This is the second part and it covers the following principles of marketing (by Philiip Kolter) : Product Life Cycle Pricing Strategies Types of Distribution Channels Promotion Mix

1. Digital
Marketing
Made By - Priyanka Gautam

2. Unit 1 -
Marketing
Fundamentals
● Importance of Marketing
● Core Marketing Concepts
● Company Orientations
● Segmentation-Targeting-Positioning
● 7p’s Framework
● PLC
● Pricing Strategies
● Types of distribution channels
● Promotion Mix

3. Product Life Cycle (PLC)

6. Marketing Strategies for each stage

7. Introduction Stage
Promotional expenditures are of
their highest ratio to sales because
of the need to -
- Inform potential customers
- Induce product trial
- Secure distribution in retail
outlets
Growth Stage
- Improve product quality and add new
product features and improved
styling
- Add new models and flanker products
- Enter new market segments
- Increase distribution coverage and
enter new distribution channels
- Shift from product awareness
advertising to product advertising
- Lower prices to attract next layer of
price-sensitive buyers

8. Maturity Stage
1) Market Modification
- Expand number of brand users by :
a) Converting nonusers
b) Entering new market segment
c) Winning competitor’s customers
- Convince current users to increase
usage by
a) Using the product on more occasions
b) Using more of the product on each
occasion
c) Using the product in new way
2) Product Modification
- Quality improvement
- Feature improvement
3) Marketing-Mix Modification
- Prices
- Distribution
- Sales promotion
- Services
- Distribution
- Personal selling
- Advertising : change of message

9. Decline Stage
- Increasing firm’s investment ; to dominate the market and strengthen its
competitive position
- Maintain the firm’s investment level until the uncertainties about the industry are
resolved
- Decrease the firm’s investment level selectively by dropping unprofitable customer
groups, while simultaneously strengthening the firm’s investment in lucrative
niches
- Harvesting the firm’s investment to recover cash quickly
- Divesting the business quickly by disposing of its assets as advantagerly as possible

10. Pricing Strategies

11. Price - the exchange
value of a product
External Factors
1) Market characteristics
2) Buyer behaviour in respect of the particular
product
3) Extent of bargaining power of major customers
4) Competitors’ pricing policy
5) Government controls/regulation/pressures on
pricing
6) Extent of bargaining power of major suppliers
Factors that influence pricing:
Internal Factors
1) Corporate and marketing objectives of the firm
2) Image sought by the firm through price
3) Basic characteristics of the product
4) Stage of the product in the PLC
5) Price elasticity of demand of the product
6) Costs of manufacturing and marketing
7) Extent of distinctiveness of the product and
extent of product differentiation practiced by the
firm
8) Composition of the product line of the firm

12. Steps in Setting a
Pricing Strategy
1) Selecting the pricing
objective
2) Determine demand
3) Estimating Cost
4) Analyzing competitors’
Costs, Prices and Offers
5) Selecting a Pricing Method
6) Selecting the Final Price

13. 1) Pricing Objectives
- Profit maximisation in the short term & long term
- Deeper penetration of market and finding new markets
- Target profit on the entire product line irrespective of the profit level on individual
products
- Keeping competition out or keeping it under check
- Fast turnaround and early cash recovery
- Providing commodities/services at process that will stimulate economic
development in the country
- Stabilising prices and margins in the market

14. 2) Demand Based Pricing
- Penetration Pricing : The price charged for products and services is set artificially
low in order to gain market share. Once this is achieved, the price is increased.
- Price skimming : company charge a higher price because it has a substantial
competitive advantage. The high price attracts new competitors into the market,
and the price inevitably falls due to increased supply.
- Psychological Pricing : When marketer wants consumer to respond on an
emotional, rather than rational basis.

15. 3) Estimating Cost
- Focuses on the cost of producing goods and services
- Fixed Cost - costs that don’t vary with production level or sales revenue
- Variable cost - vary directly with the level of production
- Total cost - Fixed + Variable Cost
- Average Cost - cost per unit
- Markup Pricing - adding a margin to the cost price, usually adopted by
distributive trade & marketing firms

16. 4) Analysing
competitors’ costs,
prices and offers
- Evaluate the worth of the features
offered by the competitor to the
customer and add that value to the
competitor’s price
- Pay attention to the competitors’
reaction when price is introduced or
change
- Keep a check on competitor’s recent
sales, customer loyalty, and corporate
objectives

17. 5) Selecting a pricing method
Markup Pricing - adding a margin to the cost price, usually adopted by distributive
trade & marketing firms
Target Return Pricing - the firm determines the price that yields its target rate of return
on investment
Target Return Price = unit cost + (desired return * invested capital)/unit sales
Perceived Value Pricing - perceived value : buyer’s image of the product performance,
the channel deliverables, the warranty quality, customer support, supplier’s
reputation/trustworthiness etc. (how much the consumer is willing to pay instead of
considering the production and related costs )

18. Value Pricing - reengineering the company’s operations to become a low-cost producer
without sacrificing quality, to attract a large number of value-conscious customers
Going - Rate Pricing - the firm bases its price largely on competitor’s prices (oligopolistic
industry) or the market conditions
Auction- Type Pricing - growing more popular, especially with the emergence of internet
selling inventories or used goods.(dispose of excess products existing with the firm)

19. Selecting the final
price
- The price must be consistent with company
pricing policies.
- Firms also need to consider the distributors and
agents, competitors, suppliers respond to prices
of the product
- Firms need to consider the legal implications of
the product

20. Adapting the Price
Geographical Pricing : It involves the pricing of products to different customers in different locations and
countries.
Should the company charge higher prices to distant customers to cover the higher shipping costs, or a lower price
to win additional business?
Promotional Pricing : the sales promotion technique which involves reducing the price of a product or services in
short term to attract more customers & increase the sales volume. (buy 1 get 1 free )
Differentiated Pricing: strategy of selling the same product to different customers at different prices/quality/style

