BBM 212:PRINCIPLES OF MARKETING

By Sk Murei

Chapter 1: Introduction to Marketing (Defining Marketing for the TwentyFirst Century)

This chapter focuses on following issues of marketing:

1. The definition of marketing, marketing process, marketing task and

scope of marketing
2. Core marketing concept
3. Demand Management in marketing
4. Company
orientation
toward
the
marketplace:
Marketing
Management philosophies

Defining Marketing

Marketing, more than any other business activities deals with customers.
Although there are a number of detailed definitions of marketing perhaps the
simplest definition of marketing is managing profitable customer
relationship.
We can distinguish between a social and a managerial definition for
marketing. According to a social definition, marketing is a societal process
by which individuals and groups obtain what they need and want through
creating, offering, and exchanging products and services of value freely with
others. As a managerial definition, marketing has often been described as
the art of selling products. But Peter Drucker, a leading management
theorist, says that the aim of marketing is to make selling superfluous. The
aim of marketing is to know and understand the customer so well that the
product or service fits him and sells itself.

Marketing is the management process that identifies, anticipates and

satisfies customer requirements profitably - The Chartered Institute of
Marketing (CIM).
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The American Marketing Association (offers this managerial definition):

Marketing (management) is the process of planning and executing the
conception, pricing, promotion, and distribution of ideas, goods, and services
to create exchanges that satisfy individual and organizational goals.

Marketing Management:
Marketing Management is the process of choosing target markets and
getting, keeping and growing customers through creating, delivering and
communicating superior customer value and satisfaction.

Difference between Selling and Marketing

The old sense of making a sale is telling and selling, but in new sense it is
satisfying customer needs. Selling occurs only after a product is produced.
By contrast, marketing starts long before a company has a product.
Marketing is the homework that managers undertake to assess needs,
measure their extent and intensity, and determine whether a profitable
opportunity exists. Marketing continues throughout the products life, trying
to find new customers and keep current customers by improving product
appeal and performance, learning from product sales results, and managing
repeat performance. Thus selling and advertising are only part of a
larger marketing mix-a set of marketing tools that work together to affect
the marketplace.

Marketing Management Philosophies (5 Concepts)

By Kalpana R Marketing

As we know, every company has different idea regarding philosophy of marketing. Some
companies concentrate on the large scale production while some concentrate only on the quality
of the product etc.
Therefore, under the marketing philosophy, there are following five concepts:
1. Production Concept:
Production concept lays emphasis on availability and affordability of products. If these two
elements are present in marketing, the enterprise will succeed. Accordingly, marketing should
aim at the reduction in the cost of production and concentrate on mass production and
distribution. This concept holds that potential exchange would be realized when the products are
inexpensive and are widely available.
However, this concept is not entirely true. Sometimes customers dont always buy products
which are inexpensive and easily available. For example, fleet shoes.
2. Product Concept:
Product concept lays emphasis on quality of production rather than quantity of production.
Accordingly, the enterprise should concentrate on product and its continuous improvement over
time because customers favour high quality products and are ready to pay higher prices for them.
The enterprises following this concept direct their maximum efforts into creating superior
products and improving the existing products. However, the main drawback of this concept is
that customers will buy the product only if they require the same. For example, a firm may be
dealing in very spacious, luxurious and expensive cars but the customers will demand same only
when they really need them and can afford their price.
3. Sales Concept:
This concept stresses on attracting and persuading customers to buy the product by making
aggressive selling and promotional efforts. Thus, the focus of business firms is to ensure the sale
of products through aggressive selling techniques such as advertising, personal selling and sales
promotion without giving any consideration to customers satisfaction.
The main aim of selling is to convert the goods into cash by using fair or unfair means. But the
buyers cannot be manipulated every time; hence selling can be successful only for short period
but not during long period.
4. Marketing Concept:
According to this concept, customer satisfaction is the key to organisational success. It assumes
that a firm can achieve its objective of maximizing profit in the long run only by identifying and
satisfying the need of present and prospective buyers in an effective way. Business firms dont
sell what they can make; rather they make and sell what customers want.
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This concept is based on the following pillars:

(i) To identify the market or customers who are selected as the target of marketing effort.
(ii) To understand the needs and wants of customers in the target market.
(iii) Developing products or services for satisfying the needs of the target customers.
(iv) To ensure better satisfaction of needs of the target market as compared to competitors.
(v) To do all this at a profit.
5. The Social Marketing Concept:
The marketing concept has been criticized by some of the people because of the challenges
posed by social problems like environmental pollution, deforestation, population explosion,
inflation etc.
This is because any activity which results in customer satisfaction but is harmful for the interest
of the society at large cannot be justified. Therefore, the firms must perform the functions of
marketing keeping in view the social welfare. For example. No to plastic bags, recycled paper.
THE MARKETINGG PROCESS
Explain The mar keting process in details
The process of the analysis of the opportunities of market, selection of the target markets, and
development of the Marketing Mix and management of the marketing efforts is called the
marketing process. The following four steps are included in the marketing process that
primarily focuses the target customers.
Marketing Process Steps
1. Analysis of the opportunities in the market.
2. Selection of the target market.
3. Development of marketing mix.
4. Management of marketing efforts.
1. Analysis of the Opportunities in the Market:
The first component of the Marketing Process is to analyze the market in order to find the
opportunities that should be availed. These opportunities are related to the needs and wants of the
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customers that are not properly satisfied by the competitors in the market. A company that is
initiating the marketing process focuses the opportunities that would be beneficial in the long run
success so that its performance would be effectively improved. For this purpose, the company
gets help from the marketing information system (MIS), which plays a significant role in
providing useful information about the market.
The company also conducts effective market research that would tell him the value able
information about the customers, competitors, general trends, and any extraordinary change
occurred in the market that can be useful for the company. Then company identifies the potential
opportunities from the collected information and split the whole market into different segment.
These segments are based on some factors like age group, geographical location etc. The
company evaluates each segment separately to check the potential of the segment in the light of
its strengths and weaknesses. Finally, it selects the target market segment to proceed further.
2. Selection of the Target Market:
This is the most important step of the marketing process in which the target customers are
selected. For this purpose, the company conducts a careful analysis of the target markets in order
to choose the final customers. As it is obvious that the company do not satisfy the needs and
wants of the whole market therefore it must divide the whole market into different segments and
choose the segment that will best meet its strengths and opportunities. In this regards, there are
certain step you need to follow.

Market Segmentation:

The process in which the whole market is split into different units of consumers, each unit having
similar wants, characteristics and behavior of consumers which need different marketing mixes
and strategies.

Market Targeting:

In this process the targeted segments of the total market are evaluated to ascertain the
attractiveness of each segment so that the one or two most suitable and potential segments should
be selected and entered. The simple rule of selecting the target unit or segment is that it must
provide the opportunity to the company to create potential customer value in the long run.
Another important rule is that a certain company has the option to satisfy the needs and wants of
one or two segments. In this case the company focuses on that relevant segments and develops
its products and strategies for them only. Such small segments are called niches. The company
has also another option to split the whole market into different segments and offers different
products and marketing mixes to each segment of the market. But the most effective method is to

focus on one or two segments and after succeeding in those segments, further new segments
should be targeted.

Market Targeting

Market Positioning:

This concept relates to the positioning of the product of a company in the minds of the customers
as compared to the products of competitors. In other words the company tries to maintain a clear
and specific perception in customers about its products. When a company wants to position its
product, it first specifies the competitive edge for which it offers competitive advantages to its
target customers. The whole marketing program of the company should concentrate its identified
positioning strategy. The positioning is effective when the company truly provides the efficient,
competitive offering to its customers in order to give them maximum value as compared to the
offering of competitors.
3. Development of Marketing Mix:
After setting of a complete marketing strategy of a company, then it is ready to initiate the
planning of its marketing mix.

Marketing Mix:

Marketing Mix is composed of certain variables of markets that are mixed by the company in
order to generate certain desired response in the targeted segments.
In fact the demand of the product is influenced by the use of certain activities of the marketing
mix. The marketing mix is composed of the following four Ps.
01- Product: means any offering (goods or services) to the market by the company.
02- Price: means the money paid by the customers to obtain the product.
03- Place: means the efforts which ensure the availability of the product in the market to
customers.
04- Promotion: means all the efforts by the company that ensure the sale of products to
customers through better provision of information about the advantages of the product.

A company develops an effective marketing program in which a suitable combination of

marketing mix is blended so that they are efficiently coordinated into a useful program to provide
the greater customer value in order to accomplish the companys objectives.

Marketing Mix
4Ps of marketing mix are from the seller perspective. In certain cases the 4Cs are replaced by
the 4Ps which are
1. Product means Customer Solution
2. Price means Customer Cost
3. Place means Convenience
4. Promotion means Communication
4. Management of Marketing Efforts:
This is actually the action phase of the development marketing program in which a suitable
marketing mix is set for a target market. For the management of marketing efforts four functions
are adopted which are as follow.
01- Analysis of the Market in which the company identifies the internal strengths and
weaknesses along with the external opportunities and threats.
02- Marketing Planning in which certain marketing plans or strategies are developed so that the
overall objective of the marketing should be accomplished.
03- Marketing Implementation in which the developed plans and strategies are practically
implemented in order to achieve the marketing objectives.
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04- Marketing Control in which the performance results of the marketing plans and strategies
are evaluated and necessary steps are taken to ensure the accomplishment of overall marketing
objectives of the company.
FUNCTION OF MARKETING
Marketing plays very important role for the success of the organization & following are seven
functions of marketing which should be understood by strategists in order to point out the
strengths & weaknesses of the organization more effectively.
1. Analysis of customers
2. Selling of products/services
3. Planning of products & services
4. Pricing
5. Distribution
6. Marketing Research
7. Opportunity analysis
7 Important Functions of Marketing
Below is the detail of 7 important functions of marketing, you need to be aware of them all. Once
you do understand all these functions of marketing, then you can easily understand the strategic
management and strategic management implementation in business.
1. Analysis of Customers:
It is one of major functions of marketing in which the needs, wants & desires of the customers
are examined & evaluated. For this purpose customer surveys are administered, consumer
information is analyzed, market positioning strategies are evaluated, profiles of customers are
developed & optimal marketing segmentation strategies are determined. An effective mission
statement can be developed with the help of customer profiles that are maintained by the
organization during customer analysis. The demographic characteristics of the customers of
organization are identified through these profiles. The needs & wants of customers are better
identified with the help of managers, distributors, suppliers, wholesalers & creditors etc by
providing useful information about customers. The buying patterns of the customers are
continuously monitored by the successful organizations.
2. Selling of Products & Services:
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The potential of organization to sell some products or services guide the implementation of
strategy. There are many marketing activities that are included in the selling function like
advertising, personal selling, sales promotion, sales force management, publicity & customer
relations etc. When an organization adopts market penetration strategy, these activities are quite
important. The effective selling tools for industrial & consumer products vary. Those
organizations that deal with industrial products should apply personal selling activity of
functions of marketing. On the other hand the organizations that deal with the consumer products
should adopt the policy of advertising. While performing internal strategic management audit,
the strengths & weaknesses of the organization in its selling function should be considered.
There is emerging trend in which the products & services are advertised on the internet. For this
activity, sales rates are based on the advertisement rates. In this situation, the rate of
advertisement is based on the number of expected individuals to view a given advertisement
which is quite different from the traditional advertisement form. These advertising rates of new
cost per sale online advertisement are possible because there is a system of checking of different
users on internet that views particular online advertisement. Also there is further possibility to
keep record of the online viewing customers of particular advertisement that actually buys that
product or service. The advertisement is free in such case when there is occurs no sale. Banner is
the most popular type of advertisement on the internet. But mostly people on the internet ignore
the advertisement through online banners.
3. Planning of Products and Services:
Functions of marketing include an important function in which the products & services are
planned. For this purpose certain activities are carried out like test marketing, positioning of
product and brand, packaging, devising warranties, determining options of product, ascertaining
features of the product, checking style of the product, ascertaining quality of the product,
deletion of older products & customer services provision etc. When an organization is involved
in product development or diversification strategy, then planning of products & services is
particularly important for it.

Planning of Products and Services

Test marketing is considered as one of the most potential techniques of planning of products &
services. In test marketing technique, alternative marketing plans are tested. The future sales of
new products & services are also forecasted ion test marketing technique. Following are some of
important consideration that should be focused by the organization while conducting their test
marketing.

The number of cities that should be included

The types of cities that should be included

The type of information that should be collected during testing

Type of action that need to be taken after the completion of the

testing.

It is more effective for the consumer goods organizations to perform test marketing as compared
to industrial goods organizations. The organization is able to point out its weak products and
poor marketing strategies before starting of large scale production of its proposed products which
is only possible through test marketing.
4. Pricing:
Pricing is one of major functions of marketing which need to be handled carefully because
customers are much sensitive to this aspect of marketing. Following are the stakeholders list that
is directly affected from the pricing function of marketing.

Consumers

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Suppliers

Governments

Competitors

Distributors

The prices that are charged from the customers against the offered products or services should
fair enough. When an organization decides to control the pricing of its product or services, it
formulates & applies forward integration strategy. Moreover, when government decides to have
control over prices of products & services of its country, it imposes constraints on certain price
discriminations, price fixing, unit price, price advertising, minimum price & price controls.
Those organizations that compete with one another should avoid discounts. There should be no
credit terms & condition for selling of products or services to the customers by the organizations.
The costs, markups & prices should not be discussed among people at meeting of trade
associations. No list is struggled to prepare that reflect new prices of products in the meetings
with competitors. There should not be restriction on production to keep prices high along with
the avoidance from rotation of low bids on contracts. The strategists should focus both long run
as well as short run aspects of price because any change in it can easily be copied by the
competitors. All the price cuts of competitors are aggressively matched by dominant organization
mostly.
Another aspect of pricing of product & services is related with the exchange rate of dollar. When
there is an increase in the price of dollar then there is a choice in front of the multinational
organizations of the USA. These can either enhance the prices often their products & services in
the foreign countries or bear the risk of losing market share & sales. These organizations
alternatively keeps prices of their products & services steady while earns less portion of profit
but ultimately enhances the dollars income from their exports.

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Distribution:
5. Distribution:
Functions of marketing include distribution function in which goods are moved from the
point of their production to the final customers. Distribution function is much broader
enough & includes the following sub-functions.

Warehousing

Distribution channels

Distribution coverage

Retail site location

Sales territories

Inventory levels & location

Transportation carriers

Wholesaling & retailing etc

In recent years, the manufacturing organizations do not sold their goods directly to the
customers. There are a number of marketing entities that performs the function of intermediaries
by developing a connection bridge that connects manufacturers with the customers. There
intermediaries may be in the form of retailers, wholesalers, middlemen, agents, brokers,
facilitators, simple distributors or vendors etc. Whatever the form they have, their main role is to
transfer the goods manufactured from the manufacturer & deliver it to the customer at a
proposed price. Organizations do not have much resources, expertise or connections with general
people that they utilize to spend on the distribution of their goods. For this purpose they need
intermediaries that can serve this function effectively.
When the organization decides to formulate & implement market development or forward
integration strategy, its distribution becomes quite important. Effective distribution of the
products is considered as one of major challenging & complex decision that organization needs
to consider. There are flourishing intermediaries in the economy because the producers lack the
required financial & other resources to perform direct distribution to the final customers. Those
producers who have the required resources & expertise to directly distribute the products to
customers gain the competitive advantage by generating more profits which will be helpful in the
improvement & expansion of their operations. For example it is not possible for General Motors
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to purchase its independent dealers which are more than eighteen thousand in number. The
potential organizations do working to point out different alternative ways that can become
convenient for them to reach their final market. There are number of approaches for distribution
of products to the final consumers. The simple way is through direct selling but with the
involvement of one or more wholesalers & retailers, the process can become more complex &
systematic. The weaknesses & strengths of all the alternative channels should be accessed
through the economic, adaptive & control criteria. The costs and benefits of different
wholesaling & retailing options should be considered by the organizations. The channel members
of the distribution should also be positively controlled by the organization and proper adaptation
to future change can be made. When a marketing channel is finalized by the organization, then it
should work in collaboration with that channel for longer period of time.
6. Marketing Research:
The systematic collection, recording & analysis of the information about the problems pertaining
to marketing of products or services is referred to as marketing research. The important strengths
& weaknesses of the organization are highlighted in the marketing research. There are many
tools, instrument, techniques procedure & concepts that marketing researcher employed in order
to gather information. All the major functions of organization are supported by the activities of
marketing research. Those organizations that have potential skill of Marketing Research can
point out the strengths & weaknesses of the organization which are further improved through
formulation & implementation of efficient strategies.

Marketing Research
7. Opportunity Analysis:
The last function of marketing is the opportunity analysis in which certain market decisions are
analyzed in order to assess the costs, risks & benefits associated with those decisions.
Cost/benefit analysis is mostly used in the function of opportunity analysis. There are three steps
in performing cost/analysis which are as follow.

Calculation of total costs linked with decision

Estimation of total benefits emerged from the decision

Comparison of total costs is made with the total benefits

When the expected benefits are more than the expected costs associated with the decision, then
the opportunity available is more attractive. In certain cases the variables that are involved in the
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cost/benefit analysis cannot be measured. It is better to perform reasonable estimates so that the
whole process is facilitated. Risk is another key factor that should be considered in the analysis.
It is also beneficial for organization to conduct cost/benefit analysis when it is trying to find
alternative ways to become socially responsible.
THE MARKETING ENVIRONMENT AND ITS CLASSIFICATION
The thorough analysis of the marketing environment is essential for the organization in order to
make identification of the opportunities & threats to the organization. The ability of the
management to prepare & maintain profitable relationships with the target customers is affected
by the factors & forces that are present in the marketing environment of the organization. The
forces & factors of the Marketing Environment vary on the basis of certain industries &
organizations.
Classifications of Marketing Environment
Marketing Environment can be classified into two categories, which are as below:

Micro Environmental Components

Macro Environmental Components

Micro environmental components are related specifically to the organization, whereas macro
environmental components are broader in nature & affect the entire industry of the region or
country. Moreover the macro environmental factors cannot be eliminated through the efforts of
the marketing department. So the marketing manager should be proactive in accessing &
anticipating the changes of the marketing environment.
The marketing managers in the organization should be vigilant in facing the threats and
opportunities of the marketing environment while collecting & processing the data from
the marketing environment. The effective organizations do not only focus their customers, but
also the forces of the marketing environment. The marketing department & other management
area of the organization consistently consider the dynamic aspect of the marketing environment
so that they can better adapt to the emerging change, develop certain long run strategies,
maintain the ability to satisfy the current & future needs of the customers and develop the ability
to effectively face the intense global competition.
The changing trends of the marketing environment are proactively analyzed by the management
of successful organization so that the appropriate marketing mix can be developed for the
changing needs & demands. The changes occurring in the marketing environment are not easy to
predict because they are emerging quickly. These changes are better monitor & pointed out by
using the marketing intelligence system & marketing research by the organization. The new
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marketing opportunities & challenges are effectively handled by the marketing management by
developing & implementing new strategies after performing systematic environmental scanning.
Micro Environment and its Components:
There are five components associated with the micro environment of an organization. These
components are as follows.
1. The Organization Itself
2. Suppliers
3. Marketing Intermediaries
4. Competitors
5. Public

Micro Environment
Lets discuss each of the above components below.
1. The Organization Itself:
The organization itself is the first micro environmental component which focuses on the role of
the organization that it performs ion the micro environment. The mission statement & long term
goals or objectives of the organization are firstly developed by the top management of the
organization. After which the tactical strategies, short term goals & policies are prepared by the
middle level management, which are followed by the functional goals. The top management of
the organization has confined the area in which marketing manager takes his decisions. The
marketing manager works in collaboration with other departments of the Business Organization
because most of the activities of the entire organization are interrelated with each other. Also the
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broader organizational goals are common for all the departments of the organization like
purchasing department, R&D department, production department etc. The main focus of all the
departments must be the customer oriented behavior that ensures the delivery of superior value to
customers and this is made possible through the efforts of the marketing department.
2. Suppliers:
Suppliers are those organizations that deliver the required resources to all the competing
organizations for the production of goods or services. The delivery of superior value to the
customers is made possible through the useful linkage of the suppliers. The availability of the
supplies is permanently watched by the organization to ensure the smooth working of its
operations. The prices of the key inputs are also analyzed by the management of the organization
because it directly affects the costs of the organization which is resultantly influence the price of
its final products. So any increase in the price of inputs is carefully analyzed.
3. Marketing Intermediaries:
The organizations that assist in promoting, selling & distribution of products to final customers
of specific organization are called marketing intermediaries. Marketing intermediaries include
the following.

Resellers

Resellers:

The organizations act as distribution channels in searching of customers for a particular

organization and also helping in making sales for it. They may take the form of the wholesaler or
retailer that performs the function of purchasing & reselling of products from certain
manufacturing organizations. The costs of the organization are reduced with the utilization of the
services of resellers, but it can cause problems in the smooth working of the entire system.

Physical Distribution Firms:

These are the firms that are helpful in distribution of goods from the manufacturing area to the
selling points. The warehouse is a common example of such physical distribution firms.

Marketing Service Agencies:

The targeting & promotion of the products of an organization is done effectively with the help of
marketing service agencies.
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Financial Intermediaries:

The finance is provided with the help of financial intermediaries like banks etc, which insure the
risks of the organization.

Customers:

The customer market must be closely studied by the organization because there are more than
one customer markets with their own unique features.

Consumer Market

Consumer Market:

It consists of household customers that purchase the goods or services of the organization for
final consumption.

Business Market:

These included other organizations that buy the goods or services for the utilization in their
production processes.

Reseller Market:

It consists of firms that buy the goods in order to resell them for profit.

Government Market:

It consists of agencies that purchase goods or services for the production & distribution of public
services.

International Market:

It includes buyer belonging to foreign countries.

4. Competitors:
Every organization faces the competition with certain competitors. So the competing
organization should develop such effective strategies that can influentially position its products
in the competing market. There is no single strategy which can be effective for all organizations.

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Public
5. Public:
Public include a group of individuals that can influence the ability of the organization to
accomplish it objectives. So the organization should develop an effective marketing plan for both
the public as well as customers. Publics can take the following forms.
Financial Public: It can affect the ability of organization to obtain funds.
Media Public: It carries an editorial opinion, features & news.
Government Public: It considers the developmental aspect.
Citizen Public: It includes consumer organizations that can question the decisions of the
organization.
Local Public: It includes community organizations & neighborhood residents.
General Public: It simply includes the general public.
Internal Public: It includes employees, managers and board of directors of an organization.
Macro Environment and Its Types
The organization along with its other forces carries its functions in the larger area of the macro
environment. There are certain factors and forces of macro environment that are responsible for
the provision of opportunities & threats to the organization. Six types of forces are present in the
macro environment of the organization, which are as below.

Macro Environment

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1. Demographic
2. Economic
3. Natural
4. Technological
5. Political
6. Cultural
Now, each one is discussed below in detail.
1. Demographic:
The demographic force of macro environment is related to the study of human population with
respect to their location, size, density, race, sex, occupation, age & other factors. The marketer of
the organization has a keen interest in this actor of macro environment because it relates to the
people, which are the foundation of any market. The trends of demographic force are changing at
a constant rate. Below are few examples of such change.
01- The rate of increase in population is growing in a speedy manner that will ultimately badly
affect the supply of food & servicing ability for the population. The poor countries are the
victims that would suffer most. The enhancing market of china is getting attention of marketers
around the world.
02- The changing age structure is another important trend of the population. The reasons for this
increase in the age structure of the population are the increasing life expectancy and the downfall
in the birth rate. After World War 2, the baby boomers have contributed much in the increasing
age of the population. The age group of people is divided into many sub-divisions by the
organization. The most important one is a middle age group which would become senior citizens
in the future. Other groups include the generation X & the echo boomers.
The overall population of the world is educating well with the new needs & demands for the
products & services. The white collar workers are increasing in number and certain products like
books & education services are more demanding by educating group. Also computer related
technical skills would become essential in the coming years. The racial & ethnic diversity in the
population is one of the big trends that also enhances. The organizations should concentrate this
diversity element of the population & utilize it in their best interests. The disabled people also
form the potential future market.

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Economic
2. Economic:
The economic factor of the macro environment includes those that influence the purchasing
power of customers along with their spending patterns. Certain important trends of the economic
environment in the USA are as follows.
01- The personal consumption becomes the reason for the recession in the country that affects
the personal & corporate actions. Now customers become more careful shoppers.
02- The customers are aware of the rise in the real income & so they adopt the strategy of value
marketing.
03- The distribution of income in the country is in skewed shape which means unequal
distribution. The majority of the customers is showing the spending patterns in the e basic areas
of food, transportation & housing. Moreover the unfair distribution of income is resulted in the
formation of two kinds of classes of the people which are affluent and less affluent.
The marketers of the organizations should develop & implement such strategies that benefit them
from the changing economic trends. So they should carefully monitor the altering trends of the
economic system in order to prevent their organizations from the side effects of the changing
trends.
3. Natural:
The natural force of the macro environment consists of the natural resources that are required by
the organizations as inputs or that is influenced by the marketing activities. The trends of the
natural environment are becoming quite important since few years like
01- The industrial expansion has seriously affected the raw materials by creating their shortage.
Moreover, certain nonrenewable inputs are depleting due to their improper usage like oil, coal
etc.
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02- The environment of the world is badly affected by the improper production procedures of the
organization. The organizations are adopting the environmental friendly trend by which they
have produced safe, biodegradable or recyclable products.
03- Now, the government is also affecting the operations of the organizations in the area of
natural environment damage. Certain policies & regulations are implemented throughout the
world and the marketers should focus these changing trends that are related to the energy &
material problems.
The organizations are promoting the green environment by developing & implementing the
environment friendly strategies.

4. Technological:
The technological aspect of the macro environment includes the actors that are responsible for
the creation of new technologies, new products & new market opportunities. For this purpose
following are the important trends of the technological area.
01- The technology is changing at a speedy rate and the new products are emerging that replace
the previous ones.
02- A large number of opportunities are emerging in the expanding fields like, space shuttle,
health care, robotics & biogenetic industries etc.
03- The technical & commercial challenges emerged for the organization to develop affordable
products. Also mew regulations are implementing from the government about the product safety
& individual privacy that must also be considered by the organizations.
5. Political:
Those actors and forces that relate to the government agencies, laws & other pressure groups that
affect the organizations or individual persons in a specific society. For this purpose following are
some of important trends.
01- Public policy is implemented by the government that guides the organizations to produce
products that are beneficial for the society.
02- Regulations are implemented that protect one organization from another.
03- Customers are protected from unfair business practices by certain laws of the government.
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04- There are also certain policies of the government that protect the interests of the society from
the unfair business behavior of the organizations.

6. Cultural:
Those actors & forces that affect the basic values, preferences, perceptions & behaviors of the
society are included in the cultural factor of the macro environment. There are certain cultural
characteristics that influence the decision of the marketers. Some of the characteristics are as
follows.
01- There are certain basic beliefs & perceptions that remain constant throughout several
generations of the society.
02- There are certain secondary beliefs that can be altered through the effective strategies
developed by the marketing department of the organization. These secondary concepts should be
identified by the marketer in order to get advantage through these concepts.
03- The personal views of the people are also helpful for getting an advantage for the
organization by the marketers. Also the views of people about others are helpful for making
effective strategies of the organization.
04- Moreover, the views of people about the organizations, society, nature & universe are
important considerable features of the cultural aspects that should be concentrated by the
marketers for development of their strategies.
MARKET SEGMENTATION AND MARKET SEGMENTATION STRATEGIES
There are many well documented benefits for the successful implementation of market
segmentation strategies. In order to understand the strengths of the Market Segmentation
Strategies in business it is very important to fully grab the meaning of Market Segmentation
itself. Lets just have an eye ball of Segmenting the Broad Market.
Creating subsets of a broader target market that have the similar or common needs and desires is
the segmentation. Marketer may choose to serve a single segment or two or three segments at the
same time based upon the common needs, interests and priorities of the end consumers, business
customers for B2B selling, or off shore countries. Proper Market Segmentation enables the
Companies to market the products and design and implement the Market Segmentation
Strategies to target the subsets of the market.
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Designing and Executing the Marketing plan requires the precise and clear Market
Segmentation Strategies. The Segmentation Strategies define and identify the targeted
customers and helps the marketer to decide the positioning strategies depending upon the product
and product lines offered by the company. In order to come up with an executable marketing and
advertising plan, the company must design the business activities to accomplish the marketing
goal and objectives.
Types of Market Segmentation Strategies:

Geographic Segmentation Strategy

Demographic Segmentation Strategy

Behavioral Segmentation Strategy

Psychographic Segmentation Strategy

Occasional Segmentation Strategy

Cultural Segmentation Strategy

Geographic Segmentation Strategy:

This Market Segmentation Strategy answers the WHERE question for the marketers and the
company. Where to serve, to market or to sell the companys product?
Geographic Segmentation is the Star of all the Market Segmentation Strategies means dividing
the market according to the geographical regions for example continents, countries and regions.
This provides the Companies a clear snapshot of the end consumer based upon their location and
specific requirements of that area. This Strategy enables firms to consider the similarities and
dissimilarities between the customers residing at a geographical location, Cultural disparities,
climate and weather conditions between geographical locations and language barriers; ultimately
helps the marketer to efficiently market the products.
Demographic Segmentation Strategy:
This Market Segmentation Strategy answers the WHO question for the marketers and the
organizations. Whom to serve, to market or to sell the companys product?
Dividing the market based on the demographic variables such as age, sex, generation, income,
social class, race, family lifecycle, occupation,religion, and level of education, Qualifications and
the actual and perceived benefits; the brand or product or service; may deliver.
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Understanding and closely identifying the needs, wants, trends,usage rate and frequency of the
end consumers is essential for the successful implementation of Market Segmentation
Strategies. Measuring end consumer preferences for brands, products and finished goods by
marketers are commonly used to execute the Marketing Plan.

Types of Market Segmentation Strategies

Behavioral Segmentation Strategy:
The end users today are mostly style oriented and prefer to spend for the uniqueness of the
product or brand; something that tells or depicts their unique stature, style and personality.
Many marketers place the variables associated with behavior as the most effective base for
market segmentation. In this type of strategy the users are divided into segments according to
their usage behavior i.e. when they use the product, what is the frequency of the use of product
and what quantity of the product is consumed?
Psychographic Segmentation Strategy
Opinions, interests and activities mostly referred to as lifestyle are studied to develop
Psychographic based market segments. In this type of segmentation the marketers determine
users based on their leisure activities and the factors to which users are most responsive and get
influenced by. Psychographic segmentation is usually done for high end & luxurious products.
Mass media usually helps this segmentation strategy attain desired results by inculcating a better
targeted lifestyle in users mind.
The most interesting tactics out of all the Market Segmentation Strategies that marketers now a
days use is segmenting the market psychographically. Playing in the market based upon
consumers social class, trends, lifestyles, personality traits, living patterns and buying interest
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helps the companies in brand building and collecting a significant market share. Assuming that
the brands and products will define the personal characteristics of the buyer is the key towards
the successful implementation of the Marketing Plan.
Occasional Segmentation Strategy:
The quite simple and interesting market segmentation strategy that now multinational companies
are opting for is the Occasional Segmentation Strategy. Identifying and analyzing the occasions
on which the brand, product or service may be used; independent of the consumers, user or
customer is segmenting the market according to the Events. Take into consideration a soft drink
company; the product is being marketed based upon the Event of Thirst without considering the
differences of the income, buying power and personal stature of the product consumer.
Using Customer Segmentation and Event Segmentation in conjunction with each other create a
model of Occasional customer segmentation. This strategy enlightens the marketers about impact
on customers behavior and needs under various occasions of time & usage. Uniqueness of this
segmentation model is manifested in the attribution of more than one segment depending on
customers circumstances.
Cultural Segmentation Strategy:
The name indicates this strategy relies on the cultural dimensions of the society. Dividing the
market according to the population proportions according to the region, territory or a state is the
Cultural Segmentation. The consumer buying pattern and usage rate largely depends upon the
cultural dimensions.
CONSUMER MARKET SEGMENTATION AND ITS TYPES
The consumer market segmentation is not confined to a single method. The market structure is
best viewed by the marketer by applying different segmentation variables both in the alone form
as well as in the combined form.
Consumer Market Segmentation Variables

Geographic Segmentation

Demographic Segmentation

Psychographic Segmentation

Behavioral Segmentation

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1. Geographic Segmentation:
The division of the entire market into different geographical units is referred to as geographic
segmentation. The units are categorized as regions, states, nations, cities, countries or
neighborhood. Mostly the organizations do business in a few of the above geographic segments,
but there are some organizations that operate in the entire geographic market. But the variation in
the needs & wants should be focused by these organizations. Effective Business Organizations
create a match between the needs of the different geographical areas and its products,
promotions, advertising & sales effort while operating in different geographical units.
2. Demographic Segmentation:
In this kind of consumer market segmentation, the entire market is divided into different
groups on the basis of the following variables.

Age

Gender

Family Size

Family life cycle

Income

Occupation

Education

Religion

Race

Nationality

Organizations mostly used demographic segmentation while segments their consumer market.
The main reason for this extensive usage is that the needs, wants & usage of customers vary
relatively in accordance with the demographic variables. Moreover, it is much easier to measure
the demographic variables than any other segmentation variables. The importance of
demographic variables is so much that even in case of another type of consumer market
segmentation, the demographic aspects are analyzed first to ascertain the target market size along
with the effective way to reach there. It is much easier to measure the demographic variables as
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compared to other kinds of variables. The demographic segmentation is further divided into the
following three categories.

Demographic Segmentation

Age & Life Cycle Stage:

Under this heading of demographic segmentation, different marketing approaches or different

products are offered for different age & life cycle groups. When this kind of segmentation is
employed, the security against stereotypes must be ensured by the marketer. There are certain
age & life cycle groups that behave in a much similar manner, but in the overall scenario the age
element is not regarded as standard one because the needs, buying power, work or family status,
health & life cycle of a person are poorly predicted by it. With the changing age, the wants &
needs of the customer also change. Still, there are many organizations that are adopting this kind
of demographic segmentation.

Gender Segmentation:

In this kind of Consumer Market Segmentation, the market is divided on the basis of the sex.
There are certain products that facilities gender segmentation like cosmetics, toiletries, clothing
& magazines etc. Moreover more and more area of the business is promoting gender
segmentation including deodorants, automobiles & financial services. The marketing &
advertisement for women is enhanced. More & more specialized websites are spreading with this
category.

Income Segmentation:

In income segmentation, the market is divided into different groups on the basis of income. This
kind of segmentation is used by the organizations dealing in clothing, financial services,
cosmetics, automobiles, and boats & traveling. By using this kind of segmentation, it is not
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compulsory for the marketer of the organization to target the affluent customers. The customers
related to other income groups are also regarded as viable & profitable ones.
3. Psychographics Segmentation:
In psychographic segmentation, the entire market is divided into various groups on the basis of
lifestyle, social class or personal characteristics. The customers who fall in the same
demographic category may differ on the psychographic grounds. For example the variable
lifestyle greatly affects the interest of the customers in the purchasing or certain products and the
purchased products resultantly express their lifestyles. Psychographic segmentation is promoting
among many organizations as an effective type of consumer market segmentation. Moreover, the
market is also usefully segmented on the basis of personality variable. The personalities of the
products are designed in accordance with the personalities of the customers.

Behavioral Segmentation
4. Behavioral Segmentation:
In this kind of consumer market segmentation, the market is grouped on the basis of knowledge
of the customers, their attitudes & responses to a product. It is usually believed that the variables
of the behavior aspect are regarded as the most effective starting point for developing market
segments. In occasion segmentation, the market is divided on the basis of occasion when the
customers purchase the product and use it. In benefit segmentation, the market is grouped on the
basis of the benefits that are searched by the customers in his purchase of a particular kind of
product. Many organizations are using benefit segmentation by identifying the appealing benefits
& their characteristics. Use status is another kind of market segmentation in which market is
categorized in groups of ex-users, non-users, first time users, potential users etc. Moreover the
market can also be divided on the basis of usage rates like, light, medium & heavy. The loyalty
status is another way of segmenting the market the loyalty factor of the customer is the basic
point of grouping them into completely loyal group, partially loyal group & non-loyal one.
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Targeting of multiple segments is becoming popular day by day that not only increases the basic
knowledge of the customers, but also ensures the competitive advantage for the organization.
Segmenting Industrial Market (10 Bases)

Practically, following bases (customer characteristics and/ or behavioural bases) are used for
segmenting industrial markets:
1. Geographic Bases:

Company needs to perform tasks differently to treat customers residing in different geographical
regions.
On the basis of geographical bases, industrial buyers can be segmented into following
segments:
i. Distance:
Local market, regional, domestic (national) market, and International market.
ii. Location of Industrial Unit:
Rural and Urban Customers.
iii. Area and Climate:
Area specific segmentation considers place-specific bases such as hilly, desert, valley, plains,
etc., while climate-based classification includes segmenting market on the basis of level and
intensity of humidity, heat, cold, rains, etc. Different buyers located at different places need to be
treated differently. Separate marketing programme must be prepared for each of these groups.
2. Types of Industry:

Companys products are used in different industries. Relevant industries should be considered for
segmenting market and, as per suitability, one or more industries can be selected as the target
market to be served.
Possible segments include:
i. Auto Industry

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ii. IT Industry
iii. Chemical industry
iv. FMCG (Fast Moving Consumer Goods) Industry
v. Textile industry
vi. Iron and steel Industry
vii. Cement Industry
viii. Engineering Industry
ix. Agro processing industry
x. Service Industry, etc.
As per companys products, it selects one or more relevant industry as target customers and
formulates appropriate marketing mix for each of the segments.
3. Type of Business Operation:

Industrial units perform different activities. Each of them differs in term of their nature of
activities/operations and requirements.
On that base, we can classify industrial customers into several segments, such as:
i. Manufacturing Units
ii. Assembling Units
iii. Processing Units
iv. Distributing units
v. Retailing Business
vi. Consultancies and Services Units, etc.
Some products are commonly used for different business operations. Companies dealing with
these products can supply or sell to different customers. Different marketing strategies are
necessary as these customers elicit different response patterns.
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4. Consumption Rate/ Size:

On the basis of order size and/or annual consumption, industrial buyers can be segmented in
certain distinct groups. A company can select suitable one or more customer groups as target
market.
Sized-based segmentation includes:
i. Heavy Users
ii. Medium Users
iii. Light Users
Particularly, price and promotion strategies must be designed differently to meet expectations of
varied groups.
5. Ownership Factor:

Ownership exhibits different response. A firm needs to treat them differently. A company can
select one or more customers to serve.
Ownership-based segmentation leads to following segments:
i. Sole Proprietary Firms and Partnership Firms
ii. Private Companies
iii. Pubic companies and Public Sector Units (PSUs)
iv. Government as a Customer
v. Corporations
vi. Defence Department
vii. Cooperative Societies
viii. Community Organisations
ix. Religious and Missionary Organisations.
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6. Buying Methods:

Industrial buyers purchase products on different ways. Every method requires different treatment
in terms of formality, timing of ordering and executing, profit margin, and overall procedures to
be followed.
Based on methods, industrial markets can be segmented on following bases:
i. Tender/sealed-bid Buying Units
ii. Service Contract Customers
iii. Leasing Customers
iv. Buying through Approved Agencies
v. Direct Purchasing Units.

7. Ordering Time or Frequency:

Taking ordering time and buying frequency as the bases, industrial markets can be
classified into several segments, such as:
i. Annual Customers:
They put a large order (once in a year) and buy all quality at a time.
ii. Regular Customers:
They buy regularly only from the particular firm. They are loyal customers.
iii. Occasional Customers:
They buy companys products occasionally. They buy companys products just to try; they buy
for change; or they buy when required products are not available from other sources.
iv. Frequent and Infrequent Customers:
Frequent customers buy more frequently. They put repeated orders and are reasonably
predictable. Infrequent customers are irregular in their buying pattern. They may or may not buy
and are difficult to be predicted.
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8. Payment Modes and Time:

Industrial customers follow different modes of payment. They also take short or long time to pay
their bills.
Main segments are:
i. Cash Purchasing Buyers
ii. Credit Purchasing Buyers
iii. Partial Credit Purchasing Buyers
iv. Fully Trusted v/s Partially Trusted Buyers
v. Full (at a time) Paying Customers
vi. Gradual or Installment Paying Customers
vii. Short-term and Long-term Credit Buyers, etc.
Suitable marketing programme should be prepared to deal with these groups of buyers.
Particularly, pricing policies are more relevant for this segmentation.
9. Legal Aspects:

Legal or authenticity aspects can be relevant base to some companies for segmenting total
market. The firm is directed to sell its products only to some agencies approved by the
government. But, due to some reasons, it has to transact (willingly or unwillingly) with illegal
customers, who have been restricted by the Law to buy, hold, or use some products. Company
can earn more profits by dealing with unauthorized customers.
In case of companies manufacturing some defence tools and devices (arms and ammunitions), or
companies supplying products for national schemes for the BPL (Below Poverty Line) families
or any other reserved categories, they may tempted to sell extra product to unauthorized
customers. Sometimes, company is restricted to produce as per the fixed quota.
Marketing strategies for legal and illegal customers seems quite different:
i. Legal Customers:
These customers are free to use any quantity without any restriction.

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ii. Restricted (Partially Permitted) Customers:

There are permitted up to certain limit. They cannot buy more quantity beyond the specified
limit.
iii. Illegal Customers:
The Law puts ban on these customers. They cannot legally buy, hold, use, or resell some
products.
10. Other Bases:

Apart from these bases, some minor behavioural bases are also used for segmenting industrial
markets.
Some of them include:
i. Occasions
ii. User status
iii. Loyalty Pattern,
iv. Benefits Expected
v. Attitudes, etc.
These are main bases for segmenting industrial markets. There can be more minor bases for
segmenting industrial markets. Besides, almost all bases used to segment consumer markets are
equally applicable to segment industrial markets. It should be clarified that theses bases are too
general and interrelated. This is a loose classification. One or more bases can be taken at a time
to segment industrial products. All bases may not be relevant to every company; it should
concentrate only on relevant bases.
DISCUSS MARKET SEGMENTATION AND MARKET TAGETING IN DETAIL
The market segmentation can be defined as the division of market into the different categories on
the basis of various characteristics and features. All the customers are not similar, infect they
vary in their relative buying attitudes, wants, locations and resources, and its almost impossible
to cover all of them in best possible manners. The business organizations divide the whole
market into different groups and then target one or two (or even more) groups with the different
sets of marketing strategies. This process of dividing the market into different sub categories,
and then implementing strategies for all of them is known as market segmentation. In
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simple word in market segmentation, we divide the market into different sub parts and then make
strategies for all of them. Segmentation and targeting allow organizations to cover the wants and
demand of relative groups in great manners.
Other than the reason of customer differences, organizations also differ in their strengths. This
means that an organization has certain strengths and weaknesses. So it is quite beneficial for that
organization to utilize its strengths and avoid its weak sides in the operations of the business
activities. For example, it may have limited resources that may not be used to fulfill the demands
of the whole mass markets. Or it may have certain technology that can be used to manufacture
products or services for a certain group of the market effectively. This would in turn make them
successful in the long run as these organizations better fulfill the wants of their customers and get
the competitive advantage over there.
Types of Market Targeting:
Market targeting is divided into the following three parts.
01- Market segmentation
02- Market targeting
03- Market Positioning
Now each of these is discussed one by one.
1. Market Segmentation:
In this first step the whole market is divided into different groups of customers. Each group
contains the similar wants, characteristics and behaviors of customers, and thus requires a
different set of Marketing Mix and Marketing Strategies. The business organizations use
different sources to point out different segments of the market, and prepare their relatives profiles
to ascertain relative opportunities.
2. Market Targeting:
In this step the segments are evaluated on certain criteria in order to check their relative
attractiveness and feasibility against the organizations strengths and weaknesses. After this
analysis, the final one or two segments are selected to be targeted by the organization.
3. Market Positioning:
The third step of targeting markets in which the marketing strategies and marketing mix are
prepared to create a specific position of the product in the minds of the customers.
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Types of Market Segmentation:

Due to the large number and the difference in the customers, there is a strong need of
segmentation in the market. For this purpose business organizations segment the market into
different groups and then target either all or one or two groups with a different set of marketing
programs. Following are the four main levels of market segmentation.

Market Segmentation

Mass Marketing

Segment Marketing

Niche Marketing

Micro Marketing

Each of these is now discussed in detail.

1. Mass marketing:
In this category, the whole market is targeted by the business organization instead of targeting
certain segment. This is the old Concepts of Marketing in which similar product or service is
produced in abundance and is offered to the whole market without any differentiated marketing
programs. The main reason for this mass marketing effort is that it can cover the large marketing
potential at the large scale. Products are manufactured in bulk and distributed to the whole
market large proportions to all the customers. In this way the cost is reduced and the profit
margin is enhanced by the businesses. An example of such mass marketing is the offering of only
single product by the Coca Cola Company to the whole market of the world a few years back.
In the modern age, it is quite difficult for any business organization to adopt this mass marketing
strategy. As there are a lot of alternative options for customers and the advertising media has
36

created different demands and attitudes in customers, so it is not feasible for an organization to
adopt this marketing strategy.
2. Segment Marketing:
In segment marketing, the whole market is divided into different groups of customers having
similar wants, needs and behaviors. In this way the company selects one or two groups and offers
its products and services for only those targeted segments in order to effectively satisfy the needs
and requirement of customers. This segmentation helps the company greatly as it can effectively
produce the different packages of its products or services for the varying requirements of the
targeted customers. The distribution of its products is done effectively and at a proper time along
with the effective advertising campaign. In this way the efforts of business are exerted towards
selected customers and this would increase the efficiency of its operations. Example include the
Lever Brothers Corporation prepares a set of its daily usage products for more than one target
segments.
If fewer competitors are focusing these targeted segments, then the business faces low
competition and this would in turn increase its market share and profitability. Moreover, the
company can also fine tune its existing products or services according to the changing needs and
wants of the targeted customers in an efficient and effective way.
3. Niche Marketing:
Generally, business organizations target larger groups or segments of the market which are
composed of distinct customers. If we take the example of customers of cars, then there are
luxury car segment, utility car segment, performance car segment, etc. In niche marketing in the
business organization divides these larger segments into sub segment and targets any of feasible
smaller sub segments.

Most organizations focus on larger segments of the market and only one or few take an interest
in smaller groups of customers. These smaller segments or groups are called niches which have
special needs and requirement that are completely understood and fulfilled by specific
organization in an effective manner.
4. Micro Marketing:
Niche marketing and mass marketing are two extreme poles of marketing that cover smaller
groups and overall market respectively. Micro Marketing is more detailed market segmentation
37

in which the individual customers are focused separately and also according to location. Certain
products or services are prepared and offered keeping in view the individual taste differences. In
this way loyal customers are developed by the organizations as they are treated individually.
Micro marketing is further divided into two types which are
01 Local marketing in which local customers are targeted.
02 Individual marketing in which individual customers are focused separately.
TYPES OF POSITIONING STRATEGIES THAT COMPANIES EMPLOYS
The product positioning can be defined as the position or place a product resides in the
consumers mind with respect to the competing product. It is a process used by marketers to
determine the best possible way to promote the product attributes to the target market according
to the customer needs and wants, competitive structures and advertising media. The survival of
the product in the market requires a sustainable competitive advantage and a unique selling
proposition. Creating an identification of the product in the market is simply called product
positioning.
Product Positioning Strategies
The tried and tested Product Positioning Strategies are listed below. The manufactures design
and choose the Product Positioning Strategies according to the manufactured products and the
unique features of that product. Choosing the right strategy for the product is crucial for the
brand Success.
1. Competition Strategies
These Product Positioning Strategies requires a unique or a superior product attribute in regard to
a competing product. Positioning a Product against the Competitors product requires a claim of
superiority. A very good example to understand this concept is of Avis Rental Cars. The
superiority claim was, We are number two. We try harder
2. Reducing Competition Strategies
This concept of Product Positioning Strategies can help to differentiate a product in the dominant
market of an already well established brand.
3. Product Benefits Strategies
In these Product Positioning Strategies the company focuses on defining and communicating the
product benefit, unique features that the product offers to the targeted customers. In this strategy
the companies emphasizes on the various product benefits. The product features include
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durability, availability, economy or reliability can be illustrated in this type of product

positioning.
4. Product Attributes Strategies
Positioning a product based upon a specific attribute can also be compelling to the targeted
audience.
5. Product Categories
Positioning your product by differentiating it from other product based upon a category is a very
effective way to resonate the key message in the targeted audience. A product can be positioned
along two or more characteristics in the same time.
6. Usage Occasions Approach
This concept is used when marketers positioned there product based upon the usage situation of
the product by the tarred audience. These types of Product Positioning Strategies is done
intentionally to expand the market for a particular brand. Introducing new and different uses of
the same product will automatically expand the horizons for the product, increase the market
share and will lead more sales.
7. Pricing Approach
Using the price and quality approach to position a product can ensure easy sales of a product. In
this concept the marketers play with human perception and the thinking of associating quality
with price. The customer often perceives that there is direct relation in quality and price i.e. the
higher the price the greater the quality of the product. The Marketers use this Price quality
approach to position the products and can easily charge higher margins of profits.
8. Users Approach
Another interesting form of product positioning strategies is to focus on the specific
characteristics of the users of the product. In this case the makers of a specific brand use a
personality or a model to effectively influencing the product image in the minds of the consumer.
This type of positioning resulted in an increased market share.

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Product Positioning Attributes

Product Positioning Attributes:
Companies can position the product based upon its attributes. Some of the product attributes are
mentioned bellow:

accessibility

durability

reliability

reparability

Good quality

The lowest price

Highest-end luxury

Exclusivity

Comfort

Design

Ease

Affordability

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Effective positioning defines how strongly the key message resonates with the customers and
what compelling positing it holds in the mind of the consumer. The stronger the Product
Positioning will ensure the effectiveness of the Integrated Marketing Communications (IMC)
strategy. The Brand Repute is strongly influenced by the effective product positioning consumers
mind. A well-positioned product has the tendency to accommodate the consumer needs, offers
differentiating features to its users in regard to its competitors.
What Target Market Thinks about a Product?
Product positioning answers the question what comes to mind when your target market thinks
about the manufactured product in comparison with the competing product?
The most crucial ingredient in the over overall Marketing plan in effective product Positioning.
Creating and influencing the market perception about the Brand is of utmost importance.
Concise, Meaningful and Clear Product Positioning help you to beat the competition, winning
the Loyal Customers and to generate Brand equity.
Objectives and Goals
The effective product positioning must achieve the following objectives.

Differentiate the Manufactured from the competing products

Identifying Customer Buying Preference

Define and articulate key product attributes

The objectives of Product Positioning must fulfill the following criteria:

Purposeful and should convey the Primary message

Meaningful and should attracts the targeted audience

Have capability to differentiate the strengths of the product against the

competitors

Should be enough significant for large targeted audience

Should resonate with the customers

Should be believable for the targeted audience

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Should be clearly substantiate your claims

NEW PRODUCT DEVELOPMENT

Product development, also called new product management, is a series of steps that includes the
conceptualization, design, development and marketing of newly created or newly rebranded
goods or services. The objective of product development is to cultivate, maintain and increase a
company's market share by satisfying a consumer demand. Not every product will appeal to
every customer or client base, so defining the target market for a product is a critical component
that must take place early in the product development process. Quantitative market research
should be conducted at all phases of the design process, including before the product or service is
conceived, while the product is being designed and after the product has been launched.

Stage 1: Idea Generation

New product ideas have to come from somewhere. But where do organisations get their ideas for
NPD? Sources include:

Market Research

Employees

Consultants

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Competitors

Customers

Distributors and Suppliers

Stage 2: Idea Screening

This process involves shifting through the ideas generated above and selecting ones which are
feasible and practical to develop. Pursing impractical ideas is expensive and a waste of resources.
Stage 3: Concept Development and Testing
The organisation may have come across what they believe to be a feasible idea, however, the
idea needs to be taken to the target audience. What do they think about the idea? Will it offer the
benefit that the organisation hopes it will? or have they overlooked certain issues? Will there be a
demand for the product? Note the idea taken to the target audience is not a working prototype at
this stage, it is just a concept.
Stage 4: Marketing Strategy and Development
How will the product/service idea be launched within the market? A proposed marketing strategy
will be written laying out the marketing mix strategy of the product, the segmentation, targeting
and positioning strategy and expected sales and profits.
Stage 5: Business Analysis
The company has a great idea, the marketing strategy seems feasible, but will the product be
financially worth while in the long run? The business analysis stage looks more deeply into the
Cashflow the product could generate, what the cost will be, likely market share and the expected
life of the product.
Stage 6: Product Development
At this stage the prototype is produced. The prototype will undergo a serious tests, and will be
presented to a selection of people made up of the the target market segment to see if changes
need to be made.
Stage 7: Test Marketing
Test marketing means testing the product within a specific geographic area.
The product will be launched within a particular region so the marketing mix
strategy can be monitored and if needed modified before national launch.
Test marketing is an experiment conducted in a field laboratory (the test market) comprising of
actual stores and real-life buying situations, without the buyers knowing they are participating in
an evaluation exercise. It simulates the eventual market-mix to ascertain consumer reaction.

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Depending on the quality and quantity of sales data required for the final decision, test marketing
may last from few weeks to several months.

Stage 8: Commercialisation
If test marketing is successful the product is ready for national launch. The following decisions
regarding the launch need to be made

timing of the launch

how the product will be launched

where the product will be launched

will there be a national roll out or will it be region by region?

Conclusion
The eight stages of product development may seem like a long process but they are designed to
save wasted time and resources. New product development ideas and prototypes are tested to
ensure that the new product will meet target market needs and wants. There is a test launch
during the test marketing stage as a full market launch is expensive. Finally the
commercialisation stage is carefully planned to maximise product success, a poor launch will
affect product sales and could even affect the reputation and image of the new product.
PACKAGING OF A PRODUCT
Role of Packaging?
Packaging performs five basic functions: 1) Protection 2) Containment 3) Information 4)
Utility of use 5) Promotion!
1) Protection:

One of the major functions of packaging is to provide for the ravages of time and environment
for the natural and manufactured products. The protection function can be divided into some
classes viz.
A. Natural deterioration:
It is caused by the interaction of products with water, gases and fumes, microbiologic organisms
like bacteria, yeasts and moulds, heat, cold, desiccation (dry environment in deserts and highaltitude areas), contaminants and insects and rodents.
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B. Physical protection:
The packaging is also used for physical protection, which include improving shock protection,
internal product protection and reducing shock damage caused from vibration, snagging, friction
and impact.
C. Safety:
A special kind of protective packaging is required for products that are deemed hazardous to
those who transport them or use them. These product include highly inflammable gas and liquid,
radioactive elements, toxic materials etc. The packaging should also be done so that children
could not easily use or dispose them.
D. Waste reduction:
Packaging also serves to reduce the amount of waste specially in case of food distribution
2) Containment:

This involves consolidation of unit loads for shipping. It starts with spots of adhesives on the
individual shippers that stick them together, straps of steel and plastic, entire shrouds of
shrinkable or stretchable plastic films and paper or corrugated wraps that surround an entire
pallet of product.
There are some special bulk boxes or pallet bins made from unusually strong corrugated board or
fabricated form plastics or metal, the method of which depends on the type and weight of
product and its protective needs. The cargo containers made of aluminum used to hold many
pallet loads of goods can be transferred to or from ships, trains and flatbed trucks by giant
cranes.
3) Information:

The packaging conveys necessary information to the consumers. The common information that
packaging provides include general features of the product, ingredients, net weight of the
contents, name and address of the manufacturers, maximum retail price (MRP).
Packaging of medicine and some food products is required to provide information on methods of
preparations, recipes and serving ideas, nutritional benefits, and date of manufacturing, date of
expiry, warning messages and cautionary information. Sometimes, the colour of the packaging
itself provides some information. For example, orange colour of the bottle of Mirinda or Fanta
conveys the information that these brands are of orange coloured soft drinks.
4) Utility of use:
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The convenience packaging has been devised for foods, household chemicals, drugs, adhesives,
paints, cosmetics, paper goods and a host of other products. This type of packaging includes
dispensing devices, prepackaged hot metals, disposable medical packaging.
5) Promotion:

Companies use attractive colours, logos, symbols and captions to promote the product that can
influence customer purchase decision.
Packaging requires several decisions:
i. Packaging concept:
This defines what the package should be or do for the particular product in terms of size, shape,
materials, colour, text, brand mark and tamperproof ability
ii. Engineering tests:
This will ensure that the package stands up under normal conditions
iii. Visual tests:
This is to ensure that the script is legible and colours are harmonious
iv. Dealer tests:
This is to ensure that the dealers find the packages attractive and easy to handle
v. Consumer tests:
This is to ensure favourable consumer response.

