Marketing Management

1
STUDY NOTES
Marketing Management
MBA/111 (MBA 2nd Sem.)
Department of Management
SHRI RAM COLLEGE OF ENGINEERING AND MANAGEMENT
SRCEM, Palwal
Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

2

3
UNIT - I
NATURE AND SCOPE OF MARKETING
INTRODUCTION: Production and marketing of goods and services are the essence of
economic life in any society. All organizations perform these two basic functions to satisfy their
commitments to their stakeholders – the owners, the customers and the society, at large. They
create a benefit that economists call utility which is the want-satisfying power of a good or
service. There are four basic kinds of utility – form, time, place and ownership utility. Form
utility is created when the firm converts raw materials and component inputs into finished goods
and services. Although marketing provides important inputs that specify consumer preference,
the organization’s production function is responsible for the actual creation of form utility.
Marketing function creates time, place and ownership utilities. Time and place utility occur when
consumers find goods and services available when and where they want to purchase them.
Online retailers with 24*7 format emphasize time utility. Vending machines focus on providing
place utility for people buying snacks and soft drinks. The transfer of title to goods or services at
the time of purchase creates ownership utility.
Marketing is an inescapable phenomenon in the present-day world. Every day, we are exhibited
to marketing of goods, services, and ideas. For example, when a salesperson sells T.V., a doctor
treats a patient or a state government asks people to get their vehicles checked for pollution, each
is marketing something to the targets. Marketing is all about recognizing and meeting human and
social needs. Marketing holds that an organization should anticipate the needs and wants of
customers and try to satisfy them more effectively than its competitors and by doing this it will
be able to achieve its organizational objectives and goals more efficiently. In simple words,
marketing is “meeting needs profitably”.
Marketing emphasizes on the needs of the customers before putting the ideas into
concrete products. With the customer's wants and needs engulfed into the design and production
of the product, sales and the goal of earning profit is likely to be accomplished.
Marketing, more than any other business function, deals with customer. It revolves
around the customer. Building relationship based on customer value and satisfaction is at the
very heart of modern marketing. The pricing strategies adopted the promotional tools selected;
the design, shape and size of the product and the place of sales etc. are all decided after finding
out the lifestyle, culture, buying habits and media consumption habits etc of all customers
Marketing is an important management function. It includes all those business activities
involved in the flow of goods and services from the point production to the points of
consumption.
MEANING & DEFINITION OF MARKETING

According to American Marketing Association (AMA) “Marketing is the process of planning
and executing the conception, pricing, promotion, and distribution of ideas, goods, and services
to create exchanges that satisfy individual and organizational objectives”.
Philip Kotler (Father of Marketing) defines marketing “It is 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”.
It is concluded that marketing is the process of identifying the needs of the target audience and
provide the products accordingly in exchange of some value. This process mainly consists of two
parties. On the one side, marketers are there who go to resource markets (raw material markets,

4
labour markets, money market, and so on) to buy these resources and shape them into goods and
services for their target consumers. On the other hand, consumers are there who provide vital
information to the marketers besides money for using various products and services. This simple
process can be understood by the figure given below:
Therefore, marketing highlights the satisfaction of consumers needs and wants and it has become
evident that knowing consumer needs and desires is a road to success for the marketers. But the
scenario in marketing has not been the same as we see today.
NATURE OF MARKETING / FEATURES OF MARKETING:
1) Marketing is a process: Marketing consists of a series of functions which are interrelated. It

is dynamic process. As it is concerned with human needs, therefore it is also called social
process. In additional it is also known as managerial process as it looks after the functions of
planning and control. It keeps on adjusting the changes in the environment of business.
2) Human activity: Originally, the term marketing is a human activity under which human
needs are satisfied by human efforts. It’s a human action for human satisfaction.
3) Consumer-oriented: Marketing revolves around the customer and his needs. It starts with
identifying the needs of the customers, planning and developing the product accordingly and
ensuring that the product is made available at the place & price where the consumer wants.
4) Art as well as science: Market is an art as the marketing manager must have his own caliber
to do marketing. A number of principles on buying, selling, financing, standardization and
marketing information have been adopted to attain success in business. Marketing is science
and it indicates market operations based on facts and principles. It outlines approximate trends
and behavior of the market precisely marketing is both art and science.
5) Exchange Process: All marketing activities revolve around commercial exchange process.
The exchange process implies transactions between buyer and seller. It also involves
exchange of technology, exchange of information and exchange of ideas.
6) Starts and ends with customers: Marketing is consumer oriented and it is crucial to know
what the actual demand of consumer is. This is possible only when required information
related to the goods and services is collected from the customer. Thus, it is the starting of
marketing and the marketing end as soon as those goods and services reach into the safe hands
of the customer.
7) Creation of Utilities: Marketing creates four components of utilities viz. time, place,
possession and form. The form utility refers to the product or service a company offers to their
customers. The place utility refers to the availability of a product or service in a location i.e.
Easier for customers. By time utility, a company can ensure that products and services are
available when customers need them. The possession utility gives customers ownership of a
product or service and enables them to derive benefits in their own business.
8) Goal oriented: Marketing seeks to achieve benefits for both buyers and sellers by satisfying
human needs. The ultimate goal of marketing is to generate profits through the satisfaction of
the customer.
9) Guiding element of business: Modern Marketing is the heart of industrial activity that tells
what, when, how to produce. It is capable of guiding and controlling business.
10) System of Interacting Business Activities: Marketing is the system through which a business
enterprise, institution or organization interacts with the customers with the objective to earn
profit, satisfy customers and manage relationship. It is the performance of business activities
that direct the flow of goods and services from producer to consumer or user.
11) Marketing is a dynamic process: A series of interrelated functions: Marketing is a complex,
continuous and interrelated process. It involves continuous planning, implementation and

5
control. Marketing is undertaken within existence of various environmental factors such as

political, social, technological demographic etc. These factors are dynamic and uncontrollable
and keep an changing very fast. Success in marketing depends upon how quickly one adjusts
to these changed circumstances.
12) Core aspect of business: Marketing is within the scope of the term business and is also
linked with other functional areas of business which include, production, finance, personnel
and so on. It is managerial functions. These are and involve analysis, planning and control of
marketing activities in an organization.
CORE CONCEPTS OF MARKETING:

Marketing Management is a social and managerial process by which individuals or firms obtain
what they need or want through creating, offering, exchanging products of value with each other.
the total marketing can be fulfilled the core concepts of business.
NEED/ WANT/ DEMAND:

Need: It is state of deprivation of some basic satisfaction. eg.- food, clothing, safety, shelter.
Want: Desire for specific satisfier of need. eg.- Indians needs food – wants paneer tikka/
tandoori chicken. Americans needs food- wants hamburger/ French fries.
Demand: Want for a specific product backed up by ability and willingness to buy.
eg.- Need – transportation. Want – Car (say, Mercedes)……but able to buy only
Maruti. Therefore, Demand is for Maruti.
PRODUCTS- GOODS/ SERVICES/ PLACE.
Product is anything that can satisfy need/ want.Product components are Physical Good.,
Service,Idea.eg. Fast food- burger/ pizza.Physical Good – material eaten.Service – purchase of
raw material/ cooking,Idea – speed of computer/ processing power.
VALUE/ COST/ SATISFACTION:
Decision for purchase made based on value/ cost satisfaction delivered by product/
offering..Product fulfills/ satisfies Need/ Want. Value is products capacity to satisfy needs/ wants
as per consumer’s perception or estimation. Each product would have a cost/ price elements
attached
o Satisfaction – Estimated in terms of time lead & travel comfort.
o VALUE– Products capacity to satisfy.
o COST– Price of each products.
EXCHANGE/ TRANSACTION:
EXCHANGE: – The act/ process of obtaining a desired product from someone by offering
something in return. For exchange potential to exist, the following conditions must be fulfilled.
There must be at least two parties.

6
Each party has something of value for other party.

Each party is capable of communication & delivery
Each party is free to accept/ reject the exchange offer.
Each party believes it is appropriate to deal with the other party.
TRANSACTION: – Event that happens at the end of an exchange. Exchange is a process
towards an agreement. When agreement is reached, we say a transaction has taken place.
Barter transaction.
Monetary Transaction.
At least two things of value.
Condition agreed upon.
Time of agreement.
Place of agreement.
May have legal system for compliance.
RELATIONSHIP/ NETWORKING:
Relationship marketing:- It’s a pattern of building long term satisfying relationship with
customers, suppliers, distributors in order to retain their long term performances and business.
Achieved through promise and delivery of ,high quality, good service, fair pricing, over a period
of time.
MARKETING NETWORK: It is made up of the company and its customers, employees,
suppliers, distributors, advertisement agencies, retailers, research & development with whom it
has built mutually profitable business relationship.
Competition is between whole network for market share and NOT between companies alone.
MARKET:
A market consists of all potential customers sharing particular need/ want who may be willing
and able to engage in exchange to satisfy need/ want.
Market Size = fn (Number of people who have need/ want; have resources that interest others,
willing or able to offer these resources in exchange for what they want.
MARKETERS/ PROSPECTS: Working with markets to actualize potential exchanges for the
purpose of satisfying needs and wants. One party seeks the exchange more actively, called as “
Marketer”, and the other party is called “Prospect”. Prospect is someone whom marketer
identifies as potentially willing and able to engage in exchange. Marketer may be seller or buyer.
Most of time, marketer is seller.
A marketer is a company serving a market in the face of competition.
Marketing Management takes place when at least one party to a potential exchange thinks about
the means of achieving desired responses from other parties.
SCOPE OF MARKETING:
The scope of marketing deals with the question, ‘what is marketed?’ According to Kotler,
marketing people are involved with ten types of entities.
1. Goods: Physical goods constitute the major part of a country’s production and marketing
effort. Companies market billions of food products, and millions of cars, refrigerators, television
and machines.
2. Services: As economies advance, a large proportion of their activities is focused on the pro-
duction of services. Services include the work of airlines, hotels, car rental firms, beauticians,
software programmers, management consultants, and so on. Many market offerings consist of a
mix of goods and services. For example, a restaurant offers both goods and services.
3. Events: Marketers promote events. Events can be trade shows, company anniversaries,
entertainment award shows, local festivals, health camps, and so on. For example, global sporting

7
events such as the Olympics or Common Wealth Games are promoted aggressively to both companies
and fans.
4. Experiences: Marketers create experiences by offering a mix of both goods and services. A product is
promoted not only by communicating features but also by giving unique and interesting experiences to
customers. For example, Maruti Sx4 comes with Bluetooth technology to ensure connectivity while
driving, similarly residential townships offer landscaped gardens and gaming zones.
5. Persons: Due to a rise in testimonial advertising, celebrity marketing has become a business. All
popular personalities such as film stars, TV artists, and sportspersons have agents and personal managers.
They also tie up with PR agencies for better marketing of oneself
6. Places: Cities, states, regions, and countries compete to attract tourists. Today, states and countries are
also marketing places to factories, companies, new residents, real estate agents, banks and business
associations. Place marketers are largely real estate agents and builders. They are using mega events and
exhibitions to market places. The tourism ministry is also aggressively promoting tourist spots locally and
globally.
7. Properties: Properties can be categorized as real properties or financial properties. Real property is the
ownership of real estates, whereas financial property relates to stocks and bonds. Properties are bought
and sold through marketing.
Marketing enhances the need of ownership and creates possession utility. With improving
income levels in the economy, people are seeking better ways of saving money. Financial and real
property marketing need to build trust and confidence at higher levels.
8. Organizations: Organizations actively work to build image in the minds of their target public. The PR
department plays an active role in marketing an organization’s image. Marketers of the services need to
build the corporate image, as exchange of services does not result in the ownership of anything. The
organization’s goodwill promotes trust and reliability. The organization’s image also helps the companies
in the smooth introduction of new products.
9. Information: Information can be produced and marketed as a product. Educational institutions,
encyclopedias, non-fiction books, specialized magazines and newspapers market information. The
production, packaging, and distribution of information is a major industry. Media revolution and
increased literacy levels have widened the scope of information marketing.
10. Idea: Every market offering includes a basic idea. Products and services are used as platforms for
delivering some idea or benefit. Social marketers widely promote ideas. Maruti Udyog Limited promoted
safe driving habits, need to wear seat belts, need to prohibit children from sitting near the driver’s seat,
and so on.

8
PHILOSOPHIES OF MARKETING MANAGEMENT

In order to achieve desired exchange outcomes with target markets, it is important to decide what
philosophy or thinking should guide the marketing efforts of an organisation. An understanding
of the philosophy or the concept to be adopted is important as it determines the emphasis or the
weight-age to be put on different factors, in achieving the organizational objectives. For
example, whether the marketing efforts of an organisation will focus on the product—say
designing its features etc or on selling techniques or on customer’s needs or the social concerns.
The concept or philosophy of marketing has evolved over a period of time, and is
discussed as follows.
1. The Production Concept: During the earlier days of industrial revolution, the demand for
industrial goods started picking up but the number of producers were limited. As a result, the
demand exceeded the supply. Selling was no problem. Anybody who could produce the goods
was able to sell. The focus of business activities was, therefore, on production of goods. It was
believed that profits could be maximised by producing at large scale, thereby reducing the
average cost of production. It was also assumed that consumers would favour those products
which were widely available at an affordable price. Thus, availability and affordability of the
product were considered to be the key to the success of a firm. Therefore, greater emphasis was
placed on improving the production and distribution efficiency of the firms.
2. The Product Concept: As a result of emphasis on production capacity during the earlier days,
the position of supply increased over period of time. Mere availability and low price of the
product could not ensure increased sale and as such the survival and growth of the firm. Thus,
with the increase in the supply of the products, customers started looking for products which
were superior in quality, performance and features. Therefore, the emphasis of the firms shifted
from quantity of production to quality of products. The focus of business activity changed to
bringing continuous improvement in the quality, incorporating new features etc. Thus, product
improvement became the key to profit maximisation of a firm, under the concept of product
orientation.
3. The Selling Concept: With the passage of time, the marketing environment underwent further
change. The increase in the scale of business further improved the position with respect to supply
of goods, resulting in increased competition among sellers. The product quality and availability
did not ensure the survival and growth of firms because of the large number of sellers selling
quality products. This led to greater importance to attracting and persuading customers to buy the
product. The business philosophy changed. It was assumed that the customers would not buy, or
not buy enough, unless they are adequately convinced and motivated to do so. Therefore, firms
must undertake aggressive selling and promotional efforts to make customers buy their products.
The use of promotional techniques such as advertising, personal selling and sales promotion
were considered essential for selling of products. Thus, the focus of business firms shifted to
pushing the sale of products through aggressive selling techniques with a view to persuade, lure
or coax the buyers to buy the products. Making sale through any means became important. It was

9
assumed that buyers can be manipulated but what was forgotten was that in the long run what matters
most is the customer satisfaction, rather than anything else.
4. The Marketing Concept: Marketing orientation implies that focus on satisfaction of customer’s needs
is the key to the success of any organisation in the market. It assumes that in the long run an organization
can achieve its objective of maximisation of profit by identifying the needs of its present and prospective
buyers and satisfying them in an effective way. All the decisions in a firm are taken from the point of
view of the customers. In other words, customer’s satisfaction becomes the focal point of all decision
making in the organisation. For example, what product will be produced, with what features and at what
price shall it be sold, or where shall it be made available for sale will depend on what do the customers
want. If the customers want features like double door in a refrigerator or a separate provision for water
cooler in it, the organisation would produce a refrigerator with these features, would price it at a level
which the customers are willing to pay and so on. If all marketing decisions are taken with this
prospective, selling will not be any problem. It will automatically follow. The basic role of a firm then is
to ‘identify a need and fill it’. The concept implies that products ad-services are bought not merely
because of their quality, packing or brand name, but because they satisfy a specific need of a customer. A
pre-requisite for the success of any organisation, therefore, is to understand and respond to customer
needs.
To sum up, the marketing concept is based on the following pillars:
a) Identification of market or customer who are chosen as the target of marketing effort.
b) Understanding needs and wants of customers in the target market.
c) Development of products or services for satisfying needs of the target market.
d) Satisfying needs of target market better than the competitors.
e) Doing all this at a profit.
Thus, the focus of the marketing concept is on customer needs and the customer satisfaction
becomes the means to achieving the firms’ objective of maximising profit. The purpose of marketing is to
generate customer value at a profit.
5. The Societal Marketing Concept: The marketing concept, as described in the preceeding section
cannot be considered as adequate if we look at the challenges posed by social problems like
environmental pollution, deforestation, shortage of resources, population explosion and inflation. It is so
because any activity which satisfies human needs but is detrimental to the interests of the society at large
cannot be justified. The business orientation should, therefore, not be short-sighted to serve only
consumers’ needs. It should also consider large issues of long-term social welfare, as illustrated above.
The societal marketing concept holds that the task of any organization is to identify the needs and wants
of the target market and deliver the desired satisfaction in an effective and efficient manner so that the
long-term well-being of the consumers and the society is taken care of. Thus, the societal marketing
concept is the extension of the marketing concept as supplemented by the concern for the long-term
welfare of the society. Apart from the customer satisfaction, it pays attention to the social, ethical and
ecological aspects of marketing. There are large numbers of such issues that need to be attended.

10
ATTRACTING, RETAINING AND DEVELOPING

RELATIONSHIP WITH CUSTOMERS
There is not a customer service business in the world which has not been left with a furrowed
brow when trying to meet the challenge of keeping the regulars and new customers happy in the
face of competition. As we continually introduce new technologies into our business, we
sometimes neglect the number one marketing channel – customer service.
Attracting and retaining customers is a continuous battle that changes daily and just when you
think you have the answer, another problem arises. It is imperative businesses set goals and
standards for staff to achieve. Here are 10 key items to consider when setting your goals for
customer retention.
1. Always keep the customer at the heart of everything you do – It’s not just thinking about
your bottom line and how you can generate the most revenue, otherwise you will end up
sucking the life-force out of a lot of customers who will not want to come back. Making sure
a customer is happy is always number one – the money comes after.
2. Keep looking outside the window – Be engrossed in not only what you offer, but also what
everyone around you is offering at the same time. Understand at least one of your key
competitors has a large share of your wallet. Analyse the contributing factors, reflect on it at
the end of the month, and see how you can use that research to your advantage. It’s not about
replication, but understanding how players interact and what they come to expect.
3. Volume vs Value – Volume will come through many components of your business such as
food, beverage, functions and entertainment. Once volume has been achieved, it is important
to understand and prioritise the value of your players and how to convert through other areas.
Remember, at the end of the day, you and your staff are all ‘salespeople’ that need to identify
and sell each component of your product.
4. Make sure there’s clear and tangible targets for growth set around everything you do –
Just because you’ve always done something isn’t a reason to keep doing it, especially in an
industry that moves as fast as ours. Yes, look after the pennies and the pounds will look after
themselves, but make sure you understand each component of the business and what value it
represents – or more importantly what value should be achieved.
5. Content is king – This incorporates all aspects of the business. Just as it is important for
gaming to have the most up-to-date and popular games, it is just as important to ensure you
are serving the latest trends in food and beverage dishes. In an industry saturated by choice,
venues must strive to ensure all products are current and in-line with the expectations of the
consumer.
6. Right to win – Ensure you have the right to win with what you show your customers. If it’s
‘good enough’, and ‘its always been like that’, then it isn’t good enough anymore. In a world
where your competitors are becoming more savvy in understanding their customers and you
have the data to stop them in their tracks, it just doesn’t make sense to take your customers
for granted. Instead, make the effort to find out their current favourite game, how much they
like to spend per session, what they like to eat/drink and targeting the different content and
value propositions that you send them based on the information at hand.
7. Keep it simple – Just because your team has years and years of experience, you can’t expect
your customers to appreciate this. We spend numerous hours each week analysing and
forecasting our business, but that’s not what the customer wants to hear. They want to hear
about their chance to win and what they need to do to qualify for a promotion. It’s about
keeping it really simple and approaching your customers in a manner they will understand.
Once they become confused, it is twice as hard to engage. Just because you understand the

11
process, it doesn’t mean your customer will. Put yourself in their shoes to find out if a
process will truly make sense and achieve the result you’re aiming for.
8. Launch and leverage, share and re-apply – Seek to continually optimise and streamline
what you’re doing. It’s not just about getting the promotion/activity live, it’s also vital to add
value in your team and making sure you have the optimal processes. It’s not only being
reactive but also making sure that it works around the clock.
9. Win as a team and celebrate success – The key to running a successful promotion and
beating your competitors, is making sure that everyone is striving towards the same goal.
Make sure that your team understands what you’re trying to achieve, and always follow up
with a moment to thank your team and celebrate success.
10. Have fun – When you look across the day-to-day and long-term plans for running a venue,
sometimes approaching it with flexible, general outline leads us to coming up with our best
ideas. Some things are about the journey, some about the destination. While it’s important to
keep the end game in mind, if you get your head stuck in budgets, logistics etc. you may miss
out on the experience the journey gives you.
BUILDING CUSTOMER SATISFACTION, VALUE AND RETENTION
Kotler on Marketing “It is no longer enough to satisfy customers, you must delight them.”
In Topic 3, students would be looking at the following factors such as; What are customer value
and satisfaction, and how can companies deliver them, What make a high performance business,
How can companies both attract and retain customers, How can companies improve both
customer and company profitability and How can companies deliver total quality?
Defining Customer Value & Satisfaction
Customers are value maximizes, within the bounds of search costs and limited knowledge,
mobility and income. They form an expectation of value and act on it. Whether or not the offer
lives up to the value expectation affects both satisfaction and repurchase probability.
Customer Perceived Value (CPV)
The difference between the prospective customer’s evaluation of all the benefits and all the costs
of an offering and perceived alternatives
Total Customer Value

Is the perceived monetary value of the bundle of economic, functional, and psychological
benefits customers expect from a given market offering?
Total Customer Cost

Is the bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of
the given market offering? Total customer cost includes the buyer’s time, energy, and psychic
costs. The buyer evaluates these elements together with the monetary cost to form Total
Customer Cost.
Sellers must assess the Total Customer Value and the Total Customer Cost associated with each
competitor’s offer in order to know how his or her offer rates in the buyers mind and Seller to
increase Total Customer Value or to decrease Total Customer Cost.
Total Customer Satisfaction

12
A Buyers’ satisfaction after a purchase depends on the offer’s performance in relation to the
buyer’s expectations. In general, Satisfaction is a person’s feelings of pleasure or disappointment
resulting from comparing a product’s perceived performance (or outcome) in relation to his or
her expectations. If the performance matches the expectation, the customer is satisfied. If the
performance exceeds expectations, the customer is highly satisfied or delighted. A completely
and highly satisfied customer is more likely to repurchase.
Customer Expectation
How do buyers form their expectation? Most customer form their expectation from past buying
experience, friends, and associates’ advice and marketers and competitors’ information and
promises. Some of today’s most successful companies are raising expectations and delivering
performances to match. These companies are aiming for Total Customer Satisfaction.
Example: Xerox guarantees total satisfaction and will replace at its own expense any dissatisfied
customer’s equipment within 3 years after purchase.
Delivering High Customer Value

How do companies deliver high customer value? The key to generating high customer loyalty is
to deliver high customer value. A company must design a competitively superior value
proposition aimed at a specific market segment, backed by a superior value delivery system. For
customer centered companies, customer satisfaction is both a goal and a marketing tool.
Companies that achieve high customer satisfaction ratings make sure that their target market
knows it. (e.g. Dell Computers).
Measuring Satisfaction
How do companies measure satisfaction?
· Complaints and Suggestion systems - (Customer centered organization makes it easy for
customers to register suggestions and complaints).
· Customer satisfaction surveys – (Companies carry out survey on product performance).

13
· Ghost Shopping – (Companies hires people to pose as potential buyers with the aim of
reporting the competitors strong and weak points experienced in the company’s and competitors’
products).
· Lost Customer analysis – Companies contact customers who have defected to another supplier
to check why this happened.
Nature of High-Performance Business

A major challenge for high-performance companies is that of building and maintaining viable
businesses in a rapidly changing market place.
· Recognize the core elements of the business.
· Maintaining a viable fit between.
o stakeholders
o Processes
o Resources
o organizational capabilities and culture
The High Performance Businesses

Stakeholders – Businesses must define its stakeholders and their needs (customers, employees,
suppliers and distributors).
Processes – Focus on the need to manage core business processes such as new product
development, customer attraction and retention and order fulfilment.
Resources – To carry out its business processes, a company needs resources (labor power,
materials, machines, information, and energy). Many companies today outsource less critical
resources if they can be obtained at a better quality or lower cost.
Organization & Organizational Culture – A company’s organization consist of its structures,
policies, and corporate culture, all of which can become dysfunctional in a rapidly changing
business environment.
To create customer satisfaction, companies must manage their value chain as well as the whole
value delivery system in a customer centered way. A company’s goal is not only to get
customers, but even more importantly to retain customers.
High performance companies are set up to create and deliver superior customer value and
satisfaction. This involves:
· Understanding customer value
· Creating customer value
· Delivering customer value
· Capturing customer value
· Sustaining customer value
To succeed a company needs to use the concepts of value chain and a value delivery network.

14
Value Chain
Michael Porter proposed the generic value chain is a useful tool for companies to determine
ways to create more customer value. Porter argues that there are nine relevant activities that
create value and cost in organization classified under two broad activities, Primary & Support
Activities.
Value Creating Activities - A firm has to look at costs and performances of its value creating
activities as compared to other competitors’ cost and performances (benchmarks). A firm success
depends not only on how well the various departments perform its work but also on how well the
various departmental activities are coordinated.
Example :
The Credit department would check customer’s credit while customer waits. Salesperson gets
frustrated. Products delivered by ship to save cost and customer waits and get more frustrated.
From the example when there is slowing down in one process it can affect others. Above is a
clear example of departments slowing down the delivery of customer services. The solution to
this problem is to place more emphasis on the smooth management of core business process.

15
The Market Sensing Process – All the activities involved in gathering market intelligence,
disseminating it within the organization, and acting on the information.
The New Offering Realization Process – All the activities involved in researching, developing,
and launching new high- quality offerings quickly and within budget.
The Customer Acquisition Process – All the activities involved in defining target markets and
prospecting for new customers.
The Customer Relationship Management Process – All the activities involved in building
deeper understanding, relationships, and offerings to individual customers.
The Fulfilment Management Process – All the activities involved in receiving and approving
orders, shipping the goods on time, and collecting payment.
Value Delivery Network

To be successful a firm also needs to look for competitive advantages beyond its own operations,
into the value chains of its suppliers, distributors, and customers (Supply Chain). Many
companies today have partnered with specific suppliers and distributors to create a superior
value-delivery network. Levi Strauss the maker of blue jeans has a good example of an excellent
Value Delivery Network. Interdependent on its suppliers as well as its intermediary.
Attracting and Retaining Customers
Relationship Marketing - Relationship marketing is concerned with attracting customers,
retaining customers, and eventually ending up with a long term relationship between customer
and company.
Frequent flyer program offered by Qantas Airlines and the Privilege Gold Card offered by some
hotels are good example of firms attempting to maintain an ongoing relationship with their
customers.
How do you attract customers?
Today’s customers are becoming harder to please. They are smarter, more price conscious, more
demanding, less forgiving, and they are approached by many more competitors with equal or
better offers. The challenge according to Jeffrey Gitomer, is not to produce satisfied customers;
several competitors can do this. The challenge is to produce delighted and loyal customers.
Companies seeking to expand their profits and sales have to spend considerable time and
resources searching for new customers. To generate leads, the company develops ads and places
them in media that will reach new prospects; its salespeople in participate in trade shows where
they might find new leads and so on. Salespeople come into play once you have attracted your
prospects.
Computing the cost of lost customers
It is not enough to be skilful in attracting new customers; the company must keep them and
increase their business. To many companies suffer from high customer defection through
switching company to company. Many lose roughly 25 percent of their subscribers each year at
an estimated cost of $2 billion to $4 billion. There are steps a company can take to reduce the
defection rate. There are steps a company can take to reduce the defection rate;

16
· Must define and measure its retention rate.

· Must distinguish the causes of customer attrition and identify those that can be managed
better.
· The company need to estimate how much profit it loses when it loses customers.
· The company needs to figure out how much it would cost to reduce the defection rate.
Nothing beats listening to customers.
CRM – Customer Relationship Management

Many companies are intent on developing stronger bonds with their customers. They do this by
carefully managing detailed information about individual customer so as to maximize customers’
loyalty. Customer defection leads to less profit and more cost to the firm in trying to attract new
customers.
Customer Retention - Key to customer retention is customer satisfaction.
Forming Strong Customer Bonds: The Basics

· Adding Financial Benefits (e.g. Frequent Flyer)
· Adding Social Benefits
· Adding Structural ties
Measuring Profitability
· Profitable customer
· Customer Profitability Analysis
Increasing Company Profitability

· Competitive Advantage (Ability of a company to perform in one or more ways that
competitors cannot or will not match
Implementing Total Quality Management
Total Quality Management (TQM) – TQM is an organizations approach to continuously
improving the quality of all the organization’s processes, product and services. Product and
Service quality, customer satisfaction, and company profitability are intimately connected.
Higher level of customer satisfaction results in higher levels of customer satisfaction which
support higher prices and often lower costs. A quality company is one that satisfies most of its
customer’s needs most of the time. Total quality is the key to value creation and customer
satisfaction.

17
MARKETING ENVIRONMENT
There are several factors which affect a firm. All the things which affect the operations of a firm
are known as marketing environment. Few of these factors can be controlled by the firm but
not all. In order to deal with these factors, firm must understand their market environment so
that positive and negative factors would be managed accordingly.
“A company’s marketing environment consists of the actors and forces outside of marketing that
affect marketing management ability to build and maintain successful relationships with target
customers”. – Philip Kotler
The marketing activities of the business are affected by several factors. While some of the factors
are in the control of the business, most of these are not and the business has to adapt itself to
avoid being affected by changes in these factors. Marketing Environment is the combination of
external and internal factors and forces which affect the company’s ability to establish a
relationship and serve its customers. These external and internal factors group together to form a
marketing environment in which the business operates.
VARIOUS FACTORS AFFECTING MARKETING FUNCTION

The environmental factors that are affecting marketing function can be classified into:
A) Internal environment and
B) External environment
A) Internal Environment of Marketing:
This refers to factors existing within a marketing firm. They are also called as controllable
factors, because the company has control over these factors. It can alter or modify factors as its
personnel, physical facilities, organization and function means, such as marketing mix, to suit the
environment.
There are many internal factors that influence the marketing function, they are:
1) Top Management: The organizational structure, Board of Director, professionalization of
management, etc. Factors like the amount of support the top management enjoys from different
levels of employees, shareholders and Board of Directors have important influence on the
marketing decisions and their implementation.
2) Finance and Accounting: Accounting refers to measure of revenue and costs to help the
marketing and to know how well it is achieving its objectives. Finance refers to funding and
using funds to carry out the marketing plan. Financial factors are financial policies, financial
position and capital structure.
3) Research and Development: Research and Development refers to designing the product safe
and attractive. They are technological capabilities, determine a company ability to innovate and
compete.
4) Manufacturing: It is responsible for producing the desired quality and quantity of products.
Factors which influence the competitiveness of a firm are production capacity technology and
efficiency of the productive apparatus, distribution logistics etc.,
5) Purchasing: Purchasing refers to procurement of goods and services from some external
agencies. It is the strategic activity of the business.
6) Company Image and Brand Equity: The image of the company refers in raising finance,
forming joint ventures or other alliances soliciting marketing intermediaries, entering purchase or
sales contract, launching new products etc.
In organization, the marketing resources like organization for marketing, quality of
marketing, brand equity and distribution network have direct bearing on marketing efficiency.
They are important for new product introduction and brand extension, etc.

18
B) External Environment of Marketing.

External factors are uncontrollable factors as beyond the control of a firm; its success depends to
a large extent on its adaptability to the environment.
The external marketing environment consists of:
a) Macro environment, and
b) Micro environment
a) Micro environment: The environmental factors that are in its proximity. The factors
influence the company‘s non-capacity to produce and serve the market. The factors are:
1) Suppliers: The suppliers to a firm can also alter its competitive position and marketing
capabilities. These are raw material suppliers, energy suppliers, suppliers of labor and capital.
According to Michael Porter, the relationship between suppliers and the firm epitomizes a power
equation between them. This equation is based on the industry condition and the extent to which
each of them is dependent on the other.
The bargaining power of the supplier gets maximized in the following situations:
a) The seller firm is a monopoly or an oligopoly firm.
b) The supplier is not obliged to contend with other substitute products for sale to the buyer
group.
c) The buyer is not an important customer.
d) The suppliers‘product is an important input to the buyer‘s business and finished product.
e) The supplier poses a real threat of forward integration.
2) Market Intermediaries: Every producer has to have a number of intermediaries for
promoting, selling and distributing the goods and service to ultimate consumers. These
intermediaries may be individual or business firms. These intermediaries are middleman
(wholesalers, retailers, agent‘s etc.), distributing agency market service agencies and financial
institutions.
3) Customers: The customers may be classified as:
i) Ultimate customers: These customers may be individual and householders.
ii) Industrial customers: These customers are organization which buys goods and services for
producing other goods and services for the purpose of other earning profits or fulfilling other
objectives.
iii) Resellers: They are the intermediaries who purchase goods with a view to resell them at a
profit. They can be wholesalers, retailers, distributors, etc.
4) Government and other non-profit customers: These customers purchase goods and services
to those for whom they are produced, for their consumption in most of the cases.
5) International customers: These customers are individual and organizations of other
countries who buy goods and services either for consumption or for industrial use. Such buyers
may be consumers, producers, resellers, and governments.
6) Competitors: Competitors are those who sell the goods and services of the same and similar
description, in the same market. Apart from competition on price, there are like product
differentiation. Therefore, it is necessary to build an efficient system of marketing. This will
bring confidence and better results.
7) Public: It is duty of the company to satisfy the people at large along with its competitors and
the consumers. It is necessary for future growth.The action of the company do influence the
other groups forming the general public for the company. A public is defined as ‗any group that
has an actual or potential interest in or impact on a company‘s ability to achieve its objective.‘
Public relations are certainly a broad marketing operation which must be fully taken care of.
Macro Environment:

19
Macro environment factors act external to the company and are quite uncontrollable. These
factors do not affect the marketing ability of the concern directly but indirectly the influence
marketing decisions of the company.
These are the macro environmental factors that affect the company‘s marketing decisions:
a) Demographic Forces: Here, the marketer monitor the population because people forms
markets. Marketers are keenly interested in the size and growth rate of population in different
cities, regions, and nations ; age distribution and ethnic mix ; educational levels; households
patterns; and regional characteristics and movements.
b) Economic Factors: The economic environment consists of macro-level factors related to
means of production and distribution that have an impact on the business of an organization.
c) Physical Forces: Components of physical forces are earth‘s natural renewal and non-renewal
resources. Natural renewal forces are forest, food products from agriculture or sea etc.
Nonrenewal natural resources are finite such as oil, coal, minerals, etc. Both of these components
quite often change the level and type of resources available to a marketer for his production.
d) Technological Factors: The technological environment consists of factors related to
knowledge applied, and the materials and machines used in the production of goods and services
that have an impact on the business of an organization.
e) Political and Legal Forces: Developments in political and legal field greatly affect the
marketing decisions. sound marketing decision cannot be taken without taking into account, the
government agencies, political party in power and in opposition their ideologies, pressure
groups, and laws of the land. These variables create tremendous pressures on marketing
management. Laws affect production capacity, capability, product design, pricing and
promotion. Government in almost all the country intervenes in marketing process irrespective of
their political ideologies.
f) Social and Cultural Forces: This concept has crept into marketing literature as an alternative
to the marketing concept. The social forces attempt to make the marketing socially responsible. It
means that the business firms should take a lead in eliminating socially harmful products and
produce only what is beneficial to the society. These are numbers of pressure groups in the
society who impose restrictions on the marketing process pinion Leadership is the process by
which the opinion leader informally influences the actions or attitudes of others, who may be
opinionDecisions regarding the product, price, promotion and distribution channels are decisions
on the elements of the "marketing mix". It can be argued that product decisions are probably the
most crucial as the product is the very epitome of marketing planning. Errors in product
decisions are legion. These can include the imposition of a global standardised product where it
is inapplicable, for example large horsepower tractors may be totally unsuitable for areas where
small scale farming exists and where incomes are low; devolving decisions to affiliated countries
which may let quality slip; and the attempt to sell products into a country without cognizance of
cultural adaptation needs. The decision whether to sell globally standardised or adapted products
is too simplistic for today's market place. Many product decisions lie between these two
extremes. Cognizance has also to be taken of the stage in the international life cycle, the
organisation's own product portfolio, its strengths and weaknesses and its global objectives.
Unfortunately, most developing countries are in no position to compete on the world stage with
many manufactured value-added products. Quality, or lack of it, is often the major letdown. As
indicated earlier, most developing countries are likely to be exporting raw materials or basic and
high value agricultural produce for some time to come.

