What Is Marketing?

Marketing is about identifying and meeting human and social needs. One of the shortest good
definitions of marketing is meeting needs profitably. Marketing management as the art and
science of choosing target markets and getting, keeping, and growing customers through creating,
delivering, and communicating superior customer value.
What Is Marketed?
Marketers market 10 main types of entities: goods, services, events, experiences, persons,
places,properties, organizations, information, and ideas.
Marketing Concepts
Target Markets and Segmentation: A marketer can rarely satisfy everyone in a market. Therefore,
marketers start with market segmentation. Theyidentify and profile distinct groups of buyers who
might prefer or require varying products and marketing mixes. Market segments can be identified by
examining demographic, psychographic, and behavioral differences among buyers. The firm then
decides which segments present the greatest opportunitythose whose needs the firm can meet in
a superior fashion. 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 benefit(s).
Needs, Wants, and Demands
Needs are the basic human requirements such as for air, food, water, clothing, and shelter. Humans
also have strong needs for recreation, education, and entertainment. These needs become wants
when they are directed to specific objects that might satisfy the need.
Demands are wants for specific products backed by an ability to pay. Many people want a
Mercedes; only a few are able to buy one. Companies must measure not only how many people
want their product, but also how many are willing and able to buy it.
Exchange and Transactions
Exchange, the core of marketing, involves obtaining a desired product from someone by offering
something in return. For exchange potential to exist, five conditions must be satisfied:
1. There are at least two parties.
2. Each party has something that might be of value to the other party.
3. Each party is capable of communication and delivery.
Offerings and Brands
Companies address customer needs by putting forth a value proposition, a set of benefits that
satisfy those needs. The intangible value proposition is made physical by an offering, which can be
a combination of products, services, information, and experiences.
Value and Satisfaction
The buyer chooses the offerings he or she perceives to deliver the most value, the sum of the
tangible and intangible benefits and costs to her. Value, a central marketing concept, is primarily a
combination of quality, service, and price (qsp), called the customer value triad. Value perceptions
increase with quality and service but decrease with price. We can think of marketing as the
identification, crcreation, communication, delivery, and monitoring of customer value. Satisfaction
reflects a persons judgment of a products perceived performance in relationship to expectations. If
the performance falls short of expectations, the customer is disappointed. If it matches expectations,
the customer is satisfied. If it exceeds them, the customer is delighted.
Supply Chain
The supply chain is a longer channel stretching from raw materials to components to finished
products carried to final buyers.
Competition
Competition includes all the actual and potential rival offerings and substitutes a buyer might
consider. An automobile manufacturer can buy steel from U.S. Steel in the United States, from a
foreign firm in Japan or Korea, or from a mini mill such as Nucor at a cost savings,
Marketing Environment
The marketing environment consists of the task environment and the broad environment. The task
environment includes the actors engaged in producing, distributing, and promoting the offering.
The broad environment consists of six components: demographic environment, economic
environment, social-cultural environment, natural environment, technological environment, and
political-legal environment. Marketers must pay close attention to the trends and developments in
these and adjust their marketing strategies as needed.

The Production Concept

The production concept is one of the oldest concepts in business. It holds that consumers 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,
Legend (principal owner of Lenovo Group), and domestic appliances giant Haier take advantage of
the countrys huge and inexpensive labor pool to dominate the market.Marketers also use the
production concept when they want to expand the market.
The Product Concept
The product concept proposes that consumers favor products offering the most quality,
performance, or innovative features. However, managers are sometimes caught in a love affair with
their products. They might commit the better-mousetrap fallacy, believing a better product will by
itself lead people to beat a path to their door. A new or improved product will not necessarily be
successful unless its priced, distributed, advertised, and sold properly.
The Selling Concept
The selling concept holds that consumers and businesses, if left alone, wont buy enough of the
organizations products. It is practiced most aggressively with unsought goodsgoods buyers dont
normally think of buying such as insurance and cemetery plotsand when firms with overcapacity
aim to sell what they make, rather than make what the market wants.
Marketing based on hard selling is risky. It assumes customers coaxed into buying a product not
only wont return or bad-mouth it or complain to consumer organizations but might even buy it
again.
The Marketing Concept
The marketing concept emerged in the mid-1950s41 as a customer-centered, sense-and-respond
philosophy. The job is to find not the right customers for your products, but the right products for
your customers. Dell doesnt prepare a perfect computer for its target market. Rather, it provides
product platforms on which each person customizes the features he or she desires in the computer.
The marketing concept holds that the key to achieving organizational goals is being more effective
than competitors in creating, delivering, and communicating superior customer value to your target
markets.
The Marketing Research Process
Step 1: Define the Problem, the Decision Alternatives, and the Research Objectives
Marketing managers must be careful not to define the problem too broadly or too narrowly for the
marketing researcher. A marketing manager who says, Find out everything you can about first class
air travelers needs, will collect a lot of unnecessary information.
Step 2: Develop the Research Plan
The second stage of marketing research is where we develop the most efficient plan for gathering
the needed information and what that will cost. To design a research plan, we need to make
decisions about the data sources, research approaches, research instruments, sampling plan, and
contact methods.
a. DATA SOURCES The researcher can gather secondary data, primary data, or both. Secondary
data are data that were collected for another purpose and already exist somewhere. Primary data
are data freshly gathered for a specific purpose or for a specific research project.
b. RESEARCH APPROACHES Marketers collect primary data in five main ways: through
observation, focus groups, surveys, behavioral data, and experiments. It is subdivided into
Observational research, Focus-group research Survey research Behavioral data Experimental
research
Step 3: Collect the Information The data collection phase of marketing research is generally the
most expensive and the most prone to error. In the case of surveys, four major problems arise.
Some respondents will not be at home and must be recontacted or replaced. Other respondents will
refuse to cooperate.

