Elements of Marketing Book

ELEMENTS OF MARKETING
BABASAB PATIL
ELEMENTS OF MARKETING SYLLABUS
Modern Marketing Concept approaches to the study of marketing Features of Industrial, Consumer and Services Marketing
Consumer Behaviour Meaning Consumer Behaviour models their relevance to marketing Market Segmentation Strategies Marketing Mix.
Product Planned and Development Test Marketing Product positioning Product life cycle Brand policies and practices
Pricing policies and Methods New Product Choice and management
Promotional Mix : Personal and Impersonal selling Salesmanship Compensation plans Evaluation of performance salesforce Advertisement practices Measurement of effectiveness advertisement publicity Sales promotion : Methods and their uses.
Contents SL. No. 1. 2. 3. 4. 5. 6. 7. 8. Lessons Marketing Meaning and Importance Marketing Concept Approaches to the study of marketing Features of industrial, consumer and service marketing Marketing Mix Market Segmentation Consumer Behaviour Product Planning an Development and PLC BABASAB PATIL
ELEMENTS OF MARKETING 9. 10. 11. 12. 13. 14. 15. Branding and Packaging Pricing policies and method Physical distribution Personal Selling Sales Management Advertising Sales Promotion
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LESSON 1 MARKETING MEANING AND IMPORTANCE

Marketing has been defined by different authors differently. A popular definition is that marketing is the performance of business activities that direct the flow of goods and services from producer to consumer or user. Another notable definition is that marketing is getting the right goods and services to the right people at the right place at the right time at the right price with the right communication and promotion. Yet another definition is that marketing is a social process by which individuals and groups obtain what they need and want through creating and exchanging products and values with other. This definition of marketing rests on the following concepts.
i) needs, wants and demands. ii) Products, iii) Value and satisfaction, iv) Exchange and transactions, and v) Markets
Needs, wants and demands: A human need is a state of felt deprivation of some basic satisfaction. People require food, clothing, shelter, safety, belonging, esteem etc. These needs exist in the very nature of human beings.
Human wants are desires for specific satisfiers of these needs. For example, cloth is a need but Raymonds suiting may be want. While peoples needs are few, their wants are many.
Demands are wants for specific products that are backed up by an ability and willingness to buy them. Wants become demands when backed up by purchasing power.
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Products: Products are defined as anything that can be offered to some one to satisfy a need or want.
Value and satisfaction: Consumers choose among the products, a particular product(s) that give them maximum value and satisfaction.
Value is the consumers estimate of the products capacity to satisfy a set of his goals.
Exchange and transactions: Exchange is the act of obtaining a desired product from someone by offering something in return. A transaction involves atleast two things of value, conditions of agreement.
Markets: A market consists of all the potential customers sharing a particular need or want who might be willing and able to engage in exchange to satisfy that need or want.
Importance of Marketing 1. Marketing process brings goods and services to satisfy the needs and wants of the people. 2. It helps to bring new varieties and quality goods to consumers. 3. By making goods available at all places, it brings balanced distribution. 4. Marketing converts latent demand into effective distribution. 5. It gives wide employment opportunities. BABASAB PATIL
ELEMENTS OF MARKETING 6. It creates time, place and possession utilities to the products. 7. Efficient marketing results in lower cost of marketing and ultimately lower prices to consumers. 8. It is vital link between production and consumption and primarily responsible to keep the wheels of production and consumption constantly moving. 9. It creates and raises standard of living of the society.
Marketing Vs Selling The marketing and selling are frequently confused. Theodore Levitt in his sensational article Marketing Myopia draws the following contract between marketing and selling. Selling focuses on the needs of the seller, marketing on the needs of the buyer. Selling is preoccupied with the sellers need to convert his product into cash, marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering and finally consuming it.
Selling 1. It is a part of the marketing process 2. The emphasis is on product 3. It aims at sellers needs 4. Its aim is sales volume
Marketing 1. It is a comprehensive term or total system. 2. The emphasis is on customer 3. It aims at buyers needs 4. Its aim is buyers satisfaction
Marketing Management: Marketing Management takes place when atleast one party to a potential exchange gives thought to objectives and means of achieving desired responds from other parties.
Marketing Management is defined as the analysis, planning, implementation and control of programmes designed to create, build and
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ELEMENTS OF MARKETING maintain beneficial exchanges and relationships with target markets for the purpose of achieving organizational objectives.
Marketing managers have to carry marketing research, marketing planning, marketing implementation and marketing control. Within marketing planning, marketers must make decision on target markets, market positioning, product development, pricing, channels of distribution, physical distribution, communication and promotion. Thus, the marketing managers must acquire several skills to be effective in market place.
REVIEW QUESTIONS:
1. Bring out the importance of marketing 2. Distinguish marketing and selling 3. What do you understand by marketing management? ************
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LESSON 2 MARKETING CONCEPTS

There are five competing concepts under which business organisation can conduct their marketing activity.
1. Production concept 2. Product concept 3. Selling concept 4. Marketing concept 5. Societal marketing concept
Production concept: The production concept holds that consumers will favour those products that are widely available and low in cost.
Product concept: The product concept holds that consumers will favour those products that offer the best quality, performance and features.
Selling Concept: The selling concept holds that consumers will ordinarily not buy the organizations products on their own unless that organisation undertakes and aggressive selling and promotion effort.
The selling concept is undertaken most aggressively with unsought goods, those goods that buyers normally do not think of buying such as insurance. The selling concept is also practiced in the areas like politics where the political parties sell their candidates to the votes.
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ELEMENTS OF MARKETING Marketing Concept: In a modern industrial economics, productive capacity has been built up to a point where most markets are buyers markets (i.e. the buyers are dominant) and sellers have scramble hard for consumers and ultimately consumers began to occupy a place of unique importance. The business firms recognize that there is only one valid definition of business purpose to create a customer. In other words, the recognition of the importance of marketing leads to the acceptance of marketing concept.
The marketing concept holds that the key to achieving organizational goals consists in determining the needs and wants of the target markets and delivering the desired satisfactions effectively and efficiently: On other words, marketing concept is a customers needs and wants orientation backed by integrated marketing effort aimed at generating customer satisfaction as the key to satisfying organizational goals.
The salient features of the marketing concept are:
1. Consumer orientation 2. Integrated marketing 3. Consumer satisfaction 4. Realization of organizational goals.
1. Consumer orientation:
The most distinguishing feature of the marketing concept is the importance assigned to the consumer. The determination of what is to be produced should not be in the hands of the firms but in the hands of the consumers. The firms should produce what consumers want. All activities of the marketer such as identifying needs and wants, developing appropriate products and pricing, distributing and promoting them should be consumer oriented. If these things are done effectively, products will be automatically bought by the consumers. BABASAB PATIL
2. Integrated marketing:
The second feature of the marketing concept is integrated marketing i.e. integrated management action. Marketing can never be an isolated management action. Marketing can never be in isolated management function. Every activity on the marketing side will have some bearing on the other functional areas of management such as production, personnel or finance. Similarly any action in a particular area of operation in production or finance will certainly have an impact on marketing and ultimately on consumer. In a business firm that accepts the marketing concept as the corner stone of its business philosophy, no management area can work in isolation. Therefore in an integrated marketing setup, the various functional areas of management get integrated with the marketing function. Integrated marketing presupposes a proper communication among the different management areas with marketing influencing the corporate decision making process. Thus, when the firms objective is to make profit by providing consumer satisfaction, naturally it follows that the different departments of the company are fairly integrated with each other and their efforts are channelized through the principal marketing department towards the objective of consumer satisfaction.
3. Consumer satisfaction:
The third feature of the marketing concept is consumer satisfaction. The objective of the company adopting marketing concept is to satisfy the customers needs so perfectly that they will become regular or permanent satisfied customer. For example, when a consumer buys a tin of coffee, he expects a purpose to be served, a need to be satisfied. If the coffee does not provide him the expected flavour, the taste and the refreshments his purchase has not served the purpose. Or more precisely, the marketer who sold the coffee has failed to satisfy his consumer. Thus, satisfaction is the proper foundation on which alone any business can build its future.
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ELEMENTS OF MARKETING 4. Realization of organizational goals including profits:
Though the organizational goals may differ from firm to firm, though key areas such as innovation, market standings, profits and social responsibility are common to all firms. According to the marketing concept, the right way to achieve these organizational goals is through ensuring consumer satisfaction.
A distinguishing feature of the marketing concept is that it considers the creation of profits as an essential requirement for any business concern. The marketing concept is against profiteering but not against profits. Reasonable returns or surplus are essential for the survival and growth of an business.
Benefits of Marketing Concept :
i) Benefits to firms:
A firm that believes in the marketing concept always feels the pulse of the market through continuous marketing audit and marketing research. It is fast in responding to the changes in buyer behaviour. It rectifies any drawback in its product and this proves beneficial to the firm. The firm gives more importance to planning, research and innovation and its decisions are no longer based on hunches but on reliable scientific data and the proper interpretation of such data. The profits for the firm become more certain.
ii) Benefits to consumers:
The concept on the part of various competing firms to satisfy the consumer puts the later in an enviable position. Reasonable prices, better quality and easy availability at convenient places are some of the benefits that accrue to the consumer as a direct result of marketing concept.
iii) Benefits to society:
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ELEMENTS OF MARKETING The practice of marketing concept contributes to better life style, better standard of living and also results in the development of entrepreneurial talents. All these sets the pace for social and economic development.
Thus the marketing concept benefits the organisation, the consumer and society at large. A proper understanding of this concept is fundamental to the study of modern marketing.
Societal Marketing Concept:
Now the question is whether the marketing concept is an appropriate oranisational goal in an age of environmental deterioration, resource shortages, explosive population growth etc., whether the firm is necessarily acting in the best long run interests of consumers and society. For example, many modern disposable packing materials create problem of environmental degradation. Situations like this, call for a new concept, which is called Societal Marketing Concept.
The societal marketing concept holds that the organizations task is to determine the needs, wants and interests of target markets and to deliver the desired satisfaction more effectively and efficiently than competitors in a way that preserves or enhances the consumers and the societys well being.
The societal marketing concept calls upon marketers to balance thre consideration in setting their marketing policies namely firms profits, consumer wants satisfaction and society interests.
REVIEW QUESTIONS: 1. Briefly discuss the various concepts of marketing. 2. Discuss in detail the modern marketing concept. 3. Write a note on societal marketing concept.
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LESSON 3 APPROACHES TO THE STUDY OF MARKETING

Marketing may be studied by different approaches. To facilitate the study these approaches may be broadly classified as follows:
i) Commodity approach, ii) Functional approach, iii) Institutional approach, and iv) Management approach. v) System approach
i) Commodity approach:
The first approach is the commodity approach under which a specific commodity is selected and then its marketing methods and environments are studied in the course of its movement from producer to consumer. In this approach, the subject matter of discussion centres around the specific commodity selected for the study and includes the sources and conditions of supply, nature and extent of demand, the distribution channels used, promotional methods adopted etc.
ii) Functional approach
The second approach is the functional approach under which the study concentrates on the specialized functions or services performed by the marketers and the problems faced by them in performing those functions. Such marketing functions include buying, selling, storage, standardizing, transport, finance, risk-bearing, market information etc. This approach certainly enables one to gain detailed knowledge on various functions of marketing.
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iii) Institutional approach: The third approach is the institutional approach under which the main interest centres around the institutions or agencies that perform marketing functions. Such agencies include wholesalers, retailers, merchantile agents and facilitating institutions like transport undertakings, banks, insurance companies etc. This approach helps one to find out the operating methods adopted by these institutions and the various problems faced because institutions and to know how whey work together in fulfilling their objectives.
iv) Management approach:
In the management approach, the focus of marketing study is on the decision-making process involved in the performance of marketing function at the level of a firm. The study encompasses discussion of the different underlying concepts, decision influencing factors, alternative strategies their relative importance, strengths and weaknesses and techniques and methods of problem-solving. This approach entails the study of marketing at the micro-level of a business firm of the managerial functions of analysis, planning, implementation, co-ordination and control in relation to the marketing functions of creating, stimulating, facilitating and valuing transactions.
v) System approach:
Modern marketing is complex, vast and sophisticated and it influences the entire economy and standard of living of people. Hence marketing experts have developed one more approach namely System approach. Under this approach, marketing itself is considered as a sub-system of economic, legal and competitive marketing system. The marketing system operates in an environment of both controllable and uncontrollable forces of the organisation. The controllable forces include all aspects of products, price, physical distribution and promotion. The uncontrollable forces include economic, BABASAB PATIL
ELEMENTS OF MARKETING socio-logical, psychological and political forces. The organisation has to develop a suitable marketing programme by taking into consideration both these controllable and uncontrollable forces to meet the changing demands of the society. The system approach, in fact, examines this aspect and also integrates commodity, functional, institutional and managerial approaches. Further, this approach emphasizes the importance of the use of market information is marketing programmes.
Thus from the foregoing discussion, one could easily understand that the marketing could be studied in any of the above approaches and the systems approach is considered to be the best approach as it provides a strong base for logical and orderly analysis and planning of marketing activities.
REVIEW QUESTIONS: 1. Discuss the various approaches to the study of marketing. 2. Explain Systems Approach to the study of marketing.
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LESSON 4
FEATURES OF INDUSTRIAL, CONSUMER AND SERVICES MARKETING

