1) Define global marketing, industrial marketing, Service Marketing?

The process of conceptualizing and then conveying a final product

or service worldwide with the hopes of reaching the
international marketing community Proper global marketing has the ability to catapult
a company to the next level, if they do it correctly.

Different strategies are implemented based on the region the company is marketing to.
For example, the menu at McDonald's varies based on the location of the restaurant.
The company focuses on marketing popular items within the country.

GlobalMarketingespeciallyimportantto companies that provide products or services tha

t have a universal demand such as automobiles and food.

Industrial Marketing: Consider the differences between a candy store selling a

chocolate bar to a single customer, and a chocolate manufacturer selling thousands of
chocolate bars to a single candy store.

While selling candy to an individual customer might rely on salesmanship and

knowledge about individual tastes and cravings, selling candy to a store takes more
than attractive packaging.

Rather, the manufacturer must ensure a safe, profitable agreement between the two
organizations. The manufacturer will market the quality, cost, and customer appeal of
its chocolate bars to convince the candy store it will have an easy time selling them.

What is industrial Marketing?

Industrial marketing, also known as business-to-business (B2B) marketing, is a
branch of communications and sales that specializes in providing goods and services to
other businesses, rather than to individual customers.

Because industrial marketing often involves large orders and long-term

relationships between the producer and client, the process from first pitch to close of
sale is often more complex than the process between a business and a private customer.
While B2C sales might focus on one-on-one interactions between two parties,
businesses are usually made up of a number of individuals. Before the product appears
on the other store's shelves, the two businesses must reach a deal that will involve the
manufacture, purchase, and shipping of thousands of products.
Who Uses Industrial Marketing?
Many companies create and market products that have little to no application on
the level of the individual customer, so their only clients will be other businesses. A
company that makes large-scale manufacturing machinery, for example, is either
unlikely or unable to sell that machinery to private individuals because those customers
are unlikely to be able to afford it or won't need equipment of such size. The machinery
would have to be sold to another business that has both the resources and need to
produce large quantities of their own product, such as a mass-market toy factory that
needs to create one million units of the same toy each year.

Many consumer product companies develop special marketing divisions

specifically for B2B clients. Furniture manufacturers often do this, opening up their
tables, chairs, and couches to businesses that may want them for their corporate offices.
This typically happens when the manufacturer's business grows to a large enough scale
to accommodate larger orders. Service providers also occasionally expand to industrial
clients to take advantage of more lucrative contracts. A legal practice specializing in
contract law, for instance, could expand its scope from representing only individuals to
helping businesses develop their own contracts.

The Industrial Marketing Process:The first step in developing an industrial

marketing plan is the same as developing any kind of marketing plan: identify the
customer. The producer must understand what kinds of businesses would benefit
from the product. This creates a foundation and focus for the rest of the marketing
plan.
Next, the producer needs to tailor their introduction to prospective clients.
Though old-fashioned, face-to-face networking is alive and well in the business-to-
business world, it is increasingly important to have a strong online presence. Potential
clients will always research a company before negotiating a sale of its product. A
website with detailed but not overly specific content about the company and its
products serves as a great introduction.
In our previous example of the chocolate bar manufacturer, they might create an
aesthetically pleasing, well-written website talking about their company's history and
the candy they produce. They would then augment the effectiveness of the website by
adding a regularly updated blog about new products, or post on social networks
informing users about the locations where they can buy their chocolate.
Once a potential client is interested in the product, the producer should shift focus from
the general introduction of its web presence to more personalized meetings and
presentations. Even if the client isn't ready to sign a contract right away, getting to
know them with professional, non-pushy contact can be of great benefit.
Communication with potential clients through email, phone conversations, and in-
person presentations helps nurture the business relationship. Professionals at the
chocolate manufacturer might send product samples with personalized notes to
develop a strong impression ahead of a business meeting.
 Once the client is ready to discuss the details of a contract, the marketing phase is
nearly over. The focus of all materials for this specific client should shift to maintaining
a good working relationship. The chocolate manufacturer should have a solid plan with
its accounts managers for how to compose emails and conduct phone conversations
with representatives of the candy store, as well as how to inform them about new
products. Because the store is no longer a new client, all communications should be
customized to their specific experience with the producer.

Service marketing: Services marketing is a form of marketing that focuses on

selling services. They can be tricky to sell, and the marketing approach for them is much
different than the approach for products. Some companies offer both products and
services and must use a mixture of styles; for example, a store that sells computers also
tends to also help people select computers and provide computer repair. Such a store
must market both its products and the supporting services it offers to appeal to
customers.

When people market services, the goal is not to get customers to buy a product
but to get people to do business with a particular company, often in a specific location.
For example, a restaurant offers a service: it provides food to customers, both on-site
and in to-go form in many cases. When the restaurant markets itself, it must convince
people that it is preferable to other restaurants and that its facility is worth the trip.

As with the marketing of products, the marketing of services covers issues like
what is being offered, what the price point is, how it compares to similar things, and
why people should choose that particular iteration over other options. With services,
which are often intangible in nature, consumers must also be convinced through
marketing that it is something they need that will have some sort of benefit.

2) Briefly describe about importance and scope of marketing, marketing environment?

A)Philip Kotler defines marketing as 'satisfying needs and wants through an exchange
process ‘Customers will only undertake the exchange, if they feel that their needs are
being satisfied, clearly the transactional value cannot be more than the amount
customers are prepared to pay to satisfy their need.

P.Tailor suggests that 'Marketing is not about providing products or services it is essentially
about providing changing benefits to the changing needs and demands of the customer.

Scope of Marketing:
 The scope of marketing really is related to the old and new concept of ‘marketing’.
Formerly the scope of marketing used to remain very much limited since the wants of
the consumers too were quite limited. The competition was almost equivalent to nil. In
the marketing, the satisfaction of the consumers was not at all considered. The
marketing was commodity based and immediately after the sale of the products, the
marketing process was over. Nowadays, the scope of marketing has become quite
extensive, and the satisfaction of the customers too is kept in view. The process of
marketing continues even after the sales have been affected. Today, the function of
conforming the product, in accordance with the changing wants, habits and fashions of
people, is undertaken by the process of marketing.

Within the scope of marketing, -the following activities are covered:

Decisions and Researches Pertaining to Customers. Now-a-days, the customer is

considered to be the crownless ruler of the market: Every producer or manufacturer or
business concern intends to know as to what is the interest, fashion, economic position,
of the customers; where do they live, what is their paying capacity, etc. Taking
decisions on the basis of all these things, the producers bring their products to the
customers accordingly and by means of their satisfaction, earn the maximum profits.

Decisions Regarding the Commodity. Before manufacturing the product, various

decisions have to be taken up, for instance, the size of the product, its shade or colour,
design and brand, packing, etc. These all are equally the main components forming the
marketing process.

Decisions Regarding Price-Determination. Every producer or manufacturer and the

business organization has also to determine beforehand, prior to undertaking its
marketing, as to what shall be the price of their product ? While deciding the price of
the product, the paying capacity of the customer and the cost of production has to be
borne in mind.

Decisions Regarding the Medium of Distribution. There are various media of

distribution. the multiple or chain shops, the super bazaar, the whole sellers, the
retailer, etc. The manufacturer or the business concern has also to determine as to what
shall remain the medium of distribution of the commodity and how much long shall be
its chain, requiring how much of expenditure. While taking the decision of the means of
distribution, various matters have also to be borne into mind.

Decisions Regarding Sales Promotion and Advertisements. In this age of stiff

competition, the sales promotion and advertisements have become almost an
inseparable part of the marketing. There are various media of sales promotion and
advertisements taking the decisions about which is also an indispensable part of the
sphere of marketing management. In the sales promotion, various decisions are
required to be taken regarding the training of the sales representatives, their
emoluments and the relevant incentives, etc.

Decisions Regarding After-Sales Service. For the satisfaction of the customers, the
provision of after-sales service is very necessary. Within the after-sales service, are
included the free repairs, the return or exchange of the product during the guarantee
period if the product proves defective or worthless, etc. In it is included the decision
that for how much period, what type of service has to be extended to the customers,
and through whom.

Scope of Marketing
The scope of marketing really is related to the old and new concept of ‘marketing’.
Formerly the scope of marketing used to remain very much limited since the wants of
the consumers too were quite limited. The competition was almost equivalent to nil. In
the marketing, the satisfaction of the consumers was not at all considered. The
marketing was commodity based and immediately after the sale of the products, the
marketing process was over. Nowadays, the scope of marketing has become quite
extensive, and the satisfaction of the customers too is kept in view. The process of
marketing continues even after the sales have been affected. Today, the function of
conforming the product, in accordance with the changing wants, habits and fashions of
people, is undertaken by the process of marketing. Within the scope of marketing, -the
following activities are covered:

Decisions and Researches Pertaining to Customers. Now-a-days, the customer is

considered to be the crownless ruler of the market: Every producer or manufacturer or
business concern intends to know as to what is the interest, fashion, economic position,
of the customers; where do they live, what is their paying capacity, etc. Taking
decisions on the basis of all these things, the producers bring their products to the
customers accordingly and by means of their satisfaction, earn the maximum profits.

Decisions Regarding the Commodity. Before manufacturing the product, various

decisions have to be taken up, for instance, the size of the product, its shade or colour,
design and brand, packing, etc. These all are equally the main components forming the
marketing process.

Decisions Regarding Price-Determination. Every producer or manufacturer and the

business organization has also to determine beforehand, prior to undertaking its
marketing, as to what shall be the price of their product ? While deciding the price of
the product, the paying capacity of the customer and the cost of production has to be
borne in mind.
 Decisions Regarding the Medium of Distribution. There are various media of
distribution. The multiple or chain shops, the super bazar, the whole sellers, the retailer,
etc. The manufacturer or the business concern has also to determine as to what shall
remain the medium of distribution of the commodity and how much long shall be its
chain, requiring how much of expenditure. While taking the decision of the means of
distribution, various matters have also to be borne into mind.

Decisions Regarding Sales Promotion and Advertisements. In this age of stiff

competition, the sales promotion and advertisements have become almost an
inseparable part of the marketing. There are various media of sales promotion and
advertisements taking the decisions about which is also an indispensable part of the
sphere of marketing management. In the sales promotion, various decisions are
required to be taken regarding the training of the sales representatives, their
emoluments and the relevant incentives, etc.

Decisions Regarding After-Sales Service. For the satisfaction of the customers, the
provision of after-sales service is very necessary. Within the after-sales service, are
included the free repairs, the return or exchange of the product during the guarantee
period if the product proves defective or worthless, etc. In it is included the decision
that for how much period, what type of service has to be extended to the customers,
and through whom.

3) Explain about factors that determine marketing Environment?

MARKETING ENVIRONMENT:

Introduction::A variety of environmental forces influence a company’s marketing

system. Some of them are controllable while some others are uncontrollable. It is the
responsibility of the marketing manager to change the company’s policies along with
the changing environment.

