Module 1: INTRODUCTION TO MARKETING

Definition: According to American Marketing Association, "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 stakeholders."

Definition of Marketing Management :According to Philip Kotler, "Marketing Management is

the analysis, planning, implementation and control of programmes designed to bring about desired
exchanges with target audiences for the purpose of personal and of mutual gain. It relies heavily
on the adoption and coordination of product, price, promotion and place for achieving responses."

2.Nature of marketing

1.Human activity: Originally, the term marketing is a human activity under which human needs
are satisfied by human efforts. It’s a human action for human satisfaction

2.Consumer-oriented: A business exist to satisfy human needs, hence business must find out
what the desire of customer (or consumer) and thereby produce goods & services as per the
needs of the customer. Thus, only those goods should be produce that satisfy consumer needs
and at a reasonable profit to the manufacturer (or producer).

3.Art as well as science: In the technological arena, marketing is the art and science of choosing
target markets and satisfying customers through creating, delivering, and communicating
superior customer value. It is a technique of making the goods available at right time, right place,
into right hands, right quality, in the right form and at right price.

4.Exchange Process: All marketing activities revolve around commercial exchange process. The
exchange process implies transactions between buyer and seller. It also involves exchange of
ideas.

5.Starts and ends with customers: Marketing is consumer oriented and it is crucial to know
what the actual demand of consumer is. This is possible only when required information related
to the goods and services is collected from the customer. Thus, it is the starting of marketing and
the marketing end as soon as those goods and services reach into the safe hands of the customer.

6.Creation of Utilities: Marketing creates four components of utilities viz. time, place,
possession and form. The form utility refers to the product or service a company offers to their
customers. The place utility refers to the availability of a product or service in a location i.e.
Easier for customers. By time utility, a company can ensure that products and services are
available when customers need them. The possession utility gives customers ownership, of a
product or service and enables them to derive benefits in their own business.
7.Goal oriented: Marketing seeks to achieve benefits for both buyers and sellers by satisfying
human needs. The ultimate goal of marketing is to generate profits through the satisfaction of the
customer.

8.Guiding element of business: Modern Marketing is the heart of industrial activity that tells
what, when, how to produce. It is capable of guiding and controlling business.

9.System of Interacting Business Activities: Marketing is the system through which a business
enterprise, institution or organization interacts with the objective to earn profit, satisfy customers
and manage relationship. It is the performance of business activities that direct the flow of goods
and services from producer to consumer or user.

3. Scope of marketing / What can be marketed?

Ans: The scope of marketing deals with the question, ‘what is marketed?’ According to Kotler,
marketing people are involved with ten types of entities.

1. Goods: Physical goods constitute the major part of a country’s production and marketing
effort. Companies market billions of food products, and millions of cars, refrigerators, television
and machines.
2. Services: As economies advance, a large proportion of their activities is focused on the pro-
duction of services. Services include the work of airlines, hotels, car rental firms, beauticians,
software programmers, management consultants, and so on. Many market offerings consist of a
mix of goods and services. For example, a restaurant offers both goods and services.

3. Events: Marketers promote events. Events can be trade shows, company anniversaries,
entertainment award shows, local festivals, health camps, and so on. For example, global
sporting events such as the Olympics or Common Wealth Games are promoted aggressively to
both companies and fans.

4. Experiences: Marketers create experiences by offering a mix of both goods and services. A
product is promoted not only by communicating features but also by giving unique and
interesting experiences to customers. For example, Maruti Sx4 comes with Bluetooth technology
to ensure connectivity while driving, similarly residential townships offer landscaped gardens
and gaming zones.

5. Persons: Due to a rise in testimonial advertising, celebrity marketing has become a business.
All popular personalities such as film stars, TV artists, and sportspersons have agents and
personal managers. They also tie up with PR agencies for better marketing of oneself
6. Places: Cities, states, regions, and countries compete to attract tourists. Today, states and
countries are also marketing places to factories, companies, new residents, real estate agents,
banks and business associations. Place marketers are largely real estate agents and builders. They
are using mega events and exhibitions to market places. The tourism ministry is also
aggressively promoting tourist spots locally and globally.

7. Properties: Properties can be categorized as real properties or financial properties. Real

property is the ownership of real estates, whereas financial property relates to stocks and bonds.
Properties are bought and sold through marketing. Marketing enhances the need of ownership
and creates possession utility.

8. Organizations: Organizations actively work to build image in the minds of their target public.
The PR department plays an active role in marketing an organization’s image. Marketers of the
services need to build the corporate image, as exchange of services does not result in the owner-
ship of anything. The organization’s goodwill promotes trust and reliability.

9. Information: Information can be produced and marketed as a product. Educational

institutions, encyclopedias, non-fiction books, specialized magazines and newspapers market
information. The production, packaging, and distribution of information is a major industry.
Media revolution and increased literacy levels have widened the scope of information marketing.

10. Idea: Every market offering includes a basic idea. Products and services are used as
platforms for delivering some idea or benefit. Social marketers widely promote ideas. Maruti
Udyog Limited promoted safe driving habits, need to wear seat belts, need to prohibit children
from sitting near the driver’s seat, and so on.

4. . Holistic marketing

Ans: Holistic marketing is a business marketing philosophy which considers business and all its
parts as one single entity and gives a shared purpose to every activity and person related to that
business.
A business is just like a human body: it has different parts, but it’s only able to function properly
when all those parts work together towards the same objective. Holistic marketing concept
enforces this interrelatedness and believes that a broad and integrated perspective is essential to
attain best results.

➢ This philosophy has the following features:

A Common Goal :Holistic marketing concept believes that the business and all its parts should
focus towards one single goal which is a great customer experience.

Aligned Activities: All of the services, processes, communication and other business activities
should be directed towards that common goal.
Integrated Activities :All activities should be designed and integrated in such a way so as to
create a unified, consistent and seamless customer experience.

➢ Components of Holistic Marketing

Relationship Marketing: The relationship marketing aspect of holistic marketing philosophy

focuses on a long-term customer relationship and engagement rather than short-term goals like
customer acquisition and individual sales. This strategy focuses on targeting marketing activities
on existing customers to create a strong, emotional, and everlasting customer connections. These
connections further help the business in getting repeated sales, free word of mouth marketing and
more leads.

Integrated Marketing: Integrated marketing is an approach to create a unified and seamless

experience for consumer to interact with the brand by designing and directing all communication
(advertising, sales promotion, direct marketing, public relations, and digital marketing) in such a
way so that all work together as a unified force and centers around a strong and focused brand
image.

Internal Marketing: There are two types of customers to every business: internal and external.
While focusing on external customers should be a top priority for every business, internal
customers should not be left unnoticed as these internal customers (employees) play a vital role
in marketing the brand and products to the external customers of the business.

Internal Marketing treats employees and staffs as internal customers who must be convinced of a
company’s vision and worth just as aggressively as external customers. It also involves crafting
processes which make them understand their role in the marketing process.

Socially responsible marketing: The socially responsible marketing aspect of the holistic
marketing concept involves a broader concern of the society at large. It requires the business to
follow certain business ethics and focuses on partnerships with philanthropic and community
organisations. A business is considered as a part of the society and is required to repay the same.

Socially responsible marketing encourage a positive impact on company’s stakeholders.

5 .MARKETING MIX :

In the words of Philip Kotler, “Marketing Mix is the set of controllable variables and their levels
that the firm uses to influence the target market.” Marketing mix is a combination of various
elements, namely, Product, Price, Place (replaced by Physical Distribution) and Promotion.

The various important elements of marketing mix are briefly discussed as follows;
1.PRODUCT: It is the thing possessing utility. It is the bundle of value the marketer offers to
potential customers. Today manufacturers are realizing that customer expects more than just the
basic product. Therefore the product must satisfy the consumers needs. The manufacturer first
understands the consumer needs and then decides the type, shape, design ,brand, package etc. of
the goods to be produced. The product is a marketer’s primary vehicle for delivering customer
satisfaction.

2.PRICE: it is the amount of money asked in exchange for product. It must be reasonable so as
to enable the consumer to pay for the product. While fixing the price of a product, the
management considers certain factors such as cost, ability of the consumers, competition,
discount, allowances, margin of profit etc.

3. PLACE (PHYSICAL DISTRIBUTION): It is the delivery of products at the right time and
at the right place. It is the combination of decision regarding channel of distribution
(wholesalers, retailers etc. ), transportation, warehousing and inventory control.

4. PROMOTION: It consist of all activities aimed at inducing and motivating customers to buy
the product. The selection of alternatives determine the success of marketing efforts. Some firms
use advertising, some others personal selling or sales promotion. Thus promotion includes
advertising public relations, personal selling and sales promotion.

Recently Packaging and People are two more elements of marketing mix that have been
emerged. These are discussed as follows

5. PACKAGING: Packaging is the art, science and technology of preparing goods for transport,
sale and exchange. A well designed pack is invaluable in building brand loyalty with the
customer. Packaging must be such that a customer is impressed at the very moment he or she
sees the product

6. PEOPLE :It consists mainly of the people to whom goods are sold(consumer) and the people
through whom goods are sold(sales people, wholesalers, retailers etc.) people include
competitors also. This factor will be the reason as well as resources for success in marketing.

6: Key customer markets:

1.Consumer Market: In this market the consumers obtain what they need or want for their
personal or family consumption. This market can be subdivided into two parts—fast moving
consumer goods market from where the consumers buy the products like toothpaste, biscuits,
facial cream etc. and services like internet, transportation etc. Another is durables market from
where, the consumers buy the products of longer life like motorcycles, cars, washing machines
etc. and services like insurance cover, fixed deposits in the banks and non-banking financial
companies etc.
2.Industrial/Business Market: In this market, the industrial or business buyers purchase
products like raw materials (iron ore, coke, crude oil etc.), components, finished, office supplies
(computers, pens, paper etc.) and maintenance and repair items. Apart from products, now-a-
days due to outsourcing the industrial buyers also require a number of services like accounting
services, security services, advertising, legal services etc. from the providers of these services.

3.Government Market: In most of the countries central/federal, state or local governing bodies
are the largest buyers requiring and number of products and services. Government is also the
biggest provider of services to the people, especially in a developing country like India where
army, railways, post and telegraph etc. services are provided by the Central Government and
State Govt. and local municipality provides services like roadways and police and sewage and
disposal and water supply respectively

4.Global Market: The world is rapidly moving towards borderless society thanks to information
revolution and the efforts of WTO to lower the tariff and nontariff barriers. The product
manufacturers and service providers are moving in different countries to sustain and increase
their sales and profits. Although the global companies from the developed countries are more in
number ( McDonald’s, Ford Motors, IBM etc.); the companies from developing countries are
also making their presence felt in foreign countries. The ultimate winners are the consumers who
are getting world class quality products and services at an affordable prices

5.Non-profit Market: On one hand the society is making progress in every field, on the other
hand the number of problems that it is facing are also increasing. Most of the people don’t care
for these problems due to variety of reasons such as—lack of awareness, lack of time etc. So in
order to fill the void, the non-profit organisations came into being. These organisations support a
particular issue and create awareness among the general public towards these issues and try to
obtain financial and non-financial support. For example there are NGOs who are working
towards the conservation of flora and fauna, Narmada Bachao Andolan,etc.

7: Concept of Market Space

Market space is a relatively new concept in marketing which is a virtual market place. It is an
electronic information exchange environment in which the constraints of physical boundaries are
eliminated. A market space is an integration of several market places through technology. This is
the reason it is also called an electronic market space.
Characteristics of market space:
• Transactions happen through internet or online media
• Content: There is information about the products available, not products themselves
• Context: Instead of a face-to-face transaction, it is through electronic medium
• Infrastructure: Actual stores and showrooms are replaced by computers and internet
Advantages of market space:
• Lesser cost because transportation costs and stocking costs are reduced
• Convenience to the consumers. They need not travel around to research or purchase
• It is present everywhere, so the problem of unavailability or inaccessibility doesn’t arise
• No rent for stores like market place

8:Concept of Meta market;

The combination of an intangible market such as the internet, promoting closely related tangible
or intangible products is known as a Meta market

Eg: An online website such as the Maruti suzuki website for second hand cars which promotes
the purchase of physical goods (Maruti suzuki cars) is known as a meta market.

9: Marketing environment:

Components of Marketing Environment

The marketing environment is made up of the internal and external environment of the business.
While internal environment can be controlled, the business has very less or no control over the
external environment.

1.Internal Environment: The internal environment of the business includes all the forces and
factors inside the organisation which affect its marketing operations. These components can be
grouped under the Five Ms of the business, which are:

▪ Men
▪ Money
▪ Machinery
▪ Materials
▪ Markets
The internal environment is under the control of the marketer and can be changed with the
changing external environment. Nevertheless, the internal marketing environment is as important
for the business as the external marketing environment. This environment includes the sales
department, marketing department, the manufacturing unit, the human resource department, etc.

