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M. B.A. II Semester University Examination 50 Marks

Internal Assessment 50 Marks Total 100 Marks

Paper No. IX MARKETING MANAGEMENT

Objectives: To understand the meaning of marketing, marketing concept, marketing management; how marketing concept and marketing mix are integrated in practice, thus resulting in marketing process and strategy; and the relevance of marketing in a developing economy. Unit - I Introduction to Marketing: Marketing Concepts, Understanding Marketing Management, Emerging issues in Marketing. Unit – II An Overview of Indian Marketing Environment: Marketing Information System, Marketing Research, Marketing Mix: Concept and Components, Marketing Strategy-Market Segmentation, Targeting and Positioning, Consumer behaviour. Unit – III Product mix: Concept & Classification, Product Life Cycle and Marketing Strategies, New Product development Process Unit-IV Pricing decisions: Objectives, Process, Methods. Place decisions – Channels of Distribution, Physical Distribution, Market Logistics. Unit-V Promotion mix: Advertising, Sales promotion, Personal selling, Public relations, Publicity. Direct Marketing - Major Channels for Direct Marketing, Online Marketing- Promises and Challenges of Online Marketing. Books Recommended:

1. Marketing Management – Philip Kotler, Prentice Hall of India Private Ltd., New Delhi. 2. Marketing Management Planning, Implementation and Control the Indian Context –

V. S. Ramaswamy and S. Namakumari, McMillan India Ltd. 3. Marketing Management – Biplab S. Bose, Himalaya Publishing House 4. Marketing Management- Karunakaran

Marketing Management- Willian Stanto

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Definition of Management

According to Harold Koontz, "Management is the art of getting things done through and with

people in formally organised groups."

Management consists of the interlocking functions of creating corporate policy and organising,

planning, controlling, directing an organisation's resources in order to achieve the objectives of

the policy.

Definition of Marketing Management

According to Philip Kotler, "Marketing Management is the analysis, planning, implementation

and control of programmes designed to bring about desired exchanges with target audiences for

the purpose of personal and of mutual gain. It relies heavily on the adoption and coordination of

product, price, promotion and place for achieving responses.".

Marketing management is a business process, to manage marketing activities in profit seeking

and non profit organisations at different levels of management. Marketing management decisions

are based on strong knowledge of marketing functions and clear understanding and application

of supervisory and managerial techniques.

Nature of Marketing Management

1. Marketing is an Economic Function Marketing embraces all the business activities involved in getting goods and services , from the hands of producers into the hands of final consumers. The business steps through which goods progress on their way to final consumers is the concern of marketing. 2. Marketing is a Legal Process by which Ownership Transfers In the process of marketing the ownership of goods transfers from seller to the purchaser or from producer to the end user. 3. Marketing is a System of Interacting Business Activities Marketing is that process through which a business enterprise, institution, or organisation interacts with the customers and stakeholders with the objective to earn profit, satisfy customers, and manage relationship. It is the performance of business activities that direct the flow of goods and services from producer to consumer or user. 4. Marketing is a Managerial function According to managerial or systems approach - "Marketing is the combination of activities

designed to produce profit through ascertaining, creating, stimulating, and satisfying the needs

and/or wants of a selected segment of the market."

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According to this approach the emphasis is on how the individual organisation processes marketing and develops the strategic dimensions of marketing activities. 5. Marketing is a social process Marketing is the delivery of a standard of living to society. According to Cunningham and Cunningham (1981) societal marketing performs three essential functions:-

1. Knowing and understanding the consumer's changing needs and wants; Efficiently and effectively managing the supply and demand of products and services; and

2. Efficient provision of distribution and payment processing systems. 6. Marketing is a philosophy based on consumer orientation and satisfaction 7. Marketing had dual objectives - profit making and consumer satisfaction

Scope of Marketing :

1. Study of Consumer Wants and Needs Goods are produced to satisfy consumer wants. Therefore study is done to identify consumer needs and wants. These needs and wants motivates consumer to purchase. 2. Study of Consumer behaviour Marketers performs study of consumer behaviour. Analysis of buyer behaviour helps marketer in market segmentation and targeting. 3. Production planning and development Product planning and development starts with the generation of product idea and ends with the product development and commercialisation. Product planning includes everything from branding and packaging to product line expansion and contraction. 4. Pricing Policies Marketer has to determine pricing policies for their products. Pricing policies differs form product to product. It depends on the level of competition, product life cycle, marketing goals and objectives, etc. 5. Distribution Study of distribution channel is important in marketing. For maximum sales and profit goods are required to be distributed to the maximum consumers at minimum cost. 6. Promotion Promotion includes personal selling, sales promotion, and advertising. Right promotion mix is crucial in accomplishment of marketing goals. 7. Consumer Satisfaction The product or service offered must satisfy consumer. Consumer satisfaction is the major objective of marketing.

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8. Marketing Control Marketing audit is done to control the marketing activities.

Emerging issues in Marketing management

1. Green Marketing

The negative impact of human activities over environment is a matter of concern today.

Governments all over the world making efforts to minimise human impact on environment.

Today our society is more concerned with the natural environment. Understanding the society's

new concerns businesses have begun to modify their behaviour and have integrated

environmental issues into organisational activities. Academic disciplines have integrated green

issues in their literature. This is true with marketing subject too, and the terms like "Green

Marketing" and "Environmental Marketing are included in syllabus. Governments all over the

world have become so concerned about green marketing that they have attempted to regulate

them.

Definition and Meaning of Green Marketing

Definition according to American Marketing Association - "Green marketing is the marketing of

products that are presumed to be environmentally safe."

According to Polonsky 1994 b, 2 - "Green or Environmental Marketing consists of all activities

designed to generate and facilitate any exchanges intended to satisfy human needs or wants,

such that the satisfaction of these needs and wants occurs, with minimal detrimental impact on

the natural environment.

Green Marketing incorporates broad range of activities including product modification, changes

to the production process, packaging changes, and modifying advertising. Green

marketing focuses on satisfaction of customer needs and wants with no or minimum harm to the

natural environment.

Why Green Marketing is Important ?

It is well known that increasing production and business activities are polluting the natural

environment. Damages to people, crops, and wildlife is reported in different parts of the world.

As resources are limited and human wants are unlimited, it is necessary for marketers to use

resources efficiently, so that organisational objectives are achieved without waste of resources.

So green marketing is inevitable. There is growing interest among people around the world

regarding protection of natural environment. People are getting more concerned for environment

and changing their behaviour for the protection of environment. As a result of this, the term

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"Green Marketing" has emerged. Hence, marketers are feeling their responsibility towards

environment and giving importance to green marketing.

Not only marketers but consumers are also concerned about the environment, and consumers are

also changing their behaviour pattern. Now, individual as well as industrial consumers are

becoming more concerned about environment-friendly products.

2. Social Marketing

Definition

According to Philip Kotler - Social Marketing is "the design, implementation, and control of

programs seeking to increase the acceptability of a social idea or practise in a target group"

According to W. Smith, Academy for Educational Development - "Social Marketing is a process

for influencing human behaviour on a large scale, using marketing principles for the purpose of

societal benefit rather than commercial profit."

Social marketing is based on tools and techniques of commercial marketing, it uses principles of

commercial marketing for the purpose of societal benefit. In social marketing,

advertising campaigns are designed, implemented, and controlled by using the principles

of commercial marketing. The key features of social marketing are taken directly from

commercial marketing, but the purpose of social marketing differs form the purpose of

commercial marketing. The purpose of commercial marketing is to increase sales and revenue,

but it is not so in the case of social marketing.

The purpose of social marketing is societal benefit rather than commercial profit. Its purpose is

to bring about positive health and social change. Its ultimate outcome is behavioural change

rather than increased sales.

Social advertising campaigns are advertising tools that attempt to influence attitude and

behaviour related to social cause. For example, social advertising campaigns have been used to

influence behaviour related to energy conservation, pollution, tobacco prevention, family

planning, breast cancer screening, and etc.

Introduction

Everyone knows one plus one is equals to two, but sometimes it is equals to eleven, synergy

between the forces makes it possible. Synergy is the interaction of two or more forces so that

their combined effect is greater than the sum of their individual effects.

In business two or more organisations comes together to produce some kind of synergistic effect

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or result. Similar happens in alliance marketing where two or more organisations jointly

undertakes marketing activities.

3. Alliance Marketing

Meaning

Alliance Marketing is marketing activity undertaken by two or more organisations, jointly to

promote product, service, or concept with the purpose to provide benefit to all the stakeholders.