20
MARKETING RESEARCH AND MARKETING INFORMATION

SYSTEM
MARKETING RESEARCH
AN INTRODUCTION TO MARKETING RESEARCH
Before defining ‘marketing research’, let us define research. Research always starts with
a question or a problem. Its purpose is to find answers to questions through the application of the
scientific method. It is a systematic and intensive study directed towards a more complete
knowledge of the subject studied.
Research can be classified into two broad categories: (i) basic research, and (ii) applied
research. Basic research is sometimes called ‘fundamental’ research, ‘theoretical research or
‘pure’ research. It aims at expanding the frontiers of knowledge and does not directly involve
pragmatic problems. The essence of basic research is that it addresses itself to more fundamental
questions and not to the problems with immediate commercial potential.
Applied research, on the other hand, proceeds with a certain problem, and it specifies
alternative solutions and the possible outcomes of each alternative. Unlike basic research, it is
prompted by commercial considerations. Though one may usually be able to distinguish between
basic research and applied research, the distinction between the two sometimes gets blurred.
Several firms may be engaged in basic research which does not have any immediate commercial
use. However, it may be potentially commercial or else the firms would not have undertaken it at
all.
Applied research can be divided into two categories: (i) problem-solving research, and (ii)
problem-oriented research. Problem-solving research, as the name implies, is concerned with a
particular issue or a problem and is usually proprietary in character. The latter characteristic
indicates that such a research is undertaken within a firm or by an outside consultant on its
behalf. Problem-oriented research, on the other hand, is concerned with a class of issues of
problems in which several
firms may be interested. Research of this type is usually concerned with conceptual
aspects but is oriented towards applied problems.
DEFINING MARKETING RESEARCH

Marketing research is a systematic and objective study of problems pertaining to the
marketing of goods and services. It may be emphasised that it is not restricted to any particular
area of marketing, but is applicable to all its phases and aspects. As marketing research tackles
problems which seem to have immediate commercial potential, it should be regarded as applied
research. We may also say that marketing research is of both types– problem-solving and
problem-oriented.
The American Marketing Association (AMA) has defined marketing research as follows:
Marketing Research is the function which links the consumer, customer, and public to the
marketer through information– information used to identify and define marketing opportunities
and problems; generate, refine, and evaluate marketing actions; monitor marketing
performance; and improve understanding of marketing as a process.
Marketing research specifies the information required to address these issues; designs
the” method for collecting information; manages and implements the data collection process;
analyses the results; and communicates the findings and their implications.

21
The American Marketing Association while defining marketing research emphasises that its
function is to provide information to management so that it can identify and react to marketing
opportunities and problems. The AMA’s definition of marketing research also indicates the
scope and process of marketing research. In short, marketing research provides the requisite
information for making marketing decisions.
WHAT KINDS OF RESEARCH ARE UNDERTAKEN?

The research studies show the following usage of marketing research:
1. The measure-market potentials, characteristics of their markets, and their shares of
markets.
2. To obtain information that could help them make short-range and long-range forecasts.
3. To evaluate new-product opportunities and acceptance, and to test existing products
relative to competitors’ products.
4. To help companies make better advertising decision.
WHY THE COMPANIES USE MARKETING RESEARCH

We have seen that there are many different ways that companies use marketing research.
But why is it even necessary for companies to use something called “marketing research”?· The
answer to this inquiry will help beginning marketing research students have a better
understanding of why marketing research has evolved and is continuing to grow.
Several characteristics of modern business encourage the use of marketing research by
businesses. First, the suppliers of products and services need to have information about final
consumers in order to market their products and services more effectively. Second, as a company
grows and starts distributing its products in a number of different markets, the managers of the
company find themselves becoming more separated from the final consumers of their products.
I. Managers Are Separated from Their Final Consumers

Many manufacturers distribute their products through their own sales personnel to wholesalers,
who in turn sell those products to retailers, who then make the sale to the final consumers. In
their normal
course of business many manufacturers have little direct contact with the retailers of their
products and no contact at all with the final consumers of their products. Thus, the marketing
managers in such firms are separated from their final consumers by geographical distance as well
as by a number of layers of people within their own organizations and within their wholesalers’
and retailers’ organizations.
Although retailers and service organizations have direct contact with their customers,
managers of retail operations often have little knowledge of their customer’s attitudes, opinions
and preferences because sales clerks and other store personnel do not relay customers’ comments
to their managers. A retailer also has no contact with potential customers, that is, with
individuals who do not currently patronize the retailer’s store but who might become customers
if the retailer could identify them and learn what would be effective in attracting them.
II. Marketers Need Information about their Final Consumers

Manufacturers, retailers, suppliers of all kinds of services, and many other organizations
need certain kinds of information in order to be able to satisfy their customers’ wants and needs
and to design effective marketing programs while still earning a profit. At least five such
information topics are of great interest to marketing managers. These five topics, and some of the
questions marketing managers have regarding them, are as follows:

22
Target market: What is the best target market for the products or services being offered
by the organization? How large is the target market and how can it be described? What are the
attitudes, opinions, preferences, lifestyles, and so on of its consumers?
Products/Services: Regarding particular products and services, how for the market is satisfied or
dissatisfied with what is currently
available? What product features and benefit5 do those consumers desire? How do they
compare the organization’s product with those offered ‘by competitors?
Price: How much value does the target market place on the product in question? What
products are they willing to substitute for the product in question? What prices are charged for
those substitutes? What advantages does the organization’s product have that might allow it to
charge a higher price?
Distribution: What distribution channel is the target market most likely to use when
purchasing the product in question? Is the organization’s pricing in line with what the target
market expects to pay for the product when purchased through that channel? Does the pricing
include the size of margin the channel traditionally expects to receive? Will the channel be able
to provide the service or support needed for the product?
Promotion: What can the organization say in its advertisements about its product that
will appeal to the target market and lead them to consider the organization’s product more
attractive, than those offered by competitors? Through what medium(s) should the organization
advertise? What specific vehicles (i.e. what specific television programs or newspapers) should
the organization use to carry the advertisements? How often should the advertisements appear,
and how much money should the organization spend on advertising? Should personal selling be
used? If so, then how?
Marketing managers in most organizations need answers to some or all of these questions.
Obtaining answers to many of these questions requires contact with final consumers. Because
most manager are separated from their final consumers- and from the information they need-
business and other organizations are increasingly turning to
marketing research to obtain the information they need for decision making.
APPLICATIONS OF MARKETING RESEARCH

Following are number of examples on the applications of marketing research. They
clearly bring out how marketing research has been helpful in resolving marketing problems or in
identifying opportunities for the development of new products.
1. A pharmaceutical company carried out a study on the prescription behaviour for a major brand
on account of its declining sales. The study brought out interesting findings on a number of
aspects such as the relationship between the sales and the age of the brand, its regular promotion,
its core therapeutic emphasis and the role of retailers in servicing prescription. On the basis of
findings of the study, the company changed its marketing strategy. This enabled it to regain the
lost market share of its brand.
2. Malayala Manorama, which is Kerala’s largest publication group, has recently launched a
monthly women’s magazine in Hindi, Vanita. While launching this magazine, the management
observed that it was convinced through market research that there was a huge vacuum in the
Hindi magazine segment. This new magazine Vanita has been positioned as a partner and friend
that the modern woman can identify with. The first print run of Vanita was one lakh copies.
Indications are that within a short time it may become one of the popular Hindi magazines.
3. Cadbury India Limited launched Picnic from its international portfolio in February, 1998. It
is wrapped in vibrant colours of red, blue and yellow in conformity with its international
packaging. Earlier, Cadbury Indian Limited commissioned a consumer research

23
study in Mumbai. The results of this study were encouraging and showed that the Indian
youth is always interested in experimenting with new food options.
4. Procter and Gamble (P&G) launched Menthol, an international vibrant of Head &
Shoulders. This joins the extra-conditioning anti-dandruff shampoo of the same brand. The
company conducted a market research study prior to its launch. The findings of the study
indicated a distinct need for a menthol-based shampoo. The study showed that in hot and humid
conditions as in India, consumers prefer a shampoo which not only removes dandruff but also
provides a cool and tingling sensation to the scalp.
5. Another example from P&G shows how marketing research is used to identify new
opportunities in the marketplace. The company was getting a lot of data on Vicks-Vaporub. The
analysis of such data revealed that the most common symptom of cold was a headache and that
majority of adults typically take a pill to cure it. This disclosed an opportunity for a product that
can treat the headache as well as the other symptoms. The company thus launched Action 500. It
not only treated headache but also gave relief from blocked nose. Marketing research can
therefore lead to the development of a new product.
6. Pepsi Foods has assigned great importance to marketing research. Through research it gets
systematic information about its markets and its customers. All its research is done by the IMRB.
Broadly, research studies done for Pepsi Foods fall in the following three areas:
(i) Studies undertaken on a continuous basis like marketing tracking studies and retail audits.
(ii) Studies are from time to time as per the requirement of the company such as a study to
ascertain the effectiveness of an ad campaign.
All these types of research studies have tremendously helped Pepsi Foods to strengthen
its position in the market. It feels the pulse of the market and is always in touch with the latest
developments in the market.
7. Another mu1tinational company Whirlpool Asia lays considerable emphasis on marketing
research. In this company, every activity, strategy and decision is based on data collected
through the research process. It believes in planning research in advance though it is rather
difficult. It strives to have a meaningful dialogue with the consumer in order to know his real
opinion about its products, what difficulties he experiences and what suggestions he has to offer.
Information thus received proves to be quite useful to the company in modifying its products or
in evolving new ones.
Whirlpool has gained an insight into the various segments in the market. In India, it has
segmented the market on the basis of the different stages of the product life cycle.
Decisions like which size of refrigerator should be put in the market or what should be
the price of a particular model are based on research. Marketing and Research Group (MARG)
has been the main marketing research agency for Whirlpool.
LIMITATIONS OF MARKETING RESEARCH

The preceding discussion on the different applications of marketing research should not lead
anyone to assume that marketing research can solve all the problems of marketing. While it can
be extremely rewarding to a firm, it is wise to know that it is subject to certain limitations. One
must be aware of these limitations in advance so that one is clear about what marketing research
can and cannot do. The following are the main limitations of marketing research:
First, many a times, marketing research tends to be fragmentary in its approach as a
result of which it becomes difficult to have an overall perspective in which a marketing problem
is to be viewed and studied.
Second, marketing research is criticised on the ground that it becomes too superficial and
faulty in industry. While the principles of marketing research are good and based on scientific
lines, in industry, marketing research is very often used by those who have had no for!llal

24
training in the subject. Such persons avoid using detailed investigations and sophisticated
techniques which require both time and patience on the part of marketing researchers.
Third, there is an absence of a meaningful dialogue between the marketing management
and the marketing research team. As a result, marketing researchers get divorced from the main
stream of marketing. This denies them any opportunity to test their findings in the practical
marketing situation. Marketing researchers tend to think that “research is the be all and end all”.
This attitude further reduces the utility of research to the management.
Fourth, marketing research is not an exact science. There are several problems which
come in the way of getting accurate results. For example, consumer behaviour is an area which is
rather elusive and the theory does not go very far in disclosing it very precisely. Analytical tools
of marketing research are still deficient and cannot give us a precise idea, especially on the
behavioural aspects.
Apart from these limitations of marketing research, one finds that it is sometimes
misused. These mis-applications, strictly speaking, are not the limitations of the subject as such.
Another misuse of marketing research is found in deliberately delaying decision-making.
In the hands of vested interests, it may be
used to avoid taking a certain decision or delaying it until the findings of marketing
research are available.
Finally, it is used to grab power and authority in an organisation. Executives who are
over-ambitious may use marketing research· to consolidate and strengthen their position in the
organisation as also to extend their authority over their colleagues.
MARKETING RESEARCH PROCESS

In planning and designing a specific research project, it is necessary to anticipate all the steps
that must be undertaken if the project is to be successful in collecting valid and reliable
information. If it were broken down into very small parts or activities, the marketing research
process would consist of a great number of steps. On the other hand, if we cluster the various
steps according to major activities, we can view the marketing research process as consisting of
the following eight steps:
• Formulating the Research Problem
• Choice of Research Design
• Determining Sources of Data
• Designing Data Collection Forms
• Determining Sampling Design and Sampling Size
• Organising and Conducting the Field Survey
• Processing and Analysing the Collected Data
• Preparing the Research Report (STUDY THIS IN DETAIL)
MARKETING INFORMATION SYSTEMS
INTRODUCTION: All businesses are operating under conditions of risk and uncertainty. The
success or failure of any firm or company depends on many factors like economic situation, the
changing tastes of customers, the extent and nature of competition and competitive activities and
more. Business decisions and especially marketing decisions, are actually the decisions about the
future of a company. The management of successful companies always focuses on each of the
aspects of their business in order to make achievable decision. Marketing is usually that area of a
company which requires lots of attention. Company sales depend on marketing so company must

25
use adequate solutions for the more effective promotion of their products. For this purpose
companies rely on marketing information system. Marketing information system allows a
company to use all relevant information for developing its marketing strategies more effectively.
Marketing Information System (MIS) is a permanent arrangement (system or setup) for provision
of regular availability of relevant, reliable, adequate, and timely information for making
marketing decisions.
Information is like a life-blood of business. Quality of decisions depends on the right type of
information. The right information implies the right quality, the right quantity, and the right
timing of information. Circulation of needed information is as important as the circulation of
blood in human being.
Information keeps the organisation actively functioning, alive, and connected with internal and
external marketing participants. It is a valuable asset for a firm as it is a base to manage other
valuable assets. The firm fails to manage information (i.e., collecting, analyzing, interpreting,
storing, and disseminating of information) will definitely fail to attain goals.
Today’s marketing is dynamic, and manager has to undergo necessary changes to cope with the
pace of changing marketing environment. Information is a basic input to know what is happening
and what is going to happen. Marion Harper has rightly asserted: “To manage a business well is
to manage its future, and to manage the future well is to manage the information.”
A company needs information on a continuous basis to be aware of marketing developments
taking place in the market. In order to learn about changing needs of customers, new
competitors’ initiatives, changing distribution practices, recent trends in promotion practices,
etc., a manager requires the permanent arrangement to get the needed information on a regular
basis. The system or arrangement that deals with providing the information regularly is known as
marketing information system (MIS).
A good marketing information system should determine the information needs of the
organisation and generate and” process such information on a continuing basis. It should also
provide for its storage so that it can be used when required.
DEFINITIONS:
Marketing Information System (MIS) has been defined as:
1. Philip Kotler:
“A marketing information system is a continuing and interacting system of people, equipment’s,
and procedures to gather, sort, analyze, evaluate, and distribute the pertinent, timely, and
accurate information for use by marketing decision-makers to improve their marketing planning,

26
implementation, and control.” Philip Kotler gives alternative definition, such as: “A marketing
information system (MIS) consists of people, equipment’s, and procedures to gather, sort,
analyze, evaluate, and distribute the needed, timely, and accurate information to marketing
decision makers.”
2. We can say:
Marketing Information System (MIS) is a permanent arrangement (system or setup) for provision
of regular availability of relevant, reliable, adequate, and timely information for making
marketing decisions.
3. Finally, let us define the term more comprehensively:
MIS concerns with setting and maintaining of a permanent system (network) to avail necessary
information on regular basis. The system consists of people, equipment’s, facilities, and
procedures directed to gather, analyze, evaluate, update, distribute, and preserve the information
to assist marketing decision-making, i.e., analyzing, planning, implementing, and controlling of
marketing activities.
COMPONENTS OF MIS
MIS is made of parts, subparts or subsystems which are called the components. Typically,
according to Philip Kotler, a marketing information system consists of four interrelated
components – Internal Reports (Records) System, Marketing Research System, Marketing
Intelligence System, and Marketing Decision Support System, as shown in Figure 1. All
components are interrelated and interdependent.
1. Internal Records System:

Internal records system is a major and easily accessible source of information. It supplies the
results data. It consists of all records of marketing operations available within organisation. This
system concerns with collecting, analyzing, interpreting, and distributing needed information
from records of various departments of the company.
Main sources include various records on sales and purchase, ordering system, sales force
reporting system, inventory level, receivable-payables, marketing staff, costs, the past research
works, and other literatures/reports available within organisation. Particularly, for sales orders
and sales force reporting, the computer technology is excessively used for accurate, efficient, and
speedy transmission of information.
To manage the internal record system, some companies appoint internal MIS committee to deal
with all aspects of internal information.

27
The committee:
(1) Attends request for all type of information required by managers,
(2) Determines sources of the information and tools needed to collect, evaluate, and analyze
information,
(3) Deals with presenting, distributing and updating the information,
(4) Handles complaints of employees , and
(5) Performs all types functions related to information.
Internal records system keeps regular circulation of the information throughout the organisation
without much expense and efforts. Managers can get the up-to-date information about marketing
operations. Once the system is set up properly, it can serve the purpose continually.
2. Marketing Intelligence System:

While internal report system concerns with information available from internal records of
organisation, the marketing intelligence system supplies the managers with happening data. It
provides information about external happenings or external environment.
Marketing intelligence system is:
The set of procedures and sources used by managers to obtain every-day information regularly
about pertinent developments in the marketing environment. A manager can try to expose
external environment in various ways.
Marketing intelligence system consists of various methods.
A manager can use one or more below mentioned methods:
i. Reading newspapers, books, and other publications.
ii. Watching TV, hearing radio, or Internet surfing.
iii. Talking to customers, dealers, suppliers, and other relevant parties.
iv. Talking to other managers and employees of his company as well as of other companies.
v. Maintaining live contacts with other officials and agencies.
vi. Purchasing useful information from professional sources.
vii. Assigning marketing intelligence task to professional agencies, etc.
Effective marketing intelligence system can facilitate managers to take immediate actions like
reacting to competitors, meeting changing needs of customers, solving dealers’ problems, and so
on.
3. Marketing Research System:

Marketing research is a powerful and independent branch of the MIS. In certain cases, managers
need detailed information on the specific problem of the specific marketing area. Thus, it is a
formal study of specific problems, opportunities, or situations. Normally, it is carried out for
solving the specific problem.
In this sense, it is not a part of routine activity. It collects need-based information. Nowadays, it
is treated as the separate discipline or subject. Philip Kotler defines: “Marketing Research is the
systematic design for collection, analysis, and reporting of data and findings relevant to specific
marketing situations facing the company.”
Marketing research consists of collecting primary and secondary data from various respondents
using various tools through various methods for definite period of time, analyzing data using
appropriate statistics tools, and presenting findings in forms of a report. It is conducted by
internal expert staff or external professionals.
4. Marketing Decision Support System (MDSS):

Previously, the component was known as Analytical Marketing System. While former three
components supply data, the marketing decision support system concerns more with processing

28
or analyzing available data. This component can improve efficiency and utility of the whole
marketing information system.
The system is used to help managers make better decisions. John D. C. Little defines: “A
marketing decision support system (MDSS) is coordinated collection of data, systems, tools, and
techniques with supporting software and hardware by which an organisation gathers and
interprets relevant information from environment and turns it into a basis for making decisions.”
According to the definition, the MDSS includes tools, techniques or models used for:
(1) Data collection,
(2) Data analysis,
(3) Interpreting results, and
(4) Supporting managerial decision-making.
In real sense, it is not a separate component, but extension of other components. Statistical tools,
new models, and software are used to help marketing managers analyze, plan, and control their
operations. The MDSS consists of two sub-components – the statistical bank and the model
bank.
The Statistical Bank:
It consists of quantitative tools used in marketing decision-making. It is popularly known as
Operations Research (OR).
The statistical tools used for data analysis include:
i. Simple statistical techniques like averages, mode, medium, etc.
ii. Regression-multiple regression analysis
iii. Discriminant analysis
iv. Correlation analysis
v. Factor analysis
vi. Cluster analysis
vii. Input-output analysis
viii. Conjoint analysis
ix. Multidimensional scaling, etc.
The Model Bank:
This component includes decision support models. It is a collection of models and software that
can help managers develop better marketing decisions. The model is a series of variables, their
interrelationships, and programmes to represent some real systems. The models are developed by
scientists who are known as operation researchers. For different purposes, different models are
used.
Widely used models include:
i. The Markov-Process Analysis
ii. Queuing Model
iii. New Product Pretest Models
iv. Sales Response Model
v. Discrete Choice Model
vi. Differential Calculus
vii. Mathematical Programming
viii. Statistical Decision Theory
ix. Game theory
x. Heuristics
xi. Decision Tree Model
xii. Feedback System Model
xiii. Linear v/s Non-linear Model, etc.

29
Using relevant variables, mathematical operators, and some techniques, the new models can be
developed as per firm’s needs. Sometimes, such models are also called packages. Some recently
developed decision models include BRAN DAI D (marketing mix model), CALLPLAN (for
sales force to determines number of calls), DETAILER (for sales force to determine type of
customers to call), GEOLINE (for designing sales and service territories), MEDICAC (for
advertising to select media), PROMOTER (for sales promotion programmes), ADCAD (for
selecting type of advertising theme), COVERSTORY (for writing sales reports and memo
writing), etc. Every model consists of variables and their relationships. Each of them can be
applied in specific decision area and for specific purpose.
STEPS OF MARKETING INFORMATION SYSTEM

In order to use marketing information, companies have to focus on three main steps of marketing
information systems.
 Assessing Information Needs
 Developing Information
 Distributing Information
Assessing Information Needs
First of all marketer should know why the marketing information is necessary? MIS system
primary serves the management and company’s employees. However it may also provide
information to external partners, such as suppliers, retailers and other marketing agencies. For
example Wal-Mart gives their key suppliers access to their information system. Dell creates
premium pages for their customers, giving them access to product design and other services
information. Company’s managers must know about a new product that competitors plans to
introduce. By all this it is clearly disclosed that marketing information system plays a vital role
for a company to make on time decision making and effective business strategy.
Markers can get information from:
1. Internal Records can be found in company’s marketing, sale, accounting departments.
2. Marketing Intelligence collect and analyzed publically available data of competitors and
other developments in the marketplace.
3. Marketing Research analyzed the collected data for report generation.
4. Marketing Decision Support Systems are tools help in marketing decision process.
Developing Information
The second and most important step in marketing information system is to develop or collect
information. There are various techniques adopted by different companies for collecting data and
information. The techniques of collecting data may vary from company to company according
to their specific needs. The common methods of data collection are as under:
 Observational research
 Survey research

30
 Focus group interview

 Personal contact method
 Sampling research plan and
 Questionnaires
Distributing & Using Marketing Information
The gathered information has no value until it is used to make better marketing decision making.
So the information should be timely available to managers and other top level management who
make marketing decisions and deal with customers. This can only be happen by regular
performance reports, intelligence updates and other information collected by research studies.
TYPES OF INFORMATION SUPPLIED BY MIS

Marketing information system usually supplies three types of information to
marketing managers. The information could be recurrent, monitoring and
requested. Recurrent information is that information which is provided on a
periodic basis. For example, information on sales, market shares, customer
satisfaction and perceptions, advertising expenditure, etc. may be supplied on
weekly or monthly basis.
Monitoring information is the information obtained from regular scanning of
certain sources. For example, official publications, journals, annual reports of
companies constitute common sources of monitoring information. These sources
can be very helpful to companies as they can indicate the nature of problems that
are likely to arise and the possible changes in business environment. In addition,
such information can be helpful in identifying new market segments, new uses,)f
the existing product as also possibilities of improving the product by introducing
new features.
Requested information, as the name implies, is the information sought by a
marketing manager. Such information could involve a wide range of activities such
as cost and price analysis of competitive products, cash flow position of
competitive companies, quality testing of competitive products, etc. It may be
noted that such information would not be usually available unless a specific
request is made for the same. Once a request is made for specific information,
then a series can be built up over time provided such information is useful and
marketing managers need it frequently.
MIS to Help Develop Marketing Plans

Concluding Comments on Marketing Research Usage
WHAT INFORMATION SOURCES ARE USED?

31
DIFFERENCE BETWEEN MARKETING RESEARCH & MARKETING

INFORMATION SYSTEM

32

33
ETHICAL ISSUES IN MARKETING

Ethics are the set of moral principles that guide a person’s behavior. These morals are shaped by
social norms, cultural practices, and religious influences. Ethics reflect beliefs about what is
right, what is wrong, what is just, what is unjust, what is good, and what is bad in terms of
human behavior. They serve as a compass to direct how people should behave toward each other,
understand and fulfill their obligations to society, and live their lives. Ethics applies to all aspects
of conduct and is relevant to the actions of individuals, groups, and organizations.
A company must have ethical marketing policies to guide their pricing, advertising, research, and
competitive strategies.
Ethical issues in marketing arise from the conflicts and lack of agreement on particular issues. Parties
involved in marketing transactions have a set of expectations about how the business relationships will
take shape and how various transactions need to be conducted. Each marketing concept has its own
ethical issues, which we will discuss in this chapter.
Emerging Ethical Problems in Market Research
Market research has experienced a resurgence with the widespread use of the Internet and the
popularity of social networking. It is easier than ever before for companies to connect directly

34
with customers and collect individual information that goes into a computer database to be
matched with other pieces of data collected during unrelated transactions.
The way a company conducts its market research these days can have serious ethical
repercussions, affecting the lives of consumers in ways that have yet to be fully understood.
Further, companies can be faced with a public backlash if their market research practices are
perceived as unethical.
Grouping the Market Audience
Unethical practices in marketing can result in grouping the audience into various segments.
Selective marketing may be used to discourage the demand arising from these so-called
undesirable market segments or to disenfranchise them totally.
Examples of unethical market exclusion may include the industry attitudes towards the gay,
ethnic minority, and plus-size groups.
Ethics in Advertising and Promotion
In the early days of existence of corporations, especially during 1940s and 1950s, tobacco was
advertised as a substance that promotes health. Of late, an advertiser who does not meet the
ethical standards is considered an offender against morality by the law.
 Sexuality is a major point of discussion when ethical issues in advertising content are
considered. Violence is also an important ethical issue in advertising, especially where
children should not be affected by the content.
 Some select types of advertising may strongly offend some groups of people even when
they are of strong interest to others. Female hygiene products as well as haemorrhoid and
constipation medication are good examples. The advertisements of condoms are
important in the interest of AIDS-prevention, but are sometimes seen by some as a
method of promoting promiscuity that is undesirable and strongly condemned in various
societies.
 A negative advertising policy lets the advertiser highlight various disadvantages of the
competitors’ products rather than showing the inherent advantages of their own products
or services. Such policies are rampant in political advertising.
Delivery Channels
Direct marketing is one of the most controversial methods of advertising channels, especially
when the approaches included are unsolicited.
Some common examples include TV and Telephonic commercials and the direct mail. Electronic
spam and telemarketing also push the limits of ethical standards and legality in a strong manner.
Example − Shills and astroturfers are the best examples of ways for delivering a marketing
message under the guise of independent product reviews and endorsements, or creating
supposedly independent watchdog or review organizations. Fake reviews can be published on
Amazon. Shills are primarily for message-delivery, but they can also be used to drive up prices
in auctions, such as EBay auctions.

35
Deceptive Marketing Policies and Ethics

Deceptive marketing policies are not contained in a specific limit or to one target market, and it
can sometimes go unseen by the public. There are numerous methods of deceptive marketing. It
can be presented to consumers in various forms; one of the methods is one that is accomplished
via the use of humor. Humor offers an escape or relief from various types of human constraints,
and some advertisers may take the advantage of this by applying deceptive advertising methods
for a product that can potentially harm or alleviate the constraints using humor.
Anti-Competitive Practices
There are various methods that are anti-competitive. For example, bait and switch is a type of
fraud where customers are "baited" through the advertisements for some products or services that
have a low price; however, the customers find in reality that the advertised good is unavailable
and they are "switched" towards a product that is costlier and was not intended in the
advertisements.
Another type of anti-competitive policy is planned obsolescence. It is a method of designing a
particular product having a limited useful life. It will become non-functional or out of fashion
after a certain period and thereby lets the consumer to purchase another product again.
A pyramid scheme is also an anti-competitive process. It is a non-sustainable business model that
promises the participants payment or services, mainly for enrolling other people into the scheme;
it does not supply any real investment or sell products or services to the public.
This business practice demands the initial investor or the "captain" to enroll other people for a
fee to them who again will further enroll more people in order to be paid by the company.
Pricing Ethics
There are various forms of unethical business practices related to pricing the products and
services.
Bid rigging is a type of fraud in which a commercial contract is promised to one party, however,
for the sake of appearance several other parties also present a bid.
Predatory pricing is the practice of sale of a product or service at a negligible price, intending to
throw competitors out of the market, or to create barriers to entry.
Using Ethics as a Marketing Tactic
Major corporations fear the damage to their image associated with press revelations of unethical
practices. Marketers have been quick to perceive the market’s preference for ethical companies,
often moving faster to take advantage of this shift in consumer taste. This results in the
propagation of ethics itself as a selling point or a component of a corporate image.
Marketing ethics, regardless of the product offered or the market targeted, sets the guidelines for
which good marketing is practiced. To market ethically and effectively one should be reminded
that all marketing decisions and efforts are necessary to meet and suit the needs of customers,
suppliers, and business partners. The mindset of many companies is that they are concerned for
the population and the environment in which they due business. They feel that they have a social
responsibility to people, places and things in their sphere of influence.

36
UNIT - II
CONSUMER BEHAVIOUR
INTRODUCTION: We all are consumers, daily we use many products that we buy from the
market according to our needs, wants, preferences, and purchasing power. What we buy, how we
buy, when we buy, from where we buy, in what quantity we buy depends on various factors like
our needs, preferences, beliefs, values, motivation, perception, attitude, personality, age, sex,
family, social and cultural background, and many other factors. These factors determines our
consumer behaviour.
Consumer behaviour is a complex and dynamic decision process; and physical activity of
evaluating, acquiring, using, or disposing of products and services. Developing an effective
marketing strategy requires in-depth knowledge of target consumers and how they behave and
make their buying decision. Proper study of consumer behaviour is important as all marketing
decisions are based on assumptions about consumer behaviour.
DEFINITION OF CONSUMER BEHAVIOUR

According to American Marketing Association, consumer behaviour can be defined as "the
dynamic interaction of affect and cognition, behaviour, and environmental events by which
human beings conduct the exchange aspects of their lives."
According to Hawkins, Best, and Coney, 2001, p7, Consumer behaviour can be defined as "the
study of individuals, groups or organisations and the processes they use to select, secure, use
and dispose of products, services, experiences or ideas to satisfy needs and the impacts that
these processes have on the consumer and society."
According to Satish K. Batra and S. H. H. Kazmi, 2004, Consumer behaviour is "the mental
and emotional processes and the observable behaviour of consumers during searching
purchasing and post consumption of a product and service."
MEANING OF CONSUMER BEHAVIOUR

Consumer behaviour is the complex and dynamic processes of deciding what product to buy,
when to buy, how to buy, from where to buy, how to secure, how to use, or how to dispose to
satisfy individuals, groups, or organisations' needs. Consumer behaviour is a decision process
and physical activity individuals, groups, or organisations engage in when evaluating, acquiring,
using, or disposing of goods and services.
Consumer behaviour has two aspects - final purchase behaviour and decision making process.
Purchase behaviour is visible to us, but the decision making process involves number of complex
variables which are not visible to us. Purchase behaviour is the end result of long decision
making process. Study of consumer behaviour attempt to understand the decision making
processes of buyers.

37
IMPORTANCE OF UNDERSTANDING CONSUMER BEHAVIOUR
The study of consumer behaviour for any product is of vital importance to marketers in shaping
the fortunes of their organisations.
ÿ It is significant for regulating consumption of goods and thereby maintaining economic
stability.
ÿ It is useful in developing ways for the more efficient utilisation of resources of marketing. It
also helps in solving marketing management problems in more effective manner.
ÿ Today consumers give more importance on environment friendly products. They are concerned
about health, hygiene and fitness. They prefer natural products. Hence detailed study on
upcoming groups of consumers is essential for any firm.
ÿ The growth of consumer protection movement has created an urgent need to understand how
consumers make their consumption and buying decision.
ÿ Consumers’ tastes and preferences are ever changing. Study of consumer behaviour gives
information regarding colour, design, size etc. which consumers want. In short, consumer
behaviour helps in formulating of production policy.
ÿ For effective market segmentation and target marketing, it is essential to have an understanding
of consumers and their behaviour.
CONSUMER BEHAVIOR MODELS: Many models have been developed describing the
buying process. These models called as consumer behavior models treat a consumer as a
decision maker who comes to a market place to buy the products brand for his satisfaction of
needs. The buying process has been discussed below through the consumer behaviors models.
The important models of buyer behaviors are as follows:
1. Economic model
2. Sociological model
3. Howard-sheath model
Economic model: - This model says as “purchasing decision are the result of largely rational and
conscious economic calculations. The individual buyer seeks to spend his income on goods that
will deliver the must utility (satisfaction) to his tastes and the relative price.
Social model.: - The S.M. has been explained by sociologists studying the behaviors of a group
of individuals and the manner in which it influences the behaviors of an individual. The models
says that the individual is always influenced by a group as he lives in a society where in many
group exist like family, reference group etc.
Harvard sheath model - The H-S model assumes problem-solving approach in buying and
assumes input output approach in buying behavior, this model is a comprehensive model and
largely approved.
Another way of classification of buyer behavior:

Complex buying behavior: This type of consumers have involvement in purchasing a brand
with high difference among goods with brands.
Dissonance reducing buying behavior: This type of consumers have low difference in branding
preference with high involvement of purchasing
Variety seeking buying behavior: This type of customers are switching brands often. But they
have low involvement of purchasing.
Habitual buying behavior: This type of customers are regularly buy goods in habitual manner.
So they have less involvement in purchasing and changing brands.

38
GENERAL CLASSIFICATION OF CONSUMERS

1. Personal Consumers
2. Organizational Consumers
3. Impulse Consumers
4. Need-based Consumers
5. Discount Driven Consumers
6. Habitual Consumers
1. Personal Consumers: This type of consumer is an individual consumer who buy products or
services for own use, or for family, or for household use. Finished products are purchased by
personal consumer and the purchases are done in small quantities.
2. Organisational Consumers: This type of consumer can be a business, government, profit or
non-profit organisation, or agency who purchases goods or services for organisation to function
or for resale purpose. Purchases are done in the form of raw-materials that are processed to
finished goods and offered for sale to other consumers.
3. Impulse Consumers:his type of consumer do unplanned purchases. Purchasing a particular
product was not a priority, but when the consumer encounter that product, he makes swift buying
decision. Impulse consumer purchase what seems good at the time.
4. Need Based Consumer: This type of consumer has a specific intention to purchase a
particular type of product. Need-based Consumer is driven by a specific need. He makes buying
decision when he actually need that product and not any other time.
5. Discount Driven Consumers: This type of consumers do purchases when they get some
lucrative offer or discount. Their buying decision is highly based on offers or discounts.
6. Habitual Consumers: Person who is habitual to the usage or consumption of a kind of
product is called habitual consumer. For example - person who smoke.
CONSUMER DECISION MAKING PROCESS

39
1. Problem or Need Recognition: Consumer decision making process begins with an

unsatisfied need or problem. Everyday we face multiple problems which individuals resolve by
consuming products or services. Consumer problem can be routine or unplanned. For example –
run out of milk or cooking oil, car indicating low level of fuel, are some of the routine problems
that individuals face. Such problems are quickly recognised, defined, and resolved. Recognition
of unplanned problem may take much longer time as it may evolve slowly over time. For
example - need of a new refrigerator as existing one is not working properly.
2. Information Search: Information search is done to know about product or service, price,
place and so on. In the process of decision making, the consumer engages in both internal and
external information search. Internal information search involves the buyer identifying
alternatives from his memory. Internal information search is sufficient for low involvement
products or services. For high involvement product or service, buyers are more likely to do
external information search. The amount of efforts a buyer put in information search depends on
various factors like market, competition, difference in brands, product characteristics, product
importance, and so on.
3. Alternatives Evaluation: At this step the buyer identifies and evaluates different
alternatives to choose from. It is not possible to examine all the available alternatives. So, buyer
develops evaluative criteria to narrow down the choices. Evaluative criteria are certain
characteristics that are important to buyer such as price of the product, size, colour, features,
durability, etc. Some of these characteristics are more important than others. To narrow down the
choices the buyer considers only the most important characteristics.
4. Purchase Decision: The earlier mentioned evaluation step helps the consumer in arriving at
a purchase intention. In the decision evaluation stage, the consumer forms preferences among the
brands in the choice set. The consumer may also form a purchase intention and lean towards
buying the most preferred brand. However factors can intervene between the purchase intention
and the purchase decision. A buyer who decides to execute a purchase intention will be making
up to five purchase decisions brand decision, vendor decision, quantity decision, timing decision
and payment method decision.
5. Post-purchase Use and Evaluation: Once the buyer makes a decision to purchase a
product or service there can be several types of additional behaviour associated with that
decision such as decisions on product uses and decision on services related to the product
purchased. The level of satisfaction experienced by the buyer after his purchase will depend on
the relationship between his expectations about the product and performance of the product. If
the buyer is satisfied then he will exhibit a higher probability of repeat purchase of the product or
service. The satisfied buyer will also tend to say good words about the product or service.
Whereas a highly dissatisfied buyer will not buy the product or service again and spread negative
words about service and company.
FACTORS INFLUENCING CONSUMER BEHAVIOUR

40
Behaviour of an individual consumer is not only influenced by his internal factors, but also by
factors external to him and beyond his control. There are various internal and external factors
that have influences on consumer behaviour. These factors are also called determinants of
consumer behaviour.
Following are the main factors that influences consumer behaviour, categorised as internal
influences and external influences.
Internal Influences
Personal Factors
 Age
 Occupation
 Life Style
 Life-cycle stage
 Personality
 Self-concept
Psychological Factors
 Motivation
 Perception
 Learning
 Beliefs & Attitude
 Involvement
External Influences
Cultural Factors
 Culture
 Sub Culture
 Social Class
 Social Groups
 Opinion Leaders
Social Factors
 Family
 Reference Group
 Role & Status
Also, Economic Factors

 Personal Income
 Family Income
 Income Expectations
 Liquid Assets & Consumer Credit
 Level of Standard of Living
 Government Policy
CONCLUSION
Consumer behaviour is simple a large subset of larger field of human behaviour and an extended field of
marketing attracting researchers and marketers from past few decades. Study of consumer behaviour is
very important to the marketers because it enables them to understand and predict buying behaviour of
consumers in the marketplace and it helps in deriving marketing strategies.