2.External Environment: The external environment constitutes factors and forces which are
external to the business and on which the marketer has little or no control. The external
environment is of two types:

(i)Micro Environment: The micro component of the external environment is also known as the
task environment. It comprises of external forces and factors that are directly related to the
business. These include suppliers, market intermediaries, customers, partners, competitors and the
public

▪ Suppliers include all the parties which provide resources needed by the organisation.
▪ Market intermediaries include parties involved in distributing the product or service of the
organisation.
▪ Partners are all the separate entities like advertising agencies, market research
organisations, banking and insurance companies, transportation companies, brokers, etc.
which conduct business with the organisation.
▪ Customers comprise of the target group of the organisation.
▪ Competitors are the players in the same market who targets similar customers as that of the
organisation.
▪ Public is made up of any other group that has an actual or potential interest or affects the
company’s ability to serve its customers.

(ii)Macro Environment: The macro component of the marketing environment is also known as
the broad environment. It constitutes the external factors and forces which affect the industry as
a whole but don’t have a direct effect on the business. The macro environment can be divided
into 6 parts.

➢ Demographic Environment: The demographic environment is made up of the people who

constitute the market. It is characterised as the factual investigation and segregation of the
population according to their size, density, location, age, gender, race, and occupation.
➢ Economic Environment: The economic environment constitutes factors which influence
customers’ purchasing power and spending patterns. These factors include the GDP, GNP, interest
rates, inflation, income distribution, government funding and subsidies, and other major economic
variables.
➢ Physical Environment: The physical environment includes the natural environment in which
the business operates. This includes the climatic conditions, environmental change, accessibility
to water and raw materials, natural disasters, pollution etc.

➢ Technological Environment: The technological environment constitutes innovation, research

and development in technology, technological alternatives, innovation inducements also
technological barriers to smooth operation. Technology is one of the biggest sources of threats
and opportunities for the organisation and it is very dynamic.

➢ Political-Legal Environment: The political & Legal environment includes laws and
government’s policies prevailing in the country. It also includes other pressure groups and
agencies which influence or limit the working of industry and/or the business in the society.

➢ Social-Cultural Environment: The social-cultural aspect of the macro environment is made up

of the lifestyle, values, culture, prejudice and beliefs of the people. This differs in different
regions.

10: Essential Components to a Marketing Plan

1. Market research. Research is the backbone of the marketing plan. Your local library is a
great place to start, offering reports like Standard & Poors or IBISWorld. Some library cards
even allow access to online services from home. Identify consumer buying habits in the industry,
market size, market growth or decline, and any current trends.

2. Target market. A well-designed target market description identifies your most likely buyers.
In addition, you should discuss at least two or three levels of segmentation. A language tutoring
business might target both students and foreign-born employees who want to improve their
English.

3. Positioning. What is the perception of your brand in the marketplace? For example, if your
restaurant sells burgers, do customers see you as the place to go for gluten-free or healthy
options or the place to go if you’ve got an appetite for a double cheeseburger? The difference in
how the target market sees you is your positioning. Develop compelling branding and marketing
messages that clearly communicate how you want to be perceived.
4. Competitive analysis. You need to know who your competitors are and how your products
and services are different. What is the price point at which your competitors are selling, and what
segment of the market are they aiming to reach? Knowing the ins and outs of your competitors
will help you better position your business and stand out from the competition.

5. Market strategy. Your marketing strategy is your path to sales goals. Ask yourself “How will
I find and attract my most likely buyers?” This is the core of what the strategy should explain. It
should look at the entire marketplace and then break down specific tactics including such as
events, direct mail, email, social media, content strategy, street teams, couponing, webinars,
seminars, partnerships, and other activities that will help you gain access to customers.

6. Budget. Develop a month-by-month schedule of what you plan to spend on marketing. Also
include a “red light” decision point. For each activity, establish a metric that tells you to stop if
it’s not generating sufficient return on investment (ROI).

7. Metrics. Track your marketing success with Google Analytics for website conversions and a
simple Excel sheet to compare your budget against the actual ROI. Test programs over the
course of a 30- to 60-day period, and evaluate the results. Repeat any programs that are
delivering sales or sign-ups to your email list, and get rid of anything that’s not.

11. Evolution of marketing concepts:

5 Marketing Concepts

1.Production Concept :The idea of production concept – “Consumers will favor products that
are available and highly affordable”. This concept is one of the oldest Marketing management
orientations that guide sellers. Companies adopting this orientation run a major risk of focusing
too narrowly on their own operations and losing sight of the real objective.Most times; the
production concept can lead to marketing myopia. Management focuses on improving
production and distribution efficiency. Although; in some situations; the production concept is
still a useful philosophy.

2 :Product Concept:The product concept holds that the consumers will favor products that
offer the most in quality, performance and innovative features.Under this concept, marketing
strategies are focused on making continuous product improvements. Product quality and
improvement are important parts of marketing strategies, sometimes the only part. Targeting
only on the company’s products could also lead to marketing myopia.
For example;
Suppose a company makes the best quality Floppy disk. But a customer does really need a
floppy disk?She or he needs something that can be used to store the data. It can be achieved by a
USB Flash drive, SD memory cards, portable hard disks, and etc. So that company should not
look to make the best floppy disk. They should focus to meet the customer’s data storage needs.

3 ;Selling Concept: The selling concept holds the idea- “consumers will not buy enough of the
firm’s products unless it undertakes a large-scale selling and promotion effort”.
Here the management focuses on creating sales transactions rather than on building long-term,
profitable customer relationships. The aim is to sell what the company makes rather than making
what the market wants. Such aggressive selling program carries very high risks. Typically the
selling concept is practiced with unsought goods. Unsought goods are that buyers do not
normally think of buying, such as insurance or blood donations.
These industries must be good at tracking down prospects and selling them on a product’s
benefits.

4 :Marketing Concept: The marketing concept holds- “achieving organizational goals depends
on knowing the needs and wants of target markets and delivering the desired satisfactions better
than competitors do”. Here marketing management takes a “customer first” approach. The
marketing concept is a customer-centered “sense and responds” philosophy. The job is not to
find the right customers for your product but to find the right products for your customers. The
marketing concept and the selling concepts are two extreme concepts and totally different from
each other.

5:Societal Marketing concept : According to Philip kotler “the societal marketing concept
holds that the organizations task is to determine needs, wants and interests of target market and
to deliver the desired satisfaction more effectively and efficiently than competitors in a way that
enhances the well being of the customers and society.
The main elements of societal marketing are
1. Customer satisfaction: in societal marketing, the marketing practices are directed towards
satisfaction of customer needs and wants.
2. Social orientation: marketing is viewed as an instrument of serving society, marketing
ideas are extended to the social field to attain social goals such as literacy, population
control etc.
3. Social impact: the impact of marketing activities on society are evaluated and negative
impact is treated as social cost in business decision making.
 MODULE 2 : BUYER BEHAVIOUR

1.Customer Relationship Management.

Meaning: Customer relationship management (CRM) refers to the principles, practices, and
guidelines that an organization follows when interacting with its customers. From the
organization's point of view, this entire relationship encompasses direct interactions with
customers, such as sales and service-related processes, and forecasting and analysis of customer
trends and behaviors. Ultimately, CRM serves to enhance the customer's overall experience.

Definition: According to Philip Kotler and Gary Armstrong, ‘CRM is concerned with managing
detailed information about individual customers and all customer “touch points” to maximize
customer loyalty.

➢ Need and Importance of CRM:

1. Better service to customers::CRM provides more avenues for customers to communicate and
explain their needs to the organization through numerous contact points. Customers get increased
satisfaction and a feeling of being special and important because of the increased personalization of
services and customization of goods offered to them.
For example, ICICI Bank maintains a list of priority customers and provides them with addi-
tional facilities and special offers such as free tickets to concerts, movies, and so on. Some
banks, such as Syrian Catholic Bank provide personalized services to their important customers.

2. Customization of market offerings::Companies can customize a product or service

depending on the data available with the firm. The firm can facilitate customer-company
interaction through the company contact centre and web site. Such interactions help develop
customized products.

3. Reduction in the customer defection rate::CRM emphasizes on training and development of

the employees to become more customer oriented. Due to CRM training and development,
employees show care and concern towards the valuable customers; therefore, the customer
defection rate may be reduced to a great extent.

4. Increase and improvement in long-term relationships::Some firms treat their customers as

partners. Firms solicit the help of the customers to design new products or to improve their ser-
vices. If the customer gets involved with the firm, they are more likely to remain with the firm.

5. Increase in customer equity::CRM increases customer equity. Firms focus the marketing
efforts more on the most valuable customers (MVCs). The main aim of CRM is to produce high
customer equity. Customer equity is the sum of lifetime values of all customers. More focus on
MVCs will enable a firm to increase the customer equity.
6. Competitive advantage::The firms that adopt CRM get competitive advantage in the market.
They can face the competition with much ease. Competitive advantage helps in generating higher
returns on investment.

7. Building and maintaining corporate image::The image of the firm also gets enhanced. Loyal
customers become evangelists. The evangelists spread a good word about the company and its
products. This enables a firm to get additional customers to its fold.

8. Higher return on investment::Due to CRM, a company gains a position to generate higher

returns on investment. This is because of the repeat purchases on the part of the loyal customers.
The company also makes money through cross selling. The higher return on investment increases
the shareholders’ value.

➢ Techniques of Building CRM:

Firms use a number of techniques to build, maintain and enhance CRM. The techniques include
the software programmes, promotional techniques, pricing strategies, MVC programmes, and so
on. Some of the techniques have been discussed in detail.

1.Data Warehousing and Data Mining:CRM analysts develop data warehouses and use data-
mining techniques to develop and maintain long- lasting relationships with the valuable customers.
1. A data warehouse is a company-wide electronic database of detailed customer information.
The purpose of data warehouse is not just to gather information, but to place it into a central
location for easy access.

Once the data warehouse locates the data at a central place, the data analysts use data mining
techniques to examine the mounds of data to find out interesting facts of the customers.

2.One-to-one Marketing: some firms adopt one-to-one marketing strategy. Such firms treat their
customers as partners, especially in the case of B2B markets firms solicit the help of customers to
design new products or to improve their services. If the customer gets involved with the firm, then
they are more likely to remain with the firm.

3.Loyalty Programs: Firms may use variety of loyalty programmes to retain customers. For
example, airlines may offer special discount for frequent fliers. Firms may also provide gifts and
other benefits to the loyal customers. But it is to be noted that all loyal customers need not be
profitable, and all profitable customers need not be loyal.
Therefore, the firm must be selective. In order to enhance marketing efficiency, a firm has to find
out which of its customers are worth retaining and which are not, and which customers should be
given extra care and attention. In other words, the firm has to determine the value of its
customers, and focus on MVCs accordingly.
4.Priority Customer Programs:Some firms introduce priority customer programmes. The
priority customers are the MVCs. They are given priority in after-sales service, delivery and
resolving complaints. The priority customer programmes are followed by several organizations,
especially in the banking industry.
For example, Citibank maintains a list of priority customers and provides them with additional
facilities special offers such as free ticket to concerts, movies, and so on. Some banks, such as
Syrian Catholic Hank provide personalized services to the important customers.

2. Loyalty program and its types.

A customer loyalty program is a program run by a company that offers benefits to frequent
customers. Those benefits may be in the form of discounts, rebates, free products, or other
promotions. An effective customer loyalty program rewards customers who buy from a business
on a regular basis, encouraging the customer to return frequently.

Types of customer loyalty program :.

1.Point based program :This is considered as the most common loyalty program that business
owners opt to give to their loyal followers. This systems will encourage your customers to spend
on your brand or business since every amount they spend can be converted to a corresponding
point which they can redeem later for better rewards. Points can be converted to discounts and
gifts and can also be used for subsequent purchases. This program will suit businesses that have
frequent purchases.

2.Non- monitory loyalty program :Customer rewards can also be non-monetary in nature. This
type of loyalty program will entitle your customers to something that they particularly want.
With this option, you can offer them a reward that suits their lifestyle even if it is not related to
your business. You can reward them for their frequent purchases with a discounted rate at a hotel
or a spa service of their choice. This is all about understanding your customer’s business and
lifestyle.
3.Tier loyalty program: This system will encourage your customers to make not just repeat
purchases but also to buy items with higher prices. This is a reward where more valuable benefits
and rewards will be given to those who make higher value purchases. Basic rewards are still
given to those who make basic purchases though. You can use this loyalty rewards system if you
have a high-priced business.
4.Loyalty card program:With loyalty card programs, your incentive plan is based on both
customer demographics and transaction details. This is specifically used by retail businesses to
reward their avid followers. A card is given to the customer and will be swiped on the POS
terminal every time they make a purchase. Loyal customers are also rewarded with discounts,
coupons and any other incentive that is not offered to non-participating customers.
5.Reward partnership program: You may also reward your customers with benefits other than
what you and your brand can offer. Many insurance companies use this reward systems to entice
more customers to do business with them. It will be good to seek partnership with companies
that are interested with such loyalty reward systems. This will benefit you and your chosen
partner company as well.
6.Gift card loyalty program: Another popular customer loyalty program is the use of a gift
card. Gift cards carry your brand thus it will ensure that the customer will do business at your
store. It can be given as a gift by your customer to their friends too thus increasing the potential
number of clients for your business.
7.Hybrid loyalty program :A hybrid loyalty program is a combination of more than one type of
loyalty systems. You may merge 2 different systems such as the tier and the game program,
where customers reach new levels of loyalty every time they complete a new level in your game.
The participation in the game should of course entail a purchase.

