most products forms
and brands gradually enter a stage of sustained salesdecline. The decline
may be slow or rapid.

New Product Development Process :

The new product development process the sequence of stages a product must pass
through to arriving at the introductory stage of the product lifecycle. These stages
are:

★Generation: The generation of new products idea signifies exploration – the

search for product ideas and opportunities.

★Idea Screening: It refers to the critical appraisal of product ideas. It is

important because a firm can afford to undertake development of only
a limited number of product ideas. The lesspromising ones must be
dropped.

★Concept Development and Testing: Those product ideas which clear

screening should be developed into fully mature product concepts. A
product idea is a possible product described inobjective functional terms
that the company can see itself
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offering to the market, whereas a product concept is a particular

subjective consumer meaning that the company tries to build intothe
product idea.

★Business Analysis: After the product concept has been developed and
tested, management undertakes business analysisof the proposed
product. The purpose of this stage is to study the commercial viability of
the concept.

★Development: If the product concept survives the businessanalysis

stage, it is committed to technical and marketing development.
During this stage, the idea is converted into aconcrete form of
product.

★Test Marketing: If a go decision is made, test marketing of theactual

product begins. Its basic purpose is (a) to determine if targeted
customers will buy the product, (b) to test the other marketing mix
elements, and (c) to prepare more reliable sales and profit forecasts

★Commercialization: After the company, is satisfied that the product is

through in test marketing, it decides to undertake fullscale
commercial production and marketing of the product. This requires
finalizing the product’s introductory marketing strategy.
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UNIT 4 : PRICING DECISION (PART 1)

Meaning of Price :

The term ‘price’ denotes money value of a product. It represents the amount of
money for which a product can be exchanged. In other words, itis the amount of
money which the buyers pay to the seller for a product.

Significance of Price :

★Determines the firm’s success: Price is an important determinant of the

success of a firm. If the price is too high thebusiness is lost; if the price is too
low the firm may loose again.

★Affects the firm’s competitive position and its share of themarket: Since the
price of a product is a major determinant of the market demand for the
product, it affects considerably the competitive position of the firm and its
share of the market.

★Influences the firm’s marketing progress: The overall performance of the

marketing managers is greatly affected by theprice of the product.

★Important to the consumer: Price of a product is important to the consumer

in as much as it determines his purchasing power andthus affects his
standard of living.
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★Help to the consumer: Notwithstanding the above, price mechanism provides

help and guidance to the consumer in taking buying decision aimed at
ensuring optimum utilization of his limitedpurchasing power among various
alternative uses.

★Important to the firm: The price of a product is of crucial importance to the

firm. It influences wages, interests, rents and profits, regulates production,
and channelizes productive resourcesinto profitable activities.

Factors Affecting Price of a Product :

(i) Cost of the product: Cost of a product is the basic

determining factor of the product’s price. This implies that theprice
of a product should be such that recovers the average total cost per
unit. Another point which should be rememberedis that cost should
not a ceiling on price; the price is ultimately determined by market
demand for the product.

(ii) Desired public image: While setting product prices the

management must ensure that prices are consistent with thepublic
image the top management is trying to create for thecompany

(iii) Product market factors: The stage in product life cycle has
considerable influence on pricing decision. The management has a
very high (degree of freedom to set a very high price) (price
skimming) or low price (penetration pricing) during market
pioneering stage. Such freedom is, however, not
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available during the periods of growth, maturity or marketdecline.

(iv) Distribution strategy: The distribution strategy adopted by the

manufacturers influences price of a product because firstly,each
middleman in the distribution expects gross margin according to
the number of services he performs for the manufacturer

(v) Promotional Strategy: If the promotional strategy of a marketer

requires middlemen to undertake a larger part of advertising, sales
promotion, etc., they will expect greater thannormal gross margins
and vice versa.

(vi) Competitor’s prices: Pricing decisions of a marketers are also

influenced by the competitor’s prices. Ordinarily a marketer seeks
to avoid price competition; rather he uses non- price competition-
product, distribution and promotion, keepinghis price essentially the
same as competitor’s price.

(vii) Economic Climate: The ups and downs in business influence

significantly the pricing decisions of a firm and while setting prices
the management must forecast and take account of impending
economic changes.

