Marketing Management

Section-A
1. What are the roles a buyers plays in the market?
For many products, it is easy to identify the buyer. Men normally choose their shaving equipment and women
choose their lipsticks. Other products involve a decision-making unit consisting of more than one person.
Consider the selection of a family automobile. The teenage son may have suggested buying a new car. A friend
might advise the family on the kind of car to buy. The husband might choose the make. The wife might have
definite desires regarding the car’s size and interior. The husband might make the financial offer. The wife
might use the car more often than her husband.
Thus we can distinguish five roles people might play in a buying decision:
i. Initiator:
A person who first suggests the idea of buying the particular product or service.
ii. Influencer:
A person whose view or advice influences the decision.
iii. Decider:
A person who decides on any component of a buying decision; whether to buy, what to buy, how to buy, or
where to buy
iv. Buyer:
The person who makes the actual purchase.
v. User:
A person who consumes or uses the product or service.
A company needs to identify these roles because they have implications for designing the product,
determining messages, arid allocating the promotional budget. If the husband decides on the car make then
the auto company will direct advertising to reach husbands. The auto company might design certain car
features to please the wife. Knowing the main participants and their roles helps the marketer fine-tune the
marketing program.
2. What are the different forms of product?
There are different types of products and they too act as a family tree and have their branches and are
classified under different sections on the basis of their features. Different types of products category are:
The differentiated product – The differentiated product enjoys a distinction from other similar
products/brands in the market. The differential claimed may be ‘real’, with a real distinction on ingredient,
quality, utility, or service, or it may be ‘psychological’ brought about through subtle sales appeals. As
competition is increasing more and more, companies are coming out with differentiated products so that they
can have a USP to sell better and build more customer value.
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Types of products
The customised product – Customer specific requirements are taken into account while developing the
product. Commonly practiced in the industrial product marketing, where the manufacturer and the user are in
direct contact and the product gets customized to the requirements of the customer. However, a couple of
companies which have brought customization to even customer levels are Harley Davidson and Royal Enfield,
products which customers love.
The augmented product – The augmented product is the result of voluntary improvements brought about by
the manufacturer in order to enhance the value of the product, which are neither suggested by the customer
nor expected by them. The marketer on his own augments the product, by adding an extra facility or an extra
feature to the product. This is most commonly observed in the Smart phone market wherein more and more
technology is being introduced just because the manufacturer is capable of giving this technology. Many
customers don’t even demand them. But augmentation gives value to the products of the company.
The potential product – The potential product is tomorrow’s product carrying with it all the improvements and
finesse possible under the given technological, economic and competitive condition. There are no limits to the
‘potential product’. Only the technological and economic resources of the firm set the limit. Virtual reality,
which was a potential product is a reality now and so is space travel which is going to a strong future product.

3. What do you mean by product and brand positioning?

Brand positioning refers to “target consumer’s” reason to buy your brand in preference to others. It is ensures
that all brand activity has a common aim; is guided, directed and delivered by the brand’s benefits/reasons to
buy; and it focusses at all points of contact with the consumer.
Brand positioning must make sure that:
Is it unique/distinctive vs. competitors ?
Is it significant and encouraging to the niche market ?
Is it appropriate to all major geographic markets and businesses ?
Is the proposition validated with unique, appropriate and original products ?
Is it sustainable - can it be delivered constantly across all points of contact with the consumer ?
Is it helpful for organization to achieve its financial goals ?
Is it able to support and boost up the organization ?
In order to create a distinctive place in the market, a niche market has to be carefully chosen and a differential
advantage must be created in their mind. Brand positioning is a medium through which an organization can
portray it’s customers what it wants to achieve for them and what it wants to mean to them. Brand
positioning forms customer’s views and opinions.

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Brand Positioning can be defined as an activity of creating a brand offer in such a manner that it occupies a
distinctive place and value in the target customer’s mind. For instance-Kotak Mahindra positions itself in the
customer’s mind as one entity- “Kotak ”- which can provide customized and one-stop solution for all their
financial services needs. It has an unaided top of mind recall. It intends to stay with the proposition of “Think
Investments, Think Kotak”. The positioning you choose for your brand will be influenced by the competitive
stance you want to adopt.
Brand Positioning involves identifying and determining points of similarity and difference to ascertain the right
brand identity and to create a proper brand image. Brand Positioning is the key of marketing strategy. A strong
brand positioning directs marketing strategy by explaining the brand details, the uniqueness of brand and it’s
similarity with the competitive brands, as well as the reasons for buying and using that specific brand.
Positioning is the base for developing and increasing the required knowledge and perceptions of the
customers. It is the single feature that sets your service apart from your competitors. For instance- Kingfisher
stands for youth and excitement. It represents brand in full flight.
There are various positioning errors, such as-
Under positioning- This is a scenario in which the customer’s have a blurred and unclear idea of the brand.
Over positioning- This is a scenario in which the customers have too limited a awareness of the brand.
Confused positioning- This is a scenario in which the customers have a confused opinion of the brand.
Double Positioning- This is a scenario in which customers do not accept the claims of a brand.

4. What are the sources of new product idea?

From the very beginning Apple shows the creativity and customer driven innovation. Apple surprised its
customer with so many innovations. Their latest surprise with their new product is Apple Watch. It hits the
market some months ago and got the immense response from the consumers. Same way they are bringing the
latest version of Mac, iPhone each year. The new iPhone 6 has basically two models one iPhone 6 (4.7″
Display) and another is iPhone 6 Plus (5.5″ Display). The way how Apple keep their customers engaged is its
innovation through their new product.
New products are the lifeblood of every business. If any business doesn’t develop it’s new product
continuously it will die soon. For developing new products there have some stages and generating ideas is the
first step of new product development process. It is important to have a great idea first and then the company
can start the new product development process. For getting great ideas there have 6 great sources. Basically
the sources can be divided into two types- one is internal sources and another one is external sources. All the
sources are discussing below:
Internal Sources:
Internal sources are the great way to find new ideas. Internal sources can be divided into two parts. They are
as follows-
R & D (Research and Development): It is the formal department of any organization to generate new ideas.
R&D department research according to the company’s future plan and then come up with the new ideas
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which complete its journey with the commercialization of the idea (product). One recent survey showed that
traditional R&D only contribute less than 15% of the ideas of the organization. However the importance of
R&D in the organization is not only depends on the idea generation, they also do some other important things.
Employees: Companies can use the brain of their employees. If customers are the Oxygen of any company
then employees are the heart of that company. All level of employees from executive to top management can
be the great source of ideas. One recent research showed that almost 45% of the ideas comes from the
employees. Many companies now use web technology to get the ideas from their internal employees. In that
web form employees can share their ideas about new product. However picking up the great idea from it and
rewarding the employees can encourage your employees to be more creative and contribute more in future.
External Sources:
Companies can also gain good new product development ideas from external sources. External sources are
those which is affiliated with the company externally. Some important external sources for idea generation is
discussing below.
Customers: Most probably customers are the most important sources to get new product development
ideas. Customer knows best what they need and what they are looking for. It is the most important thing to
deliver satisfaction by providing exactly what your customers want. For instances, when you know that your
customer need a specific product or a special feature on any particular product then it will be easier to make
that exactly what your customer need and then you will get satisfied customers. Thus way you can build long
term relationship.
Distributors and Suppliers: Distributors works very closely with the market and they know consumer problems
and their need. Distributors can give the ideas for new product possibilities. Suppliers can also help with the
information of the market like new concept, technique or materials which can be used for developing new
products.
Competitors: Competitors are another important source. One can analyze their competitors and can find
many things which can be used for idea generation. Researching competitors can give you the idea that which
thing you are missing or which thing they are missing, you can decide then what things you need to include in
your new product. Remember your competitors are not your enemy, they are your strength.
Others: Other idea sources includes outside Consultancies, Design Firms and Online Communities, Trade
Magazines, Shows and Seminars, Government agencies, Advertising agencies, Marketing research firms,
Universities, Commercial laboratories, Inventories and so on.

5. What are the components of market information system?

The Top four components of marketing information system are as follows: 1. Internal record 2. Marketing
intelligence system 3. Marketing decision support system 4. Marketing research.
An MIS should provide updated information. Hence, it is necessary to use new techniques for speed and
accuracy in the MIS. Thus, various subsystems are used to develop information. Following are the four
components of MIS:

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1. Internal record:
Marketing managers rely on internal reports related to customer orders, sales, price levels, cost, inventory
levels, receivable and payables. The heart of the internal record sys-tem is the order-to-payment cycle.
Customers send orders to the firms.
The sales department pre-pares invoices and transmits copies to various departments. The billing department
sends invoices as quickly as possible. It is the order from the customer that sets the internal record keeping.
This record becomes a vital source of information for analysis of sales, inventory levels, profit margins, credit
policy to customers, etc.
2. Marketing intelligence system:
The marketing intelligence system is a set of procedures and sources used by the managers to obtain everyday
information about marketing environment.
A company can collect marketing intelligence in the following ways:
i. Sales force:
Sales representatives are trained to pick information and send it to the concerned manager. They can spot and
report new developments.
ii. Distributors, retailers and other intermediaries:
A company can motivate the members of the distribution channel to pass information about shoppers.
Information is also collected on sales force behaviour.
iii. External networking:
Managers can attend trade shows, read competitors published reports, talk to employees, and analyse new
stories about competitors.
iv. Published data:
A company can take advantage of the government data resources. For instance, census supplies information
on changes in population, demographic groups and changing family structure. Similarly, a company can
purchase information from professional research agencies such as IMRB, A.C. Nielson Company, etc.
v. Customer feedback:
This is a technique of collecting information at a low cost. The online customer feedback facilities make it
more convenient for both the customer and the firm to collect and evaluate information.
3. Marketing decision support system:
A growing number of organizations are using marketing decision support system to help the managers in
taking better decisions. It is a system supported by software and hardware to gather information from
business and environment.

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It helps manag-ers in providing evidence for the decisions taken by them. The current marketing software
pro-grams assist in designing marketing research studies, market segmentation, selling prices, budget,
analysing media, and planning sales force activity.
4. Marketing research:
It acts as a tool for accurate decision-making in marketing. It is useful for studying and solving different
marketing problems. Marketing research techniques are used by manufacturers, exporters, distributors and
service organizations. Marketing research is an applied knowledge. Hence, it provides alternative solutions to
deal with a specific problem.
State the various concepts of Marketing.
Every company can have different ideas or philosophy. For example, a particular company can have its idea or
philosophy that if the production is done on a large scale, the cost would be less and the product would be
sold automatically.
In this way, such a company will concentrate mainly on the large scale production of goods. Similarly, some
other company can have a different idea. It may have an idea that if the quality of the product is improved,
there will be no difficulty in selling the product.
Under the marketing management philosophy, we shall study the following five concepts:
(1) Production Concept
(2) Product Concept
(3) Selling Concept
(4) Marketing Concept
(5) Societal Marketing Concept
1. Production Concept
Those companies who believe in this philosophy think that if the goods/services are cheap and they can be
made available at many places, there cannot be any problem regarding sale.
Keeping in mind the same philosophy these companies put in all their marketing efforts in reducing the cost of
production and strengthening their distribution system. In order to reduce the cost of production and to bring
it down to the minimum level, these companies indulge in large scale production.
This helps them in effecting the economics of the large scale production. Consequently, the cost of production
per unit is reduced.
The utility of this philosophy is apparent only when demand exceeds supply. Its greatest drawback is that it is
not always necessary that the customer every time purchases the cheap and easily available goods or services.
2. Product Concept
Those companies who believe in this philosophy are of the opinion that if the quality of goods or services is of
good standard, the customers can be easily attracted. The basis of this thinking is that the customers get

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attracted towards the products of good quality. On the basis of this philosophy or idea these companies direct
their marketing efforts to increasing the quality of their product.
It is a firm belief of the followers of the product concept that the customers get attracted to the products of
good quality. This is not the absolute truth because it is not the only basis of buying goods.
The customers do take care of the price of the products, its availability, etc. A good quality product and high
price can upset the budget of a customer. Therefore, it can be said that only the quality of the product is not
the only way to the success of marketing.
3. Selling Concept
Those companies who believe in this concept think that leaving alone the customers will not help. Instead
there is a need to attract the customers towards them. They think that goods are not bought but they have to
be sold.
The basis of this thinking is that the customers can be attracted. Keeping in view this concept these companies
concentrate their marketing efforts towards educating and attracting the customers. In such a case their main
thinking is ‘selling what you have’.
This concept offers the idea that by repeated efforts one can sell-anything to the customers. This may be right
for some time, but you cannot do it for a long-time. If you succeed in enticing the customer once, he cannot
be won over every time.
On the contrary, he will work for damaging your reputation. Therefore, it can be asserted that this philosophy
offers only a short-term advantage and is not for long-term gains.
4. Marketing Concept
Those companies who believe in this concept are of the opinion that success can be achieved only through
consumer satisfaction. The basis of this thinking is that only those goods/service should be made available
which the consumers want or desire and not the things which you can do.
In other words, they do not sell what they can make but they make what they can sell. Keeping in mind this
idea, these companies direct their marketing efforts to achieve consumer satisfaction.
In short, it can be said that it is a modern concept and by adopting it profit can be earned on a long-term basis.
The drawback of this concept is that no attention is paid to social welfare.

5. Societal Marketing Concept

This concept stresses not only the customer satisfaction but also gives importance to Consumer
Welfare/Societal Welfare. This concept is almost a step further than the marketing concept. Under this
concept, it is believed that mere satisfaction of the consumers would not help and the welfare of the whole
society has to be kept in mind.
For example, if a company produces a vehicle which consumes less petrol but spreads pollution, it will result in
only consumer satisfaction and not the social welfare.

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Primarily two elements are included under social welfare-high-level of human life and pollution free
atmosphere. Therefore, the companies believing in this concept direct all their marketing efforts towards the
achievement of consumer satisfaction and social welfare.

In short, it can be said that this is the latest concept of marketing. The companies adopting this concept can
achieve long-term profit.

6. Distinguish between DE marketing and Remarketing.

Ok, so what do you do with the least profitable customers? Answer: Consider “demarketing” and
“remarketing”.
“Demarketing” simply means dropping customers who are unprofitable and are expected to remain that way.
Some examples of how: raise minimum transaction requirements and/or reduce service levels.
“Remarketing” means repositioning unprofitable accounts so that they become profitable. Some examples:
Changing a direct buyer into an indirect buyer, thereby reducing the cost of doing business. Look at what the
banks have done with ATMs.
Increase minimum order quantities or add a charge to smaller orders.
Converting accounts formerly called on by salespeople into house account dealing directly with the customer
service department or telemarketing unit
D of g Kotler and Levy define demarketing as “discouraging customers in general or a certain class of
customers in particular on either a temporary or a permanent basis”.
3. M Demarketing basically refers to when a company discourage its customers to buy the product produced
by them. Its because of shortage of supply want to promote their other products and the company is not
having so much profit with the sale of that product.
4. E This happened in case of Tata Nano, when the demand for Tata Nano increased from its supply level then
Tata started promoting their other products and completely stopped the promotion of Tata Nano. When
Maruti A-star was launched, for the promotion of A-star Maruti started discoursing its customers to buy
Maruti Xtilo.

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6. Demarketing can be three forms: 1. General Demarketing 2. Selective Demarketing 3. Ostensible
Demarketing
7. 1. To reduce demand in general. General demarketing is used when a firm (or government) wants to
demarket to everyone. General demarketing is required when a company wants to shrink the level of total
demand. Example: the government demarkets cigarettes and alcohol (discouraged goods) and illegal drugs (a
banned good)
8. 2. Here a target set of consumers are discouraged from purchases. It is to protect the core/loyal customers.
Example: A landlord might demarket its property to a group of students if he prefers family for rent purposes.
9. 3. Occurs when a seller creates an artificial or perceived shortage to whet consumer appetites. Limited
distribution of goods may induce consumers to stockpile these “hard-to-get” items. Example : BMW
announced in 1997 that it was having to restrict supply to the UK market
10. D Can be categorized as 1. Passive de-marketing 2. Active de-marketing 3. Complete de-marketing
12. 2. Active de-marketing It uses the marketing mix to decrease demand in several or every market segment.
Example: Regulating prices to reduce consumption of products 3. Complete de-marketing It ceases sales of the
product. Example: Recall of products from market in case of unsuitability to the market.
List out the determinants of Marketing Channels.
Important factors affecting the choice of channels of distribution by the manufacturer are:
(A) Considerations Related to Product
When a manufacturer selects some channel of distribution he/she should take care of such factors which are
related to the quality and nature of the product. They are as follows:

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1. Unit Value of the Product:
When the product is very costly it is best to use small distribution channel. For example, Industrial Machinery
or Gold Ornaments are very costly products that are why for their distribution small distribution channel is
used. On the other hand, for less costly products long distribution channel is used.

2. Standardised or Customised Product:

Standardised products are those for which are pre-determined and there has no scope for alteration. For
example: utensils of MILTON. To sell this long distribution channel is used.
On the other hand, customised products are those which are made according to the discretion of the
consumer and also there is a scope for alteration, for example; furniture. For such products face-to-face
interaction between the manufacturer and the consumer is essential. So for these Direct Sales is a good
option.
3. Perishability:
A manufacturer should choose minimum or no middlemen as channel of distribution for such an item or
product which is of highly perishable nature. On the contrary, a long distribution channel can be selected for
durable goods.
4. Technical Nature:
If a product is of a technical nature, then it is better to supply it directly to the consumer. This will help the
user to know the necessary technicalities of the product.
(B) Considerations Related to Market
Market considerations are given below:
1. Number of Buyers:
If the number of buyer is large then it is better to take the services of middlemen for the distribution of the
goods. On the contrary, the distribution should be done by the manufacturer directly if the number of buyers
is less.
2. Types of Buyers:
Buyers can be of two types: General Buyers and Industrial Buyers. If the more buyers of the product belong to
general category then there can be more middlemen. But in case of industrial buyers there can be less
middlemen.
3. Buying Habits:
A manufacturer should take the services of middlemen if his financial position does not permit him to sell
goods on credit to those consumers who are in the habit of purchasing goods on credit.
4. Buying Quantity:

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It is useful for the manufacturer to rely on the services of middlemen if the goods are bought in smaller
quantity.
5. Size of Market:
If the market area of the product is scattered fairly, then the producer must take the help of middlemen.
(C) Considerations Related to Manufacturer/Company
Considerations related to manufacturer are given below:
1. Goodwill:
Manufacturer’s goodwill also affects the selection of channel of distribution. A manufacturer enjoying good
reputation need not depend on the middlemen as he can open his own branches easily.
2. Desire to control the channel of Distribution:
A manufacturer’s ambition to control the channel of distribution affects its selection. Consumers should be
approached directly by such type of manufacturer. For example, electronic goods sector with a motive to
control the service levels provided to the customers at the point of sale are resorting to company owned retail
counters.
3. Financial Strength:
A company which has a strong financial base can evolve its own channels. On the other hand, financially weak
companies would have to depend upon middlemen.
(D) Considerations Related to Government
Considerations related to the government also affect the selection of channel of distribution. For example,
only a license holder can sell medicines in the market according to the law of the government.
In this situation, the manufacturer of medicines should take care that the distribution of his product takes
place only through such middlemen who have the relevant license.
(E) Others
1. Cost:
A manufacturer should select such a channel of distribution which is less costly and also useful from other
angles.
2. Availability:
Sometimes some other channel of distribution can be selected if the desired one is not available.
3. Possibilities of Sales:
Such a channel which has a possibility of large sale should be given weight age.
Outline the importance of good packaging.