Step 4: Analyze the Information:The next-to-last step in the process is to extract findings by
tabulating the data and developing summary measures. The researchers now compute averages
and measures of dispersion for the major variables and apply some advanced statistical techniques
and decision models in the hope of discovering additional findings. They may test different
hypotheses and theories, applying sensitivity analysis to test assumptions and the strength of the
conclusions.
Step 5: Present the Findings: As the last step, the researcher presents findings relevant to the
major marketing decisions facing management. Researchers increasingly are being asked to play a
more proactive, consulting role in translating data and information into insights and
recommendations.
Step 6: Make the Decision
The Seven Characteristics of Good Marketing Research
1. Scientific method Effective marketing research uses the principles of the scientific method: careful
observation, formulation of hypotheses, prediction, and testing.
2. Research creativity In an award-winning research study to reposition Cheetos snacks,
researchers dressed up in a brand mascot Chester Cheetah suit and walked around the streets of
San Francisco. The response the character encountered led to the realization that even adults loved
the fun and playfulness of Cheetos. The resulting repositioning led to a double-digit sales increase
despite a tough business environment.43
3. Multiple methods Marketing researchers shy away from overreliance on any one method. They
also recognize the value of using two or three methods to increase confidence in the results.
4. Interdependence of models and data Marketing researchers recognize that data are interpreted
from underlying models that guide the type of information sought.
5. Value and cost of information Marketing researchers show concern for estimating the value of
information against its cost. Costs are typically easy to determine, but the value of research is
harder to quantify. It depends on the reliability and validity of the findings and managements
willingness to accept and act on those findings.
6. Healthy skepticism Marketing researchers show a healthy skepticism toward glib assumptions
made by managers about how a market works. They are alert to the problems caused by marketing
myths.
Market segmentation divides a market into well-defined slices. A market segment consists of a
group of customers who share a similar set of needs and wants. The marketers task is to identify
the appropriate number and nature of market segments and decide which one(s) to target.
Geographic Segmentation: Geographic segmentation divides the market into geographical units
such as nations, states, regions, counties, cities, or neighborhoods. The company can operate in
one or a few areas, or it can operate in all but pay attention to local variations. In that way it can
tailor marketing programs to the needs and wants of local customer groups in trading areas,
neighborhoods, even individual stores. In a growing trend called grassroots marketing, such
activities concentrate on getting as close and personally relevant to individual customers as
possible.
Demographic Segmentation: In demographic segmentation, we divide the market on variables such
as age, family size, family life cycle, gender, income, occupation, education, religion, race,
generation, nationality, and social class.
One reason demographic variables are so popular with marketers is that theyre often associated
with consumer needs and wants. Another is that theyre easy to measure. Even when we describe
the target market in nondemographic terms (say, by personality type), we may need the link back to
demographic characteristics in order to estimate the size of the market and the media we should
use to reach it efficiently.
Major Segmentation Variables for Business Markets
Demographic
1. Industry: Which industries should we serve?
2. Company size: What size companies should we serve?
3. Location: What geographical areas should we serve?

Operating Variables
4. Technology: What customer technologies should we focus on?
5. User or nonuser status: Should we serve heavy users, medium users, light users, or nonusers?
6. Customer capabilities: Should we serve customers needing many or few services?
Purchasing Approaches
7. Purchasing-function organization: Should we serve companies with a highly centralized or
decentralized purchasing organization?
8. Power structure: Should we serve companies that are engineering dominated, financially
dominated, and so on?
9. Nature of existing relationship: Should we serve companies with which we have strong
relationships or simply go after the most desirable companies?
10. General purchasing policies: Should we serve companies that prefer leasing? Service contract?
Systems purchases? Sealed bidding?
11. Purchasing criteria: Should we serve companies that are seeking quality? Service? Price?
Situational Factors
12. Urgency: Should we serve companies that need quick and sudden delivery or service?
13. Specific application: Should we focus on a certain application of our product rather than all
applications?
14. Size or order: Should we focus on large or small orders?
Personal Characteristics
15. Buyer-seller similarity: Should we serve companies whose people and values are similar to
ours?
16. Attitude toward risk: Should we serve risk-taking or risk-avoiding customers?
17. Loyalty: Should we serve companies that show high loyalty to their suppliers?
Market Targeting: There are many statistical techniques for developing market segments. Once the
firm has identified
its market-segment opportunities, it must decide how many and which ones to target. Marketers are
increasingly combining several variables in an effort to identify smaller, better-defined target groups.
Thus, a bank may not only identify a group of wealthy retired adults but within that group distinguish
several segments depending on current income, assets, savings, and risk preferences. This has led
some market researchers to advocate a needs-based market segmentation approach, as
introduced previously.
Effective Segmentation Criteria: Not all segmentation schemes are useful. We could divide buyers
of table salt into blond and brunette customers, but hair color is undoubtedly irrelevant to the
purchase of salt. Furthermore, if all salt buyers buy the same amount of salt each month, believe all
salt is the same, and would pay only one price for salt, this market is minimally segmentable from a
marketing point of view. To be useful, market segments must rate favorably on five key 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. It would
not pay, for example, for an automobile manufacturer to develop cars for people who are less than
four feet tall.
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. If married and unmarried women respond similarly to a sale
on perfume, they do not constitute separate segments.
Actionable. Effective programs can be formulated for attracting and serving the segments.

Five forces that determine the intrinsic long-run attractiveness of a market or market segment
1. Threat of intense segment rivalryA segment is unattractive if it already contains numerous,
strong, or aggressive competitors. Its even more unattractive if its stable or declining, if plant
capacity must be added in large increments, if fixed costs or exit barriers are high, or if competitors
have high stakes in staying in the segment. These conditions will lead to frequent price wars,
advertising battles, and new-product introductions and will make it expensive to compete.
2. Threat of new entrantsThe most attractive segment is one in which entry barriers are high
and exit barriers are low. When both entry and exit barriers are low, firms easily enter and leave the
industry, and returns are stable but low. The worst case is when entry barriers are low and exit
barriers are high: Here firms enter during good times but find it hard to leave during bad times. The
result is chronic overcapacity.
3. Threat of substitute productsA segment is unattractive when there are actual or potential
substitutes for the product. Substitutes place a limit on prices and on profits. If technology advances
or competition increases in these substitute industries, prices and profits are likely to fall.
4. Threat of buyers growing bargaining powerA segment is unattractive if buyers possess
strong or growing bargaining power. To protect themselves, sellers might select buyers who have
the least power to negotiate or switch suppliers. A better defense is developing superior offers that
strong buyers cannot refuse.
5. Threat of suppliers growing bargaining powerA segment is unattractive if the companys
suppliers are able to raise prices or reduce quantity supplied. Suppliers tend to be powerful when
they are concentrated or organized, when they can integrate downstream, when there are few
substitutes, when the supplied product is an important input, and when the costs of
switching suppliers are high. The best defenses are to build win-win relationships with suppliers or
use multiple supply sources.

Steps in the Segmentation Process

Description
1. Needs-Based Segmentation: Group customers into segments based on similar needs and
benefits sought by customers in solving a particular consumption problem
2. Segment Identification: For each needs-based segment, determine which demographics,
lifestyles, and usage behaviors make the segment distinct and identifiable (actionable).
3. Segment Attractiveness: Using predetermined segment attractiveness criteria (such as market
growth, competitive intensity, and market access), determine the overall attractiveness of each
segment.
4. Segment Profitability: Determine segment profitability.
5. Segment Positioning: For each segment, create a value proposition and product-price
positioning strategy based on that segments unique customer needs and characteristics.
6. Segment Acid Test : Create segment storyboard to test the attractiveness of each segments
positioning strategy.
7. Marketing-Mix Strategy : Expand segment positioning strategy to include all aspects of the
marketing mix: product, price, promotion, and place.

The Marketing Intelligence System

A marketing intelligence system is a set of procedures and sources that managers use to obtain
everyday information about developments in the marketing environment. The internal records
system supplies results data, but the marketing intelligence system supplies happenings data.
Marketing managers collect marketing intelligence in a variety of different ways, such as by reading
books, newspapers, and trade publications; talking to customers, suppliers, and distributors;
monitoring social media on the Internet; and meeting with other company managers.
Train and motivate the sales force to spot and report new developments. The company must
sell its sales force on their importance as intelligence gatherers.
Motivate distributors, retailers, and other intermediaries to pass along important intelligence.
Marketing intermediaries are often closer to the customer and competition and can offer helpful
insights.
Hire external experts to collect intelligence. Many companies hire specialists to gather marketing
intelligence.

