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INTRODUCTION TO MARKETING CONCEPT THE PRODUCTION CONCEPT

The production concept is one of the oldest concepts in business. It holds that consumers will prefer products that are widely available and inexpensive. Managers of production-oriented businesses concentrate on achieving high production efficiency, low costs, and mass distribution. This orientation makes sense in developing countries such as China where the largest PC manufacturer, Lenovo, and domestic appliances giant Haier take advantage of the country's huge inexpensive labor pool to dominate the market. It is also used when a company wants to expand the market THE PRODUCT CONCEPT The product concept holds that consumers will favor those products that offer the most quality, performance, or innovative features. Managers in these organizations focus on making superior products and improving them over time. However, these managers are sometimes caught up in a love affair with their products. They might commit the "better-mousetrap" fallacy, believing that a better mousetrap will lead people to beat a path to their door. A new or improved product will not necessarily be successful unless the product is priced, distributed, advertised, and sold properly. THE SELLING CONCEPT The selling concept holds that consumers and businesses, if left alone, will ordinarily not buy enough of the organization's products. The organization must, therefore, undertake an aggressive selling and promotion effort. The selling concept is epitomized in the thinking of Sergio Zyman, Coca-Cola's former vice president of marketing: The purpose of

marketing is to sell more stuff to more people more often for more money in order to make more profit

THE MARKETING CONCEPT The marketing concept emerged in the mid-1950s. Instead of a product-centered, "make-and-sell" philosophy, business shifted to a customer-centered, "sense-and-respond" philosophy. The job is not to find the right customers for your products, but the right products for your customers. The marketing concept holds that the key to achieving organizational goals consists of the company being more effective than competitors in creating, delivering, and communicating superior customer value to its chosen target markets.

WHAT IS MARKETING?

The American Marketing Association offers the following formal definition: Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stake holders. Marketing management

The art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.

A Simple Marketing System

Structure of Flows in a Modern Exchange Economy

WHAT IS MARKETED? Marketing people are involved in marketing 10 types of entities: 1. Goods- cars, truck, television, cosmetics 2. Services hotels, barbers, banks 3. Experiences Amusement park, 4. Events Olympics, World cup 5. Persons Celebrity Marketing 6. Places Silicon valley of India, Gods own country. 7. Properties Real estate, Financial properties 8. Organizations 9. Information - School, University 10. Ideas- Discourage smoking, family planning, seat belt, Helmet, child labor,,

MARKETING CONCEPTS NEEDS

Needs are the basic human requirements. People need food, air, water, clothing, and shelter to survive. People also have strong needs for recreation, education, and entertainment. WANTS The needs become wants when they are directed to specific objects that might satisfy the need. An American needs food but may want a hamburger, French fries, and a soft drink. A person in Mauritius needs food but may want a mango, rice, lentils, and beans. Wants are shaped by one's society. DEMAND Demands are wants for specific products backed by an ability to pay. Many people want a Mercedes; only a few are willing and able to buy one. SEGMENTATION, TARGETING , POSITIONING, DIFFENTIATION A marketer can rarely satisfy everyone in a market. Not everyone likes the same cereal, hotel room, restaurant, automobile, college, or movie. Therefore, marketers start by dividing up the market into segments. They identify and profile distinct groups of buyers who might prefer or require varying product and services mixes by examining demographic, psychographic, and behavioral differences among buyers. The marketer then decides which segments present the greatest opportunitywhich are its target markets. For each chosen target market, the firm develops a market offering. The offering is positioned in the minds of the target buyers as delivering some central benefits.

OFFERINGS AND BRANDS Companies address needs by putting forth a value proposition, a set of benefits they offer to customers to satisfy their needs. A brand is an offering from a known source. A brand name such as McDonald's carries many associations in the minds of people: hamburgers, fun, children, fast food, convenience, and golden arches. These associations make up the brand image. All companies strive to build brand strengththat is, a strong, favorable, and unique brand image.

Marketing Channels To reach a target market, the marketer uses three kinds of marketing channels. Communication channels deliver and receive messages from target buyers, and include newspapers, magazines, radio, television, mail, telephone, billboards, posters, fliers, CDs, audiotapes, and the Internet. Beyond these, communications are conveyed by facial expressions and clothing, the look of retail stores, and many other media. The marketer uses distribution channels to display, sell, or deliver the physical product or service(s) to the buyer or user. They include distributors, wholesalers, retailers, and agents.