Pricing Objectives :

(i) Target Return: The pricing objectives of many a firm is to achieve a

certain target Return on Investment (ROI), certainreturn on sales,
or some targeted amount of profit.
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(ii) Target Market Share: Another major pricing objective of a firmis to

maintain or increase the share of the market held by the firm. Increase
in the market share is the best method of evaluation as far as efficiency
of pricing is concerned.

(iii) Meeting or Preventing Competition: The pricing methodadopted to

achieve this objective is referred to as ‘Extinction
Pricing’. It is viewed as long-run strategy and is used as a way ofeliminating
competition.

(iv) Profit Maximisation: Profit maximisation is an economically

justifiable goal of pricing because if profits become unduly highdue to
short supply of a given product, new capital will be attracted into
the industry thus balancing demand and supply.

(v) Price Stabilisation: Some firms seek to stabilize their prices over long
period, hoping to smooth out possibly even to eliminate,cyclical price
fluctuations. Where price stabilization is the pricingobjective, the firm
tries to keep prices from falling too far duringdepression and rising too
high during (depression and rising too high during) periods of good
business.

Pricing Strategies :

(i) Skim-the-cream pricing: As its name suggests, this strategy is employed

during the introductory stage of the product simply to skim the “cream”
of demand by setting higher prices. Its aim is notto maximize profits but
to recover product development costs quickly

(ii) Penetration pricing: Penetration pricing is the opposite to skim the-

cream pricing. In this strategy a low introductory price is
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set to speed up the product’s widespread market acceptance. Thus, the

objective of this strategy is to capture a certain marketshare before
competitors enters the market.

(iii) Premium Pricing: The prices of goods and services in the premium
pricing strategy are a little bit higher than the average costs. These are
focused mostly on consumers in the premium market. Some
individuals could believe that if a product’s price ishigh, then only its
quality will remain acceptable.

(iv) Economy Pricing: One of the best pricing strategies that takesinto
account the broad category of buyers is economy pricing. These are
very cost-effective and sensible in terms of what theycan offer.

(v) Psychological pricing is one of the three main pricing strategies. This
pricing strategy is very popular to induce middleclass. For instance, Bata
has a new style of shoe that costs 1,999 rupees. Human psychology is
prepared to tolerate 1999 rupees, but it is not prepared to accept 2,000.

(vi) Product Line Pricing: It is one of the strategies for differentialpricing.

The size of the product may affect the prices in this case.

Distribution Decision ( Part 2 )

Channels of Distribution :

Channels of distribution, also called marketing channels or trade channels,are

used to provide consumers with a convenient means of obtaining the products
and services they require.
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Channels of distribution refer to various marketing institutions (middlemen)

and the interrelationships engaged in effecting the physicaland title flow of goods
and services from producers to consumers or industrial users.

Thus, the route or path through which goods move from the place of production to
the place of consumption is called channel of distribution.

Types of Channels of Distribution :

1. Direct Channel (Zero level channel): Producers sell theirgoods and

services directly to consumers through this channel. There is no
intermediary between the producers and the consumers. Producers
may sell to consumers directly through door-todoor salesmen and
their own retail establishment

2. The Indirect Channel : If the manufacturer manufactures things on a huge

scale, he may not be able to sell them directly to customers. As a result,
he sells things via middlemen. These intermediaries could be
wholesalers or retailers. A wholesaler is someone who buys items in big
numbers from producers, whereasa retailer is someone who buys goods
from wholesalers

(a) Single Level Channel: An intermediary is used in this

procedure. Instead of selling via agents or distributors, a
manufacturer sells directly to the retailer. This method is
utilized for high-end watches and other similar items.

(b) Two Level Channel: In this method, a manufacturer sells thematerial

to a wholesaler, the wholesaler to the retailer and then the retailer
to the consumer. Here, the wholesaler after purchasing the
material in large quantity from the manufacturer sells it in small
quantity to the retailer.
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(c) Three Level Channel: This adds one more level to the two level
channel in the form of an agent. An agent helps to bridge the gap
between the manufacturer and the distributor. The material is then
sold by the agents to wholesalers, who in turnsell it to retailers, who
in turn sell it to consumers.