Alliance marketing involves pooling resources like - expertise, brand reputation,

distribution infrastructure, or money, to produce an effect/result which would be more difficult

and costly to achieve independently.

Importance of Alliance Marketing

To gain access to a non-competitive businesses' customers - Businesses not competing

with each other can promote one another, they can refer customers back and forth to

increase their sales.

To pool knowledge, expertise, and resources - Pooling expertise, resources, and efforts

reduce inefficiencies and expenses.

To turn competitors into partners

To expand into new markets - Independent expansion requires heavy investment,

resources, and development of new distribution channels. Alliance marketing makes it

easy, a firm in one country can offer a product through another firm already established

in another country, thus expand into new market immediately.

For an alliance to work all the involved parties must work closely together to create business.

The alliance/relationship must be communicated well to all the stakeholders. The greater the

stakeholders' understanding of the value of the alliance, the more they can contribute to its

success.

Product life Cycle:

We have a life cycle, we are born, we grow, we mature, and finally we pass away. Similarly,

products also have life cycle, from their introduction to decline they progresses through a

sequence of stages. The major stages of the product life cycle are - introduction, growth,

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maturity, and decline. Product life cycle describes transition of a product from its development to

decline.

The time period of product life cycle and the length of each stage varies from product to product.

Life cycle of one product can be over in few months, and of another product may last for many

years. One product reach to maturity in years and another can reach it in few months. One

product stay at the maturity for years and another just for few months. Hence, it is true to say that

length of each stage varies from product to product.

Product life cycle is associated with variation in the marketing situation, level of competition,

product demand, consumer understanding, etc., thus marketing managers have to change the

marketing strategy and the marketing mix accordingly.

Product life cycle can be defined as "the change in sales volume of a specific product offered by

an organisation, over the expected life of the product."

Stages of the Product Life Cycle

The four major stages of the product life cycle are as follows :-

1. Introduction,

2. Growth,

3. Maturity, and

4. Decline.

I. Introduction Stage

At this stage the product is new to the market and few potential customers are aware with

the existence of product. The price is generally high. The sales of the product is low or

may be restricted to early adopters. Profits are often low or losses are being made, this is

because of the high advertising cost and repayment of developmental cost. At the

introductory stage :-

The product is unknown,

The price is generally high,

The placement is selective, and

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The promotion is informative and personalised.

II. Growth Stage

At this stage the product is becoming more widely known and acceptable in the market.

Marketing is done to strengthen brand and develop an image for the product. Prices may

start to fall as competitors enters the market. With the increase in sales, profit may start to

be earned, but advertising cost remains high. At the growth stage :-

The product is more widely known and consumed,

The sales volume increases,

The price begin to decline with the entry of new players,

The placement becomes more widely spread, and

The promotion is focused on brand development and product image formation.

III. Maturity Stage

At this stage the product is competing with alternatives. Sales and profits are at their

peak. Product range may be extended, by adding both withe and depth. With the

increases in competition the price reaches to its lowest point. Advertising is done to

reinforce the product image in the consumer's minds to increase repeat purchases. At

maturity stage :-

The product is competing with alternatives,

The sales are at their peak,

The prices reaches to its lowest point,

The placement is intense, and

The promotion is focused on repeat purchasing.

IV. Decline Stage

At this stage sales start to fall fast as a result product range is reduced. The product faces

reduced competition as many players have left the market and it is expected that no new

competitor will enter the market. Advertising cost is also reduced. Concentration is on

remaining market niches as some price stability is expected there. Each product sold

could be profitable as developmental costs have been paid at earlier stage. With the

reduction in sales volume overall profit will also reduce. At decline stage :-

The product faces reduced competition,

The sales volume reduces,

The price is likely to fall,

Marketing Mix

The Marketing Mix

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Summary (Click to go directly)

Introduction to Marketing Mix

Definition of Marketing Mix

Meaning of Marketing Mix

4P's - Producer-oriented Model

4C's - Consumer-oriented

Model

Introduction to Marketing Mix

Marketing is the process of identifying, anticipating, and satisfying customers' requirements with

the purpose to make profits. In this process marketing managers and marketing representatives

have to take various marketing decisions to make the operations profitable. They have to decide

what combination of marketing policies and procedures be adopted to bring about desired

behaviour of trade and consumers at minimum cost. They have to decide how can advertising,

personal selling, pricing, packaging, channels, warehousing, and the other elements of marketing

be manipulated and mixed to make marketing operations profitable. More specifically, they have

to decide a marketing mix - a decision making method in relation with the product, price,

promotion, and distribution.

The term Marketing Mix was introduced by Neil H. Borden in his article - "The Concept

of Marketing Mix". He learned about it in a research bulletin on the management of marketing

costs, written by his associate, Prof. James Culliton. in 1948. In this study of manufacturers'

marketing costs he described the business executive as a "decider," an "artist" - a "mixer of

ingredients," who sometimes follows a recipe prepared by others, sometimes prepares his own

recipe as he goes along, sometimes adapts a recipe to the ingredients immediately available, and

sometimes experiments with or invents ingredients no one else has tried.

Definition of Marketing Mix

According to Philip Kotler - "Marketing Mix is the combination of four elements, called the 4P's

(product, Price, Promotion, and Place), that every company has the option of adding,

subtracting, or modifying in order to create a desired marketing strategy"

According to Principles of Marketing, 14e, Kotler and Armstrong, 2012 - "The Marketing

Mix is the set of tactical marketing tools - Product, Price, Promotion, and Place - that the firm

blends to produce the response it wants in the target market."

Meaning of Marketing Mix

The Marketing Mix is a marketing tool used by marketing professionals. It is often

crucial when determining product or brand's offering, and it is also called as 4P's (Product, Price,

Promotion, and Place) of marketing. However, in case of services of different nature the 4 P's

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have been expanded to 7P's or 8P's.

In recent times, giving more importance to customer a new concept have been introduced,

i.e. Concept of 4C's. The Concept of 4C's is more customer-driven replacement of 4P's.

According to Lauterborn's the 4C's are - Consumer, Cost, Communication, and Convenience.

According to Shimizu's the 4C's are -Commodity, Cost, Communication, and Channel.

4P's - Producer-oriented Model of Marketing Mix

Product - Products are offerings that a marketer offers to the target audience to satisfy

their needs and wants. Product can be tangible good or intangible service. Tangible

products are goods like - cellphone, television, or motor car, whereas intangible products

are services like - financial service in a bank, health treatment by a doctor, legal advice of

a lawyer.

Price - Price is the amount that is charged by marketer of his offerings or the amount that

is paid by consumer for the use or consumption of the product. Price is crucial in

determining the organisation's profit and survival. Adjustments in price affects the

demand and sales of the product. Marketers are required to be aware of the customer

perceived value of the product to set the right price.

Promotion - Promotion represents the different methods of communication that are used

by marketer to inform target audience about the product. promotion includes -

advertising, personal selling, public relation, and sales promotion.

Place - Place or distribution refers to making the product available for customers

at convenient and accessible places.

In case of services, the producer-oriented model of marketing mix is consists of 7P's. Including

the above 4P's there are additional 3P's - Physical Evidence, People, and Process. Physical

evidence refers to elements like uniform of employees, signboards, and etc. People refers to the

employees of the organisation comes in contact with the customers in the process of marketing.

Process refers to the systems and processes followed within organisation.

New product development process

In this fast-changing world we are experiencing change in our daily life and at

marketplace too. Customer needs, wants, and expectations are changing more rapidly. Customers

are increasingly demanding advance features, appealing designs, better quality, and reliability in

products. To meet the changing demands of customer, business organisations are investing

heavily in research and development (R&D). Business organisations are updating existing

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products and developing new products to satisfy changing customer needs, wants, and

expectations.

The development of competitive new products is a prerequisite for every business

organisation to be successful. Samsung has outperformed Nokia in the global mobile-phone

market and become the global leader. Samsung updates its existing mobile phones and brings

new mobile phones more frequently at competitive low price with advance features, appealing

designs, better quality and reliability. Nokia failed to satisfy changing customer needs, wants,

and expectations, and lost its market position.

Definition of Product Development

In general, the Product Development can be defined as "creating, innovating, or developing

entirely a new product , or presenting an existing product with enhanced utility, improved

features, more appealing design, better quality and reliability to satisfy the requirements of its

end-users."

Meaning of Product Development

Product means a good, service, idea or object created as a result of a process and offered to serve

a need or satisfy a want. Development means the act or process of growing, progressing, or

developing.