3: Types of consumer buying behavior:

1) Complex buying behavior:- when the consumer is highly involved in the buying and there is
significant differences between brands then it is called complex buying behavior. So in this case
the consumer must collect proper information about the product features and the marketer must
provide detailed information regarding the product attributes. For eg. Consumer while buying
a motor cycle is highly involved in the purchase and has the knowledge about significant
differences between brands.

2) Variety seeking behavior:- in this case consumer involvement is low while buying the product
but there are significant differences between brands. Consumers generally buy different products
not due to dissatisfaction from the earlier product but due to seek variety. Like every time they buy
different washing detergent just for variety. So it is the duty of the marketer to encourage the
consumer to buy the product by offering them discounts, free samples and by advertising the
product a lot.

3) Dissonance buying behavior:- sometimes consumer is highly involved in the purchase but
there are few differences between brands. Highly involvement again means that the product is
expensive, but due to few differences between brands consumer will buy the product frequently.
Like consumer while buying a wall paints, buy them quickly as there are few differences between
brands.
4) Habitual buying behavior:- in this case there is low involvement of the consumer regarding
the product and there are few differences between brands. The consumer just goes to the market
and buys the product. For eg. Salt

4. Factors Influencing Consumer Behavior

1.Purchasing Power:Purchasing power of a consumer plays an important role in influencing

the consumer behavior. The consumers generally analyze their purchasing capacity before
making a decision to buy and products or services. The product may be excellent, but if it fails
to meet the buyers purchasing ability, it will have high impact on it its sales. Segmenting
consumers based on their buying capacity would help in determining eligible consumers to
achieve better results.

2.. Group Influence :Group influence is also seen to affect the decisions made by a consumer.
The primary influential group consisting of family members, classmates, immediate relatives
and the secondary influential group consisting of neighbors and acquaintances are seen have
greater influence on the purchasing decisions of a consumer. Say for instance, the mass liking
for fast food over home cooked food or the craze for the SUV’s against small utility vehicle are
glaring examples of the same

3.Personal Preferences :At the personal level, consumer behavior is influenced by various
shades of likes, dislikes, priorities, morals and values. In certain dynamic industries such as
fashion, food and personal care, the personal view and opinion of the consumer pertaining to
style and fun can become the dominant influencing factor. Though advertisement can help in
influencing these factors to some extent, the personal consumer likes and dislikes exert greater
influence on the end purchase made by a consumer.

4. Economic Conditions: Consumer spending decisions are known to be greatly influenced by

the economic situation prevailing in the market. This holds true especially for purchases made
of vehicles, houses and other household appliances. A positive economic environment is
known to make consumers more confident and willing to indulge in purchases irrespective of
their personal financial liabilities

5. Marketing Campaigns: Advertisement plays a greater role in influencing the purchasing

decisions made by consumers. They are even known to bring about a great shift in market
shares of competitive industries by influencing the purchasing decisions of consumers. The
Marketing campaigns done on regular basis can influence the consumer purchasing decision to
such an extent that they may opt for one brand over another or indulge in indulgent or frivolous
shopping. Marketing campaigns if undertaken at regular intervals even help to remind
consumers to shop for not so exciting products such as health products or insurance policies.
6:Othe factors; (i) Age. (ii)Culture (iii)Perception. (iv)Attitude (v)Trends. (vi)Personality
(vii)Experience.

5: Consumer Decision Making Process

1:Problem or Need Recognition: Consumer decision making process begins with an unsatisfied
need or problem. Everyday we face multiple problems which individuals resolve by consuming
products or services. Consumer problem can be routine or unplanned. For example – run out of
milk or cooking oil, car indicating low level of fuel, are some of the routine problems that
individuals face. Such problems are quickly recognised, defined, and resolved. Recognition of
unplanned problem may take much longer time as it may evolve slowly over time. For example -
need of a new refrigerator as existing one is not working properly.

2:Information Search :Information search is done to know about product or service, price, place
and so on. In the process of decision making, the consumer engages in both internal and external
information search. Internal information search involves the buyer identifying alternatives from
his memory. Internal information search is sufficient for low involvement products or services.
For high involvement product or service, buyers are more likely to do external information search.
The amount of efforts a buyer put in information search depends on various factors like market,
competition, difference in brands, product characteristics, product importance, and so on.

3:Alternatives Evaluation :At this step the buyer identifies and evaluates different alternatives to
choose from. It is not possible to examine all the available alternatives. So, buyer develops
evaluative criteria to narrow down the choices. Evaluative criteria are certain characteristics that
are important to buyer such as price of the product, size, colour, features, durability, etc. Some of
these characteristics are more important than others. To narrow down the choices the buyer
considers only the most important characteristics.

4:Purchase Decision :The earlier mentioned evaluation step helps the consumer in arriving at a
purchase intention. In the decision evaluation stage, the consumer forms preferences among the
brands in the choice set. The consumer may also form a purchase intention and lean towards buying
the most preferred brand. However factors can intervene between the purchase intention and the
purchase decision. A buyer who decides to execute a purchase intention will be making up to five
purchase decisions brand decision, vendor decision, quantity decision, timing decision and
payment method decision.

5:Post-purchase Use and Evaluation : Once the buyer makes a decision to purchase a product
or service there can be several types of additional behaviour associated with that decision such as
decisions on product uses and decision on services related to the product purchased. The level of
satisfaction experienced by the buyer after his purchase will depend on the relationship between
his expectations about the product and performance of the product. If the buyer is satisfied then he
will exhibit a higher probability of repeat purchase of the product or service. The satisfied buyer
will also tend to say good words about the product or service. Whereas a highly dissatisfied buyer
will not buy the product or service again and spread negative words about service and company.

6: Buyer roles.

1.Initiators: Usually the need for a product/item and in turn a supplier arises from the users. But
there can be occasions when the top management, maintenance or the engineering department or
any such recognise or feel the need. These people who “initiate” or start the buying process are
called initiators

2.Influencers: Technical personnel, experts and consultants and qualified engineers play the role
of influencers by drawing specifications of products. They are, simply put, people in the
organisation who influence the buying decision. It can also be the top management when the cost
involved is high and benefits long term. Influencers provide information for strategically
evaluating alternatives.

3. Deciders: Among the members, the marketing person must be aware of the deciders in the
organisation and try to reach them and maintain contacts with them. The organisational formal
structure might be deceptive and the decision might not even be taken in the purchasing
department. Generally, for routine purchases, the purchase executive may be the decider.
4.Approvers: People who authorize the proposed actions of deciders or buyers are approvers.
They could also be personnel from top management or finance department or the users.

5. Buyers: They are people who have formal authority to select the supplier and arrange the
purchase terms. They play a very important role in selecting vendors and negotiating and
sometimes help to shape the product specifications

6. Users: Under this category come users of various products. If they are technically sound like
the R&D, engineering who can also communicate well. They play a vital role in the buying
process. They also act as initiators.

7.Gate Keepers: A gatekeeper is like a filter of information. He is the one the marketer has to
pass through before he reaches the decision makers. They allow only that information
favourable to their opinion to flow to the decision makers. By being closest to the action,
purchasing managers or those persons involved in a buying centre may act as gatekeepers.

7: Organizational Purchasing Decision process.

ANS: 8 Important Phases of Organisational Purchasing Decision Process are as follows

Phase 1: Recognition of a Problem: The purchasing/buying process begins when someone in

the company recognizes a problem or need that can be met by acquiring goods or services.

The common events that lead to this phase could be:

i. The company decides to develop a new product and needs new equipment and materials to
produce this product.

ii. It decides to diversify or expand and hence requires a multitude of new suppliers.

iii. Purchasing Manager assesses an opportunity to obtain lower prices or better quality.

iv. A machine breaks down and requires replacement or new parts.

v. Purchased materials turn out to be unsatisfactory and the company searches for another
supplier.

Phase 2: Description of the need: This phase involves determination of the characteristics and
quantity of the needed item. The general characteristics could be reliability, durability, price etc.
and the marketer along with the purchasing manager, engineers and users can describe the needs.
The questions that could be posed are:
i.What performance specifications need to be met?

ii. What types of goods and services should be considered?

iii. What are the application requirements? and

iv. What quantities would be needed?

The answers to such questions will give the marketer a general description of the need which will
be the input for the next phase.

Phase 3: Product Specification: Obtaining the input from the second phase, the buying
organization has to develop the technical specifications of the needed items. In this phase, the
product is broken down into items. The items in turn are sorted into standard ones and new ones
which need to be designed.

The specifications for both are listed. As a marketer, he must involve himself and his technical
and financial counterpart to determine the feasibility and also to elaborate the services they can
offer to develop and supply the product

Phase 4: Supplier Search: This phase pertains to the search for the qualified suppliers among
the potential sources. The marketer has to ensure that he is in the list of potential suppliers. For
this to happen, he has to make periodic visits to all potential companies and create awareness.
Brochures have to be circulated and advertisements placed in specific media like trade journals.
This phase only involves making a list of qualified suppliers.

Phase 5: Proposal Solicitation: The lists of qualified suppliers are now further shortened based
on some critical factors. For example, if the buyer is not willing to try any new firm which has
not been in the market for more than three years, it can delist those suppliers. Then the
purchasing departments ask for proposals to be sent by each supplier.

After evaluations, based on the specified criteria, some firms are asked to come over for formal
presentations. A supplier that satisfies these criteria then applies sample lot for approval. Once
approved, the supplier becomes a ‘select supplier’
Phase 6: Supplier Selection: Each of the supplier’s presentations are rated according to certain
evaluation models. The buying organisation may also attempt to negotiate with its preferred
suppliers for better prices and terms before making a final decision.

Phase 7: Order Routine Specification: After the suppliers have been selected, the buyer
negotiates the final order, listing the technical specifications, the quantity needed, the expected
time of delivery, return policies, warranties etc. In case of maintenance, repair and operating
items, buyers are increasingly moving towards blanket contracts rather than periodic purchase
orders.

Phase 8: Performance Review: The final phase in the purchasing process consists of a formal
or informal review and feedback regarding product performance as well as vendor performance.
The buyer may contact the end user and ask for their evaluations which are in turn given to the
supplier or he may rate the supplier on several criteria using a weighted score method or the
buyer might also aggregate the cost of poor supplier performance to come up with adjusted cost
of purchase including price.

8: Segmentation, Targeting and Positioning

1.Segmentration: Segmentation can be defines as the process of splitting the market into small
groups with similar product needs or identifiable characteristics, for the purpoe of selecting
appropriate target market.

• It divides the market into well defined slices

• The marketer’s task is to identify the appropriate number and nature of market segments
and decide which one to target.

Bases of Market Segmentation:

Geographical segmentation: The marketer divides the market into different geographical units.
Generally international companies segment markets geographically. The theory behind this
strategy is that people who live in same area have some similar need and wants and that need and
wants differ from those of people living in other areas. It includes dividing the market based on :

• Area: This type of segmentation divides the market into different geographical units such
as country, state, region, district, area etc. Some manufacturers split up their sales
territories either state-wise or district-wise. Markets may also be divided into urban and
rural markets.
• Climate: Different types of climate prevail in different places. On the basis of climate,
areas can be classified as hot, cold, humid and rainy region. Climate determines the
demand for certain goods.
 • Population Density: The size and density of population affects the demand for consumer
goods. In those areas where size and density of population is high, there will be good
demand for consumer goods.

Demographic segmentation: -Demographic segmentation consists of dividing the market

into groups on the basis of demographic variables such as age, sex, family size, family life
cycle, income, occupation, education, religion, race and nationality. Demographic variables
are the most popular bases for distinguishing customer groups . Demographic variables or
characteristics are the most popular bases for segmenting the market.

Behavioral segmentation: - In behavioral segmentations buyers are divided into groups on

the basis of their knowledge, attitude, use and response to a product. Many marketers believe
that behavioral segmentation are best starting point for constructing market segments. It
includes :

• Attitude: Customers can be segmented on the basis of attitude such as enthusiastic,

positive, indifferent, negative, hostile etc
• Product Segmentation: The market segmentation is done on the basis of product
characteristics that are capable of satisfying certain special needs of customers.
• Occasion Segmentation: According to the occasions, buyers develop a need, purchase
a product or use a service . There can be two types of situations- regular and special.
• Volume Segmentation: The market is segmented on the basis of volume or quantity
of purchase. The buyers are grouped into categories like bulk buyers, moderate
buyers, and small buyers. Heavy buyers are often small percentage of the market but
account for a high percentage of total consumption. Marketers prefer to attract one
heavy buyer rather than several small buyers .

Psychographics segmentation: -In psychographics segmentation, buyers are divided into

different groups on the basis of their social class, life style and personality characteristics. People
within the same demographic groups can exhibit very different Psychological profiles.