Importance of Channels of Distribution :

★It creates utility: The channel of distribution creates three types of utilities
namely time, place, and possession. Time utility is createdwhen channel of
distribution makes products or services available for sale when the
consumer wants to purchase them, place utility iscreated by making
goods and services available in a convenient location and possession
utility is created when channel of distribution facilitates passing of the
title of the goods from the producer or middleman to the purchaser.

★ It entails cost: The cost involved in the use of distribution channel enters
the price of the product that the ultimate consumerhas to pay.

★It affects other marketing decisions: Distribution of channel isan important

element of the marketing mix of a firm and the channelselected affects other
marketing decisions like pricing, promotion and physical distribution.

★It determines the availability of the product: The usefulness of a product to

consumers lies in the fact that it is available to themat the right time and
right place.
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★It performs marketing functions: The real importance of channel decision

lies in the fact that distribution channel performs several functions in the
overall marketing system. First, it facilitatesexchange process. Secondly, it
enables the producer to adjust discrepancies in assortment via a process
called ‘sorting’

★It entails firm’s commitment: The channel decision entails long-term

commitment of the firm. The relations between the manufacturer and the
middlemen depend largely upon the choice-ofappropriate channels of
distribution.

★It facilitates control: The choice of a suitable channel ensures continuous and
effective distribution thereby reducing fluctuationsin production.

Factors affecting the choice of channels of distribution :

1. Market Consideration: An important factor influencing the choiceof
channel is the nature of market – type of consumers, size of demand,
geographical location of market, order size, customer buying habits and
preferences, etc.:
2. Product Consideration : Perishability, Size, Units Value, Technicalnature
3. Company Considerations : Age, Size, Resources, Desire for controlof channel
4. Middlemen considerations: Since middlemen constitute a channel of
distribution, their nature and role exert considerableinfluence on
channel selection.
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Wholesalers :
“Wholesalers are the merchants who buy products from producers or other
wholesalers and release them to retailers, organizational buyers or to
other wholesalers.”

Wholesalers provide an important link between the producers and theretailer.

Types of Wholesalers :

★Pure Wholesaler: A pure wholesaler, also called a proper wholesaler or

distributor, is engaged in only buying and selling of goods in large lots and
does not engage himself in such activities asmanufacturing or retailing as
other wholesalers do
★Retail Wholesaler: Such wholesalers combine retailing with theirwholesaling
function. Thus, they purchase goods in-large lots from manufacturers and
sell them to retailers as well as consumers.
★Manufacturer Wholesaler: A manufacturer wholesaler engageshimself in the
manufacture of goods besides undertaking wholesaling functions. He may
also deal in goods of other
manufacturers with the purpose of meeting the retailer’s demand,
increasing his turnover and thus reducing overhead expenses.

Functions of Wholesalers :

★Buying: The wholesalers anticipate customer demands gather information

regarding alternative sources of supply and purchaseand assemble goods
from these sources.
★Selling: The wholesalers sell goods in large lots to retailers andindustrial users.
★Storing: Wholesalers provide warehousing services at lower costthan most
individual producers or retailer could provide.
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★Transporting: The wholesalers transport goods from the place of

manufacture to their own godowns from where they further move the
goods to retailers.
★Grading and Packaging: The wholesalers perform grading of the assembled
goods according to certain standards, often give a brandname and
undertake packaging of goods to convince the buyers of the quality of goods
being purchased.
★Pricing: The wholesaler fixes the price of the goods he sells to
retailers/industrial users. This price often forms the basis on whichthe
retailer fixes the price that he will charge from customers.
★Financing: The wholesaler provides financial accommodation to both
manufacturers and retailers. He purchases from the manufacturers on
cash and at time gives advance to the manufacturer.

Retailers :

“retailing includes all activities directly related to the sale of goods or services to
the ultimate consumers for personal, non-business use.” Although the bulk of all
retail sales occurs in retail stores, the definition ofretailing also includes several
forms of non-store retailing.

Thus, a retailer is a middleman who sells primarily to ultimate consumersfor non-

business use.