41
ORGANIZATIONAL BUYING BEHAVIOUR

The buying is done by an individual consumer or his family as well as by various types of formal
organisations. In Indian context such organisations are government, semi-government
institutions, various departments of government like post offices, railways, public sector
undertakings, public and private limited companies in the private sector (whether in
manufacturing or service sectors), NGO (mostly organised under Indian Societies Registration
Act), cooperative societies and autonomous bodies like electricity boards, development
authorities and corporations.
Number of international organisations like World Bank, ILO, WHO, FAO are also operating in
India besides there are offices of foreign diplomatic missions. All these and other organisations
have to buy both consumable and non-consumable items. Though their share in purchases of
various items is not known, they play a dominant role in certain sectors like government,
railways, and electricity boards.
These organisations buying behaviour is much different than that of consumers. They go more
by price, quality and performance and other factors which influence general consumers play very
little role. Therefore, it has certain distinct features and their decisions are more rational. The role
of psychology in organizational and industrial buying is very limited.
Hence organisational buying behaviour is studied separately. The organisation buying behaviour,
refers to decision making processes in formal organisations”. In the earlier models the research
was confined to study vendor selection. But now the scope has been widened and includes
strategic alliances, communication between vendor and buyer, processes of selection of product.
It includes intra-firm processes and sourcing process and the role of the technicians and
executives of the buying firm. There are many authors who have completely ignored
organisational buying behaviour and many others have dealt it casually with very little
description. But in today’s economic system organisations are big buyers for many consumer
products including fast moving products like food items (hotels, caterers, office canteens), office
stationery, refrigerators, and many services like courier, transport, insurance for employees and
their assets and so forth. Moreover, it should not be forgotten that organisations buying decisions
are also influenced by brand image and other factors.
The organisational buying behaviour according to Scott Word Professor at the University of
Pennsylvania, Frederick E. Webster Jr. Professor at the Dartmouth University “is the decision
making process by which formal organisations establish the need for purchase of products and
services, and identify, evaluate, and choose among alternative brands and suppliers”.
This implies that:

(1) There should be need,
(2) There should be identification of suppliers,
(3) Different suppliers and brands should be evaluated and finally,
(4) A vendor should be selected as per procedure of the organisation.
According to another author “industrial buying behaviour is an explicit or implicit transactional

decision making interaction”.

42
It has following steps:

1. Need must be felt for product or service.
2. Search has to be made for suppliers and potential suppliers have to be identified.
3. Evaluate the marketing mix, product, price, promotion and distribution of potential identified suppliers.
4. Negotiate for (which may include offers, tenders) price and other purchase terms like delivery, terms of
payment etc.
5. Place of purchase order.
6. Receive the ordered product/service.
7. Evaluate the supplies.
Above definition is limited to industrial organisations but there are other organisations who are buyers;
most of them work for profits but there are social and political organisations also who are buyers for
various products required for the administrative purposes, social organisations buy many items for
distribution to weaker sections of the society.
Another important feature of organisational buying behavior is that they are much more demanding. They
expect much more complete and better response from vendors and in many cases or in case of certain
items much greater reliance is placed on quality and delivery. But the price should also be competitive so
that the organisation may be able to produce its final product at competitive price.
For instance, a manufacturer of biscuits needs three basic inputs – wheat flour (maida), vegetable oil and
sugar. In order to produce good quality biscuits it is necessary to ensure that the quality of inputs is good.
Secondly, inputs most be supplied as per delivery schedule so that production schedule of the company is
not affected adversely.
There are many instances specially in Japan and now in India also where ancillary units are established to
supply inputs specially in case of engineering products. But this is also true for many other inputs for
other industries like textiles, tires, chemicals, consumer products etc.
In such cases great emphasis is placed on proper vendor selection and ones vendor is selected there is
long buyer, seller relations. Sometimes buyer regularly visits the vendor’s works to ensure that goods are
being produced as per specifications and on time. Sometimes, with the passage of time these relations are
converted into joint ventures.
In India Maruti Udyog has established a number of joint ventures to supply inputs. Escorts have
developed a number of ancillary vendors. Thus the buying behaviour of organisations is much different
than that of individual consumers.
CHARACTERSTICS OF ORGANIZATION BEHAVIOUR

43
FACTORS INFLUENCING ORGANIZATIONAL BUYING BEHAVIOUR
Situational Factors
Time Factor
Current Financial Situation
Availability
Special Offers
As a supplier, now that you know what factors influence organizational buyers, you can work up
your business to business sales strategies to manipulate organizational buying activities and thus
procure more orders for your supply business.
MARKETING SEGMENTATION, TARGETING AND

POSITIONING
In marketing, segmenting, targeting and positioning (STP) is a broad framework that
summarizes and simplifies the process of market segmentation.[1] Market segmentation is a
process, in which groups of buyers within a market are divided and profiled according to a range
of variables, which determine the market characteristics and tendencies.[2] The processes of
segmentation, targeting and positioning are parts of a chronological order for market
segmentation.
 Segmentation comprises identifying the market to be segmented; identification, selection,

and application of bases to be used in that segmentation; and development of profiles.
 Targeting is the process of identifying the most attractive segments from the
segmentation stage, usually the ones most profitable for the business.[2]
 Positioning is the final process, and is the more business-orientated stage, where the
business must assess its competitive advantage and position itself in the consumer's
minds to be the more attractive option in these categories
MARKET SEGMENTATION
INTRODUCTION Markets consist of buyers who differ in one or more respects. They may
differ in their wants, resources, geographical locations, attitudes and buying practices. It is
therefore necessary for a marketer to segment his/her market.

44
MEANING OF MARKET SEGMENTATION

The process of grouping customers in markets with some heterogeneity into smaller , more
similar or homogeneous segments. The identification of target customers groups in which
customer groups in which customers are aggregated into groups with similar requirements and
buying characteristics.
Market segment – A group of individuals, groups or organizations sharing one or more similar
characteristics that cause them to have relatively similar product needs and buying
characteristics.
BENEFITS OF MARKET SEGMENTATION

There are a number of reasons organizations undertake segmentation
v Products are designed to be responsive to the needs of the marketplace. – segmenting markets
facilitates a better understanding of customer’s needs, wants and other characteristics. The
sharper focus that segmentation offers, allows those personal, situational and behavioral factors
that characterize customers in a particular segment can be considered. By being closely in touch
with segments, marketers can respond quickly to even the slight changes in what target
customers want. i.e by monitoring the trends towards healthier eating and lifestyles, Mc Donald’s
was able to respond by respond by introducing a wider range of salads and healthy eating options
– including grilled chicken, fruit and yoghurt on to its menus.
v Increase profits – different consumer segments react in contrasting ways to prices, some are far
less price sensitive than others. Segmentation allows an organization to gain from the best price
it can in every segment, effectively raising the average price and increasing profitability.
v Effective Resource Allocation - organizations are more capable of making products that
customers want and can afford.
v There is product differentiation – Various products are made to meet the needs of each
customer segment.
REQUIREMENTS OF GOOD MARKET SEGMENTS

In addition to having different needs, for segments to be practical they should be evaluated
against the following criteria:
Identifiable -The marketer should be able to identify which consumers are members of a
particular market segment. The consumers in the segment should respond in the same way to a
particular marketing mix. There must be some common characteristics that the consumers have.
Measurable - The characteristics that are common to the groups of consumers should be
measured in terms of size, purchasing power and other characteristics.
Substantial -The segment should be large enough to generate sales volume that ensures
profitability; otherwise it will not be economical to design a unique marketing mix for it. Is the
market worth the effort?
Accessible: the segments must be reachable through communication and distribution channels.
Durable: the segments should be relatively stable to minimize the cost of frequent changes.
Responsive - Market segments must be defined in their willingness to purchase a product in
response to variations in the marketing mix.

45
Compatible with corporate image -The market must be compatible with the firm’s
objectives and corporate image.
A good market segmentation will result in segment members that are internally homogenous and
externally heterogeneous; that is, as similar as possible within the segment, and as different as
possible between segments.
VARIABLES / BASES FOR SEGMENTING CONSUMER MARKETS

The following variables are commonly used to segment consumer markets.
1) Geographic segmentation -This calls for dividing the market into different geographical
units such as Nations, States, Regions – West, North, Central, South, e.t.c.
- Countries, Cities or Neighborhoods
Attention should be paid to variations in geographical needs and preferences.
Geographical segmentation assists the seller to position retail outlets in most appropriate
locations as well as simply identifying the needs on the basis of the consumers own location.
2) Demographic segmentation -This consists of dividing the market into groups on the basis
of demographic variables such as:- Age, sex, family size, family life cycle, income, education,
occupation, religion, race and nationality.
These variables are the most popular for distinguishing customer groups because,
- Consumers’ wants and preferences are closely related to them.
- They are easier to measure than most other types of variables.
a) Age -Consumer needs and wants change with age. Hence the market should be segmented as
young, old, e.t.c.
b) Gender -This can be employed to segment such markets for clothes deodorants, lotions,
magazines, e.t.c. Thus the markets can be for either men or women, male or female
c) Family life cycle (FLC) -The product needs for a household vary according to marital status
and the present ages of children. Thus family life cycle can be divided into:-
- Single,
- Young, married with no children,
- Young, married with young children,
- Older married with children, e.t.c.
d) Income -Marketers can segment the market according to the distribution of income e.g. under
1000 shillings per month, 2000/=, 4000/= per month, e.t.c.
e) Occupation -Variables include; bankers, teachers, farmers, clerks, students, housewives,
secretaries, e.t.c. A marketer can choose to specialize in the needs of one occupation group.
f) Education - Some primary education, Some high school education, College education
- University education e.t.c.
g) Religion - e.g. Muslims, Christians e.t.c.
h) Race - e.g. white, black e.t.c.
i. Nationality – e.g. Asians, Africans e.t.c.
ii. Social class -Social class has a strong influence on people’s preferences,
Marketers designing products and/or services for specific social classes build in those features
that appeal to the target social class.

46
i) Ethnic groups
j) Generation - Consumer is profoundly influenced by the generation in which it grows up. This
influences one’s inclination to Music, politics, e.t.c.
3) Psychographic segmentation -Psychographics are psychological profiles of different

consumers developed from research, sometimes referred to as A.I.O. (Attitudes, interests and
opinion profiles)
In psychographic segmentation, buyers are divided into different groups on the basis of their:-
Motives, Lifestyle and/or Personality characteristics.
People within the same demographic group can exhibit very different psychographic profiles.
Consumers can thus be sub-divided on the basis of the following psychographic variables.
i. Lifestyle -Consumers’ lifestyles are derived from their activities, interests
and opinions. Each life style group is influenced by different marketing mixes.
ii. Personality -Type of personality groups may include;
- Authoritarian
- Ambitious
- Assertive
- Self-confident
- Prestige conscious
- Extrovert/Introvert
4) Behavioral segmentation -Buyers are divided into groups in the basis of their,
Knowledge, Attitude, Use or Response to a product.
In this respect, behavioral variables that are used to segment consumer markets include:-
i) Occasions benefits -Buyers can be distinguished according to occasions when they
- Purchase a product or
- Use a product
E.g. Occasions when public transport is used mostly. Occasion segmentation can help firms
expand product usage.
ii) Benefits -Buyers are classified according to different benefits they seek from the product.
Variables here include:-
- Economy (Low price)
- Medical (Decay prevention)
- Bright teeth
- Good taste, e.t.c. for toothpaste.
Benefit segmentation requires determination of:-
- The major benefits that people seek from the product
- The kind of people who look for such benefit
- The major brands that deliver each benefit.
iii) User status -Many markets can be segmented into
- Non-users.
- Ex-users,

47
- Potential users,
- First time users and
- Regular users of a product
All these people require different marketing approaches.
iv) Usage rate -Markets can be segmented into
- Light,
- Medium and
- Heavy user group of products.
v) Loyalty status -A market can be segmented by customer loyalty patterns.
According to the loyalty status, the buyers can be divided into:-
 Hard core loyals – Consumers who buy one brand all the time
 Soft core loyals – Consumers who are loyal to two or three brands
 Shifting loyals – Consumers who shift from favoring one brand to another.
 Switchers – Consumers who show no loyalty to any brand
A company should
- Study the characteristics of its hard-core customers e.g. whether middle class, larger families,
e.t.c.
- By studying soft-core loyals, the company can pinpoint which brands are most competitive
with its own.
- By looking at customers who are shifting away from its brands, a company can learn about its
marketing weaknesses.
- The company should be aware that what appears to be brand loyalty purchase may reflect.
§ Habits,
§ Indifference,
§ A low price or
§ Non-availability of other brands.
vi) Buyer readiness stage -At any given time, people are in different stages of readiness to buy a
product;
- Some people are aware,
- Some are informed,
- Some are interested,
- Some are desirous of buying,
- Some intend to buy.
All these make a big difference in designing the marketing programme.
vii) Attitude -People in a market can be classified according to their degree of enthusiasm for a
product.
Five attitude classes can be distinguished e.g.
- Enthusiastic,
- Positive,
- Indifferent,
- Negative and
- Hostile.
viii) Volume segmentation -Involves grouping businesses by size and Purchase patterns

48
VARIABLES FOR SEGMENTING INDUSTRIAL / BUSINESS MARKETS

Industrial markets can be segmented using the same variables for consumer markets e.g.
geographic, demographic and behavioral. Other variables that may be used include volume
segments.
1) Demographic
§ Industry – Which industries should we serve?
§ Company size –Which size companies should we serve?
§ Location – What geographic areas should we focus on?
2) Operating variables
§ Technology – What customer technologies should we focus on?
§ User-non-user status – Should we focus on heavy, medium, light users or non-users?
§ Business capabilities – Should we serve business needing many or few services?
3) Purchasing approaches
§ Nature of existing relationship.- Should we serve companies with which we have strong
relationships or simply go after the most desirable companies?
§ Power structure – Should we serve companies that are engineering dominated, financially
dominated,? E.t.c.
§ Purchasing criteria i.e. focus on quality, price, service e.t.c.
4) Situational factors
§ Urgency – Should we serve companies that need quick and sudden delivery or service
§ Specific application: Should we focus on certain applications of our product rather than all
applications.
§ Size of order.- Should we focus on large or small orders.
5) Personal characteristics
§ Buyer-seller similarity – Should we focus on companies whose people and values are similar to
ours?
§ Attitude towards risk – Should we focus on risk takers or risk avoiding customers?
§ Loyalty – Should we focus on companies that show high loyalty to their suppliers?
MARKET TARGETING
This is the evaluation of the various segments identified during segmentation and deciding how
many and which ones to serve.
EVALUATING THE MARKET SEGMENTS

In evaluating different market segments, the firm must look at the following factors
1) Segment size and growth
§ Marketing segment has to be ‘right size’. Size can be measured in terms of sales volume.
§ Companies should not only concentrate on sales volume but also on the growth potential of the
segment.
2) Segments structural attractiveness – Using Porter’s Five Forces Analysis.
A segment might have desirable size and growth characteristics and still not profitable.
The company should evaluate the long-run profitability of the market segment.

49
Michael Porter has identified five forces that determine the intensive long-run attractiveness of
the whole market or any other segment within it. These five forces are:-
§ Threat of intense segment rivalry -A segment is unattractive if it already contains strong or
aggressive competitors.
§ Threat of new entrants -A segment is unattractive if it is likely to attract new competitors who will
bring in new capacity, substantial resources and a drive for market share growth.
§ Threats of substitute products -A segment is unattractive if there exists actual or potential
substitutes for the product.
§ Threats of growing bargaining powers of buyers -A segment is unattractive if the buyer’s posses
strong or increasing bargaining power. Interested in low prices but high quality.
§ Threat of growing bargaining power and suppliers -A segment is unattractive if the suppliers
posses a strong or increasing bargaining power. They can raise prices or reduce the quality and
quantity of products and services offered.
- Even if the segment has positive size and growth and it is attractive, the company has to
consider its own objectives and resources.
- The segment can be dismissed because it does not fit in the company’s long-run objectives.
- Even if segments fit the company’s objectives, it must consider whether it has the required
skills and resources to succeed in that segment.
3) Segment interrelationships
Segments selected should be inter-related in terms of costs, performance and technology for
effectiveness.
TARGET MARKET STRATEGIES

There are several different target-market strategies that may be followed. Targeting strategies
usually can be categorized as one of the following:
 Single-segment strategy - also known as a concentrated strategy. One market segment
(not the entire market) is served with one marketing mix. A single-segment approach
often is the strategy of choice for smaller companies with limited resources.
 Selective specialization- this is a multiple-segment strategy, also known as a
differentiated strategy. Different marketing mixes are offered to different segments. The
product itself may or may not be different - in many cases only the promotional message
or distribution channels vary.
 Product specialization- the firm specializes in a particular product and tailors it to
different market segments.
 Market specialization- the firm specializes in serving a particular market segment and
offers that segment an array of different products.
 Full market coverage - the firm attempts to serve the entire market. This coverage can
be achieved by means of either a mass market strategy in which a single undifferentiated
marketing mix is offered to the entire market, or by a differentiated strategy in which a
separate marketing mix is offered to each segment.
Undifferentiated marketing strategy
Differentiated marketing
With differentiated or multi-segment approach, the marketer targets a variety of different

segments with a series of differentiated products. This is typical in the motor industry which has
a variety of products such as diesel, four-wheel-drive, sports saloons, and so on.
A firm that is seeking to enter a market and grow should first target the most attractive segment
that matches its capabilities. Once it gains a foothold, it can expand by pursuing a product

50
specialization strategy, tailoring the product for different segments, or by pursuing a market
specialization strategy and offering new products to its existing market segment.
Another strategy whose use is increasing is individual marketing, in which the marketing mix is
tailored on an individual consumer basis. While in the past impractical, individual marketing is
becoming more viable thanks to advances in technology.
MARKET POSITIONING
This is the act of designing a company’s offering and image to occupy a distinctive place in the target
market’s mind. I.e. The act of creating a difference between a company’s offer from those of competitors.
Positioning is the process of establishing and maintaining a distinctive place in the market for the
organizations’ product or brands. Positioning starts with the product, but positioning is not what you do to
a product. Positioning is what you do to the mind of the customer. You should concentrate on the
perception of the customer and not the reality of the product. Positioning then is how the product is
perceived and evaluated by the target market, relative to competing products. To the consumer perception
is reality. That is why it is said that a marketing battle is fought in the minds of consumers. Marketers
who attain a superior position in customers’ minds have won the marketing battle.
A difference is worth establishing to the extent that it satisfies the following criteria.
1) Important: - The difference delivers a highly valued benefit to a sufficient number of buyers.
2) Distinctive:- The difference is delivered in a distinctive way
3) Superior: The difference is superior to other ways of obtaining the benefit.
4) Pre-emptive: The difference cannot be easily copied by competitors.
5) Affordable - The buyer can afford to pay for the difference.
6) Profitable - The Company will find in profitable to introduce the difference.
POSITIONING STRATEGIES:-
1) Attribute positioning -A company positions itself on an attribute e.g. size, number of years in
existence.
2) Benefit positioning -The product is positioned as the leader in a certain benefit.
3) Use or application positioning -Positioning a product as the best for some use or application.
4) User positioning -Positioning a product the best for some user group e.g. Bic pen, food for
consumption.
5) Competitor positioning -The product claims to be better in some way then a named competitor.
6) Product category positioning -The product is positioned as the leader in a certain product category
7) Quality or price positioning. -The product is positioned as offering the best value
As companies increase their number of claims for their brands, they risk disbelief and loss of clear
positioning. Companies must avoid four major positioning errors.
1. Under Positioning -When buyers have only a vague idea of the brand
The brand is seen as just another entry in a crowded marketplace. E.g. When Pepsi introduced its clear
crystal Pepsi in 1993 (U.S.A.) customers were distinctively unimpressed. They didn’t see ‘clarity’ as an
important benefit of a soft drink.
2. Over Positioning -Buyers may have too narrow a image of the brand. These buyers might think that
suits at Sir Henry’s start at 15000/= when in fact it offers affordable suits started at 3000/=
3. Confused Positioning -Buyers might have a confused image of the brand resulting from the company
making too many claims or changing the brands positioning too frequently e.g. Omo, Zain
4. Doubtful Positioning -Buyers might find it hard to believe the brand claims in view of the products
features, price or manufacturers.

51
PRODUCT-LIFE-CYCLE (PLC)
INTRODUCTION: We have a life cycle, we are born, we grow, we mature, and finally we pass
away. Similarly, products also have life cycle, from their introduction to decline, they progresses
through a sequence of stages. The major stages of the product life cycle are - introduction,
growth, maturity, and decline. These stages in the life of a product are collectively known as product
life-cycle. Product life cycle describes transition of a product from its development to decline.
The time period of product life cycle and the length of each stage vary from product to product.
Life cycle of one product can be over in few months, and of another product may last for many
years. One product reach to maturity in years and another can reach it in few months. One
product stay at the maturity for years and another just for few months. Hence, it is true to say that
length of each stage varies from product to product.
Product life cycle is associated with variation in the marketing situation, level of competition,
product demand, consumer understanding, etc., thus marketing managers have to change the
marketing strategy and the marketing mix accordingly.
Product life cycle can be defined as "the change in sales volume of a specific product offered
by an organisation, over the expected life of the product.". The product lifecycle, in a marketing
context, is all the stages of a product's life span that are related to its promotion and sales.
A company’s positioning and differentiation strategy must change as the product, market, and
competitors change over the product life cycle (PLC). To say a product has a life cycle is to
assert four things:
1. Products have a limited life.
2. Product sales pass through distinct stages, each posing different challenges, opportunities, and
problems to the seller.
3. Profits rise and fall at different stages of the product life cycle.
4. Products require different marketing, financial, manufacturing, purchasing, and human
resource strategies in each life-cycle stage.
Stages of the Product Life Cycle

The four major stages of the product life cycle are as follows:-
1. Introduction,
2. Growth,
3. Maturity, and
4. Decline.

52
Introduction Stage
At this stage the product is new to the market and few potential customers are aware with the
existence of product. The price is generally high. The sales of the product are low or may be
restricted to early adopters. Profits are often low or losses are being made, this is because of the
high advertising cost and repayment of developmental cost. At the introductory stage :-
 The product is unknown,

 The price is generally high,
 The placement is selective, and
 The promotion is informative and personalised.
Growth Stage
At this stage the product is becoming more widely known and acceptable in the market.
Marketing is done to strengthen brand and develop an image for the product. Prices may start to
fall as competitors enter the market. With the increase in sales, profit may start to be earned, but
advertising cost remains high. At the growth stage :-
 The product is more widely known and consumed,

 The sales volume increases,
 The price begin to decline with the entry of new players,
 The placement becomes more widely spread, and
 The promotion is focused on brand development and product image formation.
Maturity Stage
At this stage the product is competing with alternatives. Sales and profits are at their peak.
Product range may be extended, by adding both withe and depth. With the increases in
competition the price reaches to its lowest point. Advertising is done to reinforce the product
image in the consumer's minds to increase repeat purchases. At maturity stage :-
 The product is competing with alternatives,

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

 The sales volume reduces,
 The price is likely to fall,
 The placement is selective, and
 The promotion is focused on reminding.

53
NEW PRODUCT DEVELOPMENT (NPD)

INTRODUCTION: In the environment of rapid changes in tastes, technology and
competition a company cannot rely solely on its existing products. Customers expect the
new and improved products that competition will do its best to provide. Every company
needs a new product development program. New products are the future of a business.
Without a conscious flow of new products the marketing system would probably die.
What is New Product?
A new product is any product which is perceived by the customer as being new. This could
involve repositioning of existing products or offering the existing products at low prices or
making improvements in the existing product or adding new products to the existing product line
or for that matter, taking up a product line which is totally new to the organisation or new to the
world.
Need for New Product Development
One of the major challenges in marketing planning is to develop ideas for new products and to
launch them successfully. The company will have to find replacements for its products that have
entered the declining stage. Because of changes in the customers’ tastes, technology and
competition, there is a need for marketing companies to develop new products. For example, the
old radio became obsolete and transistors were developed. Then came tape recorders, two in ones
and walkman. When technology improved, CD players and Discman were launched. Also, many

54
new products fail in the market for various reasons and need replacements. Customers always
want new products, and competitors will do their best to supply them, unless the company acts
fast.
Different Types of New Products

It is important to understand the different types of new products before going into the modalities
of new product development. The development, marketing and launch strategies will be
influenced by the type of the new product. The different types of new products are given below:
1. New products for Mankind: These are new products which are the result of new discoveries
or inventions. They come out only once in the lifetime of an individual. Examples for an earlier
period are telephone, television, aeroplanes and computers. Examples for the modern era are
mobile phones, Bluetooth, MP3/MP4, LED TV, the Internet, video conferencing, induction
cooker, etc.
2. New products for the Country: These are products which have been marketed in other
countries, but introduced for the first time in our home country. 3D TV, GPS, 2G and 3G
telephony have been used in many advanced countries but are being introduced in India only
now. E books and Kindle have also come to India only recently.
3. New products for the Industry: This type includes products which are totally new for any
particular industry. Examples are laptops and netbooks launched in the computer industry, cars
with power steering, power windows and automatic gear system introduced in the automobile
industry. Launch of Tata Nano as the small and cheapest car and Bugati Vernon 16 as the
costliest car are also good examples.
4. New product in a Product Category: These are products which represent an innovation in an
already existing product category. Introduction of men’s cosmetics like Garnier face cream, Fair
and Handsome and Colgate Total are examples.
5. New product for the Company: This consists of products which are new only to a particular
company. There is nothing new in terms of an innovation, for the country, for the industry and
for the product category. A company launches the same product which is already available in the
market under a new brand name. The only thing that is new in this case is the brand name. In
order to differentiate its product, the company comes out with innovative marketing strategies
and marketing communications to ensure the success of the brand. The recent launches of
Airtel’s Dish TV, DOCOMO, and MTS as new mobile service providers, Go Air, Indigo and
Spice Jet airlines are all good examples of this type of new products and services.
Classification of New Products
Booz, Allen and Hamilton suggested that two principal dimensions need to considered while
classifying new products.
(a) How new is the product to the company?
(b) How new is it to the marketplace?
This led them to propose a 6-stage classification scheme as shown below.

55
1. New-to-the-world products: These types of new products create an entirely new market. For
example, introduction of products like laptops and palmtops has created a new market of mobile
computing.
2. New product lines: New products may allow a company to enter an established market for
the first time. Philips has developed flat TV to target a new segment of already crowded CTV
market.
3. Additions to existing product lines: New products can supplement a company’s established
product lines. For instance, McDonald’s introduced pudina flavoured burgers for Indian
consumers.
4. Improvements and revisions of existing products: These are the new products that replace
existing products by providing improved performance or greater perceived value. For example,
Microsoft replaced its MS-DOS by Windows as an improved, user-friendly GUI (Graphical User
Interface) based operating system. They also updated Windows regularly and launched the
versions of Windows 95, 98, 2000 and XP.
5. Repositioning: Existing products can be targeted to new markets or market segments. For
example, Sahara Airlines is revising its fares to target the railway AC 2/3 tier passengers.
6. Cost reductions: New products may be developed that provide similar performance at lower
cost. The mobile service providers like Airtel, Hutch and Reliance India Mobile are introducing
new post-paid schemes with low rental and outgoing facility.
NEW PRODUCT DEVELOPMENT PROCESS

New product development is a growth strategy, because of the heavy role that marketing plays in
finding, developing and launching successful new products. New products can be original
products, product improvements, product modifications, and new brands that the company
develops through its own R&D efforts. A key factor in effective new product development
process is to establish workable organizational structures. Companies handle this through the
Product Managers, New-Product Managers, New Product Committees and New Product
Departments. The product development process involves eight stages. They are:
1. Idea Generation
The new product development process starts with the search for ideas. Top management should
define the products and markets to emphasise. It should state the new product objectives,
whether it is high cash flow, market share domination, etc. It should state how much effort
should be devoted to developing original products, modifying existing products, and imitating
competitors’ products. New product ideas can be derived from many sources: customers,

56
scientists, competitors, company sales people, dealers and top management. Idea generating
techniques like Attribute Listing, Forced Relationships, Morphological Analysis, Problem
Analysis, Brainstorming, and Synetics help generate better ideas.
2. Idea Screening
The second stage is idea pruning or reducing by screening. In this stage, the company must avoid
the ‘Drop-error’, i.e., permitting a poor idea to move into development and commercialisation, or
dropping a good idea. The purpose of screening is to spot and drop poor ideas as early as
possible. ‘Idea rating’ is done by describing the product, the target market, and the competition,
and making some rough guesses as to market size, product price, development time and costs,
manufacturing costs and rate of return. Even if the idea looks good, the questions arise, ‘Is it
appropriate for the particular company? Does it mesh well with the company’s objectives,
strategies and resources?’ Ideas that do not satisfy one or more of these questions are dropped.
3. Concept Development and Testing
Surviving ideas must now be developed into product concepts. A ‘product idea’ is an idea for a
possible product that the company can see itself offering to the market. A ‘product concept’ is an
elaborated version of the idea expressed in meaningful consumer terms. For example, producing
a powder to add to milk to increase its nutritional level and taste is a product idea. Who is to use
the product? What primary benefit can be built into this product? What is the primary occasion
for this drink? By asking such questions, the company can form several product concepts like an
instant breakfast drink for adults, a tasty snack-drink for children, a health supplement for elders,
etc. Each concept requires concept positioning so that its real competition would be understood,
when compared to existing brands or substitutes. The concepts have to be tested with an
appropriate group of target consumers. The concepts may be presented symbolically or
physically. The consumers are asked to react to each concept with some standard questions. The
consumers will help the company determine which concept has the strongest appeal.
4. Marketing Strategy Development
The new product manager will have to develop a preliminary marketing strategy statement for
introducing this new product into the market. This will be refined in subsequent stages. The
marketing strategy statement consists of three parts. The first part describes the size, structure
and behaviour of the target market, the planned product positioning, the sales, market share and
profit goals sought in the first few years. The second part outlines the product’s planned price,
distribution strategy, and marketing budget for the first year. The third part describes the planned
long-run sales and profit goals, and marketing mix strategy over time.
5. Business Analysis
The next stage is to evaluate the business attractiveness of the proposal. The management must
review the sales, cost, and profit projections to determine whether they satisfy the company’s
objectives. If they do, the product concept can move to the product development stage. As new
information comes in, there will be further revision of the business analysis. The management
needs to estimate whether sales will be high enough to return a satisfactory profit to the firm.
This is done by estimating first time sales, replacement sales and repeat sales. After preparing the
sales forecast, the management should estimate the expected costs and profits of this venture.
This is done by the R&D, manufacturing, marketing and finance departments.
6. Product Development
If the product concept passes the business test, it moves to the R&D and/or the engineering
department to be developed into a physical product. Up to now it has existed only as a word
description, a drawing or a very crude model. This stage will answer whether the product idea
can be translated into a technically and commercially feasible product. The R&D department will

57
develop one or more physical versions of the product concept. It hopes to find a prototype that
satisfies the following criteria:
Consumers see it as embodying the key attributes described in the product concept statement.
The prototype performs safely under normal use and conditions.
The prototype can be produced for the budgeted manufacturing costs.
When the prototypes are ready, they must be put through rigorous functional and consumer tests.
The functional tests are conducted under laboratory and field conditions to make sure that the
product performs safely and effectively. Consumer tests can take a variety of forms, from
bringing consumers into a lab to test the product versions to giving them samples to use in their
houses.
7. Test Marketing
After the management is satisfied with the product’s functional performance, the product is ready
to be dressed up with a brand name, packing and a preliminary marketing programme, to be
tested in more authentic consumer settings. The purpose of test marketing is to learn how
consumers and dealers react to handling, using and repurchasing the actual product and how
large the market is.
For test marketing consumer goods, the methodology involves sales-wave research, simulated
store technique, controlled test marketing and test markets. New industrial products typically
undergo extensive product testing in the labs to measure performance, reliability, design and
operating cost. The next most common method is a product use test where the manufacturer
selects some potential customers who agree to use the new product for a limited period. A
second common market test is to introduce the new industrial product at trade shows. Testing can
also be done in distribution and dealer display rooms.
8. Commercialisation
Test marketing presumably gives the management enough information to make a final decision
about whether to launch the new product.
In launching a new product, the company must make four decisions:
When: The first decision is whether it is the right time to introduce the product.
Where: Secondly, the company must decide whether to launch the new product in a single
locality, a region, several regions, the national market or the international market. Normally,
companies develop a market rollout over time.
To whom: Within the rollout markets the company must target its distribution and promotion
to the best prospect groups, like early adopters, heavy users, opinion leaders and so on.
How: The company must develop an action plan for introducing the new product into the
rollout markets. It must allocate the marketing budget among the marketing mix elements and
sequence the various activities.
Product Launch
Introducing a new product into the market is known as product launch. The new product launch
is a challenging activity for marketing people. It offers an opportunity for the marketing people
to apply their theoretical and practical knowledge in their job and watch their plans succeeding.
A lot of planning has to go into the product launch. Hasty and illogical actions will result in the
new product failing in the market. A new product will generally succeed only if the target
customers are offered a clear advantage or it meets some unmet need or at least the customer
perceives it as totally different and unique.
Marketing Plan for Product Launch
The marketing plan for new product launch is a statement of the course of action to be followed
for the product’s introduction into the market. It should clearly specify the marketing objectives,
strategies and programme. Marketing planning is a continuous activity in the new product

58
development process and informally starts at the stage of idea development itself. Formally, the
planning starts as soon as the product development stage begins.
The marketing plan for new product launch consists of the following activities:
1. Setting objectives for new products
2. Situation analysis
3. Market analysis
4. Defining and selecting the target market
5. Product strategy and positioning strategy
6. Pricing the new product
7. Promoting the new product
8. Distribution of the new product
9. Planning the final launch
Why (sometimes) New Product Fail:

1) A high level executive pushes a favorite idea in research findings.
2) The idea is good, but the market size is over estimated.
3) The product is not well designed.
4) Development costs are higher than expected.
5) Competitors fight bat harder than expected.
6) Bases for New Product Development:
7) Social and governmental constraints.
8) Costliness of the new-product development process.
9) Capital shortage.
10) Shortened time span to completion.