• Life Style: A person’s life style is the pattern of living as expressed in the person’s
activities, interests and opinions .They express their life styles through the products they
use. For example, the life style of a college student is different from that of an ordinary
worker. Car, clothing, cosmetics, furniture, liquor, cigarettes etc. are segmented by using
life style
• Personality: Personality reflects a person’s traits, attitude and habits. It is in this
background that a person is classified as active or passive, rational or impulsive, creative
or conventional, introvert or extrovert
• Social Class: On the basis of Social class, consumers may be grouped into lower class,
middle class and upper class. Social class is determined by income, occupation and
education
 Effective Segmentation criteria:

• Measurability • Nature of Demand

• Substantiality • Auctionable
• Accessibility
• Differentiability • General consideration•

2: Targeting: Target marketing is the process of assessing the relative worth of different market
segments and selecting one or more segments in which to compete. These become the target
segments. Titan is using the target marketing strategy very effectively. German car manufacturer
Mercedes target high status consumers with experience and prestigious motor cars.

According to David Cravens and others “Target market is a group of existing or potential
customers within a particular product market towards which an organization directs its marketing
efforts”.

Target marketing strategies:

• Total market approach: A company develops a single marketing mix and directs it at the
entire market for a particular product. This approach is used when an organisation defines
the total market for a particular product as its target market.
• Concentration approach: An organisation directs its marketing efforts toward a single
market segment through a single marketing mix. The total market may consist of several
segments, but the organisation selects only one of the segments as its target market.
• Multi-segment approach: An organisation directs its marketing efforts at two or more
segments by developing a marketing mix for each segment.

Steps in target marketing:

• Market segmentation: Markets are segmented on the basis of certain characteristic such
as sex, education, income, age etc.
• Market targeting: It refers to evaluating each market segments attractiveness and
selecting one or more of the segments to enter. Thus target marketing and market
targeting are not one and the same. Market targeting is only a step in target marketing.
• Designing the marketing mix: After selecting the segment, the next step is to design a
suitable product and other marketing mix elements for each segment selected.
• Product Positioning: Market segmentation strategy and market positioning strategy are
like two sides of a coin. Target marketing begins with segmentation and ends with
positioning.

3: Positioning: In the words of Kotler, “Positioning is the act of designing the company’s offer
and image so that it occupies a distinct and valued place in the target consumers minds.” In short,
the process of creating an image for a product in the minds of targeted customers is known as
product positioning. Close-up tooth paste is looked upon by the consumers more as a mouth
wash than a teeth cleaner, while ‘pepsodent’ has created an impression of germ killer in the
consumers minds.

Steps in product positioning:

• Identifying potential competitive advantages: Consumers generally choose products and

services which give them greatest value.The key to winning and keeping customers is to
understand their needs and buying processes far better than the competitors do and
deliver more values.
• Identifying the competitors position: When the firm understands how its customers view
its brand relative to competitors, it must study how those same competitors position
themselves.
• Choosing the right competitive advantages: It refers to an advantage over competitors
gained by offering consumers greater value either through lower price or by providing
more benefits
• Communicating the competitive advantage: The company should take specific steps to
advertise the competitive advantage it has chosen so that it can impress upon the minds of
consumers about the superiority claimed in respect of the product over its competing
brands
• Monitoring the positioning strategy: Markets are not stagnant. They keep on changing.
Consumer tastes shift and competitors react to those shifts. After a desired position is
developed, the marketer should continue to monitor its position through brand tracking
and monitoring.

9: Competitive Strategy
Ans: competitive Strategy is defined as the long term plan of a particular company in order to
gain competitive advantage over its competitors in the industry. It is aimed at creating defensive
position in an industry and generating a superior ROI (Return on Investment). Such type of
strategies play a very important role when industry is very competitive and consumers are
provided with almost similar products.

Types of competitive strategies

1. Cost Leadership :Here, the objective of the firm is to become the lowest cost producer in the
industry and is achieved by producing in large scale which enables the firm to attain economies
of scale. High capacity utilization, good bargaining power, high technology implementation are
some of factors necessary to achieve cost leadership. e.g Micromax smart phones are giving
good quality products at an affordable price which contain all the features which a premium
phone like Apple or Samsung offers
2. Differentiation leadership:Under this strategy, firm maintains unique features of its products
in the market thus creating a differentiating factor. With this differentiation leadership, firms
target to achieve market leadership. And firms charge a premium price for the products (due to
high value added features). Superior brand and quality, major distribution channels, consistent
promotional support etc. are the attributes of such products.E.g BMW offers cars which are
different from other car brands. BMW cars are more technologically advanced, have better
features and have got personalized services
3. Cost focus: Under this strategy, firm concentrates on specific market segments and keeps its
products low priced in those segments. Such strategy helps firm to satisfy sufficient consumers
and gain popularity. E.g. Sonata watches are focused towards giving wrist watches at a low cost
as compared to competitors like Rolex, Titan, Omega etc
4. Differentiation focus: Under this strategy, firm aims to differentiate itself from one or two
competitors, again in specific segments only. This type of differentiation is made to meet
demands of border customers who refrain from purchasing competitors’ products only due to
missing of small features. It is a clear niche marketing strategy. E.g Titan watches concentrates
on premium segment which includes jewels in its watches.

Competitive position:

Market Leader: The market leader is exactly what the name says — the leader of the market
where the brand exists. It’s important to point out that the market leader isn’t necessarily the
first-to-market. Those are pioneer brands, and they can be surpassed by other brands that enter
the market later and steal the market leader position.

Market Challenger: A market challenger wants to aggressively steal market share from the
market leader, and invests time and money into finding differentiators and creating marketing
programs that enable the brand to exploit opportunities whenever they arise. And if opportunities
don’t arise, the market challenger will seek ways to create innovative opportunities. The classic
example is the ongoing Coke vs. Pepsi rivalry.

Market Follower: A market follower seeks to gain market share but is less interested in
differentiating its brand from the market leader. Instead, the market follower effectively rides on
the market leader’s coattails while positioning its brand just far enough away from the market
leader to be different. A great example is any young adult novel that’s marketed as “the next
Harry Potter.”

Market Nicher: A market nicher seeks to dominate a small part of the overall market where it
does business. Market nichers are typically smaller players and smaller companies that can’t
effectively compete against the market leader but can succeed in a specific area and with a
specific audience by focusing on a specific differentiator aligned with the niche.
 MODULE 3: PRODUCT AND PRICING DECISION
Definition: A product can be defined as a collection of physical, service and symbolic attributes
which yield satisfaction or benefits to a user or buyer. According to Jobber(2004), “ A product is
anything that has the ability to satisfy a consumer need.

1.Classification of Products:

1: Consumer Products :Those products that are purchased by final consumers for personal
consumption are called consumer products. The way of purchasing these products provides the
basis for the marketer to further classify these products. The following is an important
classification of these consumer products :

(i)Convenience Products :Those consumer products that are purchased immediately &
frequently with little efforts and comparison are called convenience products. Eg:newspaper,
soap, fast-food ,candy etc. The convenience products are placed at the front locations of the
stores in abundance quantity so that they are easily available to the customers. The price of these
products is kept lower.

(ii) Shopping Products: This type of product is purchased less frequently & careful comparison
is made by the customer on the price, quality, sustainability & style. In case of purchase
of shopping products, increased time & effort is made by the customers in collection of
information & comparison making.Eg: Clothing, Furniture, Major Appliances, Used Cars etc.
These products are distributed in fewer outlets by the marketer along with the strong sales
support services that assist customers in their comparison making.

(iii) Specialty Products: Specialty products are those consumer products that have brand
identification or unique characteristics and an important group of customers are happy to
purchase these products. Following are some of examples of specialty products.eg: Specific
brand & kinds of cars, Photographic equipment with high price, Designer clothes, The services
of legal or medical specialist. The customers of such products can make enough effort with them
for reaching relevant dealers. However, they do not compare the specialty products normally.

(iv) Unsought Products: Those consumer products that are either not known to the customers or
they are known, but customers do not usually consider them to purchase. The important
innovations are usually included in the category of unsought products because the customers get
the awareness through advertisement. Eg: Life Insurance, Blood donation to Red Cross. A lot of
personal selling, advertising & marketing efforts are required for unsought products.

2:Industrial Products:. The products which are used as inputs to produce consumer products
are known as industrial products. For example raw material, machinery, tools, lubricants etc.
These products are used for non personal & business purposes. Manufacturers, transport
agencies, banks & insurance companies, mining companies etc. are the main parties involved, in
marketing of industrial products.

(i)Material & Parts: These refer to the goods that completely enter into the manufacture of a
product.

These are of two types:

(a) Raw Material: These are of two types (i) agricultural products like sugar cane, wood, rubber
etc. and (ii) natural products like iron ore, crude petroleum etc.

(b) Manufactured Materials and Parts: These are of two types (i) component material like
glass, iron, plastic etc. and (ii) component parts like steering, battery, bulb etc.

(ii)Capital Items:. These are the goods that are used in producing finished goods. They include
tools, machines, computer etc. Capital items are classified into (a) installations like elevators,
mainframe computers etc. and (b) equipments like hand tools, fax machine etc.

(iii)Supplies & Services: These include goods like paints, lubricants, computer stationary etc.
which are required for developing or managing the finished products. These are classified into
(a) maintenance and repair items like paints, nails, solutions etc. and (b) operating supplies like
oils, lubricants, ink etc.

2: Levels of a product:

1. Core Product: This is the basic product and the focus is on the purpose for which the product
is intended. For example, a warm coat will protect you from the cold and the rain. The more
important benefits the product provides, the more that customers need the product. A key
element is the uniqueness of the core product. This will benefit the product positioning within a
market and effect the possible competition.

2. Generic Product: This represents all the qualities of the product. For a warm coat this is
about fit, material, rain repellent ability, high-quality fasteners, etc.

3. Expected Product: This is about all aspects the consumer expects to get when they purchase
a product. That coat should be really warm and protect from the weather and the wind and be
comfortable when riding a bicycle.
4. Augmented Product: The Augmented Product refers to all additional factors which sets the
product apart from that of the competition. And this particularly involves brand identity and
image. Is that warm coat in style, its colour trendy and made by a well-known fashion brand?
But also factors like service, warranty and good value for money play a major role in this. The
goal is to deliver something that is beyond an expected product. It’s the translation of the desire
that is converted into reality.

5. Potential Product: This is about augmentations and transformations that the product may
undergo in the future. For example, a warm coat that is made of a fabric that is as thin as paper
and therefore light as a feather that allows rain to automatically slide down.

3:Product Line
Definition: Product Line can be understood as an array of related products, under a specific
brand, offered by a particular company to its customers. For instance: Amul offers a series of
closely related products such as milk, butter, ghee, , yoghurt, ice cream, flavored milk,
chocolates etc.

There are many companies which are engaged in multiple product lines, i.e. depending on the
type and nature of the target audience, the product line is added by the company. For
example, A biscuit manufacturing company may have a special product line for price-sensitive
people and another line geared towards quality sensitive people, along with its regular line of
products.

Some examples of companies with multiple product lines are Proctor & Gamble (P&G),
Indian Tobacco Company (ITC), Hindustan Unilever Limited (HUL), etc.

4:Product mix:

Ans: Product mix, also known as product assortment, is the total number of product lines that a
company offers to its customers. The product lines may range from one to many and the
company may have many products under the same product line as well. All of these product lines
when grouped together form the product mix of the company.

➢ The product mix has the following dimensions:

Width :The width of the mix refers to the number of product lines the company has to offer. For
e.g., If a company produce only soft drinks and juices, this means its mix is two products wide.
Coca-Cola deals in juices, soft drinks, and mineral water and hence the product mix of Coca-
Cola is three products wide.
Length: Length of the product mix refers to the total number of products in the mix. That is if a
company has 5 product lines and 10 products each under those product lines, the length of the
mix will be 50 [5 x 10].

Depth: The depth of the product mix refers to the total number of products within a product line.
There can be variations in the products of the same product line. For e.g. Colgate has different
variants under the same product line like Colgate advanced, Colgate active salt, etc.

Consistency: Product mix consistency refers to how closely products are linked to each other.
Less the variation among products more is the consistency. For example, a company dealing in
just dairy products has more consistency than a company dealing in all types of electronics.

Product Mix Example : Product mix of Nike.

Footwear – Boots for strikers, Midfielders, Defenders, Sneakers

Apparels – Headwear, Tops/Polos, Jersey, Jackets, Shorts, Shocks
Equipment – Ball, Bags, Watches

Product Depth – 4 in Footwear, 6 in Apparels and 4 in Equipment

Product Length – 14

Product Width – 3

Product consistency – High consistency Nike focus on health-conscious people.