TYPES OF PACKAGING MATERIALS

Here are five of the most common types of packing materials that can accommodate a wide
variety of company needs.
1. Crates and Pallets
No matter what kind of product you need to move, crates and pallets are an important part of the
shipping and packaging process. They act as secondary wrapping and keep the actual goods safe
until they are delivered. Pallets keep packages raised off of the surface they are sitting on
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whether it is the ground or the bed of a delivery truck. Keeping products off the ground keeps the
packaging in good condition, and protects against dirt and moisture.
Almost all packaging companies from Toronto to Tennessee use crates and pallets when
preparing their clients products for shipment. Some companies, like Pack-All International, use
wooden materials that can easily be reused or recycled. Other shipping locations, like Nelson
Company, use reusable and recyclable plastic crates and pallets. Both materials have their
advantages and disadvantages, but either will keep your products safe and dry in their packaging.
2. Shrink Wrap
Shrink wrap is used as both/either primary and secondary packaging. You can shrink wrap your
actual product, like the shrink wrap around CD cases or loose notebook paper, or you can shrink
wrap an entire pallet of packages to hold the packagestogether and make them easier to move.
Shrink wrap does more than keep packages together. It also provides puncture and abrasion
protection as well as impact resistance. Plastic is also cheaper and more recyclable than
corrugated boxes (source: Involvo). Shrink wrap provides the same protection when it is used as
individual product packaging, plus it gives the contents visual appeal
3. Vacuum Packaging
Vacuum packaging is a great option for goods that need to be sealed, which makes it a preferred
option for perishable foods. Their compact design also makes them popular for dehydrated
goods, or food intended for camping and backpacking trips. Vacuum wrapping eliminates oxygen
from the packaged food, which keeps out bacteria, mold, and yeast. Food that comes in vacuum
packaging will also stay fresh in the freezer longer than food wrapped in other types of packages.
If your company ships any kind of perishable food, vacuum packaging will efficiently meet your
needs. Vacuum packaging is also used for medical materials, or anything that needs to be
hermetically sealed.
4. Preservation Packaging
Preservation packaging includes both shrink wrapping and vacuum packaging, as well as other
forms of packaging such as jar canning, aluminum cans, and other types of protective packages
like egg cartons and milk jugs. These packaging materials have one goalkeep the product safe,
protected, and fresh.
Another type of preservation packaging material that doesnt necessarily have to do with food is
bubble wrap. Bubble wrap is a lightweight, inexpensive way to cushion your products and
provide them with impact protection throughout the shipping process.
5. Shock Mount Packaging
For items that are extremely fragile, shock mount packaging is one of the safest options. The
packaging contains built-in shock absorption, protecting the contents from shock and vibration as
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well as humidity, dust, and moisture. This heavy-duty type of packaging is typically used for
fragile electronic equipment, or unstable chemical compounds.
There are many different ways to package and ship your products. Evaluate the needs of your
company and products, and decide which of these options will work best for you, and will keep
your products safe throughout the shipping process.
THE MARKETING MIX
The marketing mix definition is simple. It is about putting the right
product or a combination thereof in the place, at the right time, and at the
right price. The difficult part is doing this well, as you need to know every
aspect of your business plan.

A marketing expert named E. Jerome McCarthy created the Marketing 4Ps in the 1960s. This
classification has been used throughout the world. Business schools teach this concept in basic
marketing classes.
1 Marketing Mix Product
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A product is an item that is built or produced to satisfy the needs of a certain group of people.
The product can be intangible or tangible as it can be in the form of services or goods.
You must ensure to have the right type of product that is in demand for your market. So during
the product development phase, the marketer must do an extensive research on the life cycle of
the product that they are creating.
A product has a certain life cycle that includes the growth phase, the maturity phase, and the
sales decline phase. It is important for marketers to reinvent their products to stimulate more
demand once it reaches the sales decline phase.
Marketers must also create the right product mix. It may be wise to expand your current product
mix by diversifying and increasing the depth of your product line.
All in all, marketers must ask themselves the question what can I do to offer a better product to
this group of people than my competitors.
In developing the right product, you have to answer the following questions:

What does the client want from the service or product?

How will the customer use it?

Where will the client use it?

What features must the product have to meet the clients needs?

Are there any necessary features that you missed out?

Are you creating features that are not needed by the client?

Whats the name of the product?

Does it have a catchy name?

What are the sizes or colors available?

How is the product different from the products of your competitors?

What does the product look like?

#2 Marketing Mix Price

The price of the product is basically the amount that a customer pays for to enjoy it. Price is a
very important component of the marketing mix definition.
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It is also a very important component of a marketing plan as it determines your firms profit and
survival. Adjusting the price of the product has a big impact on the entire marketing strategy as
well as greatly affecting the sales and demand of the product.
This is inherently a touchy area though. If a company is new to the market and has not made a
name for themselves yet, it is unlikely that your target market will be willing to pay a high price.
Although they may be willing in the future to hand over large sums of money, it is inevitably
harder to get them to do so during the birth of a business.
Pricing always help shape the perception of your product in consumers eyes. Always remember
that a low price usually means an inferior good in the consumers eyes as they compare your good
to a competitor.
Consequently, prices too high will make the costs outweigh the benefits in customers eyes, and
they will therefore value their money over your product. Be sure to examine competitors pricing
and price accordingly.
When setting the product price, marketers should consider the perceived value that the product
offers. There are three major pricing strategies, and these are:

Market penetration pricing

Market skimming pricing

Neutral pricing

Here are some of the important questions that you should ask yourself when you are setting the
product price:

How much did it cost you to produce the product?

What is the customers perceived product value?

Do you think that the slight price decrease could significantly increase your market
share?

Can the current price of the product keep up with the price of the products competitors?

#3 Marketing Mix Place

Placement or distribution is a very important part of the product mix definition. You have to
position and distribute the product in a place that is accessible to potential buyers.

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This comes with a deep understanding of your target market. Understand them inside out and
you will discover the most efficient positioning and distribution channels that directly speak with
your market.
There are many distribution strategies, including:

Intensive distribution

Exclusive distribution

Selective distribution

Franchising

Here are some of the questions that you should answer in developing your distribution strategy:

Where do your clients look for your service or product?

What kind of stores do potential clients go to? Do they shop in a mall, in a regular brick
and mortar store, in the supermarket, or online?

How do you access the different distribution channels?

How is your distribution strategy different from your competitors?

Do you need a strong sales force?

Do you need to attend trade fairs?

Do you need to sell in an online store?

#4 Marketing Mix Promotion

Promotion is a very important component of marketing as it can boost brand recognition and
sales. Promotion is comprised of various elements like:

Sales Organization

Public Relations

Advertising

Sales Promotion
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Advertising typically covers communication methods that are paid for like television
advertisements, radio commercials, print media, and internet advertisements. In contemporary
times, there seems to be a shift in focus offline to the online world.
Public relations, on the other hand, are communications that are typically not paid for. This
includes press releases, exhibitions, sponsorship deals, seminars, conferences, and events.
Word of mouth is also a type of product promotion. Word of mouth is an informal
communication about the benefits of the product by satisfied customers and ordinary individuals.
The sales staff plays a very important role in public relations and word of mouth.
It is important to not take this literally. Word of mouth can also circulate on the internet.
Harnessed effectively and it has the potential to be one of the most valuable assets you have in
boosting your profits online. An extremely good example of this is online social media and
managing a firms online social media presence.
In creating an effective product promotion strategy, you need to answer the following questions:

How can you send marketing messages to your potential buyers?

When is the best time to promote your product?

Will you reach your potential audience and buyers through television ads?

Is it best to use the social media in promoting the product?

What is the promotion strategy of your competitors?

Your combination of promotional strategies and how you go about promotion will depend on
your budget, the message you want to communicate, and the target market you have defined
already in previous steps.

PRODUCT LINE
What is a 'Product Line'?
A product line is a group of related products manufactured by a single company. For example, a
cosmetic company's makeup product line might include foundation, concealer, powder, blush,
eyeliner, eyeshadow, mascara and lipstick products that are all closely related. The same
company might also offer more than one product line. The cosmetic company might have a

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special product line geared toward teenagers and another line geared toward women older than
60, in addition to its regular product line, that can be used by women of any age.
A good way for a company to try to expand its business is by adding to its existing product line.
This is because people are more likely to purchase products from brands with which they are
already familiar. For example, a frozen pizza company may wanted to increase its market share
by adding frozen breadsticks and frozen pastas to its product line.

PRODUCT MIX
Question - What is product mix? Explain product mix decisions.
Answer
Meaning
of
Product
Mix
Product mix or product assortment refers to the number of product lines
that an organisation offers to its customers. Product line is a group of
related products manufactured or marketed by a single company. Such
products function in similar manner, sold to the same customer group, sold
through the same type of outlets, and fall within a same price range .

Product mix consists of various product lines that an organisation offers, an

organisation may have just one product line in its product mix and it may
also have multiple product lines. These product lines may be fairly similar or
totally different, for example - Dish washing detergent liquid and Powder are
two similar product lines, both are used for cleaning and based on same
technology; whereas Deodorants and Laundry are totally different product
lines.
An organisation's product mix has following four dimensions :1. Width,
2. Length,
3. Depth, and
4. Consistency.

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Width
The width of an organisation's product mix pertains to the number of product
lines that the organisation is offering. For example, Hindustan Uni Lever
offers wide width of its home care, personal care and beverage products.
Width of HUL product mix includes Personal wash, Laundry, Skin care, Hair
care, Oral care, Deodorants, Tea, and Coffee.

Length
The length of an organisation's product mix pertains to the total number of
products or items in the product mix. As in the given diagram of Hindustan
Uni Lever product mix, there are 23 products, hence, the length of product
mix is 23.

Depth
The depth of an organisation's product mix pertains to the total number of
variants of each product offered in the line. Variants includes size, colour,
flavors, and other distinguishing characteristics. For example, Close-up,
brand of HUL is available in three formations and in three sizes. Hence, the
depth
of
Close-up
brand
is
3*3
=
9.
Consistency
The consistency of an organisation's product mix refers to how closely
related the various product lines are in use, production, distribution, or in any
other
manner.

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Product
Mix
Decision
Product mix decision refers to the decisions regarding adding a new or
eliminating any existing product from the product mix, adding a new product
line, lengthening any existing line, or bringing new variants of a brand to
expand the business and to increase the profitability.

Product Line Decision - Product line managers takes product line

decisions considering the sales and profit of each items in the line and
comparing their product line with the competitors' product lines in the
same markets. Marketing managers have to decide the optimal length
of the product line by adding new items or dropping existing items
from the line.

Line Stretching Decision - Line stretching means lengthening a

product line beyond its current range. An organisation can stretch its
product line downward, upward, or both way.

1. Downward Stretching means adding low-end items in the product line,

for example in Indian car market, watching the success of MarutiSuzuki in small car segment, Toyota and Honda also entered the
segment.
2. Upward Stretching means adding high-end items in the product line,
for example Maruti-Suzuki initially entered small car segment, but
later entered higher end segment.
3. Two-way Stretching means stretching the line in both directions if an
organisation is in the middle range of the market.

Line Filling Decision - It means adding more items within the present
range of the product line. Line filling can be done to reach for
incremental profits, or to utilise excess capacity.

PRODUCT LIFE CYCLE (PLC MODEL)

The Product Life Cycle. A new product progresses through a sequence of stages from
introduction to growth, maturity, and decline. This sequence is known as the product life cycle
and is associated with changes in the marketing situation, thus impacting the marketing strategy
and the marketing mix.

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Product Life Cycle Stages Explained

The product life cycle has 4 very clearly defined stages, each with its own characteristics that
mean different things for business that are trying to manage the life cycle of their particular
products.
Introduction Stage This stage of the cycle could be the most expensive for a company
launching a new product. The size of the market for the product is small, which means sales are
low, although they will be increasing. On the other hand, the cost of things like research and
development, consumer testing, and the marketing needed to launch the product can be very
high, especially if its a competitive sector.
Growth Stage The growth stage is typically characterized by a strong growth in sales and
profits, and because the company can start to benefit from economies of scale in production, the
profit margins, as well as the overall amount of profit, will increase. This makes it possible for
businesses to invest more money in the promotional activity to maximize the potential of this
growth stage.
Maturity Stage During the maturity stage, the product is established and the aim for the
manufacturer is now to maintain the market share they have built up. This is probably the most
competitive time for most products and businesses need to invest wisely in any marketing they
undertake. They also need to consider any product modifications or improvements to the
production process which might give them a competitive advantage.
Decline Stage Eventually, the market for a product will start to shrink, and this is whats
known as the decline stage. This shrinkage could be due to the market becoming saturated (i.e.
all the customers who will buy the product have already purchased it), or because the consumers
are switching to a different type of product. While this decline may be inevitable, it may still be
possible for companies to make some profit by switching to less-expensive production methods
and cheaper markets.
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Product Life Cycle Examples

Its possible to provide examples of various products to illustrate the different stages of the
product life cycle more clearly. Here is the example of watching recorded television and the
various stages of each method:
1. Introduction 3D TVs
2. Growth Blueray discs/DVR
3. Maturity DVD
4. Decline Video cassette
The idea of the product life cycle has been around for some time, and it is an important principle
manufacturers need to understand in order to make a profit and stay in business.
However, the key to successful manufacturing is not just understanding this life cycle, but also
proactively managing products throughout their lifetime, applying the appropriate resources and
sales and marketing strategies, depending on what stage products are at in the cycle.
THE PHYSICAL DISTRIBUTION
Definition
Physical distribution is the group of activities associated with the supply of finished product
from the production line to the consumers. The physical distribution considers many sales
distribution channels, such as wholesale and retail, and includes critical decision areas like
customer service, inventory, materials, packaging, order processing, and transportation and
logistics. You often will hear these processes be referred to as distribution, which is used to
describe the marketing and movement of products.
Accounting for nearly half of the entire marketing budget of products, the physical distribution
process typically garnishes a lot of attention from business managers and owners. As a result,
these activities are often the focus of process improvement and cost-saving initiatives in many
companies.
Importance of Physical Distribution
The importance of physical distribution to a company can vary and is typically associated with
the type of product and the necessity it has to customer satisfaction. Strategically staging
products in locations to support order shipments and coming up with a rapid and consistent
manner to move the product enables companies to be successful in dynamic markets.

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Physical distribution is managed with a systems approach and considers key interrelated
functions to provide efficient movement of products. The functions are interrelated because any
time a decision is made in one area it has an effect on the others. For example, a business that is
providing custom handbags would consider shipping finished products via air freight versus rail
or truck in order to expedite shipment time. The importance of this decision would offset the cost
of inventory control, which could be much more costly. Managing physical distribution from a
systems approach can provide benefit in controlling costs and meeting customer service
demands.
SEVEN COMPONENTS OF PHYSICAL DISTRIBUTION
(1) Order Processing:
A company receives orders from other companies, middlemen, or directly from customers
through mail, e-mail, fax, phone, or salesmen. Order processing is an importation component of
the distribution system. It is considered as a key to customer service and satisfaction.
Order processing mainly includes:
1. Receiving order
2. Recording order
3. Filing order
4. Executing order or assembling of products for dispatch
5. Credit and collection.
Thus, it concerns with processing the orders quickly, accurately, and efficiently. The time period
from the receipt of an order to the date of dispatch of products must be as short as possible.
Ideally, the order recycle time should be completed within 8 days. But, the use of computer and
computer networks, for speedy and accurate order processing, can save time, money and efforts
for the company and increases customer satisfaction. It is often called as electronic data
processing that minimizes possibility of error and omission. Every firm should establish the
standard order procedure.
The physical distribution must be customer-oriented. It starts with customer order. Note that
order processing affects customer service in two ways reordering time (interval between two
orders) and consistency of delivery time (delivering products within the fixed time). Rapid order
processing enables a company to attain economy in other areas of physical distribution.
The person in charge of order processing must be careful for following aspects:
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1. Assembling product must be exactly as per demand of customers in terms of quantity, quality,
features, and price.
2. Execution must be as quick as possible.
3. The dispatch must be in appropriate mode of transportation.
4. Credit discount and other allied benefits must be offered as per policy.
5. Assessing the effectiveness of order processing. That includes feedback and follow-up.
(2) Warehousing:
In todays context, production is made in expectation of demand. Therefore, products are to be
stored or preserved safely for the future demand. And also, all the production is not sold directly.
Warehousing plays an important role for balancing demand and supply. For example, most of the
agricultural products are produced seasonally, but have demand throughout the year.
It facilitates both continuous production and continuous marketing of the production.
Warehousing service can contribute to customer satisfaction. Be clear that storage and
warehousing are not similar terms, though are closely related.
Storage is marketing activity that involves holding and preserving products from the time of their
production until their sale. Warehousing embraces storage plus a broad range of functions, such
as assembling, breaking the bulk, dispatching as per need of middlemen, sorting/classification,
providing market intelligence, preparing product for reshipping, etc. Warehousing involves more
activities.
Classification of Warehouses:

Warehouses may be classified on two bases, on the basis of commodity and on the basis of
ownership. Lets have overview of different warehouses.
On the Basis of Commodity:
On the basis of commodity stored, there can be:
1. Special Commodity Warehouses provide facility for storing special types of commodities, e.g.,
cotton warehouses, potato warehouses, grain warehouses, tanks for liquid products, explosive
product warehouses, etc.
2. Cold Storage Warehouses provide facility for storing perishable products, e.g., fish, flowers,
vegetable, fruits, etc.
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On the Basis of Ownership:

According to the ownership, there may be various types of warehouses, like:
1. Private Warehouses are owned by individual, or firms. They are owned by retailers and
wholesalers, or by manufacturers. Retailers and wholesalers store finished products while
manufacturers store raw materials, provision, tools-equipments, and finished products.
2. Cooperative Warehouses are owned on cooperative basis by two or more private parties to
utilize storage facility jointly.
3. Public Warehouses owned by local authorities such as municipality, or by the state and central
governments. Such warehouses are used by public/traders as well as by government. Traders can
use these warehouses on the rents fixed by the government. Government uses these warehouses
to buy and maintain stock of certain essential commodities.
4. Household Warehouses are temporary in nature owned by household/family to store and
protect furniture, paintings, furs, tapestry, etc.
5. Bonded Warehouses are used to store product until payment is made or documents are cleared.
They are situated near the Port for export and import business.
Many companies set up their distribution centers in each of regions around the market and
integrate its distribution network with them for smooth, safe, and speedy delivery of products.
The latest technology is used for maximum consumer benefits. Warehouses offer a number of
direct advantages to manufacturers and sellers, and indirect advantages to customers.
Benefits Offered by Warehouses:

Following are the important benefits offered by warehouses:

1. Protection of products from fire, sunlight, dust, theft, heat/cold, etc.
2. Modern warehouses enable to store or preserve perishable products, like milk, fruits,
vegetable, flowers, and certain types of chemicals, for reasonably longer period.
3. Professional warehouses provide a lot of facilities, such as inspection, protection, records,
displacement on demand, insurance, etc., at affordable charges. Such warehouses are wellequipped with human and mechanical devices.
4. Warehouses at different key centres can speed up order processing efficiently with less risk
and costs.
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5. Producers and sellers can avail loans on the product stored in warehouses.
6. Consumers have a number of indirect benefits like quick and continuous availability, low
price, quality, etc. Producers, sellers, and users equally share all the benefits of warehousing.
Key Issues/Decisions in Warehousing:

The manager should consider following aspects while utilizing warehouses:

1. Type of product
2. Time to store the product
3. Rent charged and facilities available
4. Location
5. Working capital requirement
6. Ownership
7. Risk, etc.

(3) Transportation:
Transportation is one of the core components of distribution system. It consists of moving or
transferring products from producers to final users. Transportation involves two parties, carriers
and shippers. Carriers are those companies that provide transportation facilities to others, such as
the Western Railway, Indian Airline, Indian Shipping Companies, and many other private carriers
provide transportation services by road, rail, water, air and underground pipes.
Shippers are those organisations and individuals such as manufacturers, middlemen, customers,
and others to whom the carriers provide transportation services. For different modes of
transportation, various regulatory bodies deal with various issues related to transportation of
products. The Central and the State Governments have formulated a lot of Acts or legal provision
to regulate transportation activities in the country.
The main regulatory bodies may include:
i. The Civil Aviation Department, for air carriers.
ii. The Shipping Corporation of India, for water carriers.
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iii. The Oil and Natural Gas Commission, for pipeline carriers.
iv. The Road Transport Corporation of the state, for land or road carriers
v. The Railway Authorities, for rail transportation, etc.
Transportation plays a crucial role in todays global marketing. It creates the place utility. In
brief, transportation has positive impact in every facet of economic, social, and cultural
development of the society. The key issues in transportation are type, costs, time, speed, risk,
suitability, and availability. Marketer should take transportation decision carefully.
Key Issues in Transportation Decisions:

A marketer needs to consider on following issues:

1. Mode of Transportation:
This decision relates with selecting an appropriate mode of transportation. Main modes of
transportation are road, railway, water, air, and pipeline. As per financial capacity, need, time
available and overall suitability, the appropriate mode of transportation should be selected.
2. Costs and Availability:
One should select such a mode of transportation that is the most suitable and low in costs.
Similarly, the mode must be easily available.
3. Suitability and Credibility:
It is an important consideration. The mode of transportation must fit to the products and
companys overall internal situation, and must be reliable.
4. Relations:
In the era of relationship marketing, the marketer must maintain long-term profitable relations
with various transport agencies. A firm has to perform many activities to establish and maintain
healthy and profitable relations with the transport agencies.
5. Legal Provisions and Restrictions:
A firm must take transportation decisions within limit of contemporary legal provisions.
Knowledge of legal provisions is essential.
6. Ownership:
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This issue concerns with whether a firm should own, contract, or hire transportation means.
Depending upon a companys capacity and requirements, it may own its own means of
transportation, may undergo the contracts, or may hire such facilities.
(4) Organisational Responsibility for Physical Distribution:
Physical distribution is an important decision in todays marketing management. It involves a
wide range of activities. Therefore, an effective coordination of various activities, such as order
processing, warehousing, transportation, inventory control, etc., is indispensable to contribute in
overall success of marketing strategies.
The entire range of physical distribution must be systematic and even scientific for effective
distribution of products to the ultimate users. For the purpose, the systematic structure of
organisation should be created to take care of physical distribution activities. Organisation of
physical distribution must be well-equipped and properly organised to serve the purpose over
time.
Type, nature, formation, and activities of organisational structure for physical distribution depend
upon various factors like type of business, size of operation, resource availability, management
philosophy, and so on.
After proper analysis of various relevant variables, the suitable structure of organisation should
be created and implemented. There may be practically two alternatives, physical distribution
committee or physical distribution department.
Physical Distribution Committee:

In order to manage distribution activities effectively and efficiently, many companies formulate a
permanent committee. The committee consists of a group of people who work jointly for
attaining marketing goals. The number of members in committee depends on types of key
activities in distribution system.
A physical distribution committee consists of experts on various areas of distribution like
warehousing, transportation, communication, order processing, and so on. This committee is
headed by distribution manager or marketing manager. Each of the experts in a committee has
necessary skills and experience to handle specific group of activities.
The committee, known as physical distribution committee, takes care of the entire range of
activities related to distribution of products and is responsible for smooth distribution of
products. The committee meets periodically and formulates policy to improve physical
distribution system.
Physical Distribution Department:
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Some companies treat physical distribution as a separate area of marketing management and
maintain a separate physical distribution department. This department is headed by physical
distribution manager. He is solely responsible for managing physical distribution activities.
He appoints needed experts in his department to assist him carrying different types of activities
related to physical distribution. The physical distribution manager works under either production
manager or marketing manager.
Mostly, the companies engaged in production and distribution activities, appoint physical
distribution manager under marketing manager. He may be line administrator, a manager with
staff responsibility, or the combination of both staff and line function. This type of organisation is
typically portrayed in Figure 1.

Marketing Manager:

He, along with other marketing activities, also directs and controls physical distribution
activities. Under him, the physical distribution manager is placed. Here, physical distribution is
treated as a part of marketing. He takes care of marketing and distribution activities.
Physical Distribution Manager:

He is a direct authority responsible for physical distribution. He works under marketing manager.
His functions involve storage and warehousing, inventory management, transportation, order
processing and dispatching, communication, etc. He coordinates various activities needed for
effective physical distribution. Various officers are appointed under him for each type of
activities.
The officers who work under his direct supervision and control include:
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1. Storage and warehousing officer

2. Inventory officer
3. Transportation officer
4. Order processing and dispatching officer
5. Communication officer, etc.
As per need, the required staff is appointed to assist each of these officers in performing their
respective tasks. Sometimes, more officers are appointed for different types of works such as
accountant, packing officers, and so on. The entire department headed by distribution manager
works as a team to deal with total distribution system.
(5) Inventory Management:
Inventory refers to stock of goods meant for the future sales. It can also be said as reservoir of
goods held in anticipation of sales. Demand is fluctuating and exact prediction is not possible.
So, the primary purpose of holding inventory is to meet market demand continuously.
The firm always maintains adequate stocks of products to meet customer orders immediately. It
is considered as a link between ordering and production. Inventory management supports
demand creation and consumer satisfaction.
Three types of costs are associated with inventory. The first is, holding costs (carrying costs),
which include warehousing and storage costs, costs of capital tied up in inventory, costs of price
decline, obsolescence, spoilage, pilferages, and taxes and insurance on inventory.
The Second is, costs of stock out or shortage, which include loss of sales, adverse impact on
goodwill, losing customers permanently due to shortage of stocks, and administrative costs. And,
the third is, replenishing or reordering costs (order processing costs), such as preparing and
placing order; transportation, insurances and wastage during movement; and costs of receiving,
inspecting, and handling materials. However, carrying costs and ordering costs are more
important, and if they are balanced, the total costs can be effectively reduced.
A company has to decide on total annual need of inventory, ordering size, and level of inventory
(called as ordering level) at which new order should be placed. It must determine maximum and
minimum quantity that may be needed at any time. The main issues are ordering size how
much to order, and (reordering) ordering level when to order.

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Ordering and carrying costs are important considerations in inventory management. Ordering
and carrying costs are adversely related. If more inventory/stock is maintained, carrying costs are
high and ordering costs are low.
Quite opposite to it, when low level of inventory is maintained, carrying costs are low, and, due
to more frequent order of smaller quantity, ordering costs go high. Therefore, the manager should
decide on the optimum order size to reduce total cost of inventory. It is necessary to strike out
balance between two types of costs to minimize total costs.
The most popular technique to determine optimum size of order is Economic Ordering
Quantity, which can be determined by using following formula:
EOQ = 2 AO/C
Where,
A = Annual sales
O = Ordering costs
C = Carrying costs
Sometimes, ordering size or level is determined by trial and error or graphical method. The level
of inventory at which costs are minimum, is taken as ordering size.
(6) Other Components:
In fact, physical distribution consists of a lot of decisions.
Some of minor decisions have been listed below:
i. Material Management
ii. Communication
iii. Sorting and packing
iv. Customer service, etc.
(7) Logistical Coordination or Market Logistics:
To distribute products from the point of production to the point of consumption (consumers) is
traditionally called physical distribution. It starts from the factory and reaches the final
destinations at the right time, in the right way and form, and at low costs.
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Distribution is treated as a separate function of marketing, and the special independent

arrangement is made for smooth distribution. Problem of physical distribution is thought of only
after products are produced. Thus, physical distribution concerns with systematically distributing
products to final users.
It involves all activities necessary (like warehousing, transportation, communicating, insurance,
banking, ordering processing, inventory management, and services of channel members) to avail
the products conveniently to ultimate users.
Market logistics (often called as supply chain management) is the modern form of physical
distribution. Simple distribution is expanded into a broader concept of supply chain management.
Supply chain management starts before physical distribution. Logistics means a detailed
organisation of large and complex exercise. Here, distribution is not treated as an independent
activity but as an integral part of the total business system.
Market logistics or supply chain management is a detailed programme attempting to procure the
right inputs (raw materials, components, and capital equipments); covert them effectively into
finished products; and distribute them to the final destinations.
It can help a company identify superior suppliers and help improve its productivity. It leads to
low costs and better quality products that ultimately results into better customer satisfaction
and/or strengthening the competitive position.
Market logistics system is prepared by considering target markets requirements. Thus, study of
target markets requirements, preproduction (production planning), production process, and
distribution are integrated to form market logistics system.
Market logistics involves:
(1) Estimating target markets requirements,
(2) Procuring necessary inputs for producing the right products,
(3) Converting inputs into finished products (production process), and
(4) Systematically distributing the products to ultimate users.
Definitions:

Market logistics can be defined as under:

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1. Philip Kotler: Market logistics involves planning, implementing, and controlling the physical
flows of materials and final goods from points of origin to points of use to meet customer
requirement at profit.
2. The Council of Logistics Management: Logistics is that part of the supply chain process that
plans, implements, and controls the efficient, effective, foreword and reverse flow and storage of
goods, services, and related information between the point of origin and the point of
consumption in order to meet customers requirements.
3. In more systematic way, the term can be defined as: Market logistics consists of estimating
target markets requirements, procuring necessary inputs for producing the right products,
converting inputs into finished products, and systematically distributing the products to ultimate
users to achieve maximum customer satisfaction at profit.
4. Market logistics is coordinated system that coordinates various parties involved in production
and marketing. In this sense, we can defined the term as: Market logistics is a broad system that
involves coordinating activities of suppliers, purchasing agents, manufacturers, marketers,
channel members, and customers to permit lower prices and yield higher profit margins.
Objectives and Importance:

Market logistics system is aimed at offering the right products to the right customers, at the right
place, at the right time, in the right pattern, and at the least costs. It is an attempt to meet total
customer expectations by systematically organizing production and marketing activities.
Let us list objectives of market logistics system:
1. To satisfy target customers by right products and right way of distribution.
2. To attract additional customers.
3. To reduce total costs and/or yield more profit margins.
4. To speed up trade cycle.
5. To integrate production and marketing with target market expectations.
6. To improve competitive strengths, etc.
Market Logistic Decisions:

In fact, market logistics concerns with making the distribution system effective. It involves a lot
of decisions to offer the right products to the right buyers, at the right time, at the right place, at
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the right price, and in a right manner. It includes all the decisions that can ensure the
righteousness in all significant aspects.
Market logistics is distribution related concept and mainly involves ordering processing,
warehousing, and inventory and transportation decisions. But, distribution cannot be meaningful
without suitable products. So, virtually, it is not distribution system, but total business system
including production, marketing, finance and personnel.
Main decisions of effective market logistics system involve:
1. Determining target market requirements
2. Procuring appropriate inputs for producing the desired products
3. Producing the right products
4. Selecting suitable marketing channels
5. Order processing
6. Locating warehousing
7. Inventory management
8. Transportation
9. Handling, billing and payment
10. Maintaining relations among all parties involved.
(a) Functions of Distribution:

These broadly cover the following:

(i) Transport services for a timely and safe physical movement of goods. Major transportation
modes are: Rail, Road, Water and Air.
(ii) Warehousing facilities that irons out the market fluctuations and make the goods available to
the customers when/where needed.
(iii) Sorting/grading of goods thus facilitating customers choice in selection of goods.
(b) Different Channels of Distribution:
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The different types of distribution channels currently in India are:

i. Direct Selling/ Direct marketing:
Manufacturer to ultimate customer e.g. manufacturer of machinery may directly contact the user
firms, a detergent manufacturer employs sales girls to sell on door-to-door basis.
This is increasingly gaining popularity in industry, so is also the closely related type called
Telemarketing.
ii. Selling through Intermediaries (Middlemen):
(A) Consumer Products:
(i) ManufacturerBroker or AgentWholesalerRetailer-Consumer. Sometimes the product
may flow direct from the agent to the retailers.
(ii) ManufacturerOwn StoresConsumer.
(iii) Manufacturer-Mail OrderConsumer. (Traditionally most popular form is VPP system).
(iv) Manufacturer-WholesalerRetailers-Consumer.
(v) Manufacturer-Own Branches/DepotsRetailersConsumer.
(B) Industrial Products:
(i) ManufacturerBroker or Agent-Distributor/Wholesaler-Industrial, Institutional or
Commercial user.
(ii) ManufacturerDistributor/Wholesaler-Industrial, Institutional or Commercial user.
(iii) ManufacturerOwn Branches/Depots-Industrial, Institutional or Commercial user.
(c) Channel-Mix:

An organisation using a number of channels of distribution and not just one channel adopts a
channel-mix.
The decision of channel-mix formula is generally guided by the following broad functions:
(i) Promptness and regularity in making the products available to the ultimate users.

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(ii) Cost of alternative modes of distribution.

(iii) Extent of possible market segmentation and product differentiation.
(iv) Changes needed in the organisation e.g. setting up another branch/sales depot. The choice
out of a few alternative distribution channels will involve a proper comparative assessment of
different levels of capital investment, advertising, and sales promotional expenses, working
capital for inventory and forecast of sales and expensesall over a future time-scale.
In channel selection the overriding consideration should be maximum contribution to the profit
performance and easy availability of companys profit to ultimate users. The decision to open an
own depot in a zone depends on the turnover in that zone is at least equal to break-even sales
values to justify the setting up of a depot.
The setting up of a depot would eliminate the distributor but would involve additional variable
cost on sales due to additional transport charges, interest on working capital and inventory
carrying cost.
PROMOTION
Promotion is the marketing term used to describe all marketing communications activities and
includes personal selling, sales promotion, public relations, direct marketing, trade fairs and
exhibitions, advertising and sponsorship. Promotion needs to be precisely coordinated and
integrated into the businesses global communications message, and this is called Integrated
Marketing Communications (IMC). IMC integrates the message through the available channels
to deliver a consistent and clear message about your companys brands, products and services.
Any movement away from the single message confuses the consumer and undermines the brand.
The promotions mix (the marketing communications mix) is the specific blend of promotion
tools that the company uses to persuasively communicate customer value and build customer
relationships.
Kotler et al (2010).
Promotion is the element of the marketing mix which is entirely responsible for communicating
the marketing proposition. Marketers work hard to create a unique marketing proposition for
their product or service. McDonalds is about community, food and enjoyment. Audi is about the
driver experience and technology.
Think of it like a cake mix, the basic ingredients are always the same. However if you vary the
amounts of one of the ingredients, the final outcome is different. It is the same with promotions.
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You can integrate different aspects of the promotions mix to deliver a unique campaign. Now
lets look at the different elements of the promotions mix.
The elements of the promotions mix are:

Personal Selling.

Sales Promotion.

Public Relations.

Direct Mail.

Trade Fairs and Exhibitions.

Advertising.

Sponsorship.

And also online promotions.

marketing communications
process
The elements of the promotions mix are integrated to form a coherent campaign. As with all
forms of communication, the message from the marketer follows the communications process
as illustrated above. For example, a radio advert is made for a car manufacturer. The car
manufacturer (sender) pays for a specific advert with contains a message specific to a target
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audience (encoding). It is transmitted during a set of commercials from a radio station

(message/medium).
The message is decoded by a car radio (decoding) and the target consumer interprets the message
(receiver). He or she might visit a dealership or seek further information from a web site
(Response). The consumer might buy a car or express an interest or dislike (feedback). This
information will inform future elements of an integrated promotional campaign. Perhaps a direct
mail campaign would push the consumer to the point of purchase. Noise represents the thousands
of marketing communications that a consumer is exposed to everyday, all competing for
attention.
The Promotions Mix.
Let us look at the individual components of the promotions mix in more detail. Remember all of
the elements are integrated to form a specific communications campaign.
1. Personal Selling.
Personal Selling is an effective way to manage personal customer
relationships. The sales person acts on behalf of the organization.
They tend to be well trained in the approaches and techniques of
personal selling. However sales people are very expensive and
should only be used where there is a genuine return on investment.
For example salesmen are often used to sell cars or home
improvements where the margin is high. Downsides of Personal
Selling
The disadvantages of personal selling are its high labor costs and the corollary: its difficult to
reach large numbers of people when you try to speak them to one-to-one. Also, the information
communicated may vary from the intended message. Sometimes salespeople, in an effort to get
the sale or go the extra mile for their potential customer, may bend the rules in a way thats
detrimental for the company, such as by promising a delivery date that forces the company to pay
extra in expediting costs or overtime in an effort to meet the promised date. Worse, a company
might suffer bad publicity as a result of a salespersons unethical actions.

2. Sales Promotion.
.
Sales promotions tend to be thought of as being all promotions apart from advertising, personal
selling, and public relations. For example the BOGOF promotion, or Buy One Get One Free.
Others include couponing, money-off promotions, competitions, free accessories (such as free
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blades with a new razor), introductory offers (such as buy digital TV and get free installation),
and so on. Each sales promotion should be carefully costed and compared with the next best
alternative.
3. Public Relations (PR).
Public Relations is defined as the deliberate, planned and sustained effort to establish and
maintain mutual understanding between an organization and its publics (Institute of Public
Relations). PR can be relatively cheap, but it is certainly not free. Successful strategies tend to be
long-term and plan for all eventualities. All airlines exploit PR; just watch what happens when
there is an incident. The pre-planned PR machine clicks in very quickly with a very effective
rehearsed plan.
4. Direct Marketing.
Direct marketing is any marketing undertaken without a distributor or intermediary. In terms of
promotion it means that the marketing company has direct communication with the customer.
For example Nintendo distributes via retailers, although you can register directly with them for
information which is often delivered by e-mail or mail.
Direct mail is very highly focussed upon targeting consumers based upon a database. As with all
marketing, the potential consumer is targeted based upon a series of attributes and similarities.
Creative agencies work with marketers to design a highly focussed communication in the form of
a mailing. The mail is sent out to the potential consumers and responses are carefully monitored.
For example, if you are marketing medical text books, you would use a database of doctors
surgeries as the basis of your mail shot.
Similarly e-mail is a form of online direct marketing. You register, or opt in, to join a mailing list
for your favourite website. You confirm that you have opted in, and then you will receive
newsletters and e-mails based upon your favourite topics. You need to be able to unsubscribe at
any time, or opt out. Mailing lists which generate sales are like gold dust to the online marketer.
Make sure that you use a mailing list with integrity just as you would expect when you sign up.
The mailing list needs to be kept up-to-date, and often forms the basis of online Customer
Relationship Management (CRM).
5. Trade Fairs and Exhibitions.
Such approaches are very good for making new contacts and renewing old ones. Companies will
seldom sell much at such events. The purpose is to increase awareness and to encourage trial.
They offer the opportunity for companies to meet with both the trade and the consumer.
6. Advertising.
Advertising is a paid for communication. It is used to develop attitudes, create awareness, and
transmit information in order to gain a response from the target market. There are many
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advertising media such as newspapers (local, national, free, trade), magazines and journals,
television (local, national, terrestrial, satellite) cinema, outdoor advertising (such as posters, bus
sides). There is much more about digital, online and Internet advertising further down this pages,
as well as throughout Marketing Teacher and the Marketing Teacher Blog.
7. Sponsorship.
Sponsorship is where an organization pays to be associated with a particular event, cause or
image. Companies will sponsor sports events such as the Olympics or Formula One. The
attributes of the event are then associated with the sponsoring organization.
The elements of the promotional mix are then integrated to form a unique, but coherent
campaign.
Online Promotions/Marketing
Online promotions will include many of the promotions mix elements which we considered
above. For example advertising exists online with pay per click advertising which is marketed by
Google. You can sponsor are website for example. Online businesses regularly send out
newsletters which are targeted using e-mail and mailing lists, which is a form of direct
marketing. Indeed websites are premium vehicle in the public relations industry to communicate
particular points of view to relevant publics.
The online promotions field is indeed emerging. The field will soon spread into Geo targeting of
adverts to people in specific locations via smart phones. Another example would be how social
media targets adverts to you whilst you socialising online. Take a look at Marketing Teachers
Blog for more up-to-date examples of the emerging online promotions space.

PRICING
Definition: Price is the value that is put to a product or service and is the result of a complex set
of calculations, research and understanding and risk taking ability. A pricing strategy takes into
account segments, ability to pay, market conditions, competitor actions, trade margins and input
costs, amongst others. It is targeted at the defined customers and against competitors.
Pricing Factors
Pricing should take the following factors into account:

Fixed and variable costs

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Competition

Company objectives

Proposed positioning strategies

Target group and willingness to pay

Description: There are several pricing strategies:

Premium pricing: high price is used as a defining criterion. Such pricing strategies work in
segments and industries where a strong competitive advantage exists for the company. Example:
Porche in cars and Gillette in blades.
Penetration pricing: price is set artificially low to gain market share quickly. This is done when a
new product is being launched. It is understood that prices will be raised once the promotion
period is over and market share objectives are achieved. Example: Mobile phone rates in India;
housing loans etc.
Economy pricing: no-frills price. Margins are wafer thin; overheads like marketing and
advertising costs are very low. Targets the mass market and high market share. Example:
Friendly wash detergents; Homo; local tea producers ie Sasini Masala.
Skimming strategy: high price is charged for a product till such time as competitors allow after
which prices can be dropped. The idea is to recover maximum money before the product or
segment attracts more competitors who will lower profits for all concerned. Example: the earliest
prices for mobile phones, VCRs and other electronic items where a few players ruled attracted
lower cost Asian players.

Types Of Pricing Strategies

The table below explains different pricing methods and price strategies with an example of each
pricing strategy.
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Pricing
Strategy

Definition

Example

Here the organisation sets a

low price to increase sales and
Penetratio market share. Once market
n Pricing share has been captured the
firm may well then increase
their price.

A television satellite company

sets a low price to get
subscribers then increases the
price as their customer base
increases.

The organisation sets an initial

A games console company
high price and then slowly
reduces the price of their console
lowers the price to make the
Skimming
over 5 years, charging a
product available to a wider
Pricing
premium at launch and lowest
market. The objective is to skim
price near the end of its life
profits of the market layer by
cycle.
layer.
Setting a price in comparison
with competitors. In reality a
Competitio firm has three options and
n Pricing these are to price lower, price
the same or price higher
thancompetitors.

Pricing
Strategy

Definition

Some firms offer a price

matching service to match what
their competitors are offering.
Others will go further and refund
back to the customer more
money than the difference
between their price and the
competitor's price.

Example

Product
Pricing different products
Line Pricing within the same product
range at different price
points.

An example would be a DVD

manufacturer offering different
DVD recorders with different
features at different prices e.g. A
HD and non HD version.. The
greater the features and the
benefit obtained the greater the
consumer will pay. This form of
price discrimination assists the
company in maximising turnover
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Pricing
Strategy

Definition

Example
and profits.

Bundle
Pricing

The organisation bundles a

group of products at a
reduced price. Common
methods are buy one and get
one free promotions or
This strategy is very popular with
BOGOFs as they are now
supermarkets who often offer
known. Within the UK some
BOGOF strategies.
firms are now moving into the
realms of buy one get two
free can we call this BOGTF I
wonder?

Premium
Pricing

The price is set high to

indicate that the product is
"exclusive"

Examples of products and services

using this strategy include
Harrods, first class airline services,
and Porsche.

The seller will charge 99p instead

1 or $199 instead of $200. The
reason why this methods work, is
The seller here will consider
because buyers will still say they
Psychologi the psychology of price and
purchased their product under
cal Pricing the positioning of price within
200 pounds or dollars, even
the market place.
thought it was a pound or dollar
away. My favourite pricing
strategy.

Pricing
Strate
gy

Definition

Example

The organisation sells optional extras

Optiona
along with the product to maximise its
l Pricing
turnover.

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This strategy is used

commonly within the car
industry as I found out
when purchasing my car.

Pricing
Strate
gy

Definition

Example

The price of the product is production

costs plus a set amount ("mark up")
based on how much profit (return) that
Cost
the company wants to make. Although
Plus
this method ensures the price covers
Pricing production costs it does not take
consumer demand or competitive pricing
into account which could place the
company at a competitive disadvantage.

For example a product

may cost 100 to produce
and as the firm has
decided that their profit
will be twenty percent
they decide to sell the
product for 120 i.e. 100
plus 100/100 x 20

Cost based pricing can be

This is similar to cost plus pricing in that useful for firms that
Cost
it takes costs into account but it will
operate in an industry
Based
consider other factors such as market
where prices change
Pricing
conditions when setting prices.
regularly but still want to
base their price on costs.
This pricing strategy considers the value
Firms that produce
of the product to consumers rather than
Value
technology, medicines,
the how much it cost to produce it. Value
Based
and beauty products are
is based on the benefits it provides to the
Pricing
likely to use this pricing
consumer e.g. convenience, well being,
strategy.
reputation or joy.
Marketing Mix Price Conclusion

As we have discussed the price you charge for your products and services is important because it
is an income source and unlike the other elements of the marketing mix isn't a cost. It is also
important because it determines how much profit you make. Your challenge however is setting
the right price for your product and ensuring that your pricing strategy doesn't turn customers
way.
Marketing Controls
Measuring and monitoring the marketing planning proces
There is no planning without control. Marketing control is the process of monitoring the
proposed plans as they proceed and adjusting where necessary. If an objective states where you
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want to be and the plan sets out a road map to your destination, then control tells you if you are
on the right route or if you have arrived at your destination.
Control involves measurement, evaluation, and monitoring. Resources are scarce and costly so it
is important to control marketing plans. Control involves setting standards. The marketing
manager will than compare actual progress against the standards. Corrective action (if any) is
then taken. If corrective action is taken, an investigation will also need to be undertaken to
establish precisely why the difference occurred.

There are many approaches to control:

Market share analysis.

Sales analysis.

Quality controls.

Budgets.

Ratio analysis.

Marketing research.

Marketing information systems (MkIS).

Feedback from customers satisfaction surveys.

Cash flow statements.

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Customer Relationship Management (CRM) systems.

Sales per thousand customers, per factory, by segment.

Location of buyers and potential buyers.

Activities of competitors to aspects of your plan.

Distributor support.

Performance of any promotional activities.

Market reaction/acceptance to pricing polices.

Service levels.

and many other methods of monitoring and measureme

MARKETING AUDIT
Definition: Marketing Audit
Marketing Auditing is a tool used to know about the progress in the particular marketing job
undertaken. It is conducted at various stages of the marketing.
It involves the internal as well as the external parameters.
Internal Processes-Internal parameters constitute of the marketing mix (Product,Place, Price
Promotion), Labours, investment, machines, marketing team etc.
External Processes-External processes consist of positioning, segmentation, consumer beliefs,
buying behaviour, customer relationships etc.

In external audit, the conditions of the external market are being assed and a detailed report is
generated. In an external audit economic and competitive environment are being assed. For
economic environment a PESTLE (Political, Economic, Social, Technological, Legal, and
Environmental) analysis can be carried out. Competitive environment scan can be done by
following porters five force model. By doing these the company can gauge the external
environment.

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For an internal audit, the company has to introspect their current processes and operations like
the costs, profits, sales etc. By doing this the company can know of the existing loopholes and
can find ways to close those. The company can optimize their processes after identifying the
shortcomings.

A market audit is a process which needs to be continuously carried out by the company at all
stages. This helps the company know where it is heading and how likely is it able to achieve its
target and goals. The company can carry out such a market audit if it intends to enter new
markets or wants to launch a new product. It is extremely necessary if the company is running
into losses despite their diligent efforts.
8 Steps for Conducting a Marketing Audit
The marketing audit process helps your company analyze and evaluate your B2B marketing
strategies, activities, goals and results. While the process takes time, the results can be
enlightening and might:

Focus your communication of a consistent message to the right customers.

Reveal new, unknown or neglected markets.

Help fine-tune current strategies and plans to help increase market share.

Here are the eight steps for conducting a marketing audit to capture the information a corporate
marketer needs about their company and how they do business.
1. Assemble an Overview of Your Company. The details to include are:
o Company location, date established, sales history, number of employees, key
personnel and chronology of company events like mergers, acquisitions and
divestitures.
o An estimation of the current awareness level of company as well as perception of
your company has among your buying influencers.
2. Describe Your Marketing Goals and Objectives. They can be concepts like increase
company visibility, increase audience size, differentiate from competition, increase or maintain
market share, generate qualified sales leads or increase usage within existing customers. List
your goals and objectives as being:
o Long-term, with 6 to 8 goals listed a priority order to be accomplished in the next
two years.
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o Short-term, with a narrowing to 1 to 2 goals to be accomplished in the next 12

months.
3. Describe Your Current Customers. Include information like:
o Job titles or functions, industry or SIC codes, geographic location, company size
and other demographic, ethnic or behavioral descriptions.
o Size of current customer audience.
4. Describe Customers Youd Like to Target. Include the same type of information used in # 3
but also include:
o If target customers are outside your usual industry, geography or size of current
customers.
o Any internal or external factors that have changed in your business or industry
causing you to target a particular group.
o A behavior that needs to be present for retargeting to occur.
o Size of target customer audience.
5. Describe Your Product or Service. Describe it in terms of its purpose, features, benefits,
pricing, sizing and distribution methods. Also include:
o Strength or weakness as compared to competition.
o Any economic, legal, social, technical, seasonal or governmental factors that
affect product/service.
o Current awareness level as well as perception of your product/service.
o Sales or market share history and any changes over time.
6. Describe Your Past Business or Marketing Encounters. Describe what has:
o Helped grow your business as well as what has not helped grow business.
o Not been tried but might have helped.
o Your competition has been doing to grow their business.
7. Identify Three to Six Competitors. Include the company name and location as well as:

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o Describe their products/services in terms of their features, benefits, pricing, sizing

and distribution methods.
o Sales or market share history.
o Competitions strategy for the near future.
8. Begin to Outline a Communication Plan. Begin to list current and future media sources as
well if costs are fixed annual costs, and what funds are available for new efforts for:
o Advertising vehicles like broadcast, print, out-of-home and online advertising.
o Promotional vehicles like website, collateral, direct marketing, interactive and
online marketing.
o Media relation vehicles like media contacts, public relations and articles.
o Event vehicles like trade shows, special events, seminars and webinars.
o Analytic vehicles like databases, market research and tracking systems.
o List any promotional medium considered to be the most effective to date.
Once this information is written down on paper, you can refer back to it as your roadmap to
achieving your marketing goals and objects for the coming year. And as new ideas pop up, this
document can help remind you of the big picture. Minor adjustments can be made along the way
as changes are bound to occur in sales, customer retention and product development throughout
the year.
SOCIAL RESPONSIBILITY $ ETHICS IN MARKETING
Though the pursuit of social responsibility and ethical marketing does not
automatically translate into increased profit, it is still the responsibility of the
firm to ensure it is responsible for its actions and their impact on society. This
article will study,
1) understanding
marketing,

business

ethics

and

socially

responsible

2) developing and implementing a socially responsible marketing

plan,
3) main aspects of socially responsible marketing,
4) characteristics of socially responsible marketing,
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5) 5 benefits of integrating ethics into your marketing strategy,

6) ethical issues faced in marketing, and
7) summary of unethical marketing practices that ruin companies.

To be socially responsible is when the organization is concerned about people, society and
environment with whom and where it conducts business. In its most basic form, socially
responsible marketing is taking moral actions that encourage a positive impact on all the
companys stakeholders, including employees, community, consumers, and shareholders. The
main responsibility of marketers in this aspect is to package and communicate the organizations
decisions that will impact the various communities with which they interact. Consumers have the
right and power to decide which companies succeed or fail; so marketers have a major
responsibility to ensure their practices are seen as philanthropic without being phony.
BrandKarma is the perfect example of one of the means by which consumers make these
decisions.
Ethical Marketing in General
Ethical Marketing is a philosophy that focus focuses on honesty, fairness and responsibility.
Though wrong and right are subjective, a general set of guidelines can be put in place to ensure
the companys intent is broadcasted and achieved. Principles of this practice include:

A shared standard of truth in marketing communications

A clear distinction between advertising and sensationalism

Endorsements should be clear and transparent

Consumers privacy should be maintained at all times

Government standards and regulations must be adhered and practiced

by marketers.

American Ethical Norms and Values for marketers

The American Marketing Association has designed a statement of ethics that governs marketers
actions. The introduction of the statement reads in summary that values are the representation of
the collective idea of desirable and morally correct conduct. And that the values outlined in the
document serve as the standard by which individuals measure their own actions and those of
others including marketers. These values facilitate best practices when transacting business with
the public and all involved.
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There are 6 ethical values that marketers are expected to uphold, and these are:
1. Honesty Be forthright in dealings and offer value and integrity.
2. Responsibility Accept consequences of marketing practices and
serve the needs of customers of all types, while being good stewards
of the environment.
3. Fairness Balance buyer needs and seller interest fairly, and avoid
manipulation in all forms while protecting the information of the
consumers.
4. Respect Acknowledge basic human dignity of all the people involved
through efforts to communicate, understand and meet needs and
appreciate contributions of others.
5. Transparency Create a spirit of openness in the practice of
marketing through communication, constructive criticism, action, and
disclosure.
6. Citizenship Fulfill all legal, economic, philanthropic and societal
responsibilities to all stakeholders as well as giveback to the
community and protect the ecological environment.
Merging Social Responsibility and Marketing
Companies are aware that consumers are savvy and opinionated. So with this in mind, firms
should create an ethically sound marketing plan and integrate it into all aspects of their
marketing mix.

Do good not just to look good focus on being responsible and how
your firm can truly help the neighborhood or country. It is in doing so
that your customers, the press, and all those watching will be
impressed.

Think about long term effects, not short term gains short sighted
companies will undervalue the impact of responsible marketing for
instantly gratifying increase.

Speak up against company policies that do not reflect the ethical

profile of the company as the face of the company, marketers should
voice their concerns when there is a potential for a practice to be seen
as unethical.

DEVELOPING AND IMPLEMENTING A SOCIALLY RESPONSIBLE MARKETING

PLAN
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While ethics and social responsibility are sometimes used interchangeably, there is a difference
between the two terms. Ethics tends to focus on the individual or marketing group decision,
while social responsibility takes into consideration the total effect of marketing practices on
society. In order to foster an ethical and socially responsible behavior pattern among marketers
while achieving company objectives, special care must be taken to monitor trends and shifts in
societys values and beliefs. Next, marketers should forecast the long-term effects of the
decisions that pertain to those changes. Bearing in mind that a company cannot satisfy the needs
of an entire society, it best serves marketers to focus their most costly efforts on their target
market, while being aware of the values of society as a whole. Five simple steps every marketer
can take to create a sustainable socially responsible market plan are:
1. Define what is ethical marketing for your firm.
2. Decide which branch of ethics your marketers will apply.
3. Determine how the ethical approach to marketing will be implemented.
4. Discuss areas of the firms operations that ethical marketing will be
included as part of the program.
5. Analyse and assess how much ethical marketing will cost the company
and compare this against the benefits of ethical marketing in the long
run.
Emerging Ethical Problems in Market Research
Market research has experienced a resurgence with the widespread use of the Internet and the
popularity of social networking. It is easier than ever before for companies to connect directly
with customers and collect individual information that goes into a computer database to be
matched with other pieces of data collected during unrelated transactions.
The way a company conducts its market research these days can have serious ethical
repercussions, affecting the lives of consumers in ways that have yet to be fully understood.
Further, companies can be faced with a public backlash if their market research practices are
perceived as unethical.
Grouping the Market Audience
Unethical practices in marketing can result in grouping the audience into various segments.
Selective marketing may be used to discourage the demand arising from these so-called
undesirable market segments or to disenfranchise them totally.
Examples of unethical market exclusion may include the industry attitudes towards the gay,
ethnic minority, and plus-size groups.
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Ethics in Advertising and Promotion

In the early days of existence of corporations, especially during 1940s and 1950s, tobacco was
advertised as a substance that promotes health. Of late, an advertiser who does not meet the
ethical standards is considered an offender against morality by the law.

Sexuality is a major point of discussion when ethical issues in advertising content are
considered. Violence is also an important ethical issue in advertising, especially where
children should not be affected by the content.

Some select types of advertising may strongly offend some groups of people even when
they are of strong interest to others. Female hygiene products as well as haemorrhoid and
constipation medication are good examples. The advertisements of condoms are
important in the interest of AIDS-prevention, but are sometimes seen by some as a
method of promoting promiscuity that is undesirable and strongly condemned in various
societies.

A negative advertising policy lets the advertiser highlight various disadvantages of the
competitors products rather than showing the inherent advantages of their own products
or services. Such policies are rampant in political advertising.

Delivery Channels
Direct marketing is one of the most controversial methods of advertising channels, especially
when the approaches included are unsolicited.
Some common examples include TV and Telephonic commercials and the direct mail. Electronic
spam and telemarketing also push the limits of ethical standards and legality in a strong manner.
Example Shills and astroturfers are the best examples of ways for delivering a marketing
message under the guise of independent product reviews and endorsements, or creating
supposedly independent watchdog or review organizations. Fake reviews can be published on
Amazon. Shills are primarily for message-delivery, but they can also be used to drive up prices in
auctions, such as EBay auctions.
Deceptive Marketing Policies and Ethics
Deceptive marketing policies are not contained in a specific limit or to one target market, and it
can sometimes go unseen by the public. There are numerous methods of deceptive marketing. It
can be presented to consumers in various forms; one of the methods is one that is accomplished
via the use of humor. Humor offers an escape or relief from various types of human constraints,
and some advertisers may take the advantage of this by applying deceptive advertising methods
for a product that can potentially harm or alleviate the constraints using humor.

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Anti-Competitive Practices
There are various methods that are anti-competitive. For example, bait and switch is a type of
fraud where customers are "baited" through the advertisements for some products or services that
have a low price; however, the customers find in reality that the advertised good is unavailable
and they are "switched" towards a product that is costlier and was not intended in the
advertisements.
Another type of anti-competitive policy is planned obsolescence. It is a method of designing a
particular product having a limited useful life. It will become non-functional or out of fashion
after a certain period and thereby lets the consumer to purchase another product again.

A pyramid scheme is also an anti-competitive process. It is a non-sustainable business model

that promises the participants payment or services, mainly for enrolling other people into the
scheme; it does not supply any real investment or sell products or services to the public.
This business practice demands the initial investor or the "captain" to enroll other people for a
fee to them who again will further enroll more people in order to be paid by the company.

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Pricing Ethics
There are various forms of unethical business practices related to pricing the products and
services.
Bid rigging is a type of fraud in which a commercial contract is promised to one party, however,
for the sake of appearance several other parties also present a bid.
Predatory pricing is the practice of sale of a product or service at a negligible price, intending
to throw competitors out of the market, or to create barriers to entry.

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