Product may be classified broadly into two major categories namely consumer goods and industrial goods.
Consumer goods Consumer goods are those goods meant for use by the ultimate household consumer and in such form that they can be used by him without further commercial processing.
Consumer goods are generally divided into three sub-categories according to the method in which they are purchased namely convenience goods, shopping goods are specialty goods.
i)
Convenience goods: There are goods which the consumer usually purchases frequently and with the minimum efforts. Usually they have easy substitutes and the unit value will be low. The consumer may not have much of a preference for a particular brand. E.g. Match Box. Shopping goods: These are goods which the consumer purchase less frequently and the unit value will be higher. The consumer will look for their suitability, quality, price and style. Consumer will exercise considerable effort in choosing the product. Many consumer durables come under this category. Example: Textiles, foot wear. Specialty goods: These are consumer goods which the consumer buys rarely and the unit value will be very high. Hence buyers expect certain special characteristics and for which they make a special purchasing effort. E.g. car, jewellaries.
ii)
iii)
Industrial goods:
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ELEMENTS OF MARKETING Industrial goods are those goods which a reused in producing other goods or rendering services. They cannot be used without further processing. Industrial goods fall into three main categories.
1. Raw materials: These are industrial goods which in part or in whole become a part of the physical product and which have undergone only a minor change before becoming ready for a final consumption. Stainless steel which are used for making steel utensils is an example. 2. Equipments: These goods are exhausted only after repeated use such as installation, equipment, accessories etc. 3. Fabricated materials: These are industrial goods which have undergone processing Metals, plastics, cement come under this category.
the marketing practices for industrials and consumer goods differ due to their characteristics.
Features of Industrials The marketing of industrial goods generally possesses the following features.
1. Industrial goods are those which are produced by and sold to industries. They are mostly meant for producing consumer gods. 2. The demand for industrial goods is a derived demand. For example, the demand for paper manufacturing machinery will increase when the demand for paper increases. 3. Industrial marketing is normally backed by technical details and usually done by people with technical knowledge. In many cases, there may not be substitutes. 4. Industrials buying is comparatively a rational process. specifications and quality of products are the main criteria. 5. Number of buyers are limited. 6. Advertising are made in technical and trade journals backed by direct mailing and personal selling. Precise
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ELEMENTS OF MARKETING 7. In many cases, it is short channel, involving either direct selling or with a limited number of middlemen. 8. Each sale would generally be high value. 9. Suppliers reliability and reputation is important criterion in the industrial market. 10. The demand is normally inelastic.
Features of manufactured consumer goods:
1. The consumer goods are those goods which are bought by ultimate consumer for their consumption. 2. The consumer goods are manufactured on mass scale. 3. The number of buyers are also large and widespread. 4. Majority of consumer goods are non-durable. 5. Demand is primary in nature. 6. Other than essential products, most of the durable consumer goods have elasticity in demand. 7. The unit cost of consumer goods is normally not very high. 8. The unit of purchase is normally low. But the frequency of purchase is greater. 9. The consumer goods are very often bought by emotional impulse. 10. The goods are subject to serve competition. They may be price competition, quality competition and competition from substitute products. 11. 12. Branding and packaging also add some strength to the products. The goods are under constant threat from fashion/design changes.
13. The channel of distribution is normally long as the buyers are widespread. 14. Mass advertisement is a must. The marketer has to give equal importance to personal as well as impersonal methods of sales promotion. 15. The products are not usually technical complex.
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Services marketing: A service may be defined as an activity which has some element of intangibility associated with it, which involves some interaction with customers or with property in their possession and does not result in a transfer of ownership. The American Marketing Association defines services as activities, benefits or satisfactions which are offered for sale or are provided in connection with the sale of goods.
Scope of services marketing:
Services marketing extend to the activities listed below: - Insurance, banking, financial services, investment counselling, credit and loan services. - Business and professional services such as legal, accounting, consultancy and computer services. - Transportation and communication. - Housing and accommodation and hotels, apartments, holiday resorts, motels etc. - Recreation and entertainment. - Medial and health care. - Personal care services, E.g., beauty parlours, barber shop etc.
Features of services marketing: 1. Services are to a large extent abstract and intangible. 2. Services are non-standard and highly variable in dispensation. 3. Services are produced and consumer simultaneously and hence cannot be separated from the person who sells them. 4. Services are perishable and cannot be stored. 5. The demands for services are not stable.
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The analysis of the target market, planning and developing the services, pricing the channels of distribution and promotion of the services should be covered in a programme for marketing of services.
Review Questions: 1. Explain different kinds of consumer and industrial goods. 2. What are the characteristics of manufactured industrial goods? 3. What are the features of services marketing? **********************
LESSON 5 MARKETING MIX

Marketing mix is one of the major concepts in modern marketing. It is the combination of various elements which constitutes the companys marketing system. It is the set of controllable marketing variables that the firm blends to produce the response it wants in the target market. Though there are many basic marketing variables, it is Mc Carthy, who popularized a four-factor classification called the four Ps: Product, Price, Place and Promotion. Each P consists of a list of particular marketing variables.
The first P Product consists of i) Product Planning and development; ii) Product mix policies and strategies; and iii) Branding and packaging strategies.
The second P Price consists of i) Pricing policies and objectives, and ii) Methods of setting prices.
The third P Place consists of BABASAB PATIL
ELEMENTS OF MARKETING i) Different types of marketing channel, ii) Retailing the wholesaling institutions, and iii) Management of physical distribution system.
The fourth P Promotion consists of i) Advertising; ii) Sales promotion; and iii) Personal selling.
A detailed discussion on each of the above four Ps follows now: PRODUCT:
Product stands for various activities of the company such as planning and developing the right product and/or services, changing the existing products, adding new ones and taking other actions that affect the assortment of products. Decisions are also required in the areas such as quality, features, styles, brand name and packaging.
A product is something that must be capable of satisfying a need or want, it includes physical objects, personalities, places, organizations and ideas. Thus, a transport serviced, as it satisfies, human need in a product. Similarly, places like Kashmir and Kodaikanal, as they satisfy need to enjoy cool climate are also products.
The second aspect of product is product planning and development. Product planning embraces all activities that determine a companys line of products. It includes: i) Planning and developing a new product, ii) Modification of existing product lines, and iii) Elimination of unprofitable items.
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ELEMENTS OF MARKETING Product development encompasses the technical activities of product research, engineering and decision.
The third aspect of product is, product mix policies and strategies.
Product mix refers to the composite of products offered for sale by a company. For example Godrej company offers cosmetics, steel furnitures, office equipments, locks etc. with many items in each category.
The product mix is four dimensional. It has breadth, length, depth and consistency.
The breadth of the product mix refers to how many different product lines are manufactured by a company. The product line is the group of products that are closely related either because they satisfy a class of need, are used together, are sold to the same customer groups, are marketed through same types of outlets, or fall within given price ranges. Thus, the Godrej company manufactures several product lines such as Cosmetics, steel furnitures, office equipments and locks.
The depth of the product mix refers to how many items are found in each product line. Thus, the Godrej produces, for example.
- Five product items is steel furniture such as almirah and table. - Three product items in office equipments such as typewriters, filing cabinets and racks. - Four product items in locks, such as five levers, six levers, seven levers etc.
The consistency of the product mix refers to how closely related the various product line are in end use, production requirements, distribution channels or in some other way.
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ELEMENTS OF MARKETING Major product mix strategies are expansion of product mix, contraction of product mix and modification of existing product.
a) Expansion of product mix means increasing the number of lines and/or the items.
Contraction of product mix means either eliminating an entire line or a few items within a line. Alteration of product-means modifying the existing product to suit the changing consumer requirements.
All products, like human beings, have certain length of life cycles during which they pass through different identification stages. Broadly, the stages are introduction, growth, maturity and decline. It is the responsibility of the company to identify the stage through which its product passes, so that it could evolve an appropriate marketing strategy to capitalize the opportunities and to overcome the problems.
The second major component of product is branding. A brand, brand name and brand mark are used synonymously. A brand is a name, term, sign symbol or design or a combination of them which is intended to identify the products or services. Thus Liril Colgate are examples for brand name and Maharaja or Air India and Butterfly of Co-optex are examples for brand mark. When a brand is registered with the Registrar of Brand Names, it becomes a trade mark. The significance of registration is that no other producer could use the same name or mark for his products.
Brands help identify the product and differentiate the product from those of competitors. It is an indicator of product quality. For example, any product of TVS either Sri Chakra Tyres or TVS Washing Machine creates a feeling that it must be a good quality product. Further, brands increase the success the success of advertising and personal selling. Once the manufactures succeeds in creating brand loyalty for his products, then it would be easier for him to introduce new product it the market.
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ELEMENTS OF MARKETING Yet another integral part of product is packaging. Packaging not only protects the contents, but also helps to identify the product, offers convenience in handling and promoters sales by inducing the customers to buy the product. It is common experience that consumers, sometimes, buy the product attracted merely by the containers.
PRICE The second element of the marketing mix is Price. Price monetary value that customers pay to obtain the product. company must determine the right price for its products and strategies concerning retail and wholesale prices, discounts, credit terms. stands for the In pricing, the then decide on allowances and
Before fixing prices for the product, the company should be clear about its pricing objectives and strategies. The objectives may be to set low initial price and raising it gradually or to set high initial price and reducing it gradually or fixing a target rate of return or setting prices to meet the competition etc. But the actual price setting is based on three factors namely cost of production, level of demand and competition.
Regarding retail pricing, the company may adopt two policies. One policy is that he may allow the retailers to fix any price without interfering in his right. Another policy is that he may want to exercise control over the products. Discounts and allowance result in a deduction from the base price.
PRICE
The third element of marketing mix is place or physical distribution. Place stands for the various activities undertaken by the company to make the product accessible and available to target consumers. There are four different level channels of distribution. The first is-zero-level channel which means manufacturer directly selling the goods to the consumers.
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The second is-one-level channel which means supplying the goods to the consumer through the retailer. The third is-two-level channel which means supplying the goods to the consumer through wholesaler and retailer. The fourth is-three-level channel which means supplying goods to the consumer through wholesaler-jobber-retailer and consumer.
It is the responsibility of the company to select the right channel through which the products will reach the right market at right time. The factors affecting the choice of channel are the nature of the product, supply, middlemen, customer, environment, the distribution policy of the company and the cost of the channel.
There are large-scale retail institutions such as departmental stores, chain stores, mail order business, super-market etc. and small-scale retail institutions such as small retail shop, automatic vending, franchising etc. The company must choose to distribute their products through any of the above retailing institutions depending upon the nature of the product, area of the market, volume of scale and cost involved.
The actual operation of physical distribution system requires companys attention and decision-making in the areas of inventory, location of warehousing, materials handling, order processing and transportation.
PROMOTION: The fourth element of the marketing mix is promotion. Promotion stands for the various activities undertaken by the company to communicate the merits of its products and to persuade target customers to buy them. Advertising, sales promotion and personal selling are the major promotional activities. A perfect co-ordination among these three activities can secure maximum effectiveness of promotional strategy.
Advertising to marketing is that steam to machinery. It is impersonal presentation and promotion of ideas, goods or services. It has a strong persuasion power. It is a common technique for mass selling.
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ELEMENTS OF MARKETING The advertisement copy must be able to attract the attention of the audience, arouse interest, create desire and stimulate action. The advertisement media chosen should be able to reach maximum number of people at minimum cost.
The second element of promotional mix is the sales promotion. It includes all those marketing activities that stimulate consumer purchasing and dealer stocking the goods. Such activities include issue of free samples, coupons, gift-offer, conducting contest, demonstrations in exhibition etc. The distinct feature of sales promotional activities is that they are purely temporary in nature and are meant for short duration only.
The third element of promotional mix is personal selling. Personal selling involves oral presentation in a conversation with prospective purchases for the purpose or making sales. The purpose is to bring the right products into contract with the right customers and to make certain that sales takes place.
The salesman should have right aptitude and qualities to be successful. Hence great care has to be taken in selection, training and compensating the sales people.
For successful marketing, the marketing manager has to develop a best marketing mix for his product.
REVIEW QUESTION: 1.Define Marketing Mix. Briefly explain elements of marketing mix.
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LESSON 6 MARKET SEGMENTATION

