mips

1. Course Material
LIBRARY AND INFORMATION SCIENCE
By
Dr. K. Elavazhagan
Librarian & Chief Knowledge Officer
Department of Library and Information Science
BHARATHIDASAN UNIVERSITY
TIRUCHIRAPALLI – 620024
TAMIL NADU
MARKETING OF INFORMATION PRODUCTS AND
SERVICES

2. 1 | P a g e
|

3. 2 | P a g e
Table of Contents
Unit-I.........................................................................................................................................................
Information as a Resource.................................................................................................................. 2
Economics of Information............................................................................................................... 3
Marketing Concepts……………………………………………………………………………………………………………….9
Corporate Mission ........................................................................................................................15
Marketing Strategies……………………………………………………………………………………………………………….18
Unit-II........................................................................................................................................................
Portfolio Management......................................................................................................................21
BCG Matrix Model.........................................................................................................................21
Product Life Cycle……………………………………………………………………………………………………………….... 23
Pricing Information………………………………………………………………………………………………………………...32
Unit-III
Marketing Mix…….……………………………………………………………………………………………………………………..45
Unit-IV
Marketing Plan & Research………………………………………………………………………………………………………58
Corporate Identity…………………………………………………………………………………………………………………62
Market Segmentation and Targeting……………………………………………………………………………………..65
Geographic and Demographic Segmentation………………………………………………………………………..67
Behavioural and Psychographics Segmentation…………………………………………………………………….68
User Behavior and Adoption…………………………………………………………………………………………………69
Unit-V
Information Industry
Marketing Information Products & Services…………………………………………………………………………75
Social Media………………………………………………………………………………………………………………………..82

4. 3 | P a g e

5. 4 | P a g e
Unit-I
Information as a Resource
Information
Information is an indispensable factor for promoting the development of society. Kemp
(1976:101) observes, that information has been called, the fifth need of man, ranking after air,
water, food, and shelter. Luck, et al., adds that information is the life blood of planning,
directing, and controlling any enterprise (Luck et al, 1981:20). It makes the satisfaction of the
demands of the population possible in an efficient way.
The present age is rightly characterized as the age of information, where it success in any
activityis based on the amount and accuracy of information available. The fact that
information is a key resource for the progress and development of a nation (Raina, 1998:3) is
nothing but the socio-economic, cultural, and political development of its citizenry.
Information is a commodity or economic good of worldwide significance, which contributes
to the national economy. Information has become a commodity that people buy. The criteria
that determine power have shifted from industry ownership to the information ownership, as
the global economy has shifted from industry-based to information-based. The quality and
quantity of the information resources of the country are two of the parameters for
development. Countries with adequate information infrastructure and information technology
can create artificial demand for superfluous products and use it as a weapon against the
economy of other countries. Information is an indispensable input for technological and
economic development. It is a negotiable product that moves about in international markets.
In today's international developing economies, a country that is incapable of providing
information to its citizens will lose autonomy and be at the mercy of developed countries for
information.
IM is managing the processes of selection, collection building, processing, controlling, and
dissemination of information in an organization. IM can help an organization recognize and
use the potentials of the resources of information and information technology. (Brenner)
Librarians have a significant role to play in IM. Considering the IM cycle, one can find that
librarians have a role to play in almost every step in the information-user matching process.
 Information is essential in education, serving the process of learning, supplementing
interaction with teachers, and providing (in books, media, and databases) much of the
substance.
 Information may be an educational objective in itself, since among things to be learned
are the tools for access to and use of information.
Information is the substance of cultural enrichment, entertainment, and amusement
 Information can be a product, a commodity — something produced as a package.
 Information can be a service. Indeed, the majority of ‗business services‘ (the
national economic account that includes consulting) are information based.

6. 5 | P a g e
 Information is easily and cheaply transported. The first copy represents most of
the costs in creation, and reproduction costs are relatively small. As a result, it that
can be produced and distributed with minimal depletion of physical resources.
 There is a complex relationship between the time of acquiring information and the
value of it. For some, the value lies in immediacy—yesterday's stock information
may be worthless tomorrow. For others, the value is likely to be received in the
future rather than the present.
 There are immense economies of scale. Combined with the value in accumulation,
this provides strong incentives for sharing information, especially since, once
available, it can be distributed cheaply, which makes sharing easy.
 Information is not consumed by being used or transmitted to others. It can be
resold or given away with no diminution of its content. Many persons may possess
and use the same information, even at the same time, without diminishing its
value to others. All these imply that information is a public good.
 General Economic Policies
1. Encourage entrepreneurship
2. Shift from low technology to high technology
3. Shift from production of physical goods to information goods
 Develop the ―Information Economy‖
1. Encourage effective use of information in business
2. Provide incentives for information industries
3. Develop information skills
 Management of Information Enterprises
 Establish technical information skills
 Develop information support staff skills
There is the need to invest in the creation, production, and distribution of information and
that implies a wish to recover the investment. Furthermore, there may be value associated
with exclusivity in knowledge, so there must be an incentive to make it available to others.
This implies that information is a private good.
Economics of Information
A fundamental shift in the economics of information is under way—a shift that is less about
any specific new technology than about the fact that a new behavior is reaching critical mass.
Millions of people at home and at work are communicating electronically using universal,
open standards. This explosion in connectivity is the latest—and, for business strategists, the
most important—wave in the information revolution.
Over the past decade, managers have focused on adapting their operating processes to new
information technologies. Dramatic as those operating changes have been, a more profound

7. 6 | P a g e
transformation of the business landscape lies ahead. Executives—and not just those in high-
tech or information companies—will be forced to rethink the strategic fundamentals of their
businesses. Over the next decade, the new economics of information will precipitate changes
in the structure of entire industries and in the ways companies compete.
Just as the free flow of information is essential to well-functioning democracies, it is essential
to well-functioning consumer marketplaces. Consumers need accurate, complete, and timely
information to learn about alternatives and make good choices. Marketers need information
about consumers to learn what they want (when and where and how much) and how much
they value alternatives. Such information equips firms to offer the right product at the right
place at the right time and at the right price.
Democracies and the consumer marketplace operate by persuasion and not coercion.
Marketers and politicians need to make their cases through information and rhetoric.
Typically they appeal to the emotions as well as to the intellect. But marketers (and
politicians) are engaged in an advertising arms race, and the marketplace overflows with
commercial message, many of them irrelevant and irritating. A question is whether all this
signifies marketer power or consumer power.
Marketers‘ use of information about consumers must be balanced against consumer‘s
privacy. Traditionally, the marketing research profession has agreed on codes of ethics to
protect consumer information, such as walling off research from sales and ensuring
respondent anonymity. However, now that digital technologies enable marketers to gather,
store, and connect multiple pieces of behavioral data about individuals and tailor products
accordingly, consumer privacy increasingly is traded for the benefits that marketers can
provide by using such information. Reputable marketers need to ensure that files containing
sensitive personal information are adequately protected and that individual‘s privacy and
security are not put at risk.
Information issues are central to debates over marketers‘ rights versus consumers‘ rights, and
governments are instrumental in mediating these clashes. Democratic governments permit
marketers substantial freedom but intervene in response to sustained pressure from one side
or the other, particularly when arguments convince policy makers that existing practices fail
to conform to the ideal of a competitive, open, and well-informed marketing system.
Not everyone has equal access to information or equal ability to process it- for
example, the poor of the world, the illiterate, and those living in remote areas. According to
―new growth‖ economic theory, rapid sharing of new ideas and accurate information are
integral to economic expansion. For long-term market growth, it may be in marketers‘ best
interest to contribute to investments that bridge the digital divide, possibly through public-
private partnerships, grants, and incentives or by developing new ways to give consumers
access to information.

8. 7 | P a g e
Information, Persuasion, and Advertising
In the consumer marketplace, much of the information about products and services comes
directly from marketers, supplemented by personal experience and word of mouth. (By
contrast, in the political marketplace, much of the information comes from the media.)
Interactions with sales-people, assuming that they are knowledgeable and well trained, are
information rich for buyers and sellers alike. Whether a consumer is shopping for a new
computer or looking for the proper nut-and-bolt combination to complete a do-it-yourself
project, expert assistance can help match the right product or service to the circumstance.
Salespeople, in turn, learn what consumers are looking for and which alternative
solutions they are considering. Feedback from good salespeople can help marketers shape
their product assortment or guide new-product development. The vaunted interactivity of
new-generation websites is a pale approximation of the interactivity of the best person-to-
person exchanges.
Marketer‘s merchandising activities, including packaging, pricing, and product display, as
well as product samples from a test drive to a sample taste- are another source of information.
But in large, dispersed, and fast changing marketplaces, no buyer can learn about available
products based solely on experience, sales interactions, or merchandising. These sources are
supplemented or substituted by commercial messages in various media.
In the developed world, commercial information is ubiquitous. It includes advertisements in
newspapers, magazines, radio, television, and the Internet; street flyers, shop signs, and
billboards; direct mail and e-mail; posters on buses and trains; and logos and signage at
sporting events. And that‘s only the advertising that the average person can clearly identify as
being paid messages. Public relations events, corporate press releases that form the basis for
news stories, half-hour television ―advertorials‖ presented as objective journalism, product
placements in movies or television, corporate sponsorships of not-for-profit arts organizations
– these are less visible, more subtle versions of promotion.
In the name of acculturation to adulthood, even schools are not exempt from the
commercialization of modern life: soft-drink vending machines line hallways and
commercials are broadcast over audiovisual systems paid for by private enterprise. Churches
may be next.
Only a few places in the world are free from rampant advertising, and, if history is a guide,
they may not be ad-free for long.
The Evolution of Advertising
Modern consumer marketplaces exhibit a wide range of advertisements that differ in their
information content and persuasive approach. Advertising has evolved from purely factual

