UNIT 1

MARKETING MANAGEMENT
MEANING: Marketing management is a process of controlling the marketing
aspects, setting the goals of a company, organizing the plans step by step, taking
decisions for the firm, and executing them to get the maximum turn over by
meeting the consumers' demands.
Marketing management is the process of decision making, planning, and
controlling the marketing aspects of a company in terms of the marketing concept,
somewhere within the marketing system. Before proceeding to examine some of
the details of this process, comments on two aspects will be helpful background.
Marketing Management Involves:
1. The setting of marketing goals and objectives,
2. Developing the marketing plan,
3. Organizing the marketing function,
4. Putting the marketing plan into action and
5. Controlling the marketing programme.

IMPORTANCE OF MARKETING MANAGEMENT

1. Analysing Market Opportunities:
Marketing management collects and analyses information related to consumer’s
needs, wants and demands, competitor’s marketing strategies, changing market
trends and preferences. This helps to identify market opportunities.

2. Determination of Target Market:

Marketing management helps to identify the target market that the organization
wishes to offer its product.

3. Planning and Decision Making:

Marketing management helps to prepare future course of action. Planning relates to
product introduction, diversification. Decision making regarding pricing, selection
of promotional mix, selection of distribution channel is taken by the marketing
management.
4. Creation of Customer:
Consumers determine the future of the market .Therefore providing the best
product to the consumer according to their preference is the important task of
marketing. Marketing management helps in creation of new customers and
retention of current customers.

5. Helps in Increasing Profit:

Marketing caters to the varied and unlimited needs of consumers. Marketing
management helps to increase profit and sales volume. This is achieved by
expansion of market and increasing customers.

6. Improvement in Quality of Life:

Marketing management aims at providing innovative product and services to the
customers. Marketers continuously strive to incorporate new technology and
mechanism in their product to provide more satisfaction to customers than before.
This improves quality of life and makes life of consumers easier than before.

7. Employment Opportunities:
Marketing process is a combination of different activities like research work to
assess the marketing environment, product planning and development, promotion,
distribution of product to customers and after sales service. Marketing process
requires researcher, production engineer, different distribution intermediaries, sales
personnel also creates employment opportunities in advertisement section. Thus
marketing management opened up different employment avenues thus creating
employment opportunities.

MARKETING ENVIRONMENT

The marketing environment refers to the internal and external influences that affect
the marketing function. Marketing managers must stay aware of the marketing
environment to maintain success and tackle any threats or opportunities that may
affect their work.

A marketing environment is vast and diverse, consisting of controllable and

uncontrollable factors. The marketing firm operates within a complex and dynamic
external environment. It is the task of the marketing-oriented organization to link
the resources of the organization to the requirements of customers. This is done
within the framework of opportunities and threats in the external environment.

MICRO ENVIRONMENT

Microenvironment refers to the factors that are close to the company and affect its
ability to serve its customers. It influences the organization directly. It includes the
company itself, its suppliers, marketing intermediaries, customer markets,
competitors and the public. These factors are shown in diagram below:

➢ The company

Various groups in an organization like the Top management, Finance, Operation,

Human Resourcing, Research and Development (R&D), Accounting, etc.. needs to
be taken into account by the marketing management for designing the marketing
plans.

➢ Suppliers

Suppliers are other business organizations and individuals who provide the
organization with raw materials, parts, components, supplies or services required to
produce and supply products to customers. Suppliers form an important link in the
organizations overall customer value delivery system. Supplier problems can
seriously affect marketing.

➢ Intermediaries

Many organizations rely on marketing intermediaries to ensure that their products

reach the final consumer. Marketing intermediaries help the company to promote,
sell, and distribute its products to final buyers. Some organizations supply directly
to the retailer whilst others use a complex “chain” including intermediaries such as
wholesalers, agents and distributors

➢ Competitors

The marketing concept states that to be successful, an organization must provide

greater customer value and satisfaction than its competitors. Marketers must gain
strategic advantage by positioning their offerings strongly against competitors’
offerings in the minds of consumers.

➢ Publics

The organization's micro environment also includes various publics. A public is

any group that has an actual or potential impact on an organization's ability to
achieve its objectives.

➢ Customers

Customers are crucial and most important factors in the organization's micro
environment. In a commercial environment, no customers means no business. An
organization should be concerned about the constantly changing requirements of
its customers and should keep in touch with these changing needs by designing and
implementing an appropriate information gathering system.
MACRO ENVIRONMENT

The macro environment includes the major societal forces that affect not only the
organization, but also on its competitors and on elements in the micro-
environment.

The macro environment tends to be harder to influence than the micro

environment.

➢ Political environment

The political environment can be one of the less predictable elements in an

organization's macro environment. Marketers need to monitor the changing
political environment because political changes can profoundly affect a firm’s
marketing.
The political environment consists of laws, government agencies, and pressure
groups that influence and limit various organizations and individuals in a given
society.

➢ Economic environment

The economic environment consists of factors that affect consumer purchasing

power and spending patterns and is basically about the level of demand in the
economy and is the most visible aspect in the macro environment.

➢ Social and cultural environment

Of all the elements making up the macro environment, perhaps socio-cultural

factors are the most difficult to evaluate, and hence pose the greatest challenge to
the marketing organization. Social and cultural change manifests itself in changing
tastes, purchasing behavior and priorities of consumers and marketers need to
understand and identify these changing trends

➢ Ecological environment: Ecological Environment is concerned of issues as

to how the organization interacts with and affects the natural environment or
the ecology.

➢ Technological environment

The technological environment is perhaps the most dramatic forces that create new
technologies, creating new product and market opportunities. The pace of
technological change is becoming increasingly rapid and marketers need to
understand how technological development might affect them.
 ➢ Ethical environment

Marketing Ethics are moral philosophies/principles that define right or wrong

behavior in marketing. The most basic ethical issues have been formalized through
laws and regulations to conform to the standards of society. At the very least,
marketers are expected to obey these laws and regulations.

➢ Legal environment

Changes in the political environment often lead to changes in legal environment

and in the existing laws enforced. The legal environment sets the basic rules for
how a business should operate in society.

Some of the laws an organization should be aware of are as follows:

1. Protection of intellectual rights

2. Consumer Protection act
3. Companies Act
4. Regulatory commission
5. Environmental protection laws
6. Laws with regard to media freedom and advertising
7. Exchange control

DOMESTIC MARKETING AND INTERNATIONAL MARKETING

Domestic marketing refers to carrying out marketing activities within the

national boundaries. International marketing refers to carrying out marketing
activities outside the national boundaries also, It refers to doing marketing in local
market and it's scope is limited
 Domestic marketing refers to International marketing refers to
carrying out marketing activities carrying out marketing activities
01. within the national boundaries. outside the national boundaries also.

It refers to doing marketing in local It refers to doing marketing in global

02. market and it’s scope is limited. market and it’s scope is wide.

There is one nation, same language There are many nations, many
03. and one culture. languages and culture.

In domestic marketing only one In international marketing different

04. currency is used. currencies are used.

Controlling domestic marketing Controlling international marketing is

activities is easy as compared to difficult as compared to domestic
05. international marketing. marketing.

Well familiarity with domestic or Lack of familiarity with global or

06. local market. foreign market.

Where as more risk factors are

Low risk factors are associated with associated with international
07. domestic marketing. marketing.
 Domestic marketing requires less International marketing requires more
investment as compared to investment as compared to domestic
08. international marketing. marketing.

Mostly there is stable business Mostly there is unstable business

09. environment. environment.

It relatively deals with

10. homogeneous market. It relatively deals with diverse market.

In domestic marketing competitors In international marketing competitors

11. behavior is easy to predict. behavior is difficult to predict.

MARKETING ORGANIZATION
The Marketing organization is the vehicle for making decisions on all marketing
areas viz. products, marketing channels, prices, physical distributions and
promotions. It establishes the authority relationships among marketing personals and
specialists who are responsible for making marketing decisions and planning that
are essential for the success of any business firm.