The marketer also uses service channels to carry out transactions with potential buyers. Service channels include warehouses, transportation companies, banks, and insurance companies that facilitate transactions. Marketers clearly face a design problem in choosing the best mix of communication, distribution, and service channels for their offerings. Supply chain Whereas marketing channels connect the marketer to the target buyers, the supply chain describes a longer channel stretching from raw materials to components to final products that are carried to final buyers. The supply chain for women's purses starts with hides, and moves through tanning operations, cutting operations, manufacturing, and the marketing channels bringing products to customers. The supply chain represents a value delivery system. Each company captures only a certain percentage of the total value generated by the supply chain. When a company acquires competitors or moves upstream or downstream, its aim is to capture a higher percentage of supply chain value.

Competition Competition includes all the actual and potential rival offerings and substitutes that a buyer might consider. Suppose an automobile company is planning to buy steel for its cars. There are several possible levels of competitors. The car manufacturer can buy steel from U.S. Steel or other integrated

steel mills in the United States (e.g., from Bethlehem) or abroad (e.g., from Japan or Korea); or buy steel from a mini-mill such as Nucor at a cost savings; or buy aluminum for certain parts of the car to lighten the car's weight (e.g., from Alcoa); or buy engineered plastics for bumpers instead of steel (e.g., from Gli Plastics). Clearly, U.S. Steel would be thinking too narrowly of competition if it thought only of other integrated steel companies. In fact, U.S. Steel is more likely to be hurt in the long run by substitute products than by its immediate steel company rivals. It must also consider whether to make substitute materials or stick only to those applications where steel offers superior performance.

Marketing Environment The marketing environment consists of the 1. Task environment and the 2. Broad environment. The task environment includes the immediate actors involved in producing, distributing, and promoting the offering. The main actors are the company, suppliers, distributors, dealers, and the target customers. Included in the supplier group are material suppliers and service suppliers such as marketing research agencies, advertising agencies, banking and insurance companies, transportation companies, and telecommunications companies.

Included with distributors and dealers are agents, brokers, manufacturer representatives, and others who facilitate finding and selling to customers.

The broad environment consists of six components: 1. Demographic environment, (Population size, age distribution, and ethnic mix, educational level, household pattern) 2. Economic environment, (Inflation, Per Capita income, GDP, Savings) 3. Physical environment, (Pollution, Resources), 4. Technological environment, (Computers, ) 5. Political-legal environment, (Business laws, political stability) 6. Social-cultural environment. These environments contain forces that can have a major impact on the actors in the task environment. Market actors must pay close attention to the trends and developments in these environments and make timely adjustments to their marketing strategies.

MARKET INFORMATION SYSTEM AND MARKET RESEARCH

Why sales of mouthwash is not sufficient ? Should we start selling organic milk? Why Nano as a car not picking up sale? Developing and implementing marketing plans involves a number of decisions. Making those decisions is both an art and a science. To provide insight into and inspiration for marketing decision making, companies must possess comprehensive, up-to-date information on macro trends as well as more micro effects particular to their business. Marketers recognize that the marketing environment is constantly presenting new opportunities and threats, and they understand the importance of continuously monitoring and adapting to that environment. Every firm must organize and distribute a continuous flow of information to its marketing managers. Companies study their managers' information needs and design marketing information systems (MIS) to meet these needs.

A marketing information system (MIS) consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers. A marketing information system is developed from Internal company records, Marketing intelligence activities, and Marketing research. INTERNAL COMPANY RECORDS, Marketing managers rely on internal reports on orders, sales, prices, costs, inventory levels, receivables, payables, and so on. By analyzing this information, they can spot important opportunities and problems. The Order-to-Payment Cycle The heart of the internal records system is the order-topayment cycle. Sales representatives, dealers, and customers send orders to the firm. The sales department prepares invoices and transmits copies to various departments. Out-ofstock items are back ordered. Shipped items are accompanied by shipping and billing documents that are sent to various departments. Sales Information Systems Companies must carefully interpret the sales data so as not to get the wrong signals. Michael Dell gave this illustration: "If you have three yellow Mustangs sitting on a dealer's lot and a customer wants a red one, the salesman may be really good at

figuring out how to sell the yellow Mustang. So the yellow Mustang gets sold, and a signal gets sent back to the factory that, hey, people want yellow Mustangs."