9. 8 | P a g e
toward imagery-laden, emotional content. Early ads simply informed potential purchasers
about product availability.
A typical mid-eighteenth-century merchant would place a long newspaper advertisement
itemizing the goods in stock following a ship‘s arrival. Much current newspaper advertising
still consists of factual information about product availability and price. Ads also introduce
vocabulary or terms that educate consumers about product differences. Consumers learn to
distinguish high-quality goods and to make ever finer distinctions among types- say, a two-
megapixel versus a five-megapixel digital camera.
At the beginning of mass marketing, ads tended to extol the functional superiority of a
product or a brand, sometimes incorporating a good dose of puffery. (This type of advertising
is used in emerging economies, where advertisers need to educate consumers about basic
product performance.) Marketers talked about things like maximum cleaning strength and
presumed that consumers would choose the product on this basis. Marketers also sought to
influence choice by framing the basis for comparison, teaching consumers, which attribute
was more important or what constituted product superiority versus a competitor.
In Rosser Reeves‘s famous ―unique selling proposition‖ approach to advertising, all ads for a
product had to demonstrate a single unique benefit: ―Each advertisement must say to each
reader: ―Buy this product and you will get this specific benefit‖ Reeves didn‘t assume that
consumers always knew they needed a particular feature or could see how products differed;
it was advertising‘s job to point out consumers latent needs.
Apart from functional benefits, marketers hoped to influence consumer‘s choice by creating
strong awareness of their product and transferring liking for an ad to liking for the product.
Adman Leo Burnett forged emotional connections through association with invented
characters like the Pillsbury Doughboy.
Television advertising emphasized visual images over wordy explanations (reflecting the fact
that 80-90 % of the meaning in human communication is transmitted nonverbally). It aimed
to talk to rather that at the audience and to demonstrate rather than proclaim benefits.
Increasingly, marketers promised emotional benefits, including taking good care of one-self
or one‘s family or achieving social success by buying the right brand. Colgate toothpaste, for
example, promised ―the ring of confidence.‖
Perhaps in reaction to these developments, Vance Packard‘s sensationalist critique of the
advertising industry in the 1950s accused advertisers of using subliminal techniques to
influence consumers through their subconscious. (Some advertisers may have wished they
had such power, but they never did.)
In addition to acting as a stimulus for immediate sales, marketers used advertising to maintain
top-of-mind awareness. For example, consumers typically purchase automobiles every three
years. In the interim, mass advertising aims to keep them interested enough to consider a
brand or model the next time around. Automobile advertising also increases customers‘

10. 9 | P a g e
satisfaction with their choices. Recent purchasers notice advertising for their chosen brand; it
reassures them that they chose well.
Advertising information and market efficiency:
For consumers, increasing quantities of advertising can be annoying and intrusive. For
marketers, the more advertising there is, the harder it is to make it stand out. Marketers find
themselves in an insidious cycle of spending more on advertising just to maintain parity.
Keeping up with the times, they advertise in new media while maintaining a presence in the
old media-wherever consumers can be reached.
Even with knowledge gleaned from test markets and experimentation, it is notoriously
difficult to calculate returns on advertising spending. Advertising appears to be most effective
in introducing consumers to new products or telling them something new. But marketers also
believe that some advertising is needed to remind consumers of existing products and
maintain brand awareness. Although marketers may desire to cut back, they remain uncertain
about where to cut back or what the effect on sales might be. With Internet advertising, this
situation may improve as marketers become more confident with detailed tracking measures.
Whether the sheer amount of advertising signifies that consumers have power over
advertisers or whether advertisers have power over consumers is a matter of debate. Does it
indicate that marketers have found that advertising works that speaking loudly and frequently
to consumers influences choice significantly? Do consumers values the emotional connection
advertising creates with brands? Or, as critics might say, can it create false desire, trick
people into wanting things they don‘t need or excessive quantities of things they do need?
This would suggest advertiser power.
Or is it a sign of desperation? Do advertisers‘ messages cancel each other out, suggesting that
much advertising is wasted or at best defensive? Have consumers become sophisticated
decoders of advertising formulas, indicating consumer power? Or, alternatively, have
consumers become so inured to advertising that choice is essentially random? Despite endless
debate, the jury is still out.
Furthermore, do consumers pay higher prices than they should in order to cover the costs of
unnecessary advertising? Critics cite the prominent example of the pharmaceutical industry.
Defenders of advertising say that any extra costs are justified because ads provide valuable
information.
However, the volume of advertising, together with the prevalence of nonfactual messages,
fuels criticisms that advertising is uninformative, intrusive, and wasteful. In any case,
consumers see and hear so much advertising that it is difficult to say anything new to them. If
advertising gives consumers a minimal amount of new information (except for new products
and new features), that bolsters critics accusations that it is persuasive and manipulative.
Some marketers advocate responding to the marketplace clutter by trying to create more
intense bonds with consumers, such as an ―emotional level that can create loyalty beyond

11. 10 | P a g e
reason.‖ In trying to bypass conscious decisions perhaps they are adding fuel to the critics‘
fire.
Economists too have debated whether advertising is beneficial for markets, that is, whether it
makes them more efficient and competitive. One school of thought holds that it makes
markets more monopolistic by creating barriers to entry: to compete effectively, new entrants
must be prepared to make large investments is advertising. Further, if advertising persuades
consumers to be less sensitive to price, then monopolistic companies can raise prices over
competitive levels.
A second school of economists argues that advertising promotes competition. Advertising,
they reason, is an efficient way for competing sellers to communicate with potential
customers. It allows new products and new sellers to gain a foothold. In itself, the increased
competition keeps prices lower. Further, ads containing information about prices and
products reduce consumers‘ time and search costs.
Both schools of thought associate information with market efficiency. They differ over
whether advertising stifles or promotes the flow of information. To date there is little
evidence that advertising plays a significant role in creating monopolistic behavior. Evidence
that advertising leads to lower prices is also inconclusive.
The “economics of information” reflects a third view of the role of advertising. This branch
of economics considers what happens to market efficiency when a seller has much better
information about product quality than a potential buyer has. This is frequently the case in
modern markets, where products are complex and buyers cannot determine quality by casual
inspection.
In a seminal article, George Akerlof showed that such markets do not work very well.
However, in his example of the used-car market, dealers whose stock is of more consistent
quality offset the information problem by offering credible guarantees. They also advertise.
Philip Nelson argued that regardless of an ad‘s content, advertising conveys the information
that sellers are committed to their product and that they are willing to back up their product
and reputation by spending large amounts on advertising. Consumers rightly reason that it
would make no sense for marketers to advertise and develop a brand if quality were poor or if
they were fly-by-night operators.
This explanation helps account for the prevalence of image-oriented ―non-informational‖
advertising. What matters to consumers is the advertiser‘s pledge to its audience that it is a
reputable seller offering good-quality products to services. In the emerging automobile
market in china, for example, car buyers place great weight on the manufacturer‘s industry
leadership and aura of success. It is true that image advertising influences consumers through
their emotions, but another part of the story is that consumers extract information from all
sorts of ads. There is no strict dividing line between persuasive advertising and informative
advertising.

12. 11 | P a g e
Marketing Concepts:
Kotler (1994), a professor of marketing, adopted the following definition of marketing:
"Marketing is the analysis, planning, implementation and control of carefully
formulated programs designed to bring about voluntary exchanges of values with
target markets for the purpose of achieving organizational objectives. It relies heavily
on designing the organization's offering in terms of the target market's needs and
desires and as using effective pricing, communication, and distribution to inform,
motivate and serve the markets."
There are 7 major points to be emphasized in the above definition:
1. Marketing is a managerial process involving analysis, planning, implementation and
control.
2. Marketing is concerned with carefully formulated programs - not random actions -
designed to achieve desired responses.
3. Marketing seeks to bring about voluntary exchange.
4. Marketing selects target markets and does not seek to be all people.
5. Marketing is directly correlated to the achievement of organizational objectives.
6. Marketing place emphasis on the target market's (consumer's) needs and desire rather
than on the producer's preferences.
Marketing defined—a social and managerial process by which individuals and groups obtain
what they need and want through creating, offering, and exchanging products of value with
others.
Finally, Kotler defines Marketing concept as follows:
The Marketing concept holds that the key to achieving organizational goals consist in
determining the need and wants of target market and delivering the desired satisfaction more
effectively and efficiently than competitors.
Core marketing concepts
A. Marketing concept—assumes
1. The key to achieving organizational goals consists of being more
effective than competitors in integrating marketing activities toward
determining and satisfying the needs and wants of target markets
2. Target market—no company can operate in every market and satisfy
every need