ORGANIZATION OF A MARKETING DEPARTMENT

The marketing department of any enterprise is responsible for promoting the
products, ideas and mission of the enterprise, finding new customers, and
reminding existing customers that you are in business. It organizes all the activities
that are concerned with marketing and promotion. It may consist of a single person
or a group of people working in a hierarchal system who are responsible for
bringing the product of the business to the attention of its targeted customers. Since
this department is the key to your revenue and business activity, it requires people
who have the skills for dealing with people and understanding what they require.
There is no hard and fast rule to the organization of a marketing department, which
depends entirely upon the needs of the business, its size and the amount of money
that it wants to spend on marketing. But a typical marketing department in a large
business operation is organized as follows:
• Chief Marketing Officer: This is the person who is at the top of the pyramid and
is in charge of the marketing department. The responsibilities of CMO lie in the
decision making within the process of the development of the major marketing
strategies, as well as running the marketing department. CMO is also answerable to
the Board of Directors or the Management about the results of the marketing
strategies.
• Marketing Director: The person in this role is responsible for all the marketing
strategies that are created and implemented. With his tasks he assists the CMO of
the company.
• Vice President Marketing: He is answerable to the Marketing Director. His
responsibility is the implementation of the marketing strategies of the organization.
He works with the marketing manager in determining the strategies, messages, and
media to be employed for marketing.
• Marketing Manager: Marketing Manager works under the vice president
marketing and assists him with the implementation of all marketing strategies
including creating messages or advertisements for marketing, choosing the
medium of displaying the messages, which might include print media, television,
banners and hoarding, website and social media marketing, etc. A marketing
manager is also responsible for managing the other employees of the department.
There may be one or several marketing managers depending upon the size and
requirements of the business.
• Marketing Analyst or Researchers: These individuals are responsible for
research and analysis that drives the marketing department and guides its
marketing strategies by finding out about the target customers and the competition
of the business. Marketing Analysts employ marketing tools such as surveys or
studies to discover information that may be useful for marketing. They report to
the marketing manager.
• Public Relations: Public Relation Officer is in charge of managing the reputation
and goodwill of the company. His job is to create understanding of the clients and
try to influence their thinking and behavior. PRO uses media management and
communication to build up the company’s profile. The PRO works under the
Marketing Manager and reports to him.
• Social Media Expert/Creative services: With the internet becoming a major
player in marketing, a company benefits from the services of Social Media Experts
(SME) and creative services. While the SMEs concentrate on marketing the
business and its service on the internet so that more people become aware of it, the
 creative services take care of designing and presentation part of the business, these
include websites, web pages, brochures, booklets, flyers, advertisements, mailers
and e-mailers, and all other promotional material that is required by the marketing
department. The creative services and social media marketing report to the
marketing manager and work under him.
• Marketing Coordinator: Coordinates all the various sections of the marketing
department and manages the advertising and marketing campaigns. Marketing
Coordinator is responsible for tracking sales data, maintaining the promotional
material inventory, planning events, preparing reports, etc. They work with the
Marketing Manager and assist him.
• Marketing Assistant: Assists and reports to the marketing manager to run the day
to day business of a marketing department. Carries out administrative work
required for the smooth running of the department.

MARKETING CONTROL
Marketing control involves gathering information on marketing performance and
comparing the achieved performance against planned or budgeted performance,
using predetermined standards and yardsticks. It provides feedback; it regulates; and
it exercises a restraining influence or a redirecting influence.
ANNUAL PLAN CONTROL

Annual plan control is the monitoring of current marketing efforts and results
to ensure that the annual sales and the profit goals are achieved. Annual plan
control signifies continuous ongoing performance verification against the annual
plan and taking the necessary corrective actions.

PROFITABILITY CONTROL

Profitability control calls for measuring profitability of various products,

channels, territories, customer groups, order size, etc. It provides necessary
information to management to determine whether products, channels, or territories
should be expanded, reduced, or eliminated

STRATEGIC CONTROL

Strategic control processes allow managers to evaluate a company's marketing

program from a critical long-term perspective. This involves a detailed and
objective analysis of a company's organization and its ability to maximize its
strengths and market opportunities.

The five major marketing control techniques are competitor analysis, customer
analysis, testing research, customer feedback and cost analysis:

Analysis of Competitor Offerings and Strategies

A small business owner needs to know how his products, services and marketing
strategy compare to local, regional, national and international competitors to retain
existing customers and attract new ones. Competitor analysis involves checking out
the new products or services offered by your competitors, examining their marketing
strategies and determining whether they are succeeding or failing with their
businesses. Use this information to adjust your strategies accordingly. For example,
you could hire a mystery shopper to shop at your competitor's store to acquire
information or visit businesses similar to your own in other regions and speak with
their owners to get ideas.

Existing Customer Analysis

Another way to monitor and evaluate your marketing is to perform an existing
customer analysis to provide a detailed picture of the types of customers buying your
products or services. An analysis involves gathering data about your customers
during or after check out and then tabulating this information in a spreadsheet for
comparison. For example, you might gather data about your customers such as their
geographical location, average age and sex. In addition, you might gather spending
habits data such as average purchase amounts, amount and type of foot traffic before
and after advertising and coupon or discount usage.

Testing Research with a Focus Group

Once you identify a target customer base, you can determine the potential success
of a new product or service, the marketing methods needed to promote and sell it
and the financial impact of a planned marketing strategy through prerelease group
testing. One example of testing research involves communication with a focus group
of 10 to 15 people from your target customer base. Ask them to discuss in general
the products and services they like and dislike to help you brainstorm ideas for the
future, or ask them to try one of your new products or services and provide feedback.
Customer Opinions and Feedback
Customer feedback is a marketing control technique similar to testing research, but
instead of gaining insight into future products and services, you evaluate customers'
opinions of existing products or services and the marketing methods you currently
use. Customer feedback might involve inviting your customers to complete a survey,
offer opinions through a suggestion box or respond to specific questions in-person
or over the phone after they've purchased a product or service. Other customer
feedback methods include asking your employees for feedback and maintaining a
list of the types of products or services customers have inquired about that you don't
currently offer.
Cost Analysis and Comparison with Budget
Small-business owners use cost analysis to create an overall picture of the cost of
existing marketing strategies to reduce costs, weed out products and marketing
strategies that aren't working and create a new budget to use moving forward. To
perform a cost analysis, look at the current costs involved with all aspects of your
business including inventory, distribution and the current costs of your marketing
strategies. After you determine the costs, compare the numbers with your existing
budget and the costs of alternative marketing methods.
CUSTOMER LIFETIME VALUE

Customer lifetime value is the total worth to a business of a customer over the
whole period of their relationship. It's an important metric as it costs less to keep
existing customers than it does to acquire new ones, so increasing the value of your
existing customers is a great way to drive growth.

UNIT 2

CONSUMER BEHAVIOR

Consumer behavior is the study of individuals, groups, or organizations and all

the activities associated with the purchase, use and disposal of goods and
services. Consumer behavior consists of how the consumer's emotions, attitudes
and preferences affect buying behavior.

BUSINESS MARKET

Business markets refer to organizations, businesses or entities that acquire products

and services for use in the production of other services and products. These include
goods that are supplied, sold or rented to others. Among major players in business
markets include fisheries, agriculture, mining, transportation, construction, mining,
communication, finance, distribution and insurance services.
Characteristics of business markets include;
➢ Presence of fewer but larger buyers- While the buyers may be few, they
often buy in large quantities
➢ Geographically concentrated customers- Customers in these markets are at
vast geographical locations
 ➢ Final customer demand-driven- Since production is tailored for the final
consumer, the products are tailored towards the final consumers’ wants and
needs
➢ Inelastic demand- The prices in these markets do not affect the demands as
they do not change much
➢ Quick fluctuation in demand- Since businesses prefer to buy sat the lowest
prices, an increase in prices decreases the products purchases since high
price selling products do not sell well in the market
➢ Professional purchasing units- Due to the need of maintaining a high level of
professionalism, the purchasing process is very detail-oriented.

BUSINESS MARKETS

As mentioned, business markets refer to organizations, businesses or entities that

acquire products and services for use in the production of other services and
products. These include goods that are supplied, sold or rented to others. Among
major players in business markets include fisheries, agriculture, mining,
transportation, construction, mining, communication, finance, distribution and
insurance services.

Many people are investing in more resources and money in business markets. A
case in point is Tesla’s plan to invest $5 billion in its new eclectic car and battery,
commonly referred to as ‘Gigafactory’ in Europe. Different suppliers will then
provide accessories and parts.

Characteristics of business markets include;

➢ Presence of fewer but larger buyers- While the buyers may be few, they
often buy in large quantities
➢ Geographically concentrated customers- Customers in these markets are at
vast geographical locations
 ➢ Final customer demand-driven- Since production is tailored for the final
consumer, the products are tailored towards the final consumers’ wants and
needs
➢ Inelastic demand- The prices in these markets do not affect the demands as
they do not change much
➢ Quick fluctuation in demand- Since businesses prefer to buy sat the lowest
prices, an increase in prices decreases the products purchases since high
price selling products do not sell well in the market
➢ Professional purchasing units- Due to the need of maintaining a high level of
professionalism, the purchasing process is very detail-oriented.
➢ Has a formalized buying process- The purchasing process involves
following the organization’s protocol and the complete chain of command

CONSUMER MARKETS

This is a market whereby businesses or producers sell their products or services

directly to the final consumers.

Marketing in consumer markets involves dividing the consumers into markets and
targeting them according to their likes, interests, dislikes, values and opinions.

Characteristics of consumer markets include;

➢ Demographic characteristics- This is the foundation for understanding
consumers and include ethnicity, age, income, gender, occupation, religion,
nationality, social class, education and social class.
➢ Behavioristic characteristics- These include consumer interests in a product
such as how they intend to use it.
➢ Psychographic characteristics- This entails the kind of lifestyle
the customer lives, their interest, opinions and attitudes as well as personal
values.
 ➢ Geographic characteristics- This is information regarding where the
consumer lives. It includes the climate, religion or how densely populated
the geographical area is.

Differences between Business market and Consumer market:

Definition

Business markets refer to organizations, businesses or entities that acquire products

and services for use in the production of other services and products. On the other
hand, consumer markets refer to markets whereby businesses or producers sell
their products or services directly to the final consumers.

Demand

While business markets have inelastic demand, consumer markets have an elastic
demand.

Number of buyers

Business markets have fewer buyers who often buy in large quantities. On the
other hand, consumer markets have many buyers who purchase in small
quantities.

Buying process

While business markets have formalized buying processes whereby the purchasing
process involves following the organization’s protocol and the complete chain of
command, consumer markets do not have formalized buying processes.
Decision making

Since business markets entail many products, decision making before purchases
are made is slow. On the other hand, the decision making in consumer markets is
fast since impulse buying is rampant.

Investments

While business markets invest heavily in capital equipment, consumer markets

invest heavily in marketing and promotion activities.

Market segmentation

Business markets segment their businesses based on the industry, ownership, level
of technology and end market reached. On the other hand, consumer markets
segment their businesses based on demographic, behavioristic, psychographic and
geographic characteristics.
BUYING ROLES

Buying roles refer to the activities that one or more person(s) might perform in
a buying decision. ... User: the person(s) who consumes or uses the product or
service. Gatekeeper: the person(s) who controls information or access, or both, to
decision makers and influencers.

1. Problem/need recognition

This is often identified as the first and most important step in the customer’s
decision process. A purchase cannot take place without the recognition of the need.
The need may have been triggered by internal stimuli (such as hunger or thirst) or
external stimuli (such as advertising or word of mouth).
2. Information search

Having recognised a problem or need, the next step a customer may take is the
information search stage, in order to find out what they feel is the best solution.
This is the buyer’s effort to search internal and external business environments, in
order to identify and evaluate information sources related to the central buying
decision. Your customer may rely on print, visual, online media or word of mouth
for obtaining information.

3. Evaluation of alternatives

As you might expect, individuals will evaluate different products or brands at this
stage on the basis of alternative product attributes – those which have the ability to
deliver the benefits the customer is seeking. A factor that heavily influences this
stage is the customer’s attitude. Involvement is another factor that influences the
evaluation process. For example, if the customer’s attitude is positive and
involvement is high, then they will evaluate a number of companies or brands; but
if it is low, only one company or brand will be evaluated.

4. Purchase decision

The penultimate stage is where the purchase takes place. Philip Kotler (2009)
states that the final purchase decision may be ‘disrupted’ by two factors: negative
feedback from other customers and the level of motivation to accept the feedback.
For example, having gone through the previous three stages, a customer chooses to
buy a new telescope. However, because his very good friend, a keen astronomer,
gives him negative feedback, he will then be bound to change his preference.
Furthermore, the decision may be disrupted due to unforeseen situations such as a
sudden job loss or relocation.

5. Post-purchase behaviour

In brief, customers will compare products with their previous expectations and will
be either satisfied or dissatisfied. Therefore, these stages are critical in retaining
customers. This can greatly affect the decision process for similar purchases from
the same company in the future, having a knock-on effect at the information search
stage and evaluation of alternatives stage. If your customer is satisfied, this will
result in brand loyalty, and the Information search and Evaluation of alternative
stages will often be fast-tracked or skipped altogether.

FACTORS INFLUENCING BUYING DECISION

1. Economic Factor

The most important and first on this list is the Economic Factor. This one is the
main foundation of any purchasing decision. The reason is simple people can’t buy
what they can’t afford. The need of a product also doesn’t play a role here, but the
most important thing is affordability.

2. Functional Factor

The factor is totally about needs, backed by a logic that what makes sense and also
fits in the best interest of the customer. This one factor also plays a very important
role in the buying decision.

3. Marketing Mix Factors

There are 4 components in the marketing mix, i.e. product, pricing, promotion and
place of distribution and each of these components have a direct or indirect impact
on the buying process of the consumers. The consumers consider various things
like the characteristics of the product, price charged, availability of the product at
the required location and much more.

4. Personal Factors

The personal factors include age, occupation, lifestyle, social and economic status
and the gender of the consumer. These factors can individually or collectively
affect the buying decisions of the consumers.

5. Psychological Factor

When it comes to the psychological factors there are 4 important things affecting
the consumer buying behaviour, i.e. perception, motivation, learning, beliefs and
attitudes.
 6. Social Factors

Social factors include reference groups, family, and social status. These factors too
affect the buying behaviour of the consumer. These factors in turn reflect an
endless and vigorous inflow through which people learn different values of
consumption.

7. Cultural Factors

Cultural factors have a subtle influence on a consumer’s purchasing decision

process. Since each individual lives in a complex social and cultural environment,
the kinds of products or services they intend to use can be directly or indirectly be
influenced by the overall cultural context in which they live and grow. These
Cultural factors include race and religion, tradition, caste and moral values.

Consumers go through 5 stages in the process of adopting a new product.

1. Product Awareness.
2. Product Interest.
3. Product Evaluation.
4. Product Trial.
5. Product Adoption.
These stages imply that the new-product marketer should consider how to help
consumers move through these stages. A manufacturer of large-screen televisions
may discover that many consumers in the interest stage do not move to the trial
stage because of uncertainty and the large investment.

If these same consumers would be willing to use a large-screen television on a trial

basis for a small fee, the manufacturer should consider offering a trial-use plan
with the option to buy.

1. Product Awareness

The consumer becomes aware of the new product but lacks information about it.
Initially, the consumer must become aware of the new product.

Awareness leads to interest, and the customer seeks information about the new
product.

Whether an innovation is continuous or not, people are either little aware or aware
of it initially.

Innovator, therefore, has to inform the adopters about the innovation. In the
awareness stage, individuals become aware that the product exists, but they have
little information about it and are not concerned about getting more.

Adopters may be informed through advertising, publicity, or any other effort of the
marketer.

2. Product Interest

The consumer seeks information about the new product. Once the information has
been gathered, the consumer enters the evaluation stage and considers buying the
new product.

By this time, the innovation is introduced. It is now the time for the decision-
makers to determine whether the innovation relates to their needs.

They enter the interest stage when they are motivated to get information about its
features, uses, advantages, disadvantages, price, or location.
Interest may or may not sparked, depending on whether the decision-makers
perceive the innovation as a relevant, feasible alternative to existing items.

3. Product Evaluation

Next, in the trial stage, the consumer tries the product on a small scale to improve
its value estimate. The consumer considers whether trying the new product makes
sense.

Adopters of the innovations have to establish some evaluation measures to

compare the new product with existing ones.

During the evaluation stage, individuals consider whether the product will satisfy
certain critical criteria for meeting their specific needs. The potential adopters
consider the innovation’s benefits and determine whether to try it.

4. Product Trial

The consumer tries the new product on a small scale to improve their estimate of
its value. If the consumer is satisfied with the product, they enter the adoption
stage, deciding to use the new product thoroughly and regularly.

At this stage, the potential adopters examine, test, or try the innovative product to
determine its usefulness.

In this stage, they use or experience the product for the first time, possibly by
purchasing a small quantity, taking advantage of a free sample or demonstration, or
borrowing the product from someone.

During this stage, potential adopters determine the product’s usefulness under the
specific conditions they need.

The trial stage for innovations is complex. Successful introduction depends greatly
on the new product’s characteristics, benefits, and perceived risks. Effective
communication is the key to achieving trial by consumers.
5. Product Adoption

The consumer decides to make full and regular use of the new product. The new
product is a good, service, or idea perceived by some potential customers as new.

Individuals move into the adoption stage when choosing that specific product when
they need a product of that general type. Here the buyers purchase the new product
and can be expected to use it to solve problems.

So, this final stage of the process is indicated most directly by sales, but the
innovation’s visibility is also a success measure.

However, please do not assume that they will eventually adopt the new product
because a person enters the adoption process. Rejection may occur after any stage,
including the adoption stage.

CHANGING CUSTOMER BEHAVIOR PATTERNS

Buying behavior patterns are not synonymous with buying habits. Habits are
developed as tendencies towards an action and they become spontaneous over
time, while patterns show a predictable mental design.

Each customer has his unique buying habits, while buying behavior patterns are
collective and offer marketers a unique characterization. Customer behavior
patterns can be grouped into:

1. Place of purchase
Most of the time, customers will divide their purchases between several stores even
if all items are available in the same store. Think of your favorite hypermarket:
although you can find clothes and shoes there as well, you’re probably buying
those from actual clothing brands.

When a customer has the capability and the access to purchase the same products
in different stores, they are not permanently loyal to any store, unless that’s the
only store they have access to. Studying customer behavior in terms of choice of
place will help marketers identify key store locations.
2. Items purchased
Analyzing a shopping cart can give marketers lots of consumer insights about the
items that were purchased and how much of each item was purchased. Necessity
items can be bought in bulk while luxury items are more likely to be purchased less
frequently and in small quantities.

The amount of each item purchased is influenced by the perishability of the item,
the purchasing power of the buyer, unit of sale, price, number of consumers for
whom the item is intended, etc.

3. Time and frequency of purchase

Customers will go shopping according to their feasibility and will expect service
even during the oddest hours; especially now in the era of e-commerce where
everything is only a few clicks away.

It’s the shop’s responsibility to meet these demands by identifying a purchase

pattern and match its service according to the time and frequency of purchases.

One thing to keep in mind: seasonal variations and regional differences must also
be accounted for.

4. Method of purchase
A customer can either walk into a store and buy an item right then and there or
order online and pay online via credit card or on delivery.

The method of purchase can also induce more spending from the customer (for
online shopping, you might also be charged a shipping fee for example).

The way a customer chooses to purchase an item also says a lot about the type of
customer he is. Gathering information about their behavior patterns helps you
identify new ways to make customers buy again, more often, and higher values.

.
 UNIT 3

MARKETING RESEARCH AND SELECTING THE TARGET MARGETS

MARKETING INFORMATION SYSTEM

A marketing information system (MIS) is a management information system
(MIS) designed to support marketing decision making. Jobber (2007) defines it
as a "system in which marketing data is formally gathered, stored, analysed and
distributed to managers in accordance with their informational needs on a regular
basis."

MARKETING RESEARCH
Marketing research relates to information and data collection methods which
provide a coherent representation of a need and its potential solutions. The system
may be used for ongoing monitoring of the marketplace or on a step by step
evaluation of a product concept.

DEMAND ESTIMATION
Demand estimation is any means to model how consumer behavior changes due
to changes in the price of the product, consumer income, or any other variable
that impacts demand. In practice, demand functions for a specific market must be
estimated using empirical data

SALES FORCASTING

Sales forecasting is the process of estimating future revenue by predicting the

amount of product or services a sales unit (which can be an individual
salesperson, a sales team, or a company) will sell in the next week, month, quarter,
or year.

MARKET SEGMENTATION

Market segmentation is the practice of dividing your target market into

approachable groups. Market segmentation creates subsets of a market based on
demographics, needs, priorities, common interests, and other psychographic or
behavioural criteria used to better understand the target audience.
STP
STP marketing stands for segmentation, targeting, and positioning. I t is a
three-step process that allows for the development of a specific and
actionable marketing strategy. In marketing, segmenting, targeting and
positioning (STP) is a broad framework that summarizes and simplifies the
process of market segmentation. ...

Targeting is the process of identifying the most attractive segments from the
segmentation stage, usually the ones most profitable for the business.

SEGMENTATION:

Market segmentation is the research that defines whether the business divides its
consumers or demographic into smaller groups based on features such as age,
income, personality traits or behaviour. These categories can be used later to tailor
goods and advertising for different customers.
Market segmentation is the research that defines whether the business divides its
consumers or demographic into smaller groups based on features such as age,
income, personality traits or behaviour. The segmentation of marketing means
splitting the market into sections that represent customer needs and wants.

1. Geographic segmentation: Diving your audience based on country, region,

state, province, etc.
2. Demographic segmentation: Dividing your audience based on age, gender,
education level, occupation, gender, etc.
3. Geo-demographic segmentation:

a combination of demographic and geographic.

4. Behavioral segmentation: Dividing your audience based on how they

interact with your business: What they buy, how often they buy, what they
browse, etc.
5. Psychographic segmentation: Dividing your audience based on “who”
your potential customer is: Lifestyle, hobbies, activities, opinions, etc.

Benefits of market segmentation

➢ Increase sales
➢ Increase the growth rate
➢ High profit
➢ Increase the market share
➢ Provide adequate marketing direction
➢ Facilitate proper marketing selection
➢ Helps the targeting and positioning
➢ Attract new customers.
➢ Provide a competitive advantage
Disadvantage of segmentation
➢ Cost Increase when the company attempts several segments of the market
➢ Expenditure on marketing when the company used different programs is
used.
TARGETING:

After segmentation, you have to do target marketing. First of all, What is target
marketing?

Target marketing is niche-specific marketing. The niche is not based on products

but customers. You have to identify your potential customers who will purchase
your product based on their needs. There are around 7 billion people on earth. You
can’t sell your product to all people because they are not interested in purchasing
from you. That’s where target marketing works. So Targeting the Second step of
STP Marketing

4 types of target marketing: -

1. Undifferentiated marketing
2. Differentiated marketing
3. Concentrated or focused marketing
4. Customized marketing

➢ Undifferentiated Marketing

The company who are approaching the vast audience with the supply of mass-
produced product used this strategy.

This marketing is for the company having one type of product. They have minimal
knowledge of their customer’s characteristics and behavioural patterns (targeted
audience). There is an absence of segmentation

➢ Differentiated Marketing
When there is an increase of segments in your existing segment which resulted in
the birth of differentiated marketing. This is also known as multi-segment
marketing. Every brand trying to enter every segment with the growth in
the demand for different products.

Differentiated marketing helps to cater to your multiple audiences to help in the

boost of profitability, sales volume, market presence, market share, economies of
scales and large audience reach.
But also cost so much like human resource, Production cost, inventory, research
and development, operational cost, marketing research, product design and many
more.

➢ Concentrated or Focus Marketing

There are several segments but some choose not to fulfil everyone’s needs. They
just targeting the specific audience to solve their big problems. This strategy is
useful for the company with limited resources. They are the one who knows their
audience very well.

This strategy might not result in too much profit but helps to create a loyal fanbase.
This creates a demand for customers in the company. But, this required most of the
money invested in R&D for the companies. Their main focus depends on
innovation and marketing.

➢ Customized Marketing
This serves public and company relations where companies believe to resolve
every problem of their customers by providing the product according to the
customer’s desire and needs.

They don’t cater to the large audience but serves individuals to build a sustainable
relationship with them. This increases the highest marketing expenditure and sales
efforts.

POSITIONING

This is the last step of the STP Marketing process. position means place. In other
words, we can say where you stand. In marketing, we understand the positioning of
a product. In simple words, positioning in the market means where your product
stands in the market. it means how our product stands different from other products
in the market and how it is better than our competitor’s product.

we have to make our customers understand that our product is better than our
competitor’s product so that when our customers think of buying something, our
product must be the only product that comes to their mind.
 Benefits of Positioning:
1. Customers: Good positioning (STP of any product) will lead to more
customers. Good positioning will attract the attention and interest of the customer.

2. Profit: when more customers will be attracted then there will be more profits. A
good profit will make the company grow and succeed.

3. Brand loyalty: Good product positioning will always earn brand-loyal

customers. It means customers will always prefer our product over competing
brands. They will always repeatedly buy your product. When the company
launches a product, a brand loyal customer always wants to buy that first.

4. Power: Good positioning will give power to the brand. Your competitor starts
following you. They will follow your steps like what price you are charging, your
technology, etc. a good positioning can make you the king of the market.

4 LEVELS OF MARKET SEGMENTATION ARE;

1. Mass Marketing or Undifferentiated Marketing.

2. Product-Variety Marketing or Differentiated Marketing.
3. Concentrated Marketing or Niche Marketing.
4. Micro Marketing.

1. Mass Marketing or Undifferentiated Marketing – Target the entire

market with just one marketing campaign.

Mass marketing is the process of communicating a product to the entire market

with one marketing strategy, using the power of mass distribution and mass media.

Also, know as undifferentiated marketing because this strategy does not target
individual market segments. Different market segments are marketed with the
same blanket approach, usually to maximize sales volume.

Most businesses try combining mass and niche marketing strategies.

 2. Product-Variety Marketing or Differentiated Marketing – Target the
Entire market with different products and marketing mix

In Product-Variety Marketing or Differentiated Marketing, the marketer divides

the market into different segments depending on the consumer’s buying behavior,
requirements, purchasing power, location, and age level.

In product-variety marketing, the seller produces two or more products that have
different features, styles, quality, and so on. Subsequently, Kohinoor produced
several kinds of toothpaste bearing different brands with other packages. They
were designed to offer variety to consumers rather than creating various appeals to
different market segments.

3. Niche Marketing or Concentrated Marketing – Target a few well-defined

segments of the market

Niche marketing targets specific and well-defined market segments and

concentrates all marketing efforts on a small but specific and well-defined segment
of the population.

Niches are ‘created’ by identifying needs, wants, and requirements addressed

poorly or not at all by other firms, and developing and delivering goods or services
to satisfy them.

A niche may be identified by dividing a segment into sub-segments or by defining

a group with a different set of characteristics

The main requirements or characteristics of Niche Marketing are

• Customers have a distinct set of needs and want from the service or product.
• The seller of the service provider needs more skill or niche skills.
• Premium prices for higher quality and specialized niche services.

4. Micro Marketing – Target at a very basic level of the market segment

Micro-marketing looks at the activities individual in marketers in the entire

economic sector. This approach is still more narrowly focused than concentrated
marketing. Micro-marketing involves targeting potential customers at a very basic
level, such as postal code, specific occupation, or lifestyle.
Ultimately, micromarketing may even target individuals themselves. It is referred
to as marketing to segments of one. The internet allows marketers to boost the
effectiveness of micromarketing.

PATTERNS OF MARKET SEGMENTATION

Market segments can be build up in many ways, one way is to identify preference
segments. For example cookies buyers are asked how much they value sweetness
and saltiness in biscuits as two product attributes. Three different patterns can
emerge.

1. Homogeneous Preferences: shows a market where all the consumers have

roughly the same preferences. The market shows no natural segments. We would
predict that existing brands would be similar and cluster around the middle of the
scale in both sweetness & saltiness.

2. Diffused Preferences: At the other extreme, consumer preferences maybe

scattered throughout the space, indicating that customers vary greatly in their
preferences. The first brand to enter the market is likely to position in the center to
appeal to the most people

3. Clustered Preferences: The market might reveal distinct preference clusters,

called natural market segments. The first firm in this market has three options. It
might position in the center, hoping to appeal to all groups. It might position in the
largest market segment (concentrated marketing). It might develop several brands,
each positioned in a different segment. If the first firm developed only one brand,
competitors would enter and introduce brands in the other segments
 UNIT4

PRODUCT AND PRICING DECISION

PRODUCT

Product refers to a good or service that satisfies the needs and wants of
customers. It is offered in the market by an organization to earn revenue by
meeting the requirements of customers. Product is an asset of an organization and
referred as the backbone of marketing mix.

PRODUCT LINE

A product line is a group of similar products manufactured and sold by one

company. Many larger and more established companies have multiple product
lines because of their financial capabilities and an understanding of customers'
needs, while newer companies tend to have fewer.

Companies place products into product lines depending on characteristics such as

functionality and price range. For example, a company that sells nail care products
may have one product line that sells different colors of nail polish and another
product line that sells multiple types of nail polish removers. The nail polishes
have the same function, so they are in the same product line. Neither the polish nor
the polish remover is used for the same purpose, so they are in different product
lines

PRODUCT MIX

The product mix consists of every product a business develops and sells. Within a
product mix, there are four dimensions—width, length, depth and consistency.
Here is a brief description of each dimension:

Width: The width of a product mix refers to the total number of product lines a
business has. For example, if a breakfast food company has a product line for
hot cereal, cold cereal and breakfast snacks, it would have a width of three
because it has three product lines.

Length: The length includes the total number of products in the mix. For
example, if the breakfast food company had three product lines and each line
had four products, the length of the mix would be 12.
 Depth: Depth is the number of variations within a product line. Variations
consist of different sizes, flavors, colors or other distinguishable characteristics.
If the breakfast food company's product line for hot cereal included strawberry,
apple, banana and cinnamon flavors, the depth of that particular product line
would be four.

Consistency: The consistency of the product mix refers to how closely products
relate to each other in terms of use, distribution channels or type of consumer.
The breakfast food company is likely going to have a higher consistency of
product lines than a retail company that sells shoes, clothes and home goods.

NEW PRODUCT DEVELOPMENT

New product development (NPD) is the process of bringing a new product to the
marketplace. Your business may need to engage in this process due to changes in
consumer preferences, increasing competition and advances in technology or to
capitalise on a new opportunity.

Innovative businesses thrive by understanding what their market wants, making

smart product improvements, and developing new products that meet and exceed
their customers' expectations.

'New products' can be:

• products that your business has never made or sold before but have been
taken to market by others
• product innovations created and brought to the market for the first time.
They may be completely original products, or existing products that you
have modified and improved.

NPD is not limited to existing businesses. New businesses, sole traders or even
freelancers can forge a place in the market by researching, developing and
introducing new or even one-off products. Similarly, you don't need to be an
inventor to master NPD. You can also consider purchasing new products through
licensing or copyright acquisition.

This guide explains the importance of NPD and describes the steps involved.
Difference between packaging and labeling:
The four main points of difference between packaging and labeling are listed
below:
1. Meaning
Packaging refers to the process of designing and developing a suitable package for
enclosing and holding the product so that it can be easily covered and secured. In
contrast, labeling refers to the text, design, symbol, logo, instructions and
suggestions for usage etc. that are printed on the package of the product with the
aim of informing as well as attracting customers.

2. Objective
The prime objective of packaging is to wrap a product in any kind of packaging so
as to keep the product in a single place, prevent it from any kind of damage or
contamination, make it attractive and appealing and keep it new and fresh till it
reaches the final consumer. The key function of labeling, however, is to inform and
educate the potential customers. Labeling provides all necessary information about
the product to customers in accordance with the legal requirements of the given
geographical location in which the product in question is marketed, sold and used.

3. Focus
The focus of packaging is on the way the product is presented to the customers, i.e.
it concentrates on the appearance and first impression of the product. On the
contrary, labeling focuses on the product description that the customers often want
to know. It concentrates on the information that is to be presented on the packaging
of the product.

4. Design
Since packaging is a vital tool of marketing and has a significant role in
developing brand image, marketers try to create an innovative and attractive design
for the packaging of their products. Their aim is to make the package appealing for
customers so as to persuade them to buy their product. However, a label is
typically designed in a simple and formal manner as its main objective is to clearly
present information about the product to the customers.

BRANDING
Branding is the process of creating a strong, positive perception of a company,
its products or services in the customer's mind by combining such elements as
logo, design, mission statement, and a consistent theme throughout all marketing
communications. ... These include consistent imagery and logos.
BRAND EQUITY
Brand equity refers to a value premium that a company generates from a
product with a recognizable name when compared to a generic equivalent.
Companies can create brand equity for their products by making them memorable,
easily recognizable, and superior in quality and reliability.

BRANDING STRATEGIES

A branding strategy (a.k.a. brand development strategy) is the long-term plan to

achieve a series of long-term goals that ultimately result in the identification and
preference of your brand by consumers. A successful branding strategy
encompasses the brand's mission, its promises to its customers, and how these are
communicated.

Often misconceived, a branding strategy is not the sum of your logo, color palette,
or website; though these creative elements are integral to a successful branding
strategy. A branding strategy revolves around all the intangible elements that over
time drive brand awareness, brand equity, and brand sentiment.
Product Life Cycle Stage 1: Introduction

First, in the life cycle is the introduction of a new brand or product supported by
advertising, giveaways, and various avenues for distribution. The introduction
stage is to attract new buyers and triers.

Product Life Cycle Stage 2: Growth

As the first stage of the funnel grows to reach greater audiences, the brand reaches
the growth life cycle stage. This is where firms perform consumer analysis and
make brand enhancements to better serve the customers they’ve reached.

Product Life Cycle Stage 3: Maturity-Saturation

Next in the life cycle is the Maturity-Saturation stage. This part of the stage is
where a firm concentrates on customer retention. In order to maintain a stronghold
in the market place you will find it necessary to hold on to loyal customers and
past customers. This is a more cost effective decision as to ad spending to reach
new customers. Additionally, at this stage the market is saturated with competing
firms who have already entertained the remaining consumers in the market.

Product Life Cycle Stage 4: Decline

After the brand has experienced the Introduction, Growth, and Maturity-Saturation
life cycle stages they begin to prepare for the decline stage. This stage is where
firms witness a drop in sales; however, firms have come up with modifying,
harvesting and eliminating offers to avoid this decline.

SERVICE MARKETING

Service Marketing is simply defined as a phenomenon wherein a service or an

intangible commodity is promoted and marketed among the target audience.
A novel kind of marketing, service marketing has become quite prominent in
helping companies promote services around the world
 PRICING

Pricing is the method of determining the value a producer will get in the exchange
of goods and services. Simply, pricing method is used to set the price of producer’s
offerings relevant to both the producer and the customer.

Pricing in Marketing

Definition: Pricing is the method of determining the value a producer will get in
the exchange of goods and services. Simply, pricing method is used to set the price
of producer’s offerings relevant to both the producer and the customer.

Every business operates with the primary objective of earning profits, and the same
can be realized through the Pricing methods adopted by the firms.

While setting the price of a product or service the following points have to be kept
in mind:

• Nature of the product/service.

• The price of similar product/service in the market.
• Target audience i.e. for whom the product is manufactured (high, medium or lower
class)
• The cost of production viz. Labor cost, raw material cost, machinery cost,
inventory cost, transit cost, etc.
• External factors such as Economy, Government policies, Legal issues, etc.
FACTORS INFLUENCING PRICING DECISION
INTERNAL FACTORS

1. Top Level Management:

Top-level management has a full authority over the issues related to pricing.
Marketing manager’s role is administrative. The philosophy of top-level
management is reflected in forms of pricing also. How does top management
perceive the price?

How far is pricing considered as a tool for earning profits, and what is importance
of price for overall performance? In short, overall management philosophy and
practice have a direct impact on pricing decision. Price of the product may be high
or low; may be fixed or variable; or may be equal or discriminative depends on
top-level management.

2. Elements of Marketing Mix

Price is one of the important elements of marketing mix. Therefore, it must be
integrated to other elements (promotion, product, and distribution) of marketing
mix. So, pricing decisions must be linked with these elements so as to consider the
effect of price on promotion, product and distribution, and effect of these three
elements on price.

For example, high quality product should be sold at a high price. When a company
spends heavily on advertising, sales promotion, personal selling and publicity, the
selling costs will go up, and consequently, price of the product will be high. In the
same way, high distribution costs are also reflected in forms of high selling price.

3. Degree of Product Differentiation:

Product differentiation is an important guideline in pricing decisions. Product
differentiation can be defined as the degree to which company’s product is
perceived different as against the products offered by the close competitors, or to
what extent the product is superior to that of competitors’ in terms of competitive
advantages. The theory is, the higher the product differentiation, the more will be
freedom to set the price, and the higher the price will be.
4. Costs:
Costs and profits are two dominant factors having direct impact on selling price.
Here, costs include product development costs, production costs, and marketing
costs. It is very simple that costs and price have direct positive correlation.
However, production and marketing costs are more important in determining price.

5. Objectives of Company:
Company’s objectives affect price of the product. Price is set in accordance with
general and marketing objectives. Pricing policies must the company’s objectives.
There are many objectives, and price is set to achieve them.

6. Stages of Product Life Cycle:

Each stage of product life cycle needs different marketing strategies, including
pricing strategies. Pricing depends upon the stage in which company’s product is
passing through. Price is kept high or low, allowances or discounts are allowed or
not, etc., depend on the stage of product life cycle.

7. Product Quality:
Quality affects price level. Mostly, a high-quality-product is sold at a high price
and vice versa. Customers are also ready to pay high price for a quality product.

(B) EXTERNAL FACTORS:

External factors are also known as environmental or uncontrollable factors.
Compared to internal factors, they are more powerful.

Pricing decisions should be taken after analyzing following external factors:

1. Demand for the Product:
Demand is the single most important factor affecting price of product and pricing
policies. Demand creation or demand management is the prime task of marketing
management. So, price is set at a level at which there is the desired impact on the
product demand. Company must set price according to purchase capacity of its
buyers.

Here, there is reciprocal effect between demand and price, i.e., price affects
demand and demand affects price level. However, demand is more powerful than
price. So, marketer takes decision as per demand. Price is kept high when demand
is high, and price is kept low when demand of the product is low. Price is
constantly adjusted to create and/or maintain the expected level of demand.

2. Competition:
A marketer has to work in a competitive situation. To face competitors, defeat
them, or prevent their entry by effective marketing strategies is one of the basic
objective organisation. Therefore, pricing decision is taken accordingly.

A marketer formulates pricing policies and strategies to respond competitors, or,

sometimes, to misguide competitors.

3. Price of Raw Materials and other Inputs:

The price of raw materials and other inputs affect pricing decisions. Change in
price of needed inputs has direct positive effect on the price of finished product.
For example, if price of raw materials increases, company has to raise its selling
price to offset increased costs.

4. Buyers Behavior:
It is essential to consider buyer behavior while taking pricing decision. Marketer
should analyze consumer behavior to set effective pricing policies. Consumer
behavior includes the study of social, cultural, personal, and economic factors
related to consumers. The key characteristics of consumers provide a clue to set an
appropriate price for the product.

5. Government Rules and Restrictions:

A company cannot set its pricing policies against rules and regulations prescribed
by the governments. Governments have formulated at least 30 Acts to protect the
interest of customers. Out of them, certain Acts are directly related to pricing
aspects. Marketing manager must set pricing within limit of the legal framework to
avoid unnecessary interference from the outside. Adequate knowledge of these
legal provisions is considered to be very important for the manager.
6. Seasonal Effect:
Certain products have seasonal demand. In peak season, demand is high; while in
slack season, demand reduces considerably. To balance the demand or to minimize
the seasonal-demand fluctuations, the company changes its price level and pricing
policies. For example, during a peak season, price may be kept high and vice versa.
Discount, credit sales, and price allowances are important issues related to seasonal
factor.

7. Economic Condition:
This is an important factor affecting pricing decisions. Inflationary or deflationary
condition, depression, recovery or prosperity condition influences the demand to a
great extent. The overall health of economy has tremendous impact on price level
and degree of variation in price of the product. For example, price is kept high
during inflationary conditions. A manager should keep in mind the macro picture
of economy while setting price for the product.

PRICING STRATEGIES TO ATTRACT CUSTOMERS TO YOUR

BUSINESS
There are dozens of ways you can price your products, and you may find that some
work better than others — depending on the market you occupy. Consider these
five common strategies that many new businesses use to attract customers.
1. Price skimming
Skimming involves setting high prices when a product is introduced and then
gradually lowering the price as more competitors enter the market. This type of
pricing is ideal for businesses that are entering emerging markets. It gives
companies the opportunity to capitalize on early adopters and then undercut future
competitors as they join an already-developed market. A successful skimming
strategy hinges largely on the market you’re looking to enter.
2. Market penetration pricing
Pricing for market penetration is essentially the opposite of price skimming.
Instead of starting high and slowly lowering prices, you take over a market by
undercutting your competitors. Once you develop a reliable customer base, you
raise prices. Many factors go into deciding on this strategy, like your business’s
ability to potentially take losses up front to establish a strong footing in a market.
It’s also crucial to develop a loyal customer base, which can require other
marketing and branding strategies.
3. Premium pricing
Premium pricing is for business that create high quality products and market them
to high-income individuals. The key with this pricing strategy is developing a
product that is high quality and that customers will consider to be high value.
You’ll likely need to develop a “luxury” or “lifestyle” branding strategy to appeal
to the right type of consumer.
4. Economy pricing
An economy pricing strategy involves targeting customers looking to save as much
money as possible on whatever good or service they’re purchasing. Big box stores,
like Walmart and Costco, are prime examples of economy pricing models. Like
premium pricing, adopting an economy pricing model depends on your overhead
costs and the overall value of your product.
5.Bundle pricing
When companies pair several products together and sell them for less money than
each would be individually, it’s known as bundle pricing. Bundle pricing is a good
way to move a lot of inventory quickly. A successful bundle pricing strategy
involves profits on low value items outweighing losses on high value items
included in a bundle.

UNIT 5
PROMOTION AND DISTRIBUTION DECISION
The Promotion Mix refers to the blend of several promotional tools used by the
business to create, maintain and increase the demand for goods and services.
... The Promotion Mix is the integration of Advertising, Personal Selling, Sales
Promotion, Public Relations and Direct Marketing.
INTEGRATED MARKETING COMMUNICATION
Integrated marketing communication (IMC) can be defined as the process used to
unify marketing communication elements, such as public relations, social media,
audience analytics, business development principles, and advertising, into a brand
identity that remains consistent across distinct media channels.
Tools of Integrated Marketing Communications

1. Advertising
2. Personal selling
3. Direct Marketing
4. Mobile Marketing
5. Social Media Marketing
6. Public Relations
7. Sales Promotion
8. Sponsorships

Advertising
Advertising is the non-personal and paid form of communication. It is one of the
most effective forms of communication where it reaches a mass audience at once
within a short period of time.

It not only increases sales but also creates awareness among consumers. Marketers
need to ensure that the right message should be delivered in the right manner to the
consumers.

The various media used are print media, radio, billboards, television, etc.
Personal selling
ersonal selling includes face to face interaction with the end-users with the motive
of promoting the product and convincing the buyer to purchase the product.

It is the most effective tool in IMC as a salesperson directly communicates with the
buyer, resolves their issues on spot, improvise his pitch as per the need of the
buyer, and focuses on building a long-term relationship with end-users.

Direct Marketing
It is the oldest form of communication where organizations directly communicate
with end-users through emails, telephone, fax, text messages, catalog, brochure,
and promotional letter.

Nowadays people buy more online, so marketers help consumers in the buying
process by sending those catalogs and other marketing material which makes the
process easier for consumers.

Mobile Marketing
Mobile marketing involves communicating with customers through mobile by
sending them a text message. It is the cheapest traditional means of promotion.

Social Media Marketing

It is one of the most powerful media where the promotion of the brand or business
can be done through the social media channel. It is one of the low-cost promotional
methods where a large number of users are targeted at once.

Public Relations
It is the practice of managing the relationship between an organization and the
public.

It is a two-way communication where the public shares their feedback to the

organization.
 PR is done to create goodwill in the market and present the product of the company
in the positive light.

Promotion can be done through press releases, public appearances, event

sponsorships, news, etc.

Sales Promotion
Sales promotion is the short term incentives given to consumers to accelerate the
sale.

It gives them a reason to buy the product by providing attractive offers like
discount coupons, contests, premiums, samples, sweepstakes, price packs, low-cost
financing deals, and rebates.

Sponsorships
It is a mixture of sales promotion and public relations. Sponsorships create brand
loyalty and help in differentiating the product with competitors.

DISTRIBUTION CHANNELS

A distribution channel represents a chain of businesses or intermediaries

through which the final buyer purchases a good or service. Distribution
channels include wholesalers, retailers, distributors, and the Internet. In a direct
distribution channel, the manufacturer sells directly to the consumer.

Distribution Channels
Distribution channels in marketing are one of the classic “4 Ps” (product,
promotion, price, placement a.k.a. “distribution”). They’re a key element in your
entire marketing strategy — they help you expand your reach and grow revenue.

B2B and B2C companies can sell through a single distribution channel or through
multiple channels that may include:

• Wholesaler/Distributor

• Direct/Internet
• Direct/Catalog

• Direct/Sales Team

• Value-Added Reseller (VAR)

• Consultant

• Dealer

• Retail

• Sales Agent
TYPES OF DISTRIBUTION CHANNELS

Channels of distribution can be divided into the direct channel and the indirect
channels. Indirect channels can further be divided into one-level, two-level, and
three-level channels based on the number of intermediaries between manufacturers
and customers.

Direct Channel or Zero-level Channel (Manufacturer to Customer)

Direct selling is one of the oldest forms of selling products. It doesn’t involve the
inclusion of an intermediary and the manufacturer gets in direct contact with the
customer at the point of sale. Some examples of direct channels are peddling,
brand retail stores, taking orders on the company’s website, etc. Direct channels
are usually used by manufacturers selling perishable goods, expensive goods, and
whose target audience is geographically concentrated. For example, bakers,
jewellers, etc.

Indirect Channels (Selling Through Intermediaries)

When a manufacturer involves a middleman/intermediary to sell its product to the

end customer, it is said to be using an indirect channel. Indirect channels can be
classified into three types:

• One-level Channel (Manufacturer to Retailer to Customer): Retailers

buy the product from the manufacturer and then sell it to the customers. One
level channel of distribution works best for manufacturers dealing in
shopping goods like clothes, shoes, furniture, toys, etc.
 • Two-Level Channel (Manufacturer to Wholesaler to Retailer to
Customer): Wholesalers buy the bulk from the manufacturers, breaks it
down into small packages and sells them to retailers who eventually sell it to
the end customers. Goods which are durable, standardised and somewhat
inexpensive and whose target audience isn’t limited to a confined area use
two-level channel of distribution.
• Three-Level Channel (Manufacturer to Agent to Wholesaler to Retailer
to Customer): Three level channel of distribution involves an agent besides
the wholesaler and retailer who assists in selling goods. These agents come
handy when goods need to move quickly into the market soon after the order
is placed. They are given the duty to handle the product distribution of a
specified area or district in return of a certain percentage commission. The
agents can be categorised into super stockists and carrying and forwarding
agents. Both these agents keep the stock on behalf of the company. Super
stockists buy the stock from manufacturers and sell them to wholesalers and
retailers of their area. Whereas, carrying and forwarding agents work on a
commission basis and provide their warehouses and shipment expertise for
order processing and last mile deliveries. Manufacturers opt for three-level
marketing channel when the userbase is spread all over the country and the
demand of the product is very high.
Dual Distribution

When a manufacturer uses more than one marketing channel simultaneously to

reach the end user, he is said to be using the dual distribution strategy. They may
open their own showrooms to sell the product directly while at the same time use
internet marketplaces and other retailers to attract more customers.

A perfect example of goods sold through dual distribution is smartphones.

Distribution Channels for Services

Unlike tangible goods, services can’t be stored. But this doesn’t mean that all the
services are always delivered using the direct channels.

With the advent of the internet, online marketplaces, the aggregator business
model, and the on-demand business model, even services now use intermediaries
to reach to the final customers.
The Internet as a Distribution Channel

The internet has revolutionised the way manufacturers deliver goods. Other than
the traditional direct and indirect channels, manufacturers now
use marketplaces like Amazon (Amazon also provide warehouse services for
manufacturers’ products) and other intermediaries like aggregators
(Uber, Instacart) to deliver the goods and services. The internet has also resulted in
the removal of unnecessary middlemen for products like software which are
distributed directly over the internet.

PHYSICAL DISTRIBUTION SYSTEM

Physical distribution refers to the movement of finished goods from a

company's distribution and fulfillment network to the end user. In ecommerce,
physical distribution involves several ecommerce supply chain activities including
warehousing, inventory control, order processing, retail fulfillment, and shipping.

CHANNEL INTERMEDIARIES

Channel intermediaries are the external groups, individuals and businesses that
help a company deliver its products to customers. They act as agents between
the original creator of the merchandise and the consumer who makes the last
purchase.

Agents:

Agents act as an extension of the original manufacturers and represent the

product's producer when trying to make a sale. Agents can be individual
salespeople or entire companies. They work directly with customers to sell
products and services. Agents do not possess any ownership in the original
companies or the products they sell for them. Instead, they earn commissions from
each sale they make.

Wholesalers:

Wholesalers buy a company's products in bulk and resell them. Unlike agents,
wholesalers own the products they sell and make money by selling them to others.
Often, wholesalers can make a profit because of the discount they receive for
buying a bulk amount of products. They rarely interact with the final buyer of a
product. Instead, wholesalers sell the goods to other merchants at a higher price
point than what they spent to get the items.

Distributors:

Distributors have a business relationship with manufactures and have partial

ownership of the product they sell. Some distributors buy exclusive rights to buy a
company's product to ensure that they are the sole distributor of that product in the
area. Distributors often sell to wholesalers and retailers, creating minimal contact
with the final buyers.

Retailers:

Retailers purchase products from other channel intermediaries, such as wholesalers

and distributors, to sell directly to consumers. Retailers can be small or large for-
profit companies. They usually buy smaller quantities of products than wholesalers
and distributors. Examples of retailers include grocery stores and department
stores.

CHANNEL MANAGEMENT

The term Channel Management is widely used in sales marketing parlance. It is

defined as a process where the company develops various marketing
techniques as well as sales strategies to reach the widest possible customer
base. The channels are nothing but ways or outlets to market and sell products.

WHOLESALING AND RETAILING:

WHOLESALING

Wholesaling is the process of selling goods to consumers such as retailers,

industries, or any other entity in bulk quantities and at lower prices. A wholesaler
buys products from the manufacturer in huge lots, split them into smaller lots,
repacks them further, and sold them to the next party.
One key aspect of wholesaling is that it does not focus on the quality of goods;
instead, it emphasizes quantity. This kind of business does not require any
publicity, marketing, or advertisement. However, there is a considerable capital
investment required as the size of the company is large. Their business is entirely
dependent on the clients they have.
Customers of a wholesale business are spread in various cities, towns, or even in
different states. Most goods are sold on credit to the customers of the wholesale
business. The price of purchase on wholesale is lower as it consists of less profit
margin.

RETAILING

Retailing is the process of selling goods in smaller lots, without any purpose of
further resale, to the end customers. Retailers can typically be called the
middleman between wholesalers and end-users, as they purchase goods in bulk
from wholesalers and sell them further to buyers at higher prices.
The prices are comparatively higher in retailing because there are many additional
costs in this kind of business. Expenses such as marketing costs, shipping and
logistics costs, salary to employees, electricity expenses, warehousing costs are all
included in the retail price of a product.

To become a successful retailer, there are several factors that eCommerce

business owners have to consider. Location of the shop (if you have a brick-and-
mortar store), the look and feel of the store, product displays, quality of products,
customer support, and delivery speed are a few of the factors that have to be given
much importance in a retail business, as they leave a profound impact on the
customers’ minds.

RETAIL MARKETING

Retail marketing traditionally refers to how retailers promote their physical

stores' products and services. Historically, retailers have been responsible for
marketing and selling the goods they have purchased (wholesale) from designers.

Retail Marketing – 3 Major Types: Store Based, Non- Store Based and
Services Retailing:
Type # 1. Store Based Retailing:
A store based retail model means there is a place where the retailing activity is
carried out physically. It means there is a physical place where such activity is
carried out.
Store based retailing can be further divided into two parts:
(1) On the Basis of Ownership; and
(2) On the Basis of Goods Offered.

(1) On the Basis of Ownership:

(i) Traditional Retailer:
This is the oldest form of retailing that existed in any economy. It has provided a
base for all the other retail formats to develop. The traditional retailer owns a
single retail outlet. He generally specialises in a single type of good. The business
may vary from a local kirana shop to a paanwala shop, from a ready-made
garments shop to a jewellery business.
The business is owned and managed by the proprietor himself or a group of family
members. The business generally passes on from one generation to another.
Generally, these businesses enjoy great amount of goodwill and have personal
contact with the customers. On the contrary, these businesses cannot take
advantage of mass production and enjoy economies of scale. They are very
popularly known as ‘morn and pop shops’.
(ii) Chain Stores:
Chain stores are characterized by same brand name and same management, i.e.,
there is common ownership of one or more retail outlets. These stores are same in
terms of goods offered for sale, the outlook of the store, the prices and the
ambience. They enjoy the benefits of common sales promotion and advertising
campaigns.
(iii) Franchise:
It is a contract between two parties, the franchiser and the franchisee, whereby the
franchisor allows the franchisee to use his product, service, brand name or
trademark to carry on the business, in return for some fees or compensation as
defined by the agreement. The franchisee is given a specified geographical area for
a pre-defined period of time.
(iv) Consumer Co-Operatives:
It is owned and managed by a group of customers generally who are dissatisfied
with product offerings. The basic motive of such consumer cooperatives is mutual
benefit. These retail outlets have limited capability of growth as the amount
invested in it is very limited. A group of customers who manage this outlet
contribute to its capital also.
(v) Leased Departments:
The leased department means, when one company or a retailer carries on the
business within the premises of another company or retailer. Very popularly this
concept is known as shops within shops.
The owner of the shop leases out or rents some portion of his shop to another
person for money. It is very common practice for jewellery counters, opticals,
cosmetics and perfumes. The benefit of such leased departments is that the person
who wants to sell his products may do so without having to arrange very costly
shops on rent.
(2) On the Basis of Goods Offered:
(i) Convenience Stores:
These stores provide a range of everyday items to the customers such as groceries,
ready to eat snacks, milk, eggs, bread, biscuits, newspapers, etc. Generally the
location of convenience stores is such that they are convenient for the customers to
reach. Some convenience stores operate for twenty four hours also. 7-Eleven is a
famous example of convenience stores.
(ii) Specialty Stores:
Specialty stores offer a particular type of product to the customer. They are
exclusive stores that offer a particular type of product within a particular product
line but within the same product line there is a wide variety of goods being offered.
Specialty stores a suitable for the customers having some kind of brand preference.
Specialty stores focus on jewellery, apparels, furniture, electronics, etc.
(iii) Departmental Stores:
A departmental store is a retail establishment that provides a range of products to
the customers. The store is divided into various departments such as personal care
and cosmetics, books and stationary, housewares goods, electronics, etc. The
departmental store provides a wide range of goods to the customers under one roof.
These stores are generally large in size and owned by large chains. Examples are
Shoppers Stop, Ebony, etc.
(iv) Off Price Retailers:
These retailers provide high quality goods at cheap prices. This type of goods
when sold by the manufacturer himself directly to customers is known as factory or
seconds outlets. They sell second hand goods, off season products at cheap prices.
The goods sometimes have minor defects or may be of odd sizes (very big or very
small in size). Example- Bata Factory Outlet, Monte Carlo Factory Outlet, Nike
Factory Outlet, etc.
(v) Catalogue Showrooms:
A catalogue showroom is one in which the goods are not displayed. There are
various catalogues kept for products. The customer chooses the product from the
catalogue and then fills in the order form and deposits it at the sales counter. At the
sales counter, the sales clerk arranges for the product to be brought from the
warehouse for inspection and purchase.
It is very common practice for jewellery, electronic items (housewares items such
as washing machine, televisions, air conditioners, etc.). These days many designer
clothes are also sold through catalogue showrooms.
(vi) Super Market:
Super markets are big self-service stores providing a wide range of products such
as groceries, food items and some non-food items such as household goods, health
and beauty related items, etc. Generally super markets provide cheap products to
the customers. Examples- Easy Day, Nilgiris, Reliance/Fresh, etc.
(vii) Hyper Market:
A hyper market is a combination of a departmental store and a super market. Thus
hyper market offers a huge variety of goods and services ranging from stationary
items to groceries, from kitchen ware to electronic appliances, from furniture to
jewellery, etc. It therefore provides a one stop shop to the customers.
A hyper market usually offers huge discounts to the customers. The structure of the
hypermarket resembles that of a huge warehouse and has a lot of parking space.
Example- Big Bazaar, Best Price, Savemax, Hyper City, Vishal Mega Mart,
WAL-Mart, etc.
(viii) Shopping Mall:
A shopping mall is a retail establishment whereby there is a combination of
branded stores, food court, entertainment zones including gaming zones, movies
and parking facilities. This is the modern concept of retailing whereby the owners
of the shops pay rent or lease to the developers of malls. They occupy the place in
the mall as tenants. Examples of malls are Ambience Mall, Gurgaon, Elante Mall,
Chandigarh, etc.
(xi) Kiosk:
A kiosk is a small shop generally seen at malls, airports, railway stations, bus
stands, etc. They offer some specialised services or goods to the customers. A
kiosk can be one side or two sides open. At some places, there are automatic
vending machines, which are not operated by human beings. People have to just
put in the money in the machine and request the desired item. The item comes out
of the machine just like money comes out of the ATM.
(x) Discount Stores:
A discount store is a retail establishment that provides goods to the customers at
discounted prices. Generally the merchandise offered by these stores is broad but
these stores provide limited services to the customers. They operate as low price
retailers.
Type # 2. Non-Store Based Retailing:
Non store based retailing means a retail format that is not confined to the walls of a
particular area. Rather, due to non-store based retailing the companies are able to
expand their customer base.
The non-store based retailing can be further divided into two parts:
a. Direct Selling:
Direct Selling is a retail format which as the name suggests is a form of selling
which involves personal contact with the customer.
Further it can be divided into three types:
(i) Party plan in which the seller invites his friends, neighbors and other
acquaintances to his home for a party and displays the goods there. People see the
displayed goods and buy them,
(ii) Multi-level network where there is a network of people who further appoint
other people to work with them for distribution of goods for a commission. Many
cosmetics selling firms are largely using this multi-level networks to sell their
products, and
(iii) Door to door selling where the salesmen are sent door to door to sell the goods
to people. Sometimes this form of selling becomes a part of academic curriculum
and helps to train students to sell their products.
Mainly the articles like books, housewares items, kitchenware items, cosmetics,
imitation jewellery are sold by this method. Tupperware and Amway use this
method of selling their products.
b. Distance Selling:
Distance selling involves use of electronic commerce very popularly known as e-
commerce to sell the goods to the customers. These days due to the busy lives of
people, this form of retailing is increasingly gaining ground. The people are
informed about the product either through e-mail or telephones, or through internet
sites or television.
Type # 3. Services Retailing:
Services retailing means selling various kinds of services to the customers such as
banking, insurance, taxies, hospitality services, etc. The retailers of these services
these days are increasingly making use of internet to reach the customers and
broaden their customer base.
A customer in any part of the country or even in any part of the world may book
his taxi in advance. A person sitting at home can book movie tickets and even
select his seat by using internet. Banks and insurance companies are making use of
internet technology to offer more innovative products to their customers.

EMERGING TRENDS IN MARKETING

1. Social marketing

Social good is the primary focus of the Social Marketing that revolves around
channelizing positive changes in social, national, international and local
communities for public interest by opting for some constructive and positive means.

Some people may get confused about Social Marketing with Social Media
Marketing, Sustainable Marketing, and Commercial Marketing.

Social marketing is done when various marketing techniques are performed for
making people change their behavior towards society. Social marketing is one of the
powerful sell techniques used for targeting the audience for making them aware of
the social good that can benefit individuals as well as broader society.

Applications of Social Marketing:

1. Health promotion campaigns in India, especially in Kerala and AIDS awareness
programmes are largely using social marketing, and social workers are largely
working for it. Most of the social workers are professionally trained for this
particular task.

2. Anti-tobacco campaigns.
3. Anti-drug campaigns.

4. Anti-pollution campaigns.

5. Road safety campaigns.

6. Anti-dowry campaigns.

7. Protection of girl child campaign.

8. Campaign against the use of plastic bags.

There are six distinct advantages of social marketing that make it a vital tool
to any marketing campaign:
1. Promotes consumption of socially desirable products.

2. Promotes health consciousness in people and helps them adopt a healthier

lifestyle.

3. It helps in green marketing initiatives.

4. It helps to eradicate social evils that affect the society and quality of life.

5. Social marketing is one of the cheapest ways of marketing.

6. One of the best advantages of social marketing is that anyone can take advantage
of it, even from their own home.

2.Digital Marketing

Any marketing that uses electronic devices and can be used by marketing
specialists to convey promotional messaging and measure its impact through your
customer journey. In practice, digital marketing typically refers to marketing
campaigns that appear on a computer, phone, tablet, or other device. It can take
many forms, including online video, display ads, search engine marketing, paid
social ads and social media posts. Digital marketing is often compared to
“traditional marketing” such as magazine ads, billboards, and direct mail. Oddly,
television is usually lumped in with traditional marketing
Digital marketing, also called online marketing, is the promotion of brands to
connect with potential customers using the internet and other forms of digital
communication. This includes not only email, social media, and web-based
advertising, but also text and multimedia messages as a marketing channel.

TYPES OF DIGITAL MARKETING

1.Search engine optimization

Search engine optimization, or SEO, is technically a marketing tool rather than a
form of marketing in itself. The Balance defines it as “the art and science of
making web pages attractive to search engines.”

Social media marketing

Social media marketing means driving traffic and brand awareness by engaging
people in discussion online. The most popular platforms for social media
marketing are Facebook, Twitter, and Instagram, with LinkedIn and YouTube not
far behind.

Affiliate marketing
Affiliate marketing lets someone make money by promoting another person's
business. You could be either the promoter or the business who works with the
promoter, but the process is the same in either case.
Email marketing
The concept of email marketing is simple—you send a promotional message and
hope that your prospect clicks on it. However, the execution is much more
complex. First of all, you have to make sure that your emails are wanted.

3.Green marketing

Green marketing refers to the practice of developing and advertising products

based on their real or perceived environmental sustainability. ... When a
company's green marketing activities are not substantiated by significant
 investments or operational changes, they may be criticized for false or misleading
advertising.

OBJECTIVES OF GREEN MARKETING:

• To adhere to corporate social responsibility.

• To reduce expenses.
• To showcase how environment-friendly the company’s offerings are.
• To communicate the brand message
• To implement sustainable and socially accountable business practices.

• Product: The products should be designed and developed in such a manner that
they use fewer resources and are pollution-free, plus they do not contain any toxic
substance, whose use can be harmful. Moreover, the product must increase the
conservation of scarce resources.
• Price: In green marketing, price plays a prominent role, as the customers are going
to pay the additional price, only when there are of the view that they will be getting
the premium quality products, in terms of design, performance, appeal, taste, or
anything else.
• Promotion: Green advertising can be done in three ways, i.e. there can be ads
which display the connection amidst the product and the environment, or ads
 which promote a green and organic lifestyle, or ads that showcase a corporate
image of environmental responsibility.
• Place: Place defines the availability of the products and so the marketers should
opt an ideal way to make such products available as it will have a great impact on
the customers.

4.Retro marketing
Retro marketing involves creating a brand identity based on heritage or
nostalgia for a company's past products. Retro marketing can change the
product itself, to make it look old fashioned. ... Sometimes retro products can be a
re-issue or replica of an old product, such as Cadbury's relaunch of the Wispa bar.

MARKETING ANALYTICS
Marketing analytics is the practice of managing and studying metrics data in
order to determine the ROI of marketing efforts like calls-to-action (CTAs), blog
posts, channel performance, and thought leadership pieces, and to identify
opportunities for improvement
CURRENT DEVELOPMENTS IN MARKETING
1. Chatbots
2. Influencer Marketing
3. Increased Customization
4. Interactivity
5.Data Collection and Analytics

ETHICS IN MARKETING

Ethics are a collection of principles of right conduct that shape the decisions people
or organizations make. Practicing ethics in marketing means deliberately applying
standards of fairness, or moral rights and wrongs, to marketing decision making,
behavior, and practice in the organization.

In a market economy, a business may be expected to act in what it believes to be

its own best interest. The purpose of marketing is to create a competitive
advantage. An organization achieves an advantage when it does a better job than
its competitors at satisfying the product and service requirements of its target
markets. Those organizations that develop a competitive advantage are able to
satisfy the needs of both customers and the organization.

As our economic system has become more successful at providing for needs and
wants, there has been greater focus on organizations' adhering to ethical values
rather than simply providing products. This focus has come about for two reasons.
First, when an organization behaves ethically, customers develop more positive
attitudes about the firm, its products, and its services. When marketing practices
depart from standards that society considers acceptable, the market process
becomes less efficient—sometimes it is even interrupted. Not employing ethical
marketing practices may lead to dissatisfied customers, bad publicity, a lack of
trust, lost business, or, sometimes, legal action. Thus, most organizations are very
sensitive to the needs and opinions of their customers and look for ways to protect
their long-term interests
Second, ethical abuses frequently lead to pressure (social or government) for
institutions to assume greater responsibility for their actions. Since abuses do
occur, some people believe that questionable business practices abound. As a
result, consumer interest groups, professional associations, and self-regulatory
groups exert considerable influence on marketing. Calls for social responsibility
have also subjected marketing practices to a wide range of federal and state
regulations designed to either protect consumer rights or to stimulate trade.