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Whether you’re getting ready to create packaging for a product you’re selling or you’re considering changing
the packaging of an existing product, you may be wondering if the appearance of a product’s package is
important. Many product providers may think that the product and its performance is more important than
what the packaging looks like, but the product packaging can play a role in the success or failure of the sales of
the product.
Function
The purpose of product packaging is to protect the product from damage. Product packaging not only protects
the product during transit from the manufacturer to the retailer, but it also prevents damage while the
product sits on retail shelves. Most products have some form of packaging. For example, soups must have a
container and package while apples may have packaging for transport but not to sell the product from the
produce department of the local grocery store.
Attraction
How a product is packaged may be what attracts the consumer to take a look on the product as is sits on store
shelves. For this reason, many companies conduct extensive research on color schemes, designs and types of
product packaging that is the most appealing to its intended consumer.
Promotion
Packaging also plays an important role for portraying information about the product. Outside packaging may
contain directions on how to use the product or make the product.
Facilitates Purchase Decision
Packaging may also contain ingredients and nutritional information about the product. This information can
help to sell the product because it allows potential customers to obtain the necessary information they need
to make a purchase decision. Information contained on a package may propel the reader to buy the product
without ever having to speak to a store clerk.
Differentiation
Packaging can also differentiate one brand of product from another brand. Because the product packaging can
contain company names, logos and the color scheme of the company, it helps consumers to identify the
product as it sits among the competition’s products on store shelves. For example, as a shopper walks through
the coffee aisle of the local grocery store, the bright orange, pink and white packaging of the Dunkin’ Donuts
coffee brand may be easily recognizable for the consumer to grab on his way by the coffee shelf. The shopper
may identify with the company brand, which propels them to buy the product. If the product packaging
changes, it may alter the brand perception of the company, which doesn’t mean that the consumer would not
still purchase the product, but it may delay the purchase until the person is able to identify the product
according to its new packaging.
7. Enumerate the various techniques of pricing.
An organization has various options for selecting a pricing method. Prices are based on three dimensions that
are cost, demand, and competition.
The organization can use any of the dimensions or combination of dimensions to set the price of a product.
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Figure-4 shows different pricing methods:

Various Pricing Methods

The different pricing methods (Figure-4) are discussed below;

Cost-based Pricing:
Cost-based pricing refers to a pricing method in which some percentage of desired profit margins is added to
the cost of the product to obtain the final price. In other words, cost-based pricing can be defined as a pricing
method in which a certain percentage of the total cost of production is added to the cost of the product to
determine its selling price. Cost-based pricing can be of two types, namely, cost-plus pricing and markup
pricing.

These two types of cost-based pricing are as follows:

i. Cost-plus Pricing:
Refers to the simplest method of determining the price of a product. In cost-plus pricing method, a fixed
percentage, also called mark-up percentage, of the total cost (as a profit) is added to the total cost to set the
price. For example, XYZ organization bears the total cost of Rs. 100 per unit for producing a product. It adds
Rs. 50 per unit to the price of product as’ profit. In such a case, the final price of a product of the organization
would be Rs. 150.
Cost-plus pricing is also known as average cost pricing. This is the most commonly used method in
manufacturing organizations.

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In economics, the general formula given for setting price in case of cost-plus pricing is as follows:

P = AVC + AVC (M)

AVC= Average Variable Cost
M = Mark-up percentage
AVC (m) = Gross profit margin

Mark-up percentage (M) is fixed in which AFC and net profit margin (NPM) are covered.
AVC (m) = AFC+ NPM
ii. For determining average variable cost, the first step is to fix prices. This is done by estimating the volume of
the output for a given period of time. The planned output or normal level of production is taken into account
to estimate the output.

The second step is to calculate Total Variable Cost (TVC) of the output. TVC includes direct costs, such as cost
incurred in labor, electricity, and transportation. Once TVC is calculated, AVC is obtained by dividing TVC by
output, Q. [AVC= TVC/Q]. The price is then fixed by adding the mark-up of some percentage of AVC to the
profit [P = AVC + AVC (m)].

iii. The advantages of cost-plus pricing method are as follows:

a. Requires minimum information
b. Involves simplicity of calculation
c. Insures sellers against the unexpected changes in costs
The disadvantages of cost-plus pricing method are as follows:
a. Ignores price strategies of competitors
b. Ignores the role of customers
iv. Markup Pricing:
Refers to a pricing method in which the fixed amount or the percentage of cost of the product is added to
product’s price to get the selling price of the product. Markup pricing is more common in retailing in which a
retailer sells the product to earn profit. For example, if a retailer has taken a product from the wholesaler for
Rs. 100, then he/she might add up a markup of Rs. 20 to gain profit.

It is mostly expressed by the following formulae:

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a. Markup as the percentage of cost= (Markup/Cost) *100
b. Markup as the percentage of selling price= (Markup/ Selling Price)*100
c. For example, the product is sold for Rs. 500 whose cost was Rs. 400. The mark up as a percentage to cost is
equal to (100/400)*100 =25. The mark up as a percentage of the selling price equals (100/500)*100= 20.

Demand-based Pricing:
Demand-based pricing refers to a pricing method in which the price of a product is finalized according to its
demand. If the demand of a product is more, an organization prefers to set high prices for products to gain
profit; whereas, if the demand of a product is less, the low prices are charged to attract the customers.

The success of demand-based pricing depends on the ability of marketers to analyze the demand. This type of
pricing can be seen in the hospitality and travel industries. For instance, airlines during the period of low
demand charge less rates as compared to the period of high demand. Demand-based pricing helps the
organization to earn more profit if the customers accept the product at the price more than its cost.

Competition-based Pricing:
Competition-based pricing refers to a method in which an organization considers the prices of competitors’
products to set the prices of its own products. The organization may charge higher, lower, or equal prices as
compared to the prices of its competitors.
The aviation industry is the best example of competition-based pricing where airlines charge the same or
fewer prices for same routes as charged by their competitors. In addition, the introductory prices charged by
publishing organizations for textbooks are determined according to the competitors’ prices.
Other Pricing Methods:
In addition to the pricing methods, there are other methods that are discussed as follows:
i. Value Pricing:
Implies a method in which an organization tries to win loyal customers by charging low prices for their high-
quality products. The organization aims to become a low cost producer without sacrificing the quality. It can
deliver high- quality products at low prices by improving its research and development process. Value pricing
is also called value-optimized pricing.
ii. Target Return Pricing:
Helps in achieving the required rate of return on investment done for a product. In other words, the price of a
product is fixed on the basis of expected profit.
iii. Going Rate Pricing:
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Implies a method in which an organization sets the price of a product according to the prevailing price trends
in the market. Thus, the pricing strategy adopted by the organization can be same or similar to other
organizations. However, in this type of pricing, the prices set by the market leaders are followed by all the
organizations in the industry.
iv. Transfer Pricing:
Involves selling of goods and services within the departments of the organization. It is done to manage the
profit and loss ratios of different departments within the organization. One department of an organization can
sell its products to other departments at low prices. Sometimes, transfer pricing is used to show higher profits
in the organization by showing fake sales of products within departments.

8. Selling is tip of the marketing ice-berg – Explain.

a) "Selling and advertising are only the tip of the marketing iceberg" Do you
agree with this statement? Why or why not? Explain.
I agree with this statement, because selling and advertising are results of a long hard
work. All begins of an idea of some new product. One of the main tasks of a marketing
department is to make a brand conception and to develop this product such a famous
brand.
b) Identify the core concepts of marketing and describe their nature
Marketing has a lot of important concepts such as: a need, a want, a demand, a product,
an exchange, a market, a transaction, a market segment, suppliers, competitors,
distributors, consumers, a brand, a range, competitive benefits and others. Let’s
consider some of them.
A need is a feeling of lack of something by people.
A want is a special form of needs, starting of physiological needs to social and cultural
needs.
A demand is a need and a willingness of a person to buy some goods and services.
A product is a thing, which can satisfy a person’s needs.
A market a place for meeting of buyers and sellers, where goods and services are the
main objectives of buying and sales.
Suppliers are subjects of the marketing system, who supply with material resources of
participants in the market.

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Competitive benefits are different factors which define advantages of a company. That
can be revenue, profit, market share and other indicators.

How does the changing role of women in the society affected the market for food stuff?
Gender and food security are closely interrelated.

In recent years there has been increased recognition of the crucial importance of women's contribution to
food security. In most developing countries, rural women are the mainstay of small-scale agriculture, farm
labour, and day-to-day family subsistence. Efforts to alleviate rural poverty and improve food security will not
be successful unless issues relating to women as producers and providers of food are taken into account.
These issues include the contribution of women to household food supply and income, access to productive
resources, and the impact of policy reforms on the economic and social roles of women and household food
security.

Many studies show that although there is a wide diversity in household production patterns, women in all
regions play a predominant role in household food security through agricultural and food production. The
pooling of incomes of household members is often a precondition for survival as neither female nor male
members alone tend to receive adequate incomes to support all household members. The relative share of
income that a household member contributes to particular items of essential expenditure are often a function
of societal traditions. However, the direct responsibility for household food provision largely falls on women,
and that the improvement of household food security and nutritional levels is associated with women's access
to income and their role in household decisions on expenditure.

In almost all countries female-headed households are concentrated among the poorer strata of society and
often have lower incomes than male-headed households. The problems faced by such households vary
according to their degree of access to productive resources including land, credit and technology.

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Moreover, although women farmers play a predominant role in food production, they often lack access to
agricultural services. For instance, lack of land ownership restricts women farmer's access to credit as land is
often used as collateral. Membership in cooperatives also tends to be based on land ownership or "head of
household" criteria and thus excludes women. In addition, training and extension services have, in practice,
been predominantly directed towards men. Since the possibility of improving household food security can
only be realized if female farmers, in addition to their male counterparts, have access to agricultural services.
The need to incorporate the constraints women face in obtaining such services in household food security
policies and programmes, should be emphasized.

Many agricultural development policies and programmes have yet to adequately address the needs of small
farmers, particularly those of women. While initiatives have been made to include rural women in agricultural
development activities, either through direct projects, WID Units, or national women's organizations, a major
impediment to incorporating gender issues into such activities has been the lack of comprehensive data on the
nature and role of women's contributions to food and agricultural production.
In general, the majority of agrarian reform and land settlement schemes entail the division of land into
separate holdings based on the "head of household" concept as mentioned previously. Thus ownership of land
has overwhelmingly bestowed on the male household head who has ultimate legal authority over land use
and its utilization as collateral for credit, even when absent from the household.
The impact of structural adjustment programmes on household food security is a major area of policy concern.
Changes in employment and income-earning opportunities, coupled with a reduction in government subsidy
programmes, has had adverse affects on food consumption, both quantitatively and qualitatively.
Due to the crucial links between the environment and the role of rural women in ensuring household food
security, there is an increasing need for policy measures to enhance the participation of women in rural
development programmes, especially in the areas of forestry and energy supply. Policy makers and planners
should recognize that women should participate in rural development on an equal basis with men and fully
share in improved conditions of life in rural areas. They also should recognize that the integration of women's
roles and needs in the development paradigm is a prerequisite for successful rural development planning and
programme implementation.

The role of women as producers and providers of food should be promoted and therefore the importance of
gender to household food security emphasized.
Governments should continue to facilitate and strengthen the contributions of women to agricultural growth
and the alleviation of rural poverty. This in turn will enhance the availability and stability of food supplies while
ensuring access to food by all.

9. Enlist the objectives and the functions of marketing research.

Meaning:

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It is very important to understand at the outset that the, modern concept of marketing revolves around the
customer. Satisfaction of customer is the main aim of marketing. For achieving this goal, marketing research is
undertaken.
In fact, marketing management is nothing but marketing research. With the expansion of business, marketing
management becomes complex. It has to rely heavily on marketing research for solving problems in the field
of marketing.

Various definitions of marketing research are given below:

“The systematic gathering, recording and analysis of data about problems relating to the marketing of goods
and services” —The American Marketing Association.
“The systematic objective and exhaustive research for and study of the facts relevant to any problem in the
field of marketing.” —Richard Crisp
“Marketing research is the careful and objective study of product design, markets, and such transfer activities
as physical distribution and warehousing, advertising and sales management.” —Clark and Clark
“Marketing research is the inclusive term which embraces all research activities carried on for the
management of marketing work, the gathering, recording and analysing of all facts about problems relating to
the transfer and sale of goods and services from producer to consumer.” —Harry Hapner
From the above definitions, it is clear that marketing research is concerned with tackling the problems
emerging from the beginning to the final stage of marketing process.
The origin and development of marketing research was started in England. In 1911, Prof. Arthur Bowie used
the method of random sampling and published a paper entitled “Working Class Households.” Afterwards, it
was developed by a German Prof. Whilhelm Vershofen, who is known as the father of market research.
Marketing research techniques and methods are being increasingly adopted by all the countries of the world
whether developed, developing or underdeveloped. In America, marketing research is conducted by many
companies on a very high scale.
Marketing Research V/S Market Research:
Marketing research is a broader term including market research. Marketing research is concerned with all the
major functions of marketing. Market research is primarily concerned with knowing the capacity of the market
to absorb a particular product. Marketing research is not only concerned with the jurisdiction of the market
but also covers nature of the market, product analysis, sales analysis, time, place and media of advertising,
personal selling and marketing intermediaries and their relationships etc.

Marketing Research:
Marketing research serves the purpose of ‘intelligence wing of the marketing management. Its scope is very
broad as compared to market- research. It is concerned with collection of market information systematically
and impartially, analysis and evaluation of relevant data and use such data for the benefit of the organisation.
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It is a careful and objective study of various areas of marketing activities. What, when, where and how to sell
the end product and the services are four questions to which the marketing research wing provides an answer.
Thus, market research and marketing research are different from each other. Market research is a narrow
concept whereas marketing research is a broad one and its scope is much wider.
It includes nature of the market, product analysis, sales analysis, time, place and media of advertising,
personal selling, pricing, sales organisation, packaging, brand names, etc.
Objectives of Marketing Research:
Marketing research is undertaken for attaining the following objectives:
(1) To Provide Basis For Proper Planning:
Marketing and sales forecast research provides sound basis for the formulation of all marketing plans, policies,
programmes and procedures.

(2) To Reduce Marketing Costs:

Marketing research provides ways and means to reduce marketing costs like selling, advertisement and
distribution etc.

(3) To Find Out New Markets for The Product:

Marketing research aims at exploring new markets for the product and maintaining the existing ones.

(4) To Determine Proper Price Policy:

Marketing research is considered helpful in the formulation of proper price policy with regard to the products.

(5) To Study in Detail Likes and Dislikes of the Consumers:

Marketing research tries to find out what the consumers, (the men and women who constitute the market)
think and want. It keeps us in touch with the consumers, minds and to study their likes and dislikes.

(6) To Know The Market Competition:

Marketing research also aims at knowing the quantum of competition prevalent in the market about the
product in question. The company may need reliable information about competitor’s moves and strategies
which are of immense significance for further planning.

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(7) To Study The External Forces and Their Impact:
Marketing research provides valuable information by studying the impact of external forces on the
organisation. External forces may include conditions developing in foreign markets, govt, policies and
regulations, consumer incomes and spending habits, new products entering in the market and their impact on
the company’s products.

Prof. Gilies has rightly pointed out that, “The basic objective of marketing research is to supply management
with information which will lead to a fuller understanding of the distribution habits and attitudes of present
and potential buyers and users, and their reactions to products, packing, selling and advertising methods”.
Distinguish between rational and emotional buying motives with suitable examples.
Classification of Buying Motives: Product Buying and Patronage Buying!
Buying motive is the urge or motive to satisfy a desire or need that makes people buy goods or services.
Behind every purchase there is a buying motive.

It refers to the thoughts, feelings, emotions and instincts, which arouse in the buyers a desire to buy an article.
A buyer does not buy because s/he has been persuaded by the salesman, but s/he buys for the aroused desire
in him or her. Motives should be distinguished from instincts.

A motive is simply a reason for carrying out a particular behaviour and not an automatic response to a
stimulus, whereas instincts are pre-programmed responses, which are inborn in the individual and
involuntary. Thus hunger is an instinct whereas desire to purchase pizza is a buying motive. According to Prof.
D. J. Duncan, “Buying Motives are those influences or considerations which provide the impulse to buy, induce
action and determine choice in the purchase of goods and services.” Buying motives are can be divided by the
following way:

Product Buying Motives:

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Product buying motives refer to those influences and reasons, which prompt (i.e. induce) a buyer to choose a
particular product in preference to other products. They include the physical attraction of the product (i.e. the
design, shape, dimension, size, colour, package, performance, price etc. of the product) or the psychological
attraction of the product (i.e. the enhancement of the social prestige or status of the purchaser through its
possession), desire to remove or reduce the danger or damage to life or body of the possessor, etc. In short,
they refer to all those characteristics of a product, which induce a buyer to buy it in preference to other
products.