13. 12 | P a g e
3. Customer needs—it‘s not enough to just find the market; marketers
must also understand their customer‘s needs and wants. This is not a
simple task
4. Integrated marketing—all of a company‘s departments must work
together to serve the customer‘s interests. This begins among the
various marketing functions and carries into other departments
5. Profitability—the ultimate purpose of marketing is to help
organizations achieve profitability goals
6. Hurdles to adopting the marketing concept
a) Organized resistance—some departments see marketing as a
threat to their power in the organization
b) Slow learning—despite efforts by management, learning comes
slow
c) Fast forgetting—there is a strong tendency to forget marketing
principles
7. Needs, wants, and demands
a) To need is to be in a state of felt deprivation of some basic
satisfaction
b) Wants are desires for specific satisfiers of needs
c) Demands are wants for specific products that are backed by an
ability and willingness to buy them
Even for commercial organizations, it is quite difficult to assess the
nature of needs and wants which customers would like satisfied. For
libraries/information centers, this problem is compounded by the fact
that the specific nature and quantum of requirements of their clients
not known at a point in time, and there can be a great deal of variation
across time. For most of their clients, the broad information
requirement may be generally know. The specific needs can be quite
variable and may be assessed through interactions with the customer
(called interactive marketing). Through such interaction, important
needs, specific to a customer at a particular time and situation, could be
identified. As explained earlier, satisfaction can judged through
assessing the difference between the total customer value and the total
customer cost. A sharp focus on understanding the needs and wants of
target customers, may help the library in enhancing the total customer
value, by providing the needed information in time thereby, reducing
the energy, time, and psychic cost.
Customers - Top Priority
The new customers do not know about library rules and regulation, therefore it is duty of
library staff to give orientation for maximum utility of library. They do not care about rules
and ways of doing business. They care to adapt its products and services to fit their problems.
This represents the evolution of marketing to the customer-driven. We must always
remember the following points:

14. 13 | P a g e
 Customers are the most important people to be served in library and information
centers.
 They are not dependent on the library; rather the library depends on them.
 They are not just from outsiders but part of the library.
 They are not just statistics, but also they are human beings.
 They are the people who bring their wants and needs and we are there to meet their
information needs exceedingly.
Customers - Expectation
Library and information professionals should strive hard to gain a far vision of 'who our
customers are', 'what they want', and 'what are their social characters, values, desires, and
aspiration‘. The advancement of information and communication technologies (ICTs) has
enabled education and technology in self-help and do-it-yourself activities in libraries. The
21st century customer will place high value on self-reliance, adaptability and survival under
difficult conditions and the ability to do things of his/her own.
Quality Services
The user of the service is the ultimate judge of the quality. S/he weighs the value s/he
receives from a service organization against the time spent and/or the efforts involved besides
the monetary burden in getting the desired service and thus decides the quality. Users seldom
define the quality of the library and its services in terms of stock size, annual budget, physical
facilities, staff and the mere number of services. No doubt, these are some of the essential
criteria for providing quality services; it benefits the service itself that users look for. Quality
service in part depends on how well various elements function together in a service system
(see Figure 1).
These elements include the people who perform the specific service in the service chain, the
equipment that supports these performances and the physical environment in which the
services are provided. The management concept achieving service excellence is termed as
Total Quality Management. It is a customer need driven management process. It emphasizes
on identifying customers‘ needs expressed in customer's own words and then linking
customers' perceived quality into internal processes and measuring the impact of quality
measurement on the market place.
Figure1. Relationships between library services and the customer
8. Target markets , Positioning and segmentation

15. 14 | P a g e
a) Every product or service contains features that a marketer must
translate into benefits for a target market
No organization is going to have large enough resources to cater to the
needs of the total market. Careful selection of the target market
customers thus helps in an efficient allocation/utilization of scarce
organizational resource.
b) The consumer perceives these benefits to be available in a
product and directly impacts the perceived ability to meet the
consumer need(s) or want(s)
The concept of focusing on some markets/segments is quite alien to
service organizations where everybody is treated on par. There is a
greater need for libraries/information centers to be selective in their
choice of clientele and/or prioritize among the selected target
segments.
9. Marketers and prospects
a) A marketer is someone actively seeking one or more prospects
for an exchange of values
b) A prospect has been identified as willing and able to engage in
the exchange
10. Product or offering
a) Anything offered for sale that satisfies a need or want.
b) Products consist of three primary components: goods, services
and ideas
c) The physical product provides the desired service or action.
What do they buy? This question can help in identifying the current products, services, and
mechanisms used by customers to satisfy their needs/requirements. In other words, it helps to
identify which of the current competing products and services are chosen, for satisfying the
specific needs.
How do they use the product/service? Answer to this question may help in identifying current
and/or potential products, services, and mechanisms which could fit into the customer‘s use
process better.
Why do they buy? This could throw significant light on the motivation of customers to buy, as
well as be in assessment of the current products/services being used. A deeper probe into the
motivations may reflect the relative importance of price and non-price factors in deciding the
purchase. Specific advantages and disadvantages of currently used products/services could be
assessed, to find, if there is any dissatisfaction, for which improved/new products/services
could be designed. Also the information could be used for deciding how to promote the
products/services.

16. 15 | P a g e
How do they buy? Customers use some process of buying which could be identified through
this question. Some products/services are known and are being used on an ongoing basis.
Orders for such products/services may be placed with a previously selected supplier as soon
as the stock is over, or the need is felt. In case of high value products & services with
uncertain outcomes, and with which the customer does not have much experience, there may
be several in buying which are as follows:
 Recognize the need.
 Search for information to generate potential alternative products/services which could
satisfy the need.
 Evaluate the alternatives generated for satisfying the need.
 Decide on purchase of one of the options.
 Assess post-use and post-purchase experiences and feelings.
Who participates in buying? Different roles are played by different participants in the buying
process. Identification of participants in the buying process (called Decision making unit-
DMU), and their considerations in deciding in favor of or against a specific option, would go
a long way in deciding the person to whom the promotion should be address to, in the target
segment, and how to promote the product/service.
What are their sources of information? The customer and the participants in the buying
process may be using specific sources for collecting information on products/services.
Knowledge of these could help in deciding the means/media of promotion.
Where do they buy? Answer to this question could lead to identification of agents/suppliers
through whom the products/services are bought. This can help in deciding distribution
element of the marketing plan.
In case of services, post-purchase and post-use feelings and actions of customers may be
quite critical in influencing potential customers. This is because benefits of most services,
particularly electronic information products and services become obvious only after use. A
satisfied customer would spread a good word and lead to improved demand from other
customers.
11. Value and satisfaction
a) Value is the consumer‘s estimate of the product‘s overall
capacity to satisfy his or her needs
b) Needs are determined according to the lowest possible cost of
acquisition, ownership and use
II. Marketing today embraces an integrated value proposition. This in effect, would mean
that with making a decision about using a particular service or evaluating a marketing
relationship a customer not only looks at the product or value related to it, but s/he
also evaluates the process, the total transaction cost. To a customer, value is the

17. 16 | P a g e
benefits received from the burden endured. Benefits may be product quality, personal
service and convenience. Cost includes price and non-monetary cost as time, energy
and efforts. In the process s/he interacts with the people, technology, methods,
environment and the materials used to serve the customers in the library. In the
marketing oriented library, the process depends on the customer preferences and cues
to their requirements. Even the customers are an important partner to the process and
in libraries most of the time, they put forward their views to overcome their problems
and work with the staff to solve them.
III. By simply shedding long standing stereotypes, librarians have been able to take the
5P's of the traditional external marketing mix and use them to paint a more accessible
service-oriented picture of library offerings for their customers.
IV. The 5 P's of the traditionally external marketing mix with an internal twist for
libraries should be considered is mentioned in Table 1.
V. Table 1. Five P's
Product: Information resources and research services.
Price:
Free to employees. In other words, company sponsored. This is particularly
important in an R&D environment where research budgets are tight and the
company may not realize Return on Investment (ROI) in a project for some time.
Place:
Not necessarily a physical location anymore. A strong web presence is
necessary. Libraries are virtual as well as physical spaces now and the
possibilities in both these worlds are endless.
Promotion:
Internal bulletins, e-mails, the company intranet, the library web site, newsletters
and poster campaigns are all effective promotional vehicles for highlighting new
tools and advertising events.
People
(Staff):
Staff is relatively a new element in marketing mix as its importance for the
Development of strategies has only recently been realized. It is difficult to
achieve satisfactory exchanges with public without suitable staff. That is why
marketing experts now talk about "internal marketing", emphasizing that the
entire staff must be at all costs involved in the organization's marketing
strategies.
VI. For the library to remain competitive, or even more fundamentally, to remain
relevant, it has to change its image. It has to shed the image of a highly fortified
storehouse of knowledge guarded by staff and security devices, a treasure house
where the borrower is a nuisance or a potential thief. The new-age library ought to be
a true service organization, a group of professionals who quickly identify in the vast
ocean of knowledge the kind of information that different customers need and help
them access it with the least waste of time and effort. A library that can survive and
thrive in the Internet age is a knowledge-based social structure.
1. Exchange and transactions—exchange means obtaining a desired
product by offering something desirable in return
a) Five conditions must be satisfied (see text)