Product Development is a process of improving the existing product or to introduce a new

product in the market. It is also referred as New Product Development. The functions of product

development are as follows :-

1. Creation of an entirely new product or upgrading an existing product,

2. Innovation of a new or an existing product to deliver better and enhanced services,

3. Enhancing the utility and improving the features of an existing product,

4. Continuous improvement of a product to satisfy rapidly changing customer needs and

wants.

Product Development Process

Product development process is a crucial process for the success and survival of any

business. Today, businesses are operating in a highly dynamic and competitive environment.

Business organisations have to continuously update their products to conform to current trends.

The product development process starts from idea generation and ends with product development

and commercialisation. Following are the steps in the process of product development.

1. Idea Generation - The first step of product development is Idea Generation that is

identification of new products required to be developed considering consumer needs and

demands. Idea generation is done through research of market sources like consumer

liking, disliking, and competitor policies. Various methods are available for idea

generation like - Brain Storming, Delphi Method, or Focus Group.

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2. Idea Screening - The second step in the process of product development is Idea

Screening that is selecting the best idea among the ideas generated at the first step. As the

resources are limited, so all the ideas are not converted to products. Most promising idea

is kept for the next stage.

3. Concept Development - At this step the selected idea is moved into development

process. For the selected idea different product concepts are developed. Out of several

product concepts the most suitable concept is selected and introduced to a focus group of

customers to understand their reaction. For example - in auto expos different concept

cars are presented, these models are not the actual product, they are just to describe the

concept say electric, hybrid, sport, fuel efficient, environment friendly, etc.

4. Market Strategy Development - At this step the market strategies are developed to

evaluate market size, product demand, growth potential, and profit estimation for initial

years. Further it includes launch of product, selection of distribution channel, budgetary

requirements, etc.

5. Business Analysis - At this step business analysis for the new product is done. Business

analysis includes - estimation of sales, frequency of purchases, nature of business,

production and distribution related costs and expenses, and estimation of profit.

6. Product Development - At this step the concept moves to production of finalised

product. Decisions are taken from operational point of view whether the product is

technically and commercially feasible to produce. Here the research and development

department develop a physical product.

7. Test Marketing - Now the product is ready to be launched in market with brand name,

packaging, and pricing. Initially the product is launched in a test market. Before full scale

launching the product is exposed to a carefully chosen sample of the population, called

test market. If the product is found acceptable in test market the product is ready to be

launched in target market.

8. Commertialisation - Here the product is launched across target market with a proper

market strategy and plan. This is called commercialisation phase of product development.

Marketing information System

Definition

A system that analyzes and assesses marketing information, gathered continuously from sources

inside and outside an organization. Timely marketing information provides basis for decisions

such as product development or improvement, pricing, packaging, distribution, media selection,

and promotion. See also market information system.

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Marketing information system

Defination : “A marketing information system is a continuing and interacting structure of people,

equipment and procedures to gather, sort, analyze, evaluate, and distribute pertinent, timely and

accurate information for use by marketing decision makers to improve their marketing planning,

implementation and control.

Marketing Research

Marketing basically consists of identifying the consumers and satisfying them in the best

possible way. Marketing research plays a key role in this process. Marketing research helps the

firm to acquire a better

understanding of the consumer, the competition and the marketing environment. It also

helps the formulation of right marketing mix, which include decisions on product, price, place

and promotion. The conduct of marketing research has become so complex due to

increasing complexity of marketing and hence requires specialized skills and sophisticated

techniques. Marketing research has been variously defined by marketing researches. Richard

Crisp defined marketing research “as the systematic, objective and exhaustive search for and

study of the facts relating to any probkem in the field of marketing”. According to Green and

Tull, marketing research is “the systematic and objective search for and analysis of information

relevant to the identification and solution of any problem in the field of marketing’. America Marketing Association defined marketing research, “as the systematic gathering,

recording and analyzing of data about problems relating to the marketing of goods and services.

An analysis of above definitions clearly highlights the salient

Features of marketing research:

It is a search for data which are relevant to marketing problems;

It is carried out in a systematic and objectives manner;

It involves a process of gathering, recording and analysis of data. None of the definitions is

explicit about the managerial purposes of marketing research, except saying that data are

required for solving marketing problem. A better definition of marketing research is, that it is an

objective, and systematic collections, recording and analysis of data, relevant to marketing

problems of a business in order to develop an appropriate information base for decision making

in the marketing area.

MARKET RESEARCH

Market research is different from marking research. Market research is a systematic study of

‘facts about market only – who, what, where, when, why, and how of actual and potential buyers.

On the other hand the scope of marketing research is to wide that it includes all functional areas

of marketing including market.

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IMPORTANCE OF MARKETING RESEARCH

The emergence of buyer’s market requires continuous need of marketing research to identify

consumer’ need and ensure their satisfaction. The ever expanding markets require large number

of middlemen and intensive distribution. Marketing research should help identify and solve the

problems of middlemen and distribution. There is always a change in the market conditions and

the requirements of consumers. Marketing research enables to anticipate and meet any such

changes. Marketing research can help bring about prompt adjustments in product design and

packaging.

It can help find out effectiveness of pricing.

It can help find out the effectiveness of sales promotion and advertisement.

It can help identify the strength and weakness of sales force. The impact of economic and

taxation policies on marketing could also be known through marketing research.

In short, marketing research enables the management to identify and solve any problem in the

area of marketing and help better marketing decisions.

SCOPE OF MARKETING RESEARCH

The scope of marketing research stretches from the identification of consumer wants and needs

to the evaluation of consumer satisfaction. It comprises of research relating to consumer,

products, sales, distribution, advertising, pricing and sales forecasting. A clear view of

the scope of marketing research may be obtained by the following classification of marketing

research activity.

The aim of this research is to develop an understanding about

present and potential consumers and the level of satisfaction expected

and derived by them from company’s products. The broad areas of

consumer research are:

Study of consumer profile

Study of consumer brand preferences, tastes and reactions

Study of consumer satisfaction/ dissatisfaction, reasons, etc.

Marketing Strategies

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 basically a strategy of ‘divide

and rule’. The strategy involves the development of two or more different marketing

programmers for a given product or service, with each marketing programme aiming at each

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segment. A strategy of market segmentation requires 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.

Causes for market segmentation

There are three reasons why firms use market segmentations: Because some markets are

heterogeneous Because market segments respond differently to different

promotional appeals; and Because market segmentation consider with the marketing concept.

Heterogeneous Markets:

Market is heterogeneous both in the supply and demand side. On supply side, many

factors like differences in production equipments, processing techniques, nature of resources or

inputs available to different manufactures, unequal capacity among the competitors in terms of

design and improvement and deliberate efforts to remain different from other account for the

heterogeneity. Similarly, the demand side, which constitute consumers – is also different due to

differences in physical and psychological traits of consumer. Modern business managers realize

that under normal circumstances they cannot attract all of the firm’s potential customers to one

product, because different buyers simply have different needs and wants. To accommodate this

heterogeneity, the seller must provide different products. For example, in two wheelers, the TVS

Company first introduced TVS50 Moped, but later on introduced a variety of two wheelers, such

as TVS XL, TVS Powerport, TVS Champ, TVS Sport, TVS Scooty, TVS Suzuki, TVS Victor, to

suit the requirements of different classes of customers.

Varied Promotional Appeals:

A strategy of market segmentation does not necessarily mean that the firm must produce

different products for each market segment. If certain promotional appeals are likely to affect

each market segment differently, the firm may decide to build flexibility into its promotional

strategy rather than to expand its product line. For example, many political candidates have tried

to sell themselves to the electorate by emphasizing one message to labour, another to business,

and a third to farmers. As another example, the Sheraton Hotel serves different district

market segments, such as conventioneers, business people and tourists. Each segments has

different reasons for using the hotel. Consequently, Sheraton uses different media and different

messages to communicate with the various segments.

Bases of Market Segmentation

There are a number of bases on which a firm may segment its market

1. Geographic basis

a. Nations

b. States

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c. Regions

2. Demographic basis

a. Age

b. Sex

c. Income

d. Social Class

e. Material Status

f. Family Size

g. Education

h. Occupation

3. Psychographic basis

a. Life style

b. Personalities

c. Loyalty status

d. Benefits sought

e. Usage rate (volume segmentation)

f. Buyer readiness stages (unaware, aware, informed, interested, desired, intend to buy)

g. Attitude stage (Enthusiastic, positive, indifferent, negative, hostile)

METHODS OF SEGMENTATION

On the basis of the bases used for the market segmentation, various characteristics of the

customers and geographical characteristics etc., common methods of market segmentations could

be done. Common methods used are:

Geographical Segmentation

When the market is divided into different geographical unit as region, continent, country, state,

district, cities, urban and rural areas, it is called as geographical segmentation. Even on the

geographic needs and preference products could be made. Even through Tata Tea is sold on

a national level, it is flavoured accordingly in different regions. The strength of the tea differs in

each regions of the country. Bajaj has sub-divided the entire country into two distinct markets.