59
UNIT - III
PRODUCT MIX AND PRODUCT LINE DECISIONS
DEFINITION OF PRODUCT: We define a product is anything that can be offered to a market
for attention, acquisition, use or consumption and that might satisfy a want or need. Products
include more than just tangible goods. It includes physical objects, services, persons, place,
organizations, ideas or mixtures of these entities. Products are almost always combinations of the
tangible and intangible. The entire package is sometimes referred to as the augmented product.
The mix of tangibles and intangibles in the augmented product varies from one product or
service to another.
LEVELS OF THE PRODUCT:

1) Core Product / Core Benefit: The fundamental service or benefit that the customer is really
buying.
(2) Basic Product: At the same level, the marketer has to turn the core benefit into a basic
product.
(3) Expected Product: A set of attributes and conditions buyers normally expect when they
purchase this product.
4) Augmented Product: The marketer prepares an augmented product that exceeds customer
expectations. Today’s competition essentially takes place at the product augmentation level.
5) Potential Product: encompasses all the possible augmentations and transformations the
product might undergo in the future. Companies search for new ways to satisfy customers and
distinguish their offer.
In case of a car, the 5 levels of a product are:

1. Core product: Transportation from one place to another.
2. Actual Product: Brand of the car, looks and design of the car etc.
3. Expected Product: Decent mileage, proper engine, inflated tyres etc.
4. Augmented Product: After-sale services, insurance policy etc.
5. Potential Product: May run more smoothly as it wears off a

60
CLASSIFICATION OF THE PRODUCT

Products are classified into 2 types.
1. Consumer product.
2. Industrial product.
Consumer product:
On the basis of the product characteristics:
a) Non durables
b) Durables
c) Services
a) Non durables: These are tangible goods normally consumed in one or few uses. Because
these goods are consumed quickly and purchased frequently, the appropriate strategy is to make
them available at many locations, charge only a small mark up and advertise heavily to induce
trial and build preference.
b) Durables: These are tangible goods that normally survive many uses. Normally require more
personal selling and service, command a higher margin, and require more seller guarantees.
c) Services: These are intangible, inseparable, variable and perishable products. Normally
require more quality control, superior credibility, and adaptability.
On the basis of customer shopping habits

a) Convenience goods
b) Shopping goods
c) Specialty goods
d) Unsought goods
a) Convenient goods: These goods that the customer usually purchases frequently, immediately,
and with a minimum of efforts. This type of goods can divide into the following way:
(A) Staples: Consumers purchase on a regular basis.
(B) Impulse Goods: are purchased without any planning or search efforts.
(C) Emergency Goods: are purchased when a need is urgent.
b) Shopping goods: These goods that the customer in the process of selection and purchase,
characteristically compares on such basis as suitability, quality, price and style.
c) Specially goods: These goods with unique characteristics or brand identification for which
buyer is willing to make a special purchasing effort.
d) Unsought goods: These goods the consumer does not know about or does not normally think
of buying. These goods require advertising and personal selling support.
Industrial products: -
1. Material and parts: Raw materials consists of form product-wheat, cotton, live stock, fruits,
vegetables manufactured material, iron, yarn, cement and wires.
2. Capital items: installations consist of major purchases such as buildings, factories, offices.
Accessory equipment-hand tools lift trucks.
3. Suppliers and services: Suppliers-lubricants, coal, paper, pencils, advisory services-legal,
management consulting, and advertising.

61
PRODUCT LINE
Introduction: In marketing jargon, product lining is offering several related products for sale
individually. Unlike product bundling, where several products are combined into one group,
which is then offered for sale as a unit, product lining involves offering the products for sale
separately. A line can comprise related products of various sizes, types, colors, qualities, or
prices.

62
PRODUCT MIX:
Introduction: Product mix, also known as product assortment, refers to the total number of
product lines that a company offers to its customers. For example, a small company may sell
multiple lines of products. Sometimes, these product lines are fairly similar, such as dish
washing liquid and bar soap, which are used for cleaning and use similar technologies. Other
times, the product lines are vastly different, such as diapers and razors. The four dimensions to a
company's product mix include width, length, depth and consistency.
Product Width: The width of a company's product mix pertains to the number of product lines
that a company sells. For example, if a company has two product lines, its product mix width is
two. Small and upstart businesses will usually not have a wide product mix. It is more practical
to start with some basic products and build market share. Later on, a company's technology may
allow the company to diversify into other industries and build the width of the product mix.
Product Length: Product mix length pertains to the number of total products or items in a
company's product mix, according to Philip Kotler's textbook "Marketing Management:
Analysis, Planning, Implementation and Control." For example, ABC Company may have two
product lines, and five brands within each product line. Thus, ABC's product mix length would
be 10. Companies that have multiple product lines will sometimes keep track of their average
length per product line. In the above case, the average length of an ABC Company's product line
is five.
Product Depth: Depth of a product mix pertains to the total number of variations for each
product. Variations can include size, flavor and any other distinguishing characteristic. For
example, if a company sells three sizes and two flavors of toothpaste, that particular brand of
toothpaste has a depth of six. Just like length, companies sometimes report the average depth of
their product lines; or the depth of a specific product line.
Product Consistency: Product mix consistency pertains to how closely related product lines are
to one another--in terms of use, production and distribution. A company's product mix may be
consistent in distribution but vastly different in use. For example, a small company may sell its
health bars and health magazine in retail stores. However, one product is edible and the other is
not. The production consistency of these products would vary as well.
BRANDING AND PACKAGING DECISIONS

BRANDING Introduction: There are millions of products and services all over the world; each
claims to be the best among their category. But, every product is not equally popular. Consumer
doesn't remember every product, only few products are remembered by their name, logo, or
slogan. Such products generate desired emotions in the mind of consumer. It is branding that
makes product popular and known in the market; branding is not an activity that can be done
overnight, it might takes months and even years to create a loyal and reputed brand.
Definition of Branding
According to American Marketing Association - Brand is “A name, term, design, symbol, or
any other feature that identifies one seller’s good or service as distinct from those of other
sellers. The legal term for brand is trademark. A brand may identify one item, a family of items,
or all items of that seller. If used for the firm as a whole, the preferred term is trade name.”
According to Philip Kotler - “Brand is a name, term, sign, symbol, design, or a combination of
them, intended to identify the goods or services of one seller or group of sellers and to
differentiate them from those of competitors”

63
Meaning of Branding
Branding is a process of creating a unique name and image for a product in the mind of
consumer, mainly through advertising campaigns. A brand is a name, term, symbol, design or
combination of these elements, used to identify a product, a family of products, or all products of
an organization.
Elements of Branding
Brand includes various elements like - brand names, trade names, brand marks, trade-marks, and
trade characters. The combination of these elements forms a firm's corporate symbol or name.
Brand Name - It is also called Product Brand. It can be a word, a group of words, letters, or
numbers to represent a product or service. For example - Pepsi, iPhone 5, and etc.
Trade Name - It is also called Corporate Brand. It identifies and promotes a company or a
division of a particular corporation. For example - Dell, Nike, Google, and etc.
Brand Mark - It is a unique symbol, colouring, lettering, or other design element. It is visually
recognizable, not necessary to be pronounced. For example - Apple's apple, or Coca-cola's
cursive typeface.
Trade Mark - It is a word, name, symbol, or combination of these elements. Trade mark is
legally protected by government. For example - NBC colourful peacock, or McDonald's golden
arches. No other organisation can use these symbols.
Trade Characters - Animal, people, animated characters, objects, and the like that are used to
advertise a product or service, that come to be associated with that product or service. For
example - Keebler Elves for Keebler cookies
Branding Strategies
There are various branding strategies on which marketing organisations rely to meet sales and
marketing objectives. Some of these strategies are as following :-
1. Brand Extension - According to this strategy, an existing brand name is used to promote a
new or an improved product in an organisation's product line. Marketing organisations uses this
strategy to minimise the cost of launching a new product and the risk of failure of new product.
There is risk of brand diluting if a product line is over extended.
2. Brand Licensing - According to this strategy, some organisations allow other organisations to
use their brand name, trade name, or trade character. Such authorisation is a legal licensing
agreement for which the licensing organization receives royalty in return for the authorisation.
Organisations follow this strategy to increase revenue sources, enhance organisation image, and
sell more of their core products.
3. Mixed Branding - This strategy is used by some manufacturers and retailers to sell products.
A manufacturer of a national brand can make a product for sale under another company's brand.
Like this a business can maintain brand loyalty through its national brand and increase its
product mix through private brands. It can increase its profits by selling private brands without
affecting the reputation and sales of its national brand.
4. Co-Branding - According to this strategy one or more brands are combined in the
manufacture of a product or in the delivery of a service to capitalise on other companies'
products and services to reach new customers and increase sales for both companies' brands.

64
Brand Sponsored:
1. Manufacturer Brand: Real manufacture of a product may have chance to put his own name
for product. It is called manufacturer’s brand.
2. Distributor Brand: It is called store brand, reseller brand, house brand or private brand. Here
it not manufacturer but they can get finished products from another maker, but they sell in
market with his name it is called distributor brand.
3. Licensor Brand: Some companies may get license from branded companies to use their
brands for other manufacturer products for the period licensed term.
Brand Name
1. Individual Brand: From every company many products are being produced, but every
product has its own name. This policy helps for the company in a situation of any particular
product fails in market. For example EENADU has its own different goods like ETV, EENADU,
PRIYA, KALANJALI, BRISHA and MARGADARSHI. This the policy of individual brand.
2. Separate Brand Family brand names:A family brand name is used for all products. By
building customer trust and loyalty to the family brand name, all products that use the brand can
benefit. Good examples include brands in the food industry, including Kellogg’s, Heinz and Del
Monte. Of course, the use of a family brand can also create problems if one of the products gets
bad publicity or is a failure in a market. This can damage the reputation of a whole range of
3. Blanket Brand: One of the strategies that are available in brand name decision. In this
strategy, every product the company offers to market bears the same brand name. Usually, this
name is a company name. This strategy offers certain advantages such as the development cost is
less because there is no need for name research or heavy advertising expenditures to create brand
name recognition? Furthermore, sales of new product are likely to be strong if the
manufacturer’s name is well known.
Brand Strategy
1. Line extension: Line extension occurs when a company introduces additional items in the
same product category under the same brand name, usually with new flavours, forms, colours,
added ingredients, package sizes and so on. Line extensions generally have a higher chance of
survival than new products. On the down side extensions may lead to the brand name losing its
specific meanings; Ries and Trout call this “ Line Extension Trap .”
2. Brand Extension: Brand Extension also involves risks. The new product might disappoint
buyers and damage their respect for company’s other products. The brand name may loose its
special positioning in the consumer’s mind through over extension - a phenomenon called “
brand dilution .”
3. New Brands: When a company launches products in a new category, it may find that none of
its current brand names are appropriate. When the present brand image is not likely to help the
new product, companies are better off creating new brand names
4. Multi Brands: A company will often introduce additional brands in the same product
category. One of the motives for multi branding is to establish different features and/or appeal to
different buying motives. It also enables the company to lock up more distributor shelf space and
protest its major brand by setting up flanker brands
5. Co–branding: Co-branding occurs when two different companies pair their respective brands
in a collaborative marketing effort. Each brand sponsor expects that other brand name will
strengthen brand preference or purchase intension.

65
PACKAGING
INTRODUCTION: Packaging is the activity of designing and producing the container or
wrapper for the product. It is an important and effective sales tool for encouraging the consumers
for buying. It is powerful medium for sales promotion. It must perform all the basic function
such as protection, ease of handling and storage, convenience in usage etc. and should not be
deceptive and convey any deceptive message. It is the best method for attracting the consumers
for buying the products.
Kotler defines packaging as "all the activities of designing and producing the container for a
product." Packaging can be defined as the wrapping material around a consumer item that
serves to contain, identify, describe, protect, display, promote, and otherwise make the product
marketable and keep it clean. Packaging is the outer wrapping of a product. It is the intended
purpose of the packaging to make a product readily sellable as well as to protect it against
damage and prevent it from deterioration while storing. Furthermore the packaging is often
the most relevant element of a trademark and conduces to advertising or communication.
According to W.J.Stanton, “Packaging may be defined as the general group of activities in

product planning which helps in value designing and producing the container or wrapper for a
product.”
Product packaging plays an important role in the marketing mix. Packaging plays an important
role as a medium in the marketing mix, in promotion campaigns, as a pricing criterion, in
defining the character of new products, as a setter of trends and as an instrument to create brand
identity and shelf impact in all product groups.
THE TOP TEN REQUISITES ABOUT PACKAGING: Even though the consumer is not
dissatisfied with the packaging available on the market, he would still like to be tempted by
functional and attractive packaging ideas, by multisensory appeal and creative design –
preferably with packaging ideas made from board. He acknowledges additional benefits and
appeal and is even willing to pay an extra charge for them. Good starting points for
improvements, changes, innovations which optimise the features of packaging that determine
buying decisions and thus generate new market potential can be summarised in consumers' top
ten requests about product packaging:
1. Eye-catching appearance A distinctive, unmistakable and eye-catching appearance is a
signal at the POS to which all consumers and particularly the younger ones respond positively.
Whatever stands out clearly in the monotonous competitive environment, whatever is surprising
scores points with the consumer. Special effort makes a special impression - and is allowed to
cost more too.
2. Design, shape and colour The purpose of well-considered design, creative printing and
finishing is to entice the consumer to devote attention to the pack and its contents at the POS.
Aesthetics and attractiveness are major distinctive features - and are in fact essential in some
product segments: beautiful packaging design is of central importance in the cosmetics and
confectionery product groups. Consumers like to buy agreeably designed and decorative
products!
3. Functionality Functional aspects are the basis for all successful packaging and for thus
greater product success too. Product and aroma protection, hygiene and tightness, environmental
responsibility and practical handling (in both use and storage) are just as important here as ideas
that improve comfort: closure mechanisms, portioning, see-through windows, for example.

66
4. Innovation Novelty has exceptionally strong appeal. An innovative pack can even make "new
products" out of familiar ones. Unusual solutions, functional new developments and originality
not only set design trends but also boost sales!
5. Material What is printed on board is read particularly willingly, while what is packaged in
board sells particularly well. Sustainability, easy disposal and, above all, great design variety and
potential are particular features of the material. Popular with consumers, particularly high appeal
and many other advantages too.
6. Efficient communication The packaging is the credible medium at the point of sale and is
consulted willingly and intensively (see "Material"). This makes it an efficient means of
communication and, in addition, one that gets closer to the consumer than all others. If several of
his senses are appealed to as well, he can be persuaded particularly successfully.
7. Multisensory appeal Anyone who approaches consumers via several of his senses attracts
greater attention, intensifies perception and stimulates interest in buying. Packaging that can be
felt, smelled and heard as well as looked at wins the customer's favour. So much so that he is
willing to pay a higher price for this multisensory appeal.
8. Appropriateness for the product Packaging is considered to be an important indicator of
quality. The quality of the product therefore has to be communicated by good packaging and not
just by promises of quality made in the text on the packaging. A credible "overall work of art" is
created as a result, in which the contents and the packaging are coherent and the consumer is
convinced by their consistency.
9. Value Packaging is an excellent way to communicate sophistication, class and value. This
makes it an ideal strategic option for expressing premium positioning - as well as being the
instrument of choice when a product needs to be upgraded or a brand needs to be revitalised.
Products in classy packaging are particularly popular presents too.
10. Additional benefits Successful packaging not only combines what is pleasant with what is
functionally useful but also provides additional benefits. For example, as a gift or for
presentation, with entertaining components or simply by making it possible to continue using the
packaging for something else after the product has been consumed.
FUNCTIONS OF PACKAGING:
1. Product Identification: Packaging serves as an identification of the product. A product is
packed in special sized, coloured and shaped container for keeping its difference from the
products of competitors. For ex
2. Product Protection: The main function of packaging is to provide protection to the product
from dirt, insects, dampness and breakage. For example, the products like biscuit, jam, chips,
etc., need to be protected from environmental contact. That is why they are tightly packed.
3. Convenience: Packaging provides convenience in the carriage of the product from one place
to another, in stocking and in consuming. For example, the new pet bottles of COKE makes the
carriage and stocking easier. Similarly, the pack of FROOTI provides convenience in its
consumption.
4. Product Promotion: Packaging simplifies the work of sales promotion. Packing material in
the house reminds the consumers constantly about the product. In this way, the packaging
performs the role of a passive salesman. Consequently, it increases the sales.
5. Allows easy product mix:Product mix relates to the product lines and an assortment of sizes,
colors, measures, grades, package types etc. offered by the selling house. Change in product mix
can be possible as packaging helps to influence weight, size, and dimensions of the product.
Packaging helps to allow the product mix easily for the consumers.

67
IMPORTANCE OF PACKAGING
The importance of packaging are as follows:
 Creation of demand: Packaging plays an important role in the creation of demand by
attracting the consumers. The customers become known with the product through advertising.
It helps to increase the demand of the customers.
 Protection of the product: Packaging helps to protect the product from heat, light, moisture,
evaporation, dust etc. during its long passage from the factory to the target customers. It
protects the products from breakage, leakage spoilage etc.
 Transportation: Packaging facilitates transportation of products from one place to another. It

ensures easy transportation and better handling of products in transit.
 Guidelines to customers: Packaging helps as a guidelines for the customers.From the

informative literature regarding the quality and use of the product, the customers get the
guidelines. The customers are ensured about the quality of the products.
 Better storage: Packaging acts as a better storage of the products.Goods with good packages
can be stored in the retail shop also in lesser price.
 Facilitates for carrying: Packaging plays an important role in carrying the goods in transit
and from one place to another. It is made in different sizes and it facilitates provisions for easy
and open carrying.
 Identification of product differentiation: Packaging helps to identify the product

differentiation easily.It ensures the individuality of the products and one product can be easily
differentiated with each other products in the market. The customers can easily identify their
product of choice at the time of purchase. This helps the customers to prevent substitution of
goods by other customers.
 Economy: Packaging helps to reduce the cost of marketing the goods by reducing losses from
damages. As packaging is helpful for sales promotion, so it helps to attain economy in the cost
structure of the producers and marketers.
TYPES OF PACKAGING
There are various types of packaging some of them are as follow:
 Consumer packaging: Consumer packaging is one which holds the required volume of a
product for ultimate consumption. It is the means of buying household. In other words, the
consumer has the option to purchase the pack size which he/she considers adequate for the
consumption of his/ her family over a length of time.
 Transit packaging: Transit packaging is another type of packaging. It is either for the
industrial consumer’s use. The consumer package itself very often requires an outside
package in which it is sometimes referred to a bulk package or an outer container.

68
 Industrial packaging: An industrial packaging can either describe a bulk package or the
package for durable consumer goods. These are the basic package types although many
subdivisions can be listed which can be broadly listed under these basic headings.
 Dual use packaging: A dual packaging is one which has a secondary usefulness after its
contents have been consumed. The examples of dual use packaging are Drinking glasses,
boxes of jewelry, waste baskets, refrigerator dishes, etc.
CONCLUSION The significance of packaging has come to be increasingly recognized in export as well
as in marketing of a wide range of consumer goods and industrial products within the country. The
volume of exports depends not only on the quantity of the production and prices, but also to a substantial
extends on the standards of packaging adopted for the products. Goods damaged in transit or arriving at
the destination in an unacceptable condition tarnishes the reputation of the manufacturer as well as the
country as a whole, besides colossal wastage of scarce economic resources. Further, packaging has a
crucial role to play in the fetching higher unit values for our consumer goods (like tea and cashew)
through the substitution of the bulk packs by consumer packs. In the recent past packaging has been
increasingly recognized as a significant factor in the nations export promotion effort. Effort should be
there to understand the importance of packaging there by to avoid the loss and damage cost incurred
during transport and delivery. Keep in mind that a conscious effort on the part of marketing managers can
increase the volume of sales and there by improve the reputation of the product and organisation.
LABELLING
Labelling, which is closely related to the packaging, is another feature that requires managerial
attention. A label is a part of the product that carries information about the product and the seller.
A label may be part of a package or it may be a tag attached to a product. The seller must label
products. The label might carry only the brand name or a great deal of information. Labels are of
three types:
1. Brand label: Brand label is simply the brand alone applied to the product or package. Some
clothes carry the brand label like Mc wear.
2. Descriptive label: It gives the information about the product use, care, performance, and other
features. On a descriptive label for a Maggi Noodles, there are statements concerning the weight,
ingredients, tastes, price etc.
3. A Grade Label: It identifies the product judged quality with a letter, number, or word. Corn
and wheat are grade-labelled 1 and 2.
Brand labelling is a acceptable form of labelling but it does not provide sufficient
information about the product. Descriptive labels provide more information about the product
but not necessarily all that is needed or desired by a consumer.
There is a long history of legal concerns surrounding labels, as well as packaging. The
public’s complaints about false or deceptive labelling and packaging have led to a number of
Federal Labelling Laws. In 1914, the Federal Trade Commission Act held that false, misleading,
or deceptive labels or packages constitute unfair competition. Even with this legislation,
consumer discontent with labelling and packaging did not disappear. Consumer still charged, for
example, that labels contained incomplete as misleading information and there were a confusing
number of sizes and shapes of packages or a given product. Congress responded with the Fair
Packaging and Labelling act (1966).

69
This law provide for (1) mandatory labelling requirements (2) an opportunity for business to
voluntarily adopt packaging standards that can limit the proliferation of the same product in
different weights and measure and (3) administrative agencies, notably the Food and Drug
Administration and the Federal Trade Commission, with the discretionary power to set
packaging regulation. The Food and Drug Administration has required processed food producers
to include nutritional labelling that clearly state the amount of protein, fat, carbohydrates, and
calories contained in the products, as well as there vitamin and mineral content as a percentage
of the recommended daily allowances. Consumerists have lobbied for additional labelling laws
to require opening date (to describe product freshness), unit pricing to state the product cost in
standard measurement units), grade labelling (to rate the quality level), and percentage labelling
(to show the percentage of each important ingredient).
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
PRICING STRATEGIES AND PRACTICES

Introduction: A price is an expression of value. The value rests in the usefulness and quality of
the product itself, in the image that is conveyed through advertising and promotion, in the
availability of the product through wholesale and retail distribution systems, and in the service
that goes with it. A price is the seller’s estimate of what all of this is worth to potential buyers,
recognizing the other options buyers will have for filling the need the product is intended to
satisfy. The Company first decides where it wants to position its market offering. The clearer a
firm’s objectives, the easier it is to set price.
Pricing is most important part of a company marketing mix strategies. Pricing can help or
hinder a company products or services sale. Every company sell either a product or a service, and
all companies have to choose the price to sell their products or services at, which is difficult
choice than most people realize.
Pricing can be defined as the process of determining what a company will receive from its
customers in exchange for the products or services it sells. It is very important for a company
to manage its pricing strategies in allegiance with the requirements of industry in which company
operates, the markets in which company supply its products, the customers with whom company
transact and the objectives that company wants to achieve. Ultimately every company exists to
make money, so the general aim of pricing strategies is to maximize the profit that the
company can make.
Five major objectives through pricing:
1. Survival,
2. Maximum current profit,
3. Maximum market share,
4. Maximum market skimming,
5. Product-quality leadership.
THE FOLLOWING ARE THE PRICE SETTING METHODS.

1. Market pricing / cost pricing: - The most elementary pricing method is to add standard
markup to the cost of the product. Construction companies omit job bids by estimating the total
project cost and adding a standard markup for profit. Lawyers, accountants and other professions
typically price by adding a standard markup to their costs.
2. Target return pricing: - Another cost oriented pricing approach is target return pricing. The
firm tries to determine the price that is at would yield the target rate of return on investment. This

70
pricing method is also used by public utilities that are constrained to make a fair return on their
investment.
3. Perceived value pricing: - It fits in well with modern product positioning thinking. The key to
perceived value pricing is to accuracy determine the market’s perception of the offer is value.
Market research is needed to establish the market perception of value as a guide to effective
pricing. They use the non-price variables in the marketing mix to build up perceived value in the
buyers’ minds.
4. Going rate pricing: - In going rate pricing, the firm bases its rice largely on competitors
prices, with less attention aid to its own cost or demand. The firm might change the same, more
or less than its major competitors. Going rate pricing is quite popular. Where costs are difficult to
measure or competitive response is uncertain firms feel that the going rice represents a good
solution.
5. Sealed- bid pricing: - Competitive oriented pricing also dominates where firms bid for jobs.
The firm bases its price on expectations of who competitors will rice rather than on a rigid
relation to the firm a costs or demand. The firm wants to win the contract and this requires
pricing lower than the other firms. The higher it sets its rice above the costs the lower its chance
of getting the contract.
PRICING STRATEGIES:-
Companies do not set a single price but set a pricing structure that covers different products and
items in the line and reflect variations in geographical demand and costs market segment
intensity of demand, purchase timing and other factors.
1. Geographical pricing: - Geographical pricing involves company in deciding how to price its
products to customers located in different parts rice of the country. Companies have evolved few
different approaches to geographical pricing strategy.
They are as follows.
a) Uniform delivered pricing.
b) Basic-point pricing.
c) Zeno pricing.
2. Promotional pricing: - Under certain circumstances, companies will temporality price their
products below the list price and sometimes even below cost promotional pricing takes several
forms.
a) Loss leader pricing: - Here supermarkets and departments stores drop the price on well-
known brands to stimulate additional traffic.
b) Special event pricing: - This will be used by sellers in certain seasons to draw in more
customers. Thus lines are promotionally priced every January to attract shopping-weakly
customers into the stores.
c) Cash rebates: - consumers are offered cash rebates to get them to buy that manufacturer’s
product, with-in a specified time period. The rebate can help the manufacturer clean inventories
without having to cut the list price.
d) Low-interest financing: - This is another tool for stimulating sales without lowering the
price.
e) Psychological discounting: - This involves putting artificially high rice on a product and then
offering it at substantial savings.
f) Warranties and service contracts: - The Company can promote sales by adding a free
warranty offer or serves contract. This is a way reducing the price.

71
3. Discriminatory pricing: - Discriminatory pricing describes the situation where the company
sells a product or service at two or more prices that do not reflect a proportional deference in
costs. It takes several forms.
a) Customer segment pricing: - Here different customer groups are charged different prices for
the same products or service museums will change a lower admission fee to students and senior
citizens.
b) Product form pricing: - Here different versions of the product are priced differently but not
proportionality to their respective costs.
c) Image pricing: - Some companies will price the same product at two different levels based on
image differences.
d) Location pricing: - Here different locations are priced differently even through the cost of
offering each location in the same. A theater varies its seat prices because of audience references
for curtain locations.
e) Time pricing: - Here prices are varied seasonally by the day and even by the hour public
utilities vary their energy raises to commercial users by time of day and weekend versus week
day.
f) Product mix pricing: - Price-setting logic has to be modified when the product is a part of a
product-mix. In this case, the firm searches for a mutual set of prices that maximize the profits
on the total product mix.
Process of pricing decision making:

1. Setting the pricing objectives
2. Determine demand
3. Estimating cost
4. Analyzing competitive price
5. Selecting the price method
6. Select final price
---------------------------------------------------------------------------------------------------------------------
FACTORS AFFECTING SELECTION OF MARKETING CHANNELS
A marketing channel is the people, organizations, and activities necessary to transfer the
ownership of goods from the point of production to the point of consumption. It is the way
products and services get to the end-user, the consumer; and is also known as a distribution

72
channel. A marketing channel is a useful tool for management, and is crucial to creating an
effective and well-planned marketing strategy
Roles of marketing channel in marketing strategies

 Links producers to buyers.
 Influences the firm's pricing strategy.
 Affecting product strategy through branding, policies, willingness to stock.
 Customizes profits, install, maintain, offer credit, etc.
MARKETING CHANNEL STRUCTURE

Channel structure is distinguished on the basis of the number of intermediaries. There are
different levels in a channel structure. The common levels are zero-level, one-level, two-level,
and three-level. Each level presents both opportunities and challenges for the marketer. Exhibit
4.6 gives a picture of the different levels
Typical channel structure for Consumer Goods
Zero-level
Structure is one of the simplest forms of the channel structure. Here organizations like Avon,
Eureka Forbes use direct selling mode to take the products from their production houses to the
consumers directly. A lot of money has to be spent in order to make this channel structure
effective, as there is no third party to take your product to the consumer. Even a bakery can come
as a firm, which bakes cakes and sells it directly to the consumers. Marketers who use the
mailing services, toll-free numbers are also using this service.
One-level
Structure is one in which we have one intermediary acting as a link between the manufacturer
and the consumer. Here the retailers procure goods directly from the manufacturer and supply it
to the consumers.
Retailers like Viveks, Wal-Mart deal directly with the manufacturer. In some cases in order to
retain profitable and reputed retailers the manufacturers act as wholesalers. One of the
advantages for the intermediaries is the customization and the discounts they receive.
Two-level
Channel has two people interceding before the product reaches the consumer. Here there would
be a wholesaler and a retailer who takes the efforts for a speedy delivery and this is one of the
most commonly used structures for consumer goods. In the case of Metro, most of the small
retail and Kirana stores buy all the merchandise from Metro and in turn sell them to the

73
consumer. One of the advantages of the four-level structure is the benefit of using the wholesaler
in the distribution of services.
Three-level
Channel happens predominantly when the firms plans to go global.
When a manufacturer enters another country, it always holds good when he uses the help of
agents to operate in that environment. The agents are people who know the legal procedures and
who can negotiate with the host country in case of a problem. Most of the airline firms that
operate in different countries take the help of agents to penetrate the market
Example of Consumer Markets
When it comes for Business-to-Business operations, the channels differ from the consumer
markets, in this structure, firms predominantly may use their existing sales force to sell the
products to the customers, they may even use industrial distributors to take their products to the
industrial customers. Exhibit 4.8 details the Business-to-Business model of channel structure
DESIGNING DISTRIBUTION CHANNELS

Channel design refers to those decisions that involve in the development of new marketing
channels or modifying the existent ones.
The channel design decision can be broken down into six steps namely:

74
1. Recognizing the need for channel design decision

2. Setting and coordinating distribution objectives
3. Specify the distribution tasks
4. Develop alternative channel structures
5. Evaluate relevant variables
6. Choose the best channel structure
FACTORS AFFECTING SELECTION OF MARKETING CHANNELS

Every producer, in order to pass on the product to the consumer, is required to select a channel
for distribution. The selection of the suitable channel of distribution is one of the important
factors of the distribution decisions. The following factors affect the selection of the channel of
distribution:
I. FACTORS PERTAINING TO THE PRODUCT
Keeping in view the nature, qualities and peculiarities of the product, could only the channel for
distribution be properly made. The following factors concerning the product, affect the selection
of the channel of distribution:
(1) Price of the Product. The products of a lower price have a long chain of distributors. As
against it, the products having higher price have a smaller chain. Very often, the producer
himself has to sell the products to the consumers directly.
(2) Perishability. The products which are of a perishable nature need lesser number of the
intermediaries or agents for their sale. Under this very rule, most of the eatables (food items),
and the bakery items are distributed only by the retail sellers.
(3) Size and Weight. The size and weight of the products too affect the selection of the
middlemen. Generally, heavy industrial goods are distributed by the producers themselves to the
industrial consumers.
(4) Technical Nature. Some products are of the nature that prior to their selling, the consumer is
required to be given proper instructions with regard to its consumption. In such a case less of the
middlemen arc) required to be used.
(5) Goods Made to Order. The products that are manufactured as per the orders of the customers
could be sold directly and the standardized items could be sold off only by the middlemen.
(6) After-Sales Service. The products regarding which the after-sales service is to be provided
could be sold off either personally or through the authorized agents.
II. FACTORS PERTAINING TO THE CONSUMER OR MARKET

The following are the main elements concerned with the consumer or the market:
(1) Number of Customers. If the number of customers is large, definitely the services of the
middlemen will have to be sought for. As against it, the products whose customers are less in
number are distributed by the manufacturer himself.
(2) Expansion of the Consumers. The span over which are the customers of any commodity
spread over, also affects the selection of the channel of distribution. When the consumers are
spread through a small or limited sphere, the product is distributed by the producer himself or his
agent. As against it, the goods whose distributors are spread throughout the whole country, for
such distributors, services of wholesaler and the retailer are sought.
(3) Size of the Order. When bulk supply orders are received from the consumers, the producer
himself takes up the responsibility for the supply of these goods. If the orders are received piece-
meal or in smaller quantities, for it the services of the wholeseller could be sought. In this way,
the size of the order also influences the selection of the channel of the distribution.

75
(4) Objective of Purchase. If the product is being purchased for the industrial use; its direct sale is
proper or justified. As against it, if the products are being purchased for the general consumption,
the products reach the consumers after passing innumerable hands.
(5) Need of the Credit Facilities. If, for the sale of any product, it becomes necessary to grant
credit to any customer, it shall he helpful for the producer that for its distribution, the services of
the wholesaler and retailer businessmen be sought. In this way, the need of the credit facilities
too influences the selection of the channel of distribution.
III. Factors Pertaining to the Middlemen

The following are the main factors concerned with the middlemen:
(1) Services Provided by Middlemen. The selection of the middlemen be made keeping in view
their services. If some product is quite new and there is the need of its publicity and promotion of
sales, then instead of adopting the agency system, the work must be entrusted to the
representatives.
(2) Scope or Possibilities of Quantity of Sales. The same channel should be selected by means of
which there is the possibility of more sales.
(3) Attitude of Agents towards the Producers' Policies. The producers generally prefer to select
such middlemen who go by their policies. Very often when the distribution and supply policies
of the producers being disliked by the middlemen, the selection of middlemen becomes quite
limited.
(4) Cost of Channel of Distribution. While selecting the channel of distribution, the cost of
distribution and the services provided by the middlemen or agents too must be kept into
consideration. The producers generally select the most economical channel.
IV. Factors Pertaining to the Producer or Company

The following factors, concerning the producer, affect the selection of the channel of
distribution:
(1) Level of Production. The manufacturers who are financially sound and are of a larger
category, are able to appoint the sales representatives in a larger number and thug could
distribute the commodities (products) in larger quantities. As against it, for the smaller
manufacturers, it becomes necessary to procure the services of the wholesellers and the retail
traders.
(2) Financial Resources of the Company. From the financial point of view, the stronger company
needs less middlemen.
(3) Managerial Competence and Experience. If some producer lacks in the necessary managerial
experience or proficiency, he will depend more upon the middlemen. The new manufacturers in
the beginning remain more dependent upon the middlemen.
V. Other Factors
(1) Distribution Channel of Competitors. While determining the channel of distribution, the
channels of distribution of the competitors too must be borne in mind.
(2) Social Viewpoint. What is the attitude of society towards the distribution, this fact too must be
kept into consideration while selecting the middlemen.
(3) Freedom of Altering. While selecting the agents, this fact too must be kept into mind that in
case of need, there must be the liberty of changing or replacing the agents (middlemen).
MANAGING CHANNEL MEMBERS AND THEIR CONFLICTS
After a particular channel is selected, the marketer must manage or administer the channel
members or intermediaries. Managing channel members include
a. Selecting intermediaries

76
b. Motivating channel members or middlemen

c. Controlling or managing channel conflicts, and
d. Evaluating performance of channel members
a. Selecting intermediaries Selection of intermediaries or middlemen is a continuous process
because some of them leave the channel or get terminated by the marketer. Hence it is not part of
channel design. It is necessary for the marketer to determine criteria or factors for selection of
intermediaries. These criteria differ depending on the type of middlemen and the firm’s
particular product/market conditions. Some of the common factors considered
are financial standing, location, prior experience and type of customers served.
b. Motivating middlemen The marketer must continuously motivate his intermediaries to
achieve long-term success. Motivating the intermediaries to achieve top performance should start
with understanding the middlemen’s needs, perceptions and outlook. The quality of support from
middlemen will depend on the motivational techniques used and incentives offered.
c. Controlling channel conflicts
Even though a manufacturer’s channel design is well done, there will be some conflict because
of the differences in the objectives and perceptions of the channel members. The conflicts or
tensions between the channel members can damage channel performance. Marketers should
periodically undertake surveys of intermediaries or conduct formal/ informal discussions with
them to assess the areas or sources of conflicts.
Some of the sources of conflict are indicated below
The channel conflicts can be controlled or managed in several ways, including:

 Effective communication network
 Joint goal-setting
 Diplomacy

77
 Mediation
 Arbitration and
 Developing a vertical marketing system (which is described in the next section).
An effective communication network between the manufacturer and the
intermediaries can be developed through periodic formal and informal meetings and co-optation
of intermediaries in board of directors or advisory committees. In joint-goal setting, the channel
members come to an agreement on the super-ordinate (or fundamental) goals they jointly seek.
Such goals can be market share leadership, customer satisfaction or
product/service quality in a highly competitive market where survival and success of channel
members depend on their performance and cooperation. The channel members may resort to
diplomacy, mediation or arbitration, when conflicts are sharp. Diplomacy is used when the
conflict is resolved through discussions between the persons from both the parties.
In mediation a neutral third party tries to conciliate the interests of the two
parties. In arbitration, both the parties present their arguments to a third party (i.e. the arbitrator)
and agree to accept the arbitration decision.
d. Evaluating channel members

It is a good policy for the marketer to evaluate the performance of each channel member
periodically. An evaluation is useful to know which intermediaries are achieving favourable
results and which are not.
The intermediaries not performing well need to be counseled, re-trained, re-motivated or
terminated. An evaluation data can also be used while deciding which type of middlemen to be
used. The factors or criteria to be used for an evaluation of middlemen’s performance can
include sales achieved versus sales quota, average inventory levels, customer delivery
performance, customer complaints, cooperation in market feedback, support for new products
and new customers generated.
INTRODUCTION TO WHOLESALING AND RETAILING;

INTRODUCTION: The third P among the four P’s of marketing as coined by McCarthy’s, that
is, ‘Place’, refers to creating place utility. It is related to the distribution channels that increase
the value of products by making them available to those who need them. Wholesaling and
retailing are the two important activities of the distribution system. The people and the business
firms who are engaged in wholesaling and retailing are known as wholesalers and retailers. They
act as middlemen between the producers and the final consumers of goods. They provide a wide
range of services to both the parties.
Wholesaler and retailers make possible easy and ready delivery of goods to the
consumers at convenient places. On the other hand, they help the manufacturers by distributing
his product to the final consumers and give vast market coverage to his products. In this lesson
we will study about the concept and formats of wholesaling and retailing. We will also discuss
the various price and promotional strategies adopted by these middlemen. Wholesalers and
retailers are important intermediaries between the manufacturers and consumers.
WHOLESALING
Wholesaling involves all the activities related to selling of goods and services to those people
who are not ultimate buyers, but buy for resale or business use. They act as middlemen between
the producers and the retailers. These intermediaries are known as wholesalers. In fact they work

78
as a link between the producers and the retailers. Wholesalers usually purchase goods in large
quantities and sell them to retailers in small lots. Besides this, they provide lots of other services
to both the parties. Let’s have a look on various services provided or functions performed by the
wholesalers.
FUNCTIONS OF WHOLESALERS
1. Buying and Sorting- Wholesalers select items from different manufacturers and build the
assortments that retailers demand or the ultimate customers require. Thus the retailers or the
customers are saved from considerable work.
2. Selling and Promotion- Wholesalers provide vast market coverage to manufacturers at
relatively lower cost.
3. Bulk Breaking – Wholesalers purchase large quantities and sell in small segments. Bulk
buying reduces cost and selling small quantities in different segments makes it convenient to the
customers to purchase products.
4. Storage – Wholesalers hold large inventory. This leads to reduction in inventory costs. It
also diverts the risks of suppliers and retailers.
5. Transportation – Normally wholesalers provide faster delivery to customers because they
are closer to them than producers.
6. Financing – Wholesalers generally grant credit facilities to the retailers.
7. Risk Bearing –wholesalers reduce risk by bearing the cost of theft, damage, spoilage and
obsolescence.
8. Market Information – Wholesalers provide feedback of products to the manufacturers and
also inform them about the competitors’ activities, new products, price development etc.
WHOLESALING FORMATS
Format means the style of store that a seller presents to its buyers. There are different types of
wholesale formats in the market. Some deal in specialty products, while some are general
merchandise. There are also some wholesalers who provide various services to manufacturers
and retailers. Let us discuss them.
1. General Merchant Wholesalers -These wholesalers offer broad product lines. The retailers
who deal in wide assortment of products (like convenience store) are more interested in these
wholesalers. General merchant can be of two types:
(a) Full service wholesalers – These wholesalers primarily sells to retailers. As the same
depicts they provide lots of other facilities or services also, like carrying stock, maintaining sales
force, credit facilities, delivery services, management assistance etc.
(b) Limited service wholesalers – These wholesalers provide few services. We can classify
them as follows:
(i) Cash and Carry – It is a self service based wholesale format where buyers purchase
their order themselves and pay in cash (no credit facility). After making payment they carry the
goods themselves, there is no delivery facility. Customers arrange it of their own. The examples
of cash and carry wholesalers are Metro cash and carry and Carrefour.
(ii) Drop Shipper – These wholesalers deal in bulk industries like coal, heavy equipments
etc. They don’t take physical possession of the goods. They simply receive order from customers
and then place order with product manufacturer. At last shipping is arranged from supplier to
customer’s place. Major drop shipper wholesalers in India are YFS India and India Drop
Shipping Co.
(iii) Truck – As the name depicts, truck wholesalers operate with a truck or a big vehicle
stocked with products. Primarily these goods are semi perishable goods or food items. They sell

79
and deliver products to their assigned geographical territories where they may regular visits.
Mostly they target convenience stores, shops, chemist shops etc.
(iv) Rack Jobbers– These wholesalers also sell from a truck but the basic difference is
that here goods are more arranged in racks within the truck. This format is prevalent in magazine
business, bakery and beauty products.
2. Broker and agent – These wholesalers bring buyer and seller together for a transaction. For
this they are paid a pre decided percentage of selling price by the party who hires their services.
The basic difference between a broker and agent is that, relationship of broker with buyer and
seller is short term (normally for one transaction only). But agents work for their clients for
extended period.
3. Industrial distributers – They sell products to the manufacturer rather than to other
resellers. They also provide various services such as credit and delivery. The examples of
industrial wholesalers are Sunkist(deals in citrus fruits) and Sunmaid Raisin Grower
Association.
4. Specialized wholesalers – These wholesalers focus on specific product lines that give them
a deep knowledge of the market they serve. For example auction companies, agricultural
assemblers etc.
WHOLESALING STRATEGY
Every business firm has to prepare itself not only to earn profits in the present but to survive in
long run. For this a definite plan or strategy is needed. Strategy is a clear and definite plan made
by the business firm to capture the market, which helps in building a long-term relationship with
consumers. The strategy formulation in wholesaling is same as that for any other industry. It
starts with defining the mission of the organization. Other aspects of strategy are flexible and
change in different situations.
A wholesale trader considers the following factors while preparing his strategy
1. Product, in which the trader is dealing, must be according to the taste of the ultimate
consumers. To get this information, wholesaler uses retailer’s knowledge and feedback
because they directly deal with final consumers.
2. Quantity – Wholesalers breaks the bulk and offer small lots which are convenient to
retailers. They make a wide assortment of goods and provide a large variety to retailers.
3. Identification of the popular distribution channels of the target market. For example if
majority of customers are buying directly from retail stores then wholesaler should target
large number of retailers for having wide coverage of the market.
4. Wholesalers use various promotional techniques like some reward after selling a fixed
quantity of goods, make various discount offers, ensure high profit margins, or offer
various services (e.g. delivery, credit) etc.
WHOLESALING STRUCTURES AND OPERATION

To maximize the efficiency and profitability, it is necessary to have an organizational structure.
Organizational structure explains the hierarchy of all the duties and responsibilities to all the
members of the organization. In wholesaling business functional organizational structure is more
suitable as well as prevalent. Functional organizational structure means structure is made
according to the functions or activities to be performed. Organizational structure of wholesaling
firm depends upon the size and various services provided by the wholesalers. Basic activities of
all wholesale organizations like purchasing from manufacturers, storing, breaking bulk etc.
remain same.

