Marketing management

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Meaning
Marketing is defined as a process by which companies create value for customers and build strong customer relationships
in order to capture value from customers in return .
Marketing is adopted by business firms as well as non – profit organizations.
Marketing is the process of communicating the value of a product or service to customers. It is a critical business function
for attracting customers.
The management process through which goods and services move from concept to the customer. It includes the
coordination of four elements called the 4 P's of marketing:
(1) identification, selection and development of a product,
(2) determination of its price,
(3) selection of a distribution channel to reach the customer's place, and
(4) development and implementation of a promotional strategy.
For example, new Apple products are developed to include improved applications and systems, are set at different prices
depending on how much capability the customer desires, and are sold in places where other Apple products are sold. In
order to promote the device, the company featured its debut at tech events and is highly advertised on the web and on
television.
Marketing is based on thinking about the business in terms of customer needs and their satisfaction. Marketing differs
from selling because (in the words of Harvard Business School's retired professor of marketing Theodore C. Levitt) "Selling
concerns itself with the tricks and techniques of getting people to exchange their cash for your product. It is not
concerned with the values that the exchange is all about. And it does not, as marketing invariable does, view the entire
business process as consisting of a tightly integrated effort to discover, create, arouse and satisfy customer needs." In
other words, marketing has less to do with getting customers to pay for your product as it does developing a demand for
that product and fulfilling the customer's needs.
Nature of marketing
 Consumer oriented , competitor oriented and market driven.
 It starts with customers and ends with customers by satisfying their needs.
 It is most important function of management
 Long term objective : Profit maximization through customer satisfaction
 It is an integrated process, based on strategies and models.
It delivers goods and services in exchange of money

10 types of entities for marketing
Goods, Services, Experiences, Events, Persons, Places, Properties, Organisations, Information and Ideas
Scope of Marketing
1. Study of ConsumerWants and Needs
Goods are produced to satisfy consumer wants.Therefore study is done to identify consumer needs and wants. These
needs and wants motivates consumer to purchase.
2. Study of Consumer behaviour
Marketers performs study of consumer behaviour. Analysis of buyer behaviour helps marketer in market segmentation
and targeting
3. Production planning and development
It starts with the generation of product idea and ends with the product development and commercialization. Product
planning includes everything from branding and packaging to product line expansion and contraction.
4. Pricing Policies
Marketer has to determine pricing policies for their products. Pricing policies differs form product to product. It depends
on the level of competition, product life cycle, marketing goals and objectives, etc.
5.Distribution
Study of distribution channel is important in marketing. For maximum sales and profit goods are required to be
distributed to the maximum consumers at minimum cost.
6. Promotion
Promotion includes personal selling, sales promotion, and advertising. Right promotion mix is crucial in accomplishment
of marketing goals.
7. Consumer Satisfaction
The product or service offered must satisfy consumer. Consumer satisfaction is the major objective of marketing.
8. Marketing Control
Marketing audit is done to control the marketing activities.
MARKETING PHILOSPHY
PHILOSOPHY to Guide Marketing/ Strategies/Marketing Management/ Orientations:

(a) Production concept
(b) Selling concept
(c) Marketing Concept
(d) Societal Marketing Concept
Production Concept: holds that consumers will favour products that are available and highly affordable.
- Management should focus on production and distribution efficiency.
- This is an old concept
Example: LENOVO computers in chinese PC market due to low labour cost, high production efficiency and mass
distribution.
Product Concept – It holds that consumers will favour products that offer the most in quality, performance and
innovative features. Marketing strategy under this concept focuses on making continuous product improvements. Eg.
Desk top computers may be replaced by lap top computers or e-note books in long run.
Example: better mouse trap.
Selling Concept- holds that consumers will not buy enough of firm’s products unless it undertakes large scale selling and
promotion efforts.
- These industries must be good at tracking down prospects and selling them on product benefits.
- Aim is to sell whatever is made rather to make what market wants.
- No play firm relationship.
- Selling is insider-out prospective.
Marketing Concept: holds that achieving organisational goals depends on knowing the needs and wants of target market
and delivering the satisfaction better then competitors do.
- Concept is customer oriented i.e. ‘sense and respond’
- To finds right products for ‘customers perspective’
- Customers outside-in
- Integrated Marketing: When company’s all the departments work together to serve the customers’ interests, the
result is integrated Marketing.
- Societal Marketing Concept: It holds that organisations’ task is to determine the needs, wants and interests of
the target markets and to deliver the desired satisfaction more effectively and efficiently than the competitors in
a way that preserves or enhances the customer's or society’s well being.

Marketing management
Marketing management is a business discipline which is focused on the practical application of marketing techniques and
the management of a firm's marketing resources and activities. Rapidly emerging forces of globalization have led firms to
market beyond the borders of their home countries, making international marketing highly significant and an integral part
of a firm's marketing strategy.[1] Marketing managers are often responsible for influencing the level, timing, and
composition of customer demand accepted definition of the term. In part, this is because the role of a marketing manager
can vary significantly based on a business's size, corporate culture, and industry context. For example, in a large consumer
products company, the marketing manager may act as the overall general manager of his or her assigned product.[2] To
create an effective, cost-efficient marketing management strategy, firms must possess a detailed, objective
understanding of their own business and the market in which they operate.[3] In analyzing these issues, the discipline of
marketing management often overlaps with the related discipline of strategic planning.
The Marketing Process
• Understand the marketplace and customer needs and wants.
• Design a customer-driven marketing strategy.
• Construct a marketing program that delivers superior value.
• Build profitable relationships and create customer delight.
• Capture value from customers to create profits and customer equity.

MARKETING MIX
Marketing Mix - A mixture of several ideas and plans followed by a marketing representative to promote a
particular
product or brand is called marketing mix.
• Mc Carthy worked and popularized ‘4P’s as Marketing Mix :
• The Four Ps of the Marketing Mix
• (i)Product: A product is seen as an item that satisfies what a consumer needs or wants. It is a tangible good or an
intangible service. Intangible products are service based like the tourism industry, the hotel industry and the
financial industry. Tangible products are those that have an independent physical existence. Typical examples of
mass-produced, tangible objects are the motor car and the disposable razor. A less obvious but ubiquitous mass-
produced service is a computer operating system.Variety, Quality, Design, Features, Brand Name, Packaging,
Services , etc,.
• (ii) Price: List Price, Discounts, Allowances, Payment period, Credit terms.
• (iii) Promotion: advertising, Personal selling, Sales promotion, Public relations , Direct Selling
• (iv) Place: refers to providing the product at a place which is convenient for consumers to access.Channels,
Coverage, Assortments, Locations, Inventory, Transportation, Logistics, etc,.
In recent times, the concept of four Cs has been introduced as a more customer-driven replacement of four Ps.[1]
And
there are two four Cs theories today. One is Lauterborn's four Cs (consumer, cost, communication, convenience), another
is Shimizu's four Cs (commodity, cost, communication, channel).
4Ps are decided on the basis of Marketing Research for Target Market involving ‘4 O’s
(i) Object: What does market buy?

(ii) Objective: Why does market buy it?
(iii) Organization: Who participates in buying?
(iv) Operation: How does the market buy?
Extended Marketing Mix
• Extended Marketing Mix is applicable for services due to its peculiary characteristics explained above .
• In case of services apart from 4Ps i.e. Product , price , promotion and place , the folowing additional Ps are
applicable :
Physical evidence elements within the store -- the store front, the uniforms employees wear, signboards, etc.
People the employees of the organization with whom customers come into contact.
Process the processes and systems within the organization that affects its marketing process
Marketing Environment
The market environment is a marketing term and refers to factors and forces that affect a firm’s ability to build and
maintain successful relationships with customers.Three levels of the environmment are: Micro (internal) environment -
small forces within the company that affect its ability to serve its customers. Meso environment – the industry in which a
company operates and the industry’s market(s). Macro (national) environment - larger societal forces that affect the
microenvironment
Micro environment :
The micro environment refers to the forces that are close to the company and affect its ability to serve its customers. It
includes the company itself, its suppliers, marketing intermediaries, customer markets and publics. A firm's
microenvironment includes all of the following EXCEPT: Competitors
The company aspect of microenvironment refers to the internal environment of the company. This includes all
departments, such as management, finance, research and development, purchasing, operations and accounting. Each of
these departments has an impact on marketing decisions. For example, research and development have input as to the
features a product can perform and accounting approves the financial side of marketing plans and budgets.
The suppliers of a company are also an important aspect of the microenvironment because even the slightest delay in
receiving supplies can result in customer dissatisfaction. Marketing managers must watch supply availability and other
trends dealing with suppliers to ensure that product will be delivered to customers in the time frame required in order to
maintain a strong customer relationship.
Macro environment
The macroenvironment refers to all forces that are part of the larger society and affect the microenvironment. It includes
concepts such as demography, economy, natural forces, technology, politics, and culture.