18. 17 | P a g e
b) A transaction is the trade of values (involves several
dimensions)
2. Relationships and networks
a) Relationship marketing{ XE "Relationship marketing" } seeks
long-term, ―win-win‖ transactions between marketers and key
parties (suppliers, customers, distributors)
b) The ultimate outcome of relationship marketing is a unique
company asset called a marketing network of mutually
profitable business relationships
3. Marketing channels
a) Reaching the target market is critical
b) To do this the marketer can use two-way communication
channels (media including newspapers and the Internet), versus
more traditional means
The marketer also must decide on the distribution channel, trade channels, and selling
channels (to effect transactions)
VII. Company orientations toward the marketplace
A. Production concept—assumes consumers will favor those products that are
widely available and low in cost
B. Product concept—assumes consumers will favor those products that offer the
best combination of quality, performance, or innovative features
C. Selling concept—assumes organizations must undertake aggressive selling
and promotion efforts to enact exchanges with otherwise passive consumers
1. Profitability
D. Societal marketing concept
1. The organization‘s task is to determine the needs, wants, and interests
of target markets
To deliver the desired satisfactions more effectively and efficiently than competitors in a way
that preserves or enhances the consumer‘s and the society‘s well-being.
Corporate Mission
A mission statement is a pragmatic, literate statement of enterprise cohesion and future
prospect. Magna International is an example of a corporation going beyond the ordinary
mission statement to a Corporate Constitution. Where nation states are involved, a mission
statement is insufficient, a constitution is required.
A mission statement is a statement of the purpose of a company, organization or person, its
reason for existing. It is a written declaration of an organization's core purpose and focus that
normally remains unchanged over time. Properly crafted mission statements (1) serve as
filters to separate what is important from what is not, (2) clearly state which markets will be
served and how, and (3) communicate a sense of intended direction to the entire organization.

19. 18 | P a g e
A mission is different from a vision in that the former is the cause and the latter is the effect;
a mission is something to be accomplished whereas a vision is something to be pursued for
that accomplishment. Also called company mission, corporate mission, or corporate purpose.
The mission statement should guide the actions of the organization, spell out its overall goal,
provide a path, and guide decision-making. It provides "the framework or context within
which the company's strategies are formulated
Effective mission statements start by cogently articulating the organization's purpose of
existence.
Mission statements often include the following information:
1. Aim(s) of the organization
2. The organization's primary stakeholders: clients/customers, shareholders,
congregation, etc.
3. How the organization provides value to these stakeholders, for example by offering
specific types of products and/or services
4. A declaration of an organization's sole core purpose. A mission statement answers the
question, "Why do we exist?"
According to Bart, the commercial mission statement consists of 3 essential components:
1. Key market – who is your target client/customer? (generalize if needed)
2. Contribution – what product or service do you provide to that client?
3. Distinction – what makes your product or service unique, so that the client would
choose you?
The mission statement can be used to resolve trade-offs between different
business stakeholders. Stakeholders include: managers & executives, non-management
employees, shareholders, board of directors, customers, suppliers, distributors,
creditors/bankers, governments (local, state, federal, etc.), labour unions, competitors, NGOs,
and the community or general public. By definition, stakeholders affect or are affected by the
organization's decisions and activities.
A mission statement may be the most visible and public part of a strategic plan. As such, it is
comprehensive in its coverage of broad organizational concerns. Although no empirical
research has been published to guide corporate mission statement development, the limited
evidence available suggests eight key components of mission statements:
1. The specification of target customers and markets.
2. The identification of principal products/ services.
3. The specification of geographic domain.

20. 19 | P a g e
4. The identification of core technologies.
5. The expression of commitment to survival, growth, and profitability.
6. The specification of key elements in the company philosophy.
7. The identification of the company self-concept.
8. The identification of the firm's desired public image.
Mission Statement Creation
1. To create your mission statement, first identify your organization's "winning idea".
2. This is the idea or approach that will make your organization stand out from its
competitors, and is the reason that customers will come to you and not your
competitors (see tip below).
3. Next identify the key measures of your success. Make sure you choose the most
important measures (and not too many of them!)
4. Combine your winning idea and success measures into a tangible and measurable
goal.
5. Refine the words until you have a concise and precise statement of your mission,
which expresses your ideas, measures and desired result.
Example:
Take the example of a produce store whose winning idea is "farm freshness". The owner
identifies two keys measures of her success: freshness and customer satisfaction. She creates
her mission statement – which is the action goal that combines the winning idea and
measures of success.
The mission statement of Farm Fresh Produce is:
"To become the number one produce store in Main Street by selling the highest quality,
freshest farm produce, from farm to customer in under 24 hours on 75% of our range and
with 98% customer satisfaction."
Vision Statement Creation
Once you've created your mission statement, move on to create your vision statement:
First identify your organization's mission. Then uncover the real, human value in that
mission.
1. Next, identify what you, your customers and other stakeholders will value most about
how your organization will achieve this mission. Distil these into the values that your
organization has or should have.

21. 20 | P a g e
2. Combine your mission and values, and polish the words until you have a vision
statement inspiring enough to energize and motivate people inside and outside your
organization.
3. Using the example mission statement developed for Farm Fresh Produce, the owner
examines what she, her customers and her employees value about her mission.
4. The four most important things she identifies are: freshness, healthiness, tastiness and
"local-ness" of the produce. Here's the Vision Statement she creates and shares with
employees, customers and farmers alike:
"We help the families of Main Town live happier and healthier lives by providing the
freshest, tastiest and most nutritious local produce: From local farms to your table in under 24
hours."
Marketing Strategies:
A strategy is a long-term plan to achieve certain objectives. A marketing strategy is therefore
a marketing plan designed to achieve marketing objectives. For example, marketing objective
may relate to becoming the market leader by delighting customers. The strategic plan
therefore is the detailed planning involving marketing research, and then developing a
marketing mix to delight customers. Every organisation needs to have clear marketing
objectives, and the major route to achieving organisational goals will depend on strategy. It is
important, therefore, to be clear about the difference between strategy and tactics.
Marketing strategy is a process that can allow an organization to concentrate its resources on
the optimal opportunities with the goals of increasing sales and achieving a sustainable
competitive advantage. Marketing strategy includes all basic and long-term activities in the
field of marketing that deal with the analysis of the strategic initial situation of a company
and the formulation, evaluation and selection of market-oriented strategies and therefore
contribute to the goals of the company and its marketing objectives.
There are three basic types of marketing strategies that all businesses, big and small use. All
marketing plans can be broken down into one or all of these types. They are:
1. Online or internet marketing.
2. Offline marketing.
3. Word of mouth or relationship marketing.
Developing a marketing strategy
Marketing strategies serve as the fundamental underpinning of marketing plans designed to
fill market needs and reach marketing objectives. Plans and objectives are generally tested for
measurable results. Commonly, marketing strategies are developed as multi-year plans, with
a tactical plan detailing specific actions to be accomplished in the current year. Time horizons
covered by the marketing plan vary by company, by industry, and by nation, however, time

22. 21 | P a g e
horizons are becoming shorter as the speed of change in the environment increases.
Marketing strategies are dynamic and interactive. They are partially planned and partially
unplanned. See strategy dynamics.
Marketing strategy involves careful scanning of the internal and external environments.
Internal environmental factors include the marketing mix, plus performance analysis and
strategic constraints. External environmental factors include customer analysis, competitor
analysis, target market analysis, as well as evaluation of any elements of the technological,
economic, cultural or political/legal environment likely to impact success. A key component
of marketing strategy is often to keep marketing in line with a company's overarching
mission statement.
Once a thorough environmental scan is complete, a strategic plan can be constructed to
identify business alternatives, establish challenging goals, determine the optimal marketing
mix to attain these goals, and detail implementation. A final step in developing a marketing
strategy is to create a plan to monitor progress and a set of contingencies if problems arise in
the implementation of the plan.
Types of strategies
Marketing strategies may differ depending on the unique situation of the individual business.
However there are a number of ways of categorizing some generic strategies. A brief
description of the most common categorizing schemes is presented below:
Strategies based on market dominance - In this scheme, firms are classified based on their
market share or dominance of an industry. Typically there are four types of market
dominance strategies:
 Leader
 Challenger
 Follower
 Nicher
Porter generic strategies - strategy on the dimensions of strategic scope and strategic strength.
Strategic scope refers to the market penetration while strategic strength refers to the firm‘s
sustainable competitive advantage. The generic strategy framework (porter 1984) comprises
two alternatives each with two alternative scopes. These are Differentiation and low-cost
leadership each with a dimension of Focus-broad or narrow. Product differentiation Cost
leadership Market segmentation Innovation strategies — this deals with the firm's rate of the
new product development and business model innovation. It asks whether the company is on
the cutting edge of technology and business innovation. There are three types: Pioneers Close
followers Late followers Growth strategies — In this scheme we ask the question, ―How
should the firm grow?‖. There are a number of different ways of answering that question, but
the most common gives four answers:

23. 22 | P a g e
 Horizontal integration
 Vertical integration
 Diversification
 Intensification
These ways of growth are termed as organic growth. Horizontal growth is whereby a firm
grows towards acquiring other businesses that are in the same line of business for example a
clothing retail outlet acquiring a food outlet. The two are in the retail establishments and their
integration lead to expansion. Vertical integration can be forward or backward. Forward
integration is whereby a firm grows towards its customers for example a food manufacturing
firm acquiring a food outlet. Backward integration is whereby a firm grows towards its
source of supply for example a food outlet acquiring a food manufacturing outlet.
Q & A:
1 How important the information as a resource for the organizational growth?
2 Discuss the impact of inefficient management of information in the organization?
References:
Quelch, John A. & Jocz, Katherine E. Greater Good: How good marketing makes for better
democracy. Chapter: Information, 95-101pgs
Basanta Kumar Das & Sanjay Kumar KarnMarketing of Library and Information Services in
Global Era: A Current Approach; Webology, Volume 5, Number 2, June, 2008
Abhinandan K Jain(ed.) and others.Marketing Information products and services: A primer
for librarians and information professionals
Dr. M. Madhusudhan(2008),Marketing of Library and Information Services and Products in
University Libraries: A Case Study of Goa University Library; Library Philosophy and
Practice
Robert M. Hayes (2005) The Economics of Information.