80
RETAILING
Retailing involves all the activities that are related to the sale of goods or services to the ultimate
consumers. The ultimate consumer is the one who uses the product for his personal use or non-
business purpose. The people and business firms who deal in retailing are known as retailers.
Retailers act as intermediary, who procure goods from wholesalers or producers and sell it to the
final consumers. They play an important role in the distribution channel because without them it
would not be possible to sell the goods to the distant places. They have an advantage of direct
personal relationship with consumers because they deal directly with the consumers. This
relationship gives them an insight of changing consumer tastes and preferences. Retailers
provide this market information to wholesalers and producers that serve as an important
feedback for the products or services. Some of the retailers that you may have come across are
shown in the figure below.
FUNCTIONS OF RETAILERS
Retailers are the last link in the distribution channel and they perform various important
functions, which are as follows:
(a) Uninterrupted Supply - A retailer ensures continuous supply of products to consumers. He
purchase goods in large quantity, breaks the bulk and sell in small segments to final users.
(b) Large Variety - Retailers buy merchandise from different sources and provide a wide
variety to consumers.
(c) Financing - Some retailers provide credit facility to consumers.
(d) Transportation - Retailers carry goods from wholesalers and some retailers provide home
delivery service to customers.
(e) Market Information - A retailer is in direct personal contact with consumers. He provides
information about the tastes and preferences of consumers to his suppliers.

81
RETAIL FORMATS
Retail format is the style of the store that the retailer presents to the customers. A format is a
retail mix used by a retailer. Each retailer has to decide the retail mix after analyzing its target
market. This primarily involves a market analysis by the retailer to identify the opportunities
available and various threats attached to it. A good retail format gives a competitive advantage to
the retailer.
CLASSIFICATION OF FORMATS
There are various types of retail formats, so we need to arrange them on the basis of some
criteria. Here we classify the various formats on the basis of ownership, pricing strategy and their
style of working. Such categorization does not put a retail format in watertight compartment and
allows overlapping such that a department store can be classified as a part of a chain; it may be
an e-tailer and a franchise store too.
Ownership based formats: Retailing is one of those sectors of our economy where
entrepreneurial activity is quite high. Although there is a large number of small retailers (having
one outlet), but there are very large retailers also. On the basis of ownership retail firms may be
independents, chain owned, franchisee operated and leased stores owned by manufacturers,
wholesalers or consumers. Let us discuss them.

82
FORMATS ON THE BASIS OF OWNERSHIP
1. Independent – An independent retailer owns a single retail unit. Such retails are run
entirely by the owner and/or their family members and have no paid workers. The high
numbers of independent retailers is associated with the ease of entry in the market owing
to low capital requirement, no or relatively simple license procedure etc. The best
examples of independent retailing are small kirana stores and convenience stores in the
neighborhood.
2. Chain owned - Chain retailers are very common nowadays. As the name suggests, they
operate multiple outlets (stores). Retail chain may range from two stores to retailers with over
1000 store. Some retail chains are divisions of large corporations. Chain retailers have many
advantages. They enjoy strong bargaining power with suppliers due to the volume of
purchases. Some of them buy directly from the manufacturers. These stores help in selling new
products in the market more easily than the other retail formats. Chains achieve cost
effectiveness due to centralization of purchasing, storing and computerization. But chains suffer
from some limitations also, like less flexibility, as they need to be consistent in terms of prices,
promotion, and product assortment. At the same time chains requires high investment for
multiple leases, fixtures, product assortment and employees. Examples of chain owned stores are
Walmart, McDonald’s, Big Bazar etc.
3. Franchising- Franchising is a contractual agreement between two parties, the franchiser and
franchisee that allows the franchisee to run a retail outlet using franchiser’s name and format
developed and supported by franchiser. According to the contract the franchisee pays lump sum
amount plus a royalty on all sales. The franchisee has to operate the outlet according to the
procedure prescribed by the franchiser. The franchiser provides help in establishing the store,
developing products, management training and advertising. Franchisee can take advantage of
prototype store, standardized products and cooperative advertising. The examples of franchise
stores are Haldiram’s, McDonald’s, Subway etc.

83
4. Leased Departments- It is a retail store rented generally by a manufacturer or wholesaler.

The lessee is responsible for all transactions of business and pays a rent. The leased department
may be single or multiple brand stores.
After discussing, the all ownership based formats. Let us put them all together in a comparative
table to have a deep understanding of the above.
Basis of comparison Independent Chain Franchise Store Leased
Owned Departments
1. Target market Mass/ Mass Mass Mass
Specialty
1. Product General/ General General General/
carried Specialty Specialty
1. Financial Low High High Low

Investment
1. Pricing Competitive Discount Competitive Competitive

Strategy
1. Autonomy to Full freedom Limited Least freedom Limited

Work freedom freedom
1. Scale of Small Large Large Large

Operation
GENERAL FORMATS: These formats are different from each other due to their style of
operations.
1. Mom and Pop- These stores are small and individually owned and run retail stores.
Normally these are family run convenience stores, catering to the local community. These stores
provide a high level of service but relatively limited product selection. These stores could be any
type of business such as auto repair garage, restaurant and bookstore.
2. Mass discounter- As the name depicts these stores focus on providing discount pricing to
the customers. These stores may be general or specialty merchandisers.
3. Department store- These stores are big retail outlets offering a large variety of quality
products and strong level of services. These stores have several product lines like foodstuffs,
kitchen accessories, furniture, electronics etc. Major department store are Big Apple, Big Bazar,
Shopper Stop, Reliance Fresh etc.

84
4. Convenience store- These general merchandisers offer an easy and comfortable purchase
experience to the customers. Convenience is offered through easy accessible location and small
store size that means quick shopping and checkout. The products offered by these stores are very
limited but they provide high level of services. Convenience store’s examples are KB’s Fair
Price, Reliance Fresh, 7Eleven etc.
5. Vending machines- Here in this format, automated methods are used for selling
products. This format is normally used to sell smaller items such as beverages, snacks, cigarettes
etc.
6. E-tailers- The retailers who primarily sell via Internet are known as e-tailers. There are
thousands of online retail sellers of which amazon.com is the most famous. These retailers offer
shopping convenience, most importantly being open for business for 24*7. Electronic retailers or
e-tailers also have the ability to offer a wide selection of products.
7. Superstore - These stores are big retail houses having huge selling space and deal in
routinely purchased food and household items along with services like laundry, dry cleaning
etc. Superstore’s examples are Vishal Mega Mart, Reliance Retail, Easy Day, Big Bazar etc.
8. Category killers- These are large stores having deep assortment in one category. These so
called category killers have been found in such specialty area as electronic (e.g. best buy), office
supplies (e.g. staples), auction business (e.g. ebay.com)
Super Specialty Online Retail Store

85
9. Catalog showroom- These retailers sell a large variety of household and personal items.
Here most of the items are not displayed, customers select the products from a printed booklet or
catalog and fill the order form. Customers are not allowed to selects goods themselves. They
give their order form on the counter and pay the bill. They receive order from dispatch counter.
The best examples of this format are CDS Canteens and Sports authority.
10. Hawkers- Hawkers or street vendors sell goods on the streets. These are non-store retailers
and deals in small and inexpensive items. These are the most common retailers in India.
Non-store Retailers
PRICING STRATEGY BASED FORMATS:

Retail formats can also be classified on the basis of the pricing strategy adopted by them. There
are some stores that charge full price, some give lots of discounts and few go for competitive
prices. Let’s have a look into these formats:
Formats on the basis of Pricing Strategy
1. Full price pricing –These retail formats refers to those where retailers target high quality
luxurious product markets that are far less price sensitive than other markets. These stores charge
high prices for the products by providing extra value for example prime location, more attractive
design, more services etc. Due to high prices, profit margin of these retailers is quite high.
2. Competitive pricing - These retailers are those who often deal in specialty markets. They
monitor the market continuously to ensure that their pricing is competitive. They avoid price war
and use other elements of marketing mix, like better quality, appealing store settings to create
higher value for which the customer will be ready to pay more.
3. Discount pricing- Discount retailers are known for selling products at low price that cause
higher sales volume. Lower price leaves lower profit margin for them. The aggressive efforts
taken by them to sell in high volume is an attempt to secure sufficient profits. To offer products
at lower prices, they often cut down on their costs by offering fewer services to their customers
thereby targeting the price sensitive segment of the market.

86
RETAIL STRATEGIES:
To be successful, a retailer must have competitive advantage; for which it needs to

develop a strategy to satisfy the needs and preferences of the target consumer group. This
strategy, also known as retail mix, involves careful consideration of:
(a) the product,

(b) price charged for the product,
(c) place where to sell the product,
(d) the proper time to make the product available, and
(e) promotion technique to gain the customer’s interest.
Following are the elements of retail strategies:
Product- Retailers make efforts to offer products according to the tastes and preferences of the
consumers. For this they provide feedback about products to wholesalers and manufacturers for
future improvements in products.
Quantity- Retailers sell products in small lots that are useful and convenient for consumers.
While small quantity packages may be appropriate for small and nuclear family and for daily
wage earners who buy frequently in small lots; large quantity packages offering savings in
money may be suitable for large families with greater consumption needs and for the price
sensitive section of the market.
Place - Location of the retailer should be easily accessible and convenient to the consumers. So
retailers select location of their store very consciously, keeping in mind the convenience of
customers in approaching the retail outlet.
Timing- Making the products available when and where it is required, is the most important
thing. So retailers identify consumers purchasing pattern and behavior, and adjust themselves
according to that, for example extended store hours, inventory levels and promotional techniques
like providing free home delivery etc. They identify special occasions that generate opportunities
to sell more, such as holidays, festivals, weddings etc.
Price- Price is the monetary value of the product. There are various pricing strategies used by
retailers to attract consumers. For example some retailers go for low or discount prices to attract
consumers that are price sensitive. While some retailers charge higher prices to convey higher
status and superior quality.
Promotion - Retailers use various promotional techniques to create awareness of the retailer’s
store. These techniques include advertisement, sales promotion, public awareness etc.
RETAIL STRUCTURE AND OPERATION
A retail store may be small or big, but each retail unit must be structured in a way to fulfill the
objectives of the business and to make the business successful. Organizational structure of a
retail unit will depend upon the size and format of the business. Basic activities involved remain
the same in all retail business. Also, the process of preparing organization structure is same as
that of any other business. Firstly all the activities or functions to be performed are to be

87
specified clearly. Then all the similar functions are put together into a division or department
with a title and lastly organizational chart is prepared.
Small and independent store normally combines many functions under one division. For example
a small shop may be run by the owner (and his family members) himself or it may be with few
employees, all of whom are put in one category called ‘store operators’. While a big retail store
creates various divisions for each function. For example a department store may have a manager,
assistant manager, sales associates etc. for each of its division.
Organization structure may vary with formats of retailing. Every business prepares its structure
according to its requirements. As the business grows, organization structure also changes. So it
becomes necessary to redesign the store’s organization structure to support the new objectives
and requirements.
COMPARISON CHART – WHOLESALING V/S RETAILING
Basis for
Wholesale Retail
Comparison
Wholesale is a business in which goods
When the goods are sold to the final
are sold in large quantities to the
Meaning consumer in small lots, then this type
retailers, industries and other
of business is termed as retail.
businesses.
Creates link
Manufacturer and Retailer Wholesaler and Customer
between
Price Lower Comparatively higher
Competition Less Very high
Volume of
Large Small
transaction
Capital
Huge Little
Requirement
Deals in Limited products Different products
Area of
Extended to various cities Limited to a specific area
operation
Art of selling Not Required Required
Need for
No Yes
advertisement
Summary:
 Wholesaling and retailing are two major activities of distribution system. They both work as intermediaries between the manufacturer
and the consumers.
 Wholesalers deals with manufacturers. They purchase large quantities and sell the goods in small lots to retailers. On the other hand,
retailers directly deal with the final consumers and provide goods at accessible and convenient places.
 Wholesaling formats are classified on the basis of services provided by them, like full service and limited services wholesalers. While
retailing formats are categorized on the basis of Ownership, pricing strategy and style of operation.
 Both wholesaler and retailer prepare their strategies keeping in mind the requirements of the target market segment. Marketing mix in
both the cases is very similar because the basic activities in both trades are same.
 Organization structures in both the cases are based of functions. Large organizations have separate divisions for each kind of functions
while small organizations have a very simple structure having one or two levels.

88
RETAILING & WHOLESALING (BRIEF OVERVIEW)
Retailing includes all the activities involved in selling goods or services directly to final
customers for their personal, nonbusiness use. A retailer is any business enterprise whose sales
volume comes primarily from retailing.
Types of Retailing
Store Retailing: 8 categories
1. Specialty Stores: Carry a narrow product line with a deep assortment within the line.
2. 2. Department Stores: Carry several product lines.
3. Supermarkets: Relatively large, low-cost, low-margin, high-volume, self-service
operations designed to serve the consumer’s total needs for food, laundry, & household
maintenance products.
4. Convenience Stores: Relatively small stores located near residential areas, opened long
hours seven days a week.
5. Discount Stores: Sell standard merchandise at lower prices by accepting lower margins
& selling higher volumes.
6. Off-Price Retailers: Buy at less than regular wholesale prices & charge consumers less
than retail.
o Factory outlets: Owned & operated by manufacturers & normally carry the
manufacturer’s surplus, discontinued or irregular goods.
o Independent off-price retailers: Owned & run either by entrepreneurs or by
division of larger retail corporations.
o Warehouse clubs: Sell a limited number of brand-name grocery items,
appliances, clothing, etc. at deep discounts. Operate in huge, low-overhead,
warehouse-like facilities. No credit cards. No deliveries.
7. Superstores: 35,000 square feet selling space. Meets consumer’s total needs.
8. Catalog Showrooms: Sell a broad selection of high-markup, fast-moving, brand-name
goods at discount.
Retail life cycle: emerges, grows, matures, declines.
Wheel-of-retailing hypothesis:
New store types emerge to challenge old store types.
New store types emerge to meet widely different consumer preferences for service levels &
specific services. Retailers can position themselves as offering one of four levels of service:
1. Self-service.
2. Self-selection. Customers can ask for assistance. Higher operating expenses than the
previous one.
3. Limited-service. More sales assistance because customers need more info.
4. Full-service. Provides salespeople who are ready to assist in every phase of the locate-
compare-select process.

89
NON-STORE RETAILING: 4 MAJOR CATEGORIES
1. Direct Selling: Oldest one. 3 types:

o One-to-one selling: A salesperson visits & tries to sell products to a single
potential user. Ex: Avon, Electrolux.
o One-to-many: A salesperson goes to the house of a host who has some people in
the house. Ex: Tupperware.
o Multilevel: A variant of direct selling in which companies recruit independent
businesspeople who act as distributors for their products. These distributors in
turn recruit & sell to sub-distributors, who eventually recruit others to sell their
products, usually in customer homes. Ex: Amway, NuSkin.
2. Direct Marketing: Includes telemarketing, TV direct response marketing & electronic
shopping. Ex: 1-800-FLOWERS, Home Shopping Network.
3. Automatic Vending: Vending machines offer 24 hour selling, self-service & unhandled
merchandise. Ex: COKE, Pepsi.
4. Buying Service: A storeless retailer serving specific clienteles- usually the employees of
large organizations, such as schools, hospitals, unions, & government agencies. Ex:
United Buying Service
Retail Organizations
Achieve many economies of scale, such as greater purchasing power, wider brand recognition, &
better trained employees. The major types of retail organizations are:
1. Corporate Chain Stores: Two or more outlets that are commonly owned & controlled,
employ central buying & merchandising, & sell similar lines of merchandise. Their size
allows them to buy in large quantities. Ex: Tower Records, Pottery Barn.
2. Voluntary Chain: Wholesaler-sponsored group of independent retailers engaged in bulk
buying & common merchandising. Ex: Independent Grocers Alliance.
3. Retailer Cooperative: Independent retailers who set up a central buying organization &
conduct joint promotion efforts. Ex: Associated Grocers, ACE.
4. Consumer Cooperative: A retail firm owned by its customers. Started by community
residents. Ex: local consumer cooperatives.
5. Franchise Organization: Contractual association between a franchiser & franchisees.
Normally based on some unique product, service or method of doing business. Prominent
in fast foods, video stores, health/fitness centers, auto rentals. Ex: McDonald’s, Pizza
Hut, Taco Bell, Burger King.
6. Merchandising Conglomerate: A free-form corporation that combines several
diversified retailing lines & forms under central ownership , along with some integration
of their distribution-&-management function Ex: F.W. Woolworth, Kids Mart.
Retailer Marketing Decisions
1. Target-market decision: A retailer’s most important decision. Until the target is not
defined, the retailer cannot make consistent decisions. Retailers should conduct periodic
marketing research to ensure that they are reaching & satisfying their target customers.
2. Product Assortment-&-procurement decision: Must match the target market’s
shopping expectations. The retailer has to decide on product-assortment breadth & depth.

90
Another product assortment dimension is the quality of the goods. The real challenge is
to develop a product differentiation strategy:
o Feature some exclusive brands not available at competing retailers.
o Feature mostly private branded merchandise.
o Feature blockbuster distinctive merchandise events.
o Feature surprise or ever-changing merchandise
o Feature the latest or newest merchandise first.
o Offer merchandise customizing services.
o Offer a highly targeted assortment
Once the retailer decides on the product-assortment strategy, the retailer must decide on
procurement sources, policies, & practices. Retailers are rapidly improving their
procurement skills. Stores are learning to measure direct product profitability, which
enables them to measure a product’s handling costs from the time it reaches their
warehouse until a customer buys it & takes it out.
3. Services-&- store- atmosphere decision: The services mix is one of the key tools for
differentiating one store from another. The store’s atmosphere is another element. Ex:
Banana Republic stores work on the concept of retail theater.
4. Price Decision: Key positioning factor & must be decided in relation to the target
market, the product-&-service-assortment & competition. Retailers must pay attention to
pricing tactics. They will plan markdowns on slower-moving merchandise. A growing
number of retailers have abandoned “sales pricing” in favor of everyday low pricing
(EDLP). This could lead to lower advertising costs, greater pricing stability, a stronger
store image of fairness & liability, & higher retail profits.
5. Promotion Decision: Use promotion tools that reinforce image position.
6. Place Decision: Retailers have a choice of locating their stores in:
o Central business districts (downtown). Rents are high.
o Regional shopping centers. Large suburban malls containing 40-200 stores. Malls
are attractive because of generous parking, one-stop shopping, restaurants, &
recreational facilities.
o Community shopping centers. Smaller malls. Between 20-40 smaller stores.
o Strip malls. Contain a cluster of stores, usually housed in one long building.
o A location within a larger store. Certain well known retailers-McDonald’s,
Dunkin Donuts- are locating units in airports, schools, Wal-Marts.
Retailers can assess a particular store’s sales effectiveness by looking at four indicators:
1. Number of people passing by on an average day.

2. % who enter the store.
3. % of those entering who buy.
4. Average amount spent per sale.
Trends in Retailing
Main developments that retailers need to take into account as they plan their competitive
advantage:

91
 New Retail Forms constantly emerge to threaten established retail forms.

 Shortening Retail Life Cycles. Retail forms are rapidly copied.
 Nonstore Retailing due to electronic age.
 Increasing Intertype Competition. Competition between store & nonstore retailers is
common.
 Polarity of Retailing.
 Giant Retailers are emerging.
 Changing Definition of One-Stop Shopping. Now specialty stores within malls are
becoming increasingly competitive with large department stores in offering one-stop
shopping.
 Growth of Vertical Marketing Systems.
 Portfolio Approach. Retail organizations are increasingly designing & launching new
store formats targeted to different lifestyle groups.
 Growing Importance of Retail Technology.
 Global Expansion of Major Retailers due to mature & saturated markets at home. Ex: The
Gap, Burger King, Tony Romas.
 Retail Stores as Community Centers or Hangouts. Establishments that provide a place for
people to congregate (cafes, tea shops, book-shops, etc.).
WHOLESALING
All the activities involved in selling goods or services to those who buy for resale or business
use.
 Excludes manufacturers, farmers & retailers.

 They are also called distributors.
 Pay less attention to promotion, atmosphere & location.
 Transactions are larger than in retailing.
 They are used whenever they perform one of the following more efficiently: selling &
promoting, buying & assortment building, bulk breaking, warehousing, transportation,
financing, risk bearing, market info & management services & counseling.
Types of Wholesalers
1. Merchant wholesalers. Independently owned businesses that take title to the

merchandise they handle. Two categories:
o Full service wholesalers provide a full line of services. Two types:
 wholesale sell primarily to retailers
 industrial distributors sell to manufacturers.
o Limited-service wholesalers offer fewer services than full-service wholesalers.
Several types:
 Cash & carry wholesalers. Limited line of fast moving goods. Sell to small
retailers. Do not deliver.
 Truck wholesalers. Limited line of semi-perishable products. Sell &
deliver.
 Drop shippers. Operate in bulk industries. Do not carry inventory.
 Rack jobbers. Serve grocery & drug retailers. Bill the retailers only for the
goods sold to consumers.

92
 Producers’ cooperatives. Owned by farmer members & assemble farm

produce to sell in local markets.
 Mail-order wholesalers. Send catalogs.
2. Brokers & agents. Do not take title to goods & perform only a few functions.
o Brokers bring buyers & sellers together & assist in negotiation.
o Agents represent either buyers or sellers on a more permanent basis than brokers
do. Several types:
 Manufacturers’ agents
 Selling agents
 Purchasing agents
 Commission merchants
3. Manufacturers’ & retailers’ branches & offices. Branches & offices dedicated either
to either sales or purchasing.
4. Miscellaneous Wholesalers. A few specialized types of wholesalers are found in certain
sectors of the economy.
PROMOTION MIX
Promotion is all about communication. Promotion includes all those activities which are aimed
at creating or stimulating demand. It has been defined as “the coordination of all seller-initiated
efforts to set up channels of information and persuasion to facilitate the sale of a good or service,
or acceptance of an idea”. Thus, promotion is a marketing activity which is aimed at informing,
persuading and inducing the customer to buy goods or services. The role of promotion in
marketing mix may be seen in Fig. 1. It shows that promotion is in tandem with other elements
of marketing strategy, viz., product, pricing and distribution strategies. The marketing manager
cannot design his promotion strategy unless it is decided what products are to be sold, what is
their price and what distribution channels are to be used· for selling. Once these decisions have
been made, he is ready to determine his advertising, sales promotion, personal selling and
publicity programmes for reaching the target market. Promotion programmes aimed at present
and potential customers result in sales. Sales volume provides feedback for marketing objectives
and marketing strategies including promotion strategy and indicates the need for adjustments in
them for the achievement of sales targets.
It is important to understand that a business will use more than one method of promotion. The
variety of promotional methods used is referred to as the promotional mix.
In marketing, the promotional mix describes a blend of promotional variables chosen by

marketers to help a firm reach its goals. It has been identified as a subset of the marketing mix. It
is believed that there is an optimal way of allocating budgets for the different elements within the
promotional mix to achieve best marketing results, and the challenge for marketers is to find the
right mix of them. Activities identified as elements of the promotional mix vary, but typically
include the following:
 Advertising is the paid presentation and promotion of ideas, goods, or services by an

identified sponsor in a mass medium. Examples include print ads, radio, television,

93
billboard, direct mail, brochures and catalogs, signs, in-store displays, posters, mobile
apps, motion pictures, web pages, banner ads, emails.
 Personal selling is the process of helping and persuading one or more prospects to
purchase a good or service or to act on any idea through the use of an oral presentation,
often in a face-to-face manner or by telephone. Examples include sales presentations,
sales meetings, sales training and incentive programs for intermediary salespeople,
samples, and telemarketing.
 Sales Promotion is media and non-media marketing communication used for a pre-
determined limited time to increase consumer demand, stimulate market demand or
improve product availability. Examples include coupons, sweepstakes, contests, product
samples, rebates, tie-ins, self-liquidating premiums, trade shows, trade-ins, and
exhibitions.
 Public relations or publicity is information about a firm's products and services carried by
a third party in an indirect way. This includes free publicity as well as paid efforts to
stimulate discussion and interest. It can be accomplished by planting a significant news
story indirectly in the media, or presenting it favorably through press releases or
corporate anniversary parties. Examples include newspaper and magazine articles, TVs
and radio presentations, charitable contributions, speeches, issue advertising, seminars.
 Direct Marketing is a channel-agnostic form of advertising that allows businesses and
nonprofits to communicate directly to the customer, with methods such as mobile
messaging, email, interactive consumer websites, online display ads, fliers, catalog
distribution, promotional letters, and outdoor advertising.
Which promotional methods are used depends on several factors:
Stage in the life cycle E.g. advertising is important at the launch stage
Nature of the product How much information is required by customers before they buy
Competition What are rivals doing?
Marketing budget How much can the firm afford?
Marketing strategy Other elements of the mix (price, product, place etc)
Target market Appropriate ways to reach the target market
A business will use a range of promotional activities for its product, depending on the marketing
strategy and the budget available.

94
The way in which promotion is targeted is split into two types:
Above the line promotion – paid for communication in the independent media e.g. advertising
on TV or in the newspapers. Though it can be targeted, it could be seen by anyone outside the
target audience.
Below the line promotion – promotional activities where the business has direct control e.g.
direct mailing and money off coupons. It is aimed directly at the target audience.
ADVERTISING
Modern marketing calls for more than developing a good product, pricing it attractively and
making it accessible to the target consumer. Companies must also communicate with the present
and potential customers. In this respect, advertising is a potent promotion tool of promotion mix
Print advertisements, advertisements in Television, Radio, Billboard, Brouchers and Cataloges,
Direct mails, In-store display, motion pictures, emails, banner ads, web pages, posters are some
of the examples of advertising
DEFINITION OF ADVERTISISNG
The word advertising originates from a Latin word advertise, which means to turn to. The dictionary
meaning of the term is “to give public notice or to announce publicly”. Advertising may be defined
as the process of buying sponsor-identified media space or time in order to promote a product or an
idea.
“Advertising Consists of all the activities involved in presenting to a group a non –personal, oral
or visual openly – sponsored, identified message regarding a product, service or idea. This
message, called an advertisement, is disseminated through one or more media and paid for by the
identified sponsor”.
The American Marketing Association, Chicago, has defined advertising as “any form of non-
personal presentation or promotion of ideas, goods or services, by an identified sponsor.”
EXPLANATION OF DEFINITION:
1. Any form: The advertising is any form of communication. It may be a symbol, sign or
message in newspaper, magazines, on television, radio advertisement, outdoor advertising or
direct mail; or new media such as websites and text messages.
2. Paid Form: It means advertising is a paid transaction.
3. Non-Personal Presentation: Advertising is not a personal selling & person to person
presentation but it is a non personal presentation i.e. advertising is addressed to a mass audience.
4. Identified Sponsor: Sponsor is agency through which advertising is made. Examples: Print
ads, radio, television, billboard, direct mail, brochures and catalogs, signs, in-store displays,
posters, motion pictures, Web pages, banner ads, and emails.
WHAT ADVERTISEMENT IS?

Advertisement is a mass communicating of information intended to persuade buyers to by
products with a view to maximizing a company‟s profits. The elements of advertising are:
(i) It is a mass communication reaching a large group of consumers.
(ii) It makes mass production possible.

95
(iii) It is non-personal communication, for it is not delivered by an actual person, nor is it

addressed to a specific person.
(iv) It is a commercial communication because it is used to help assure the advertiser of a long
business life with profitable sales.
(v) Advertising can be economical, for it reaches large groups of people. This keeps the cost per
message low.
(vi) The communication is speedy, permitting an advertiser to speak to millions of buyers in a
matter of a few hours.
(vii) Advertising is identified communication. The advertiser signs his name to his advertisement
for the purpose of publicizing his identity.
WHAT IS INCLUDED IN ADVERTISING?

(i) The information in an advertisement should benefit the buyers. It should give them a more
satisfactory expenditure of their rupees.
(ii) It should suggest better solutions to their problems.
(iii) The content of the advertisement is within the control of the advertiser, not the medium.
(iv) Advertising without persuasion is ineffective. The advertisement that fails to influence anyone,
either immediately or in the future, is a waste of money.
(v) The function of advertising is to increase the profitable sales volume. That is, advertising
expenses should not increase disproportionately.
ADVERTISING INCLUDES THE FOLLOWING FORMS OF MESSAGES:

The messages carried in-
Newspapers and magazines;
On radio and television broadcasts;
Circular of all kinds, (whether distributed by mail, by person, thorough tradesmen, or by inserts
in packages);
Dealer help materials,
Window display and counter – display materials and efforts;
Store signs, motion pictures used for advertising,
Novelties bearing advertising messages and Signature of the advertiser,
Label stags and other literature accompanying the merchandise.
ADVERTISING OBJECTIVES
(i) To stimulate sales amongst present, former and future consumers. It involves a decision
regarding the media, e.g., TV rather than print ;
(ii) To communicate with consumers. This involves decision regarding copy ;
(iii) To retain the loyalty of present and former consumers. Advertising may be used to reassure
buyers that they have made the best purchase, thus building loyalty to the brand name or the
firm.
(iv) To increase support. Advertising impliedly bolsters the morale of the sales force and of
distributors, wholesalers, and retailers, ; it thus contributes to enthusiasts and confidence attitude
in the organizational. :
(v) To project an image. Advertising is used to promote an overall image of respect and trust for
an organization. This message is aimed not only at consumers, but also at the government,
shareholders, and the general public.
IMPORTANCE OF ADVERTISING Generally, advertising is a relatively low-cost method of

conveying selling messages to numerous prospective customers. It can secure leads for salesmen
and middlemen by convincing readers to request more information and by identifying

96
outlets handling the product. It can force middlemen to stock the product by building consumer
interest. It can help train dealers salesmen in product uses and applications. It can build dealer
and consumer confidence in the company and its products by building familiarity. Advertising is
to stimulate market demand.
While sometimes advertising alone may succeed in achieving buyer acceptance, preference, or
even demand for the product, it is seldom solely relied upon. Advertising is efficiently used with
at least one other sales method, such as personal selling or point-of-purchase display, to directly
move customers to buying action.
Advertising has become increasingly important to business enterprises – both large and small.
Outlay on advertising certainly is the voucher. Non-business enterprises have also recognized the
importance of advertising. The attempt by army recruitment is bases on a substantial advertising
campaign, stressing the advantages of a military career. The health department popularizes
family planning through advertising Labour organizations have also used advertising to make
their viewpoints known to the public at large. Advertising assumes real economic importance
too.
Advertising strategies that increase the number of units sold stimulate economies in the
production process. The production cost per unit of output is lowered. It in turn leads to lower
prices. Lower consumer prices then allow these products to become available to more people.
Similarly, the price of newspapers, professional sports, radio and TV programmes, and the like
might be prohibitive without advertising. In short, advertising pays for many of the enjoyable
entertainment and educational aspects of contemporary life.
Advertising has become an important factor in the campaigns to achieve such societal-oriented
objectives such as the discontinuance of smoking, family planning, physical fitness, and the
elimination of drug abuse.
Though in India, advertising was accepted as a potent and recognized means of promotion only
25 years ago, its growing productive capacity and output necessitates the finding of consumers
and advertising plays an important role in this process. Advertising helps to increase mass
marketing while helping the consumer to choose from amongst the variety of products offered
for his selection.
In India, advertising as a profession is in its infancy. Because of this fact, there is a tremendous
scope for development so that it may be productively used for the benefit of producers, traders,
consumers, and the country‟s economy.
CLASSIFICATION AND TYPES OF ADVERTISING

1. Product – Related Advertising
A. Pioneering Advertising
B. Competitive Advertising
C. Retentive Advertising
2. Public Service Advertising
3. Functional Classificaiton
A. Advertising Based on Demand Influence Level.
A. Primary Demand (Stimulation)
B. Selective Demand (Stimulation)
B. Institutional Advertising
C. Product Advertising
A. Informative Product Advertising
B. Persuasive Product Advertising
C. Reminder-Oriented Product Advertising
4. Advertising based on Product Life Cycle

97
A. Consumer Advertising
B. Industrial Advertising
5. Trade Advertising
A. Retail Advertising
B. Wholesale Advertising
6. Advertising Based on Area of operation
A. National advertising
B. Local advertising
C. Regional advertising
7. Advertising According to Medium Utilized
ADVERTISING MESSAGE
Advertisers go through four steps to develop a creative message: message generation,
message evaluation and selection, message execution, and social responsibility review.
MEDIA PLANNING
Having defined the target, message content and the expected response, the advertiser must
choose the best combination of media support that will allow it to achieve the desired number of
exposures to the target within the limits imposed by the advertising budget.
Generally, a higher degree of reach is necessary when launching a new product or starting an
ambitious programme of promotion. On the other hand, a higher degree of frequency is required
when the message is complex, the product frequently bought and brand loyalty low. However,
too much repetition is useless, as it may cause irritation or boredom
The second strategic option is between ‘continuity’ as opposed to ‘intermittence’ in advertising:

seeking continuity of advertising efforts over time to overcome the forgetting rate, stimulate
repeated purchases, oppose rivals’ efforts etc., or, on the contrary, seeking intermittence
(pulsing) so as to optimize consumer learning or reinforcement, or to ‘stretch budgets’ to
coincide with consumption patterns.
Finally, the third strategic choice is between media ‘concentration’ or media ‘diversification’
seeking diversification in various types of media so as to enjoy complementarities between them,
obtain a better net reach, a better geographical allocation etc., or, on the contrary, concentration
on a single medium, so as to dominate the medium best suited to the target, to personalize the
campaign and the product and to benefit from economies of scale and discounts.
All depends on the adopted segmentation strategy. Diversification is desirable if the
firm follows undifferentiated marketing; if, on the contrary, it follows a market niche strategy,
then it is probably more effective to concentrate on a single medium.
CRITERIA FOR MEDIA SELECTION:

Media selection is guided by quantitative and qualitative criteria which are listed below. Among
quantitative criteria, the following are important:
• Compatibility of message with medium: The execution of message may call for or
prohibit use of a specific medium. e.g. an auto manufacturer having strong
acceleration would have to go in for TV advertising.
• Target audience media habits, i.e. the proportion of the target group that can be reached
through the medium.

98
• The stability of the reach over time, for instance from one week to another or from one
season to another.
• The possibility of having frequent exposure to the message.
The medium selectivity in terms of socio-demographic or life style profiles.
• The cost per thousand persons reached, which is a function of the vehicle audience and
of the medium cost.
Qualitative criteria of media selection must complement the quantitative ones. The
following can be noted in particular:
• Audience attention probability, which is, for instance, very high for cinemas and very
low for outdoor advertising.
• The duration of the message’s life, i.e. the period during which the message can be
perceived.
• The editorial quality of the vehicle, i.e. its prestige and credibility.
• The technical quality of the medium, for instance, the use of colour, the quality of sound
or of images etc.
• The degree of advertising saturation of the vehicle and the presence of competitive
advertising.
The final choice is concretized in a media plan describing budget allocation between the
different media. Once one has chosen the media, the next decision is to select the specific
vehicles to advertise within the media. Although the choices are complex and numerous, a
number of paid research services in media and vehicles selection provide data to help the
decision-maker. The latter choice is now increasingly made using computer models of vehicle
selection.
ADVERTISING BUDGET DECISIONS

1) Cost-oriented advertising budgets:
2) Communication-oriented advertising budgets:
MEASURING ADVERTISING EFFECTIVENESS

The marketing manager is deeply interested in knowing how far his advertising has
succeeded in achieving its objectives. He needs to evaluate the effectiveness of advertising for
three purposes: (i) To improve the effectiveness of advertising by making changes in advertising
message, media, timing, etc. Such an evaluation provides him invaluable guidance in planning
the optimum media mix. (ii) To convince management about the instrumentality of advertising in
improving the firm’s profitability so as to get the required level of budget appropriation for
advertising. (iii) To determine the optimum level of advertising expenditure.
Measurement of advertising effectiveness has turned out to be an extremely complex and

challenging task. Sales are the result of such a large number of variables including the product,
price, distribution channels, advertising, personal selling, etc., that it is impossible to determine
what proportion of it is due to effective advertising. However, marketing researchers have
developed some tools for measuring the communication as well as sales effectiveness of
advertising.
Measures used for measuring advertising effectiveness: A number of tests have been
developed for measuring the communication effectiveness of advertising. It is generally assumed
that there is a positive relationship between communication and sales effect of advertising but it
is not known how strong is that relationship.

99
1) Recall tests
2) Response Tests
3) Attitude and Opinion
4) The Lottery Measure
5) The Rating Scale
6) The Predisposition-to-Buy Scale
7) The Constant Sum Scale
8) Paired Comparison
9) Forced Switching
10) Advertising Recall
11) First and Second Choice
12) Awareness:
13) Buying Game
SALES PROMOTION
Sales Promotion is an activity or material (or both) that acts as a direct inducement and
offers added value to or incentive to buy the product to resellers, sales persons or consumers. It
consists of a diverse collection of incentive tools, mostly short term, designed to stimulate
quicker or greater purchase of particular product or services by consumers or traders.
Sales promotion has grown dramatically in the last ten years, largely because of focus of
business on short term profits. A decade ago, the advertising-to-sales-promotion ratio was about
60:40. Today, in many consumer-packaged-goods companies, sales promotion accounts for 65%
to 75% of the combined budget. Sales promotion expenditure has been increasing as a
percentage of budget expenditure annually for the last two decades and the fast growth is
expected to continue. Several factors have contributed to the rapid growth of sales promotion,
particularly in consumer markets.
Internal factors include the following:
• Promotion is now more accepted by top management as an effective sales tool;
• Product managers are under greater pressure to increase their current sales.
External factors include the following:
• The number of brands have increased;
• Competitors use promotions frequently;
• Many brands are seen as similar;
• Consumers are more price-oriented;
• Advertising efficiency has declined because of rising costs, media clutter, and legal
restraints.
SALES PROMOTION IS A KEY INGREDIENT IN MARKETING CAMPAIGNS AND

INCLUDES TOOLS FOR:
(a) Consumer Promotion: These are aimed at consumers and include Samples, Coupons,
Cash-refund-offers, Premiums, Prizes, Rewards, Free trials, Warranties/Guarantees, Tie-in-
promotions, Point-of-purchase displays and demonstrations.
(b) Trade Promotion: These are aimed at distribution channel members and include Price
offs, Advertising and Display allowances, and Free goods.
(c) Business and Sales force Promotion: (Trade shows, Conventions, Contests for sales
reps, and Speciality Advertising).

100
OBJECTIVES OF SALES PROMOTION

Sales promotion objectives are derived from broader promotion objectives, which are
derived from more basic marketing objectives. The specific objective set for sales promotion
varies with the target market.
In relation to consumers, objectives of sales promotion include:
• Encouraging purchase of large size units.
 Building trial among non-users.
• Attracting switchers away from competitors’ brands.
In relation to retailers, objectives include:
• Persuading retailers to carry new items and higher levels of inventory,
• Encouraging off-season buying,
• Encouraging stocking of related items,
• Off-setting competitive promotions,
• Building brand loyalty and gaining entry into new retail outlets.
In relation to the sales force, objectives include:
• Encouraging support of a new product or model,
• Encouraging more prospecting, and
• Stimulating off-season sales.
MAJOR CONSUMER PROMOTION TOOLS

(a) SAMPLES: Offer of a free amount of a product or service. These might be delivered
door to door or found attached to another product or featured in an advertising offer. Sampling is
the most effective and most expensive way to introduce a new product.
(b) COUPONS: Certificates entitling the bearer to a stated saving on the purchase of a
specific product. These can be mailed or enclosed in other products or inserted in magazines and
newspaper ads. Coupons can be effective in stimulating sales of a mature brand and inducing
early trial of a new brand.
(c) CASH REFUND OFFERS: Provide a price reduction after the purchase rather than at the
retail shop. The manufacturer refunds a “part of purchase price” by mail after receiving a
“specified proof of purchase”.
(d) PRICE PACKS: They can take the form of a reduced-price pack (such as two for the
price of one) or banded pack, which is two related products banded together. Price-packs are
very effective in short-term sales even more so than coupons.
(e) PREMIUMS: Merchandise offered at a relatively low cost or free as an incentive to
purchase a particular product. The package itself, if a reusable container, can serve as a premium.
(f) PRIZES: Offer a chance to win cash, trips or merchandise as a result of purchasing
something. A contest calls for consumers to submit an entry, a jingle, estimate, suggestion to be
judged by a panel of judges who will select the best entries.
(g) FREE TRIALS: Invite prospective purchasers to try the product without cost, in the
hope that they will buy the product.
(h) PRODUCT WARRANTIES/GUARANTEES: Explicit or implicit promises by sellers
that the product will perform as specified or that the seller will fix it or refund the customer’s
money during a specified period.
(i) TIE-IN-PROMOTIONS: Involves two or more companies or brands that team up on
coupons, refunds and contests to increase their pulling power. The companies pool their funds
with the hope of broader exposure and multiple sales-forces push these promotions to retailers.
(j) POINT-OF-PURCHASE DISPLAYS AND DEMONSTRATION: Take place at the
point of purchase or sale.

101
MAJOR TRADE-PROMOTION TOOLS

(a) PRICE-OFF: A straight discount off the list price on each case purchased during a
stated time period. The offer encourages dealers to buy a quantity that they might not ordinarily
buy. The dealers can use the buying allowance for immediate profit, advertising or price
reductions.
(b) ALLOWANCE: An amount offered in return for the retailers agreeing to feature the
manufacturer’s product in some way. An advertising allowance compensates retailers for
advertising the manufacturer’s product. A display allowance compensates them for carrying a
special product display.
(c) FREE GOODS: Offers of extra cases of merchandise to intermediaries who buy a
certain quantity. Manufacturers might offer push money or free specialty advertising items to the
retailers that carry the company’s name, such as pens, pencils, calendars, paperweights, memo
pads, and ashtrays.
MAJOR BUSINESS-PROMOTION TOOLS

(a) TRADE SHOWS AND CONVENTIONS: Industry associations organize annual
trade shows and conventions. Firms selling products and services to a particular industry buy
space and set up booths and displays to demonstrate their products at the trade shows. The
participating vendors expect several benefits, including several new sales leads, maintaining
customers’ contacts, introducing new products, educating customers with publications, motion
pictures and audio-visual materials.
(b) SALES CONTESTS: It is a contest involving the sales force or dealers, aimed at
inducing them to increase their sales over a stated period, with prizes going to those who
succeed. The good performance may receive trips, cash prizes or gifts.
(c) SPECIALITY ADVERTISING: Specialty advertising consists of useful, low cost
items given by salespeople to prospects and consumers without obligation and which bear the
company’s name and address and sometimes an advertising message. The item keeps the
company’s lame before the prospects and creates goodwill because of the items utility.
DEVELOPING THE SALES-PROMOTION PROGRAM

In this context, there are specific tasks like:
(i) The marketer has to determine the size of the incentive to offer. Ascertaining
minimum incentive is necessary if the promotion is to succeed.
(ii) Conditions for participation have to be established. A premium might be offered only
to those who turn in with the proof of purchase.
(iii) The marketer has to decide the duration of promotion. If the sales promotion period
is too short, many prospects will not be able to take advantage of it. If the
promotion period is too long, the deal will lose some of its “act now” force.
(iv) The marketer must choose a distribution cycle. Each distribution method has a
different level of reach, cost and impact.
(v) The timing of promotion must be established.
(vi) The marketer must determine the total sales promotion budget.
(vii) Although sales promotion program are designed on the basis of experience, pretests
should be conducted to determine if the tools are appropriate; the incentive size is optimal; the
presentation method is efficient.
IMPLEMENTING AND CONTROLLING THE PROGRAM

Implementation and control plans should be prepared for each individual promotion.
Implementation planning must cover lead time sell in time. Lead time is the time necessary to

102
prepare the program prior to launching it. Sell-in time begins with the launch and ends when
approximately 95% of the deal merchandise is in the hands of consumers, which can take one to
several months, depending on the deal duration. It covers initial planning, design and approval of
package modifications or material to be mailed or distributed to the home, preparation of
conjunctive advertising and point-of-sale material, notification of field personnel, establishment
and allocations for individual distributors, purchasing and printing of special premiums and
packages, production of advanced inventories and staging at distribution centres in preparation
for release at a specific date, and finally, the distribution to the retailer.
EVALUATING THE SALES-PROMOTION PROGRAM

Evaluation is a crucial requirement. Manufactures can use four methods to measure sales
promotion effectiveness:
(a) Sales Data: Examine the sales data before, during, and after a promotion. Sales
promotion works best, in general, when they attract competitors’ customers to try a superior
product and as a result customers switch permanently.
(b) Consumer panel: Consumer Panel data would reveal the kind of people who
responded to the promotion and what they did after the promotion.
(c) Consumer surveys can be conducted to gain more information, learn how many recall the
promotion, what they thought of it, how many took advantage of it, and how the promotion
affected their subsequent brand-choice behaviour.
(d) Experiments: Experiments evaluate· such attributes as: incentive value, duration, and
distribution media.
Beyond these methods of evaluating the results of specific promotions, management must
recognize other potential costs and problems:
• Promotions might decrease long-run brand loyalty by making more consumers deal
prone rather than advertising prone.
• There are hidden costs of special production runs, extra sales-force effort, and handling
requirements.
• Certain promotions irritate retailers and they demand extra trade allowances or refuse to
co-operate in the operation.
PUBLIC RELATION
Public relation (PR) is another important marketing tool. Not only must the company relate it
constructively to its customers, suppliers and dealers, but it must also be related to a large set of
interested publics.
PR department perform the following five activities, not all of which directly support marketing
objectives:
(i) Press relations: The aim of press relations is to place newsworthy information into the
news media to attract attention to a person, product, service, or organization.
(ii) Product publicity: Product publicity involves various efforts to publicize a specific product.
(iii) Corporate communication: This activity covers internal and external
communications and promotes understanding of the organization.
(iv) Lobbying: It involves dealing with legislators and government officials to promote or
defeat legislation and regulation.
(v) Counselling: Counselling involves advising management about public issues and
company positions and image.

103
MARKETING PUBLIC RELATION AS PUBLICITY

The old name for Marketing Public Relations (MPR) was publicity, which was seen as
the task of securing editorial- as opposed to paid space- in print and broadcast media to promote
a product, place, or person. But MPR goes beyond simple publicity by contributing to the
following tasks:
(a) Assist in the launch of new products.
(b) Assist in repositioning a mature product.
(c) Build up interest in a product category.
(d) Influence specific target groups.
(e) Defend products that have encountered public problems.
(f) Build the corporate image in a way that projects favourably on its products.
OBJECTIVES OF PUBLIC RELATIONS AND PUBLICITY

(a) Build awareness: PR can place stories in the media to bring attention to a product,
service, person, organization or idea.
(b) Build credibility: PR can add credibility by communicating the message in an editorial
context.
(c) Stimulate the sales-force and dealers: PR can help boost sales-force and dealer
enthusiasm. Stories about a new product before it is launched will help the sales farce sell it to
retailers and consumers.
(d) Hold down promotion costs: PR costs less than direct mail and media advertising. The
smaller the company’s promotion budget, the stronger is the case for using PR to gain share of
mind.
MAJOR TOOLS OF PUBLIC RELATIONS AND PUBLICITY

(a) PUBLICATIONS: Companies rely extensively on communication materials to reach and
influence target markets. These include annual reports, brochures, articles, audio-visual
materials, and company newsletter and magazines. Company newsletters, and magazines can
help build up the company’s image and convey important news to target markets. Audio-visual
material, such as films, slides, and video and audio cassettes are coming into increasing use as
promotion tools. The cost of audio-visual material is usually greater than the cost of printed
material, but so is the impact.
(b) EVENTS: Companies can draw attention to’ new products or other company activities by
arranging special events. These include news conferences, seminars, outings, exhibits, contests
and competitions, anniversaries, and Sport and culture sponsorships that will reach the target
publics.
(c) NEWS: One of the major tasks of PR professionals is to’ find or create favourable news
about the company, its products, and its people. News generation require skills in developing a
story concept, researching it, and writing a press release. But the PR person’s skill must go
beyond news preparing stories. Getting the media to’ accept press releases and press conferences
calls for marketing and interpersonal skills. A good PR media director understands the press’
needs far stories that are interesting and timely. The media director needs to build favourable
relations with editors and reporters. The mare the press is cultivated, the mare likely it is to give
more and better coverage of the company.
(d) SPEECHES: Speeches are another tool for creating product and company publicity.
Increasingly, company executive must face questions from the media or give speeches at trade
associations or sales meetings. These appearances can build the company’s image.
(e) PUBLIC SERVICE ACTIVITIES: Companies can improve public goodwill by contributing
money and time to good causes. A large company may typically ask executives to support

104
community affairs where their offices are situated. In other instances, companies may donate a
certain amount of money to specified cause out of consumer purchases.
(f) IDENTITY MEDIA: Normally, a company’s materials acquire separate looks, which creates
confusions and misses an opportunity to-create and reinforce a corporate identity. In an over-
communicated society, companies have to compete for attention. They should strive to create a
visual identity that the public immediately recognizes. The visual identity is carried by the
companies’ logos, stationary, brochures, signs, business forms, business cards, buildings,
uniforms and dress codes, and rolling stock.
PERSONAL SELLING
Personal selling can make a strong contribution in consumer goods marketing. Some consumer
marketers play down the role of the sales-force, using them mainly to collect weekly orders from
dealers and to see that sufficient stock is on the shelf. The common feeling is that “salespeople
put products on shelves and advertising takes them off.”
It includes face-to-face communication this can be done by ‗Knocking on Doors‘, by setting up
meetings, over the telephone, organizing conferences, workshops. Personal selling is more costly
method of marketing communication. For conducting personal selling it charge high prices, it is
also technically complex task, and it includes costly tools. It makes personal selling very costly
and complex element in product promotion. One of the best options in personal selling is
salesmanship for distributing the product.
Personal selling is more powerful element rather than advertising to convinces or persuade
customers. But many companies can adopt both elements personal selling and advertising to sell
products as well as to get maximum possible customers response.
American Marketing Association has defined Personal selling (salesmanship) as
―salesmanship is the process of including and assisting perspective buyers to buy a commodity
or service or to act favourably upon an idea that has commercially significance to the seller.‖
NEED AND IMPORTANCE OF PERSONAL SELLING (SALESMANSHIP)

1. Personal communication: - personal selling includes personal communication it means two
way communications. it is not possible to provide personal communication by any other tool of
the salesmanship.
2. Brief Information:- it provide detail demonstration of the product. With the help of
salesmanship, it gives detail demonstration of product to the customer which is not possible by
advertising.
3. Increasing Sales:- in personal selling the main purpose is to increase sales of the product by
the effective salesmanship company can increase sales.
4. Personal attention: - Personal selling focus on personal problems, doubts, and objections of
the consumers. Therefore personal attention is done by salesmanship not by the tools like
publicity and advertising. Because the publicity & advertising are the mass communication tools.
5. Quick Feedback: - the personal selling provide Quick or immediate feedback from the
customers. Salesman can collect feedback from customers whether they like the product or not.
6. Challenging Task:-It is challenge to the salesman to influence buyer. Every good salesman
has improved ability to influence people to buy a product.
7. Improve Image: - the salesman can give detail and real information related to company. And
also remove misunderstanding, quarries, doubts, objections of the customers. So the result is to
improve image of the product and its company.

105
8. Personal selling can increase customer‘s faith and confidence towards the product and its
company.
9. Personal selling is an expensive task as well as complex task to handle. It wills took more
effort from the salesman to approach buyer to buy product.
10. Personal selling can face some legal and ethical issues about the way of product selling.
11. The aim of personal selling is a mutual benefit (profits) to seller to buyers.
12. Personal selling is much flexible and dynamic in nature.
THE PERSONAL SELLING PROCESS

The basic philosophy underlying the approach to personal selling should be an extension of the
marketing concept. This implies that, for long-term survival it is in the best interest of the sales
person and his/her company to identify customer needs and aid customer decision-making by
selecting from the product range those products which best fit the customer’s requirements.
Many persons have developed models for personal selling. Some say that it is nothing but
SPANCO (finding SUSPECTS, reaching PROSPECTS, APPROACH, NEGOTIATION,
CLOSE, AND ORDER TAKING) other say that it is SPIN (SUSPECT, PROSPECT,
INTERVIEW, and NEGOTIATION). However, in order to develop personal selling skills we
will distinguish six phases of the selling process. These phases are not watertight compartments
and may not occur in the given order. Objections may be raised during presentation or during
negotiation, or a trial close may be attempted at any point during the presentation if buyer
interest is high. Furthermore, negotiation mayor may not take place and may occur during any of
the stages.
(a) The Opening- Initial impressions can cloud later perceptions, and so it is important to
consider the ways in which a favourable initial response can be achieved. There is a saying that
‘first impression is the last impression’ you get. Buyers expect sales people to be business-like in
their personal appearance and behaviour. Untidy hair and a sloppy manner of dress can create a
lack of confidence picture. Further the sales person who do not respect the fact that the buyer is
likely to be a busy person, may cause irritation on the part of the buyer.
Sales people should open the sales call with a smile, a handshake and, in situations where
they are not known to the buyer, introduce themselves and the company they represent. Common
courtesies should be followed. Opening remarks are important since they set the tone for the rest
of the sales interview. This can generate close rapport with the buyer, but the sales person must
be aware of the reason for being there, am not be excessively diverted from talking business.
(b) Need and problem identification- Most salespeople have a range of pro ducts to sell. A car
salesman has many models ranging from small economy cars to super luxury top-of-the range
models. The computer salesperson will have a number of systems to suit the needs and sources
of different customers. In each case, the seller’s first objective should be to discover the
problems and needs of the customer. Before a car salesperson can sell a car, he needs to
understand the customer’s circumstances. What size of car is required? Is the customer looking
for high fuel economy or performance? What kind of price range being considered? Having
obtained this information the salesperson is in a position to sell the model which best suits the
needs of the buyer.
(c) The presentation and demonstration- Once the problems and needs of the buyer have been
identified, the presentation follows as a natural consequence. A given product may have a range
of potential features that confers benefits to customers, but different customers· place different
priorities on them. Having identified the needs and problems of the buyer, the presentation
provides the opportunity for the salesperson to convince the buyer that he/she can supply the
solution.

106
There is a Chinese proverb- “Tell me and I’ll forget; show me and I may remember;
involve me and I shall understand.” This proverb is very important in a sales call.
Demonstrations reduce risk because they prove the benefits of the product. Car salespeople allow
customers to test drive cars. For all but the most simple of products it is advisable to divide the
demonstration into two stages. The first stage involves a brief description of the features and
benefits of the product and an explanation of how it works. The second stage entails the actual
demonstration itself.
There are several advantages of demonstrations. They add realism to the sales routine in
that they utilize more human senses than mere verbal descriptions or visual presentation. When a
potential customer is participating in a demonstration it is easier for the salesperson to ask
questions in order to ascertain buying behaviour. Customer objections can be more easily
overcome if they can be persuaded to take part in the demonstration process. There are
advantages to customers in that it is easier for them to ask questions in a more reliable way in
order to ascertain the product’s utility more clearly and quickly. Purchasing inhibitions are
quickly overcome arid buyers; declare their purchasing interest sooner than in face-to-face
selling/buying situations. Once a customer has participated in a demonstration there is less
likelihood of ‘customer remorse’ (i.e. the doubt that value for money is not good value after all).
(d) Dealing with objections- Objections should not always be viewed with dismay by
salespeople. Many objections are simply expressions of interest by the buyer when the buyer is
asking for further information because he or she is interested in what the Salesperson is saying.
The problem is that the-buyer is not yet convinced. Objections highlight the issues which are
important to the buyer. The effective approach for dealing with objections involves two areas:
tile preparation of convincing answer, and the development of a range of techniques for
answering objection in a manner which permits the acceptance of these answers without loss of
face on the part of the buyer.
(e) Negotiation- In some selling situations, the salesperson or sales team have a degree of
discretion with regard to terms of the sale. Negotiation may, therefore, enter into the sales
process. Sellers may negotiate price, credit terms, delivery times, trade-in values and other
aspects of the commercial transaction. The deal that is arrived at, will be dependent upon the
balance of power and the negotiating skills of the respective parties. The buyer’s needs, the
competition that the- supplier faces, knowledge about the buyer’s business, and the pressures
upon him/her should be estimated.
(f) Closing the sales- The skills and techniques discussed so far are not in themselves sufficient
for consistent sales success. A final ingredient necessary to complete the process is the ability to
close the sale. A major consideration at the closing is the timing. A general rule is to attempt to
close the sale when the buyer displays heightened interest or a clear intention to purchase the
product. Salespeople should look out for such buying signals and respond accordingly. Purchase
intentions are unlikely to grow continuously throughout the sales presentation, they are more
likely to rise and fall as the presentation progresses. The salesperson should attempt to close at a
peak and which peak is to be chosen comes with experience.
(g) Follow-up- This final stage in the sales process is necessary to ensure that the customer is
satisfied with the purchase and that no problem with such factors as delivery, installation,
product use and training has arisen. Salespeople may put-off the follow up call because it does
not result in an immediate order. However, for most companies repeat business is the hallmark of
success and follow-up call can play a major role in showing that a salesperson really cares about
the customer rather than only being interested in making sales. The follow-up call can also be
used to provide reassurance that the purchase was right one.

107

108
UNIT - IV
MARKETING ORGANISATION STRUCTURE
INTRODUCTION: Organisation is the vehicle for accomplishing the goals and objectives of
the business. Organisation is essential, when human beings have to collaborate and work for a
common purpose. In fact, an organisation is often defined as “a group of persons working
together towards the attainment of certain common objectives.” When the enterprise expands,
some pattern of organisation should be adopted. Generally, the following are the types of
organisation.
MEANING OF ORGANIZATION: An organization is a group of people that is structured and
managed to achieve a common goal. Every organization have a defined structure that determines
relationship between its members, and assigns their roles, responsibilities, and authority.
MEANING OF MARKETING ORGANIZATION: Marketing organization is a group of
marketing persons brought together to make decisions on marketing areas like product, price,
place, and promotion. Marketing organization is the foundation of effective sales planning for
systematic execution of plans and policies. Marketing organization provides a system of
relationships among various marketing functions to be performed by proper coordination among
marketing persons.
DEFINITION OF MARKETING ORGANIZATION
"Marketing organization can be defined as a formal or informal group of individuals working
together to reach quantitative and qualitative marketing objectives by making decisions on
product, price, place, and promotion."
TYPES / STRUCTURES OF MARKETING ORGANISATIONS

1. MILITARY TYPE OF ORGANISATION: This is the simplest and oldest form of
organisation. It is also referred as line organisation, scalar or hierarchical organisation. Under
this type of organisation, a superior delegate’s authority to a subordinate, who in turn delegates
authority to another subordinate and so on. Authority descends from the top to the bottom level,
through downward delegation of authority. Subordinates become responsible to their immediate
superiors. The topmost management has full control over the entire field.
Suitability:

109
This form is suitable:

1. If the business is comparatively small.
2. If the labour management problems are easy to solve.
3. If the processes are easily directed.
4. If the work is of a routine nature.
Merits:
1. It is simple to work.
2. It is economical and effective.
3. It is easy to fix responsibility.
4. It facilitates quick decisions and prompt actions.
5. Quick communication is easy.
6. Discipline can easily be maintained.
Demerits:
1. The organisation is rigid and inflexible.
2. It works on a dictatorial basis.
3. Departmental heads act on their own whims and desire, as it is difficult to secure coordination
of the activities of workers and departments.
4. In big business it does not operate satisfactorily.
2. FUNCTIONAL TYPE ORGANISATION: The limitations of line organisation have been

removed under this system. All types of work of the organisation are grouped and managed by
the top executive. There are separate functional departments for major functions of the
enterprise; example personnel department, purchase department etc. Each department does its
function for the entire organisation. Sales department does the function for the whole enterprise.
The functional organisation works through the line organisation. Functional organisation is based
on expert knowledge and makes the greatest use of division of labour resulting in high efficiency
and specialization.
Merits:
1. Greatest use of division of labour is possible.
2. The system is based on expert knowledge.
3. Functional efficiency of the worker can be maintained.
4. Mass production is made by standardization and specialization.
5. Separation of mental and manual functions is possible.
6. Methods and operations can be standardized.
Demerits:
1. Too many experts and bosses (high officials) create confusion in the mind of the worker.
2. It is difficult to fix responsibility on workers.
3. Discipline and morale of the workers are seriously affected, because of contradictory orders
from different experts.
4. There is heavy overhead expense.

110
3. LINE AND STAFF SYSTEM: In this type, the organisation is based on the line organisation
and the functional experts advise the line officers as to the functions of the enterprise. The line
officers are the executives and the staff officers are their advisers. Though the staff officers do
not have the power to command the line officers, their advice is generally adhered to.
The combination of organisation with this expert staff forms the type of organisation-line and
staff. The ‘line’ keeps the discipline and the staff provides expert information. The line gets out
the production and the staff carries on research, planning, fixing standard etc. This type of
organisation is suitable for large concerns.
The line officers give orders, decisions etc., to subordinates in consultation or guidance with the
staff officers. The underlying idea of this method is that specialized work is to be left to experts
who will give advice on specialized groups-investigation, research etc. The staff officers who
have no executive positions in the concern, but are only the thinkers, while the line officers are
the doers.
Merits:
1. This type is based on specialization.
2 It brings expert knowledge of the whole concern.
3. Increased efficiency of operations may be possible
4. Mass production is possible.
Demerits:
1. There arises confusion unless the duties and responsibilities are clearly indicated by charts and
office manuals.
2 Advice and, expert information are given to the workers through the line officers. It is possible
that the workers may misunderstand or misinterpret.
4. COMMITTEE ORGANISATION:
Committee organisation is widely used for the purpose of discharging advisory functions of the
management. Committees are formed in different levels of organisation. A committee is a group
of people who meet by plan to discuss or make a decision on a particular subject. Because of its
advantages, committee organisation is preferred. The management committee usually consists of
General Manager and departmental heads to deal with current problems. A co-ordinated plan is
agreed to in a meeting. Thus group judgement is possible to attain an aimed result.
For a successful committee organisation, the following hints may be noted:
1. Number of individuals is to be kept at a minimum, so as to function effectively. If there are
many members, it will cause lengthy discussions and delayed decisions.
2. The chairman of the committee must have full control over the members, while they are in
meeting.
3. There must be a proper agenda, arranged in order of importance.

111
4. All the members are to be informed before the meeting about the points to be discussed, so
that they may prepare for the meeting.
5. The meeting must be started on time and must end on time.
Merits:
1. It stimulates co-operative action.
2. It can promote better understanding.
3. A problem is discussed in detail and decision taken.
4. It facilitates co-ordination of activities of various departments.
5. Group discussion and decision will bring better results.
6. It gives demographic management.
Demerits:
1. Committees are expensive.
2. Committee weakens individual responsibility.
3. Committee may sometimes become time-consuming rather than time-saving.
4. Responsibility cannot be fixed on any person.
5. It lacks secrecy.
5. GEOGRAPHICAL TYPE: The structure is based on territorial or regional basis. When

business activities are expanded, the various parts of the market area are divided into territories.
The whole world into continents, continent into regions, region into zones, zone into districts etc.
This type of organisation gives importance to the consumer’s needs and desire, especially in
pharmaceutical companies.
In this way, the market is fragmented into different sales territories like national market into
regions, region into districts, district into areas as shown in the chart next. Salesmen are
controlled by the respective district sales managers (DSM), DSM are controlled by their regional
sales manager (RSM), RSM are controlled by the marketing executive.
This type of organisation enjoys the knowledge of likes and dislikes of people in the particular
areas. A firm can modify or alter the products, on the basis of the needs of the buyers who are
represented by sales manager. The competitors can be counteracted soon.
Merits (Geographical Type):

1. Geographical type of divisions allow a manager to pay special attention to the needs and
problems of the local markets.
2. Geographic type of organisation provide opportunities for local talent to be utilized.
3. Geographic division helps managers gain extensive knowledge of diverse activities.
4. This type of organisation improve an organization’s relationship with customers.
Demerits (Geographical Type):

112
1. This type of organisation require more people to work.

2. There arise communication problems.
3. Cost of operations are high.
4. Top managers at HO find it difficult to control and supervise the activities in different
locations.
6. PRODUCT TYPE: Certain companies produce different varieties of products and it is

advantageous to boost the sales on the basis of product or product groups. A separate product
manager is appointed for each product. He attends to the production and marketing of his
products when the market is competitive, the product type organisation with the product manager
can concentrate its attention on the performance of a particular product or brand. Sales
promotion, advertising, marketing research etc., remain as the centralized activity for the product
group. (Fig. 3.5)
7. Market Type (Consumer): This type of organisation is based on the different types of
customers. The enterprises have adopted customer-oriented marketing and thus there arise two
sets of organisations through which the needs of customers or market are met; i.e., subdivision of
markets on the basis of government and non-government customers, industrial individual
customers, rich and poor customers and on the basis of sex, income, taste, age etc. A firm may
have different groups of customers, who have different needs and problems. Thus, each section
can look into the needs of each group of consumers and facilitate their buying-wholesale section,
retail section etc. (Fig. 3.6)
Merits (Consumer type):

1. This type of organisation can encourage consumers with clearly defined services.
2. The specialists can understand the needs of a particular segment of customers.
3. This type of organisation is useful to serve different type of customers.

113
Demerits (Consumer type):

1. Coordination between sales and other functions of marketing is difficult.
2 More man-power is required thus expenditure is high.
8. MATRIX TYPE: Matrix organisation is also known as grid or project organisation. Matrix
organisation is created by merging the two or more complementary organisations, say, purchase
section and sales section. A team may be set up within the existing organisation, to conduct a
study of a particular product or design or to complete a specific assignment in time.
A project manager has a project team consisting of people from several functional sections. For
instance, a project team is formed to market the television, and for this people will be drawn
from different functional departments, say, production, research, marketing, engineering etc.
These specialists are drawn from respective departments, borrowed to perform their part in the
project work. When the project work is complete, they go back to their respective departments.
This type of organisation is needed when a special type or urgent assignment of jobs or
complicated job or a new product etc., is introduced. Generally, such organisation may be
temporary.
Merits:
1. Specialized product knowledge is acquired.
Z It is economical to draw experts from various sections.
3. Expansion, improvements, diversification etc., are the result.
4. The chances of success of the project are higher.
5. It allows effective use of resources.
Demerits (Matrix type):
1. Administrative costs are high.
2. Workers under this type have to report to two bosses.
3. There arise conflicts between functional managers and project managers.
We may adopt any of the organisation structures for organizing its marketing operations; it
should be goal-oriented and flexible. It must have scope for possible future growth. Market
conditions change very frequently. Marketing structure should be capable of accommodating all
the changes and marketing people should be dynamic to take up various sales job assignments
and marketing challenges. The adopted marketing organisation structures should provide for the
formulation of marketing policies and programmes from the bottom to the top and every
marketing person should have an opportunity for participation in it.

114
IMPLEMENTATION AND CONTROL OF THE MARKETING

PROGRAMME
The effectiveness of strategy implementation determines the outcome of marketing planning.

The management of the planning process may enhance implementation effectiveness by building
commitment and ownership of the plan and its execution .For example actively managing the
participation of different functions and executives from different specializations may improve
the fit between the plan and the company’s real capabilities and resources and avoid
implementation barriers. Planning and execution are interdependent parts of strategic change.
Marketing managers increasingly function as boundary spanners both internally
between functional areas and externally with suppliers, organizational partners and customers.
Additional efforts to make the strategy implementation process more effective are a high priority
in many companies.
Estimates suggest as many as 70% of new strategic initiatives in companies fail at the
implementation stage. Many companies now recognize that implementation capabilities are an
important corporate capability that requires detailed management attention.
IMPLEMENTATION PROCESS
A good implementation process spell out the
i. Activities to be implemented - ,
ii. Who is responsible for implementation,
iii. The time and location of implementation and
iv. How implementation will be achieved.
BARRIERS TO SUCCESSFUL IMPLEMENTATION OF MARKETING STRATEGY
There are many barriers that stand in the way of successful implementation of marketing
strategy, some evident, some not . The barriers fall broadly into three separate categories
a. External pressures of the organization – These are pressures emanating from the firm’s
external environmental i.e social, legal, economic, political, technological etc.
b. Internal pressures on the marketing function – These are pressures from within the
firm. These are :
i. Leadership – The ultimate success and implementation of any strategic plan
will depend on the degree to which top management buys into the process. This is especially
evident where strategic thrust of the plan involves any form of significant change. The
organizations leadership may be opposed to objectives of the marketing plan for a number of
reasons i.e they may be from non marketing disciplines, may feel that the need for change is not
yet apparent or simply be more comfortable with steady slate management style. Whatever
reasons, unless strong leaders are brought in to the vision and strategy completely, little progress
is likely to be made.
ii. Organization culture – There are many forms of organization culture and in
truth, few of these are customer or market focused. In organization with non market oriented
culture, the chances of successfully implementing a true marketing strategy must be limited.
Marketing in this type of firm tends to be all about marketing services often linked or even
subservient to all important sales functions. In product or production oriented organization, the
marketers role is to provide sales materials , product information and market analysis to support
the sales and production functions of the firm. The market or customer oriented organization is
the only one that sees the marketers role as the catalyst and change agent to focus the rest of the
organization activities or the one activity that really matters – the customers.