Network internally and externally. The firm can purchase competitors products, attend open
houses and trade shows, read competitors published reports, attend stockholders meetings, talk to
employees, collect competitors ads, consult with suppliers, and look up news stories about
competitors.
Set up a customer advisory panel. Members of advisory panels might include the companys
largest, most outspoken, most sophisticated, or most representative customers. Take advantage of
government-related data resources.
Purchase information from outside research firms and vendors. Well-known data suppliers
include firms such as the A.C. Nielsen Company and Information Resources Inc. They collect
information about product sales in a variety of categories and consumer exposure to various media.

Marketing information system: IT is 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." In addition, the online business dictionary defines Marketing Information System
(MkIS) as a system that analyzes and assesses marketing information, gathered continuously from
sources inside and outside an organization. An overall Marketing Information System can be
defined as a set structure of procedures and methods for the regular, planned collection, analysis
and presentation of information for use in making marketing decisions. MIS systems are composed
on four components:
Internal reporting systems: All enterprises which have been in operation for any period of time
nave a wealth of information. However, this information often remains under-utilised because it is
compartmentalised, either in the form of an individual entrepreneur or in the functional departments
of larger businesses. That is, information is usually categorised according to its nature so that there
are, for example, financial, production, manpower, marketing, stockholding and logistical data. Often
the entrepreneur, or various personnel working in the functional departments holding these pieces
of data, do not see how it could help decision makers in other functional areas.
Marketing research systems: The general topic of marketing research has been the prime '
subject of the textbook and only a little more needs to be added here. Marketing research is a
proactive search for information. That is, the enterprise which commissions these studies does so to
solve a perceived marketing problem. In many cases, data is collected in a purposeful way to
address a well-defined problem.
Marketing intelligence systems: Whereas marketing research is focused, market intelligence is
not. A marketing intelligence system is a set of procedures and data sources used by marketing
managers to sift information from the environment that they can use in their decision making.
Marketing intelligence is the province of entrepreneurs and senior managers within an agribusiness.
It involves them in scanning newspaper trade magazines, business journals and reports, economic
forecasts and other media. In addition it involves management in talking to producers, suppliers and
customers, as well as to competitors. Nonetheless, it is a largely informal process of observing and
conversing.
Marketing models: Within the MIS there has to be the means of interpreting information in order to
give direction to decision. These models may be computerised or may not. Typical tools are:
Time series sales modes
Brand switching models
Linear programming
Elasticity models (price, incomes, demand, supply, etc.)
Regression and correlation models
Analysis of Variance (ANOVA) models
Sensitivity analysis
Discounted cash flow
Macro Environment:
1. Demography: It is defined as the statistical study of the human population & its distribution. This
is one of the most influencing factors because it deals with the people who form the market. A
company should study the population, its distribution, age composition, etc before deciding the
marketing strategies. Each group of population behaves differently depending upon various
factors such as age, status, etc. if these factors are considered, a company can produce only

those products which suits the requirement of the consumers. In this regard, it is said that to
understand the market you must understand its demography.
2. Economic Environment: A company can successfully sell its products only when people have
enough money to spend. The economic environment affects a consumers purchasing behavior
either by increasing his disposable income or by reducing it. Eg: During the time of inflation, the
value of money comes down. Hence, it is difficult for them to purchase more products. Income of
the consumer must also be taken into account. Eg: In a market where both husband & wife work,
their purchasing power will be more. Hence, companies may sell their products quite easily.
3. Physical Environment or Natural Forces: A company has to adopt its policies within the limits
set by nature. A man can improve the nature but cannot find an alternative for it.
Nature offers resources, but in a limited manner. A product manager utilizes it efficiently.
Companies must find the best combination of production for the sake of efficient utilization of the
available resources. Otherwise, they may face acute shortage of resources. Eg: Petroleum
products, power, water, etc.
4. Technological Factors: From customers point of view, improvement in technology means
improvement in the standard of living. In this regard, it is said that Technologies shape a
Persons Life.
Every new invention builds a new market & a new group of customers. A new technology
improves our lifestyle & at the same time creates many problems. Eg: Invention of various
consumer comforts like washing machines, mixers, etc have resulted in improving our lifestyle
but it has created severe problems like power shortage.
Eg: Introduction to automobiles has improved transportation but it has resulted in the problems
like air & noise pollution, increased accidents, etc. In simple words, following are the impacts of
technological factors on the market:
a) They create new wants
b) They create new industries
c) They may destroy old industries
d) They may increase the cost of Research & Development.
5. Social & Cultural Factors: Most of us purchase because of the influence of social & cultural
factors. The lifestyle, values, believes, etc are determined among other things by the society in
which we live. Each society has its own culture. Culture is a combination of various factors which
are transferred from older generations & which are acquired. Our behaviour is guided by our
culture, family, educational institutions, languages, etc.
Micro Environment:
1. Suppliers: They are the people who provide necessary resources needed to produce goods &
services. Policies of the suppliers have a significant influence over the marketing managers
decisions because, it is laborers, etc. A company must build cordial & long-term relationship with
suppliers.
2. Marketing Intermediaries: They are the people who assist the flow of products from the
producers to the consumers; they include wholesalers, retailers, agents, etc. These people
create place & time utility. A company must select an effective chain of middlemen, so as to
make the goods reach the market in time. The middlemen give necessary information to the
manufacturers about the market. If a company does not satisfy the middlemen, they neglect its
products & may push the competitors product.
3. Consumers: The main aim of production is to meet the demands of the consumers. Hence, the
consumers are the center point of all marketing activities. If they are not taken into consideration,
before taking the decisions, the company is bound to fail in achieving its objectives. A companys
marketing strategy is influenced by its target consumer. Eg: If a manufacturer wants to sell to the
wholesaler, he may directly sell to them, if he wants to sell to another manufacturer, he may sell
through his agent or if he wants to sell to ultimate consumer he may sell through wholesalers or
retailers. Hence each type of consumer has a unique feature, which influences a companys
marketing decision.

4. Competitors: A prudent marketing manager has to be in constant touch regarding the

information relating to the competitors strategies. He has to identify his competitors strategies,
build his plans to overtake them in the market to attract competitors consumers towards his
products.

The Consumer Buying Decision Process

I. Need recognition / Problem recognition :
The need recognition is the first and most important step in the buying process. If there is no need,
there is no purchase. This recognition happens when there is a lag between the consumers actual
situation and the ideal and desired one. However, not all the needs end up as a buying behavior. It
requires that the lag between the two situations is quite important. But the way (product price,
ease of acquisition, etc.) to obtain this ideal situation has to be perceived as acceptable by the
consumer based on the level of importance he attributes to the need.
II. Information search: Once the need is identified, its time for the consumer to seek information
about possible solutions to the problem. He will search more or less information depending on the
complexity of the choices to be made but also his level of involvement. Then the consumer will seek
to make his opinion to guide his choice and his decision-making process with:

Internal information: this information is already present in the consumers memory. It comes
from previous experiences he had with a product or brand and the opinion he may have of the

brand
External information: This is information on a product or brand received from and obtained
by friends or family, by reviews from other consumers or from the press. Not to mention, of
course, official business sources such as an advertising or a sellers speech.