Meso-Environment
Marketing intermediaries help to sell, promote, and distribute goods. Intermediaries take many forms:
 Resellers
 Physical distribution firms
 Marketing services agencies
 Financial intermediaries
 Customer markets must be studied.
 Market types
 Consumer
 Business
 Government
 International
Customer markets must be studied:
 Market types
 Consumer
 Business
 Government
 Reseller
 International
Various publics must also be considered:
 Government
 Media
 Financial
 Local
 General
 Internal
 Citizen Action Groups

Marketing Environment : Forces that affect working of company or ability of company to serve the customer .
External Environment : Uncontrollable forces those affect ability of company to serve the customer .
External (Macro Environment) : Factors like demographic, economic , political ,social , etc , affect working or ability of
company and micro environmental forces like suppliers , intermediaries etc to serve their customers.
External Micro Environment : Suppliers , intermediaries, competitors , public affect the company`s ability to serve the
customer .
Objective of Environmental analysis : To carry out SWOT analysis i.e. strengths & weaknesses through internal
environment and opportunity and threats through external environment analysis
Internal Environment
Top Management : Sets company`s mission, vision , objectives, strategies, and policies
• Finance Department
• Research and Development Department
• Purchase Department
• Operations
• Marketing strategies and marketing Mix
Micro external environment :

Suppliers : provide resources to company to produce goods and services.
- Suppliers to be considered as partners in company`s operation.
- Quality , payments to supplier and timely delivery to be monitored by company
- Strikes and workers` unrest to be resolved quickly to avoid delays.
Marketing Intermediaries : Whole Salers , distributors and retailers have power and influence to attract customers .
- Logistics firm affect level of customer service .
• Competitors : Companies are expected to monitor value being provided by competitors to customers and provide
better value .
• Public : 7 type of public can affect organisations in achieving goals , hence to be taken care by company:
- Financial public
- Media public
- Government public ( From legal view point )
- Consumer organisations
- Local public
- General public
- Internal public
Demographic :
• Population
• Population density
• Government policy regarding no. of children: China`s six pocket syndrome
• Population pattern : income wise , education wise
• Government policy to encourage education : Developed countries , now India ( Demographic dividends )
Economic Environment : pattern of demand and supply is affected by factors like :
• Income
• Inflation
• Recession
• Interest rate
• Exchange rate

Marketer should understand effect of above factors on demand of products and company`s strategies and policies may
be decided accordingly.
Socio-cultural environment : Tastes , preferences and needs of different products depend on these factors .
- Market must study these factors to frame marketing strategies and policies.
Technological Environment : Market to take care of new technologies and update their products accordingly.
Natural environment : Natural resources , climate and topography of country play important role in the marketing of
products.
- Marketers are expected to take care these aspects.
Consumer and Organizational Buyer Behavior(incomplete)
Difference between Consumer and Organizational Buying
 Fewer organizational buyers
 Close, long-term relationship between organizational buyers and sellers
 Organizational buyers are more rational
 Organizational buying may be to specific requirements
 Reciprocal buying may be important in organizational buying
 Organizational selling/ buying may be more risky
 Organizational buying is more complex
 Negotiation is often more important in organizational buying
Consumer Buyer Behavior
 An understanding of customers can only be obtained by answering the following questions
 Who is important in the buying decision?
 How do they buy?
 What are their choice criteria?
 Where do they buy?
 When do they buy?

Market segmentation
Market segmentation is a marketing strategy that involves dividing a broad target market into subsets of consumers who
have common needs, and then be designed and implemented to target these specific customer segments, addressing
needs or desires that are believed to be common in this segment, using media that is used by the market segment.
While there may be theoretically 'ideal' market segments, in reality every organization engaged in a market will develop
different ways of imagining market segments, and create product differentiation strategies to exploit these segments.
Successful market segmentation and corresponding product differentiation strategy can give a firm a commercial
advantage, due to the more effective match between target customer and product.
Criteria for segmenting
An ideal market segment meets all of the following criteria:
 It is possible to measure.
 It must be large enough to earn profit.
 It must be stable enough that it does not vanish after some time.
 It is possible to reach potential customers via the organization's promotion and distribution channel.
 It is internally homogeneous (potential customers in the same segment prefer the same product qualities).
 It is externally heterogeneous, that is, potential customers from different segments have different quality
preferences.
 It responds consistently to a given market stimulus.
 It can be reached by market intervention in a cost-effective manner.
 It is useful in deciding on the marketing mix.
Basis for segmenting consumer markets
Geographic segmentation
The market is segmented according to geographic criteria—nations, states, regions, countries, cities, neighborhoods, or
zip codes
Psychographic segmentation:
consumers are divided according to their lifestyle, personality, values and social class
Behavioral segmentation
In behavioral segmentation, consumers are divided into groups according to their knowledge of, attitude towards, use of
or response to a product. It is actually based on the behavior of the consumer.called behavioral segmentation.
Positive market segmentation

This part of the segmentation process consists of drawing up a perceptual map, which highlights rival goods within one's
industry according to perceived quality and price. After the perceptual map has been devised, a firm would consider the
marketing communications mix best suited to the product in question
Occasions
Segmentation according to occasions is based on the arising of special need and desires in consumers at various
occasions. For example, for products that will be used in relation with a certain holiday. Products such
as Christmas decorations or Diwali lamps are marketed almost exclusively in the time leading up to the related event, and
will not generally be available all year round.
Benefits
Segmentation takes place according to benefits sought by the consumer or which the product/service can provide.
Positioning (marketing)
In marketing, positioning is the process by which marketers try to create an image or identity in the minds of their target
market for its product, brand, or organization.
Re-positioning involves changing the identity of a product, relative to the identity of competing products.
De-positioning involves attempting to change the identity of competing products, relative to the identity of your own
product.
Targeting(from book also)
After the most attractive segments are selected, a company should not directly start targeting all these segments -- other
important factors come into play in defining a target market. Four sub activities form the basis for deciding on which
segments will actually be targeted.
The four sub activities within targeting are:
1. defining the abilities of the company and resources needed to enter a market
2. analyzing competitors on their resources and skills
3. considering the company’s abilities compared to the competitors' abilities
4. deciding on the actual target markets.
The first three sub activities are described as the topic competitor analysis. The last sub activity of deciding on the actual
target market is an analysis of the company's abilities to those of its competitors. The results of this analysis leads to a list
of segments which are most attractive to target and have a good chance of leading to a profitable market share.
Obviously, targeting can only be done when segments have been defined, as these segments allow firms to analyze the
competitors in this market. When the process of targeting is ended, the markets to target are selected, but the way to use

marketing in these markets is not yet defined. To decide on the actual marketing strategy, knowledge of the differential
advantages of each segment is needed.
Positioning
When the list of target markets is made, a company might want to start on deciding on a good marketing mix directly. But
an important step before developing the marketing mix is deciding on how to create an identity or image of the product
in the mind of the customer. Every segment is different from the others, so different customers with different ideas of
what they expect from the product. In the process of positioning the company:
1. identifies the differential advantages in each segment
2. decides on a different positioning concept for each of these segments. This process is described at the
topic positioning, here different concepts of positioning are given.
The process-data model shows the concepts resulting from the different activities before and within positioning. The
model shows how the predefined concepts are the basis for the positioning statement. The analyses done of the market,
competitors and abilities of the company are necessary to create a good positioning statement.
When the positioning statement is created, one can start on creating the marketing mix.
Product Concepts
Product (business)
In marketing, a product is anything that can be offered to a market that might satisfy a want or need.[1] In retailing,
products are called merchandise. In manufacturing, products are bought as raw materials and sold as finished goods.
Commodities are usually raw materials such as metals and agricultural products, but a commodity can also be anything
widely available in the open market.

Product levels/ layers :
 Core benefits : Basic need to be satisfied e.g. for hotels rest and sleep.
 Basic product : Basic product to meet the need . In case of hotel : Hotel room with bed , bath room , towels, desk,
dresser , closet.
 Expected product : Additional features customers like to have . In case of hotel it include clean bed and linen ,
working lamp , TV etc
 Augmented product : Product features for generating customer delight . In case of hotel it may be
complementary gift on arrival or on birth day.
 Potential product : Features which are not provided by competitors : In case of hotel , heavy discount on marriage
anniversary party of important customer.
Product hierarchy :Each product is related to certain other products forming hierarchy . It has 6 levels :
 Need family : Core need. e.g. Security for Life insurance
 Product family : Product classes that satisfy a core need with reasonable effectiveness e.g. savings and income.
 Product class : A group of products within a product family recognised as having a certain functional coherence
e.g. Financial instruments
 Product line : A group of products within a product class that are closely related .
 Product type : Group of closely related items within a product line e. g.Term life in insurance.
 Items : Distiguishable within a product line.