115
iii. Organizational processes – In many organizations, the existing organization

processes are simply not designed to be able to deliver the proposed marketing strategy as is
intended. Too many processes are designed for the convenience and administrative ease of those
that work in them rather than being designed in order to deliver satisfaction to customers. It is
unrealistic to design customer focused marketing strategy without spending sometime looking at
the organizations processes and ability to deliver on the promise that may be made to the
customers. When dealing with organizations, it is important to consider the ‘soft ‘ cultural
elements such as style , skills, staffing and shared values as well as the traditional ‘hard ‘ values.
iv. Functional policies – Functional policies and procedures determine how the
organizations’ staff manage day to day business activities. The intended marketing strategy may
fall short of these best practice functional processes and encounter a blockage on path of
implementation.
v. Resources - The proposed marketing strategy may require either the allocation
of significant additional resources to certain functions or even the appropriation of resources into
different areas of the organization. Successful implementation will depend on these resources
being available. The potential barrier here is likely to be either the resources simply not being
available or that senior management considers that other causes are more deserving.
Implementation takes place in an environment that is prone to changes hence it is important to be
flexible and build in an acceptable degree of contingency (additional resource to be called on)
within any implementation strategy.
vi. Evaluation and control procedures – lack of appropriate monitoring and
evaluation procedures in an organization will be a significant block to the successful
implementation of any strategy – What gets measured gets done.
Control ensures that what is supposed to be done is actually done. Astute management should
develop effective control systems.
c. Pressures within the marketing function itself – These are a number of aspects of the
marketing department or function which can also act as potential blockage to the
development and implementation of marketing strategy.
i. Marketing interface with other functions – How marketing interacts
with other functions will determine the successful implementation of the strategy.
ii. The role of marketers – The role played by marketers in their
organization determines the level of implementation of strategy. In a market/ customer oriented
organization, the role of marketer is to identify, anticipate and satisfy customer needs profitably.
Doing this needs much more than an in depth knowledge of advertising and promotional
methodology and techniques, the marketers key area of responsibility is to understand the
organizations customers and to feed this information back to the organization and other functions
so that people are able to act upon it profitably.
iii. Marketing feedback – Successful implementation of marketing strategy
depends on how much, how relevant and how good information is and how well it is
interpretated and acted upon. Information (not lots of data) is critical, information and feedback
on a plans progress is never 100% accurate but it does act to both reduce certainty in planning
and improve the quality of action. Customer’s information is the marketing powerbase, although
too few marketing professionals use it as such.
BUILDING IMPLEMENTATION EFFECTIVENESS
Managers are important facilitators in the implementation process and some are better
implementers than others. Planners and implementers often have different strengths and
weaknesses. An effective planner may not be good at implementing plans. Desirable
implementation skills include:

116
 The ability to understand how others feel and good bargaining skills
 The strength to be tough and fair in putting people and resources where they will be most
effective.
 Effectiveness in focusing on the critical aspects of performance in managing marketing
activities
 The ability to create a necessary informal organization or network to match each problem
with which they are confronted.
In additional to skillful implementers, several factors facilitate the implementation process.
These include:
 Organizational structure – Certain types of organizational structure aid implementation.
Product managers or multifunctional coordination teams are useful implementation
methods. Management may create implementation teams consisting of representatives
from the business functions and /or marketing activities involved. Flat, flexible
organization structures offer several advantages in implementation, since they encourage
inter functional cooperation and communication .These designs are responsive to
changing conditions.
 Incentives – Various rewards may help achieve successful implementation. Special
incentives such as contests,recognition and extra compensation are used to encourage
salespeople to push new products. Since implementation often involves teams of people,
creation of team incentives may be necessary. Performance standards must be fair and
incentives should encourage something more than normal performance. Focusing
incentives on the achievement of overall plan goals rather than individual efforts is
particularly relevant.
 Communications – Rapid and accurate movement of information through the
organization is essential in implementation. Both vertical and horizontal communications
are needed in linking together the people and activities involved in implementation.
Meetings, status reports and informal discussions help to transmit information throughout
the organization. Computerized information and decision support systems like corporate
intranets help to improve communication speed and effectiveness.
Problems often occur during implementation and may affect how fast and how well plans are put
into action. Examples include competitor’s actions, internal resistance between departments, loss
of key personnel, supply chain delays affecting product availability (e.g supply, production and
distribution problems) and changes in the business environment. Corrective actions may require
appointing a person or team for trouble shooting the problem, increasing or shifting resources or
changing the original plan.
MARKETING STRATEGY CONTROL

Control can be defined as attempting to guarantee behavior and systems conform to, and support,
predetermined corporate objectives and policies.
The basis of control is ability to measure. It compares what should happen with what actually
happened or is likely to happen. Given the importance of measurement, a tendency exists to
measure what is easy to quantify rather than what is important. Project managers must guard
against this and focus on the key areas. Good control systems often detect and rectify problems
before they become significant and managers should remember that prevention is better than
cure. It is important to be proactive rather than reactive.
The control process entails the following steps:
i. Set targets – ideally these is integrated into overall marketing planning.
ii. Predetermining the method of measurement- performance appraisal

117
iii. Measured results are compared with the predetermined targets and corrective action if
required is undertaken
Control should be carried out in both the inputs and the outputs. This helps management to
optimize the process and take strategic view. Typical inputs include:
 Finance: investments, working capital and cash.
 Operatives: capacity, usage, efficiency and application of machines, systems and other
assets.
 People: Numbers, quality and skills of staff.
Output is measured in terms of overall system performance. Performance is derived from
combination of efficiency and effectiveness.
 Efficiency: How well utilized are the inputs? Do we make maximum use of finances,
minimize cost and operate at optimal levels of capacity.
 Effectiveness: Are we doing the right things? This relates to actual performance and will
include sales revenue, profit, market share and measures of customer satisfaction.
It is better to pursue effectiveness.
WHAT MAKES AN EFFECTIVE CONTROL SYSTEM?
Control systems require careful design. Generic principles exist which are common to all
effective control mechanism. It is important to retain a degree of flexibility and common sense.
Six principles to ensure effective control.
 Involvement – It is achieved by encouraging participation in the process. Management
can achieve desired results through consultation. Staff could contribute to setting targets.
Their development needs could be considered along with the required tasks. Correctly
applied, this enhances morale, promotes ownership and develops skill base of employees.
 Target setting: The target criteria should be objective and measurable. How this is
assessed needs to be communicated and agreed in advance. Targets needs to be
challenging but achievable.
 Focus : It recognizes the differences between the symptoms and the source of the
problem. While it may be expedient to treat the symptoms, tackling the source of the
problem should eliminate it once and for all.
 Effectiveness: The tendency exists to measure efficiency as opposed to effectiveness.
Efficiency is the usage and productivity of assets. Effectiveness is about doing the right
things. In reality we tend to apply efficiency measures to areas easiest to measure. The
system should measure what is important not what is easy to quantify. The measurement
should be accurate, valid and consistent.
 Management by exception: Management attention is directed to areas of need. Identifying
what constitutes an exception to the norm is useful exercise in its own right. The process
involves setting tolerances and benchmarks for normal operations. Management action
becomes a priority when pre set limits are breached.
PROBLEMS OF CONTROL: Three problems are commonly associated with the control systems. The
system can be costly. The benefits of control and subsequent improvements are outweighed by the cost of
the control mechanism. This often relates to large bureaucratic systems- layer upon layer of
administration is built upon each. This is self serving rather than customer focused, often absorbing
resources that would be more effectively deployed in core activities.
· Control systems stifle effort and creativity – such systems promote uniformity and conformance to pre
set targets. They become barriers to innovation.
· Control promotes a view of inspection as opposed to developments- systems often deal with the
symptom rather than the root of the problem. This leads to constant fire fighting and looking for quick
fixes as opposed to developing a better overall method of operation. The effect is to filter and /or suppress
information from those with the power to radically overhaul a poor system.

118
SALES FORECASTING METHODS

INTRODUCTION: Any forecast can be termed as an indicator of what is likely to happen in a
specified future time frame in a particular field. Therefore, the sales forecast indicates as to how
much of a particular product is likely to be sold in a specified future period in a specified market
at specified price.
Accurate sales forecasting is essential for a business house to enable it to produce the re-
quired quantity at the right time. Further, it makes the arrangement in advance for raw materials,
equipment’s, labour etc. Some firms manufacture on the order basis, but in general, firm
produces the material in advance to meet the future demand.
Forecasting means estimation of quantity, type and quality of future work e.g. sales. For any
manufacturing concern it is very necessary to assess the market trends sufficiently in advance.
This is a commitment on the part of sales department and future planning of the entire concern
depends on this forecast.
The management of a firm is required to prepare its forecast of share of the market that it
can hope to capture over the period of forecasting. In other words, sales forecast is an estimate of
the sales potential of the firm in future. All plans are based on the sales forecasts.
This forecast helps the management in determining as to how much revenue can be expected to
be realised, how much to manufacture, and what shall be the requirement of men, machine and
money.
Thus we can define sales forecasting as, estimation of type, quantity and quality of future
sales. Goal for the sales department is decided on the basis of this forecast and these forecasts
also help in planning future development of the concern. The sales forecast forms a basis for
production targets.
From above, looking to its importance, it is essential that sales forecast must be accurate,
simple, easy to understand and economical.
Thus we can say that a sales forecast is an estimate of the amount of sales for a specified
future period under a proposed marketing plan or programme. Sales forecast can also been
defined as, an estimate of sales in terms of money or physical units for a specified future period
under a proposed marketing plan or programme and under an assumed set of economic and other
forces outside the unit for which the forecast is made.
IMPORTANCE OF SALES FORECASTING

1. Sales forecasting enables a business organization to work systematically.
2. Forecast enables the production manager to set target for his workers.
3. It enables the sales department to fix responsibilities on every salesman.
4. In the absence of sales forecast, a business enterprise may work without any focus and this
may result in wastage of its resources.
5. It helps to cut down wasteful expenditure and as a result the goods can be offered at a fair
price.
6. Sales forecast enables all the departments of the business to work together in proper co-
ordination and co-operation.
7. As target is set for each individual and department, it is easy to control performance.
8. Sales forecasting is vital for preparing budget.
9. It helps to determine the production capacity that is actually required.
10. Sales forecast helps in product mix decisions as well. It enables the business to decide
whether to add a new product to its product line or to drop an unsuccessful one.

119
METHODS USED FOR SALES FORECASTING:
The following are the various methods of sales forecasting:

1. Jury of Executive Opinion.
2. Sales Force Opinion.
3. Test Marketing Result.
4. Consumer’s Buying Plan.
5. Market Factor Analysis.
6. Expert Opinion.
7. Econometric Model Building.
8. Past Sales (Historical Method).
9. Statistical Methods.
1. JURY OF EXECUTIVE OPINION: This method of sales forecasting is the oldest. One or
more of the executives, who are experienced and have good knowledge of the market factors
make out the expected sales. The executives are responsible while forecasting sales figures
through estimates and experiences. All the factors-internal and external—are taken into account.
This is a type of committee approach. This method is simple as experiences and judgment are
pooled together in taking a sales forecast figure. If there are many executives, their estimates are
averaged in drawing the sales forecast.
Merits:
(a) This method is simple and quick.
(b) Detailed data are not needed.
(c) There is economy.
Demerits:
(a) It is not based on factual data.
(b) It is difficult to draw a final decision.
(c) More or less, the method rests on guess-work, and may lead to wrong forecasts.
(d) It is difficult to break down the forecasts into products, markets, etc.
2. SALES FORCE OPINION: Under this method, salesmen, or intermediaries are required to
make out an estimate sales in their respective territories for a given period. Salesmen are in close
touch with the consumers and possess good knowledge about the future demand trend. Thus all
the sales force estimates are processed, integrated, modified, and a sales volume estimate formed
for the whole market, for the given period.
Merits:
(a) Specialized knowledge is utilized.
(b) Salesmen are confident and responsible to meet the quota fixed.
(c) This method facilitates to break down in terms of products, territories, customers, salesmen
etc.
Demerits:
(a) Success depends upon the competency of salesmen.
(b) A broad outlook is absent.
(c) The estimation may be unattainable or may to too low for the forecasts as the salesmen may
be optimistic or pessimistic.
3. TEST MARKETING RESULT: Under the market test method, products are introduced in a
limited geographical area and the result is studied. Taking this result as a base, sales forecast is

120
made. This test is conducted as a sample on pre-test basis in order to understand the market
response.
Merits:
(a) The system is reliable as forecast is based on actual result.
(b) Management can understand the defects and take steps to rectify.
(c) It is good for introducing new products, in a new territory etc.
Demerits:
(a) All the markets are not homogeneous. But study is made on the basis of a part of a market.
(b) It is a time-consuming process.
(c) It is costly.
4. CONSUMERS’ BUYING PLAN: Consumers, as a source of information, are approached to

know their likely purchases during the period under a given set of conditions. This method is
suitable when there are few customers. This type of forecasting is generally adopted for
industrial goods. It is suitable for industries, which produce costly goods to a limited number of
buyers- wholesalers, retailers, potential consumers etc. A survey is conducted on face to face
basis or survey method. It is because changes are constant while buyer behaviour and buying
decisions change frequently.
Merits:
(a) First hand information is possible.
(b) User’s intention is known.
Demerits:
(a) Customer’s expectation cannot be measured exactly.
(b) It is difficult to identify actual buyers.
(c) It is good when users are few, but not practicable when consumers are many.
(d) Long run forecasting is not possible.
(e) The system is costly.
(f) Buyers may change their buying decisions.
5. MARKET FACTOR ANALYSIS: A company’s sales may depend on the behaviour of

certain market factors. The principal factors which affect the sales may be determined. By
studying the behaviours of the factors, forecasting should be made. Correlation is the statistical
analysis which analyses the degree of extent to which two variables fluctuate with reference to
each other.
The word ‘relationship’ is of importance and indicates that there is some connection between the
variables under observation. In the same way, regression analysis is a statistical device, which
helps us to estimate or predict the unknown values of one variable from the known values of
another variable.
For instance, you publish a text book on “Banking”, affiliated to different universities. The
permitted intake capacity of each and the medium through which the students are taught are
known. Is it a compulsory or an optional subject? By getting all these details and also by
considering the sales activities of promotional work, you may be able to declare the probable
copies to be printed.
The key to the successful use of this method lies in the selection of the appropriate market
factors. Minimizing the number of market factors is also important. Thus the demand decision
makers have to consider price, competitions, advertising, disposal income, buying habits,
consumption habits, consumer price index, change in population etc.

121
Merits:
(a) It is a sound method.
(b) Market factor is analysed in detail.
Demerits:
(a) It is costly.
(b) It is time-consuming.
(c) It is a short run process.
6. EXPERT OPINION: Many types of consultancy agencies have entered into the field of sales.
The consultancy agency has specialized experts in the respective field. This includes dealers,
trade associations etc. They may conduct market researches and possess ready-made statistical
data. Firms may make use of the opinions of such experts. These opinions may be carefully
analysed by the company and a sound forecasting is made.
Merits:
(a) Forecasting is quick and inexpensive.
(b) It will be more accurate.
(c) Specialized knowledge is utilized.
Demerits:
(a) It may not be reliable.
(b) The success of forecasting depends upon the competency of experts.
(c) A broad outlook may be lacking.
7. ECONOMETRIC MODEL BUILDING: This is a mathematical approach of study and is an

ideal way to forecast sales. This method is more useful for marketing durable goods. It is in the
form of equations, which represent a set of relationships among different demand determining
market factors. By analyzing the market factors (independent variable) and sales (dependent
variable), sales are forecast. This system does not entirely depend upon correlation analysis. It
has great scope, but adoption of this method depends upon availability of complete information.
The market factors which are more accurate, quick and less costly may be selected for a sound
forecasting.
8. PAST SALES (HISTORICAL METHOD): Personal judgment of sales forecasting can be

beneficially supplemented by the use of statistical and quantitative methods. Past sales are a
good basis and on this basis future sales can be formulated and forecast. According to
Kirkpatrick, today’s sales activity flows into tomorrow’s sales activities; that is last year’s sales
extend into this year’s sales. This approach is adding or deducting a set of percentage to the sales
of previous year(s). For new industries and for new products, this method is not suitable.
(a) Simple Sales Percentage:
Under this method, sales forecast is made by adding simply a flat percentage of sales so as to
forecast sales as given below:
Next year sales = Present year sales + This year sales/Last year sales
or = Present year sales + 10 or 5% of present sale
(b) Time Series Analysis:
A time series analysis is a statistical method of studying historical data. It involves the isolation
of long time trend, cyclical changes, seasonal variations and irregular fluctuations. Past sales
figures are taken as a base, analysed and adjusted to future trends. The past records and reports
enable us to interpret the information and forecast future trends and trade cycle too.

122
Merits:
(a) No guess-work creeps in.
(b) The method is simple and inexpensive.
(c) This is an objective method.
Demerits:
(a) ‘Market is dynamic’ is not considered.
(b) No provision is made for upswings and downswings in sales activities.
9. STATISTICAL METHODS: Statistical methods are considered to be superior techniques of

sales forecasting, because their reliability is higher than that of other techniques.
They are:
(i) Trend Method
(ii) Graphical Method
(iii) Time-series Method:
(a) Freehand method
(b) Semi-average method
(c) Moving average method
(d) Method of least square
(iv) Correlation method
(v) Regression method.
Merits of Statistical Method
1. It is an objective forecast.
2. No guess work is involved in it
3. It is simple to use.
Demerits of Statistical Method
1. It ignores market conditions.
2. It does not make provision for uncertainties.
APART FROM THE ABOVE, THE FOLLOWING FACTORS MAY ALSO BE

CONSIDERED:
1. Availability of raw materials
2. Plant capacity
3. Government policies
4. Buying habits of consumers
5. Fashion changes
6. Distribution system
7. Financial capacity
8. Market competition
9. National income movement
10. Sales promotions.
LIMITATIONS OF SALES FORECAST

1. The tastes and preferences of the buyers do not remain constant. A sudden change in the
preference of the buyers may render the forecasts meaningless.
2. The economic conditions prevailing in every country also do not remain stable. Purchasing
power of money, desire to save and invest etc., are some of the important economic factors
having a bearing on sales forecast.

123
3. The political conditions in a State also influence sales forecast. The policies of the
Government regarding business change often. A sudden hike in excise duty or sales tax by the
Government may affect sales.
4. The entry of competitors may also affect sales. A firm enjoying monopoly status may lose
such a position if the buyers find the competitors’ products more superior.
5. Progress in science and technology may render the present technology obsolete. As a result,
products which are right now enjoying a good market may lose market and the demand for
products made using the latest technology will increase. This is particularly true in the case of
market for electronic goods, computer hardware, software and so on.
FEATURES OF A GOOD FORECASTING METHOD

There are various methods of forecasting demand of product in market. Of them, some are very
costly and a few are cheap. Some forecasting methods are flexible and some require skill and
sophistication. Therefore, there is a problem of choosing the best method for a particular demand
situation.
What are the criteria of a good forecasting method?
They are:
1. Plausibility
The management should have good understanding of the technique chose and they should have
confidence in the technique adopted. Then only proper interpretation will be made.
According to Joel Dean, the plausibility requirements can often increase the
accuracy of the result. Accuracy entails the executives to accept the results. Experienced
executives will have a market feel and they can contribute effectively.
2. Simplicity
The method chosen should be of simple nature or ease of comprehension by the executives.
Elaborate mathematical and econometric procedures are less desirable, if the management does
not really understand what the forecaster is doing.
3. Economy
Cost is a primary consideration which should be weighed against the importance of the forecasts
to the business operation. There is no point in adopting very high levels of accuracy at great
expense, if the forecast has little importance in the business.
4. Availability
Immediate availability of data is a vital requirement in forecasting method. The technique should
yield quick and meaningful result. Delay in result will adversely affect the managerial decision.
To conclude, the ideal forecasting method is the one which yields good returns
and costs in accuracy meets new circumstances with flexibility.
GREEN MARKETING:
INTRODUCTION: The negative impact of human activities over environment is a matter of
concern today. Governments all over the world making efforts to minimize human impact on
environment. Today our society is more concerned with the natural environment. Understanding
the society's new concerns businesses have begun to modify their behaviour and have integrated
environmental issues into organizational activities. Academic disciplines have integrated green
issues in their literature. This is true with marketing subject too, and the terms like "Green
Marketing" and "Environmental Marketing are included in syllabus. Governments all over the
world have become so concerned about green marketing that they have attempted to regulate
them.

124
DEFINITION AND MEANING OF GREEN MARKETING

Definition according to American Marketing Association - "Green marketing is the marketing
of products that are presumed to be environmentally safe."
According to Polonsky 1994 b, 2 - "Green or Environmental Marketing consists of all
activities designed to generate and facilitate any exchanges intended to satisfy human needs or
wants, such that the satisfaction of these needs and wants occurs, with minimal detrimental
impact on the natural environment.
Green Marketing incorporates broad range of activities including product modification, changes
to the production process, packaging changes, and modifying advertising. Green
marketing focuses on satisfaction of customer needs and wants with no or minimum harm to the
natural environment.
WHY GREEN MARKETING IS IMPORTANT?

It is well known that increasing production and business activities are polluting the natural
environment. Damages to people, crops, and wildlife are reported in different parts of the world.
As resources are limited and human wants are unlimited, it is necessary for marketers to use
resources efficiently, so that organizational objectives are achieved without waste of resources.
So green marketing is inevitable. There is growing interest among people around the world
regarding protection of natural environment. People are getting more concerned for environment
and changing their behaviour for the protection of environment. As a result of this, the term
"Green Marketing" has emerged. Hence, marketers are feeling their responsibility towards
environment and giving importance to green marketing.
Not only marketers but consumers are also concerned about the environment,
and consumers are also changing their behaviour pattern. Now, individual as well as industrial
consumers are becoming more concerned about environment-friendly products.
EVOLUTION OF GREEN MARKETING
Green advertising term was initially talked about in a class on - Ecological Marketing sorted out
by American Marketing Association (AMA) in 1975 and had its spot in the writing. The term
green promoting became a force to be reckoned with in the late 1980s and mid-1990s. The
principal wave of green promoting happened in the 1980s. The unmistakable development for
the primary flood of green showcasing came as distributed books, both of which were called
Green Marketing. They were by Ken Pattie in the United Kingdom and by Jacquelyn Ottman in
the United States of America.
As indicated by Peattie, the development of green advertising has three stages.
To begin with stage was named as "Natural" green advertising, and amid this period all
promoting exercises were worried to help ecological issues and give solutions for ecological
issues.
Second stage was "Natural" green advertising and the attention moved on clean innovation
that included planning of inventive new items, which deal with contamination and waste issues.
Third stage was "Practical" green promoting. It became a force to be reckoned with in the late
1990s and mid 2000 concerned with growing great quality items which can address customers
issue by concentrating on the quality, execution, evaluating and comfort in a domain cordial
way.
ATTRIBUTES OF GREEN PRODUCTS

We can characterize green items by taking after measures
1. Products those are initially developed.
2. Products those are recyclable, reusable and biodegradable.
3. Products with common fixings.

125
4. Products containing reused substance and non dangerous synthetic.

5. Products substance under affirmed chemicals.
6. Products that don't hurt or contaminate nature.
7. Products that won't be tried on creatures.
8. Products that have eco-accommodating bundling i.e. reusable, refillable holders and so forth.
GREEN PRODUCTS IN INDIA

Wipro Info tech (Green It) was India's first organization to dispatch environment benevolent PC
peripherals.
Samsung, was the first to dispatch eco benevolent versatile handsets (made of renewable
materials) – W510 and F268-in India.
Oil and Natural Gas Corporation Ltd. (ONGC), India's biggest oil organization, has presented
vitality proficient Mokshada Green Crematorium, which spares 60% to 70% of wood and a
fourth of the blazing time per incineration.
Reva, India's own special Bangalore based organization was the first on the planet to financially
discharge an electric auto. Honda India presented its Civic Hybrid auto. ITC has presented Paper
Kraft, a premium scope of eco-accommodating business paper. Indusland Bank introduced the
nation's first sun based fueled ATM and in this manner realized an eco-savvy change in the
Indian saving money segment. Suzlon Energy produces and markets wind turbines, which give
an option wellspring of vitality in light of wind force. This green activity taken by the
organization is critical for decreasing the carbon impression.
GREEN MARKETING-CHALLENGES
In spite of the fact that an extensive number of firms are honing green promoting, it is not a
simple employment as there are various issues which should be tended to while executing Green
showcasing. The real difficulties which Green showcasing must be confronted are:
1. New Concept-Indian educated and urban shopper is getting more mindful about the benefits of
Green items. Be that as it may, it is still another idea for the masses. The buyer should be
instructed and made mindful of the natural dangers. The new green developments need to
achieve the masses and that will take a great deal of time and exertion.
2. Cost Factor-Green showcasing includes advertising of green items/administrations, green
innovation, green influence/vitality for which a ton of cash must be spent on R&D programs for
their advancement and resulting special projects which at last may prompt expanded expenses.
3. Convincing clients the clients may not put stock in the association's system of Green
promoting, the firm accordingly ought to guarantee that they embrace every single conceivable
measure to persuade the client about their green item, the most ideal choice is by executing Eco-
marking plans. Once in a while the clients may likewise not will to pay the additional cost for the
items.
4. Sustainability-Initially the benefits are low since renewable and recyclable items and green
advances are more costly. Green showcasing will be fruitful just in long run. Consequently the
business needs to anticipate long haul instead of transient methodology and plan for the same, in
the meantime it ought to abstain from falling into bait of deceptive practices to make benefits in
short term.
5. Non Cooperation-The organizations honing Green showcasing need to endeavor hard in
persuading the partners and numerous a times it might neglect to persuade them about the long
haul advantages of Green advertising when contrasted with fleeting costs.
6. Avoiding Green Myopia-Green showcasing must fulfill two goals: enhanced ecological
quality and consumer loyalty. Misinterpreting either or overemphasizing the previous to the
detriment of the last can be named green showcasing nearsightedness.

126
EVENT MARKETING
INTRODUCTION: At its core, marketing is communication. It is the ability to clearly convey a
message at the opportune time. Live events provide the opportunity for one to connect directly
with stakeholders and clearly communicate their message. It’s no wonder that event marketing
continues to grow as one of the most important marketing strategies for today’s big companies.
According to Forrester Research, events make up for 24% of the B2B marketing budget. By
2020, 3.2M global professional events will be taking place on an annual basis. Companies are
believing in the power of live events and this trend will only continue to grow in the coming
years.
Event marketing strategies leave a lasting, brand-focused impression of fun by grabbing the
attention of a group of people who are gathered together. If executed successfully, event
marketing will provide each of them with an experience that will resonate in their minds.
Event marketing is a promotional strategy that involves face-to-face contact between companies
and their customers at special events like concerts, fairs, and sporting events. Brands use event
marketing entertainment (like shows, contests, or parties) to reach consumers through direct
hand-to-hand sampling or interactive displays. The practice works because it engages consumers
while they’re in a willing, participatory position.
WHAT IS EVENT MARKETING?

Event marketing can be described as a promotional strategy which involves face-to-face contact
that the companies make with their customers at special events like concerts, musical shows,
fairs and sporting events. Such event marketing entertainments like shows etc. are used by
brands to reach consumers through direct hand-to-hand sampling or interactive displays. This
engages consumers and provides them value beyond information about the product or service.
It describes the process of developing a themed exhibit, display, or presentation to promote a
product, service, cause, or organization leveraging in-person engagement. Events can occur
online or offline, and can be participated in, hosted, or sponsored. The promotion of these
activities can occur through various inbound and outbound marketing techniques.
A successful event marketing campaign provides value to attendees beyond information about a
product or service. A discount, free sample, charity alignment, or fun event will make customers
feel like they are receiving a benefit and not just attending a live-action commercial.
In contrast to traditional advertising, which blasts millions of consumers with the same general
television, radio or billboard message, event marketing targets specific individuals or groups at
gathering spots, in hopes of making quality individual impressions.
The key to pulling off an effective event marketing campaign is to identify the target audience
correctly and create an experience that remains in participants’ memories. By finding an
opportunity to interact with the right demographic of people – both current customers and
prospective buyers – a brand can build favorable impressions and long-lasting relationships. The
best, most creative events create interactions that not only reflect positively on the brand at the
time, but generate a buzz long after the event is over.
Online events, such as webinars or live streamed workshops, vary in scope and prove to be just
as impactful as live events. Whatever the format, event marketing is a versatile and incredibly
effective strategy that builds long-term value upon relationships with clients and partners alike.
In fact, according to the Event Marketing 2018: Benchmarks and Trends report, the majority
of marketers (80%) believe that event marketing is the single-most effective marketing channel.

127
Customers feel that they are not just attending a live-action commercial but are receiving some
benefit when they attend such charity or fun events. Compared to mass traditional advertising
which targets the customers through the same TV, radio or billboard messages, event marketing
targets specific individuals at events hoping to make quality individual impressions.
The key is to identify the target audience correctly and create an experience for them that remain
in the participants’ memories thus creating long-lasting relationships. The most creative events
create interactions that along with creating a positive image for the brand at that time also
generate a buzz long after the event is over.
For example- credit card companies giving away free t-shirts at any football or cricket game in
exchange for a credit card application. Another example can be being surrounded by a sudden
flash mob put on by the local theater company in a crowded mall. All these acts are done to
attract the customer attention and leave lasting impacts on his mind.
WHY IS EVENT MARKETING IMPORTANT?

In today’s buyer-empowered world, marketers need to seize every opportunity to build
relationships, generate goodwill, and earn the trust of prospective buyers and customers. The
modern consumer wants more than a pitch when evaluating solutions or making purchasing
decisions. Events offer a unique opportunity for them to interact with brands to get a firsthand
sense of a company’s focus, perspective, and personality. Event marketing needs to be an
integral part of the demand generation mix, and a strategic combination of offline and online
events are essential to any company’s bottom line.
Event marketing is one of the best ways to:

 Build brand awareness
 Increase customer engagement
 Generate leads
 Educate prospects and customers
 Up-sell customers
REASONS TO USE EVENT MARKETING

Companies choose to participate in an event for various reasons. A small company may want the
exposure that a live webinar can provide, while a large company may need the face-to-face
interaction that a tradeshow affords.
1. Branding and Awareness
A key reason for a business to participate in an event is to establish and build its brand. Event
marketing allows your company to cultivate and express its identity firsthand. Through events,
you gain the perfect venue to share your ideas, thoughts, and name in the exact manner you want
to present them.
2. Lead Generation
Another important reason businesses choose to participate in an event is to generate leads. And
what better way to do so than to be part of an event where your target demographic is present?
The right event allows your company to interact with a group of prospects that already have an
interest in who you are and what you do.
3. Customer Engagement and Upsell
Events offer an unparalleled level of customer engagement, with an opportunity for positive
personal interaction that builds loyalty. Plus, every marketer knows that companies can realize
the biggest ROI on their marketing dollars by retaining and growing existing customers. The
challenge is to gain the attention of your customers amid the distractions of daily work. At

128
events, you enjoy the chance to upsell customers by introducing them to products and services
that they may not know about—or may not realize could address their needs.
4. Education
Most people attend events to network and be educated. Both are powerful draws in their own
ways. No matter what type of event you are at, it is critical to impart knowledge that the audience
will value—and that sets your company apart.
COMMON TYPES OF EVENT MARKETING

Events come in a large variety of flavors, and can be held in countless venues, whether online or
off. Below are some common types of events you can expect to participate in.
Online Events
Online events connect presenters and participants through a web-based interface. Common types
of online events include webinars, virtual events, and live streaming events. Online events are
often less costly than in-person events and can enable you to easily reach geographically
dispersed audience.
Webinars
Webinars revolve around presentations, discussions, or workshops that are delivered via the web.
They can happen in real-time or on-demand, and typically last from 30-60 minutes. Real-time
webinars enable interaction among participants, provide the opportunity to receive and discuss
information on a topic that is presented through web-based conferencing tools. Real-time
webinars can be interactive on many levels, and typically allow attendees to ask questions
directly to presenters.
Virtual Events
Virtual events enable individuals in different locations to participate in a virtual environment that
has the look and feel of an offline event, by combining education, networking, and interactive
features. Participants visit a virtual booth where they can collect materials, meet the staff, ask
questions, and even pick up some virtual swag. These programs tend to happen in real-time for
all participants.
Live Streaming Events

These are live events that you can stream to your viewers. You can conduct these with a simple
webcam or employ a full production crew for higher quality broadcasting. Applications such as
Livestream and Ustream, as well as new options like Google+ Hangouts, offer a live service that
allows you to fully stream, record, and engage your audience with chat and social media
functionality.
Physical Events
Offline events require physical attendance and interactions take place in person. While they often
require more investment than virtual events, offline events allow face-to-face relationship
building. Don’t underestimate the impact a handshake or a personal meeting can make on a
prospect or customer.
Tradeshows
A tradeshow is a physical gathering of individuals in a particular industry or profession in a
forum that typically features numerous companies in a specific market. A business may sponsor
or participate in a tradeshow to show off a product or simply to network and strengthen its
presence in a market.
Conferences

129
Conferences are often company-specific marketing events that gather attendees for the purpose
of delivering information such as a user summit. These events tend to be on the larger side, and
are held by companies for training or educational purposes.
Seminars
The term seminar is usually used to describe smaller meetings, roadshows, or field events. Some
seminars are set up similar to a classroom lecture, where an expert shares information with the
audience in a traditional more formal style. Others are styled as roadshows, where marketers take
their company’s message out to the public or to employees or partners.
Breakfasts, Lunches, and Dinners
These are typically smaller, more targeted events. They can be both customer and prospect
focused. These events are usually very intimate with 8-10 people, or can be larger with 50 or
more attendees. For the smaller functions, these tend to be high level and provide executives a
private setting for networking. On a larger scale, breakfasts, lunches, and dinners can include
thought leadership presentations as part of the event.
Meetups
Brands can sponsor a local meetup geared towards their target audience to build brand awareness
and engagement. These smaller, more intimate events offer brands a chance to network and build
relationships with locals. If you have a local business, meetups are a great place to offer specials
or promotions to generate new customers as well.
Appreciation Events
Showing your appreciation to your best customers by throwing an event can increase customer
satisfaction, retention, referrals, testimonials and even sales. Many times companies do this by
hosting a breakfast, lunch, or dinner around a conference that many of their customers will be
attending.
WHAT SHOULD I DO AT THE EVENT?
1) Promote Authentically: Soft-Sell with Demos
2) Engage with Customers
3) Use Real-Time Social Media
4) Hosts
5) Participants
6) Hosts and Attendees
HOW TO MEASURE EVENT MARKETING SUCCESS

In order to maximize the impact of event marketing strategies, it’s necessary to set the right goals
and utilize relevant KPI’s. Defining and measuring event success is just as important as the event
itself. Below are a list of ways to articulate event marketing goals followed by nine metrics to
properly measure event ROI, helping to ensure continued success.
SMART Goals
Before diving into the specific KPI’s, it is worth mentioning the S.M.A.R.T. acronym to help
you better understand how to achieve event marketing success. Defining goals with this method
will help you reach your desired results in the most efficient way possible.
1) Specific
2) Measurable
3) Achievable
4) Results-Oriented
5) Time-Bound

130
9 KPIS FOR MEASURING EVENT MARKETING SUCCESS

1) Registrations
2) Gross revenue
3) Attendee satisfaction
4) Attendee engagement
5) Social Media Mentions
6) Speaker page engagement
7) Total check-ins
8) Cost to revenue ratio
9) Customers acquired
5 EVENT MARKETING MISTAKES TO AVOID
You need to cover lots of details when it comes to events, and the best way to do that is to be
over-prepared. That said, it is easy to make mistakes when planning or hosting an event. Here are
some common ones to avoid and some ways that you can be as prepared as possible:
1. Going in Blind
Make sure you plan, plan, plan, and plan some more! Set proper expectations for the event,
including training your staff, reviewing messaging, and doing your research on the exhibitors
prior to arriving. Details matter. Events are a big investment, so make sure that everyone is on
top of their game and you know all of the detail prior to the actual event.
“Have a plan and a backup plan and a crisis escalation plan. Decide who can make what kinds
of decisions on the fly and make sure everyone knows the backup plan as well. And always have
walkie-talkies in addition to cell phones - cell coverage can get rapidly overwhelmed at events
and you have to have a back up.”
2. Not Knowing How Much Staff You Need
Ever attended a tradeshow where you feel like the staff outnumbers the attendees? Nothing looks
worse than having booth staff standing around and doing nothing. Not only does it decrease your
productivity, it also cuts down on the amount of real estate you have to hold a conversation with
your prospects. And it just looks plain bad. On the other end of the spectrum, you want to make
sure you have enough resources to effectively represent your company and engage with
attendees.
3. Forgetting Relevant Conversations
This is a tough one, since there is so much going on at an event. How can you remember
everything that was said if you had a good conversation with a very viable prospect? Make sure
each and every staff member logs the key points of each conversation. You can do this on the
back of a business card, a sheet of paper that you can staple to the business card, and many iPad
scanners now have the ability to save conversations directly in the app. This will make it easy for
you to insert notes into your CRM system for targeted follow-up based on your conversation.
4. Missing Deadlines
We all know that tradeshows are expensive. The cost of missing discount deadlines will come
back to bite you in the place that hurts most—your wallet. Many events offer early bird specials
for registration, shipping, hotels, A/V, etc. If you procrastinate you may end of paying double the
price. So plan early, and make sure you stay on top of all deadlines.
5. Not Standing Out from the Crowd
It doesn’t matter if you have the best looking booth—if it doesn’t draw traffic you likely won’t
be returning to the even next year. What have you done to promote your presence at the event?
Think of ways to create buzz. This can be in the form of social media, swag, games or contests,
etc. Remember, other exhibitors and sponsors at the event are trying to connect with the same
audience. Make sure you give that audience a reason to seek you out.

131
DIRECT MARKETING
In India, direct marketing is fast catching up as an instrument for promoting goods and services.
What is direct marketing (DM)? What are its different forms? Why is it becoming so popular?
To know more, read the following article.
When Shoppers’ Stop sends you a mailer detailing its latest season stock, what it is indulging in
is direct marketing. In simpler terms, direct marketing means, sending a promotional message
directly to consumers, rather than via a mass medium. Instead of putting up an advertisement on
television, when a mailer is sent directly, a direct communication has been established with the
customer.
Forms of Direct Marketing

Direct response advertising may be communicated in many forms: email, snail mail, telephone,
print, computer or any other interactive medium.
Impact
Direct marketing may lead to any one of the following three responses from the customer:-
 Inquiry (A credit card company calls you up and you make an inquiry about the interest
rate)
 Order (You place a order after reading a mailer sent by Shopper’s Stop)
 Contribution (The local politician sent you an appeal requesting you to vote for him and
you did so)
Need for Direct Marketing

With the rapidly escalating advertising spends, be it on television or radio by the various
companies; customers have almost reached their saturation limits with respect to this traditional
form of advertising. Many of them have also started distrusting the claims made by companies.
Popularity Scales
Direct marketing has become extremely popular due to the cost advantage. The typical spend on
television by high power brands like Lux or Ariel is in the range of Rs. 50-100 crores every year.
There is no way to objectively evaluate the return on investment. Every time an advertisement is
aired, marketers are not able to quantify, how much of the spend actually gets noticed and
propels the customer to make the purchase. Viewers are in the entertainment mode when they
watch television and given the high profile advertising these days, it is not clear which
advertisements actually register in the minds of viewers. An excess of 20 channels further
accentuates this dilemma as marketers have to grapple with the tough task of deciding the
channel on which to air their advertisement.
In such a scenario, the concept of direct marketing is an extremely lucrative option. When a
credit card company say ICICI sends you a mailer, the cost to the company is less than Rs. 1/-. If
the conversion rate is even 1 in every 100 which is a very pessimistic figure, the company has
spent less than Rs. 100/- on getting the mindspace of that one customer. Given a budget of 50
crores, ICICI can actually send more than 50 crore mailers and can hope to get more than 50 lakh
prospective customers to buy the product.

132
Thus, direct marketing is a very cost effective means of reaching the target audience.
In a developed country like the US, direct marketing has another advantage. Let us assume that a
company thinks of a new product offering. In India, the company would have to advertise on
television and this allows the competition to immediately catch up. However, when the new
product mix is offered to customers through mail, it takes some time for the competition to learn
of it and react.
But then the obvious question is why do companies not switch exclusively to direct marketing?
One of the reasons for companies not switching to direct marketing is the non-availability of
data. In developed countries like the US, every citizen has a social security number through
which they can be recognised. Databases are also available which contain the records of all US
citizens with their contact numbers and addresses. This kind of information is not available in
India and hence companies find it hard to contact the targeted group of customers in entirety.
To secure access to such data, companies sponsor events, wherein besides informing target
customers about their products, they also get the database of all visitors to the fair from the
organisers to further their direct marketing initiatives.
The size and geography of our country prevents companies from getting thorough information
about the customers. In a country such as ours, where a majority of people reside in the rural
areas, getting this information is quite a struggle.
Direct Marketing Media:
Direct marketing operates through the following media:-
 The telephone
This is probably one of the best media for direct marketing. Instead of depending upon a
mailer or a television advertisement to convince the prospective customer, the company
representative directly interacts with them and tries to clarify all doubts and
apprehensions that they may have.
 Kiosks
Kiosks are not very popular in India but work very well in the western world. When you
make a call at a ZIP Phone Booth or an ICICI ATM machine, you are faced with a little
more than just advertisements of different companies. Any further information you
require is available on clicking a few buttons.
 Emails
Most email users are faced with the ubiquitous junk mail. But when direct marketing
companies send you junk mail, its effectiveness is questionable, but it is definitely cost
effective. An issue that is raised is the customer irritation at unsolicited mail and the
consequent negative publicity it may generate.
 Mailers
This means of direct advertising is very regularly used. Banks, shopping malls and other
similar businesses send mailers informing you of their latest product offerings.
Potential in India
The potential for direct marketing in a country such as ours is huge. The only concern remains
getting information about the various customers in order to contact them.
Companies need to make substantial investments in getting databases of target customers and

133
once the data is in, they must cash on it by contacting the customers, offering them current
products, taking feedback on the products and making necessary changes to meet their
expectations.
Likely Sectors
In India most sectors dealing with consumer goods are likely to take to DM, the nature of using
direct marketing will also vary with the image the company wants to portray. For instance a
company like Mercedes would not use direct marketing to advertise its cars on kiosks the way
Hyundai does. Hyundai uses kiosks since their cars have the potential to be the first cars, which
people would buy and hence their target audience is a huge subset of the Indian population.
The top three industries likely to reap maximum benefits from direct marketing: –
 Retail industry: Direct marketing is an ideal medium for the retail industry. The reason
being the need of the retail industry to keep the customers informed of the latest
offerings, which they have to make. For this, the database can be generated through
loyalty programs, in which they procure the contact details of their regular customers and
keep in touch with them through telephone or mailers.
 Financial services: With the increasing awareness of financial service products,
companies may want to take first mover advantage by using direct marketing and then
hooking on to the customers by offering them different products.
 Banks: In India, since the disposable income of the people is constantly on the rise, a
number of banks offer credit cards and other loans. These services are very competitive
and have different offerings at different times of the year. Hence, these banking services
can also greatly exploit the advantages of direct marketing.
Media Spend Strategies:

Direct marketing does not make other forms of marketing void. If a new bank; say, Bank X has
to enter India and sell credit cards; we cannot expect the bank to initially adopt direct marketing.
The customers only seriously look at your offering if your brand name exists in the market.
However, for you to build that trust among customers, television is the starting point. Television
advertisements portray the seriousness with which the company is looking at the Indian market.
If the customer sees Bank X’s credit cards advertisements on television, then he will think that
the company is big and hence will then seriously look at the direct marketing claims made by the
company.
Thus, direct marketing must supplement the other marketing initiatives taken by the company.
Impact
While several economic advantages have been sighted, several direct marketing efforts tend to
fail because: –
 People get customers through direct marketing but do not know how to retain them, and
hence lose them blaming it on direct marketing
 Marketers are not serious about direct marketing. Some marketers who are not convinced
of this method, do not put in the required effort thus leading to poor results
 This method though cheaper, will get only individuals convinced. Hence, for a company /
industry which is looking at getting thousands of customers in the first month, this means

134
of marketing is not suitable. You would rather switch to television marketing which
though more expensive is much faster in reaching the audience
 Direct marketing requires constant maintenance of communication with the customer
because it sets an expectation in the customer’s mind that he will always be informed of
any new offer
To sum up, we see that the advantages of direct marketing are enormous and very cost effective,
provided the company believes in it and takes this marketing initiative very seriously. To sum it
all, whether any company takes it seriously or not, direct marketing is here to stay.
NETWORK MARKETING
INTRODUCTION: Network marketing is a mode of direct marketing by the manufacturer. It
consists of recruiting independent business persons who act as distributors of company’s
products. Each distributor can further engage sub-distributors who can further engage other
distributors and so on. Thus, a network of distributors is formed who operate at various levels.
Thus, network marketing is also called multilevel marketing
Network marketing distributors purchase products at wholesale prices, and may either use
discounted products themselves or retail the products to others for a profit. In addition,
distributors receive a monthly commission for their ‘personal volume’, which is the value of
every product they personally buy or sell. Further, the distributors receive a net commission on
the sales of those they recruit into the network. The sales developed from network marketing are
not developed solely from sales created by retailing, but also developed through recruiting or
sponsoring independent distributors. Thus, as distributors continue to recruit or sponsor new
distributors to expand their network, the new distributors will contribute new sales to the
network and gain commission in return. The multiplying effect on network marketing will
expand when these distributors continue their recruiting or sponsoring efforts. This multiplying
effect, an important element in the recruiting or sponsoring function, makes the network
marketing quite different from other types of direct selling involving paid sales persons.
Thus, under network marketing the product reaches the customers from the manufacturers
via distributors. No formal marketing infrastructure is required. The distributor’s compensation
includes a percentage of sales of those engaged by the distributor as well as earnings on direct
sales to customers.
DEFINITION: Network marketing, also known as multi-level marketing, is a business model

which involves a pyramid structured network of people who sell a company’s products. The
participants in this network are usually remunerated on a commission basis. That is, people in
this network get commission every time they perform the specified task, like –
 Make a sale of a product.

 Their recruits make a sale of the product.
In simple words, this model involves a pyramid structure of non-salaried participants who get
paid whenever they or a person below them in the pyramid makes a sale.
In this system, consumers are the participants. Their family and friends are their customers, and
this cycle goes on.

135
PROMINENT NETWORK MARKETING FIRMS IN INDIA

 Amway India
 Hindustan Lever Network
 Oriflame India
 Avon Beauty
 Tupperware India
CHARACTERISTICS OF NETWORK MARKETING

1. Direct Sales
Network marketing organizations sell their product directly don’t make use of any well-defined
channel of trade. The responsibility to sell the products is transferred to the non-employed
individuals (the participants) who get the commission everytime they make a sale.
2. Independent Business Owners (IBO)
The participants are called IBO as they work as if they are promoting their own business.
3. Selling Philosophy
This model involves participants to use the selling philosophy of marketing. The main focus is
on recruiting and selling as much as you can to earn more commission. No relationships are
built. People may even trick you to buy the products or to join them.
4. System Of Hierarchy
Suppose a person ‘A’ has a person ‘B’ under him. Now ‘A’ will get the commission whenever he
makes a sale and also a part of commission when ‘B’ makes a sale. Now, to earn more money,
‘B’ will also try to recruit a person ’C’ under him and so on. This makes the system a big
hierarchy.
5. Less Or No Advertising
Dependency on direct sales helps the organization to rely less on advertising as personalized
contact have more convincing power than advertisements.
6. No Fixed Salaries
This is a commission based network where participants (not employees) are paid commissions to
perform the specific task.
7. Accountability
Everyone is accountable only to himself. The more he sells, the more he earns.
8. Benefits To The Participants
Participants are also the consumers of the network. Hence, they also get discounts and other
attractive offers to when they join the network.

136
ADVANTAGES OF NETWORK MARKETING

Network marketing offers the following advantages:
1. The distribution network grows continuously.
2. It becomes easier to enter new markets through growing networks.
3. The distributor gets the product direct from the firm and hence, the material is always genuine.
4. Lower overhead costs as no infrastructure is required under network marketing. That is, the
distributor gets a chance to do business with the company without any investment or liability.
5. The network companies can maintain higher margins on their products.
LIMITATIONS OF NETWORK MARKETING

The limitations of network marketing are as under:
1. There is no direct link between the manufacturer and the customers. Thus, customer
relationships cannot be developed.
2. Sales forecasting is difficult. This often results in under or over stocking of various product
items.
3. Distributors often become the largest customers and hence take over the control of the
company.
4. It becomes difficult for the manufacturer to exercise effective control over his sales team.
Direct selling method in which independent-agents serve as distributors of goods and services,
and are encouraged to build and manage their own sales force by recruiting and training other
independent agents. In this method, commission is earned on the agent's own sales revenue, as
well as on the sales revenue of the sales-force recruited by the agent and his or her recruits
(called downline). Also called multilevel marketing (MLM), cellular marketing, or by other such
names, it is a multi-billion dollar worldwide industry that distributes practically any portable
item, although restricted or banned in several countries due to its history as a vehicle for
consumer fraud.
AN OVERVIEW OF NETWORK MARKETING:

Here we provide an overview of what network marketing is, how it works, and some educational
options that may prove beneficial for a career in network marketing. Network marketing, also
known as multi-level marketing (MLM), is a direct selling method that uses a network of people
to sell a product. According to the IRS, network marketers earn money either by directly selling
products themselves or by recruiting others to sell products for them. Those persons in turn
recruit others to sell the same product, and so on and so forth, until there is a hierarchy of
distributors who are selling and promoting the product, hence the term multi-level marketing.
Each distributor is essentially an independent business owner, or more accurately put, an
independent sales representative. Each representative gets paid for sales he or she makes, as well
as sales made by each person he or she has recruited. Network marketers often earn bonuses for
acquiring new distributors and customers and residual income on repeat business.

137
HOLISTIC MARKETING
Holistic Marketing Concept is probably the newest approach to marketing and the latest
business concept. It originated as a response to fundamental changes in the current marketing
environment (demographic changes, globalization, hypercompetition, Internet development,
corporate social responsibility, etc.).
Philip Kotler and Kevin Lane Keller define this holistic approach as follows: “A holistic
marketing concept is based on the development, design and implementation of marketing
programs, processes and activities that recognize the breadth and interdependencies. Holistic
marketing recognizes that ‘everything matters’ with marketing and that a broad, integrated
perspective is necessary to attain the best solution.”
Holistic marketing concept includes all elements of marketing mix 4P (Product, Price, Place,
Promotion), closely related to the marketing mix 4C (Consumer, Cost, Convenience,
Communication) and web marketing mix 4S (Scope, Site, Synergy, System).
Definition: A Holistic Marketing approach states that business is considered as a whole

wherein all the departments viz. R&D, Marketing, Finance, HR, etc. are integrated and work
collectively towards the marketing and sale of a product. This approach has recently gained
popularity because of the increased competition in the market where everyone is trying to create
the brand image in the minds of the customers.
Holistic marketing is based on 360-degree view approach, where ideas and suggestions from
everyone who are directly or indirectly related to the business are taken to match up with the
changing marketing trends. This approach has given equal importance to every department
which can contribute to the success of the product.
Generally, the research teams from R&D department check the performance of the product and
seek suggestions from the sales person to bring about a positive change in the product. In doing
so, the finance department is regularly consulted for the approval of the budget. The type of
person required for sale or marketing operations is informed to the HR department whose
responsibility is to recruit the suitable candidate. So here the holistic approach is followed where
everyone is working together to create a brand image in the minds of the customers and compete
with the other brands in the market.
According to both authors, the main four components of holistic marketing are:
1) Internal Marketing: Marketing between all the

departments in an organization. Internal
marketing means hiring, training, motivating and
inculcating business values in cable employees
who can serve customers well. This approach is
based on a general understanding that if
employees do not have full information about the
product then how we can expect them to convince
the customers to purchase it. Thus, internal
marketing is an important holistic marketing trait

138
that is prevalent at all the levels of the organization.

2) Relationship Marketing: Building a better relationship with your customers, internal
as well as end customers is beneficial for holistic marketing. Relationship marketing
focuses on building a strong and long-lasting relationship with all who can directly or
indirectly add to the success of an organization. The major parties in business can be
its shareholders, employees, channel partners, customers and financial institutions.
Thus, relationship marketing witnesses a strong bond between these parties by
understanding their needs, desires and goals.
3) Performance Marketing: Driving the sales and revenue growth of an organization
holistically by reducing costs and increasing sales. Performance marketing focuses on
the returns to the business from the marketing activities undertaken as well as the
effects of the same on the society as a whole. The marketer has to give answers to the
top authority for the amount spent on marketing activities along with its effects on
business.
4) Integrated Marketing: Products, services and marketing should work hand in hand
towards to growth of the organization. Integrated marketing means how well the 4 P’s
of the marketing mix (product, price, place, promotion) are synced to deliver the
efficient message to the prospective customers. What so ever communication tool viz.
Television, radio, public relations, prints advertising, m-commerce, email, etc. is
chosen by the marketer he must ensure that every tool contributes its maximum in
increasing the efficiency of the message. Integrated marketing, an important character
of holistic marketing must ensure that each communication tool must give real and
authentic information to the customer.
All the components of holistic marketing show that business works as a single unit wherein all
the functional departments work together towards the accomplishment of organizational goal i.e.
increasing sales.
5 BENEFITS OF HOLISTIC MARKETING

1) Attract New Business
2) Focus
3) Efficiency
4) Alignment
5) Your Company Uses Resources Smarter
Thus Holistic marketing is a concept which is organization wide and helps the growth of the
organization with the right marketing of the product. With the rise in competition and the limits
placed on customers with finite financial resources, decisions will be scarce and as an
organization we have to implement holistic marketing so that decisions are made by customers in
our favour.
EXAMPLE OF HOLISTIC MARKETING CONCEPT

An organization will have different departments like sales and marketing, accounting and
finance, R&D and product development and finally HR and operations. Thus, if you want to
implement a holistic marketing concept in your organization, you need to ensure that R&D and
product development take the feedback from marketing and sales to launch the product which is
most likely to attract customers.

139
On the other hand they need to work closely with accounting and finance to find out the
exact budget for the project. Sales and marketing need to communicate to the HR the right kind
of people that they need, and finally, admin and operations need to devise a plan to retain these
people.
Thus, in the above manner, you get the right product at a right price with the right profits.
Along with this you get the right people who will market your product in the right manner.
If you do all these things, you are sure to get the right customer to your doorstep. This is
the complete essence of holistic marketing concept. By doing the right things together as an
organization, your product and brand stands a far better chance in being successful than
compared to these elements working individually without any holistic vision.
Today, customer mindset is changing. Wealth is becoming lesser and debt is high. Thus
customer purchases are being made after lots of thinking. Customers search offline as well as
online for the right product and have good knowledge of the product before they purchase. It is
likely that the customer has already made a purchase decision even before he enters the
showroom. Thus holistic marketing concept is needed at this hour to ensure that the customer
chooses your product over everyone else.
A key driver of Holistic marketing is marketing communications. The job of marketing
communications is to send the right message to the target group. By approaching various
customer contact points, a uniform message can be sent to the customer. This consistency is
likely to raise confidence in the customer for your company thereby raising the brand image.
Samsung is an example of Holistic marketing where the products are developed keeping
the customer in mind, The showrooms are branded in the proper manner, the customer service is
polite and the service is fast. Thus Samsung is an excellent example of Holistic marketing.
PERMISSION MARKETING
INTRODUCTION: Have you ever said 'yes' to marketing messages from your favorite brand?
In all likelihood, you've said yes dozens of times; that's why your email inbox is bursting at the
seams!
Consumers understand that by giving their email address they're trading access to great deals for
a bit of marketing directed at their inbox. This strategy is known as permission marketing.
Permission marketing is a concept introduced in a book ‘Permission Marketing’ in 1999 by
marketing guru Seth Godin. Permission marketing is a non-traditional marketing technique that
sells goods and services when advance consent is given
WHAT IS PERMISSION MARKETING?

The term was coined by marketer Seth Godin who describes it on his website as, ''the privilege
(not the right) of delivering anticipated, personal and relevant messages to people who actually
want them.''
This is not the television ad you seen while watching the news or the billboard you encounter on
your commute home. These are purposeful, direct and targeted marketing messages to people
who have said ''yes'' to a brand.
Maybe it's a Facebook ad delivered to fans who have liked a social media account or a text
message about a sale to loyal consumers. Whatever it is, the audience has said they'd like to hear
more and has given permission to send content to them, perhaps by phone, email, text or social
media.

140
Permission marketing puts the power of messaging in the consumer's hand because they have to
want to receive marketing, which they generally do by signing up, subscribing, joining loyalty
programs or consenting to text messages about products or services.
However, just like a consumer can say ''yes'' to a message, they also have the power to stop the
communication at any time.
You've probably seen permission-based marketing in some of these scenarios:
 Subscribing to a brand newsletter
 Joining a business' text club
 Adding an RSS feed to your email
 Subscribing to blog posts sent to your email
 Opting in to a loyalty or rewards program
BENEFITS OF PERMISSION MARKETING

Say you own an online company that sells accessories. Once a customer has given you
permission to market your products to them, what does it mean for you as a marketer?
First, it means you've found a low-cost method of reaching consumers. Permission marketing is
based around digital delivery of messaging, such as e-mail, text alerts and social media posts. All
of those can be done at bargain basement prices.
Second, you have a captive audience. The people who have given you permission to 'talk' to
them are doing so because they want to hear from you. It's like they've said, ''Yes, please tell me
all about your brand/product/service.'' So, go ahead and deliver relevant messaging to them!
With that being said, relevance is key. Use the gift of your consumers' permission to give them
personalized and informative marketing. It will help build a relationship between your brand and
your audience. Don't forget to offer coupons or incentives that keep them interested and likely to
buy!
EXAMPLES
Permission marketing signifies an approach towards selling products/services where a prospect
has given explicit ‘permission’ to receive marketing information.
Some examples of permission marketing include:
 Opt-in emails where a user has signed up for newsletters

 Facebook ads delivered to fans who have liked a specific social media account
 RSS feeds
 Blog posts sent to users who have signed up through email
 The subscribing feature on Youtube channels
 Getting people to sign up to win annual sweepstakes, which in turn grants the business
permission to contact them as a part of their marketing efforts.
PERMISSION MARKETING TAKES THE OPPOSITE APPROACH.
Instead of constantly trying to interrupt the attention of everybody, permission marketing seeks
to find people that already care and then ask for permission to market to them.
As Godin explains, permission marketing consists of three characteristics:
 Anticipated: People want to hear your message.

141
 Personal: Your message is targeted to specific people.

 Relevant: People are interested in the topic you’re talking about.
As you build a relationship with your customer, you’ll be able to ask for more permission. And
as you build permission and trust with your prospects, you’ll be able to close sales at a much
higher success rate than interruption marketing. It’s exactly like dating
Seth Godin’s Five Steps to Dating Your Customers
Step 1: Offer an Incentive. Your goal is to broadcast your message and make it easy for people
in your target market to tell you that they’re interested. You’ll usually need to do this with some
form of interruption marketing like Google AdWords, banners, print ads, etc. You’re goal isn’t to
ask for the sale though, it’s to generate leads. You’re simply trying to figure out who’s
interested.
This is much easier to do if you offer an incentive. Don’t just tell people to email or call you,
offer them something for free like a white paper or ebook. Offer them something of value that
allows them to get to know you and trust you. You’re offering something that can help solve
their problems and they’re giving you the ability (permission) to keep marketing to them.
Step 2: Teach the Prospect Over Time. You’re not going to build enough trust after the first
interaction. You need to keep offering information that your prospects value a great deal. As they
see you fulfill your promises and provide genuine value, they’ll trust your brand even more.
This information should focus on the types of problems that your product or service solves. If
you sell pool supplies, teach people how to take care of their pool.
Step 3: Reinforce the Incentive. People become bored incredibly quickly. To avoid this and
keep your prospects engaged, you’l want to mix things up. Don’t simply give out the same type
of material in the same format. By offering a video or a free consultation instead of an ebook,
you’ll make sure you still have their attention.
Step 4: Increase the Level of Permission. Usually, this involves asking for more information
about your prospect through surveys, phone calls, or consultations. Your goal is to convince your
prospects to allow you to become more involved with their businesses or lifestyles.
Step 5: Ask for the Sale. Now that you’ve proven your worth and have established a
deep reservoir of trust with your prospect, close the sale. Your products will practically sell
themselves because you’ve already demonstrated that you follow through on your promises. This
entire process also filters out prospects that will never be interested in what you have to say.
Everyone that you pitch to will be highly qualified and much more likely to buy.
The Five Commandments of Permission Marketing
Godin outlines a set of five principles that you must follow, as a Permission Marketer, to be
effective:

142
1. As a Permission Marketer, you are a farmer and constantly need to work at harvesting
your crop/customers. An Interruption Marketer is just a hunter and tries to kill something
once with a single bullet.
2. Permission is a process, not a single moment.
3. Never breach the trust of your customer once they grant you permission to speak with
them by selling their data to someone else.
4. Frequency is always better than reach.
5. Give a prospect a reason to pay attention –- you have to offer an explicit reward,
information, education, entertainment, or even cold hard cash to get the customer to opt-
in to the message.
Permission Marketing requires you to understand the buying process of your customers and to
adjust your Marketing efforts around that, as opposed to expecting your persona to adjust around
you.
BENEFITS OF PERMISSION MARKETING

Say you own an online company that sells accessories. Once a customer has given you
permission to market your products to them, what does it mean for you as a marketer?
Permission marketing allows consumers to choose whether or not to be subjected to marketing.

This choice can result in better engagement. For example, consumers are more likely to open an
email marketing message if they "double opt in" compared to a regular "single opt in". By
targeting volunteers, permission marketing improves the odds that consumers pay more attention
to the marketing message. Permission marketing thus encourages consumers to engage in a long-
standing, cooperative marketing campaign.[13]
 Cost Efficient: Permission marketing employs low cost online tools – social media,
search engine optimization, e-mails, etc. Furthermore, by only marketing to consumers
who have expressed an interest, businesses can lower their marketing costs.
 High Conversion Rate: As the targeting audience are those who have expressed an
interest to the product, it is easier to convert the leads into sales.
 Personalization: Permission marketing allows businesses to run personalized campaigns;
it allows them to target specific audiences according to their age, gender, geographical
location, etc.
 Establish Long-Term Relationships with the Customer: Through the usage of social
media and e-mails, businesses can interact and build long-term relationships with the
customers.
 Maintains Marketing Reputation: Unlike Interruption marketing where consumers are
bombarded with marketing messages, Permission marketing only sends information to
those who are anticipating the information. Therefore, prospects who receive the
information do not feel discomfort.
LEVELS OF PERMISSION IN PERMISSION MARKETING
There are 5 levels of permission in permission marketing. These "levels" measure the degree of
permission a consumer has granted to a specific business. At each successive level of the
permission framework, the business achieves a higher efficiency state, with a decrease in
marketing cost. Thus, businesses usually aim to achieve the “intravenous permission” level.

143
However, the 5 levels of permission should not be considered as a necessary sequential process,
as more than one level could apply simultaneously depending on the nature of the business.[17]
 Situational permission: The prospect permits the business to come into contact by
providing their personal information.
 Brand trust: The prospect permits the business to continue supplying their needs.
 Personal relationship: The prospect’s permission is granted because of a personal
relationship that he/she has with someone in the provider organization.
 Points permission: At this stage, the customer has agreed to receive goods or services and
has allowed the business to collect their personal data. This is usually because they are
provided with incentives, such as exchangeable points or an opportunity to earn a prize.
 Intravenous permission: The supplier has now taken over the supply function for a
specific good or a service; the customer is completely dependent on the business.
THE PERMISSION MARKETING TOOLS
For a small business, it has never been easier to build a permission marketing platform. Here’s
some of the more popular tools:
 Email Lists
 Blogs
 Facebook
 Twitter
 Youtube
 Webinars
 Forums
Email is the most reliable way to provide information to prospects. You’ll always be able to
reach them at an exceptionally low cost to yourself. Just remember to respect the level of
permission someone has already given you. They may have given you permission to reach out to
them through email but that doesn’t mean you should spam their inbox with unrelated offers.
SOCIAL MARKETING
Definition of Social Marketing

According to Philip Kotler - Social Marketing is "the design, implementation, and control of
programs seeking to increase the acceptability of a social idea or practise in a target group"
According to W. Smith, Academy for Educational Development - "Social Marketing is a

process for influencing human behaviour on a large scale, using marketing principles for the
purpose of societal benefit rather than commercial profit."
Social marketing is based on tools and techniques of commercial marketing, it uses principles of
commercial marketing for the purpose of societal benefit. In social marketing,
advertising campaigns are designed, implemented, and controlled by using the principles

144
of commercial marketing. The key features of social marketing are taken directly from
commercial marketing, but the purpose of social marketing differs form the purpose of
commercial marketing. The purpose of commercial marketing is to increase sales and revenue,
but it is not so in the case of social marketing.
The purpose of social marketing is societal benefit rather than commercial profit. Its purpose is
to bring about positive health and social change. Its ultimate outcome is behavioural change
rather than increased sales.
Social advertising campaigns are advertising tools that attempt to influence attitude and
behaviour related to social cause. For example, social advertising campaigns have been used to
influence behaviour related to energy conservation, pollution, tobacco prevention, family
planning, breast cancer screening, and etc.
OVERVIEW OF SOCIAL MARKETING.
Social marketing is the use of commercial marketing principles and techniques to improve the
welfare of people and the physical, social and economic environment in which they live. It is a
carefully planned, long-term approach to changing human behavior.
Social marketing uses the same collection of tools to "sell" healthy behaviors that are used to sell
jeans. There are four basic principles of commercial marketing. They are referred to as the "4
Ps".
P1 - Product is what you are marketing. In social marketing the product is a behavior change or
a shift in attitude. For example, a campaign may be designed to increase condom use or to
convince adolescents that spreading rumors is harmful or dangerous.
P2 - Price is the cost. In social marketing, price is the cost of changing behaviors. It is difficult
to price the personal costs of using a condom when the individual commits to a new behavior
that had been identified as inconvenient, time consuming and embarrassing. The goal of social
marketing is to reframe the recommended behavior change so that the consumer realizes that the
benefits of change outweigh the efforts or costs.
P3 - Place is where and how the priority population can be reached. In social marketing, place
represents all efforts to make the behavior change as easy as possible to a consumer. It might
mean offering free or inexpensive condoms at convenient locations (i.e. schools, bars, or
restrooms) or changing a clinic schedule to accommodate busy students.
P4 - Promotion is the ways used to notify the public about the change messages. Advertising is
just one method to achieve this goal. A promotion campaign includes incorporating messages
about the recommended behavior change into all existing programs in the community in order to
reinforce the message on multiple levels.
Social marketing employs a fifth P that is not included in the commercial campaigns. This
special component of social marketing is:
P5 - Policy is the intent to influence policy that will not be punitive but will promote positive
behavior change.

145
WHY IS SOCIAL MARKETING IMPORTANT?
So what makes the concept of social marketing particularly important? Perhaps you've been
doing your work quite effectively for years without ever even hearing the phrase. That's actually
pretty likely; the phrase was only coined about 25 years ago.
There are three major advantages, however, which suggest that social marketing is worthy
of your consideration:
 It helps you reach the target audiences you want to reach.

 It helps you customize your message to those targeted audiences; and by doing so,
 It helps you create greater and longer-lasting behavior change in those audiences.
Bottom line? Social marketing is a good idea because it works.
STAGES OF A SUCCESSFUL SOCIAL MARKETING EFFORT
With that understanding of marketing in mind, let's turn now to the focal point of an effective
campaign--the consumer. People will have different ideas and beliefs at different times. For
example, among smokers, some may not believe smoking is that bad for them, others might
understand the risks but not care, still others may not want to take the effort to stop smoking, and
a final group of smokers may be actively trying to quit. A social marketing campaign will see all
of these beliefs (and their related actions) as part of a continuum, and try to move people along to
the next step.
The idea is that these changes won't happen overnight. Most people won't go immediately from
believing smoking is "cool" and not really understanding the health risks to quitting right away.
Instead, a social marketing campaign might start them thinking that it's not the best thing to do--
and after that idea has had time to turn around in their head for a while, another part of the
campaign will help them quit, and yet another part will help them remain smoke free.
How are these beliefs shaped and decisions made? Well, generally speaking, the following
activities need to occur:
 Create awareness and interest

 Change attitudes and conditions
 Motivate people to want to change their behavior
 Empower people to act
 Prevent backsliding
To clarify each, let's look at a step-by-step example.
In much of Africa, women have traditionally had many, many children; in such countries as
Nigeria, the average woman might bear as many as 12 children during her lifetime. A social
marketing message that has been widely disseminated, then, is have fewer children. This
message has been geared towards the goals of increasing women's health, and decreasing
overpopulation and famine.

146
 Create awareness and interest. The recipient must get the message, literally. You have
to get the recipient's attention. The message needs to be brought to women all over the
country, including village women who are generally illiterate, speak only a local dialect,
and who often don't have access to television or radios. Also, the recipient must
understand the message. Not only does the message need to be conveyed to the women in
a language they understand; it needs to make sense for the their lives as well. For women
in Africa, wealth and status have traditionally been tied up in how many children they
bear. The idea of having fewer children hasn't made sense because doing so would have
hurt their standing in the community, even if it would improve their health.
 Change attitudes and conditions. The recipient has to develop a positive attitude or
positive frame of mind about the behavior in question. With effective social marketing,
African women might come to think, "Maybe it is better to have fewer children."
 Motivate people to want to change their behavior. The recipient has to form an
intention to act on the basis of that attitude. It's not enough to just convince people that
something is a good idea. A leap needs to be made from thinking something is a "good
idea" to the stage of "I will do that." Think about it--how many of us think it would be a
really good idea to cut down on our fat intake, or get up at 5:00 a.m. to exercise? Social
marketing helps people move from attitude to intention, and beyond. For African women,
this might mean taking the leap to find out about birth control or planning to postpone
intercourse.
 Empowering people to act. The recipient has to act, i.e., convert that intention into
action. A woman or her partner needs to go to the clinic and get the birth control, and use
it.
 Prevent backsliding. Often, the recipient's action must be followed by reinforcement, by
the provision of some benefit for having acted, so that the desired action will be repeated.
How is her life better in a meaningful way for having fewer children? Will her friends
and family improve? Will she have more money? Can she go to school? Is she healthier
than her neighbors?
As we mentioned above, not every person will be at the same place on the continuum. It's like
they are at different points on a bridge, spanning from attention to action. The tasks of the
marketer are first to know who stands where on the bridge, and then to design messages to move
each targeted person or group one or more stages further along that bridge, in the direction of
desired action.
In Summary
Social marketing is a concept that's fairly new to the health and development field. Nonetheless,
it's an idea that shows immense promise, and can give you an excellent framework through
which your organization can do what you have set out to do: help individuals and society as
whole live better lives.
BEST OF LUCK!
by
SRCEM Palwal

Marketing Management

Uploaded by

Copyright:

Available Formats

Marketing Management

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Marketing Management

Uploaded by

Copyright:

Available Formats

1

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

MEANING & DEFINITION OF MARKETING

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

NATURE OF MARKETING / FEATURES OF MARKETING:

1) Marketing is a process: Marketing consists of a series of functions which are interrelated. It

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

control. Marketing is undertaken within existence of various environmental factors such as

CORE CONCEPTS OF MARKETING:

NEED/ WANT/ DEMAND:

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

Each party has something of value for other party.

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

PHILOSOPHIES OF MARKETING MANAGEMENT

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

ATTRACTING, RETAINING AND DEVELOPING

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

BUILDING CUSTOMER SATISFACTION, VALUE AND RETENTION

Total Customer Value

Total Customer Cost

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

Delivering High Customer Value

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

Nature of High-Performance Business

The High Performance Businesses

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

Value Delivery Network

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

· Must define and measure its retention rate.

CRM – Customer Relationship Management

Forming Strong Customer Bonds: The Basics

Increasing Company Profitability

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

VARIOUS FACTORS AFFECTING MARKETING FUNCTION

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

B) External Environment of Marketing.

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

MARKETING RESEARCH AND MARKETING INFORMATION

DEFINING MARKETING RESEARCH

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

WHAT KINDS OF RESEARCH ARE UNDERTAKEN?

WHY THE COMPANIES USE MARKETING RESEARCH

I. Managers Are Separated from Their Final Consumers

II. Marketers Need Information about their Final Consumers

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

APPLICATIONS OF MARKETING RESEARCH

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

LIMITATIONS OF MARKETING RESEARCH

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

MARKETING RESEARCH PROCESS

MARKETING INFORMATION SYSTEMS

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

Prepared By: - Mr.Azam Khalid- Assistant Professor, SRCEM, Palwal

1. Internal Records System: