Marketing

UNIT
01 Introduction to Marketing
Names of Sub-Units
Definition of Marketing, Importance of Marketing, Challenges in Current Era, Relationship with other
Functional Areas, Latest Trends and Issues in Marketing
Overview
The unit begins by explaining the meaning of marketing, its importance and the relationship of
marketing with other functional areas. Further, it discusses the differences between sales and
marketing, challenges in marketing in the current era and the latest trends in marketing.
Learning Objectives
In this unit, you will learn to:

 Summarise the meaning of marketing
 Describe the objectives of marketing
 Justify the difference between sales and marketing
 State the challenges in marketing in the current era
 Define the latest trends in marketing
JGI JAIN
DEEMED-TO-BE UNIVERSIT Y
Marketing Management and Research
Learning Outcomes
At the end of this unit, you would:

 Define Marketing
 Evaluate the Importance of Marketing
 Analyse the Objectives of Marketing
 Examine the Latest Trends in Marketing
 Identify the Relationship of Marketing with other Functional Areas
Pre-Unit Preparatory Material
 https://www.youtube.com/watch?v=kQsaPTvN4A8
1.1 INTRODUCTION
Apple Inc. is an iconic American multinational organisation that manufactures computers, computer
accessories, laptops, iPods and iPhones. It is widely considered as the best innovative company across
the world. The innovation strategy of the company mainly involves launching new products and using
new marketing strategies. The company provides innovative software with excellent hardware to its
consumers. Michael Lopp, the Senior Engineering Manager, Apple, states, “Really good ideas wrapped
up in other really good ideas”.
In Apple, the innovation leaders always strive to pace the company’s innovation for developing new
products to stay ahead of competitors. Competitors of Apple always find themselves behind in the
release of innovative products from time to time. Suppose, if the competitors chase one of Apple’s
products, then Apple introduces that product with innovative ideas in a short period or within months.
The new products that are developed by Apple are then promoted and marketed to bring them to
the notice of the customers. To promote products in the market, the company organises tech events
or advertises the products online and on television. Marketing of products is extremely necessary to
gain profit. Boston Consulting Group states, “The combination of product innovation and business
model innovation (BMI) put Apple at the center or a market approximately 30 times larger than its
original market. It also helped expand the company’s share of the traditional computer market, as new
customers became so attached to their iPods that they took another look at Apple computers.”
Today, marketing is embedded in everything you do from the websites you click on to the clothes
you wear and to the ads you see. Marketing is everywhere. On a daily basis, you encounter several
marketing communication messages; buy several products and services; are involved in numerous
customer services; receive various telemarketing calls and visit various shops, supermarkets and retail
outlets. While on one hand, you have already experienced the significance of marketing in our lives
as a customer, now you need to understand the role of marketing from a manufacturer or marketer’s
perspective, i.e., how to market products to consumers. To understand this, you must be aware of exactly
what marketing is.
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UNIT 01: Introduction to Marketing JGI JAIN
1.2 DEFINITION OF MARKETING

Marketing refers to a process of meeting and satisfying the needs and demands of customers.
Management, on the other hand, is a process that involves planning, organising, directing, motivating,
controlling and coordinating various functions and activities of an organisation. Thus, marketing
management is a term used for the management of the marketing function of an organisation. In other
words, marketing management is a business discipline focused primarily on the practical application of
marketing techniques for utilising, tracking and reviewing an organisation’s marketing resources and
activities. Effective marketing management utilises an organisation’s resources to increase its customer
base, improve customer satisfaction level by providing better products and services and increase the
organisation’s perceived value.
Marketing is a process that involves designing, implementing, formulating and controlling strategies
to facilitate the exchange of goods and services between organisations and customers. It helps an
organisation in identifying the needs and wants of customers and delivering goods and services to
satisfy those needs and wants.
The American Marketing Association defines “Marketing as a process of planning and executing the
conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that
satisfy individual and organisational goals.”
Philip Kotler defines “Marketing as the task of creating, promoting, and delivering goods and services
to consumers and businesses; it is defined as a societal process by which individuals and groups obtain
what they need and want through creating, offering, and freely exchanging products and services of
value with others.”
As a function, marketing keeps customers as the centre of all of its activities. Marketing deals with the
following major concerns:
 Identifying target customers
 Satisfying the customers
 Retaining the customers
 Growing the customers
1.2.1 Importance of Marketing

Marketing is an enormous subject and different people perceive the concept of marketing from different
points of view. The significance of marketing is as follows:
 Marketing focuses on customers: Customers are the central theme for all marketing activities.
Organisations develop their offerings according to the needs and demands of customers. Usually,
organisations focus on developing their offerings for a specific group of customers or target
market. However, a few organisations focus on more than one target market with various product
mix, promotion mix, prices and distribution systems to meet specific needs of the respective target
markets.
 Marketing focuses on satisfying exchange relationships: Exchange is the core process that takes
place between customers and organisations in terms of the transfer of any goods or services against
money. Four conditions determine the successful functioning of any exchange process. They are as
follows:
 There must be two or more parties to participate in the exchange process. In addition, each
party must have something of value that the other party desires.
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 There must be the occurrence of satisfaction or benefit-generation to both the parties after the
completion of the transaction process.
 Each party should feel confident enough in concluding that they have ‘something of value’.
 The exchange process must meet the expectation level of both parties as it is the only means of
building trust.
 Marketing happens in a dynamic environment: Marketing is a process that takes place in an active
environment. The environment includes various factors, such as political, economic, socio-cultural,
technological, legal, demographic and global factors, which are better known as factors of the
external environment. It is the dynamism of any environment that makes marketing challenging
and interesting. There are a few other factors, such as organisation, suppliers, distributers, dealers
and target customers that create an internal environment for any organisation as they affect the
production, distribution and promotional aspects of the organisation.
1.2.2 Objectives of Marketing

The marketing strategies of an organisation are designed in tune with various marketing objectives
that aim at:
 Creating demand for products by identifying the needs and wants of customers.
 Increasing the market share of the organisation.
 Building the goodwill of the organisation in the market.
 Increasing profits and achieving long-term goals through customer satisfaction.
 Satisfying the clients’ requirements and their objectives.
 Leveraging the gain for the growth of the business.
 Developing customer base for the business.
 Creating an appropriate marketing mix.
 Raising the quality of life of people.
 Building a good image of the organisation.
 Maintaining the long-run concept.
1.2.3 Scope of Marketing/ Relationship of Marketing with Other Areas

In recent years, the scope of marketing has increased to a greater extent. There are various areas where
the concept of marketing can be applied. Let us discuss some of these areas:
 Goods: These include consumer and industrial goods. Goods are defined as tangible entities that can
be felt or touched, such as cars, television and machines.
 Services: These are intangible offerings that cannot be seen and touched but provide value to the
customer. Examples of services are banking, education, transportation, healthcare and laundry.
 Experiences: Marketers try to entertain their customers by providing an in-depth experience with
products/services. For example, entertainment parks give customers a delightful experience of rides
and games. This type of marketing is called experiential marketing, which focuses on marketing
strategies that influence the purchasing decisions of customers.
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 Events: These involve the marketing of shows, seminars and functions. These events help
organisations in gaining goodwill and recognition in society and help in promoting their products/
services.
 Persons: These include artisans, musicians, politicians or celebrities, who market themselves to gain
publicity. These persons show their talent to gain a brand image in society. This type of marketing is
called celebrity marketing.
 Places: These include cities, states, regions and historical places. The marketers, such as real estate
agents, commercial banks and advertising agencies, promote their location to attract tourists,
residents and organisations.
 Properties: Properties are of two types, such as real estate property (a house) and financial property
(a stock). One can sell such properties with the help of real estate agents, investment organisations
or banks.
 Information: It includes meaningful content presented in newspapers, encyclopaedias, magazines
and other sources. Universities and schools indulge in distributing information to students at a
certain price. The Internet is an extensively used source of information.
 Ideas: These are intellectual thoughts, which can benefit customers. Ideas include concepts and
philosophies on various issues. For an organisation, an idea can be in the form of a blueprint of a
business plan/project. In the social context, an idea may aim at creating awareness about issues,
such as AIDS or family planning.
1.3 DIFFERENCES BETWEEN SALES AND MARKETING

Sales are transaction-based whereas marketing focuses on winning and retaining the customers for a
longer period. Sales and marketing mainly share a common goal to maximise an organisation’s revenue
but they both differ in functions and processes.
Sales refer to the exchange of products and services for money or money’s worth whereas marketing
refers to the activities that start with the market research and ends with consumer satisfaction.
Marketing fulfils the needs of the customers and sales are concerned with reaching the organisation’s
sales targets and ultimately focus on fulfilling organisation’s needs.
Marketing tends to recognise the customer’s needs wants and demands, to satisfy them profitably.
Conversely, a sale is about pushing the company’s products and services onto the customers, by
convincing them to buy. Table 1 shows the difference between sales and marketing:
Table 1: Difference between Sales and Marketing
S. No. Sales Marketing

1. It is the process of selling, whereby product is It is the process of understanding the requirements
offered for sale to the customer at a certain of the customers in such a way that whenever any
price and a given period new product is introduced, it sells itself
2. It is product-oriented It is customer-oriented
3. It uses a fragmented approach It uses an integrated approach
4. It focuses on organisation’s needs It focuses on market needs
5. It is related to the flow of goods to customers It is related to all the activities which facilitate the
flow of goods to customers.
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S. No. Sales Marketing

6. Its duration is short term Its duration is long term
7. Its objective is to instigate shoppers in such a Its objective is to identify the needs of customers and
way that they turn out as buyers. create products to satisfy those needs.
8. Its target is an individual or small group Its target is the general public
9. Its scope is the selling of the product. Its scope is an advertisement, sales, research,
customer satisfaction and after sales services.
10. It uses a push strategy It uses a pull strategy
1.4 CHALLENGES IN MARKETING IN THE CURRENT ERA

If marketing decisions are taken after considering all the aspects of ethical practices, organisations can
generate higher revenues, improve brand recognition, boost employee motivation and attract investors.
Let us now discuss major issues or challenges related to marketing:
 Product-related marketing issues: These issues occur when marketers fail to provide their
customers with information related to products, such as features, value, usage and associated
risks. Such failure on part of an organisation is regarded as a dishonest practice. For example,
organisations selling weight management products can claim that the product can make them slim
within a specific period. Such organisations may make exaggerated and manipulative claims to
trick customers to purchase products. Product related marketing issues may also relate to:
 Packaging and labelling practices
 Maintaining quality standards for products
 Product safety
 Promotion-related marketing issues: Due to the fast growth of communication mediums, mass
media has the power to promote the image of a brand or an organisation if properly used. It
helps in promoting products and other offerings, which are produced and distributed to a large
audience. It is, therefore, important not to overlook social, ethical and legal aspects of promoting
a product or service through mass media. An extensive body of laws has been developed by the
government to govern unethical practices, used in promotional techniques. For instance, Indian law
prohibits advertisements that promote the usage of cigarettes and alcoholic drinks. In addition, all
advertisements that hurt morality, decency or religion directly or indirectly are strictly prohibited
as per Indian law. Wrong and misleading information on any product or service that can cause loss
or injury to consumers is considered to be unfair trade practices. Let us discuss major issues at the
product/service promotional level:
 Deceptive advertising
 Sales promotion gimmick
 Price-related marketing issues: Every customer wants to pay a fair price for the product purchased
by him/her. If marketers indulge in unethical marketing practices, they may lose customers forever.
There are various unethical pricing policies followed by various organisations. Some of them are as
follows:
 Price fixing is an unethical way of fixing the price of a product or manipulating the economic
market conditions. Usually, price fixing can be of two types:
(a) Vertical price-fixing refers to an arrangement which is illegal and parties at various levels of
a production and distribution system act to fix the product’s market price.
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(b) Horizontal price-fixing is also an illegal arrangement where several competitors pre-decide
to sell a product at the same price.
 Bid rigging: It is a kind of fraud where competitors decide in advance about one party who will
submit the winning bid on a commercial contract. Here, other parties present their bids just for
the sake of making a presence.
 Price war benefits customers, but not marketers. As one competitor lowers the price, the other
follows the same strategy. It is followed by a series of price reductions.
 Deceptive pricing is an act of pricing products/services to intentionally mislead customers while
performing price promotion. It is counted as an illegal pricing practice under Federal Trade
Commission Act, 1914 and Wheeler-Lea Act, 1938.
 Superficial discounting is one form of deceptive pricing where an organisation advertises
discounted prices; however, the product is always sold at the same price.
 Unfair pricing is an unethical pricing strategy that is usually followed by monopolist sellers. If
the number of buyers is more than the number of sellers, the sellers usually follow this pricing
strategy for their products/services. They charge high prices for their products/ services even
if it comes with basic features. In unfair pricing conditions a buyer usually stops purchasing
products/services from the monopolistic vendor as they feel the price is too high. In other words,
unfair prices may lead a customer not to make purchases.
 Price discrimination is another unethical pricing strategy where organisations charge different
prices to different customers.
 Distribution-related marketing issues: Issues in distribution can occur between suppliers,
producers and distributors in terms of manipulating product availability, selling surplus inventory
to wholesalers and retailers at higher rates, forcing other intermediaries to behave in a specific
manner, etc. These issues may result in increased prices, misled investors and fluctuations in
demand.
In the current scenario, the following are the major challenges in marketing:
1. Getting new clients and increasing client base
2. Retaining old and new clients
3. Keeping up with advertisement platform changes
4. Managing time
5. Hiring and training new employees
1.5 LATEST TRENDS IN MARKETING

The latest trends in marketing are online marketing, content marketing, social media marketing, email
marketing and relationship marketing. Let us understand the latest trends in marketing in detail:
 Online marketing: Online marketing is an e-commerce technique that allows consumers to purchase
products and services using the Internet. It saves time and effort for both marketers and customers.
To ensure the success of online marketing, marketers need to maintain interactive websites and adopt
advanced technology. The term ‘online marketing’ is used synonymously with ‘online shopping’ and
‘online retailing.’ Online marketing has not only ensured the growth of marketers but also helped
marketers to reach out to the maximum number of consumers in a short period. In recent years,
India has also witnessed a significant impact on Internet marketing. Various online marketers, like
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eBay, Amazon, Flipkart, Myntra and Jabong, have reached maximum Indian customers within a
very short period.
 Content marketing: Quality content is important for digital marketing. Content that addresses
the keywords that your audience types on search engines is pivotal for the success of the digital
marketing strategy. Content marketing involves adding a Call to Action (CTA) button, recycling past
content, getting backlinks, etc., to navigate the website at the top of search results on the search
engines.
 Social media marketing: These days more than 2.3 million people are on various social media sites or
mobile apps, which makes social media a vital digital marketing tool. Social media marketing helps
in connecting with more and more potential consumers. It delineates the behaviour of potential
consumers, their interests and key trends in the market. Social marketing is a technique used along
with commercial marketing activities for improving the welfare of the people along with benefiting
the social, physical and economic conditions of the environment as a whole. These are activities
that are well planned and are undertaken as a long-term approach for changing or maintaining
people’s behaviour. It is based on the fact that satisfied customers will keep returning to use the
organisation’s offerings and will provide positive feedback to other people. In the 1970s the principles
of social marketing had started with commercial marketing activities being used to sell products to
consumers. Philip Kotler and Gerald Zaltman discovered that the same marketing principles can be
used for selling ‘ideas, attitudes and behaviours’ to the consumers.
According to Kotler and Andreasen, social marketing is “differing from other areas of marketing
only concerning the objectives of the marketer and his or her organisation. Social marketing seeks
to influence social behaviours not to benefit the marketer, but to benefit the target audience and the
general society.”
 Email marketing: Sending personalised mails to the targeted audience is a lead-nurturing strategy
adopted by organisations. E-mail marketing is an important component to maintain a long-term
relationship with consumers. Organisations nowadays send follow-up mails; special discount offers
over mails and specially customised mail on festivals to their potential leads.
 Relationship marketing: It is an important part of customer relationship management (CRM)
that emphasises customer loyalty and satisfaction based on a close relationship with customers.
Relationship marketing focuses on a long-term relationship with customers rather than a shorter-
term one for maintaining their profitability. The important features of relationship marketing are
as follows:
 Focus on building and maintaining profitable and long-lasting relations with the customers and
 Creating superior customer value and customer satisfaction.
 Aims on the co-operative and collaborative relationship between the product and its customer
 Ensures putting the customer first through effective customer involvement for increasing brand
value, sales volume, market share and profits
 Sharing of knowledge through various modes of communication
 Building a long term relationship and not as a one-time purchaser
 If the customer is taken care of, sales volume, market share and profits will grow.
 Makes use of Information technology and database, interactivity through websites, call centres
and other means for connecting with the customers.
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 Service marketing: It is different from marketing physical goods. It is relatively a new concept,
which has gained importance as a discipline of study towards the end of the 20th century. Some
major features of service marketing are:
 Service marketing focuses on selling services.
 Service marketing is an integrated process by which an organisation creates customer interest
in services.
 Service marketing focuses on making strategies related to sales techniques, communication and
business development.
 Service marketing includes issues related to marketing activities like what is being offered, what
is the price, how it compares to similar services and why customers should select a particular
service over other options.
Some examples of service marketing include marketing of services, like communication services,
banking services, hospitality services, rental services, professional services and emergency services.
Conclusion 1.6 CONCLUSION
 Marketing refers to a process of meeting and satisfying the needs and demands of customers.
 Effective marketing management utilises an organisation’s resources to increase its customer base,
improve customer satisfaction level by providing better products and services and increase the
organisation’s perceived value.
 Marketing deals with the following major concerns:
 Identifying target customers
 Satisfying the customers
 Retaining the customers
 Growing the customers
 Sales are transaction-based whereas marketing focuses on winning and retaining the customers for
a longer period. Sales and marketing mainly share a common goal to maximise an organisation’s
revenue but they both differ in functions and processes.
 Online marketing is an e-commerce technique that allows consumers to purchase products and
services using the Internet.
 Various online marketers, like eBay, Amazon, Flipkart, Myntra and Jabong, have reached maximum
Indian customers within a very short period.
 Content marketing involves adding a Call to Action (CTA) button, recycling past content, getting
backlinks, etc., to navigate the website at the top of search results on the search engines.
 E-mail marketing is an important component to maintain a long-term relationship with consumers.
Organisations nowadays send follow-up mails, special discount offers over mails and specially
customised mail on festivals to their potential leads.
 Relationship marketing is an important part of customer relationship management (CRM) that
emphasises customer loyalty and satisfaction based on a close relationship with customers.
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 Service marketing is different from the marketing of physical goods.

 Some examples of service marketing include marketing of services like communication services,
banking services, hospitality services, rental services, professional services and emergency services.
1.7 GLOSSARY
 Exchange: A process of obtaining the desired product from someone by giving something of value
in return
 Market: A place where organisational activities are carried out
 Needs: The basic requirements, such as food, clothing and shelter of customers
 Offerings: Any set of benefits that an organisation offers to its target customers to satisfy their
needs
 Value: The benefits and costs associated with a product offered to the customer
1.8 CASE STUDY: AMAZON.COM –THE ONLINE MARKETING LEADER
Case Objective
This case study aims to describe the marketing techniques used by Amazon.
In 1994, an online bookstore named after the world’s biggest river, Amazon, was set up in Seattle,
Washington. No one could imagine that in 10 years, it would become the largest online retailer in the
world. Today, Amazon is one of the most profitable and biggest online retailers in the world, offering
diverse products, such as books, apparel, beauty, electronic items, video games, furniture, food and toys.
By charting its success path, it has paved a way for online retail business in a major way. Amazon was
formed when its founder, Jeff Bezos came upon an innovative idea.
Although he did not have any prior experience in the online retail business, he realised huge business
potential in selling books online. He realised that an online bookstore can accommodate much more
titles than a brick-and-mortar store. He also understood that an online bookstore enables customers to
order any book of their preference.
Jeff founded the first virtual store of Amazon in 1995 with more than 1.1 million titles. In the initial years,
Amazon did not have its delivery network. After receiving a customer’s order, Jeff would use his vehicle
to deliver products to the post office so that they could reach customers. In 1997, Amazon went public
on NASDAQ by raising more than USD 50 million. By December 1998, an online retail store reached a
market value of USD 5.5 billion.
Today, there are so many products and services such as books, movies, music and games along with
electronics, toys, apparel, sports, tools, groceries and general home and garden items are provided by
Amazon.com Amazon is a great example of an Online business which has attempted to close service
gaps to thoroughly meet consumer expectations.
In this case study, let us discuss what marketing techniques Amazon uses that make it an online market
leader.
Understanding Customer Needs

From the time, the customer starts to shop at Amazon’s online store, Amazon attempts to understand
their expectations. This process begins right at the beginning when a customer first makes a product
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selection. At this point, Amazon creates a consumer profile and attempts to offer alternative goods and
services that may delight the customer. Following that, throughout the customer experience, Amazon
continues to try and identify customer preferences and needs.
Customer Defined Standards

When a customer buys a product from Amazon, they select the mode of delivery and the company tells
them the expected number of days it will take to receive their merchandise.
Details: Standard shipping is three to five days but shipping in one or two days is also available. The
company has set standards for how quickly customers are informed when a product is unavailable
(immediately), how quickly customers are notified whether an out of a print book can be located (three
weeks), how long customers can return items (30 days) and whether they pay return shipping costs.
Amazon has started its new service ‘Amazon Prime’, under which it provides unlimited free fast delivery,
videos and music facility. Prime members enjoy unlimited free, fast delivery on eligible items, video
streaming, ad-free music and exclusive access to various deals.
Another new service started by Amazon is ‘Amazon Pantry’, which is based on the concept of the online
supermarket and offers customers to buy grocery and household items at cheaper rates. Customers can
fill a virtual box of items from the Amazon Pantry store and have items delivered the next day to his/her
doorstep. The delivery charge is `30 for Prime customers and `59 for non-Prime customers. However,
if the Pantry order value is above `599, the delivery is free. These standards exist for many activities at
Amazon from delivery to communication to service recovery.
Service Performance
Amazon believes in gaining service performance excellence. Orders often arrive ahead of promised dates;
orders are accurate and are in excellent condition because of careful shipping practice. Customers can
track packages and review previous orders at any time. Amazon also makes sure that all its partners
who sell used and new books and other related items meet Amazon’s high standards. The company
verifies the performance of each purchase by surveying the customer and posting scores that are visible
to other customers. Managing promises is handled by clear and careful communication on the website.
Every page is easy to understand and navigate.
Forexample, thepagewhichisconsideredwiththereturnstriestominimisecustomer’smisunderstanding
by clearly describing what products or services can be returned or refunded. The page also highlights
the ways to repack items and when refunds are given. The customer account page list down the previous
purchases made by the customers and helps the customers to locate exactly where every ordered item
is in the shipping process.
Conclusion
The marketing strategy of Amazon brand is known worldwide. Amazon has an effective product
management which includes multiple business strategies, skills and tasks. Product managers of Amazon
plan to develop the best products and operational excellence for maximising following things:
 customer satisfaction
 loyalty
 retention.
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By recognising and closing gaps helps in extending high quality customer service to customers and
achieve goals while increasing the market position, market share and financial results brings customer
satisfaction. It enables the managers to recognise areas of weakness and make improvements to a
company’s service delivery.
Questions
1. Explain how Amazon works on understanding customers’ expectations.
(Hint: As an online marketer, Amazon creates a customer profile and attempts to offer alternative
goods and services that may delight the customer)
2. Describe Amazon’s service performance.
(Hint: deliver the order before the expected delivery date, package tracking)
3. What do you understand by customer’s defined standards?
(Hint: selection of delivery mode, method of payment)
4. Write a short note on strategies that Amazon undertakes for successful online marketing.
(Hint: effective product management, recognising and closing gaps, offering high quality customer
service to the consumer)
5. Summarise the case in your words as per your understanding of the case study.
(Hint: Amazon is one of the world’s most profitable and biggest online retailers, started its new
service ‘Amazon Prime’)
1.9 SELF-ASSESSMENT QUESTIONS
A. Essay Type Questions

1. Today, marketing is embedded in everything you do from the websites you click on to the clothes you
wear and to the ads you see. Explain the concept and scope of marketing in present scenario.
2. Sales and marketing mainly share a common goal to maximise an organisation’s revenue but they
both differ in functions and processes. Distinguish between selling and marketing.
3. Online marketing is one of the latest trends in marketing. Explain the concept of online marketing.
4. Describe the challenges in marketing in the current era.
5. Social media marketing helps in connecting with more and more potential consumers. Describe the
importance of social media marketing in more detail.
1.10 ANSWERS AND HINTS FOR SELF-ASSESSMENT QUESTIONS
A. Hints for Essay Type Questions

1. Marketing refers to a process of meeting and satisfying the needs and demands of customers. Refer
to section Definition of Marketing
2. Sales are transaction-based whereas marketing focuses on winning and retaining the customers for
a longer period. Sales and marketing mainly share a common goal to maximise an organisation’s
revenue but they both differ in functions and processes. Refer to section Differences between Sales
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and Marketing
3. Online marketing is an e-commerce technique that allows consumers to purchase products and
services using the Internet. Refer to section Latest Trends in Marketing
4. Product-related marketing issues, Promotion-related marketing issues and Price-related marketing
issues are the challenges faced in marketing. Refer to section Challenges in Marketing in Current
Era
5. Social media marketing helps in connecting with more and more potential consumers. It delineates
the behaviour of potential consumers, their interests and key trends in the market. Refer to section
Latest Trends in Marketing
@ 1.11 POST-UNIT READING MATERIAL
 https://opentextbc.ca/businessopenstax/chapter/the-marketing-concept/
 http://www.netmba.com/marketing/concept/
1.12 TOPICS FOR DISCUSSION FORUMS
 Discuss the evolution of the marketing era.
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Introduction to Marketing
Unit –1
Prof. Preksha Yadav
We are going to discuss
• Definition of Marketing, Importance of Marketing, Challenges in
Current Era
• Relationship with other Functional Areas, Latest Trends and Issues in

Marketing
• Learning Outcome: To understand the importance of Marketing in

current scenario.
Learning Outcome
To understand the importance of Marketing in current scenario.
What is Marketing...??
1. Selling?
2. Advertising?
3. Promotions?
4. Making products available in stores?
5. Maintaining inventories?
All of the above, plus much more!

Definition of Marketing
Philip Kotler Definition :
Marketing Management is the Art and Science of choosing target markets and getting, keeping and
growing customers through creating, delivering and communicating superior customer value.
American Marketing Association Definition

Marketing is the process of planning and executing the conception, pricing, promotion, and distribution
of ideas, goods, services to create exchanges that satisfy individual and organizational goals.
https://www.youtube.com/watch?v=Pst9FCWkKTQ
Importance of Marketing
Importance of Marketing
https://www.youtube.com/watch?v=4eIDBV4Mpek
Challenges in Current Era
• Training Marketing Teams

• Generating Traffic and Leads
• Demonstrating ROI of Marketing Activities
• Justifying Your Budget
• Managing Your Website
• Reaching Global Audiences
• Hiring Top Talent
Relationship with other Functional Areas
Type to enter a caption.

Latest Trends in Marketing
1.Social Selling
2.Chatbots
3.Personalisation
4.User Experience
5.Content is still the King
6.Cross Devices
https://www.youtube.com/watch?v=kshIWIc15yg
UNIT
02 Fundamental Concepts of Marketing
Names of Sub-Units
The Exchange Concept, Production Concept, Product Concept, Sales Concept, Marketing Concept,
Holistic Marketing, Differences between Sales and Marketing, Marketing Myopia
Overview
The unit begins by explaining the different concepts of marketing and holistic marketing. Further, it
discusses the concept of marketing myopia.
Learning Objectives

 Define the different concepts of marketing
 Describe the exchange and production concept
 Examine the product, sales and marketing concepts
 Justify the holistic marketing
 State the concept of marketing myopia
JGI JAIN
Learning Outcomes

 Assess the concepts of marketing
 Evaluate the production and marketing concepts
 Analyse the product and sales concepts
 Design the holistic marketing approach
 Identify the marketing myopia
 https://www.marketing91.com/holistic-marketing-concept/
2.1 INTRODUCTION
Marketing focuses on identifying the needs and wants of customers and coordinating marketing
activities to achieve organisational goals. Marketing management can be described as a process of
creating, building and maintaining beneficial products. It also involves designing marketing strategies
to fulfil organisational objectives. An organisation needs to take care of interests of its customers as
well as the society while developing marketing strategies. Marketing basically deals with four kinds
of activities that relate to product, price, place and promotion. These activities are termed as 4Ps and
collectively, they create elements of the marketing mix. Various phases involved in the evolution of
marketing are:
 Production era
 Sales era
 Marketing era
 Relationship marketing era
Five philosophies of marketing management are:

 Production concept
 Product concept
 Selling concept
 Marketing concept
 Societal marketing concept
2.2 DIFFERENT CONCEPTS OF MARKETING

There are various key concepts in marketing that a customer and a marketer should know. The knowledge
of these concepts is important for an organisation to fulfil customer’s expectations and organisational
goals. Therefore, it is essential to study the core concepts of marketing for the effective implementation
of marketing management.
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UNIT 02: Fundamental Concepts of Marketing JGI JAIN
The following are the core concepts of marketing:

 Need, want and demand: Need refers to an individual’s basic requirements. When the need is
directed to some specific direction, it becomes ‘want’.Demand is a want supported by the ability to
pay.
 Market: It refers to a place where a business is carried out or where the actual buying and selling of
products take place. The market can also be a virtual market where buying and selling takes place
through the Internet.
 Exchange: It is an act of obtaining a desired product from someone by giving something of value in
return. Marketing involves an exchange transaction between the buyer and seller.
 Value and satisfaction: The concept of value in marketing relates to the quality of a product. Value
can be defined as the ratio between what customers get and what they give in return. In other
words, it is the difference between the benefits derived from a product and costs of acquiring the
product. On the other hand, satisfaction refers to the personal judgment of any person regarding
the perceived performance of any product in association with expectations. If performance is less
than expectations, it leads to dissatisfaction. If the performance is equal to expectations, it brings
satisfaction. On the other hand, if the performance happens to be greater than what has been
expected, then it results in customer delight.
 Competition: A marketer faces threats in terms of competition presented by actual and potential
competitors. Rival offerings and substitute products are issues to be considered by any organisation.
A marketer may face rivalry in terms of direct competition where similar functions are performed
byproducts that compete against each other. There may be indirect competition where products,
which compete against each other, are close substitutes.
 Integrated marketing: Integrated marketing describes the process where all the departments of an
organisation work in synchronisation to fulfil the interests of customers.
Figure 1 shows the philosophies or core concepts of marketing:
Production Concept
Product Concept
Philosophies Guiding
Selling Concept
Marketing Management
Marketing Concept
Societal Marketing Concept
Figure 1: Core Concepts of Marketing

Let us understand these concepts in detail.
2.2.1 Exchange Concept

The central idea of the marketing is the exchange of product between the seller and the buyer. Exchange
covers the distribution aspect and the price mechanism of the product. The concept of exchange value
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in marketing is a useful tool to position product and service offerings. Consumers use value to evaluate
the worth of the offerings as compared to competitive offerings. From the seller’s perspective, the buyer-
oriented pricing involves understanding consumers’ benefit and needs and setting a price consistent
with this value. For instance, you go into a restaurant and order your favourite meal. You eat the food
and then you pay for it with your credit card. This is an example of basic exchange relationship. You
use your Android or iPhone to download an app and you pay for it using PayPal. Again you have gone
through and completed an exchange process.
2.2.2 Production Concept

According to the production concept, which is one of the oldest concepts of marketing, customers will
buy products that are easily available at low prices. This concept focuses on lowering the cost of the
product by mass production and efficient distribution. This is useful in the following cases:
 When there is less competition and the demand exceeds supply
 When customers are more interested in products rather than its attributes
 When an organisation aims for expansion
 When a new product is launched
 When the tastes of customers do no alter
You must note that the production concept is used in the past when the competition is very less. When
the competition is less, the more you produce can be consumed easily in the market. Consider the case
of the automobile company, FORD, which manufactured automobiles in large numbers by using its
manufacturing assembly line, which was first of its kind.
2.2.3 Product Concept

The product concept focuses on quality, features and attributes of products. According to this concept,
customers prefer products, which offer high quality, good performance and innovative features.
Therefore, an organisation should always focus on the continuous improvement of its products. Consider
an example of a company that manufactures high quality Compact Disks (CDs). However, the question
arises, does the customer really requires a CD to fulfil his storage needs? It is because several products
such as USB drives, Blu-ray disk, DVDs, etc., are present in the market, which can store more data than
CDs and are therefore, better in terms of satisfying customers’ needs of storing data.
2.2.4 Sales Concept

Organisations that follow the ‘selling concept’ show aggressive selling efforts to persuade customers to
buy products/services. These organisations often focus on selling products rather than understanding
customers’ wants. The selling concept generates profit for an organisation for a short period but it
fails in the long run as it does not focus much on the customer satisfaction aspect. Organisations that
follow the ‘selling concept’ show aggressive selling efforts to persuade customers to buy products/
services. Organisations think that the customer will buy products only when he/she is persuaded
through promotion of their products/services. Organisations motivate customers to buy products by
presenting the product to them as their need. This concept is applied in case of unsought goods such
as life insurance policies, fire fighting equipment, vacuum cleaner, etc., which are sold to customers by
persuading them that these products are their needs. This concept was popular during World War II
when people were persuaded to buy bonds. Organisations use this concept, often focussing on selling
products rather than understanding what customers’ actually want. The selling concept generates
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profit for an organisation for a short period but it fails in the long run as it does not focus much on the
customer satisfaction aspect.
2.2.5 Marketing Concept

According to the marketing concept, customer is the king. As per the marketing concept, the main aim
of an organisation is to find the right product for the customer rather than finding the right customer
for its product. Figure 2 shows the three pillars of the marketing concept:
Customer orientation
Organisational integration
Profit orientation
Figure 2: Three Pillars of the Marketing Concept

The three pillars of the marketing concept are:
 Customer orientation: The success of an organisation solely depends on how efficiently it determines
the needs and wants of customers before deciding what product to be sold. Organisations should
indulge in market research programs by systematically collecting, recording and analysing market
data to know customer expectations.
 Organisational integration: All departments of the organisation should work together to ensure
the satisfaction of customers.
 Profit orientation: Organisations should aim for long-term profitability to sustain themselves in the
market. No organisation can survive if it fails to maintain a considerable amount of profit margin.
Thus, profit orientation is seen as a means to fulfil the goals of organisations.
The marketing concept has gained popularity during 1950s when two companies, Pepsi and Coke, who
sold similar product, cold drink, were trying hard to carve themselves out in the market. The values
behind selling their products are completely different till today. Pepsi targets the success of younger
generations; whereas, coke focuses on the holistic approach.
2.3 HOLISTIC MARKETING

Holistic marketing is the marketing strategy wherein an entire business and various channels of
marketing are considered as a system. Under holistic marketing strategy, an organisation with various
departments comes together in synergy in pursuit of a conscious mission, great customer experience,
and a positive brand image.
We can say that this type of marketing considers business and all its parts as one individual entity and
gives a shared purpose to every activity and person concerned with the business.
The following are the features of holistic marketing:
 It has a common goal: This concept believes that the business and all the departments should focus
towards a common or single goal, i.e., great customer experience.
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 It aligns activities: Under this concept, services, processes, communication and other business
activities are aligned towards a common goal.
 It integrates activities: Under this concept, all activities should be designed and integrated to create
a unified, consistent and seamless customer experience.
Figure 3 represents the components of holistic marketing:
Relationship Marketing
Integrated Marketing
Internal Marketing
Socially responsible marketing
Figure 3: Components of Holistic Marketing

Holistic marketing focuses on developing or designing those marketing strategies, which market the
organisations brand to every person related to it, i.e., employees, existing customers or potential/
new customers and communicating it in a unified manner while considering the corporate social
responsibility. Let’s understand the components of holistic marketing in detail.
 Relationship Marketing: This component focuses on a long-term customer engagement and
relationship rather than focusing on short-term goals such as customer acquisition and individual
sales. Relationship marketing applies marketing strategies on the existing or old customers for
developing strong, emotional, and everlasting customer connections which help an organisation in
getting repeated sales, free marketing (word of mouth) and generating more leads.
 Integrated Marketing: This type of marketing develops a unified and seamless experience for their
customers so that they can interact with the organisation’s brand by designing and directing all
communication which acts as a unified force and centres around a strong and focused brand image.
 Internal Marketing: There are internal and external business customers. An organisation while
giving priority to external customers must not forget the internal customers, i.e., as they play
a vital role in marketing the brand and products to the external customers. Employees of the
organisation or total staff is considered as internal customers who must be convinced of the vision
of the organisation and worth just as external customers. Internal marketing involves the crafting
processes which help customers to understand their role in an organisation’s marketing process.
 Socially responsible marketing: The socially responsible marketing aspect of the holistic marketing
concept involves a broader concern of the society at large. It requires the business to follow certain
ethics. It makes the organisation focus on partnerships with philanthropic and community
organisations. In this marketing, business is taken as a part of the society. Business is needed to
repay the same. It makes a positive impact on company’s stakeholders.
The following are the reasons that explain why holistic marketing is important:
 It helps in brand building among all stakeholders.
 It helps in maintaining consistency with the help of unified communication and strategies.
 It eliminates repetitions and makes business more efficient.
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 It helps in tapping opportunities and spotting potential threats.

 It enables business to focus on the big picture.
 It creates a synergy that effectively reinforces the brand message, image and positions the brand
uniquely in customers mind.
2.4 CONCEPT OF MARKETING MYOPIA

Marketing Myopia refers to the stage when the organisations are only busy in developing quality of
the product or services without understanding the real or exact customer needs with shortsightedness
and narrow vision. Some of the organisations are restricted in their marketing tactics with limited
research as a result they do not see the real picture and feels that their product is the best. This is called
marketing myopia.
The following are the reasons leading to marketing myopia:
 Organisations are more focused towards short-term vision rather than long term vision.
 Organisations primary goal is to sell the products and not to build customer-oriented products.
 Organisations are over confined in marketing activities.
 Organisations believe that they can create a better business model without the help of the market
survey.
 Organisations focus on mass production without knowing the actual needs of .
 Organisations have very less or no competitions in the market.
The ways to get rid from marketing myopia are:
 By creating products and services on the basis of customer’s demands
 By giving importance to the customer’s needs
 By building a better relationship with customers
 By taking any step after analysing the market research
 By analysing competitors’ strategy
Some examples of Marketing Myopia are:

 Kodak only creates old cameras and camera rolls. It do not focus on creating the digital camera.
 Yahoo or Bing was not able to satisfy the customers but Google was able to build better relations
with its services. Yahoo or Bing audiences have shifted to Google.
 Marketing management can be described as a process of creating, building and maintaining

beneficial products.
 Various phases involved in the evolution of marketing are:
 Production era
 Sales era
 Marketing era
 Relationship marketing era
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 The market can also be a virtual market where buying and selling takes place through the Internet.
 Value can be defined as a ratio between what customers get and what they give in return.
 Integrated marketing describes the process where all the departments of an organisation work in
synchronisation to fulfil the interests of customers.
 According to the production concept, which is one of the oldest concepts of marketing, customers
will buy products that are easily available at low prices.
 The product concept focuses on quality, features and attributes of products. According to this
concept, customers prefer products, which offer high quality, good performance and innovative
features.
 The selling concept generates profit for an organisation for a short period but it fails in the long run
as it does not focus much on the customer satisfaction aspect.
 According to the marketing concept, customer is the king.
 Holistic marketing is the marketing strategy wherein entire business and various channels of
marketing are considered as a system.
 Holistic marketing focuses on developing or designing those marketing strategies which market
the organisations brand to every person related to it i.e. employees, existing customers or potential/
new customers and communicating it in a unified manner while considering the corporate social
responsibility.
 Some of the organisations are restricted in their marketing tactics with limited research as a result
they do not see the real picture and feels that their product is the best. This is called marketing
myopia.
2.6 GLOSSARY
 Marketing management: It involves designing marketing strategies to fulfil organisational

objectives.
 Marketing mix: It is a collection of tools that can be used in achieving marketing objectives.
 Aggressive selling: It is a strategy, where an organisation applies vigorous sales techniques to
increase the sales volume of its products/services.
 Demand:It is wants for specific products supported by an ability to pay.
 Production concept: It is one of the oldest concepts of marketing; customers will buy products that
are easily available at low prices.
2.7 CASE STUDY: PATANJALI’S RISE
Case Objective
The aim of this case study is to highlight the marketing strategy and growth of Patanjali.
In January 2006, Patanjali Ayurved Limited was registered and soon it became known for its Ayurvedic
Medicines. Patanjali established several medical clinics within the country. It opened clinics with the
name of Divya Chikitsalaya and offered free diagnosis to people. Divya Chikitsalayas were established
for helping needy people to gain access to better health services. Ayurvedic medicines were provided
with the help of the Divya Pharmacy outlets. For 6 years, Patanjali gave its services in the niche, and
then in 2012, Baba Ramdev and Acharya Balkrishna, the founder of the company, decided to enter
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into the Indian mainstream retail sector. They launched different grocery products such as common
household ayurvedic products and small and big daily use items.
Presently, Patanjali’s mega marts can be seen across the nation providing all the essentials. Patanjali’s
products are available in retail stores too.
Patanjali gave very tough competition to Hindustan Unilever Limited(HUL). Patanjali influenced people
to purchase the products which are made in India ‘swadeshi’. The company declared that its products
are pure and natural with low price. Patanjali followed two-stage distribution strategy in General
Trade (GT) and a strong alternative system of distribution for demand creation and for building word-
of-mouth advocates. Initially, Patanjali started drives (trail and consumption) using Arogya Kendra,
Chikitsalaya and SwadeshiKendras. It also trained and gave a certificate to the nominated practitioners
from the stores or Kendras. This helped in building trust and credibility. These practitioners played a
keyrole in increasing the sale of Patanjali’s products. There are approximately10,000 stores, including
Chikitsalaya, Arogya Kendra,and SwadeshiKendras which contributes to 60 % of Patanjali’s revenues.
Patanjali’s products can be purchased from any general stores, grocers, chemists and e-commerce
platforms.
Source: https://walnutfolks.com/patanjali-case-study/
Questions
1. How Patanjali managed to enter the Indian market?
(Hint: Established several medical clinics, offered free diagnosis,launched different grocery products)
2. Explain the strategies used by Patanjali.
(Hint: Two-stage distribution strategy in general trade, swadeshi products, word-of-mouth
advocates)
3. According to you, who are the competitors of Patanjali?
(Hint: Dabur India, Procter and Gamble, Himalya herbal healthcare)
4. What is two stage distribution strategies?
(Hint: Wholesaler and retailer, Arogya Kendra, Chikitsalaya and SwadeshiKendras)
5. Summarise the case.
(Hint: Patanjali is a well-known herbal company, gives very tough competition to Hindustan Unilever
Limited)

1. Define marketing myopia and also state the reason which leads to marketing myopia.
2. Explain the components of holistic marketing.
3. Describe the marketing concept in detail.
4. List down the pillars of marketing.
5. State the production concept.`
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1. Some of the organisations are restricted in their marketing tactics with limited research as a result
they do not see the real picture and feels that their product is the best. This is called marketing
myopia. Refer to section 2.4 Concept of Marketing Myopia
2. Relationship marketing, integrated marketing, internal marketing and socially responsible
marketing are the components of holistic marketing. Refer to section 2.3 Holistic Marketing
3. As per the marketing concept, the main aim of an organisation is to find aright product for the
customer rather than finding the right customer for its product. Refer to section 2.2 Different
Concepts of Marketing
4. Need, wants and demand, market, exchange etc. are the pillars of marketing. Refer to section 2.2
Different Concepts of Marketing
5. According to the production concept, which is one of the oldest concepts of marketing, customers
will buy products that are easily available at low prices. Refer to section 2.2 Different Concepts of
Marketing
 https://www.mbaskool.com/business-concepts/marketing-and-strategy-terms/11167-marketing-
myopia.html
 https://www.marketing91.com/marketing-myopia/
 Discuss the difference between production concept, selling concept and marketing concept.
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Fundamental Concepts of Marketing
Unit –2
Prof. Preksha Yadav
Unit 2: Fundamental Concepts of Marketing
1. The Exchange Concept

2. Production Concept
3. Product Concept
4. Sales Concept
5. Marketing Concept
6. Holistic Marketing
7. Differences between Sales and Marketing
8. Marketing Myopia
Learning Outcome
To understand the basic Marketing Concepts.

Exchange Concept
Exchange Concept gives importance to the exchange of goods and services.

1. Here, consumers have to accept those goods that are available in the market.
2. This idea does not give importance to quality, consumers satisfaction, etc.
3. It is a traditional concept of marketing.
4. This concept was in use before the industrial revolution. It is an old, outdated and narrow
concept of marketing.
Production Concept
Production Concept gives importance to the production of goods.
1. This concept is production-oriented. Here, goods are produced and distributed on a large scale.
2. According to this concept, the consumers will purchase those products that are readily available and are
low in cost. During the industrial revolution, this concept was widely used.
3. Today, this concept is only used in the third world countries. In these countries, the demand is more than
supply.
4. So the consumers are more interested in purchasing the product. They don't pay much attention to the
quality of the product.
5. Developed countries don't follow this concept. In these countries, the consumers are more interested in
the product quality.
Product Concept
Product Concept gives importance to the quality of the product. This concept is product-oriented.
1. Here, good quality products are produced and distributed on a large-scale.
2. The company goes for product excellence. That is, they work on improving the quality of the
product.
3. According to this concept, the consumers will only purchase good quality products.
4. This idea does not give any importance to the needs, wants and problems of the users. Here,
products are not made according to the needs and desire of the consumers.
5. So this concept does not concentrate on the consumer. It only focuses on the product. Therefore,
this idea is not accepted.
Sales Concept
Sales Concept gives importance to sales promotion techniques. This concept is sales-oriented.
1. Here, the product is pushed into the market by aggressive advertising and publicity, personal
selling, discount offers, gifts, attractive packages, etc.
2. According to this concept, the sales will increase only by using sales promotion techniques. That
is, the consumer must be induced (attracted) to purchase the product.
3. It does not give any significance to the needs and wants of the consumers.
4. Companies who have excess production capacity and who face a lot of competition use this
concept. However, this is not useful for all marketing situations.
Marketing Concept
Marketing Concept gives importance to consumers and service. This concept is consumer-
oriented. In fact, this concept is also called Consumer-Orientation Concept.
1. This concept started in 1950.
2. According to this concept, the company must first find out the needs and wants of the
consumers.
3. Then they must satisfy these needs and wants.
4. Here, the consumers are the primary focus of a business. They are the centre of all marketing
activities.
Societal Concept
Societal Concept gives importance to consumer satisfaction, social welfare and company's profit. This concept is
social-oriented.
1. This concept started in 1980.
2. According to this concept, the company must satisfy society.
3. The company must produce products that are healthy for the consumers and friendly to the environment.
4. The company must perform all its social obligations like pollution control, environment protection, not harming
the ecology balance, doing social welfare activities, etc.
5. This concept is broad, dynamic and socially significant. Today this concept is universally accepted.
https://www.youtube.com/watch?v=8pjMyc5b9sQ
Holistic Marketing
Holistic marketing concept considers all the different parts of a business as one single entity. It is based on the
premise that the whole is greater than the sum of its parts. As such, there is a shared aim and purpose for all the
activities related to a business. This ensures that each person in every department, from sales to operations to HR to
marketing and others, work towards one common goal.
Holistic Marketing Example:
Coca-Cola has one of the best examples of holistic marketing concept. They have recently refreshed their entire global
identity to “Real Magic”. The idea behind this strategy is to showcase the brand’s goal to refresh the world and make a
difference. Manuel Arroyo, the global chief marketing officer for The Coca-Cola Company says, “Real Magic is not just
a tagline. We see it as a philosophy that transcends advertising and embodies all that is special about the brand.”
Holistic Marketing
1. Internal Marketing
Holistic marketing sees two types of customers - internal and external. While external customers are the top priority for
any business, internal customers (employees) also play a vital role in the marketing process. Internal marketing treats
employees as customers who must be convinced of the company’s core values just as aggressively as its external
customers. This ensures that they understand their role in the marketing process.
2. Integrated Marketing
Integrated marketing creates a seamless experience for the consumer to interact with the brand by integrating various
communication channels (sales promotion, public relations, advertising, direct marketing, digital marketing, etc). This
3. Societal Marketing
Societal or socially responsible marketing involves a broader concern for society at large. It follows the philosophy that a business
is part of a society and should give back to it. This requires following certain business ethics and focusing on philanthropy and
community organizations. Societal marketing encourages all stakeholders of a business to have a positive impact on society.
4. Relationship Marketing
Relationship marketing is centered on the relationships you have with your potential and existing customers, employees, partners,
and competitors. This component of holistic marketing focuses on creating a comprehensive business plan with long-term goals
that cover the whole business system. The main goal is to focus on marketing activities that create a strong, emotional bond and
3 Features of Holistic Marketing Philosophy
There are three main features of holistic marketing philosophy: a common goal, aligned activities, and integrated
activities.
1. Common Goal - All parts of the business focus on a single goal to provide a great customer experience.
2. Aligned Activities - All activities, processes, and communication that occur within the business should be
aligned towards the achievement of the common goal.
3. Integrated Activities - All activities done within the business should be designed and integrated such that they
work in a cohort to provide a seamless and consistent customer experience.

5 Reasons to Have Holistic Marketing
1. Brand Building
2. Focus
3. Efficiency
4. Effectiveness
5. Cohesiveness
Differences between Sales and Marketing

Marketing Myopia
Marketing myopia is a situation when a company has a narrow-minded marketing

approach and it focuses mainly on only one aspect out of many possible marketing
attributes.
A brand focusing on the development of high-quality products for customers who

disregard quality and only focus on the price is a classic example of marketing myopia.
When Does Marketing Myopia Strike In?
Marketing myopia strikes in when the short term marketing goals are given more importance than
the long term goals. Some examples are:
• More focus on selling rather than building relationships with the customers.
• Predicting growth without conducting proper research.
• Mass production without knowing the demand.
• Giving importance to just one aspect of the marketing attributes without focusing on what the
customer actually wants.
• Not changing with the dynamic consumer environment.
UNIT
03 Value Philosophy of Marketing
Names of Sub-Units
Understanding the Value Philosophy, Value Delivery, Tenets of the Value Philosophy, Concept and
Definition of Customer Value, Steps in Value Delivery Task, Co –Creating Value with Customers
Overview
The unit begins by explaining the meaning of marketing mix and customer value. Further, it discusses
the value philosophy, value delivery and co –-creating value with customers.
Learning Objectives

 Define the marketing mix
 Describe the concept of customer value
 Examine the tenets of the value philosophy
 State the steps in value delivery
 Summarise the co –-creating value with customers
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Learning Outcomes

 Assess the concepts of customer value
 Evaluate the value philosophy
 Analyse the tenets of the value philosophy
 Justify the steps in value delivery
 Identify the co –creating value with customers
 https://www.marketingstudyguide.com/customer-value/
3.1 INTRODUCTION
Marketing is an important function of an organisation that helps in determining consumers’ needs
and preferences. Marketing helps an organisation to recognise the target markets for their products
and services. Additionally, it involves promotional activities such as advertisement of products or
services. Marketing focuses on customer satisfaction, quality, and consumer value. One of the most
commonly used business strategy is creating the marketing mix of a brand. The set of controllable
tactical marketing tools is called marketing mix. Marketing mix includes product mix, price mix, place
mix and promotion mix. These marketing tools are blended by the organisation to accomplish the
desired objectives in the target market. The marketing mix helps an organisation to make available the
right products at the right place, at the right time and at an affordable or right price. The marketing
mix enables an organisation to positively impact the demand for its products or services. The 4Ps of
marketing mix highlights the sellers view for influencing buyers. However, if we see from the consumer’s
perspective, the 4Ps of marketing mix must deliver a customer benefit. There are markets and product-
related factors that impact marketing mix of the organisation. These market-related factors include the
behaviour of the customer, distribution system, legal policies and the nature of competition. Product-
related factors include product planning, market research, promotion method and branding. According
to the controllability and non-controllability of factors, there are two types of factors that influence
the marketing mix. Internal factors can be controlled by the organisation whereas external factors
cannot be controlled by the organisation. External factors are uncontrollable factors that are beyond
the control of the marketing management.
3.2 MEANING OF MARKETING MIX

The marketing mix is described as an organisational tactical tool used to promote the marketer’s
offering in the target market. The 4Ps together makes up the marketing mix. Product, price, place and
promotion are the widely recognised tools or elements of marketing mix but there are some other Ps
too that needs to be considered by the organisation. These Ps are people, process and physical evidence.
Marketing mix enables an organisation to confidently take strategic decisions such as launching new
products, diversifying business or revising current products.
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UNIT 03: Value Philosophy of Marketing JGI JAINDEEMED-TO-BE UNIVERSIT Y
According to American marketing author, consultant, and Professor Philip Kotler, Marketing Mix is the
set of controllable variables that the firm can use to influence the buyer’s response.
The controllable variables mentioned in the definition refer to the 4 Ps (product, price, place and
promotion). Every organisation tries to make a perfect composition of 4‘P’s and create consumer
satisfaction along with meeting organisational objectives. Therefore, the marketing mix of various
organisations differs from another depending upon resources used and marketing objectives.
Let us now understand the importance of marketing mix:
 It helps in understanding the utility of the products or services offered by the organisation to the
customers.
 It facilitates planning as a successful product offering.
 It helps to plan, develop and execute marketing strategies effectively.
 It enables the business to optimally utilise its strengths and eliminate unnecessary costs.
 It helps in facing the market risk proactively.
 It enables the organisation to find out whether it’s products or services are suitable for the customers
or not.
 It helps in recognising and understanding customer’s requirements.
 It enables the organisation to learn when and how to promote its products or services.
 It facilitates the organisation to make the product or service available to the customers at the right
time, at the right place and at reasonable price.
The 4Ps of the marketing mix, i.e., Product, Price, Place and Promotion are the main framework for the
marketing management decisions.
Figure 1 shows the 4Ps of the marketing mix:
Marketing mix - 4P’s (1)
• Features
• Sales Promotion • Quality
• Advertising • Branding
• Public Relations • Packaging
• Direct Marketing Promotion Product • Services
• Warranties
Marketing
Mix
• Channels • Price Strategy

• Market Coverage • Pricing
• Assortment Place Price • Allowances
• Location • Discounts
• Inventory • Payment Terms
• Transport
Figure 1: Elements of the Marketing Mix

Source: https://yourfreetemplates.com/marketing-mix-template/
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JGI JAIN
Let us understand in detail the four components of marketing mix:

 Product: Product can be defined as the goods and services that an organisation offers for sale.
Products can be tangible or intangible. Intangible products, such as ideas, service and experience,
cannot be touched and felt before purchase. They can only be experienced after purchase. On the
other hand, tangible products such as shoes, lipstick and bottles, can be seen, felt and touched,
stocked and consumed in many uses.
 Price: Price refers to the monetary amount charged by the business for the product. Price is
considered as the key marketing mix element. The price of the product also makes a significant
impact on an organisation’s profitability.
 Place: Place can be defined as the point of sale or the location or area where goods are to be sold to
the customers. Place of sale must be convenient for the buyer to make purchase.
 Promotion: Promotion involves the activities that are undertaken by the organisation for making
their products or services known to the market population. Promotion includes sales promotion,
advertising, word of mouth, public relations, etc.
3.3 CONCEPT OF CUSTOMER VALUE

Customer Value, also known as customer-perceived value, shows the difference between customer’s
perceived evaluations of the benefits versus the product cost. Customer value helps in measuring the
worth of the product or service from the customer’s perspective and makes comparison between its
possible alternatives. Customer value determines whether the customer perceives enough value of the
product offering in exchange of the amount that he is paying for the particular product or service. The
customer will regret making the purchase if he/she feels that the price of the product outweighs its
benefits, especially when the competitor is offering a better product at a lower price.
In simple equation:
CV = B – C
Here,
CV means Customer Value
B means Benefits
C means Cost
The key aspect of developing a profitable customer relationship is customer value. Let us understand
why it is important to consider customer value:
 Prospective customers look for products that are affordable and able to fulfil their needs and wants.
They are not specifically searching for a particular organisation’s product or service. That’s why it
is important to find out the preference, and taste of the customers and get to know what they need.
 Different people have different perceptions of value. The perception about the value of a product
or service will differ from one situation to another. Some customers may find the product worthy
on the other hand some may not. Therefore, it is important to do customisation of customer value,
wherever required.
 Good knowledge of the requirements of the customers helps in aligning customer value.
4
UNIT 03: Value Philosophy of Marketing JGI JAIN
 Understanding customer value makes the customer feel more valued and it is considered as a very
good practice.
 Delivering customer value helps n achieving the sales target for specific market segments.
3.3.1 Value Philosophy

Value refers to a fair return or equivalent in goods, services or money for something. It is the relative
worth, utility or importance.
Customer perceived value is the idea that the product’s success in any business hinges on its customers’
belief that the offered product or service can satisfy their needs.
 According to Philip Kotler: Total Customer benefit is the “perceived monetary value of the bundle
of economic, functional and psychological benefits customers expect from a given market offering
because of the product, service, people and image“.
 Total Customer Cost is the “perceived bundle of costs customers expect to incur in evaluating,
obtaining, using and disposing of the given market offering, including monetary, time, energy and
psychological costs“.
An organisation must consider not only the price paid by the customer but also the time, effort,
convenience, and energy spent in making the purchase. For each customer, benefits may vary which
changes the value. Benefits which the consumer counts from the product or service include product
quality, ownership, image, organisation’s brand and affiliation, customer service and experience. Figure
2 shows customer perceived cost:
Total Customer Total Customer

Benefits Costs
Product Monetary
Benefits Cost
Services Psychological
Benefits Cost
Personnel Energy
Benefits Cost
Image Time
Benefits Cost
Figure 2: Customer’s Perceived Cost

Let’s understand the components under total customer benefits:
 Product benefit: It includes those attributes of the product which have the ability to entice the
potential consumer for selecting the offered product over others.
 Services benefit: It includes those attributes of the services offered such as help, instructions offered
along with the product. For example, the ingredients and customer helpline numbers.
5
JGI JAIN
 Personnel benefit: It refers to the perceived values that are provided by the human resource in the
system, involved in the process. For instance, the sales personnel of the organisation who help the
customer in making the right choice on the basis of their requirements.
 Image benefit: It refers to the brand name linked with the product.
Now let’s understand the components under total customer costs:

 Monetary Cost: It includes the costs that are incurred by a customer for obtaining the product.
 Psychological cost: It refers to the total mental effort made during acquiring and using the product
from the time it was purchased to the moment it was consumed.
 Energy Cost: It refers to the energy which a buyer spent during the whole process of purchasing the
product.
 Time Cost: It refers to the time invested by the buyer during the buying process. It includes the time
taken for the customer to visit the store and to purchase product.
3.3.2 Tenets of the Value Philosophy

The tenets of customer value philosophy are as follows:
 Product function
 differentiation point
 Product or service quality
 Customer Service
 Marketing and marketing strategy
 Branding
 Product price
 Existing relationships or experience
 Personal bias because of the experience and upbringing
3.3.3 Value Delivery

The following are the ways to deliver customer value:
 Recognise customers to be served
 Determine how to target potential customers
 Do overall positioning of the product or service
 Design a marketing program
 Use marketing mix
 Choose the right distribution channels as well as payment options
 Change the price of the product or service, if needed
 Make customers feel that their efforts are valued by the organisation
 Create and enhance brand image
6
Steps in Value Delivery

The steps to create customer value are:
1. Try to find out the driving value for the customers through research, survey or conversations. This
will help the businesses to understand what people are looking for and how businesses can fulfil
their needs.
2. Determine the value of the product and services offered by the organisation. Also, find out the price
for them and the ancillary cost of usage.
3. Recognise potential customers who find value in our products in comparison to the competitors.
4. Fix the price of the product or service in such a way that it creates a win-win situation. Price should
make the customer feel that he is getting enough value out of the purchase and also increase the
organisation’s profits.
5. Invest in the customers who are more loyal to the brand.
3.3.4 Co-Creating Value with Customers

High quality customer value depends largely on what customers think about the organisation’s service
standards. Measuring the performance of service standards may help organisations identify their
strong and weak areas. For this, taking feedback about customer satisfaction should be practiced as a
regular part of the business. In today’s competitive environment, it is essential for a service provider to
raise customer satisfaction by interacting and communicating with customers on a regular basis.
In order to gain high customer value (CV), organisations tend to maintain high service quality standards.
CV represents customers’ worth from a service providers’ point of view. It evaluates the value of the
customer’s relationship with an organisation in financial terms. In other words, CV measures how
valuable (in monetary terms) each customer is to the organisation. Estimating customer value provides
guideline to organisations regarding how much they should spend on acquiring and retaining each
customer.
Zeithaml (1988) defined customer value as the consumers’ overall assessment of what is received relative
to what is given.
The extent of CV is seen as the difference between perceived benefits and costs. Usually the higher the
CV, the greater would be the cost of retaining customers, as there would be more stress on providing
high quality benefits to customers.
In other words, if customers are paying a higher price, they will demand a higher quality of service.
For example, the quality of service offered by a five-star hotel should be higher than that offered by
an ordinary hotel, as the customer charges are comparatively higher. Therefore, the higher the price
charged from the customer, the more should be the value/benefits offered by the service provider.
 The marketing mix is described as an organisational tactical tool used to promote product’s brand
in the target market.
 Marketing mix helps in understanding the utility of the products or services offered by the
organisation to the customers.
 The 4Ps of marketing mix are Product, Price, Place and Promotion.
7
JGI JAIN
 Product can be defined as the goods and services that an organisation offers for sale.
 Price refers to the monetary amount charged by the business for the product.
 Place can be defined as the point of sale or the location or area where goods are to be sold to the
customers.
 Promotion involves the activities which are undertaken by the organisation for making their
products or services known to the market population.
 Value is also known as customer-perceived value.
 Customer perceived value shows the difference between customer’s perceived evaluations of the
benefits versus product cost.
3.5 GLOSSARY
 Tactics: These are the actions to support organisation’s strategy.

 Positioning: It is creating the image of brand in the mind of people.
 Personnel benefit: It refers to the perceived values that are provided by the human resource in the
system, involved in the process.
 Perspective customers: These are the one who are willing and interested in making purchase.
 Substitute products: These are products that are similar to other product like Pepsi and Coca Cola,
tea and coffee.
3.6 CASE STUDY: HDFC- 8P’S OF MARKETING MIX
Case Objective
The aim of this case study is to show the marketing mix of HDFC.
Housing Development Finance Corporation (HDFC) was established in India in1978. Today, HDFC is
counted as one of the top banks in the nation with the most consistent clientele. The various factors that
are responsible for the exceptional growth of HDFC are:
 Thoughtful marketing strategies
 Excellent financial products
 Aggressive expansion and promotion techniques
 Brilliant service delivery
The marketing strategy of the bank over the years concentrates on offering a wide range of financial
products/services through numerous distribution channels. The bank mainly deals into three business
activities which are:
 Retail banking
 Wholesale banking
 Treasury operations
To be successful in the market, any organisation focuses on its marketing mix strategy and this
marketing mix has made HDFC one of the most popular banks in India.
8
Let us discuss the various components of HDFC’s marketing mix strategy:

1. Product: HDFC offers various financial products, such as HDFC ergo, HDFC life and HDFC home
loans along with banking services. HDFC has a huge financial product portfolio and the USP of
HDFC is that it creates and markets very competitive products in the market to ensure longevity
for business life. HDFC plans its products in such a manner that could effectively meet with the ever
increasing customer’s needs, demands and expectations. Being a housing finance corporation, HDFC
also offers a large variety of loans for buying houses, housing lands, construction, re-construction,
etc. the product mix of HDFC consists of:
 Accounts and deposits
 Loans
 Cards
 Demat
 Investments
 Insurance
 Forex
 Premium banking
 Private banking
2. Place/Distribution: Being into the services industry, HDFC’s major strength for supporting the
products lies in its distribution. Therefore, after the product, the place and distribution of HDFC’s
products and services are the most important for parameter for the success of HDFC. The bank
operates through a large network that consists of 3488 branches in 2231 cities across the world.
Headquartered in Mumbai, India HDFC has 11,426 ATM’s across the country. In addition to this, the
bank offers its services through net banking, phone banking, mobile banking and SMS banking.
In order to serve its huge clientele, HDFC needs to ensure its presence in every part of the country
through tactically decided distribution strategies. Banking is a complex function with various
confidential and security pertaining processes that are needed to be carried on a regular basis, with
minimal margin of errors. By placing its operational facilities at the most easily accessible localities
across cities, towns, and villages; HDFC ensures that all the daily confidential processes are duly
fulfilled. In this scenario, placement or distribution of the facilities becomes a very thoughtful
decision in itself. Today, HDFC’s products and services are available for its vast clientele base at
strategically planned branches.
3. Price: Due to its rational and profitable price structure for its products and services, HDFC holds a
major portion of the total market share in the Indian banking sector. When compared with national
and PSU banks, HDFC shows premium competitive pricing as the minimum amount obligatory for
opening an account in HDFC is relatively high. However, at the same time, home loan interest, offered
by HDFC are as per RBI guidelines and therefore, competitive in nature. This is because; the prices
for such products are controlled by the market and not by the organisation. HDFC provides loans
at maximum repayment period and on reasonable interest rates to the customers. Apart from fixed
charges, the bank does not charge anything for other functions such as advance loan repayment,
cheque replacement, and take over. Therefore, for some operations, HDFC charges premium price,
whereas in others it is competitively priced as per the market norms.
4. Promotion: HDFC plans and executes its promotional activities in a manner that could justify its
service catalogue. It promotes its products and services through aggressive promotional techniques,
such as commercials, campaigns, and other marketing activities. HDFC conducts its promotional
9
activities primarily through print, broadcast, and internet media. In addition, it also focuses on
signage and billboard advertising. In the rural areas of country it places signboards and milestones
in local languages to promote its connection with the masses and make prospective client base. In
spite of being a mass marketed product; banking, sometimes, requires customisation. To deal with
the high profile customers, banks need well trained relationship managers, wealth managers etc. to
retain such clients with the bank. Therefore, delivery of quality services also becomes a promotional
product for HDFC.
5. People: HDFC operates with around 69,065 employees (as per the data, collected in year 2013). It shows
around 20 per cent of annual attrition rate. Like every other organisation, HDFC also emphasises
a lot on its human resource. Employees play an important role in the organisation’s growth by
adopting the best practices. Being a service industry organisation, the banking activities are highly
associated with the customers. Therefore, in order to grow the business it is essential for a bank
to maintain proper relations with customers. HDFC considers that customers and employees both
are interconnected for better delivery of services. As the degree of the employee customer contact
varies, the bank has different categories of employees, such as:
 High contact personnel
 Low contact personnel
 Skilled and professional
 Non professionals
 Support personnel
6. Process: In a service sector, organisations like bank, processes relate to how services are offered to
a customer. HDFC, in order to achieve economies of scale, processes its office operations in batches.
However, it caters to the needs of individuals while marketing of products and services so that the
customers feel special and receive customised services. The organisation considers various factors,
such as customer participation, degree of customer contact, place of service delivery, and difficulties
in service delivery while designing and implementing its service processes.
7. Physical evidence: A service transaction usually takes place between the service provider and
the customer in a service environment. The tangible cues present in this service environment that
help the service provider to offer a physical element to their services are called physical evidence.
Therefore, any tangible commodities with which the service providers can communicate the service
performance to the target customers are termed as physical evidence. HDFC offers excellent physical
evidences to its customers through its facilities and ambiance. The bank provides the following
tangible things to bring the element of physical evidence in their core service offerings:
 Financial reports
 Pens, diaries, writing pads
 Passbooks and check books
 Employee dress code
 Comfortable furniture setting
 Controlled temperature inside the facility
 Proper lighting
 Noise free ambiance
 Soothing music, odour and colour
10
8. Productivity: It is one element that is measured by the quantity of output that is generated per unit
of input. In a bank, establishment expenses and operating expenses are considered as input, while
business per branch, business per employee and operating profit per employee are considered as
output.
In HDFC, for the year 2011-12, the deposit per employee was `3.73 crores, while advance per employee
was `2.96 crores. The productivity of any bank depends on the deposits and deliveries of capital as
both collectively work as the net measure of productivity. In HDFC advance + deposits per employee
was `6.69 crores for the year 2011-12. While talking about deposit per branch ratio, HDFC shows
`112.86 crores as deposit per branch ratio for the year 2011-12. On the other hand, the total business
per branch was `202.25 crores for the same year.
Questions
1. What is your understanding of marketing mix?
(Hint: Organisational tactical tool used to promote the marketer’s offering in the target market,
Product, price, place and promotion, people, process and physical evidence)
2. With reference to the given case study, discuss the significance of marketing mix for a service
organisation like bank.
(Hint: As services are intangible, inseparable, heterogeneous, and perishable in nature, they demand
a combination of marketing activities to promote and sell these services, as opposed to tangible
products. The 8P’s of service marketing mix helps a service organisation like bank to promote and
sell a product/service into the market successfully.)
3. List down HDFCs physical evidence.
(Hint: Financial reports, Pens, diaries, writing pads)
4. Explain the pricing strategy followed by HDFC. Do you find it competitive?
(Hint: Yes. HDFC charges premium price for some operations like opening an account; whereas in
other matters like home loan interest, it is competitively priced as per the market norms.)
5. Describe promotion strategy of HDFC.
(Hint: Aggressive promotional techniques, such as commercials, campaigns, and other marketing
activities)

1. Describe the concept of marketing mix.
2. Explain the components of marketing mix.
3. Analyse the concept of customer value.
4. Summarise the components under total customer costs and total customer benefits.
5. Define value and write the steps in value delivery.
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1. The marketing mix is described as an organisational tactical tool used to promote the marketer’s
offering in the target market. Refer to section Meaning of Marketing Mix
2. The 4Ps of the marketing mix, i.e., Product, Price, Place and Promotion are the main framework for
the marketing management decisions. Refer to section Meaning of Marketing Mix
3. Customer Value,also known as customer-perceived value shows the difference between customer’s
perceived evaluations of the benefits versus the product cost. Refer to section Concept of Customer
Value
4. Benefits which the consumer counts from the product or service include product quality, ownership,
image, organisation’s brand and affiliation, customer service and experience. Refer to section
Concept of Customer Value
5. Value refers to a fair return or equivalent in goods, services or money for something. It is the relative
worth, utility or importance. Refer to section Concept of Customer Value
 https://www.mindtools.com/pages/article/newSTR_94.htm
 http://www.uop.edu.pk/ocontents/marketing%20mix.pdf
 Discuss how an organisation can create customer value.
12
Value Philosophy of Marketing
Unit – 03
Prof. Preksha Yadav
Unit 3: Value Philosophy of Marketing
1. Understanding the Value Philosophy,

2. Value Delivery,
3. Tenets of the Value Philosophy,
4. Concept and Definition of Customer Value,
5. Steps in Value Delivery Task,
6. Co –Creating Value with Customers
Learning Outcome:
To analyse the Customer Value Proposition.

Understanding the Value Philosophy
Interestingly the CIM (Chartered Institute of Marketing) changed their definition of marketing about two
years ago ( they’d had the previous version for the past 30 years –
“Marketing is an organisational function and a set of processes for creating, communicating and
delivering value to customers and for managing customer relationships in ways that benefit the
organisation and its stakeholders.”
Regardless of what business you’re in, it will be based on some form of exchange between the seller and
the customer and both parties will be exchanging something of relative worth.
Value
● A fair return or equivalent in goods, services or money for something
● Relative worth, utility or importance: precise significance
● Something intrinsically desirable
Perceived value
The biggest problem is that human beings are notoriously complicated beings and the perception of value can
differ from one individual to the next. This element of subjectivity is what marketing must try to alleviate – we
need to be certain of who are target audience are, what they want and need, and how we can differentiate our
value proposition from that of our competitors. Our aim as marketers is to ensure that we provide strategies
and tactics that are aligned with a business’ overall goals and that help deliver the best perceived value to
customers.
Value Delivery
The following are the ways to deliver customer value:
● Recognise customers to be served

● Determine how to target potential customers
● Do overall positioning of the product or service
● Design a marketing program
● Use marketing mix
● Choose the right distribution channels as well as payment options
● Change the price of the product or service, if needed
● Make customers feel that their efforts are valued by the organisation
● Create and enhance brand image
Tenets of the Value Philosophy
The tenets of customer value philosophy are as follows:
● Product function
● differentiation point
● Product or service quality
● Customer Service
● Marketing and marketing strategyBranding
● Product price
● Existing relationships or experience

● Personal bias because of the experience and upbringing
Customer Value
Customer Value, also known as customer-perceived value, shows the difference between customer’s perceived evaluations
of the benefits versus the product cost. Customer value helps in measuring the worth of the product or service from the
customer’s perspective and makes comparison between its possible alternatives. Customer value determines whether the
customer perceives enough value of the product offering in exchange of the amount that he is paying for the particular
product or service. The customer will regret making the purchase if he/she feels that the price of the product outweighs its
benefits, especially when the competitor is offering a better product at a lower price.
In simple equation:
CV =B – C
Here,
CV means Customer ValueB means Benefits

C means Cost
https://www.youtube.com/watch?v=UV0GhfIz_mM
The key aspect of developing a profitable customer relationship is customer value. Let us
understand why it is important to consider customer value:
● Prospective customers look for products that are affordable and able to fulfil their needs and wants. They
are not specifically searching for a particular organisation’s product or service. That’s why it is
important to find out the preference, and taste of the customers and get to know what they need.
● Different people have different perceptions of value. The perception about the value of a product or
service will differ from one situation to another. Some customers may find the product worthy on the
other hand some may not. Therefore, it is important to do customisation of customer value, wherever
required.
● Good knowledge of the requirements of the customers helps in aligning customer value.
● Understanding customer value makes the customer feel more valued and it is considered as a very good
practice.
● Delivering customer value helps n achieving the sales target for specific market segments.
Value Philosophy
Value refers to a fair return or equivalent in goods, services or money for something. It is the relative
worth, utility or importance.
Customer perceived value is the idea that the product’s success in any business hinges on its
customers’ belief that the offered product or service can satisfy their needs.
According to Philip Kotler: Total Customer benefit is the “perceived monetary value of the bundle
of economic, functional and psychological benefits customers expect from a given market offering
because of the product, service, people and image“.
Total Customer Cost is the “perceived bundle of costs customers expect to incur in evaluating,
obtaining, using and disposing of the given market offering, including monetary, time, energy and
psychological costs“.
Customer Perceived Value
Let’s understand the components under total customer benefits:
● Product benefit: It includes those attributes of the product which have the ability to entice thepotential consumer for selecting
the offered product over others.
● Services benefit: It includes those attributes of the services offered such as help, instructions offeredalong with the product. For
example, the ingredients and customer helpline numbers.
● Personnel benefit: It refers to the perceived values that are provided by the human resource in the system, involved in the process.
For instance, the sales personnel of the organisation who help the customer in making the right choice on the basis of their
requirements.
● Image benefit: It refers to the brand name linked with the product.
Now let’s understand the components under total customer costs:
● Monetary Cost: It includes the costs that are incurred by a customer for obtaining the product.
● Time Cost: It refers to the time invested by the buyer during the buying process. It includes the timetaken for the customer to visit the
store and to purchase product.
● Energy Cost: It refers to the energy which a buyer spent during the whole process of purchasing theproduct.
● Psychological cost: It refers to the total mental effort made during acquiring and using the productfrom the time it was purchased to
the moment it was consumed.
Steps in Value Delivery
The steps to create customer value are:
1. Try to find out the driving value for the customers through research, survey or conversations. This will help
the businesses to understand what people are looking for and how businesses can fulfil their needs.
2. Determine the value of the product and services offered by the organisation. Also, find out the price for them
and the ancillary cost of usage.
3. Recognise potential customers who find value in our products in comparison to the competitors.
4. Fix the price of the product or service in such a way that it creates a win-win situation. Price should make the
customer feel that he is getting enough value out of the purchase and also increase theorganisation’s profits.
5. Invest in the customers who are more loyal to the brand.
https://www.youtube.com/watch?v=qwHbOIM-hC8&t=117s
Co –Creating Value with Customers
Marketing Environment
Unit 4
Prof. Preksha Yadav
1. Macro Environment,
2. PESTEL,
3. Task Environment,
4. Global Environment,
5. Marketing Environment of India.
Learning Outcome
To relate Marketing terms to real world situations and

evaluate the influence of environment on Marketing decision.
The marketing environment refers to all internal and external factors, which
directly or indirectly influence the organization’s decisions related to
marketing activities.
Internal factors are within the control of an organization; whereas, external

factors do not fall within its control.
The external factors include government, technological, economical, social,

and competitive forces; whereas, organization’s strengths, weaknesses, and
competencies form the part of internal factors.
Types of Marketing Environment:
A marketing environment mostly comprises of the following types of

environment:
1. Micro Environment
2. Macro Environment
Micro Environment
Micro environment refers to the environment, which is closely linked to the

organization, and directly affects organizational activities. It can be divided into
supply side and demand side environment. Supply side environment includes
the suppliers, marketing intermediaries, and competitors who offer raw materials
or supply products. On the other hand, demand side environment includes
customers who consume products
Macro Environment
Macro environment involves a set of environmental factors that is

beyond the control of an organization. These factors influence the
organizational activities to a significant extent. Macro environment is
subject to constant change. The changes in macro environment bring
opportunities and threats in an organization.
PESTEL-A Technique to Environment Analysis
Task Environment
Task Environment of an organization is the environment which directly affects

the organization from attaining business goals. In brief, Task Environment is the
set of conditions originating from suppliers, distributors, customers, stock
markets and competitors which directly affects the organization from achieving
its goals.
Task Environment
Global Environment
Global Environment is multidimensional. It consists of factors such as the political factors or risks,
cultural differences, foreign exchange risks, legal and taxation issues. Therefore, global business
environment comprises:
1. Political
2. Economic
3. Regulatory
4. Tax
5. Social and cultural
6. Legal
7. Technological
Marketing Environment of India
India is considered as the country having larger consumer markets in the world. India has complex
consumer market. Consumers are diverse so organisations have to tailor their marketing strategies
accordingly. Organisations have to face intense competition from small, medium and large retailers
and multinational companies. It is important to consider cultural background, the purchasing power of
people, population etc. Organisations hire a local person having local area knowledge to deal with the
complexities of the Indian market.
Organisation makes a detail marketing plans and take into consideration some main elements like:
1. Stakeholder management
2. Brand
3. Public relations
4. Digital and social media
5. Product value
6. Brand value
UNIT
04 Marketing Environment
Names of Sub-Units
Concept of Marketing Environment, Macro environment, Task environment, PESTEL – A Technique to

Environment Analysis, Global environment
Overview
This unit explains the concept of the market environment. Further, this unit also describes the internal
and external marketing environment along with task environment. PESTEL analysis and global
environment are also discussed in this unit.
Learning Objectives

 Describe the concept of market environment
 Elaborate the market environment factors
 Define PESTEL
 Justify the PESTEL factors
 Summarise the global environment
JGI JAIN
Learning Outcomes

 Examine the concept of market environment
 Conclude the reason for scanning market environment
 Discuss the concept of PESTEL
 Brief the difference between domestic environment and global environment
 https://www.shivajicollege.ac.in/sPanel/uploads/econtent/d39b61fcece4f18a9064b1e7e36ef870.
pdf
4.1 INTRODUCTION
Nike is a globally recognised brand in sports accessories, sports equipment, footwear, athletic apparels,
etc. Nike has gained the advantages of policies formulated by the government of United States for the
growth of their business. The company has gained advantage of the stable currency and low-interest
rate on loans including competitive tax arrangements which led to the growth of its business. Nike has
gained benefits of the initiatives taken by the US government with respect to the transparency in the
global value chain. But, Nike has also been through hard times in other countries like Indonesia, Thailand
and Vietnam due to unrest in the political environment. There were no proper trade pacts between
United States and these three countries, which made it difficult for Nike to trade with these countries.
Nike gained access to the markets of these countries only when the US government established trade
pacts with these countries.
The process of formulation of the vision, mission, goals, and objectives of an organisation is followed by
the analysis of the environment in which the organisation operates. An organisation is influenced by
two types of environment – external and internal. The external environment includes external factors
that are beyond the organisation’s control, whereas the internal environment includes internal factors
that are within the control of the organisation. External factors offer opportunities
and create threats for the organisation. However, internal factors help in identifying strengths and
weaknesses of the organisation in various functional areas.
Therefore, the organisation needs to analyse the environment in which it operates.
It cannot formulate effective strategies without analysing its environment. Even the formulation of
vision and mission requires studying external environment as the businesses survive/grow in a dynamic
environment. No organisation operates in isolation; its business operations are affected by a number of
external factors. These external factors comprise political, economic, social, cultural, technological and
legal factors. For example, government policies and plans change substantially with a change in political
forces within the government. The political change in the government can affect an organisation greatly.
Similarly, an organisation or an industry as a whole gets affected by economic conditions prevailing in
a country. For instance, in times of recession, the organisation witnesses a decline in sales. In addition,
the organisation has to cope with interest rate fluctuations and inflation. The same is true for social,
cultural, technological and legal factors. The organisation does not have any direct control over these
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UNIT 04: Marketing Environment JGI JAIN
external factors. However, the organisation is hugely affected by these factors. On the other hand, there
are some internal factors which affect the organisation’s operations. These include organisational
culture, structure, capabilities and resources. The organisation has direct control over these internal
factors. The environment in the context of an organisation refers to all these factors (external and
internal), influences and circumstances that directly or indirectly affect the organisation.
Thus, in order to retain its market position and have an upper hand over its competitors, the organisation
needs to be aware of its environment. The long-term sustainability and success of the organisation
mostly depends on the favourability of different environmental factors. For example, the Internet and e-
commerce have totally changed the mode of business transactions. e-books and e-papers have also
posed serious challenges to the traditional publishing industry. Increasing concern for the eco-system
is forcing organisations to become eco-friendly. Therefore, those organisations which cannot adapt to
these environmental changes find it difficult to survive in the competitive marketplace.
There are three forces that form the vital part of an organisation’s environment and drive its growth.
These forces are discussed in the following points:
 Customers: They demand customised products and want the organisation’s individual attention.
Customers’ tastes and expectations influence marketing strategies of the organisation to a great
extent.
 Competition: It drives out inferior products out of the market. Competition compels organisations
to produce better quality products at competitive prices and provide best services. In addition, it
initiates fight for the market share and thus influences the organisation’s strategies.
 Change in market needs: It leads to innovation of new products and services and their introduction
in the market. Change is an imperative part of the organisation in today’s dynamic world.
4.2 CONCEPT OF MARKETING ENVIRONMENT

A market can be defined as a system of institutions, instructions and processes relating to the exchange
of goods and services between persons or organisations.
Markets can be defined on the basis of various factors, such as geographical dimensions, consumers,
products or even the behavioural aspects of consumers. They are mainly divided into two types, namely
international market and domestic market.
According to Philip kotler, “A company’s marketing environment consists of the internal factors &
forces, which affect the company’s ability to develop & maintain successful transactions & relationships
with the company’s target customers.”
The marketing environment of an organisation consists of an internal and external environment.
By monitoring the marketing environment, marketers try to predict potential changes in terms of
opportunities and threats for the business. With these changes, marketers continue to modify their
strategies and plans. As stated, the marketing environment consists of various internal and external
factors, which directly or indirectly influence an organisation’s marketing decisions. Organisation’s
strengths, weaknesses and competencies are the internal factors, while external factors include
government, technological, economic, social and competitive forces.
Internal factors are within the control of an organisation, whereas external factors do not fall within its
control. External factors are uncontrollable factors which affects the organisation.
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Figure 1 shows the types of marketing environment:
Marketing
Environment
Internal Environment External Environment

Or Or
Controllable Factors Uncontrollable Factors
Micro Environment
Macro Environment
Figure 1: Types of Marketing Environment

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4.2.1 Macro Environment

Macro environment involves a set of environmental factors that is beyond the control of an organisation.
These factors influence organisational activities to a significant extent. Macro environment is subject
to constant change. The changes in macro environment bring both opportunities and threats to an
organisation. The following are the factors that affect the macro environment of an organisation:
 Demographic environment: This refers to the type of environment in which there is scientific study
of population’s age, gender, educational qualification, occupation, income and location. These
elements are also called demographic variables. Before marketing a product, a marketer collects
information to find a suitable market for the product. Consider the example of an automobile
company, which identifies people belonging to high-income group, aged between 35 to 60 years,
to sell its luxury cars. This will be the company’s ideal demographic for selling its luxury cars. Any
change in this environment cause variations in the individuals tastes, preferences and buying
patterns. This also persuades an organisation to time to time modify their marketing strategies so
that they can satisfy the needs of customers.
 Economic environment: This type of environment influence the costs structure of the organisation
and purchasing power of the customers. The customers purchasing power is based on the customer’s
current income, their savings, product prices and credit availability. The significance of economic
environment is different for different people. Consider an example of a farmer for whom factors
such as weather conditions, price of fertilizers, etc., are important. For a TV channel, the steep rise
in the Internet advertising matters a lot from business perspective but not weather conditions.
Similarly, for a farmer, advertising does not matter from the perspective of agriculture. The factors
affecting the economic environment are:
 Inflation: Inflation is responsible for influencing the demand of the customers for various
products. For example, Demand for the cars will decrease if the price of petrol increases.
 Interest rates: Interest rates are determined by the organisation’s borrowing activities. For
example, if the bank increases the interest rate on loans, the organisation may have to cut their
important activities.
 Unemployment: Unemployment is the result of nil or zero income state. This influence individual’s
purchasing power.
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 Customer income: This factor is responsible for regulating the customer’s buying behaviour.
Any increase or decrease in the customer’s income results to change in the spending patterns or
habits of the customers.
 Monetary and fiscal policy: This policy refers to the government policy which tries to stabilise
country’s economy. This is done by controlling interest rates and money supply in an economy.
Fiscal policy refers to the policy which regulates the government spending in different areas by
collecting revenue from citizens and by taxing their income.
 Natural environment: This refers to the surrounding which has natural resources. These resources
are required by the organisations to manufacture products or offer services. Natural factors that
affect marketing activities of an organisation include:
 Socio-cultural environment: This refers to the surrounding which consists of factors like values,
attitude, education, language, religion, perceptions and buying behaviour. This environment
explains the characteristics of the society and class in which an organisation exists. The screening
of the socio-cultural environment enables an organisation to recognise organisation’s threats and
opportunities.
 Technological environment: Technology has a great role in contributing to the country’s economic
growth. Technology is the indispensable part of our lives. It is rapidly changing force, which has the
strong potential for creating new opportunities for the organisation. For example; Smart watch and
fitness tracker has captured the market of smart watches. Therefore, marketers should scan the
technological environment. Following are the factors in technological environment:
 Rate at which the technology is changing
 R&D (Research and development)
 Increased regulation
 Political and legal environment: This refers to the surrounding which consists of legal bodies
and government agencies which impacts the organisations and individuals. Interference of the
government in organisations work, ban, fines, penalties etc. marketing activities of the organisation.
4.2.2 Task Environment

Task environment affects the working of the organisation. The factors under this environment are:
 Suppliers: Suppliers provide raw material to produce goods and services. They can influence the
profit of an organisation because the price of raw material determines the final price of the product.
 Marketing intermediaries: They help organisations in establishing a link with customers by
promoting, selling and distributing products. Marketing intermediaries include:
 Merchants: This category includes resellers such as wholesalers and retailers. Resellers purchase
products from organisations and sell them to customers. Apart from this, there are distribution
centres that help organisations to store goods. A warehouse is an example of a distribution
centre.
 agents: Agents work as an extension of the manufacturing company. They do not directly own
the product/service, but take possession of the product/service in its distribution process.
 Agents help to promote products/services by making customers aware of their benefits. An
advertising agency is an example of a marketing agency.
 Facilitators: Facilitators provide financial help for business transactions. Examples of facilitators
are banks, credit organisations and insurance organisations.
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 Customers: Customers buy product/service of an organisation for final consumption. An

organisation undertakes research and development activities to analyse the needs of customers
and manufactures products according to those needs.
 Competitors: Competitors help an organisation to differentiate its products in the market.
 Public: Public is also one of the major components of micro environment. It includes a group of
individuals that influence an organisation’s ability to fulfil its objectives. Thus, it is a responsibility
of an organisation to satisfy the general interest of the public. In other words, an organisation must
evaluate its actions in terms of how they can affect the public. By doing so, an organisation could
develop an effective marketing plan for both the public as well as customers.
4.3 PESTEL – a TECHNIQUE TO ENVIRONMENT ANALYSIS

PESTEL is the technique which is used by the organisation to track the environment special if they are
launching a new product or service. PESTEL stands for:
P-Political factors
E-Economic factors
S-Social factors
T-Technological factors
E-Environmental factors
L-Legal factors
The different components of the external environment are political, economic, socio-cultural,
technological, ecological and legal. Their abbreviated form is known as PESTEL. Therefore, the external
environment analysis is also known as PESTEL analysis. Every component of the external environment
plays an essential role in influencing the activities of the organisation. There is no relative importance
given to a particular component. Figure 2 shows the PESTEL analysis
P E S T E L
• Government • Economic • Population • Technology • Weather • Discrimination

Policy Growth Growth Rate Incentives • Climate Law
• Political • Exchange Rates • Age Distribution • Level of • Environmental • Antitrust Laws
Stability • Interest Rates • Career Attitudes Innovation Policies • Employment
• Corruption • Inflation Rates • Safety Emphasis • Automation • Climate Change Law
• Foreign Trade • Disposable • Health • R&D Activity • Pressures from • Consumer
Policy Income Consciousness • Technological NGO’s Protection Law
• Tax Policy • Unemployment • Lifestyle Charge • Copyright and
• Labour Law Rates Attitudes • Technical Patent Laws
• Trade • Cultural awareness • Health and
Restriction Barriers Safety Laws
Figure 2: PESTEL analysis

Source: https://www.business-to-you.com/scanning-the-environment-pestel-analysis/
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Let’s understand the factors:

 Political factors: These include government regulations such as employment laws, environmental
regulations and tax policy.
 Economic factors: These affect the cost of capital and purchasing power of an organisation. These
factors include economic growth, interest rates, inflation and currency exchange rates.
 Social factors: These impact the customer’s need and potential market sise for an organisation’s
goods and services. These factors include population growth, age demographics and attitude
towards health.
 Technological factors: These influence barriers to entry, make or buy decisions and investment in
innovation, such as automation, investment incentives and rate of technological change.
 Ecological or Environmental factors: The ecological environment signifies the natural environment.
Similar to the political, economic, socio-cultural and technological factors, the natural environment
also has a significant impact over an organisation. For example, agro industries are found in
places which are favourable for agricultural productivity. In addition, nowadays consumers are
increasingly concerned about global warming and environmental damage. Recent trends suggest
that more and more consumers are switching to eco-friendly products to reduce environmental
pollution. Further, both governmental and non-governmental organisations (NGOs) are also putting
pressure on business organisations to reduce their carbon footprint and produce more eco-friendly
products. All over the world, organisations are facing protests by farmers and local people who
get affected by environmental damage caused by business organisations. Thus, an organisation
needs to be concerned about ecological environment, and make continuous efforts to minimise
environmental damage. In other words, the organisation can create a better brand image by being
more environmentally conscious. Therefore, the ecological environment plays a vital role in the
long-term success of the organisation. Environment factors consist of ecological and environmental
aspects such as weather, climate, environmental offsets and climate change.
 Legal Factors: Legal factors affect the work of the organisation. These are laws such as discrimination
laws, antitrust laws, employment laws, consumer protection laws, copyright and patent laws, and
health and safety laws. Organisation must have a clear understanding of these laws to trade
successfully and ethically.
4.4 MARKETING ENVIRONMENT OF INDIA

India is considered as the country having larger consumer markets in the world. India has complex
consumer market. Consumers are diverse so organisations have to tailor their marketing strategies
accordingly. Organisations have to face intense competition from small, medium and large retailers
and multinational companies. It is important to consider cultural background, the purchasing power of
people, population sise etc. Organisations hire a local person having local area knowledge to deal with
the complexities of the Indian market.
Organisation makes a detail marketing plans and take into consideration some main elements like:
 Stakeholder management
 Brand
 Public relations
 Digital and social media
 Product value
 Brand value
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JGI JAIN
The socio-cultural environment of India is changing and evolving which affects consumer choices.
Price of the product is very important for the consumers in India especially lower-middle class and
lower income people. India has rural population of approximately seven hundred million, leaving many
opportunities for growth.
Let’s understand the Indian socio-cultural environment with the help of an example.
For example, when McDonald’s entered India, it did not launch its Big Mac burger, which is beef
preparation. Since majority of Indians are Hindus, they don’t consume beef. Therefore, instead of beef
burgers, McDonald’s serves chicken, fish and vegetable burgers in India.
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Premium Business Paper aims to provide consumers an opportunity to lessen the adverse impact of
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The exclusive chemical treatment has empowered the paper to be an eco-friendly paper with great
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generates by-products during this process. The by-products include a large number of organo-chlorine
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Technology almost reduces the creation of such toxins. This is attained by relieving elemental chlorine
with chlorine dioxide. Ozone treatment is advancement over ECF, which results in lower chemical
usage and reduced water pollution. These determinations cover all critical elements of environmental
sustainability and have directed ITC to be the only organisation in the world of its size to achieve the
success of being carbon positive, water-positive and triumphing almost 100% solid waste recycling.
4.5 GLOBAL ENVIRONMENT

Global Environment is multidimensional. It consists of factors such as the political factors or risks,
cultural differences, foreign exchange risks, legal and taxation issues. Therefore, global business
environment comprises:
 Political
 Economic
 Regulatory
 Tax
 Social and cultural
 Legal
 Technological
The global business environment refers to the surrounding in which international or global organisations
run their businesses. This business environment brings along it with many differences.
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There is some difference between business environment and international business environment. Let’s
discuss.
Global business environment refers to the business environment or surroundings in which the
international organisations operate. Whereas business environment is the surrounding wherein
domestic organisation operates. An international market is defined geographically as a market outside
the international boundaries of a company’s country of citizenship. A company is usually a citizen of the
country where it was organised. IBM, for example, was
formed in the United States. Thus, IBM’s international market would be any geographical area outside
the territorial boundary of the US, where it conducts business. On the other hand, domestic market is
conceptually opposite of international market. It is the geographic region within the national boundaries
of the company’s home country.
To operate in the global business environment, an organisation has to consider following things:
 Import and Export
 Licensing
 Franchising
 Joint venture
 Foreign Direct Investment
Following are the advantages of global business environment:

 It helps to expand the business
 It helps in attracting more customers
 It enables the international companies to do proper management of the product life cycle
 It helps in mutual growth
 The marketing environment has the internal and external environment.

 Internal factors are within the control of an organisation, whereas external factors do not fall within
its control.
 External factors are uncontrollable factors which affects the organisation.
 Macro environment has various environmental factors which are beyond the control of an
organisation. These factors influence organisational activities to a significant extent. Macro
environment is subject to constant change.
 Based on internal and external factors, the two major categories of marketing environment are:
1. Micro environment
2. Macro environment
 Micro environment links closely to an organisation and affects its activities directly.
 Macro environment involves a set of environmental factors that is beyond the control of an
organisation.
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JGI JAIN
 The major task environmental forces that affect an organisation are:

 Suppliers
 Marketing intermediaries
 Customers
 Competitors
 The factors that affect the macro environment of an organisation are:
 Demographic environment
 Economic environment
 Natural environment
 Socio-cultural environment
 Technological environment
 Political and legal environment
 PESTEL analysis is a scan of external macro-environment wherein the organisation exists.
4.7 GLOSSARY
 Socio-cultural environment: It consists of elements, such as society’s basic values, attitudes,

education, language, religion, perceptions and buying behaviour.
 Public: It includes a group of individuals that influence an organisation’s ability to fulfil its objectives.
 PESTEL analysis: It stands for the political, economic, socio-cultural and technological environment.
 global business environment: It refers to the surrounding in which international or global
organisations run their businesses.
4.8 CASE STUDY: GLOBAL MARKETING STRATEGIES FOR TANGO SPICES
Case Objective
This case study aims to describe the global marketing strategies for Tango spices.
Tango Spices Ltd. (TSL) is the biggest spice marketer in India. TSL decided to launch an aggressive bid
for Europe’s major spice marketer Chilean. It is a very rare case that an Indian company is interested
in making an unsolicited aggressive takeover bid for an international company. Tango Spices has its
competencies in Indian spices and they dominate the Indian markets.
International markets
The important destination markets for the Tango spices exports have been Europe and America. The
competencies of Europe’s major spice marketer Chilean, consist of Italian herbs and spices. The Indian
company bidding for the takeover wishes to synergise its operations in the world market. It also wants
to take advantage of entering the international market enjoyed by the Italian company in several
countries, where its products are not being sold presently. The move for the aggressive takeover follows
Chilean’s rejection of an agreement entered a year back. At that time, Chilean was suffering losses and it
offered majority shares at a price of € 2.25. A total of 20% of shares was transferred at that time. Chilean
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turn around its business operations in one year and in the last quarter, the company made good profits.
The promoters having residual holding of 35 per cent do not want to transfer the shares now and also
rejected the agreement with request that the earlier offer price was not good enough. Tango spices
revised their offer to € 2.95. After this, largest shareholders of Chilean showed their interest in selling
their stakes. On the other hand, the promoters maintained their position on this matter.
The important issues on hand for them were:
 Working on strategies for the international expansion
 Understanding the market potential of the overseas markets
 Importance of customising the products to suit the environment
 Overcoming the challenges and ensuring success
Conclusion
Going through the process of buying of shares in the market Tango spices gradually consolidated their
hold in Chilean to 45% shares. This made them a major shareholder in the company and this prompted
them to be ready for a takeover. At the same time, Yippee Spices Ltd. was trying hard to improve their
position within the company so that they do not leave any place for Chilean’s promoters to stop their bid
for the takeover process in the future.
Questions
1. Define international market.
(Hint: global surroundings, outside physical boundaries)
2. Why was TSL interested in taking over Chilean?
(Hint: Takeover would synergise its operations in the world market and it can take advantage of
entering the international market)
3. What strategies are followed by organisations to enter into international markets?
(Hint: The choice of strategy to be used in the international market depends on the country’s culture,
laws, competition, etc.)
4. State the reasons for entering international markets.
(Hint: Entering international markets help in fast industrialisation and rise in the standard of living)
5. What strategic alternatives can be followed by TSL for the takeover bid?
(Hint: Stability strategy, expansion strategy, retrenchment strategy or the combination strategy)
B. Essay Type Questions

1. Global Environment is multidimensional. Describe the global environment.
2. India is considered as the country having larger consumer markets in the world. Explain the
marketing environment of India.
3. This technique is used to evaluate market growth or market decline and as such the position,
potential and direction for a business. Which technique is this? Explain.
4. Define agent and the role of the agent in detail.
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5. Elaborate uncontrollable and controllable factors in detail.
B. Hints for Essay Type Questions

1. It consists of factors such as the political factors or risks, cultural differences, foreign exchange
risks, legal and taxation issues. Refer to Section Global Environment
2. Organisations have to face intense competition from small, medium and large retailers and
multinational companies. Refer to Section Marketing Environment of India
3. PESTEL refers to the external environment scanning tool to scan the political, economic, socio-
cultural and technological environment. Refer to Section PESTEL – A Technique to Environment
Analysis
4. Agents work as an extension of the manufacturing company. Refer to Section Concept of Marketing
Environment
5. Internal factors are within the control of an organisation, whereas external factors do not fall
within its control. External factors are uncontrollable factors which affects the organisation. Refer
to Section Concept of Marketing Environment
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 Describe few examples of organisations that are late entrants but are still successful.
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UNIT
05 Consumer Behaviour
Names of Sub-Units
Understanding Consumer Behaviour as a Process, Factors Influencing Buying Behaviour, Buying

Decision Process and Differences between Consumer Markets and Business Markets
Overview
The unit begins by explaining the concept of consumer behaviour and factors influencing buying
behaviour. Further, it discusses the buying decision process and differences between consumer
markets and business markets.
Learning Objectives

 Define the consumer behaviour
 Describe the factors influencing buying behaviour
 Examine the buying decision process
 State the stages in buying decision process
 Distinguish between consumer markets and business markets
JGI JAIN
Learning Outcomes

 Assess the concepts of consumer behaviour
 Evaluate the factors influencing buying behaviour
 Analyse the buying decision process
 Design the consumer markets
 Identify the business markets
 http://aryacollegeludhiana.in/E_BOOK/commerce/Marketing_Management.pdf
5.1 INTRODUCTION
An organisation in order to be successful requires assessing not only the market environment but also
target customers and their preferences. It involves analysing both, customer market and business
market. Analysing the customer market involves examining the requirements of customers and
satisfying their needs. In a rapid changing business environment, analysing the customer market
has become an essential part for an organisation. Understanding the frequently-changing tastes of
customers helps an organisation to satisfy customers’ requirements. For establishing a better market
value, it is also important for an organisation to identify customers’ buying behaviour and grab the
attention of the customers’ psychology. A customer usually goes through several stages while taking a
buying decision. An organisation should recognise customer behaviour at each stage before offering
and promoting a product/service in the market.
Apart from customer market, organisations also einvolve in Business-to-Business (B2B) activities. Such
activities are performed in a business market, which consists of buyers and suppliers who buy and
sell products as an intermediate material for their production. This market consists of manufacturers,
material suppliers, machinery suppliers, producers of other productive resources and various other
marketing services. The buying process and buying behaviour in a business market is normally different
from a customer market. Therefore, an understanding of business market is important for marketing
professionals.
5.2 UNDERSTANDING CONSUMER BEHAVIOUR AS A PROCESS

A customer is an individual or business that buys goods or services created by a business. Attracting
customers is the essential objective of most open-facing organisations, because the customer makes
demand for goods and services. Organisations frequently contend through promotions or bring costs
down to pull in an ever bigger client base.
A customer selects purchases, use or dispose of products and services, ideas or experiences to satisfy
needs and wants. Studies conducted on customers have indicated that customer buying behaviour
is largely affected by their thought processes and the past experiences (cognitive). So understanding
customer behaviour aims at decoding how individuals make decisions on how to spend their available
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UNIT 05: Consumer Behaviour JGI JAIN
resources like time, money and efforts on various consumption-related items. A marketer aims at
understanding some key aspects of customer behaviour such as:
 What makes a customer to buy a particular product/brand?
 How do they buy them?
 From where do they buy these products?
 What is the frequency of buying products?
 When do they buy them?
Along with this, the marketer also aims to understand what factors influence the decision making
process of customers. Hence, customer behaviour is all about understanding the way an individual
responds to any product or service. In other words, customer behaviour is the study of when, how, why,
and where people purchase or do not purchase any product/ service. It also aims to understand the
decision-making process of customers.
The study of customer behaviour is an important field of study and it is a separate branch in the
marketing discipline. Marketers now know that customers do not always behave in the same manner
as they have lots of alternatives with them so their buying behaviour may differ from one situation to
another.
Buying behaviour of customers is influenced by cultural, social, personal and psychological factors. In
this context, we can discuss the black box model. This model explains the interaction between external
stimuli, customer characteristics, and decision making process and customer responses to these.
Marketing stimuli are planned by organisations, and the environmental stimulus is provided by social
factors such as economic, political and cultural situations of the society. Customers are exposed to
various external stimuli in the marketplace. Some are controlled by the marketer and some others are
environmental in nature. While placing any product in the market, marketers should understand the
stimuli and the response of customers. Figure 1 shows the structure of black box for analysing customer
behaviour:
BLACK BOX
STIMULI
(BUYER’S MIND) RESPONSES
EXTERNAL FACTORS
INTERNAL FACTORS
Marketing Mix Consumer Characteristics Purchase

Product Beliefs/Attitudes Product
Price Values Brand
Place Knowledge Source
Promotion Motives Amount
Perceptions Method of Payment
Lifestyle
Environmental Decision making process

Economic Problem solving
Technological Information search
Political Alternate evaluation No Purchase
Purchase
Cultural
Post Purchase
Demographic
Evaluation
Situational
Figure 1: Black Box Structure
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5.3 FACTORS INFLUENCING BUYING BEHAVIOUR

The consumer decision making is a complex procedure, which involves everything starting from
problem recognition to post purchase activities. Every consumer has different needs and according to
their needs, they make their buying decision. With regards to purchase decision making in a business
organisation, decisions depend on the cost and strategic importance of the purchase. Decision making is
the way toward settling on decisions by distinguishing a choice, gathering data, and surveying elective
goals. In other words, decision making is an everyday action for any individual. There is no special case
about that. With regards to business, decision making is a routine and a procedure too.
Powerful and effective decisions benefit organisations and ineffective ones cause loss to organisations.
Hence, corporate decision making process is the most basic procedure in any organisation.
Let’s now understand the decision marketing process from the customer’s point of view. There are
various factors that influence customer behaviour.
These factors are shown in Figure 2:
Cultural Factors
Social Factors
Personal Factors
Psychological Factors
Figure 2: Factors Influencing Buying Behaviour

Let us discuss these factors in detail.
 Cultural factors: “Culture encompasses religion, food, what we wear, how we wear it, our language,
marriage, music, what we believe is right or wrong,how we sit at the table, how we greet visitors, how
we behave with loved ones, and a million other things,” Cristina De Rossi, Live Science.“It shares its
etymology with a number of other words related to actively fostering growth,” De Rossi said. Culture
alludes to the combined store of learning, knowledge, convictions,values, dispositions, implications,
pecking orders, religion, ideas of time,jobs, spatial relations, ideas of the universe, and material
items and assets procured by a gathering of individuals over the span of ages through individual
and gathering endeavours.
People from the western part of the world would prefer eating hotdogs or burgers than to eat
chapattis and samosas. In marketing, we refer to various types of culture such as western culture,
eastern culture, Latin culture, middle culture, middle eastern culture, African culture, etc.
Distinctive layers of culture exist at the accompanying dimensions:

 The national dimension: Associated with the country all in all
 The local dimension: Associated with ethnic, phonetic, or religious contrasts that exist inside a
country
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 Sex-role orientation: Role of men and women in various tasks

 The age level: Associated with the contrasts among grandparents and guardians, and kids
 The social class level: Associated with instructive chances and contrasts in occupation
 The corporate dimension: Associated with the specific culture of an association
 Social factors: The buying behaviour of a customer is also influenced by social factors such as
reference groups, family and customers’ current status. Reference group refers to groups which have
a face-to-face influence on the attitude and behaviour of customers. Groups with direct influence
on customers are known as membership groups. There is another group called primary group. This
consists of the people with whom one interacts frequently and informally such as friends, family
and co-workers. People may also belong to secondary groups such as religious groups, trade unions
and professionals, where interaction takes place in a more formal manner.
When a person hopes to join a particular group, it is termed as aspirational group and when the
same person rejects a group, it is known as dissociative group.
A person may participate in different groups, clubs and organisations where he/she performs
different roles and occupies different status. Some people prefer to opt for a product depending on
his/her existing status in the society. For example, a vice president of marketing is expected to play a
higher role and with a more prestigious status than a sales manager. Therefore, a marketer also has
to analyse the customer market based on the perceived status of the customer in addition to other
factors influencing purchasing decisions.
 Personal factors: Decision of a customer can also be influenced by personal factors such as age,
occupation, personality, values, lifestyle, economic condition, and stage of the person in his/her life
cycle. These factors have a direct impact on the behaviour of customers, and therefore, marketers
should analyse these factors closely. Through Family life cycle, an organisation attempts to describe
the effect of family through the phase of marriage, births and deaths and family income. The Family
life cycle is a marketing strategy for isolating the parts of the family market at various phases of
life. For example, in a joint family, there may be adolescents, guardians,grandparents, uncles and
aunties, all in various stages of their life. By accepting every one of them as a target market, what
can be the marketing methodologies that you can embrace can be replied by the family life cycle.
The fundamental points of interest of the family life cycle idea are:
 It gives a system of envisioning the market development through market estimation by judging
the number of people going into each phase of a cycle in one year.
 It gives an overview of the factors which influence the section of a family into the distinctive
phases of life.
The idea has developed in fame over the most recent couple of decades in light of being connected
in various sorts of ventures with victories. The family life cycle is concentrating on shopping
styles, data use and basic decision making by an individual in the diverse phases of his life.
The stages in the family life cycle in consumer behaviour are mentioned as follows:
 Young and Single: The youthful and single statistic incorporates the individuals who are
unmarried and don’t have any kids, just as same-sex couples, regardless of whether the
couple has youngsters, as indicated by the Marketing Teacher site. This statistic is most
fascinating in purchasing of vogue garments and vehicles. Individuals in the youthful and
single class will likewise purchase essential kitchen machines like:
 Toasters
 Openers
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 Roti makers
 Microwaves
 Small size refrigerators
Basic furniture like:

 Beds
 Couches
 Study tables
 Computer tables
These buyers make a few purchases that will make them fascinating to a potential mate also. Some of
these purchases are:
 Architect cologne
 Salon services
 Skin/hair treatments
 Newlyweds: Couples who are recently married without any kid are financially strong. But these
couples may have quite recently gone into a home loan responsibility, which implies they may
cut their spending on vanity things. Individuals in the love bird class may buy top of the line
furniture that will keep going for quite a long time, alongside life coverage,as a preparatory
instrument to keep their conceivably developing family monetarily protected.
 Family-Full Nest 1 and 2: This stage of the family life cycle comprises families having youngsters.
The quantity of kids may fluctuate and consequently they are sorted in Nest 1, Nest 2 and so
forth. The buys of these individuals are ruled by the kids needs for most of the part. In this
manner, individuals having 2 children are probably going to set aside extra cash and spend
more later on their kids.
 Solitary survivor: This can comprise either a widow or widower, who is yet working or who has
resigned from her/his job. The principal center of the solitary class is around reserve funds and
their buys are commanded by convenience and medication generally.
 Psychological factors: Psychological processes indicate the mental consciousness of a person that
drives him/her to respond to the marketing and environmental stimuli. The buying behaviour of
any customer is directly influenced by his/her mind set, which helps him/her in completing the
decision-making process. In a competitive market, marketers require studying human mind set well
as it helps in better product/service management decisions.
5.4 BUYING DECISION PROCESS

Philip Kotler defines, “The buying decision process is the decision-making process used by consumers
regarding market transactions before, during, and after the purchase of a good or service. It can be
seen as a particular form of a cost–benefit analysis in the presence of multiple alternatives.” The buying
decision process involves stages that a person undertakes before, during and after the purchase of
any product. Making decisions about purchasing a product, based on its potentials, is a psychological
construct. A customer needs to go through several stages for selecting the desired product out of
multiple alternatives.
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The buying decision process is basically a five stage model as shown in Figure 3:
Problem Information Evaluation of

Recognition Search Alternatives
Purchase Post-purchase
Decision Behaviour
Figure 3: Buying Decision Process

The buying decision making process starts well before the actual purchase, but a customer may not
always pass through these stages for purchasing a product. For example, a person using the Colgate
toothpaste on a regular basis need not follow information search and evaluation. Here, the buying
process starts directly from the identification of a need. The scenario may differ for a new customer,
purchasing any product for the first time. The Bissell Group has developed its “steam n’ clean” vacuum
cleaner based on the trial experience of the product. As a result, the brand has come out with some
changes in colour and commercial features of its products. Therefore, marketers always need to
understand the buying process of their customers. Let us now discuss various stages involved in the
buying decision making process:
1. Problem recognition: Recognising a problem is the first stage of the buying decision by a customer.
This stage takes place when a problem or need for a particular product is identified through internal
and external stimuli.
The internal stimuli may drive a person to meet his/her basic needs such as hunger, thirst, shelter,
etc. A person may also get influenced by the external stimuli such as television ads or neighbour’s
buying decisions. Markets need to understand the need factor that drives a customer to buy a
product.
2. Information search: It is the second stage of the buying decision process. Once a customer recognises
the problem or need for a product/service, he/she goes for searching information related to his/her
requirements. The role of a marketer is to provide all possible information desired by a customer
through various means such as customer service personnel, news feed, ads, websites, etc.
3. Evaluation of alternatives: After gaining the required information, a customer evaluates all
possible alternatives. While evaluating an alternative,a customer may consider different criteria
for evaluation. Table 1 exemplifies different possible criteria for selecting a product/service:
Table 1: Different Possible Criteria for Selecting a Product/Service

PRODUCT/SERVICE CRITERIA FOR EVALUATION
Hotels • Geographic
• Service
• Cleanliness
• Price
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PRODUCT/SERVICE CRITERIA FOR EVALUATION

Toothpaste • Germ killing potentials
• Price
• Flavour
Tires • Safety
• Brand
• Price
• Quality
Calculator • Display size
• Numerical features
• Price
• Warranty
Some intangible features such as market value, brand reputation and customer feedback are also
considered for alternative evaluation.
4. Purchase decision: Purchase decision is the fourth stage in the buying decision process. The
purchase decision by a customer is also influenced by several factors such as brand name, previous
experience, terms of sale, availability of the product and the payment method. While taking a
purchase decision, the customer may perceive different types of risks associated with the product.
These risks are functional (product do not meet the expectations), physical (use of the product
threats the health of user), financial (product is not worth the paid amount), social (results in
embarrassment), psychological (affects the mental well-being) and time (a better alternative is
expected in future).
Therefore, marketers should understand the expected risks associated with the product and try to
minimise these risks.
5. Postpurchase behaviour: Post purchase behaviour occurs when a customer compares the purchased
product/service with his/her expectations and feels satisfied or dissatisfied. Most organisations aim
to provide a better post purchase service to the customer by offering product warranty, servicing
guaranty, instalment facility, etc. Post purchase services aim to make customers believe that they
are equally valued even after the deal is closed. Most organisations often make follow-up calls during
the post-purchase phase in an attempt to convince the customer towards making the right buying
decision. Marketing communication should ensure that customers feel good about the product and
refer it to others.
5.5 DIFFERENCES BETWEEN CONSUMER MARKETS AND BUSINESS

The business market comprises all organisations that buy goods and services to be used in the production
of other products and services that are sold, rented or supplied to/by others. It also includes retailers
and wholesalers that acquire goods for the purpose of reselling or renting them to others to earn profits.
In the business buying process, business buyers initially determine products and services they require.
Subsequently they find, evaluate and choose among alternative suppliers and brands. Organisations
dealing in a business market need to understand the market and its buyer’s behaviour properly.
Philip Kotler defines, “The business market consists of all the organisations that acquire goods and
services used in the production of other products or services that are sold, rented, or supplied to others.”
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The business market is usually filled with institutional buyers and suppliers such as government,
educational institutions and other public service organisations. It also consists of farming organisations
such as agricultural, fisheries and forestry organisations. Mining, manufacturing, transportation,
construction,communication, banking and financial institutions are also important constituents of a
business market. A business market consists of the following aspects:
 Structure of business market: The structure of a business market involves some businesses as
buyers and some as sellers. In such a case, the product of one organisation is the raw material or
intermediate product for another organisation. The market of a business customer is geographically
more cantered. Buyers and sellers in a business market, generally try to locate themselves in one
area only as it helps in dealing with prospects, availing the required material without the wastage of
time, reducing transportation costs of intermediary items, etc. Take an example of the most textile
organisations in India that are located in cotton producing states of Gujarat and Maharashtra.
 Types of customers in business market: It involves institutional customers. The representatives of
an organisation take the purchasing decision. There are usually more than one individual involved
in the panel that represent the organisation as a customer. Since an organisation has its own
recognition as a dummy buyer, the purchase order is also taken under the name of the organisation.
For example, while Delhi Transport Corporation buys buses for public service from Tata Motors,
Delhi Transport Corporation is regarded as a customer and not as any representative or owner.
 Demand pattern of business market: The demand for a product in business market is usually few
in numbers but huge in quantities. When an organisation buys some products, they are either to be
used as organisational assets or as material for its production process. The demand in a business
market is less elastic as the requirement solely depends on the size of the business organisation.
For example, when Bharat Heavy Electricals Limitedbuys computers for office use from Hindustan
Computer Limited, the size of order will be close to the size of office staff in the organisation.
 Buying decision of business market: It involves a professional buying decision that gets influenced
by various internal and external factors of an organisation. The process of buying decision making
is a time consuming and complex one. It involves a long-term relationship with the seller, which
establishes more loyal relationship between buyers and sellers. For example, Reliance has been
purchasing mobile handsets produced by LG sinceReliance entered this business sector.
 Buying process of business market: The buying process in a business market happens to be a formal
buying process where the buyer organisation invites tenders or proposals from sellers in the market.
In some other cases, the buyer organisations may also search for sellers from references, Internet
or through advertisements posted by the sellers. In most cases, there is a tendency of repetitive
selection of the same seller for the same service. There is a formal purchase order placement and
delivery. For example, when a government body orders for the dress material for employee uniforms,
a formal order is placed to supply the required quality within a stipulated timeframe.
Table 2 shows the difference between consumer market and business market:
S. No. Business Market Consumer Market
1. It refers to organisations, businesses or entities It refers to markets whereby businesses or producers

that acquire products and services for use in the sell their products or services directly to the final
production of other services and products. consumers.
2. It has fewer buyers who often buy in large It has many buyers who purchase in small quantities.
quantities.
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S. No. Business Market Consumer Market
3. It has formalised buying processes whereby It does not have formalised buying processes
the purchasing process involves following the
organisation’s protocol and the complete chain
of command
4. This market entails many products, decision The decision making in consumer markets is fast
making before purchases are made is slow. since impulse buying is rampant.
5. Invest heavily in capital equipment Invest heavily in marketing and promotion activities
 An individual or group is called customer when he/she/they select, purchase,use, or dispose of

products and services, ideas or experiences to satisfy needsand wants.
 Customer behaviour refers to an understanding the way an individualresponds to any product or
service.
 Various factors that influence customer behaviour are:
 Cultural factors
 Social factors
 Personal factors
 Psychological factors
 The buying decision process involves steps taken before, during and afterthe purchase of any
product.
 The buying decision process includes five stages, which are problem recognition, information
search, evaluation of alternatives, purchase decision and post purchase behaviour.
 A business deals with producing commercial items and comprises various resources, materials,
manpower, equipment and finances for production.
 The business market comprises all organisations that buy goods and servicesto be used in the
production of other products and services that are sold, rented or supplied to/by others.
5.7 GLOSSARY
 Attitude: It is the positive or negative interpretations of an individual to any objector person.

 Customer behaviour: It is the study of understanding ways in which a customer reacts to the
product in a given market environment.
 Initiator: It refers to the person who first suggests the idea of purchasing a particular product
 Learning: It refers to the change that takes place in one’s behaviour as a result ofexperience and
knowledge.
 Personality: It is the combination of psychological traits, feelings and behavioural response patterns
of an individual.
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5.8 CASE STUDY: GILLETTE-ANALYSING CUSTOMER BEHAVIOUR
Case Objective
The aim of this case study is to highlight the way in which Gillette analysed customer behaviour.
Gillette is one brand that immediately reminds everyone of razors. Over the years, the brand has been
popular for its safety razors and also offers shaving and personal care products. In 2005, in a merger,
Gillette and Procter & Gamble were amalgamated. Initially, the assets of Gillette were assimilated into
Procter &Gamble as Global Gillette. However, in 2007, Global Gillette was dissolved and integrated with
Procter & Gamble Beauty and Procter & Gamble Household Care.
The most popular products of the Gillette brand are Gillette Mach-3 Turbo, Oral-B, and Duracell, which
have satisfied customers by providing high-quality service. To offer the best in quality, Gillette conducted
a research to know the opinion of customers about the existing razors in the market. According to
Gillette’s analysis of the customer market, the Indian market, till the 1990s, was dominated by disposable
razors. It was also reported that customers were looking for a multipurpose cartridge razor. This
provided Gillette an opportunity to focus on delivering its high tech cartridge and disposable razors by
providing three attributes – closeness, comfort and safety. The brand also brought sensor razors with
independently moving twin blades in the market. However, the price of the sensor razors was relatively
high. The company specially focused on taking feedback from college students and professionals to
know their opinion about sensor razors. After analysing their opinions, the company came out with a
disposable sensor razor along with five
free blades. This had a positive impact on the customers of that segment (students and professionals).
As a result of this offer, many customers switched to Gillette. In the Indian market, Gillette introduced
its various products under different price segments. For example, Gillette’s Mach3 triple-blade razor
was launched in the Indian market in 2004 and was kept at a premium price. However, the research on
the customer buying behaviour revealed that most Indian men still preferred the traditional two-blade
razors as the Gillette Mach3 was found to cause skin irritation, took long shaving time and was generally
unpleasant. Thereafter, in 2010, Gillette introduced its latest product offering, Gillette Guardrazor, which
it created especially for the Indian market and included more customised features. It was priced as low
as ` 15 per razor and also featured a refill cartridge at ` 5 only. With these new changes, it managed to
meet customer expectations on safety and ease of use. Thus, it was found that there was a significant
rise in the customer buying behaviour.
Despite having a strong presence and market share in the blades and razors market, Gillette was
struggling to attain the same position in other toiletry products in the market. This forced the company
to analyse the customer market for its toiletries with the new Gillette Series aerosols, and other family
products for both men and women. Gillette also decided to promote and categorise its toiletries in the
form of the following items:
 Shaving gels for sensitive skins
 Shaving cream
 Clear gel deodorant
 Anti-perspiring stick
 After shave gel
 After shave lotion
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Gillette understood that customers basically preferred quality products with a reasonable price.
Thus, analysis of customer’s behaviour paved the way for Gillette’s success in the market. As a result,
customers started expecting similar hi-tech output from its other items as well. While Gillette rules the
market of blade and razors at global level, it still has a lot more to analyse in the Indian market to satisfy
the customers’ needs in toiletries.
Questions
1. What according to you forced Gillette to introduce Gillette Guard razor in Indian market?
(Hint: The research on the customer buying behaviour revealed that most Indian men preferred
the traditional two-blade razors as the Gillette Mach3 was found to cause skin-irritation, took long
shaving time and was generally unpleasant)
2. Describe customer behaviour as per your understanding of the case.
(Hint: Understanding ways in which a customer reacts, individual responds to any product)
3. What were the major outcomes of Gillette’s customer buying behaviour analysis?
(Hint: Gillette’s customer buying behaviour analysis revealed that customers prefer quality products
with a reasonable price)
4. Which items Gillette decided to promote?
(Hint: Shaving gels, creams, after shave)
5. When does Gillette found significant rise in the customer buying behaviour?
(Hint: In 2010, it introduced latest product offering for the Indian market with customised features.
It also featured a refill cartridge, managed to meet customer expectations on safety and ease of use)

1. A customer selects purchases, use or dispose of products and services, ideas or experiences to satisfy
needs and wants. Explain the concept of customer behaviour.
2. The consumer decision making is a complex procedure. State the various factors that influence
customer buying behaviour.
3. The business market is usually filled with institutional buyers and suppliers. Define business market.
4. Buying decision process is basically a five stage model. Describe the steps involved in the buying
decision process.
5. Conclude the difference between consumer market and business market.

1. Customer behaviour refers to an understanding the way an individual responds to any product or
service. Refer to Section Understanding Consumer Behaviour as a Process
2. Various factors that influence customer behaviour are Cultural factors, Social factors, Personal
factors and Psychological factors. Refer to Section Factors Influencing Buying Behaviour
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3. The business market comprises all organisations that buy goods and services to be used in the
production of other products and services that are sold, rented or supplied to/by others. Refer to
Section Differences between Consumer Markets and Business Markets
4. The buying decision process includes five stages, which are:
1. Problem recognition
2. Information search
3. Evaluation of alternatives
4. Purchase decision
5. Post purchase behaviour
Refer to Section Buying Decision Process
5. Consumer market has many buyers who purchase in small quantities. Business market has fewer
buyers who often buy in large quantities. Refer to Section Differences between Consumer Markets
and Business Markets
 https://clootrack.com/knowledge_base/what-is-consumer-behavior/
 Discuss organisational buying behaviour and the characteristics of organisational buying

behaviour.
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Consumer Behaviour
Unit –05
Prof. Preksha Yadav
Consumer Behavior
1. Buying Decision Process

2. Factors Influencing Buying Behavior
3. Differences between Consumer Markets and Business Markets
4. Understanding Consumer Behavior as a step process
Learning Outcome
Able to analyze the behavior of consumers.

Consumer Behaviour
Consumer behaviour is the study of individuals, groups, or organizations and all the
activities associated with the purchase, use and disposal of goods and services.
Consumer behaviour consists of how the consumer's emotions, attitudes, and
preferences affect buying behaviour.
Buying Decision Process
Factors Influencing Buying Behaviour
Differences between Consumer Markets and Business Markets

UNIT
06 Segmentation, Targeting and

Positioning
Names of Sub-Units
Introduction to Market Segmentation, Reason for Segmenting Markets, Bases of Market

Segmentation, Segmentation Methods, Targeting, Evaluation and Selection of Segments, Developing
and Communicating Positioning Strategies
Overview
This unit explains the concept of market segmentation and reasons to segment markets. Further, this
unit also describes the bases for market segmentation along with segmentation methods. Concept of
targeting and development and communication of positioning strategies are also discussed in this
unit.
Learning Objectives

 Describe the concept of market segmentation
 Elaborate the market segmentation bases
 Define targeting
 Justify the evaluation and selection of segments
 Summarise the positioning strategies
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Learning Outcomes

 Examine the concept of market segmentation
 Conclude the reason for segmenting the markets
 Discuss the concept of targeting
 Brief the methods of segmentation
 https://www.yourarticlelibrary.com/economics/market/market-targeting-introduction-
definition-procedure-and-methods/48609
6.1 INTRODUCTION
In the present scenario, the customer behaviour has become dynamic and there are plenty of substitutes
available in the market. In such a case, it has become easier for customers to switch to other brands.
Therefore, to survive in today’s competitive world and fulfil customers’ needs successfully, organisations
come up with various strategies related to identifying their target audience and approaching them.
Segmentation, Targeting and Positioning (STP) is a strategy that helps organisations in running their
businesses successfully by studying various segments of customers and targeting them and making
a strong brand image in the minds of customers. To understand the concept of STP, it is important to
comprehend the three terms segmentation, targeting and positioning separately. Segmentation is a
process of dividing the market on the basis of geographical, demographic, psychographic, behavioural
factors to understand the variations in the market. Targeting involves selecting the targeted set
of customers to whom an organisation wants to sell its products and services. On the other hand,
positioning is all about creating an image or perception in the minds of consumers about their brand,
product or service.
For instance, Rolex, the well-known luxury brand of watches, has segmented the market on the basis of
income, targeting the high-end affluent consumer, which is distinct from competition.
6.2 WHAT IS MARKET SEGMENTATION?

Organisations often provide different variants of a product in a market. For example, Tide Laundry
Detergent is marketed under various sub-brands, such as tide plus, tide naturals, tide cold water liquid,
tide sport, tide ultra, etc. Tide laundry detergent offers various variants, such as tide plus and tide
naturals to cater to the different needs of its target customers. Though the basic function of all the
washing powders is same, i.e., cleaning; different variants help in attracting different customers by
adding certain dissimilar values to each sub-brand. Here lies the concept of market segmentation. When
a large homogenous market is defined and subdivided into evidently recognisable segments having
similar needs or demand characteristics, it is called market segmentation. In the given example, Tide
laundry detergent offers various variants such as tide plus, tide naturals to cater to the different needs
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UNIT 06: Segmentation, Targeting and Positioning JGI JAIN
of its target customers. In simple words, market segmentation is a process of dividing the market into
various segments on the basis of differing needs and then deciding which of these needs it can fulfil
with offerings. Markets can be segmented on the basis of demographic, geographic, psychological and
behavioural variables of customers. By segmenting the market, marketers have a better understanding
of their targeted audience and how they can shape the future course of actions to withstand stiff
competition.
According to kotler and armstrong, “market segmentation as a process of dividing a market into
distinct groups of buyers who have distinct needs, characteristics, or behaviour and who might require
separate products or marketing mixes”.
Let us understand the process of market segmentation.
1. Conducting a survey: It helps in understanding the buying pattern, attitude, and behaviour of
customers. It also helps in collecting personal information such as age, religion, profession, income,
social class and other attributes of customers, which helps in segmentation.
2. analysing the findings: It helps marketers to identify opportunities and weaknesses in the market.
It identifies the shift in customers’ buying patterns, attitude, values and perceptions and taking
timely corrective measures.
3. Profiling the segments: It helps in understanding market segments by distinguishing attitudes,
demographics and behaviour of individuals. It plays an important role in designing the marketing
mix for segments.
4. Evaluating segment attractiveness: It assesses different segments in the market. The marketers
conduct feasibility study before targeting the segment. This study helps to know the profitability of
a segment. The steps to evaluate the attractiveness of a segment are:
i. Evaluate the long-term profitability of the segment.
ii. Understand the existing competition and market growth rate.
iii. Check the availability of resources.
iv. Examine the impact of environmental forces on the market segment.
6.2.1 Why to Segment Markets?

Segmentation helps the marketer to choose target market and satisfy the customers well. Market
segmentation includes grouping customers and satisfying their needs. If an organisation fails to
segment and target the correct market, it could lead to product failure. Thus, every organisation should
follow a process of market segmentation to divide the market effectively.
6.2.2 Bases for Market Segmentation

Every organisation aims to earn profits by meeting the needs and requirements of consumers successfully.
For this, organisations employ various marketing strategies. Market segmentation is done to address
the differing needs of the customers. One product does not satisfy all the customers. Customer markets
can be segmented on the basis of various variables such as the geography that customers come from,
their own characteristics - demographic as well as psychographics.
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Figure 1 shows the bases for market segmentation:
Market Segmentation
Demographics Geographics
Local Regional
Age Gender Income
Marital National International

Ethnic
Status Background
Psychographics Behavioral
Activities Attitudes Benefits Patterns
Personality Usage Rates

and Values
Figure 1: Bases for Market Segmentation

Source: https://www.businessstudynotes.com/
Let us now discuss variables involved in consumer market segmentation.
geographic Factors
In geographic segmentation, a market is divided into different geographical areas like cities, states
and countries. In this type of segmentation, an organisation needs to study the respective geographical
area and offer products as per the needs and choices of local inhabitants. Theatres in Delhi do not play
movies of other language except Hindi and English; whereas, theatres in Tamil Nadu play movies in other
languages (Telgu, Kannad, Tamil) including Hindi and English. Geographic segmentation is important
as it helps marketers to understand the needs of local customers in a better way. For instance, in hot
and dry areas, coolers may be a good option, but for hot and humid areas, air-conditioners may be a
more suitable option. Thus, a marketer needs to understand the requirements of consumers according
to their geographical area and develop products accordingly to attract more target customers.
Demographic Factors
Demographic factors segment the market on the basis of age, gender, income, occupation, religion,
race and social class. Some of the demographic attributes are as follows:
 age: This factor divides the market into different segments based on the age and the natural life
cycle of a human being. A child has different tastes and preferences as compared to an elderly
person. Organisations use different communication methods to approach customers of different
age groups. For example, a garment shop has different segments for customers of different age
groups, such as kids, teenagers, men and women.
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 Income: This factor segments the market on the basis of earnings of customers. This type of
segmentation may or may not reflect the most accurate buying behaviour; however, it is widely
practiced by marketers. This type of segmentation is highly contradictory in nature for an
organisation going global as different countries have different purchasing powers. An individual
from a low-income group in the United States may have a higher purchasing power than a person
from the high-income group in Bangladesh. Thus, it may not be a truly authentic approach for an
organisation; however, it is the most common one. Several housing societies in India have divided
the market as per the income group of customers. For example, Low Income Group (LIG), Medium
Income Group (MIG) and High Income Group (HIG) flats.
 gender: This factor helps an organisation to segment its products on the basis of gender
differentiation. For example, until few years back, fairness creams were targeted as a beauty
product only to women. However, now, a separate range of fairness products are being targeted to
men as well.
 Social class: This factor acts as an important element to segment the market on the basis of different
classes in the society. The buying behaviour of customers is based on its perceived social class. There
is a thin line between income-based and social class segmentation. For example, the automobile
industry in India has targeted its marketing strategy based on different social classes. Maruti
company specially manufactured a range of Maruti Suzuki cars ranging from Celerio, Wagon R,
Swift, Baleno to the midrange Ciaz to high end to target middle class customers of India.
 generation: The tastes and preferences of customers change with the changing time. Marketers
design products on the basis of different requirements of individuals of different generations.
Psychographic Factors
Psychographic segmentation involves segmentation on the basis of lifestyles, values and beliefs of an
individual. Various factors that come under psychographic segmentation are as follows:
 Lifestyle: It is defined by individual’s habits, income groups and social status. People purchase
product and services on the basis of their lifestyles. You can easily differentiate urban and rural
lifestyles. For example, individuals of urban and rural areas may have same needs and wants but
their choice may be highly different due to different lifestyles.
 Personality: It refers to segmenting the market on the basis of individual’s personality traits that
determine their buying behaviours. Marketers try to match their products with the personality of
the targeted segment.
 Values: They are connected with the thoughts and beliefs of customers, which may influence
the attitudes of customers towards the product in the long run. These are important to develop
communication programs that affect the thoughts of customers. For example, TV serials and movies
are often based on value-based customer segmentation. Most Indian television soaps convey the
importance of Indian cultural values and focus on the joint family concept.
Behavioural Factors
Behavioural factors are useful where a customer purchases a product regularly. Here, an organisation
has to understand the customers behaviour towards product. The factors under the behavioural
segmentation are discussed as follows:
 Benefits: They refer to the advantages of the product for customers. The benefits of the product
attract customers to purchase the product on a regular basis.
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 Occasions: They are the special time or festival. Occasions divide the customers purchase
requirements. For example, Cadbury launched Celebration’s Rich Dry Fruit Collectionat the time of
Rakshabandhan or Diwali.
 Usage rates: They classify products according to their use by the customer that can be heavy,
medium or light. The marketers mainly focus on users who need products for heavy and medium
usage.
 Loyalty status: The customers who always purchase the products of some specific brands or
company are called loyal customers. Companies analyse customers as per their loyalty status and
apply a suitable marketing strategy.
6.3 SEGMENTATION METHODS

A market consists of various customers who have different tastes and preferences that help in dividing
the market into different levels. The different levels or methods of market segmentation help in
simplifying the process of segmentation for an organisation. The various segmentation strategies are:
 Mass segmentation: Mass segmentation does not select a particular segment of the market;
instead it targets the entire market at once. Therefore, marketers, following the mass segmentation
approach target all customers with one offering. It is the most profitable form of segmentation for
marketers. Mass marketing is not only beneficial for an organisation but also provides a value for
money for customers. The basic reason is that it helps in keeping the price of a product low.
 Segment marketing: Segment marketing divides the market into different subgroups or classes
commonly known as segments. In today’s competitive environment, usually, an organisation cannot
serve the entire market with one product. This is because every individual has different needs and
one product cannot satisfy the needs of all. Considering this, organisations try to identify profitable
segments and serve those segments only instead of covering the entire market. These marketers
focus on selected segments and try to fulfil the needs of those segments only.
 Niche marketing: It refers to the type of marketing where the marketer aims on small but specific
or particular markets, having an explicit customer set with same tastes and preferences. The target
customers in these small markets are specific about their choices and preferences and are ready to
pay a premium for these specialised products.
 Local marketing: Local marketing concentrates on tastes and preferences of customers of the local
market. This segment is region based and takes care of the needs of the local community. Local
marketing helps an organisation to produce customised products at the global level to match
the tastes and preferences of customers. In a nation like India, where there is a huge culture and
language diversity, it is necessary to consider the local market requirements.
 Individual marketing: Individual marketing customises products or services as per individual tastes
and preferences. This is the ultimate level of segmentation and is also known as one-to-one marketing
where marketers focus on individual customers. Fashion, media and automobile industries use this
marketing technique to customise their product as per the requirement of customers.
6.4 TARGETING
After market segmentation, the companies need to target the most profitable segment so that they can
earn more profit. The selection of the target market involves evaluating the market attractiveness and
choosing g profitable markets. An organisation considers size and growth of a particular segment and
understands customers and the competitive environment.
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Market targeting is a process of selecting the target market from the entire market. Target market
consists of group/groups of buyers to whom the company wants to satisfy or for whom product is
manufactured, price is set, promotion efforts are made, and distribution network is prepared.
The two core activities in the target market selection process are:
1. Evaluating the market segment
2. Selecting the market segment
Let us discuss these core activities in detail.
6.5 EVALUATION AND SELECTION OF SEGMENTS

The organisation can evaluate the market segment by focusing on the following dimensions:
 Market potential: It refers to the product amount or quantity purchased by a customer. Marketer
tries to evaluate and determine the potential of the target market. The customer purchases are
influenced by price, quality and income and customers’ expectations.
 Organisation’s sales potential: It refers to the percentage of the market potential that an organisation
expects to gain for a product. The sales potential of an organisation can be measured by following
the approaches given below:
 Breakdown approach: It involves developing the general forecast for an organisation to derive
market potential. Then, sales potential is calculated from the estimated market potential.
 Build-up approach: It involves determining the customer purchases in a segment, multiplying it
with the number of potential customers. Build-up approach helps in determining the total sales
potential of a particular segment.
Selection of a particular segment of the market involves looking for a target market in which products
can be sold out. The target market refers to the market decided to utilise marketing efforts. The basic
techniques of selecting a market segment are as follows:
 Single segment concentration: It helps the organisation in choosing the most attractive segment.
It is as also called concentrated segmentation. For example, Ginger Hotels target only budget-
conscious customers and provides only the basic facilities for its customers.
 Selective specialisation: It focuses on multiple market segments. In this type of specialisation, the
organisation utilises expertise in fulfilling the needs of the selected segments.
 Product specialisation: Under this specialisation, an organisation concentrates on providing
various products for different segments types. The organisation gives importance to products than
segments.
 Market specialisation: Under this specialisation, organisation sees customers as the king. Marketer
analyses the needs and wants of the potential customers of a specific market. Market specialisation
involves risks because the organisation caters the needs of a specific market.
 Full market coverage: Here, an organisation focuses on the importance of supplying products to all
the market segments and also helps an organisation to expand their market and earn more profit.
6.6 DEVELOPING AND COMMUNICATING POSITIONING STRATEGIES

A positioning strategy can be defined as a process by which an organisation creates an image or identity
for its products/services in the minds of its target customers.
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The positioning strategy aims at creating the first impression in the minds of customers. A product is
positioned with the help of effective use of promotion mix that entails the unique selling proposition of
a product.
In addition, positioning strategy should aim at:
 carrying a value benefit for ample number of customers
 making the product of an organisation different from its competitors
 denying the possibility of imitation of the product by other organisations
 generating profit for the organisation
An organisation should create differentiation on the basis of the following criteria:

 Significance: It implies that a product should give benefits to its target customers.
 Uniqueness: It refers to the distinctive characteristics or features which a product has.
 Reasonable: It should check the buying ability and budget of customers.
 Profitability: It is an organisation’s ability to generate revenues in excess of its expenses which
enables an organisation to operate for a longer period and differentiate with change in time.
Following are various errors generally made by organisations while positioning a product:
 Targeting a limited part of the market due to limited available information.
 Targeting a narrow group of customers who are not even profitable for the organisation.
 Misinforming customers about features, prices and benefits of products, which in turn, dissatisfy
them and create a negative image of the organisation.
 Market segmentation is segmenting a market into different groups of buyers with different needs,
characteristics or behaviour that require separate products or marketing mixes.
 Various factors that influence consumer segmentation involves:
 Demographic
 Psychographic
 Geographic
 Behavioural
 Levels or methods of market segmentation are as follows:
 Mass marketing
 Segment marketing
 Niche marketing
 Local marketing
 Individual marketing
 The selection of the target market involves evaluating the market attractiveness and choosing g
profitable markets
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 Competitive differentiation is defined as a process of formulating a list of differentiating factors to

distinguish between offerings of an organisation and its competitors.
 A positioning strategy is a process which helps in creation of a unique image or identity of its
products/services in customers mind.
6.8 GLOSSARY
 Differentiation service: It is an effective way of attracting a massive number of potential customers

by offering a distinctive, unique, high quality products and services that help them to establish a
competitive edge in the market.
 Operating variables: It is the process of deciding the best suitable technology to be adopted, selecting
the target set of users (by product or brand) and determining customer capabilities (operating,
technical, and financial terms).
 Positioning: It is the ability to influence consumer perception regarding a product or service to
acquire a distinctive place in the market in the minds of consumers.
 Segmentation: It is the process of dividing the entire market on the basis of geographical,
psychological, behavioural and demographic factors by analysing varied needs and preferences
from both business and consumer viewpoint.
 Targeting: It is the process of selecting a group of customers to whom an organisation wishes to sell
its products and services.
6.9 CASE STUDY: ACCENTURE’S POSITIONING STRATEGY
Case Objective
This case aims to describe the positioning strategy of Accenture.
Accenture is the world’s largest management and technology services organisation that serves around
4000 clients in more than 120 countries through extremely advanced technology, strategies and
operations competencies. With more than 336,000 employees serving clients across the world, Accenture
is considered to be a prominent consulting and outsourcing organisation in the B2B market. Accenture
was started as Andersen Consulting, a business and technology consulting division of accounting firm,
Arthur Andersen. However, in 1989, Arthur Andersen and Andersen Consulting decided to work as
separate business entities. As a result, Andersen Consulting was required to change its name. The whole
incident rebranded the Andersen Consulting and the new entity was retitled as ‘Accenture’ on January
1, 2001. The company, in order to reposition itself and give its new name a corporate identity, invested
around $175 million on a global advertising campaign, tagged, ‘‘Now It Gets Interesting.’’ The campaign
successfully drew the attention of corporate executives, which was the ultimate target of Accenture.
Accenture with the help of its New York-based advertising agency, Young & Rubicam, followed up this
initial advertising effort with ‘‘I Am Your Idea,’’ campaign that helped the company to heighten its brand
image among high-level executives.
‘‘I Am Your Idea’’ was a global campaign, based on an attention-grabbing concept. The ad aimed to
promote Accenture’s ability to turn its clients’ vision into reality. Usually consulting firms are criticised
for imposing their own notions on clients. However, this ad campaign promoted the thought of a
consulting firm that helps its clients in implementing their own ideas. The ad concept was well received
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by the target audience. The ‘‘I Am Your Idea,’’ campaign targeted basically the corporate decision
makers, including senior executives, such as CEO, CFO, COO, CIO and CMO. The campaign was made
with a thought that whenever these executives think of a consulting firm for their projects, they think
of Accenture. To reach to global audience, Accenture went for a high volume aggressive advertising
efforts with an estimated cost of $175 million. The company used several advertising media channels,
such as TV, print and outdoor mediums to promote its name among the target audience. First a set
of TV ads were launched in February 2002, followed by a second round of commercials in September
2002. In addition, the company targeted global business-oriented magazines and newspapers to reach
corporate executives. Considering the target audience’s need to travel frequently, airport posters were
also used as part of the advertising campaign. The TV commercials of the ‘‘I Am Your Idea,’’ campaign
were so engaging that they easily grabbed the attention of the target audience and successfully helped
the company to create global awareness of the Accenture brand. The ads used to depict a high-class
executive and a voice, speaking to the executive and urging him to act on it. For example, a commercial
showed an executive walking with a briefcase in hand on a lonely street at night, while his idea whispered,
Listen, it’s me. You know, I’m your idea. You can’t ignore me. I’m what keeps you up at night. I make you
restless, maybe even a little nervous. Streetlights mysteriously lit up, as the idea won the executive’s
attention. The idea in each campaign proclaims, It’s not how many ideas you have. It’s how many you
make happen. Another commercial shows a doctor entering a patient’s room to explain the reason of
his sickness. The doctor displays the X-ray report to the patient and says, you seem to have one of those
office sticky notes lodged in your head. The report shows a yellow note reading ‘‘USE ME’’ pasted in
the patient’s skull. The doctor advises, Do something with that idea, and then it should disappear. The
patient asks, but what if I can’t? The doctor gives a serious response; it could develop into a notepad,
a folder, possibly even a filing cabinet. Each commercial showed an Accenture logo and the tagline
‘‘Innovation Delivered” at the end.
At the end of each ad a reiterated message could be seen saying, it’s not how many ideas you have. It’s
how many you make happen. So whether it’s your idea or Accenture’s, we’ll help you turn innovation
into results. It then used to direct the readers to the Accenture website, www.accenture.com, followed
by the ‘‘Innovation Delivered’’ tagline with the Accenture logo. The print and outdoor ads also used the
similar concept of advising executives to realise the need of identifying the potential of their own ideas.
For example, an outdoor ad at a rack of airport luggage carts was attached with a sign that read, I am
your idea. Push me. Another ad featured a disposable coffee cup wrapped with a message reading I
am your idea. I won’t stay hot forever. The ‘‘I Am Your Idea,’’ campaign productively helped Accenture
in creating the global awareness of the brand as the number of target executives who decided to opt
Accenture as their consulting partner had tripled. Accenture successfully made $16.1 billion in bookings
during the campaign’s run, which was more than the pre-campaign booking goal of $12 billion. For its
huge success, the campaign won a 2004 Euro EFFIE Gold Award in the corporate category. It also won
the inaugural Sappi Print Media Efficiency Award at Euro EFFIE ceremony in the same year.
Questions
1. Define positioning as per your understanding of the case.
(Hint: ability to influence consumers, position image of product in customer’s mind, perception
regarding a brand)
2. Discuss the effectiveness of ‘‘I Am Your Idea’’ campaign in repositioning the corporate image of
Accenture.
(Hint: ‘‘I Am Your Idea’’ campaign that was based on an attention-grabbing concept, aimed to
promote Accenture’s ability to turn its clients’ vision into reality)
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3. Discuss the advertising media channel strategy used by Accenture to position itself in the minds of
target customers.
(Hint: The ‘‘I Am Your Idea,’’ campaign, several advertising media channels, such as TV, print and
outdoor mediums)
4. What are the advantages of positioning?
(Hint: distinguish product, establish image, sit in the hearts and minds of the customer)
5. Summarise this case study as per your understanding.
(Hint: ‘‘I Am Your Idea,’’ campaign that helped Accenture to heighten its brand image among high-
level executives)

1. STP is segmentation, targeting and positioning. Define market segmentation.
2. One product does not satisfy all the customers. Explain the bases for market segmentation.
3. The different levels or methods of market segmentation help in simplifying the process of
segmentation for an organisation. Describe the different methods of segmentation.
4. According to you what are the errors that are generally made by organisations while positioning a
product?
5. The organisation can evaluate the market segment. Describe how an organisation evaluate and
select market segment in detail.

1. Market segmentation is a process of dividing the market into various segments on the basis of
differing needs and then deciding which of these needs it can fulfil with offerings. Refer to Section
What is Market Segmentation?
2. Customer markets can be segmented on the basis of various variables such as the geography that
customers come from, their own characteristics - demographic as well as psychographics. Refer to
Section What is Market Segmentation?
3. Levels or methods of market segmentation are as follows:
 Mass marketing
 Segment marketing
 Niche marketing
 Local marketing
 Individual marketing
Refer to Section Segmentation Methods
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4. Targeting a limited part of the market due to limited available information. Refer to Section
Developing and Communicating positioning Strategies
5. Marketer tries to evaluate and determine the potential of the target market. The customer purchases
are influenced by price, quality and income and customers’ expectations. Refer to Section Evaluation
and Selection of Segments
 https://ftms.edu.my/v2/wp-content/uploads/2019/02/CHAPTER-6-1.pdf
 Discuss ways to select and evaluate the market segment.
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Segmentation, Targeting and Positioning
Unit – 06
Prof Preksha Yadav
Segmentation, Targeting and Positioning
• What is Market Segmentation

• Why to segment markets
• Segmentation Methods: Geographic, Demographic, Psychographic,
Behavioral,
• Targeting, Evaluation & amp;Selection of Segments
• Developing and Communicating Positioning Strategies
Learning Outcome
To be able to segment markets for a product or service.

Market Segmentation
According to Kotler and Armstrong,

“Market segmentation as a process of dividing a market into
distinct groups of buyers who have distinct needs, characteristics,
or behaviour and who might require separate products or
marketing mixes”.
Why to Segment Markets?
Segmentation helps the marketer to choose target market and satisfy the
customers well.
Market segmentation includes grouping customers and satisfying their needs.
If an organisation fails to segment and target the correct market, it could lead to
product failure.
Thus, every organisation should follow a process of market segmentation to divide

the market effectively.
https://www.youtube.com/watch?v=-z-RWTvckkI
Market Targeting
Market targeting is a process of selecting the target market from the entire
market. Target market consists of group/groups of buyers to whom the
company wants to satisfy or for whom product is manufactured, price is
set, promotion efforts are made, and distribution network is prepared.
The two core activities in the target market selection process are:
1. Evaluating the market segment

2. Selecting the market segment
Positioning
Positioning refers to the place that a brand occupies in the minds of the customers and how it is distinguished
from the products of the competitors and different from the concept of brand awareness.
The positioning strategy aims at creating the first impression in the minds of customers. A product is
positioned with the help of effective use of promotion mix that entails the unique selling proposition of a
product.
• Carrying a value benefit for ample number of customers

• Making the product of an organisation different from its competitors
• Denying the possibility of imitation of the product by other organisations
• Generating profit for the organisation
https://www.youtube.com/watch?v=BO0FlrveCts
Developing and Communicating Positioning Strategies
A positioning strategy can be defined as a process by which an organisation
creates an image or identity for its products/services in the minds of its target
customers.
The positioning strategy aims at creating the first impression in the minds of
customers. A product is positioned with the help of effective use of promotion
mix that entails the unique selling proposition of a product.
1. Carrying a value benefit for ample number of customers
2. Making the product of an organisation different from its competitors
3. Denying the possibility of imitation of the product by other organisations
4. Generating profit for the organisation
An organisation should create differentiation on the basis of the following
criteria:
• Significance: It implies that a product should give benefits to its target customers.
• Uniqueness: It refers to the distinctive characteristics or features which a product

has.
• Reasonable: It should check the buying ability and budget of customers.
• Profitability: It is an organisation’s ability to generate revenues in excess of its

expenses which enables an organisation to operate for a longer period and
differentiate with change in time.
UNIT
07 Competitor Analysis
Names of Sub-Units
Competitive forces, Industry and Market concepts of Competition, Analysing Competition, Competitive
strategies of Market Leaders, Challengers, Followers and Nichers
Overview
This unit explains the competitive forces along with the industry and market concepts of competition.
Further, this unit also describes the ways to analyse competition and explains the competitive
strategies of market leaders. This unit elaborates the challengers, followers and nichers.
Learning Objectives

 Describe the meaning and concept of market competition
 Explain the strategies adopted by different marketing firms
 Analyse the competitive forces and competitive strategies
 Elaborate the concept of challengers and followers
 Define the nichers
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Learning Outcomes

 Examine the competitive forces
 Access the competitive forces along with the Industry
 Justify the development of market strategy for a different firm
 Analyse the competition by understanding the internal and external forces involved
 Compare challengers, followers and nichers
 https://www.investopedia.com/terms/p/porter.asp
7.1 INTRODUCTION
Competitive analysis is one of the most important components of a corporate strategy. It is also argued
that most of the organisation neglects this analysis. Many firms are at the risk of dangerous competitive
blind spots due to the absence of the robust competitor analysis. Competitive blind spot refers to the
inability of seeing the importance of in the business environment which slows organisation’s response
to the actions of the competitors. It is very important to conduct competitor analysis at different stages
of your business to make the best strategy to provide the best possible product or service to your target
consumer. It is very important to know your competition to design a successful marketing strategy for
your business to gain most of the market share. If you are unaware of your competition as well as their
strength and weaknesses then your competitors can take the advantage and can enter the best market
and enjoy competitive advantage. It can also attract your consumers or potential customers. You will
lose your current customers as well as potential consumers.
Therefore, it is very important to perform competitive analysis and identifying the strength and
weaknesses of your competitors. It is also important to be aware of competitor’s products and services
which is the key element to remain competitive in the market and also it plays a crucial role in the
survival of any business.
7.2 MEANING OF COMPETITION

In marketing, competition is said to be the rivalry among different companies involved in the selling
of similar products and services to achieve maximum profit, revenue and market share growth. The
competition that prevails in the market motivates the companies to increase their sales volume by the
effective utilisation of the four components of the marketing mix which are also referred to as the four
Ps of marketing. These four P’s stand for product, price place and promotion. Competitor analysis is
said to be one of the most important parts of any firm’s activities. Competitor analysis is said to be the
assessment of the weaknesses and strengths of your potential and current competitors have which
may encompass firms not only in their sector but also in their other prospective sectors as well. In short,
we can say that competitive analysis is a driver that helps a firm to design its strategy and it helps the
firm to act or react in their respective sectors. The competitor analysis provides defensive and offensive
strategic context to the firm to identify their threats and opportunities.
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UNIT 07: Competitor Analysis JGI JAIN
7.2.1 Industry and market concept of competition

All the customers having similar needs and wants may respond to marketing offers in the same manner.
These customers are said to be the target market for any organisation. In this way, all those of Rings
present in the market that provides similar needs and wants to the customer is said to be a competition
to the firm. For example, we can say that the internet is a competition to book publishers, retail stores
and news magazines.
To succeed in the market a firm needs to identify all the forms of competition that prevail in the market
who are trying to make the most of the opportunities present in the market. A firm faces competition
from the market as well as from the industry. For example, we can say that solar water heaters are a
threat to electric water heaters manufacturers. So to remain competitive in the firm an organisation
has to study the manufacturers making electric water heaters and also the strategies of solar water
heater manufacturers.
Let’s understand industry concept of competition or brand competition.
The group of organisation offers similar products and services to the consumer to serve the similar
needs and wants of the target market is said to be the industry. These offerings can be similar to the
company offerings or can be the substitute to each other. This can also be termed as “brand competition”
where different brands offering the same product type compete against each other in a similar market.
Following are the factors to be considered:
 Growth and size of the industry: The size and growth of the industry give an idea about the
demands prevent for the particular product in the market which helps a market to formulate a
strong marketing strategy for their firm’s product so that they remain competitive in the market.
By gaining information regarding sales, cost, profit, several firms help a market to analyse the
growth of the industry in the past few recent years and hence they made their marketing strategy
accordingly to remain competitive in the market.
 Cost structure: It involves the cost of equipment, manufacturing, investment of plant, employees,
direct labour, distribution etc. and has to be considered properly as different industries having
different cost structures as a hotel industry having different cost structures from an airline industry.
 Industry structure: Here, the nature and competitions strategy among different firms should be
analysed based on their size and differentiation of products offered by them.
Let’s understand the market concept of competition.

The market concept of competition perspective goes beyond the industry concept. Under the market
concept, a competitor for a firm is said to be any other firm who are offering the same kind of products
to satisfy their target consumers needs and wants. This can be understood with the help of an example.
Let’s say a consumer who wants to buy a scooter can also be the one who is eager to buy a motorbike
so a motorbike manufacturer can also fulfil his or her needs so, for the manufacture of the scooter,
motorbike manufacturer is also a competitor along with scooter manufacturer.
Market concept of competition is also referred to as product type competition. The customer is the one
who can fulfil his needs from any of the products available in the market which he thinks and satisfy his
current need. For example, Smartphone having good camera quality fulfil the needs of a teenager who
is looking for a basic camera. That is why we can say that product type competition is the competition
that prevails between the brands offering dissimilar products but satisfying the same needs of the
consumer.
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7.3 COMPETITIVE FORCES

Competitive forces are said to be those variables and factors that affect the profitability of any
organisation and also prevent its growth. Briefly, these factors are grouped into two categories:
1. Direct forces: Direct forces determine how low the organisation can go for price competition. This
may generally include:
 The intensity of direct competition: The intensity of direct competition can be measured by the
degree of product specialisation and the number of competitors that prevail in the market as
well as the amount of excess production capacity.
 Negotiation power of a customer: This includes how strong the customer negotiating power is,
that is directly or indirectly influenced by customer expectation towards product price and its
quality.
2. Indirect forces: The indirect forces in the market include the following:
 The threat of indirect competition: This includes all of those products offering dissimilar
products but offer similar performance.
The threat of new entrants is that they offer similar products like yours into the marketplace.
 Supplier pressure: There is an increase in supply pressure when the demand for the inputs
become increasing suppliers raises their prices.
 Regulatory pressure: An organisation is also bound under various regulatory pressures,
different laws, rules and regulations also affect the supply and consumer behaviour as well as
the availability of substitute products and services.
To address various direct and indirect forces, an organisation performs SWOT analysis. SWOT refers
to Strength, Weakness, Opportunities and Threats present in an organisation, wherein Strength and
Weaknesses are said to be internal to the organisation and Opportunities and Threats are said to be
external to the organisation where the company has no control over it. The main objective to address
the SWOT analysis is not only to counter these direct and indirect forces but also to let the company get a
competitive advantage. It is advisable that these insides are analysed annually as a part of the strategic
planning process and accordingly a company should be made its strategic planning to get a maximum
competitive advantage.
7.4 ANALYSING COMPETITION

Competitive analysis is said to be analysing the competition of an organisation and it is considered to
be the most important part of most marketers. To develop an impactful marketing strategy you must
have a clear understanding of your competitors and their strategies as well. That is why you need to
understand the competitive analysis framework.
A competitive analysis framework is said to be a model which you can use to research your competitor’s
strategy and which in turn gives you specific information about your competitor and also guide you to
structure your market analysis.
There is various framework that you can use for competitive analysis. Different competitive analysis
frameworks are used for different marketing agencies. Here, we explain the most popular competitive
analysis frameworks that will help you to prepare an impactful marketing strategy for the organisation
to remain competitive in the market. Following are the frameworks under competitive analysis:
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UNIT 07: Competitor Analysis JGI JAINDEEMED-TO-BE UNIVERSIT Y
1. SWOT Analysis
The SWOT analysis framework helps you to evaluate the internal as well as external factors present in an
organisation that impact your business and its source of action. SWOT refers to strengths, weaknesses,
opportunities and threats present in an organisation, wherein strength and weaknesses are said to be
internal to the organisation and opportunities and threats are said to be external to the organisation
where the company has no control over it. Figure 1 shows the SWOT analysis:
HOW TO DO A STRATEGIC SWOT ANALYSIS
VISION MISSION OBJECTIVES
Key resources, capabilities, assets

and partnerships that offer a Characteristics such as resources,
S TRENGTHS
competitive advantage over
others. W EAKNESSES
talent, assets and capabilities that
are a disadvantage to others.
EXTERNAL Elements That External elements that could
O PPORTUNITIES
Provide Opportunities for growth,
innovation and other benefits. THREATS
damage capabilities, resources or
weaken competitive position.
Figure 1: SWOT analysis

Source: https://www.garyfox.co/swot-analysis-free-templates/
Let’s understand when to use a SWOT analysis.

SWOT analysis is used to identify a potential competitive advantage. SWOT analysis is used by the
organisations for making proper strategic planning. Various marketing agencies perform a SWOT
analysis as a part of their Competitive Landscape Analysis (CLA) for their clients. Under this, they
compare the strength and weaknesses of their competitors for various marketing channels like social
media, website, blog digital ads and organic search which helps them to determine the recommendation
for a client strategy.
2. Porter’s five forces model
Porter’s Five Force model is highly used by various marketing firms as it provides a framework to
examine the competitive market forces in which your organisation or industry is placed. With the
help of this model, you can evaluate the market according to five elements: the threat of new entrants,
the bargaining power of buyers, the bargaining power of suppliers, the threat of substitutes, and the
intensity of competitive rivalry. Going to Michael Porter these are the five main forces that directly
affect the competition faces by an organisation.
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Figure 2 shows the Porter’s five force model:
Threat of new
entrants
Degree of Threat of
rivalry substitutes
Porter's
5 Forces
Bargaining Bargaining
power of power of
suppliers buyers
Figure 2: Porter’s 5 Force Model

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Let’s understand when to use porter’s five force model.

When you want to study the competitive structure of an industry the porter’s five Force model is useful.
By analysing these five forces one can get an idea that how attractive it is to enter a new market. Give
your understanding that whether you should expand your product offering to reach new customers
or not. Porter’s Five Force model gives them insight to the marketers to shape their strategy to remain
competitive in their industry.
3. Strategic group analysis
Strategic group analysis is a kind of framework that helps you to analyse the cluster of the organisation
based on their similarity of strategy. Once you identify that which cluster your firm falls then it can
give you a sense of the impact of the different strategic approaches. With the help of this competitive
analysis Framework, you will also be able to analyse which forms are closely competing with each other.
The strategic group analysis Framework can be particularly used when you have a clear idea about
the effect of a business dimension. By exploring different dimensions you will be able to analyse the key
factors that help you to succeed and also you will be able to evaluate your relative position as compared
to other firms present in the industry.
4. Growth share matrix
The BCG growth-share Matrix was first introduced in 1970 by the Boston consultancy group. The BCG
growth-share matrix is said to be a planning tool that uses a graphical representation of company
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products and services that helps the company to decide whether it should keep, invest or sell its products
to gain a competitive advantage. Which BCG growth matrix a company offering is ported into 4 square
matrices, where the y-axis represents the rate of market growth and the x-axis represent the market
share.
The BCG growth-share Matrix breakdown the products and services offered by a company into four
categories such as “Dogs”, “cash cows”, “stars” and “question marks” and each quadrant having their
own set of unique characteristics. Figure 3 shows the BCG Matrix:
THE BCG MATRIX

High Growth, High Share. A
Relative market share
significant amount of investment
should be made in "Star" products.
High Low
High Growth, Low Share. Investment

High
should be made in "Question Mark"

products depending on their chances
Market Growth
of becoming stars.
Low Growth, High Share. "Cash

Cows" should be milked so products
can be reinvested in "Stars" and
Low
"Question Marks".
Low Growth, Low Share. Businesses

should liquidate, divest, or reposition
products in the "Dogs" category.
Figure 3: BCG Matrix

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Let’s understand the four categories in detail.

A. Question mark: These products have high growth but low market share products and also their
new products having high potential. According to the BCG growth Matrix, these goods should be
invested in a let go depending upon whether it is likely to become a star or not.
B. Stars: These are the products having a high market share and also achieve high growth. A firm
should invest heavily in these products and services.
C. Dogs: These products have low market share as well as slow rate of growth come under this category
and it is advisable to liquidate, sold or repositioned them.
D. Cash cow: These products have relatively large market share but it has low growth area are
considered as “cash cows”. All those products who came under this category can reinvest in high
growth areas as they are having future potential.
7.5 COMPETITIVE STRATEGIES

Competitive strategy is said to be a long term marketing plan developed by any Organisation to remain
competitive in the market and also to defend their market position and what their best to gain most of
the market share over their competitors.
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Let us now understand why the competitive strategies are important.

If your industry is facing higher competition then it becomes hard for an organisation to compete with
it. When you enter a concentrated market you must set a high bar otherwise you won’t be able to keep
pace with your rivalry firms especially with those firms who deal with similar products your company
has.
To remain competitive in the market it becomes very important that organisation analyse their
competitor’s strengths, weaknesses, opportunities as well as threats. It is also very important that
organisation finds out the problems, needs and preferences of the potential market to cope up with this
task. Without an effective competitive strategy, it becomes very hard for a business to make informed
decisions and to improve its products and services. That is why to gain most of the competitive advantage
it becomes very essential that organisation maintain a competitive strategy.
Based on market shares, brand image, market position, resource capacities and domination power
there are four types of competitors such as:
1. Market leaders
2. Market challengers
3. Market followers
4. Market niches
Different organisations formulate different strategies to react with respective competitors.
7.5.1 Marketing strategies for market leaders

Market leaders are those who are having a dominant position in the market and also have the largest
market share in the relevant product or services in the industry. It may possible that other forms may
or may not respected market leaders but they have to acknowledge their dominance. Depending upon
phone marketing strategy other forms can follow challenge or avoid the market leader. Examples of the
market leader in India are Hero Honda in two-wheelers, Maruti Suzuki in cars, McDonald’s in fast food
and so on.
Some of the market leaders have a monopoly over the market and also to maintain their position they
have to remain alert all the time. This is so because other firms always challenging their leadership
position. A little mistake made by the market leader can make its position down to second or third
position. Hence to retain its market leader position they have to adopt innovative practices, also
sometimes they have to incur excessive costs to maintain their leading position.
All the firms who want to maintain their market leader position can adopt one of the following strategies:
1. Expanding total market: The market leader can explain its total market in the following ways:
I. Add new users: The market leader can expand its market by adding a new user to its product as
every product has the potential to attract new buyers by adopting a good advertising strategy.
II. Discover new uses: Another way to expand the market is to discover the new uses of existing
products and this strategy can be applied to consumer products as well as industrial Products.
The existing users can be encouraged to Innovative use of the product and also the company
should be involved in research and development to discover the innovative use of their product.
2. Defending current market share: This is strategy works on the basis to retain the existing market
share as they believe that consumer attention is more profitable than consumer creation and at
any cost, the current market share should not be e in threat or endangered. So while expanding the
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market share the marketer also works to defend its current market share against the competitive
firm. For example, Coca-Cola protects its share against Pepsi. In the same way, Hindustan Unilever
guards its market share against Procter and Gamble.
3. Expanding market share: Under this strategy, an organisation chooses to improve or increase
organisational profitability by expanding their market share. There are various ways to expand the
market share:
I. Adding new product lines: Sometimes to expand the market share market leader add new and
diversified products to its existing product line to give its product mix a more comprehensive
and attractive look.
II. Expanding existing product lines: It is also called a product line extension where the market
leader expands its current product line by introducing new varieties or models of items with
attractive features and of superior qualities to attract more customers towards its existing
product line.
III. Improving product qualities: Here, a market leader introduces new products with improved
qualities to attract those customers who prefer quality goods.
7.5.2 Marketing strategies for market Challengers

Today’s market is unsaturated because various sellers deal with similar goods or services which simply
means that if you enter any market then you will become a market Challenger. A mistake done by most
of the organisations is that they only think to beat that market leader but forget about the impact made
by other organisations who hold second or third position in the market who had also challenge them.
Some of the market challenger’s strategy that is needed to protect the business areas follows:
I. Frontal attack: This attack is done directly by the company while offering better quality products
at a very low price with aggressive advertising and also provides better service quality to their
customers. This attack is quite risky because if you lose then your customers, sale volume, public
image all be in vain.
II. Flank attack: This kind of attack simply means to attack the weak points of the competitor. Based on
Aryan d a market challenges can identify with points of its competitor and hence they will find out
those areas of the competitor where they are underperforming and develop their market strategy
accordingly to character that area to capture the most share of the market. If you perform this
strategy in the right way then you will maintain a good rank in the Marketplace and bring great
results.
III. Encirclement attack: Under this strategy, a marketer tries to attract its computer based on their
strength and weaknesses at the same time. Simply, we can say that an enrichment attack is the
combination of flank attacks and frontal attacks.
IV. Bypass attack: This is an indirect attack where the market challenger attacks easier market
bypasses the leader to broaden its resource base.
V. Guerrilla marketing: Guerilla market is a strategy that first gains small victory but in the long
run, give use impact for you by increasing your market share. These are strategies used by a small
company that first made success in the local market then introduce it in the broader market by
offering various price and trade discounts.
7.5.3 Market Strategies for followers

Followers are those who follow the path of a market leader rather than challenging themselves and
making their own strategies. Although some followers prefer to challenge themselves they also prefer
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to follow the leader. However, it has also been seen that market followers react strongly in case of any
loss happen.
In various capital goods industries like fertilizer, chemical, steel, cement etc., service qualities are similar
but product differentiation is low and price sensitivity is high. In such industries, they prefer to follow
the leaders by offering a similar kind of product. But it is always to be kept in mind that it is not always
rewarding to follow the leader’s path to pursue.
7.5.4 Market Strategies for market Niches

Niches are those who deal with the narrow market in the small segment with serving distinctive needs
and in most of the cases in such segment customers are ready to pay a high price for the product. Their
marketing strategy includes the following:
I. End-user specialist: The firm prefers to provide the offerings to end-user customers. For example,
criminal cases can be handled by legal advisory only for a fashion designer like Manish Malhotra
can work with few film stars only.
II. Vertical level specialist: Here, the firm preferred to deal with the vertical level of distribution of
production like producing only raw materials for specific forms or it may deal with only on retailing.
III. Geographic specialist: Here, the firm serves the customer who belongs to a specific area or region
of the world.
Every firm needs to make its competitive strategy to be successful in the market and gain a more
competitive advantage over its competitors. For every company, it becomes very essential to make their
strategy and do internal and external analysis periodically to remain competitive in the market.
 Competitor analysis is said to be one of the most important parts of any firm’s activities.
 “Brand competition” is where different brands offering the same product type compete against each
other in a similar market.
 Under the market concept, a competitor for a firm is said to be any other firm who are offering the
same kind of products to satisfy their target consumers’ needs and wants.
 Market concept of competition is also referred to as product type competition.
 Competitive forces are said to be those variables and factors that affect the profitability of any
organisation and also prevent its growth.
 Direct forces determine how low the organisation can go for price competition.
 The indirect forces in the market include threat of indirect competition, supplier pressure and
regulatory pressure.
 SWOT refers to Strength, Weakness, Opportunities and Threats present in an organisation, wherein
Strength and Weaknesses are said to be internal to the organisation and Opportunities and Threats
are said to be external to the organisation where the company has no control over it.
 A competitive analysis framework is said to be a model which you can use to research your
competitor’s strategy and which in turn gives you specific information about your competitor and
also guide you to structure your market analysis.
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 Porter’s Five Force model is highly used by various marketing firms as it provides a framework to
examine the competitive market forces in which your organisation or industry is placed.
 Strategic group analysis is a kind of framework that helps you to analyse the cluster of the
organisation based on their similarity of strategy.
 The BCG growth-share Matrix was first introduced in 1970 by the Boston consultancy group.
 The BCG growth-share Matrix breakdown the products and services offered by a company into four
categories such as “Dogs”, “cash cows”, “stars” and “question marks” and each quadrant having
their own set of unique characteristics.
 Market leaders are those who are having a dominant position in the market and also have the
largest market share in the relevant product or services in the industry.
 Followers are those who follow the path of a market leader rather than challenging themselves and
making their own strategies.
 Niches are those who deal with the narrow market in the small segment with serving distinctive
needs and in most of the cases in such segment customers are ready to pay a high price for the
product.
7.7 GLOSSARY
 Market leaders: It refers to those have a dominant position in the market and also have the largest
market share in the relevant product or services in the industry
 Flank attack: It is a kind of attack simply means to attack the weak points of the competitor
 Guerilla market: It is a strategy that first gains small victory but in the long run, give use impact for
you by increasing your market share
 Followers: It refers to the one who follows the path of a market leader rather than challenging
themselves and making their own strategies
 Niches: It refers to those who deal with the narrow market in the small segment
7.8 CASE STUDY: CANON AND XEROX
Case Objective
The aim of this case study is to describe the competitive analysis.
When the Japanese copier manufacturer Canon enters the US market in the year 1980, Xerox believes
that canon was dumping a product in the US market at a lower cost. This is so because Xerox what
shipping the product equal to the manufacturing cost of the Xerox. So Xerox decided to do the competitive
analysis of Canon by taking apart a Canon copier and sending every piece to the distributor in Japan.
Distributors were expected to tell them the cost of each part, so that Xerox could present the dumping of
product action before the US Department of Commerce. They were hopeful that the US government will
charge punitive tariff on Canon’s products.
After some time, Xerox found that Canon managed to build the parts in an economically manner. When
Xerox got all the pieces of the Canon copier back, it found that Canon had a less expensive method for
building and assembling copiers. For instance, Xerox found that instead of four screws Canon had put 2
screws to hold an assembly and Xerox has placed six screws to hold the assembly.
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This type of information through competitive analysis was collected and noted by the Xerox. This helped
in finding out the why their production cost was high and Xerox was shocked to find that Canon in fact
could make more revenue or profit at that price. Xerox decided to throw up their hands and get out of
the small desktop copier business.
Xerox decided to determine what actions they can perform to decrease their costs. Xerox was seriously
challenged. It finally rose to that challenge and recalibrated.
Source: https://businesstown.com/shows/competitive-intelligence/breaking-competition-case-study/
Questions
1. What do you understand by the term competitive analysis?
(Hint: important components of a corporate strategy, helps in designing market strategy)
2. Why Xerox wanted to highlight Canon’s dumping product action in front of the US department of
Commerce?
(Hint: Canon’s product price was very cheap, Xerox doubted the product)
3. What are the ways in which the competitor analysis helped Xerox?
(Hint: No dumping of product by Canon, Canonused economic ways of assembling andmanufacturing
product)?
4. Define dumping of product.
(Hint: Price discrimination, organisation selling products abroad at reduced price)
5. Explain the outcome of competitive analysis.
(Hint: helped in finding out the why Xerox production cost was high, preparation of new marketing
strategy)

1. There are two types of competitive forces. Briefly explain the direct competitive forces and indirect
competitive forces.
2. A little mistake made by the market leader can make its position down to second or third position.
Elaborate the different strategies used by market leaders, Challengers, followers and Niches.
3. All the customers having similar needs and wants may respond to marketing offers in the same
manner. Justify the industry concept of competition and market concept of competition.
7.10 ANSWER AND HINTS FOR SELF-ASSESSMENT QUESTIONS

1. Competitive forces are said to be those variables and factors that affect the profitability of any
organisation and also prevent its growth. Briefly, these factors are grouped into two categories i.e.
Direct and Indirect. Refer to Section Competitive forces
2. Some of the market leaders have a monopoly over the market and also to maintain their position
they have to remain alert all the time. Refer to Section Competitive Strategies
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3. The group of organisation offers similar products and services to the consumer to serve the
similar needs and wants of the target market is said to be the industry. Refer to Section Meaning of
competition
 https://www.yourarticlelibrary.com/marketing/competitors-and-their-marketing-strategies-with-
diagram/4875
7.12 TOPICS FOR DISCUSSION FORUM
 Discuss the advantages of SWOT analysis, Porters five force model and BCG matrix with your
professor.
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Competitor Analysis
Unit – 07
Prof. Preksha Yadav
Unit 7: Competitor Analysis
• Competitive forces,
• Industry and Market concepts of Competition,
• Analyzing Competition,
• Competitive strategies of Market Leaders, Challengers,
Followers and Nichers
Learning Outcome
To be able to identify and analyze competitors.
Competitive analysis
• Competitive analysis is one of the most important components of a corporate strategy.
• It is also argued that most of the organisation neglects this analysis.
• Many firms are at the risk of dangerous competitive blind spots due to the absence of the
robust competitor analysis.
• Competitive blind spot refers to the inability of seeing the importance of in the business
environment which slows organisation’s response to the actions of the competitors.
• It is very important to conduct competitor analysis at different stages of your business to make
the best strategy to provide the best possible product or service to your target consumer.
Competition
• In marketing, competition is said to be the rivalry among different
companies involved in the selling of similar products and services to
achieve maximum profit, revenue and market share growth.
• The competition that prevails in the market motivates the companies

to increase their sales volume by the effective utilisation of the four
components of the marketing mix which are also referred to as the
four Ps of marketing.
Industry concept of competition
Industry is the group of organisations that offers products or services that

serve the same needs and wants of the target market. These offerings can be
similar to the company’s offering, or can be each other’s substitutes. This
concept is also referred as Brand competition wherein various brands with
same product types compete against each other in the same market.
The factors to be considered are –
• Industry size and growth gives the marketer an idea of the demand.
• Industry structure is the nature and competition intensity among the firms basis their numbers, their
size, and differentiation of the offerings.
• Entry, Mobility and Exit barriers refer to the barriers a firm faces at different stages in the
industry. Entry into a retail business is different as compared to an airline business. Mobility is the
entry of the firm within the segments inside the industry. Exit barriers are in the form of legal issues,
moral obligations to investors, customers, recovery on investments, government policies, etc.
• Cost structure refers to the costs involved in investment of plant, equipment, manufacturing,
distribution, employees, direct labour, etc.
• Degree of Vertical integration is the forward or backward integration within the supply chain.
• Marketing strategies in the industry also help a marketer make correct decisions. These are the
marketing objectives most relevant to the industry, target market segments.
Market concept of competition
• Under the Market concept the perspective of competition goes beyond the
industry concept and looks at potential and existing competitors at a broader
level.
• A competitor to a firm can be any other firm that satisfies the same need and
wants of a customer in the target market. For example, a customer who wants to
buy a scooter can also be lured by a motorbike manufacturer to fulfill his/her
need.
• Market concept of competition is also referred to as Product-type competition.
Customers can see a need fulfilled from any product available in the market. A
smart phone with a camera fulfils a need of a teenager who has a need to buy a
basic camera
Competitive forces
1. Direct forces: Direct forces determine how low the organisation can go for
price competition. This may generally include:
• The intensity of direct competition
• Negotiation power of a customer
2. Indirect forces: The indirect forces in the market include the following:
• The threat of indirect competition:
• Supplier pressure:
• Regulatory pressure
Analyzing Competition
• SWOT Analysis
• Porter’s five forces model
• Strategic group analysis
• Growth share matrix
SWOT Analysis
Porter’s five forces model
Strategic group analysis
• Strategic group analysis is a kind of framework that helps you to analyse the
cluster of the organization based on their similarity of strategy.
• Once you identify that which cluster your firm falls then it can give you a
sense of the impact of the different strategic approaches.
• With the help of this competitive analysis Framework, you will also be able
to analyse which forms are closely competing with each other.
Growth share matrix
• The BCG growth-share Matrix was first introduced in 1970 by the
Boston consultancy group.
• The BCG growth-share Matrix breakdown the products and

services offered by a company into four categories such as
“Dogs”, “cash cows”, “stars” and “question marks”
BCG growth-share Matrix
Competitive strategies
Based on market shares, brand image, market position, resource capacities
and domination power there are four types of competitors such as:
1. Market leaders
2. Market challengers
3. Market followers
4. Market niches
Different organisations formulate different strategies to react with respective

competitors
Marketing strategies for market leaders
1. Expanding total market:

• Add new users
• Discover new users
2. Defending current market share:
3. Expanding market share:
• Adding new product lines
• Expanding existing product lines
• Improving product qualities:
Marketing strategies for market Challengers
• Frontal attack: This attack is done directly by the company while offering better quality
products at a very low price with aggressive advertising and also provides better service
quality to their customers.
• Flank attack: This kind of attack simply means to attack the weak points of the competitor.
• Encirclement attack: Under this strategy, a marketer tries to attract its computer based on
their strength and weaknesses at the same time.
• Bypass attack: This is an indirect attack where the market challenger attacks easier market
bypasses the leader to broaden its resource base
• Guerrilla marketing: Guerilla market is a strategy that first gains small victory but in the long
run, give use impact for you by increasing your market share
Market Strategies for followers
Followers are those who follow the path of a market leader rather than
challenging themselves and making their own strategies. Although some
followers prefer to challenge themselves they also prefer to follow the leader.
However, it has also been seen that market followers react strongly in case of
any loss happen.
Market Strategies for market Niches
• End-user specialist: The firm prefers to provide the offerings to end-user

customers. For example, criminal cases can be handled by legal advisory
only for a fashion designer like Manish Malhotra can work with few film
stars only.
• Vertical level specialist: Here, the firm preferred to deal with the vertical
level of distribution of production like producing only raw materials for
specific forms or it may deal with only on retailing.
• Geographic specialist: Here, the firm serves the customer who belongs
to a specific area or region of the world
UNIT
08 Product Management
Names of Sub-Units
Introduction of Product, Product Life Cycle, New Product Development, Product Mix Decisions.
Overview
This unit explains the different aspects of products and product mix. The unit also highlights the
different stages of new product development and the stages of the product life cycle. The unit also
throws light on various product mix decisions. Product management is an interdisciplinary part of
management that reaches across the team to plan, design and continuously bringing better products
to the market.
Learning Objectives

 Discuss the concept of product
 Explain the different concept related to product and product mix
 Describe the stages of the product life cycle
 Analyse the steps involved in the new product development
Learning Outcomes

 Express the different concepts of product and product mix
 Examine Impact of the product life cycle in organisational decision
 Illustrate the process of new product development
JGI JAIN
8.1 INTRODUCTION
Product management is said to be an integral part of marketing and the most important function of
marketing. During the past few years, you have seen a lot of changes in product management. It is now
becoming the nerve the centre of an organisation.
Effective product management is a purposeful, practical and positive approach to improving the result
of a company with the help of various efforts made by the committed team of marketing departments,
sales department and manufacturing department. In short, you can say that product management
involves the proper management of products by undergoing different product mix decisions after
evaluating the product life cycle.
Product management is said to be the practice of developing, marketing and continuous improvement
of an organisation’s product or products. The idea of product management was first introduced in the
early 30’s why the president of Procter and gamble whose name is Neil H. McElroy, where he introduced
the idea of product management first time. He also introduced the concept of product manager according
to him a product manager is the one who is completely responsible for a brand and instrumental to its
growth.
With more explosion towards software market now the concept of product management has taken a new
shape. Since then product management has been closely connected and typically found in companies
creating software.
The main objective of product management is the development of a new product. Its ultimate goal is
making sure you are building the right product and building the product right.
8.2 MEANING OF PRODUCT

A product is any item or a substance that is processed and manufactured for sale. A product can be
any substance or service offered. It can be in different forms such as tangible or virtual. A product
is produced after incurring a specific cost and is out for sale for a market price. Every product has a
specified shelf life after which it needs to be re-invented or replaced. The price of a product depends on
the quality, quantity, market, and marketing strategy of the product. A product is created for a specific
purpose, to fulfil certain needs and it should meet the immediate needs of the user. A product should
be communicable to its user describing to them its uses, benefits and durability. A product should be
updated from time to time so that it becomes relevant and adaptable.
8.2.1 Product Characteristics

The characteristics of a product are divided into two parts- explicit and implicit.
Explicit characteristics mean the features which are found similar in a product by different buyers.
Every person associated with the product does not disagree about the presence of these characteristics
in the product. Here are some of the explicit characteristics of a product:
1. Physical appearance: Every product is made up of some physical material whether it may be plastic,
wood, metal or any other thing. Each product has its colour shape, texture, taste and size.
2. Naming and packaging: Packaging plays a vital role in a product’s sale. Attractive packaging can
increase the demand for a product to a great extent. Whereas some products cannot be separated
from their packaging such as lipsticks, and perfumes. Similarly, the brand name of a product is
also intrinsic. Sometimes people recognise the products by their brand name itself. Examples are-
Colgate for toothpaste, lux for soap, etc.
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UNIT 08: Product Management JGI JAIN
3. Related services: While selling a product a seller is bound to provide some pre and post services to
its customers. Before selling a product a seller has to give a demonstration of the product and also
offer credit facilities if any. Whereas after the sale of the products some associated services to be
provided are delivery, warranty, installation, repairs and spare parts.
4. Life cycle of the product: Every product has a life cycle as any other living being on this planet. There
is a fixed characteristic pattern of the sale of a product. Initially, the sales of a product increase and
then it reaches its maximum point. Slowly the rate of sales starts to decrease and finally, the sales
reach its least rate.
Implicit characteristics means the features which are observed differences in a product by different
buyers. This disagreement with the features of a product is known as implicit characteristics:
1. Symbolism: Every product has its communication power when observed by people. A product can
convey different symbols such as the economy, status, personalityor boldness. Different people
interpret different symbols of a product as per its shape, size, colour and its uses.
2. Perception: In our society, each person has their perception. Based on the environment in which you
live and the messages stored in our brain, you make several perceptions about anything. The clue a
consumer receives from observing a product is the basis of his/her perception.
3. Evaluation: Based on the perception of a person, he/she evaluates the features of a product.
8.2.2 Product Classification a product can be classified into four different groups based on its
price, features and the habits of a consumer
1. Convenience goods: Products that a consumer uses daily and purchases repeatedly without any
hesitation are known as consumer goods. These goods include soap, toothpaste, toilet paper, milk,
cereals, etc. A consumer continues to use a particular brand of the product unless he/she is attracted
by some other brands.
2. Shopping goods: These products are those which a consumer purchases only after conducting
proper research, comparison, and analysis over it. Products like cars, clothes, and other luxury
items are considered shopping goods.
3. Speciality goods: The products with a different individuality which has their uniqueness are
considered as speciality goods. iPhone is one of the best examples of speciality goods. A consumer
generally does not need to spend time comparing or analysing the product before purchase.
4. Unsought goods: The goods which are purchased by the consumer by the sense of fear and without
any excitement are known as unsought goods. Goods such as life insurance, fire extinguisher, oxygen
cylinders are the examples of unsought goods.
8.2.3 Difference Between Product and Services

1. Physical: A product is tangible whereas a service cannot be touched or felt.
2. Ownership: After purchasing a product the consumer can own a product, whereas a service cannot
be owned once final payment is made for the service.
3. Storage: A product is durable to a limited extent and can be used in the future, whereas a service is
perishable.
4. Quality: A product’s quality depends on the nature of the product, whereas a service provider
determines the quality of service.
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5. Return or exchange: A product can be returned or exchanged after sale, whereas in the case of
service it is not possible.
6. Comparison: Product comparison is easy, whereas comparing services are a bit difficult.
7. Quantification: Products are in numbers, hence they can be quantified. Service is non-quantifiable.
8. Billing: Products are generally billed at once, whereas services may be billed in different instalments.
9. Valuation: The value of the product is derived by the ultimate consumers, whereas a service provider
decides the value of a service.
8.2.4 Different Levels of Product There are five different levels of product
1. Core benefit: The primary level which a consumer looks for in a product is the core benefit it achieves
from the product. Every product has its specified purpose which it should fulfil. It might be tangible
or intangible.
2. Generic product: A product with just the basic features which is necessary for fulfilling its needs. It
includes only the basic characteristics which a consumer needs for solving his/her problem.
3. Expected product: A product with a set of features that a consumer buys to satisfy his specific
expectations.
4. Augmented product: A product with a set of additional features, benefits, and other services which
make it better than other products.
5. Potential product: A product that includes all the features and transformations that a product
may undergo in the future. It is based on what can be added to the product that can make it more
desirable in the future.
8.2.5 Components of a Product The flowing four things form the core of a product:
1. Core product: It is the actual benefit a consumer is availing from the product. The purpose for which
a product is formed should be of immediate use to the consumer.
2. Additional features: Along with the main product the buyer also gets the benefit of some additional
features. Features such as easy availability, demonstration or affordable pricing.
3. Brand name: A brand gives an identity to a product with its names, symbol, design and logo.
Consumers are attracted to brand-name products which increase their demand in the market.
4. Packaging: The most important factor that distinguishes a product is its packaging. Earlier the
basic role of packaging was to protect a product but today it has become its identity and reason of
attraction.
8.3 PRODUCT LIFE CYCLE

The PLC (Product life cycle) is the stage when a product enters the marketplace and moves around, then
there is a marketplace. In different words, the product life cycle is the stages that are experienced by the
product. The managers use it as a tool to develop and analyse strategies of the product as they move
around in the market.
There are six stages of the product life cycle:
1. Development: It is the stage in which research of the product is done before introducing it in the
marketplace. In this stage, the companies develop prototypes, strategise about their launch of the
product, bring investors, do effectiveness tests of the product. The companies have to spend money
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without any income as the product has not been sold till now. This stage takes a lot of time as it
depends on whether the product is new, its complexity and the competition in the market. This stage
helps you to build brand awareness and publish early the product to achieve your marketing goal.
2. Introduction: This stage involves the launching of a product in the marketplace. In this stage, the
company builds product awareness. Through this, they try to reach the customers. At the initial there
is low product sale and demand will also increase slowly. This stage mostly involves the marketing
and advertising of the product. The companies work on distribution channels and educate their
customers about the product. The customer should know about the product details before buying
them.
3. Growth: This stage involves the expansion and development of the product. At this stage, the
company knows that the consumers have bought their product. This means that the profit and
demand of the product will grow at a rapid pace. In this phase, the company shifts its marketing
campaign to establish a presence for the brand so that the consumer chooses their product instead
of the developing competitors. As the company starts to grow, they add more features and services
to the product.
4. Maturity: In this stage, the sales of the product increase at a rapid speed and the companies start to
reduce their product price so that they can attract the consumer and stay in the market competition.
The marketing campaign now focuses on differentiation, which means that the features will be
improved, prices will decrease and intensive distribution of the product. This is the stage where the
company earns the most of the profit as the cost decreases and sales increase.
5. Saturation: This is a stage in which competitors take a portion of the market, so the product will not
grow, and there will be no decline in sales. This is the phase when customers use the product.
6. Decline: This is the stage when the sales of your product will decrease due to market competition
that is difficult to overcome. During this time the trends change as new trends come to the market.
The companies then look to begin the cycle again in another country.
8.4 NEW PRODUCT DEVELOPMENT PROCESS

Most of the new products fail to give profit to the company. There can be many reasons, but sometimes it
is because the developer takes shortcuts in the development process of the new product. It is always not
necessary that the development of a new product involves a new world product. Sometimes the existing
product can be relaunched by upgrading it. There are eight stages involved in this process.
i. Idea generation: ideas can be innumerable, you just need to find them. This stage includes creating
ideas whether from an internal source (includes research and development, employees, etc.) or an
external source (includes customers, competitors, etc.).
ii. Idea screening: in this stage, the ideas that are possible are taken into consideration. That is done
by evaluating the ideas by checking their compatibility, assumptions, relevance, constraints, value,
risks and feasibility.
iii. Concept testing and development: In this stage, multiple concepts are developed based on the ideas
and testing. Through this, the company will acknowledge and know about each concept, and they
can choose the best possible concept for them.
iv. Development through marketing strategy: In this stage, the detailed description related to the
target, such as sales size, offer planning, profit goals or market share, is prepared. They also plan
the long-term sales and goal earning strategy.
v. Business analysis: This stage involves the evaluation of the product that is production cost,
marketing cost, sales cost, projected profit and projected sales.
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vi. Product development: At this stage, product development takes place. It means that the concept is
converted into a physical product. This stage takes time as it involves the making of the product.
vii. Test marketing: In this stage, product is given an identity, and then it is tested. This involves making
marketing strategies such as communication strategy, positioning strategy, distribution strategy,
pricing strategy and promotional strategy.
viii. Commercialisation: This stage involves the execution of communication and advertising,
purchasing of manufacturing units that are leased and development of sales promotion.
8.5 PRODUCT MIX DECISIONS
8.5.1 Meaning of Product Mix

The number of product lines offered by an organisation to its clients is referred to as the product mix. A
product line is a collection of linked products that a single company markets or manufactures. All the
products which lie in single product line follow the similar manner which sold through single kind of
outlet and fall within the same price range as well.
Product mix consists of different product lines offered by an organisation. The organisation may deal
with a single product line in its product mix, and sometimes it is also having multiple product lines in
its product mix. If an organisation is having multiple product lines, then the product line may be fairly
similar to one another or different from one another.
8.5.2 Dimensions of a product mix offered by an organisation

1. Width
2. Length
3. Depth
4. Consistency
Width
The width of a product mix is said to be the number of product lines offering by an organisation. For
example, Hindustan Unilever offers high width of its beverage products, home care products and
personal care products.
Length
The length of a product mix is said to be the total number of product items present in the organisation’s
product mix. Let us say Hindustan Unilever offer 23 kinds of products, therefore, the length of the
product mix of Hindustan Unilever is 23.
Depth
The depth of an organisation’s product mix is said to be the total number of items present in each
product line.
Consistency
The consistency in the product mix of an organisation refers to how closely related products are present
in the various product line of the organisation.
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Product mix decisions

Product with the decision is said to be the decision made by an organisation regarding adding a new
product line or eliminating the existing product line from the product mix.
Product line decision

It is the responsibility of the product line manager to take optimum product line decisions after
considering the profit and sales of each item present in the line while comparing the product line of the
competitors as well to ensure the maximum profit to the company.
Line stretching decision

Line stretching decision involves strengthening the existing product line by including more products in
the existing range. An organisation can make line stretching decisions in the following ways:
Downward stretching
It involves the addition of low-end product items to the existing product line.
Upward Stretching
It is opposite to downward stretching that involves the addition of high-end products to the existing
product line.
Two way stretching

It involves the stretching of the items in both the direction upward and downward if the organisation is
in the middle range of the market.
 A product is any item or a substance that is processed and manufactured for sale. A product can be
any substance or service offered. It can be in different forms such as tangible or virtual.
 A product is produced after incurring a specific cost and is out for sale for a market price. Every
product has a specified shelf life after which it needs to be re-invented or replaced.
 The price of a product depends on the quality, quantity, market, and marketing strategy of the
product.
 A product is created for a specific purpose, to fulfil certain needs and it should meet the immediate
needs of the user.
 A product should be communicable to its user describing to them its uses, benefits and durability.
 Every product is made up of some physical material whether it may be plastic, wood, metal or any
other thing. Each product has its colour shape, texture, taste and size.
 Packaging plays a vital role in a product’s sale. Attractive packaging can increase the demand for
a product to a great extent. Whereas some products cannot be separated from their packaging
such as lipsticks, and perfumes. Similarly, the brand name of a product is also intrinsic. Sometimes
people recognise the products by their brand name itself.
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 Every product has its communication power when observed by people. A product can convey
different symbols such as the economy, status, personality or boldness. Different people interpret
different symbols of a product as per its shape, size, colour and its uses.
 Products that a consumer uses daily and purchases repeatedly without any hesitation are known as
consumer goods. These goods include soap, toothpaste, toilet paper, milk, cereals, etc. A consumer
continues to use a particular brand of the product unless he/she is attracted by some other brands.
 The PLC (Product life cycle) is the stage when a product enters the marketplace and moves around,
then there is a marketplace. In different words, the product life cycle is the stages that are experienced
by the product. The managers use it as a tool to develop and analyse strategies of the product as
they move around in the market.
 The companies have to spend money without any income as the product has not been sold till now.
This stage takes a lot of time as it depends on whether the product is new, its complexity and the
competition in the market.
 Most of the new products fail to give profit to the company. There can be many reasons, but sometimes
it is because the developer takes shortcuts in the development process of the new product. It is always
not necessary that the development of a new product involves a new world product. Sometimes the
existing product can be relaunched by upgrading it.
 Ideas can be innumerable, you just need to find them. This stage includes creating ideas whether
from an internal source (includes research and development, employees, etc.) or an external source
(includes customers, competitors, etc.).
 The number of product lines offered by an organisation to its clients is referred to as the product
mix.
 A product line is a collection of linked products that a single company markets or manufactures. All
the products which lie in single product line follow the similar manner which sold through single
kind of outlet and fall within the same price range as well.
 Product mix consists of different product lines offered by an organisation.
 The organisation may deal with a single product line in its product mix, and sometimes it is also
having multiple product lines in its product mix. If an organisation is having multiple product lines,
then the product line may be fairly similar to one another or different from one another.
8.7 GLOSSARY
 Product: A product is any item or a substance that is processed and manufactured for sale. A product
can be any substance or service offered. It can be in different forms such as tangible or virtual. A
product is produced after incurring a specific cost and is out for sale for a market price.
 Product management: Product management is said to be an integral part of marketing and the
most important function of marketing. Product management involves the proper management of
products by undergoing different product mix decision after evaluating the product life cycle.
 Core Product: It is the actual benefit a consumer is availing from the product. The purpose for which
a product is formed should be of immediate use to the consumer.
 Generic Product: A product with just the basic features which is necessary for fulfilling its needs. It
includes only the basic characteristics which a consumer needs for solving his/her problem.
 Expected Product: A product with a set of features that a consumer buys to satisfy his specific
expectations.
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 Augmented Product: A product with a set of additional features, benefits, and other services which
make it better than other products.
 Potential Product: A product that include sall the features and trans formations that a product
may under go in the future. It is based on what can be added to the product that can make it more
desirable in the future.
8.8 CASE STUDY: SUNSILK PRODUCT LIFE CYCLE
Case Objective
This case study exhibits the product life cycle of Sunsilk.
Sunsilk is a leading brand of hair care products. It was launched in 1864 with a variety of hair care
products. Sunsilk was launched in India, when the hair care industry especially the shampoo market
is viable and of potential. Sunsilk initially introduced as a cosmetic beauty shampoo. it grew with the
expansion in the hair care industry, specifically the shampoo market, in India, launching a wide range
of product variants.
The life cycle of Sunsilk shampoo is given as follows:
 Introduction: The introduction stage is the stage of launching the product into the market. Sunsilk
launched its range of hair care shampoo which focussed on hair issues. It put its publicity efforts in
1995 and launched many advertising campaigns.
 Growth: During its growth stage, markets adapted the product and Sunsilk witnessed a rise in sales.
In the early 1970s, it launched its punch line – “All you need is Sunsilk”. It also communicated about
various product variants to its consumers. Within 10 years of its entry in India, it launched various
product ranges according to the needs of the consumers. It launched anti-dandruff, daily repair,
hydrating, etc., range of shampoos and conditioners for its Indian consumers.
 Maturity: During the maturity stage of its products, Sunsilk was accepted as a global brand with the
sale of products in 69 countries. It reframed the brand in 2003 and launched a new product “Sunsilk
naturals”. It also connected with haircare professionals all over the world during 2009 and started
to work for developing a range of innovative products. It understood that different women have
different hair needs according to their age, hair type, location, etc. Sunsilk created a new tagline,
“Life can’t wait” for its innovative products.
 Decline: During the decline stage of the Product Life Cycle, sales begin to decline. Products are
phased out of the market during this stage. But Sunsilk somehow managed to make a steady impact
on the consumers during its maturity stage. To conclude, it can be said that Sunsilk is far away from
its decline.
Questions
1. Explain how Sunsilk managed to make an impact on consumers during its maturity stage.
(Hint: Brand rejuvenation, haircare professionals, etc.)
2. Explain the growth stage of Sunsilk.
(Hint: Sales increased, new products launched, etc.)
3. When was Sunsilk launched?
(Hint: Sunsilk launched its range of hair care shampoo which focussed on hair issues. It was launched
in 1995.)
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4. How Sunsilk expanded in its operations.

(Hint: Expansion in the hair care industry, specifically the shampoo market, in India, launching a
wide range of product variants.)
5. Has Sunsilk come to a decline?
(Hint: Sunsilk somehow managed to make a steady impact on the consumers during its maturity
stage.)

1. Write about a product.
2. Explain about the characteristics of a product.
3. Summarise convenience products.
4. Illustrate product life cycle.
5. Express idea generation.

1. A product is any item or a substance that is processed and manufactured for sale. A product can be
any substance or service offered. It can be in different forms such as tangible or virtual. A product
is produced after incurring a specific cost and is out for sale for a market price. Every product has
a specified shelf life after which it needs to be re-invented or replaced. Refer To Section Meaning of
Product
2. The characteristics of a product are as follows:
 Related services: While selling a product a seller is bound to provide some pre and post services
to the customers. Before selling a product a seller has to give a demonstration of the product
and also offer credit facilities if any. Whereas after the sale of the products some associated
services to be provided are delivery, warranty, installation, repairs and spare parts.
 Life cycle of the product: Every product has a life cycle as any other living being on this planet.
There is a fixed characteristic pattern of the sale of a product. Initially, the sales of a product
increase and then it reaches its maximum point. Slowly the rate of sales starts to decrease and
finally, the sales reach its least rate.
Refer To Section Meaning of Product
3. Products that a consumer uses daily and purchases repeatedly without any hesitation are known as
consumer goods. These goods include soap, toothpaste, toilet paper, milk, cereals, etc. A consumer
continues to use a particular brand of the product unless he/she is attracted by some other brands.
Refer To Section Meaning of Product
4. The PLC (Product life cycle) is the stage when a product enters the marketplace and moves around,
then there is a marketplace. In different words, the product life cycle is the stages that are experienced
by the product. The managers use it as a tool to develop and analyse strategies of the product as
they move around in the market. Refer To Section Product life cycle
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5. Ideas can be innumerable, you just need to find them. This stage includes creating ideas whether
from an internal source (includes research and development, employees, etc.) or an external source
(includes customers, competitors, etc.). Refer To Section New Product Development Process
 http://managementhelp.org/productdevelopment/
 https://www.enotesmba.com/2013/07/product-mix-decision.html
 https://www.productplan.com/learn/what-is-product-management/
 Discuss the importance of product and the role of product life cycle play in the development of a
product in the organisation with your classmates.
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Product Management
Unit – 08
Prof Preksha Yadav
Unit 8: Product Management
• Product Characteristics and Classification,
• Differences between Products and Services,
• Different Levels of Product,
• Generic to Potential,
• Components of a Product,
• Product Life Cycle,
• New Product Development Process,
• Product Mix Decisions

Learning Outcome
To be able to develop a product based on market needs.

Product
A product is any item or a substance that is processed and

manufactured for sale. A product can be any substance or service
offered. It can be in different forms such as tangible or virtual. A
product is produced after incurring a specific cost and is out for sale for
a market price. Every product has a specified shelf life after which it
needs to be re-invented or replaced.
Product Characteristics
Product Classification
Differences between Products and Services
5 Different Levels of Product
Components of a Product
Product Life Cycle
New Product Development Process
Product Mix Decisions
Product mix consists of different product lines offered by an

organisation. The organisation may deal with a single product line in its
product mix, and sometimes it is also having multiple product lines in
its product mix.
Dimensions of a product mix offered by an organization
1. Width
2. Length
3. Depth
4. Consistency
• Product mix decisions: Product with the decision is said to be the
decision made by an organisation regarding adding a new product line or
eliminating the existing product line from the product mix.
• Product line decision: It is the responsibility of the product line manager

to take optimum product line decisions after considering the profit and sales
of each item present in the line while comparing the product line of the
competitors as well to ensure the maximum profit to the company.
• Line stretching decision: Line stretching decision involves strengthening

the existing product line by including more products in the existing range.
UNIT
09 Pricing Strategies
Names of Sub-Units
Importance of pricing value, factors influencing pricing, pricing objectives, pricing methods, pricing
to capture value.
Overview
Pricing is said to be the key element of the marketing mix. There is four-piece in the marketing mix:
Product, Price, Place and Promotion. All the three elements promotion packaging and product are the
cost generated which means they are the cost for the company. On the other hand, price is the only
element of the marketing mix that generates revenue and it is also the most important determinant
of the profitability of the business by the way of sales volume.
Learning Objectives

 Discuss the different pricing methods
 Explain the factors influencing pricing
 Describe the objectives of pricing
 Analyse how pricing affects the sale of an organisation.
Learning Outcomes

 Illustrate a detailed understanding of various pricing methods and all those factors influencing
the pricing.
 Different elements are involved with the pricing of any product.
 Express how does pricing act an important role in the success of any organisation?
JGI JAIN
9.1 INTRODUCTION
A price is said to be a monetary value that one party pays to another party in exchange for some goods
or services. Hence, a price simply means the amount of money the buyer will pay to the seller as a
consideration in exchange for goods or services. For any organisation, it is not always an easy job to set
a price. There are different aspects, such as cost of the product, demand and supply of the product, the
value of the product for the customer, and its perception that affect the price of a particular product.
Therefore, while deciding the price of a particular product the company has to take a lot of things under
consideration. The price of the product is neither too high nor too low as it may lead the product to fail
in the market. This is also the main reason why determining the price of a product is not a single-time
event. Based on different circumstances and market conditions a company needs to changes the price
of its product.
9.2 IMPORTANCE OF PRICING

Another crucial decision made during the manufacturing process is the product's price. The present is
believed to be the most crucial School of Competition since it determines if a product is acceptable to
buyers, its future, and its profitability. The following are some of the reasons why price is so important
for a business:
1. Flexible element of the marketing mix: One of the most adaptable parts of the marketing mix
is pricing. Pricing is another part of marketing mixes that can be readily modified and updated,
just like product, price, or promotion. Furthermore, if you wish to change the product's design or
distribution system, it will take a lengthy time to do so. Similarly, adjustments in the promotion
of promotional activities needed a significant amount of time and are a time-consuming effort.
However, when it comes to pricing, it is extremely flexible and may be adjusted based on a variety of
elements as well as the needs of the circumstance.
2. Price creates the first impression: The first factor a consumer notices about a product is its price,
and hence it plays a vital role in creating the first impression about your product in the consumer’s
mind. Although the consumer made his final buying decision after considering the overall benefits
offered by the product and he is more likely to compare the actual price of the product with the
perceived value of the product to evaluate its satisfaction level after buying the particular product.
But at first, he considered the price of the product and if he is satisfied with the price then he tries to
learn more about the qualities of the product attached to it and then decide whether the product is
worth buying or not.
3. Vital element of sales promotion: Pricing is also considered to be the most important part of sales
promotion. If a marketer wants to increase sales volume then he may reduce the price of the product
to create its demand in the market. Therefore, price plays an important role in promoting sales
because in most of the cases where the demand of the particular product is price sensitive and the
marketer made a small reduction in price it will lead to higher sales volume. However, a marketing
manager should always get this thing in mind that the prices of the product should not fluctuate
frequently to stimulate sales.
4. Price is a competitive weapon: In today’s cut-throat competition, every organisation has to survive
in a highly competitive environment and in such a competitive environment price play an important
role to fight competition. It is because of the competition only, the importance of price contributes a
lot. If an organisation offers the same quality product at a comparatively low price, then consumers
may switch from your competitors’ product to your product based on the pricing of your product.
That is why it is said that price is a competitive weapon for any organisation.
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UNIT 09: Pricing Strategies JGI JAIN
5. Price is the determinant of profitability: The profitability of any firm largely depends upon the price
of its offering. Price helps determine the profitability of the firm by influencing its sales revenue. If
the price of your product is true to its value, then it will boost the sales and which, in turn, increase
the profitability of the firm due to high sales volume.
6. Price-regulated demand: The demand for a particular product is also regulated by its price. If your
company is offering any product at a very competitive price, then there is a chance of increasing
demand for that product as there is an inverse relationship between price and demand. The lesser
the price, the more will be the demand for the product in the market which, in turn, boosts the
profitability of the firm.
9.2.1 Factors Influencing Pricing

Various factors are internal and external to an organisation that affect the pricing policy of the firm
which includes the following:
Internal factors
 Marketing objectives and pricing objectives: The main objective of pricing is to maximise the profit
and receive maximum return on sale investment. In the same way, if the marketing objective is to
increase the market share and to increase its sales volume, then it has made an influence on pricing
policy as to capture the largest market of the share we must increase sales volume and that can be
possible when we provide the product to our customer below at a price our competitor offers, hence,
marketing objective made its influence on pricing objective of a firm.
 Costs: The cost has made a direct influence on the price of the product. The price of any product
is determined after adding some portion of margin to the cost incurred while producing that item
that is why the cost has made a direct influence on pricing. Six steps need to be identified while
evaluating the cost price structure which includes:
 Define the existing price structure adopted by a company
 The next step is to identify the price of competing products for each item present in the product
line
 Now decide which product required most of the attention
 Calculate the profitability of the current product mix
 Identify those products and services whose prices need to change
 This is the last step where we have to decide the new prices structure of the company
 Organisational considerations: All the marketers make their marketing strategy to get maximum
profit from their products. Profit is the function of demand, cost and revenue. Hence, a manager
needs to understand the relationship between price cost revenue and demand for a particular
product prevail in the market and accordingly should set the perfect pricing strategy for the
particular product as the price of any product plays an important role to decide whether the product
will adopt in the market or not.
External factors
 Nature and demand of the market: What is the expectation of the market regarding the particular
product or services and what is the demand level for the particular product at different prices
helps the manager to decide the pricing policy and he should consider all these factors are very
consciously to design the perfect price for the product.
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 Competition: The competition prevails in the market place a vital role in deciding the price of a
particular product. If the product is highly competitive in the market which means if it is having
more substitutes present in the market, then the market manager should adopt a skimming cream
policy so that it will be able to reach out to most of the customers because of its low price and helps
to gain more market share.
 Environmental factors: There are various external environmental factors also that directly or
indirectly influence the pricing policy of any organisation and also the organisation has no control
over it and they have to adjust themselves according to those factors and these factors include
government actions, economic condition, inflation, social conditions, reseller needs and many more.
A marketing manager must consider these external forces while deciding the pricing policy for the
particular product in an organisation.
9.2.2 Pricing Objectives

The main aim of a company is to position its product in consumers minds and for that, a firm must have
a clear that objective which is why it became easier for them to set a price for the product. Any firm that
is going to set a price for its product wants to achieve one or more of the following objectives:
 Maximum current profit: The major goal of setting a price for a product is to maximise current
profit, thus the corporation estimates demand and costs associated with several pricing before
selecting the one that would help them generate the most sales, cash flow, and return on investment
 The maximum long term profit: The pricing policy of any organisation also helps to generate long-
term profit for the firm. The main aim of any organisation by setting the price is to capture the
largest share of the market by beating their competitors. And to confirm the long-term sales an
appropriate price for the product must be fixed by keeping in mind the purchasing power of the
customer and competitors’ reactions.
 Maximum market penetration: Various companies assume that lowering the product's price will
result in better sales volume and, as a result, a larger market share. Lower unit costs and increased
long-term earnings will result as a result of this. As a result, the primary goal of pricing is to
encourage increased market growth.
 To face competition: Pricing in the MI fashion competition is critical because it helps a lot in dealing
with today's tough competition and remaining competitive in the industry. To obtain a competitive
advantage, a company can change its current policy to match the competitor's strategy of providing
the best quality product at the lowest price to its customers. Many businesses employ rise as an
effective tool to respond to increased competition.
 To win the confidence of customers: The main aim of any company is to serve its target customer
in the best possible way. The company sets best practices in its pricing policy to win the confidence
of its target consumer. A corporation can keep and establish the confidence of the client that the
price charged for the product is worth and reasonable for them to afford with the help of a suitable
pricing policy. The pricing policy should be based on the needs of the clients, and they should not
feel misled.
 To satisfy customers: The main aim of any company is to satisfy their customer in the best possible
manner. The company set the pricing policy according to the perceived value of the product in
consumer minds and is ready to adjust and readjust it to satisfy its target consumer. In short, a
company should design its pricing policy in such a way that provides maximum satisfaction to its
target consumers.
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9.3 PRICING TO CAPTURE VALUE

Pricing is a method in which a business decides to sell a particular product or service at a set price. This
price is set based on costs incurred, quality, marketplace and situation, brand and competition. The
majority of the companies believe that the market sets the prices for their products, whereas the truth
is they are the marketers who set the prices. Pricing of products and services is generally done by the
companies based on their cost or price set by competitors. Generally, pricing is done by adding a certain
percentage of profit to the cost incurred by the company. Instead of this, the companies should analyse
what their customers are willing to pay for their product.
To capture the value of your product, the companies need to understand these capabilities.
 Pricing economics: the price of goods and services are regulated by the law of demand and supply.
Products with lower prices will have a higher demand and vice versa. But the customers who are
willing to pay a higher price are not considered in this prospect. Therefore, companies should divide
their customers into two categories – one who appreciates the value and one who looks for low
prices.
 Customers’ data and insight: If you want to price your goods for their best value, you need
to understand what your customers need. Companies generally focus on the ingredients and
composition of the product while pricing, whereas the consumer looks for the benefits that he/she
receives from the product or service. They value their products on the basis of measurable and
tangible things. Companies with less or inaccurate customer data and insight do not have expertise
in value capturing.
 Psychology of pricing: people generally believe that prices are affected by customer behaviour,
whereas the truth is the reverse of it. It is the perception of the customer that leads to a change in a
customers’ behaviour. As per research, it is found that a person who is shown a higher rate product
initially takes product value into consideration after seeing the low rate product, whereas a person
showed low rate product before high rated one compares the product on the basis of its price. It is
human psychology to evaluate things on the basis of which they are presented to them.
 Pricing management: To acquire the best value for your products or service, it is very important
to maintain a good pricing strategy. The companies who believe that discounts are the best way to
increase the demand for their products are not on the right path. Just giving discounts is not the
best solution. Discounts allowed should be such that put a consumer in a dilemma and make their
decision difficult. The best example of this is airline tickets. The airlines allow discounts and low
prices on weekdays, long-duration flights or initially. Slowly the prices are increased till the date of
the flight, and the consumers are forced to pay higher prices for the instant booking of flight tickets.
Often companies also get into a dilemma with the objectives related to the decision of pricing. The
dilemmas are generally related to the term of the consumer, promotions, discounts, profit, consistency,
internal or external forces, etc. The best way to solve these dilemmas is to study a company’s customers’
willingness to pay for a product. This is an excellent method to value your product. As every consumer
compares your product with your competitor’s product before purchasing it. If you are providing a
better product than your competitor, then the buyer will likely be willing to pay more for your product.
Therefore, you need to create value for your product and implement it in your pricing strategy. This is
the best way in which you can capture the best value for your product and services.
There is no thumb rule for any business to attain excellence in pricing, therefore, that it can capture
the best value for its products and services. But by following these core capabilities, they can succeed
in attaining the best value for their products. The thing that always should be noted is the consumers’
behaviour and willingness. Otherwise, the company will lose its customers and brand value.
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9.4 PRICING METHODS

The pricing method is said to be some strategy in order to achieve the desired pricing objectives. Here
are the several methods of pricing which are categorised in different groups
1. Cost-based pricing
 Markup pricing: Markup pricing is considered to be the most elementary kind of pricing method.
This pricing method as standard markup is added to the production cost to achieve the desired
price of your product.
 Going rate pricing: It's the polar opposite of skimming pricing, in which marketers set low prices
for their items in order to capture the majority of market share and increase sales.
 Target rate of return pricing: The firm determines the price that would yield its target return of
investment rate. It can be calculated by using the following formula
Target return pricing= unit cost+ desired return x invested capital/ number of unit sales.
 Break-even pricing: In this method, the firm first determines the level of sale needed to cover the
overall cost including fixed cost and variable cost. The break-even price is said to be the price at
which the cause of the goods and the sales revenue is equal to each other or we can say that it is
the position of no profit and no loss.
For example, if the fixed cost of any commodity is rupees 200,000 and the variable cost per unit
is rupees10 and the selling price of each item is rupees 15. In such a situation the form needs to
sell 40,000 units of product to get their break-even pricing. Therefore, the form has to plan its
strategy accordingly so that it is able to sell more than 40,000 units to make profit. If the form
fails to sell 40,000 units or from research it has found out that is firm is not able to sell this many
units then in such a case it has to increase the selling price of the woods in order to reach the
break-even point.
 Early cash recovery pricing: When the forecast suggests that the life of the market is likely to be
shot in such a case some form may fix a price in order to realise the early recovery of investment.
This type of pricing is mostly seen in fashion-related products because this product maybe out of
the market if the new product of the same kind is introduced also technology sensitive products
also use this kind of pricing method.
2. Market for demand-based pricing
 Skimming pricing: Under this pricing policy from the charged high price of their product in
order to scheme the high-value customers in the beginning. This type of pricing policy is mostly
adopted by luxury products for high-end products. For example when Apple launched its new
model then firstly it will charge high.
 Penetration pricing: It is the opposite of skimming pricing where marketers charge low prices
for their products in order to capture most of the market share to boost its selling.
3. Competition oriented pricing
Under this pricing policy, the marketer considers the competitor’s price as the reference point
for the price of the product. It then can decide on premium pricing which is higher than that of
competitor price, discount pricing which is the price below the competitors’ price for parity pricing
which means the price is equal to the competitors’ price. When a marketer has established a market
price with the intention of stabilising the price the smaller firms in the industry may have to go in
for parity pricing.
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4. Perceived value pricing

There are a lot of elements through which perceived value is made which include quality, customer
support, buyers’ image of the product, performance, brand equity, warranty and firms reputation.
The main purpose of pricing is not only to cover the production cost but also to capture the value
of the product that is being perceived by the target consumer. 100% value pricing company tries to
price their product more than equal to the consumer perceived its value attached to it.
5. Psychological pricing
Under psychological pricing, the marketer tries to play with the psychology of the consumers, and
hence price the product in such a manner that it may perceive by the consumer that priceless but
actually it is the optimum price. You have seen that in earlier days this kind of pricing was mostly
used by Bata companies as most of the footwear price according to psychology pricing. Ex- instead
of praising the product INR 500 You can price it INR 499.
6. Economy pricing
Economy pricing is generally adopted in the community good sector market. The main motive of
economic pricing is to set up prices below than the price set by the competitor in order to make the
money back with an increase the volume.
 A price is said to be a monetary value that one party pays to another party in exchange for some
goods or services. Hence, a price simply means the amount of money the buyer will pay to the seller
as a consideration in exchange for goods or services. For any organisation, it is not always an easy
job to set a price.
 There are different aspects, such as cost of the product, demand and supply of the product, the value
of the product for the customer, and its perception that affect the price of a particular product.
 Therefore, while deciding the price of a particular product the company has to take a lot of things
under consideration.
 The price of the product is neither too high nor too low as it may lead the product to fail in the
market. This is also the main reason why determining the price of a product is not a single-time
event. Based on different circumstances and market conditions a company needs to changes the
price of its product.
 Another crucial decision made during the manufacturing process is the product’s price. The present
is believed to be the most crucial School of Competition since it determines if a product is acceptable
to buyers, its future, and its profitability.
 One of the most adaptable parts of the marketing mix is pricing. Pricing is another part of marketing
mixes that can be readily modified and updated, just like product, price, or promotion.
 Adjustments in the promotion of promotional activities needed a significant amount of time and
are a time-consuming effort. However, when it comes to pricing, it is extremely flexible and may be
adjusted based on a variety of elements as well as the needs of the circumstance.
 The first factor a consumer notices about a product is its price, and hence it plays a vital role in
creating the first impression about your product in the consumer’s mind.
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JGI JAIN
 Although the consumer made his final buying decision after considering the overall benefits offered
by the product and he is more likely to compare the actual price of the product with the perceived
value of the product to evaluate its satisfaction level after buying the particular product.
 The profitability of any firm largely depends upon the price of its offering. Price helps determine
the profitability of the firm by influencing its sales revenue. If the price of your product is true to its
value, then it will boost the sales and which, in turn, increase the profitability of the firm due to high
sales volume.
 The demand for a particular product is also regulated by its price. If your company is offering any
product at a very competitive price, then there is a chance of increasing demand for that product as
there is an inverse relationship between price and demand.
 Pricing is a method in which a business decides to sell a particular product or service at a set price.
This price is set based on costs incurred, quality, marketplace and situation, brand and competition.
 The majority of the companies believe that the market sets the prices for their products, whereas
the truth is they are the marketers who set the prices.
 Pricing of products and services is generally done by the companies based on their cost or price set
by competitors.
9.6 GLOSSARY
 Price: Price simply means the amount of money the buyer will pay to the seller as a consideration in
exchange for goods or services.
 Penetration pricing: Penetration pricing is the polar opposite of skimming pricing, which involves
charging cheap costs for a product in order to capture the majority of the market share and increase
sales
 Penetration pricing: It is opposite to skimming pricing where marketers charge low prices for their
products in order to capture most of the market share to boost its selling.
 Going rate pricing: In this pricing policy, the firm adopts the competitors’ price and charge the same
price on more or less than the price of major competitors or market leaders present in the market.
9.7 CASE STUDY: EXCEL MOUNTS
Case Objective
This case study exhibits the pricing strategy on an organisation.
Excel Mounts is a 30-year old company manufacturing shock absorbers catering to the requirements of
OEM in the automobile industry, and replacement markets.
The company has technical collaboration with a renowned German firm. The company is known for its
superior quality product.
The company had a little over 55% market share in the OEM segment and had many of the major
auto manufacturers (both four and two wheelers) as its customers. The company had only two major
competitors, Roamers and Filco besides some small and medium sized firms.
Within the last two years the situation in the replacement market has been gradually changing because
of the price cuts introduced by Excel Mount’s competitors. Price sensitivity in the replacement market
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is significant and resellers as well as final consumers have increasingly opted for cheaper alternatives.
Most companies in the industry offered margins to dealers and retailers in excess of 30%. As a result
of this range of margin, it were the resellers who actually controlled the pricing in the replacement
market. For the last six months, the competition had become more intense not only in the replacement
segment but also in OEM segment.
The price-cuts made by others and also the two major competitors, Roamers and Filco, due to recession
had made these two competitors’ an attractive option for the OEM segment and Excel Mounts had lost
some of its orders to these two competitors. Recently the situation had acquired grave dimensions. A
major OEM buyer, with whom the company had been doing business for quite a long time and had good
relations, had threatened to stop procuring from Excel Mounts if the company did not reduce its prices.
If this were to happen, Excel Mounts would suffer a severe blow to its sales.
Excel Mounts had announced a reduction in its prices by just 1%, which was negligible compared to
reductions by competitors. The CEO, Bhagwat Shinde was against compromising on quality by using
material of lower gauge, make appropriate reductions in price, and retain its market share. He believed
the compromise on quality would tarnish the company image, which would be detrimental to long-term
business interests.
There was one option. Excel Mounts could buy raw materials from suppliers who were ready to offer
heavy discounts provided the entire material was sourced through them.
Such an action, though, would result in the closure of the ancillary units which were totally dependent
on Excel Mounts for their survival.
Questions
1. What is the competency of Excel Mounts?
(Hint: It has technical collaboration with a renowned German firm, superior quality product etc.)
2. What is the market share of the company?
(Hint: The company had a little over 55% market share in the OEM segment.)
3. What the major OEM buyer threatened?
(Hint: It threatened to stop procuring from Excel Mounts if the company did not reduce its prices.)
4. What is the status of competition in the industry?
(Hint: The competition had become more intense not only in the replacement segment but also in
OEM segment.)
5. What was stated by Excel Mount?
(Hint: Excel Mounts had announced a reduction in its prices by just 1%.)

1. Explain the role of pricing in marketing mix.
2. State the role of competition in marketing mix.
3. Express any one objective of pricing.
4. Write about pricing to capture value.
5. Summarise economy pricing.
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1. One of the most adaptable parts of the marketing mix is pricing. Pricing is another part of marketing
mixes that can be readily modified and updated, just like product, price, or promotion. Furthermore,
if you wish to change the product's design or distribution system, it will take a lengthy time to do so.
Refer To Section Importance of Pricing
2. The competition prevails in the market place a vital role in deciding the price of a particular product.
If the product is highly competitive in the market which means if it is having more substitutes
present in the market, then the market manager should adopt a skimming cream policy so that it
will be able to reach out to most of the customers because of its low price and helps to gain more
market share. Refer To Section Importance of Pricing
3. The maximum long term profit The pricing policy of any organisation also helps to generate long-
term profit for the firm. The main aim of any organisation by setting the price is to capture the
largest share of the market by beating their competitors. And to confirm the long-term sales an
appropriate price for the product must be fixed by keeping in mind the purchasing power of the
customer and competitors’ reactions. Refer To Section Importance of Pricing
4. Pricing is a method in which a business decides to sell a particular product or service at a set price.
This price is set based on costs incurred, quality, marketplace and situation, brand and competition.
The majority of the companies believe that the market sets the prices for their products, whereas
the truth is they are the marketers who set the prices. Refer To Section Pricing to capture value
5. Economy pricing is generally adopted in the community good sector market. The main motive of
economic pricing is to set up prices below than the price set by the competitor in order to make the
money back with an increase the volume. Refer To Section Pricing Methods
 https://praxie.com/kotlers-pricing-strategies-model-online-tools-templates/
 https://blog.hubspot.com/sales/
 Discuss the impact of pricing policy on the success of an organisation and being the start-up
company, which pricing policy should be adopted by a firm to remain competitive in the market
with your friends and classmates.
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Pricing Strategies
Unit – 09
Prof Preksha Yadav
Unit 9: Pricing Strategies
• Importance of Pricing
• Factors influencing Pricing
• Pricing Objectives
• Pricing to Capture Value
• Pricing Methods
Learning Outcome
To be able to estimate prices for products and services.
Pricing
Pricing is a process of fixing the value that a manufacturer
will receive in the exchange of services and goods.
It brings you the value you deserve for your products and
services offered and secures the profits you need to invest in
change and growth.
Importance of Pricing
1. Flexible element of the marketing mix
2. Price creates the first impression
3. Vital element of sales promotion
4. Price is a competitive weapon
5. Price is the determinant of profitability
6. Price-regulated demand
Factors influencing Pricing
Pricing Objectives
Pricing to Capture Value
Pricing is done by adding a certain percentage of profit to the cost incurred by the
company. Instead of this, the companies should analyse what their customers are willing to pay
for their product
To capture the value of your product, the companies need to understand these capabilities:
1. Pricing economics
2. Customers’ data and insight
3. Psychology of pricing
4. Pricing management
Pricing Methods
UNIT
10 Distribution Management
Names of Sub-Units
Introduction, Meaning of distribution, Utilities of distribution management, Types of distribution,

Modes of transportation, Warehousing decision, Designing distribution networks
Overview
No matter how good quality product you produce, what if the product does not reach the proper
market where it can achieve the high demand. Every product requires a proper distribution system to
reach its potential customers. The better is the distribution system, the higher is the chance of selling
the products than the competitors. It is essential for any type of business as it can make or break
any business. A good distribution system helps in lowering the costs, and hence increasing the profit
margin of the company. Businesses with a proper distribution system have higher chances of success
and longevity.
Learning Objectives

 Describe the meaning of distribution and the importance of distribution management in a business
 Discuss the different types of distribution methods and their applicability in businesses
 Analyse the various modes of transportation and which mode is suitable for which business
 Summarise the factors affecting the decision of selecting a warehouse appropriate for a business
 Explain the various steps of designing a distribution network.
JGI JAIN
Learning Outcomes

 Understand the distribution management and its important role in business
 Analyse the various types of methods of distribution that you can use as per your business
requirements
 Describe the various modes of transportation and advantages and disadvantages of each model
 Summarise How warehousing decisions can affect your business costing
 Elucidate the designing distribution networks and their importance in business
 https://corporatefinanceinstitute.com/resources/knowledge/other/distribution-management/
10.1 INTRODUCTION
The marketing comprises of four elements or P’s which include product, pricing, promotion and place.
Out of these, the fourth P, i.e., place or distribution is an essential element of the marketing mix. It has
always been a challenge in business to manage The distribution system of the goods. In a business,
the timely arrival of raw materials and goods is very essential to prevent wastage and maintain a
good flow of the goods in the market. With the help of proper distribution management, businesses
can have real-time information about their inventories. With the lack of distribution management,
effective distribution is not possible and the competitors easily take over the market. Several methods
and steps are involved in a successful distribution management strategy. The idea behind distribution
management is bridging the gap between the manufacturer or service provider and the end-consumer
most effectively and efficiently.
10.2 MEANING OF DISTRIBUTION

Distribution is a process through which goods or services are carried to the different levels of business
users or the end consumer. The producer or the service provider can themselves distribute their
products or services or take the help of intermediaries and distributors. The main objective behind
distribution is to make the products and services easily available to the targeted consumers in the most
cost-efficient way. While in services, the purpose of distribution is to provide easy access to the services
to the consumers. The process of distribution has to be planned based on the company’s vision and
mission. Though it is a simple concept, it requires management and control to ensure the proper flow of
goods and services.
A process through which a track of the movement of goods is kept at different levels of the transaction
is known as distribution management. In a business, the goods move from manufacturer to wholesaler
to retailers and finally to the end-consumers. This movement of goods needs to be overseen, to maintain
a record of inventory and prevent wastage of goods or raw material. Distribution management involves
several and wide range of activities which includes logistics, transportation, storage and warehousing,
inventory and channel management. It also involves selecting the correct channel and rewarding the
distributors if needed.
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UNIT 10: Distribution Management JGI JAIN
10.2.1 Utilities of Distribution Management

The utilities of distribution management are discussed as follows:
 Reduces wastage: Distribution management helps in reducing wastage in several ways. If there is
a lack of management in the inventory from the initial stage it leads to wastage of raw materials
and even finished products. More than a required inventory of raw materials and finished products
require more storage space. Thereby, there is an increase in the cost of storage and warehousing,
whereas with proper distribution management, a business can eliminate such unnecessary costs
and other costs such as shipping charges. When the goods are distributed on-demand, customers
receive faster delivery of goods with less shipping charges.
 Increased profit: Distribution management is all about delivering the goods and services to willing
customers within time in a cost-efficient manner. It mainly focuses on the least amount of wastage
of resources. As there is a reduction in wastage, the overall cost per unit of a product decrease.
This decrease in the cost of products leads to a higher margin of profits from the sale of goods and
services. Therefore, distribution management has a direct impact on the profits of a business. With
better distribution management, a company can generate higher profits.
Easy stock management. With the help of good distribution management, a manufacturer can
have a proper record of its inventory in the distribution houses. With this record, the manufacturer
can easily fill up the gap of any required stock beforehand. It helps in ensuring that there is no
shortage of goods in the market due to which a customer may return empty-handed. Distribution
management also helps the manufacturer to predict a particular retailer’s flow of sales and increase
it by providing promotional sale offers.
 Improved efficiency: Proper distribution management system provides better transparency in
the transactions. With proper records, the requirements of goods needed can be easily estimated
and timely orders can be placed. It leads to fast delivery and thereby increases the efficiency of a
business. If there is comfort and efficiency between the distributors and the company, the frequency
of transaction increases, thereby generating more revenue and profits from sales of goods and
services.
 Saves time: With distribution management, you can make your tasks automated which helps you to
save time. You can focus on areas that require more attention instead of maintaining inventory and
accounting records.
10.2.2 Types of Distribution

Every business requires a channel for distribution. However, the type of distribution depends on the type
and goals of the business you are running. Choosing the right distribution channel is very important as
it will have a great impact on your marketing strategy. Here are the four different types of distribution
channels which you can choose as per your business model:
1. Direct selling: It is a process of distribution where there is no involvement of the intermediaries
in the transactions of goods and services. In direct selling the goods and services are sold directly
by the producer or service provider to the end consumer. Direct selling can be done by any method
like door-to-door selling, online store, retail store, exhibitions, and fair or telemarketing. The best
example to it is Apple company, which sells its product only through its retail outlets or own website.
In direct selling the entire control and responsibility of the marketing, packaging and delivering
the goods is of the producer. It is a cost-effective way of distribution, as no payment has to be made
to any third party for the process. It is an appropriate channel of distribution for small business
owners.
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JGI JAIN
2. Selling through intermediaries: This type of distribution involves taking the help of third parties
because of which is also known as the indirect distribution channel. Here, intermediaries are the
wholesalers and the retailers who help the producer to make the goods available in the market.
Wholesalers are those who purchase goods from the producer in bulk at a low price to further sell
the good to small wholesalers or retailers. Retailers further sell the goods to the end consumer in the
market. In this channel of distribution, the control and risk related to the goods are transferred and
divided. If the goods are not well accepted in the market the losses will be borne by all the parties.
Therefore, in this distribution channel, it is important to maintain a good relationship with each
party.
3. Dual distribution: In this method, the producer uses more than one distribution channel to sell its
products in the market. In dual distribution, the producer themselves sell their goods to the end-
consumer directly and also through distributors and brokers indirectly. For example, the Coach
brand selling its products in large departmental stores such as Dillard. This method is an alternative
to direct selling and is appropriate for new manufacturing businesses. With this method benefits of
both, direct selling and selling through intermediaries can be obtained.
4. Reverse channel: In the reverse channel of distribution, the goods move from the consumer to the
other consumer or beneficiary. In this method, there is no producer. People involved in second-hand
business are an example of reverse channel distribution users. Reverse channel distribution can
also be used in the reuse or recycling of products. When an end consumer sells the goods to the
company for recycling or refurbishment, then the consumer uses the reverse channel of distribution.
Technology can also be transacted through reverse channel distribution.
10.3 MODES OF TRANSPORTATION

There are six modes of transportation for business. A shipper can use any of these modes of transportation
for delivering goods or services to its consumers. Every mode of transportation has its unique features
and has its own merits and demerits for the shipper. Therefore, it is important to choose the right mode
as per your requirements. The different modes of transportation are:
 Road transportation: It is the oldest and the most common means of transportation in logistics.
From bullock carts to trucks everything is used for road transport. The development of roads and
vehicles over a period of time has made road transport the most versatile mode of transportation.
This mode of transportation is preferable for short distances with lighter loads. It is the only mode
of transportation that offers deliveries on doorsteps. Therefore, it is the ultimate mode of transport
to the doorsteps of any shipment that initially was carried by any mode of transportation. Road
transports are generally of two forms that include Less than truckload (LTL) and Truckload (TL).
In LTL the route of transportation of the vehicle is fixed with several stoppages. Whereas in TL the
vehicle moves from origin to destination without any stoppage. LTL is suitable when the shipment
is smaller and would not cover the entire truck. The only problems associated with road transport
are traffic, weather, rules and regulations relate to roads, and lack of manpower for driving. These
factors influence the effectiveness of road transport and cause a delay in shipment.
 Rail transportation: Since the invention of railways in the early nineteenth century, rail transport
has become an ideal option for bulk cargo transportation within and outside countries. Large and
heavy loads that cannot be transported by land through vehicles, use this mode of transportation.
Bulk cargos such as coal, iron ore, wheat and other grains are transported through trains which
is an economical choice. As the railways require more infrastructure than road transportation, it
is costlier. The infrastructure of railway requires more time and labour with limited route options.
However, there is no stoppage and traffic or diversion in the transport by rail which saves time and
prevents damage.
4
 Air transportation: It is the latest mode of transportation which is gaining popularity nowadays
due to its time efficiency and numerous route possibilities. It plays an important role in domestic
and international trade these days. With the improvement in technology, the fast-growing world
requires faster actions which can be fulfilled with air transport. The growth of e-commerce has
played a vital role in increasing the demand for air transportation. Companies such as UPS and
Amazon has started owning their airplanes for faster supplies than their competitors. With the
increase in demand for flights for travelling, transport through air has also become preferable.
This has made air an economical mode of transportation. But air transportation is only preferable
for light weighed and less volume freights. Moreover, air transport causes the highest pollution
compared to other modes of transport. It is also the most expensive mode of transportation till date.
 Maritime transportation: It is the most efficient way of transportation that has been carried out
for hundreds of years. It is ideal for international transportation. This mode of transportation has
the highest capacity to carry weights and volume in the most cost-efficient way. The routes used for
maritime transportation are fixed and calculated and cannot be changed. However, the time taken
by ships for shipping the consignment is very high as they move slowly. There are marine trafficking
frequently when there are several ships on the same route causing a delay in delivery. Moreover, the
carbon emission of a ship is millions of times more than a car which leads to water pollution.
 Pipeline transportation: It is a mode of transportation which is specifically used for the
transportation of fossil fuels. Oil and gas are fossil fuels that are transferred from the place of
their extraction to their destination through pipelines. These pipelines can be built underground,
underwater or on the ground as per the need and place. The cost associated with the construction
of the pipeline and the material being transported decides the cost of transportation through this
mode. The demand for this mode of transportation is increasing with the increase in extraction and
transportation of crude oil. Earlier, railways were used for transporting oil, but the oil extraction
companies are willing to switch the mode of transportation to pipelines. It is a cost-effective and
relatively safe mode of transportation for fossil fuels compared to railways.
10.4 WAREHOUSING DECISION

Owning or leasing a warehouse can be a major decision that can influence the effectiveness of a business.
Therefore, it is very important to choose the right warehouse as per the needs and requirements of your
business. Here are the following factors that you should consider while choosing a warehouse:
 Rent and taxes: The most important factor to be considered is the cost you have to incur to store
your goods in a warehouse. You need to choose a warehouse as per your requirement that fits your
budget. The rates of the warehouse shall depend on the size, location, and maintenance required.
Further, you should also consider the tax liability, tax concession and the laws of the state government
applicable to your business. You should also ensure there are no hidden charges applicable.
 Roads and flow of traffic: The choice of your warehouse shall also affect your transportation cost.
If the warehouse you choose shall not have proper roads, highway connectivity, and a low density
of traffic, your transportation cost shall increase. You need to ensure your warehouse offers proper
entry and exit, proper highway connectivity, and less traffic density especially if your transportation
is done by trucks.
 Availability of workforce and labour cost: Before selecting a warehouse for your business make
sure the area you choose has sufficient workforce and labour required for your business. Also, pay
attention to the demand and supply of the workforce. If there is a lesser supply than demand of the
labourers, the salary demand shall increase, thereby increasing your cost. It is also essential that
you get skilled labourers for your work in the location of your warehouse.
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 Local markets and environmental conditions: You should ensure that your warehouse should not
be very far away from your major local suppliers and producers. As this can increase your time and
cost of transportation. Further, you should also review the climatic conditions of the location of your
warehouse, as it can cause damage to your products.
 Utility and alternative options: You should always have alternative options for your business. If your
business grows or falls, your requirements might change. You should always have a backup option
to increase or decrease your space as per your requirements. Make sure there are other warehouses
available nearby in case you need more space. Further, utility services as the Internet, electricity
and communication services should always be available in the location of your warehouse.
 Distance from airport or port: If your business’s main mode of transportation is via air or water,
make sure your warehouse is located nearby the airport or the harbour port. This shall reduce your
time and cost of transportation.
10.5 DESIGNING DISTRIBUTION NETWORKS

Designing or redesigning your distribution network can help the company in minimising its logistics
costs, improvement of levels of service for clients, provide more flexibility, and many more. You need to
follow these steps to design or redesign a distribution network:
 Make a clear understanding of the business strategies and understand the business’s present and
future needs of distribution
 Target your customers and understand how to reach them through customer service indicators
 Address the promises made to your customers and business goals that will help you to access
your financial and physical resources. Continue the process until you receive a balanced cost and
satisfaction from your customers
 Define the scope, route, process and need of your distribution network center. It should be defined in
such a way that the customer satisfaction strategy is achieved at minimum cost with an appropriate
mix of network elements
 Analyse your competitor’s weaknesses and strengths and find opportunities for the betterment of
distribution strategy than your competitors
 Choose the best distribution network design software that is suitable for your business. It should be
flexible and innovative to fit the changing needs of a business
 The marketing comprises of four elements or P’s which include product, pricing, promotion and
place. Out of these, the fourth P, i.e., place or distribution is an essential element of the marketing
mix. It has always been a challenge in business to manage.
 The distribution system of the goods. In a business, the timely arrival of raw materials and goods is
very essential to prevent wastage and maintain a good flow of the goods in the market.
 Several methods and steps are involved in a successful distribution management strategy. The idea
behind distribution management is bridging the gap between the manufacturer or service provider
and the end-consumer most effectively and efficiently.
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 Distribution is a process through which goods or services are carried to the different levels of
business users or the end consumer. The producer or the service provider can themselves distribute
their products or services or take the help of intermediaries and distributors. The main objective
behind distribution is to make the products and services easily available to the targeted consumers
in the most cost-efficient way.
 While in services, the purpose of distribution is to provide easy access to the services to the consumers.
The process of distribution has to be planned based on the company’s vision and mission. Though
it is a simple concept, it requires management and control to ensure the proper flow of goods and
services.
 A process through which a track of the movement of goods is kept at different levels of the transaction
is known as distribution management.
 In a business, the goods move from manufacturer to wholesaler to retailers and finally to the end-
consumers. This movement of goods needs to be overseen, to maintain a record of inventory and
prevent wastage of goods or raw material.
 Distribution management involves several and wide range of activities which includes logistics,
transportation, storage and warehousing, inventory and channel management. It also involves
selecting the correct channel and rewarding the distributors if needed.
 Distribution management helps in reducing wastage in several ways. If there is a lack of management
in the inventory from the initial stage it leads to wastage of raw materials and even finished products.
 More than a required inventory of raw materials and finished products require more storage
space. Thereby, there is an increase in the cost of storage and warehousing, whereas with proper
distribution management, a business can eliminate such unnecessary costs and other costs such as
shipping charges.
 When the goods are distributed on-demand, customers receive faster delivery of goods with less
shipping charges.
 Distribution management is all about delivering the goods and services to willing customers within
time in a cost-efficient manner. It mainly focuses on the least amount of wastage of resources.
 As there is a reduction in wastage, the overall cost per unit of a product decrease. This decrease in the
cost of products leads to a higher margin of profits from the sale of goods and services. Therefore,
distribution management has a direct impact on the profits of a business.
 With better distribution management, a company can generate higher profits.
 In the reverse channel of distribution, the goods move from the consumer to the other consumer or
beneficiary. In this method, there is no producer. People involved in second-hand business are an
example of reverse channel distribution users.
 Reverse channel distribution can also be used in the reuse or recycling of products. When an end
consumer sells the goods to the company for recycling or refurbishment, then the consumer uses
the reverse channel of distribution.
 Technology can also be transacted through reverse channel distribution. There are six modes of
transportation for business.
 A shipper can use any of these modes of transportation for delivering goods or services to its
consumers. Every mode of transportation has its unique features and has its own merits and
demerits for the shipper.
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10.7 GLOSSARY
 Distribution: The process of spreading the products and services sufficiently in a market, that it is
easily available to the willing consumers. Distribution involves the following elements which include
transportation, tracking, packaging and research of potential marketplaces.
 Distribution management: It is a process of overseeing the movement of products from the
producer or manufacturer to the intermediate or end consumers. Distribution management
involves numerous processes and activities like supply chain, logistics, warehousing, packaging, and
the management of inventory. Distribution management adoption is essential for any business’s
longevity and success.
 Warehousing: The process of physically storing the goods in a warehouse or an area with a storage
facility, before their sale or distribution to the intermediate or final consumer. A warehouse can be
any place such as a basement, storeroom, garage or a rented place in a building.
 Transportation: The process of moving goods and another organism from one place to another
using various means such as land, air, and water. With the growth in technology, the means of
transportation are also increasing day by day. The other modes of transportation used these days
are cable, pipeline and space.
 Distribution network: It is a group of transportation systems and storage facilities that are
interconnected and receives the goods inventory and delivers the products to the consumer. It is the
middle point from where you get the goods from the manufacturer and send it to the end consumer,
directly or indirectly.
 Reverse channel distribution: It is a method of distribution in which the goods flow in a backward
direction from the consumer to the beneficiary. This kind of distribution is generally seen in the
recycling or refurbishment business, where the companies take products from consumers to reuse
the product. There is no producer in the reverse channel distribution method as the good already
exists.
 Logistics: Logistics is a military term and is derived from the Greek word ‘logos’. It is the process of the
overall management of the acquisition, storage, and transportation of resources to their ultimate
destination. It involves the identification of effective and accessible distributors and suppliers for
business. The person who manages the logistics is known as a Logistician.
10.8 CASE STUDY: DISTRIBUTION MANAGEMENT
Case Objective
The case study exhibits the distribution management of organisation.
As a company grows and changes, distribution channels may shift. Consider Alice's, a modest one-
story family restaurant offering excellent, one-of-a-kind homemade salad dressings (e.g., Pomegranate
Vinaigrette, Rum-Raisin-Orange Ranch, Blue Cheese Catalina). The dressings were initially only accessible
to Alice's clients. Then customers start asking for bottles to buy. Alice's Salad Dressings were first sold
and distributed to walk-in customers from the restaurant. A 32-ounce canning jar with a handwritten
label was used to package the product. In this scenario, Alice's one-story restaurant spawned a new
business, new distribution methods, and sales reps. Customers were first able to purchase the salad
dressings directly from Alice's restaurant for $5.00 per 32-ounce jar (15.6 cents per ounce). When it was
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decided to market Alice's Dressings in grocery stores as a shelf-stable item, the bottles were altered to a
normal 26-ounce size to compete with other dressings sold in this size
As a company grows and changes, distribution channels may shift. Consider Alice's, a modest one-
story family restaurant offering excellent, one-of-a-kind homemade salad dressings (e.g., Pomegranate
Vinaigrette, Rum-Raisin-Orange Ranch, Blue Cheese Catalina). The dressings were initially only accessible
to Alice's clients. Then customers start asking for bottles to buy. Alice's Salad Dressings were first sold
and distributed to walk-in customers from the restaurant. A 32-ounce canning jar with a handwritten
label was used to package the product.In this scenario, Alice's one-story restaurant spawned a new
business, new distribution methods, and sales reps. Customers were first able to purchase the salad
dressings directly from Alice's restaurant for $5.00 per 32-ounce jar (15.6 cents per ounce). When it was
decided to market Alice's Dressings in grocery stores as a shelf-stable item, the bottles were altered
to a normal 26-ounce size to compete with other dressings sold in this size. When competitor brands
varied from $1.29 to $2.69 for the same 26-ounce quantity, Alice was afraid that grocery shoppers
unfamiliar with the restaurant would not spend more than $3.99 retail per 26-ounce bottle. At $2.89 per
bottle, wholesale pricing were 28% less than retail. However, at $1.00 per bottle, the cost of ingredients
was significantly more than competing brands, and packaging and processing costs added another
$0.50 per bottle. Profits per bottle were lowered from restaurant sales, but remained acceptable (i.e.,
from $3.50 per bottle, or 11 cents per ounce, to $1.39 per bottle, or five cents per ounce), because total
sales and profits were predicted to be far higher. Following up with industry marketing specialists and
sales brokers, it was discovered that the delivered distributor price might be reduced by another 40%.
(including brokerage commissions and shipping costs). Even at the higher retail price of $3.99 per bottle,
Alice would only make $1.73 per bottle after brokerage commissions of 5%, leaving an unacceptably low
gross margin of only 23 cents per bottle (13%).
Alice eventually upgraded the bottle and label to a distinctive, tall, triangular Italian glass bottle with
cork, gold and black labels, and recipe hang-tags designed by a local design company. She sold the
dressings to high-end specialty and grocery stores directly. There would be no use of distributors. At a
10% commission on net sales, specialty brokers were employed to assist with direct sales. In this non-
elastic, low-price-sensitivity market sector, premium pricing was also maintained, with the new bottles
retailing for $4.99 apiece. After deducting 10% brokerage costs, final net factory sales per bottle were
$2.69, with net factory profits of $1.10 per bottle. Specialty food stores grew in popularity to compete
with other dressings sold in this size.
Questions
1. What does Alice deal in?
(Hint: It is family restaurant offering excellent, one-of-a-kind homemade salad dressings.)
2. Who could earlier access the dressing at Alice?
(Hint: The dressings were initially only accessible to Alice's clients.)
3. When happened when it was decided to market Alice's Dressings in grocery stores as a shelf-stable
item?
(Hint: the bottles were altered to a normal 26-ounce size to compete with other dressings sold in this
size.)
4. Why Alice was apprehensive?
(Hint: that grocery shoppers unfamiliar with the restaurant would not spend more than $3.99 retail
per 26-ounce bottle.)
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5. What was ultimately the design of Alice's bottle?

(Hint: tall, triangular Italian glass bottle with cork, gold and black labels, and recipe hang-tags
designed by a local design company.)

1. Write about distribution.
2. Explain how distribution management helps in profitability.
3. Express direct selling.
4. Summarise dual distribution.

1. Distribution is a process through which goods or services are carried to the different levels of
business users or the end consumer. The producer or the service provider can themselves distribute
their products or services or take the help of intermediaries and distributors. The main objective
behind distribution is to make the products and services easily available to the targeted consumers
in the most cost-efficient way. Refer To Section Meaning of Distribution
2. Distribution management is all about delivering the goods and services to willing customers within
time in a cost-efficient manner. It mainly focuses on the least amount of wastage of resources. As
there is a reduction in wastage, the overall cost per unit of a product decrease. This decrease in the
cost of products leads to a higher margin of profits from the sale of goods and services. Refer To
Section Meaning of Distribution
3. It is a process of distribution where there is no involvement of the intermediaries in the transactions
of goods and services. In direct selling the goods and services are sold directly by the producer or
service provider to the end consumer. Direct selling can be done by any method like door-to-door
selling, online store, retail store, exhibitions, and fair or telemarketing. Refer To Section Meaning of
Distribution
4. In this method, the producer uses more than one distribution channel to sell its products in the
market. In dual distribution, the producer themselves sell their goods to the end consumer directly
and also through distributors and brokers indirectly. Refer To Section Meaning of Distribution
 https://www.netsuite.com/portal/resource/articles/erp/distribution-management.shtml
 Divide your class into two groups. You have to discuss the advantages and disadvantages of each
mode of transportation. Each group will present and justify its argument based on facts and
statistics. You can also give examples of any.
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 Prepare a report on the various methods of distribution. You have to mention the merits and
demerits of each method of distribution. Also, mention the suitability of each method of distribution
to different types of business. Discuss your report in your classroom and find the point of view of
others.
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Distribution Management
Unit – 10
Prof. Preksha Yadav
Unit 10: Distribution Management
• Utilities in Distribution Management,
• Physical Distribution,
• Types of Distribution,
• Transportation Modes,
• Warehousing Decisions,
• Designing Distribution Networks

Learning Outcome
Analyze various options in distribution and be able to design
distribution network in practice.
Distribution Management
• Distribution is a process through which goods or services are carried to the different levels of
business users or the end consumer.
• The producer or the service provider can themselves distribute their products or services or take
the help of intermediaries and distributors.
• The main objective behind distribution is to make the products and services easily available to the
targeted consumers in the most cost-efficient way.
• While in services, the purpose of distribution is to provide easy access to the services to the
consumers. The process of distribution has to be planned based on the company’s vision and
mission.
• Though it is a simple concept, it requires management and control to ensure the proper flow of
goods and services
Utilities of Distribution Management
• Reduces wastage
• Increased profit
• Improved efficiency
• Saves time
Types of Distribution
• Direct Selling: It is a process of distribution where there is no involvement of the intermediaries in the
transactions of goods and services. In direct selling the goods and services are sold directly by the producer
or service provider to the end consumer
• Selling through intermediaries: This type of distribution involves taking the help of third parties because of
which is also known as the indirect distribution channel. Here, intermediaries are the wholesalers and the
retailers who help the producer to make the goods available in the market
• Dual Distribution:: In this method, the producer uses more than one distribution channel to sell its products in
the market. In dual distribution, the producer themselves sell their goods to the end consumer directly and
also through distributors and brokers indirectly.
• Reverse Channel: In the reverse channel of distribution, the goods move from the consumer to the other
consumer or beneficiary. In this method, there is no producer. People involved in second-hand business are
an example of reverse channel distribution users.
Transportation Modes
Warehousing Decisions
• Rent and taxes
• Roads and flow of traffic
• Availability of workforce and labour cost
• Local markets and environmental conditions
• Utility and alternative options
• Distance from airport or port:
Designing Distribution Networks
UNIT
11 Integrated Marketing
Communication
Names of Sub-Units
Marketing Communication a larger concept than Promotion, Why IMC, The Marketing Communication
Mix, Physical features of the Product Communication, Price-Quality and Price- Status Equations, Sales
promotion, Publicity
Overview
This unit explains Marketing Communication as a larger concept than Promotion. This unit further
explains Why IMC is needed. Further, this unit describes the Marketing Communication Mix, Physical
features of the Product Communication, Price-Quality and Price- Status Equations. At the end, this
unit explain the Sales promotion and Publicity.
Learning Objectives

 Discuss the meaning, concept and needs of Integrated Marketing Communication (IMC)
 Describe the marketing communication mix
 Explain the Product communication and its physical features Analyse the equations of price with
quality and status
 Summarise the meaning, techniques, merits and demerits of sales promotion
 Simplify publicity and its benefits
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Learning Outcomes

 Elaborate the Integrated Marketing Communication and the benefits of implementing it.
 Justify the different communication platforms and their role in marketing a product
 Explain how price affects consumer behaviour
 Examine benefits and losses from sales promotion techniques.
 Explain the meaning and the benefits businesses receive from publicity
 https://www.marketingtutor.net/integrated-marketing-communication/
11.1 INTRODUCTION
How do you covey your business vision and mission to your customers? It is marketing that helps you
deliver your message to your customers. But today there are several platforms and channels available
for marketing your products and services. Companies often choose several modes and tools to promote
their products. But all the modes must convey the same and correct message on your behalf to your
customers. Here is where the concept of Integrated Marketing Communication (IMC) comes in. It helps
to form a link and coordination among the different channels of a business to promote its products
and services. Integrated marketing communication helps to convey a single and clear message to the
potential customers of the company.
Marketing refers to the actions taken by a business organisation to promote the sale and purchase of a
product or service. It is a wider concept which includes selling, advertising and delivering products to the
end consumers. The main purpose of marketing is to draw the attention of potential customers towards
the product or service. But it is only possible when the marketing techniques used by the business,
communicate the right message to its customers. Therefore, integrated marketing communication is
essential for attracting potential customers and generating more revenue.
11.2 CONCEPT OF INTEGRATED MARKETING COMMUNICATION (IMC)

Integrated Marketing Communication (IMC) means the collection of all the tools and modes of promotion
so that it can work smoothly in coordination. When isolated these promotional tools do not work properly
leading to disturbance in communication. The basic concept behind the integrated marketing concept
is forming the link between all communications in a business. The levels of integration are horizontal,
vertical, external and internal.
Horizontal integration is the link formed between the same level of departments in a business such
as sales, purchase, finance, communication and distribution. They should work together and be well-
coordinated so that their action and decisions gives a clear message to its consumers. Vertical integration
has an objective to support the missions and objectives of corporates which are at high levels.
Internal integration implies marketing internally among the business staff. The main objective is to keep
them informed and updated about the latest developments, identities, strategies, advertisements and
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UNIT 11: Integrated Marketing Communication JGI JAIN
other business-related issues, whereas external integration aims to coordinate with external partners
such as advertisement agencies, PR partners to deliver a single and clear message on behalf of the
company to the consumers.
11.2.1 Need for Integrated Marketing Communication (IMC)

Here are some of the reasons justifying the need for integrated marketing communication for the
growth and smooth functioning of your business.
1. For delivering clear and consistent messages: Your business must convey a single message through
every platform it chooses. Businesses that neglect integrated Marketing Communication (IMC) often
end up delivering vague, inconsistent, unclear and unfocused messages to their consumers. As a
result of which the business starts losing its customers. IMC helps to align all the promotional tools
together to form better communication among them and deliver an accurate message on behalf of
the business.
2. For cost-saving: IMC helps the business to conserve its resources by maximising the benefit it
receives from marketing strategies. Whatever promotional tool or mode a business uses, if it is well-
coordinated, it will help you from unnecessary wastage. If your business delivers a single message it
saves you from unnecessary editing and modifications of your messages.
3. Building up brand image: Every brand has its particular logo, sign, name, content, headers and voice
which conveys a message about a brand. When your brand works in a particular tandem everything
about the brand delivers a particular message, it becomes your brand image. This creates a huge
impact on your brand image and makes your brand unique in your respective industry.
4. Better results: Integrated Marketing Communication helps in delivering consistent and clear
messages to the consumers which has a larger and wider impact on the consumers. When an
organisation coveys a single message internally and externally it achieves better results from its
strategies. Consumers remain clear-headed about the product and services, which results in higher
returns for the business.
11.3 MARKETING COMMUNICATION - a LARGER CONCEPT THAN PROMOTION

Marketing is a broader term that includes a product’s pricing, research and development, distribution,
promotion, and communication. Which implies that promotion is just a part of marketing.
11.3.1 Marketing Communication Mix

Communication mix is a process where a business combines different platforms and tools to
communicate and convey its message to its customers or potential customers. This communication mix
is formed to deliver a single message to the consumers on a repetitive basis so that the consumers recall
the message and the impact of the product or service remains the same. Here are some of the common
variables of marketing communication mix:
1. advertising: There are two different types of advertising which include ATL and BTL advertising.
Advertising is done through television, print media and radio are included in ATL advertising,
whereas the advertising which we see outside our houses is included in BTL advertising such as
billboards, pamphlets, and more. Advertising has a great impact on the behaviour of a consumer.
The more unique and attractive your advertising is the more customers are attracted to your
product. Brand owners use advertising as the main communication tool to beat their competitors.
2. Sales promotion: Discounts, incentives and free products are some of the basic methods of sales
promotion. The different methods to be used for increasing your sale depends on the market and
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industry from which the product belongs. FMCG products are generally promoted with freebies
and discounts, whereas products from other industries such as electronics are promoted using
free service and free installation tactics. In sales promotion incentives are provided both to the
consumers and the dealers to increase the purchase and sale of the products. It helps in raising the
volume of sales and involves less expenditure. It is widely used as a marketing tool in e-commerce.
3. Personal selling: Nowadays, every branded company has its retail outlet in every city. At their store,
they appoint their own sales promoters who have complete knowledge and understanding of their
products than the local vendors. Through personal selling, the consumers get a better understanding
of the benefits and usage of the products. Moreover, the salesperson appointed ensures that the sales
of their brand increase by providing a complete guide and promoting the product to the customers.
4. Digital or internal marketing: In the past recent years digital marketing has taken over all the other
forms of marketing including television advertising and print media. Social media has become a
great platform to reach every end consumer. Therefore, small and large companies both invest huge
amounts in digital marketing. Digital marketing is also budget-friendly and has a wider impact these
days. The companies generate higher revenue through digital marketing. From famous brands to
startups, digital marketing is beneficial for all.
5. Packaging: Earlier packaging was just done to safeguard the product from damage, but nowadays
packaging has become a communication mode for the companies with its customers. To beat their
competition, the companies are coming up with attractive packaging with the description of the
product so that the customer is drawn towards the product. Packaging has become an important
part of the marketing communication mix, as the consumer is initially attracted to the packaging
itself.
6. Public relations: In this method of communication, a piece of news is spread about a particular
product or service among the public to raise its popularity. Once a hype is created among people
about the product, the company launches the product in the market for sale. Social media is the
biggest platform these days to form public relations. The news goes viral on social media within
hours, thereby slowly building the brand image.
11.3.2 Physical features of Product Communication

When a person directly or indirectly interacts about a particular product with a potential customer
willingly, the person is believed to be involved in product communication. Product communication is a
part of a promotion which itself is a part of marketing. Before offering your product or service in the
market you need to evaluate several things about a product:
1. Should have a message: Every communication made between people should convey a beneficial
message. Communication without a clear message is vague and has no value. The subject of the
communication is based on a message.
2. any mode of communication: The product communication made can be either written, oral or
gestural. The message conveyed is important and not the mode of it. If any sentence or writing
or even a gesture is conveyed which attracts a consumer towards a product or service shall be
considered as product communication.
3. Two-way process: Even product communication needs to be two-way. In addition to the person
promoting the product or service, the audience should also be a part of the communication. The
consumer must understand the message being delivered. But the agreement is not essential in this
communication.
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4. attract a consumer: The main motive behind product communication is to attract consumers to
purchase the product or service. To motivate the consumer to purchase the product the message
should be conveyed clearly and well presented.
5. Formal or informal: Any person promoting a product or service can be either formal or informal. It
depends on the channel or medium of promotion. If a product is promoted through advertising or
publicity it shall be considered formal, whereas, if a product is promoted through personal selling
or public relation, then it can be even informal.
11.4 PRICE-QUALITY EQUATION AND PRICE-STATUS EQUATION

Generally, a product or service is priced to determine whether the product is affordable or not. But the
majority of the consumers determine the quality of the product by its price. Consumers believe that a
product with a higher price shall be of better quality. However, in reality, the product quality and pricing
is a complex matter in the real market as the quality is evaluated differently by different publications
and price differs in each outlet.
Similarly, consumers purchasing higher price products consider themselves of higher status. They
determine their status of living based on the price they spend on their daily needs. Consumers have
an illusion that the higher they spend on themselves the better quality of life they are living. Hence,
consumers consider the equation of price proportional to the quality of the product and their status.
11.5 SALES PROMOTION

Once the product is priced and distributed in the market, the company needs to choose a particular
strategy to promote its product to the buyers. Promotion includes all the activities through which the
company intends to inform its customers about its products and convince them to purchase them. To
increase the volume of sales of the product and services, companies offer short-term incentives to their
customers to encourage them to immediately buy the product or service. This process is known as sales
promotion. It is an alternative to other promotional activities like advertising, digital marketing and
personal selling.
Sales promotion is used differently for different categories of people. For customers, the product is
promoted for sale through discounts, contests, free samples, etc. For traders and vendors, methods
such as dealer discounts and incentives, cooperative advertising, contests, etc. are used. The dealers are
rewarded with incentives and coupons for achieving a set sales target. Similarly, salespeople are also
awarded bonuses, special offers and contests for reaching a particular sales target.
Apart from discounts, incentives, rebates, contests and free samples, there are some other sales
promotion techniques which include:
1. Combination products: In this technique another product is offered on the purchase of the main
product. For example- a toothbrush is free with toothpaste.
2. assigned gifts: Some products are sold to customers which are provided with scratch cards which
has surprise gifts or coupons in them. For example- On the purchase of television you get a scratch
card with different gifts.
3. Finance at 0%: Products such as electronics are generally offered to customers with an allowance of
payments. In this method, instalment is allowed at a zero percent rate of interest.
4. Lucky draw: On purchase, the customer is provided with a coupon with a number on it. Later by
draw of lots, lucky winners are announced and given gifts.
5. Quantity gift: On the purchase of the main product when some extra quantity is given for free.
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Merits of Sales Promotion

1. grabs the attention of the customer: Sales promotion techniques attract the customer’s attention
towards the product and the incentive it is offered on an immediate purchase. Consumers are bound
to purchase the products in more quantity.
2. Enhances other promotional activities: With the help of sales promotion activities, you can have an
additional impact on the remaining promotional activities on the sales of the product. It increases
the overall effectiveness of promotional activities like advertising and personal selling.
3. Beneficial for launching a new product: When the products are offered at lower prices or as free
samples, the customers are attracted towards the offer and induced to buy a new product. Sales
promotion incentives attract buyers to try and purchase new products.
Limitations of Sales Promotion

1. Spoil the brand image: Sometimes the sales promotion activities adversely affect the image of the
brand or the product. If a brand offers incentives regularly, people start to believe that the product
is low quality or not priced appropriately. Therefore, the brand starts to lose its customers.
2. Reflects crisis: Often frequent sales promotion activities in the market leave the brand with an
impression that it has no demand in the market. It is believed that the company is offering discounts
to clear its stock and the reputation of the company goes down.
3. Short-term measure: It is to be noted that sales promotion includes activities that are used to
provide short-term incentives. This promotional activity is just a short-term method to boost the
sales of a product. It cannot be used as a method to maintain a consistent large sales volume.
11.6 PUBLICITY
In terms, of marketing publicity is an act through which an individual or an organization creates
awareness about a product or a service. Through publicity, attention is grabbed through projecting the
brand or the company to the customers or potential customers. It helps in creating an image among
the customers and increases the sales revenue of the company. It is relatively low in cost as compared
to advertising and other promotional activities. Publicity can have both the negative and the positive
effects depending on what outcome it has on the organisation. Where marketing focuses on increasing
the sales of the product or service, publicity focuses on creating awareness about the product or service.
Therefore, publicity is generally preferred at the initial stage of the launch of a product or service. It
helps in creating a brand image of a product and making it popular among potential customers. The
different types of publicity depend on the channel or medium used. There are some of the types of
publicity which an organisation can use to promote its products or services- News, product release,
press release, emergency, events, conferences and several offers.
advantages of Publicity
1. Trustworthy: The promotion done by publicity is considered more trustworthy than other
promotional activities. People expect more biased opinions through advertising and personal
selling. But publicity through non-affiliated companies are considered unbiased and more credible
by consumers.
2. affordable: If a company uses social media or any unsolicited newspaper as a channel for publicity
of its products or service it becomes very cost-effective. As promoting on social media is very cost-
friendly
3. Brand image: When a company frequently promotes its company and product through publicity, it
creates its brand value which helps in increasing its revenue.
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4. More opportunities: Publicity opens doors to many new business partners which is beneficial for
the growth of the business.
Disadvantages of Publicity
1. If the publicity strategy of any business organization goes wrong it can destroy the brand image of
the organisation. Companies with safety issues and health hazards are likely to face this problem.
2. Once a consumer harms the product or service, it is very difficult to change the perception of the
consumers. Hence, the company’s reputation can be spoilt permanently.
3. Lack of trust, as publicity is done by affiliated companies is biased and not reliable. The lack of
physical presence of the product does not satisfy the quality of the product to the consumers.
 Integrated Marketing Communication (IMC) means the collection of all the tools and modes of
promotion so that it can work smoothly in coordination.
 Horizontal integration is the link formed between the same level of departments in a business such
as sales, purchase, finance, communication and distribution.
 Vertical integration has an objective to support the missions and objectives of corporates which are
at high levels.
 Communication mix is a process where a business combines different platforms and tools to
communicate and convey its message to its customers or potential customers.
 Product communication is a part of a promotion which itself is a part of marketing.
 Sales promotion is used differently for different categories of people. For customers, the product is
promoted for sale through discounts, contests, free samples, etc.
 Marketing publicity is an act through which an individual or an organization creates awareness
about a product or a service.
11.8 GLOSSARY
 advertising: It refers to an impersonal kind of communication that is paid for by marketers or

sponsors in order to advertise their services and products.
 Communication mix: It involves the tolls that are required to communicate with potential customers.
It can be through social media, advertising, websites, exhibition, etc.
 Marketing communication: It is the media and messages by the marketers to communicate with
market targets.
 Packaging: It refers to the act of producing and designing the wrapper or container of a product.
 Personal selling: It entails giving an oral presentation of the message, which may include a
conversation with one or more clients in order to generate product sales. Under this, company
appoints salespersons the sell products.
 Public relations: It refers to a number of programmes designed to safeguard and promote a
company’s.
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11.9 CASE STUDY: INTEGRATED MARKETING COMMUNICATIONS OF PAMPERS
Case Objective
The aim of this case is to describe the integrated marketing communications of pampers.
The disposable nappy market in the UK is worth over £480 million per year and is dominated by two
major competitors, Pampers and Huggies. The Pampers marketing team faced several critical issues,
despite it having been the brand leader for many years. Huggies was perceived as the innovator in the
marketplace because They were constantly creating new products.
Huggies managed to develop close relationships with mothers with the help of interactive marketing
techniques. A less direct Threat came from growing independence among mothers, particularly first-
time Ones. Their use of widely available information from diverse sources to make decisions challenged
traditional purchase patterns and reduced brand loyalty. The Proliferation of information channels
forced Pampers to explore a new approach to Cut through the background noise to reach prospective
customers. Pampers decided To introduce a one-to-one approach in addition to their traditional TV-
driven campaigns.
New channels were appropriated and existing ones enhanced. Pampers decided to send a direct mail
communication to mothers at eight points in the mother and baby’s life, three pre-birth and five post-
birth. Two CDs were also sent to mothers. One CD gives mothers an insight into how babies experience
the world while still in the womb. A post-birth CD of baby massage was also sent. Appropriate nappy
samples and discount coupons to encourage first purchase were included as well.
Forty percent of mothers are now online so the internet could not be ignored as an opportunity for
interactive communication. Pampers.com is organised into three sections that cover the aspects of
child development that moms are most interested in: learning, playing, and sharing. Parents can opt-in
to receive a monthly newsletter that updates them about the development of their babies. Interactive
digital TV (IDTV) was used as a bridge, combining the emotive strength and visual quality of traditional
TV advertising with the depth and personalisation available through the Internet. Interactive digital
TV offered the opportunity to develop consumer relations over time, using TV email to send profiled
newsletters.
The internet and iDTV complement each other as there was only an overlap among 20 per cent of
homes, and people use the services at different times of the day and in different ways. According to
the most recent qualitative consumer study, there has been a shift in the brand’s perception and how
mothers view Pampers. The company’s market share has increased, and it now has a clear market
leadership position. Consumer feedback is continuously good, indicating that the proper signals are
being transmitted.
Questions
1. As per the understanding of the case what is marketing strategy of pamper?

(Hint: attracts mothers, interactive marketing)
2. What was highlighted by the latest quantitative consumer research?
(Hint: turnaround in brand perception, change in leadership position)
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1. What is Integrated Marketing communication (IMC)? Explain in detail the process of IMC?
2. Define sales promotion.
3. Explain the different types of sales promotion techniques.
4. Define publicity and its advantages.

1. Integrated Marketing Communication (IMC) means the collection of all the tools and modes of
promotion so that it can work smoothly in coordination. Refer to section Concept of Integrated
Marketing Communication (IMC)
2. Discounts, incentives and free products are some of the basic methods of sales promotion. The
different methods to be used for increasing your sale depend on the market and industry from
which the product belongs. Refer to section Marketing Communication - A Larger Concept Than
Promotion
3. Combination products- In this technique another product is offered on the purchase of the main
product. For example- a toothbrush is free with toothpaste. Refer to section Sales Promotion
4. In terms, of marketing publicity is an act through which an individual or an organization creates
awareness about a product or a service. Refer to section Publicity
 http://mpbou.edu.in/slm/mba1p6.pdf
1. You will have to write a brief paragraph (nearly about 200 words) in which you will discuss the
negatives and positives of any one of the following topics of methods of communications. You will do
this work in a group of two. Each of you will support one side of your argument. You will also have to
give existing examples whenever required. The topics are following:
 Social Media
 Direct Marketing
 In-Store Promotions
 Online Media
 Sales Promotions
2. For another discussion forum, each student will have to create a postthen everyone will read their
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discussion posts to other classmates and each student can give at least two responses to two different
students. You will have to write more than a few words or phrases such as “Sounds good”, “I agree”
or “Well said”. You can write sentences of nearly 50 words that are suitable for a discussion. You can
even ask questions or even politely challenge students if you want. If you are in doubt just remember
that this is a discussion, not a competition.
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Integrated Marketing
Communication
Unit – 11
Prof. Preksha Yadav
Unit 11: Integrated Marketing Communication
• Marketing Communication a larger concept than Promotion,

• Why IMC,
• The Marketing Communication Mix,
• Physical features of the Product Communication,
• Price-Quality and Price- Status Equations,
• Sales promotion, Publicity
Learning Outcome:
Learn to apply the concept of IMC in practice

Integrated Marketing Communication (IMC)
• Integrated Marketing Communication (IMC) means the collection
of all the tools and modes of promotion so that it can work
smoothly in coordination.
• \When isolated these promotional tools do not work properly
leading to disturbance in communication.
• The basic concept behind the integrated marketing concept is
forming the link between all communications in a business.
• The levels of integration are horizontal, vertical, external and
internal.
Why IMC?/ Need for Integrated Marketing Communication (IMC)
• For delivering clear and consistent messages
• For cost-saving
• Building up brand image
• Better results
The Marketing Communication Mix
Physical features of the Product Communication
• Should have a message: e: Every communication made between people should convey a
beneficial message
• Any mode of communication: The product communication made can be either written, oral or
gestural.
• Two-way process: Even product communication needs to be two-way
• Attract a consumer: The main motive behind product communication is to attract consumers
to purchase the product or service
• Formal or informal: Any person promoting a product or service can be either formal or
informal
Price-Quality and Price- Status Equations
Price-Quality: Product or service is priced to determine whether the product is affordable or not. But
the majority of the consumers determine the quality of the product by its price. Consumers believe
that a product with a higher price shall be of better quality. However, in reality, the product quality and
pricing is a complex matter in the real market as the quality is evaluated differently by different
publications and price differs in each outlet.
Price- Status: Consumers purchasing higher price products consider themselves of higher status.
They determine their status of living based on the price they spend on their daily needs. Consumers
have an illusion that the higher they spend on themselves the better quality of life they are living.
Hence, consumers consider the equation of price proportional to the quality of the product and their
status.
Sales promotion
A sales promotion is a marketing strategy where a business will use short-term campaigns to spark
interest and create demand for a product, service or other offers.
Apart from discounts, incentives, rebates, contests and free samples, there are some other sales
promotion techniques which include:
1. Combination products: In this technique another product is offered on the purchase of the main
product. For example- a toothbrush is free with toothpaste.
2. Assigned gifts: Some products are sold to customers which are provided with scratch cards which
has surprise gifts or coupons in them. For example- On the purchase of television you get a scratch
card with different gifts.
3. Finance at 0%: Products such as electronics are generally offered to customers with an allowance
of payments. In this method, instalment is allowed at a zero percent rate of interest.
4. Lucky draw: On purchase, the customer is provided with a coupon with a number on it. Later by
draw of lots, lucky winners are announced and given gifts.
5. Quantity gift: On the purchase of the main product when some extra quantity is given for free
Publicity
• Marketing publicity is an act through which an individual or an organization creates awareness about
a product or a service.
• Through publicity, attention is grabbed through projecting the brand or the company to the
customers or potential customers.
• It helps in creating an image among the customers and increases the sales revenue of the company.
• It is relatively low in cost as compared to advertising and other promotional activities.
• Publicity can have both the negative and the positive effects depending on what outcome it has on
the organisation.
• Where marketing focuses on increasing the sales of the product or service, publicity focuses on
creating awareness about the product or service. Therefore, publicity is generally preferred at the
initial stage of the launch of a product or service.
UNIT
12 Advertising and Branding
Names of Sub-Units
Role of Advertising in the Value Delivery Process, AIDA Model, Five M’s in Advertising, Decision Areas
in Advertising, Ad Agency’s changing role, What is a Brand, Characteristics of Strong Successful
Brands, Brand Extension, Umbrella Brand
Overview
This unit begins with the discussion of the meaning of advertising and also explains how advertising
helps the firm to achieve its objectives. Along with that, you get insight into at the various advertising
media and various models of advertising. The unit focuses on the importance of advertising and
branding.
Learning Objectives

 Discuss the concept of advertising and branding
 Describe the different elements of advertising and branding
 Explain the different media used in advertising
 Summarise the role of the ad agency for the successful business organisation
 Analyse the brand and its characteristics
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Learning Outcomes

 Assess the different elements of the brand and how brands add value to an organisation’s products
and services
 Examine how the marketers use brand positioning to a line marketing activities and build a
successful brand
 Analyse the advertising and what role an advertising agency plays to remain competitive in the
market and capture the largest Market share
 Elaborate the importance of the selection of the particular name in building a successful brand
 https://ipsedu.in/downloads/MBABooks/principles-of-marketing-philip-kotler.pdf
12.1 INTRODUCTION
Advertising is closely related to Integrated Marketing Communication (IMC) in various aspects. IMC
involves a message dealing with the buyer-seller relationship but advertising consists of paid and non-
personal communication through the use of various media to pursue or inform the consumer about a
particular product. All the marketers use advertising to reach their target consumers with a message
designed to appeal to the non-profit organisation, business firms or ultimate consumers. The investment
in advertisement depends on the type of industry and it varies from Industries to industry. Simply it can
be said that advertising is used as a means to promote goods services or ideas in the market to catch the
attention of the target consumer towards the desired product and also provide information about the
features price and utility of the product.
Following are the main objectives of advertising:
 To give an introduction to the product to target consumers
 To provide authentic information about product features, usage and price to the consumers
 To inform the consumer about the product availability
 To build demand for your product in the market
 To persuade immediate sales
 To create a good reputation of the firm by providing reliable information of product quality to target
consumers
 To make the selling process easy
 To give authentic information about improved product features
 To reach among the large area of the market and developed overseas market as well
12.2 ROLE OF ADVERTISING IN THE VALUE DELIVERY PROCESS

Value delivery is a way in which a person designs the product so that it gives the customer the maximum
value of the product. The value delivered to the consumer can be of any form such as benefits, attributes
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or products. Anything that creates value for the consumer can be involved in the Value Delivery Process.
The scam artist is a term that is used for the people who take other people’s money and do not give
them equivalent value delivery. Value delivery includes everything that makes a customer happy
for paying the money such as customer support, order processing, delivery, inventory management,
troubleshooting or fulfilment. There are three phases of the value delivery process that have to be kept
in mind are choosing the value of the product, providing the value, and communicating the value.
Advertising is considered as the best way of communicating with the consumers at it informs the
consumer about the product and create brand awareness. Advertising is useful for everyone whether
young, old or even a kid. It helps in educating people about the product. Ad agencies design the product
in such a way that will give the maximum value to their consumers. They make it look very attractive
and show the features of the product through their advertisements. The ad agencies make sure that the
company is delivering service, value and product to the consumer by making a profit. The product must
satisfy the consumer and the company is also earning profit.
In this highly competitive society, an increasing number of rational buyers are faced with abundant
choices a company can win only by fine-tuning the value delivery process and providing, communicating
and choosing the best value of the product. In the traditional method, the company uses to make product
and then sell it in the market but in the modern method, advertising plays a very important role in the
value delivery process. It is the task of ad agencies to design the product so that it attracts the customer.
They also have to monitor the performance made by their advertisement so that they can estimate the
company’s profit. It also helps them to improve their ad so they can get better results and more profit.
It is the responsibility and work of the ad agencies to make sure they give the right information about
the product. They should not mislead the consumer and try to earn their trust.
12.3 AIDA MODEL

AIDA model stands for Attention, Interest, Desire and Action. It identifies the stages from which an
individual goes through while purchasing items. This model is generally used by public relation
campaign, digital marketing and sales strategies. Figure 1 shows AIDA MODEL:
Attention
Interest
Desire
Action
Figure 1: AIDA MODEL
First step: Attention

This is the first step of advertising where consideration is made to attract the attention of consumers
by answering few questions as how does a marketer make its buyers aware of its offering? what should
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be its outreach strategy? Which tools of platforms are to be used to create brand awareness and what
message do you want to convey to the consumer? This can be done through the following ways:
 This can be done by performing advertisement in some unique situation or unexpected location that
is why it can also be referred to as guerrilla marketing
 It is also referred to as personalisation as it is equipped with an intense targeted message
Second step: Interest

The second step is to generate interest in those offerings in the consumer’s mind. In this step, the
advertising campaign must work on increasing the interest level of the potential consumer.
Third step: Desire

Once the interest is generated about the particular product the next step creates the desire for
a particular product. Here is the main goal of the marketers is to make their consumers want that
product and convert their mindset from ‘I like it to ‘I want it’. In this step, the main aim of the marketer
is to provide interesting information about the product along with its unique features and advantages
attached to it. In the continuation of the above example to create the Desire of the upcoming Disney
tour, if the stars who are going to perform in the tour, communicate about how great the show is to the
target audience, then there is more chance that they want to go to the tour.
Fourth step: Action

The last and final step of the AIDA model is to influence their consumer to finally take action which means
to purchase the particular product or service. The main aim of a marketer in this step is to get ready
your consumer to initiate the action of purchasing your offerings. Therefore, to make the consumer
ready to take action that one Demat should be and which a call to action, a statement particularly
designed to get an immediate response from the target audience. For example, Netflix always uses a
persuasive text to convince its target consumer to watch its shows by trying to give them a free trial.
This can be understood from the AIDA model that says that awareness leads to interest that leads to the
desire and finally a consumer decides to take action by purchasing the offering.
12.4 FIVE M’S IN ADVERTISING

Advertisement is said to be the art of promoting your product by using different media. In today’s
environment when everything is becoming dynamic so the advertisement is. To understand the whole
concept of advertisement need to understand the 5 M’s involved in it which are as follows:
 Mission: Every organisation is having a mission to achieve in the short-term advertisement is also
having a clear mission that what he wants to achieve through different media of advertisement. In
mission, advertisement companies set their goals objectives and mission to analyse that what they
are going to do. Therefore, in simple words, you can say that an advertising campaign is having a
mission with them for which they work to get it done.
 Money: Money is the critical part of the advertisement. As advertisement is promoting your product
by using different paid media and the charge of different media as a different according to their
reach towards the consumer. Different media involves different budgets for example and newspaper
advertisement may be more affordable than TV Advertisement. Therefore, every advertisement
campaign sets its budget for advertising its product through different media.
 Message: The message is said to be the information, literature, Idea or theme that you want to
communicate to your target audience and on the basis of your target audience, the message is
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framed so that they can easily be communicated to them. One important thing to be kept in mind
is that the message of the advertisement can be changed if you decide to change the source of the
advertisement.
 Media: There are hundreds of media present through which you can advertise your product and one
of the most important decisions to be taken by the advertising manager is to select the proper media
to convey the right message to the target audience. The decision of selecting the particular media
largely depends upon the nature of the target market as an organisation needs to analyse its target
market and then decide the media that whether they are connected to the Internet or still prefer
traditional media such as a newspaper.
 Measurement: In order to evaluate the success or failure of your advertisement campaign, it is very
important to measure it by using various parameters so that you will get the desired result. It will
also help a manager to decide to whether go for the same media next time or should alter their
advertising strategy.
12.5 DECISION AREA IN ADVERTISING

The marketing manager needs to design the advertising program very cautiously. This advertising
program revolves around several decisions which include the following:
1. Setting the advertising objective: These are based on the decisions of Market Positioning, target
market and marketing mix. The organisation must study the market thoroughly. On the basis of
stages of Hierarchy of effects the advertisement is classified as follows:
 Informative advertising: It creates knowledge and awareness of new products or new features
of the existing product to the target audience.
 Persuasive advertising: It creates preference, conviction, liking and purchase of an offering of
product or service.
 Reminder advertising: It stimulates the repeat purchase of the products from the target
audience in order to make those customers loyal towards your organisation.
 Reinforcement advertising: It convinces the customer that they made the right choice by
purchasing your product or service offering.
2. Deciding the Advertising Budget: Advertising is a form of long-term investment that helps in
building brand equity. Following are the five basic factors based on which the advertising budget is
decided:
 Stages in the product life cycle Market share and consumer base Competition prevails in the
market Advertising frequency Product sustainability.
3. Choosing the advertising message: The advertisement needs to be delivered in an innovative form
by designing a beautiful message for the audience in which facts are combined with creativity.
There are four steps to developing a creative strategy which include message generation, message
evaluation and selection, message execution and social responsibility.
4. Deciding on media and measuring the effectiveness: Are there a different media present? Hence,
the marketing manager needs to narrow down the available option on the basis of the following
factors:
 Desired reach Frequency and impact Selecting specific media vehicles Deciding media timing and
geographical location Evaluating advertising effectiveness There are different media available
to the marketers, such as television, newspaper, magazine, direct mail, radio, newsletter,
telephone and the Internet, and on the basis of the advertising objective a manager can select
the desired media for advertisement.
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12.6 AD AGENCY’S CHANGING ROLE

The ad agency is a business service that is provided to handle, create and plan for advertising for their
clients. But in reality, everything changes from time to time. Nowadays, marketers rethink hiring them.
The concept of ad agencies has evolved their role in process of advertising. As the demand and supply
changed these ad agencies started to work as advertising agents.
The role of modern ad agencies is beyond advertising, promotion band marketing. Today’s agencies
come in different sizes and shapes that range between start-up or multinational corporations. Looking
at the roles and responsibilities of these ad agencies their role has become both the focused and the
diverse. They will have to understand the specific needs of the consumers and then design the marketing
strategy.
The days are gone when ad agencies use to develop and design advertisements for television, radio or
print media. The use of digital technology has affected our lives by transforming ad agencies which
have become a marketing strategy for companies. Every ad agency nowadays works for marketing
activities such as creating content, branding, promotion, developing marketing strategies. Nowadays,
ad agencies do not only create ads but also advise on publishing planning. They not only give consultants
but also works as partners. The role of ad agencies has widened which has transformed its structure
that now involves professional marketing, creating content and many other.
How do ad agencies help the organisation?
 Choosing the media for advertising and place for publication: The agencies try to understand the
objective of advertising such as the need of campaign, for promotion, or the type of consumer they
want to target. After knowing the reason the agency advises according to the information. They
help the company to choose the correct media to publish the ad that will create more impact.
 Branding and further on: The role of the agencies has increased. Before they use to only support
branding activities but nowadays they have to create brand awareness. The agencies have to use all
types of advertising methods whether indoor or outdoor so that the brand gets maximum visibility.
 Strategic partners: Nowadays, ad agencies not only do advertisement publishing but also have
become partners. This helps in creating a good understanding between agency and company that
helps to make the work easier. This makes the work unique that brings interest in the consumer’s
mind.
 Monitoring of performance: The ad agencies continuously monitor the performance of the
campaign that helps in identifying the tangible gain that the company will earn. They also work on
improving campaigns so that they get better results.
12.7 WHAT IS A BRAND?

In marketing, term brand is a term, name, symbol, sign, design or combination of all of them intended
to identify the particular goods or services from one seller and to differentiate them from those of its
competitors. The brand has no expiry date and it is an asset for the organisation.
12.7.1 Characteristics of Strong Successful Brands

Some of the main characteristics present in any strong and successful brand are as follows:
 Competitiveness: To be successful in a market, t the brand should be competitive enough. To
make your brand competitive the whole team must work a lot starting from basic administrative
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assistants to those who are present in a higher-level position. A good and successful brand provides
more than the consumer expectation to remain competitive in the market.
 Distinctiveness: To make your brand memorable so that it can easily be identified, it is very essential
that it should be distinctive enough. Some of the famous popular brands from around the world
such as Starbucks, Apple and Domino’s pizza have been successful because of their distinctive brand
identities. For example, Apple is widely known because of its approach of unique design and well-
equipped with technology as well as to offer innovative products to their highest consumer which
are mostly creamy layer.
 Passion: Passion plays a very vital role in building a brand and maintain its success for a long-term
basis. Some of the most successful personalities from around the world such as Oprah Winfrey,
Steve Jobs and Rodger Federer are successful because of their passion for their services.
 Consistency: The most important thing to be successful in the market is to be consistent with your
work. A brand should be able to be consistent by providing differentiate attributes to its product as
compared to its competitor in order to remain in the mind of consumers for a longer period of time.
Along with consistency brand should be able to provide high-quality goods and services that will
stand in accordance with the expectation of the consumer.
 Exposure: The most important element of a successful brand can adopt is to adopt a new way of
promoting their brand by exposing different media channels. Well-known brands combine to adopt
various marketing channels in order to reach out to their target consumer by involving in marketing
social media marketing to provide all the attributes of its brand to its customer.
 Audience Knowledge: It is also very important that your brand should be reached out to your target
audience and to be successful it is also very important that you should have a proper understanding
and knowledge about your target audience. To get indexed knowledge about your target audience
you should carry out research about their demographic profile so that you can be made quality
improvements in your contentand your brand can communicate with your target audience in the
best way possible.
12.7.2 Brand Extension

This is a kind of marketing strategy where the market introduces a new product or a new product
category under its existing and established brand name. The newly introduced product is related to the
original product but it has a substantial difference in its features or category. One thing to be kept in
mind is that brand extension should involve a different product or category. For example, if you launch
a new flavour open existing Ice Cream brand, then it is not considered to be a brand extension. Here you
have to introduce a new product which should be different from the existing one. It should be considered
as a brand extension when a new product launches under the existing brand name.
12.7.3 Umbrella Brand

Umbrella branding is a kind of marketing strategy where different products are sold in the market
under the name of a single brand. This is why umbrella branding is also considered family branding,
which aims to create equity or brand value for a single brand. However, it is a quite difficult and
challenging task for marketing to practice umbrella branding as it required strong coordination with
every individual brand. But if adopt proper marketing practices and implemented well, then umbrella
branding will provide great result advantages to the organisation as it helps to create brand loyalty.
One of the great examples of umbrella branding is of Apple Inc. Under this brand name, you may find
iPhone, iPad, Macbook, Mac Air, Apple watch, etc. Originally Apple was known for its Mac computer and
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hence it is considered to be the top product of the Apple umbrella. This umbrella then further divides
into iPad iPhone and other products under the same brand.
 In today’s environment advertising is evolving even more with a usual approach such as give
ways, public places, and different media channels and due to increased competition, it becomes
very important for any organisation to advertise its product efficiently to remain competitive and
successful in the market.
 It is the responsibility of the ad agency to make sure that the ad is meaningful and create audience
attention that can stand out in this competitive market.
 In the same manner, branding also plays a vital role to be successful as it attached unique attributes
to it to make it different from the competitors offering and that is why people remain loyal to the
particular brand.
12.9 GLOSSARY
 Advertising: It is the any paid form of non-personal presentation and promotion

 Branding: it is the process of giving a meaning to specific company’s product or service
 Informative advertising: It creates knowledge and awareness of new products or new features of
the existing product to the target audience.
 Persuasive advertising: It creates preference, conviction, liking and purchase of an offering
 Reminder advertising: It stimulates the repeat purchase of the products from the target audience
12.10 CASE STUDY: ‘SHARE A COKE’ CAMPAIGN
Case Objective
The aim of this case is to describe the marketing campaign launched by Coke.
Coke launched its “Share a Coke” campaign in the U.S., using 250 of the most common U.S. millennial
names to market its product to individual consumers.
The campaign seems to have been a huge success with U.S. audiences, gaining significant traction in the
short amount of time the ad has been running here.
According to the Wall Street Journal, more than 125,000 social media posts referenced the “Share a
Coke” campaign between June and July of 2014, and 12% of online conversations about Coca-Cola in
that time can be attributed to the campaign. What’s more, over 353,000 virtual bottles of coke have been
shared via Coke’s campaign-specific website.
You can also see the success of this campaign when you look at data for the Coca-Cola brand in Google
Trends.
After being launched in the U.S., the campaign earned an increasing amount of attention. The search
term “share a coke” saw a significant increase in U.S.-based Google searches in the short, three-month
timelapse from June to August.
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Even more indicative of the campaign’s success, though, is the fact that it has also seemed to spike
Google searches for terms like “Coke” and “Coca-Cola” within the last three months – a strong sign of an
effective advertising campaign.
When you look at the other search terms people have used to search for the “Share a Coke” campaign,
you can also see the campaign’s impact through the sudden appearance of terms such as “coke names”
and “coke with names.”
This data tells us that people who have seen the campaign, but maybe do not know exactly what it is
called, are actively seeking to learn more about the “Share a Coke” ads. Their willingness to seek out
information about the campaign is a good indicator of their likelihood to interact with the brand in the
future.
Source: https://www.webfx.com/blog/marketing/case-study-coca-cola-marketing/
Questions
1. What campaign was lunched by Coke and why?
(Hint: “Share a Coke” campaign,strong sign of an effective advertising campaign)
2. List down the objective of this campaign.
(Hint: to increase their sales, to engage customers)

1. What is the role of advertising in the value delivery process?
2. Define branding? What are brand Extension and umbrella brands?
3. Briefly explain the AIDA model?

1. Value delivery is a way in which a person designs the product so that it gives the customer the
maximum value of the product. Refer to section Role of Advertising in the Value Delivery Process
2. In marketing, term brand is a term, name, symbol, sign, design or combination of all of them
intended to identify the particular goods or services from one seller and to differentiate them from
those of its competitors. The brand has no expiry date and it is an asset for the organisation. Refer
to section What is a Brand?
3. The model used in advertising stands for Attention, Interest, Desire and Action. A model is an
advertising model which identifies the stages from which an individual goes through while
purchasing particular goods or services. Refer to section AIDA Model
 https://courses.lumenlearning.com/boundless-marketing/chapter/branding/
 https://www1.udel.edu/alex/chapt19.html
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 With your classmates find an example of cross-promotion. If possible bring it to class to discuss its
effectiveness. Then create your plan for cross promoting two products that you think would be a
good candidate for cross-promotion.
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Advertising and Branding
Unit – 12
Prof. Preksha Yadav
Unit 12: Advertising and Branding
• Role of Advertising in the Value Delivery Process,

• AIDA Model,
• Five Ms in Advertising,
• Decision Areas in Advertising,
• Ad Agency’s changing role,
• What is a Brand, Characteristics of Strong Successful Brands,
• Brand Extension, Umbrella Brand
Learning Outcome
• To be able to design advertising campaigns for a product or

service
Advertising
Advertising is the practice and techniques employed to bring attention to a product or service.
Advertising aims to put a product or service in the spotlight in hopes of drawing it attention from
consumers.
Main objectives of advertising
• To give an introduction to the product to target consumers
• To provide authentic information about product features, usage and price to the
consumers
• To inform the consumer about the product availability
• To build demand for your product in the market
• To persuade immediate sales
• To create a good reputation of the firm by providing reliable information of product
quality to target consumers
• To make the selling process easy
• To give authentic information about improved product features
• To reach among the large area of the market and developed overseas market as well
Role of Advertising in the Value Delivery Process
• Anything that creates value for the consumer can be involved in the Value
Delivery Process.
• Advertising is considered as the best way of communicating with the
consumers at it informs the consumer about the product and create brand
awareness. Advertising is useful for everyone whether young, old or even a
kid. It helps in educating people about the product. Ad agencies design the
production such a way that will give the maximum value to their consumers.
• The ad agencies make sure that the company is delivering service, value
and product to the consumer by making a profit. The product must satisfy
the consumer and the company is also earning profit.
AIDA Model
Five Ms in Advertising
Decision Areas in Advertising
Ad Agency’s changing role
The ad agency is a business service that is provided to handle, create
and plan for advertising for their clients. But in reality, everything
changes from time to time.
• Choosing the media for advertising and place for publication

• Branding
• Strategic Partners
• Monitoring of performance
What is a Brand
In marketing, term brand is a term, name, symbol, sign, design or combination of all of
them intended to identify the particular goods or services from one seller and to
differentiate them from those of its competitors. The brand has no expiry date and it is an
asset for the organisation.
Characteristics of Strong Successful Brands:

• Competitiveness
• Distinctiveness
• Passion:
• Consistency:
• Exposure
• Audience Knowledge
Brand Extension, Umbrella Brand
Brand extension or brand stretching is a marketing strategy in which a firm

marketing a product with a well-developed image uses the same brand name
in a different product category. The new product is called a spin-off.
Organizations use this strategy to increase and leverage brand equity.
Umbrella branding is a marketing practice involving the use of a single brand

name for the sale of two or more related products. Umbrella branding is mainly
used by companies with a positive brand equity. All products use the same
means of identification and lack additional brand names or symbols etc.
UNIT
13 Introduction to Marketing Research
Names of Sub-Units
Concept of market research, objectives of market research, the role of market research in decision
making, marketing research and competitive intelligence, marketing research problems and
approaches to the solution, management decision problems.
Overview
This unit explains the concept of market research and objectives of market research. Also, the
unit describes role of market research in decision making, marketing research and competitive
intelligence. Further, the unit explains the marketing research problems, approaches to the solution
and management decision problems.
Learning Objectives

 Discuss the concept of marketing research
 Describe the role of marketing research in the development of an organisation
 Explain how to conduct a market research
 Summarise the competitive intelligence received through market research
 Analyse the decision-making power through market research
JGI JAIN
Learning Outcomes

 Elaborate objective of market research
 Assess role played by marketing research for the development and profit maximization of a firm
 Analyse market research problem and approaches to be adapted for its solution
 Elaborate management decision problems.
 https://www.b2binternational.com/assets/ebooks/mr_guide/practical-guide-to-market-
research_full.pdf
13.1 INTRODUCTION
Marketing research simply means is a process of collecting and using information for marketing decision
making. Since it is the underlying purpose of the research is to find out more about customers, it is clear
that research is Central to effective customer satisfaction and customer relationship programmes.
Technology such as the Iinternet and virtual reality are opening up a new channel through which
researchers can tap into consumer information.
It will be a challenging task for many marketers to collect information about customers’ needs and
wants. Marketing research is the process of collecting and using information for marketing decision
making. Data comes from a variety of sources. Some results come from well-planned studies designed
to elicit specific information. Other valuable information comes from Salesforce reports, published
reports and accounting records. Steal other data emerges from controlled experiments and computer
simulations. Marketing research can present the important information in a useful format that helps
the decision maker to analyse the data in the best possible manner to take an accurate decision. This
chapter discusses the marketing research function along with the role of market research in the
decision-making process. It also deals with the marketing research problem and approaches to solve
those problems.
Besides accelerating the pace and broadening the base of data collection computers have added
marketers in making informed decisions about problems and opportunities. For example, marketers
are allowed to evaluate alternatives by posting what-if questions. Marketing researchers at manning
consumer goods simulate product introductions through computer programmes to determine whether
to risk real word product launches or even two subject products to test marketing. You are only
beginning to see the impact of a marketing decision support system that allows marketing researchers
to transform data into useful information.
Who conducts marketing research?
The size and form of research is usually linked to the structure of the company. Some forms organised
research units to support different product lines brands of geographical areas. Others organise their
research functions according to the types of research they need to perform such as sales analysis, new
product development, advertising evaluation, or sales forecasting.
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UNIT 13: Introduction to Marketing Research JGI JAIN
Many firms outsource their research needs and depend on independent marketing research firms. These
independent organisations might specialise in handling just part of a larger study such as conducting
consumer interviews. The firms can also contract out entire research studies.
Marketers usually decide whether to conduct a study internally or through an outside organisation
based on cost. Another major consideration is the accuracy and reliability of the information collected
by an outside organisation. Collecting marketing data is, what this outside organisation, to full time, the
information together is often more accurate than that collected by a less experienced in-house staff of
the organisation. Also, outside marketing research firms can provide technical assistance and expertise
which are not available within the company’s marketing department. Interaction with outside suppliers
also helps to ensure that research does not conduct a study only to validate a favourite viewpoint or
preferred option. Marketing research companies range in size from a sole proprietorship to national
and international forms such as Arbitron or ACNielsen.
The marketing research process involves the series of following steps:
1. Define the problem
2. Conduct exploratory research
3. Formulate a hypothesis
4. Create a research design
5. Collect data
6. Interpret and present research information
13.2 CONCEPT OF MARKET RESEARCH

Market research is said to be the gathering, recording and analysing of qualitative and quantitative data
to determine the viability of new products or services through research conducted with the consumers
of the potential market. Market research is conducted by an organisation to discover the target market
and to get an idea about the feedback from the consumers regarding their interest in the launched
product or service. Market research can be done by the company itself or can hire a third-party firm
who is having specialisation in conducting the market research. Market research is conducted with
the help of product testing, surveys and focus groups. Market research plays an important role in the
research and development of a new product or service to be launched in the market.
For example, a company might desire to launch a new product in the market. If the market research
shows a satisfactory result regarding the product or service and confirms the consumer interest, hence
the business may confidently proceed with the business plan. But if the market research does not show
positive research, then in that case the company made an adjustment to the existing business plan and
launch the product in line with the customers’ desires and wants.
13.2.1 Objectives of Market Research

Marketing research is deliberate intellectual activity and main objectives of conducting market research
are as follows:
 To know the buyers: The main objective of the marketers is to search for those persons who are
willing to purchase their products and pay for the products or services offered by the firm. The
knowledge of these target buyers acts as a variable to know about the number of buyers to purchase
the product and accordingly the manufacturing firm produces the product to maintain a balance
between demand and supply to maximise the utilisation of the resources.
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 Provide the basis for proper planning: With the proper research has been made for marketing
and sales forecast, it will help to provide a basis for the formulation of different marketing policies,
plans, procedures and programmes.
 Helps in reducing marketing costs: After conducting optimum marketing research, the marketer is
aware of the target population and hence helps reduce marketing costs related to the advertisement,
selling, distribution and many more.
 To find out a new market for the product: Under marketing research, test marketing is done in the
potential market that helps the marketer to find out the new market to be launched for the product.
The main aim of marketing research is to explore new markets for the newly launched goods and
services as well as to maintain the existing ones.
 To determine pricing policy: After conducting market research, the marketers are aware of the
potential customers and their buying power. According to the result achieved from marketing
research, the marketers design a price policy for the products or services.
 To know about the market competition: The main aim of marketing research is also to know about
the amount of competition prevail in the market. This will help the marketers to formulate a unique
strategy to remain competitive in the market and introduce their products in the market in the most
unique way so that it will be able to capture most of the market share.
 To study the external forces and their impact: Marketing research also gives an idea about the
external forces and their impact on the organisation so that the firm can adjust accordingly. These
external forces may include government policies and regulations, consumer income and spending
habits, the threat of new entrants and many more which directly or indirectly made an impact on
the company’s product.
13.2.2 Role of Market Research in Decision Making

As per Forbes magazine, almost half of the Fortune 500 companies have either bankrupted or merged
or acquired since the year 2000. As the new startups and innovative companies are coming up with
unique business ideas. These innovative ideas and business plans come from market research. Market
research creates awareness about the product and trend ongoing in the market of which your company
is not aware. The factors that can influence a decision in a company can be recognized through market
research. These factors include the latest technology, rising competitors, changing preferences of
consumers, disruption, changing laws and regulations, growth and reduction of market size, socio-
economic changes and potential parties and suppliers.
Generally, marketing research is based on three different categories which include selective,
programmatic and evaluative. Research through market analysis, segmentation and analysing the
consumer behaviour and usage of a product is known as programmatic research. If the decision is
related to test and decide among various alternatives such as a new product or advertising test, then
it is known as selective research. Then comes the evaluative research, which is used to evaluate the
performance of the company in the market. Research on customers; satisfaction, brand and product
image and the impact of advertising is considered evaluative research. Every company has to conduct
these different research regularly to have complete knowledge about the market trends and their
competitors’ actions.
In this ever-changing business environment, prediction or forecasting is not sufficient. Therefore, in

today’s fast-changing market, effective decision-making is very essential based on the market study.
The companies should accumulate data about the industry and do a qualitative assessment about the
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products available in the market of the same industry. Based on that research, work on any gaps found
in customer satisfaction by your competitors.
Market research is considered both challenging and promising for companies in today’s business world.
The regular hype in the number and varieties of new products and services had increased the need
for market research for effective decision-making. Before launching any new product in the market a
company has to work relentlessly to collect new information to identify the new needs and expectations
of a consumer segment.
Active research on the market also allows companies with an option to invest in new business sectors
with potential future growth. The companies who perform market research continuously are more
likely to seize valuable opportunities available in the market for your product or service. Only with
proper research and evidence, you can convince your senior management for investing in new plans and
projects. Market research also helps companies in forming new external relations such as partnerships
or outsourcing. Therefore, if you are a new or an existing company, make sure to invest your resources
and money for market research for staying updated with the latest market trends.
13.3 MARKETING RESEARCH AND COMPETITIVE INTELLIGENCE

Marketing research is an organised effort for gathering information of the target markets or customers.
It is the term that is commonly used for businesses and their potential opportunities. This might include
what products are already available, what competitors are in the market, and other related things. But
market research can be also done by individuals who are seeking the information for their personal use
such as freelancing or buying a product.
When you do market research you can do a quantitative data gathering where you collect data about all
the businesses that could be interested in your services. You can even do quantitative research to learn
if people would be interested in your services. Market research sometimes feels such as a waste of time
as it is not a fun activity especially if you have to just dig through the data. But it is important to realise
that if you skip this step you can end up wasting much more of your time and resources. It also helps the
company to evaluate marketing performance and they can change their strategies according to that.
Competitive intelligence is a process that makes your business more competitive. It should, if actioned
correctly positively and directly, impact your revenue and profit. If you think of business as a race, then
the goal of business is not only to get to the finish line but to win it. It is not all about taking part as a
business is tough, and if you are not winning or trying to win, then you are losing and we all know what
happens to the losers. The finish line in business can mean a lot of different things such as an increase
in sales, successful launch of a new product or perhaps entering a new market regardless of the goal.
Getting to the finish line first is not as simple as being the fastest. There are a lot of obstacles between
your business and the finish line like competitors, trade issues, and many other.
Competitive intelligence helps you understand and navigate the competitive landscape by researching
such things as a competitor. It helps you to plot a course that will ensure you reach your business objective.
This source comes from reports, financial statements, articles, the company’s website, etc. The data is
gathered by talking to people, online, or by other data methods. It is more than analysing competitors
and is an ethical and legal business practice There is information conversion into intelligence and then
using it in decision making. It essentially means understanding and learning what is happening in the
world outside the business which is very important for the business to run.
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13.4 MARKETING RESEARCH PROBLEMS AND APPROACHES TO THE SOLUTION

In a current business world, all the form wants to protect themselves from different vulnerabilities that
may weaken them. The main aim of the sperms is to maximise customer satisfaction. To solve marketing
problems marketing research has been conducted to identify the different business problems that need
to be solved in the best possible manner. One of the main ingredients to find out the problems of the
business is market research.
Market research is done based on two things “what” and “how”. As the name implies problem-solving
research have to identify the various solution to solve those problems through applying different
marketing strategies. Research helps you to identify the problem and search for the optimum solution
for it to make your company the best in the market.
According to the nature of the company market research offers various problem identification and its
optimum solution so that your company will get the most benefit out of it.
Here are some factors that your Marketing department should consider while conducting problem
identification research:
 knowing the features of your target market: The company needs to determine the different
features that impact the purchasing power of your target consumer. Consumers belong to different
geographical regions are likely to exhibit different purchasing patterns and different buying
behaviour. Hence, the marketer needs to study the demographic feature of the consumer and the
differences at the beat buy them belonging to different subcultures.
 Estimating your products potential profit: Market research a firm can know about the purchasing
habit of the consumer and how he may react to the pricing or advertising made for the product
before actually action is initiated. This will allow the forms to be better prepared and make strategies
according to the needs and wants of the consumer to capture more market share.
 gauging customer perceptions of your brand image: Sometimes company ignores the important
factor that how their customer views them. It is very important to research your consumer’s current
perception about your company and what are expecting from u.s. it plays a vital role to provide
maximum customer satisfaction which, in turn, also helps you to get customer loyalty.
Here are some of the approaches of the marketing department for problem-solving research
 Market segmentation to group customers by similar background: Market research helps you to
properly segment your market based on their purchase patterns and similar background that also
helps you to design advertisements to target those specific groups of customers. For conducting
optimum market research you should collect both quantitative and qualitative data to ensure
accuracy of understanding your market segments.
 Promotional research to evaluate the effectiveness of advertising strategy: It is very important to
maximize your profit but at the same time, it is also very important to not waste your money especially
when it can be prevented through a little research. If you are adopting a certain advertising strategy
to attract customers, then it is also very important that some of the factors related to advertising
must be considered and monitored. It also helps you to optimise your advertising budget and also
ensure that your advertisement will be able to attract more customers effectively. It also helps you
to protect your firm from overspending.
 Pricing research to determine the ideal price of the product: One of the key papers is to remain
successful in the market is to adopt the ideal pricing policy. Effective marketing research a firm can
know the purchasing power of the decision and the amount of consumer is ready to pay which helps
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the company to decide the price of the particular product so that it will be able to attract consumer
and also they feel that the product is worth the money they are paying for the same.
13.5 MANAGEMENT DECISION PROBLEMS

The most important factor for any company is to define the problem because when a problem is clearly
defined then only a research project can be implemented properly. Defining the market research
problem is important course of the entire project. In marketing research problem definition was the
statement of the general marketing research problem and identifying various components attached to
it. If the problem is not adequately defined it may lead to a cause of failure for the different marketing
research projects. Before start conducting the marketing research, it is very important to communicate
the actual research problem then it will be able to give a more generous way of providing the solution
to the problem and hence also helps in improving the usefulness of the research.
Management decision problem
The management decision problem asks what the DM needs to do. The marketing research problem asks
what information is needed by the manager and how it can be obtained in the best possible way. The
management decision problem is said to be action-oriented because it is concerned with the possible
action to be taken by the manager. The decision should be taken like how should the loss of the market
share be arrested? Or should the market be segmented differently or by demographic profile only?
A management decision problem has the following features:
 Does it ask what the decision-maker needs to do?
 The management decision problem is action-oriented.
 It mainly focuses on symptoms
 Marketing research simply means is a process of collecting and using information for marketing
decision making.
 Many firms outsource their research needs and depend on independent marketing research firms.
 These independent organisations might specialise in handling just part of a larger study such as
conducting consumer interviews. The firms can also contract out entire research studies.
 Generally, marketing research is based on three different categories which include selective,
programmatic and evaluative.
 The most important factor for any company is to define the problem because when a problem is
clearly defined then only a research project can be implemented properly.
13.7 GLOSSARY
 Hypothesis: It is a proposition made on the basis of limited evidence for further investigation
 Questionnaire: It is a set of printed or written questions with a choice of answers prepared for the
purpose of survey or statistical study
 Simulation: It is a scientific modelling of natural systems with an aim to understand their functioning
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13.8 CASE STUDY: RESEARCH PROCESS FOLLOWED IN URVI LIMITED
Case Objective
The aim of this case is to describe the process of research followed in URVI Ltd.
Urvi Limited, one of the top research companies, was started in Mumbai, India in the year 1996. Since
then, it has done research on various pressing social issues, such as child marriage, dowry and honour
killing. Now, it plans to conduct a research on the increasing effect of alcohol on adolescents and youth.
To get a clear and deep understanding of the topic, the company surveys and reviews already available
research papers and thesis, which include conceptual as well as empirical literature. It also takes help
from various books and journals. This in-depth review and survey of available material enables Urvi
Limited to develop a clear understanding for formulating the research hypothesis.
After formulating its research hypothesis clearly, Urvi chalks out the complete research design within
which the research would be carried out. It collects primary data as well as secondary data from books,
journals and observation and personal interviews. The collected data is then analysed critically using
various statistical tools, such as bars, pie charts, tables and time series. Urvi Limited presents a final
report of its work that also includes strategies to reduce the effects of alcohol.
Questions
1. Mention the research process followed in Urvi Limited.
(Hint: The process followed in Urvi Limited include various steps such as defining the topic of
research, reviewing literature to gain more understanding about the topic, and so on)
2. Is focus group a more efficient method of data collection for Urvi Limited?
Give reasons in support of your answer.
(Hint: No, focus group is not a preferred method of data collection for Urvi Limited. This is because
Urvi Limited needs to carry out research on social problems in which large-scale data is required.
For this purpose, survey is the preferred method.)

1. Give a brief introduction to market research. Explain the different objectives of market research?
2. Briefly explain market research and competitive intelligence.
3. What are the basic market research problems and what approaches were adopted for its Solution?
4. Briefly explain the management decision problem.

1. Market research is said to be the gathering, recording and analysing of qualitative and quantitative
data to determine the viability of new products or services through research conducted with the
8
consumers of the potential market. Refer to Section Concept of Market Research

2. Competitive intelligence helps you understand and navigate the competitive landscape by
researching such things as a competitor. Refer to Section Marketing Research and Competitive
Intelligence
3. According to the nature of the company market research offers various problem identification
and its optimum solution so that your company will get the most benefit out of it. Refer to Section
Marketing Research Problems and Approaches to the Solution
4. The most important factor for any company is to define the problem because when a problem
is clearly defined then only a research project can be implemented properly. Refer to Section
Management Decision Problems
 https://lapaas.com/marketing-research/
 https://www.yourarticlelibrary.com/marketing/marketing-research-meaning-definition-and-
objectives-explained/25862
 Discuss the process of marketing research with your fellow class members. Also, what are the
different techniques to be adopted for conducting a good market research to maximise the profit of
a firm and capture more market share by the organisation?
9
Introduction to Marketing Research
Unit – 13
Prof. Preksha Yadav
Unit 13: Introduction to Marketing Research
• Objectives of Market Research,
• Role of Market Research in Decision Making,
• Marketing Research and Competitive Intelligence,
• Defining the Marketing Research
• Problem and Developing an Approach,
• Management Decision Problems
• Marketing Research Problems

Learning Outcome
• To understand the importance of Market research.
Objectives of Market Research
Market research is an organized effort to gather information about target markets
and customers: know about them, starting with who they are. It is an important
component of business strategy and a major factor in maintaining competitiveness.
• To Know the Buyers:

• To Measure the Impact of Promotional Efforts:
• To Know Consumer Response:
• To Know Market Costs and Profits:
• To Master the External Forces:
• To Design and Implement Marketing Control:
Role of Market Research in Decision Making
Marketing Research and Competitive Intelligence
Defining the Marketing Research
Marketing research is the systematic gathering, recording, and analysis of

qualitative and quantitative data about issues relating to marketing products and
services. The goal is to identify and assess how changing elements of the
marketing mix impacts customer behavior.
Marketing Research Process
UNIT
14 Research Design Formulation
Names of Sub-Units
Introduction to Research Design Research, Classification of Research Design, The Relationship

between Exploratory Descriptive and Causal Research, Market Research Proposal.
Overview
This unit discusses the marketing research design along with the classification of research design into
exploratory research, causal research and descriptive research. It further explains the relationship
between exploratory research, causal research and descriptive research. The unit further explains
what steps to be followed while conducting a marketing research proposal to get the best results from
your research.
Learning Objectives

 Discuss the concept of research design
 Describe the exploratory research, descriptive Research and causal research
 Explain the relationship between exploratory, descriptive and causal research
 Analyse the marketing research proposal
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Learning Outcomes

 Assess the concept of research design
 Draft research design
 Conduct exploratory research, descriptive research and causal research
 Analyse the process of market research proposal
 https://backup.pondiuni.edu.in/storage/dde/downloads/markiii_mr.pdf
14.1 INTRODUCTION
Research Design is said to be the overall strategy that a researcher used to integrate the various
components of the study logically and coherently, thereby ensuring the effective address of the research
problem. Research Design is said to be the blueprint for the measurement collection and analysis of the
data that helps to carry on further research in the most effective way. To design something various parts
are put together to complete the phenomenon. The same process is adapted to conduct research. All the
steps involved in the research process are interrelated to each other and there is no single independent
activity is launched without considering the decision on the previous stages. One has to understand that
from problem identification to the presentation of findings every step is interlinked and interrelated to
each other.
The word design has a different meaning related to a different subject. But here Research Design means
a pattern or an outline of a different research project in its work. Research is said to be a blueprint
with having an essential element that provides a basic guideline for conducting user research. The
Research Design is said to be the blueprint of a model that stays how the whole process of research
would be conducted. Research Design each step to be followed is mentioned and yet it is very simple to
understand by the researcher. The actual project is carried out based on Research Design.
14.2 WHAT IS RESEARCH DESIGN?

A Research Design is a detailed blueprint used to guide a research study towards its objective (Aaker
et al). Research Design is a broad term that involves a series of steps that provide a guideline for the
researcher to conduct actual research after realising the objective of the research. In other words, we
can say that a Research Design is a master plan which helps execute an actual research project.
Contents of Research Design
The most important aspect to be involved in Research Design includes the following:
 Statement of the problem which says what is the purpose to conduct the research project
 Different types of data are needed to perform the research accurately
 Defining the population and sampling procedures to be followed
 Time, cost and responsibility are involved while conducting the research
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UNIT 14: Research Design Formulation JGI JAIN
 Methods and procedures to be adopted for the Collection of data

 Tools and methods are required to analyse the data properly
 The outcome of research and the possible action to be taken based on those outcomes
14.2.1 Classification of Research Design

Process design is a broad term that involves series of steps and gives the layout for the researcher
that helps him to carry out the research project effectively. There are three types of Research design -
exploratory Research Design experimental or causal Research Design and descriptive Research Design.
Depending upon the nature of the problem the use of a particular Research Design has been made by
the researcher.
Exploratory research
The choice of the researcher to select the particular Research Design depends upon various information
such as the scope of the problem, nature of the problem, known information, and objective of the study.
As the name suggests exploratory Research Design is used by the researcher to gain background
information about the problem and to define the research problem most effectively. The exploratory
Research Design is used to gain more insight into the research problem. With the use of exploratory
Research Design, the research problem clarifies as well as it also helps to establish hypotheses and
Research priorities. The hypothesis is said to be a statement based on limited evidence which needs
to be approved or disapproved by the researcher after doing further investigation. It also helps an
organisation to formulate its problem in a more defined way.
Exploratory research is done by the researchers when they are having very limited knowledge about
the subject as well as few differences and studies have been carried out for the subject. When there is
no availability of pass data related to the subject then in such a situation exploratory research has been
conducted. Sometimes the exploratory research is said to be unstructured and informal. Exploratory
research is a tool that gives an idea about the research problem. It is conducted by the researcher to
find out the nature of the problem to develop a better understanding of the problem of the research.
Exploratory research provides the base for future research by giving a theoretical idea about the
problem. To carry out exploratory research the researchers are required to investigate different sources
such as data from other services, published secondary data, opinions about a company product or
service, observation of research items and many more.
 Example of exploratory research design: Freshline is an online eCommerce store that delivers
fresh foods to their customer at their doorstep according to their order with the help of its delivery
partners. This company is operating in different cities of the country. In starting company is getting
a great response but after a year its sales started declining. Due to the lack of historical data the
cells that actor is unaware about the reason for the decline in sales. To gain depth about the problem
he appoints a marketing research consultant to conduct exploratory research to determine the
reasons for declining sales. The prime objective of conducting this exploratory research is to identify
the possible reasons which cause declining in the sale such as competition, inferior quality of
products or services or ineffective marketing. Once the potential causes are identified by conducting
exploratory research the strength of each region can be tested using causal research.
Descriptive Research
Descriptive research is said to be a research method that describes the features of the population under
study. The methodology used by descriptive research focuses more on the “what” of the research in place
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of the “why” of the research. The primary aim of descriptive research is to made focus on describing the
nature of the demographic segment of the study. In other words, we can say is that descriptive research
describes the subject of the research without considering why it has happened.
For example, if an apparel brand wants to understand the fashion purchasing trend among the buyer of
the country, then in such a situation it will conduct a demographic survey in the particular region. For
this purpose, the brand gathers data of the population and conducts descriptive research for the same.
This is study gives detail about the purchasing pattern of the country buyers. This study made in faces
on what is the purchasing pattern of the buyers instead of why this pattern exists. Because the main aim
of the marketer is to understand the nature of the market.
Characteristics of descriptive research
Following are the main characteristics of descriptive research:
 Quantitative research: Descriptive research is quantitative. It aims to collect quantifiable
information that further help to perform various statistical analysis of the sample population.
Descriptive research is the popular market research tool that helps the marketer to collect and
describe the demographic profile and nature of the population.
 Uncontrolled variable: All the variables under the study of descriptive research are uncontrolled
which means the marketer is not having any control over the variable. In this research, none of the
variables is influenced by any other ways. That is why it is said that under descriptive research the
nature of the variable is not under the control of the researcher.
 Cross-sectional studies: In most cases, descriptive research is said to be a cross-sectional study
where the sample of different sections belonging to the same group is studied under.
 The basis for further research: Descriptive research provides the base for the researcher to carry
on for the research in search of the why of the subject. The research can use the collected data from
descriptive Research and analyse it using different research techniques. Data is also used to you
decide which type of research method should be used for the subsequent research.
 Example of descriptive research: Research has been carried out in a school district that wants to
evaluate the attitude of teachers while using technology in the classroom. This can be understood
by conducting and survey to observe the comfortableness of the teacher while using Technology
through the observation method. This research gives an idea about what is the attitude of the
teacher while using technology in the classroom which further helps a researcher to carry out
different ways to influence the attitude of the teacher for using technology in the classroom hence
this research is said to be a descriptive research
Causal Research
Causal research is research that explains the cause and relationship between two or more variables.
This was generally used to determine the cause of a particular behaviour. With the help of causal
research, researchers can decide the variations that have taken place in an independent variable by
making changes in the dependent variable.
Simply causal research means to determine the cause and effect relationship between two variables.
Causal research is also known as explaining its research because it explains the relationship between
a dependent variable and an independent variable. In causal research, variation taking place in the
independent variable is observed which is generally assumed by the resistor to be taken place due to
changes made in the dependent variable. To get the perfect output another confounding variable that
may influence the results is kept constant. It is quite complex to carry out causal research because it is
difficult for a researcher to control the confounding variable to not made any influence in the causal
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relationship between two variables. For example, if a company wants to study the behaviour of their
consumer while changing the price of their goods or services, then in such a situation it is called causal
research.
Advantages of causal research
 Causal research helps to understand the variation taken place in independent variable due to the
changes made independent variable. This knowledge of cause and effect helps the researcher to
take the necessary steps to fix the problem taken place.
 If there is a need for it then causal research also provides the benefits of replication.
 Causal research helps to identify the impact of changing in the process or existing method.
Disadvantages of causal research

 Causal research is quite complex to conduct because sometimes it becomes very difficult for a
researcher to have control over all the confounding variables.
 Causal research is time-consuming as well as it involves a huge amount of money to conduct. For
example, if a company wants to research about cause and effect of advertising on a campaign, then
it makes cost it more than one or two million dollars.
 It is not possible to get accurate results from causal research as you have discussed earlier that
there are some confounding for an extra genius variable that made it influence on dependent
variable which is not in control of the researcher that is why it becomes quite difficult to get proper
result with the causal research.
 One of the biggest disadvantages of causal research is coincidence. Sometimes due to coincidence,
a cause and effect relationship between two variable which is misassumed as a cause and effect
relationship.
 Sometimes it became quite easy for the researcher to determine a variable but at the same time, it
is difficult for him to analyse which variable is the independent variable and which variable is the
dependent variable.
Example of causal research

To check the performance of a new advertising campaign to decide whether to continue with the present
advertising strategy or not.
To measure the improvement in the performance of employees after providing them training.
Relationship between exploratory, descriptive and causal research

Research Design is a blueprint and can be used as a tool to carry out market research properly. The
Research Design is supposed to have the details of the procedure which needs to be followed to solve
certain problems related to marketing research. Major approaches to be used in research include
exploratory research, causal research, and descriptive research design. In research design, various
information is required to be mentioned clearly. It should have standard spending about measures
and scales to be used for analysing the data. The sample size and the sampling process to be used for
collecting the data and what statistical tool is to be used for analysing the data to get an accurate result.
The objective is to discover the insights and ideas about descriptive research and it involves describing
the functions and aspects of the market. It’s not like causal research design whose main aim is to
establish a cause-effect relationship between the two variables.
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One of the major features of exploratory research design is its flexibility and adaptability as well as the
front end of the total research design. The descriptive Research Design is marked by the fast formulation
of specific hypotheses as it just explains the phenomena and concerns about what is in place of why.
The primary aim of descriptive research is to made focus on describing the nature of the demographic
segment of the study. This Research Design is structured and preplanned . On the other hand, causal
research design was two or three independent variables in it. This was generally used to determine
the cause of a particular behaviour. With the help of causal research, the researcher can decide the
variations that have taken place in an independent variable by making changes in the dependent
variable. In causal research design, a researcher wants to control moderating variables which may
influence the independent variable to get a better result.
In the exploratory research approach, it used case study, survey and information of other studies to
get the data. In descriptive research different approaches are used as a formation may gather from
analysis and observation while in causal research only experiment has been used to understand the
cause and effect relationship between dependent and independent variables.
14.3 MARKETING RESEARCH PROPOSAL

The market research proposal is the first step to conduct all the studies. It is identical to a skeleton that
defines study’s goals direction and focuses. It is said to be the first point of reference for the management
to carry out the research. The market research proposal at the one which can break or make a project
funding. A marketing research proposal helps the research to research the right direction which
understands all the concepts under study. To get the best market research proposal, it is very important
to understand the series of steps to conduct market research which involves the following:
Define the problem and objectives of the study
When you are aware of the problem which is well defined your problem is have solved. A well-defined
research problem helps the researcher to focus on securing the exact information needed for the
solution. Clearly defining the question that researchers need to answer increases the accuracy and
speed of the research process. To have a clear understanding of the problem a researcher must avoid
confusing symptoms of a problem. A symptom gives alertness to the marketer that a problem exists.
For example, suppose that a marketer of frozen Pizza sees its market share dropped from 8 to 5% in
6 months. To define the problem the firm must look for the underlying cause of its market share loss.
A logical starting point in identifying the problem might be to evaluate the form target market and
marketing mix elements.
Conduct exploratory research
Once the form has a clearly defined problem then the next step can be to start with the exploratory
research by the researcher. Exploratory research finds cause of problem by discussing the problem
with outside and within the firm, and by examining data from other information sources as well.
The exploratory Research Design is used to gain more insight into the research problem. With the
use of exploratory Research Design, the research problem clarifies as well as it also helps to establish
hypotheses and Research priorities. The hypothesis is said to be a statement based on limited evidence
which needs to be approved or disapproved by the researcher after doing further investigation. It also
helps an organisation to formulate its problem in a more defined way.
In addition to talking with employees, exploratory research can include the evaluation of complete
records such as profit analysis and sales analysis with available competitive data. To gain more insights
about the research and to collect data market researchers of use internal Data Collection as situation
analysis as well for conducting exploratory research.
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Formulate a hypothesis
After defining the problem and conducting successful exploratory research the next step needed to be
done by a marketer is to formulate a hypothesis. The hypothesis is said to be a tentative explanation
for some specific event. The hypothesis is a statement that explains the relationship among various
variables and which carries clear implications for testing the relationship occur. It sets the stage for
more in-depth research by further clarified what researchers need to test.
Create a research design
To test hypotheses and to find a solution to a marketing problem a marketer is to create a research
design. Research Design is a broad term that involves a series of steps that provide a guideline for the
researcher to conduct actual research after realising the objective of the research. In other words, you
can say that a Research Design is a master plan which helps execute an actual research project.
While planning a research project, marketers must be sure that the study will measure what they intend
to measure. For this purpose, it became very important to frame a research design that acts as a guide
for the researcher to research the proper direction.
Collect data
There are two kinds of data collected by the marketer: secondary data and primary data. Secondary
data is said to be the information that is collected from previously published or compiled sources such
as census data.
On the other hand, primary data refers to the information collected for the first time by the researchers
themselves to carry out a marketing research study. In this step, the techniques to be employed while
collecting primary and secondary data is the basis for further research.
Interpret and present research information
The final step in the marketing research process is to integrate reserved and present them to the
decision-maker in the proper format that allows the manager to make an effective judgement and
decision regarding the problem.
 Research Design is the blueprint of any research study.

 Research Design helps the researcher to guide what steps to be followed to make a successful
experiment.
 In the Research Design, you can develop independent and dependent variables.
 There are three types of Research Design, namely exploratory research, descriptive research and
causal research.
 The researcher can choose the optimum research design based on the subject of the research to
gain more insights into the research and to get them the proper result from further research.
14.5 GLOSSARY
 Research design: It is said to be the blueprint of a model that stays how the whole process of research
would be conducted
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 Exploratory research: It is used by the researcher to gain background information about the
problem and to define the research problem most effectively.
 Descriptive research: It is said to be a research method that describes the features of the population
under study.
 Causal research: It is research that explains the cause and relationship between two or more
variables.
14.6 CASE STUDY: SINTEX INDUSTRIES LTD. A PIONEER IN THE PLASTIC

INDUSTRY
Case Objective
This case study discusses how GHI SUPERCAM established its demand-supply equilibrium.
The Sintex group is one of the leading providers of plastic and niche textile-related products in India.
It caters to the Indian market and has a solid presence spanning nine countries across four continents
including countries such as France, Germany, the USA. Sintex group clients are scattered across the globe
and most of them are parts of the fortune 500 companies list. Sintex was founded in 1931 and had track
record of pioneering innovative concepts in the plastic and textile sectors in India and an uninterrupted
77 years of dividend payment to its shareholders. Continuous innovation is the foundation of Sintexs
over the year. Active thinking drives the company on its path.
The innovative ideas are not only limited to products but also implemented in the manufacturing process
markets and management policies. The company generates 45% of consolidated turnover from building
materials such as prefabs and Monolithic, 40% comes from custom moulded and plastic composite
products, and the remaining 15% is attributed to textiles. The company is highly successful and has
witnessed a steady increase in income sales and profit after tax from 1997-1998 to 2007-2008. Sintex
Industries Limited never suffered from losses in the last 11 years. Rather it has shown a tremendous
growth rate during this period. This consistent performance is the foundation of the company’s overall
excellence.
1. What are the variables that influence the success of the Sintex company.
2. What are the opportunities for the Indian plastic industry.

1. Briefly explain the Research Design. What is the objective and importance of Research Design?
2. Explain the classification of Research Design.
3. What is the relationship between exploratory, descriptive and causal research?
4. What steps are to be followed while preparing a marketing research proposal?
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1. Research Design is a broad term that involves a series of steps that provide a guideline for the
researcher to conduct actual research after realising the objective of the research. Refer to Section
What is Research Design?
2. There are three types of Research design - exploratory Research Design experimental or causal
Research Design and descriptive Research Design. Refer to Section What is Research Design?
3. Major approaches to be used in research include exploratory research, causal research, and
descriptive research design. In research design, various information is required to be mentioned
clearly. Refer to Section What is Research Design?
4. The market research proposal is the first step to conduct all the studies. It is identical to a skeleton
that defines study’s goals direction and focuses. Refer to Section Marketing Research Proposal
 https://www.discuss.io/write-market-research-proposal/
 https://ivypanda.com/essays/comparison-and-contrast-of-exploratory-descriptive-and-causal-
research-designs-giving-examples/
 https://www.marketing91.com/causal-research/
 Discuss the concept and impact of Research Design to carry out the research. Also, discuss few
examples related to different research designs to get in-depth knowledge about the classification of
the Research Design and the importance of Research Design in the decision-making process of the
organisation.
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Research Design Formulation
Unit – 14
Prof. Preksha Yadav
Unit 14: Research Design Formulation
• Research Design Definition and Classification,
• Exploratory, Descriptive and Causal Research,
• Relationship between these three,
• Marketing Research Proposal

Learning Outcome:
To be able to formulate Research problem and prepare a research proposal.

Research Design Definition and Classification,
Research design is defined as a framework of methods and techniques
chosen by a researcher to combine various components of research in a
reasonably logical manner so that the research problem is efficiently
handled.
It provides insights about “how” to conduct research using a particular

methodology.
Research Classification
Exploratory, Descriptive and Causal Research,
Marketing research proposal
What is a market research proposal? A market research proposal is a

document that sells your services to potential clients by showing them
what they can accomplish by hiring you to complete their project or
research study.
UNIT
15 Data Collection and

Sampling Design
Names of Sub-Units
Primary and Secondary Data, Questionnaire Survey, Sampling Design Process, Sampling Methods,
Data Analysis, Hypothesis Testing, Introduction to SPSS and SAS
Overview
This unit explain the Primary and Secondary Data, Questionnaire Survey and Sampling Design Process.
Further, this unit describes the Sampling Methods, Data Analysis, Hypothesis Testing, Introduction to
SPSS and SAS.
Learning Objectives

 Explain the data and its types
 Describe the important role of data in the business decision making
 Discuss the different concepts of data
 Summarise the different methods of data collection and its uses in different sectors
 Interpret how a questionnaires survey should be prepared
 Elucidate the meaning of sampling and the steps involved in the sampling design process
 Explain how data is analysed using different data analysis tools
 Describe how does hypothesis testing work and the various steps involved in it
 Discuss the features of SPSS and SAS tools for data analysis
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Learning Outcomes

 Analyse various methods of data collection
 Examine how data helps in making effective decision in business
 Differentiate between primary and secondary data, quantitative and qualitative data, and
subjective and objective data.
 Assess questionnaires survey used for data collection.
 https://www.gbnews.ch/the-basic-concepts-of-data/
 https://www.questionpro.com/blog/data-collection-methods/
15.1 INTRODUCTION
No matter in which industry or area you work or whatever you take interest in you will require data to
gather information and knowledge about that. It is data that is changing the world’s face each and every
day. It can be any study or report or research through which you can have access to data. The meaning
of data varies according to the area or situation. Basically “data” is a combination of facts and opinions
in form of numbers, measurements, words or observations that can be used for decision making about
a specified task or goal. With the help of data, management of a business makes a decision based on
the quality information it receives. Data collection is done by companies through analysis, research
and study. Without data, a company shall not be aware of anything going on in the industry and will be
unable to make any decisions. Data collection helps them to stay updated with trends, solutions to their
problems and can have a new insight.
Every area of knowledge and work requires data. Before you start any task or business you need to
collect data and information about the specific situation or industry. In today’s digital world data can
be easily accessed. Different surveys, reports and researches are carried out to collect different types of
data. Data collection is essential for every department and plan of business. It helps the management
to take an informed and evidence-backed decisions related to business. Making decisions based on
assumptions and observations can be misleading and not effective for the business. Therefore, it is
recommended to organise a proper data collection system in every department of business. This data
collection system shall use different methods to obtain data from different sources. After collecting the
data, it is analysed by the researchers to arrive at a conclusion.
15.2 CONCEPT AND IMPORTANCE OF DATA

It can be both objective and subjective in nature:
1. Objective data: The data that is collected from measurements or observations are known as objective
data. These data are free from biases. The objective data is collected from multiple resources. In
general, data means the representation of facts about a particular thing. Data is neither facts nor
fiction. Data can be qualitative and quantitative in nature. These data are proved by conducting
tests. Transaction data, experimental data, data generated from the sensor are examples of objective
data.
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UNIT 15: Data Collection and Sampling Design JGI JAIN
2. Subjective data: The data that is collected by communications and interactions, such as talking,
explaining, sharing, tweets, are known as subjective data. The data is used for assessing the opinions
and perspectives of people like their beliefs, feelings and desire. The subjective data can vary from
individual to individual and is qualitative in nature. Interviews, questionnaires, editorials and blogs
are some of the examples of subjective data.
Data is important for a business to analyse, verify, validate and assess any situation and make
decision accordingly. It is important for long-term as well as short-term decision making related to
business. Here, there are some of the reasons why data is important for any business organiSation:
 Informed decision making: Data helps to gain knowledge about the unknown areas and helps
the management to make informed decisions. The decision made with adequate data collection
is backed with evidence and proof. Decisions made on assumptions can lead to wastage of
resources leading to arriving at incorrect conclusions.
 Get desired results: Based on the data collected, each business plans a strategy for its task. Based
on the accuracy of data you can determine the effectiveness of the strategy. You can determine
how good your plan is working and if any changes are needed.
 Find solutions: To find a solution to any problem you need to know its cause. With the help of
data, you can decide the cause of a problem. By knowing the exact reasons for any problem, a
better solution can be found to face the problem.
 Keeping track: With the help of accurate data, an organisation can establish its benchmarks and
baselines. These goals help to you to move forward. The higher goals you set for your business
the better will be the growth of your business.
 Backup evidence for your arguments: For justifying your point to the management for any
approval you need to prove yourself correct. The data collected by you act as evidence for your
justification that why you are putting this point up.
 Prevent crisis: Data helps in monitoring the systems of your organisation. With the help of
qualitative data, organisations can prevent problems to convert into crises. Organisation’s can
take steps before handed.
 Avoid assumptions: The data you collect will help you make a decision based on facts and
opinions rather than just assumptions. The decision based on data is more confident with
outcomes and more reliable.
 Aware of your actions: When you conduct proper research and survey to collect the data and
make a decision, you are more confident about it. You have facts and reasons to justify your
point. It brings a sense of self-satisfaction when you perform the task on our own, rather than
relying on people’s assumption.
 Proper utilization of resources: Generally every organisation has the resources it needs for
data collection. But proper utilisation of these resources is essential for your organisation. You
can take the help of an online search on how to effectively utilise your resources for the growth
of your business.
 Profit more from your money: Funding is based on the outcome achieved from your actions and
decisions. Therefore, it is important for an organisation to collect accurate data and implement
it for strategic decision making to get the estimated outcomes.
 Strategic approaches: Collection and the analysis of data help in increasing the efficiency of
a business. It helps to employ the scarce resources in the place of their need. It helps to decide
which area of the business requires more priority.
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15.3 TYPES OF DATA

The objective behind every research and study defines which kind of data needs to be collected for
fulfilling the purpose. Generally, data is of two types. These are discussed in the next sub-sections:
15.3.1 Primary Data

The data collected from original or initial research is known as primary data. It is the information that
is collected by your sources. Primary data is collected by organizing surveys and group discussions.
A company generally collects primary data when it wants information and decides on a particular
matter or a specific subject. For example, when a company wants to know the preferences or reviews
of a consumer about a particular product. The process and methods of collecting primary data can be
sometimes costly for a company. It is a time-consuming process as the information is collected by its
resources. However, the primary data collected is more reliable and specific. You get the true information
and not a biased opinion.
15.3.2 Secondary Data

The data which was collected in the past and by any other source is known as secondary data. It is
collected by someone else and not by your resources. Secondary data is based on the Internet research,
reports of company or articles in the newspapers. Secondary data is generally collected when a company
wants an overall view of any new product or area. For example, when a company wants to enter a new
market segment, it uses these resources to collect secondary data. Secondary data collection is cost-
effective for a company as they do not have to use their resources. The data is easily available and does
not take time. However, you can get biased information in secondary data.
15.4 METHODS OF DATA COLLECTION

There are several methods of data collection out of which some of the commonly used methods are
explained below.
15.4.1 Questionnaire Survey

A questionnaire is a form that is a typed or printed list of questions with options of different answers
set in a format. It is an instrument that is used to gain certain information and data from the person
replying to the form. It is offered or delivered to a person generally by mail or post, from whom you want
to collect the information by requesting them to fill the form with their answers. The person filling the
form must have a clear understanding of the questions asked before replying to them.
This method of data collection is generally used by private and government companies or by individuals,
NGOs, etc. as it is a cost-effective tool for conducting research and collecting data from the general
public. Questionnaires are the most important method of collecting primary data.
15.4.2 Sampling Design Process

The process of sampling designing is divided into five steps which are importantly related to market
research. The five steps of the sampling design process are:
1. Defining the targeted population: The people who are believed to have the information required for
the research project, by the person conducting the research are known as the targeted population.
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2. Sample frame determination: A representation of the targeted population is known as a sample

frame.
3. Selection of a sampling technique: As there are several methods and techniques for sampling, it
may take time and effective decision making for choosing the right technique of sampling. Based
on the requirements the technique of sampling can be either traditional or Bayesian approach,
probability or non-probability sampling or replacement or without replacement sampling.
4. Determination of the size of sample: For the determination of the size of the sample various
quantitative and qualitative factors are to be involved. Factors such as research nature, importance
of decision, and the variable numbers that shall help to decide the sample size.
5. Execution of the sampling process: After making the various decisions related to the sampling, the
process is executed.
15.4.3 Sampling Method

A sample is a small part of the total population. It can be a single or a group of elements that are
selected from the population. It represents the population for the research based on the terms of time,
cost, and convenience. “n” is the representation for a sample size. There are several methods used for
the sampling process.
Sampling is a process or method of selection of a part of a population to represent the entire population,
for determining its characteristics. You can ensure that the sample selected is good if it satisfies the
following conditions:
1. Size: You should make sure to choose an adequate size of the sample during the sampling process.
The size of the sample should be such that the information received is accurate and reliable and
should represent the whole population under the research.
2. Representativeness: The main motive behind the selection of the sample for the research is that it
gives the best representation of the whole population under study. The researcher hopes for accurate
representation from the sample of the population. For representative samples, you can conduct a
probability sampling method. Moreover, the sample should be valid to be accurate.
3. Accuracy: For achieving accurate samples it should be free from influences that can bring any
differences. It should represent the population for its accuracy. Moreover, the sample collected
should not have a biased opinion.
15.5 DATA ANALYSIS

The process of cleaning, sorting and transforming the collected data to find business-related useful
information for decision making is known as data analysis. The main purpose of data analysis is to
extract valuable information from the data collected for decision-making related to business. For the
growth of any business, analysis is very essential. The analysis of data and processes related to business
is essential if you are looking to grow your business forward. If your business is not experiencing any
growth and development, you need to analyse your mistakes done in the past and make a plan for future
growth avoiding those mistakes. As you analyse your past and future to grow in your lives, similarly you
have to perform that for our business.
There are several data analysis tools that helps the users to easily process and transform the data.
These data analysis tools help in analysing the correlations between data and identification of trends
and patterns useful for interpretations. As per the business and technology, there are several types of
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data analysis tools and methods that exist. Here, there are some of the commonly used data analysis
tools used for business research:
 Text Analysis
 Statistical Analysis
 Diagnostic Analysis
 Predictive Analysis
 Prescriptive Analysis
15.6 HYPOTHESIS TESTING

Just the collection of data is not enough. The interpretation of the data is necessary to conclude. With
the help of hypothesis testing, interpretations and conclusions are drawn from the sample data related
to the population. It evaluates the evidence’s strength from the sample and generates a framework for
determination. The method used for the interpretation by the analyst depends on the nature of the data
and the motive of the research.
How does hypothesis testing works

In the process of hypothesis testing, an analyst test a sample to provide evidence. Every analyst tests a
random sample of a population for testing two types of hypothesis, i.e., null hypothesis and alternative
hypothesis.
Null hypothesis- It is a hypothesis where there is population parameter equality. For example,- when the
population means the return is zero it is known as the null hypothesis.
The alternative hypothesis- It is the reverse of the null hypothesis. For example- when the population
means the return is not equal to zero it is known as the alternative hypothesis.
These two are mutually exclusive, thus only one of the two can be true. However, at least one must be
true.
Different Steps of Hypothesis Testing

Here is a four-step process for testing all different types of hypotheses:
1. In the initial stage, the analyst is required to state both the hypothesis, so that both ones can be
correct
2. Secondly, to evaluate the data, and analysis plan is to be formulated and decided
3. In the next step, the plan formulated needs to be carried out by physical analysis of the data sample
4. In the final step, the analysis of the result is done to either state the null hypothesis plausibility or
rejecting the null hypothesis
15.7 INTRODUCTION TO SPSS AND SAS

Statistical Package for Social Sciences (SPSS) is software for analyzing statistical data. Founded in 1968,
it is the first statistical programming language for computers. The software plays an important role
in social science and is an important tool for non-statisticians. It is very user-friendly as the user does
6
not need to learn to code. However, it is costly and is not efficient in handling a large database. It slowly
adapts to new technologies and requires different licenses for different functions.
Statistical Analysis System (SAS) is a programming language that is suitable for advanced analytics,
data management, predictive analysis and business intelligence. It has a high quality of production code
with strong handling capabilities. It is capable of handling huge data and is beneficial for easy sorting
of data. It is also user-friendly and easy to learn if you know SQL. It is a highly popular software in the
industry for analytical data management. SAS is also a costly tool and requires different programs for
different visualization.
 Behind every decision taken in a business, data is the core of it.

 Every department of a business whether it is Human Resource, Marketing, Sales or Production,
requires data collection for effective decision making. --With the help of effective data, a business
can plan the entire process from the production of the product to its sale to the customers.
 It not only helps you to utilise your resources effectively but also reduces the wastage of time and
money.
 Proper collection and analysis of data are crucial for every organisation.
15.9 GLOSSARY
 Data: It is derived from the Latin word “datum”. Data is very important for the decision making in
business.
 Data collection: It is process of combining, accumulating and measuring information in an
established system to evaluate answers and outcomes to relevant questions is known as data
collection.
 Data Analysis: It is the process of inspecting, cleansing, transforming the data to discover
information that is useful and arriving at a conclusion and helps in decision making.
 Sampling: It is used for statistical analysis.
 Hypothesis testing: It is the process, method, or theory of testing a hypothesis and a null hypothesis
and comparing them is known as hypothesis testing.
 Null hypothesis: It is that typical statistical theory that says that there is no significant existence of
a statistical relationship in a given observed variable.
15.10 CASE STUDY: BUYERSYNTHESIS’S PRIMARY DATA COLLECTION FOR ABC
Case Objective
The aim of this case is to explain process of data collection.
BuyerSynthesis is a consultancy organisation that provides primary data collection services. It provides
consumer insights to its various clients which include consumer-facing companies, creative agencies
and non-profit organisations.
7
JGI JAIN
This organisation was established in 2002 and is located in Denver, USA. The organisation helps its
clients by creating more effective marketing strategies and plans by better understanding their buyers.
BuyerSynthesis believes that the consumers are the most important factor in any business. Therefore,
the organisations must become consumer-oriented.
BuyerSynthesis helps in taking the voice of an organisation’s consumers to the concerned organisations
which can then plan their marketing strategies accordingly. BuyerSynthesis team carries out primary
research projects along with their client’s in-house teams to carry out their research.
BuyerSynthesis worked with an organisation ABC (a non-profit organisation). The management of ABC
wanted to research ways in which it can refresh its image so as to attract new generation people without
losing its loyal customers. The organisation also wanted to bridge the gaps with its core audiences.
In order to carry out data collection for this, BuyerSynthesis started with an internal audit of the
marketing department of ABC so that they may assess the challenges and the resources of ABC. This
was essential in order to find out what aspects of marketing required refurbishing and whether the
recommendations of BuyerSynthesis would be feasible for them or not.
To begin with their research, BuyerSynthesis roped in numerous participants from ABC’s audience
to carry out its focus group research. the focus groups were segmented using three categories viz.
generation, visitation frequency and when their last visit to ABC was.
The focus groups were moderated and they discussed the following aspects:
 What ABC meant to them?
 What changes in the organisation they would like to see?
 What could the effect of innovations on them?
All the participants narrated their experiences with respect to the recent and memorable experience.
Focus group research helped BuyerSynthesis in gaining information regarding who ABC’s audience was
and what attributes were important for them. BuyerSynthesis also recognised that the organisational
members felt a high degree of personal attachment with ABC and they deeply appreciated it.
On the basis of research, BuyerSynthesis made certain recommendations which helped ABC in
enhancing the relationship between the organisation and its clients and at the same time keep the costs
under control. This research led ABC to develop innovative audience engagement and delivery plans. In
addition, process of planning infrastructure improvement was also expedited.
Questions
1. Describe the nature of BuyerSynthesis as an organisation.
(Hint: BuyerSynthesis is a marketing research organisation and it helps its clients by creating more
effective marketing strategies and plans by better understanding their buyers.)
2. What were the major topics that were discussed within the focus groups created by BuyerSynthesis
for ABC?
(Hint: The major topics that were discussed within the focus groups included: What ABC meant to
them?; What changes in the organisation they would like to see, etc.)
8

1. Describe the importance of data collection.
2. What are the types of data?
3. List down the methods of data collection.

1. Data is important for a business to analyse, verify, validate and assess any situation and make
decision accordingly. Refer to Section Concept and Importance of Data
2. The data collected from original or initial research is known as primary data. It is the information
that is collected by your sources. Refer to Section Types of Data
3. A questionnaire is a form that is a typed or printed list of questions with options of different answers
set in a format. It is an instrument that is used to gain certain information and data from the person
replying to the form. Refer to section Methods of Data Collection
 https://www.wikipedia.org/
 https://www.scribbr.com/methodology/data-collection/
 Form two groups in your class and discuss the two different types of data collection methods. One
group shall choose the qualitative approach and the other group chooses the quantitative approach
for conducting the research. Justify why would you use either of the approaches for conducting the
research. Also, mention the advantages and disadvantages of each approach.
 Conduct a survey or questionnaires on any topic in your class. Discuss how a questionnaires survey
is beneficial for conducting research. Discuss what you got to learn from conducting this research.
Also, discuss the drawbacks if you find any while conducting the research and discuss what you can
do to overcome these drawbacks if any.
9
Data Collection and Sampling Design
Unit – 15
Prof. Preksha Yadav
Unit 15: Data Collection and Sampling Design
• Primary and Secondary Data,
• Questionnaire Survey,
• Sampling Design Process,
• Sampling Methods,
• Data Analysis, Hypothesis Testing,
• Introduction to SPSS and SAS

Learning Outcome:
To be able to conduct a market research.

Primary and Secondary Data
Primary data refers to the first hand data gathered by the researcher
himself. Secondary data means data collected by someone else earlier.
Surveys, observations, experiments, questionnaire, personal interview, etc.
Government publications, websites, books, journal articles, internal records
etc.
Questionnaire Survey
A questionnaire is a research tool used to conduct surveys. It includes

specific questions with the goal to understand a topic from the respondents'
point of view. Questionnaires typically have closed-ended, open-ended,
short-form, and long-form questions.
Sampling Design Process
Sampling Methods

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UNIT

In this unit, you will learn to:

At the end of this unit, you would:

Pre-Unit Preparatory Material

1.2 DEFINITION OF MARKETING

1.2.1 Importance of Marketing

1.2.2 Objectives of Marketing

1.2.3 Scope of Marketing/ Relationship of Marketing with Other Areas

1.3 DIFFERENCES BETWEEN SALES AND MARKETING

Table 1: Difference between Sales and Marketing

S. No. Sales Marketing

S. No. Sales Marketing

1.4 CHALLENGES IN MARKETING IN THE CURRENT ERA

1.5 LATEST TRENDS IN MARKETING

Conclusion 1.6 CONCLUSION

 Service marketing is different from the marketing of physical goods.

1.8 CASE STUDY: AMAZON.COM –THE ONLINE MARKETING LEADER

Understanding Customer Needs

Customer Defined Standards

1.9 SELF-ASSESSMENT QUESTIONS

A. Essay Type Questions

1.10 ANSWERS AND HINTS FOR SELF-ASSESSMENT QUESTIONS

A. Hints for Essay Type Questions

@ 1.11 POST-UNIT READING MATERIAL

1.12 TOPICS FOR DISCUSSION FORUMS

 Discuss the evolution of the marketing era.

• Relationship with other Functional Areas, Latest Trends and Issues in

• Learning Outcome: To understand the importance of Marketing in

All of the above, plus much more!

American Marketing Association Definition

• Training Marketing Teams

Type to enter a caption.

5.Content is still the King

02 Fundamental Concepts of Marketing

In this unit, you will learn to:

At the end of this unit, you would:

Pre-Unit Preparatory Material

Five philosophies of marketing management are:

2.2 DIFFERENT CONCEPTS OF MARKETING

The following are the core concepts of marketing:

Figure 1 shows the philosophies or core concepts of marketing:

Societal Marketing Concept

Figure 1: Core Concepts of Marketing

2.2.1 Exchange Concept

2.2.2 Production Concept

2.2.3 Product Concept

2.2.4 Sales Concept

2.2.5 Marketing Concept

Figure 2: Three Pillars of the Marketing Concept

2.3 HOLISTIC MARKETING

Figure 3 represents the components of holistic marketing:

Socially responsible marketing

Figure 3: Components of Holistic Marketing

 It helps in tapping opportunities and spotting potential threats.

2.4 CONCEPT OF MARKETING MYOPIA

Some examples of Marketing Myopia are:

Conclusion 2.5 CONCLUSION

 Marketing management can be described as a process of creating, building and maintaining

 Marketing management: It involves designing marketing strategies to fulfil organisational