Product buying motives may be sub-divided into two groups, viz., (1) emotional product buying motives and
(2) rational product buying motives.
A. Promotional Product Buying Motives:
When a buyer decides to purchase a product without thinking over the matter logically and carefully (i.e.,
without much reasoning), she is said to have been influenced by emotional product buying motives. Emotional
product buying motives include the following:

1. Pride or Prestige:
Pride is the most common and strongest emotional buying motive. Many buyers are proud of possessing some
product (i.e., they feel that the possession of the product increases their social prestige or status). In fact,
many products are sold by the sellers by appealing to the pride prestige of the buyers. For instance, diamond
merchants sell their products by suggesting to the buyers that the possession of diamonds increases their
prestige or social status.
2. Emulation or Imitation:
Emulation, i.e., the desire to imitate others, is one of the important emotional buying motives. For instance, a
housewife may like to have a silk saree for the simple reason that all the neighbouring housewives have silk
sarees.
3. Affection:
Affection or love for others is one of the stronger emotional buying motives influencing the purchasing
decisions of the buyers. Many goods are purchased by the buyers because of their affection or love for others.
For instance, a husband may buy a costly silk saree for his wife or a father buy a costly watch for his son or
daughter out of his affection and love.
4. Comfort or desire for comfort:
Desire for comfort (i.e., comfortable living) is one of the important emotional buying motives. In fact, many
products are bought comfort. For instance, fans, refrigerators, washing machines, cushion beds, etc. are
bought by people because of their desire for comfort.
5. Sex appeal or sexual attractions:

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Sex appeal is one of the important emotional buying motives of the buyers. Buyers buy and use certain things,
as they want to be attractive to the members of the opposite sex. Men and women buy cosmetics, costly
dresses, etc., because of this emotional motive, i.e., sex appeal.
6. Ambition:
Ambition is one of the emotional buying motives. Ambition refers to the desire to achieve a definite goal. It is
because of this buying motive that, sometimes, customers buy certain things. For instance, it is the ambition
that makes many people, who do not have the facilities to pursue their college education through regular
colleges, pursue their education through correspondence courses.
7. Desire for distinctiveness or individuality:
Desire for distinctiveness, i.e., desire to be distinct from others, is one of the important emotional buying
motives. Sometimes, customers buy certain things, because they want to be in possession of things, which are
not possessed by others. Purchasing and wearing a particular type of dress by some people is because of their
desire for distinctiveness or individuality.
8. Desire for recreation or pleasure:
Desire for recreation or pleasure is also one of the emotional buying motives. For instance, radios, musical
instruments, etc. are bought by people because of their desire for recreation or pleasure.
9. Hunger and thirst:
Hunger and thirst are also one of the important emotional buying motives. Foodstuffs, drinks, etc. are bought
by the people because of this motive.
10. Habit:
Habit is one of the emotional considerations influencing the purchasing decision of the customers. Many
customers buy a particular thing because of habit, (i.e. because they are used to the consumption of the
product). For instance, many people purchase cigarettes, liquors, etc. because of sheer habit.

B. Rational Product Buying Motives:

When a buyer decides to buy a certain thing after careful consideration (i.e. after thinking over the matter
consciously and logically), s/he is said to have been influenced by rational product buying motives. Rational
product buying motives include the following:

1. Safety or Security:
Desire for safety or security is an important rational buying motive influencing many purchases. For instance,
iron safes or safety lockers are bought by the people because they want to safeguard their cash, jewelries etc.,
against theft. Similarly, vitamin tablets, tonics, medicines, etc., are bought by the people because of this
motive, i.e. they want to safeguard their health and protect themselves against diseases.

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2. Economy:
Economy, i.e. saving in operating costs, is one of the important rational buying motives. For instance, Hero
Honda bikes are preferred by the people because of the economy or saving in the operating cost, i.e. petrol
costs.

3. Relatively low price:

Relatively low price is one of the rational buying motives. Most of the buyers compare the prices of competing
products and buy things, which are relatively cheaper.

4. Suitability:
Suitability of the products for the needs is one of the rational buying motives. Intelligent buyers consider the
suitability of the products before buying them. For instance, a buyer, who has a small dining room, naturally,
goes in for a small dining table that is suitable, i.e. that fits in well in the small dining room.

5. Utility or versatility:
Versatility or the utility of a product refers to that quality of the product, which makes it suitable for a variety
of uses. Utility of the product is one of the important rational buying motives. People, often, purchase things
that have utility, i.e. that can be put to varied uses.

6. Durability of the product:

Durability of the product is one of the most important rational buying motives. Many products are bought by
the people only on the basis of their durability. For instance, buyers of wooden furniture go in for teak or
rosewood table, though they are costlier, as they are more durable than ordinary wooden furniture.

7. Convenience of the product:

The convenience of the product (i.e. the convenience the product offers to the buyers) is one of the important
rational product buying motives. Many products are bought by the people because they are more convenient
to them. For instance, automatic watches, gas stoves, etc., are bought by the people because of the
convenience provided by them.

Patronage Buying Motives:

Patronage buying motives refer to those considerations or reasons, which prompt a buyer to buy the product
wanted by him from a particular shop in preference to other shops. In other words, they are those

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considerations or reasons, which make a buyer, patronise a particular shop in preference to other shops while
buying a product.

Patronage buying motives also may be sub-divided into two groups viz. a) Emotional patronage buying
motives and b) Rational patronage buying motives.

A. Emotional Patronage Buying Motives:

When a buyer patronises a shop (i.e. purchases the things required by him from a particular shop) without
applying his mind or without reasoning, he is said to have been influenced by emotional patronage buying
motives. Emotional patronage buying motives include the following:

1. Appearance of the shop:

Appearance of the shop is one of the important emotional patronage buying motives. Some people make their
purchases from a particular shop because of good or attractive appearance of the shop,

2. Display of goods in the shop:

Attractive display of goods in the shop also makes the buyers patronise a particular shop.

3. Recommendation of others:
Recommendation of others also constitutes one of the important emotional patronage buying motives. Some
people purchase their requirements from a particular shop because that shop has been recommended to
them by others, i.e., by their friends and relatives.

4. Imitation:
Imitation also is one of the emotional patronage buying motives influencing the purchases of buyers. Some
people make their purchases from a particular shop just because other people make their purchases from that
shop.

5. Prestige:
Prestige is one of the emotional patronage buying motives of the buyers. For instance, some people consider
it a prestige to take coffee from a five-star hotel.

25
6. Habit:
Habit is also one of the important emotional patronage buying motives. Some people make their purchases
from a particular shop for the simple reason that they have been habitually making their purchases from that
shop.

B. Rational Patronage Buying Motives:

When a buyer patronises a shop after careful consideration (i.e. after much logical reasoning and careful
thinking) he is said to have been influenced by rational patronage buying motives. Rational patronage buying
motives include the following:

1. Convenience:
Convenient location proximity of a shop is one of the considerations influencing the purchases of many buyers
from a particular shop. Many buyers, usually, buy their requirements from a near-by shop, as it is convenient
to them to make their purchases.

Similarly, convenient working hours of the shop also influence the purchases of good many buyers. For
instance, if a shop works for a longer period of time every day and even on Sundays, it will be very convenient
to the buyers. As such, many buyers may make their purchases from such a shop.

2. Low price charged by the shop:

Price charged by the shop also influences the buyers to patronise a particular shop. If the price charged by a
shop for a particular product is relatively cheaper, naturally, many people will make their purchases from that
shop.

3. Credit facilities offered:

The credit facilities offered by a store also influence the buying of some people from a particular shop. People
who do not have enough money to make cash purchases every time prefer to make their purchases from a
shop which offers credit facilities.

4. Services offered:
The various sales and after-sale services, such as acceptance of orders through phone, home delivery of goods,
repair service, etc., offered by a shop also induce the buyers to buy their requirements from that shop.
Rational buyers are, often, influenced by the various services or facilities offered by the shop.

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5. Efficiency of salesmen:
The efficiency of the salesmen employed by a shop also influences the people in patronising a particular shop.
If the employees are efficient and are capable of helping the buyers in making their purchases, people
naturally would flock to such a shop.

6. Wide choice:
Wide choice of goods offered by a shop is one of the rational considerations making the buyers patronise a
particular shop. People generally prefer to make their purchases from a shop, which offers wide choice (i.e.
wide varieties of goods).

7. Treatment:
The treatment meted out by a shop to the customers is one of the rational considerations influencing the
buyers to patronise a particular shop. Usually, people would like to purchase their requirements from a shop
where they get courteous treatment.

8. Reputation of the shop:

Reputation of the shop for honest dealings is also one of the rational patronage buying motives. Usually,
people would like to make their purchases from a store having reputation for fair dealings.

10. Why do new products fail in the market ?

In the big book of product failures, there are a few examples that stand out as so colossal you have to wonder
what the company was thinking. Still, others seem to have just been a case of bad timing, bad marketing and
bad luck. Below we'll look at six reasons why products fail, and the products that prove it.

Timing
In some cases, a luxury product that's been in planning stages for years is set to launch just as a major
recession is starting. This was the case with the Ford Edsel. The Edsel has become synonymous with failure,
and it is well known as a marketing catastrophe, but the 1958 recession certainly played a large part in its
undoing.

Sometimes a product is just "ahead of its time," and the market for it just doesn't exist, like the precursor to
popular PDA devices, the Apple Newton MessagePad. This kinda-clunky PDA had a few shortcomings - most
famously, its inability to live up to the claim of understanding handwriting - but more than that was its release
at a time when paying $700US for a PDA seemed absurd.

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Today, if there was a PDA that came out and revolutionized the industry, $700 would seem like a bargain. (The
time will come when you'll be the one explaining these obsolete technologies. Learn more in Technology Your
Kids (Or Grandkids) Will Laugh At.)

Not Living Up To The Hype

There's nothing worse than when the public feels like they're being tricked. This happens when something has
hyped-up marketing, but the product is pretty ho-hum. It's another reason why the Edsel failed, as Ford had
positioned it as a cutting-edge new automobile, but the public saw it as more of the same for a higher cost.
This poor positioning cost Ford $350 million, a huge sum in 1959.
McDonald's also fell prey to this with the release of the Arch Deluxe menu in the '90s. No one was fooled
when Mickey-D's claimed to have moved into the fine dining racket just by slapping a tomato on top of a
burger. McDonald's reportedly spent $100 million on advertising the failed line. For another example, don't
forget the Windows Vista saga.

Prohibitively Strong Branding

A strong brand can be a blessing and a curse. Consumers trusted Colgate for toothpaste, but it didn't make
sense when that name was put on the Colgate Kitchen Entrees. Connecting the taste of food and toothpaste
was off-putting for the consumer. With the McDonald's Arch Deluxe fiasco, McDonald's name was too strong
as a value burger joint for anyone to take the "dining for adults" line seriously.

Fixing What Ain't Broken

Companies that are already successful sometimes try to improve themselves but end up scaring off their
already loyal consumers. This is best illustrated in what is known as one of the worst product failures in
history: "New Coke." In 1985, Coca-Cola was doing fairly well, but was worried about losing more market
share to Pepsi. There was a $4 million market research project stating that Coke drinkers would prefer the
new taste, but when it came down to it, they still wanted the original.
Crystal Pepsi is another good example. Making a clear cola did not entice non-cola drinkers - it just confused
Pepsi's branding.
Cross Contamination - Mixing Two Successful Products Into One Big Failure
It seems counterintuitive that combining two successful products or companies can somehow bring about
disaster, but it happens. Just think of the combo of peanut butter and jam in one bottle or Kellogg's disastrous
milk-with-cereal packaging campaign Cereal Mates.

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Another example is the recently failed merger: AOL Time Warner. Though the AOL Time Warner debacle had a
lot to do with management, timing and meshing of company culture, it goes to show that taking two
successful things and combining them can lead to unmitigated disaster.

Not Making The Right Business Partners

Sony's Betamax and Toshiba's HD DVD are perfect examples of this. Betamax was widely regarded as being
superior to VHS, but its higher cost meant it wasn't picked up by the big distributors, which led to its downfall.
HD DVD was like the VHS of the DVD battle, because it cost less than Blu-Ray and held less information, except
that HD DVD lost. Certain studios (Fox, Sony, Walt Disney), Sony's Playstation 3 and retailers like Wal-Mart and
Best Buy all sided with Blu-Ray, leaving Toshiba's HD DVD at a disadvantage because it had less available titles
and sales outlets. Like Betamax, this caused a chain reaction where fewer films were released for the less-
available format, and Toshiba eventually stopped producing HD DVD players in mid-2008.

Toshiba's loss from HD DVD is thought to be near $1 billion. (As technology advances, some industries become
obsolete. Follow the trends that will affect jobs, investments and your purchases in 4 Industry-Changing Tech
Trends.)

The Bottom Line

Sometimes there's no accounting for the failure of a product. Even if the product is better than competitors,
has strong market research and a huge advertising campaign, it can still fail. A look at the above reasons shows
that failure has many faces and is often unpredictable.
11. Explain the concepts of marketing
Concepts of Marketing
There are 5 different concepts of marketing, each of which vary in the function that they deal with. For
example – production concept deals with production and selling concept deals with selling. Each of the
concept was developed as per the need of the market. As the market changed, so did the concepts of
marketing. And today, we have an opportunity to look at all 5 concepts of marketing and what they represent.

Production concept
Product concept
Selling concept
Marketing concept
Societal marketing concept
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The article lists out the concepts of marketing in a very brief manner. You can click on each link to know more
about each individual concept of marketing.

Production Concept – Consumers prefer products that are widely available and inexpensive. The production
concept is more operations oriented than any other concept. Click here to read more about the Production
Concept

Product Concept – Consumers favor products that offer the most quality, performance, or innovative features.
The product concept believes in the consumer and it says the consumers are more likely to be loyal if they
have more options of products or they get more benefits from the product of the company. Click here to read
more about the Product Concept

Selling Concept – Consumers will buy products only if the company aggressively promotes or sells these
products. Off course, in this era of marketing, we know that selling is not the only tactic to sell your product.
You have to focus on marketing as well. Click here to read more about the Selling Concept

Marketing Concept – Focuses on needs/wants of target markets & delivering value better than competitors.
The marketing concept believes in the pull strategy and says that you need to make your brand so strong that
customers themselves prefer your brand over every other competitor. This can be achieved through
marketing. Click here to read more about the Marketing Concept

Societal Marketing concept – Focuses on needs / wants of target markets & delivering value better than
competitors that preserves the consumer’s and society’s well-being. Click here to read about the Societal
Marketing concept

12. What are the stages in a Product Life Cycle?

Stages in the Product Lifecycle
There are four stages in the product life cycle: introduction, growth, maturity, and decline .
Firm Life Cycle
Firms progress through stages of development, indicated by their changing profits over time.

Introduction
After all research and development has be done it is time to launch the product and begin its lifecycle. The
introduction stage of the product life cycle is when the marketing team emphasizes promotion and the
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product's initial distribution. Often the product will have little or no competitors at this point. Nonetheless,
sales may remain low because it takes time for the market to accept the new product. At this stage of the life
cycle, the company usually loses money on the product.

Growth
In the growth stage of the product life cycle, the market has accepted the product and sales begin to increase.
The company may want to make improvements to the product to stay competitive. At this point, there are still
relatively few competitors.

Maturity
In the maturity stage of the product life cycle, sales will reach their peak. Other competitors enter the market
with alternative solutions, making competition in the market fierce. The company that introduced the new
product may begin to find it difficult to compete in the market.
Decline
In the decline stage of the product life cycle, sales will begin to decline as the product reaches its saturation
point. Most products are phased out of the market at this point due to the decrease in sales and because of
competitive pressure. The market will see the product as old and no longer in demand.
There is no set schedule for the stages of a product life cycle. Differences will occur depending on the type of
product, how well it is received by the market, the promotional mix of the company, and the aggressiveness of
the competition.

13. What are the market targeting strategies for a consumer goods marketer?
Target Marketing: Four Generic Target Marketing Strategies!
The purpose of evaluating market segments is to choose one or more segments to enter. Target market
selection is the choice of which and how many market segments the company will compete in.

Target Marketing
Image Courtesy : richardscottdial.files.wordpress.com/2013/03/hires_marketseg.jpg
When selecting their target markets, companies have to make a choice of whether they are going to be
focused on one or few segments or they are going to cater to the mass market. The choice that companies
make at this stage will determine their marketing mix and positioning plank. There are four generic target
marketing strategies.

1. Undifferentiated marketing:
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There may be no strong differences in customer characteristics. Alternatively, the cost of developing a
separate marketing mix for separate segments may outweigh the potential gains of meeting customer needs
more exactly. Under these circumstances a company will decide to develop a single marketing mix for the
whole market. There is absence of segmentation.
This strategy can occur by default. Companies which lack a marketing orientation may practice this strategy
because of lack of customer knowledge. It is convenient since a single product has to be developed.
A company using an undifferentiated targeting strategy essentially adopts a mass-market philosophy. It views
the market as one big market with no individual segments. The company uses one marketing mix for the
entire market. The company assumes that individual customers have similar needs that can be met with a
common marketing mix.
The first company in an industry normally uses an undifferentiated targeting strategy. There is no competition
at this stage and the company does not feel the need to tailor marketing mixes to the needs of market
segments.
Since there is no alternate offering, customers have to buy the pioneer’s product. Ford’s Model T is a classical
example of an undifferentiated targeting strategy. Companies marketing commodity products like sugar also
follow this strategy.
Companies following undifferentiated targeting strategies save on production and marketing costs. Since only
one product is produced, the company achieves economies of mass production. Marketing costs are also
lower as only one product has to be promoted and there is a single channel of distribution.
But undifferentiated targeting strategy is hardly ever a well considered strategy. Companies adopting this
strategy have either been blissfully ignorant about differences among customers or have been arrogant
enough to believe that their product will live up to the expectations of all customers, till focused competitors
invade the market with more appropriate products for different segments.

Therefore companies following this strategy will be susceptible to incursions from competitors who design
their marketing mixes specifically for smaller segments.

Finding out that customers have diverse needs that can only be met by products with different characteristics
means that managers have to develop new products, design new promotional campaigns and develop new
distribution channels. Moving into new segments means that salespeople have to start prospecting for new
customers.

2. Differentiated marketing or multi-segment targeting:

When market segmentation reveals several potential target segments that the company can serve profitably,
specific marketing mixes can be developed to appeal to all or some of the segments. A differentiated
marketing strategy exploits the differences between marketing segments by designing a specific marketing
mix for each segment.
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A company following multi-segment targeting strategy serves two or more well- defined segments and
develops a distinct marketing mix for each one of them. Separate brands are developed to serve each of the
segments.
It is the most sought after target market strategy because it has the potential to generate sales volume, higher
profits, larger market share and economies of scale in manufacturing and marketing. But the strategy involves
greater product design, production, promotion, inventory, marketing research and management costs.
Another potential cost is cannibalization, which occurs when sales of a new product cut into sales of a firm’s
existing products. Before deciding to use this strategy, a company should compare the benefits and costs of
multi-segment targeting to those of undifferentiated and concentrated targeting.
The car market is most clearly segmented. There are segments for small cars, luxury cars, sports utility
vehicles, etc. Most car makers like General Motors, Ford, Toyota, Honda and others offer cars for all the
segments. Though Toyota entered the US market with small cars, it eventually chose to operate in most of the
segments.

3. Focus or concentrated targeting:

Several segments may be identified but a company may not serve all of them. Some may be unattractive or
out of line with the company’s business strengths. A company may target just one segment with a single
marketing mix. It understands the needs, and motives of the segment’s customers and designs a specialized
marketing mix.
Companies have discovered that concentrating resources and meeting the needs of a narrowly defined market
segment is more profitable than spreading resources over several different segments. Starbucks became
successful by focusing exclusively on customers who wanted gourmet coffee products.
The strategy is suited for companies with limited resources as these resources may be too stretched if it
competes in many segments. Focused marketing allows R&D expenditure to be concentrated on meeting
needs of one set of customers and managerial activities are devoted to understanding and catering to their
needs.

Large organizations may not be interested in serving the needs of this one segment or their energies may be
so dissipated across the whole market that they pay insufficient attention to the requirements of this small
segment. One danger that such niche marketers face is attracting competition from larger organizations in the
industry if they are very successful.

Companies following concentrated targeting strategies are obviously putting all their eggs in one basket. If
their chosen segments were to become unprofitable or shrink in size, the companies will be in problem. Such
companies also face problems when they want to move to some other segments, especially when they have
been serving a segment for a long time.

33
They become so strongly associated with serving a segment with a particular type of product or service, that
the customers of other segments find it very difficult to associate with them. They believe that the company
can serve only that particular segment.

Companies which start with concentrated targeting strategy but nurse ambitions to serve more segments
should make early and periodic forays into other segments.
The idea is to avoid being labelled as the company which exclusively serves a particular segment. The
association with one particular segment should not be allowed to become so strong that customers cannot
imagine the company doing something else.

Mercedes offers premium cars for the upper segment of the market only. It does not offer cars for the middle
and lower segments. But Mercedes segments the premium segment and offers different cars for its different
premium segments.
Some companies are focused in another way. They focus on heavy users—the small percentage of customers
that account for large share of a product’s sale

14. Describe the components of promotion mix.

Elements of promotional mix are also called as tools, means, or components. Basically, there are five elements
involved in promotional mix. Some authors have considered more elements, too. However, we will consider
five elements as shown in Figure 1.

Elements of market promotion mix

1. Advertising:
Advertising is defined as any paid form of non-personal presentation and promotion of ideas, goods, and
services by an identified sponsor. It is a way of mass communication. It is the most popular and widely
practiced tool of market promotion. Major part of promotional budget is consumed for advertising alone.
Various advertising media – television, radio, newspapers, magazines, outdoor means and so forth – are used
for advertising the product.

Characteristics of advertising are as follow:

i. Adverting is non-personal or mass communication. Personal contact is not possible.
ii. It is a paid form of communication.
iii. It is a one-way communication.
iv. Identifiable entity/sponsor-company or person gives advertising.
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v. It is costly option to promote the sales.
vi. It can be reproduced frequently as per need.
vii. Per contact cost is the lowest.
viii. Various audio-visual, print, and outdoor media can be used for advertising purpose.
ix. It is a widely used and highly popular tool of market promotion.

2. Sales Promotion:
Sales promotion covers those marketing activities other than advertising, publicity, and personal selling that
stimulate consumer purchasing and dealer effectiveness. Sales promotion mainly involves short-term and non-
routine incentives, offered to dealers as well consumers. The popular methods used for sales promotion are
demonstration, trade show, exhibition, exchange offer, seasonal discount, free service, gifts, contests, etc.

Characteristics of sales promotion are as follows:

i. The primary purpose of sales promotion is to induce customers for immediate buying or dealer effectiveness
or both.

ii. Excessive use of sale promotion may affect sales and reputation of a company adversely.
iii. It is taken as supplementary to advertising and personal selling efforts.
iv. It involves all the promotional efforts other than advertising, personal selling, and publicity.
v. It consists of short-term incentives, schemes, or plans offered to buyers, salesmen, and/ or dealers.
vi. It involves non-routine selling efforts.

3. Personal Selling:
Personal selling includes face-to-face personal communication and presentation with prospects (potential and
actual customers) for the purpose of selling the products. It involves personal conversation and presentation
of products with customers. It is considered as a highly effective and costly tool of market promotion.

Characteristics of personal have been listed below:

i. Personal selling is an oral, face-to-face, and personal presentation with consumers.
ii. Basic purpose is to promote products or increase sales.
iii. It involves two-way communication.

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iv. Immediate feedback can be measured.
v. It is an ability of salesmen to persuade or influence buyers.
vi. It is more flexible way of market communication.
vii. Per contact cost is higher than advertising.
viii. It involves teaching, educating, and assisting people to buy.

4. Publicity:
Publicity is also a way of mass communication. It is not a paid form of mass communication that involves
getting favourable response of buyers by placing commercially significant news in mass media. William J.
Stanton defines: “Publicity is any promotional communication regarding an organisation and/or its products
where the message is not paid for by the organisation benefiting from it.”

It is the traditional form of public relations. Publicity is not paid for by the organisation. Publicity comes from
reporters, columnists, and journalists. It can be considered as a part of public relations. Publicity involves
giving public speeches, giving interviews, conducting seminars, charitable donations, inauguration by film
actor, cricketer, politician or popular personalities, stage show, etc., that attract mass media to publish the
news about them.

Main characteristic of publicity include:

i. Publicity involves obtaining favourable presentation about company or company’s offers upon radio,
television, or stage that is not paid for by the sponsor.
ii. It is a non-paid form of market promotion. However, several indirect costs are involved in publicity.
iii. It may include promotion of new product, pollution control efforts, special achievements of employees,
publicizing new policies, etc., for increasing sales. It is primarily concerns with publishing or highlighting
company’s activities and products. It is targeted to build company’s image.
iv. Mostly, publicity can be carried via newspapers, magazines, radio or television.
v. Company has no control over publicity in terms of message, time, frequency, information, and medium.
vi. It has a high degree of credibility. Publicity message is more likely to be read and reacted by audience.
vii. Publicity can be done at a much lower cost than advertising. Company needs to spend a little amount to
get the event or activity publicized.
viii. Frequency or repetition of publicity in mass media depends upon its social significance or the values for
news. Mostly, it appears only once.

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5. Public Relations:
The public relations is comprehensive term that includes maintaining constructive relations not only with
customers, suppliers, and middlemen, but also with a large set of interested publics. Note that public relations
include publicity, i.e., publicity is the part of public relations.

William Stanton defines:

“Public relations activities typically are designed to build or maintain a favourable image for an organisation
and a favourable relationship with the organization’s various publics. These publics may be customers,
stockholders, employees, unions, environmentalists, the government, and people in local community, or some
other groups in society.” Thus, public relations include organization’s broad and overall communication efforts
intended to influence various groups’ attitudes toward the organisation. Some experts have stated that the
public relations are an extension of publicity.

Main characteristic of publicity are as under:

i. Public relations is a paid form of market promotion. Company has to incur expenses.
ii. Public relations activities are designed to build and maintain a favourable image for an organisation and a
favourable relationship with the organization’s various publics.
iii. It is an integral part of managerial function. Many companies operate a special department for the purpose,
known as the public relations department.
iv. It involves a number of interactions, such as contacting, inviting, informing, clarifying, responding,
interpreting, dealing, transacting, and so forth.
v. Public relations covers a number of publics – formal and informal groups. These publics may be customers,
stockholders, employees, unions, environmentalists, the government, people of local community, or some
other groups in society.
vi. Public relations activities are undertaken continuously. It is a part of routine activities.
vii. All the officials, from top level to supervisory level, perform public relations activities.
viii. In relation to modern management practices, the public relations is treated as the profession.

Thus, there are five major elements or promotion mix. Each tool/element has its advantages, limitations, and
applicability. Depending upon company’s internal and external situations, one or more tools are used. Mostly,
company’s promotional programme involves more elements, each element supplements others.

37
 15. Explain the method of Direct Marketing.
Direct marketing is a very effective and powerful way to share information about a product or service. This
lesson will discuss what direct marketing is and what concepts are important in direct marketing and also give
examples.
Direct Marketing Definition
Direct marketing is a very popular and widely used method of informing people about products and services.
It's a method of contacting customers and potential customers personally, rather than having an indirect
medium between the company and the consumer, such as magazine ads or billboards that are seen by the
general public. Direct marketing can take many forms, including mail, telephone calls, emails, brochures, and
coupons. The information is usually very broad and meant for a general audience. Direct marketing works best
for products that have a wide appeal.
Direct Marketing Concepts
There are three significant concepts relevant to a direct marketing campaign:
First, ensure direct marketing is the appropriate method for the product or service being promoted. As part of
an effective marketing strategy, the product or service must be considered and the best method determined
for the best result. For instance, a company selling maps of foreign countries may have greater success with a
more targeted marketing campaign than trying to sell maps to everyone. Direct marketing is not the best
option for companies who have niche products to sell.
Second, determine if the expected revenue generated from the campaign will justify the expense. Direct
marketing can be a very costly method of advertising. If the sales from the campaign far exceed the cost of the
direct marketing and product costs, direct marketing may be a viable option for increasing awareness for a
product or service.
Third, approach direct marketing as one aspect of a full marketing process. There is a saying in marketing that
consumers must hear about a product or service seven times before they are ready to buy. The most effective
marketing efforts ensure potential customers hear about the product or service many times, in different
places, and from different mediums. Direct marketing is part of the entire plan and needs to be supported
with other forms of marketing, such as television ads, social media, billboards, etc.
16. State the various concepts of marketing. (R)
17. What are the elements of promotion mix?( R )
18. Distinguish between counter marketing and demarketing.
Counter Marketing
Many of us have been confronted on a daily basis with counter marketing strategies and probably had no idea
about this concept. Counter marketing involves advertising techniques which try to reduce the demand of a
product being used. Counter marketing typically uses negative messages to stop people from using a product.

Let me explain counter marketing easily with the help of an example.

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Let us assume that you are used to smoking regularly. Most of the times, whenever you buy a package of
cigarettes you can notice warnings on the package. This warning mentions the effects that smoking has on the
body such as pulmonary cancer, skin aging, death, etc. Similarly, when you are traveling through roadways or
railways, you might come across big billboards explaining hazards and negative effects of smoking. In some
cases, the ads also provide telephone number or solutions to your smoking problem with places where you
can call in case you want to quit smoking.

This advertising technique is what is called counter marketing. The tobacco example is one of the most
popular counter marketing tactics used globally. However, in the same category we can also include alcohol,
high fat fast foods, and sugar sodas. If we were to analyze a bit, I believe that we could also include the drug
industry in the same category, based on the fact that more and more often, the use of pills is avoided for
treatment of some symptoms, when these pills can easily be replaced by natural remedies.
Each country sees one election for presidency every year or once in four years. These elections may be for
presidency, ministries, local governors, etc. Whenever the election periods get close, you are overwhelmed by
a multitude of negative advertising pointing towards the potential candidates, each one trying to overcome his
opponent by spreading negative messages about him. This could be another example of counter marketing
techniques, in which the political advertising targeted towards supporters of the opposite candidate uses
counter marketing to reduce demand for that candidate.
To give a more business based explanation for the counter marketing, the counter marketing tactic can be
defined as an advertising strategy that takes a position contrary to an advertising message that preceded it.
The purpose lies in permanently reducing demand for a product or service due to various reasons.
The frequency and concentration of counter marketing tactics directly affects the business done by the
product in the market. It may affect negatively on the product itself and in the end the product might be
shunned by the society or by the market altogether.
Basically, counter marketing strategy puts in close perspective explanations of the danger related to the use of
a specific product/service. It communicates the social costs and it can use multiple voices and strategies.
Generally, the counter marketing strategy should work together with other tactics in order to alter social
norms.
We are on a daily basis faced with strategies which are part of counter marketing strategies such as excise
taxes, taxes on export, import taxes or distribution restrictions.
Often used to take an opposing position on a controversial topic or to counter an impression that might be
made by another party’s advertising, the counter marketing strategy tends to introduce brand substitution.
Therefore, the brand is an important key in connection to the effectiveness of a counter marketing tactic. If
the brand is strong against which counter marketing tactics are being used, then the brand-customer
relationship becomes more resistant under this tactic.

39
Finally, in order to be effective, the counter marketing programs must be evaluated and have explicit goals
coupled with performance measures, while aspects such as time, money and political context are important
variables for the performance of the strategy.
Demarketing
While there are many definitions of demarketing—the common thread is the intent to decrease demand.
Businessdictionary.com defines demarketing as: Efforts aimed at discouraging (not destroying) the demand for
a product which (1) a firm cannot supply in large-enough quantities, or (2) does not want to supply in a certain
region where the high costs of distribution or promotion allow only a too little profit margin. Common
demarketing strategies include higher prices, scaled-down advertising, and product redesign.[3]
According to Websters dictionary, demarketing is “The use of advertising to decrease demand for a product
that is in short supply.”[4]
A few other definitions include one from DictionaryReference.com: “Advertising that urges the public to limit
the consumption of a product, as at a time of shortage.”[5]
The All Business dictionary defines demarketing as: Marketers attempt to reduce the demand for a product
when the demand for the product is greater than the manufacturer’s ability to produce it.
Examples
Paper Reduction
Promoting the use of paperless products at home and in the office to save the trees, is an example of
demarketing paper products. Pennsylvania, Texas, Wisconsin, and other states are now issuing electronic
vehicle titles.[15]
Water Conservation
Due to the severe drought, the State of California has been restricting water usage, while providing tax rebates
for installing synthetic turf. An average home that converts to artificial grass saves about 22,000 gallons of
water per year.[16]
Junk Food
Promoting high fiber, organic, and healthy products against food and beverages with saturated fat, high
fructose corn syrup, and artificial ingredients helps to prevent obesity, diabetes, and other diseases.
19. Highlight the various stages in product life cycle. ( R )
20. List out the characteristics of a good brand name.
Brand name is one of the brand elements which helps the customers to identify and differentiate one product
from another. It should be chosen very carefully as it captures the key theme of a product in an efficient and
economical manner. It can easily be noticed and its meaning can be stored and triggered in the memory
instantly. Choice of a brand name requires a lot of research. Brand names are not necessarily associated with
the product. For instance, brand names can be based on places (Air India, British Airways), animals or birds
(Dove soap, Puma), people (Louise Phillips, Allen Solly). In some instances, the company name is used for all
products (General Electric, LG).
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Features of a Good Brand Name
A good brand name should have following characteristics:
It should be unique / distinctive (for instance- Kodak, Mustang)
It should be extendable.
It should be easy to pronounce, identified and memorized. (For instance-Tide)
It should give an idea about product’s qualities and benefits (For instance- Swift, Quickfix, Lipguard).
It should be easily convertible into foreign languages.
It should be capable of legal protection and registration.
It should suggest product/service category (For instance Newsweek).
It should indicate concrete qualities (For instance Firebird).
It should not portray bad/wrong meanings in other categories. (For instance NOVA is a poor name for a car to
be sold in Spanish country, because in Spanish it means “doesn’t go”).
Process of Selecting a renowned and successful Brand Name
Define the objectives of branding in terms of six criterions - descriptive, suggestive, compound, classical,
arbitrary and fanciful. It Is essential to recognize the role of brand within the corporate branding strategy and
the relation of brand to other brand and products. It is also essential to understand the role of brand within
entire marketing program as well as a detailed description of niche market must be considered.
Generation of multiple names - Any potential source of names can be used; organization, management and
employees, current or potential customers, agencies and professional consultants.
Screening of names on the basis of branding objectives and marketing considerations so as to have a more
synchronized list - The brand names must not have connotations, should be easily pronounceable, should
meet the legal requirements etc.
Gathering more extensive details on each of the finalized names - There should be extensive international
legal search done. These searches are at times done on a sequential basis because of the expense involved.
Conducting consumer research - Consumer research is often conducted so as to confirm management
expectations as to the remembrance and meaningfulness of the brand names. The features of the product, its
price and promotion may be shown to the consumers so that they understand the purpose of the brand name
and the manner in which it will be used. Consumers can be shown actual 3-D packages as well as animated
advertising or boards. Several samples of consumers must be surveyed depending on the niche market
involved.
On the basis of the above steps, management can finalize the brand name that maximizes the organization’s
branding and marketing objectives and then formally register the brand name.
Distinguish between selling and marketing.
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In general we use ‘marketing’ and ‘selling’ as synonyms but there is a substantial difference between both the
concepts. It is necessary to understand the differences between Marketing vs Selling for a successful
marketing manager. Selling has a prod¬uct focus and mostly producer driven. It is the action part of marketing
only and has short – term goal of achieving market share.
The emphasis is on price variation for closing the sale where the objective can be stated, as “I must somehow
sell the product”. This short – term focus does not consider a prudential planning for building up the brand in
the market place and winning competi¬tive advantage through a high loyal set of cus¬tomers. The end means
of any sales activity is maximizing profits through sales maximization.
When the focus is on selling, the businessman thinks that after production has been completed the task of the
sales force starts. It is also the task of the sales department to sell whatever the production department has
manufactured. Aggressive sales methods are justified to meet this goal and customer’s actual needs and
satisfaction are taken for granted. Selling converts the product in to cash for the company in the short run.
Marketing as a concept and approach is much wider than selling and is also dynamic as the fo¬cus is on the
customer rather than the product. While selling revolves around the needs and in¬terest of the manufacturer
or marketer, market¬ing revolves around that of consumer. It is the whole process of meeting and satisfying
the needs of the consumer.

Marketing vs selling
Marketing consists of all those activities that are associated with product planning, pricing, promoting and
distributing the product or service. The task commences with identifying consumer needs and does not end till
feedback on consumer sat-isfaction from the consumption of the product is received. It is a long chain of
activity, which comprises production, packing, promotion, pricing, distribution and then the selling. Consumer
needs become the guiding force behind all these activities. Profits are not ignored but they are built up on a
long run basis. Mind share is more important than market share in Marketing.
According to Prof. Theodore Levitt ‘The difference between selling and marketing is more than semantic. A
truly marketing minded firm tries to create value satisfying goods and services which the consumers will want
to buy. What is offers for sale is determined not by the seller but by the buyers. The seller takes his cues from
the buyer and the product becomes the consequence of the marketing effort, not vice versa. Selling merely
concerns itself with the tricks and techniques of getting the customers to exchange their cash for the
company’s products, it does not bother about the value satisfaction that the exchange is all about. On the
contrary, marketing views the en¬tire business as consisting of a tightly integrated effort to discover, create,
arouse ad satisfy customer needs’.
Main Features of SELLING in Selling vs Marketing
1 Emphasis is on the product
2 Company Manufactures the product first
3 Management is sales volume oriented
4 Planning is short-run-oriented in terms of today’s products and markets

42
5 Stresses needs of seller
6 Views business as a good producing process
7 Emphasis on staying with existing technology and reducing costs
8 Different departments work as in a highly separate water tight compartments
9 Cost determines Price
10 Selling views customer as a last link in business

Main features of MARKETING in Selling vs Marketing

1 Emphasis on consumer needs wants
2 Company first determines customers needs and wants and then decides out how to deliver a product to
satisfy these wants
3 Management is profit oriented
4 Planning is long-run-oriented in today’s products and terms of new products, tomorrow’s markets and
future growth
5 Stresses needs and wants of buyers
6 Views business as consumer producing process sat¬isfying process
7 Emphasis on innovation on every existing technol¬ogy and reducing every sphere, on providing better costs
value to the customer by adopting a superior technology
8 All departments of the business integrated manner, the sole purpose being generation of consumer
satisfaction
9. Consumer determine price, price determines cost
10. Marketing views the customer last link in business as the very purpose of the business

21. Write a note on marketing intelligence system. (R )

22. Why do new products fail? (R )
“Package is a salient sales man” –Discuss.
Professional marketers apply the term "silent salesman" to packaging, displays, signs or promotional products
designed to increase sales and profits. These are particularly useful to small businesses that have few
salespeople on hand to promote their products and services. An added benefit is that silent salesmen help
inform customers about special events and discounts.

Packaging
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Product packaging works as a silent salesman because consumers often make a psychological connection with
it, according to the website MarketingWeek. Packaging may appeal to consumers if it represents something
that’s important to them or symbolizes someone they aspire to be. Shoppers who have environmental
concerns may choose a product packaged in recycled materials. People who have active lifestyles may select a
product because the packaging includes a photo of an athlete who epitomizes vitality.
Displays
Point-of-purchase displays in stores can bolster sales because they give shoppers more information about
items even when salespeople aren’t available to highlight product features. These displays often include
unpackaged samples that shoppers can try out in a store. For example, a television that’s kept running at a
point-of-purchase display allows customers to judge the sharpness of its picture. Shoppers are more likely to
buy such items when they can observe their performance.
Signage
Consider outdoor signs as silent salesmen beckoning consumers to enter your place of business, giving you the
opportunity to make a sale. Outdoor signs that promote discounts, special events and new products can
effectively increase customer traffic and sales opportunities. Indoor signs make more sales pitches for
business owners by highlighting additional products and special offers that don’t appear on outdoor signs.
Promotional Products
You can put numerous silent salesmen at work for you outside of your place of business with promotional
products. These products can include pens, coffee mugs, calendars and other useful items imprinted with your
company’s name, address and contact information. Business owners often give away promotional products at
trade shows and other events to attract new customers and encourage repeat business from previous
customers.
Considerations
Silent salesman tactics can backfire if they’re not carefully planned. For instance, ensure signs advertising
discounts clearly cite how customers receive a discount. Special offers that come with limiting conditions that
aren’t posted on a sign may anger shoppers and hamper your business reputation with them.
23. Outline the different dimensions of target marketing. (R) )

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SECTION-B
24. Discus the impact of global economic slowdown on marketing consumer goods.
Some economists have jokingly defined a recession like this: If your neighbor gets laid off, it's a recession. If
you get laid off, it's a depression. Economists officially define a recession as two consecutive quarters of
negative growth in gross domestic product (GDP). The National Bureau of Economic Research cites "a
significant decline in economic activity spread across the economy, lasting more than a few months" as the
hallmark of a recession.
Both definitions are accurate because they indicate the same economic results: a loss of jobs, a decline in real
income, a slowdown in industrial production and manufacturing and a slump in consumer spending - spending
that drives more than two-thirds of the U.S. economy.
In the article we'll explain how the impact of these broad-spectrum slowdowns on both large and small
businesses can be very damaging, and in some instances, catastrophic. Some businesses may be affected only
moderately, or not at all, if the recession is mild and brief. If the recession lingers and the downturn is
widespread, all big businesses - firms publicly traded on major stock exchanges - may ultimately be hurt. (Read
about classic examples of economic downturn in Stagflation, 1970s Style and What Caused The Great
Depression?)
How a Recession Impacts Large Businesses
Let's take an unnamed Fortune 1000 manufacturer as a typical big business suffering the effects of a
recession. What happens to this firm will likely happen to other big businesses as the recession runs its course.
As sales revenues and profits decline, the manufacturer will cut back on hiring new employees, or freeze hiring
entirely. In an effort to cut costs and improve the bottom line, the manufacturer may stop buying new
equipment, curtail research and development and stop new product rollouts (a factor in the growth of
revenue and market share). Expenditures for marketing and advertising may also be reduced. These cost-
cutting efforts will impact other businesses, both big and small, which provide the goods and services used by
the big manufacturer.
Falling Stocks and Slumping Dividends
As declining revenues show up on its quarterly earnings report, the manufacturer's stock price may decline.
Dividends may also slump, or disappear entirely. Shareholders may become upset. They and the board of
directors (B of D) may call for a new CEO and/or an entirely new senior management team. The
manufacturer's advertising agency may be dumped and a new agency hired. The internal advertising and
marketing departments may also face a personnel shakeup.

When the manufacturer's stock falls and the dividends decline or stop, institutional investors who hold that
stock may sell and reinvest the proceeds into better-performing stocks. This will further depress the
company's stock price. (Learn how understanding the business cycle and your own investment style can help
you cope with an economic decline in Recession: What Does It Mean To Investors? and Recession-Proof Your
Portfolio.)

45
The sell-off and business decline will also impact employer contributions to profit-sharing plans or 401(k) plans
if the company has such programs in place.
Credit Impairment and Bankruptcy
Also impacted by the recession is the accounts receivable (AR). The customers of the company that owe it
money may pay slowly, late, partially or not at all. Then, with reduced revenues, the affected company will pay
its own bills more slowly, late, or in smaller increments than the original credit agreement required. Late or
delinquent payments will reduce the valuation of the corporation's debt, bonds and ability to obtain financing.
The company's ability to service its debt (pay interest on the money it has borrowed) may also be impaired,
eventuating in defaults on bonds and other debt, further damaging the firm's credit rating and preventing
further borrowing. (Debt Reckoning can teach you how a company's debt is an indicator of financial health.)
Debt will have to be restructured and/or refinanced, meaning new terms will have to be agreed upon by
creditors. If the company's debts cannot be serviced and cannot be repaid as agreed upon in the lending
contract, then bankruptcy may ensue. The company will then be protected from its creditors as it undergoes
reorganization, or it may go out of business completely. (For related reading, see An Overview Of Corporate
Bankruptcy, Profit From Corporate Bankruptcy Proceedings and Taking Advantage Of Corporate Decline.)
Employee Lay-offs and Benefit Reductions
The business may cut employees, and more work will have to be done by fewer people. Productivity per
employee may increase, but morale may suffer as hours become longer, work becomes harder, wage
increases are stopped and fear of further layoffs persists. (Read about how employment statistics influence
corporate confidence in Surveying The Employment Report.)
As the recession increases in severity and length, management and labor may meet and agree to mutual
concessions, both to save the company and to save jobs. The concessions may include wage reductions and
reduced benefits. If the company is a manufacturer, it may be forced to close plants and discontinue poorly
performing brands. Automobile manufacturers, for example, have done this in previous recessions.
Cuts to Quality of Goods and Services
Secondary aspects of the goods and services produced by the recession-impacted manufacturer may also
suffer. In an attempt to further cut costs to improve its bottom line, the company may compromise the
quality, and thus the desirability, of its products. This may manifest itself in a variety of ways and is a common
reaction of many big businesses in a steep recession. (Learn about the importance of production levels in
Understanding Supply-Side Economics.)
Airlines, for example, may lower maintenance standards. They may install more seats per plane, further
cramping the already squeezed-in passenger. Routes to marginally profitable or money-losing destinations
may be cut, inconveniencing customers and damaging the economies of the cancelled destinations.
Giant food purveyors may offer less product, for the same price, in the same size package in which the larger
amount was previously sold. Quality may also be reduced. Coffee, for example, may be cut with lesser-quality
beans, compromising flavor and driving away cost-conscious consumers with little brand loyalty who have
noticed the change. (Read about the importance of standing out from the competition in Competitive
Advantage Counts.)

46
Reduced Consumer Access
As firms impacted by the recession spend less money on advertising and marketing, big advertising agencies
which bill millions of dollars per year will feel the squeeze. In turn, the decline in advertising expenditures will
whittle away at the bottom lines of giant media companies in every division, be it print, broadcast or online.
(Read about successful marketing strategies in Advertising, Crocodiles And Moats.)
As the effects of a recession ripple through the economy, consumer confidence declines, perpetuating the
recession as consumer spending drops. (To learn more, read Economic Indicators: Consumer Confidence Index
(CCI).)
A Recession's Impact on Small Businesses
The impact of a recession on small businesses that have annual sales substantially less than the Fortune 1000
and that are not public companies is similar to large businesses. Without major cash reserves and large capital
assets as collateral, however, and with more difficulty securing additional financing in trying economic times,
smaller businesses may have a harder time surviving a recession. Bankruptcies among smaller businesses may
therefore occur at a higher rate than among larger firms.
The bankruptcy or dissolution of a small business that serves a community - a franchised convenience store,
for example - can create hardships not only for the small business owners, but for residents of the
neighborhood. (Learn how businesses can safeguard their assets in Asset Protection For The Business Owner.)
In the wake of such bankruptcies or dissolutions, the entrepreneurial spirit which inspired someone to go into
such a business may take a hit, discouraging, at least for a while, any risky business ventures. Too many
bankruptcies may also discourage banks, venture capitalists and other lenders from making loans for startups
until the economy turns around. (Read Six Steps To A Better Business Budget to learn about an easy but
essential process that helps owners keep their small businesses afloat.)
Recessions Don't Last Forever
Recessions come and go and some are more severe and last longer than others. But history shows that
recessions invariably end, and when they do, an economic recovery follows.

25. Describe the process of buying decision making.

The customer buying process (also called a buying decision process) describes the journey your customer goes
through before they buy your product. Understanding your customer’s buying process is not only very
important for your salespeople, it will also enable you to align your sales strategy accordingly.

The five stages framework remains a good way to evaluate the customer’s buying process. John Dewey first
introduced the following five stages in 1910:

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1. Problem/need recognition
This is often identified as the first and most important step in the customer’s decision process. A purchase
cannot take place without the recognition of the need. The need may have been triggered by internal stimuli
(such as hunger or thirst) or external stimuli (such as advertising or word of mouth).
A clear understanding of how to effectively design and manage the customer experience can transform your
retention and revenue numbers.
Our B2B Customer Experience Marketer's Guide will show you exactly how to do it.
Packed with templates, diagrams, step-by-step processes and specialist marketer-focused advice, the guide
will show you:
How to champion and reinforce a CX culture within your organisation.
How to understand the exact role your business plays in what your customers do.
How to profile your customers into targeted CX journeys.
How to visualise and design a highly effective CX blueprint.
How to focus on the critical aspects of customer engagement that will impact your CX success.
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B2B Customer Experience Management Guide
2. Information search
Having recognised a problem or need, the next step a customer may take is the information search stage, in
order to find out what they feel is the best solution. This is the buyer’s effort to search internal and external
business environments, in order to identify and evaluate information sources related to the central buying
decision. Your customer may rely on print, visual, online media or word of mouth for obtaining information.

3. Evaluation of alternatives
As you might expect, individuals will evaluate different products or brands at this stage on the basis of
alternative product attributes – those which have the ability to deliver the benefits the customer is seeking. A
factor that heavily influences this stage is the customer’s attitude. Involvement is another factor that
influences the evaluation process. For example, if the customer’s attitude is positive and involvement is high,
then they will evaluate a number of companies or brands; but if it is low, only one company or brand will be
evaluated.

4. Purchase decision
The penultimate stage is where the purchase takes place. Philip Kotler (2009) states that the final purchase
decision may be ‘disrupted’ by two factors: negative feedback from other customers and the level of
motivation to accept the feedback. For example, having gone through the previous three stages, a customer
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chooses to buy a new telescope. However, because his very good friend, a keen astronomer, gives him
negative feedback, he will then be bound to change his preference. Furthermore, the decision may be
disrupted due to unforeseen situations such as a sudden job loss or relocation.

5. Post-purchase behaviour
In brief, customers will compare products with their previous expectations and will be either satisfied or
dissatisfied. Therefore, these stages are critical in retaining customers. This can greatly affect the decision
process for similar purchases from the same company in the future, having a knock-on effect at the
information search stage and evaluation of alternatives stage. If your customer is satisfied, this will result in
brand loyalty, and the Information search and Evaluation of alternative stages will often be fast-tracked or
skipped altogether.

On the basis of being either satisfied or dissatisfied, it is common for customers to distribute their positive or
negative feedback about the product. This may be through reviews on website, social media networks or word
of mouth. Companies should be very careful to create positive post-purchase communication, in order to
engage customers and make the process as efficient as possible.

26. Explain the problems and prospects of rural marketing.

Twelve problems faced in rural marketing are as follows: 1. Deprived people and deprived markets 2. Lack of
communication facilities 3. Transport 4. Many languages and dialects 5. Dispersed markets 6. Low per capita
Income 7. Low levels of literacy 8. Prevalence of spurious brands and seasonal demand 9. Different way of
thinking 10. Warehousing problem 11. Problems in sales force management 12. Distribution problem.

1. Deprived people and deprived markets:

The number of people below the poverty line has not decreased in any appreciable manner. Thus, poor people
and consequently underdevel-oped markets characterize rural markets. A vast majority of rural people is
tradition bound, and they also face problems such as inconsistent electrical power, scarce infrastructure and
unreliable telephone system, and politico-business associations that hinder development efforts.

2. Lack of communication facilities:

Even today, most villages in the country are inaccessible dur-ing the monsoons. A large number of villages in
the country have no access to telephones. Other communication infrastructure is also highly underdeveloped.

3. Transport:

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Many rural areas are not connected by rail transport. Many roads have been poorly surfaced and got severely
damaged during monsoons. The use of bullock carts is inevitable even today. Camel carts are used in
Rajasthan and Gujarat in both rural and urban sectors.

4. Many languages and dialects:

The languages and dialects vary from state to state, region to region and probably from district to district.
Since messages have to be delivered in the local language, it is difficult for the marketers to design
promotional strategies for each of these areas. Facilities such as phone, telegram and fax are less developed in
villages adding to the communica-tion problems faced by the marketers.

5. Dispersed markets:
Rural population is scattered over a large land area. And it is almost impos-sible to ensure the availability of a
brand all over the country. District fairs are periodic and occa-sional in nature. Manufacturers and retailers
prefer such occasions, as they allow greater visibility and capture the attention of the target audience for
larger spans of time. Advertising in such a highly heterogeneous market is also very expensive.

6. Low per capita Income:

The per capita income of rural people is low as compared to the urban people. Moreover, demand in rural
markets depends on the agricultural situation, which in turn depends on the monsoons. Therefore, the
demand is not stable or regular. Hence, the per-capita income is low in villages compared with urban areas.

7. Low levels of literacy:

The level of literacy is lower compared with urban areas. This again leads to a problem of communication in
these rural areas. Print medium becomes ineffective and to an extent irrelevant, since its reach is poor.

8. Prevalence of spurious brands and seasonal demand:

For any branded product, there are a multitude of local variants, which are cheaper and hence more desirable.
Also, due to illiteracy, the consumer can hardly make out a spurious brand from an original one. Rural
consumers are cautious in buying and their decisions are slow, they generally give a product a trial and only
after complete satisfaction they buy it again.

9. Different way of thinking:

There is a vast difference in the lifestyles of the people. The choice of brands that an urban customer enjoys is
not available to the rural customer, who usually has two to three choices. As such, the rural customer has a

50
fairly simple thinking and their decisions are still governed by customs and traditions. It is difficult to make
them adopt new practices.

10. Warehousing problem:

Warehousing facilities in the form of godowns are not available in rural India. The available godowns are not
properly maintained to keep goods in proper conditions. This is a major problem because of which the
warehousing cost increases in rural India.

11. Problems in sales force management:

Sales force is generally reluctant to work in rural areas. The languages and dialects vary from state to state,
region to region, and probably from district to district. Since messages have to be delivered in the local
language, it is difficult for sales force to communicate with the rural consumers. Sales force finds it difficult to
adjust to the rural environ-ment and inadequate facilities available in rural areas.

12. Distribution problem:

Effective distribution requires village-level shopkeeper, toluka-level wholesaler/dealer, district-level
stockist/distributor, and company-owned depot at state level. These many tiers increase the cost of
distribution.

Rural markets typically signify complex logistical challenges that directly translate into high distribution costs.
Bad roads, inadequate warehousing and lack of good distributors pose as major problems to the marketers.
Define segmentation and explain the various basis for segmenting markets.
Some of the major bases for market segmentation are as follows: 1. Geographic Segmentation 2. Demographic
Segmentation 3. Psychographic Segmentation 4. Behavioristic Segmentation 5. Volume Segmentation 6.
Product-space Segmentation 7. Benefit Segmentation.

A large number of variables are used to segment a consumer market.

The most common bases for segmenting markets are as follows:

Traditional:
Geographic, Demographic

Modern:
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Psychographic, Behaviouristic

1. Geographic Segmentation:
Geographic location is one of the simplest methods of segmenting the market. People living in one region of
the country have purchasing and consuming habit which differs from those living in other regions. For
example, life style products sell very well in metro cities, e.g., Mumbai, Delhi, Kolkata and Chennai but do not
sell in small towns. Banking needs of people in rural areas differ from those of urban areas. Even within a city,
a bank branch located in the northern part of the city may attract more clients than a branch located in
eastern part of the city.

2. Demographic Segmentation:
Demographic variables such as age, occupation, education, sex and income are commonly used for
segmenting markets.

(a) Age:
Teenagers, adults, retired.
(b) Sex:
Male and female.
(c) Occupation:
Agriculture, industry, trade, students, service sector, house-holds, institutions.

ADVERTISEMENTS:

(i) Industrial sector:

Large, small, tiny.

(ii) Trade:

Wholesale, retail, exporters.

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(iii) Services:

Professionals and non-professionals.

(iv) Institutions:

Educational, religions, clubs.

(v) Agriculture and cottage industries.

(d) Income Level:

Above Rs. 1 lakh per annum, Rs. 50,000 to Rs. 1 lakh, Rs. 25,000 to Rs. 50,000 per annum, i.e., higher, middle
and lower.

(e) Family Life-cycle:

Young single, young married no children, young married youngest child under six, young married youngest
child over six, older married with children, older married no children under eighteen, older single, etc.

3. Psychographic Segmentation:
Under this method consumers are classified into market segments on the basis of their psychological make-up,
i.e., personality, attitude and lifestyle. According to attitude towards life, people may be classified as
traditionalists, achievers, etc.

Rogers has identified five groups of consumer personalities according to the way they adopt new products:

(а) Innovators:

These are cosmopolitan people who are eager to try new ideas. They are highly venturesome and willing to
assume the risk of an occasional bad experience with a new product.
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(b) Early Adopters:

These are influential people with whom the average person checks out an innovation.

(c) Early Majority:

This group tends to deliberate before adopting a new product. Its members are important in legitimising an
innovation but they are seldom leaders.

(d) Late Majority:

This group is cautious and adopts new ideas after an innovation has received public confidence.

(e) Laggards:

These are past-oriented people. They are suspicious of change and innovations. By the time they adopt a
product, it may already have been replaced by a new one. Understanding of psychographic of consumers
enables marketers to better select potential markets and match the product image with the type of consumer
using it. For example, women making heavy use of bank credit cards are said to lead an active lifestyle and are
concerned with their appearance. They tend to be liberated and are willing to try new things.

Psychographic classification may, however, be an oversimplification of consumer personalities and purchase

behaviour. So many factors influence consumers that an early adopter of one product might well be a laggard
for some other product and vice versa.

4. Behavioristic Segmentation:
In this method consumers are classified into market segments not the basis of their knowledge, attitude and
use of actual products or product attributes.

Any of the following variables might be used for this purpose:

54
(а) Purchase Occasion:

Buyers may be differentiated on the basis of when they use a product or service. For example, air travellers
might fly for business or vacation. Therefore, one airline might promote itself as a business flyer while another
might target the tourists.

(b) Benefits Sought:

The major benefit sought in a product is used as the basis of classify consumers. High quality, low price, good
taste, speed, sex appeal are examples of benefits. For example, some air travellers prefer economy class (low
price), while others seek executive class (status and comfort).

(c) User Status:

Potential buyers may be classified as regular users, occasional users and non-users. Marketers can develop
new products or new uses of old products by targeting one or another of these groups.

5. Volume Segmentation:
Consumers are classified light, medium and heavy users of a product. In some cases, 80 per cent of the
product may be sold to only 20 per cent of the group. Marketers can decide product features and advertising
strategies by finding common characteristics among heavy users. For example, airlines having ‘Frequent Flyer’
are using user rate as the basis of market segmentation. Generally, marketers are interested in the heavy user
group.

But marketers should pay attention to all the user groups because they represent different opportunities. The
non-users may consist of two types of people— those who do not use the product and those who might use it.
Some may change over time from a non-user to a user.

Those who do not use due to ignorance may be provided extensive information. Repetitive advertising may be
used to overcome inertia or psychological resistance. In this way non-users can gradually be converted into
users.

6. Product-space Segmentation:

55
Here the buyers are asked to compare the existing brands according to their perceived similarity and in
relation to their ideal brands. First, the analyst infers the latent attributes that consumers are using to
perceive the brand. Then buyers are classified into groups each having a distinct ideal brand in mind. The
distinctive characteristics of each group are ascertained.

7. Benefit Segmentation:
Consumer behaviour depends more on the benefit sought in product/service than on demographic factors.
Each market segment is identified by the major benefits it is seeking. Most buyers seek as many benefits as
possible. However, the relative importance attached to individual benefits differs from one group to another.
For example, some consumers of toothpaste give greater importance to freshness while other prefer taste or
brightness of teeth.

Research studies on benefit segmentation reveal that it is easier to take advantage of existing segment, then
to create new segments. As no brand can appeal to all consumers, a marketer who wants to cover the market
fully must offer multiple brands.

The following benefit segments have been identified:

(а) The Status Seeker:

This group comprises buyers who are very much concerned with the prestige of the brand.

(b) The Swinger:

This group tries to be modern and up-to-date in all of its activities.

(c) The Conservative:

This group prefers popular brands and large successful companies.

(d) The Rational Man:

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This group looks for benefits such as economy, value, durability and other logical factors.

(e) The Inner Directed Man:

This group is concerned with self-concept, e.g., sense of homour, independence, honesty, etc.

(f) The Hedonist:

This group is concerned mainly with sensory benefits.

Marketing experts suggest that benefit segmentation has the greatest number of practical implications than
any other method of segmentation.

Discuss the various components of promotion mix. (R )

Suggest appropriate distribution strategy for the following :

Automobile car
Ready made dresses
Sports equipment
Fertilizers

What do you mean by innovation diffusion? What steps would you take to diffuse a newly developed mobile
phone of an Indian brand in the domestic market?
Products tend to go through a life cycle. Initially, a product is introduced. Since the product is not well known
and is usually expensive (e.g., as microwave ovens were in the late 1970s), sales are usually limited.
Eventually, however, many products reach a growth phase—sales increase dramatically. More firms enter
with their models of the product. Frequently, unfortunately, the product will reach a maturity stage where
little growth will be seen. For example, in the United States, almost every household has at least one color TV
set. Some products may also reach a decline stage, usually because the product category is being replaced by
something better. For example, typewriters experienced declining sales as more consumers switched to
computers or other word processing equipment. The product life cycle is tied to the phenomenon of diffusion
of innovation. When a new product comes out, it is likely to first be adopted by consumers who are more
innovative than others—they are willing to pay a premium price for the new product and take a risk on
57
unproven technology. It is important to be on the good side of innovators since many other later adopters will
tend to rely for advice on the innovators who are thought to be more knowledgeable about new products for
advice.

At later phases of the PLC, the firm may need to modify its market strategy. For example, facing a saturated
market for baking soda in its traditional use, Arm ü Hammer launched a major campaign to get consumers to
use the product to deodorize refrigerators. Deodorizing powders to be used before vacuuming were also
created.
It is sometimes useful to think of products as being either new or existing.

Many firms today rely increasingly on new products for a large part of their sales. New products can be new in
several ways. They can be new to the market—noone else ever made a product like this before. For example,
Chrysler invented the minivan. Products can also be new to the firm—another firm invented the product, but
the firm is now making its own version. For example, IBM did not invent the personal computer, but entered
after other firms showed the market to have a high potential. Products can be new to the segment—e.g.,
cellular phones and pagers were first aimed at physicians and other price-insensitive segments. Later, firms
decided to target the more price-sensitive mass market. A product can be new for legal purposes. Because
consumers tend to be attracted to “new and improved” products, the Federal Trade Commission (FTC) only
allows firms to put that label on reformulated products for six months after a significant change has been
made.
The diffusion of innovation refers to the tendency of new products, practices, or ideas to spread among
people. Usually, when new products or ideas come about, they are only adopted by a small group of people
initially; later, many innovations spread to other people.

The bell shaped curve frequently illustrates the rate of adoption of a new product. Cumulative adoptions are
reflected by the S-shaped curve. The saturation point is the maximum proportion of consumers likely to adopt
a product.

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In the case of refrigerators in the U.S., the saturation level is nearly one hundred percent of households; it well
below that for video games that, even when spread out to a large part of the population, will be of interest to
far from everyone.

Several specific product categories have case histories that illustrate important issues in adoption. Until some
time in the 1800s, few physicians bothered to scrub prior to surgery, even though new scientific theories
predicted that small microbes not visible to the naked eye could cause infection. Younger and more
progressive physicians began scrubbing early on, but they lacked the stature to make their older colleagues
follow.

ATM cards spread relatively quickly. Since the cards were used in public, others who did not yet hold the
cards could see how convenient they were. Although some people were concerned about security, the
convenience factors seemed to be a decisive factor in the “tug-of-war” for and against adoption.

The case of credit cards was a bit more complicated and involved a “chicken-and-egg” paradox. Accepting
credit cards was not a particularly attractive option for retailers until they were carried by a large enough
number of consumers. Consumers, in contrast, were not particularly interested in cards that were not
accepted by a large number of retailers. Thus, it was necessary to “jump start” the process, signing up large
corporate accounts, under favorable terms, early in the cycle, after which the cards became worthwhile for
retailers to accept.

Rap music initially spread quickly among urban youths in large part because of the low costs of recording.
Later, rap music became popular among a very different segment, suburban youths, because of its apparently
authentic depiction of an exotic urban lifestyle.

Hybrid corn was adopted only slowly among many farmers. Although hybrid corn provided yields of about
20% more than traditional corn, many farmers had difficulty believing that this smaller seed could provide a
superior harvest. They were usually reluctant to try it because a failed harvest could have serious economic
consequences, including a possible loss of the farm. Agricultural extension agents then sought out the most
progressive farmers to try hybrid corn, also aiming for farmers who were most respected and most likely to be
imitated by others. Few farmers switched to hybrid corn outright from year to year. Instead, many started
out with a fraction of their land, and gradually switched to 100% hybrid corn when this innovation had proven
itself useful.

Several forces often work against innovation. One is risk, which can be either social or financial. For example,
early buyers of the CD player risked that few CDs would be recorded before the CD player went the way of the
8 track player. Another risk is being perceived by others as being weird for trying a “fringe” product or idea.

59
For example, Barbara Mandrell sings the song “I Was Country When Country Wasn’t Cool.” Other sources of
resistance include the initial effort needed to learn to use new products (e.g., it takes time to learn to
meditate or to learn how to use a computer) and concerns about compatibility with the existing culture or
technology. For example, birth control is incompatible with strong religious influences in countries heavily
influenced by Islam or Catholicism, and a computer database is incompatible with a large, established card file.

Innovations come in different degrees. A continuous innovation includes slight improvements over time. Very
little usually changes from year to year in automobiles, and even automobiles of the 1990s are driven much
the same way that automobiles of the 1950 were driven. A dynamically continuous innovation involves some
change in technology, although the product is used much the same way that its predecessors were used—e.g.,
jet vs. propeller aircraft. A discontinous innovation involves a product that fundamentally changes the way
that things are done—e.g., the fax and photocopiers. In general, discontinuous innovations are more difficult
to market since greater changes are required in the way things are done, but the rewards are also often
significant.

Several factors influence the speed with which an innovation spreads. One issue is relative advantage (i.e., the
ratio of risk or cost to benefits). Some products, such as cellular phones, fax machines, and ATM cards, have a
strong relative advantage. Other products, such as automobile satellite navigation systems, entail some
advantages, but the cost ratio is high. Lower priced products often spread more quickly, and the extent to
which the product is trialable (farmers did not have to plant all their land with hybrid corn at once, while one
usually has to buy a cellular phone to try it out) influence the speed of diffusion. Finally, the extent of
switching difficulties influences speed—many offices were slow to adopt computers because users had to
learn how to use them.

Some cultures tend to adopt new products more quickly than others, based on several factors:

Modernity: The extent to which the culture is receptive to new things. In some countries, such as Britain and
Saudi Arabia, tradition is greatly valued—thus, new products often don’t fare too well. The United States, in
contrast, tends to value progress.
Homophily: The more similar to each other that members of a culture are, the more likely an innovation is to
spread—people are more likely to imitate similar than different models. The two most rapidly adopting
countries in the World are the U.S. and Japan. While the U.S. interestingly scores very low, Japan scores high.
Physical distance: The greater the distance between people, the less likely innovation is to spread.
Opinion leadership: The more opinion leaders are valued and respected, the more likely an innovation is to
spread. The style of opinion leaders moderates this influence, however. In less innovative countries, opinion
leaders tend to be more conservative, i.e., to reflect the local norms of resistance.

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It should be noted that innovation is not always an unqualifiedly good thing. Some innovations, such as infant
formula adopted in developing countries, may do more harm than good. Individuals may also become
dependent on the innovations. For example, travel agents who get used to booking online may be unable to
process manual reservations.

Sometimes innovations are disadopted. For example, many individuals disadopt cellular phones if they find
out that they don’t end up using them much.

Explain the impact of micro and marco environmental factors on a consumers goods marketer in India.
There are two kinds of external marketing environments; micro and macro. These environments’ factors are
beyond the control of marketers but they still influence the decisions made when creating a strategic
marketing strategy.

micro and macro environments

Micro Environment Factors

The suppliers: Suppliers can control the success of the business when they hold the power. The supplier holds
the power when they are the only or the largest supplier of their goods; the buyer is not vital to the supplier’s
business; the supplier’s product is a core part of the buyer’s finished product and/or business.
The resellers: If the product the organisation produces is taken to market by 3rd party resellers or market
intermediaries such as retailers, wholesalers, etc. then the marketing success is impacted by those 3rd party
resellers. For example, if a retail seller is a reputable name then this reputation can be leveraged in the
marketing of the product.
The customers: Who the customers are (B2B or B2C, local or international, etc.) and their reasons for buying
the product will play a large role in how you approach the marketing of your products and services to them.
The competition: Those who sell same or similar products and services as your organisation are your market
competition, and they way they sell needs to be taken into account. How does their price and product
differentiation impact you? How can you leverage this to reap better results and get ahead of them?

61
The general public: Your organisation has a duty to satisfy the public. Any actions of your company must be
considered from the angle of the general public and how they are affected. The public have the power to help
you reach your goals; just as they can also prevent you from achieving them.
Macro Environment Factors

Demographic forces: Different market segments are typically impacted by common demographic forces,
including country/region; age; ethnicity; education level; household lifestyle; cultural characteristics and
movements.
Economic factors: The economic environment can impact both the organisation’s production and the
consumer’s decision making process.
Natural/physical forces: The Earth’s renewal of its natural resources such as forests, agricultural products,
marine products, etc must be taken into account. There are also the natural non-renewable resources such as
oil, coal, minerals, etc that may also impact the organisation’s production.
Technological factors: The skills and knowledge applied to the production, and the technology and materials
needed for production of products and services can also impact the smooth running of the business and must
be considered.
Political and legal forces: Sound marketing decisions should always take into account political and/or legal
developments relating to the organisation and its markets.
Social and cultural forces: The impact the products and services your organisations brings to market have on
society must be considered. Any elements of the production process or any products/services that are harmful
to society should be eliminated to show your organisation is taking social responsibility. A recent example of
this is the environment and how many sectors are being forced to review their products and services in order
to become more environmentally friendly.
Micro and macro environments have a significant impact on the success of marketing campaigns, and
therefore the factors of these environments should be considered in-depth during the decision making
process of a strategic marketer. Considering these factors will improve the success of your organisation’s
marketing campaign and the reputation of the brand in the long term.

Explain the marketing strategies of a consumer goods marketer at different stages in the consumer buying
decision process. ( R )

A small car manufacturer in India wants to segment the consumer market for its different variants of small
cars. Suggest the product and people oriented bases of market segmentation.
Market segmentation, in simple words, is dividing consumers into various groups. There can be several such
bases used for segmenting consumer market. Normally, as stated by Philip Kotler, bases can be classified into
two categories as shown in figure 5.

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1. People-oriented Bases for Segmentation, and
2. Product-oriented Bases for Segmentation.
Bases for segmenting consumer market
(A) People-Oriented Bases:
People-oriented bases for segmenting consumer markets are also known as consumer characteristics.
Main bases in the category include:
1. Geographical bases,
2. Demographical bases, and
3. Psychographic bases.

Geographical Bases:
This segmentation is based on places or locations where consumers reside. Here, market segmentation calls
for dividing the market into different geographical units, such as nations, states, regions, cities, climates,
urban/village, etc. Needs and preferences differ significantly at different places. So, a company may operate in
one or more geographical area as per its capacity.

Typically, with regard to Indian situation, a company divides its market in following segments:

1. Local Market:

ADVERTISEMENTS:

Company operates in a limited area. Local market includes villages, town or city. Company concentrates on
local needs and preferences. Vegetables, bakery items, local dairies, etc., products may prefer this
segmentation. Note that products can be distributed widely throughout the country, but the company prefers
to operate locally.

2. Urban Market:

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Here, the company serves urban consumers only. Certain products are used mostly in urban areas, for
example flat decoration materials, lifts, costly furniture, educational books for college and postgraduate
students, specialist doctors, chartered accountants, and industrial products mostly prefer urban market.

However, due to rapid means of transportation and communication, easy access to Internet, improved
economic prosperity, etc., the real difference between rural and urban markets is on decline. But, still rural
and urban consumers differ significantly in several ways like habit, style, attitude, preference, and buying and
bargaining ability.
3. Rural Market:
Certain products are used in rural areas only, such as thick cotton cloths, cattle feeds, pesticides, fertilizers,
etc. In most cases, the rural customers use cheaper, durable, and simple products. However, this conclusion is
not strictly applicable. In the countries like India, where more than 65% population resides in villages, the rural
market attracts not only national but also multinational companies.
4. Regional or State Market:
Certain products are produced and consumed only in certain regions or states. Due to regional culture,
tradition, climate, restrictions of regional governments, or habit of people, certain products are demanded in
particular regions. For example, the State Transport Corporation and regional education publications have got
regional/state level market.
5. National Market:
Certain products are sold throughout the nation. For example, Bata’s products, Goderej refrigerator, Lux soap,
Prestige cooker, etc., have national market.
6. International or Global Market:
Some products are sold in many countries. Market for these products is called international or global market.
For example, Air India, Colgate Palmolive, Hindustan Uniliver, Coca-Cola, Pepsi, Nirma Chemicals, etc., have
got international market.
7. Climate/Weather:
Climate plays an important role in determining needs of people. Climate is based on cold, heat, rainfall,
hills/mountains, jungle, sea, desert, and so on. Some products are used only in particular climate. Certain
products like vehicles, cloths, foods, boats, camels, umbrella and rain suits, cold drinks, fans, air conditioners,
etc., are used as per their suitability with the climate of specific region.
Thus, a company should formulate marketing strategy as per its market in different geographical areas.
Product, price, promotion, and distribution decisions are considerably affected by geographic segmentation.

Demographic Bases (Segmentation):

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Demographic means relating to population. In demographic segmentation, the market is divided on the basis
of demographic variables, such as age, sex, family size, income, occupation, etc. It is the most popular and
widely practiced set of bases. Needs, wants, preferences, and usage rate are highly associated with
demographic variables. Also, it is comparatively easy to identify and measure market by demographic
variables.

Widely used demographic bases for market segmentation are discussed as under:

1. Age:
Consumers of different age groups differ in terms of needs, preference, quantity, interest, habits, etc. An
individual changes his needs, preferences, and habits as he grows from childhood to adulthood. Based on age
criteria, we can classify the market in various segments as infants/ children, teenagers, young, adults, and
olds. For the products like chocolates, cloths, cycles and motorcycles, films, books and magazines, foods,
medicines, clubs, etc., an age-based segmentation seems effective.
2. Sex/Gender:
Sex or gender refers to male or female. This base is used for the products like cloths, cosmetics, magazines,
cigarettes, two-wheelers, ornaments and jewelleries, garments, watches, and likewise. Male and female
consumers differ significantly in terms of needs, attitudes, preference, and overall response to the product.
However, this base cannot be strictly applied to all the products. Some products are used by both male and
female.

3. Size of Family:

Market can be segmented in terms of size of family also. Need, size/quantity, frequency packing, quality, etc.,
depend on the number of members in the family? In case of refrigerator, toothpaste, cars, flats, furniture,
provisions, ice-cream package, etc., this type of segmentation makes sense.

4. Family-Life-Cycle:

According to family life cycle, market can be segmented into several segments like single, newly married,
family with one child, family with aged parents, and so on. At different stage of family-life-cycle, type,
quantity, size, and preference of products are subject to vary.

5. Income:

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Income is a powerful determinant of needs and wants. It affects quantity, size, quality, novelty, and style.
Companies dealing with automobiles, clothing, cosmetics, furniture, travels, footwear, electronics, clubs,
hospitals, restaurants, hotels, etc., can use an income-based segmentation. It is quite obvious that poor,
middle class, rich, and elite income groups differ significantly in term of quality, preference, services, and
novelty.

6. Education:

Education makes a difference. The market can be divided in terms of level of education also, such as illiterate,
semi-educated, and educated. Illiterate cannot read and write; semi-educated can read and write with limited
capacity; and the educated means more than matriculation.

All three classes of customers respond differently to different products. Market for magazines, newspapers,
books, movies, TV serials, schools, colleges and educational institutions, etc., can be segmented on education
basis.

7. Castes and Social Classes:

Sometimes, market segmentation takes place as per castes and social classes. Castes and social classes are
based on social system and income both. As per social system, there may be higher class or lower class, while
on the basis of income there may be lower class, middle class, higher class, etc. In Indian Society, we find a
number of castes and classes. Caste or social class affects leisure activity, occupation, colour preference,
habits, traditions, customs, rituals, etc.

8. Profession/Occupation:

On the basis of profession or occupation, the market can be divided as businessmen, service class, farmers,
laborers, professionals (such as lawyers, chartered accountants and doctors), actors, writers, etc. Consumers
belong to various professions/occupations differ in terms of need, preference, life style, status, income, and so
on. This segmentation is relevant to such products like two-wheeler, car, club membership, travels, furniture,
magazines, and electronic appliances.

9. Religion:

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As per this base, the market is segmented on the basis of religions like Hindu, Muslim, Christian, Jew, fanatic,
secularist, and many other religions. Even in each religion, there can be more sub-religions. Followers of each
religion have different needs, habits, preferences, foods, clothing, rituals, reading materials, festivals, and
what not. Producer keeps in mind of different religions and accordingly consumers of particular religion(s)
must be selected.

10. Nationality:

Use of products depends on nationality. Consumers of various countries differ in terms of habit, preference,
food, clothing, festivals, religions, education, income, customs, beliefs and traditions, and life styles. They
need different products of different style, price, quality, and taste. For example, Indians, Americans, Chinese,
Japanese, African, etc., have completely varied needs and preferences.

Psychographic Bases:
In psychographic segmentation, the market is divided into different groups on the basis of psychographic
characteristics of buyers, like social class, life style, perception, learning, attitudes, and personality.
Psychological characteristics refer to the inner or intrinsic qualities of the individual consumer. Consumers
within same geographic and demographic group can exhibit quite different psychographic profile.

Psychographic segmentation mainly involve following bases:

1. Social Class:

Here, social class doesn’t mean income-based social classes only. It implies a relative status in community.
Consumers in different social classes vary in terms of values, product preferences, and buying habits. The
concept of social classes implies a hierarchy in which individuals occupy different statues.

Each class has specific values, traditions, and habits. In Indian context, community is divided into various
classes like higher class, middle class, lower class, etc. However, many authors have considered this base in
demographic segmentation. But, it has psychological implications.

2. Life-style:

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Life-style is a total pattern of life. It can be defined as one’s own way of living. It is reflected in terms of
interest, association, use of products, and way of influencing others. People purchase those products, which
reflect their life styles. Car, motorbike, cell phone, magazine, cigarette, wine, cosmetic, clothing, etc., products
are marketed on life-style base. Marketer tries to suit his products with life-style of consumers.

3. Personality:

Personality and life-style go hand in hand. Consumers buy those products that suit their personality.
Personality is a distinctive way to influence others. Personality is determined by certain physical and mental
characteristics. However, mental or psychological characteristics are more relevant for market segmentation.

Personality characteristics such as self-confidence, extrovert, firmness, individualism, balance, sociability,

impressiveness, willpower, talent, and many other such characteristics affect product need and preference.
This segmentation may be used for clothing, car, bikes, house, and glasses.

4. Buying Motives:

Buying motives refer to the purpose of buying the product. What consumers expect from the product is the
matter of interest for a marketer. People hold different motives for different product. They buy those
products that can match with their expectations.

Buying motives may be durability, reliability, taste, safety, ease, performance, services, prestige, status, and
likewise. The market can be divided on the basis of these motives. This segmentation is applicable in
automobile, furniture, electronic products, travels, gold and jewelry, hotels, charitable activities, etc.

Psychographic segmentation is more confusing as the views of various writers seem inconsistent. But, it is
clear that personality, values, perception, attitudes, motivation, etc., have tremendous effect on consumers’
buying decision. We have discussed only limited psychological/ psychographic bases.

B. Behavioural (Product-Oriented) Bases:

Such segmentation is also called as consumer response segmentation, behavioural segmentation or product
characteristics-based market segmentation. Clearly, the market is divided on the bases of product
characteristics or consumer response to the products. (Consumer responds differently due varied product
characteristics). In the former bases, we have considered consumer characteristics, here; we will consider
product characteristics as the bases for segmenting the market.
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The popularly used behavioural bases have been discussed in following part:

1. Occasions:
Many products are purchased and/or used occasionally. Therefore, a wise marketer associates the use of
products with particular occasions. Occasions create demand. Clothing, furniture, firecrackers, eclectic
appliances, gold, greeting cards, gift varieties, etc., products experience more demand during Diwali.

Tours and travels companies organize special tours during vacations. So, the company finds an opportunity to
segment the market on the basis of occasions. This is the reason why the most of companies introduces new
models and varieties along with the special offers during various occasions.

Occasions may be regular (birthday or marriage anniversary); may be special (achievement, special party,
transfer/promotion, marriage, birth of child); or may be festivals like Kite-flying, Diwali, and Janmastami).

There can be various occasions such as festivals, elections, birthday, marriage anniversary, death, illness,
outstanding achievements, examination results, change in employments, acquisition of home, and so many
similar occasions. Company segments the market on one or more occasions and tries to meet needs and
wants during such occasions.

2. Benefits:
It is a widely used base of dividing the market. This segmentation is based on benefits the consumers seek the
products. Benefits desired by the consumers may include quality, services, guarantee/warrantee, economy,
ease, safety, performance, durability, and prestige/status.

Company divides the market as per benefits expected by the buyers. For example, Colgate prevents cavity,
Close-up offers freshness, etc. Most automobiles manufacturers use this segmentation. Firm can design its
marketing programme in a way that different benefit-seekers can be satisfied.

3. User Status:
Market may be segmented on the basis of user status, such as non-users, ex-users, potential users, first-time
users, occasional users, and regular users.

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i. Non-users:

They are not using the company’s products.

ii. Ex-users:

They were using, but now are not using the products.

iii. Potential Users:

They are not using, but there is potential that they may use the products.

iv. First-time Users:

They have used the product only for the first time, if they are satisfied, they may use repeatedly.

v. Occasional Users:

They use the product infrequently; they may buy when other brands are not available.

vi. Regular Users:

They are regularly using the product.

The ultimate aim of the company is to convert all users into the regular users. All these different users need
different marketing treatment. A company needs to formulate distinct product, price, promotional, and
distribution strategies for each type of users.

4. Usage Rates:
Market can be segmented on the basis of the usage rates like light, medium, and heavy product users.
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i. Light Users:

They are more in number, but purchase a small quantity.

ii. Medium Users:

They are relatively more in number, and consume more quantity compared to the first one.

iii. Heavy Users:

They are small percentage of the market, but account for high percentage of total consumption.

5. Loyalty Pattern/Status:
Consumers’ loyalty pattern can be used for dividing the market. Consumers hold varying degree of loyalty to
the brand.

Accordingly, buyers can be divided into four major groups:

i. Hard-core Loyal:

Consumers who buy the same brand all the time. For example, they buying pattern may be A, A, A, A, A. They
buy brand ‘A’ all the times.

ii. Soft/split Loyal:

Consumers who are loyal to two or more brands. Their buying pattern may be A, A, B, B, A, B. Their loyalty
splits between two brands.

iii. Shifting Loyal:

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Consumers who shift from one brand to another. Their buying pattern is A, A, A, B, B, B. Their loyalty is shifting
from brand A to brand B.

iv. Brand Switchers:

Consumers who show no loyalty to any brand. Their buying pattern is A, B, C, D, E, A, B. They are switching
from one brand to next. They are variety seekers.

However, a company should conclude carefully these buying patterns as they do not always reflect the degree
of loyalty. Company tries to create more hard-core loyal consumers.

6. Buyer Readiness Stage:

Consumers show different stages of readiness to buy the product. They can be classified on the basis of
readiness stages, too.

Accordingly, the market is segmented as:

i. Unaware:

They are not aware of the product.

ii. Aware:

They are just aware, but don’t have information about the product feature, quality, and price.

iii. Informed:

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This group has sufficient information to evaluate the offer.

iv. Interested:

This group is interested to buy the product.

v. Desirous:

This group is more likely to buy.

vi. Intended to Buy:

They will buy, if they are convinced.

They all differ in terms of response to product, price, promotion, and distribution. Company has to prepare a
separate marketing strategy for each group of buyers in varying readiness stages.

7. Attitudes toward Product:

Different groups of buyers with different attitudes behave in different ways. The company, therefore, may
segment the market on the basis of attitudes of consumers. Needless to mention, each type of attitude-
holders should be tackled separately.

Possible groups of consumers on the basis of the degree of favourableness of attitudes are:

i. Enthusiastic:

They hold the most favourable attitudes toward the product brand and company. They favour the brand
strongly.

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ii. Positive:

They talk positively, they favour the product and company reasonably.

iii. Indifferent:

They hold neither positive nor negative attitudes toward the product and/ or brand. They are neutral.

iv. Negative:

They do not favour the product. They may have prejudice for the product. They talk negatively, but do not
react strongly as hostile.

v. Hostile:

They react forcefully or have strong objections against product of the company. They try to harm the company
in any way. A company tries to convert other attitudes holders into enthusiastic and positive. However, hostile
and, to some extent, negative groups are more detrimental.

In fact a company uses more bases to divide total market and select the target market. Practically, the target
market of the company consists of multiple bases. That is to say that target market bears geographical,
demographical, psychographic, and behavioural characteristics.
Compare and contrast the distribution channel of a Consumer Goods and an industrial Goods marketer.
Industrial channels are shorter than consumer channels because there are a small number of industrial
customers, and they are geographically concentrated at a few locations. Industrial products are often complex
in nature, and the buying process is long.

Classification of Distribution Channels

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Manufacturers and industrial customers interact extensively during the buying process, and even afterwards,
as most industrial products need to be routinely serviced. Consumer channels are normally longer because a
large number of geographically dispersed customers have to be reached.

The consumers buy in small quantities. The information needed to arrive at a purchase decision is limited
because the products are not very sophisticated.
Consumer channels:
Manufacturers may reach out to consumers either directly, i.e., without using distribution channels, or by
using one or more distribution channel members.
Manufacturer to consumer:
Direct marketing includes use of personal selling, direct mail, telephone selling and internet. Avon cosmetics,
Tupperware, Aqua guard and Amazon.com are examples of companies engaged primarily in direct marketing.
The company contacts customers directly through salespersons, mail, telephone, or internet and makes sales.
The products are sent directly to customers by the manufacturers.
Manufacturer to retailer to consumer:
Retailers have grown in size. Growth in retailer size means that it has become economic for manufacturers to
supply directly to retailers rather than through wholesalers.
Supermarket chains and corporate retailers exercise considerable power over manufacturers because of their
enormous buying capabilities. Wal-Mart uses its enormous retail sales to pressurize manufacturers to supply
products at frequent intervals directly to their store at concessional prices.
Manufacturer to wholesaler to retailer to consumer:
For small retailers with limited order quantities the use of wholesalers makes economic sense. Wholesalers
buy in bulk from producers and sell smaller quantities to numerous retailers.
But large retailers in some markets have the power to buy directly from manufacturers and thus cut out the
wholesalers.

These big retailers are also able to sell at a cheaper rate to consumers than retailers who buy from the
wholesaler. Wholesalers dominate where retail oligopolies or monopolies are not dominant.

Manufacturer to agent to wholesaler to retailer to consumers:

A company uses this channel when it enters foreign markets. It does not have enough sales to warrant the
setting up of a sales and distribution infrastructure, and therefore, it delegates the task of selling its product to
an agent who does not take title to the goods. The agent contacts wholesalers in the foreign market and
receives commission on sales.

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Companies want to sell to larger number of customers, and hence are increasingly using multiple channels to
distribute their products.
A company’s product may be found in a company-owned store, an exclusive store, a multi-brand store and a
discount store simultaneously. Companies have realized that all customers of a product do not buy from the
same retailer.
Industrial channels:
Industrial channels are usually shorter than consumer channels. Direct selling is prevalent due to closer
relationship between the manufacturer and the customer, as well as due to the nature of the product sold.
Manufacturer to industrial customers:
This is a common channel for expensive industrial products like heavy equipments and machines. There needs
to be close relationship between the manufacturer and the customer, because the product affects the
operations of the buyer.
The seller has to participate in many activities like installation, commissioning, quality control and
maintenance jointly with the buyer. The seller is responsible for many aspects of the operations of the product
long after the product is sold.
The nature of the product requires a continuing relationship between the seller and the buyer. The large size
of the order makes direct selling and distribution economical.
Manufacturer to agent to industrial customer:
A company that sells industrial products can employ the services of an agent who may sell a range of products
from several producers on a commission basis. Such an arrangement spreads selling costs and is beneficial to
companies who do not have the resources to set up their own sales and distribution operation.
The arrangement allows the seller to reach a large number of customers without having to invest in a sales
team. But the company does not have much control over the agent, who does not devote the same amount of
time and attention as a company’s dedicated sales team.
Manufacturer to distributor to industrial customer:
For less expensive, more frequently purchased products, distributors are used. The company has both internal
and field sales staff. Internal staff deals with customer and distributor generated enquiries and order placing,
order follow-up and checking inventory levels. Outside sales staff is proactive.
They find new customers, get product specifications, distribute catalogues and gather market information.
They also visit distributors to address their problems and keep them motivated to sell the company’s products.
Distributors enable customers to buy small quantities locally.
Manufacturer to agent to distributor to industrial customers:
The manufacturer employs an agent rather than a dedicated sales force to serve distributors mainly because it
is less expensive to do so.

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The agent may sell the goods of several suppliers to an industrial distributor, who further sells it to the
business user. This type of channel may be required when business customers require goods rapidly, and
when an industrial distributor can provide storage facilities.

Service channels:
Distribution channel for services are usually short, and are either direct or use an agent. Since stocks are not
held, the role of wholesalers, retailers or industrial distributors does not apply.
Service provider to consumer or industrial customer:
Close relationship between service provider and customer means that service supply has to be direct, for
instance, healthcare.
The service provider operates several outlets to reach out to the final consumer or to the industrial buyer.
Many service providers such as banks, retail outlets, service centers operate via this distribution channel.
Service provider to agent to consumer or industrial customer:
Agents are used when the service provider is geographically away from customers and when it is not
economical for the provider to establish its own local sales team.
For instance, many financial institutions are using this distribution channel to cross sell their services to
customers by using a database of existing or potential customers.
Service provider via internet to consumer or industrial customer:
Increasingly, services like music, software solutions and financial information are being distributed via the
internet. This distribution channel is successful in case of products which can be downloaded. It is a very useful
channel for information products. Nowadays, e-tickets have become very popular.
Describe the changing market environment and its impact on marketing decisions with a suitable illustration.
The marketing environment is everything your company must take into consideration when developing and
presenting a new product. The elements of a marketing environment include, but are not limited to, the
changing preferences of customers, your competition, the legal, political and regulatory environment, your
own resources and budget, current trends and the overall economy. All these elements affect your marketing
decisions -- or at least they should, because all of them influence your prospects.

Tastes and Trends

To be successful, a marketing plan should focus on consumer preferences and current market trends. For
example, many large retailers have decided to adapt to consumers' increasing enthusiasm for social media by
establishing corporate Twitter accounts and opening online storefronts in Facebook. Consumers no longer
need to visit a retailer's main website to buy; some platforms allow them to make the purchase without ever
leaving Facebook. Companies that fail to take major trends into account may find their sales lagging behind
competitors'.

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Budget and Economy
Your budget plainly has a role in your marketing decisions. It dictates how much advertising you buy and
where you can afford to place it. The overall economy also has a massive influence on your marketing
decisions. If you're marketing in a down economy, your consumers won't be willing to pay a premium for your
product, and your advertising should probably point out that the product saves your customers money, costs
less than your competitor's product, or lasts a long time and is therefore a good value. In a strong economy,
your strategy probably will change. You'll be able to charge more, and your ad message may stress the
pleasure or convenience your product offers your customers.

Competitors
Prudent marketing decisions must factor in competitors -- how many you have and how good they are at what
they do will affect your marketing plans. If, for example, your competitors are able to offer their product for a
much lower price than yours, your marketing strategy must stress the fact that your product is of a higher
quality, that your warranty is better, or that your product lasts longer. If you have few or no local competitors,
you're free to expand into new markets. You may choose to broadcast your ad on a Spanish-language
television station, for example.

Legal and Political

Changes in the political and legal environment can restrict or even end certain marketing activities. The
tobacco industry is a case in point. The U.S. government first mandated cigarette warning labels in 1965, and,
as evidence of cigarettes' harmful health effects grew, it battled the tobacco industry more and more
vigorously. These battles culminated in the passage of a 2009 law that gave the federal government the
authority to regulate tobacco, which also includes its marketing and labeling. Before offering a product, you
should consider whether it is a candidate for legal or regulatory trouble.

Explain the different models of consumers behavior.

1. The term customer refers to the purchaser of a product or service whereas the term consumer refers to
the end user of a product or service. A customer is
2. Factors influencing consumer behavior Cultural Social Personal Psychological
3. personality
4. Contd.. Schiffman (2008) as that the unique dynamic organization of characteristics of a particular person,
physical and psychological, which influence behaviour and responses to the social and physical environment.
related to the heredity and the experience of early childhood.
5. psychographic Activities •Interests •Opinions

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6. Family helps shape an individual's attitudes and behaviours develop political and religious beliefs,
lifestyle choices, and consumer preferences
7. society outside influences of others
8. Attitude and life styles “the patterns in which people live and spend time and money.” Beliefs and
feelings
9. Values of perception •Organization, •Identification, •Interpretation
10. The organization, identification and interpretation of sensory information in order to represent and
understand the environment. can be shaped by learning, memory and expectations.
11. Models of consumer behavior Traditional models: Economic Model Learning Model Psychoanalytic
Model Sociological Model
12. Economic model Law of principal of maximum utility Law of equimarginal utility enables a consumer to
secure the maximum utility from limited purchasing power Price effect Substitution effect Income effect
13. Learning model The response of satisfaction reinforces the relationship Learns to associate connection
between stimulus and response which becomes habit Understanding the response of consumer at the
market place
14. Psychoanalytical model Personality of consumers and their responses Consumer behavior is directed
by a complete set of deep seated motives
15. Sociological model As his role, status, interaction, influence, group relation, lifestyle, income, occup-
ation, place of residence, social class etc.
16. Contemporary models Harward seth model Nicosia Webster and wind Engel, balckwell and minard
model
17. Howard sheth model Customer lacks well defined evaluative criteria to judge the product Searches for
information After passing his own personality, his intake is modified Evaluates the brands available Seeks
greatest potential of satisfying his motives
18. example Online shopping
19. Nicosia model Proposed by Francesco Nicosia in 1970s Incomplete in a number of aspects, very
reductionist Variables in the model have not been clearly defined
20. A number of assumptions have been made that question the validity of this model, for instance: What
type of consumer are we talking about? The company and the consumer have an existing relationship? What
type? Is this for a new product? Is this the first exchange the consumer has had with the producer?
21. example Four-wheelers
22. Engel, Blackwell and minard model Information input Information processing Decision process stage
Variables influencing decision making process
23. example Garment sector Social class Family Lifestyle Personality Beliefs attitudes

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24. Webster and wind partitiones the buying process into several processes processes of decision-making
are determined by environmental and organizational factors. Final buying process rendered as the mixture
of individual and group decision
25. example Automobile manufacturing • B2B business • Purchasing tires
26. conclusion Understanding consumer contributes the best to any organization and for this, models would
work great
List out the determinants of market segmentations and evolve a segmentation strategy for a construction
company.
Marketing is all about satisfying the needs and wants of consumers. Consumers have the funds and are willing
to spend to satisfy their needs by buying goods and services. Marketing strategies are important for a business
to satisfy consumer needs. The target market comprises of groups of people or organizations for whom the
business intends to implement its marketing strategies. The business then divides the target market into
groups of buyers with distinct needs, characteristics or behaviors; these groups are called market segments.
Market segments are, therefore, subsets of target markets and their characteristics bring out the
characteristics of target markets.

Measurable
Consumers who belong to a particular target market and segment should be clearly identifiable. The
characteristics to include or exclude in identification of a market segment are also well defined and
measurable. Target markets are quantifiable in terms of population, income and age bracket, among other
factors.

Accessible
Market segments should be accessible in terms of geography and economy. To enable accessibility of goods
and services, there should be use of appropriate marketing strategies. This is because the marketing strategy
used for one group should differ from the strategy used for another, as their needs differ. For example,
different age groups have different fashions, styles and consume different products. The way of
communicating to this market segment should correspond to the relevant needs of consumers in this
segment.

Profitable
A market segment should be large enough to be worth pursuing. The main aim of market segmentation is to
be able to tailor marketing techniques toward specific segments. This enables a firm to enjoy economies of
scale while at the same time fulfilling consumers’ needs. The amount of disposable income the target market
is willing to spend in purchasing the goods and services should be enough to enable the firm to earn profits.
For example, if a product’s target market is young consumers, the price range should be attainable,
considering that majority of the young people are dependent on their parents or guardians.
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Market Responsiveness
Consumers in a given market segment should be responsive to the products meant for them. Unless
consumers in market segments are willing to respond to the products developed, there is little reason to
develop these products. The success of products introduced in the markets depends on whether they meet
consumer or organization needs. Consumers’ decisions on whether to purchase or not to purchase will be an
indicator of the performance of the product in the market.

Describe the process of new product development. ( R )

Craft an appropriate promotion and distribution strategy for the following :

Health care products
Ready to wear dresses.

Describe the positioning strategies used by the marketers of the following products with examples :
Automobile cars
Shoes
Ready made shirts

Define branding and explain the brand extension and multibrand strategies of any toilet soap and a wrist
watches manufacturing company in the Indian market.
To understand branding, it is important to know what brands are. A brand is the idea or image of a specific
product or service that consumers connect with, by identifying the name, logo, slogan, or design of the
company who owns the idea or image. Branding is when that idea or image is marketed so that it is
recognizable by more and more people, and identified with a certain service or product when there are many
other companies offering the same service or product. Advertising professionals work on branding not only to
build brand recognition, but also to build good reputations and a set of standards to which the company
should strive to maintain or surpass. Branding is an important part of Internet commerce, as branding allows
companies to build their reputations as well as expand beyond the original product and service, and add to the
revenue generated by the original brand.

When working on branding, or building a brand, companies that are using web pages and search engine
optimization have a few details to work out before being able to build a successful brand. Coordinating
domain names and brand names are an important part of finding and keeping visitors and clients, as well as

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branding a new company. Coordination of a domain name and brand names lends identification to the idea or
image of a specific product or service, which in turn lets visitors easily discovery the new brand.

Branding is also a way to build an important company asset, which is a good reputation. Whether a company
has no reputation, or a less than stellar reputation, branding can help change that. Branding can build an
expectation about the company services or products, and can encourage the company to maintain that
expectation, or exceed them, bringing better products and services to the market place.
Brand extension is a common method used by companies to launch a new product by using an existing brand
name on a new product in a different category. A company using brand extension hopes to leverage its
existing customer base and brand loyalty to increase its profits with a new product offering.

BREAKING DOWN 'Brand Extension'

For brand extension to be successful, there usually must be some logical association between the original
product and the new one. A weak or nonexistent association can result in brand dilution. Even worse, if a
brand extension is unsuccessful, it can harm the parent brand.
Brand Extension Methods
Brand extension can be as simple as offering an original product in a new form such as frozen pizza offered by
a made-to-order pizza restaurant or a restaurant selling a proprietary sauce in stores. Another form of brand
extension is combining a product with another such as a chocolate company working with a pretzel company
to offer chocolate-covered pretzels. Another method is to leverage a brand's reputation to move into new
product categories such as a car company known for its engineering prowess starting a motorcycle division
and selling those motorcycles based on superior engineering qualities. A company could also create
companion products; a peanut butter company could start offering jelly to leverage its brand and the natural
relationship between the products. Another method is to leverage a designer brand or status to offer products
seemingly different from the original; a band grows popular through its music, and then it starts branding
clothing with its logo.

Examples of Brand Extension

The following are all examples of brand extension. Starbucks coffee company creating Starbucks ice cream to
be sold not at Starbucks retail stores but in grocery stores, with the ice cream flavors based on the flavors of
Frappuccinos that Starbucks sells in its coffee shops. Quaker, a popular oatmeal producer, creating Quaker
granola bars, also made with oatmeal. Celebrity homemaker Martha Stewart creating the Martha Stewart
Home Collection of products such as bathroom accessories and bedding. Perhaps one of the most successful
brand extensions is with Clorox expanding from a laundry disinfectant/bleach product into a full-blown
disinfectant line to include not only laundry products but also disinfectant wipes, sprays, toilet bowl cleaners
and bleach pens to remove stains on demand.

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Brand extensions can go bad; some of these include brand extensions from soda products into sauces and
marinades. Dr. Pepper, 7-Up and A&W Root Beer were not successful in catching on as condiments and
marinades as they were as soda products. Other bad examples include Zippo, known for lighters, and Harley-
Davidson, known for motorcycles, expanding into the women's perfume market. Both companies have since
ended their offerings in the women's perfume market.

Explain the various stages of buying decision making. (R )

“ the distribution strategy depends upon the cost and the level of the customer services” – discuss
In today’s fast paced world, distribution by a company can be an enormous competitive advantage to the
company. Most companies target their customers far and wide. Because of the rising costs, companies are
trying to expand in various markets so that they have a higher turnover and hence a higher margin.

To reach far and wide, you need the right distribution strategies in place. You cannot market a product and
then not deliver the product to the end customer. This is a sheer loss of money as you waste money on your
marketing and the opportunity loss is also huge. Not to mention, the loss to the brand when the customer
wants to purchase the product but cannot find it.

Thus, there is a lot of importance given to making proper distribution strategies for a company. This is also the
reason why Place (Which majorly consists of distribution) is one of the major 4P’s of the marketing mix. Place
is considered in case of products as well as services.

Distribution strategy is mainly decided by keeping the top management in loop because it affects overall
operations. This strategy can be summarised with 3 main points.

How to get the product from the manufacturing point to the end customer.

How to control costs and save time while executing the distribution strategy

How to build a competitive advantage through distribution

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On a macro level, there are two types of distribution.

1) Indirect distribution – Indirect distribution is when the product reaches the end customer through
numerous channels in between. For example – The product goes from manufacturer to C&F, then to the
distributor, then to the retailer and finally to the customer. Thus the chain is long.

2) Direct distribution – Direct distribution is when the company either directly sends the product to end
customer or when the channel length is very less. A company selling on an e commerce portal or selling
through modern retail is the form of Direct distribution.

Further more, distribution strategies are also decided based on the level of penetration that the company
wants to achieve. This level of penetration is decided again by the remaining 3 P’s of the marketing mix –
Product, price and promotions. However, based on the level of penetration, the distribution strategies vary as
follows.

Intensive distribution – When the company is having a mass marketing product, then it uses intensive
distribution. Intensive distribution tries to cover as much of the market as it can. Typical FMCG and consumer
durable products are best example of intensive distribution strategy.

Selective distribution – A company like Armani, Zara or any other such branded company will have selective
distribution. These companies are likely to have only limited outlets. For example – In an urban city, Armani
might have 2-3 outlets at the maximum whereas Zara might have 4-5.

Exclusive distribution – If Zara has 4-5 outlets in a city, how many outlets would a company like Lamborghini
have? Probably one in a region of 5-7 cities. That’s exclusive distribution for you. If a company wants to give a
big region to one single distributor then it is known as exclusive distribution strategy. In some cases, a
distributor might be appointed for a complete country. There would be no one other then that distributor
operating in that company.

Overall, distribution strategies depend a lot on the various products which the companies might have. A single
company might have multiple product line and lengths, each with its own distribution strategy.

Some products, which are premium, might need selective distribution whereas others which are mass
products, may need intensive distribution. The strategies for both types will be different. So, in the end, the

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distribution of a company is dynamic in nature and it contributes a lot to the competitive advantage of the
company.
Discuss the various dimensions of integrated marketing communication.
Introduction to Integrated Marketing Communications

Integrated marketing communications (IMC) is an approach used by organizations to brand and coordinate
their communication efforts. The American Association of Advertising Agencies defines IMC as "a
comprehensive plan that evaluates the strategic roles of a variety of communication disciplines and combines
these disciplines to provide clarity, consistency and maximum communication impact. " The primary idea
behind an IMC strategy is to create a seamless experience for consumers across different aspects of the
marketing mix. The brand's core image and messaging are reinforced as each marketing communication
channel works together as parts of a unified whole rather than in isolation.

Promotional Tools
IMC unifies promotional tools across all marketing communication channels.

The Shift from Fragmented to Integrated Marketing Communications

Prior to the emergence of integrated marketing communications during the 1990s, mass communications—
the practice of relaying information to large segments of the population through television, radio, and other
media—dominated marketing. Marketing was a one-way feed. Advertisers broadcasted their offerings and
value propositions with little regard for the diverse needs, tastes, and values of consumers.

Often, this "one size fits all" approach was costly and uninformative due to the lack of tools for measuring
results in terms of sales. But as methods for collecting and analyzing consumer data through single-source
technology such as store scanners improved, marketers were increasingly able to correlate promotional
activities with consumer purchasing patterns. Companies also began to downsize their operations and expand
marketing tasks within their organizations. Advertising agencies were also expected to understand and
provide all marketing functions, not just advertising, for their clients.

Today, corporate marketing budgets are allocated toward trade promotions, consumer promotions, branding,
public relations, and advertising. The allocation of communication budgets away from mass media and
traditional advertising has raised the importance of IMC importance for effective marketing. Now, marketing is

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viewed more as a two-way conversation between marketers and consumers. This transition in the advertising
and media industries can be summarized by the following market trends:

a shift from mass media advertising to multiple forms of communication

the growing popularity of more specialized (niche) media, which considers individualized patterns of
consumption and increased segmentation of consumer tastes and preferences
the move from a manufacturer-dominated market to a retailer-dominated, consumer-controlled market
the growing use of data-based marketing as opposed to general-focus advertising and marketing
greater business accountability, particularly in advertising
performance-based compensation within organizations, which helps increase sales and benefits in companies
unlimited Internet access and greater online availability of goods and services
a larger focus on developing marketing communications activities that produce value for target audiences
while increasing benefits and reducing costs
The Tools of Integrated Marketing Communications

The IMC process generally begins with an integrated marketing communications plan that describes the
different types of marketing, advertising, and sales tools that will be used during campaigns. These are largely
promotional tools, which include everything from search engine optimization (SEO) tactics and banner
advertisements to webinars and blogs. Traditional marketing communication elements such as newspapers,
billboards, and magazines may also be used to inform and persuade consumers. Marketers must also decide
on the appropriate combination of traditional and digital communications for their target audience to build a
strong brand-consumer relationship. Regardless of the brand's promotional mix, it is important that marketers
ensure their messaging is consistent and credible across all communication channels.

Benefits of Integrated Marketing Communications

With so many products and services to choose from, consumers are often overwhelmed by the vast number of
advertisements flooding both online and offline communication channels. Marketing messages run the risk of
being overlooked and ignored if they are not relevant to consumers' needs and wants.

One of the major benefits of integrated marketing communications is that marketers can clearly and
effectively communicate their brand's story and messaging across several communication channels to create
brand awareness. IMC is also more cost-effective than mass media since consumers are likely to interact with
brands across various forums and digital interfaces. As consumers spend more time on computers and mobile

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devices, marketers seek to weave together multiple exposures to their brands using different touch points.
Companies can then view the performance of their communication tactics as a whole instead of as
fragmented pieces.

The other benefit of integrated marketing communications is that it creates a competitive advantage for
companies looking to boost their sales and profits. This is especially useful for small- or mid-sized firms with
limited staff and marketing budgets. IMC immerses customers in communications and helps them move
through the various stages of the buying process. The organization simultaneously consolidates its image,
develops a dialogue, and nurtures its relationship with customers throughout the exchange. IMC can be
instrumental in creating a seamless purchasing experience that spurs customers to become loyal, lifelong
customers.

Describe the process of new product development. ( R )

Explain the components of promotion mix and their determinants. ( R )

Explain the factors that influence buying behavior with respect to the following:
Dress materials and cosmetics
Mobile phone
Life insurance policy

Discuss the various criteria for segmenting consumer and industrial markets. (R )
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Define, personal selling and explain the significance of each stage of the process of personal selling.
1. Prospecting:
Searching for prospects is prospecting. Here, prospect is a person or an institution who is likely to be benefited
by the product the salesman wants to sell and can afford to buy it.
Prospecting is the work of collecting the names and addresses or persons who are likely to buy the firm’s
products and services. Provide encompasses even the discovery of special needs and multiplying the sales
with existing clientele.
While collecting the details, ‘suspects’ must be separated from ‘prospects’ to avoid or reduce waste of time,
treasure and talent. There are definite methods of prospecting.
The most popular ones are:
1. Endless chain method,
2. Centre of influence method,
3. Personal observation method,
4. Spotter’s method,
5. Cold-canvas method;
6. Direct mail and
7. Telephone method.
2. Pre-approach:
Pre-approach is to get more detailed facts about a specific individual to have effective sales appeals on him or
her. It is a record round effort to get details regarding the prospect such as his ability, need, authority,
accessibility to buy; it is a closer look of prospects, likes and dislikes, tastes, habits, financial status, social
esteem, material status, family background and the like.
The objectives of pre-approach are to providing additional qualifying information; to design an effective
approach strategy; to better the planning information; to avoid serious errors and to build-up confidence.
The sources of information are his fellow salesmen, customers, local newspapers, special investigators, sales
office, directories, observation and the prospect.
3. Approach:
Approach means the meeting of the prospect in person by the salesman where he makes face to face contact
with prospects to understand them better. Approach is such a delicate and critical stage of the sales process
that the sales are either won or lost.
Approach is stepping stone for sales presentation. It is because of this delicacy that sales are likened to a chain
where break of one link will break it into useless lump of hooks.

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Success follows the salesman who possesses courage, courtesy and confidence. The objectives of approach
are: To help the salesman to make a favourable impression; to amplify the detailed information obtained by
the salesman at pre-approach level; to convert the favourable attention of the prospect easily and smoothly
into the sales proposition.

4. Presentation and demonstration:

Presentation implies an array and decoration of articles in the shop. It is the heart of selling process. Effective
presentation has the capacity to convince the customer of his sales proposition. It creates and holds the
interest of customers towards the products. It would be wrong to assume that all those who enter the shop do
buy the products.
Normally, most of the prospects visit the shop to see prior to their decision to buy. This casual visit can be a
commitment visit provided products are displayed, presented and demonstrated by the salesmen in an
appealing manner. Demonstration is a part of presentation because, more description is not enough.
Demonstration is the crucial task of providing the proofs and providing the statements about quality, utility,
performance and service of a product by evidences of experiment, operation or a test.
The significance of demonstration lies in reducing the sales talk, facilitating the comparison, appealing to
senses, fortifying the sales talks and convincing the fastidious customers. Here, A-I-D-A approach works
wonders.
5. Overcoming objections:
For a creative and persuasive salesman, the process of selling really starts when the prospect raises objections.
In absence of sales resistance the salesman is merely an order booking clerk. For every action of salesman
there is prospect’s pro-action or reaction that is, approval or disapproval.
Each salesman should understand the reasons as to why prospects raise objections because; each objection
has its roots in the buying decision. An objection is the expression of disapproval of an action taken by
salesman; it is an adverse reason or an argument indicating clearly that the prospect is not yet ready to buy.
These objections may be genuine or mere excuses. Overcoming objections is really a delicate stage that makes
or mars the unbroken chain of selling process.
Being a very crucial aspect, the experts have a set procedure for overcoming the objections namely, listen to
the prospect cushion the jolt anticipate the objections and prevent their occurrence. It is the creative task of
bringing the customer to the sales track once again.
6. Closing:
All the earlier stages of sales talk namely, prospecting, pre-approach; approach, presentation and handling the
objections have been designed to induce the prospect to make decision to buy so that a sale can be
concluded.

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The success in earlier stages will lead to the last stage of closing the sale and clinch the deal. Here, ‘close’
means the act of actually getting the prospect’s assent to the sales proposal or he gets an order.
The underlying point of closing sale is to persuade the prospect to act right now than postponing or delaying
the action. It is here that the prospect is turned into a customer desire into demand.
Though it sounds very easy, it is the most difficult task. It is the positive attitude and self-confidence that plays
a decisive role in converting wish into desire and desire into demand. A poor closer is a poor salesman and
salesman who cannot close well will have to close the line.
Describe the process of new product development. (R )

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