21. Types of Distribution Channels

22. Distribution Channel
Distribution channel is a set of independent organisations involved in the process of
making a product or service available for use or consumption
- Philip Kotler
Importance : Greater efficiency in making goods available to target markets

23. Intermediaries
Provides : contacts, experiences,
specialisation, scale of operation
Also helps match supply and demand
Types
1) Middleman merchant : a) Wholesalers & b)
Retailers
2) Agents : a) Brokers b) Commission agents c)
selling agents

24. Wholesalers
- Selling in bulk quantities
- Act as a link between manufacturer & retailer
- Competition is less
- HUge capital requirements
- Extended to various cities
- Art of selling is not required
- Functions :
- Assembling and buying
- Warehousing
- Transporting
- Risk bearing
- Dispersing & selling
- Providing information
- Packing and packaging
- Selling in small quantities
- Act as a link between wholesaler & customer
- More competition
- Less capital requirement
- Limited to a specific area
- Art of selling required
- Functions :
- Buying and assembling
- Warehousing
- Selling
- Grading and packing
- Financing
- Advertising
Retailers

25. Agent Middleman Agent middleman are those channel components who
help in the transfer of goods from the hands of
ultimate users without acquiring the ownership of
these goods.
They work on commission and fees.
Their main job is to represent the producer to the final
user in selling a product.
Example. Travel agents, insurance agents, in cases like
tupperware,

26. Channel Levels
0 - Level - Manufacturer -> Customer
1 - Level - Manufacturer → Retailer → Customer
2 - Level - Manufacturer → Wholesaler → Retailer → Customer
3 - Level - Manufacturer → Wholesaler → Jobber → Retailer → Customer

27. Zero Level - Also called Direct marketing channel
- Shortest and simple channel
- Products are directly sold to customers
- Ways : door-to-door salesman, direct mail, telemarketing,
internet selling, manufacturer-owned stores.
- Examples : eureka forbes sales representatives selling vacuum
cleaners and water purifiers, Fabindia sells garments and
furniture through its own stores etc

28. One Level
- Manufacturers sell to one or more retailers who sell to customers
- Mostly used when retailers are big and buy in large quantities
- Examples : departmental stores, super markets etc
- Relieves manufacturer of selling and provides control over distribution
- Generally used for consumer durables and products of high value like automobiles,
home appliances etc
- Suitable where producers have limited finance and narrow product line
- Used in case of consumer durables which are not subject to frequent changes in
fashion
Two Level

29. Three Level - Longest Channel
- Producers hand over the entire output to the agent who
sells them to wholesalers
- For example in case of clothes
- Results in wider distribution of products

30. Factors determining
the choice of
channels

31. Promotion Mix

32. Promotional Mix - Combination of different ways of promotion
- Promotion keeps the products in the mind of
customers and helps stimulate the demand of
the product
- Advertising, sales promotion, public relations,
personal selling, and direct marketing are
considered the elements of promotion mix.

33. Advertising
Advertising - any paid form of non personal
presentation and promotion of ideas, goods, or
services by an identified sponsor.
- Print and broadcast ads
- Outer Packaging
- Inner packaging
- Motion Pictures
- Brochures and Booklets
- Posters and leaflets
- Directories
- Billboards
- Display Signs
- POint of purchase display
- Audio visual material
- Symbols and logos
- Website
Characteristics
1) Pervasiveness - permits the seller to repeat
message many times & compare messages of
competitors
2) Amplified expressiveness - provides
opportunities for dramatizing the company
(artful use of print, sound and color.)
3) Control - choice of product aspect and focus of
communication

34. Characteristics
Ability to be attention-getting : draw attention and
may lead consumer to product
Incentive - They incorporate some concession,
inducement, or contribution that gives value to the
consumer
Invitation - distinct invitation to engage in the
transactions now
2) Sales Promotion - a variety of short-term incentives
to encourage trail or purchase of product or service
- Contests, games, lotteries
- Premium gifts
- Sampling
- Fairs and tradeshows
- Exhibits
- Demonstration
- Coupons
- Rebates
- Low-interest financing
- Entertainment

35. Public Relations
Public Relations - a variety of programs designed to
promote or protect a company’s image or its individual
products
- Press Kits
- Speeches
- Seminars
- Annual reports
- Charitable donations
- Sponsorships
- Publications
- Community relations
- Lobbying
- Identity Media
- Company Magazine
- Events
Characteristics
High credibility : New s stories and features are mmore
authentic and credible to readers than ads
Ability to reach hard-to-find buyers – Public relations
can reach prospects who prefer to avoid mass media
and targeted promotion
Dramatisation – Public relations can tell the story
behind a company, brand, or product

36. Characterisitcs
Personal interaction – Personal selling creates an
immediate and interactive episode between two or
more persons.
Cultivation – Personal selling also permits all kinds of
relationships to spring up, ranging from a matter-of-
fact selling relationship to a deep personal friendship
Response – The buyer is often given personal choices
and encouraged to directly respond
4) Personal Selling - Face to face interaction with one
or more prospective purchasers for the purpose of
making presentations answering questions and
procuring orders
- Sales presentations
- Sales meeting
- Incentives programs
- Samples
- Fairs and trade shows

37. Characteristics
Customised – The message can be prepared to appeal
to the addressed individual
Up-to-date – A message can be prepared very quickly
Interactive – The message can be changed depending
on the person’s response
5) Direct Marketing - use of mail, telephone, fax, e-
mail or internet to communicate directly with or solicit
response or dialogue from specific customers or
prospects
- Catalogs
- Mailings
- Telemarketing
- Electronic shopping
- E-mail