5: Product life cycle:

1.Introduction stage: This is the stage at which the product is introduced into the market. This
stage of the cycle could be the most expensive for a company launching a new product. The size
of the market for the product is small, which means sales are low, although they will be
increasing. On the other hand, the cost of things like research and development, consumer
testing, and the marketing needed to launch the product can be very high, especially if it’s a
competitive sector. During this stage,

• costs are very high

• slow sales volumes to start
• little or no competition
• demand has to be created
• customers have to be prompted to try the product
• makes little money at this stage

2.Growth Stage – The growth stage is typically characterized by a strong growth in sales and
profits, and because the company can start to benefit from economies of scale in production, the
profit margins, as well as the overall amount of profit, will increase. This makes it possible for
businesses to invest more money in the promotional activity to maximize the potential of this
growth stage.During this stage,

• costs reduced due to economies of scale

• sales volume increases significantly
• profitability begins to rise
• public awareness increases
• competition begins to increase with a few new players in establishing market
• increased competition leads to price decreases

3.Maturity Stage – During the maturity stage, the product is established and the aim for the
manufacturer is now to maintain the market share they have built up. This is probably the most
competitive time for most products and businesses need to invest wisely in any marketing they
undertake. They also need to consider any product modifications or improvements to the
production process which might give them a competitive advantage.During this stage,

• costs are decreased as a result of production volumes increasing and experience curve
effects
• sales volume peaks and market saturation is reached
• increase in competitors entering the market
 • prices tend to drop due to the proliferation of competing products
• brand differentiation and feature diversification is emphasized to maintain or increase
market share
• industrial profits go down

4.Decline Stage – Eventually, the market for a product will start to shrink, and this is what’s
known as the decline stage. This shrinkage could be due to the market becoming saturated (i.e.
all the customers who will buy the product have already purchased it), or because the consumers
are switching to a different type of product. While this decline may be inevitable, it may still be
possible for companies to make some profit by switching to less-expensive production methods
and cheaper markets. During this stage,

• costs become counter-optimal

• sales volume decline
• prices, profitability diminish
• profit becomes more a challenge of production/distribution efficiency than increased
sales

6:Branding, Packaging and Labeling.

1.BRANDING: According to Philip Kotler - “Brand is a name, term, sign, symbol, design, or a
combination of them, intended to identify the goods or services of one seller or group of sellers
and to differentiate them from those of competitors.

Meaning of Branding: Branding is a process of creating a unique name and image for a product
in the mind of consumer, mainly through advertising campaigns.

➢ Elements of Branding

Brand includes various elements like - brand names, trade names, brand marks, trade marks, and
trade characters. The combinations 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.

Brand Mark - It is a unique symbol, coloring, lettering, or other design element. It is visually
recognizable, not necessary to be pronounced. For example - Apple's apple, or Coca-cola's
cursive typeface.
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.

2: PACKAGING: Packaging refers to all those activities related to designing, evaluating and
producing containers for a product. It is considered as silent salesman. Well designed packaging
can build brand equity and drive sales.

➢ Effective packaging should include the following:

• Eye-catching appearance
 • Design, shape and color
• Functionality
• Innovation
• Efficient communication
• Multisensory
• Appropriateness
• Value
• Additional benefits

➢ Functions of packing:

1. Product Identification: Packaging serves as an identification of the product. A product is

packed in special sized, coloured and shaped container for keeping its difference from the
products of competitors.

2. Product Protection: The main function of packaging is to provide protection to the product
from dirt, insects, dampness and breakage. For example, the products like biscuit, jam, chips,
etc., need to be protected from environmental contact. That is why they are tightly packed.

3. Convenience: Packaging provides convenience in the carriage of the product from one place
to another, in stocking and in consuming. For example, the new pet bottles of COKE makes the
carriage and stocking easier. Similarly, the pack of FROOTI provides convenience in its
consumption.

4. Product Promotion: Packaging simplifies the work of sales promotion. Packing material in
the house reminds the consumers constantly about the product. In this way, the packaging
performs the role of a passive salesman. Consequently, it increases the sales.

3:LABELLING: Labelling is defined as a slip or tag attached with the product or with its
package which provides necessary information about the product and its producer.

➢ KINDS OF LABELS

There are four kinds of labels:

1) Brand Label: It gives the brand name or mark. For example, Britannia Biscuits, Vicks
Vaporub etc.

2) Grade Label: It gives grade or quality of the product by a number, letter or words. For
example, A grade, B grade or 1and 2 category based on quality.
3) Descriptive Label: It gives details of product, its functions, price, warnings etc

4) Information Label: It provides maximum information about the product. It contains fuller
instructions on the use and care of the product

7:Types of new products:

1) New-to-the-world products: These types of new products create an entirely new market. For
example, introduction of products like laptops and palmtops has created a new market of mobile
computing.

2) New product lines: New products may allow a company to enter an established market for
the first time. Philips has developed flat TV to target a new segment of already crowded CTV
market.

3) Additions to existing product lines:New products can supplement a company’s established

product lines. For instance, McDonald’s introduced pudina flavoured burgers for Indian
consumers.
4) Improvements and revisions of existing products:These are the new products that replace
existing products by providing improved performance or greater perceived value. For example,

Microsoft replaced its MS-DOS by Windows as an improved, user-friendly GUI (Graphical User
Interface) based operating system.

5) Repositioning: Existing products can be targeted to new markets or market segments. For
example, Sahara Airlines is revising its fares to target the railway AC 2/3 tier passengers.

6) Cost reductions: New products may be developed that provide similar performance at lower
cost. The mobile service providers like Airtel, Hutch and Reliance India Mobile are introducing
new post-paid schemes with low rental and outgoing facility
.
8:New product development process.

1.Idea Generation: Idea generation is the first step of New Product Development process. It is a
systematic search to find out new ideas. It comes from everywhere and in any form. In the first
stage, new ideas are collected from many sources, which are
▪ Internal Sources. Mostly, large companies have their own formal Research and
Development department. But normally any employee can come up with a good idea.
▪ Customers. A company should always listen to customers’ questions, complaints and
feedbacks that help to generate new product ideas to satisfy customer problems.
▪ Competitors. To generate ideas companies can conduct competitors swot analysis.
▪ Distributors and suppliers. Also known as collaborators are close to the market. They
know the consumer problems and new ideas and techniques to address these problems.

2. Idea Screening: Ideas can be many, but good ideas are few. This second step of new product
development involves finding those good and feasible ideas and discarding those which aren’t.
Many factors play a part here, these include –

▪ Company’s strength,
▪ Company’s weakness,
▪ Customer needs,
▪ Ongoing trends,
▪ Expected ROI,
▪ Affordability, etc.

3.Concept Development and Testing: Concept development and testing is the third step of new
product development. A product concept provides a detailed description of the idea, keep in
mind your consumer perspective.
Those ideas qualify the screening stage to become a concept and it must be tested. Companies
cannot launch a new product without properly testing the concept. Concept testing help
companies to investigate customers reactions before introducing to the market.

A more physical and visual presentation is required for a more reliable concept test. The concept
further engages target market. After exposing the concept, companies ask questions from
consumers. Companies want to know the customer's reactions in term of feedback.

4:Marketing Strategy and Business Analysis:In this step, the company develop marketing and
business strategy to introduce a new product in the market successfully. The company engages
different business units – to perform marketing and financial analysis – to meet the marketing
objectives.
The company initially explain target market and product positioning. It should also explain
forecasted sale, market share and profit both in short and long-run. The company also describes
the marketing mix strategy.

Business analysis involves a detailed review of company cost, sales, profit projections whether
the company is satisfied with objectives.
5:Product Development: When all the marketing and business strategies are finalized. In this
step, the product concept is transformed into a physical product. In the development stage, a
prototype is designed that is functional and able to satisfy the consumer wants. The product
undergoes serious tests to make sure its effectiveness and performance.

6:Test Marketing: After designing a successful prototype, it is introduced for further research
and feedback. With the help of test marketing, the company tries to understand the consumers
and dealers feedback and reaction. Important changes are made in the actual product if needed.
This step completes the process empowers the company to successfully introduce the new
product in the market.

7:Commercialization:Test marketing helps the company to make decisions and launch the new
product in the market. Commercialization is introducing the new product in the target
market. The marketing mix strategies are applied. Four decisions are important when launching
a new product.
▪ When to introduce the product.
▪ Where to launch a new product in single or multiple location, national or international
market.
▪ To whom the company must decide distribution and promotion (already decided in test
marketing phase).
▪ How (action plan) a company should introduce the new product in the target market.
________________________________________________________________________

9: Diffusion of Innovation Theory

Ans: In his theory on Diffusion of Innovations, Everett Rogers describes a product’s innovation
life cycle. In this cycle theory he distinguishes five stages in which the product may find itself
with five different user groups that accept the product or idea. These determine the success of a
product. Through his theory it becomes clear how a product or idea develops among the users.
Depending on the stage of the product, several adjustments take place, for example much or little
promotion or a high or low sales price. When promoting an innovation, there are different
strategies used to appeal to the different adopter categories

1. Innovators - These are people who want to be the first to try the innovation. They are
venturesome and interested in new ideas. These people are very willing to take risks, and are
often the first to develop new ideas. Very little, if anything, needs to be done to appeal to this
population.
2. Early Adopters - These are people who represent opinion leaders. They enjoy leadership
roles, and embrace change opportunities. They are already aware of the need to change and
so are very comfortable adopting new ideas. Strategies to appeal to this population include
 how-to manuals and information sheets on implementation. They do not need information to
convince them to change.
3. Early Majority - These people are rarely leaders, but they do adopt new ideas before the
average person. That said, they typically need to see evidence that the innovation works
before they are willing to adopt it. Strategies to appeal to this population include success
stories and evidence of the innovation's effectiveness.
4. Late Majority - These people are skeptical of change, and will only adopt an innovation after
it has been tried by the majority. Strategies to appeal to this population include information
on how many other people have tried the innovation and have adopted it successfully.
5. Laggards - These people are bound by tradition and very conservative. They are very
skeptical of change and are the hardest group to bring on board. Strategies to appeal to this
population include statistics, fear appeals, and pressure from people in the other adopter
groups

10: Pricing policies and strategies .

Definition: “Price is the amount of money or goods for which a thing is bought or sold”. For a
consumer, price is the monetary expression of the value to be enjoyed/benefits of purchasing a
product, as compared with other available items. The concept of value can therefore be expressed
as: {(perceived) VALUE = (perceived) BENEFITS – (perceived) COSTS}

Types of pricing policies:

1.Cost-based Pricing: cost-based pricing can be defined as a pricing method in which a certain
percentage of the total cost of production is added to the cost of the product to determine its
selling price. Cost-based pricing can be of the following types:

1. Cost Plus Pricing- cost plus a percentage of profit

2. Target Pricing- cost plus a pre determined target rate of return

3. Marginal Cost Pricing- fixed plus variable costs

4. Break-Even Pricing- at break-even point i.e, where total sales=total cost{no profit,no loss
point}

2.Demand-based Pricing: Demand-based pricing refers to a pricing method in which the price
of a product is finalized according to its demand. If the demand of a product is more, an
organization prefers to set high prices for products to gain profit; whereas, if the demand of a
product is less, the low prices are charged to attract the customers. The success of demand-based
pricing depends on the ability of marketers to analyze the demand. For instance, airlines during
the period of low demand charge less rates as compared to the period of high demand.It inclues
the following methods:
1. Premium Pricing-Use a high price where there is a uniqueness about the product or service.
This approach is used where a substantial competitive advantage exists. Such high prices are
charged for

2. Differential Pricing-Same product is sold at different prices to different consumers.

3.Competition-based Pricing: Competition-based pricing refers to a method in which an

organization considers the prices of competitors’ products to set the prices of its own products.
The organization may charge higher, lower, or equal prices as compared to the prices of its
competitors.
The aviation industry is the best example of competition-based pricing where airlines charge the
same or fewer prices for same routes as charged by their competitors.

There are three methods as follows:

1. Going Rate Pricing-Many businesses feel that lowering prices to be more competitive can be
disastrous for them and so instead, they settle for a price that is close to their competitors.

2. Customary Pricing- Prices for certain commodities get fixed because they have prevailed over
a long period of time.

3. Sealed Bid Pricing-Firms have to quote less price than that of competitors. Tenders , winning
contracts etc.

4:Price Skimming: Under this strategy a high introductory price is charged for an innovative
product and later on the price is reduced when more marketers enter the market with same type
of product for example, Sony, Philips etc. when they introduce a new technology then a high
price is charged for the product. When the same technology is used by other electronic
companies in their product also then the price is reduced. Generally innovators use price
skimming strategy to get reward for their research and development.

5:Penetrating Pricing: This strategy means using lower initial price to capture a large market.
These forces the customers to buy the product and company can capture a very big share and
leave very small share for competitors. Penetration pricing is attractive when following
conditions are satisfied:
(i) The price elasticity of demand is high and easy substitutes of that product are available.

ii) The firm can increase its production capacity with increase in demand.

(iii) When customers are highly price sensitive which means customers easily shift to another
brand if it is available at low price.
(iv) When company has to face high competition while launching the product.

Eg:The Reliance Company followed penetration pricing strategy when it introduced mobile
phone.

11: Factors affecting price determination.

➢ Internal Factors:

1 Cost: While fixing the prices of a product, the firm should consider the cost involved in
producing the product. This cost includes both the variable and fixed costs. Thus, while fixing
the prices, the firm must be able to recover both the variable and fixed costs.

2. The predetermined objectives: While fixing the prices of the product, the marketer should
consider the objectives of the firm. For instance, if the objective of a firm is to increase return on
investment, then it may charge a higher price, and if the objective is to capture a large market
share, then it may charge a lower price.

3. Image of the firm: The price of the product may also be determined on the basis of the image
of the firm in the market. For instance, HUL and Procter & Gamble can demand a higher price
for their brands, as they enjoy goodwill in the market.