24. 23 | P a g e
Unit-2
Portfolio Management
As growing numbers of companies have discovered the benefits of effective marketing
planning, they have developed planning methods to assist in this important function. This
section discusses two useful methods: the strategic business unit concept and the market
share/market growth matrix.
Business Portfolio Analysis.
Although a small company may offer only a few items to its customers, a larger organization
frequently offers and markets many products to widely diverse markets. Top managers at
these larger firms need a method for spotting product lines that deserve more investment as
well as lines that aren‘t living up to expectations. So they conduct a portfolio analysis, in
which they evaluate their company‘s products and divisions, to determine which are strongest
and which are weakest. Much like securities analysts review their portfolios of stocks and
bonds, deciding which to retain and which to discard, marketing planners must perform the
same assessment of their products, the regions in which they operate, and other marketing
mix variables. This is where the concept of an SBU Comes in.
Strategic Business units (SBUs) are key business units within diversified firms. Each
SBU has its own managers, resources, objectives, and competitors. A division, product line,
or single product may define the boundaries of an SBU. Each SBU pursues its own distinct
mission, and each develops its own plans independently of other units in the organization.
SBUs also called categories focus the attention of company managers so that they can
respond effectively to changing consumer demand within limited markets. Companies may
have to redefine their SBUs as market conditions dictate.
THE BCG MATRIX
To evaluate each of their organizations‘ strategic business units, marketers need some type of
portfolio performance framework. A widely used framework was developed by the Boston
Consulting Group (BCG). This market share/market growth matrix places SBUs in a four-
quadrant chart that plots market share - the percentage of a market that a firm controls –
against market growth potential. The position of an SBU along the horizontal axis indicates
its market share relative to those of competitors in the industry. Its position along the vertical
axis indicates the annual growth rate of the market. After plotting all of a firm‘s business
units, planners divided them according to the matrix‘s four quadrants. Figure illustrates this
matrix by labeling the four quadrants cash cows, stars, dogs and question marks. Firms in
each quadrant require a unique marketing strategy.

25. 24 | P a g e
Relative Market Share
High Low
Industry
Growth
Rate
Low
High
Stars
Generate considerable
Income
Strategy:Invest more funds for future
growth
Question Marks
Have potential to become stars or cash
cows
Strategy:Either invest more funds for
growth or consider disinvesting
Cash Cows
Generate Strong cash flow
Strategy:Milk profits to finance
growth of stars and questions marks
Dogs
Generate little profits
Strategy: Consider withdrawing
Starsrepresent units with high market shares in high-growth markets. These products or
business are high-growth market leaders. Although they generate considerable income, they
need inflows of even more cash to finance further growth. Apples‘ popular iPod is the No.1
selling portable digital music player in the world, but because of rapidly changing
technology, Apple will have to continue to invest in ways to update and upgrade the player.
Cash cowscommand high market shares in low-growth markets. Marketers for such an SBU
want to maintain this status for as long as possible. The business produces strong cash flows,
but instead of investing heavily in the unit‘s own promotions and production capacity, the
firm can use this cash to finance the growth of other SBUs with higher growth potentials.
Question marks achieve low market shares in high-growth markets. Marketers must decide
whether to continue supporting these products or business since question marks typically
require considerably more cash than they generate. If a question mark cannot become a star,
the firm should pull out of the market and target other markets with greater potential. So far,
Apple‘s online iTunes Music Store hasn‘t turned a profit, but it is an important factor in the
success of iPod, selling millions of songs to music buffs. In addition, Apple has signed a deal
with Hewlett-Packard (HP) to sell iPods and load iTunes into millions of PCs manufactured
by HP. So iTunes could transform itself from a question mark to a star.
Dogsmanage only low market shares in low-growth markets. SBUs in this category promise
poor future prospects, and marketers should withdraw from these businesses or product lines

26. 25 | P a g e
as quickly as possible. In some cases, these products can be sold to other firms, where they
are a better fit.
THE PRODUCT LIFE CYCLE
Product:
 In a narrow sense, a product is a set of tangible attributes in an identifiable form; a
golf ball, a rock concert, a pair of underpants and so on.
 In marketing, we believe that consumers want to buy the benefits or solutions to
problems that products offer, rather than the products themselves. For example, we
don‘t want ‗sandpaper‘, we want a ‗smooth surface‘ – the sandpaper is the means to
achieve it. So what, you might say – we still have to buy the sandpaper. Well, yes, but
only until someone comes along with a better or cheaper or easier method of
obtaining a smooth surface. That‘s why marketers focus on the customer wants rather
than the product itself. Products are the means of satisfying customer wants, as
diverse and changeable as they may be.
 Because Calvin Klein and Holeproof underwear might offer different benefits - style,
prestige, fit, durability – we see them as different products. To marketers, two brands
of the same basic item can be considered as different products.
 Changes in a product feature, such as design, color, size or packaging, also create
another product, and each such change provides the seller with an opportunity to use a
new set of appeals to satisfy a different set of customer wants. For example, Panadol
in a capsule form is a different product from the same brand in tablet form, even
though the chemical contents of the tablet and capsule are identical.
 We can broaden our definition of ‗product‘ further. A Sony TV set bought in a
discount store on a cash-and-carry basis is a different product from an identical model
purchased in a department store, where the customer might pay a higher price for the
se, but is given credit, has it delivered free of charge and receives other store services.
So, the concept of a product also includes services accompanying the sale.
 Because marketers see a ‗product‘ as anything capable of satisfying a want, it can
include physical goods, intangible services, places, people and ideas. (However, we
acknowledge that many people, marketers included, mean physical goods when they
use the term ‗product‘.)
What is a ‘new’ product?
There is no clear definition of exactly when an innovation is a new product. For example:
 Are the new models that car manufacturers introduce each year considered to be new
products?

27. 26 | P a g e
 If a firm adds a wrinkle-remover cream to its assortment of women‘s cosmetics, is
this a new product?
 If a new size of an existing breakfast cereal is launched, is this a new product?
 Must an item be totally new in concept before we can class it as a new product?
There is no universal agreement to these questions. We might agree on three types of new
products, however:
1. True Innovations: Such products might include a hair restorer that really works or a
cancer cure. Past examples might include Post-It notes, Viagra and laser eye surgery.
2. Innovative replacements for existing products. Such products should be significantly
different from existing ones, such as disposable contact lenses, digital TV and
genetically modified foods.
3. Imitative products those are new to a particular company. The ‗newness‘ of these
products is really internal to one particular firm, although the firm may well present
the product to the market as an innovation based on some small improvement or
change.
In the end, of course, regardless of what the firm believes, does or says a product is ‗new‘ if
the market sees it as new.
A new product strategy and stages in development process:
Modern organizations need a well-prepared, explicit strategy for developing new products. A
new-product strategy is a statement identifying the strategic role the product will play in
achieving corporate and marketing goals.
This strategy should guide the development of each new product. This is very
important because new products are exciting, and marketers can become carried away by
every new product idea that pops up. A clear strategy helps to ensure that the firm takes on
only those new-product projects that ‗fit‘ the firm‘s resources and goals and have a strong
chance of success.
Some common strategic roles for new products include:
 Defending a market-share position
 Maintaining the company‘s position as a product innovator
 Meeting a specific return-on-investment goal
 Establishing a position in a new market.
The development of new products should be carried out through a series of six steps.
1. Idea generation
2. Screening and evaluation of ideas
3. Business analysis
4. Product prototype development
5. Test marketing

28. 27 | P a g e
6. Commercialization
While this might seem rather a formal approach, it has several advantages:
 Improved teamwork, especially between departments
 Less re-working
 Earlier detection of probable failure
 Higher success rates.
The disadvantage of the six-step approach is that a longer development period (or lead time)
is often required. Senior management should be actively involved in the process to prevent
projects from becoming bogged down. At each stage, management should pause and decide
whether or not to proceed to the next stage, abandon the project or seek additional
information.
The Product life cycle can be divided into four stages:
1. Introduction
2. Growth
3. Maturity
4. Decline
The life cycle concept applies to a product category (e.g. microwave oven, digital cameras or
Pilates classes) rather than specific brands (e.g. Sharp or Olympus).
A company‘s marketing success can be affected considerably by its ability to
understand and manage the life cycles of its products. These life cycles can be illustrated with
sales-volume and profit curves, as show in Figure. The shapes of these curves will vary from
product to product, but the basic shapes and the relationships between the two curves are
usually as illustrated.
It is worth noting two initial points about the life cycle curve. As Figure shows, the
profit curve for most new products is negative through most of the introductory stage. Also,
in the latter part of the growth stage, the profit curve starts to descend while the sales volume
is still rising. This happens because a company usually has to increase its advertising and
selling effort, or cut its prices – or do both – to continue its sales growth during the maturity
stage in the face of intensifying competition.

29. 28 | P a g e
Product Life Cycle
Introduction Growth Maturity Decline
Market Characteristics:
Sales Low Rapidly Rising Peak Declining
Costs per
customer
High Average Low Low
Profits Negative Rising High Declining
Customers Innovators Early adopters Middle majority Laggards
Competitors Few Growing
number
Stable number
beginning to
decline
Declining
number
Strategic considerations:
Marketing
objectives
Create Product
awareness and
Maximize
market share
Maximize
profits while
Reduce
expenditures and
Introduction Growth Maturity Decline
Dollars
Life of product
Sales
Volume
Loss
0

30. 29 | P a g e
trial defending
market share
milk the brand
Product
strategies
Offer a basic
product
Offer product
extensions,
service,
warranty
Diversify brand
and models
Phase out weak
items
Distribution
Strategies
Build selective
distribution
Build intensive
distribution
Build more
intensive
distribution
Go selective;
phase out
unprofitable
outlets.
Promotion
strategies
Build product
awareness
among early
adopters and
dealers; use
heavy sales
promotional to
entice trial
Build awareness
and interest in
mass market;
reduce sales
promotions to
take advantage
of heavy
consumer
demand
Stress brand
differences and
benefits;
increase sales
promotions to
encourage brand
switching
Reduce
promotion
activity to the
level needed to
retain hard-core
loyal customers
Price Strategies Charge cost-plus Price to
penetrate market
Price to match
or beat
competitors
Cut price
Source: Kotler, 1997.
Table: Strategic Considerations Across the Traditional product life cycle.
Introducing a new product at the proper time will help maintain the company‘s
desired level of profit.
Characteristics of each life cycle stage
We must be able to recognize what part of the life cycle our product is in at any given
time. The competitive environment, and the marketing strategies that should be used, will
usually depend on the particular stage. Let‘s examine each in turn.
Introduction:
These are the features of the introduction stage:
 The product has gone through idea evaluation, pilot models and test marketing.
 There are a high percentage of product failures in this stage.
 Costs are high, sales volumes are low, there are net losses and distribution is limited.
 Achieving distribution is a key goal, so that more customers can have access to the
product when promotion begins.
 In many respects, the introduction or pioneering stage is the most risky and expensive
stage; however, for completely new products there is the advantage of having little
direct competition.

31. 30 | P a g e
 Promotional programs at this stage (if any) are designed to stimulate primary demand
(demand for the product type, such as ‗Hybrid cars are better because…‘) rather than
secondary demand (demand for a particular brand).
Growth:
These are the features of the growth stage:
 Both sales and profits rise, often at a rapid rate.
 Competitors enter the market – in large numbers if the profit outlook is particularly
attractive.
 Sellers shift to secondary demand promotion (‗The Toyota Prius is a better hybrid car
because…‘)
 The number of distribution outlets increases, economies of scale is established and
prices might come down. A services firm will open more branches at this stage.
 Typically, profits peak near the end of the growth stage and may decline thereafter.
Maturity:
These are the features of the maturity stage:
 During the first part of this period, sales continue to increase, but at a decreasing rate.
While sales are leveling off, the profits of both the producer and retailers are
declining.
 Marginal producers are forced to drop out of the market. Price competition intensifies.
 The Producer assumes a greater share of the total promotional effort in the fight to
retain dealer‘s support and shelf space in their stores.
 New models are introduced as producers broaden their lines, and trade-in sales
become significant. Services firms may offer free or low-cost extra services.
Decline and possible abandonment:
For virtually all products, obsolescence inevitably sets in as new products start their own life
cycles and replace the old ones:
 Cost control becomes increasingly critical as demand drops.
 Advertising expenditure is reduced because it seems too difficult to obtain a return on
the investment.
 A number of competitors may withdraw from the market.
 It is often management‘s abilities that determine whether or not the product has to be
abandoned, or whether the surviving sellers can continue on a profitable basis.
The length of the product life cycle

32. 31 | P a g e
The length of the life cycle varies from product to product. It ranges from a few weeks or a
short season (for a fad or clothing fashion) to many decades (for cars or telephones).
In general, however, product life cycles are getting shorter. Rapid changes in technology
can make a product obsolete virtually overnight. In addition, if competitors can quickly
introduce ‗me-too‘ versions of a popular product, it can move swiftly into the maturity stage.
(As a teacher, I‘m always amazed how each semester my students seem to arrive with a
new model of mobile phone-what was hot in February is decidedly uncool by July!)
The product life cycle stages cover nearly equal periods, for any given product the
different stages usually last for different lengths of time. In addition, the duration of each
stage varies from product to product. For example, certain products take years to pass through
the introductory stage, whereas others are accepted in a few weeks.
Not all brands go through all of the stages. Some fail in the introductory stage, and others
are not introduced until the market is in the growth or maturity stage. In most cases, however,
decline and possible abandonment are inevitable, for one of the following reasons:
 The need for the product disappears (e.g. mobile phones may soon eliminate the
need for households to have telephones connected by land line)
 A better or less expensive product is developed to fill the same need (e.g. CDs
replaced cassette tapes, and music downloads and MP3 players are replacing CDs)
 People simply grow tired of a product (e.g. a clothing style), so it disappears from
the market.
A product might be in the growth or maturity stage in a number of markets, but in the
introductory stage in others. Notebooks are in the mature stage in the business market, but are
still growing as a consumer product. In terms of the international market, a product might be
in its maturity stage in one country and in the introductory stage in another.
Product life cycle management.
The shape of a product‘s sale and profit curves is not fixed. To a surprising extent these
shapes can be controlled. There are two types of successful life cycle management strategies:
1. Predicting the shape of the proposed product‘s cycle even before it is introduced.
2. At each stage, anticipating the marketing requirements of the following stage.
Introductory stage Strategies:
A firm entering a new market must decide whether to plunge in during the introductory stage,
or wait and make its entry during the early part of the growth stage, after innovating
companies have proved that there is a viable market. By delaying entry, the firm may save on
market development and education costs and avoid the risk of investing in a product category
failure.

33. 32 | P a g e
On the other hand, it gives the firm‘s competitors the advantage of being the first –
the world of marketing is filled with examples of brands like eBay, Nokia, Perrier and
Microsoft that became market leaders because they captured consumer attention and loyalty
with their innovations before others did. Marketing history generally supports this strategy:
the first brands into a market often become the strongest. Even a powerful firm like IBM
could not manage to achieve the success it had hoped for in the PC market after it delayed its
entry for a decade and followed Compaq and Dell.
However, there are also good reasons for delaying entry until the market is proven:
 Pioneering requires a large investment.
 The risks of launching a brand new product are great, as demonstrated by their high
failure rate.
 Brands that are launched before the technology or other aspects are perfected may
bear the brunt of consumer dissatisfaction, while later brands that get it right may reap
the benefits of waiting.
 There are examples of firms that have entered a market later in the life cycle and have
still done well. Boost juice was certainly not among the earliest entrants into the
Australian juice bar market, and yet is has developed the strongest business model.
Growth Stage Strategies:
During the growth stage, usually an exciting one, a company has to devise the right strategies
for its brand in the category. Often, the strategies put in place during this stage will
determine.
 Target markets have to be confirmed or, if necessary, adjusted.
 The product range has to be determined, and product improvements may have to be
developed.
 Initial pricing strategies have to be monitored and possibly adjusted.
 Distribution may also have to be expanded, and it is likely that this will have to be
achieved against new competition. For example, there are only so many sites suitable
and available for a fresh juice bar.
Maturity stage strategies:
There are a number of common strategies for maintaining or boosting sales during maturity.
Their aim is to extend the economic life of the product.
Modifications to a product can give it a new lease of life, as can line extensions (e.g.
Omo laundry detergent in a concentrated form, or new flavors of Magnum ice-cream).
New uses can be devised for a product, to increase usage rates by existing consumers
or to attract new users. Even aspirin – a good example of a mundane, mature product – was
found to thin the blood and developed new markets among heart disease sufferers and air
travelers.

34. 33 | P a g e
New promotional activities can offer extra ‗reason to buy‘ – contests and bonus offers
are good examples. ‗Twenty per cent more at no extra cost‘ is a common offer made to
support supermarket lines in the mature stage.
Decline stage strategies
It is probably the sales decline stage that poses the greatest challenges in terms of life cycle
management. At some point in a product‘s life, management might have to consider whether
or not to abandon it. The costs of carrying profitless products go beyond the expenses that
show up on financial statements; the real burdens are the costs in managerial time and effort
diverted to sick products.
Many firms often seem reluctant to discard a product, even in the decline stage. They
may believe the category still has enough life left in it to justify preserving, or it may be that
the line is a traditional favorite with a small group of loyal customers who also buy other
lines from the firm. Strategies in these instances include:
 Improving the product in a functional sense, or revitalizing it in some manner,
perhaps with new packaging.
 Making sure that the marketing and production programs are as efficient as possible –
it takes great restraint to carefully manage the progress of declining products, but it
can be done, at least for a time
 Streamlining the product range by pruning out unprofitable sizes and models – this
tactic will frequently decrease sales and yet at the same time increase profits
 Running out the product – that is, cutting all costs to the bare-minimum level that will
optimize profitability over its limited remaining life.
In the final analysis, the only alternative might still be to abandon the product. Knowing
when and how to delete products successfully might be as important as knowing when and
how to introduce new ones. Certainly, management should develop a systematic procedure
for phasing out weak products.