III. Alternative evaluation

Once the information collected, the consumer will be able to evaluate the different alternatives that
offer to him, evaluate the most suitable to his needs and choose the one he think its best for him. In
order to do so, he will evaluate their attributes on two aspects. The objective characteristics (such
as the features and functionality of the product) but also subjective (perception and perceived value
of the brand by the consumer or its reputation). Each consumer does not attribute the same
importance to each attribute for his decision and his Consumer Buying Decision Process.
IV. Purchase decision : Now that the consumer has evaluated the different solutions and products
available for respond to his need, he will be able to choose the product or brand that seems most
appropriate to his needs. Then proceed to the actual purchase itself. His decision will depend on the
information and the selection made in the previous step based on the perceived value, products
features and capabilities that are important to him.
V. Post-purchase behaviour : Once the product is purchased and used, the consumer will evaluate
the adequacy with his original needs (those who caused the buying behavior). And whether he has
made the right choice in buying this product or not. He will feel either a sense of satisfaction for the
product (and the choice). Or, on the contrary, a disappointment if the product has fallen far short of
expectations. An opinion that will influence his future decisions and buying behavior. If the product has

brought satisfaction to the consumer, he will then minimize stages of information search and alternative
evaluation for his next purchases in order to buy the same brand. Which will produce customer loyalty.

CONCEPT AND COMPONENTS OF MARKETING MIX

Marketing involves a number of activities. Once the target group is decided, the product is to be
placed in the market by providing the appropriate product, price, distribution and promotional efforts.
These are to be combined or mixed in an appropriate proportion so as to achieve the marketing
goal. Such mix of product, price, distribution and promotional efforts is known as Marketing Mix.
This mix is assembled keeping in mind the needs of target customers, and it varies from one
organisation to another depending upon its available resources and marketing objectives.
Product : Product refers to the goods and services offered by the organisation. A pair of shoes, a
plate of dahi-vada, a lipstick, all are products. All these are purchased because they satisfy one or
more of our needs. We are paying not for the tangible product but for the benefit it will provide. So,
in simple words, product can be described as a bundle of benefits which a marketer offers to the
consumer for a price. Product can also take the form of a service like an air travel,
telecommunication etc. Thus, the term product refers to goods and services offered by the
organisation for sale.
Price: Price is the amount charged for a product or service. It is the second most important element
in the marketing mix. Fixing the price of the product is a tricky job. Many factors like demand for a
product, cost involved, consumers ability to pay, prices charged by competitors for similar products,
government restrictions etc. have to be kept in mind while fixing the price. In fact, pricing is a very
crucial decision area as it has its effect on demand for the product and also on the profitability of the
firm.
Place: Goods are produced to be sold to the consumers. They must be made available to the
consumers at a place where they can conveniently make purchase. This involves a chain of
individuals and institutions like distributors, wholesalers and retailers who constitute firms
distribution network (also called a channel of distribution). The organisation has to decide whether to
sell directly to the retailer or through the distributors/wholesaler etc. It can even plan to sell it directly
to consumers. The choice is guided by a host of factors about which you will learn later in this
chapter.
Promotion: If the product is manufactured keeping the consumer needs in mind, is rightly priced
and made available at outlets convenient to them but the consumer is not made aware about its
price, features, availability etc, its marketing effort may not be successful. Therefore promotion is an
important ingredient of marketing mix as it refers to a process of informing, persuading and
influencing a consumer to make choice of the product to be bought. Promotion is done through
means of personal selling, advertising, publicity and sales promotion. It is done mainly with a view to
provide information to prospective consumers about the availability, characteristics and uses of a
product. It arouses potential consumers interest in the product, compare it with competitors product
and make his choice. The proliferation of print and electronic media has immensely helped the
process of promotion.

CONCEPT OF PRODUCT AND ITS CLASSIFICATION

As stated earlier, product refers to the goods and services offered by the organisation for sale. Here
the marketers have to recognise that consumers are not simply interested in the physical features of
a product but a set of tangible and intangible attributes that satisfy their wants. For example, when a
consumer buys a washing machine he is not buying simply a machine but a gadget that helps him
in washing clothes. It also needs to be noted that the term product refers to anything that can be
offered to a market for attention, acquisition, or use.
PRODUCT CLASSIFICATION
Product can be broadly classified on the basis of (1) use, (2) durability, and (3) tangibility
1. Based on use, the product can be classified as:
(a) Consumer Goods; and
(b) Industrial Goods.
(a) Consumer goods: Goods meant for personal consumption by the households or ultimate

consumers are called consumer goods. This includes items like toiletries, groceries, clothes etc.
Based on consumers buying behaviour the consumer goods can be further classified as :
(i) Convenience Goods : these goods belong to the categories of convenience goods which are
bought frequently without much planning or shopping effort and are also consumed quickly. Buying
decision in case of these goods does not involve much pre-planning. Such goods are usually sold at
convenient retail outlets.
(ii) Shopping Goods; and : These are goods which are purchased less frequently and are used very
slowly like clothes, shoes, household appliances. In case of these goods, consumers make choice
of a product considering its suitability, price, style, quality and products of competitors and
substitutes, if any. It may be noted that shopping goods involve much more expenses than
convenience goods.
(iii) Speciality Goods : Because of some special characteristics of certain categories of goods
people generally put special efforts to buy them. In fact, prior to making a trip to buy the product
he/she will collect complete information about the various brands. Examples of speciality goods are
cameras, TV sets, new automobiles etc.
(b) Industrial Goods: Goods meant for consumption or use as inputs in production of other
products or provision of some service are termed as industrial goods. These are meant for nonpersonal and commercial use and include (i) raw materials, (ii) machinery, (iii) components, and (iv)
operating supplies (such as lubricants, stationery etc). The buyers of industrial goods are supposed
to be knowledgeable, cost conscious and rational in their purchase and therefore, the marketeers
follow different pricing, distribution and promotional strategies for their sale. It may be noted that the
same product may be classified as consumer goods as well as industrial goods depending upon its
end use. Take for example the case of coconut oil. When it is used as hair oil or cooking oil, it is
treated as consumer goods and when used for manufacturing a bath soap it is termed as industrial
goods. However, the way these products are marketed to these two groups are very different
because purchase by industrial buyer is usually large in quantity and bought either directly from the
manufacturer or the local distributor.
2. Based on Durability, the products can be classified as:
(a) Durable Goods; and
(b) Non-durable Goods.
(a) Durable Goods : Durable goods are products which are used for a long period i.e., for months
or years together. Examples of such goods are refrigerator, car, washing machine etc. Such goods
generally require more of personal selling efforts and have high profit margins. In case of these
goods, sellers reputation and presale and after-sale service are important determinants of purchase
decision.
(b) Non-durable Goods: Non-durable goods are products that are normally consumed in one go or
last for a few uses. Examples of such products are soap, salt, pickles, sauce etc. These items are
consumed quickly and we purchase these goods more often. Such items are generally made
available by the producer through large number of convenient retail outlets. Profit margins on such
items are usually kept low and heavy advertising is done to attract people towards their trial and
use.
3. Based on tangibility, the products can be classified as:
(a) Tangible Goods; and
(b) Intangible Goods.
(a) Tangible Goods : Most goods, whether these are consumer goods or industrial goods and
whether these are durable or non-durable, fall in this category as they have a physical form, that
can be touched and seen. Thus, all items like groceries, cars, raw-materials, machinery etc. fall in
the category of tangible goods.
(b) Intangible Goods : Intangible goods refer to services provided to the individual consumers or to
the organisational buyers (industrial, commercial, institutional, government etc.). Services are
essentially intangible activities which provide want or need satisfaction. Medical treatment, postal,
banking and insurance services etc., all fall in this category.