Owing to the better road conditions in the north, the super FE Sector is promoted better with

small wheels; whereas in the case of south, Bajaj promotes Chetak FE with large wheels because

of the bad road conditions.

Demographic Segmentation

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Demographics is the most commonly used basis for market segmentation. Demographic

variables are relatively easy to understand and measure, and they have proven to be excellent

segmentation criteria for many markets. Information in several demographic categories is

particularly useful to marketers. Demographic segmentation refers to dividing the market into

groups on the basis of age, sex, family size cycle, income, education, occupation, religion, race,

cast and nationality. In better distinctions among the customer groups this segmentation helps.

The above demographic variables are directly related with the consumer needs, wants and

preferences.

Age: Market segments based on age are also important to many organizations. Some aspects of

age as a segmentation variable are quite obvious. For example, children constitute the primary

market for toys and people 65 years and older are major users of medical services. Age and life

cycle are important factors. For instance in two wheeler market, as Bajaj has ‘Sunny’ for the college girls; ‘Bajaj Chetak’ for youngsters; ‘Bajaj Chetak’ for the office going people and Bajaj M80 for rural people. In appealing to teenagers, for example, the marketing executive must

continually monitor their ever-changing beliefs, political and social attitudes, as wells as the

entertainers and clothing that are most popular with young people at a particular time. Such

factors are important in developing effective advertising copy and illustrations for a product

directed to the youth market. Sex segmentation is applied to clothing, cosmetics, magazines and

hair dressing. The magazines like Women’s Era, Femina, (in Malayalam), Mangaiyar Malar (in

Tamil) are mainly segmented for women. Recently even a cigarette exclusively for women was

brought out. Beauty Parlours are not synonyms for the ladies.

Income segmentation: It has long been considered a good variable for segmenting markets.

Wealthy people, for example, are more likely to buy expensive clothes, jewelleries, cars, and to

live in large houses. In addition, income has been shown to be an excellent segmentation

correlate for an even wider range of commodity purchased products, including household

toiletries, paper and plastic items, furniture, etc. Social Class segmentation: This is a significant

market segment. For example, members of different social classes vary dramatically in their use

of bank credit cards. People in lowe4r social classes tend to use bank credit cards as installment

loans, while those in higher social

classes use them for convenience purposes. These differences in behaviour can be significant

when segmenting a market and developing a marketing program to serve each segment.

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Psychographic Segmentation

On the basis of the life style, personality characteristics, buyers are divided and this segmentation

is known as psychographics segmentation. Certain group of people reacts in a particular manner

for an appeal projected in the advertisements and exhibit common behavioural patterns.

Marketers have also used the personality variables as independent, impulsive, masculine,

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aggressive, confident, naïve, shy etc. for marketing their products. Old spice promotes their after

shave lotion for the people who are self confident and are very conscious of their dress code.

These advertisements focus mainly on the personality variables associated with the product.

Behavioural Segmentation

Buyer behavioural segmentation is slightly different from psychographic segmentation. Here

buyers are divided into groups on the basis of their knowledge, attitude, use or response to a

product.

Benefit segmentation:

The assumption underlying the benefit segmentation is that markets can be defined on the basis

of the benefits that people seek from the product. Although research indicates that most

people would like to receive as many benefits as possible from a product, it has also been shown

that the relative importance that people attach to particular benefits varies substantially. These

differences can then be sued to segment markets.

Market Targeting

Target marketing tailors a marketing mix for one or more segments identified by market segmentation. Target marketing contrasts with mass marketing, which offers a single product to the entire market.

Two important factors to consider when selecting a target market segment are the attractiveness of the segment and the fit between the segment and the firm's objectives, resources, and capabilities.

Attractiveness of a Market Segment

The following are some examples of aspects that should be considered when evaluating the attractiveness of a market segment:

Size of the segment (number of customers and/or number of units) Growth rate of the segment Competition in the segment Brand loyalty of existing customers in the segment Attainable market share given promotional budget and competitors' expenditures Required market share to break even Sales potential for the firm in the segment Expected profit margins in the segment

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Market research and analysis is instrumental in obtaining this information. For example, buyer intentions, salesforce estimates, test marketing, and statistical demand analysis are useful for determining sales potential. The impact of applicable micro-environmental and macro-environmental variables on the market segment should be considered.

Note that larger segments are not necessarily the most profitable to target since they likely will have more competition. It may be more profitable to serve one or more smaller segments that have little competition. On the other hand, if the firm can develop a competitive advantage, for example, via patent protection, it may find it profitable to pursue a larger market segment.

Suitability of Market Segments to the Firm

Market segments also should be evaluated according to how they fit the firm's objectives, resources, and capabilities. Some aspects of fit include:

Whether the firm can offer superior value to the customers in the segment The impact of serving the segment on the firm's image Access to distribution channels required to serve the segment The firm's resources vs. capital investment required to serve the segment

The better the firm's fit to a market segment, and the more attractive the market segment, the greater the profit potential to the firm.

Target Market Strategies

There are several different target-market strategies that may be followed. Targeting strategies usually can be categorized as one of the following:

Single-segment strategy - also known as a concentrated strategy. One market segment (not the entire market) is served with one marketing mix. A single-segment approach often is the strategy of choice for smaller companies with limited resources.

Selective specialization- this is a multiple-segment strategy, also known as a differentiated strategy. Different marketing mixes are offered to different segments. The product itself may or may not be different - in many cases only the promotional message or distribution channels vary.

Product specialization- the firm specializes in a particular product and tailors it to different market segments.

Market specialization- the firm specializes in serving a particular market segment and offers that segment an array of different products.

Full market coverage - the firm attempts to serve the entire market. This coverage can be achieved by means of either a mass market strategy in which a single undifferentiated marketing mix is offered to the entire market, or by a differentiated strategy in which a separate marketing mix is offered to each segment.

The following diagrams show examples of the five market selection patterns given three market segments S1, S2, and S3, and three products P1, P2, and P3.

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Single Segment

Selective Specialization

Product Specialization

Market Specialization

Full Market Coverage

S1 S2 S3 P1

P2

P3

S1 S2 S3 P1

P2

P3

S1 S2 S3 P1

P2

P3

S1 S2 S3 P1

P2

P3

S1 S2 S3 P1

P2

P3

A firm that is seeking to enter a market and grow should first target the most attractive segment that matches its capabilities. Once it gains a foothold, it can expand by pursuing a product specialization strategy, tailoring the product for different segments, or by pursuing a market specialization strategy and offering new products to its existing market segment.

Another strategy whose use is increasing is individual marketing, in which the marketing mix is tailored on an individual consumer basis. While in the past impractical, individual marketing is becoming more viable thanks to advances in technology.

Market Positioning:

The way in which a company distinguishes itself from competitors; a company can differentiate

itself using the following criteria:

important: the difference delivers highly valued benefit to buyers distinctive: the difference either is not offered by others or is offered in a more distinctive

way by the company superior: the difference is superior to other ways of obtaining the same benefit communicable: the difference is communicable and visible to buyers preemptive: the difference cannot be easily copied by competitors affordable: the buyer can afford to pay for the difference profitable: the company will find it profitable to introduce the difference

In developing a positioning strategy working out the tactical details is essentially determining the

marketing mix: product, price, place, and promotion. A company can position its products along

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several lines: attribute, benefit, use/application, user, competitor, product category, or

quality/price

Product Mix

Concept of product

One of the important elements of marketing mix is Product. Any firm is known by the

product it is offering. The other elements of marketing mix are based on it. So there it is very

important that the firm must have a sound product policy. Product is any object which satisfies

the consumer needs. It can be in any form like tangible or intangible.

Levels of product

According to Philip Kotler the levels of product are five. These levels are also known as

consumer value hierarchy as each level is adding more consumer value.

i) The first level of product is core benefit or core product which a consumer is actually buying.

ii) The next level of product is basic product which includes the features, quality, design etc. of

the product.

iii) Then the third level is expected product which means expectations by the consumer regarding

the product.

iv) The fourth level is augmented product means to offer extra services to consumer than

expected by them.

v) The last level is potential product which means changes in the product in the coming future.