Market in heterogeneous both in the supply side and in the demand side. On supply side, many factors like differences in production equipments, processing techniques, nature of resources or inputs available to different manufacturers, unequal capacity among the competitors in terms of design and improvement and deliberate efforts to remain different from others account for the heterogeneity. Similarly, the demand side, which constitute consumers- is also different due to differences in physical and psychological traits. As a result, imperfect markets are common. This problem is to be solved by the strategy of product differentiation and market segmentation.
According to William Stanton, Market segmentation is the process of dividing the total heterogeneous market for a product into several sub-markets or segments each of which tend to be homogeneous in all significant aspects.
Market segmentation is a strategy of divide and rule. The strategy involves the development of two or more different marketing programmes for a given product or service, with each marketing programmes aimed at a different group of individuals whose expected reactions to the sellers marketing efforts will be similar during a specified time period. A strategy of market segmentation required that the marketer first clearly define the number and nature of the customer groupings to which he intends to offer his product or service. This is a necessary condition for optimizing efficiency of marketing effort.
Bases for market segmentation:
There are a number of bases on which a firm may segment its market.
1. Geographic basis a. Nations b. States BABASAB PATIL
ELEMENTS OF MARKETING c. Regions d. Cities 2. Demographic basis a. Age b. Sex c. Material status d. Family size e. Education f. Occupation 3. Socio-economic a. Income b. Nationality c. Religion d. Culture 4. Psychographic a. Social class b. Life style c. Personalities d. Loyalty status e. Benefits sought price or quality or durability f. Usage rate (volume segmentation) g. Buyer readiness stage (unaware, aware, informed, interested, desired, intend to buy) h. Attitude stage (Enthusiastic, positive, indifferent, negative, hostile)
Bases for segmenting industrial markets:
1. Geographical 2. Behaviouristic
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ELEMENTS OF MARKETING a. Benefits sought b. User status c. Loyalty status d. Readiness stage
Requirements for Effective Segmentation:
1. Measurability the degree to which the size and purchasing power of the segments can be measured. 2. Accessibility the degree to which the segments can be effectively reached and served. 3. Substantiality the degree to which the segments are large and /or profitable enough 4. Actionability the degree to which effective programmes can be formulated for attracting and serving the segments.
Possible market coverage strategies:
The firm can adopt one of three market coverage strategies known as undifferentiated marketing, differentiated marketing and concentrated marketing.
Undifferentiated marketing: The firm might decide to ignore market segment differences and go after the whole market with one market offer.
Differentiated marketing: Here the firm decide to operate in several segments of the market and designs separate marketing programmes to each. Thus, Maruti Udyog produces cars for every purse, purpose and personality. Similarly Bajaj two-wheelers.
Concentrated marketing: Under this strategy, the firm goes after a large share in one or a few sub-markets. BABASAB PATIL
Benefits of market segmentation: Market segmentation gives a better understanding of consumer needs, behaviour and expectations to the marketers. The information gathered will be precise and definite. It helps for formulating effective marketing mix capable of attaining objectives. The marketer need not waste his marketing effort over the entire area. The product development is compatible with consumer needs, pricing matches consumer expectations and promotional programmes are in tune consumer willingness to receive, assimilate and possibility react to communications.
In short, the strength of market segmentation lies in matching products to consumer needs that augment consumer satisfaction and firms profit position. However, the major limitation of market segmentation is the inability of a firm to take care of all the segmentation bases and their numerous variables. still, the strengths of market segmentation outweigh its limits and offers considerable opportunities for market exploitation.
REVIEW QUESTIONS 1. What is market segmentation? What are its bases? 2. What are the benefits of market segmentation?
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LESSON 7 CONSUMER BEHAVIOUR

Under the modern marketing Consumer is the fulcrum, he is lifeblood, he is very purpose of the business and hence the business firms have to listen consumer voices.... understand his concerns. His needs have to be focused and his respect has to be earned. He has to be closely followed what he wants ....... when, where and hos. The new business philosophy is that the economic and social justification of a firms existence lies in satisfaction of consumer wants. Charles G. Mortimer has rightly pointed out that, instead of trying what is easiest for us to make, we must find out much more about what the consumer is willing to buy..... we must apply our creativeness more intelligently to people and their wants and needs rather than to products. To achieve consumer satisfaction, the marketer should know, understand consumer behaviour their characteristics, needs attitudes and so on But, the study of consumer behaviour is not an easy task as it involves complex system of interaction of various factors namely sociological, cultural, economical and psychological.
BUYER BEHAVIOUR MODELS The influence of these social on buyer behaviour has promoted marketing experts to propound certain models for explaining buyer behaviour. Broadly, they include the economic model, the learning model, the psychoanalytical model and the sociological model.
The Economic Model
According to the economic model of buyer behaviour, the buyer is a rational man an his buying decisions are totally governed by the concept of utility. If he has a certain amount of purchasing power, a set of need to be met and a set of products to choose from, he will allocate amount over the set of products in a very rational manner with the intention of maximizing the utility or benefits.
The Learning Model
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ELEMENTS OF MARKETING According to the learning model which takes its cue from the Pavlovian stimulus response theory, buyer behaviour can be influenced by manipulating the drives, stimuli and response of the buyer. The model rests on mans ability at learning, forgetting and discriminating.
The Psychoanalytical Model
The psychoanalytical model draws from Freudian psychology. According to this model, the individual consumer has a complex set of deep-seated motives which drive him towards certain buying decisions. The buyer has a private world with all his hidden fears, suppressed desires and totally subjective longings. His buying action can be influenced by appealing to these desire and longings.
The Sociological Model
According to the sociological model, the individual buyer is influenced by society by intimate groups as well as social classes. His buying decisions are not totally governed by utility, he has a desire to emulate, follow and fit in with his immediate environment. And several of his buying decisions may be governed by societal compulsions.
The Nicosia Model
In recent years, some efforts have been made by marking scholars to build buyer behaviour models totally form the marketing mans standpoint. The Nicosia model and the Howard and Sheth model are two important models in this category. Both of them belong to the category called the systems model, where the human being is analyzed as a system with stimuli as the input to the system and behaviour as the output of the system.
Francesco Nicosia, an expert in consumer motivation and behaviour put forward his model of buyer behaviour in 1966. The model tries to establish the linkages between a firm and its consumer towards the product. Depending on the situation, be develops a certain attitude towards the product. If these steps BABASAB PATIL
ELEMENTS OF MARKETING have a positive impact on him, it may result in a decision to buy. this is the sum and substance of the activity explanations in the Nicosia model. The Nicosia model groups these activities into four basic fields.
Field One has two sub-fields- the firms attributes and the consumers attributes. An advertising message from the firm reaches the consumers attributes. Depending on the way the message is received by the consumer, a certain attribute may develop, and this becomes the input for Field Two. Field Two is the area of search and evaluation of the advertised product and other alternatives. If this process results in a motivation to buy, it becomes the input for Field Three. Field Three consists of the act of purchase. And Field Four consists and the use of the purchased item. There is an output from Field Four feedback of sales results to the firm.
The Howard Sheth Model
John Howard and Jagadish Sheth put forward the Howard and Sheth model in 1969, in their publication entitled. The Theory of buyer Behaviour. The logic of the model runs like this. there are inputs in the form of Stimuli. There are outputs beginning with attention to a given stimulus and ending with purchase. In between the inputs and the outputs there are variables affecting perception and learning. These variables are termed hypothetical since they cannot be directly measured at the time of occurrence.
Over the years, several other models have also been put forward, with the intention of explaining buyer behaviour. All these models have certain merits as well as limitations. They do not fully explain the complex subject of buyer behaviour. Nor do they establish a straight input-output equation on buyer behavior.
And, none of them provides a precise answer to the whys or hows of buyer behaviour. They merely explain the undercurrents of human behaviour from different angles and premises. But these models will certainly be helpful in gaining at least a partial insight into buyer behaviour.
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ELEMENTS OF MARKETING Factors influences consumer behaviour:
Consumer are stimulated by two types of stimuli - internal and environmental. The internal influence comprise of motivation, perception, learning and attitudes all concepts drawn from the field of psychology. The environmental influences include cultural, social and economical. Experts in these areas attempt to explain why people behave as they do as buyers. All these influences interact in a highly complex ways, affecting the individuals total pattern of behaviour as well as his buying behavour.
Cultural Factors:
Culture is the most fundamental determinant of a persons wants and behaviour. It encompass customs, traditions and any other capabilities and habits required by an individual as a member of a society. Each culture contains smaller groups of sub-cultures such as national culture, religious culture and caste culture that provides more specific identification and socialization for its members. Thus, the Japanese culture provides for certain manners of dressing while the Indian culture provides for different patterns. Similarly, religious groups such as Hindus, Christians and Muslims possess distinct cultural preferences and taboos. Each culture evolves unique pattern of social conduct. The prudent marketer has to analyze these pattern to understand their behaviour to evolve a suitable marketing programme.
Sociological Factors: The sociological factors are another group of factors that affect the behaviour of the buyers. These include reference groups, family and the role and status of the buyers. The reference groups are those groups that have a direct or indirect influence on the persons attitudes, options and values. These groups include peer group, friends, and opinion leaders. The marketers, therefore, aim their marketing efforts to reach reference groups and through them reach the potential buyers. A more direct influence on buying behaviour is ones family members namely, spouse and children. The person will have certain position in his family, that is called a status and has a duty assigned - that is role and this status and role also determine buying behaviour. The marketer needs to
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ELEMENTS OF MARKETING determine which member normally has the greater influence on the purchase of a particular product and should try to reach him to market his product.
Personal Characteristics:
An individuals buying behaviour is also influenced by his personal characteristics such as his age and life cycle stage, occupation, income, and personality.
For example, if the target market is kids, their food and other reqirements will certainly be different from aged people. Similarly, behavour and need differs depending on the nature of occupation, of the buyers. For example, factory workers and other defence people require footwear of mainly durable type that could withstand severe strain whereas people with white collar jobs require footwear of light and fashionable type. Hence, marketers should try to identify the occupational groups that have interest in their products and services. An organisation can even specialize in manufacturing products needed by a particular occupational group.
Basically it is the level of income, its distribution and the consequent purchasing power that determine ones buying behaviour. Out of the ones total income, a part may be saved and the remaining part is available for spending. Again out of this, a sizable part has to be reserved for meeting essential expenses and it is only the balance the individual has the discretion to spend. An intelligent marketer has to watch the income serving trend of his consumer and basing on that evolve a marketing programme.
Each person has a distinct personality that will influence his buying behaviour. A persons personality is usually described in terms of such traits as self-confidence, dominance, autonomy, and adaptability. Personality can be a useful variable in analyzing consumer behaviour.
Psychological Factors:
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ELEMENTS OF MARKETING Psychological characteristics play the largest and most enduring role in influencing the buyers behaviour. A persons buying choices are influenced by four major psychological processes motivation, perception, learning and attitudes.
Motivation is one which leads the individual to behave in a particular way. It may be conscious or subconscious a force that underlies a behaviour. It is the complex network of psychological and physiological mechanism. Motives can be instinctive or learned, conscious or unconscious, rational or irrational. The most popular human motivation theories are profounded by Maslows, Freuds and Herzberg. For example, Maslow has classified human needs into five types in the order of importance basic, safety, social, esteem and self actualization needs. The most urgent motive is acted upon first. If this is fulfilled, the individual proceeds to fulfill them next higher need. It is important for the marketer to understand the motives that lead consumers to make purchases and he must be able to explain the prospective buyers how best his product can satisfy a particular need. But he must be sure that the target consumers have already fulfilled the previous need.
Freuds Theory deals with sub-conscious factors. He asserts that people are not likely to be conscious of the real motives guiding their behaviour because these motives are often repressed from their own consciousness. Only through special methods of probing such as in depth interviews, projective techniques their motives can really be discovered and understood. The marketer should be aware of the role of visual and tactile elements in triggering deeper emotions that can stimulate or inhibit purchase.
Frederick Herzberg develop a two factor theory of motivation which distinguishes between dissatisfiers and satisfiers. The implication of this theory is that the marketers should do their best to prevent dissatisfiers from affecting the buyers and then he should carefully identify the major satisfiers or motivators of purchase.
Perception means how one views or thinks about a particular situation. The marketer while issuing advertisement message should be sure that a given message is properly perceived by the consumers. If the message is susceptible to different types of perceptions, it would defeat the purpose. BABASAB PATIL
Learning is the changes that occur in an individuals behaviours arising from experience. Learning is produced through the interplay of drives, stimuli, cues, responses and reinforcement. A drive is a strong internal stimulus impelling action and it becomes a motive when it is directed toward a particular drive-reducing stimulus object. Cues are minor stimuli that determine when, where and how the person responds. These cues can influence response to buy a product and if its experience is rewarding, he will continue to buy the same product which means his response is reinforced. The principal importance of learning theory for marketing is that they can build up demand for a product by associating it with strong drives, using motivating cues and providing positive reinforcement.
A belief is a descriptive thought that a person holds about something. These beliefs may be based on knowledge, opinion or faith. Marketers are very much interested in the beliefs of people about their products and service because they influence their buying behaviour. If some of the beliefs are wrong and inhibit purchase, the marketer should launch a campaign to correct these beliefs.
An attitude describes a persons enduring favourable or unfavourable cognitive evaluations, emotional feelings and action tendencies toward some object or idea. Attitudes put them into a frame of mind of liking and disliking an object, moving toward or away from it. This leads people to behave in a fairly consistent way towards similar objects. Hence, the marketer should try to fit his product into existing attitudes rather than to try to change peoples attitudes.
From the above discussions, it becomes obvious that consumer behaviour is influenced by economic, sociological and psychological factors. But it is wrong to assume that consumer behaviour is influenced by any one of these factors. The fact is that at a point of time and in a giver set of situation, it is influenced by a sum total of these diverse yet interrelated factors. When a consumer is in the process of taking a purchase decision, all these factors are prove to work simultaneously and influence his choice. But it is possible that the relative importance of these factors vary in a given situation. It is the intelligence of the marketer to find out the nature and intensity of the influence exerted by these factors and to formulate appropriate marketing programme. BABASAB PATIL
REVIEW QUESTIONS:
1. Bring out the importance of studying consumer behaviour. 2. Discuss the influence of socio-cultural factors in determining consumer behaviour. 3. Explain how the psychological determine buyer behaviour.
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LESSON 8 PRODUCT : PLANNING AND DEVELOPMENT
In common parlance, any tangible items such as textiles, books, tooth paste and many other items are called as products. But an individuals decision to buy an item is based not only on its tangible attributes but also on a variety of associated non-tangible and psychological attributes such as services, brand, package, warranty, image etc. Hence, it is essential to understand the term product.
According to Alderson, Product is a bundle of utilities consisting of various product features and accompanying services. The bundle of utilite is composed of those physical and psychological attributes that the buyer receives when he buys the products.
A product is anything that can be offered to a market for attention, acquisition, use or consumption might satisfy a want or need. It includes physical objects services, persons, places, organisation and ideas.
In order to further facilitate understanding it would be appropriate to know the meaning of some other also which often recur in any discussion on product. Some of these terms are discussed below.
Product item: A distinct unit that is distinguishable by size, appearance or some other attribute.
Product line: A product line is a group of products that are closely related, are able to satisfy a class of need are used together, are sold to the same customer groups, are marketed through the same type of outlets or fall within given price ranges. Example: cosmetics, office furniture.
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ELEMENTS OF MARKETING Product mix: A product mix is the set of all product lines and items that a particular seller offers for sale to buyers. It is also called Product assortment.
A product mix can have certain width, length, depth and consistency.
The width of product mix refers to how many different product lines the company carries.
The length of product mix refers to the total number of items in its product mix.
The depth of product mix refers to how many variants are offered of each product item in the line.
The consistency of the product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels or some other way.
Above four dimensions of the product mix defines the firms product strategy.
Product Planning: Product planning is the process of determining that line of products which can secure maximum net realization from the intended markets. It is an act of marking out and supervising the search, screening, development and commercialization of new products, the modification of the existing lines and the discontinuance of marginal or unprofitable items.
Thus, product planning encompasses the following aspects: 1. Planning and developing new products. 2. Modification of existing products, 3. Elimination of marginal or unprofitable product items.
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ELEMENTS OF MARKETING New Product Development Process: New product development process consists of the following eight steps. 1. Idea generation 2. Screening of ideas 3. Concept development and testing 4. Marketing strategy development 5. Business analysis 6. Product development 7. Test marketing 8. Commercialization of new product.
Idea generation The new product development process starts with the search for ideas. A product idea is an idea for a possible that the firm can see itself offering to the market.
The new product ideas can be derived from the following sources.
Customers: Customers needs and wants are the logical place to start in the search for new product ideas. Firms can identify consumer needs and wants through direct consumer surveys, projective tests, focused group discussions and suggestion and complaint letters from customers.
Scientists: The Companys scientists will also be able to supply new product ideas.
Competitors: Companies can find new ideas by monitoring their competitors products. The company should assess who is buying competitors new products and why. Many companies buy competitors products, take them apart and build better ones.
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ELEMENTS OF MARKETING Sales representatives and dealers: Since sales representative and dealers have first hand exposure to customers needs and complaints, they are good source of new product ideas.
Top management is another major source of new product ideas because its vast experience in the particular field.
Besides the above, new product ideas can come from a variety of sources such as University and commercial laboratories, industrial consultant, advertising agencies, marketing research firms and industrial publications.
Really good ideas come out of inspiration and creativity. The following techniques may help generate better ideas.
1. Attribute listing: The major attributes of an existing product are listed and then each attribute is modified in the search for an improved product. 2. Problem analysis: Consumers may be asked for the problem they encounter in using a particular product. 3. Brain-storming: Groups can be stimulated to greater creativity through the technique called brain-storming.
Screening of ideas:
Under this stage, the ideas are pruned and the purpose of screening is to spot and drop poor ideas as early as possible.
In the screening stage the company must avoid two types of errors. A drop-error occurs when the company dismisses a good idea. A go-error occurs when the company permits a poor idea to move into development and commercialization.
The purpose of screening is to spot and drop poor ideas as early as possible. The ideas are screened considering the target market, market size, competition BABASAB PATIL
ELEMENTS OF MARKETING price, development time and costs, manufacturing costs and rate of return. The ideas are also screened in terms of companys objectives, strategies and resources. Ideas that do not satisfy these are dropped. The remaining ideas can be rated using the weighted index method considering the factors required for the successful launching of the product and weights assigned by the management to these factors to reflect their relative importance.
Concept development and testing: The selected ideas, then be developed into product concepts. A product concept is an elaborated version of the idea expressed in meaningful consumer terms.
Concept testing implies testing these concepts with an appropriate group of target consumers. The concept may be presented symbolically or physically. At this stage a picture description is also sufficient. The consumers responses will help the firm determine which concept has the strongest appeal. Concept development and testing methodology applies to any product or service.
Marketing strategy development:
The preliminary marketing strategy consists of three aspects. The first aspect describes the size, structure and behaviour of the target market, the sales, the market share and profit goals planned in the first few years.
The second aspect outlines the products planned price, distribution and promotional strategies for the first year and the third part describes the planned long-run sales and profit goals and marketing mix strategy over time.
Business analysis: Once management develops the product concept and marketing strategy, it can evaluate the business alternativeness of proposal by reviewing the sales, cost and profit projections to determines whether they satisfy the companys objectives. BABASAB PATIL
Management needs to estimate whether sales will be high enough to return a satisfactory profit to the firm. It has to estimate first time sales of the new product, replacement sales and repeat sales.
After preparing the sales forecast, management can estimate the expected costs Research and development, manufacturing, marketing and finance departments and profits of this venture.
Product development:
Under this stage, the product concept is converted into a real physical product. This stage will answer whether the product idea can be translated into a technically and commercially feasible product. Whenever possible, a prototype could be produced, otherwise products should be produced only in limited quantities. When the prototypes are ready, they must be put through rigorous functional and consumer tests. The functional tests are conducted under laboratory and field conditions to make sure that the product performs safely and effectively. Consumer testing can take a variety of forms such as giving samples to use in their homes.
Market testing:
After management is satisfied with the products functional performance, the product should be given a brand name, packaging and a preliminary marketing programme to test it in real market. The purpose of market testing is to learn how consumers and dealers react to handling, using and repurchasing the actual product and to know the size of the market, marketing programme effectiveness and other matters. The amount of market testing is influenced by the investment, cost and risk, time pressure and research cost.
Commercialization:
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ELEMENTS OF MARKETING In this stage, management makes a final decision about whether to launch the new product. In launching a new product, the management must make four decisions a) the right time to introduce the new product b) The geographical area single locality, a region, the national market or the international market to introduce the product c) The target market prospects and d) action plan to introduce the new product in the market. It must allocate the marketing budget among the marketing-mix elements and sequence the various activities.
The Consumer Adoption Process:
The consumer adoption process begins where the firms innovation process ends. It describes how potential consumers learn about new product, try them and adopt or reject them. Management must understand this process in order to build in effective strategy for early market penetration.
Innovation - Diffusion and Adoption:
An innovation refers to any good, service or idea that is perceived by someone as new.
The diffusion is defined as the spread of a new idea from its source of invention or creation to its ultimate users or adopters.
Adoption is the decision of an individual to become a regular user of a product.
Adoption process:
The adoption process focuses on the mental process through which an individual passes from first hearing about an innovation to final adoption.
The adoption process consists of five stages:
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ELEMENTS OF MARKETING a) Awareness: The consumer becomes aware of the innovation but lacks information about it. b) Interest: The consumer is stimulated to seek information about the innovation. c) Evaluation : The consumer evaluates whether it would be beneficial to try the innovation. d) Trial: The consumers tries the new product on a small scale to find out his estimate of its value. e) Adoption: If the consumers is satisfied, he decides to make full and regular use of the new product.
Product Diversification:
Product diversification means adding a new product to the existing product line or mix. It does not mean that the new product should be complementary or an allied product to the existing one. It may be a product which may be entirely distinct and different from the existing products. For example, Bata entering into readymade garments, Raymonds entering into footwear business etc.
Reasons for diversification:
1. To offset declining market for the existing products. 2. To compensate for technological obsolescence. 3. To utilize the existing spare capacities more profitability. 4. To take advantage of the reputation of the companys image. 5. To maintain employment of labour force.
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ELEMENTS OF MARKETING Product Modification:
Product modification is any deliberate alternation in the products characteristics in a way that will attract new users and/or more usage from current users. It may be quality improvement aiming at increasing functional performance of the product its durability, reliability, speed, taste etc. and/or feature improvement aiming at adding new features such as size, weight, materials etc that expand the products versatility, safety or convenience. It would also be style appearance improvement. E.g. new car models.
Product Elimination:
Product elimination is the process of withdrawing or dropping a product in the existing product line if they are unprofitable.
Such product tend to consumer a disproportionate amount of managements time, the advertising and sales force effectiveness will go waste, requires frequent price, adjustments and affects the companys image.
Product life cycle:
Like human beings, every product has a life span. When a new product is launched in the market, its life starts and the product passes through various distinct stages and after the expiration of its span dies dies in terms of its capacity to generate saels and profits. This is called Product Life Cycle (PLC)
The Product Life Cycle is an attempt to recognize distinct stages in the sales history of the product. In each stage, there are distinct opportunities and problems with respect to marketing strategy and profit potential. Hence, products require different marketing, financing manufacturing, purchasing and personal strategies in the different stages of their life cycle. The PLC concept provides a useful framework for developing effective marketing strategies in different stages of the Product Life Cycle. There are four stages in the Product Life Cycle which are known as Introduction, growth, maturity and decline. BABASAB PATIL
Introduction Stage:
When a new product is launched, the company has to stimulate awareness, interest, trial and purchase. This takes time. In introductory stage only a few persons will buy the product. Further, it takes time to fill the dealer pipeline and to make available the product in several markets. Hence, sales will be low and profit will be negative or low. The distribution and promotion expenses are very high. There are only a few competitors. Regarding pricing, the management can pursue either skimming strategy i.e., fixing a high price or penetration strategy i.e., fixing a low price.
Growth Stage:
The growth stage is marked by rapid increase in sales and profits. New competitors enter the market, attracted by the opportunities for high profits.
Prices remain the same. Companies maintain their promotional expenditure at the same level to meet competition and continue educating the market. Sales rise much faster.
During this stage, the company uses the following marketing strategies.
- The company improves product quality and adds-product features and models. - It enters new market segments. - It enters new distribution channel - It changes the price.
Maturity Stage:
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ELEMENTS OF MARKETING This stage normally lasts longer than the previous stages. At this stage, sales will slow down. This stage can be divided into three phases growth maturity, stable maturity and decaying maturity.
In the growth phase, the sales start to decline because of distribution saturation.
In the stable phase, sales become static because of market saturation.
In decaying maturity phase, the absolute level of sales now starts to decline and customers start moving toward other products and substitutes. Competition becomes acute.
Marketing strategies in the maturity stage:
- Market Modification: The company should seek to expand the market. - Product modification: The company should modify the products characteristics such as quality improvement, feature improvement, style improvement to attract new users and/or usage from current users. - Marketing mix modification: The company should also try to stimulate sales through modifying one or more marketing-mix elements such as price cut, step up sales promotion, change advertisement copy, extending credit etc.
A major problem with marketing-mix modification is that they are highly imitable by competitors. The firm may not gain as much as expected and in fact all firms may experience profit erosion as they compete each other.
Decline stage:
In this stage, sales decline due to number of reasons including technological advances, consumer changes in tastes and acute competition. As sales and profit decline, some firms withdraw from the market. Those remaining may reduce the number of product offerings. BABASAB PATIL
They may drop smaller market segments and marginal trade channels. They may reduce the promotion budget and prices further.
Marketing strategies during the decline stage:
- Identify the weak products by appointing a product-review committee with representatives from marketing, manufacturing and finance. - The firms may adopt the following strategies. i) Continuation strategy by increasing the firms investment to reap the profits. ii) iii) Concentration strategy by continuing sales only in selected pockets. Harvesting strategy by selling to get profit whatever is possible in the market.
When a company decides to drop a product, the firm can sell or transfer the product to someone else or drop it completely. It must decide to drop the product quickly or slowly. It must decide on how much parts in inventory and service required to maintain service to past customers.
Use of PLC Concept:
PLC concepts real usefulness varies in different decision-making situations. As a planning tool, the PLC concept characteristics the main marketing challenges in each stage and suggests major alternative marketing strategies the firm might pursue. As a control tool, it allows the company to compare product performance against similar products in the past.
Criticism of PLC concept: 1. 2. PLC stages do not have predictable durations. It may vary from product of product. The marketer cannot tell at what stage the product is in, as there is no definite line of demarcation between one stage to another stage. BABASAB PATIL
ELEMENTS OF MARKETING 3. 4. Not all products pass through all the stages. It is possible that the product may travel to the first and second stage and then die out. A product may not be in an identical stage in all the market segments, it may be in the second stage in one segment whereas in the third stage in another segment at a point of time.
Product Positioning:
Each competitive product occupies a given place in the market segment. What is important is the consumer perception of the place each product occupies in the market. Product positioning is the act of designing the companys product and marketing mix to fit a given place in the consumers mind in relation to competitors product.
Every product offered to a market needs positioning strategy so that its place in the total market can be communicated to the target market. The following six alternatives are identified for a product-positioning strategy. - Positioning on specific product features. - Positioning on benefits or needs - Positioning for specific usage occasions. - Positioning for user category - Positioning against competitors product - Positioning for another product class. E.g. Positioning a recreational theme park not as recreation but as an educational institution.
The companys product positioning decision further defines its customers and competitors. At this point the company can start planning the details of its marketing mix.
REVIEW QUESTIONS: 1. Discuss the new product development process. 2. Explain PLC concept. What are its uses?
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ELEMENTS OF MARKETING 3. Write a not on product diversification and product modification. 4. What are the steps involved in the adoption process. 5. Write a note on product positioning.
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LESSON 9 BRANDING AND PACKAGING

Branding and packaging are the integral part of the product. The word brand is a comprehensive term. A brand is a name, term, sign, symbol or design or a combination of them, which is intended to identify the goods or services of one seller or group of sellers and to differentiated them from those of competitors.
Brand name: It consists of words, letters and/or numbers which can be vocalized or pronounced. E.g. Crompton, Kelvinator, No/: 1 Premier.
Brand mark: It is that part of a brand which can be recognized such as a symbol, design or distinctive colouring or lettering. E.g Maharaja of Air India. Red inverted triangle of Family Welfare Dept.
Trade Name/Trade Mark: When a brand name or brand mark is registered and given legal protection, it becomes trade name/trade mark respectively. A trade mark protects the sellers exclusive rights to use the brand name and/or brand mark.
Reasons for branding: 1. It helps in product identification 2. It helps indicate the product quality and other characteristics 3. It helps create brand image and brand loyalty to products. 4. It helps increase the success of advertisement and personal selling. 5. It helps increase sales 6. It ensures legal right on the products. 7. It helps product and price differentiation. 8. It helps introduce new product easily.
Characteristics of a good brand name: BABASAB PATIL
1. It should be short, simple, easy to pronounce, spell and remember. 2. It should suggest something about products benefits, quality and action. E.g. Stopache cream balm. Ruchi pickles. 3. It should be distinctive 4. It should be versatile
Types of brands:
Individual brand name: When each product has a unique brand name, it is called individual brand name. E.g. TVS XL, TVS Champ, TVS Scooty.
Family brand name: When a same brand name is given to all the products of a single manufacturer, it is called family brand name. E.g. Godrej, Tata.
Packaging:
Packaging may be defined as the activities of designing and producing the container or wrapper for a product. The container or wrapper is called the package.
In recent times, packaging has become a potent marketing tool.
The package must perform many of the sales tasks. It must attract attention, describe the products features, give the consumer confidence and make a favourable impression.
Packaging protects the products and provides convenience, appearance, dependability and prestige for the products.
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ELEMENTS OF MARKETING Packaging helps create brand and corporate image for the products.
Innovative packaging can bring benefits to consumers and profits to products.
Packaging decisions:
Developing an effective packaging for a new requires a number of decisions. The first task is to establish the packaging concept i.e., what the package should basically be or do for a particular product protection, convenience or image building.
Decisions must be made on further elements of package design size, shape, materials and colour. The packaging elements must also be harmonized with decions on pricing, advertising and other marketing elements.
After the packaging is designed, it must be put through a number of tests. Engineering tests are conducted to ensure that the package stands up under normal conditions, visual tests are conducted to ensure that the letters and colours are legible, dealer tests to ensure that dealer find the packages attractive and easy to handle, and consumer test to ensure favourable consumer response.
Labelling: Label is a small ship placed on or near the product to denote its nature, contents ownership etc.
Labels perform several functions:
- The label helps identify the product or brand - The label might describe several things about the product, who made it, where it was made, when it was made, its contents, how it is to be used and how to use it safely etc.
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ELEMENTS OF MARKETING - It might promote the product through its attractive design.
Kinds of labels:
1. Brand labels: These labels are exclusively means for popularizing the brand name of the product. E.g. Soaps, Cigarettes. 2. Grade labels: These labels give emphasis to standards or grades. E.g. Dust tea, Cloth etc. 3. Descriptive Labels: The label which are descriptive in nature are called descriptive labels. They describe product features, contents, method of using it etc. E.g. Milk food products and medicines. 4. Promotional Labels: These labels aim at attracting the attention, arousing desire and creating interest among the consumers to buy the product.
The marketers should make sure that their labels contain all the required information before launching the product.
REVIEW QUESTIONS:
1. Define brand. What are the reasons for branding the product? 2. Define packaging. What are the functions of packaging? 3. What is labeling? What are the usual contents of labeling.
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LESSON 10 PRICING POLICIES AND METHODS

Among the different components of the marketing mix, price plays an important role to bring about product-market integration. Price is the only element in the marketing-mix that produces revenue.
Price may be defined as the value of product attributes expressed in monetary terms which a consumer pays or is expected to pay in exchange and anticipated of the expected or offered utility. It helps to establish mutually advantageous economic relationship and facilitates the transfer of ownership of goods and services from the company to buyers. The managerial tasks involved in product pricing include establishing the pricing objectives, identifying the price governing factors, ascertaining their relevance and relative importance, determining product value in monetary terms and formulation of price policies and strategies. Thus, pricing plays a far greater role in the marketing-mix of a company and significantly contributes to the effectiveness and success of the marketing strategy and success of the firm.
Factors influencing pricing:
Price is influenced by both internal and external factors. In each of these categories some may be economic factors and some psychological factors, again, some factors may be quantitative and yet others qualitative.
Internal factors influencing pricing: - Corporate and marketing objectives of the firm - The image sought by the firm through pricing - The characteristics of the product - Price elasticity of demand of the product - The stage of the product on the product life cycle - Turn around rate of the product
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ELEMENTS OF MARKETING - Costs of manufacturing and marketing - Product differentiation practiced by the firm - Other elements of marketing mix of the firm and their interaction with pricing. - Composition of the product line of the firm.
External factors influencing pricing:
- Market characteristics - Buyers behaviour in respect of the given product. - Bargaining power of the major customers - Bargaining power of the major suppliers - Competitors pricing policy - Government controls/regulations on pricing - Other relevant legal aspects - Social considerations - Understanding, if any, reached with price cartels.
Pricing Objectives:
A business firm will have a number of pricing objectives. Some of the them are primary, some of them are secondary, some of them are long-term while others are short-term. However, all pricing objectives emanate from the corporate and marketing objectives of the firm.
Some of the pricing objectives are discussed below:
1. Pricing for a target return 2. Pricing for market penetration 3. Pricing for market skimming. BABASAB PATIL
ELEMENTS OF MARKETING 4. Discriminatory pricing 5. Stablishing pricing 6. Competitor oriented pricing 7. Achieving market share 8. Profit maximization pricing.
1. Pricing for a target return: This is a common objective found with most of the established business firms. Here, the objective is to earn a certain rate of return on investment (ROI) and the actual price policy is worked out to earn that rate of return. The target is in terms of return of investment. There are companies which set the target at, for example, 20 percent return on investment after taxes. They target may be for a short-term or a long-term. A firm also may have different targets for its different products but such targets are related to a single overall rate of return target.
2. Pricing for market penetration:
When companies set a relatively low price on their new product in initial stages hoping to attract a large number of buyers and win a large market-share it is called penetration pricing policy. They are more concerned about growth in sales than in profits. Their main aim is capturing and to gain a strong foothold in the market. This object can work in a highly price sensitive market. Is it also done with the presumption that unit cost will decrease when the level of sales reach a certain target. Besides, the lower price may make competitors to stay out. When market share increases considerably, the firm may gradually increase the price.
3. Pricing for market skimming:
Many companies that launch a new product set high prices initially to skim the market. They set the highest price they can charge given the comparative benefits of their product and the available substitutes. After the initial sales BABASAB PATIL
ELEMENTS OF MARKETING slow down. They lower the price to attract the next price-sensitive lover of customers.
4. Discriminatory Pricing:
Some companies may follow a differential or a discriminatory pricing policy-charging different prices for different customers or allowing different discounts to different buyers.
Discrimination may be practices on the basis of product or place or time for example, doctors may charge different fees for different patients, railways charge different fares for usual passengers and season ticket holders. Manufacturers may offer quantity discounts or quote different list prices to bulk-buyers, institutional buyers and small buyers.
5. Stabilising pricing:
The objective of this pricing policy is to prevent frequent fluctuations in pricing and to fix uniform or stable price for a reasonable period. When price is revised, the new price will be allowed to be remain for sufficiently a long period. This pricing policy is adopted, for example, by newspapers and magazines.
6. Competitor oriented pricing:
Under this method, pricing is fixed on par with competitors pricing policy. If the competitors reduces the prices, the firm will also correspondingly reduce the price. If the competitors increases the price, the firm will also increase the price or keep the price as it is thereby prevent competition.
7. Achieving market share:
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ELEMENTS OF MARKETING A firm may aim to secure a target market share by employing price as an input. Target market share means that share of the industry sale which a firm aspires to attain. It is usually expressed as percentage.
8. Profit maximization pricing:
Profit maximization is the most common pricing objective. It means in a given set of market conditions, firm attempts to maximize profit through the instrument of price. Besides the above, fast turn around and early cash recover, Profit optimization in the long term and target sales volume could also be other pricing objectives.
Pricing Methods:
The pricing method must be appropriate for achieving the desired pricing objectives. There are several methods of pricing. Each of them is appropriate for achieving a particular pricing objective or combination of pricing objectives.
The different methods of pricing can be grouped under the following broad categories.
1. Cost-based Pricing
Under this category, there are several approaches: i) Make-up pricing ii) Rate of return pricing iii) Marginal cost pricing
2. Demand-based pricing method: Under this category, there are different approaches. i) Skimming pricing BABASAB PATIL
ELEMENTS OF MARKETING ii) Penetration pricing
3. Competition Oriented Pricing Method:
Three alternatives are available under this method. i) Premium pricing ii) Discount pricing iii) Parity pricing
4. Product-line Pricing Method:
Under this method, the firm fixes the price of each product is such a manner that the entire product line is prices optimally resulting in optimal sales of all the products in the line put together and optimal total profits from the line.
5. Affordability-based Pricing Method:
The affordability-based pricing method is relevant in respect of essential commodities which meet the basic needs of all sections of people. Under this, often, an element of state subsidy is involved and the product items are often distributed by the Public distribution system.
New Product Pricing:
Firms launching a new product can choose between market-skimming pricing and market penetration pricing.
i) Market skimming Pricing:
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ELEMENTS OF MARKETING Firms launching a new product may set high prices initially to skim the market. After the initial sales slow down, they lower the price to draw in the next-price sensitive layer of customers.
ii) Market penetration pricing:
Firms may set a relatively low price on their innovative product, hoping to attract a large number of buyers and win a large market share.
Government Control on pricing:
Price controls refer to the Governmental regulations in respect of price fixation. Usually statutory price control entails imposition of price ceiling so that it does not exceed consumer capacity to pay. Currently for example, the price of petrol is under statutory price controls. The firms manufacturing these products are assured retention prices which are based on costs, and ensure fair return on investment.
In case of sugar, a dual pricing system has been introduced. Under this system, a manufacturer is required to compulsory sell a part of its production to the Government at substantially low prices, called levy price.
The rest of production may be sold in the open market at a price the firm deems fit. The statutory price control also envisages the announcement of support price for certain agricultural products like cotton, food grains etc. so as to protect cultivators from price fluctuation.
Voluntary price control envisages formulation of price control measures by the respective industry association under the direction of and according to the guidelines provided by the Government.
REVIEW QUESTIONS: 1. What is pricing? What are the factors influence pricing? BABASAB PATIL
ELEMENTS OF MARKETING 2. Discuss various pricing objectives. 3. State the pricing methods. 4. Write a note on Government control on pricing.
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LESSON 11 PHYSICAL DISTRIBUTION

Distribution management consists of two major tasks - physical distribution and management of distribution channels.
Physical distribution is the process of taking the product to the consumers. It encompasses all the activities involved in the physical flow of products from producers to consumers.
Importance of Physical distribution:
Physical distribution provides places utility and time utility to a product. In other words, it is physical distribution that makes the product available at the right place and at the right time.
Physical distribution largely determines the customer service level and serves as an effective tool for building up a market.
It is a very important area of cost savings. A systematic planning of inventory levels, warehousing operations, transport schedules and materials handling would lead to considerable savings in cost.
An efficient management of physical distribution may accrue to a firms larger market share. It is possible to achieve a larger market share by decentralizing warehousing operations and by using economic and efficient modes of transportation to reach those market segments which have hitherto bee untapped.
An effective management of physical distribution can also stabilize prices of products by a judicious use of transport and warehousing facilitate.
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Channels of distribution:
The channels of distribution may be defined as a pathway composed of intermediaries also called middlemen, who perform such functions as needed to ensure smooth and sequential flow of goods and services from the manufacturing ends to the consuming ends in order to achieve marketing objectives of a company.
Role and importance of middlemen:
Middlemen bring together the producer and consumer in an efficient and economic manner.
Middlemen combine the products of different firms and offer them in the form of assortments that are convenient to final users. They help to sell new products in the market. The dealers promote the product through their task. They provide market intelligence and feed back to their principles. Since they maintain constant and direct contract with customers and know the pulse of the market.
Middlemen help create awareness and interest about the product among the consumers by attractive display of the new product.
Middlemen help implement the price mechanism in the market, they assist in arriving at the price level that is acceptable to the producer and the user.
They also look after a good part of the physical distribution function like transportation, warehousing and inventory management. In addition, they look after financing of the goods, credit transactions, negotiations with buyers etc.
Middlemen also act as change agents among the buyers and generate demand for new products. BABASAB PATIL
Pattern or Types of distribution channels:
1. Manufacturer User (Short or direct channel) 2. Manufacturer Retailer User 3. Manufacturer Wholesaler Retailer User Long channel 4. Manufacturer Stockiest Semi Wholesaler Retailer User Long channel.
Factors determining the choice of channel:
The best channel is one that works best in the marketing strategy selected by the company. The channel chosen should achieve ideal market exposure and should meet target customers needs and preferences.
The channel choice is influenced by - Distribution policy - Product characteristics - Supply characteristics - Supply characteristics - Customer characteristics - Middlemen characteristics - Company characteristics - Environmental characteristics - Cost of channel
Distribution Policy
A firms distribution policy may be of intensive distribution, selective distribution or exclusive distribution. BABASAB PATIL
Intensive distribution refers to maximum distribution through every possible type of outlet. This policy requires the use of more than one channel to reach the target market with many intermediaries.
Selective distribution is the sale of product through only those outlets which will be able to sell more product.
Exclusive distribution involves granting of exclusive rights to the channel member to distribute the products. Thus, the distribution policy of the firm decides the choice of a channel.
Product characteristics:
The product characteristics such as the use of the product, its frequency of purchase, Perishability, value, the service required etc decide the channel.
For example, perishable products require more direct marketing, convenience goods such as soaps, match box which are frequently purchased and low unit value require long channel. Shopping goods such as refrigerator require selective channel.
Supply characteristics:
Small number of producers, geographically concentrated use short channel. If the number of producers are large, and geographically dispersed use long channel.
Customer characteristics
Customer characteristics such as their number, geographical dispersion, frequency and regularity of purchase greatly influence the channel selection.
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Middlemen characteristics:
The choice of channel is also depends on the strengths and weaknesses of various types of middlemen performing various marketing functions. Their behavioral differences, product lines, the number and locations affect the choice of the channel.
Company characteristics:
The choice of channel is also influenced by company characteristics such as its financial position, size, product mix, past channel experience etc. The company marketing policies such as speedy delivery, after-sales service etc. also influence the choice of channels.
Environmental characteristics:
Environmental characteristics such as economic conditions and law also influence the channel selection. For example, when economic conditions are depressed the producers prefer shorter channels to reduce cost.
Cost of channel:
As each channel will be doing some of the marketing functions, the cost of performing such marketing functions at each distribution level and the total cost of performing the entire marketing task has an influence in the choice of the channel. Those channels which ensure efficient distribution at least expense and which secure the desired volume of sales should be chosen.
Functions of Middlemen
BABASAB PATIL
ELEMENTS OF MARKETING The middlemen mainly, comprised of wholesalers and retailers. The word wholesaler means to market goods in relatively larger quantities and who usually does not sell the ultimate consumers.
Services rendered by the wholesaler to the manufacturers:
1. Securing orders form large number of retailers 2. Reducing the manufacturers need for carrying large stocks and incurring warehousing expenses. 3. Saving the manufacturer from the risk of credit sales with customers. 4. Participation in manufacturers. sales promotion and advertising numerous of the
tasks
5. Acting as the interpreter of consumers needs and opinions. 6. Helping the manufacturers for continuous production. 7. Taking over the marketing functions from the manufacturer, thus enabling him to concentrate on production.
Services to the Retailers:
1. Relieving the retailers to hold large stocks. 2. Prompt delivery of goods to the retailers 3. The wholesaler who specialists in one line of goods can offer better advise to the retailer regarding the quality of goods. 4. Grant credit to the retailers 5. Informing and influencing the retailers to buy new products. 6. Sharing the risk involves in marketing.
Retailers:
BABASAB PATIL
ELEMENTS OF MARKETING Retailer is the last link in the channel of distribution. He sells the commodities to the ultimate consumer. As an intermediary between the manufacturer/wholesaler and the consumer he is performing the following services.
1. He makes available wide assortment of goods to the consumer. 2. He keeps ready stock to meet the day to day demand of the customers. 3. He brings new products and new varieties to the consumers. 4. He offers expert advise to the consumers regarding suitability of product. 5. He is able to ascertain first hand needs and requirements and reactions of consumers 6. He undertakes sales promotion activities 7. He extends credit facilities. 8. He maintains personal contract with consumers considerable influence on their buying decisions. and exercises
Elimination of Middlemen:
Middlemen are used by the manufacturers because they can perform the marketing functions more economically and more effectively than the manufacturer at a given cost.
Further the manufacturer does not have the ability to perform those, functions and / or because he does not possess adequate financial resources to perform them effectively. Even those producers who have required financial resources to sell directly to final consumers often can earn a greater return by increasing their investment in other aspects of business. The element of risk also arises here. Direct selling involves owning warehouses, delivery equipments and sales personnel. These involve fixed costs and increases the risk. But if middlemen are used, these risks are borne by the middlemen. These middlemen by virtue of their specialization and experience may do the job better than the producer.
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ELEMENTS OF MARKETING It is wrong notion to believe that goods are marketed cheaply when middlemen are not used. The elimination of middlemen does not mean the elimination of the marketing functions. The functions are to be performed and the issue is who should perform it is largely one of relative efficiency and effectiveness. Therefore, one of the reasons the producer does not choose to perform a number of specific marketing functions is that the middlemen through their specialization may perform it at less cost. Hence it is not possible to eliminate the middlemen from the channel and it is wrong to blame them as parasites on the society by pointing to the difference between the final price and the producers price. It is only when the middlemen take advantage of shortage and consumer ignorance and exploit them, they can be termed as parasites.
Relating Establishments:
1. House to house selling:
House-to-house selling is also known as Home selling or Door-to-door selling. Under this method, salesperson directly meets the consumers in their homes, to promote the new products and to popularize existing products extensively as well as intensively. It is a flexible method and no fixed investment is involved for a retail store at a specific place. It is a convenient method of buying to consumers, in many cases after demonstration.
Marketing by mail order:
Mail order marketing also known as Mail Order Business is one the popular method. Under this method, the prospective consumers become aware of the product through information furnished by the produces through the print media or through broadcast or through direct mail. Interested consumers respond by placing order through mail to the suppliers. the products are supplied to the consumer by mail and payment made either by VPP or by cheque.
Vending Machines:
BABASAB PATIL
ELEMENTS OF MARKETING Vending machines enable the producers to supply the products to the consumers through machine without employing salesmen. Usually products which belong to the buy on impulse category like soft drinks, ice creams, cigarette etc are marketed through this method.
Independent stores:
Independent stores are retail shops marketing the products to the consumers. They have the following advantages: - Personal relationship with customers - Location at convenient places to the customers - Greater flexibility in working - Catering for more individualistic need - Personal supervision - Prompt and quick decisions - Better services
Department Stores:
A department store is defined as a retail institution that handles a wide variety of merchandise grouped into well defined departments for purposes of promotion, service, accounting and control. It is capable of supplying all the requirements of the customer under a single roof.
Main features of department stores are: a. A wide variety of goods b. Departmental organisation c. Large size
Advantages: BABASAB PATIL
ELEMENTS OF MARKETING 1. Centralized location 2. Availability of a wide range of goods in one location 3. Convenience of shopping for consumers 4. Being a large organisation procurement it can get economics of large-scale
5. It can afford to have effective advertisement and can derive economics of large scale advertisement. 6. It can offer better sales services.
Drawbacks:
1. High cost of doing business 2. Limited personal attention to customers 3. Need for higher capital 4. Higher mark-up in prices 5. Dependence on hired employees
Chain stores or Multiple shops:
A chain store system consists of a number of retail stores which sell similar products, are centrally owned and are operated under one management. The various stores may be located in the various localities of a city or may be spread over a number of cities in the country.
Advantages to the manufacturer or owner of the chain:
1. Low operational expenses 2. Low cost of goods
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ELEMENTS OF MARKETING 3. Uniformity in prices 4. Standardized methods of operation 5. Multiplication of selling points 6. Low investments in inventory 7. Proximity to customers.
Advantages to customers:
1. Easy accessibility 2. Elimination of middlemens profits 3. Assured quality 4. Uninterrupted supply 5. Direct contact
Disadvantages:
1. Problems relating to personnel and supervision 2. Inflexibility in operations 3. Rise in distribution cost 4. Limited varieties
Super Market:
A supermarket is defined as a large retailing business unit with wide variety and assortments, self-service and heavy emphasis on merchandise appeal
Advantages:
1. Supermarket stocks a wide variety of assortments of goods
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ELEMENTS OF MARKETING 2. Prices are normally low 3. It operates on the principle of self-services 4. It is a low cost retail institution
Limitations: 1. It can operate in the area of concentration of buyers 2. It has to face the problem of personnel and supervision
REVIEW QUESTIONS
1. What are the factors that decide the choice of a channel? 2. middlemen can be eliminated Discuss 3. What are the services rendered by the wholesalers and retailers? 4. Evaluate the merits and demerits of department stores and chain stores. 5. Write note on i) automatic House-to-house selling. vending ii) mailorder business iii)
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LESSON 12 PERSONAL SELLING

Personal Selling is a broader concept and involves oral presentation in a conversation with one or more prospective purchasers for the purpose of making sales. The purpose of personal selling is to bring the right products into contact with the right customers and to make certain that ownership transfers take place. Personal selling is employed for the purpose of creating product awareness, stimulating interest, developing brand preference, negotiation price and finally clinch the deal.
The art of selling is called salesmanship. Salesmanship is one of the skills used in personal selling Salesmanship is defined as seller-initiated effort that provides prospective buyers with information, and motivates or persuades them to make favourable buying decisions concerning the sellers product or services.
The selling done by the salesforce is called personal selling while selling achieved through advertising and other sales promotional methods are called impersonal selling.
Strengths of Personal Selling:
Personal Selling is present in all the three phases of buying namely pre-transactional, transactional and post-transactional.
It is two way communication and thereby it proves to be effective. It is one human mind influencing another human mind.
It is more flexible and adaptable to the varying purchase situations. It is possible for a salesman to adapt himself to the needs, motivates, impulses and other behavioural traits of the prospective customers.
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ELEMENTS OF MARKETING In personal selling, there is minimum possibility of message distortions. The salesman is able to focus his message on qualified consumers only.
It is possible for a salesman to detect loss of consumer attention and interest and regenerate them by proper techniques.
A relatively durable relationship may be developed between salesman and consumer which makes future sale exploration much effectives.
The salesman acts as a market researcher. He gathers and promptly transmits relevant market information to the company in making timely strategic and tactical decisions.
Conditions favouring Personal Selling:
Personal selling is relatively more economical and effective in the following conditions.
1. 2. 3. 4. 5. 6. 7. 8. 9.
When a firm sells in the small market. When desired agent-middlemen are not available When the product is in the introductory stage of its cycle When the product is of a high unit value When the product requires demonstration When the product needs personal attention to match specific consumer needs. When the product requires after sales servicing. When the consumer purchasing involves a deliberative process i.e., not impulsive When consumer need instant answers to his questions.
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ELEMENTS OF MARKETING 10. When a company cannot afford a consistent and large advertising outlay.
Qualities of a Effective Salesperson
Good salesmanship is not a matter of some rare, persuasive, inherited skill, which, when turned on, magically gets the order. On the contrary, good salesmanship is the result of careful analysis of the buyers problem combined with some articulateness in explaining to the buyer how the seller can solve his problem. The size-up of salesmanship may well emphasize the personal qualities required of good salesmen.
Most companies desire that certain essential personally traits, qualities, characteristics, aptitudes, attitudes and abilities should be possessed by the people whom they want to recruit to the sales force. However there is no standardized formula for listing the essential qualities such thing as the ideal sales personality. There are many kinds of selling jobs requiring different types of salesmen. So the characteristics of salesmen usually varies also from one sales position to another and also from company to company. This means, each company should make its own study of its selling job and decide the characteristics of its own sales force.
However, a number of lists of essential characteristics are available. Mayer and Herbert conclude, it is enough if a good salesman has two basic qualities empathy and ego drive. Empathy is the ability to feel as the customer does. Ego drive refers to a strong personal need to make the sale for its own sake and not merely for the money to be gained. But these are rarely enough. The majority of scholars feel that the following should be the essential characteristics of successful salesman.
1. Ambition 2. Enthusiasm 3. Cheerfulness 4. Sympathy
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ELEMENTS OF MARKETING 5. Patience and persistence 6. Tact 7. Hardwork 8. Determination 9. Dependability 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. Integrity Ability to ask questions Ability to make quick and accurate spot judgements Ability to provoke answer Modest and confident answers to questions Alertness Sense of humour Story telling ability Ability of smile Optimism Right facial expression Ability to mix easily with other people Memory Leadership Power of observation Acceptance of criticism Habit of asking for the order Knowledge of the company Knowledge of the product Knowledge of the prospect Personal appearance.
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ELEMENTS OF MARKETING As pointed out already, the above are the common qualities required of a good salesman. In practice, it is difficult to find from a single individual all the above qualities. But still, the individual could develop the above qualities to become a better salesman.
Difference between selling consumer and Industrial Goods
Consumer goods are those meant for use by the ultimate household consumer and in such form that they can be used by him without further commercial processing.
Consumer goods are generally divided into three sub-categories according to the method in which they are purchased viz, convenience goods, shopping goods and specially goods.
Industrial goods are those which are used in producing other goods or rendering service. Industrial goods are divided into three main categories viz., raw materials, equipments and fabricated materials.
Difference between selling consumer and Industrial Goods:
1. Scale of Production:
Consumer goods are manufacturing on a mass scale when compared to industrial goods.
2. Nature of demand:
The demand for consumer goods are generally primary in nature whereas demand for industrial goods is derived demand.
3. Number of buyers: BABASAB PATIL
In consumer market the buyers are large in numbers but in the case of industrial goods, the buyers are limited in number.
4. Location of buyers:
The consumer market is widespread and the consumers are scattered whereas industrial users are generally concentrated geographically.
5. Unit of purchases:
The unit of consumer goods is invariably low and unit of purchase is also low. But the frequency of purchase is greater. In the case of industrial goods, the scale of purchase is high and the unit cost is also high.
6. Nature of products:
The consumer goods are not complex when compared to industrial goods which are of more technical and complex in nature.
7. Buying Process:
In the case of consumer goods, purchasing is done by individual consumer whereas it is group process or by a Committee of Experts in the case of industrial goods.
8. Buying Motive:
Consumer goods are bought by emotional impulse whereas industrial goods are bought on rational motive.
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ELEMENTS OF MARKETING 9. Competition:
Consumers goods are subject to severe competition when compared to industrial goods.
10.
Suppliers Reputation:
When compared to consumer goods suppliers reputation plays a major role in industrial goods.
11.
Channel of distribution:
The length of the channel for consumer goods is long and indirect when compared to industrial goods where the channel of distribution is short and direct.
12.
Pricing Policies:
The price of consumer goods are subject to frequent changes when compared to industrial goods.
13.
Constant threat from changes in fashion:
The consumer goods market has a constant threat from changes in fashion than industrial goods.
14.
Nature of salesman:
Industrial selling is normally backed by technical details and usually done by people with some technical background.
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ELEMENTS OF MARKETING 15. Nature of Advertising:
Mass advertising essential for consumer goods whereas it is not needed for industrial goods. Advertisement in trade and technical journals backed by direct mailing and personal selling will serve the purpose for selling industrial goods.
16.
Government Control:
Government control is comparatively more for consumer goods than for industrial goods.
An understanding of difference between consumer goods and industrial goods is necessary for the salesperson to workout a better sales strategy.
REVIEW QUESTION
1. What is personal selling? Bring out its importance 2. Enumerate the qualities required for a good salesman.
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BABASAB PATIL
LESSON 13 SALES MANAGEMENT

Sales management is an integral system of marketing management. It translates the marketing plan into marketing performance. The various tasks involved in sales management are:
- Determining the personal selling objectives of the firm - Formulating the sales policies - Structuring the salesforce - Deciding the size of the salesforce - Selection and Recruitment - Compensation, motivation and training and development - Sales control
Personal Selling Objectives:
The major areas where personal selling objectives have to be set are:
- Sales volume - Market volume - Profits - Selling expense level - Appointment of new dealers - Pre sale and after sale service - Assistance in sales promotional measures - Gathering and reporting market intelligence
Formulating Sales Policies BABASAB PATIL
ELEMENTS OF MARKETING Sales management has a major role in shaping and implementing policies relating to product, price, distribution and promotion.
Structing the sales force:
The sales force is usually structured on a territory basis or on a product basis. This structuring is the task of sales management.
Determining the size of the sales forces:
The size of the salesforce ahs to be fixed at the optimum level. The size of the salesforce depends on the following considerations.
1. Level of sales expected and the number of salesmen needed for generating this sale. 2. Minimum number of salesmen needed from the servicing angle, irrespective of level of sales. 3. Costs involved in maintaining the sales force.
The firms integrate exercise of determining the number of territories and the number of salesmen and arrive at the optimum.
Managing the sales force:
The various activities involved in the management of sales force are:
- Recruitment and selection - Training of salesmen - Compensation the sales force
BABASAB PATIL
ELEMENTS OF MARKETING Recruitment and selection: After having determined the size of the sales force, the firm has to recruit and select the right kind of persons to serve as salesmen. Recruitment is an act of inducing qualified and competent people to get interested in and apply for a salesmans position with the firm. Selection is a consequence of recruitment activities and implies choosing the desired number of applicants for employment among those who have applied. It involves the process of matching educational, aptitudinal and personality attributes of the applicants with the man-job specification laid down by the firm.
The selection process consists of the following steps:
1. Application blanks:
The firm may ask the prospective candidates to apply by issuing application blanks. The application blank contains questions relating to personal history, educational background, experience, expectations etc.
2. Conducting Tests:
In order to develop an indepth understanding of the candidates, the firm may conduct psychological and other tests such as tests of ability, tests of habitual characteristic and tests of achievement. Besides, a firm may also administer physical /medial tests to ascertain the physical fitness of the candidate for a hard and strenuous selling job.
Interviews:
Interviews involves personal interaction with the candidates and is aimed at discovering the salesmanship in the candidate.
After having screened the application blanks, administrated the various tests and interviews, the results of these different components of the process are BABASAB PATIL
ELEMENTS OF MARKETING compiled and the final score is arrived at to prepare a panel of candidates acceptable for employment.
Training of Salesman:
Having selected the salesmen, he should be trained and retained, adequately compensated and effectively motivated.
Need for training: - To improve sales performance - To increase the efficiency of the salesmen. - To reduce the selling expense - To have a better understanding of the company - To have improved customer relations - To shape the behaviour of the salesmen.
Consists of Training Programme:
- Knowledge about the company - Knowledge about the product - Knowledge about the market - Knowledge about selling techniques - Knowledge about competitors
Training Method:
A variety of training methods are available to train the salesmen. These methods may include the following:
1. Self-study Method: BABASAB PATIL
The individual salesmen may be supplied with booklets, journals, reports to study by himself to acquire sufficient knowledge.
2. Lecture Method:
Under this method, the lecturer delivers lecturers on the course content to trainees. Audio-visual aids are also used. It is a teacher-dominent method which inhibits trainees active participation in the learning process.
3. Discussion:
Under this method, the trainee activity participates in the learning process by discussing buying selling situations/problems and this their analytical facilities and help them think logically.
4. Royal Playing:
This method requires trainee to act out roles in contrived problem situation wherein the trainee assumes the role of customer, salesman and other characters. Having played the roles, each trainee evaluates his own performance its strengths and weaknesses. Feed back is provided by groups members and audio visual means.
5. Case studies:
Case studies are particularly appropriate for developing analytical skills. Trainees are asked to analyze situations, identify problems and opportunities and make recommendations for dealing with them.
6. Sensitivity Training:
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ELEMENTS OF MARKETING Sensitivity training is aimed at making trainees sensitive to their environment and customers behaviour to enable them to know how they should adjust to it.
7. On-the job training:
In this method, the trainee is imparted instructions by placing him on the job of selling. In the beginning the trainee will accompany the trainer, observe his performance and he will be asked to do job under the trainees supervision. The trainees performance will be reviewed and if necessary suggestions made to improve his performance.
8. Conference and Seminars:
The salesmen may also be deputed to conference and seminars conducted by outside organisatoins to enable them to get new knowledge and experience.
Evaluation of Training:
The effectiveness of training programme may be done at the end of the programme by getting their views and analyzing them. The overall impact may be evaluated by comparing salesmens performance in terms of sales volume, sales profitability, expenses etc between pre and post training periods. For new recruits the judgement may be formed on the basis of absolute total performance.
Compensation of salesforce
Salesmens compensation means monetary reward given by a company to its salesmen in consideration of the services rendered by them.
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ELEMENTS OF MARKETING Compensation serves as an important motivation tool to retain the salesmen and to contribute to the growth of the company. It is an important magnitude tool to direct and control sales force to attain the sales objectives.
Requirements of a Good Compensation Plan:
1. It should be simple to understand by salesmen. 2. It should be fair to both the salesmen and the company 3. It should ensure a living wage to salesmen 4. It should also be flexible enough to provide scope for adjustment of compensation basing on salesmens performance. 5. It should be easy and economical to administer. 6. It should really prove to be an instrument of attaining sales objectives.
A company has to develop an optimal mix of the above requirements so as to develop a viable compensation plan.
Methods of Compensation:
Usually, the following methods of compensation are employed. - Straight Salary - Straight Commission - Salary and Commission
Straight Salary:
Under this method, fixed salary for a specific period, usually, a month is paid to salesmen. It is fixed and guaranteed and does not vary with quantum of sales.
This system ensures regular income to the salesmen and thereby provides security. It is simple to understand and easy to calculate. BABASAB PATIL
It does not provide any incentive to salesmen for additional performance. It may not attract/retain high-performing sales people.
This method is used primarily in industrialized selling where technical service is an important element in the selling. It is appropriate when the salesperson sells very high-value products at very low volumes.
Straight Commission only: In this method, compensations is composed of only a commission which is related to some measure of productivity like sales volume, net profits, collection of debts etc. Usually sales volume is the basis.
It provides maximum monetary incentive to salesmen. It attracts high caliber salesmen. It is simple to understand. It is flexible enough to meet changes in business conditions.
This method, however, has certain drawbacks. The sales personnel may pursue short-term goals to the detriment of activities which have the effect in the longer term. Their focus is only on selling, non-selling tasks such as preparation of report, market intelligence are usually ignored. The system provides little security to the sales people.
This system is used where there are a large number of potential customers, the buying process is relatively short and technical assistance and services is not required. E.g. Insurance selling.
Salary plus commission:
Under this method, usually a mix of salary (fixed component) and commission (variable component) is developed in such a way that salesmen are assured of a secured steady income and also adequate incentive to work harder. The commission may be paid on total sales/profit or on a certain quota of sales predetermined. BABASAB PATIL
It is the most commonly used method of compensating salespeople, although method of calculating commission may vary.
Evaluation of Performance of Salesforce:
The performance of salesforce has to be evaluated both periodically and on a continuing basis to determine the compliance of policies and achievement of targets. Evaluation of performance involves establishing standards or measures of performance and measuring actual performance and comparing it with established standard and taking corrective action, in case of deviation. The standards of performance may be broadly divided into two namely quantitative and qualitative. Quantitative standards are those which specify performance levels of salesmen in terms of targets. Qualitative standards are those which measure the salespersons knowledge and behaviour. While quantitative standards could be measured qualitative standards are difficult to measured.
Quantitative measures of performance:
The main output measures relate to sales and profit performance. Specific output measures for individual salesmen include:
- Sales volume achieved - Profits generated - Number of orders - Sales to new customers - Number of new customers
Input measures include
BABASAB PATIL
ELEMENTS OF MARKETING - Number of calls made per day - Expenses per call - Number of calls on prospects - Expenses for square Km of territory
Qualitative Measures of Performance:
- Sales skills - Customer relationship - Product knowledge - Co-operation and attitudes
For an evaluation, to work efficiently, it is important for the sales team to understand its purpose. It should be used and perceived as a means of assisting salespeople in improving their performance.
REVIEW QUESTIONS: 1. Discuss the steps involved in the selection process of salesmen 2. Discuss the various methods of training of salesmen 3. Explain the major methods of compensating sales force 4. What are the methods of evaluating the performance of salesforce?
BABASAB PATIL
LESSON 14 ADVERTISING
The term advertising originates from the Latin work adverto, which means to turn around. Advertising, thus, denotes the means employed to draw attention towards any object or purpose. In the marketing context, advertising has been defined as, an paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor. It is component of firms promotional mix. It is a common technique of mass selling. Publicity is different from advertising. Publicity is not normally paid for and sponsor could not be identified. It is not easily controlled by the firm. Advertising can have both long-term and short-term objectives. Some common objective are:
1. The basic objective of the advertising is to inform and influence the buyers to buy the product and thereby increase the sales 2. Advertising may be used to introduce a new product to potential customers. 3. It is used to induce the middlemen to store and handle the product. 4. It helps build up brand image and brand loyalty to the products. 5. Advertising may be necessary to publicise the changes made in prices, channels of distribution, any improvement made in the quality, size, weight and packing of the product. 6. It may be issued, sometimes, to compete with or neutralize competitors advertising. 7. It helps build up corporate image. 8. In the case of mail order business, advertising does the selling job by itself. 9. By supplementing personnel selling, advertising makes the job of salesforce easier. 10. 11. It helps increase the effectiveness of sales promotion campaign. Finally, it encourages the creative arts and the artists.
Decision areas in advertising BABASAB PATIL
The decision areas in advertising comprises of: 1. Deciding the advertising objectives 2. Deciding the advertising budget 3. Deciding on the advertising copy 4. Deciding the media 5. Evaluating the effectiveness of advertisement.
Deciding the advertising objectives:
Advertising objectives are essential because it helps the marketer know in advance what they want to achieve and helps ensure effective development of advertising programmes and guides and controls decision-making in each area and at each stage.
Deciding the Advertising Budget:
Deciding how much money to the spent on advertising is not an easy task. The type of products involved, the competitive structure of the industry, legal constraints, environmental conditions etc. influence advertising expenditure. The decision cannot be taken by applying a standard formula. The answer varies from industry to industry and from company to company within the same industry. The same companys advertisement expenditure may differ from time to time.
Methods of advertising budget:
1. Affordable method 2. Competitive parity method 3. Percentage of sales method 4. Objective and task method
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Affordable Method:
This method as the name indicates, rests on the principle that a firm will allocate for whatever it can afford. Usually small firms follow this method. Even the limited funds provides for advertising may get reallocated for other items depending upon the emergent requirements.
Competitive Parity Method:
Under this method, the firms make their advertising budget comparable to that of their competitors. They simply do what others are doing.
Percentage on sales method:
Under this method, the advertising budget is set in terms of a specified percentage of sales. The fact that different product/brands at different stages of their life cycle will require varying levels of advertising support which is not taken into account by this method.
Another limitation is that the level of sales determines the level of advertising budget but the actual functional relationship would seem to be the reverse. Hence it is advisable that at percentage of projected sales be allocated rather than a percentage of previous years sales.
Objectives and task Method:
In actual practice, marketers usually blend some of the well accepted methods and arrive at compromise budget which is logical. In other words, the budget decision is closely linked up with the advertising objectives, the media decisions and copy decisions. These four decision areas in advertising interact among themselves and influence each other. The decision-making is an
BABASAB PATIL
ELEMENTS OF MARKETING integrated process, which takes into account the total task of advertising to be performed.
Deciding the Copy:
The term copy includes every single feature that appears in the body of advertisement such as the written matter, picture, logo, label and designs. Developing the copy is, of course, a creative process. It is an area where no rigid rules can be applied. Some essential qualities that must be present in a good advertisement are that it must be able to i) attract the attention of audience ii) arouse interest iii) create desire and iv) stimulate the action of buying. This is known as AIDA (Attention, Interest, Desire and Action).
Formulating the copy requires the consideration of the following:
1. Message content What to say? 2. Message structure How to say it logically? 3. Message source Who should say it?
Message Content:
The advertising has to decide What to say to the target audience to produce the desired response. The basis is advertising objectives. Depending on the nature of the product nature of target market the message can have rational value, emotional value, moral value, educational value, suggestive value, attention value, humour value etc.
Message Structure:
The structure deals with the organisation and arrangement of the various elements of a message. This includes decision on the headline, message size, colour drawings etc.
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Message Source:
The source of the message has great deal of persuasive influence on the buyers. The persuasive influence of the source depends mainly on two specific characteristic of the source.
- The credibility of the source - Likeability/Attractiveness of the source
Source credibility is an important determinant of audience persuasion. Source factors such as level of expertise, trust worthiness, culture, age and educational level usually deiced the sources credibility with the audience. If an audience perceives the source as sincere, honest and trustwirthly, the source will be effective in communicating the message. For example, when a doctor is seen to render a message about a pain reliever, the receiver of the message is tempted to accept it as an authentic information.
Likability of the source is the second major characteristic. If the source is identical to the audience is personality, political affiliations, the audience tends to like the source. The audience would emulate the source and identity themselves with the sources.
Deciding on media:
Media consists of channels for carrying the intended advertising message to the selected audience. There is difference between media and media vehicle. For example, newspapers are media, The Times of India, The Hindu are media vehicle. Media that are commonly used in advertising are:
Print Media:
- Newspapers BABASAB PATIL
ELEMENTS OF MARKETING - Magazines - Trade journals - Direct mail such as catalogues
Audio-Visual Media: - Radio - Television - Cinema - Outdoor media such as posters/banners/hoardings
Selecting the appropriate media and media vehicle and arriving at a sound media mix is a very crucial function in advertising. Now, advertising agencies provide help in media selection as an integral part of their service to their customers.
Considerations in Media Planning and Selection:
1. Target Audience:
It is essential for the media planner to find out the firms existing image in the market, characteristics of its major customer segments, their habits, life styles, reading habits etc.
The media planner also has to seek information regarding the age, income occupation, education, religion, social class etc of the firms customers. These demographic and psychographic variables of the existing and potential customers will give the medial planner the required background information.
Communication objectives:
BABASAB PATIL
ELEMENTS OF MARKETING The marketing objectives, particularly, advertising objectives help the media planner decide what media or what combinations of media or media mix can help attaining the objectives. Hence, the must know the objectives clearly.
Total budget available:
Another factor that has to be seriously taken into account by the media planner is the total budget available to run the advertising campaign.
Exposure, Reach and Frequency:
The main consideration in selecting the media is how many exposures can be purchased for the budgeted amount, the cost of exposure in different media and media vehicles, and the reach of media. The exposure available through a media is a product of its reach and frequency.
Nature of product and Message: The nature of product and message also plays an important role in media selection.
Mathematical Models:
Of late, several mathematical models and computer programmes are available in deciding the best media mix for a given situation. Linear programming heuristic programming, and simulation techniques are now used for media selections. MEDIAC a computer model is gaining popularity.
The innumerable qualitative dimensions enter the media selection call for a fine tuning which only a conscious human judgement can provide.
Evaluating Advertising Effectiveness
BABASAB PATIL
ELEMENTS OF MARKETING Evaluating advertising effectiveness is not easy. Jerome Mc Carty wrote three decades back. This holds true even to-day. The quantum of sales or communication goals as the basis, still measurement of effectiveness becomes difficult. In spite of the difficulty, firms resort to evaluation of advertising results. They try to assess how far the sales task and the communication task have been accomplished by advertising.
Copy tests are conducted during development process, at the end of actual production process and (pre-test) and after the campaign is launched (post-testing) to find out the effectiveness. Tests may be conducted in laboratory, in the simulated environment or real/natural environment.
The labouratory methods normally use physiological measuring techniques with the help of aids like eye-camera, polygraphs, etc. The market tests include folio test in the print media, in-home projector test for T.V. commercials etc. one of the widely used methods for testing T.V. commercials is the Day-After-Recall techniques, commonly called DAR. Those who had the opportunity to see the test commercial are interviewed to find out their ability to recall the commercial. A majority of the tests are centering on attention, recognition and recall factors. This means the tests are mostly concerned with communication effectiveness of the copy.
REVIEW QUESTIONS
1. Define advertising. What are its objectives? 2. What are the different methods of advertising budget? 3. What are the types of advertising media? What are the factors to be considered in choosing the media? 4. Write a note on evaluating the effectiveness of advertisement.
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BABASAB PATIL
LESSON -15 SALES PROMOTION

Sales promotion is essentially a direct and immediate inducement that adds an extra value to the product, so that it induces the dealers and ultimate consumers to buy the product. It is defined as those sales activities that supplement both personal selling and advertising and co-ordinate them and help to make them effective, such as displays, shows and expositions, demonstrations and offer non-recurrent selling efforts not in the ordinary routine.
Salespromotion measures are not that durable and lasting like the results obtained through advertising and personal selling. It is practised as a catalyst and as supporting facility to advertising and personal selling.
Need for sales promotion
Marketers resort to sales promotion to meet the following needs:
1. To introduce new product 2. To overcome a unique competitive situation 3. To exhaust accumulated inventory 4. To overcome seasonal slumps 5. To get additional customers 6. To retain the existing customers 7. To supplement to the advertising effort. 8. To supplement to the salesmens effort 9. To persuade the salesmen to sell the full line of products. 10. To persuade dealers to procure more.
BABASAB PATIL
ELEMENTS OF MARKETING The sales promotion effort may be aimed at Consumers, traders/dealers and salesmen.
Tools and Techniques of Sales promotion: The sales promotional methods aim at consumers include:
1. Free samples 2. Coupons 3. Premiums 4. Contests, or sweepstakes 5. Point of purchase displays 6. Discounts 7. Gifts 8. Demonstrations 9. Trade fairs and exhibitions
Free samples are offered to persuade the consumers, to try the product. By this method the firm tries to gain entry into that market. Soaps, soft drinks are examples.
Coupons are certificates which offer price reductions to consumers during the subsequent purchase of same items. Coupons are distributed through newspapers and magazines advertisements or even by direct mail. These are useful for introducing new product and to increase the sale of existing product.
Premium or bonus offer: An offer of a certain amount of product at free cost to buyers who buy a specific amount of product or special pack there of is called premium offer or bonus offer. For example one silver spoon with Horlicks or plastic bucked with 1 Kg. of surf powder.
BABASAB PATIL
ELEMENTS OF MARKETING Contests or Sweepstakes:
Under this, an opportunity is provided for consumers to participate in a sweepstake, contest or game with chances of winning cash prizes, goods, free air/cricket match tickets. A sweepstake involves merely inclusion of the consumers name or his bill number who buy more than the specified value of products in the drawing of prize winners.
E.g. Made for each other contest by will.
A game comprises finding out a missing letter or completing a slogan. Contests take variety of forms such as quiz contest, beauty contest, car rallies, lucky draws etc.
Point purchase promotion:
This is nothing but innovating, attractive displays of products in the shelf space to induce the consumers to buy the product. Various kinds of display materials like posters, stickers, mobile wobblers are used at the retail shop to induce the purchase.
Discounts/Price off:
It is giving discount on certain products to induce buying of products. One could see grand discount sales during festival seasons on textiles to stimulate sales.
Installment offers is another popular method of sales promotion.
Gifts:
BABASAB PATIL
ELEMENTS OF MARKETING Companies also distribute gifts to customers such as pen, calenders, diaries, table decorations etc which will carry companies name and logo.
Demonstration:
Firms resort to product demonstrations when they introduce new products Vaccum cleaners, washing machines are best examples. Demonstration may be done at retail stores, schools, homes and in trade fairs and exhibitions.
Trade fairs and exhibitions:
Firms can introduce their products by displaying them in trade fairs and exhibitions to induce the buyers to buy the product. Especially in international marketing, international trade fairs play a pivotal role.
Dealer/Trade sales promotions:
Dealer sales promotion include 1. Buying allowance 2. Promotional allowance 3. Sales contest
Buying allowance:
It involves an offer of a percentage off on each minimum quantity of product purchased during a stated period of time by the dealer. The buying allowance is usually deducted from the face value of the invoice.
Promotion allowance:
BABASAB PATIL
ELEMENTS OF MARKETING This is given to compensate the dealers for promotion expenses incurred by them. These include advertising allowance, displays allowance etc.
The manufacturers may also issue advertisement of other publicity materials like calenders, key chains which carry the names of retailers who stock the product.
Sales contest:
It is a contest among the dealers in selling the product. The winners will the given prizes by the manufacturers. This is done to stimulate the distrigutiosn/dealers.
Salesforce promotions: The tools of sales promotion include a. Bonus b. Salesforce contest c. Sale meetings
Bonus: A quota is set for salesforce for a specific period. Bonus is offered to salesforce on sales in excess of the quota.
Salesforce contest:
The contests are conducted among the sales force to stimulate selling and prizes are awarded to the top performance.
Sales meetings:
BABASAB PATIL
ELEMENTS OF MARKETING Sales meetings, conventions and conferences are conducted for the purpose of educating, inspiring and rewarding the salesmen. New products and new selling techniques are also described and discussed.
Factors to be considered in Organising sales Promotion Campaign:
1. Identifying and defining sales promotional objectives: - Is it to enhance dealers off-take of the product? - Is it to bring extra sales? - Is it to clear accumulated stock? - Is it to supplement advertisement?
2. Identify the right promotional programme The firm has to select the right promotional programme suitable to the current need and the current situation.
3. Enlist the support and involvement of salesmen.
For success, it is essential that salesmen are briefed on the context and content of the promotion programme, informed their roles and given detailed information / guides regarding what they to do during different stages of the campaign.
4. Enlisting the support of dealers:
Since major part of the activity has to take place around the dealer, it is essential to enlist their support and motivate them.
5. Timing of the campaign:
The programme has to be launched at the appropriate time. BABASAB PATIL
6. Launching and follow-up:
The programme has to be perfectly launched and tempo should be maintained till end with proper follow-up.
REVIEW QUESTIONS:
1. Define sales promotion. What are its objectives? 2. Discuss the various methods of sales promotion. 3. What are the factors to be considered while organizing sales promotion campaign?
****************** PAPER 2.5 : MARKETING TIME : 3 HOURS SECTION A Answer any FIVE questions MAX. MARKS : 100 ( 5 X 8 = 40)
1. What is marketing concept? Discuss the components of marketing concept. 2. Discuss the various approaches to the study of marketing. 3. Bring out the features industrial and consumer marketing. 4. What is market segmentation? What are the bases and benefits of market segmentation? 5. Explain PLC concept. 6. What are the essential qualities of a successful salesmen? 7. Explain the methods of compensating the salesmen. 8. What are the objectives of advertisement? SECTION B Answer any FOUR Questions (4 X 15 = 60)
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ELEMENTS OF MARKETING 9. Discuss the factors determining consumer behaviour. 10. Explain new product development process. 11. What are the pricing objectives and pricing methods 12. What are the factors that decide the choice of distribution channel. 13. What are the objectives of sales promotion? Discuss the various sales promotional techniques. 14. What are the different methods of training of salesmen? 15. Discuss the advertising media. What are the factors to be considered in choosing the media.
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BABASAB PATIL
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ELEMENTS OF MARKETING

ELEMENTS OF MARKETING SYLLABUS

Pricing policies and Methods New Product Choice and management

LESSON 1 MARKETING MEANING AND IMPORTANCE

LESSON 2 MARKETING CONCEPTS

The salient features of the marketing concept are:

1. Consumer orientation 2. Integrated marketing 3. Consumer satisfaction 4. Realization of organizational goals.

ELEMENTS OF MARKETING 4. Realization of organizational goals including profits:

Benefits of Marketing Concept :

ii) Benefits to consumers:

iii) Benefits to society:

Societal Marketing Concept:

****************** BABASAB PATIL

LESSON 3 APPROACHES TO THE STUDY OF MARKETING

ii) Functional approach

iv) Management approach:

FEATURES OF INDUSTRIAL, CONSUMER AND SERVICES MARKETING

Features of manufactured consumer goods:

Scope of services marketing:

LESSON 5 MARKETING MIX

The third P Place consists of BABASAB PATIL

A detailed discussion on each of the above four Ps follows now: PRODUCT:

LESSON 6 MARKET SEGMENTATION

Bases for market segmentation:

1. Geographic basis a. Nations b. States BABASAB PATIL

Bases for segmenting industrial markets:

Requirements for Effective Segmentation:

Possible market coverage strategies:

LESSON 7 CONSUMER BEHAVIOUR

The Economic Model

The Learning Model

The Psychoanalytical Model

The Sociological Model

The Nicosia Model

The Howard Sheth Model

ELEMENTS OF MARKETING Factors influences consumer behaviour:

LESSON 8 PRODUCT : PLANNING AND DEVELOPMENT

Marketing strategy development:

The Consumer Adoption Process:

Innovation - Diffusion and Adoption:

Adoption is the decision of an individual to become a regular user of a product.

The adoption process consists of five stages:

Reasons for diversification:

ELEMENTS OF MARKETING Product Modification:

Product life cycle:

In the stable phase, sales become static because of market saturation.

Marketing strategies in the maturity stage:

Marketing strategies during the decline stage:

Use of PLC Concept:

LESSON 9 BRANDING AND PACKAGING

Characteristics of a good brand name: BABASAB PATIL

In recent times, packaging has become a potent marketing tool.

Innovative packaging can bring benefits to consumers and profits to products.

Labels perform several functions:

LESSON 10 PRICING POLICIES AND METHODS

Factors influencing pricing:

External factors influencing pricing:

Some of the pricing objectives are discussed below:

2. Pricing for market penetration:

3. Pricing for market skimming:

6. Competitor oriented pricing:

7. Achieving market share:

8. Profit maximization pricing:

ELEMENTS OF MARKETING ii) Penetration pricing