4. Product life cycle: The stage at which the product is in its product life cycle also affects its
price. For instance, during the introductory stage the firm may charge lower price to attract the
customers, and during the growth stage, a firm may increase the price.

5. Credit period offered: The pricing of the product is also affected by the credit period offered
by the company. Longer the credit period, higher may be the price, and shorter the credit period,
lower may be the price of the product.

6. Promotional activity: The promotional activity undertaken by the firm also determines the
price. If the firm incurs heavy advertising and sales promotion costs, then the pricing of the
product shall be kept high in order to recover the cost.

➢ External Factors:

1. Competition: While fixing the price of the product, the firm needs to study the degree of
competition in the market. If there is high competition, the prices may be kept low to effectively
face the competition, and if competition is low, the prices may be kept high.
2. Consumers: The marketer should consider various consumer factors while fixing the prices.
The consumer factors that must be considered includes the price sensitivity of the buyer,
purchasing power, and so on.

3. Government control: Government rules and regulation must be considered while fixing the
prices. In certain products, government may announce administered prices, and therefore the
marketer has to consider such regulation while fixing the prices.

4. Economic conditions:The marketer may also have to consider the economic condition
prevailing in the market while fixing the prices. At the time of recession, the consumer may have
less money to spend, so the marketer may reduce the prices in order to influence the buying
decision of the consumers.

5.Channel intermediaries: The marketer must consider a number of channel intermediaries and
their expectations. The longer the chain of intermediaries, the higher would be the prices of the
goods.

12: Steps In Setting Price For A Product.

6 Essential Steps In Setting Price For A Product are:

1.Selecting the Pricing Objective: The company first decides where it wants to position its
market offering. The clearer a firm’s objectives, the easier it is to set price. Five major objectives
are:
▪ Survival
▪ Maximum current profit
▪ Maximum market share
▪ Maximum market skimming
▪ Product-quality leadership

2: Determining Demand :Each price will lead to a different level of demand and have a
different impact on a company’s marketing objectives. The normally inverse relationship
between price and demand is captured in a demand curve. The higher the price, the lower the
demand.

Most companies attempt to measure their demand curves using several different methods.

▪ Surveys
▪ Price experiments
▪ Statistical analysis

3: Estimating Costs :For determination the price of product company should estimate the cost of
product.

Variable and Fixed Cost : Price must cover variable & fixed costs and as production increases
costs may decrease. The firm gains experience, obtains raw materials at lower prices, etc., so
costs should be estimated at different production levels.

Differential Cost in Differential Market :Firms must also analyze activity-based cost accounting
(ABC) instead of standard cost accounting. ABC takes into account the costs of serving different
retailers as the needs of differ from retailer to retailer.

Target Costing :Also the firm may attempt Target Costing (TG). TG is when a firm estimates a
new product’s desired functions & determines the price that it could be sold at. From this price
the desired profit margin is calculated. Now the firm knows how much it can spend on
production whether it be engineering, design, or sales but the costs now have a target range. The
goal is to get the costs into the target range.

4: Analyzing Competitors’ Costs, Prices, and Offers :The firm should benchmark its price
against competitors, learn about the quality of competitors offering, & learn about competitor’s
costs.

Step 5: Selecting a Pricing Method :Various pricing methods are available to give various
alternatives for pricing.

▪ Markup Pricing: a 20% markup

▪ Target Return Pricing: this is based on ROI
▪ Perceived-Value Pricing: buyers perception of the product is key, not cost so what is the
product worth to consumer sets the price.
▪ Value Pricing: more for less philosophy
▪ Going Rate Pricing: charge what everyone else is
▪ Auction-Type Pricing: companies bid prices to get a job

6: Selecting the Final Price: Pricing methods narrow the range from which the company must
select its final price. In selecting that price, the company must consider additional factors.

(I)Impact of other marketing activities (II) Gain-and-risk-sharing pricing

(III)Impact of price on other parties (IV) Company pricing policies
 MODULE 4: DISTRIBUTION AND PROMOTION DECISIONS

1.Definition: In the words of Phillip Kotler, “Physical distribution involves planning,

implementing and controlling the physical flow of materials, and final goods from the point of
origin of use to meet customer needs at a profit.”

Meaning of Channel of distribution: According to Phillip Kotler,”It is a set of independent

organizations involved in the process of making a product or service available for use or
consumption.” Thus, a channel of distribution is a path way directing the flow of goods and
services from producers to consumers composed of intermediaries through their functions and
attainment of the mutual objectives.

➢ ROLE/IMPORTANCE OF PHYSICAL DISTRIBUTION SYSTEM

The physical distribution system has a definite role. It provides a new orientation for marketing.
The following points will reveal the role of physical distribution system.

1. Creation of Utilities: Creation of utility is addition of value to a thing. The major component
of physical distribution are transportation and warehousing. It is transport system that creates
place utility, making goods more useful by bringing them from the places where they are not
needed. Warehousing system is known for creating time utility.

2. Improved consumer services: Customer service in physical distribution system consists of

providing products at the time and location corresponding to the customer needs. High level of
customer satisfaction can be possible through a viable distribution system that takes into account
the factors that affect customer service such as time, dependability, communication etc.

3. Cut in distribution cost: The prices paid by the customer consists of not only production
costs but also delivery cost. Delivery cost can be minimized by systematic planning in inventory
levels, warehousing location and operation, transportation schedule and modes, material
handling, order processing and communication.

4. Increased market share: There are definite ways in which an efficient physical distribution
system can contribute towards the objective of increased market share. It is possible by
decentralizing its warehousing operations, devise the combination of efficient and economic
means of transport, planning inventory operations to avoid stock outs etc

. 5. Price stabilization: It can contribute considerably to the attainment of price stabilization. It

is the best use of available transport and warehousing facilities that can bring about amicable and
matching adjustment between the demand for and supply of goods thus preventing price
fluctuations.
2. Multichannel marketing:

Multichannel marketing refers to the practice of interacting with customers using a combination
of indirect and direct communication channels – websites, retail stores, mail order catalogs,
direct mail, email, mobile, etc. – and enabling customers to take action in response – preferably
to buy your product or service – using the channel of their choice. In the most simplistic terms,
multichannel marketing is all about choice.

Advantages of Multi Channel Marketing

• An increased market potential

• Marketing as per consumer preference –
• increased revenue
• Optimization of Marketing
• Competitive advantage
• Sustainability

Challenges to Multi Channel Marketing:

• It requires a huge budge

• Loss of Focus

• Increased Sales Costs

• Marketing response attribution.

2:Factors influencing choice of distribution channel:

1. Nature of Product: The selected channel must cope up perish ability of the product. If a
commodity is perishable, the producer prefer to employs few middlemen. For durable and
standardized goods, longer and diversified channel may be necessary. If the unit value is low ,
intensive distribution is suggested. If the product is highly technical, manufacture is forced to sell
directly, if it is not highl

2. Nature of market: If the market is a consumer market, then retailer is essential. If it is an

industrial market, we can avoid retailer. If consumers are widely scattered large number of
middlemen are required. When consumers purchase frequently, more buyer seller contacts are
needed and middlemen are suggested.

3. Competitors’ Channel: The distribution channel used by the competitors will influence the
channel selection. There is nothing wrong in copying the channel strategy of the competitor if it
is a right one
. 4. The financial ability of channel members: Before selecting the channel, the manufacture
has to think about the financial soundness of the channel members. In most of the case financial
assistance are required to the channel members in the form of liberal credit facilities and direct
financing.

5. The Company’s financial position: A company with a strong financial background can
develop its own channel structure. Then there is no need to depend other channel intermediaries
to market their product

6. Cost of Channel: The cost of each channel may be estimated on the basis of unit sale. The
best type of channel which gives a low unit cost of marketing may be selected.

7. Economic factors: The economic conditions prevailing in he country have bearing on channel
selection decision. During the period of boom, it is better to depend channels directly. During the
periods of deflation direct relation with the consumers are desirable.

8. The legal restrictions: Before giving the final shape to channels of distribution, we have to
consider the existing legal provisions of the various Acts. For eg. MRTP Act prevent channel
arrangements that tend to lessen competition, create monopoly and those are objectionable to the
very public interest.

9. Marketing policy of the company: The marketing policy of the company have a greater and
deeper bearing on the channel choice. The marketing policies relating to channels of distribution
are advertising, sales promotion, delivery, after sale service and pricing. A company has a heavy
budget on advertising and sales promotion, the channel selected is bound to be direct as it
requires a few layers of people to push the product.

3: Role/ Functions of Marketing Channel

Ans: Some of the important functions of a good marketing channel are as follows:

1) Information Provider: Middlemen have a role in providing information about the market to
the manufacturer. Developments like changes in customer demography, media habits and the
entry of a new competitor or a new brand and changes in customer preferences are some of the
information that all manufacturers want. Since these middlemen are present in the market place
and close to the customer they can provide this information at no additional cost.

2) Price Stability: Maintaining price stability in the market is another function a middleman
performs. Many a time the middlemen absorb an increase in the price of the products and
continue to charge the customer the same old price. This is because of the intra-middlemen
competition. The middleman also maintains price stability by keeping his overheads low.
3) Promotion: Promoting the product/s in his territory is another function that middlemen
perform. Many of them design their own sales incentive programmes, aimed at building
customers traffic at the other outlets.

4) Financing: Middlemen finance manufacturers’ operation by providing the necessary working

capital in the form of advance payments for goods and services. The payment is in advance even
though the manufacturer may extend credit, because it has to be made even before the products
are bought, consumed and paid for by the ultimate consumer.

5) Title: Most middlemen take the title to the goods, services and trade in their own name. This
helps in diffusing the risks between the manufacturer and middlemen. This also enables
middlemen to be in physical possession of the goods, which in turn enables them to meet
customer demand at very moment it arises.

6) Help in Production Function: The producer can concentrate on the production function
leaving the marketing problem to middlemen who specialize in the profession. Their services can
best utilized for selling the product. The finance, required for organising marketing can
profitably be used in production where the rate of return would be greater.

7) Matching Demand and Supply: The chief function of intermediaries is to assemble the
goods from many producers in such a manner that a customer can affect purchases with ease.
The goal of marketing is the matching of segments of supply and demand.

8) Pricing: In pricing a product, the producer should invite the suggestions from the middlemen
who are very close to the ultimate users and know what they can pay for the product. Pricing
may be different for different markets or products depending upon the channel of distribution.

9) Standardizing Transactions: Standardizing transactions is another function of marketing

channels. Taking the example of the milk delivery system, the distribution is standardized
throughout the marketing channel so that consumers do not need to negotiate with the sellers on
any aspect, whether it is price, quantity, method of payment or location of the product.
By standardizing transactions, marketing channels automate most of the stages in the flow of
products from the manufacturer to the customers.

10) Matching Buyers and Sellers: The most crucial activity of the marketing channel members
is to match the needs of buyers and sellers. Normally, most sellers do not know where they can
reach potential buyers and similarly, buyers do not know where they can reach potential sellers.
From this perspective, the role of the marketing channel to match the buyers’ and sellers’ needs
becomes very vital.
4: Marketing Channel flows:

Ans: 1.Product flow: It is the physical movement of goods from the manufacturer to the
transportation company which transports the goods to its wholesalers and retailers. They also
take physical possession of the goods before reaching its final customers.

2: Negotiation flow: Shows the mutual exchange in the right of ownership between the sellers
and buyers. In all its members the flow is bi-directional.

3: Ownership flow: shows the movement of title of the product as it passes from manufacturer
to its final consumers through its channel of wholesalers and retailers. Among the manufacturer
and wholesaler the flow is unidirectional and with wholesaler, retailer and consumer it’s bi-
directional.

4: Information flow: shows the bi-directional flow of information from the manufacturer to
consumer through the transportation companies as well as wholesalers and retailers.

5: Promotion flow: shows the persuasive communication which takes place with the help of an
advertising agency This is bi-directional informal flow between the manufacturer and the
advertising agency and an unidirectional flow between its wholesaler-retailer and again a
bidirectional flow between its retailers and consumers.

5: Distribution channel levels.

Definition: Channel Levels refers to the intermediary in marketing distribution channel between
the producer/manufacturer and the end consumer. Every channel level plays a role in making the
good available to the end consumer. The number of channel levels between the producer and
consumer could be 0,1,2,3 or more.

➢ Channel Levels:

(i) A Zero Level Channel: A zero level channel, commonly known as direct marketing channel
has no intermediary levels. In this channel framework manufacturer sells merchandise directly to
customers. An example of a zero level channel would be a factory outlet store. Many service
providers like holiday companies, also market direct to consumers, bypassing a traditional retail
intermediary – the travel agent.

Eureka Forbes, leaders in domestic and industrial water purification systems, vacuum cleaners,
air purifiers & security solutions is pioneered in direct selling that makes it an Asia’s largest
direct sales organization.
(ii) A One Level Channel: A one level channel contains one selling intermediary. In consumer
markets, this is usually a retailer. The consumer electrical goods market in the United Kingdom
is typical of this arrangement whereby producers such as Sony, Panasonic, Canon etc. sell their
goods directly to large retailers such as Comet, Dixons and Currys which then sell the goods to
the final consumers.