Databases, Data Warehousing, and Data Mining Today companies organize their information in databasescustomer databases, product databases, salesperson databasesand then combine data from the different databases. Companies warehouse these data and make them easily accessible to decision makers. Furthermore, by hiring analysts skilled in sophisticated statistical methods, they can "mine" the data and garner fresh insights into neglected customer segments, recent customer trends, and other useful information. The customer information can be cross-tabbed with product and salesperson information to yield still deeper insights. THE MARKETING INTELLIGENCE SYSTEM The internal records system supplies results data, but the marketing intelligence system supplies happenings data. A marketing intelligence system is a set of procedures and sources managers use to obtain everyday information about developments in the marketing environment. Marketing managers collect marketing intelligence by reading books, newspapers, and trade publications; talking to customers, suppliers, and distributors; and meeting with other company managers. A company can take several steps to improve the quality of its marketing intelligence.

 A company can train and motivate the sales force to spot and report new developments. A company can motivate distributors, retailers, and other intermediaries to pass along important intelligence. A company can network externally. A company can set up a customer advisory panel. A company can take advantage of government data resources. A company can purchase information from outside suppliers. A company can use online customer feedback systems to collect competitive intelligence. To help in designing the research, management should first spell out the decisions it might face and then work backward. Suppose management spells out these decisions: (1)Should American offer an Internet connection? (2)If so, should the service be offered to first-class only, or include business class, and possibly economy class? (3)What price(s) should be charged? (4)On what types of planes and lengths of trips should it be offered

THE MARKETING RESEARCH PROCESS Step 1: Define the Problem, the Decision Alternatives, and the Research Objectives Step 2: Develop the Research Plan

Data sources Primary Data Secondary data Research Approach Observational Research Survey Research Experimental Research Research instruments Questionnaires Qualitative measures Mechanical devices Sampling plans Sampling unit- who is going to be surveyed Sample size How many people is to be surveyed Sampling procedure- Hoe should the respondent be chosen Contact methods Mail questionnaire Telephone Interview Personal interview Online interview Step 3: Collect the Information

Step 4: Analyze the Information Step 5: Present the Findings Step 6: Make the Decision

Market demand function

Market demand function

SALES FORECASTING AND BUDGETING

BASIC TERMS USED IN FORECASTING Market potential It is the best possible (or maximum) estimated sales of a given product or service for the entire industry in a given market for a specific period of time. The following four parts must be included for a complete definition of market potential as well as sales potential and sales forecast. 1. Item marketed, such as a product, or service. 2. Sales estimated in units or value (Rupees or Dollars). 3. Description of the market by a geographical area, or type of customer, or both. 4. A specific time period, such as a particular year. For example, the market potential for personal computers (PCs) in India for the year 2005-06 was estimated to be 4 million numbers. Market forecast It is the expected industry sales of a given product or service at one specific level of industry marketing expenditure, in a given market, for a specific period of time.

Company sales potential It is the best possible (or maximum) estimated sales of a given product or service of a company in a given geographic area for a specific period of time. Sales potential is also defined as the maximum share (or percentage) of market potential that is expected to be achieved by a company. For instance, sales potential of ICICI-Prudential is expected to be close to five per cent of the gross premium collection of life insurance industry in India in coming years. Sales forecast for company It is the estimated company sales of a given product or service, under a proposed marketing plan, in a given market, for a specific period of time. A company may make a sales forecast for an entire product line (like detergent from Hindustan lever) or a product item (such as wheel brand). Sales potential and sales forecast are usually not the same. Sales potential is what a company would achieve under ideal conditions. Typically, the sales forecast is less than the sales potential, for different reasons, such as limited production facilities, and inadequate financial resources. Sales Forecasting Methods As shown sales forecasting methods or techniques can be classified as:

(1) Qualitative methods, (2) Quantitative methods. Qualitative methods 1. Executive Opinion 2. Delphi Method 3. Sales Force Composite 4. Survey of Buyers' Intentions

5. Test Marketing Quantitative methods 1. Moving Averages method 2. Exponential Smoothing 3. Decomposition 4. Naive / Ratio Method 5. Regression Analysis 6. Econometric Analysis

Executive Opinion The method includes getting the views of top executives of the company regarding future sales. The sales forecasts are made either by taking the average of all the executives' individual opinion or through discussions among the executives. Some executives' opinion may be supported by the use of forecasting methods, and other executives may form their opinion based on experience, judgment, and intuition. The advantages of this method are: (i) (ii) (iii) Forecasting can be done quickly and easily, Less expensive than other methods, and Very popular, particularly among small and medium-sized companies.