Thus, these above discussed are the levels of the product.

Classification of product

The product can be classified into five categories.

I) Durable product:- these are the products which have long life. They can be seen or touched.

Like table, chair etc.

II) Non durable product:- these are the products which have short life, which perish quickly.

They can also be seen or touched. Like fruits etc.

III) Service:- services can not be seen or touched. Like the service of chartered accountant,

lawyer etc.

IV) Consumer product:- these are the products which are used by the consumer directly without

processing. Like washing powder, biscuits etc.

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V) Industrial product:- these are the goods which are used by manufacturer for further production

like raw material.

PRICING DECISIONS

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

products revenue. In the narrowest sense, price is the amount of money charges for a product or

service. More broadly, price is the sum of all the values that customer exchange for the benefits

of having or using the product or service. Price may be defined as the value of product attributes

expressed in monetary terms which a customer pays or is expected to pay in exchange and

anticipation of the expected or offered utility. Pricing helps to establish mutually advantageous

economic relationship and facilities 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 play 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 econo0mic 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

common ob jectives are survival, current profit maximizaitn, market-share leadership and

product-quality leadership. The image sough by the firm through pricing. The desirable market

positioning of the firm. The characteristics of the product. Price elasticity of demand of the

product. The satge of the product on the product life cycle. Turn around rate of the product.

Costs of manufacturing and marketing. Product differentiation practiced by the firm. Other

elements of marketing mix of the firm and their interaction with pricing. Consumption of the

product line of the firm. External Factors Influences Pricing

Pricing Process

The pricing procedure usually involves the following steps:

1. Development of Information Base

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The first step in determining the basic price of a company’s product(s) is to develop an adequate and up-to-date information base on which price decisions can be

based. It is composed of decision-inputs such as cost of production, consumer demand, industry,

prices and practices, government regulations.

2. Estimating Sales and Profits

Having developed the information base, management should develop a profile of sales

and profit at different price levels in order to ascertain the level assuring maximum sales and

profits in a given set of situation. When this information is matched against pricing objectives,

management gets the preview of the possible range of the achievement of objectives through

price component in the marketing-mix.

3. Anticipation of Competitive Reaction

Pricing in the competitive environment necessitates anticipation of competitive reaction

to the price being set. The co0mpetition for company’s product(s) may arise from similar products, close substitutes. The competitor’s reaction may be violent or subdued or even none.

Similarly, the reaction may be instant or delay. In order to anticipate such a variety of reactions,

it is necessary to collect information about competitors in respect of their production capacity,

cost structure, market share and target consumers.

4. Scanning The Internal Environment

Before determining the product price it is also necessary to scan and understand the

internal environment of the company. In relation to price the important factors to be considered

relate to the production capacity sanctioned, installed and used, the ease of expansion,

contracting facilities, input supplies, and the state of labour relations. All these factors influence

pricing decisions.

5. Consideration of Marketing-mix Components

Another step in the pricing procedure is to consider the role of other components of the

marketing-mix and weigh them in relation to price. In respect of product the degree of perish

ability and shelf-life, shape the price and its structure; faster the perish ability lower is likely to

be the price.

6. Selections of Price Policies and Strategies

The next important step in the pricing procedure is the selection of relevant pricing

policies and strategies. These policies and strategies provide consistent guidelines and

framework for setting as well as varying prices to suit specific market and customer needs.

7. Price Determination

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Having taken the above referred steps, management may now be poised for the task of

price determination. For determination of price, the management should consider the decisions

inputs provided by the information base and develop minimum and maximum price levels. These

prices should be matched against the pricing objectives, competitive reactions, government

regulations, marketing-mix requirements and the pricing policing and strategies to arrive at a

price. However, it is always advisable to test the market validity of its price during test marketing

to ascertain its match with consumer expectations.

Methods/approaches of Pricing

1. Cost-Plus Pricing

This is the easiest and the most common method of price setting. In this method, a standard mark

up is added to the cost of a product to arrive at its price. For example, the cost of

manufacturing a fan is Rs. 1000/- adds 25 per cent mark up and sets the price to the retailer at Rs.

1250/-. The retailer in turn, may mark it up to sell at Rs. 1350/- which is 35 per cent market up

on cost. The retailer’s gross margin in Rs. 1500/-. But this method is not logical as it ignores

current demand and competition and is not likely to lead to the optimum price. Still mark up

price is quite popular for three reasons:

i) Seller have more certainty about costs than about demand and by tying the price to cost, they

simplify their pricing task and need not frequently adjust price with change in demand.

ii) Where all firms in the industry use this pricing method, their prices will similar and price

competition will be minimized to the benefit of al of them;

iii) It is usually felt by many people that cost plus pricing is fairer to buyers as well as to seller.

3. Break-Even Pricing and Target-Profit Pricing

An important cost-oriented pricing method is what is called target-profit pricing under which the

company tries to determine the price that would product the profit it wants to earn. This pricing

method uses the popular ‘break-even analysis’. According to it, price is determined with the help

of a break-even chart. The break-even charge depicts the total cost and total revenue expected at

different sales volume. The break-even point on the chart if that when the total revenue equals

total cost and the seller neither makes a profit nor incurs any loss. With the help of the break-

even chart, a marketer can find out the sales volume that he has to achieve. In order to earn the

targeted profit, as also the price that he has to charge for his product.

3 Buyer-based Approach

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Perceive-Value Pricing

Many companies base their price on the products perceived value. They take buyer’s perception of value of a product, and not the seller’ s cost, as the key to pricing. As a result, pricing begins

with analyzing consumer needs and value perceptions, and price is set to match

consumers’ perceived value. Such companies use the non-price variables in their marketing mix

to build up perceived value in the buyer’s minds, e.g. heavy advertising and promotion to

enhance the value of a product in the minds of the buyers. Then they set a high price to capture

the perceived value. The success of this pricing method depends on and determination of the

market’s perception of the product’s value.

4Competition-based Approach

1. Going Rate Pricing

Under this method, the company bases its prices largely on competitor’s prices paying less attention to its own costs or demand. The company might charge the same prices as charged by

its main competitors, or a slightly higher or lower price than that. The smaller firms in an

industry follow the leading firm in the industry and change their prices when the market leader’s prices changes. The marketer thinks that the going price reflects the collective wisdom of the

industry.

2. Sealed-Bid Pricing

This is a competitive oriented pricing, very common in contract businesses where firms bid for

jobs. Under it, a contractor bases his price on expectations of how competitors will price rather

than on a strict relation to his cost or demand. As the contractor wants to win the contract, he has

to price the contract lower than the other contractors. But a bidding firm cannot set its price

below costs. If it sets the price much higher than the cost, its chance of getting the contract will

be lesser.

PRICING OBJECTIVES

A businesses firm will have a number of pricing objectives. Some of 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.

4. Discriminatory pricing

5. Stabilizing pricing.

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1. Pricing for a target return.

Channels of Distribution

Most powerful element among marketing mix elements. The main function of this element is to

find out appropriate ways through which goods are made available to the market. It is a

managerial function and hence proper decisions are to be taken in this matter. When the product

is finally ready for the market, it has to be determined what methods and routes will be used to

bring the product to the market, i.e. to ultimate consumers and industrial users. This process

involves establishing distribution and providing for physical handling a distribution. Distribution

is concerned with various activities involved in the transfer of ownership from the

producer to the consumer. A channel of distribution for a product is the route taken by the goods

as they move from the organisation to the ultimate consumer or user.

DEFINITION

Cundiff E.W. and Still R.S. define a marketing channel as “a path traced in the direct or indirect

transfer of title to a product, as it move from a producer to ultimate consumes or industrial

users”. According to American Marketing Association, “A channel of distribution, or marketing

channel is the structure of intra-company organisation units and extra-company agents and

dealers wholesale and retail, through which a commodity, product or service is marketed.”

Philip Kotler difines a marketing channel as “the set of firms and individuals, that take title, or

assist in transferring title, to the particular goods or services as it moves from the producer to the

consumers.” A distribution channel is “a set of interdependent organizations involved in the

process of making a product or service available for use ro consumption by the consumer of

business user.” Thus, it may be noted that every marketing channel contains one or more of the

‘transfer points’ at each of which there is either an institution or a final buyer of the product.

From the view point of the producer, such a network of institutions used for reaching a market is

known as a marketing channel.

A channel always includes both the producer and the final customer of the product, as well as

agents and middlemen involved in the transfer of title. However, the channel does not include

firms such a bank, railways and other institutions which render a marketing service, but play no

major role in purchase and sales. If a consumer buys rice from the cultivator, or if the publisher

sells a book by main direct to a lecturer, the channel is from producer to consumer. On the other

hand, if the publisher sells books to booksellers who in turn sell to the students and teachers are

channel is from producer-retailer-consumer.

CHANNEL FUNCTIONS

The primary purpose of a distributive channel is to bridge the gap between producers and

users by removing differences between supply and demand. For this, certain essential functions

need to be performed. They are:

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1. Information: gathering and distributing marketing research and intelligence information about

actors and forces in the marketing environment needed for planning and aiding exchange.

2. Promotion: developing and spreading persuasive communications about an offer.

3. Contact: finding and communicating with prospective buyers

4. Matching: shaping and fitting the offer to the buyer’s needs, including such activities as

manufacturing, grading, assembling and packaging.

5. Negotiation: reaching an agreement on price and other terms of the offer so that ownership or

possession can be transferred. Others help to fulfill the completed transactions.

6. Physical distribution: transporting an storing goods.

7. Financing: acquiring and using funds to cover the costs of the channel work.

8. Risk taking: assuming the risks of carrying our the channel work.The importance of these

functions varies depending upon the nature of the goods themselves. For example: transportation

and storage tend to predominate in the case of bulky raw materials such as coal, petroleum

products and iron one, where price and specification are standardized and the market comprises a

limited number of buyers and sellers. As the complexity of the product increases, the provision

of information and product service becomes predominant; for example, computers, automobiles

etc. Therefore, it is necessary to consider the precise nature of the product and the seller-buyer

relationship to determine their relative importance.

MAJOR CHANNELS OF DISTRIBUTIONS

There are a number of channels of distribution available to the producer which may be employed

by him to bring his products to the market.

Distribution of Consumer Goods Consumer goods may be distributed generally through various

Channels. The channels used are:

i) Producer to Consumer

ii) Producer-Retailer-Consumer

iii) Producer-Wholesaler-Retailer-Consumer.

iv) Producer-Wholesaler-Jobber-Retailer-Consumer. Distribution of Industrial Goods Industrial

goods are distributed by manufacturer, through four important channels, although he may also

use his sales brand or sales office for the purpose.

i) Producer-Industrial User: Through this direct channel are sold, large installations like

generators, plants etc. to users.

ii) Producer-Industrial distributor-User: Through this channel are sold operating supplies and

small accessory equipment, such as building material, construction equipment, air-conditioning

equipment.

iii) Producer-Agent- User: This channel is often used when a new product is introduced, or a new

market is entered.

iv) Producer-Agent-Industrial distributor-User

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PHYSICAL DISTRIBUTION AND LOGISTICS MANAGEMENT

In today’s global marketplace, selling a product is sometimes easier than getting it to customers.

Companies must decide on the best way to store, handle, and mover their products and services

so that are available to customer in the right assortments, at the right time, and in the right place.

Logistics effectiveness will have a major impact on both customer satisfaction and company

costs.

NATURE AND IMPORTANCE

To some managers, physical distribution means only trucks and warehouses. But modern

logistics is much more than this. Physical distribution – or marketing logistics – involves

planning, implementing and controlling the physical flow of materials, final goods and related

information from points of origin to points of consumption to meetcustomer requirements at a

profit. The logistics manager’s tasks is to coordinate the whole-channel physical distribution

system – the activities of suppliers, purchasing agents, marketers, channel members and

customers. These activities include forecasting, information systems, purchasing, production

planning, order possessing, inventory, warehousing and transportation planning.

Companies today are placing greater emphasis on logistics for several reasons:

1) Effective logistics is becoming a key to wining and keeping customers. Companies are finding

that they can attract more customers by giving better service or lower prices through better

physical distribution.

2) Logistics is a major cost element for most companies. Poor physical distribution decisions

result in high costs. even large companies sometimes make too little use of modern decision tools

for coordinating inventory levels; transportation modes, and plant, warehouse, and store

locations. Improvements in physical distribution efficiency can yield tremendous cost savings for

both the company and its customers.

3) The explosion in product variety has created a need for improved logistics management.

4) Finally, improvements in information technology have created opportunities for major gains

in distribution efficiency. The increased use of computer, point-of-sale scanners

.

MAJOR LOGISTICS FUNCTIONS

Given a set of logistics objectives, the company is ready to design alogistics system that

will minimize the cost of attaining these objectives. The major logistics functions include order

processing, warehousing, inventory management and transportation.

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Order Processing The orders once received, must be processed quickly and accurately. The order

processing system prepares invoices nd sends order information to those who need it. The

appropriate warehouse receives instruction to pack and ship the ordered items. Shipped itesm

are accompanied by shipping and billing documents, with copies going to various departments.

Both the company and its customers benefits when the order-processing steps are carried out

efficiently.

Warehouse

Every company must store its goods while they wait to be sole. A

storage function is needed because production and consumption cycles

rarely match. A company must decide on how many and what types of

warehouse it needs, and where they will be located. The more warehouse

the company uses, the more quickly goods can be delivered to customers.

However, more locations mean higher warehousing costs. The company,

therefore, must balance the level of customer service against distribution

costs.

Inventory

Inventory levels also affect customer satisfaction. The major problems to maintain the delicate

balance between carrying too much inventory and carrying too little. Carrying too much

inventory results in higher-than necessary inventory carrying costs and stock obsolescence.

Carrying too little may result in stock-outs, costly emergency shipments or production, and

customer dissatisfaction. In making inventory decisions, management must balance that costs of

carrying larger inventories against resulting sales and profit. Inventory decisions involve

knowing both when to order and how much to order. In deciding when to order, the company

balances the risks of running our of stock against the cost of carrying too much. In deciding

how much to order, the company needs to balance order-processing costs against inventory

carrying costs. Larger average-order size results in fewer orders and lower order-processing

costs, but it also means larger inventory carrying costs.

Transportation

Marketers need to take an interest in their company’s transportation decisions. The choice of

transportation carries affects the pricing of products, delivery performance, and condition of the

goods when they arrive – all of which will affect customer satisfaction. The company can choose

among five transportation modes: road, rail, sea, air and pipeline. In choosing a transportation

mode for a product, senders consider as many as five criteria, viz. speed, dependability,

capability, availability and cost.

Promotion mix:

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Definition

A specific combination of promotional methods used for one product or a family of products.

Elements of a promotion mix may include print or broadcast advertising, direct marketing,

personal selling, point of sale displays, and/or merchandising.

1) Advertising :

Advertising is a form of nonpersonal promotion. It is when companies pay to promote

ideas, goods, or services in a variety of media outlets. It can be found everywhere. With

advertising, a company engages in a one-way communication to the prospect or customer.

Examples: magazines, newspapers, television, websites, city buses, etc.

Meaning of Advertising - Advertising is an activity of attracting public attention to a product, service, or business as by paid announcements in the print, broadcast, or electronic media. Definition of Advertising - "Advertising is the non-personal communication of information usually paid for and usually persuasive in nature about products, services or ideas by identified sponsors through the various media." Now let's take this statement apart and see what it means. Non-personal Basically sales is done either personally or non-personally. Personal selling requires the seller and buyer to get together. Personal selling has its on advantages and disadvantages. Whereas advertising is non-personal selling. Personal selling has many advantages over advertising like direct communication, bargaining, enough time to discuss in detail about the product, seller can easily locate potential buyer. Advertising has none of the advantages of personal selling, very little time to present sales message, message is cannot be changed easily. But, advertising has its own advantages which is not found in personal selling: advertising has comparatively speaking, all the time in the world. Unlike personal selling, the sales message and its presentation does not have to be created on the spot with the customer watching. It can be created in as many ways as the writer can conceive, be rewritten, tested, modified, injected with every trick and appeal known to affect consumers. Advertising covers large groups of customer and to make it effective proper research about customer is done to identify potential customers, to find out what message element might influence them, and figure out how best to get that message to them. Thus, it appears that advertising is a good idea as a sales tool. For small ticket items, such as chewing gum and guitar picks, advertising is cost effective to do the entire selling job. For large ticket items, such as cars and computers, advertising can do a large part of the selling job, and personal selling is used to complete and close the sale. Advertising is nonpersonal, but effective. Communication

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Communication means passing information, ideas, or feelings by a person to another. Communication uses all the senses like smell, touch, taste, sound, sight. Only two senses - sound and sight are really useful in advertising. In advertising, what appears is everything the writer thinks the customer needs to know about the product in order to make a decision about the product. That information will generally be about how the product can benefit the customer. Paid For Advertiser has to pay for the creation of ad and for placing it in the media. Cost of ad creation and cost of time/space in the media must be paid for. Cost of advertising depends on TRP of media, reach of media, and frequency of ad to be displayed. Persuasive "Persuasive" stands to reason as part of the definition of advertising. The basic purpose of advertising is to identify and differentiate one product from another in order to persuade the consumer to buy that product in preference to another. Identified Sponsors Identified sponsors means whoever is putting out the ad tells the audience who they are. There are two reasons for this: first, it's a legal requirement, and second, it makes good sense. Legally, a sponsor must identify himself as the sponsor of ad. By doing so the sponsor not only fulfils the legal requirements, but it also makes a good sense, if the sponsor doesn't do so, the audience may believe that the ad is for any competitor's product, thus wasting all the time and money in making and placing the ad.

Functions of Advertising - Following are the basic functions of advertising: 1. To distinguish product from competitors' products There are so many products of same category in the market and they competes with each other, advertising performs the function of distinguishing advertiser's product from competitors. 2. To communicate product information Product related information required to be communicated to the targeted customers, and advertisement performs this function. 3. To urge product use Effective advertisement can create the urge within audience for a product. 4. To expand product distribution When the market demand of a particular product increases, the number of retailer and distributor involved in sale of that product also increases, hence product distribution get expanded. 5. To increase brand preference There are various products of different bands are available, the brand which is effectively and frequently advertised is preferred most. 6. To reduce overall sale cost

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Advertising increases the primary demand in the market. When demand is there and the product is available, automatically the overall cost will decrease, simultaneously the cost of sales like distribution cost, promotional cost also get decreased. Classification of Advertising - Advertising can be classified on the basis of Function, Region,

Target Market, Company demand, Desired response, and Media. A) Classification on the basis of function

Advertisement informs the customers about a product Advertisement persuades the consumers to buy a products Advertisement reminds existing customers about the presence of the product in the

market

Let us discuss some important types of advertising based on the functional aspect of advertising. Informative advertising: This type of advertising informs the customers about the products, services, or ideas of the firm or organization. Persuasive advertising: This type of advertising persuades or motivates the prospective buyers to take quick actions to buy the products or services of the firm. Example: “Buy one, get one free”. Reminder advertising: This genre of advertising reminds the existing customers to become medium or heavy users of the products or services of the firm that have been purchased by them at least once. This type of advertising exercise helps in keeping the brand name and uses of the products in the minds of the existing customers.

2) Public relation

Another major mass-promotion tool is public relations - building good relations with the company’s various publics by obtaining favourable publicity, building up a good “corporate image”, and handling or heading off unfavorable rumours, stories and events. The old name for

marketing public relations was publicity, which was seen simply as activities to promote a company or its products by planting news about it in media not paid for by the sponsor. Public relations is a much broader concept that includes publicity as well as many other activities. Public relations departments may perform any or all of the following functions. Press relations or press agency: Creating and lacing newsworthly information in the media to attract attention to a person, product, or serice.

Product publicity: Publicizing specific products.

Public affairs: Building and maintaining national or local community relations.

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Lobbying: Building and maintaining relations with legislators and government officials to influence legislation and regulations.

Investor relations: Maintaining relationships with shareholders and

others in the financial community.

Development: Public relations with donors or members of nonprofit organisation to gain financial or volunteer support. Public relations are used to promote products, people, places, ideas, activities, organization and even nations. Public relations can have a strong impact on public awareness at a much lower cost than

MAJOR PUBLIC RELATIONS TOOLS

Public relations professional use several tools. One of the major tools is news. PR professional find or create favourable news about the company and in its products or people. Sometimes news stories occur naturally, and sometimes the PR person can suggest events or activities that would create news. Speeches can also create product and company publicity. Increasingly, company executive must field questions form the media or give talks at trade associations or sales meetings. And these events can either build or hurt the company’s image. Another common PR tool isspecial events, ranging from news conferences, press tours, grand openings and fireworks displays to later shows, hot-air balloon releases, multimedia presentations and star-studded spectaculars designed to

reach and interest target publics. Public relations people also prepare written materials to reach and influence their target markets. These materials include annual reports, brochures, articles, and company newsletters and magazines.Audiovisual materials , such a films, slide-and-sound programmes, and video a audio cassettes, are being used increasingly as communications tools.

Corporate – identity materials also can help create a corporate identity that the public immediately recognizes. Logos, stationery, brouchers, signs, business forms, business cards, buildings, uniforms and company

cars and trucks – all become marketing tools when they are attractive, distinctive and memorable. Companies also can improve public goodwill by contributing money and time to public-service activities . In considering when and how to use product public relations, management should set PR objectives, choose the PR messages and vehicles, implement the PR plan and evaluate the results.

3) Personal Selling

Personal Selling is the only promotional tool which involves the personal communication between buyers and the seller. Personal selling is specific and tailor made for the requirements of each customer. Promotional message could by easily made in consonance with the complex situations at the buyer’s place. In other words, personal selling creates a climate for interaction between the parties that leads to an effective and timely resolution of the perceived buying need. In effect personal selling gives a quick response to the problem and the purchase actions is

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carried out immediately in most of the occasions with an exception to industrial marketing. Personal selling is an active effort to communicate with high-potential buyers on a direct and face to face basis. Sales people form the vital part of the personal selling measures. They provide key information to assist the companies in making purchase decisions. In this intense market driven competition, a buyer will not be satisfied unless he has had a conversation with the sales people before buying washing machines cars, refrigeration etc. Depending on the type of industry and the company, the role of personal selling varies in promotional strategy adopted by the company. Those products which are complex, technical, etc. the role of personal selling becomes more important. In the case of mass based products, the promotional strategies involves mainly advertising. They also rely on personal selling since every time they bring out new products and hence introducing the new product to the dealer, customer etc. is taken care partly by the sales force.

The sales force serves as a critical link between a company and its customers. In many cases, salespeople serve both masters – the seller and the buyer. First, they represent the company to customers. They find and develop new customers and communicate information about the company’s products and services. They sell products by approaching customers, presenting their products, answering objections, negotiating prices and terms, and closing sales. In addition, salespeople provide services to customers carry out market research and intelligence work and fill our sales call reports. At the same time, salespeople represent customers to the company, acting inside the firm as “champions” of customer’s interests. Salespeople people concerns about company products and actions back to those who can gdjgfds them. They learn about customer needs, and work with others in the company to develop greater customer value. Thus, the salesperson often acts as an account manager”, who manages the relationship between the seller and buyer. As companies move toward a stronger market orientation, their sales forces are becoming more market focused and customer oriented. The old view was that salespeople should worry about sales and the company should worry about profit. However, the current view holds that

PERSONAL SELLING PROCESS

1. Prospecting

Initially the sales person has to locate the list of prospective and potential customers. The sales person, may use external sources like reference concerts community contracts, clubs etc and internal sources like the records maintained by the company, inquires, personal contracts and other sales seminars

2. Pre-Approach

Sales person collects information about the prospect that will be used to formulate the sales presentation. Sales person understands the buyers needs, buyer motives and other details relevant for making the sales presentation.

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3. Sales Presentation Planning

The sales person must begin specifically stated objective for each sales presentation. The objectives could be order quantities, value of purchase, communication or agreements with the buyer. Sales person should be able to identify the benefits to be offered to the buyer for clinching the sale. Formats should be used for planning the sales presentation. A sales proposal may be developed after careful investigation of the prospect’s needs. This is often combined with fact toface presentations and question and answer periods

4. Approach

Approaching the customer is done in two phases: The first phase is getting an appointment for the sales interview. This will give afeeling of prospect’s time importance. Appoints may be made overphone, mail or personal contact.

5. Seles Presentation

The sales person expands on the basic theme established in the first few minutes of the sales call or during the previous sales calls. Inorder to reduce the perception of risk in the prospect, the salesperson should present himself or herself as the credible source of information. By dressing appropriately showing the traits of honesty and integrity and able to listen to the prospect’s views are considered to be a credible source of information.

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6. Handling Objections

Customers almost always have objections during the presentation orwhen asked to place an order. The problem can be either logical orpsychological and objections are often unspoken. In handlingobjections , the salesperson should use a positive approach, seek outhidden objections.

7. Closing the Sale

The sales person must be able to facilitate the prospect’s decision making process towards making the purchase and to furnish the stimulus for the decision at the appropriate time. Several techniques like direct close, summary close, choice close etc., are available for the sales person to choose for closing the sale. Some sales people fear rejection and may hence avoid the stimulus for the purchase decision.

8. Follow Up

In order to ascertain the delivery of the benefits and satisfactionguaranteed by the product and to establish a mutually satisfying long term relationship with the customers follow up is important.

Publicity

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Publicity is the deliberate attempt to manage the public's perception of a subject. The subjects of publicity include people (for example, politicians and performing artists), goods and services, organizations of all kinds, and works of art or entertainment.

Publicity is the act of attracting the media attention and gaining visibility with the public. It necessarily needs the compliment of the media as it cannot be done internally. It is the process of making service known by the people or creating awareness or letting your product known or your company; it is the publicist that carries out publicity while PR is the strategic management function that helps an organization communicate, establish and maintain relation with the important audiences, It can be done internally without the use of media

From a marketing perspective, publicity is one component of promotion which is one component of marketing. The other elements of the promotional mix are advertising, sales promotion, direct marketing and personal selling. Examples of promotional tactics include

Direct Marketing :

Direct marketing is a channel-agnostic form of advertising that allows businesses and nonprofits organizations to communicate straight to the customer, with advertising techniques that can include cell phone text messaging, email, interactive consumer websites, online display ads, database marketing, fliers, catalog distribution, promotional letters, targeted television commercials, response-generating newspaper/magazine advertisements, and outdoor advertising. Amongst its practitioners, it is also referred to as Direct Response Advertising.

Direct marketing messages emphasize a focus on the customer, data, and accountability. Hence, besides the actual communication, creation of actionable segments, pre- and post-campaign analytics, and measurement of results, are integral to any good Direct Marketing campaign. Characteristics that distinguish direct marketing are:

A database of names (prospects, customers, businesses, etc.), often with certain other relevant

information such as contact number/address, demographic information, purchase

habits/history, company history, etc., is used to develop a list of targeted entities with some

existing common interests, traits or characteristics. Generating such a database is often

considered part of the Direct Marketing campaign.

Marketing messages are addressed directly to this list of customer and/or prospects. Direct

marketing relies on being able to address the members of a target market. Addressability comes

in a variety of forms including email addresses, phone numbers, Web browser cookies, fax

numbers and postal addresses.

Direct marketing seeks to drive a specific "call to action." For example, an advertisement may

ask the prospect to call a free phone number, mail in a response or order, or click on a link to a

website.

Direct marketing emphasizes trackable, measurable responses, results and costs from prospects

and/or customers—regardless of medium.

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Major Channels of Direct Marketing

Any medium that can be used to deliver a communication to a customer can be employed in direct marketing, including:

Email marketing

Sending marketing messages through email or email marketing is one of the most widely used direct-marketing methods.[11] One reason for email marketing's popularity is that it is relatively inexpensive to design, test, and send an email message. It also allows marketers to deliver messages around the clock, and to accurately measure responses.

Online tools

With the expansion of digital technology and tools, direct marketing is increasingly taking place through online channels. Most online advertising is delivered to a focused group of customers and has a trackable response.

Display Ads are interactive ads that appear on the Web next to content on Web pages or Web services. Formats include static banners, pop ups, videos, and floating units. Customers can click on the ad to respond directly to the message or to find more detailed information. According to research by eMarketer, expenditures on online display ads rose 24.5% between 2010 and 2011.[12]

Search: 49% of US spending on Internet ads goes to search, in which advertisers pay for prominent placement among listings in search engines whenever a potential customer enters a relevant search term, allowing ads to be delivered to customers based upon their already-indicated search criteria.[13] This paid placement industry generates more than $10 billion for search companies. Marketers also use search engine optimization to drive traffic to their sites.

Social Media Sites, such as Facebook and Twitter, also provide opportunities for direct marketers to communicate directly with customers by creating content to which customers can respond.

Mobile

Through mobile marketing, marketers engage with prospective customers and donors in an interactive manner through a mobile device or network, such as a cellphone, smartphone, or tablet. Types of mobile marketing messages include: SMS (short message service)—marketing communications are sent in the form of text messages, also known as texting. MMS (multi-media message service)—marketing communications are sent in the form of media messages.

In October 2013, the Federal Telephone Consumers Protection Act made it illegal to contact an individual via cell phone without prior express written consent for all telephone calls using an automatic telephone dialing system or a prerecorded voice to deliver a telemarketing message to wireless numbers and residential lines. An existing business relationship does not provide an exception to this requirement.

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Mobile Applications: Smartphone-based mobile apps contain several types of messages. Push Notifications are direct messages sent to a user either automatically or as part of a campaign. They include transactional, marketing, geo-based, and more. Rich Push Notifications are full HTML Push Notifications. Mobile apps also contain Interactive ads that appear inside the mobile application or app; Location-Based Marketing: marketing messages delivered directly to a mobile device based on the user's location; QR Codes (quick-response barcodes): This is a type of 2D barcode with an encoded link that can be accessed from a smartphone. This technology is increasingly being used for everything from special offers to product information. Mobile

Banner Ads: Like standard banner ads for desktop Web pages but smaller to fit on mobile screens and run on the mobile content network

Telemarketing

Another common form of direct marketing is telemarketing, in which marketers contact customers by phone. The primary benefit to businesses is increased lead generation, which helps businesses increase sales volume and customer base. The most successful telemarketing service providers focus on generating more "qualified" leads that have a higher probability of getting converted into actual sales.

prerecorded message) to register his or her do-not-call request. The provisions do not cover calls from political organizations or charities.

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Direct response mail order

Mail order in which customers respond by mailing a completed order form to the marketer. Mail order direct response has become more successful in recent years due to internet exposure.

Direct response television

Direct marketing via television (commonly referred to as DRTV) has two basic forms: long form (usually half-hour or hour-long segments that explain a product in detail and are commonly referred to as infomercials) and short form, which refers to typical 30-second or 60-second commercials that ask viewers for an immediate response (typically to call a phone number on screen or go to a website). TV-response marketing—i.e. infomercials—can be considered a form of direct marketing, since responses are in the form of calls to telephone numbers given on-air. This allows marketers to reasonably conclude that the calls are due to a particular campaign, and enables them to obtain customers' phone numbers as targets for telemarketing. One of the most famous DRTV commercials was for Ginsu Knives by Ginsu Products, Inc. of RI. Several aspects of ad, such as its use of adding items to the offer and the guarantee of satisfaction were much copied, and came to be considered part of the formula for success with short-form direct-response TV ads (DRTV).

Forms of direct response marketing on television include standard short form television commercials, infomercials and home shopping networks. Short-form direct-response

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commercials have time lengths ranging from 30 seconds to 2 minutes. Long form infomercials are typically 30 minutes long. An offshoot of the infomercial is the home shopping industry. In this medium, items can potentially be offered with reduced overhead.

Online Marketing

Definition:

Online Marketing is the art and science of selling products and/or services over digital networks, such as the Internet and cellular phone networks. The art of online marketing involves finding the right online marketing mix of strategies that appeals to your target market and will actually translate into sales.

Advantages of Internet Marketing

Low-cost promotion strategy. There’s no doubt that Internet marketing requires no large capital investment and there is no physical capital to worry about, as everything is online.

Each a global market. Online marketing also lets your business reach customers around the world. Because your business isn’t limited to a particular geographic location, you can reach a much wider target audience and have a higher chance of success.

Reach your target market easily. Online marketing can also help you reach your target market immediately and potential customers will be able to find you with a quick search.

Convenient payment collections. With e-commerce enabled on your website, you’ll also be able to collect payment easily and conveniently.

24/7 advertising. Your online marketing will be available and visible 24 hours a day, 7 days a week.

Affiliate marketing. You can earn passive income from affiliate marketing combined with your Internet marketing.

Disadvantages of Online Marketing

No instant trust. Because online advertising is everywhere, there is no way for potential customers to tell if the marketing is good or bad. It can take some time for a business marketing online to gain the trust of users.

Competition. One of the biggest downsides to online marketing is the stiff competition. It can be very difficult to make your business and information stand out with companies around the world competing.

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Skill and knowledge required. Online marketing today also requires a great deal of knowledge and skill to be successful.

Many businesses find it helpful to consult with or hire an advertising firm or design company to help them with their marketing strategy.

Because online marketing comes with so much competition, it’s worth a second thought before you jump in and try to market your own business online.