Product classification :
I. Based on durability and tangibility :
 Non – durable : Soap, cold drinks etc
 Durable : Washing machine, car , computers
 Services : Repair, haircut , etc,.
II. Based on use :
a) Consumer goods :
 Convenience goods : soap, newspaper etc
 Shopping goods : Require shopping efforts to buy e.g. clothing, furniture etc
 Specialty goods : Cars , cameras , Personal computers
 Unsought goods : Insurance policy, encyclopedias , etc,.
b) Industrial goods :
 Raw material : Iron ore , alumina etc
 Plant and equipment : Machines to manufacture other products .
 Spare parts
 Operating supplies
 Utilities
Product Levels
Customers will choose a product based on their perceived value of it. Satisfaction is the degree to which the actual use of
a product matches the perceived value at the time of the purchase. A customer is satisfied only if the actual value is the
same or exceeds the perceived value. Kotler defined five levels to a product:
1. Core Benefit
the fundamental need or want that consumers satisfy by consuming the product or service.
2. Generic Product

a version of the product containing only those attributes or characteristics absolutely necessary for it to function.
3. Expected Product
the set of attributes or characteristics that buyers normally expect and agree to when they purchase a product.
4. Augmented Product
inclusion of additional features, benefits, attributes or related services that serve to differentiate the product from its
competitors.
5. Potential Product
all the augmentations and transformations a product might undergo in the future.
Kotler noted that much competition takes place at the Augmented Product level rather than at the Core Benefit level or,
as Levitt put it: 'New competition is not between what companies produce in their factories, but between what they add to
their factory output in the form of packaging, services, advertising, customer advice, financing, delivery arrangements,
warehousing, and other things that people value.'
Kotler's model provides a tool to assess how the organisation and their customers view their relationship and which
aspects create value.
Product and service decisions

I . Individual product and service decisions
 Product attributes
 Branding
 Packaging
 Labeling
 Product support services
II. Product Line decisions
III. Product Mix decisions
IV .Product planning and development / New product decisions
Product attributes :

 Product quality
 Product features
 Product style and design
Product quality : Relates to freedom from defects .
- Direct impact on product/ service performance, customer value and satisfaction.
- It is ability to satisfy stated and implied customer needs.
- TQM : tool for product / service quality improvement .
- Two dimensions of product quality : Levels and consistency
Features of products/services :
- Different features add value to customer.
- For cars , marketer offers basic model without extra features and other models with extra features charging
higher price than basic model.
Product style and design :
- Distinctive product style and design adds value.
- Style : Describes appearance of the product. It should be eye catching.
- Good design contributes to usefulness as well as looks of the product.
Branding :A brand is a name , term, sign, symbol, design or combination of these that identifies the marketer of the
product or service.
 Branding adds value to customer.
 Marketer is required to build and manage the brands.
 Famous brands : Tata, Nike, Coca-cola, Pepsi, Nike, cadbury , Sony , Toyota.
Packaging : Involves designing and producing containers or wrappers for a product.
 Primary function of package : to hold and protect the product.
 Additional sales functions : attracting attention .
Labeling : It provides description and graphic on the package.

 Describes product details , brand name , manufacturer , contents , MRP, expiry date caution for use.
Product support services : After sales services through customer care centers . Ex :Marketers of HP computers provide
good after sales services .
Marketing mix decisions
 Marketing mix : company’s tactical tool kit for establishing strong positioning in target markets.
 An effective marketing program blends all marketing mix elements into an integrated marketing program
designed to achieve the company’s marketing objectives by delivering value to customers .
 4Ps of marketing mix :
a) Product : as customer solution . Includes :
- Variety - Quality - Design - Features - Brand name - Packaging - Services
b) Price : Customer cost . Includes :
- List price - Discounts - Allowances - Payment terms - Credit terms
C ) Promotion : Customer communication . Includes :
- Advertising - Personal selling - Sales promotion - Public relations
d) Place : Customer convenience. Includes
- Channels - Coverage - Assortments - locations - Inventory - Transportation - Logistics
Product line decisions
Product line : Similar items of product mix are classified under one product line . Large companies deal with a number of
product lines.
 Product width and depth : It is the number of product lines offered by a firm .
- It indicates diversification of firm.
 Depth of product line : No. of products under one line .
- It reflects firm’s segmentation approach and marketing orientation.
 Product consistency : It refers to how closely related products lines are in their end use , production requirement
and distribution channels.

Brand Management
A brand is a name, term, sign,symbol, design or a combination of the above to identify the goods or service of a seller and
differentiate it from the rest of the competitors.When you cannot do this,the product is a commodity.
Brand management is a communication function that includes analysis and planning on how that brand is positioned in
the market, which target public the brand is targeted at, and maintaining a desired reputation of the brand. Developing a
good relationship with target publics is essential for brand management. Tangible elements of brand management
include the product itself; look, price, the packaging, etc. The intangible elements are the experience that the consumer
takes away from the brand, and also the relationship that they have with that brand. A brand manager would oversee all
of these things.
Brand management begins with having a thorough knowledge of the term “brand”. It includes developing a promise,
making that promise and maintaining it. It means defining the brand, positioning the brand, and delivering the brand.
Brand management is nothing but an art of creating and sustaining the brand. Branding makes customers committed to
your business. A strong brand differentiates your products from the competitors. It gives a quality image to your
business.
Brand management includes managing the tangible and intangible characteristics of brand. In case of product brands,
the tangibles include the product itself, price, packaging, etc. While in case of service brands, the tangibles include the
customers’ experience. The intangibles include emotional connections with the product / service.
Branding is assembling of various marketing mix medium into a whole so as to give you an identity. It is nothing but
capturing your customers mind with your brand name. It gives an image of an experienced, huge and reliable business.
It is all about capturing the niche market for your product / service and about creating a confidence in the current and
prospective customers’ minds that you are the unique solution to their problem.
The aim of branding is to convey brand message vividly, create customer loyalty, persuade the buyer for the product, and
establish an emotional connectivity with the customers. Branding forms customer perceptions about the product. It
should raise customer expectations about the product. The primary aim of branding is to create differentiation.
Strong brands reduce customers’ perceived monetary, social and safety risks in buying goods/services. The customers can
better imagine the intangible goods with the help of brand name. Strong brand organizations have a high market share.
The brand should be given good support so that it can sustain itself in long run. It is essential to manage all brands and
build brand equity over a period of time. Here comes importance and usefulness of brand management. Brand
management helps in building a corporate image. A brand manager has to oversee overall brand performance. A
successful brand can only be created if the brand management system is competent.
Following are the important concepts of brand management:
Definition of Brand
Brand Name
Brand Attributes

Brand Positioning
Brand Identity
Sources of Brand Identity
Brand Image
Brand Identity vs Brand Image
Brand Personality
Brand Awareness
Brand Loyalty
Brand Association
Building a Brand
Brand Equity
Brand Equity & Customer Equity
Brand Extension
Co-branding
Parameters of brand popularity :
 Age of brand
 Reliability
 Trust
 Emotions that a brand evokes in customers
 Value for money
 Proprietary characteristics
 Competitive position of brand
 Indispensability of brand in consumer’s life
Brand Equity is the value and strength of the Brand that decides its worth. It can also be defined as the differential impact
of brand knowledge on consumers response to the Brand Marketing. Brand Equity exists as a function of consumer
choice in the market place. The concept of Brand Equity comes into existence when consumer makes a choice of a

product or a service. It occurs when the consumer is familiar with the brand and holds some favourable positive strong
and distinctive brand associations in the memory
Advantages of branding :
 Denotes uniform quality.
 Leads to quality improvement due to brand competition.
 Less time required in buying.
 Psychological satisfaction to buyers.
 Recall easier.
 Advantages to manufacturer in terms of higher price.
Disadvantages : Price tends to go up.
 Quality may be compromised by companies of popular brands.
 Uncertainty of quality comparison.
Product Life Cycle
 Concept : Each product passes through a Life Cycle i.e. stages
being : introduction, growth , maturity and decline
 PLC reflects sales and profits of a product over a period of time .
 It generally follows an established S shaped curve.
Introduction: The Introduction stage is probably the most important stage in the PLC. In fact, most products that fail do
so in the

Introduction stage. This is the stage in which the product is initially promoted. Public awareness is very
important to the success of a product. If people don't know about the product they won't go out and buy it.
There are two different strategies you can use to introduce your product to consumers. You can use either a
penetration strategy or a skimming strategy. If a penetration strategy is used then prices are set very high initially and
then gradually lowered over time. This is a good stategy to use if there are few competitors for your product. Profits are
high with this
strategy but there is also a great deal of risk. If people don't want to pay high prices you may lose out. The
second
pricing strategy is a skimming strategy. In this case you set your prices very low at the beginning and then
gradually
increase them. This is a good strategy to use if there are alot of competitors who control a large portion of
the market.
Profits are not a concern under this strategy. The most important thing is to get you product known and
worry about
making money at a later time.
Growth: If you are lucky enough to get your product out of the Introduction stage you then enter this stage. The
Growth stage is
where your product starts to grow. In this stage a very large amount of money is spent on advertising. You
want to
concentrate of telling the consumer how much better your product is than your competitors' products.
There are several ways to advertise your product. You can use TV and radio commercials, magazine and
newspaper
ads, or you could get lucky and customers who have bought your product will give good word-of-mouth to
their
friends/family.
If you are successful with your advertising strategy then you will see an increase in sales. Once your sales
begin to
increase you share of the market will stabilize. Once you get to this point you will probably not be able to
take anymore
of the market from your competitors.
 Sales start growing due to cumulative effect of promotion , distribution and word of mouth influence.
 Cost decreases
 High and sharply rising profits
 Care for customer satisfaction is needed at this stage.
 Marketing task is cultivating selective demand like niche marketing and focused marketing strategies.
Strategies include : Product modification, enlarging distribution & service network , maintaining competitive price level ,
different uses of products and packaging alternatives

3. Maturity: The third stage in the Product Life Cycle is the maturity stage. If your product completes the Introduction
and Growth
stages then it will then spend a great deal of time in the Maturity stage. During this stage sales begin to
stabilize. The key to surviving this stage is differentiating your product from the similar
products offered by your competitors. Due to the fact that sales are beginning to stabilize you must make
your product
stand out among the rest.
 Sales growth continues but at a slow rate , decrease in profit margin and cut throat competition.
 Narrow down price and promotion war
 Boom in market demand
 Marketing task is to adopt segmental approach.
 marketing strategies include service augmentation ,image marketing , strengthening brand through repositioning
, shortening of distribution channels
4. Decline: This is the stage in which sales of your product begin to fall. Either everyone that wants to has bought
your product or
new, more innovative products have been created that replace yours. Many companies decide to
withdrawal their
products from the market due to the downturn. The only way to increase sales during this period is to cut
your costs
reduce your spending.
Decline Phase :
 Sales decline as customer preferences changed in favour of more efficient and better products.
 No. of competing firms reduce
 Marketing task is diverting and gradual withdrawal of the product
New product development
In business and engineering, new product development (NPD) is the complete process of bringing a new product to
market. A product is a set of benefits offered for exchange and can be tangible (that is, something physical you can touch)
or intangible (like a service, experience, or belief). There are two parallel paths involved in the NPD process: one involves
the idea generation, product design and detail engineering; the other involves market research and marketing analysis.
Companies typically see new product development as the first stage in generating and commercializing new product
within the overall strategic process of product life cycle management used to maintain or grow their market share.

The eight stages
1. Idea Generation is often called the "NPD" of the NPD process[1]
.
 Ideas for new products can be obtained from basic research using a SWOT analysis (Strengths,
Weaknesses, Opportunities & Threats). Market and consumer trends, company's R&Ddepartment,
competitors, focus groups, employees, salespeople, corporate spies, trade shows, or ethnographic
discovery methods (searching for user patterns and habits) may also be used to get an insight into new
product lines or product features.
 Lots of ideas are generated about the new product. Out of these ideas many are implemented. The ideas
are generated in many forms. Many reasons are responsible for generation of an idea.
 Idea Generation or Brainstorming of new product, service, or store concepts - idea generation techniques
can begin when you have done your OPPORTUNITY ANALYSIS to support your ideas in the Idea Screening
Phase (shown in the next development step).
2. Idea Screening
 The object is to eliminate unsound concepts prior to devoting resources to them.
 The screeners should ask several questions:
 Will the customer in the target market benefit from the product?
 What is the size and growth forecasts of the market segment / target market?
 What is the current or expected competitive pressure for the product idea?
 What are the industry sales and market trends the product idea is based on?
 Is it technically feasible to manufacture the product?
 Will the product be profitable when manufactured and delivered to the customer at the target
price?
3. Concept Development and Testing
 Develop the marketing and engineering details
 Investigate intellectual property issues and search patent databases
 Who is the target market and who is the decision maker in the purchasing process?
 What product features must the product incorporate?
 What benefits will the product provide?
 How will consumers react to the product?
 How will the product be produced most cost effectively?

 Prove feasibility through virtual computer aided rendering and rapid prototyping
 What will it cost to produce it?
 Testing the Concept by asking a number of prospective customers what they think of the idea -
usually[citation needed]
via Choice Modelling.
4. Business Analysis
 Estimate likely selling price based upon competition and customer feedback
 Estimate sales volume based upon size of market and such tools as the Fourt-Woodlock equation
 Estimate profitability and break-even point
5. Beta Testing and Market Testing
 Produce a physical prototype or mock-up
 Test the product (and its packaging) in typical usage situations
 Conduct focus group customer interviews or introduce at trade show
 Make adjustments where necessary
 Produce an initial run of the product and sell it in a test market area to determine customer acceptance
6. Technical Implementation
 New program initiation
 Finalize Quality management system
 Resource estimation
 Requirement publication
 Publish technical communications such as data sheets
 Engineering operations planning
 Department scheduling
 Supplier collaboration
 Logistics plan
 Resource plan publication
 Program review and monitoring
 Contingencies - what-if planning
7. Commercialization (often considered post-NPD)

 Launch the product
 Produce and place advertisements and other promotions
 Fill the distribution pipeline with product
 Critical path analysis is most useful at this stage
8. New Product Pricing
 Impact of new product on the entire product portfolio
 Value Analysis (internal & external)
 Competition and alternative competitive technologies
 Differing value segments (price, value and need)
 Product Costs (fixed & variable)
 Forecast of unit volumes, revenue, and profit
These steps may be iterated as needed. Some steps may be eliminated. To reduce the time that the NPD process takes,
many companies are completing several steps at the same time (referred to as concurrent engineering or time to
market). Most industry leaders see new product development as a proactive process where resources are allocated to
identify market changes and seize upon new product opportunities before they occur (in contrast to a reactive strategy in
which nothing is done until problems occur or the competitor introduces an innovation). Many industry leaders see new
product development as an ongoing process (referred to as continuous development) in which the entire organization is
always looking for opportunities.
Pricing Concepts and decisions
Definition of Price : Price may be defined as the exchange of goods or services in terms of money. Price is the marketing
mix element that produces revenue while other elements of marketing mix produce costs. Price is also one of the most
flexible elements.
Factors affecting Pricing
I) Internal Factor
(a) Cost of the Product
(b) Objective of the firm ( maximize the current profit, Price stability, survival, maximize their Market share to fight
with competition ).
(c) Nature of Product
II) External Factor
(a) Demand

(b) Competition
(c) Economic conditions
(d) Government regulations
Demand is the key determinant for market oriented company. Demand is the starting point for all activities.
Simply, the average customer will be demanding different product quantities, depending on price. Law of the
market says that demand and price are counter proportional ( price increase leads to demand decrease and vice
versa ).
Competition has a significant influence to price determination of market oriented companies. Prices need to be
adjusted in order to address the competition. Every company should research market and competition, prior to
launch of the new product. Survey should include direct competitors but also the substitutes. Based on market
survey and the strength of the company the prices can be the same, lower or higher.
Costs – While demand and competition are external factor, the costs are internal. The costs must be embedded in
every stage of price determination process. There are several methods of cost embedding into price:
1.) Costs Plus – company calculates the costs and increase price for the specific profit.
2.) Markup – price based on cost increased for amount of specific markup percentage.
3.) Target Return Method – calculated required markup, in order to achieve return on investment.
4.) Profit Maximizing is the price where the marginal profit equals marginal cost.

5.) Breakeven Analysis – is the number of units sold that generates profit that can cover cost. This point does not
have profit nor lost.
Life Cycle pricing approach analysis the current phase of product life in market.
1.) Entering phase usually requires higher sales prices in order to payback initial development costs. Also
customers are willing to pay more for a new product.
2.) Growth phase is bringing the market stabilization. Prices are more or less stabile.
3.) Saturation phase leads to price decline, due to competition entrance and loss of consumer's interest
4.) Declining phase is the last part of product life cycle. Prices are still going down.
Sales Channels have the different shopping occasion. Consequently the pricing is adjusted to sales channel. For
example, the same products is cheaper in hypermarket than on petrol station.
vernment is usually do not interfere into price determination. Exceptionally it may limit maximal prices for a
certain products. Still, government is influencing pricing, since the taxes & custom duties are the part of the price.
Pricing process
Step 1: Examine Objectives
marketing decisions including price are driven by the objectives set by the management of the organization. These
objectives come at two levels. First, the overall objectives of the company guide all decisions for all functional areas (e.g.,
marketing, production, human resources, finance, etc.). Guided by these objectives the marketing department will set its
own objectives which may include return on investment, cash flow, market share and maximize profits to name a few.
1st Step : Selecting the Price Objectives :
We all know the price setting is the major part of marketing policy and one of P4 of marketing mix. So, it is the first in
which you have to select the price object for setting it. It may be
a) Survival the product in market :
Company thinks that his product is new and for creating its position in market, company should take minimum price from
its customers.
b) Maximum profit objective :

If company wants to earn maximum profit, the company can set high price under price skimming. Company thinks that if
it will fix high price, no competitor faces it.
c) High market share objective :
Company's object is to increase sale. So, it will determine low price than competitors.
2nd Step : Determining the Demand :
Main aim of taking second step is to check whether our set price is best for increasing demand or not. In this step, we
takes following decisions
a) Create the demand curve and check the trend :
With past records of our company's product price and past sales company can create demand curve, it shows the effect of
changing price on demand of customer. The company can take the help of economist which they can explain its technical
explanation. But with this, company can know whether company's price are creating bad effect on demand or good effect
on demand.
b) Demand Elasticity
With this, company can estimate about how much demand is effected with increasing or decreasing the price.
3rd Step : Estimate the Costs :
Determine an Initial Price
Marketers have at their disposal several approaches for setting the initial price which include:
 Cost Pricing
 Market Pricing
 Competitive Pricing
 Bid Pricing
For determination the price of product company should estimate the cost of product.
I) Calculate variable and fixed cost :
Fixed cost = Electricity + salary bill etc
variable cost = raw material cost + labour cost + other expenses etc.

II) Calculate differential cost in differential market :
Use activity base costing system if company sells product different time period.
III) Target Costing :
This is japan's technique
at what price consumer wants the product xxxx
Less margin = xxxx
-------------------------------------------------
Estimated price = xxxx
--------------------------------------------------
Cost must be less than estimated price
IV) Also estimate competitor's price:
4th Step : Selecting a Good Price Method :
a) Markup pricing :
Total cost price xxxx
Add % Margin on sale xxxx
----------------------------
Sale price xxxx
----------------------------
b) Perceived value price :
it is fixed on the basis of cost of market mix and margin
( product cost + advertising cost + placement cost ) + margin = fix price
c) Value Price :
Low price of quality product than competitors.