However, there are some disadvantages: (a) Unscientific, (b) Subjective, and (c) Difficult to break-down the forecast into subunits (like regions, branches) of the organization.

Delphi method This method is similar to the executive opinion method, and was developed by Rand Corporation during the late 1940s. The difference is that the members of expert panel do not meet or discuss in a committee. The procedure includes selection of panel of experts from within and outside the organization. A coordinator asks each expert separately to make a forecast on some matter. Each member of the expert panel submits in writing his/her forecast anonymously. The coordinator summarizes these forecasts into a report that is sent to each panel member. The experts are then asked to make another prediction separately on the same matter, with the knowledge of the forecasts of the other experts on the panel. This process is repeated until the panel of experts arrive at some consensus. The basic belief in this method is that experts, without any pressure or influence will develop a more accurate prediction of the future. The advantages of this method are: (i) objective forecast that is accurate, (ii) useful for technology, new product, and industry sales forecast, and (iii) both long and short-term forecasting possible. However, the disadvantages are: (a) difficulty getting a panel of experts, (b) longer time for getting consensus, and (c) break-down of forecast into products or territories is not possible. Sales force composite method This method involves salespeople to estimate their future sales. Each salesperson estimates in his/her territory how much quantity or value existing and potential customers will buy of each of the company's products and/or services. This method is often used by industrial or business marketing companies. Sales representatives make the sales estimate in consultation with customers and sales supervisors, and/or based on their experience and intuition. The company sales forecast is made up (composite) of all the salespersons' sales forecast.

The advantages of this method are: (i) forecasting is done by salespeople who are closest to the market and have better insight into sales trends than any other group in the company, (ii) detailed sales estimate broken down by customer, product, sales representative and territory are possible, and (iii) involvement of sates people. The disadvantages include: (a) sales forecast are often pessimistic or optimistic, as salespeople are not trained in forecasting, (b) if sales forecast are used to set sales quotas, which are linked to incentive schemes, salespeople may deliberately underestimate the demand, and (c) many salespersons are not interested in sales forecasting, and prefer to spend time in the field meeting customers. Survey of buyers intentions method This method is sometimes called as market research (or market survey). It includes asking existing and potential customers about their likely purchases of the company's product and services for the forecast period. For instance, the question like the following is asked: Do you intend to buy a refrigerator within the next six months? The above is called a purchase probability scale. The customers are also asked other questions, such as product quality, features, price and service, which are all a part of the questionnaire. The information collected from buyers help the company to make effective decisions not only in sales and marketing areas, but

0.0 Not at all

0.20 Slight Possibility

0.40 Fair Possibility

0.6 Good Possibility

0.8 High Possibility

1.0 Certain Buying

also on production, research and development.

Test marketing method This method is useful for forecasting sales for a new product, which has no historical (or previous) sales figures. It can also be used for estimating sales for an established product in a new territory. Major methods used for consumerproduct market testing include: (1) Full-blown test markets, (2) Controlled test marketing, and (3) Simulated test marketing.

Full-blown test markets: It consists of the company choosing a few (two to six) representative cities, in which full promotion campaign is introduced, similar to what would be done in national marketing. The duration of the test market varies from a few months to one year, depending on the repurchase period of the new product. Buyer surveys are carried out to get information about consumer attitude, usage and satisfaction towards the new product. Controlled test marketing: The company with the new product hires a research firm and gets a panel of stores at specified geographic locations. The research firm delivers the new product to the panel of stores, arranges promotions at the stores, and measures the sales of the new product. The research firm also interviews sample consumers to get their perceptions on the new product. Both fullblown test markets and controlled test marketing expose the new product to the competitors. Simulated Test Marketing: In this method, about 30-40 consumers (or shoppers) are selected, based on their brand familiarity and preferences in a particular product category, such as baby care and soft drink products. These shoppers are shown commercials or print advertisements of well-known products and also the new product,

without any specific mention. These consumers are given a small amount of money and asked to buy any items in a store. The researcher of the company notes how many consumers buy the new product and competing products. These consumers are interviewed to find reasons for buying or not buying, and later, after usage of the new product, satisfaction levels and repurchase intentions. This method gives accurate results. The new product is not exposed to the competitors.

Moving average method This is a relatively simple method that develops a company forecast by calculating the average company sales for previous years. As shown in Table a company's sales forecast was worked out by calculating moving averages for three and six year time periods.

Year 1997 1998 1999 2000 2001 2002 2003 2004

Actual sales 840 880 864 832 862 948 956

3 years

6 years

861 858 852 880 922 871 890

If a company operates in a stable environment, a short two or three year average may be most useful. However, if a firm is in an industry with cyclical variations, the moving average should use data equal to the length of a cycle or a longer averaging period.

The advantages of this method are: (a) relatively simple method, (b) easy to calculate, and (c) widely used for short-term and medium-term sales forecasts. The disadvantages are: (a) unable to predict a downturn or upturn in the market, (b) cannot predict long-term sales forecast accurately, and (c) historical data is needed.

Exponential smoothing method Sales forecast for next year = (L) (actual sales this year) + (1 - L) (this year's sales forecast) Where (L) is a smoothing constant, or probability weighing factor. The forecaster decides the value of the smoothing constant based on: (a) review of sales data, (b) knowledge and observation about the conditions in the forecasted period and conditions in previous period, and (c) intuition. For instance, a smoothing constant (L) with a high value of (0.7) or (0.8) allows most recent periods of actual sales to influence sales forecast more than sales in earlier periods, whereas a smoothing constant with a low value of (0.2) or (0.3) allows earlier periods of actual sales to influence forecasted sales more than sales in recent periods. The smoothing constant (L) can range from something greater than zero to something less than 1. Let us take the example of Table 3.2, and calculate the forecasted sales for the year 2004 by using the exponential smoothing method. The sales forecast for the year 2004 would be 0.2 x 956 + 0.8 x 880 = Rs. 895. The advantages of this method are: (a) simple to operate, (b) forecaster's knowledge or intuition can be used in forecasting, (c) useful method when sales data have a trend or a seasonal pattern, (d) immediate response to a upturn or downturn in sales, and (e) used by many firms.

The disadvantages are: (a) smoothing constant is somewhat arbitrary, and (b) long-term and new product forecasting are not possible.

Decomposition method In this method the company's previous periods' sales data is broken down (or decomposed) into four major components, such as trend, cycle, seasonal, and erratic events. These components are then recombined to produce the sales forecast. Let us consider an example of this method by continuing from Table Assume that various analysis have broken down (or decomposed) the previous sales data into the following components: A growth of 3 per cent in sales due to the development in technology, capital formation and population (trend component). Increased terrorist activities are expected to reduce sales by 5 per cent (erratic events component). A10 per cent reduction in sales is expected due to a recession in demand (cyclic component). The sales in the third quarter of the year are expected to go up by 15 per cent due to festive season, as compared to other three quarters (seasonal component). The forecaster would combine the different components, as under, in order to forecast sales for 2004. Sales in 2003 was Rs 956 million. The trend component shows that 2004 sales will be Rs 985 million (956 x 1.03) The sales are reduced due to introduction of erratic event component to Rs 936 million (985 x 0.95). The sales forecast changes further due to cyclic component of recession to Rs 842 million (936 x 0.90) The annual sales forecast for 2004 is Rs 842 million.

Naive or ratio method Naive or ratio method is a time series method of forecasting, which is based on the assumption that what happened in the immediate past will continue to happen in the immediate future. The simple formula used is as follows: Sales forecast for next year = Actual sales X Actual sales of this year of this year Actual sales of last year

Regression analysis This is a statistical forecasting method that is used to predict sales, called as dependent variable 'Y'. The company then identifies causal (cause and effect) relationship between the company sales and the independent variables (or factors), which influence the sales. If there is only one independent variable (x), say promotional expenditure, it is plotted on a graph of paired data of past sales and promotional expenditure. This is called linear(or simple) regression, with only one independent variable, and different pattern of relationships. In practice, the company sales are influenced by several independent variables, such as price, promotional expenditure, and population. To forecast the effect of several independent variables on the company sales, the method used is called Multiple Regression Analysis.

Econometric analysis In this method, many regression equations are built to forecast industry sales, general economic conditions, or future events. The procedure followed is as follows: To find out which factors or variables influence sales and the relationships between sales and these factors as well as the interrelationships between the factors, develop a number of regression equations representing these relationships. A forecast is prepared by solving these equations on a computer. The major advantage of this method is that accurate forecast of economic conditions and industry sales are possible. The disadvantage is that a large volume of data is required representing the various factors.

SALES BUDGET Sales budget includes a detailed estimate of sales revenue as well as selling expenditure. The sales manager is responsible for preparing three detailed budgets : (i) (ii) (iii) The sales volume budget, The selling-expense budget, and The administrative budget of the sales department.

The sales volume budget, The sales volume budget, which is derived from the sales forecast, is broken down into (a) Product-wise quantities, the average selling price per unit, and sales revenue, (b) Territory-wise quantities to be sold and sales revenue, (c) Customer-wise and Salesperson-wise sales volume quota during yearly, quarterly, and monthly budget period. The selling-expense budget The selling-expense budget includes expenditures for personal selling activities, such as the salaries, commissions (or incentives) and other expenses for the sales force. Any plans for increase in numbers of salespeople must also be included in this budget. The administrative budget The administrative budget of the sales department should include the salaries of territory sales managers, sales supervisors, their secretaries and office staff. The budget should also include operating expenses like rent, power, supplies, office equipment, and general overhead.

CONSUMER BUYING PROCESS

NEW PRODUCT DEVELOPMENT PROCESS Idea Generation Interacting with others Creativity techniques Idea Screening Concept Development and Testing Business Analysis Product Development Commercialization

Marketing strategy formulation consist of 1) STPD 2) Marketing Mix formulation

Bases for Segmenting Consumer Markets Geographic Segmentation Urban and rural Demographic Segmentation AGE AND LIFE-CYCLE STAGE LIFE STAGE GENDER INCOME GENERATION SOCIAL CLASS Psychographic Segmentation

Behavioral Segmentation DECISION ROLES Initiator, Influencer, Decider, Buyer BEHAVIORAL VARIABLES Occasions Benefits User Status Usage Rate Buyer-Readiness Stage Loyalty Status Attitude

Effective Segmentation Criteria Measurable. The size, purchasing power, and characteristics of the segments can be measured. Substantial. The segments are large and profitable enough to serve. A segment should be the largest possible homogeneous group worth going after with a tailored marketing program. Accessible. The segments can be effectively reached and served. Differentiable. The segments are conceptually distinguishable and respond differently to different marketing-mix elements and programs Actionable. Effective programs can be formulated for attracting and serving the segments

Positioning is the act of fixing the locus of the product offer in the minds of the target consumers. The marketer decides how and around what parameters, the products offer will be placed before the target consumer. He is seeking a platform for his offer. But the platform is in the mind of the consumer. Differentiation and positioning are related While in differentiation the work mainly revolves around endowing the offer with certain differential advantage, in positioning the attempt is to reach this offer to a particular place in the prospects mind through an appropriate positioning logic/theme consistent with the product value proposition E.g Nestle-Maggie Kellogs- cereals as breakfast food. Cadbury

Differentiation Brands can be differentiated on the basis of a number of different product or service Product Dimensions: Product form, Features, Performance, Conformance, Durability, Reliability, Reparability, Style, and

 Design, Service dimensions as Ordering ease, Delivery, Installation, Customer training, Customer consulting, and Maintenance and repair.

A number of positioning strategies might be employed in developing a promotional program. Positioning by Product attributes, Price/quality, Use, Product class, Users, and Competitor. Positioning by cultural symbols.

Marketing Mix What is a marketing mix? The marketing mix refers to the set of actions, or tactics, that a company uses to promote its brand or product in the market. The 4Ps make up a typical marketing mix Price, Product, Promotion and Place.

Product: refers to the item actually being sold. The product must deliver a minimum level of performance; otherwise even the best work on the other elements of the marketing mix wont do any good. Place: refers to the point of sale. In every industry, catching the eye of the consumer and making it easy for her to buy it is the main aim of a good distribution or place strategy. Retailers pay a premium for the right location. Promotion: this refers to all the activities undertaken to make the product or service known to the user and trade. This can include advertising, word of mouth, press reports, incentives, commissions and awards to the trade; it can also include consumer schemes, direct marketing, contests and prizes. Price: refers to the value that is put for a product. It depends on costs of production, segment targeted, ability of the market to pay, supply demand and a host of other direct and indirect factors. There can be several types of pricing strategies, each tied in with an overall business plan. Pricing can also be used a demarcation, to differentiate and enhance the image of a product. PRODUCT

The Product Hierarchy Need family: The core need that underlies the existence of a product family. Product family: All the product classes that can satisfy a core need with reasonable effectiveness. Product class: (Product category): group of products within the product family recognized as having a certain functional coherence. Product line: A group of products within a product class that are closely related because they perform a similar function, are sold to the same customer groups, are marketed through the same outlets or channels, or fall within given price ranges. A product line may be composed of different brands or a single family brand or individual brand that has been line extended. Product type: A group of items within a product line that share one of several possible forms of the product. Item (also called stock keeping unit or product variant): A distinct unit within a brand or product line distinguishable by size, price, appearance, or some other attribute.

Product Systems A product system is a group of diverse but related items that function in a compatible manner. For example, PalmOne handheld and smartphone product lines come with attachable products including headsets, cameras, keyboards, presentation projectors, e-books, MP3 players, and voice recorders. Shaving cream, Shaving brush and shaving razor A product mix (also called a product assortment) is the set of all products and items a particular seller offers for sale. A product mix consists of various product lines. A company's product mix has a certain width, length, depth, and consistency. These concepts are illustrated in Table

Product line : A group of closely related product constitutes a product line. The product mix of the a company is composed of all the product lines it carries. The width of a product mix refers to how many different product lines the company carries. Table shows a product-mix width of 11 lines. The Length of a product mix refers to the total number of items in the mix. In Table , it is 25. We can also talk about the average length of a line. This is obtained by dividing the total length (here 25) by the number of lines (here 11), or an average product length of 3.

PRICE Service organizations even use different terms to describe the prices they set. 1) Universities talk about tuition, 2) Professional firms collect fees, 3) Banks impose interest and service charges, 4) Brokers charge commissions, 5) Expressways impose tolls, 6) Utilities set tariffs and 7) Insurance companies determine premiums.

Service organizations even use different terms to describe the prices they set. 1) Universities talk about tuition, 2) Professional firms collect fees, 3) Banks impose interest and service charges, 4) Brokers charge commissions, 5) Expressways impose tolls, 6) Utilities set tariffs and 7) Insurance companies determine premiums.

Pricing strategies for New Products 1. Skimming Pricing 2. Penetration Pricing Price Strategies for Established Products 1. Maintaining the Price 2. Reducing the Price 3. Increasing the Price Price-Flexibility Strategy 1. One-Price Strategy 2. Flexible-Pricing Strategy 1. By market, 2. By product, 3. By timing, 4. By technology Product Mix - Pricing Strategy 1. Product-line pricing, 2. Optional-feature pricing, 3. Captive-product pricing, 4. Two-part pricing, 5. By-product pricing, 6. Product-bundling pricing.

PRICE DISCOUNTS AND ALLOWANCES 1. Cash Discount 2. Quantity Discount 3. Functional Discount 4. Seasonal Discount 5. Allowance PROMOTIONAL PRICING 1. Loss-leader pricing 2. Special-event pricing 3. Cash rebates 4. Low-interest financing 5. Longer payment terms 6. Warranties and service contracts 7. Psychological discounting PLACE The American Marketing Association defines a distribution channel as the structure of intracompany organizational units and extracompany agents and dealers, wholesale and retail, through which a commodity, product, or service is marketed. In a technical sense, a channel is a group of businesses that take ownership title to products or facilitate exchange during the marketing process from original owner to final buyer. Among the least understood areas of business is the complex grouping of institutions referred to as the distribution or marketing channel.

The diversity and complexity of channel arrangements make it, difficult to describe and generalize the challenges managers confront when developing a comprehensive channel strategy. Business managers need to understand channel economics and relationship management in order to plan and implement satisfactory business arrangements. In actual practice considerable planning and negotiation precede establishment of a channel structure. Once a strategy is implemented, it is common for managers to constantly change or modify one or morel facets of their channel arrangement. Thus, channel arrangements are dynamic as firms constantly seek to improve their relative position. A superior channel structure can lead to competitive advantage.

Bower Sox I. Channel-Structure Strategy Direct Indirect II. Distribution-Scope Strategy Exclusive Selective Intensive III Multiple-Channel Strategy Complementary Competitive IV. Channel-Control Strategy V. Conflict- Management Strategy

PROMOTION

COMMUNICATION MIX (Personal)

SELLING (PERSONAL ) DIRECT & INTERACTIVE MARKETING

WOM

Sales presentation Sales meeting Incentive program Samples Fair and trades shows

Catalogs Mailings Telemarketing Electronic shopping TV shopping

Person to Person Chat Rooms Blogs

Fax mail

E- mail Voice mail Blogs Web sites

SALES MANAGEMENT