(iii) A Two Level Channel: A two level channel encompasses two intermediary levels – a
wholesaler and a retailer. A wholesaler typically buys and stores large quantities of merchandise
from various manufacturers and then breaks into the bulk deliveries to supply retailers with
smaller quantities. For small retailers with limited financial resources and order quantities, the
use of wholesalers makes economic sense

(iv).Three Level Channel: Under this one more level is added to Two Level Channel in the
form of agent. An agent facilitates to reduce the distance between the manufacturer and the
wholesaler. Some big companies who cannot directly contact the wholesaler, they take the help
of agents. Such companies appoint their agents in every region and sell the material to them.
Then the agents sell the material to the wholesalers, the wholesaler to the retailer and in the end
the retailer sells the material to the consumers.

6:Introduction to Retailing & Wholesaling

(i)Wholesalers: Wholesaler is a trader who deals in large quantity. He purchases goods from the
producers in bulk quantity and sell it to the retailers in small quantity. According to American
Management Association, “ wholesalers sells to retailers or other merchants and/or individual,
institutional and commercial users but they do not sell in significant amounts to ultimate
consumers.”

➢ Functions of wholesalers

1. Assembling and buying: It means bringing together stocks of different manufactures

producing same line of goods, and making purchases in case of seasonal goods.
2. Warehousing: The warehousing function of the wholesalers relieves both the producers and
the retailers from the problem of storage.

3. Transporting: In the process of assembling and warehousing, the wholesaler do undertake

transportation of goods form producers to their warehouse and back to retailers

4. Financing: They grant credit on liberal terms to retailers and taking early delivery of stock
from the manufacturers to reduce their financial burden.

5. Risk bearing: Wholesaler bear the risk of loss of change in price, deterioration of quality,
pilferage, theft. Fire etc.

6. Grading, Packing and packaging: By grading they sort out the stocks in terms of different size,
quality shape and so on.

7. Dispersing and selling: Dispersing the goods already stored with them to the retailers.

8. Market information: Finally providing the market information to the manufactures

➢ Services of wholesalers:

A. Services to Manufacturers:

1. The wholesaler helps the manufacture to get the benefit of economies of large scale production

. 2. Wholesalers helps the manufactures to save his time and trouble by collecting orders from
large number of retailers on behalf of the manufactures.

3. The wholesaler provides market information to the manufactures which will helps him to
make modifications in his product.

4. The wholesaler buys in large quantities and keeps the goods in his warehouses. This relieves
the manufacturer the risk of storage and obsolescence.

5. The wholesales helps to maintain a steady prices for the product by buying the product when
the prices are low and selling when the prices are high.

B. Services to Retailers:

1. He gives valuable advices to the retailers on his business related matters.

2. He helps the retailer to get the goods very easily and quickly.

3. He render financial assistance to the retailer by granting credit facilities.

4. The wholesalers bears the risk associated with storage and distribution of goods to a certain
extend.
5. The wholesaler helps the retailers to keep price steady.

Retailers: The term ‘retail’ implies sale for final consumption. A retailer is the last link between
final user and the wholesaler or the manufacturer. According to Professor William Standton,
”retailing includes all activities directly related to the sale of goods and services to the ultimate
consumers for personal or non business use

➢ Functions of retailers:

1. Buying and Assembling:- A retailer buys goods from the best and most dependable
wholesalers and assemble the goods in a single shop.

2. Warehousing: It helps the retailer to ensure adequate and uninterrupted supply of goods

3. Selling: A retailer sells the products in small quantities to the needy consumers.

4. Risk bearing: It is the basic responsibility of a retailer to bear the risk arising out of physical
deterioration and changes in prices.

5. Sales promotion: Retailer undertakes some sales promotion through displaying of goods in
the shop, distribution of sales literature, introduction of new product etc.

6. Financing: A retailer granting credit in liberal terms to the consumer and it helps the
consumers a lot to purchase the required goods.

7. Supply of market information: As being in close and constant touch with the consumers, a
retailer can supply the market related information to the wholesalers and manufactures at the
earliest.

8. Grading and Packing: Retailers undertake second round grading and packing activities left
by the manufacturers and wholesalers.

➢ Services rendered by Retailers:

A. Services to the manufactures and wholesalers:

(1). Providing information: Retailer do provide the wholesalers and manufactures the
information about the latest consumer movements and it helps the manufactures to produce
goods according to the needs of consumers.

2) Looks after the distribution process: A retailer, in general, looks after the entire distribution
process and it helps the manufactures to concentrate on production.
(3 )Creation of demand: By giving local ad and display of goods, retailers helps to create
demand for the goods.

(4)A big relief: A retailer gives a relief to the manufacturers and wholesalers from the problem
of selling goods in small quantities.

B. Services to the consumers:

(1)No need to store goods: A retailer holds goods on behalf of the customers at a convenient
place and in convenient lot. Hence, the consumer need not buy and stock in large quantity.

(2)Largest choice: Retailers collects products of different manufactures and it enables the
consumers to have a largest choice at cost, quality and so on.

(3) Providing information: A retailer supplies information about the introduction of a new
product in the market and its features.

(4)Granting credit: Most of the retailers granting credit facilities to regular customers.

(5) After sale services: In certain cases a retailer provides after sales services to the ultimate
consumers to ensure the customers shop loyalty.

➢ TYPES OF RETAILERS

The retailers can be classified in to Small scale retailers and large scale retailers:

1. Small Scale Retailers: It includes

(a) Unit stores: These are the retail stores run on proprietory basis dealing in general stores or
single line stores.

(b) Street traders: They are the retailers who display their stock on foot paths or the side walks
of the busy street.

(c) Market traders: These retailers open their shops on fixed days or dates in specified areas.
The time interval may be week, or a month.

(d) Hawkers and pedlars: This type of retailers do not have any fixed place of business. They
carry goods from one place to another. They keep on moving from locality to locality.

(e) Cheap-jacks: Cheap jacks is retailer who has fixed place of business in a locality but goes
on changing his place to exploit the market opportunities.
2. Large scale retailers: It includes

(a)Departmental stores: A departmental stores carries several product line, invariably all that is
required by a typical house hold. It includes food, clothing, appliances, other house hold goods,
furnishings and gifts etc. It is a central location and a unified control. In a typical department
store each product line is managed independently by specialist buyers.

(b)Multiple shops: It is a chain of retail store dealing in identical and generally restricted range
of articles operating in different localities under central ownership and control. It works on the
principles of centralized buying and administration and decentralized selling. It is also known as
chain store.

(c)Mail order houses: Here, the customers do not visit the seller’s premises and there is no
personal inspection of goods before the purchase. Orders are received from customers through
post and the goods are also sold through post. The transaction is settled through postal medium.
Eg. Leather goods, ready made garments etc.

(d)Consumer co-operatives: These are the stores owned by a group of consumers themselves
on co- operative principles. Here the store purchasing in bulk quantity and sells it to the
consumers at a reasonable price. It is formed to eliminate the exploitation of middlemen.

(e)Super markets: This is a large, low cost, low margin, high volume, self service operation
designed to serve customer’s need for food laundry and house hold products. The wide range of
product mix carried by these stores make them a favorite retail outlet.

(f) Discount stores: Discount stores are the ones that sell standard merchandise at lower prize
than conventional merchants by accepting lower margins but pushing for higher sales volume.

(g)Convenience store: These are generally food stores that are much smaller in size than in
supermarkets. They are conveniently located in residential areas. Due to a high degree of
personalized service and home delivery by store clerk, these stores fill in a very important need
of a house wife.

(h) Speciality store: These are ones that carry a narrow product line with a deep assortment
within that line. According to some marketing thinkers, the future scenario belongs to super
speciality store as they provide increasing opportunities for market segmentation, focused
marketing, and creation of brand equity.
7: Marketing communication mix

The marketing communication mix, sometimes referred to as the promotion mix, is a set of
five tools that businesses use to communicate with their customers, prospects and
stakeholders. The marketing communication mix involves advertising, public relations, sales
promotion, personal selling and direct marketing – and can also sometimes involve
sponsorship and events.

1: ADVERTISING- American Marketing Association defined it as, “Any paid form of non –
personal presentation of ideas, goods, or services by an identified sponsor.” It is a paid form of
mass communication and can be traced to an identified sponsor. Now a day s Advertising plays a
significant role in awareness creation and attitude formation.

➢ Role/Importance/Advantages of Advertising
(1) Introduces a New Product in the Market:Advertising plays significant role in the
introduction of a new product in the market. It stimulates the people to purchase the product.

(2) Expansion of the Market:It enables the manufacturer to expand his market. It helps in
exploring new markets for the product and retaining the existing markets. It plays a sheet anchor
role in widening the marketing for the manufacturer’s products even by conveying the customers
living at the far flung and remote areas.

(3) Increased Sales: Advertisement facilitates mass production to goods and increases the
volume of sales. In other words, sales can be increased with additional expenditure on
advertising with every increase in sale, selling expenses will decrease.

(4) Fights Competition: Advertising is greatly helpful in meeting the forces of competition
prevalent in the market. Continuous advertising is very essential in order to save the product
from the clutches of the competitors.

(5) Enhances Good-Will: Advertising is instrumental in increasing goodwill of the concern. It

introduces the manufacturer and his product to the people. Repeated advertising and better
quality of products brings more reputation for the manufacturer and enhances goodwill for the
concern.

(6) Educates The Consumers: Advertising is educational and dynamic in nature. It familiarises
the customers with the new products and their diverse uses and also educates them about the new
uses of existing products.
(7) Elimination of Middlemen:It aims at establishing a direct link between the manufacturer
and the consumer, thereby eliminating the marketing intermediaries. This increases the profits of
the manufacturer and the consumer gets the products at lower prices.

(8) Better Quality Products: Different goods are advertised under different brand names. A
branded product assures a standard quality to the consumers. The manufacturer provides quality
goods to the consumers and tries to win their confidence in his product.

(9) Supports The Salesmanship: Advertising greatly facilitates the work of a salesman. The
customers are already familiar with the product which the salesman sells. The selling efforts of a
salesman are greatly supplemented by advertising. It has been rightly pointed out that “selling
and advertising are cup and saucer, hook and eye, or key and lock wards.”

(10) More Employment Opportunities: Advertising provides and creates more employment
opportunities for many talented people like painters, photographers, singers, cartoonists,
musicians, models and people working in different advertising agencies.

2: PERSONAL SELLING: According to American Marketing Association,” Personal selling is

the oral presentation in a conversation with one or more prospective purchasers for the purpose
of making sales; it is the ability to persuade the people to buy goods and services at a profit to the
seller and benefit to the buyer”.

➢ PROCESS OF PERSONAL SELLING

Selling is the sequence of steps involved in the conversion of human desire into demand for
a product or service. Personal selling process involves the following stages.

1. Prospecting: It is the work of collecting the names and addresses of persons who are
likely to buy the firm’s product of services. While collecting the details, ‘suspects’ must be
separated from ‘prospects’ to avoid waste of time.

2. Pre approach: Pre approach is to get more detailed facts about a specific individual to
have effective sales appeal on him or her. It is closer look of prospects like habits, financial
status, social esteem, family background, material status, tastes and preferences etc.

3. Approach: Approach means the meeting of the prospect in person by the salesmen. It is a
face to face contact with the prospect to understand him better.

4. Presentation and demonstration: A good sales presentation is one that not only gives all
the benefits that the prospect gets but also proves to the latter that he or she will better off
 after the product is bought and used. An effective sales presentation demands the sales
person use skills like presentation and explanation.

5. Managing objections: This is the most important stage of personal selling. For every
action of salesman there is prospect’s pro action or reaction, ie, approval or disapproval. An
efficient sales man has the ability to identify the reasons for raising objections by the
prospects and the ways to overcome these objections.

6. Sale: If all the above stages have been concluded successfully, then the next stage is
ultimate sale of the product.

➢ Advantages of Personal Selling

• It is a two-way communication. So the selling agent can get instant feedback from the
prospective buyer. If it is not according to plan he can even adjust his approach accordingly.

• Since it is an interactive form of selling, it helps build trust with the customer. When you are
selling high-value products like cars, it is important that the customer trusts not only the
product but the seller also. This is possible in personal selling.

• It also is a more persuasive form of marketing. Since the customer is face to face with the
salesperson it is not easy to dismiss them. The customer at least makes an effort to listen.

• Finally, direct selling helps reach the audience that we cannot reach in any other form. There
are sometimes customers that cannot be reached by any other method.

➢ Disadvantages of Personal Selling

• It is a relatively expensive method of selling. High capital costs are required.

• Also, it is an extremely labour intensive method. A large sales force is required to carry out
personal selling successfully.

• The training of the salesperson is also a very time consuming and costly.

• And the method can only reach a limited number of people. Unlike TV or Radio ads it does
not cover s huge demographic.