Functions of Retailers :

(i) Buying and assembling of goods from favour wholesalers and

manufacturers with a view to meeting the needs of ultimate
consumers.
(ii) Selling of goods in retail to the ultimate consumers.
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(iii) Storing of goods to hold stocks so as to maintain uninterrupted

supply of products demanded by the consumers.
(iv) Transporting goods from wholesalers
(v) Dividing, packaging and pricing of goods purchase from
wholesalers.
(vi) Risk-taking against possible loss of goods due to fire, theft,
determination, etc.

Concept of Marketing Logistics :

The term “logistics” refers to the complete process of bringing raw materials
and component parts into an organisation, then moving to nextstage of work-in-
progress through the organisation and transporting finished goods out of the
organisation. To carry out this logistics task, effective marketers establish and
nurture long-term partnerships with suppliers, companies, partners, customers,
wholesalers, etc

Importance of Marketing Logistics :

1. Improving customer experience: Logistics management helps toprovide

faster and quality service.
2. Accessibility: Ensures access to the right product at right time.
3. Creates time and place utility: The company uses time utility sothat all the
components and materials are available when they are needed, and the
manufacturing line is unaffected. Place utility denotes that all necessary
commodities and services are accessiblewhere and when they are
needed.
4. Boosting Profits: When goods are manufactured on time and
delivered to the end user on time, wastage tends to be very lowwhich
tends to increase the profits of the firm.
5. Helps to align with the changing work environment: As weall know
business trends are changing rapidly and involvement of
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information technology has increased in every sector, so is the casewith the

logistics.

Stages in Marketing Logistics :

(a) Inbound Logistics: These are logistics that flow from the supplierto the
manufacturing unit. These are basically the raw materials needed by the
firm to manufacture a certain good

(b) Outbound Logistics: They flow from the manufacturer to the pointof
consumption. Shipments of items to other firm facilities, such as
temporary warehouses, physical stores, suppliers, and production
facilities, are also included in this logistics step.

(c) Reverse Logistics: Reverse logistics is the process of sending goodsback to

the supply chain from end users to either the producer or the retailer.
Reverse logistics begin with the end user and end at the producer of the
good

Components of Marketing Logistics :

1. Order Processing : Processing consumer orders serves as the foundation

of marketing logistics. The customer orders should be completed as
quickly as possible in order to give a better customer service. Order
processing starts from receiving a order, recording it,filling it, processing
it and assembling all received orders for furthertransportation.

2. Transportation : transportation means the movement of goods from one

place to another. Transportation is a necessary function of
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marketing because most of the markets are geographically separated from

the areas of production. A firm’s ability to transportundamaged products to
appropriate distributors in a timely fashioneffects the firm’s success in
satisfying consumer’s needs and wants.

3. Storage and Warehousing : Storage involves holding and preserving of

goods between the time of their production and thetime of their use. A
warehouse is a place where goods are stored oraccumulated. The storage
function is thus made effective throughthe establishment of warehouse.
And warehousing is the design of operation of storage facilities, i.e.,
warehouses.

4. Inventory Control : Inventory means the stock of goods held by a firm in

anticipation of sales. Inventory may be of two types: in-transitinventory
which is moving through the distribution system, and warehouse inventory,
i.e. stock of goods lying in the factory and/ or warehouses.

5. Information Monitoring : The marketing logistics managers constantly

want the most recent data on stock, shipping, and warehousing. For
instance, information regarding the current stockposition, future
engagements, and replenishment capabilities are constantly needed in
relation to inventory
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UNIT 5: PROMOTION DECISIONS(PART 1)

Concept of Promotion :

Promotion is the process of communication with the potentialbuyers

involving information, persuasion and influence. It includes all types of
personal or impersonal communication with the customers and middlemen.

No business enterprise can sell its goods and services withoutinforming the
people about the availability of products and without creating in them the
desire to buy the goods and services.

Promotion planning refers to the formulation of objectives, budgets and

strategies of promotion and selection of promotional techniques in the light of
marketing conditions.

Objectives of Promotion :
(i) To Provide Information: The first aim of promotion isto inform
the prospective customers about the availability, features, and
uses of products so that they need not search out for them.