35. 34 | P a g e
PRICING INFORMATION
The meaning of ‘price’
As with product, the first P of the marketing mix, marketers also have a specialized view of
price. So, in marketing terms, what is price?
Suppose you paid $2900 for a notebook, but I paid only $1575 for mine. At first
glance, it looks as though I got a better deal… but did I?
Your notebooks is a well-known brand, is fully optioned and comes with a twelve-
month warranty, and you received comprehensive pre-sale advice and assistance loading your
software. I bought a basic model of a no-name brand and was simply handed the box at the
discount store counter.
So, who paid the higher price? The answer really depends on exactly what each of us
was purchasing.
 With pricing, marketers consider more than just the tangible good by itself, but rather
a combination of the core product plus all relevant services and other want-satisfying
benefits.
 At its most simple level, price is what we pay for what we get! It is the amount of
money needed to acquire a product. In our notebook example, each of us paid a price
to obtain a set of benefits. It may be that you placed a greater value than I did on the
peace of mind you gained from buying a trusted brand. And, although it might not
have been specified on the invoice, you paid an amount for advice and assistance. So,
understanding what customers are prepared to pay for different tangible and
intangible benefits of a product is an important aspect of the marketing approach to
pricing.
 This also raises the issue of value, which is the quantitative measure of the worth of a
product in an exchange for something else. So, price is value expressed in money
terms. Different customers may place different amounts (values) on different benefits.
 Price and quality are also often seen as directly related. For example, King Island brie
(soft cheese) became more popular after the price was increased to the level of
imported brie cheeses.
 To some customers, price is the single most important factor in a purchase decision.
Aldi supermarkets are growing in popularity because, in spite of their small product
range and low service levels, they are becoming known as having the cheapest
groceries.
 Most firms, however, try hard to minimize their dependence on price. They encourage
customers to assign value to other non-price aspects of the product. The more they
can emphasize quality, convenience, service and brand, the less they need to rely on
price to win customers.

36. 35 | P a g e
Have a close look at a product you have purchased recently, preferably a shopping or
specialty good or a service. What did the price include? Compile a list of the tangible and
intangible elements that were included in the price. Can you suggest attributes that could
have been included in the price but were not?
Marketers see price setting as a four-stage process, as illustrated by figure. These stages are:
1. Selecting a pricing goal
2. Considering the various factors that might influence pricing
3. Selecting a method of setting the base price
4. Designing appropriate price adjustment strategies
Let‘s examine each stage in turn.
Stage 1: Select a pricing goal
Every marketing task – including pricing – should be directed towards a goal – what do we
want this price to achieve for us? The main choices are to maximize short-term profits, to
generate quick and substantial sales, or to avoid causing conflicts with competitors.
Stage 1: Select a pricing goal
Profit-oriented Sales –Oriented Status quo-oriented
Stage 2: Consider factors influencing price
Extent of demand other parts of the marketing mix Product cost
Stage 3: Select a method of setting the base price
Cost-based pricing Demand-based pricing Competition-based pricing
Stage 4: Design appropriate price adjustment strategies
Entry price strategy Discounts and allowances Freight Charges
Fixed v flexible pricing Price lining Psychological pricing
Loss leader pricing Recommended retail price

37. 36 | P a g e
Marketers should decide which of these is more important before determining the price itself.
Not enough firms consciously establish a pricing objective.
The three main pricing goals are called profit-oriented, sales-oriented and status quo goals.
Profit-oriented goals
Profit-oriented pricing goals are often expressed as achieving a target return on sales or
investment, or maximizing short-term profit.
Woolworths and many other firms, for example, set prices to achieve a required gross profit
on each sales dollar – say, 15-25 per cent. Other firms might set prices to achieve a certain
rate of return on investment – if the cost of launching a new product is estimated to be one
million dollars, the firm might set prices that it hopes will product an annual profit of, say,
15% of the investment over the first three years.
The pricing objective of making as much money as possible – profit maximization can be
considered over the short term or long run. A food or beverage licensee at the MCG will
probably set prices to maximize returns from each season or even from each game. Other
firms, however, may take a longer-term view, might be prepared to earn less than maximum
profits initially then look to increase prices when their product is established – many products
in the computer software market have been marketed this way. Or, they may be prepared to
take a loss on some product lines and look at maximizing profit overall from the whole range.
Sales-Oriented goals
Alternatively, a firm might not look to maximize profits, but rather to set a price aimed at
increasing sales volume or market share. These are sales-oriented pricing goals.
 The goal might be to achieve, say, a 15 percent annual
growth in sales over three years. This goal will probably require a lower than profit-
maximizing price, or regular discounting.
 Pricing may be set to achieve viable operational levels
of sales. When Jetstar entered the Australian air travel market, for example, it set
prices well below profit-maximization levels in order to achieve viable passenger
loads.
 In growing markets, such as those for computers and
other technology-based products, companies want large market shares in order to gain
added bargaining power with suppliers, drive down production costs and/or project a
dominant appearance to consumers.
 In other situations, firms might set prices to use up
excess production capacity or to gain the benefits from economies of scale.
Occasionally a price war is started when one firm cuts its price in an effort to increase its
market share. The battle for share of the cross-Tasman air route, for example, led to both
Qantas and Air New Zealand incurring large losses. Other airlines in the market were then
forced to cut their prices just to maintain their own market share.

38. 37 | P a g e
Status quo pricing goals
The aim in the case of status quo pricing goals might be a stabilize prices or to meet
competition. The primary intention here is to avoid price competition, to live and let live.
Status quo is often the goal in industries where the product is highly standardized (e.g. steel,
petrol, copper, and bulk chemicals) and one large firm has acted, historically, as a leader in
setting prices. Smaller firms in these industries simply adopt a follow-the-leader policy-
meeting competition- when setting their own prices. A major reason for seeking price
stability is to avoid price wars.
Many other firms consciously price their products to meet the competitive market price. This
policy gives management an easy means of avoiding difficult pricing decisions.
A status quo pricing goal may, of course, still be accompanied by aggressive marketing
strategies in others aspects of the mix – product, distribution and especially promotion. This
approach is called non-price competition.
If you were launching a new MP3 player to compete with Apple‘s iPod, would you focus on
profit-oriented, sales-oriented or status quo pricing goals when choosing your price? Justify
Stage 2: Consider factors influencing price
In setting its pricing goal, there are several other factors a firm needs to consider in setting its
base price. The base price (some firms call this list price) is the price of one unit of the
product at the point of production or resale. This is the price before provision is made for
discounts, freight charges or any other modifications.
The extent of demand
First, we need to estimate the total potential demand for the product. There are two steps
here.
Step 1: Determine the expected price
The expected price is the price at which customers consciously or unconsciously values a
product – that is, what they think the product is worth:
 It is more realistic to think of a range of prices, rather
than a specific amount. The expected price for a certain type of restaurant meal, for
example, might be $ 20-30, or a real estate agent might tell a prospective buyer that
‗two-bed units in this area of Brisbane are usually under $ 250000‘.
 We must also consider the middleman‘s reaction to
price. Middlemen are more likely to give a product favorable treatment in their stores
if they feel the price is viable. Professional retail buyers can often make an accurate
estimate of the amount that the market will spend for a particular item.
 It is possible to set a price too low – customers
become suspicious of prices that are below their expectations.

39. 38 | P a g e
 Many sellers have raised the price of a product and
experienced a considerable increase in sales. This situation is called inverse demand –
the higher the price, the greater the unit sales. The example given earlier or King
Island brie illustrates this concept. Inverse demand though is relatively rare, and
usually exists only within a given price range and only at low levels; once a price rises
to some particular point, inverse demand ends and the usual demand curve takes
over. Demand then declines as prices rise (see figure)
 To gauge the expected price, marketers might talk to
their wholesalers or retailers, sample typical consumers or conduct a test market in a
particular region.
Step 2: Estimate sales at various prices
It is helpful if we can estimate what the sales volume for a product might be at several
different price levels – this establishes what is known as the demand curve for the product.
This curve reflects the product‘s demand elasticity – the responsiveness of quantity
demanded to price changes. We will discuss demand elasticity shortly.
There are several methods sellers can use to estimate potential sales at various prices (you
will notice that these are similar to the methods suggested for establishing expected price; in
fact, marketers usually work on both aspects simultaneously):
Conduct a survey of buyer intentions to determine consumer‘s buying interest at different
prices.
Conduct test-market experiments, offering the product at a different price in each market and
measuring consumer purchases in each case

40. 39 | P a g e
 Design a computerized model that will simulate field-selling conditions and sales
responses at various prices
 Obtain sales estimates by surveying wholesalers and retailers
 Ask members of the sales team to estimate sales for their areas or customers.
The price elasticity of demand
This is the effect that price changes have on the number of units sold and on total revenue.
(Total revenue –that is, total sales in dollars –equals the price for each unit times the number
of unit sold.)
Demand is elastic when:
1. Reducing the unit price causes an increase in total revenue.
2. Raising the unit price causes a decrease in total revenue.
Demand in inelastic when:
1. A price cut causes total revenue to decline
2. A price rise results in an increase in total revenue.
Price
Quantity Sold
Normal
Demand
Curve
Inverse
Demand

41. 40 | P a g e
In general, the demand for necessities (salt, sugar, petrol, and telephone, gas and
electricity services etc.) tends to be inelastic. For example, if the price of petrol goes up or
down 5 to 10 cents a liter, the total number of liters sold will not change very much. In
contrast, the demand for products purchased with discretionary income (luxury items, large
appliances, furniture or cars) is typically much more elastic.
Stage 3: Select a method of setting the base price
Marketers usually work with three variables to set actual prices:
1. Cost-based: what profit margin can/should we add to the cost of the product?
2. Demand –based: how much of the product will be able to sell at different price levels?
3. Competition-based: what prices have our competition set, and where should our price
be in relation to theirs?
In most cases, the price set will have taken into account all three perspectives, although
one might well be dominant in the decision. Let‘s examine each of these price-setting
approaches in turn.
Cost-plus pricing
Cost-plus pricing means setting the price of each unit of a product at a level equal to the
unit‘s total cost plus the desired profit on it (or mark-up)
Price based on marginal costs only
Another approach to cost-plus pricing is to set prices based on marginal costs only, rather
than total costs. Marginal-cost pricing might be feasible, however, if management want to
keep its staff employed during a slack season. It might also be used when one product is
expected to attract business for another. A department store might price meals in its café at a
level that covers only the marginal costs; the reasoning here is that this café will bring
shoppers to the store, where they will buy other, more profitable products.
Marginal costing is sometimes used for export sales. If the firm has recovered its fixed costs
in the domestic market, for example, it needs only to get back variable production costs,
export costs and profit from its overseas pricing. The firm must be careful it is not dumping,
however – that is, illegally selling below cost in the overseas market.
Evaluation of cost-plus pricing
Marketers believe that firms should be market-oriented and cater to customer wants.
On the other hand, used by itself, cost-plus pricing is a weak and unrealistic method because
it ignores competition and market demand:
It does not take into account the way in which the two main types of cost fixed and variable
respond to changes in sales volume.

42. 41 | P a g e
It ignores market demand. Cost-plus pricing assumes that cost determines the price of a
product, or what customers are prepared to pay for it, but this is really back-to-front. In fact,
the builder may have been able to sell the units at a higher price.
Demand-based pricing
Many marketers believe that cost should not be the starting point for setting prices. Rather,
they attempt to estimate the value of the product to the customer, remembering that value
includes both tangible and intangible attributes.
Importantly, in this demand-based pricing approach, it is the price the firm believes
customers will pay that drives the process, rather than cost.
Break-even analysis
One tool used to consider both demand and cost when setting prices is break-even analysis:
 A break-even point is that quantity of output at which total revenue equals total
cost, assuming a certain selling price. There is a different break-even point for
each different selling price.
 Sales of quantities above the break-even output result in a profit on each
additional unit - the further the sales are above the break-even point, the higher the
total and unit profits.
 Sales below the break-even point results in a loss.
Competition-based pricing
Sometimes the dominant influence in a firm‘s price setting will be the prices being charged
by competitors:
In some markets, customers appear to increasingly see products as commodities (the various
available types or brands are identical or very similar): basic clothing, stationery and even
PCs are in this category. Accordingly, buying at the best possible price becomes the
customer‘s main goal.
The internet is certainly assisting this process – it is easy now for prospective purchasers to
quickly scan the available suppliers and their offerings.
Initially, the firm needs to decide whether it will set its price to meet the competition, or to be
above or below it.
Stage 4: Design appropriate price adjustment strategies
Once a firm has examined its cost structure, market demand and competitive environment, it
is ready to set the actual prices that customers will pay. There are a number of strategies that
need to be considered here.

43. 42 | P a g e
Market entry strategies
A product is only new once, so it is important that the initial price accurately reflects the
market image and pricing goal set by the firm. There are two basic strategies for the market
entry price for a new product: market-skimming pricing and market-penetration pricing.
Market-skimming pricing (sometimes called skim-the-cream pricing) involves
setting a relatively high initial price – that is, a price that is high in range of expected prices
for the target market. The price is set at the highest possible level that interested consumers
will pay for the new product.
This strategy is particularly suitable for new products because, often in the early
stages of a product‘s life cycle, price is less important to buyers, competition is minimal and
the product‘s distinctiveness creates opportunities for non-price competition.
With Market-penetration pricing, a relatively low initial price is set for a new
product. In other words, the price is low in relation to the target market‘s range of expected
prices.
Market penetration has two main potential benefits:
1. It can reach the mass market immediately, and in so doing generates a substantial
sales volume and market share.
2. It can discourage competitors from entering the market.
Penetration pricing is likely to be used rather than market skimming when:
The product has a highly elastic demand, which is typical in the later stages of the product
life cycle for a product category.
Substantial reductions in unit costs can be achieved through large-scale operations that is,
economies of scale are possible.
The product is expected to face very strong competition soon after it is introduced to the
market.
Discounts and allowances
Discounts and allowances result in a deduction from the base (or list) price. The deduction
might be in the form of a reduced price or some other concession, such as free merchandise
or advertising allowances (where a producer allows another organization say, a retailer a
discount in return for the retailer advertising the producer‘s products). There are many types
of these discounts and allowances.
Quantity discounts a) Non-cumulative quantity discount b) Cumulative discounts
Trade discounts
Cash discounts

44. 43 | P a g e
Promotional discounts
Freight Costs and Geographic pricing strategies:
When setting prices for physical goods, marketers need to take into account the cost involved
in shipping goods to the buyer. The greater the proportion of total variable costs, the more
important the freight costs are
The alternatives here are: the buyer pays all the freight, or the seller does, or the two
parties share the expense. Which geographic pricing strategy a firm should use depends on
four factors:
1. The geographic limits of the firm‘s market
2. The location of its production facilities
3. The source of its raw materials
4. Its competitive strength in various markets areas.
Four alternative methods of pricing for freight are point-of-production pricing, uniform-
delivered pricing, zone-delivered pricing and freight-absorption pricing.
Other pricing tactics
There are a number of other pricing tactics a firm‘s management might consider using.
Flexible pricing
Under flexible pricing, similar customers might pay a different price when buying similar
quantities of a product, according to the market conditions at the time or the buyer‘s ability to
negotiate.
Airlines, banks and many retailers use flexible pricing-although they will often try to create
the impression that their prices are fixed.
With a flexible pricing strategy, weak bargainers may feel that they are at competitive
disadvantage.
Flexible pricing is also used to meet a competitor‘s price.
Airlines, too, have used flexible pricing in recent years to enter new markets or gain an
increased market share. Their new business comes from two sources – passengers now flying
on other airlines, and passengers who would not fly at higher prices. In the second group,
especially, demand for air travel s highly elastic. The trick is to keep the market segment of
price-sensitive passengers separate from the business-traveler segment, whose demand is
inelastic. Airlines keep these segments apart by placing restrictions on lower-priced tickets,
requiring advance purchase and, for example, a Saturday-night stays in the destination city.
Fixed pricing (the alternative to flexible pricing) can create an image of consistency and
stability that can build customer confidence. On the other hand, it can appear inflexible and

45. 44 | P a g e
lacking in customer focus. Obviously, for flexible pricing, the reverse perceptions can be
created.
Price lining
 Price lining involves selecting a limited number of prices at which a business will sell
related products.
 The tactic is used extensively by clothing retailers, for example. A limited number of
prices are selected at which a store will sell its merchandise.
 For the consumer, the main benefit is that it simplifies buying decisions.
 From the retailer‘s point of view, price lining helps store owners to plan their
purchases.
 Rising costs can put a real squeeze on price lines, because companies will hesitate to
change their price lines every time costs go up. But, if costs increase and prices
remain stationary, profit margins will be compressed, and the retailer might be forced
to seek products with lower costs.
Psychological (or odd) pricing
 Psychological pricing is a strategy used by retailers for setting prices at uneven (or
odd) amounts –for example, Books may cost at $ 29.95.
 The rationale for odd pricing is that uneven endings suggest lower prices. In general,
retailers believe that pricing items at odd amounts will result in larger sales. Hence a
price of $39.95 or Rs.198/- will bring greater revenue that $40 or Rs.200/-. While
studies have reported inconclusive results about the value of odd pricing, it does
appear to be effective in stores that emphasis low prices.
 Odd pricing is often avoided in prestige stores or on higher-priced items. An
expensive men‘s suit, for example, might be priced at $ 1600 not $ 1599.95.
Loss Leader pricing
 Many firms – especially retailers – temporarily cut prices on a few items to attract
customers. This pricing and promotional strategy is called loss leader pricing, and the
items whose prices are cut are called ‗loss leaders‘.
 Loss leaders should be well known, heavily advertised articles that are purchased
frequently.
 The idea is that customers will come to the store to buy the advertised leader items
and will stay to but other – regularly priced – merchandise. The net results, the firm
hopes will be increased total sales volume and net profit.
Recommended retail price
Some manufacturers want to control the prices at which middlemen resell their product. This
is called ‗resale-price maintenance‘. In other words, retailers must be free to set their prices
without interference from manufactures.