6th Step : Select the Final Price
After analysis of above five steps, marketer selects the final price of a new product.
Pricing Policies & Strategies
Pricing Strategies
There are many ways to price a product. Let's have a look at some of them and try to understand the best
policy/strategy in various situations.
Premium Pricing.
Use a high price where there is a uniqueness about the product or service. This approach is used where a a
substantial competitive advantage exists. Such high prices are charge for luxuries such as Cunard Cruises, Savoy Hotel
rooms, and Concorde flights.
Penetration Pricing.
The price charged for products and services is set artificially low in order to gain market share. Once this is achieved,
the price is increased. This approach was used by France Telecom and Sky TV.
Economy Pricing.
This is a no frills low price. The cost of marketing and manufacture are kept at a minimum. Supermarkets often
have economy brands for soups, spaghetti, etc.
Price Skimming.
Charge a high price because you have a substantial competitive advantage. However, the advantage is not
sustainable. The high price tends to attract new competitors into the market, and the price inevitably falls due to
increased supply.Manufacturers of digital watches used a skimming approach in the 1970s. Once other manufacturers
were tempted into the market and the watches were produced at a lower unit cost, other marketing strategies and
pricing approaches are implemented.Premium pricing, penetration pricing, economy pricing, and price skimming are the

four main pricing policies/strategies. They form the bases for the exercise. However there are other important
approaches to pricing.
Psychological Pricing.
This approach is used when the marketer wants the consumer to respond on an emotional, rather than rational basis. For
example 'price point perspective' 99 cents not one dollar.
Product Line Pricing.
Where there is a range of product or services the pricing reflect the benefits of parts of the range. For example
car washes. Basic wash could be $2, wash and wax $4, and the whole package $6.
Optional Product Pricing.
Companies will attempt to increase the amount customer spend once they start to buy. Optional 'extras' increase
the overall price of the product or service. For example airlines will charge for optional extras such as guaranteeing a
window seat or reserving a row of seats next to each other.
Captive Product Pricing
Where products have complements, companies will charge a premium price where the consumer is captured.
For example a razor manufacturer will charge a low price and recoup its margin (and more) from the sale of the only
design of blades which fit the razor.
Product Bundle Pricing.
Here sellers combine several products in the same package. This also serves to move old stock. Videos and CDs are often
sold using the bundle approach.
Promotional Pricing.
Pricing to promote a product is a very common application. There are many examples of promotional pricing
including approaches such as BOGOF (Buy One Get One Free).
Geographical Pricing.

Geographical pricing is evident where there are variations in price in different parts of the world. For example rarity
value, or where shipping costs increase price.
Value Pricing.
This approach is used where external factors such as recession or increased competition force companies to
provide 'value' products and services to retain sales e.g. value meals at McDonalds.
Designing a Marketing Channel
Start at the End
Before you examine the cost of websites, email-blast campaigns or even fliers, start with your customer. Determine who
your customer is. Do this by identifying the needs your products or services fill. Once you know the needs they fill, you
can identify who has those needs. For example, if you know your discount grocery store appeals to nonworking mothers
with large families, start thinking about how to reach such a customer.
Work Backward
Once you have identified your customer, think about that customer's shopping habits. Ask yourself if your customer uses
the Internet, responds to email or prefers to shop sales discovered from posters and fliers. Knowing your customer's
habits can save you a lot of time and money in designing your marketing channel, because you won't waste effort
pursuing avenues that don't lead to your customer.
Distribution
Work your way back from customers through product outlets to distribution. Your distribution should be chosen based on
your customer's habits. Many businesses make the mistake of finding distribution first, then trying to get the customer to
where products are sitting. If you start with your customer and work back to distribution, you can find the best method
for getting your products to where your customers are.

Investment vs. Expense
According to Partners in Excellence, a consulting company that helps businesses with marketing strategy, many
businesses fail to build effective marketing channels because they view the process as an expense rather than an
investment. If you invest in creating an effective marketing channel, you have a valuable conduit to customers. If you view
your marketing channel as an expense, a liability for your company, you will have a tendency to take shortcuts and
shortchange your business by under-marketing.
Product Promotion
Product Promotion Mix :
1. Advertising 2.Sales promotion
3 . Public Relations / publicity 4. Personal selling 5. Direct Marketing
Advertising : It is a paid form of non-personal presentation and promotion of ideas , goods and services by an identified
sponsor. Advertising
Advertising or advertizing[1][2][3] is a form of communication for marketing and used to encourage, persuade, or
manipulate an audience (viewers, readers or listeners; sometimes a specific group) to continue or take some new action.
Most commonly, the desired result is to drive consumer behavior with respect to a commercial offering, although political
and ideological advertising is also common. In Latin, ad vertere means "to turn the mind toward."[citation needed] The
purpose of advertising may also be to reassure employees or shareholders that a company is viable or successful.
Advertising messages are usually paid for by sponsors and viewed via various traditional media; including mass media
such as newspaper, magazines, television commercial, radio advertisement, outdoor advertising or direct mail; or new
media such as blogs, websites or text messages.
Function of advertising
1. Promotion of sales of goods, services and ideas.
2. Introduction of new products
3. Creation of good public image.
4. Facilitates large- scale production.
5. Stimulates research and development activity. New substitutes.
6. Educating the people :Maggie's use.
7. To support press and T.V. Channels.

Types of advertising
Television advertising / Music in advertising
The TV commercial is generally considered the most effective mass-market advertising format, as is reflected by the high
prices TV networks charge for commercial airtime during popular TV events. The annual Super Bowl football game in the
United States is known as the most prominent advertising event on television
Infomercials
An infomercial is a long-format television commercial, typically five minutes or longer.
Radio advertising
Online advertising
New media
Technological development and economic globalization favors the emergence of new and new communication channels
and new techniques of commercial messaging.
Product placements
Covert advertising, is when a product or brand is embedded in entertainment and media. For example, in a film, the main
character can use an item or other of a definite brand, as in the movie Minority Report, where Tom Cruise's character
John Anderton owns a phone with the Nokia logo clearly written in the top corner, or his watch engraved with the Bulgari
logo. Another example of advertising in film is in I, Robot, where main character played by Will Smith mentions his
Converse shoes several times, calling them "classics," because the film is set far in the future. I, Robot Press advertising
Billboard advertising
Billboards are large structures located in public places which display advertisements to passing pedestrians and motorists
Mobile billboard advertising
Mobile billboards are generally vehicle mounted billboards or digital screens.
In-store advertising
In-store advertising is any advertisement placed in a retail store. It includes placement of a product in visible locations in a
store, such as at eye level, at the ends of aisles and near checkout counters (aka POP—Point Of Purchase display), eye-
catching displays promoting a specific product, and advertisements in such places as shopping carts and in-store video
displays.
Coffee cup advertising
Coffee cup advertising is any advertisement placed upon a coffee cup that is distributed out of an office, café, or drive-
through coffee shop. This form of advertising was first popularized in Australia, and has begun growing in popularity in
the United States, India, and parts of the Middle East.[citation needed]
Street advertising

Sheltered Outdoor Advertising
Celebrity branding
Consumer-generated advertising
Aerial advertising
Sales promotion :
Variety of short term incentives to encourage trial or purchase of a product or service. Sales promotion is one of the
seven aspects of the promotional mix. (The other six parts of the promotional mix are advertising, personal selling, direct
marketing, publicity/public relations, corporate image and exhibitions.) Media and non-media marketing communication
are employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve
product availability. Examples include contests, coupons, freebies, loss leaders, point of purchase displays, premiums,
prizes, product samples, and rebates
Sales promotions can be directed at either the customer, sales staff, or distribution channel members (such as retailers).
Sales promotions targeted at the consumer are called consumer sales promotions. Sales promotions targeted at retailers
and wholesale are called trade sales promotions. Some sale promotions, particularly ones with unusual methods, are
considered gimmicks by many.
Sales promotion includes several communications activities that attempt to provide added value or incentives to
consumers, wholesalers, retailers, or other organizational customers to stimulate immediate sales. These efforts can
attempt to stimulate product interest, trial, or purchase. Examples of devices used in sales promotion include coupons,
samples, premiums, point-of-purchase (POP) displays, contests, rebates, and sweepstakes.
 Public relations or publicity :
A variety of programs designed to promote and/or protect a company image or its individual product. Publicity is the
deliberate attempt to manage the public's perception of a subject. The subjects of publicity include people (for
example, politicians and performing artists), goods and services, organizations of all kinds, and works of art or
entertainment.
Publicity is the act of attracting the media attention and gaining visibility with the public, it necessarily needs the
compliment of the media it cannot be done internally because it requires the attention of the publicist and it is the
publicist that carries out publicity while PR is the strategic management function that helps an organization
communicate, establish and maintain relation with the important audiences, It can be done internally without the use
of media
From a marketing perspective, publicity is one component of promotion which is one component of marketing. The
other elements of the promotional mix are advertising, sales promotion, direct marketing and personal selling.
Examples of promotional tactics include:
 Art exhibitions

 event sponsorship
 Arrange a speech or talk
 Make an analysis or prediction
 Conduct a poll or survey
 Issue a report
 Take a stand on a controversial subject
 Arrange for a testimonial
 Announce an appointment
 Invent then present an award
 Stage a debate
 Organize a tour of your business or projects
 Issue a commendation
The advantages of publicity are low cost, and credibility (particularly if the publicity is aired in between news stories
like on evening TV news casts). New technologies such as weblogs, web cameras, web affiliates, and convergence
(phone-camera posting of pictures and videos to websites) are changing the cost-structure. The disadvantages are
lack of control over how your releases will be used, and frustration over the low percentage of releases that are taken
up by the media.
Publicity draws on several key themes including birth, love, and death. These are of particular interest because they
are themes in human lives which feature heavily throughout life. In television serials several couples have emerged
during crucial ratings and important publicity times, as a way to make constant headlines. Also known as a publicity
stunt, the pairings may or may not be according to the fact
Personal Selling :
Face to face interaction with one or more prospective purchasers for the purpose of making presentations , answer the
questions and procuring orders.
Personal selling is where businesses use people (the “sales force”) to sell the product after meeting face-to-face with
the customer.
 The sellers promote the product through their attitude, appearance and specialist product knowledge. They aim to
inform and encourage the customer to buy, or at least trial the product.
 A good example of personal selling is found in department stores on the perfume and cosmetic counters.
 A customer can get advice on how to apply the product and can try different products. Products with relatively high
prices, or with complex features, are often sold using personal selling. Great examples include cars, office equipment
(e.g. photocopiers) and many products that are sold by businesses to other industrial customers.


 The main advantages and disadvantages of personal selling can be summarised as follows:
Advantages Disadvantages
High customer attention
Message is customised
Interactivity
Persuasive impact
Potential for development of relationship
Adaptable
Opportunity to close the sale
High cost
Labour intensive
Expensive
Can only reach a limited number of customers
 Point-of-sale merchandising can be said to be a specialist form of personal selling. POS merchandising involves face-to-
face contact between sales representatives of producers and the retail trade.
 A merchandiser will visit a range of suitable retail premises in his/her area and encourage the retailer to stock products
from a range. The visit also provides the opportunity for the merchandiser to check on stock levels and to check
whether the product is being displayed optimally.
 Direct marketing :
In this we use mail, telephone , fax, e-mail and other non personal contact tools to communicate directly with or solicit a
direct response from specific customers or prospects. Direct marketing is a channel-agnostic form of advertising that
allows businesses and nonprofits organizations to communicate straight to the customer, with advertising techniques
that can include Cell Phone Text messaging, email, interactive consumer websites, online display ads, fliers, catalog
distribution, promotional letters, and outdoor advertising.
Direct Marketing Channels
Email Marketing
Online Tools
[edit]Mobile
[edit]Telemarketing
Another common form of direct marketing is telemarketing, in which marketers contact customers by phone.
[edit]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. [edit]Broadcast Faxing
Couponing
Couponing is used in print and digital media to elicit a response from the reader. An example is a coupon which the
reader receives through the mail and takes to a store's check-out counter to receive a discount.

[edit]Direct Response TV
[edit]Direct Mail
Direct Response Radio
Insert Media
Another form of direct marketing, insert media are marketing materials that are inserted into other communications,
such as a catalog, newspaper, magazine, package, or bill. Coop or shared mail, where marketing offers from several
companies are delivered via a single envelope, is also considered insert media.
Out-of-Home
Out-of-home direct marketing refers to a wide array of media designed to reach the consumer outside the home,
including transit, bus shelters, bus benches, aerials, airports, in-flight, in-store, movies, college campus/high schools,
hotels, shopping malls, sport facilities, stadiums, taxis — that contain a call-to-action for the customer to respond.
Direct Response Magazines and Newspapers
Direct Selling
Direct selling is the sale of products by face-to-face contact with the customer, either by having salespeople approach
potential customers in person, or through indirect means such asTupperware parties.
Grassroots/Community Marketing
The door-to-door distribution of flyers and leaflets within a local community is a business-to-consumer form of direct
marketing used extensively by restaurants, fast food companies, and many other business focusing on a local catchment.
Similar to direct mail marketing, this method is targeted purely by area and community, and costs a fraction of the
amount of a mailshot, since it is not necessary to purchase stamps, envelopes, or address lists with the names of home
occupants.

Channels of Distribution
Looking at the diagram above:
Channel 1 contains two stages between producer and consumer - a wholesaler and a retailer. A wholesaler typically buys
and stores large quantities of several producers’ goods and then breaks into bulk deliveries to supply retailers with
smaller quantities. For small retailers with limited order quantities, the use of wholesalers makes economic sense.
Channel 2 contains one intermediary. In consumer markets, this is typically a retailer. The consumer electrical goods
market in the UK is typical of this arrangement whereby producers such as Sony, Panasonic, Canon etc. sell their goods
directly to large retailers such as Comet, Tesco and Amazon which then sell onto the final consumers.
Channel 3 is called a "direct-marketing" channel, since it has no intermediary levels. In this case the manufacturer sells
directly to customers. An example of a direct marketing channel would be a factory outlet store. Many holiday companies
also market direct to consumers, bypassing a traditional retail intermediary - the travel agent.
Emerging Channel Integrations Include:

 Mobile Messaging, Ad Delivery, SMS Integration and Opt-in Mobile Number Acquisition
 Online Video Integration
 Social Media Integration
 Rich Media Integration

Distribution Decisions
Our discussions in the tutorials Product Decisions and Managing Products indicate product
decisions may be the most important of all marketing decisions since these lead directly to the reasons (i.e., offer benefits
that satisfy needs) why customers decide to make a purchase. But having a strong product does little good if customers
are not able to easily and conveniently obtain it. With this in mind we turn to the second major marketing decision area –
distribution.
Distribution decisions focus on establishing a system that, at its basic level, allows customers to gain access and purchase
a marketer’s product. However, marketers may find that getting to the point at which a customer can acquire a product is

complicated, time consuming, and expensive. The bottom line is a marketer’s distribution system must be both effective
(i.e., delivers a good or service to the right place, in the right amount, in the right condition) and efficient (i.e., delivers at
the right time and for the right cost). Yet, as we will see, achieving these goals takes considerable effort.
Distribution decisions are relevant for nearly all types of products. While it is easy to see how distribution decisions
impact physical goods, such as laundry detergent or truck parts, distribution is equally important for digital goods (e.g.,
television programming, downloadable music) and services (e.g., income tax services). In fact, while the Internet is playing
a major role in changing product distribution and is perceived to offer more opportunities for reaching customers, online
marketers still face the same distribution issues and obstacles as those faced by offline marketers.
In order to facilitate an effective and efficient distribution system many decisions must be made including (but certainly
not limited to):
 Assessing the best distribution channels for getting products to customers
 Determining whether a reseller network is needed to assist in the distribution process
 Arranging a reliable ordering system that allows customers to place orders
 Creating a delivery system for transporting the product to the customer
 For tangible and digital goods, establishing facilities for product storage
Marketing intermediaries: the distribution channel
Many producers do not sell products or services directly to consumers and instead use marketing intermediaries to
execute an assortment of necessary functions to get the product to the final user. These intermediaries, such as
middlemen (wholesalers, retailers, agents, and brokers), distributors, or financial intermediaries, typically enter into
longer-term commitments with the producer and make up what is known as the marketing channel, or the channel of
distribution. Manufacturers use raw materials to produce finished products, which in turn may be sent directly to the
retailer, or, less often, to the consumer. However, as a general rule, finished goods flow from the manufacturer to one or
more wholesalers before they reach the retailer and, finally, the consumer. Each party in the distribution channel usually
acquires legal possession of goods during their physical transfer, but this is not always the case. For instance,
in consignment selling, the producer retains full legal ownership even though the goods may be in the hands of the
wholesaler or retailer—that is, until the merchandise reaches the final user or consumer.
4 Types of Marketing Intermediaries
Agents
The agent as a marketing intermediary is an independent individual or company whose main function is to act as the
primary selling arm of the producer and represent the producer to users. Agents take possession of products but do not
actually own them. Agents usually make profits from commissions or fees paid for the services they provide to the
producer and users.
Wholesalers

Wholesalers are independently owned firms that take title to the merchandise they handle. In other words, the
wholesalers own the products they sell. Wholesalers purchase product in bulk and store it until they can resell it.
Wholesalers generally sell the products they have purchased to other intermediaries, usually retailers, for a profit.
Distributors
Distributors are similar to wholesalers, but with one key difference. Wholesalers will carry a variety of competing
products, for instance Pepsi and Coke products, whereas distributors only carry complementary product lines, either
Pepsi or Coke products. Distributors usually maintain close relationships with their suppliers and customers. Distributors
will take title to products and store them until they are sold.
Retailers
A retailer takes title to, or purchases, products from other market intermediaries. Retailers can be independently owned
and operated, like small “mom and pop” stores, or they can be part of a large chain, like Walmart. The retailer will sell the
products it has purchased directly to the end user for a profit.
Functions of Marketing Intermediaries
Functions of an Intermediary
Deciding whether to use an intermediary in the distribution channel depends on many factors, but essentially it involves
determining whether the needs of the consumer can successfully be met by the available resources and skills of the
producer. The three basic functions performed by an intermediary in the distribution channel are:
1. Transactional: This function involves adding value to the distribution channel by bringing in the intermediary's
resources to establish market linkages and customer contacts. The intermediary either directly undertakes the
marketing and sales function or helps to establish buyer-seller relationships by serving as a link between the
manufacturer and the retailer.
2. Logistical: This function involves the physical distribution of goods. It involves sorting and storing supplies at
locations within the reach of the end customer. It also breaks up the bulk production of the manufacturer into
smaller portions and may include the transportation of smaller shipments to intermediaries or retailers further
down the channel of distribution.
3. Facilitating: Although often confused with logistics, the facilitating functions of intermediaries supplement the
entire marketing flow of the product and are separate from logistics. The facilitating functions include financially
supporting the marketing chain by investing in storage capabilities. They may include facilitating sales by helping
the consumer buy even when he or she does not have cash (through financing plans, purchase agreements, etc.).
Together, these functions performed by the intermediary ensure market coverage, reduce the cost of market coverage,
increase the availability of cash flow in the distribution channel, and increase end-user convenience. A producer can
bypass an intermediary by elimination or substitution, but the tasks performed by the intermediary cannot be
eliminated.
Advantages of Using an Intermediary

The advantages of using intermediaries stem from the core economics of supply-chain management: market coverage,
customer contacts, lower costs, systematic cash flow, etc. The intermediary adds value to the marketing of the product by
bringing in specialization, marketing knowledge, capacity to segment the market, and selling skills that allow the marketer
to implement marketing strategies effectively.
Intermediaries providing logistic support increase convenience to both the producer and the consumer by offering
effective delivery and pre- and post-purchase customer service as well as facilitating manufacturer services, making them
indispensable to most mid- and small-scale producers.
Disadvantages of Using an Intermediary
Manufacturers quite often see intermediaries as parasites rather than assets. The disadvantages of using an intermediary
stem from psychological apprehensions, market antecedents which have created such apprehensions, and lack of
managerial skills or resources that are sufficient to balance and manage the intermediary. Fears, which may come true if
the producer fails to manage the intermediary, might include:
 fear of losing control
 fear of losing customer contact
 fear of losing customer ownership
 fear of opportunistic behavior
 fear of inadequate communication
 fear that the objectives of the intermediary will conflict with those of the producer
 fear that the intermediary will extract rather than add to value
 fear of poor market management
Furthermore, an intermediary may have many of the same fears (except for the last two on the list). These fears often
undermine the working relationship between a producer and an intermediary and keep them from effectively utilizing
each other's resources and maximizing the potential of the marketing mix.
How To Select An Intermediary
If you're considering hiring an intermediary to help you buy or sell a middle market company, here are ten keys to
selecting a good one. These tips are based on 20 years experience buying and selling my own companies with and without
an intermediary, being an intermediary personally, and dealing with intermediaries on the “other side of the table” in
transactions over the years.
Some of this guidance might be a little unconventional, but it’s a summary of what I’ve learned out in the marketplace -
seeing the good, the bad and the ugly. Like any profession, there are excellent intermediaries all across the country.
Unfortunately, there are many who are not so hot. Buying and selling a company is a serious and important matter, and

you should have first rate representation. Hopefully, what follows will give you some ideas about what to look for so you
can select the right intermediary for your situation. It’s the advice I’d give my best friend if I was unable to represent him
personally.
1. Entrepreneurial Experience. Not counting his current brokerage business, has the intermediary ever started,
bought and sold his own companies? If someone has not paced the floor in the middle of the night sweating
about cash flow, if he’s not dealt with employees, vendors, landlords and bankers (on his own dime), if he’s not
ever managed a business profitably, then there is no way he can really fully relate to the concerns of business
buyers and sellers. Select an intermediary that is also an entrepreneur. His or her business experience will
manifest itself repeatedly throughout the transaction and both buyers and sellers will note in relief, “Ah, here’s
someone that understands!”
3. Street Smarts
4. Longevity. As my favorite flyfishing guide says, “There’s simply no substitute for time on the river.” An
intermediary who has not been closing deals out in the marketplace for at least ten years might be smart,
talented and well meaning, but they simply do not have enough seasoning to achieve optimum results
consistently. There is much turnover in the M&A profession. It looks like a great career (and it is). It’s pretty easy
to get started (print business cards), but it is extremely difficult to survive and thrive long term as a business
intermediary. It takes financial, physical and emotional staying power to last 10 years or more. Longevity brings
wisdom, patience, persistence and the emotional stability to ride the rollercoaster of a deal without getting overly
excited about positive developments or overly panicked by an adverse turn of events. Being an intermediary is a
lot like being an experienced flyfisherman – you’ve gotta love the process. When the fishing is good, you fish
harder and enjoy every minute. When it’s bad, you embrace the challenge. You fish even harder, and still enjoy it.
It’s that same kind of confidence, belief, commitment and passion that makes a good intermediary.
4. Lots of Deals. It takes brokering about 50 deals to really begin to get a solid handle on this profession. There are
simply too many variables in transactions to make a claim to mastery with any less. And it’s not just knowledge;
it’s the practice at anticipating potential problems, responding to the unexpected challenges and salvaging the
apparently unsalvageable. What I’ve seen repeatedly, both as an intermediary and as a buyer and seller, is that
you’re better off with an intermediary who’s closed 100 transactions, of any size, than by a guy who hit a home
run and completed 1 monster deal. Even novices can get lucky and hook a big fish, but you can bet an angler
who’s landed 1,000 trout knows how to fish. Same with deal makers.
5. Marketing and Sales Experience
6. Life Experience.
7. Competitive Fire
8. Technical Knowledge.
9. Values
10. Chemistry. Finally, you’ll invest the next 6 to18 months with the person you hire to help you buy or sell a
company. Mergers and acquisitions is a serious business, but it does not have to be grim. Will you enjoy the
process? Will you enjoy working with this person. Do you “click?” Do you think potential buyers (or sellers) will be
attracted to and trust your intermediary? Sometimes people say, “I don’t care whether I like the dealmaker or

not. I want someone who is a fierce negotiator – the meaner and tougher the better – who will grind away on my
“opponent” to get me the best price.
It does not work that way in the real world. Here’s what buyers (for example) say when the seller’s intermediary is a jerk:
“This guy is a jerk. If he is any reflection of the seller’s character and judgment, this is not the deal for us. We’re out of
here.”
So hire an intermediary with strong character, communications skills and relational abilities. One who will reflect well on
you and your company and who can build a bridge between you and the other party in the transaction that leads to an
optimal, lasting and dignified deal.
Consumerism
Consumerism is a social and economic order that encourages the purchase of goods and services in ever-greater
amounts. In economics, consumerism refers to economic policies placing emphasis on consumption. In an abstract sense,
it is the belief that the free choice of consumers should dictate the economic structure of a society
(compare producerism, especially in the British sense of the term)
"Consumerism" is the concept that consumers should be informed decision makers in the
marketplace.[4]
Practices such as product testing make consumers informed.
1. "Consumerism" is the concept that the marketplace itself is responsible for ensuring economic justice and
fairness in society.[4]
Consumer protectionpolicies and laws compel manufacturers to make products safe.
2. "Consumerism" refers to the field of studying, regulating, or interacting with the
marketplace.[4]
The consumer movement is the social movement which refers to all actions and all
entities within the marketplace which give consideration to the consumer.
While the above definitions were being established, other people began using the term "consumerism" to mean
"high levels of consumption".[4]
This definition gained popularity since the 1970s and began to be used in these
ways:

3. "Consumerism" is the selfish and frivolous collecting of products, or economic materialism. In protest to
this some people promote "anti-consumerism" and advocacy for simple living.[4]
4. "Consumerism" is a force from the marketplace which destroys individuality and harms society.[4]
It is
related to globalization and in protest to this some people promote the "anti-globalization movement".[5]
2. As commonly understood consumerism refers to wide range of activities of government , business and
independent organisations designed to protect rights of the consumers. Consumerism is a process through which
the consumers seek redress(to set right) , restitution and remedy for their dissatisfaction and frustration with the
help of their all organised or unorganised efforts and activities.
“consumerism is not limited to organized effort only but , is a social movement seeking to augment(increase)
the rights and powers of buyers in relation to seller”
(Philip Kotler)
How did consumerism originate?
In our India the existing markets of products run in shortage , adulteration & black market prices. The profit
making attitude of the business failed to discharge social responsibilities of maintaining fair price, quality of goods &
providing services etc.
For example:-
1. tooth paste tube filled with air.
2. Adulteration in PURE GHEE etc.
To over come from that type of problem consumerism originate.
Benefits of Consumerism
• Consumer Education
• Consumer Groups can liaison between Government & Industry
• Product Research & Information to Consumer
• Inculcate Honesty, Responsiveness & Responsibility on to Manufacturers & Marketers.
• Move towards Societal Concept of Marketing
• Importance of consumerism:-
1. Stop unfair trade practices
2. Provide complete & latest information
3. Discourage anti-social activities
4. Implementation of consumer protection laws

5. Protect against exploitation
Rural Marketing
• Collin’s cobuild dictionary describes the word rural as “places for away from towns or cities”
• Sociology point of view rural is defined as a group of people who are traditionalists inout look, rooted in the land
and who resist change.
Definition:-
• Rural Marketing is defined as any marketing activity in which one dominant participant is from a rural area. This
implies that rural marketing consists of marketing of inputs (products or services) to the rural as well as marketing
of outputs from the rural markets to other geographical areas.
• In simple words, is planning and implementation of marketing function for the rural areas.
• It is a two-way marketing process which encompasses the discharge of business activities that direct the flow of
goods from urban to rural areas(for manufactured goods) and vice-versa (for agriculture produce)
• R.Marketing has also been defined as the process of developing, pricing, promoting, distributing rural specific
goods and services leading to exchange between urban and rural markets, which satisfies consumer demand and
also achieves organisational objectives (Iyer)
Difference between Rural and Urban Marketing:-
• Intra community influences are relatively more important than inter- community ones. Word- of- mouth in close
knit communities is more powerful.
• Scarcity of media bandwidth. Rural individual’s access to media channels is limited and in the case of broadband
the comparable upload and download speed may be slower.
• Slow to adopt brands. Slow to give them up. Rural consumers will be slower to pick up trends or brands but will
remain loyal when accepted.
• Expenses are year long; income is seasonal. Many rural areas rely on seasonal tourism peaks when income will
be high and to a lesser extent agricultural incomes from seasonal crops. This means there will be more disposable
income at certain times with rural businesses and employees.
• Commercially profitability; and socially acceptable. Brands with demonstrable local, rural, environmental and / or
social credibility stand a better chance.
Rural Marketing Strategies
I) Segmentation : Income based i.e. land holding
 Marginal farmers upto : 1 hectare
 Small farmers upto : 1 to 2 hectare

 Semi- medium farmers upto: 2 to 4 hectare
 Large farmers above: 10 Acres
II) Product Strategies:
a) Small Unit Packaging:- Tea sachets, Biscuits, Talcum, Skin Cream , Hair Oil, Soaps
b) Low Priced Packaging
c) New Product Design:- Shoes, pressure cookers ,chapels, towels.
d) Sturdy Products:- Heavier dry cell batteries
e) Utility Oriented Products:- Mobiles, TVs
f) Brand names:- Gatta Paint, Nili Tikki
Pricing Strategies
a) Low Cost/ Cheap products
b) Avoid sophisticated packing/ small packages
c) Refill/ reusable packs – Reusable sacks for fertilizers.
Distribution Strategies
a) 6 Lakhs villages approx. coverage based on population.
b) Use of cooperative societies.
c) Utilization of public distribution system.
• Utilization of multi- purpose distribution centers by petroleum and oil companies- ATM/ STD/ ISD.
• Distribution upto feeder markets/ towns
• Haats/ Melas
• Agricultural input dealers
Promotion Strategies:
a) Mass Media- TV, Newspapers, Cinemas, Radio
b) Hoardings, wall paintings
c) Haats/ Melas
d) Personal selling/ Opinion Leaders.
e) Special Campaigns

Promotion strategies
f) 1.Think global act local
g) Rural population is diverse
h) But the commonalities of their ethos and simple living habits need to be understood for advertising to succeed(
context, story line, language and idioms)
i) 2. think in local idiom
j) ‘thanda matlab coca cola’
k) 3.simplicity and clarity
l) 4.Narrative story style
m) 5.Choice of brand ambassadors
n) govinda in the mirinda ad boosted the sales of the drink in rural market.
o)
Whether Rural Markets are Attractive?
Large population
� Rising prosperity
� Growth in consumption
� Life-style changes
� Life-cycle advantages
� Market growth rates higher than Urban
� Rural marketing is not expensive
�� Remoteness is no longer a problem.
Nature and characteristics of the rural market
large and scattered market
Heterogeneous market
• Not a homogeneous
• 24 languages and 1642 dialects- varies every 100 km
• Difficult to develop uniform message – caste, community, tradition values (from state to state, region to region
differ)

Income from agriculture
• 55% of rural income comes from the agriculture sector
• Hence rural prosperity is tied with agricultural prosperity
Standard of living
• Lower standard of living
• 70% rural population is employed in small – scale agricultural and related occupation
• Seasonality’
• As it is unreliability in income- rural consumers are extremely conscious in their purchase behaviour
infrastructural facilities
• Road, warehouse, communication system and financial facilities are inadequate in rural area
• Roads donot connect nearly 50% villages in the country
• Inadequate infrastructure is single most important factor distinguishes urban and rural
• Promotion and physical distribution thus becomes very difficult
Social marketing
 Social Marketing was born as discipline in 1970 when Philip Kotler and Gerald Zaltman realised that same
marketing principles those were being used to sell the products to consumers could be used to sell ideas ,
attitudes and behaviours.
Definition : According Kotler and Andreasen “ Social Marketing differs from other areas of marketing only with respect to
the objectives of the marketer and his/her organisation. Social marketing seeks to influence social behaviours not to
benefit but to benefit target audience and the general society.
 Social marketing is systematic application of marketing along with other concepts and techniques , to achieve
specific behavioural goals for a social good .
 Social marketing can be applied to promote merit goods or avoid demerit goods and thus promote society’s well
being .
 Primary aim of Social Marketing is ‘Social Good’ while Commercial marketing aims at Financial gains.
 The focus on consumer involves in-depth research and constant reevaluation of every aspect of program .
 Research and evaluation together form the very corner stone of the social marketing process.
 Examples of Social marketing are to promote :

- Asking people not to smoke in public , to use seat belts, to follow speed limits in driving .
 Societal marketing : It integrates issues of social responsibility into commercial marketing.
 In contrast , social marketing uses commercial marketing theories , tools and techniques to social issues.
Components of social marketing :
1. A consumer orientation to realise organisational ( social ) goals.
2. An emphasis on the voluntary exchanges of goods and services between providers and consumers.
3. Research in audience analysis and segmentation strategies.
4. Use of formative research and message design and pretesting these materials.
5. An analysis of distribution ( or communication ) channels.
6. Use of marketing mix utilising and blending product , price , place and promotion characteristics in intervention
planning and implementation.
7. A process tracking system with both integrative and control functions.
8. A management process that involves problem analysis , planning , implementation and feedback/ control system.
Ps of Social Marketing
I. Product , Price , Place and Promotion are normal Marketing Mix of Social Marketing as Traditional Marketing .
II. Additional Ps of Social Marketing :
 Publics– Effective Social Marketing knows its audience, and can appeal to multiple groups of people. “Public” is
the external and internal groups involved in the program. External publics Include the target audience, secondary
audiences, policy makers, and gatekeepers, while the internal publics are those who are involved in some way
with either approval or implementation of the program.
 Partnership– Most social change issues, including “green” initiatives, are too complex for one person or group to
handle. Associating with other groups and initiatives to team up strengthens the chance of efficacy.
 Policy– Social marketing programs can do well in motivating individual behavior change, but that is difficult to
sustain unless the environment they’re in supports that change for the long run. Often, policy change is needed,
and media advocacy programs can be an effective complement to a social marketing program.
 Purse Strings– How much will this strategic effort cost? Who is funding the effort?
Reasons against social marketing
Cost – Social marketing programmes can cost considerable amounts of money. Criticisms of these expenditures are
heightened as they are often financed by public money in times of resource constraints and therefore have a high
opportunity cost. A related issue is that of the problems involved in assessing the success of these programmes due to
The long term nature of behavioural change and the difficulties in establishing cause–effect relationships .

–marketing is often equated with selling and persuading people
to buy things that they do not really want. Interestingly, when people are asked if they have been persuaded they usually
say no. Lack of awareness of the potential of marketing, misunderstanding and the observation of some of the more
doubtful practices of the commercial sector are some of the reasons behind this.
ity – A final point emerges from marketing authors themselves. that the wider application
of marketing away from the commercial sector dilutes the content and nature of marketing as a discipline.
Direct Marketing
Definition : is an interactive marketing system that uses one or more advertising media to effect a measurable response
and / or transaction at any location. Direct marketing is a channel-agnostic form of advertising that allows businesses and
nonprofits organizations to communicate straight to the customer, with advertising techniques that can include Cell
Phone Text messaging, email, interactive consumer websites, online display ads, fliers, catalog distribution, promotional
letters, and outdoor advertising.
Direct marketing messages emphasize a focus on the customer, data, and accountability. Characteristics that distinguish
direct marketing are:
1. Marketing messages are addressed directly to the customer and/or customers. Direct marketing relies on being
able to address the members of a target market. Addressability comes in a variety of forms including email
addresses, mobile phone numbers, Web browser cookies, fax numbers and postal addresses.
2. Direct marketing seeks to drive a specific "call to action." For example, an advertisement may ask the prospect to
call a free phone number or click on a link to a website.
3. Direct marketing emphasizes trackable, measurable responses from customers — regardless of medium.
Basic characteristics/ properties of Direct marketing :
1. A definite offer to customer.
2. All necessary information provided to make a decision.
Basic characteristics/ properties of Direct marketing ( Cont…… ) :
3. A mechanism to respond to the offer . Within this frame work fall all direct marketing options : Sales letters,
catalogues, telemarketing , direct response , TV advertisements and internet.
Businesses that rely heavily on Direct marketing :
 Magazines and news letter publishers
 Mail order merchandisers.
 Fund raisers
 Book publishers
 House hold durables

Reasons to find Direct marketing attractive :
1. Investment required is low.
2. It does not require any specialized skill.
3. All that is required is a data base with consumer profiles.
4. Returns are quick and its effectiveness can be measured.
5. Consumer reaction can be known immediately.
Examples : Free delivery of items as in Amway,
Domino’s delivery system
Dell Computers
Amazon.com
Future of Direct Marketing in India
 1. Reaching out to non-metro/non-urban markets depends on infrastructure available and increased use of
mobile phones.
 2. Enhancing credibility of the offer: Experience of customer plays an important role.
 3. Wider use of debit and credit card. (e-commerce)
 4. Emergence of specialised data base firms.
Methods of Direct Marketing

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