(ii) To Stimulate Demand: Promotional activities are

undertaken to create awareness and interest of consumers
in new products.
(iii) To Differentiate the Product: A businessman carries on
promotional activities in order to differentiate his product from
the competitive products. The objectiveof promotion is not only to
increase one time sale of aproducts
(iv) To Highlight the Utility of the Product: Promotional activities
add value to a product by emphasizing itsspecial features.
(v) To Meet Competition and Stabilise Sales: Promotionalactivities are
undertaken to counter competition by reassuring the customers
about the quality and priceof the product or service.
(vi) To Build Image: Publicity, public relations, advertising,and other
promotional activities are often used to build a favourable public
image of the firm.
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Promotion Mix :

The term ‘promotion mix’ is used to refer to the combination ofdifferent kinds of
promotional techniques used by a business enterprise to create and maintain
sales of its products.

A firm can utilize one or more of four basic tools of promotion,viz.., personal
selling, advertising, sales promotion, and publicity. These are known as
elements of promotion mix.

Promotion Mix Tools :

(i) Personal Selling: Personal selling or a salesmanship isthe process of

assisting and persuading a prospective buyer to buy a product or
service, in a face-to-face situation. It involves direct and personal
contact between the prospective buyer and the seller or his
representative. Personal selling is the most, effective tool of
promotion.

(ii) Advertising: Advertising is any non-personal presentation or

promotion of goods, services, or ideas. Itinvolves transmission of a
standard message to a large number of people. The message which
is transmitted is known as advertisement.

(iii) Publicity: Publicity is a non-personal stimulation of demand for a

product, service, or a business unit by planting commercially
significant news about it in a published medium or by obtaining
favourable presentation of it upon radio, television or stage that is
not paid for by the identified sponsor.

(iv) Sales Promotion: It includes all the activities, other than personal
selling, advertising, and publicity, that stimulate consumer
purchasing and dealer effectiveness. Sales promotion activities are
designed tosupplement and reinforce advertising and personal
selling.
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Promotion Decision :

A promotion decision refers to the process of choosing and implementing

various promotional strategies and tactics toeffectively communicate and
market a product, service, or brand to the target audience.

(i) Identification of the Target Audience

(ii) Determination of the Promotion Objectives
(iii) Development of Effective Message
(iv) Selection of the Communication Channel
(v) Establishment of Promotion Budget
(vi) Decision on the Promotion Mix
(vii) Measurement of Promotion’s Results
(viii) Organisation and Management of integrated Marketing
Communications

Communication Process :

★Sender: S/he begins the process as s/he feels the need or is professionally
required to communicate ideas, thoughts, ormessages.
★Encoding: The sender selects the codes or structure which will be the
‘content’ or ‘form’ of the message. This selectiondepends on the language or
communication skills of the sender and the comprehension level of the
receiver.
★Message/Medium: Just as ‘water’ is the ‘message’ which is carried through the
‘pipes’ which become the medium, themessage requires the medium.
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★Decoding: Decoding means interpretation of the message by the

receiver. It depends on the clarity of the encoding, comprehension
skills and noise free environment for oralmessages.
★Receiver: The receiver is the person who receives the message. S/he should
be attentive and ready to ‘receive’the complete message
★Feedback: Receiver’s response to the message is the finalstep in the
communication cycle as it indicates if the message received is the one
intended by the sender.

Integrated Marketing Communication :

The process of synchronizing a brand’s messaging so that it is consistent across all

media that the brand utilises to reach itstarget audience is known as
Integrated Marketing Communications (IMC).

“a planning process designed to assure that all brand contactsreceived by a

customer or prospect for a product, service, or organization are relevant to
that person and consistent over
time.”

Importance of IMC :

★Building of Trust : The goal of integrated marketing initiatives is to

develop a relationship with the consumer.By promoting their brands
and enhancing their reputations, businesses attempt to establish
rapport.
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★Creating Consistency : Marketing professionals can effectively

communicate a consistent brand story and messaging across a variety
of communication channels toraise awareness because of IMC and it is
one of its key advantages.
★Personalized marketing campaigns : Individualised emailsare used in
personalised communications as a tool; they also include loyalty
programmes that offer discounts or one-time promotions as rewards
for their customers.
★Cost effective : IMC creates multi usable campaigns thatcan be used in
every type of media; therefore it is considered as a cost effective tool.
★Return on investment : A company’s return on investment can be
increased more effectively by using unified messages across many
channels than by using a number ofinconsistent advertisements or
commercials.

Publicity:

“Publicity is any promotional communication regarding an

organisation and/or its products where the message is not paid for by
the organisation benefiting from it.”

Publicity is a basic method of advertising that involves spreading brand

knowledge among the public through mediacoverage and other forms of
communication. The main goal isto raise brand awareness by
disseminating information aboutthe brand through unpaid mass media
channels.
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Advantages of Publicity:

★Advertisements are less real and believable in the eyes ofreaders;

publicity has high credibility. As it is generated through third party
sources
★Publicity involves low or no cost as compared to other toolsof promotion.
★Social media and internet have made it super easy for brands to
disperse information in the minimum possible time. Therefore, if your
brand is promoted by using publicity as a tool, there are high chances
that it will capture a big market size and lead to good promotion of a
particular good/service.
★Publicity allows brands to reach a massive audience in a minimum time.
As the brand will become more publicly known, more and more
customers will attract towards it.

Direct marketing:

“direct marketing involves the use of mail, telephone, fax, e- mail, or Internet to
communicate directly with or solicit a directresponse from specific customers
and prospects.”

In direct marketing, businesses connect with their target customers directly

in an effort to generate a response or atransaction.
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Benefits of Direct marketing:

(a)Customers find direct marketing to be an extremelyhandy and

hassle-free method of shopping.
(b) It saves time and introduces buyers to a wider rangeof goods.
(c)Direct marketing offers marketers the chance to communicate with
potential customers on a more personallevel.
(d) It can assist marketers in evaluating the effectivenessof their
efforts and selecting the most beneficial strategy.
(e)Direct marketers are able to maintain a connection with each
customer and receive regular feedbacks fromthem.

PART 2 : DEVELOPMENTS INMARKETING

Sustainable Marketing :

Promoting goods, services, and behaviours that are sociallyresponsible is

known as sustainable marketing.

Sustainability marketing encourages consumers to choose sustainable

products over throw away ones by portraying a brand as socially conscious
and accountable.

Green marketing, also known as sustainable marketing, is a strategy that

incorporates waste management and energy regeneration into marketing
and promotional strategies. Sustainable marketing draws attention to a
company’s efforts to improve its social and environmental sustainability.
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Issues in Sustainable Marketing :

1. Lack of Awareness: In this situation, marketers must acknowledge

their pioneering roles in sustainability. Sustainable education should
involve ongoing efforts because it cannot be accomplished in one go.
2. Lack of Profitability: This is also possible, particularly when companies
jump headfirst into green efforts without doing adequate testing.
Marketers frequently have to handle the consequences of these losses.
3. Reputational Damage: It is another important issue generated in
sustainability marketing practice. Companies are required to make
their customers stable for their products buying but if consumers
switch from one product to another then the reputation of the company
suffers.
4. Behavioural Change: Encouraging consumers to adopt more sustainable
behaviours can be difficult due to habits, cost considerations and a
perception that sustainable productsare less convenient.
5. Green Washing: Many companies claim to be environmentally friendly
without substantiating their claims, which misleads consumers and
undermines the credibility of genuine sustainability efforts.
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Rural Marketing :

Rural marketing is the process of creating the product, price, place, and
promotion elements of the marketing mix for a good or service. It entails
interacting with the rural and urban markets, meeting consumer
expectations, and achieving organizational goals.

The most crucial element of rural marketing is productutilization, which also

influences other factors like price, promotion, brand recognition, and
organization’s image. A better understanding of how the product is used
enables the company to efficiently manage and arrange the marketing mix’s
components for overall success.

Characteristics of Rural Marketing :

★Greater Capacity for Purchases: Rural residents’ purchasing power is

increasing. Marketers are growing their activities in rural India as a
result of realising the potential of these areas.
★Market Expansion: Over the years, the rural market has shown
consistent growth. The demand for branded, conventional, and
consumer goods has all increased over time.
★Development of Infrastructure: Rural marketing now plays a bigger role
in India thanks to the development of infrastructural amenities like
bridge construction, transportation, communication, rural electricity,
and public service initiatives.
★Low Quality of Living: Rural customers suffer from a variety of
socioeconomic backwardness, and rural areas have a low standard of
living. In various regions of the nation, this varies.
★A Traditional Outlook: Rural consumers value long-standing traditions
and practices. Change is not what they prefer. The demand pattern of
the rural population is gradually shifting, and companies have a
market for branded goods too in the rural areas.
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Rural Marketing Mix :

1. Product Mix: Product is a key factor in determining a company’s success.

In all material ways, the products must be suited for rural consumers. The
corporation must produce goods in accordance with the current and
anticipated conditions of rural consumers. Size, shape, colour, weight,
and other product attributes, quality, brand name, packaging, labelling,
services, and other pertinent aspects must match the demands, desires,
and financial capability of the target market.

2. Price Mix: Particularly for rural areas, the price is the distinctive
component of the marketing mix. Due to their higher price sensitivity,
rural consumers tend to make more impulsive purchases. Pricing plans
and policies needto be developed with attention and caution

3. Promotional Mix: Rural markets have a subtle but potent power. To

serve the needs of the rural population, several adjustments are
necessary. The distribution and promotion tactics are of utmost
significance.

4. Place Mix: The crucial distributional difficulties are present in rural

markets. The marketer needs to make the distribution plans
stronger. It is a huge effort to distribute little and medium-sized
packages over long distances and on bad roads into remote areas of
rural India while convincing the rural retailers to believe in the
mobility
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Social Marketing :

Social marketing is the application of marketing strategies to benefit the

general population rather than the corporation in terms of financial gain.
Environmental issues, health, safety, ethics, legislation, human rights, peace,
and other causes that benefit society as a whole are covered by social
marketing.

Advantages of Social Marketing :

1. It guarantees that economic planning is more importantand

beneficial to society.
2. Societal marketing enhances the general level of life.
3. Financial resources are utilized effectively.
4. Social welfare and society at large should be given priorityin products
and corporate policy.
5. Promote long-term growth and expansion.
6. Expands market share and sales. 8. It offers one a
competitive edge over rivals.

Issues in Social Marketing :

1. The ultimate goal of social marketing is to advance the interests of

the target market or society as a whole, not the marketer. Due of
this, it differs from commercial marketing but resembles non-profit
marketing.

2. Behaviour influence, or more specifically, bringing about a change in

behaviour, is the fundamental method of generating increased welfare.
Social marketers work in the field of behaviour. The goal in social
situations is to influence behaviour, just as it is in private situations.

3. The main player in the social marketing process is the target audience.
Excellent social media marketing is always completely focused on the
target audience. The optimum term to employ is “customer,” even
though “client” and “target audience member” can be used more or less
interchangeably with it.
Digital Marketing :

Online marketing is another name for digital marketing. This includes not
only email, social media, and web-based advertising, but also text and
multimedia messages as a marketing channel. Digital marketing takes into
account how each tool or digital channel can convert prospects.

Tools of Digital Marketing :

1. Search Engine Optimisation: It is one of the most crucial tools for

generating leads that eventually turn into customers. It is the natural
process of attracting quality free traffic from potential customers to
your website
2. Pay Per Click (PPC): Pay per click is also very important type of digital
marketing model which follows paid form for advertisement to attract
the target customers. The main distinction between search engine
optimization and pay per click is that PPC is a paid form of digital
promotion while SEO is an unpaid method, both of which fall under the
umbrella of social media marketing.
3. Social Media Marketing: The most widely used social mediaplatforms are
Facebook, Instagram, Twitter, Snapchat, YouTube, and Pinterest. These
platforms can be used very
a. effectively to promote your brand, product, or service because
they encourage direct communication with the user

4. Content Marketing: It is the form of digital promotion and online

marketing. Some of the forms of content marketing are interviews,
surveys, case studies, infographics, productreviews, vlogs, press releases,
and templates.

5. Affiliate Marketing: Currently, affiliate marketing is a common form

of promotional strategy in digital marketing, where a marketer,
blogger, or vlogger sells or provides links to a seller’s products to
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target audience.

6. Influencer Marketing: Influencer marketing helps a brand to

generate more leads and draw in new customers. It is a tried-and-
true tactic that is a part of the larger marketing mix. In order for
influencer marketing to be successful, you must establish a
connection between the takers of the influencer’s content and
yourself.
7. E-mail Marketing: A well-designed signing form helps to build the
trust and reliability factor for your brand. Engaging and relevant
content also helps in email marketing.