PRICING AND FACTORS AFFECTING PRICING DECISIONS

The factors usually taken into account while determining the price of a product can be broadly
described as follows:
(a) Cost: No business can survive unless it covers its cost of production and distribution. In large
number of products, the retail prices are determined by adding a reasonable profit margin to the
cost. Higher the cost, higher is likely to be the price, lower the cost lower the price.
(b) Demand: Demand also affects the price in a big way. When there is limited supply of a product
and the demand is high, people buy even if high prices are charged by the producer. But how high
the price would be is dependent upon prospective buyers capacity and willingness to pay and their
preference for the product. In this context, price elasticity, i.e. responsiveness of demand to changes
in price should also be kept in view.
(c) Competition: The price charged by the competitor for similar product is important determinant
of price. A marketeer would not like to charge a price higher than the competitor for fear of losing
customers. Also, he may avoid charging a price lower than the competitor. Because it may result in
price war which we have recently seen in the case of soft drinks, washing powder, mobile phone
etc.
(d) Marketing Objectives: A firm may have different marketing objectives such as maximisation of
profit, maximisation of sales, bigger market share, survival in the market and so on. The prices have
to be determined accordingly. For example, if the objective is to maximise sales or have a bigger
market share, a low price will be fixed. Recently one brand of washing powder slashed its prices to
half, to grab a bigger share of the market.
(e) Government Regulation: Prices of some essential products are regulated by the government
under the Essential Commodities Act. For example, prior to liberalisation of the economy, cement
and steel prices were decided by the government. Hence, it is essential that the existing statutory
limits, if any, are also kept in view while determining the prices of products by the producers.

METHODS OF PRICE FIXATION

1. Cost Based Pricing
Under this method, price of the product is fixed by adding the amount of desired profit margin to the
cost of the product. If a particular soap costs the marketeer Rs. 8 and he desires a profit of 25%, the
price of the soap is fixed at Rs 8 + (8x25/100) =Rs. 10. While calculating the price in this way, all
costs (variable as well as fixed) incurred in manufacturing the product are taken into consideration.
2. Competition Based Pricing
In case of products where market is highly competitive and there is negligible difference in quality of
competing brands, price is u. sually fixed closer to the price of the competing brands. It is called
young rate pricing and is a very convenient method because the marketers do not have to worry
much about demand and cost and effect the change as per the changes by the industry leaders.
3. Demand Based Pricing
At times, prices are determined by the demand for the product. Under this method, without paying
much attention to cost and competitors prices, the marketeers try to ascertain the demand for the
product. If the demand is high they decide to take advantage and fix a high price. If the demand is
low, they fix low prices for their product. At times they resort to differential prices and charge
different prices from different groups of customers depending upon their perceived values and
capacity to pay.
4. Objective Based Pricing
This method is applicable to introduction of new (innovative) products. If, at the introductory stage of
the products, the organisation wishes to penetrate the market i.e., to capture large parts of the
market and discourage the prospective competitors to enter into the fray, it fixes a low price. the
organisation may decide to skim the market i.e., to earn high profit by taking advantage of a group
of customers who give more importance to their status or distinction and are willing to pay even a
higher price for it.

CHANNELS OF DISTRIBUTION
The manufacturer has to ensure the availability of his goods to the consumers at convenient points
for their purchase. He may do so directly or, as stated earlier, through a chain of middlemen like
distributors, wholesalers and retailers. The path or route adopted by him for the purpose is known
as channel of distribution. A channel of distribution thus, refers to the pathway used by the

manufacturer for transfer of the ownership of goods and its physical transfer to the consumers and
the user/buyers (industrial buyers).
Primarily a channel of distribution performs the following functions:
(a) It helps in establishing a regular contact with the customers and provides them the necessary
information relating to the goods.
(b) It provides the facility for inspection of goods by the consumers at convenient points to make
their choice.
(c) It facilitates the transfer of ownership as well as the delivery of goods.
(d) It helps in financing by giving credit facility.
(e) It assists the provision of after sales services, if necessary.
(f) It assumes all risks connected with the carrying out the distribution function.

TYPES OF CHANNELS OF DISTRIBUTION

(a) Zero stage channel of distribution: Zero stage distribution channel exists where there is direct
sale of goods by the producer to the consumer. This direct contact with the consumer can be made
through door-to door salesmen, own retail outlets or even through direct mail. Eureka Forbes, for
example, sells its water purifiers directly through their own sales staff.
(b) One stage channel of distribution : In this case, there is one middleman i.e., the retailer. The
manufacturers sell their goods to retailers who in turn sell it to the consumers. This type of
distribution channel is preferred by manufacturers of consumer durables like refrigerator, air
conditioner, washing machine, etc. where individual purchase involves large amount. It is also used
for distribution through large scale retailers such as departmental stores (Big Bazaar,
Sponsors) and super markets.
c) Two stage channel of distribution : This is the most commonly used channel of distribution for
the sale of consumer goods. In this case, there are two middlemen used, namely, wholesaler and
retailer. This is applicable to products where markets are spread over a large area, value of
individual purchase is small and the frequency of purchase is high.
(d) Three stage channel of distribution : When the number of wholesalers used is large and they
are scattered throughout the country, the manufacturers often use the services of mercantile agents
who act as a link between the producer and the wholesaler. They are also known as distributors.

FACTORS AFFECTING THE CHOICE OF DISTRIBUTION CHANNEL

The manufacturer has to be careful while finalising the channel of distribution to be used. He should
pay attention to the following factors while making his choice.
(a) Nature of Market: There are many aspects of market which determine the choice of channel of
distribution. Example, where the number of buyers is limited, they are concentrated at few locations
and their individual purchases are large as is the case with industrial buyers, direct sale may be the
most preferred choice. But in case where number of buyers is large with small individual purchase
and they are scattered, then need may arise for use of middlemen.
(b) Nature of Product: Nature of the product considerably affects the choice of channel of
distribution. In case the product is of technical nature involving a good amount of pre-sale and after
sale services, the sale is generally done through retailers without involving the wholesalers. As
against this in case of items like industrial machinery, having large value and involving specialised
technical service and long negotiation period, direct sale is preferred.
(c) Nature of the Company: A firm having enough financial resources can afford to its own a
distribution force and retail outlet, both. But most business firms prefer not to create their own
distribution channel and concentrate on manufacturing. The firms who wish to control the
distribution network prefer a shorter channel.
d) Middlemen Consideration: If right kind of middlemen having the necessary experience,
contacts, financial strength and integrity are available, their use is preferred as they can ensure
success of newly introduced products. Cost factors also have to be kept in view as all middlemen
add their own margin of profit to the price of the products. But from experience it is learnt that where
the volume of sales are adequate, the use of middlemen is often found economical and less
cumbersome as against direct sale.

PROMOTION
Promotion refers to the process of informing and persuading the consumers to buy certain product.
By using this process, the marketers convey persuasive message and information to its potential
customers. The main objective of promotion is to seek buyers attention towards the product with a
view to:
arouse his interest in the product;
inform him about its availability; and
inform him as to how is it different from others.
It is thus a persuasive communication and also serves as a reminder. A firm uses different tools for
its promotional activities which are as follows:
Advertising
Publicity
Personal selling
Sales promotion
1. Advertising: Advertising is the most commonly used tool for informing the present and
prospective consumers about the product, its quality, features, availability, etc. It is a paid form of
non-personal communication through different media about a product, idea, a service or an
organisation by an identified sponsor. It can be done through print media like newspaper,
magazines, billboards, electronic media like radio, television, etc. It is a very flexible and
comparatively low cost tool of promotion.
2. Publicity: This is a non-paid process of generating wide range of communication to contribute a
favourable attitude towards the product and the organisation. The other tools of publicity are press
conference, publication and news in the electronic media etc. It is published or broadcasted without
charging any money from the firm. Marketeers often spend a lot of time and effort in getting news
items placed in the media for creation of a favourable image of the company and its products.
3. Personal selling: You must have come across representatives of different companies knocking
at your door and persuading you to buy their product. It is a direct presentation of the product to the
consumers or prospective buyers. It refers to the use of salespersons to persuade the buyers to act
favourably and buy the product. It is most effective promotional tool in case of industrial goods.
4. Sales promotion: This refers to short-term and temporary incentives to purchase or induce trials
of new goods. The tool include contests, games, gifts, trade shows, discounts, etc. Sales
promotional activities are often carried out at retail levels.

Product Life Cycle Concept

Product life cycle can be defined as "the change in sales volume of a specific product offered by an
organisation, over the expected life of the product."
We have a life cycle, we are born, we grow, we mature, and finally we pass away. Similarly,
products also have life cycle, from their introduction to decline they progresses through a sequence
of stages. The major stages of the product life cycle are - introduction, growth, maturity, and decline.
Product life cycle describes transition of a product from its development to decline. The time period
of product life cycle and the length of each stage varies from product to product. Life cycle of one
product can be over in few months, and of another product may last for many years. One product
reach to maturity in years and another can reach it in few months. One product stay at the maturity
for years and another just for few months. Hence, it is true to say that length of each stage varies
from
product
to
product.
Product life cycle is associated with variation in the marketing situation, level of competition, product
demand, consumer understanding, etc., thus marketing managers have to change the marketing
strategy and the marketing mix accordingly.
Stages of the Product Life Cycle
The four major stages of the product life cycle are as follows:-

Introduction: At this stage the product is new to the market and few potential customers are aware
with the existence of product. The price is generally high. The sales of the product is low or may be
restricted to early adopters. Profits are often low or losses are being made, this is because of the
high advertising cost and repayment of developmental cost. At the introductory stage: The product is unknown,
The price is generally high,
The placement is selective, and
The promotion is informative and personalised.
Growth Stage
At this stage the product is becoming more widely known and acceptable in the market. Marketing is
done to strengthen brand and develop an image for the product. Prices may start to fall as
competitors enters the market. With the increase in sales, profit may start to be earned, but
advertising cost remains high. At the growth stage:The product is more widely known and consumed,

The sales volume increases,

The price begin to decline with the entry of new players,

The placement becomes more widely spread, and

The promotion is focused on brand development and product image formation.

Maturity Stage
At this stage the product is competing with alternatives. Sales and profits are at their peak. Product
range may be extended, by adding both width and depth. With the increases in competition the
price reaches to its lowest point. Advertising is done to reinforce the product image in the
consumer's minds to increase repeat purchases. At maturity stage:The product is competing with alternatives,

The sales are at their peak,

The prices reaches to its lowest point,

The placement is intense, and

The promotion is focused on repeat purchasing.

Decline
Stage
At this stage sales start to fall fast as a result product range is reduced. The product faces reduced
competition as many players have left the market and it is expected that no new competitor will
enter the market. Advertising cost is also reduced. Concentration is on remaining market niches as
some price stability is expected there. Each product sold could be profitable as developmental costs
have been paid at earlier stage. With the reduction in sales volume overall profit will also reduce. At
decline stage:The product faces reduced competition,

The sales volume reduces,

The price is likely to fall,

The placement is selective

The promotion is focused on reminding.

NEW PRODUCT DEVELOPMENT (NPD)

Stage 1: Idea Generation
New product ideas have to come from somewhere. But where do organisations get their ideas for
NPD? Sources include:
Market Research, Employees Consultants, Competitors, Customers, Distributors, and Suppliers

Stage 2: Idea Screening

This process involves shifting through the ideas generated above and selecting ones which are
feasible and practical to develop. Pursing impractical ideas is expensive and a waste of resources.
Stage 3: Concept Development and Testing
The organisation may have come across what they believe to be a feasible idea, however, the idea
needs to be taken to the target audience. What do they think about the idea? Will it offer the benefit
that the organisation hopes it will? or have they overlooked certain issues? Will there be a demand
for the product? Note the idea taken to the target audience is not a working prototype at this stage,
it is just a concept.
Stage 4: Marketing Strategy and Development
How will the product/service idea be launched within the market? A proposed marketing strategy will
be written laying out the marketing mix strategy of the product, the segmentation, targeting and
positioning strategy and expected sales and profits.
Stage 5: Business Analysis
The company has a great idea, the marketing strategy seems feasible, but will the product be
financially worth while in the long run? The business analysis stage looks more deeply into
the Cashflow the product could generate, what the cost will be, how much market shares the
product may achieve and the expected life of the product.
Stage 6: Product Development
At this stage the prototype is produced. The prototype will undergo a serious tests, and will be
presented to a selection of people made up of the the target market segment to see if changes need
to be made.
Stage 7: Test Marketing
Test marketing means testing the product within a specific geographic area. The product will be
launched within a particular region so the marketing mix strategy can be monitored and if needed
modified before national launch.
Stage 8: Commercialisation
If test marketing is successful the product is ready for national launch. The following decisions
regarding the national launch need to be made

timing of the launch

how the product will be launched
where the product will be launched
will there be a national roll out or will it be region by region?

Product Mix Decision

Product mix or product assortment refers to the number of product lines that an organisation offers
to its customers. Product line is a group of related products manufactured or marketed by a single

company. Such products function in similar manner, sold to the same customer group, sold through
the same type of outlets, and fall within a same price range. Product mix consists of various product
lines that an organisation offers, an organisation may have just one product line in its product mix
and it may also have multiple product lines. These product lines may be fairly similar or totally
different, for example - Dish washing detergent liquid and Powder are two similar product lines,
both are used for cleaning and based on same technology; whereas Deodorants and Laundry are
totally different product lines. An organisation's product mix has following four dimensions:Width
The width of an organisation's product mix pertains to the number of product lines that the
organisation is offering. For example, Hindustan Uni Lever offers wide width of its home care,
personal care and beverage products.
Length
The length of an organisation's product mix pertains to the total number of products or items in the
product mix. As in the given diagram of Hindustan Uni Lever product mix, there are 23 products,
hence, the length of product mix is 23.
Length
The length of an organisation's product mix pertains to the total number of products or items in the
product mix. As in the given diagram of Hindustan Uni Lever product mix, there are 23 products,
hence, the length of product mix is 23.
Consistency
The consistency of an organisation's product mix refers to how closely related the various product
lines are in use, production, distribution, or in any other manner.

Product Mix Decision

Product mix decision refers to the decisions regarding adding a new or eliminating any existing
product from the product mix, adding a new product line, lengthening any existing line, or bringing
new variants of a brand to expand the business and to increase the profitability.
Product Line Decision - Product line managers takes product line decisions considering the
sales and profit of each items in the line and comparing their product line with the competitors'
product lines in the same markets. Marketing managers have to decide the optimal length of the
product line by adding new items or dropping existing items from the line.
Line Stretching Decision - Line stretching means lengthening a product line beyond its
current range. An organisation can stretch its product line downward, upward, or both way.
1.
Downward Stretching means adding low-end items in the product line, for example in Indian
car market, watching the success of Maruti-Suzuki in small car segment, Toyota and Honda also
entered the segment.
2.
Upward Stretching means adding high-end items in the product line, for example MarutiSuzuki initially entered small car segment, but later entered higher end segment.
3.
Two-way Stretching means stretching the line in both directions if an organisation is in the
middle range of the market.
Line Filling Decision - It means adding more items within the present range of the product
line. Line filling can be done to reach for incremental profits, or to utilise excess capacity.

Branding Packaging and Labelling

Branding is a sellers promise to deliver a specific set of features, benefits and services consistent
to the buyers. Branding gives personality to a product; packaging and labelling put a face on the
product. Effective packaging and labelling work as selling tools that help marketer sell the product.
Elements of Branding
Brand includes various elements like - brand names, trade names, brand marks, trade marks, and
trade characters. The combination of these elements form a firm's corporate symbol or name.
Brand Name - It is also called Product Brand. It can be a word, a group of words, letters, or
numbers to represent a product or service. For example - Pepsi, iPhone 5, and etc.
Trade Name - It is also called Corporate Brand. It identifies and promotes a company or a
division of a particular corporation. For example - Dell, Nike, Google, and etc.

Trade Mark - It is a word, name, symbol, or combination of these elements. Trade mark is
legally protected by government. For example - NBC colourful peacock, or McDonald's golden
arches. No other organisation can use these symbols.
Trade Characters - Animal, people, animated characters, objects, and the like that are used
to advertise a product or service, that come to be associated with that product or service. For
example - Keebler Elves for Keebler cookies

Branding Strategies

There are various branding strategies on which marketing organisations rely to meet sales and
marketing objectives. Some of these strategies are as following :Brand Extension - According to this strategy, an existing brand name is used to promote a
new or an improved product in an organisation's product line. Marketing organisations uses this
strategy to minimise the cost of launching a new product and the risk of failure of new product.
There is risk of brand diluting if a product line is over extended.
Brand Licensing - According to this strategy, some organisations allow other organisations
to use their brand name, trade name, or trade character. Such authorisation is a legal licensing
agreement for which the licensing organisation receives royalty in return for the authorisation.
Organisations follow this strategy to increase revenue sources, enhance organisation image, and
sell more of their core products.
Mixed Branding - This strategy is used by some manufacturers and retailers to sell
products. A manufacturer of a national brand can make a product for sale under another company's
brand. Like this a business can maintain brand loyalty through its national brand and increase its
product mix through private brands. It can increase its profits by selling private brands without
affecting the reputation and sales of its national brand.
Co-Branding - According to this strategy one or more brands are combined in the
manufacture of a product or in the delivery of a service to capitalise on other companies' products
and services to reach new customers and increase sales for both companies' brands.

Marketing Mix

The Marketing Mix is a marketing tool used by marketing professionals. It is often crucial when
determining product or brand's offering, and it is also called as 4P's (Product, Price, Promotion, and
Place) of marketing. However, in case of services of different nature the 4 P's have been expanded
to 7P's or 8P's.
4P's - Producer-oriented Model of Marketing Mix
Product - Products are offerings that a marketer offers to the target audience to satisfy their
needs and wants. Product can be tangible good or intangible service. Tangible products are goods
like - cellphone, television, or motor car, whereas intangible products are services like - financial
service in a bank, health treatment by a doctor, legal advice of a lawyer.
Price - Price is the amount that is charged by marketer of his offerings or the amount that is
paid by consumer for the use or consumption of the product. Price is crucial in determining the
organisation's profit and survival. Adjustments in price affects the demand and sales of the product.
Marketers are required to be aware of the customer perceived value of the product to set the right
price.
Promotion - Promotion represents the different methods of communication that are used by
marketer to inform target audience about the product. promotion includes - advertising, personal
selling, public relation, and sales promotion.
Place - Place or distribution refers to making the product available for customers
at convenient and accessible places.

Role of Advertising in Marketing Communication

Marketing communications are the means by which organisations attempt to inform, persuade, and
remind consumers about products, services, or brands. Marketing communications inform and
make consumers aware about the availability of the product or service, about its usage, price and
special offers. Marketing Communications attempt to persuade potential consumers to purchase

and try the product. Marketing communications can also be used to reinforce experiences, or to
remind consumers about their needs and their past experiences related to the product with a view to
convince them for repurchases. Marketing communication also differentiate products in markets
where there is little to separate competing products and brands. Advertising is a paid form of a nonpersonal message communicated through the various media by industry, business firms, non profit
organisations, or individuals. Advertising is persuasive and informational and is designed to
influence the purchasing behavior and/or thought patterns of the audience. The advertising
message has to reach a billion people, speaking different languages, practicing many religions.
Advertisers can reach their audiences through television, radio, cinema, print medium, outdoor
advertising, sales promotion and the Internet. Hence, advertising is a form of mass communication.

Process of Advertising
Following are the steps that are required to be followed for development and execution of
advertising :1.
Briefing - Advertising process starts with briefing - a document confirming understanding
between client and advertising agency on - what product to advertise, objective of advertising, timeframe of ad campaign, strategies to reach the audience, and total estimated cost.
2.
Market Research - After briefing market research will done. Research include - comparison
of advertiser's product or service with competitor's product or service, consumers' perception of their
brand in comparison to their competitors, study of competitors' advertising, and response of
consumers to competitors' advertising.
3.
Identify Target Audience - Next step is to identify target audience. Using the market
research, the advertising agency will identify the target audience.
4.
Media Selection - Using the research, the advertising agency or the media agency will
select the media that should be used to reach the target audience in the most cost effective way.
5.
Ad Designing & Ad Creation - At this step the creative people of advertising agency will
convert the advertising communication into words and pictures. The copywriter will write the copy of
advertising and the art director will visually implement the copywriter's message.The advertising
agency may get the filming or taping done by outside production companies.
6.
Decide Place & Time - This step is to decide where and when the advertisement will be
shown. Traffic department within the advertising agency will ensure that the commercials are ready
on time and all required legal approvals have been granted.
7.
Execution - Finally the advertisement will be executed.
8.
Performance Check - Once the advertisement is executed, the media agency will check its
performance.

Functions of Advertising - Following are the basic functions of advertising:

1. To distinguish product from competitors' products
There are so many products of same category in the market and they competes with each other,
advertising performs the function of distinguishing advertiser's product from competitors.
2. To communicate product information
Product related information required to be communicated to the targeted customers, and
advertisement performs this function.
3. To urge product use
Effective advertisement can create the urge within audience for a product.
4. To expand product distribution
When the market demand of a particular product increases, the number of retailer and distributor
involved in sale of that product also increases, hence product distribution get expanded.
5. To increase brand preference
There are various products of different bands are available, the brand which is effectively and
frequently advertised is preferred most.
6. To reduce overall sale cost
Advertising increases the primary demand in the market. When demand is there and the product is
available, automatically the overall cost will decrease, simultaneously the cost of sales like
distribution cost, promotional cost also get decreased.

Classification of Advertising

A) Classification on the basis of function

Advertisement informs the customers about a product
Advertisement persuades the consumers to buy a products
Advertisement reminds existing customers about the presence of the product in the market
B) Classification on the basis of region: Advertisements can also be classified on the basis of
the region, say:
Global advertising: It is executed by a firm in its global market niches. Reputed global
magazines like Time, Far Eastern Economic Review, Span, Fortune, Futurist, Popular
Science. Cable TV channels are also used to advertise the products through out world.
National advertising: It is executed by a firm at the national level. It is done to increase the
demand of its products and services throughout the country. Examples: BPL
Regional advertising: If the manufacturer confines his advertising to a single region of the
country, its promotional exercise is called Regional Advertising. This can be done by the
manufacturer, wholesaler, or retailer of the firm. Examples: Advertisements of regional
newspapers covering those states or districts where these newspapers are circulated.
Local advertising: When advertising is done only for one area or city, it is called Local
Advertising. Some professionals also call it Retail Advertising.
C) Classification on the basis of target market
Consumer product advertising: This is done to impress the ultimate consumer. An ultimate
consumer is a person who buys the product or service for his personal use. This type of
advertising is done by the manufacturer or dealer of the product or service. Examples:
Advertisements of Intel.
Industrial product advertising: This is also called Business-to-Business Advertising. This is
done by the industrial manufacturer or his distributor and is so designed that it increases the
demand of industrial product or services manufactured by the manufacturer.
Trade advertising: This is done by the manufacturer to persuade wholesalers and retailers
to sell his goods.
Professional advertising: This is executed by manufacturers and distributors to influence
the professionals of a particular trade or business stream.
Financial advertising: Banks, financial institutions, and corporate firms issue
advertisements to collect funds from markets.
D) Classification on the basis of desired responses
Direct action advertising: This is done to get immediate responses from customers.
Examples: Season's sale, purchase coupons in a magazine.
Indirect action advertising: This type of advertising exercise is carried out to make a
positive effect on the mind of the reader or viewer. After getting the advertisement he does
not rush to buy the product but he develops a favourable image of the brand in his mind.
Surrogate advertising: This is a new category of advertising. In this type of promotional
effort, the marketer promotes a different product. For example: the promotion of Bagpiper
soda. The firm is promoting Bagpiper Whisky, but intentionally shows soda.
E) Classification on the basis of the media used in advertisement
Audio advertising: It is done through radio, P A systems, auto-rickshaw promotions, and
four-wheeler promotions etc.
Visual advertising: It is done through PoP displays, without text catalogues, leaflets, cloth
banners, brochures, electronic hoardings, simple hoardings, running hoardings etc.
Audio-visual: It is done through cinema slides, movies, video clips, TV advertisements,
cable TV advertisements etc.
Written advertising: It is done through letters, fax messages, leaflets with text, brochures,
articles and documents, space marketing features in newspapers etc.
Internet advertising: The world wide web is used extensively to promote products and
services of all genres. For example Bharat Matrimony, www.teleshop.com,
www.asianskyshop.com etc.

Verbal advertising: Verbal tools are used to advertise thoughts, products, and services
during conferences, seminars, and group discussion sessions. Kinesics also plays an
important role in this context.

Sales Promotion
Promotion is the final element in the marketing mix. After the nature of product is decided, its price
fixed and the methods of distribution decided, the manufactures has to take effective steps in
meeting the consumers in the markets. In the present consumer oriented markets it is the duty of
manufacturers to know what is required by the consumer. It is also their duty to make the customers
know where, when how and at what prices. The products would be available.
There are two type of promotion blends:1. Pull Blend: It is one in which mass impersonal, sales efforts are given the greatest emphasis.
The purpose of pull blend to pre-sell to the final consumers. So that they demand the product at the
retail level of distribution. The firm adopting this strategy would spend more on advertising and sales
promotion rather than in personal selling. These efforts pull down the product from the
manufacturer.
2. Push Blend: It emphasizes personal selling. Naturally firms adopting this method develop a
strong sales force at both the distributor and the dealer level. This method would tends to push the
product through the channel of distribution.
Objective of Sales Promotion
1. To increase sales directly by publicity through media which are complementary to press and
poster advertising.
2. To disseminate information through sales man dealers etc. So as to insure the product getting in
to satisfactory use by the ultimate consumer.
3. To attract new consumer.
4. To face the competition effectively.
5. To help salesman in selling more to the retailers and consumers.
6. To check seasonal decline in sales. Generally speaking sales promotion involves rendering the
following services:- (a) Services to dealers. (b) Services to own salesman. (c) Special publicity.
AIDA Concept
AIDA Model is a selling concept presented by Elmo Lewis to explain how personal selling works.
AIDA Model outlines the processes for achieving promotional goals in terms of stages of consumer
involvement with the message. The Stages are Attention, Interest, Desire, and Action.
Attention
In this media filled world, advertisers need to be quick and direct to grab audience attention. Ads are
required to be eye catchy which can make audience stop and read or watch what advertiser have to
say next. Powerful words and pictures are used in ads to make them attractive.
Interest
After getting attention of a chunk of the targeted audience, it is required to keep them engaged with
the ad to make them understand the message in more detail. Gaining the reader's or audience
interest is more difficult process than grabbing their attention. To gain audience interest the
advertisers must stay focused on audience needs.
Desire
The Interest and Desire parts of AIDA goes hand-in-hand. As advertiser builds the audience interest,
he also need to help them understand how what he is offering can help them in a real way. The way
of doing this is by appealing to their personal needs and wants.
A good way of building the reader's desire for advertiser offering is to link features and benefits.
Hopefully, the significant features of the offering have been designed to give a specific benefit to
members of the target market.
Action

Finally, advertiser need to be very clear about what action he want the audience to take- trial,
purchase, repurchase, or other.

AIDA and the Promotional Mix

Attenti Interes Desire
on
t

Action

Advertis Very
Effect
ing
ive

Very
Effect
ive

Somew Not
hat
Effecti
Effecti ve
ve

Very
Public
Relation Effect
ive
s

Very
Effect
ive

Very
Effect
ive

Sales
Promoti
on

Somew
hat
Effecti
ve

Somew Very
hat
Effect
Effecti ive
ve

Persona Somew Very

Effect
l Selling hat
Effecti ive
ve

Very
Effect
ive

Not
Effecti
ve
Somew
hat
Effecti
ve
Very
Effecti
ve