According to Philip Kotler, “A company’s marketing environment consists of the

internal factors & forces, which affect the company’s ability to develop & maintain
successful transactions & relationships with the company’s target customers”.

The Environmental Factors may be classified as:

1) Internal factors
 1. External Factor

External Factors may be further classified into:

External Micro Factors & External Macro Factors

Company’s Internal Environmental Factors: A Company’s marketing system is

influenced by its capabilities regarding production, financial & other factors. Hence, the
marketing management/manager must take into consideration these departments
before finalizing marketing decisions. The Research & Development Department, the
Personnel Department, the Accounting Department also have an impact on the
Marketing Department. It is the responsibility of a manager to company-ordinate all
department by setting up unified objectives.

External Micro Factors:

1. Suppliers: They are the people who provide necessary resources needed to produce
goods & services. Policies of the suppliers have a significant influence over the
marketing manager’s decisions because, it is laborers, etc. A company must build
cordial & long-term relationship with suppliers.
2. Marketing Intermediaries: They are the people who assist the flow of products
from the producers to the consumers; they include wholesalers, retailers, agents, etc.
These people create place & time utility. A company must select an effective chain of
middlemen, so as to make the goods reach the market in time. The middlemen give
necessary information to the manufacturers about the market. If a company does not
 satisfy the middlemen, they neglect its products & may push the competitor’s
product.
3. Consumers: The main aim of production is to meet the demands of the consumers.
Hence, the consumers are the center point of all marketing activities. If they are not
taken into consideration, before taking the decisions, the company is bound to fail in
achieving its objectives. A company’s marketing strategy is influenced by its target
consumer. Eg: If a manufacturer wants to sell to the wholesaler, he may directly sell
to them, if he wants to sell to another manufacturer, he may sell through his agent or
if he wants to sell to ultimate consumer he may sell through wholesalers or retailers.
Hence each type of consumer has a unique feature, which influences a company’s
marketing decision.
4. Competitors: A prudent marketing manager has to be in constant touch regarding
the information relating to the competitor’s strategies. He has to identify his
competitor’s strategies, build his plans to overtake them in the market to attract
competitor’s consumers towards his products.
Any company faces three types of competition:
a) Brand Competition: It is a competition between various companies producing
similar products. Eg: The competition between BPL & Videocon companies.
b) The Product Form Competition: It is a competition between companies
manufacturing products, which are substitutes to each other Eg: Competition
between coffee & Tea.
c) The Desire Competition: It is the competition with all other companies to attract
consumers towards the company. Eg: The competition between the
manufacturers of TV sets & all other companies manufacturing various products
like automobiles, washing machines, etc.
Hence, to understand the competitive situation, a company must understand the
nature of market & the nature of customers. Nature of the market may be as
follows:
I. Perfect Market
II. Oligopoly
III. Monopoly
IV. Monopolistic Market
V. Duopoly
5. Public: A Company’s obligation is not only to meet the requirements of its
customers, but also to satisfy the various groups. A public is defined as “any group
that has an actual or potential ability to achieve its objectives”. The significance of
the influence of the public on the company can be understood by the fact that almost
all companies maintain a public relation department. A positive interaction with the
public increases its goodwill irrespective of the nature of the public. A company has
to maintain cordial relation with all groups, public may or may not be interested in
the company, but the company must be interested in the views of the public.
 Public may be various types.
They are:
a. Press: This is one of the most important group, which may make or break a
company. It includes journalists, radio, television, etc. Press people are often
referred to as unwelcome public. A marketing manager must always strive to get
a positive coverage from the press people.
b. Financial Public: These are the institutions, which supply money to the
company. Eg: Banks, insurance companies, stock exchange, etc. A company
cannot work without the assistance of these institutions. It has to give necessary
information to these public whenever demanded to ensure that timely finance is
supplied.
c. Government: Politicians often interfere in the business for the welfare of the
society & for other reasons. A prudent manager has to maintain good relation
with all politicians irrespective of their party affiliations. If any law is to be
passed, which is against the interest of the company, he may get their support to
stop that law from being passed in the parliament or legislature.
d. General Public: This includes organizations such as consumer councils,
environmentalists, etc. as the present day concept of marketing deals with social
welfare; a company must satisfy these groups to be successful.
External Macro Environment:
These are the factors/forces on which the company has no control. Hence, it has to
frame its policies within the limits set by these forces:
1. Demography: It is defined as the statistical study of the human population & its
distribution. This is one of the most influencing factors because it deals with the
people who form the market. A company should study the population, its
distribution, age composition, etc before deciding the marketing strategies. Each
group of population behaves differently depending upon various factors such as
age, status, etc. if these factors are considered, a company can produce only those
products which suits the requirement of the consumers. In this regard, it is said that
“to understand the market you must understand its demography”.
2. Economic Environment: A company can successfully sell its products only when
people have enough money to spend. The economic environment affects a
consumer’s purchasing behavior either by increasing his disposable income or by
reducing it. Eg: During the time of inflation, the value of money comes down.
Hence, it is difficult for them to purchase more products. Income of the consumer
must also be taken into account. Eg: In a market where both husband & wife work,
their purchasing power will be more. Hence, companies may sell their products
quite easily.
3. Physical Environment or Natural Forces: A company has to adopt its policies
within the limits set by nature. A man can improve the nature but cannot find an
alternative for it. Nature offers resources, but in a limited manner. A product
manager utilizes it efficiently. Companies must find the best combination of
 production for the sake of efficient utilization of the available resources. Otherwise,
they may face acute shortage of resources. Eg: Petroleum products, power, water,
etc.
4. Technological Factors: From customer’s point of view, improvement in technology
means improvement in the standard of living. In this regard, it is said that
“Technologies shape a Person’s Life”.
Every new invention builds a new market & a new group of customers. A new
technology improves our lifestyle & at the same time creates many problems. Eg:
Invention of various consumer comforts like washing machines, mixers, etc have
resulted in improving our lifestyle but it has created severe problems like power
shortage.Eg: Introduction to automobiles has improved transportation but it has
resulted in the problems like air & noise pollution, increased accidents, etc. In simple
words, following are the impacts of technological factors on the market:
a) They create new wants
b) They create new industries
c) They may destroy old industries
d) They may increase the cost of Research & Development.
5. Social & Cultural Factors: Most of us purchase because of the influence of social &
cultural factors. The lifestyle, values, believes, etc are determined among other
things by the society in which we live. Each society has its own culture. Culture is a
combination of various factors which are transferred from older generations &
which are acquired. Our behaviour is guided by our culture, family, educational
institutions, languages, etc.
The society is a combination of various groups with different cultures & subcultures.
Each society has its own behavior. A marketing manager must study the society in
which he operates.
Consumer’s attitude is also affected by their society within a society, there will be
various small groups, each having its own culture.Eg: In India, we have different
cultural groups such as Assamese, Punjabis, Kashmir’s, etc. The marketing manager
should take note of these differences before finalizing the marketing strategies.

4) Briefly describe a bout mis and markerking research?

An MIS may be defined as a set of procedures and methods for the regular, planned
collection, analysis, and presentation of information for use in
making marketing decisions. This of course is a step beyond logistics systems, which
handle inventory control, orders, and so forth.”

4) Describe about product development process?

A) 8 Step Process Perfects New Product Development

When teams collaborate in developing new innovations, having the following eight
ingredients mixed into your team’s new product developmental repertoire will ensure
that it’s overall marketability will happen relatively quick, and accurately – making
everyone productive across the board.

Step 1: Generating: Utilizing basic internal and external SWOT analyses, as well as
current marketing trends, one can distance themselves from the competition by
generating ideologies which take affordability, ROI, and widespread distribution costs
into account.

Lean, mean and scalable are the key points to keep in mind. During the NPD process,
keep the system nimble and use flexible discretion over which activities are executed.
You may want to develop multiple versions of your road map scaled to suit different
types and risk levels of projects.

Step 2: Screening The Idea : Wichita, possessing more aviation industry than most other
states, is seeing many new innovations stop with Step 2 – screening. Do you go/no go?
Set specific criteria for ideas that should be continued or dropped. Stick to the agreed
upon criteria so poor projects can be sent back to the idea-hopper early on.

Because product development costs are being cut in areas like Wichita, “prescreening
product ideas,” means taking your Top 3 competitors’ new innovations into account,
how much market share they’re chomping up, what benefits end consumers could
expect etc. An interesting industry fact: Aviation industrialists will often compare
growth with metals markets; therefore, when Boeing is idle, never assume that all
airplanes are grounded, per se.

Step 3: Testing: The Concept: As Gaurav Akrani has said, “Concept testing is done after
idea screening.” And it is important to note, it is different from test marketing. Aside
from patent research, design due diligence, and other legalities involved with new
product development; knowing where the marketing messages will work best is often
the biggest part of testing the concept. Does the consumer understand, need, or want
the product or service?

Step 4: Business Analytics: During the New Product Development process, build a
system of metrics to monitor progress. Include input metrics, such as average time in
each stage, as well as output metrics that measure the value of launched products,
percentage of new product sales and other figures that provide valuable feedback. It is
important for an organization to be in agreement for these criteria and metrics. Even if
an idea doesn’t turn into product, keep it in the hopper because it can prove to be a
valuable asset for future products and a basis for learning and growth.

Step 5: Beta / Marketability Tests: Arranging private tests groups, launching beta
versions, and then forming test panels after the product or products have been tested
will provide you with valuable information allowing last minute improvements and
tweaks. Not to mention helping to generate a small amount of buzz. Word Press is
becoming synonymous with beta testing, and it’s effective; Thousands of programmers
contribute code, millions test it, and finally even more download the completed end-
product.

Step 6: Technicalities + Product Development: Provided the technical aspects can be

perfected without alterations to post-beta products, heading towards a smooth step 7 is
imminent. According to Akrani, in this step, “The production department will make
plans to produce the product. The marketing department will make plans to distribute
the product. The finance department will provide the finance for introducing the new
product”.

As an example; In manufacturing, the process before sending technical specs to

machinery involves printing MSDS sheets, a requirement for retaining an ISO 9001
certification (the organizational structure, procedures, processes and resources needed
to implement quality management.)In internet jargon, honing the technicalities after
beta testing involves final database preparations, estimation of server resources, and
planning automated logistics. Be sure to have your technicalities in line when moving
forward.

Step 7: Commercialize: At this stage, your new product developments have gone
mainstream, consumers are purchasing your good or service, and technical support is
consistently monitoring progress. Keeping your distribution pipelines loaded with
products is an integral part of this process too, as one prefers not to give physical (or
perpetual) shelf space to competition. Refreshing advertisements during this stage will
keep your product’s name firmly supplanted into the minds of those in the
contemplation stages of purchase.

Step 8: Post Launch Review and Perfect Pricing: Review the NPD process efficiency
and look for continues improvements. Most new products are introduced with
introductory pricing, in which final prices are nailed down after consumers have
‘gotten in’. In this final stage, you’ll gauge overall value relevant to COGS (cost of
goods sold), making sure internal costs aren’t overshadowing new product profits. You
continuously differentiate consumer needs as your products age, forecast profits and
improve delivery process whether physical, or digital, products are being perpetuated

5) Explain about marketing Research and marketing information system?

A) Definition of marketing research:"Marketing research is the systematic and objective

search for, and analysis of, information relevant to the identification and solution of any
problem in the field of marketing."

The purpose of the research: It is not at all unusual for marketing managers to neglect to
tell the researcher the precise purpose of the research. They often do not appreciate the
need to do so. Instead, they simply state what they think they need to know. This is not
quite the same thing. To appreciate the difference consider the case of the marketing
research agency which was contacted by the International Coffee Organization (ICO)
and asked to carry out a survey of young people in the age group 15-24. They wanted
information on the coffee drinking habits of these young people: how much coffee they
drank, at what times of day, with meals or between meals, instant or ground coffee,
which other beverages they preferred and so on. In response, the research organization
developed a set of wide-ranging proposals which included taking a large random
sample of young people.

In fact much of the information was interesting rather than important. Important
information is that information which directly assists in making decisions and the ICO
had not told the research company the purpose of the research. The initial reason for the
study had been a suspicion, on the part of the ICO, that an increasing percentage of
young people were consuming beverages other than coffee, particularly soft drinks, and
simply never developed the coffee drinking habit. Had this been explained to the
research company then it is likely that their proposals would have been radically
different. To begin with, the sample would have been composed of 15-24 year old non-
coffee drinkers rather than a random sample of all 15-24 year olds. Second, the focus
would have been non-coffee drinking habits rather than coffee drinking habits. Unless
the purpose of the research is stated in unambiguous terms it is difficult for the
marketing researcher to translate the decision-makers problem into a research problem
and study design.

Clear, concise, attainable, measurable and quantifiable objectives: Suppose that the
marketing manager states that he needs to know the potential market for a new product
his/her organization has been developing. At first glance this might appear to meet all
of the requirements of being clear, concise, attainable, measurable and quantifiable. In
practice it would possibly meet only one of these criteria, i.e. it is concise! Here is
another case to be considered. A small engineering firm had purchased a prototype
tree-lifter from a private research company. This machine was suitable for lifting semi-
mature trees, complete with root-ball intact and transplanting such trees in another
location. It was thought to have potential in certain types of tree nurseries and
plantations.

The problem with the objective is that the marketing manager needs to know the
potential market for the new tree-lifter is that it is not attainable. One could find out
how many tree-lifters were currently being sold but this is not the same as the objective
set by the marketing manager. The market potential for any new brand is a function of
at least 4 things, as shown in Figure 1.1. Figure 1.1 the components of market potential

It was possible to test customer reaction to the concept of the new tree-lifter by showing
pictures, line drawings and by supplying product specifications to prospective buyers.
However, since the company had not decided their pricing policy an important element
could not be tested. In large measure, it was also possible to gauge the likely reaction
from competitors. The researchers began by looking at the basis of competition to
determine whether it was on price, product quality or unique product features. The
researchers were able to look at precedents. They examined the pattern of response on
past occasions when one or other of those companies already in the market had
launched a new product. An audit of the environment was undertaken too, but the
missing component was the company's' own plans for exploiting the market. Since the
company had no involvement in the agricultural engineering sector, prior to acquiring
the rights to the tree-lifter, they had no agreements with distributors, no idea of which,
if any, of the distributors would be prepared to stock their product; they had no
salesmen trained in selling into this industry and so on. The product's potential
depended very much on such initiatives.

The solution would have been to undertake a study which would have described the
market in detail in terms of customers, competitors and the environment. The company
could then have put a marketing plan together and conducted a follow-up study to test
their propositions out on the marketplace.

The need to set a time horizon for marketing research

Inevitably there are deadlines which the marketing research activity must fit and these
must be stated clearly at the outset of the research. As was said earlier, because of time
pressures, management is often seeking quick answers from marketing research. If the
researcher is aware of the time constraints then this will become an overriding factor
when he/she plans the research design. He or she is likely to put forward a design
which is less elegant, and gives rise to less precise information but delivers the results
on schedule. A resource allocation, including the budget and facilities

There are essentially two approaches to establishing the resource allocation to a

particular marketing research exercise. Management can start with the problem and
work out how much it will cost to solve it. Alternatively, they can decide how much the
management can afford to spend, at the time, and seek the best answer they can for the
time, money and manpower allocated. In practice the decision-makers prefer the latter
approach and the researchers the former. In the end, some kind of compromise
develops. The researcher rarely gets all of what he/she judges is required to reach a
satisfactory conclusion but if the research proposal is well thought out and persuasively
presented some concessions can be obtained.Whichever the approach to resource
allocation adopted, it is imperative that the researcher is aware of the financial and
other constraints within which he/she must complete the work.

A reporting period: The researcher must also know from the outset of the study the
points in time when interim reports are required, if any, and the deadline for the final
report. The form of interim reports should also be specified at the outset, whether
verbal or written, and whether presentations are to be made to a group (nature and size
of the group) or an individual.

In addition there are several characteristics of a good research brief and these are that it:
means the same thing to all concerned does not ask for irrelevant information defines
the relevant populations to be measured identifies the correct variables to be measured
specifies the degree of accuracy really needed within the main results specifies an order
of priorities when the sample has to be broken down for the purposes of analyzing data
for subgroups, and does not pre-judge the selection of research techniques and
procedures.
The research proposal: Having received the research brief, the researcher responds with
a research proposal. This is a document which develops after having given careful
consideration to the contents of the research brief. The research proposal sets out the
research design and the procedures to be followed. The eight steps are set out in figure
1.2. These are only briefly discussed here since the remainder of this textbook consists of
a detailed explanation of each step.

Figure 1.2 The research design

Step 1: Problem definition

The point has already been made that the decision-maker should clearly communicate
the purpose of the research to the marketing researcher but it is often the case that the
objectives are not fully explained to the individual carrying out the study. Decision-
makers seldom work out their objectives fully or, if they have, they are not willing to
fully disclose them. In theory, responsibility for ensuring that the research proceeds
along clearly defined lines rests with the decision-maker. In many instances the
researcher has to take the initiative.

In situations, in which the researcher senses that the decision-maker is either unwilling
or unable to fully articulate the objectives then he/she will have to pursue an indirect
line of questioning. One approach is to take the problem statement supplied by the
decision-maker and to break this down into key components and/or terms and to
explore these with the decision-maker. For example, the decision-maker could be asked
what he has in mind when he uses the term market potential. This is a legitimate
question since the researcher is charged with the responsibility to develop a research
design which will provide the right kind of information. Another approach is to focus
the discussions with the person commissioning the research on the decisions which
would be made given alternative findings which the study might come up with. This
process frequently proves of great value to the decision-maker in that it helps him think
through the objectives and perhaps select the most important of the objectives.

Whilst seeking to clarify the objectives of the research it is usually worthwhile having
discussions with other levels of management who have some understanding of the
marketing problem and/or the surrounding issues. Other helpful procedures include
brainstorming, reviews of research on related problems and researching secondary
sources of information as well as studying competitive products. Kerlinger 2 suggests
that a well-defined marketing research problem tends to have three common
characteristics as shown in figure 1.3.

Step 2: Hypothesis generation: Whilst it is true that the purpose of research is to

address some question, nonetheless one does not test research questions directly. For
example, there may be interest in answering the question: "Does a person's level of
education have any bearing upon whether or not he/she adopts new products?" Or,
"Does a person's age bear any relation to brand loyalty behavior?". Research questions
are too broad to be directly testable. Instead, the question is reduced to one or more
hypotheses implied by these questions.

Figure 1.3 Characteristics of a sound definition of the research problem.

A hypothesis is a conjectural statement regarding the relation between two or more
variables. There are two key characteristics which all hypotheses must have: they must
be statements of the relationship between variables and they must carry clear
implications for testing the stated relations. These characteristics imply that it is
relationships, rather than variables, which are tested; the hypotheses specify how the
variables are related and that these are measurable or potentially measurable.
Statements lacking any or all of these characteristics are not research hypotheses. For
example, consider the following hypothesis:

"Red meat consumption increases as real disposable incomes increase."

This is a relation stated between one variable, "red meat consumption", and another
variable, "disposable incomes". Moreover, both variables are potentially measurable.
The criteria have been met. However for the purposes of statistical testing it is more
usual to find hypotheses stated in the so-called null form, e.g.

"There is no relationship between red meat consumption and the level of disposable
incomes."

Consider a second hypothesis:"There is no relationship between a farmer's educational

level and his degree of innovativeness with respect to new farming technologies."

Again there is a clear statement of the relationship being investigated but there are
question marks over the measurability with respect to at least one of the variables i.e.
"...a farmer's degree of innovativeness." We may also encounter difficulties in agreeing
an appropriate measure of the other variable, i.e. "level of education". If these problems
can be resolved then we may indeed have a hypothesis.

Hypotheses are central to progress in research. They will direct the researcher's efforts
by forcing him/her to concentrate on gathering the facts which will enable the
hypotheses to be tested. The point has been made that it is all too easy when conducting
research to collect "interesting data" as opposed to "important data". Data and questions
which enable researchers to test explicit hypotheses are important. The rest are merely
interesting.

There is a second advantage of stating hypotheses, namely that implicit notions or

explanations for events become explicit and this often leads to modifications of these
explanations, even before data is collected.

On occasion a given hypotheses may be too broad to be tested. However, other testable
hypotheses may be deduced from it. A problem really cannot be solved unless it is
reduced to hypothesis form, because a problem is a question, usually of a broad nature,
and is not directly testable.

Step 3: Decision on type of study: Marketing research can be carried out on one of
three levels: exploratory, descriptive or causal.

Exploratory research: The chief purpose of exploratory research is to reach a better

understanding of the research problem. This includes helping to identify the variables
which should be measured within the study. When there is little understanding of the
topic it is impossible to formulate hypotheses without some exploratory studies. For
example, crop residues such a straw are high in lignin (a wood-like substance) and low
in nutrients. This makes them a poor animal feed since the lignin acts against
digestibility and the low nutrient content means poor food value. However, if treated in
a strong alkali, plus a little heat, the lignin breaks down and the nutrient content
increases. A company was established to exploit this technology and did so successfully
for 4 seasons. After this period sales began to slow down. Three other manufacturers
had entered the market by this time. The company, Animal Feed Systems, did not know
whether the whole industry had slowed down or if only their product was suffering.
Nor did they know if the problem was temporary in that perhaps the market comprised
of "early adopters" had been saturated but it was only a matter of time before other
farmers began to buy their systems when they saw how well they worked. It was also
possible that if a problem did exist it could lie in any one of a number of areas: animal
populations might be declining, distributors may not be promoting the product
aggressively, and customers may be experiencing difficulties in getting the chemicals,
and so on and on.

This is a good example of a situation where insufficient knowledge prevented the

development of clear objectives, since the problem could not be articulated with any
precision and therefore research of an exploratory nature was required. Such research
can take the form of literature searches, informal personal interviews with distributors
and users/non-users of the product and/or focus group interviews with farmers
and/or distributors.

Exploratory research is intended to help researchers formulate a problem in such a way

that it can be researched and suggest testable hypotheses.

Descriptive research: As the name suggests, descriptive research is concerned with

describing market characteristics and/or marketing mix characteristics. Typically, a
descriptive study specifies the number and size of market segments, the alternative
ways in which products are currently distributed, listing and comparison of the
attributes and features of competitive products, etc.

This type of study can involve the description of the extent of association between
variables. For example, the researcher may observe that there is an association between
the geographical location of consumers and their tendency to consume red meat. Note
that the researcher is able to describe the relationship rather than explain it. Nonetheless
if the relationship between the two is fairly stable this descriptive information may be
sufficient for the purposes of prediction. The researcher may, for example, be able to
predict how fast the per capita consumption of red meat is likely to rise over a given
time period.

The principal difference between exploratory and descriptive research is that, in the
case of the latter, specific research questions have been formulated before the research is
undertaken. When descriptive research is conducted the researcher must already know
a great deal about the research problem, perhaps because of a prior exploratory study,
and is in a position to clearly define what he/she wants to measure and how to do it.

Causal research: Causal research deals with the "why" questions. That is, there are
occasions when the researcher will want to know why a change in one variable brings
about a change in another. If he/she can understand the causes of the effects observed
then our ability to predict and control such events is increased.
In summary then there are three distinct types of marketing research study:
exploratory, descriptive and causal. The purpose of each is summarized in figure 1.4. In
some cases, a research programmer will be of one kind or another, but in other
instances these three typologies will represent phases within a single marketing
research investigation.

Step 4: Decision on data collection method: The next set of decisions concerns the
method(s) of data gathering to be employed. The main methods of data collection are
secondary data searches, observation, the survey, experimentation and consumer
panels. Each of these topics is dealt with later on, so they are simply noted here.

Step 5: Development of an analysis plan: Those new to marketing research often

intuitively believe that decisions about the techniques of analysis to be used can be left
until after the data has been collected. Such an approach is ill-advised. Before
interviews are conducted the following checklist should be applied: Is it known how
each and every question is to be analyzed? (e.g. which univariate or vicariate
descriptive statistics, tests of association, parametric or nonparametric hypotheses tests,
or multivariate methods are to be used?) Does the researcher have a sufficiently sound
grasp of these techniques to apply them with confidence and to explain them to the
decision-maker who commissioned the study? Does the researcher have the means to
perform these calculations? (e.g. access to a computer which has an analysis program
which he/she is familiar with? Or, if the calculations have to be performed manually, is
there sufficient time to complete them and then to check them?) If a computer program
is to be used at the data analysis stage, have the questions been properly coded? Have
the questions been scaled correctly for the chosen statistical technique? (E.g. a t-test
cannot be used on data which is only ranked)There is little point in spending time and
money on collecting data which subsequently is not or cannot be analyzed. Therefore
consideration has to be given to issues such as these before the fieldwork is undertaken.

Step 6: Data collection : At this stage the researcher is ready to go into the field and
collect data. The various issues relating to data collection constitute the main body of
the text and therefore, are not dwelt upon here.

Step 7: Analysis of data: The word 'analysis' has two component parts, the prefix 'ana'
meaning 'above' and the Greek root 'lysis' meaning 'to break up or dissolve'. Thus data
analysis can be described as: "...a process of resolving data into its constituent
components, to reveal its characteristic elements and structure."Where the data is
quantitative there are three determinants of the appropriate statistical tools for the
purposes of analysis. These are the number of samples to be compared, whether the
samples being compared are independent of one another and the level of data
measurement.

Step 8: Drawing conclusions and making recommendations: The final chapter of this
textbook is devoted to the topic of report writing. However, it is perhaps worth noting
that the end products of marketing research are conclusions and recommendations.
With respect to the marketing planning function, marketing research helps to identify
potential threats and opportunities, generates alternative courses of action, provides
information to enable marketing managers to evaluate those alternatives and advises on
the implementation of the alternatives.

Too often marketing research reports chiefly comprise a lengthy series of tables of
statistics accompanied by a few brief comments which verbally describe what is already
self-evident from the tables. Without interpretation, data remains of potential, as
opposed to actual use. When conclusions are drawn from raw data and when
recommendations are made then data is converted into information. It is information
which management needs to reduce the inherent risks and uncertainties in management
decision making.

Customer oriented marketing researchers will have noted from the outset of the
research which topics and issues are of particular importance to the person(s) who
initiated the research and will weigh the content of their reports accordingly. That is,
the researcher should determine what the marketing manager's priorities are with
respect to the research study. In particular he/she should distinguish between what the
manager: must know should know could know This means that there will be
information that is essential in order for the marketing manager to make the particular
decision with which he/she is faced (must know), information that would be useful to
have if time and resources within the budget allocation permit (should know) and there
will be information that it would be nice to have but is not at all directly related to the
decision at hand (could know). In writing a research proposal, experienced researchers
would be careful to limit the information which they firmly promise to obtain, in the
course of the study, to that which is considered 'must know' information. Moreover,
within their final report, experienced researchers will ensure that the greater part of the
report focuses upon 'must know' type information.

SECONDARY SOURCES OF INFORMATION: Marketing information must be timely, organized,

useful and in a simple form if it is to ease decision making. It should also be easily manipulated to satisfy
the changing and ad hoc requirements of management for information. There is more to marketing
information than marketing research. Indeed, marketing research is a subsystem of the marketing
information system. A Marketing Information System (MIS) is a structure within an organization designed
to gather, process and store data from the organization’s external and internal environment and to
disseminate this in the form of information to the organization’s marketing decision makers. The
activities performed by an MIS and its subsystems include information discovery, collection,
interpretation (which may involve validation and filtering), analysis, and intra-company dissemination
(storage, transmission, and/or dumping).

Measurement When a researcher conducts fieldwork she/he is possibly able to

error estimate inaccuracies in measurement through the standard deviation
and standard error, but these are sometimes not published in secondary
sources. The only solution is to try to speak to the individuals involved
in the collection of the data to obtain some guidance on the level of
accuracy of the data. The problem is sometimes not so much 'error' but
differences in levels of accuracy required by decision makers. When the
research has to do with large investments in, say, food manufacturing,
and management will want to set very tight margins of error in making
market demand estimates. In other cases, having a high level of accuracy
is not so critical. For instance, if a food manufacturer is merely assessing
the prospects for one more flavor for a snack food already produced by
the company then there is no need for highly accurate estimates in order
to make the investment decision.
Source bias Researchers have to be aware of vested interests when they consult
secondary sources. Those responsible for their compilation may have
reasons for wishing to present a more optimistic or pessimistic set of
results for their organization. It is not unknown, for example, for
officials responsible for estimating food shortages to exaggerate figures
before sending aid requests to potential donors. Similarly, and with
equal frequency, commercial organizations have been known to inflate
estimates of their market shares.
Reliability The reliability of published statistics may vary over time. It is not
uncommon, for example, for the systems of collecting data to have
changed over time but without any indication of this to the reader of
published statistics. Geographical or administrative boundaries may be
changed by government, or the basis for stratifying a sample may have
altered. Other aspects of research methodology that affect the reliability
of secondary data is the sample size, response rate, questionnaire design
and modes of analysis.
Time scale Most censuses take place at 10 year intervals, so data from this and other
published sources may be out-of-date at the time the researcher wants to
make use of the statistics.
 The time period during which secondary data was first compiled may
have a substantial effect upon the nature of the data. For instance, the
significant increase in the price obtained for Ugandan coffee in the mid-
90's could be interpreted as evidence of the effectiveness of the
rehabilitation programmed that set out to restore coffee estates which
had fallen into a state of disrepair. However, more knowledgeable coffee
market experts would interpret the rise in Ugandan coffee prices in the
context of large scale destruction of the Brazilian coffee crop, due to
heavy frosts, in 1994, Brazil being the largest coffee producer in the
world.

Whenever possible, marketing researchers ought to use multiple sources of secondary

data. In this way, these different sources can be cross-checked as confirmation of one
another. Where differences occur an explanation for these must be found or the data
should be set aside.

Figure 2.1 presents a flowchart depicting the decision path that should be followed
when using secondary data. As can be seen, the flowchart divides into two phases. The
early stages of the flowchart relate to the relevance of the data to the research objectives.
The later stages of the flowchart are concerned with questions about the accuracy of
secondary data.

Sources of information Secondary sources of information may be divided into two

categories: internal sources and external sources.

Internal sources of secondary: Information Sales data: All organizations collect

information in the course of their everyday operations. Orders are received and
delivered, costs are recorded, sales personnel submit visit reports, invoices are sent out,
and returned goods are recorded and so on. Much of this information is of potential use
in marketing research but a surprising amount of it is actually used. Organizations
frequently overlook this valuable resource by not beginning their search of secondary
sources with an internal audit of sales invoices, orders, inquiries about products not
stocked, returns from customers and sales force customer calling sheets. For example,
consider how much information can be obtained from sales orders and invoices: Sales
by territory, Sales by customer type Prices and discounts Average size of order by
customer, customer type, geographical area Average sales by sales person and Sales by
pack size and pack type, etc.This type of data is useful for identifying an organization’s
most profitable product and customers. It can also serve to track trends within the
enterprise's existing customer group.
Financial data: An organization has a great deal of data within its files on the cost of
producing, storing, transporting and marketing each of its products and product lines.
Such data has many uses in marketing research including allowing measurement of the
efficiency of marketing operations. It can also be used to estimate the costs attached to
new products under consideration, of particular utilization (in production, storage and
transportation) at which an organization’s unit costs begin to fall.

Transport data: Companies that keep good records relating to their transport
operations are well placed to establish which are the most profitable routes, and loads,
as well as the most cost effective routing patterns. Good data on transport operations
enables the enterprise to perform trade-off analysis and thereby establish whether it
makes economic sense to own or hire vehicles, or the point at which a balance of the
two gives the best financial outcome.

Storage data: The rate of stock turn, stock handling costs, assessing the efficiency of
certain marketing operations and the efficiency of the marketing system as a whole.
More sophisticated accounting systems assign costs to the cubic space occupied by
individual products and the time period over which the product occupies the space.
These systems can be further refined so that the profitability per unit, and rate of sale,
are added. In this way, the direct product profitability can be calculated.

External sources of secondary information: The marketing researcher who seriously

seeks after useful secondary data is more often surprised by its abundance than by its
scarcity. Too often, the researcher has secretly (sometimes subconsciously) concluded
from the outset that his/her topic of study is so unique or specialized that a research of
secondary sources is futile.

"You should never begin a half-hearted search with the assumption that what is being
sought is so unique that no one else has ever bothered to collect it and publish it. On the
contrary, assume there are scrolling secondary data that should help providing
definition and scope for the primary research effort."

The same authors support their advice by citing the large numbers of organizations that
provide marketing information including national and local government agencies,
quasi-government agencies, trade associations, universities, research institutes, financial
institutions, specialist suppliers of secondary marketing data and professional
marketing research enterprises. Dillon et al further advice that searches of printed
sources of secondary data begin with referral texts such as directories, indexes,
handbooks and guides. These sorts of publications rarely provide the data in which the
researcher is interested but serve in helping him/her locate potentially useful data
sources.

The main sources of external secondary sources are (1) government (federal, state and local) (2) trade
associations (3) commercial services (4) national and international institutions.

Government These may include all or some of the following:

statistics Population censuses Social surveys, family expenditure surveys
Import/exportstatisticsProductionstatistics, Agricultural statistics.
Trade Trade associations differ widely in the extent of their data collection
associations and information dissemination activities. However, it is worth checking
with them to determine what they do publish. At the very least one
would normally expect that they would produce a trade directory and,
perhaps, a yearbook.
Commercial Published market research reports and other publications are available
services from a wide range of organizations which charge for their information.
Typically, marketing people are interested in media statistics and
consumer information which has been obtained from large scale
consumer or farmer panels. The commercial organization funds the
collection of the data, which is wide ranging in its content, and hopes to
make its money from selling this data to interested parties.
National and Bank economic reviews, university research reports, journals and
international articles are all useful sources to contact. International agencies such as
institutions World Bank, IMF, IFAD, UNDP, ITC, FAO and ILO produce a plethora
of secondary data which can prove extremely useful to the marketing
researcher.

Marketing Information System

A marketing information system (MIS) is a management information system designed to

support marketing decision making.
Internal Reporting Systems/Internal Records

Firstly, with any business it is greatly important to keep an eye on what is going
on inside the business. A lot can be missed if the performance is not closely monitored
and then analyzed. The internal reporting systems enable a company to always be
aware of how they are performing as a team and what issues may need addressing.
· Marketing research systems: Market research has been one of the fundamental aspects
of marketing for many years and its uses are just as valuable in today's world. The
marketing research systems allow a company to really find out what their
customers/potential customers think of the current trends and their views on certain
items, or polices. Marketing research can also delve into a customer's habits in the hope
the company can spot a gap in the market or service; they believe they can deliver to the
customer, which will benefit their usual routine.

Marketing intelligence systems the marketing intelligence systems are used to

deal with the costs of running a marketing department and a business as a whole. It will
process all the facts and figures delivering what needs to be spent where and what may
be using too much money.

Analyzing Marketing Information /market decision support system: information

gathered in internal databases and through marketing intelligence and marketing
research usually requires more analysis and managers may need help applying the
information to their marketing decisions. This help may include advance statistical
analysis to learn more about the relationship between a set of data. Such analysis allows
managers to go beyond means and standard deviations in the data and to answer
questions about markets, marketing activities and outcomes.
6) Organizational buyer’s behavior process?

A) Organizational buying is very similar to individual buyer behavior with some

contextual differences. Organizations buy in furtherance of organizational objectives,
such as to manufacture and deliver goods and services to members, customers or the
community.
Purchases are ingredients, components or supplies in the conversion process, for administrative
or operational use or for rental or resale. Organizations serve a marketplace and are driven by the needs
of their customers, whatever form they take. The differences between organizational and individual
buying processes are shown in the following table:

Buying Step Business to Business Consumer

Problem recognition Anticipates and plans forReacts to needs when they

purchase on a routine basis arise

General need description Extensive, objective cost-benefitLimited analysis of benefits;

analysis concern with total cost

Product specification Precise technical descriptionDescription more in terms of

using techniques such as valuebenefits
analysis

Information/ Supplier search Extensive search that extendsLimited search –

to the search for supplier geographically and in terms
of sources

Proposal solicitation Formal, such as in a tenderMay be verbal

process if large volumes or
values involved

Buying Step Business to Business Consumer

Supplier selection Made after extensiveLimited analysis with

evaluation of objectivesubjective and anecdotal
information information influencing the
decision

Order-routine specification Routine calculation of re-orderNot routine

points as well as time and place
of delivery
 Post-purchase performanceExtensive comparison madeLittle basis for comparison
review and feedback given, concern
with quality management at
source

Many large organizational purchases involve consultative selling, that is where

the buyer and vendor work together to define the problem, identify a solution and
work together throughout a long process of implementation and support. Because of
the relationship issues which occur in a long association, trust, integrity, empathy and
engagement become important factors to consider in the buying decision.
Organizational buying is heavily influenced by derived demand, that is, demand
for an end product or for a product or service sold by the buyer’s customers. The
demand for components by a manufacturer will be dependent on demand coming from
their customers, the retailers and wholesalers, who in turn are reacting to demand from
their customers, the consumers. Overall consumer demand may in turn be impacted by
economic, social, political and technological factors in the environment.
Organizational buying is often referred to as group buying where a number of
individuals or groups undertake different roles in the buying process. Often the buying
process will involve highly technical issues which will require the input of technical
experts. At the same time, major purchases will involve economic considerations such
as financing, return on investment, maintenance costs, life cycle consideration and so
on. Different groups or individuals may play one or more of the following roles:
 Users: these are the people who will directly use or consume or require the
product or service in order to undertake their operational duties.
 Influencers: these are individuals or groups who help specify the requirements
or provide information to help evaluate the alternatives. People who provide
technical input are usually in this group.
 Buyers: these individuals and groups have the formal authority to select vendors
and undertake the actual purchase transaction. They may take a major role in the
negotiations on price and conditions of supply.
 Deciders: These individuals have formal or informal authority to select the final
supplier. May be the same as Buyers in routine purchases.
Gatekeepers: These individuals informally or formally control the flow of
information or access to other groups involved in the buying process.
This structure is not just limited to organizations; we can see similar patterns in family
situations where the user, decision-maker and influencer are different members of the
family. Similar elements may exist in peer groups where different peer group members
have influence on the buyer behavior.
 A problem with working in a B2B environment for many vendors is the difficulty
of establishing the members of the different groups and the level of their formal and
informal involvement. A further problem lies in the manner in which the problem or
solution specifications are arrived at. If developed too early and with little input from
the vendor, they could be excluded if they solved the problem in a way different from
that required through the specification. Another problem may exist where one vendor
has a special relationship with some of the buying groups and is able to bias the
specifications towards their solution.
Buying patterns in habitual purchases and frequent low risk purchases where
little evaluation is required follow similar processes as for individuals. These tend to
use routine procurement practices with little involvement from the vendors prior to the
buy decision.
Complex, large or infrequent and perceived risky decisions are similar to
personal buy decisions but as we can see, usually involve many more participants and
are usually much more formal in process. Organizational decisions are also capable of
being of very large scale and can involve purchases in the many millions of dollars, take
many months if not years to transact and can make or break careers and fortunes.
Perceived risk can be very high and encompass many actors.
These complex transactions are often in situations where the specification or the
problem and/or the solution is problematic. In environments where problems are
dynamic and interact with a developing and changing society and economy and where
solutions evolve with knowledge and technology, the specifications themselves evolve.
Often the buyer needs the active support of the vendor to understand the problem or to
understand the state of possible solutions.
Solutions themselves may adapt to the problem definition as it is uncovered.
Often it takes the active support of the vendor to uncover the requirements, especially
where the vendor has much greater knowledge of the problem environment. Thus, it is
not unusual for a deep relationship to develop between buyer and vendor as the project
evolves. Trust, integrity, empathy and openness often become key characteristics of the
final decision process.
A good portion of organizational buying is controlled or constrained by the
economic situation. Components, ingredients and supplies must fit with the conversion
process and with the economic objectives of the final outcome. Some decisions are
constrained by mandated decision rules which limit the scope of the decision making
power of the actors, especially prevalent in government procurement.
Organizational buying is not entirely predictable or entirely rational. Individuals
who specify requirements or provide technical input, those who search for information
and others who undertake evaluations will still be influenced by their own past
experiences, knowledge and training. If a rigorous process of information search and
evaluation is not undertaken or if there is time pressure to make a decision, then not all
vendors will be considered or fully evaluated.
In a complex one-off buying situation, an organization proceeds through a series
of steps to arrive at the buying process itself. Externally or internally some trigger kicks
off the process. At this point, some part of the organization defines the issues and seeks
permission to do something about it. Some individual or department is then given
responsibility to investigate and recommend action. A budget needs to be assigned and
the process of establishing the need and investigating possible solutions commenced.
This process can be complex where multiple organizational units are involved and
where organizational change is involved.
7) Explain about new product development process?
A) Every entrepreneur knows that productivity is one of the key ingredients for
successful product development. One of the two key processes in Robert's Rules of
Innovation is the New Product Development Process. A formalized, NPD process -- also
referred to and best practice: the Stage Gate Process -- is a must, from simple to
sophisticate.
The New Product Development process is often referred to as The Stage-Gate
innovation process, developed by Dr. Robert G. Cooper as a result of comprehensive
research on reasons why products succeed and why they fail.

When teams collaborate in developing new innovations, having the following

eight ingredients mixed into your team's new product developmental repertoire will
ensure that it's overall marketability will happen relatively quick, and accurately --
making everyone productive across the board.

Step 1: Generating
Utilizing basic internal and external SWOT analyses, as well as current
marketing trends, one can distance themselves from the competition by generating
ideologies which take affordability, ROI and widespread distribution costs into account.

Lean, mean and scalable are the key points to keep in mind. During the NPD
process, keep the system nimble and use flexible discretion over which activities are
executed. You may want to develop multiple versions of your road map scaled to suit
different types and risk levels of projects.

Step 2: Screening the Idea

Wichita, possessing more aviation industry than most other states, is seeing
many new innovations stop with Step two screening. Do you go/no go? Set specific
criteria for ideas that should be continued or dropped. Stick to the agreed upon criteria
so poor projects can be sent back to the idea-hopper early on.
 Because product development costs are being cut in areas like Wichita,
"prescreening product ideas," means taking your top three competitors' new
innovations into account, how much market share they're chomping up, what benefits
end consumers could expect etc. An interesting industry fact: Aviation industrialists
will often compare growth with metals markets; therefore, when Boeing is idle, never
assume that all airplanes are grounded, per se.

Step 3: Testing the Concept:

As Gaurav Akrani has said, "Concept testing is done after idea screening." And it
is important to note, it is different from test marketing.

Aside from patent research, design due diligence, and other legalities involved
with new product development, knowing where the marketing messages will work best
is often the biggest part of testing the concept. Does the consumer understand, need or
want the product or service?

Step 4: Business Analytics

During the New Product Development process, build a system of metrics to

monitor progress. Include input metrics, such as average time in each stage, as well as
output metrics that measure the value of launched products, percentage of new product
sales and other figures that provide valuable feedback. It is important for an
organization to be in agreement for these criteria and metrics.

Even if an idea doesn't turn into product, keep it in the hopper because it can
prove to be a valuable asset for future products and a basis for learning and growth.

Step 5: Beta/Marketability Tests

Arranging private tests groups, launching beta versions, and then forming test
panels after the product or products have been tested will provide you with valuable
information allowing last minute improvements and tweaks. Not to mention helping to
generate a small amount of buzz. Word press is becoming synonymous with beta
testing, and it's effective. Thousands of programmers contribute code; millions test it,
and finally even more download the completed end-product.

Step 6: Technicalities and Product Development

Provided the technical aspects can be perfected without alterations to post-beta
products, heading towards a smooth Step seven is imminent.

According to Akrani, in this step, "The production department will make plans to
produce the product. The marketing department will make plans to distribute the
product. The finance department will provide the finance for introducing the new
product".

As an example, in manufacturing, the process before sending technical specs to

machinery involves printing MSDS sheets, a requirement for retaining an ISO 9001
certification (the organizational structure, procedures, processes and resources needed
to implement quality management).

In internet jargon, honing the technicalities after beta testing involves final database
preparations, estimation of server resources, and planning automated logistics. Be sure
to have your technicalities in line when moving forward.

Step 7: Commercialize
At this stage, your new product developments have gone mainstream, consumers are
purchasing your good or service, and technical support is consistently monitoring
progress. Keeping your distribution pipelines loaded with products is an integral part
of this process too, as one prefers not to give physical (or perpetual) shelf space to
competition. Refreshing advertisements during this stage will keep your product's
name firmly supplanted into the minds of those in the contemplation stages of
purchase.

Step 8: Post Launch Review and Perfect Pricing

Review the NPD process efficiency and look for continues improvements. Most new
products are introduced with introductory pricing, in which final prices are nailed
down after consumers have "gotten in." In this final stage, you'll gauge overall value
relevant to COGS (cost of goods sold), making sure internal costs aren't overshadowing
new product profits. You continuously differentiate consumer needs as your products
age, forecast profits and improve delivery process whether physical, or digital, products
are being perpetuated

8) Write short note on product line, product mix, product life cycle?
A) A product line refers to a number of products that are related and developed by the
same manufacturer.
Product lines are not to be confused with product bundling, which combines
various items into one type of product. Items within a product line generally share the
same basic theme, and with the help of a successful marketing plan these products can
be entirely effective.
Frequently, a product line includes different products that are offered to the
public at varying price points. This way, a manufacturer or company can ensure that all
products within a line will be purchased by all kinds of people. Product line extension
refers to any additional products that may be added to a current product line.
 Most of the time, product extensions are introduced to the public in order to
ward off competitors. By creating products that match other, competitive products,
manufacturers are able to keep customers interested in a product that they are familiar
with. Since most people purchase brands that they know, these same consumers are
more likely to purchase a new product from a brand that they are comfortable with
rather than purchase a product from an unknown brand.

PRODUCT MIX: PRODUCT MIX involves planning and developing the right
type of product that will satisfy fully the needs of customers. A product has several
dimensions. These dimensions are collectively called product mix. Product mix for
example may consist of size and weight of the product, volume of output, product
quality, product design, product range, brand name, package, product testing, and
warranties and after sales services and the like.

Definition: Product life cycle (PLC) is the cycle through which every product goes
through from introduction to withdrawal or eventual demise.

Description: These stages are: 1) Introduction: When the product is brought into the
market. In this stage, there's heavy marketing activity, product promotion and the
product is put into limited outlets in a few channels for distribution. Sales take off
slowly in this stage. The need is to create awareness, not profits. The second stage
is growth. In this stage, sales take off, the market knows of the product; other companies
are attracted, profits begin to come in and market shares stabilize. The third stage
is maturity, where sales grow at slowing rates and finally stabilize. In this stage,
products get differentiated, price wars and sales promotion become common and a few
weaker players exit. The fourth stage is decline. Here, sales drop, as consumers may
have changed; the product is no longer relevant or useful. Price wars continue, several
products are withdrawn and cost control becomes the way out for most products in this
stage.

Significance of PLC: PLC analysis, if done properly, can alert a company as to the health
of the product in relation to the market it serves. PLC also forces a continuous scan of
the market and allows the company to take corrective action faster. But the process is
rarely easy.

8) Define pricing, pricing methods?

A) Pricing is the process of determining what a company will receive in exchange for its
product. Pricing factors are manufacturing cost, market place, competition, market
condition, brand, and quality of product. Pricing is also a key variable
in microeconomic price allocation theory. Pricing is a fundamental aspect of financial
modeling and is one of the four Ps of the marketing mix. (The other three aspects are
product, promotion, and place.) Price is the only revenue generating element amongst
the four Ps, the rest being cost centers. However, the other Ps of marketing will
contribute to decreasing price elasticity and so enable price increases to drive greater
revenue and profits.
Pricing is the manual or automatic process of applying prices to purchase and sales
orders, based on factors such as: a fixed amount, quantity break, promotion or sales
campaign, specific vendor quote, price prevailing on entry, shipment or invoice date,
combination of multiple orders or lines, and many others. Automated systems require
more setup and maintenance but may prevent pricing errors. The needs of the
consumer can be converted into demand only if the consumer has the willingness and
capacity to buy the product. Thus pricing is very important in marketing.
Cost-plus pricing - Set the price at your production cost, including both cost of goods
and fixed costs at your current volume, plus a certain profit margin. For example, your
widgets cost $20 in raw materials and production costs, and at current sales volume (or
anticipated initial sales volume), your fixed costs come to $30 per unit. Your total cost is
$50 per unit. You decide that you want to operate at a 20% markup, so you add $10
(20% x $50) to the cost and come up with a price of $60 per unit. So long as you have
your costs calculated correctly and have accurately predicted your sales volume, you
will always be operating at a profit.
Target return pricing - Set your price to achieve a target return-on-investment (ROI).
For example, let's use the same situation as above, and assume that you have $10,000
invested in the company. Your expected sales volume is 1,000 units in the first year. You
want to recoup all your investment in the first year, so you need to make $10,000 profit
on 1,000 units, or $10 profit per unit, giving you again a price of $60 per unit.
Value-based pricing - Price your product based on the value it creates for the customer.
This is usually the most profitable form of pricing, if you can achieve it. The most
extreme variation on this is "pay for performance" pricing for services, in which you
charge on a variable scale according to the results you achieve.
Psychological pricing - Ultimately, you must take into consideration the consumer's
perception of your price, figuring things like:
Positioning - If you want to be the "low-cost leader", you must be priced lower than
your competition. If you want to signal high quality, you should probably be priced
higher than most of your competition.
Popular price points - There are certain "price points" (specific prices) at which people
become much more willing to buy a certain type of product. For example, "under $100"
is a popular price point. "Enough under $20 to be under $20 with sales tax" is another
popular price point, because it's "one bill" that people commonly carry. Meals under $5
are still a popular price point, as are entree or snack items under $1 (notice how many
fast-food places have a $0.99 "value menu"). Dropping your price to a popular price
point might mean a lower margin, but more than enough increase in sales to offset it.
Fair pricing - Sometimes it simply doesn't matter what the value of the product is, even
if you don't have any direct competition. There is simply a limit to what consumers
perceive as "fair". If it's obvious that your product only cost $20 to manufacture, even if
it delivered $10,000 in value, you'd have a hard time charging two or three thousand
dollars for it -- people would just feel like they were being gouged. A little market
testing will help you determine the maximum price consumers will perceive as fair.
9) DESCRIBE ABOUT FACTORS AFFECTING PRICE DETEMINATION?
A) Internal or controllable pricing factors
Under the internal organization factors include the objective of the business firm,
production and distribution cost, marketing mix, nature of products, firm's expectations
and reputation, etc. They are called internal pricing determinants and can be controlled
by marketer.

a. Organization's objectives
The objectives of a marketing organization greatly influence pricing. A manufacturing
company, at the introductory stage of its new product, determines low price to bring
them to markets. But some other firms may determine high introductory price of their
products to recover their investment or to get expected return from the investment.
Whatever the objective of the company may be, it affects price determination.

b. Cost of manufacturing and marketing

The manufacturing and distribution cost greatly as well as directly affects pricing. If the
cost for production and distribution is high, it becomes impossible to determine low
price.

c. Other marketing mix components

The other components of marketing mix i.e. product, place and promotion prepared by
a business organization all affect pricing. The nature of products does not only make it
possible bust also make it is essential to determine price of the product. Similarly,
reputation or goodwill of organization also affect price determination. Likewise
promotion cost also affects pricing decision.

2. External or independent pricing factors

The external factors include customers, channel members, competitors, government,
economic condition of country etc. These are independent factors and cannot be
controlled by marketer.

a. Consumers and market

Consumers and target markets also affect pricing of products. Those who determine
price should pay careful attention to the elements of buying behavior and methods.
More attention should be given to the characteristics of target market, condition of the
products, consumers' perception, thought and attitudes towards the price and quality of
the products etc.

B. Channel Members
Pricing is also affected by the members of distribution channel. The necessity and
objective of channel members matching with pricing policy of the marketer can make
distribution possible. The discount given to wholesalers or retailers is the important
component in the profit to middlemen. So, the price determiner should get knowledge
about the distributors' attitude towards the price and what price will they sell the
products to consumers. Without written agreement, manufacturers cannot provide
authority or direct the middlemen to fix final price, but can give suggestions.

c. Competition
Price of most of products is determined by considering the competition in market price.
The company with having large market share becomes the price leader. When it
increases or decreases price of its products, other company also does the same or adopts
the same policy. But if there is no domination or influence of any single company in the
market, the marketer analyses and evaluates the prices of all main competitor
companies, collects reactions and draws conclusion. In this way, competition among
manufacturers affects price determination.

d. Government
Government policy and decisions also affect pricing. The government of each country
has their own policy, decisions, rules and regulations. Price should be determined
considering price control policy of government, sale tax, income tax policy etc. Prices of
some products are controlled by government direction and the government itself
determines prices of some products.
10) Define personal selling and steps in personal selling?
A) Personal selling is the most expensive form of advertising and to be effective one
should use a step by step process to gain the most benefit. Personal selling can adjust
the manner in which facts are communicated and can consider factors such as culture
and behavior in the approach. They can ask questions to discover the specific need of
the customer and can get feedback and adjust the presentation as it progresses. The
personal selling process is a consecutive series of activities conducted by the
salesperson, the lead to a prospect taking the desired action of buying a product or
service and finish with a follow-up contact to ensure purchase satisfaction.

Step One: Prospecting - the first step in the personal selling process
The process of looking for and checking leads is called prospecting or determining
which firms or individuals could become customers. Up to 20% of a firm's customer
base can be lost for reasons such as transfer, death, retirement, takeovers, dissatisfaction
with the company and competition. A steadily growing list of qualified prospects is
important for reaching the sales targets.

Qualifying a prospect: A lead is a name on a list. It only becomes a prospect if it

is determined that the person or company can benefit from the service or product
offered. A qualified prospect has a need, can benefit from the product and has the
authority to make the decision.

Step Two: The Pre-approach: This stage involves the collecting of as much relevant
information as possible prior to the sales presentation. The pre-approach investigation
is carried out on new customers but also on regular customers. Systematic collection of
information requires a decision about applicability, usefulness and how to organise the
information for easy access and effective use.
Step Three: The Approach-The salesperson should always focus on the benefits for the
customer. This is done by using the product's features and advantages. This is known as
the FAB technique (Features, Advantages and Benefits).Features: Refers to the physical
characteristics such as size, taste etc.

Advantages: Refers to the performance provided by the physical characteristics eg it

does not stain.

Step Four: The Sales Presentation-After the prospects interest has been grasped, the
sales presentation is delivered. This involves a "persuasive vocal and visual explanation
of a business proposition". It should be done in a relaxed atmosphere to encourage the
prospect to share information in order to establish requirements. Some small talk may
be necessary to reduce tension but the purpose always remains business.
Step Five: The Trial Close-The trial close is a part of the presentation and is an
important step in the selling process. Known as a temperature question - technique to
establish the attitude of the prospect towards the presentation and the product.

Step Six: Handling Objections-Objections are often indications of interest by the

prospect and should not be viewed with misgiving by salespeople. The prospect is in
fact requesting additional information to help him to justify a decision to buy. The
prospect may not be fully convinced and the issues raised are thus very important. It
also assists the salesperson to establish exactly what is on the prospect's mind.
Step Seven-Closing the Sale: This is the last part of the presentation. Many salespeople
fear the closing of a sale. Closing a sale is only the confirmation of an understanding.
Fear will disappear if the salesperson truly believes that the prospect will enjoy benefits
after the purchase of the product.

Step Eight: The Follow-up: The sale does not complete the selling process. Follow-up
activities are very important and are useful for the establishment of long-term business
relationships. It is important to check if the products have been received in good
condition, to establish the customer is satisfied etc.

Q) Describe about Marketing Communication?

A) marketing communications are the means by which firms attempt to inform,

persuade, and remind consumers - directly or indirectly - about the products and
brands that they sell." (Kotler and Kellter).

Personal and non personal communication channels can be used for marketing
communications. Within both of them there are many sub channels. The marketing
communications mix is now thought of as consisting six major modes or types of
communication alternatives.

1. Advertising2. Sales promotion3. Events and experiences4. Public relations and

publicity5. Direct marketing6. Personal selling

Personal communication channels

Personal communication is communication between two or more persons with a

specific person communication with others. The message emanates from a specific
person. It can be done face to face, or by a person to audience, over telephone, or
through post or couriers or through emails or through mobile messages.
 The personal communications in the case of marketing can also be categorized as
communications from advocate, expert and social contacts. The company salespersons’
communication to customers is communication from advocates of the product.

An independent expert communicating to prospective buyers about the merits of

the product is classified as expert communication. A neighbor saying good things about
a brand is social channel of communication.

Companies take various steps to stimulate personal communications about their

products and brands.

1. They identify influential individuals and devote extra effort on them.

2. Create opinion leaders by supplying possible opinion leaders with the product on
attractive terms.

3. Use influential or believable people in testimonial advertising.

4. Develop word of mouth publicity by requesting satisfied clients to promote their

product among their friends.

5. Establish online discussion groups and communities

NONPERSONAL COMMUNICATION CHANNELS

They include media, atmospheres, and events. Media channels include print
media (newspaper, magazines, souvenirs, proceedings of conferences), broadcast media
(radio, television), display media (billboards, signs, posters) and electronic media
(audiotape, videotape, videodisk, CD-ROM).

Atmosphere is what firms create in their office environment. The office interiors
and exteriors have a meaning to the potential buyers.

Events are occurrences designed to communicate particular messages to target

audiences or audiences. Company arranged news conferences, opening ceremonies of
various kinds, and sponsorships of various events come under event communications
channels.

Communication through mass media stimulates personal communication channels.

THE PROMOTIONAL TOOLS

The characteristics of various promotional tools are as follows:

Advertising
Advertising is a public mode of communication. Because it is communicated
simultaneously to large number of people and people know that the same
communication is going to many people, they feel their motives for buying are
understood by the advertiser.

Advertising messages can be repeated number of times. Buyers also can compare
advertisements of various companies selling the same product. The media offers the
facility to add color, sound etc. to the message and dramatize the message. But
advertising cannot have dialogue with the people. People may not see and pay
attention to the advertisement. Advertising is an efficient way to reach geographically
dispersed potential buyers at a low cost per exposure.

Advertising has two recent variants. Advertorials are offer editorial content and
while it is paid for by the advertiser and it will be difficult for the reader to easily make
out that it is an advertisement. Similarly infomercials are TV programs that are meant
for promoting the products of the company. They discuss the working of the product,
benefits of the products, and user experience etc. and they may beam the message to
buy the product and the address to be contacted.

Sales promotion
Sales promotion tools like coupons, contests, premiums, and the like act as
communication medium and also promote sales. They gain attention and provide
information that may lead the consumer to the product. They include a distinct
invitation to the consumer to do the transaction in a short period of time.

Public relations and publicity

News stories and feature articles are more authentic and credible than advertisements
to readers. The articles act as testimonials. The message gets through to the potential
buyers as news and they may not turn away from it as they turn away from the
advertisements.

Personal selling
Personal selling as a communicative channel involves a live, immediate, and interactive
relationship between persons. Personal selling leads to relationships. The listener feels
obligated to respond to the salesman at least with a polite “thank you.”

Direct Marketing
The alternatives are direct mail, Email, and telemarketing. In these cases the message is
addressed to a specific person. The message can be customized. Even though mailing
folders and email are normally standardized to gain efficiency. The message can be up
to date. In case of telemarketing, message can be altered depending on the response. In
the case of other alternatives subsequent communication can be altered depending on
the response.
11) What are Channels of Distribution, Logistics, and Wholesaling?
A) The Importance of Distribution:
Most producers use intermediaries to bring their products to market. They try to
develop a distribution channel (marketing channel) to do this. A distribution channel is
a set of interdependent organizations that help make a product available for use or
consumption by the consumer or business user. Channel intermediaries are firms or
individuals such as wholesalers, agents, brokers, or retailers who help move a product
from the producer to the consumer or business user.

A company’s channel decisions directly affect every other marketing decision.

Place decisions, for example, affect pricing. Marketers that distribute products through
mass merchandisers such as Wal-Mart will have different pricing objectives and
strategies than will those that sell to specialty stores. Distribution decisions can
sometimes give a product a distinct position in the market. The choice of retailers and
other intermediaries is strongly tied to the product itself. Manufacturers select mass
merchandisers to sell mid-price-range products while they distribute top-of-the-line
products through high-end department and specialty stores. The firm’s sales force and
communications decisions depend on how much persuasion, training, motivation, and
support its channel partners need. Whether a company develops or acquires certain
new products may depend on how well those products fit the capabilities of its channel
members.

Some companies pay too little attention to their distribution channels. Others,
such as FedEx, Dell Computer, and Charles Schwab have used imaginative distribution
systems to gain a competitive advantage.

Functions of Distribution Channels

Distribution channels perform a number of functions that make possible the flow
of goods from the producer to the customer. These functions must be handled by
someone in the channel. Though the type of organization that performs the different
functions can vary from channel to channel, the functions themselves cannot be
eliminated. Channels provide time, place, and ownership utility. They make products
available when, where, and in the sizes and quantities that customers want.
Distribution channels provide a number of logistics or physical distribution functions
that increase the efficiency of the flow of goods from producer to customer. Distribution
channels create efficiencies by reducing the number of transactions necessary for goods to
flow from many different manufacturers to large numbers of customers. This occurs in
two ways. The first is called breaking bulk. Wholesalers and retailers purchase large
quantities of goods from manufacturers but sell only one or a few at a time to many
different customers. Second, channel intermediaries reduce the number of transactions
by creating assortments—providing a variety of products in one location—so that
customers can conveniently buy many different items from one seller at one time.
Channels are efficient. The transportation and storage of goods is another type of physical
distribution function. Retailers and other channel members move the goods from the
production site to other locations where they are held until they are wanted by
customers. Channel intermediaries also perform a number of facilitating functions,
functions that make the purchase process easier for customers and manufacturers.
Intermediaries often provide customer services such as offering credit to buyers and
accepting customer returns. Customer services are oftentimes more important in B2B
markets in which customers purchase larger quantities of higher-priced products.

Some wholesalers and retailers assist the manufacturer by providing repair and
maintenance service for products they handle. Channel members also perform a risk-
taking function. If a retailer buys a product from a manufacturer and it doesn’t sell, it is
“stuck” with the item and will lose money. Last, channel members perform a variety
of communication and transaction functions. Wholesalers buy products to make them
available for retailers and sell products to other channel members. Retailers handle
transactions with final consumers. Channel members can provide two-way
communication for manufacturers. They may supply the sales force, advertising, and
other marketing communications necessary to inform consumers and persuade them to
buy. And the channel members can be invaluable sources of information on consumer
complaints, changing tastes, and new competitors in the market.

The Internet in the Distribution Channel

By using the Internet, even small firms with limited resources can enjoy some of
the same competitive advantages as their largest competitors in making their products
available to customers internationally at low cost. E-commerce can result in radical
changes in distribution strategies. Today most goods are mass-produced, and in most
cases end users do not obtain products directly from manufacturers. With the Internet,
however, the need for intermediaries and much of what has been assumed about the
need and benefits of channels will change. In the future, channel intermediaries that
physically handle the product may become largely obsolete. Many traditional
intermediaries are already being eliminated as companies question the value added by
layers in the distribution channel. This removal of intermediaries is
termed disintermediation, the elimination of some layers of the distribution channel in
order to cut costs and improve the efficiency of the channel.

Manufacturer-owned intermediaries are set up by manufacturers in order to

have separate business units that perform all of the functions of independent
intermediaries, while at the same time maintaining complete control over the channel.
Manufacturer-owned intermediaries include sales branches, sales offices, and
manufacturers’ showrooms. Sales branches carry inventory and provide sales and service
to customers in a specific geographic area. Sales offices do not carry inventory but
provide selling functions for the manufacturer in a specific geographic area. Because
they allow members of the sales force to be located close to customers, they reduce
selling costs and provide better customer service.
 Manufacturers’ showrooms permanently display products for customers to visit.
They are often located in or near large merchandise marts, such as the furniture
market in High Point, North Carolina.

Types of Distribution Channels:

The first step in selecting a marketing channel is determining which type of
channel will best meet both the seller’s objectives and the distribution needs of
customers.

Channel Length: Distribution channels can be described as being either short or long. A
short channel involves few intermediaries. A long channel, on the other hand, involves
many intermediaries working in succession to move goods from producers to
consumers. In general, business products tend to move through shorter channels than
consumer products due to geographical concentrations and comparatively few business
purchases. Service firms market primarily through short channels because they sell
intangible products and need to maintain personal relationships within their channels.
Not-for-profit institutions also tend to work with short, simple, and direct channels.
Please note Table 15.1 below that highlights the characteristics of short and long
marketing channels.

Consumer Channels: The simplest and shortest distribution channel is a direct channel.
A direct channel carries goods directly from a producer to the business purchaser or
consumer. One of the newest means of selling in a direct channel is the Internet. A
direct channel may allow the producer to serve its customers better and at a lower price
than is possible using a retailer. Sometimes a direct channel is the only way to sell the
product because using channel intermediaries may increase the price above what
consumers are willing to pay. Another reason to use a direct channel is control.

Many producers, however, choose to use indirect channels to reach consumers.

Customers are familiar with certain retailers or other intermediaries and habitually turn
to them when looking for what they need. Intermediaries also help producers fulfill the
channel functions previously cited. By creating utility and transaction efficiencies,
channel members make producers’ lives easier and enhance their ability to reach
customers.

The producer-retailer-consumer channel is the shortest indirect channel. GE uses

this channel when it sells small appliances through large retailers such as Wal-Mart or
Sears. The producer-wholesaler-retailer-consumer channel is another common
distribution channel in consumer marketing.

Business-to-Business Channels:B2B distribution channels facilitate the flow of goods

from a producer to an organizational customer. Generally, B2B channels parallel
consumer channels in that they may be direct or indirect. The simplest indirect channel
in industrial markets occurs when the single intermediary—a merchant wholesaler
referred to as an industrial distributor rather than a retailer—buys products from a
manufacturer and sells them to business customers. Direct channels are more common
to business-to-business markets because B2B marketing often means selling high-dollar,
high-profit items to a market made up of only a few customers. In such markets, it pays
for a company to develop its own sales force and sell directly to customers at a lower
cost than if it used intermediaries.

Channels for Services: Because services are intangible, there is no need to worry about
storage, transportation, and the other functions of physical distribution. In most cases,
the service travels directly from the producer to the customer. Some services, however,
do need an intermediary, often called an agent, who helps the parties complete the
transaction. Examples include insurance agents, stockbrokers, and travel agents.

Note the alternative distribution channels for consumer goods, business goods, and

Services illustrated in Figure

Horizontal Marketing Systems

A horizontal marketing system is a channel arrangement in which two or more
companies at one level join together to follow a new marketing opportunity. By
working together, companies can combine their financial, production, or marketing
resources to accomplish more than any one company could alone. Companies can join
forces with competitors or noncompetitors. McDonald’s places “express” versions of its
restaurants in Wal-Mart stores. McDonald’s benefits from Wal-Mart’s considerable store
traffic, while Wal-Mart keeps hungry shoppers from having to go elsewhere to eat.

Multichannel Distribution Systems.A multichannel distribution system is a

distribution system in which a single firm sets up two or more marketing channels to
reach one or more customer segments. This is also called a hybrid marketing channel.
Multichannel distribution systems offer many advantages to companies facing large
and complex markets. With each new channel, the company expands its sales and
market coverage and gains opportunities to tailor its products to the specific needs of
diverse customers. Multichannel distribution systems, however, are harder to control,
and they generate conflict as more channels compete for customers and sales.

Channel Strategy:
Marketers face several strategic decisions in choosing channels and marketing
intermediaries for their products. Selecting a specific channel is the most basic of these
decisions. Marketers must also resolve questions about the level of distribution
intensity, the desirability of vertical marketing systems, and the performance of current
intermediaries.
Marketing Channel Selection
Marketing channel selection can be facilitated by analyzing market, product, producer,
and competitive factors. A marketer could refer to Table 15.1 above for insights into
whether the distribution channel should be short or long for the product in question.
Then, he or she could refer to Figure 15.2 above and consider the alternative long or
short channels for consumer goods, business goods, or services.
Distribution Intensity
Distribution intensity refers to the number of intermediaries through which a
manufacturer distributes its goods. The decision about distribution intensity should
ensure adequate market coverage for a product. In general, distribution intensity varies
along a continuum with three general categories: intensive distribution, selective
distribution, and exclusive distribution.
Intensive Distribution: An intensive distribution strategy seeks to distribute a product
through all available channels in an area. Usually, an intensive distribution strategy
suits items with wide appeal across broad groups of consumers, such as convenience
goods.
Selective distribution: is distribution of a product through only a limited number of
channels. This arrangement helps to control price cutting. By limiting the number of
retailers, marketers can reduce total marketing costs while establishing strong working
relationships within the channel. Moreover, selected retailers often agree to comply
with the company’s rules for advertising, pricing, and displaying its products. Where
service is important, the manufacturer usually provides training and assistance to
dealers it chooses. Cooperative advertising can also be utilized for mutual benefit.
Selective distribution strategies are suitable for shopping products such as clothing,
furniture, household appliances, computers, and electronic equipment for which
consumers are willing to spend time visiting different retail outlets to compare product
alternatives. Producers can choose only those wholesalers and retailers that have a good
credit rating, provide good market coverage, serve customers well, and cooperate
effectively. Wholesalers and retailers like selective distribution because it results in
higher sales and profits than are possible with intensive distribution where sellers have
to compete on price.

Exclusive distribution : distribution of a product through one wholesaler or retailer in

a specific geographical area. The automobile industry provides a good example of
exclusive distribution. Though marketers may sacrifice some market coverage with
exclusive distribution, they often develop and maintain an image of quality and
prestige for the product. In addition, exclusive distribution limits marketing costs since
the firm deals with a smaller number of accounts. In exclusive distribution, producers
and retailers cooperate closely in decisions concerning advertising and promotion,
inventory carried by the retailers, and prices. Exclusive distribution is typically used
with products that are high priced, that have considerable service requirements, and
when there are a limited number of buyers in any single geographic area. Exclusive
distribution allows wholesalers and retailers to recoup the costs associated with long
selling processes for each customer and, in some cases, extensive after-sale service.
Specialty goods are usually good candidates for this kind of distribution intensity.
Channel Conflict: The channel captain or leader, the dominant and controlling member
of a distribution channel, must work to resolve conflicts between channel members.
Conflicts can be horizontal and vertical.

Horizontal & Vertical Conflict

Horizontal conflict occurs among firms at the same level of the channel (i.e.
between two retailers). Vertical conflict is conflict between different levels of the same
channel (i.e. between a wholesaler and a retailer). Some conflict in the channel takes the
form of healthy competition. Severe or prolonged conflict, however, can disrupt
channel effectiveness and cause lasting harm to channel relationships.

Vertical Marketing Systems

A vertical marketing system (VMS) is a distribution channel structure in which
producers, wholesalers, and retailers act as a unified system. One channel member
owns the others, has contracts with them, or has so much power that they all cooperate.
A conventional distribution channel consists of one or more independent producers,
wholesalers, and retailers. A vertical marketing system, on the other hand, provides a
way to resolve the channel conflict that can occur in a conventional distribution channel
where channel members are separate businesses seeking to maximize their own profits
—even at the expense sometimes of the system as a whole. The VMS can be dominated
by the producer, wholesaler, or retailer. There are three major types of vertical
marketing systems: corporate, contractual, and administered.
 A corporate VMS is a vertical marketing system that combines successive stages
of production and distribution under single ownership—channel leadership is
established through common ownership. A little-known Italian eyewear maker,
Luxottica, sells its many famous eyewear brands—including Giorgio, Armani, Yves
Saint Laurent, and Ray-Ban—through the world’s largest optical chain, Lens Crafters,
which it also owns.
A contractual VMS is a vertical marketing system in which independent firms at
different levels of production and distribution join together through contracts to obtain
more economies or sales impact than they could achieve alone. Coordination and
conflict management are attained through contractual agreements among channel
members. The franchise organization is the most common type of contractual
relationship.
There are three types of franchises: manufacturer-sponsored retailer franchise
system (Ford Motor Co.), manufacturer-sponsored wholesaler franchise system (Coca-Cola
bottlers), and service-firm-sponsored retailer franchise system (McDonald’s). The fact that
most consumers cannot tell the difference between contractual and corporate VMSs
shows how successfully the contractual organizations compete with corporate chains.
An administered VMS is a vertical marketing system that coordinates successive stages
of production and distribution, not through common ownership or contractual ties, but
through the size and power of one of the parties. Manufacturers of a top brand can
obtain strong trade cooperation and support from resellers (P&G). Large retailers such
as Wal-Mart can exert strong influence on the manufacturers that supply the products
they sell.
Logistics: Logistics is the process of designing, managing, and improving the
movement of products through the supply chain. The supply chain is all the firms that
engage in activities necessary to turn raw materials into a product and put it in the
hands of the consumer or business customer. The difference between a supply chain
and a distribution channel is the number of members and their function. A supply chain
consists of those firms that supply the raw materials, component parts, and supplies
necessary for a firm to produce a product plus the firms that facilitate the movement of
that product from the producer to the ultimate users of the product—the channel
members.

Physical Distribution:Logistics has the objective of delivering exactly what the

customer wants—at the right time, in the right place, and at the right price. In planning
for the delivery of goods to customers, marketers have usually looked at a process
termed physical distribution, which refers to the activities used to move finished goods
from manufacturers to final customers. Physical distribution activities include order
processing, warehousing, materials handling, transportation, and inventory control. This
process impacts how marketers physically get products where they need to be, when
they need to be there, and at the lowest possible cost.

In logistics, the focus is on the customer. When planning for the logistics
function, firms consider the needs of the customer first. The customer’s goals become
the logistics provider’s goals. With most logistics decisions, firms must compromise
between low costs and high customer service.

12) Marketing ambush, marketing gurella, green marketing?

A)Abush Marketing:marketing technique inwhich advertisers work toconnect
their product with a particular event in the minds of potential customers, without
having to pay sponsorship expenses for the event. An example of ambush marketing
might involve selling music merchandise just outside the grounds of a concert without
the consent or awareness of the concert promoters, relying on association with the
concern to drive sales.

GURELLA Marketing: A marketing tactic in which a company uses surprise and/or

unconventional interactions in order to promote a product or service. Guerrilla
marketing is different than traditional marketing in that it often relies on personal
interaction and has a smaller budget, and it focuses on smaller groups of promoters that
are responsible for getting the word out in a particular location rather than on wide-
spread media campaigns.

GREEN MARKETING: Marketing products and services based on environmental

factors or awareness. Companies involved in green marketing make decisions relating
to the entire process of the company's products, such as methods of processing,
packaging and distribution.