3: SALES PROMOTION: According to American Marketing Association,” those

marketing activities other than personal selling, advertising and publicity that stimulate
consumer purchasing and dealer effectiveness such as display, shows and exhibitions,
demonstrations and various non-recurrent selling effort in the ordinary routine.”
 ➢ Advantages of Sales Promotion

1. Helps Create Awareness of New Products – Sales promotion is a highly effective

methods for exposing customers and business partners to new products and for moving
customers to take an action (e.g., sample a product).
2. Strengthens Customer Involvement and Loyalty – Sales promotion can be the primary
mechanism organizations use to interact with their customers and ultimately build a
stronger connection (e.g., offer customer rewards).
3. Can Be Quick to Develop – Compared to other types of promotion, some sales
promotions can be quickly created and made available within a market (e.g., creation and
distribution of email coupon).
4. Used to Support Other Promotions – Sales promotion is often used as a supporting
feature of other methods of promotion (e.g., salespeople may give promotional items to
give to sales prospects).
5. Helps Reduce Inventory – Sales promotion can be used to rapidly reduce inventory in
situations where product replacement is needed (e.g., products nearing expiration date;
clearing inventory to make room for new models).

➢ Disadvantages of Sales Promotion

While the benefits of sales promotion are very attractive to a marketer’s promotional plan, there
are downsides to this type of promotion. These include:
1. May Condition Customers to Wait for Promotion – Repeated use of sales promotion may
condition customers to wait until a product promotion is available before making their next
purchase resulting in the marketer not maximizing a product’s revenue potential (i.e.,
customer will not pay full price).
2. Can Lower Perception of the Brand – The overuse of some sales promotions may
condition customers to believe the lower price is the regular price, which may cause them to
not believe the product’s quality compares to similar competitors’ products that offer less
frequent or no price reductions.
3. Issues With Promotion Clutter – While in the same way an advertisement competes with
other ads for customers’ attention, promotional clutter may also be an issue with sales
promotions (e.g., excessive promotion sent by email, postal mail).
4. Distributors May Not Be Willing to Accept – Some sales promotions targeted to
consumers require the assistance of distributors (e.g., retailers), however, not all distributors
may accept a consumer sales promotion, especially if the promotion requires the distributor
to perform extra work.

4: PUBLIC RELATONS : It is the actions of a corporation, store, government, individuals, etc.

in promoting goodwill between itself and the public, the community, employees, customers, etc.
It can be defined as the practice of managing communication between an organization and its
public. Public relation is used to build rapport with employees, customers, investors, or the
general public. This method of marketing does not aim at promoting a single product/service but
the company as a whole.

➢ Advantages of Public relations:

1.Credibility: The information communicated through public relation department is more

reliable and it has more credibility. For eg.an article in newspapers or magazines discussing the
virtues of aspirin may be perceived very much as more credible than an ad for a particular brand
of aspirin.

2. Cost: In both absolute and relative terms, the cost of PR is very low, especially when the
possible effects are considered. While a firm can employ advertisement agencies and spend
millions of dollars on advertisements, for smaller companies, this form of communication may
be the most affordable alternative available.

3. Lead Generation : Information about the technological innovations, medical break-through

and the like results almost immediately in a multitude of inquiries. These inquiries may give the
firm some quality sales lead.

4. Ability to reach specific groups: Because some products appeal to only small market
segments, it is not feasible to engage in advertising and / or promotions to reach them. If the firm
does not have the financial capabilities, to engage in promotionalexpenditures, the best way to
communicate to these groups is through PR.

5. Image Building: Effective PR helps to develop positive image for the organization. A strong
image is insurance against later mis-fortunes.

6. Stimulate awareness: Public relation techniques helps to stimulate awareness among the
customers regarding the products of the company and thereby creating demand for your product.

5: DIRECT MARKETING: Direct marketing is an advertising strategy that relies on the

individual distribution of a sales pitch to potential customers. Mail, email, and texting are among
the delivery systems used. It is called direct marketing because it generally eliminates the
middleman such as advertising media.

➢ Direct Marketing Channels :

1. Email Marketing: Sending marketing messages through email is one of the most widely used
direct-marketing methods. According to one study email is used by 94% of marketers, while
86% use direct mail.

2. Mobile Marketing: Through mobile marketing, marketers engage with prospective customers
and donors in an interactive manner through a mobile device or network, such as a cell phone,
smart phone , or tablet. Types of mobile marketing messages include: SMS: (short message
service) — marketing communications are sent in the form of text messages, also known as
texting. MMS: (multi-media message service)

3. Direct Mail: The term "direct mail" is used to refer to communications sent to potential
customers or donors via the postal service and other delivery services. Direct mail is sent to
customers based on criteria such as age, income, location, profession, buying pattern, etc. Direct
mail includes advertising circulars, catalogs, free-trial CDs, pre-approved credit card
applications, and other unsolicited merchandising invitations delivered by mail to homes and
businesses.

4. Telemarketing: Another common form of direct marketing is telemarketing in which

marketers contact customers by phone. The primary benefit to businesses is increased lead
generation, which helps businesses increase sales volume and customer base.

5. Voicemail Marketing: Voicemail marketing emerged out of the market prevalence of

personal voice mailboxes, and business voicemail systems. Voicemail marketing presented a cost
effective means by which to reach people directly, by voice

6. Direct Response TV : Direct marketing via television (commonly referred to as DRTV) has
two basic forms: long form (usually half-hour or hour-long segments that explain a product in
detail and are commonly referred to as infomercials) and short form, which refers to typical 30-
second or 60-second commercials that ask viewers for an immediate response (typically to call a
phone number on screen or go to a website).

7. Catalogue marketing: In catalogue marketing , an organisation provides a catalogue from

which customers make selection and place orders by mail or telephone. It involves selling of
products through catalogues mailed to selected customers

MODULE 5: MARKETING CONTROL AND MODERN TRENDS IN MARKETING

1: The Marketing Control Process:

Definition: Marketing control is the process of measuring and evaluating the results of market
strategy and taking corrective actions to ensure that the marketing objectives are achieved or not.

➢ Steps involved in Marketing Control Process:

1. Setting performance standards:The starting point in control process is setting the
performance standards for marketing operations. These performance standards are the
parameters of expected performance against which the actual marketing performance is gauged
and evaluated. These can be quantitative and qualitative. Quantitative standards define
performance expectations in physical and monetized forms or terms such as sales volume, profit
or expenses per product etc. On the other hand, the qualitative standards are those defined in
intangible and behavioural values

2. Appraising the performance:Fixing of performance standards is followed by the appraisal of

marketing performance. Performance appraisal calls for collecting information about
performance, analysing it and relating it with the standards with a view to trace deviations if any,
and the cause thereof. This is possible only when the organisation has built-in management
information system that receives stores and presents authentic, adequate and timely feed-back
from the market performance of different components of marketing mix. Such appraisal may be
continuous or periodic.

3. Correcting deviations:It is the performance appraisal that reveals the deviations or variations
from the standard performance or the planned course of action. These deviations can be
favourable or unfavourable.Favourable deviations are acceptable deviations where actual
performance is better than the planned one and indicates the cause or causes for the better
performance.Unfavourable deviations, on the other hand, are unacceptable deviations indicating
the bitter performance less than desired giving the cause or causes for such short-fall in the
achievement.

4. Reformulating the plan:The final phase of marketing control process is reformulating the
plan, on the basis of the inputs provided by the marketing information system on the actual
marketing performance and its analysis and evaluation. For instance, if every time, there are
favourable or unfavourable variances, it means that standards are too low or too high where
equalization has not been brought about in terms of zero deviation.
Such feed-back of facts and analysis makes the marketing personnel much alert and wiser about
relevance and effectiveness of policies, strategies, targets and resources on one hand and their
practical application on the other.

2: Types of Marketing control.

1:Annual Plan Control: In this method, annul plans are prepared for various activities. Each
plan includes setting objectives (expected results or standards), allocating resources, defining
time limit, and formulating rules, policies and procedures. Annual plan control relates to sales.
Periodically (mostly annually) the actual results are measured and compared with standards to
judge whether annual plans are being (or have been) achieved. Depending on the degree of
difference between the planned and the actual results, causes are detected and suitable corrective
actions are undertaken. Thus, it contains checking ongoing performance against annual plan and
taking corrective action.

➢ Measures (Evaluation Tools) of Annual Plan Control:

1. Analysis of Different Sales:
2. 2. Analysis of Market Share:
3. Analysis of Market Expenses-to-Sales
4. Financial Analysis
5. Analysis of Customer and Stakeholder Attitudes

2: Profitability Control: In this method, the base of exercising control over marketing activities
is the profitability. Certain profitability (and expenses) related standards are set and compared
with actual profitability results to find out how far company is achieving profits. Profitability
control calls for measuring profitability of various products, channels, territories, customer
groups, order size, etc. It provides necessary information to management to determine whether
products, channels, or territories should be expanded, reduced, or eliminated.

➢ Process of Marketing-Profitability Analysis

1.Identifying Functional Expenses

2. Assigning Function Expenses to Marketing Entities

3. Preparing Profits and Loss statement

4. Taking Action

3: Efficiency Control: This control, particularly, concerns with measuring spending efficiency.
While profitability control reveals the relative profits a company is earning, the efficiency
control shows the ways to improve efficiency of various marketing entities like sales force,
advertising, distribution, sales promotion, and so forth.

Sometimes, a post of marketing controller is created to work out a detailed programme to

measure and improve efficiency of expense-centered marketing activities. Efficiency control can
improve efficiency of marketing department in two ways – one is, improving ability of various
marketing activities to contribute more in reaching the goals, and the second is, reducing
expenses or wastage.
 ➢ Types of Efficiency Control:
1. Sales Force Efficiency Control

2. Advertising Efficiency Control

3. Sales Promotion Efficiency Control

4. Distribution Efficiency Control

5. Marketing Research Efficiency Control

4: Strategic Control: Strategic control implies a critical review of overall marketing

effectiveness in relation to broad and long-term objectives and firm’s response to marketing
environment. It deals with assessing firm’s ability to define and achieve marketing goals, and
response pattern to environment. Normally, strategic control verifies company’s long-term
performance with reference to the close competitors. Here, entire marketing system is reviewed
to judge firm’s overall strengths and weaknesses.

➢ Methods or Tools:

1. The Marketing Effectiveness Review

2. The Marketing Audit
3. The Marketing Excellence Review
4. The Ethical and Social Responsibility Review

3:Marketing Audit

Meaning: A marketing audit is a thorough review of your marketing plan, objectives, strategies,
and current activities being executed in your small business. The goal is to see what's working
and what isn't so you can identify areas for improvement. A successful marketing audit will help
you pinpoint your marketing strengths and weaknesses, so you can make solid decisions about
where to put your resources in the future.

4: Marketing Challenges in Globalized Era:

1. Marketers are unsure which regions to prioritize and how many languages to translate content
into;
2. Budget and resource constraints limit the number of campaigns and collateral that need to be
localized, forcing triage and delays of which markets receive what content and when;
3. Difficulty coordinating local, regional and global campaigns while also maintaining brand and
message consistency;
4. Tried translating superficial levels of content, but it isn’t driving demand (e.g., just translating
one email and the first layer of a web page, and the rest is in English); and
5. Localization process is too time-consuming and impossible to scale for the amount of content
and campaigns necessary to reach all target regions.

5: Green Marketing

Meaning: Green marketing refers to the process of selling products and/or services based on
their environmental benefits. Such a product or service may be environmentally friendly in itself
or produced in an environmentally friendly way, such as:

• Being manufactured in a sustainable fashion

• Not containing toxic materials or ozone-depleting substances
• Able to be recycled and/or is produced from recycled materials
• Being made from renewable materials (such as bamboo, etc.)
• Not making use of excessive packaging
• Being designed to be repairable and not "throwaway"

Impacts or Importance of Green Marketing:

Green marketing affects positively the health of people and the ecological environment.
People are aware of pure products and pure methods of producing, using, and disposing the
products. It encourages integrated efforts for purity in production and consumption as well.

We can witness following impacts of green marketing:

1. Now, people are insisting pure products – edible items, fruits, and vegetables based on organic
farming. The number of people seeking vegetarian food is on rise.

2. Reducing use of plastics and plastic-based products.

3. Increased consumption of herbal products instead of processed products.

4. Recommending use of leaves instead of plastic pieces; jute and cloth bags instead of plastic
carrying bags.

5. Increasing use of bio-fertilizers (made of agro-wastes and wormy-composed) instead of

chemical fertilizers (i.e. organic farming), and minimum use of pesticides.
6. Worldwide efforts to recycle wastes of consumer and industrial products.

7. Increased use of herbal medicines, natural therapy, and Yoga.

8. Strict provisions to protect forests, flora and fauna, protection of the rivers, lakes and seas
from pollutions.

9. Global restrictions on production and use of harmful weapons, atomic tests, etc. Various
organisations of several countries have formulated provisions for protecting ecological balance.

10. More emphasis on social and environmental accountability of producers.

11. Imposing strict norms for pollution control. Consideration of pollution control efforts and
eco-technology in awarding IS), ISO 9000, or ISO 14000 certificates and other awards.

12. Declaration of 5th June as the World Environment Day.

13. Strict legal provisions for restricting duplication or adulteration.

14. Establishing several national and international agencies to monitor efforts and activities of
business firms in relation pollution control and production of eco-friendly products.
: