Introduction To Marketing - Itm University

- - - - - -
--
I T M
UNIVERSITY
ONLINE
Introduction to M a r k e t i n g
Table of Content
1.
eBook
Fundamentals of Marketing
1.1
Introduction
1.2
Meaning
1.3
Difference between
1.4
Scope of Marketing
10
1.5
Nature of Marketing
11
1.6
Importance of Marketing
12
1. 7
Functions of Marketing
13
1.8
Core Marketing
14
1. 9
Company Orientation toward
1.10
Holistic Marketing
18
1.11
Non-traditional
21
1.12
Chapter Summary
2.
Marketing
and
7
Definition of Marketing
Marketing and
Selling
Concepts
the Marketplace
23
Planning
24
Introduction
2.2
Definition and
2.3
Difference between Strategic Planning and
2.4
Definition and
2.5
Frequent Mistakes in
2.6
The P l a n n i n g
2.7
Steps in
2.8
Steps for Developing
2.9
Chapter Summary
Marketing
25
Objectives of Plans
26
Objectives of Marketing
Planning
Marketing
Planning
27
Plan
27
Process
28
30
Process
Planning
Process
an
32
Effective Marketing
Plan
35
41
42
Environment
43
3.1
Introduction
3.2
Meaning
3.3
Internal and
3.4
Components of Marketing
3.5
Chapter Summary
4.
17
Marketing
2.1
3.
and
Definition of Marketing
External
Consumer Buying
44
Environment
45
Environment
45
Environment
58
59
Behavior
60
4.1
Introduction
4.2
Consumer Behavior:
4.3
Significance of Understanding
4.4
Black Box Model of Consumer Behavior
www.itmuniversityonline.org
An
61
Enigma
Consumer Behavior
61
61
Page 2
I n t r o d u c t i o n to M a r k e t i n g
Table of Content
eBook
4.5
Characteristics Affecting
4.6
Types of B u y i n g
4.7
The Buyer Decision
Process
4.8
The Buyer Decision
Process for New
4.9
Chapter Summary
5.
Consumer Behavior
Decision
63
Behavior
71
73
Products
75
79
Market Segmentation, Targeting, and
80
Positioning
81
5.1
Introduction
5.2
Meaning
5.3
Criteria for Effective
5.4
Levels of Market Segmentation
83
5.5
Patterns of Market Segmentation
85
5.6
Steps in Segmenting
86
5.7
Bases of Segmenting
5.8
Bases for Segmentation of Business Markets
91
5.9
Market Targeting
92
5.10
Differentiation and
5.11
Choosing
5.12
Bases of Positioning
100
5.13
Positioning
101
5.14
Product
5.15
Repositioning
5.16
Repositioning
5.17
Chapter Summary
6.
Creating
and
83
Market Segmentation
a Market
87
Consumer Markets
96
Positioning
a Differentiation and
Positioning
96
Strategy
Errors
Positioning
and
82
Definition of Market Segmentation
and
Brand
101
Positioning
102
104
Strategies
106
107
Managing the Product
108
6.1
Introduction
6.2
Meaning
6.3
Product Characteristics
110
6.4
Classification of Products
111
6. 5
Levels of Products
114
6.6
Product-line
115
6. 7
Product-mix
118
6.8
Product Life Cycle (PLC)
121
6.9
PLC Characteristics,
6.10
Definition and
and
109
Definitions of a Product
Objectives, and
124
Strategies
125
Meaning of Brand
Page 3
Table of Content
eBook
6.11
Importance of Branding
6.12
Important Terms Associated
6.13
M a j o r Brand
6.14
Elements of Branding
132
6.15
Packaging
134
6.16
Decisions on
6.17
Labeling
136
6.18
Chapter Summary
137
7.
Strategy
126
with
Branding
127
Decisions
127
Packaging
135
138
Pricing
139
7.1
Introduction
7.2
Meaning
7.3
The Strategic Role of Price
140
7.4
Objectives of Pricing
141
7.5
Factors Affecting
7.6
How Companies Price?
146
7.7
Setting
146
7.8
Approaches to Pricing
152
7.9
Economic Approach to Pricing
153
7.10
Pricing
154
7.11
Chapter Summary
8.
Marketing
and
140
Definition of Pricing
Pricing
144
Decisions
the Price
Strategies
156
Channels
157
8.1
Introduction
158
8.2
Definition of Channel of Distribution
159
8.3
Channel
Functions and
159
8.4
Channel
Levels
8.5
Channel
Behavior and
8.6
Channel
Design
8.7
Channel
Management Decisions
8.8
Marketing
8.9
Chapter Summary
Flows
163
Organization
165
Decisions
Logistics and
S u p p l y Chain
170
174
Management
178
182
Page 4
Table of Content
9.
Integrated
eBook
Marketing
Communications
9.1
Introduction
9.2
Meaning
9. 3
A View of Communication
9.4
Marketing
9.5
Developing
9.6
Chapter Summary
and
183
184
Definition
185
Process
Communications
185
Mix
188
Effective Communications
190
200
10. Marketing of Services
201
10.1
Introduction
202
10.2
Definition of Services
203
10.3
Difference between Goods Marketing
10.4
Services Marketing
10. 5
Characteristics of Services
10.6
Implications of Service Characteristics and
10. 7
Reasons for Growth of Services
211
10.8
Career Opportunities in the Service Sector
213
10.9
Industries Classified
214
10.10
Emerging
10.11
Ethics in Services Marketing
216
10.12
Chapter Summary
217
and
Marketing
203
Mix
205
207
Ways of Overcoming Them
208
under Service Sector
Options for the Youth of India
Services
in Service Sector
214
Page
Fundamentals
of M a r k e t i n g
01.
eBook
1 . 1 Introduction
Marketing
your
has become an
day-to-day
Officially
indispensable
activities,
or unofficially,
right
people and
individuals relate marketing

in
reality,
marketing
wants.
It
it
is much
is
also
the
from
with
part of everyone's
brushing
creates
of u n d e r s t a n d i n g
and
solutions that deliver
Thus,
the
in order to
marketplace
relationships with
be a leader,
and
try
to
and
is deeply embedded
to
the
clothes
by marketing
satisfaction
looking
customers,
transform
it
need
into
to
to
in
you
wear.
24/7.
Many
However,
In simple terminology,
the
customer's
needs
the customers and
and
profit and
respectively.
not
organizations
advertising.
responding
stakeholders,
Today's successful organizations are simply

long-term
It
personal s e l l i n g , advertisement or promotion.
benefits to the manufacturers and
building
teeth
organizations are encircled
more than the act of selling
means
your
life.
by
to
for sales
delivering
and
involved
quality service and
understand
products
but are also
the
needs and
services
to
win
in
value.
wants of
customer
approval.
This
chapter
will
set
the
foundations
of
marketing,
by
explaining
several
important
concepts of marketing.
After reading t h i s chapter,
you
will
be able to:
Define marketing
Distinguish
Describe the nature of marketing
Explain the core concepts in marketing
Explain
Explain the different categories of non-traditional marketing
between marketing and
selling
holistic marketing
Page 7
01.
1 . 2 Meaning
Marketing
is,
and
Definition of M a r k e t i n g
fundamentally,
changing
needs
individual
and
of
eBook
about
customers.
of society.
It
assembling
deals
Marketing
with
identifying
managers,
fit into the needs of their target customers.
organizational
usually,
resources to
and
design
In simple terms,
meeting
the
meet
the
needs
of
products or services that
marketing
is about meeting
the needs of customers profitably.
Some important definitions of marketing are:

According
to
planning
and
goods
the
American
executing
and
service
Marketing
the
to
Association,
conception,
create
pricing,
exchanges
"Marketing
promotion
that
is
the
and
satisfy
process
of
distribution
of
individual
and
organizational objectives."
In
the
words
which
of
Philip
individuals
Kotler,
and
"Marketing
groups
obtain
is
social
what
and
they
managerial
need
and
process
want
by
through
creating, offering and exchanging products of value with others."
Pride
and
Ferrel
promoting,
and
defined
marketing
pricing
goods,
as,
"the
services,
process
of
and
ideas
the
whole
creating,
to
distributing,
facilitate
exchange
relationships in a dynamic environment."
According
to
Peter
F.
Drucker,
point of view of its final
1.3
Many
people think that
marketing
differences
the difference
between
is
business
seen
from
the
result, that is, from the customer's point of view."
Difference between
considerable
to the
"Marketing
between
them
as
M a r k e t i n g and S e l l i n g
and
selling
both
both,
are synonyms of each other
of them.
marketing
Marketing
and
managers
selling,
bring
but there are
must
understand
different orientations
business.
Page 8
01.
The differences between marketing
eBook
and
selling
are displayed
in Table
1.3a.
Points of
Marketing
Selling
Difference
Marketing
Scope
involves a l l the
Selling
involves activities
activities that start from
that are undertaken for
the
the distribution of products
idea of producing
goods and
end
with the
satisfaction of the needs of
that are produced
by the
company.
customers, even after the

product
Objective
Focus
Orientation
is sold.
The objective of marketing
The objective of selling
is to make profits t h r o u g h
to make profits by selling
the accomplishment of
more quantities of
customer satisfaction.
manufactured
It focuses on the needs of
It focuses on the needs of
customers.
sellers.
Marketing
Selling
is customer-
is
is
products.
product-oriented.
oriented.
Approach
Marketing converts
S e l l i n g converts products
customer needs into
into cash.
products.
Price Determination
In the marketing
process,
In the selling
process,
cost
customer needs are the
determines the price of the
driving
product.
force that
determines the price of the

product.
End-result
The marketing
continues,
build
as
it
process
favors to
The end-result of selling
is
the sale of the product.
long-term
relationships with target

customers.
Table
1.3a:
Difference between
Marketing and Selling
Page 9
01.
eBook
1 . 4 Scope of M a r k e t i n g
Marketing activities are directed
toward
w i l l satisfy customer needs and
The areas that marketing
bring
the development and
promotion of products that
welfare to society as a whole.
activities can think of discovering
are:
Goods
Goods
refer
to
tangible
televisions, and
items
computers.
that
are
Maximum
produced
by
companies,
such
marketing activities are connected
as
watches,
with the sale of
these goods to final users.
Concept
Each
market
ideas
in
the
promoting
offering
form
of
awareness
comprises a
products
about
basic concept
and
AIDS
services.
and
or
idea.
Social
family
Marketing
marketers
planning,
managers
encourage
which
fall
sell
such
under
the
these
ideas
by
scope
of
social marketing.
Organization
Organizations
target
gains
are
customers.
utmost
trying
In
to
develop
highly
importance.
positive
competitive
Colleges,
and
strong
market,
museums,
the
and
image
in
the
marketing
non-profit
of
minds
an
of their
organization
organizations
use
this
concept to establish a favorable p u b l i c image.
Service
As
the economy
The
works
of
is expanding,
teachers,
marketing
lawyers,
activities are
airlines,
hotels,
now giving
engineers,
e m p h a s i s to
etc.,
all
come
services.
under
the
category of service marketing.
Event
Organizations
are
anniversaries,
etc.
offerings
with
aggressively
and
these
awareness and
promoting
strengthening
events.
increase brand
Many
events,
such
their
image
by
events
are
also
as
trade
connecting
shows,
company
themselves
sponsored,
in
order
and
to
their
create
recognition.
Place
Geographical
locations,
attract tourists,
such
as
business houses,
cities,
and
nations,
towns,
and
states,
are
promoted
residential areas.
Page
10
to
01.
eBook
Property
Property
se l l i n g
refers
to
property
the
intangible
requires
se l l i n g of residential and
rights
marketing.
of
Real
commercial
real
property
estate
agents
or f i n a n c i a l
are
assets.
involved
in
the
Buying
and
buying
and
real estates.
1 . 5 Nature of Marketing
The nature of marketing
Marketing
science,
is
used
positivist
can
combination
for
of art
marketing
approach.
scientific
be explained
Many
approach
of
profitability of retail
of
science.
studies,
natural
has
have
science,
locations,
patterns
and
models
advantages of this approach

identification
with the help of the following
and
gained
been
in
scientific
favor
order
to
approach
from
developed
price-volume
is that
and
The
the
with
relationships.
better
natural
basis
consumer
of
the
of
the
behavior,
One of the greatest
it states a great objectivity.
trends
of
supporters
on
predict
points:
confidence,
This
as
results
in the
compared
to
casual observation.
In
the
year
1998,
the
metrics' its research

UK,
initiated
should
the
in
it
has
closed
Therefore,
thus,
This
argued
that
method
in
which
the
research
capable
cannot
approach
keep
what
considered
scientific and
science
investigators
all
In
believes
reality,
measurement.
forecasting
inquiry
made
the
Institute of Marketing,
highlights
methods
hold
all
'marketing
that
be duplicated.
cannot
simply
science usually
the
research
unrelated
be
includes
variables
isolate the effects of changes in the variable.
framework.
of
of
research of natural
the effect of changes of price on

factors
marketers u s u a l l y work in the open system,
Post-positivist
USA,
that the results should
natural
The experimental
investigator studying
customers
Institute,
On s i m i l a r lines, the Chartered
program.
been
system
the
Sciences
out in a logical manner and
marketing.
constant and
from
priority.
similar
be carried
However,
copied
Marketing
will
combination
of
the
the world
They
happen
that
in
art
believe
periods
and
constant,
as compared
truth
cannot
that
of
will
never
scientific
science,
and
price.
to the closed
be d i v i d e d
turbulent
creative approaches in a balanced
besides
the demand
be
Moreover,
system.
recognized
in
i n t o variables that are
approach
change.
is
Thus,
successful
not
good
at
marketing
organizations
manner.
Page
11
is
use
01.
Marketing
is
oriented
toward
eBook
consumers,
as
b e g i n s with consumers and ends at consumers,
Marketing
well
as,
competitors.
by meeting
is the key function of management and also, an
Typically,
it
their needs.
integrated
process that
is based on strategies and models.
Maximization of profits is the long-term objective of marketing and
it accomplishes
this objective through customer satisfaction.
1 . 6 I m p o r t a n c e of Marketing
Points that h i g h l i g h t the importance of marketing are:
Marketing
helps
raise the standard
the demand of new and existing
It
offers
tremendous job
of living
of a society,
products and
o p p o rt u n i t i e s
in
by creating
and
growing
services.
areas
like
personal
selling,
packaging,
storage, transportation, product development, and advertising.
An
efficient
marketing
system
trims
down
the
cost
of
distribution,
and
in
this
manner, products are offered to consumers at a reasonable price.
Marketing
provides
knowledge to
consumers about
the
latest
technology
through
the means of its promotional tools.
Marketing
boosts
up
demand,
which
directly
fuels
production
activities
in
the
country. This results in an increase in the national income.
Marketing
activities
help
produce
profits,
which
are
necessary
for
the
continued
existence of business enterprises.
Page 12
01.
eBook
1 . 7 F u n c t i o n s of Marketing
Marketing
and
carries out eight universal functions of b u y i n g ,
warehousing,
standardization
and
grading,
risk
selling,
taking,
transportation,
financing,
and
storage
marketing
information.
Buying
It
is
one
of
the
important
Marketers must decide

order to
be unbeaten
behavior.
products
and
that
will
ownership
how and
in
Additionally,
the
preference or liking
of
marketing
w h y consumers
marketplace,
retailers
capture
utilities
functions
the
and
other
minds
through
of
these
for purchases to
they
that
buy
is
out
must try to understand
buyers.
purchases,
at
many
particular products and
intermediaries
their
carried
must
Since
marketers
an
effort
generate
must
services.
In
consumer-buying
make
they
levels.
to
time,
forecast
find
place,
consumer
be made numerous months later.
Selling
Selling
the
is crucial
marketing
services
at
organization
for the success of an organization
function.
high
in
The m a i n
profits.
Thus,
influencing
aim
in a marketplace.
of marketing
selling
activities
comprises
potential customers to
all
buy
is
those
to
It
is at the heart of
sell the
efforts
products and
that
help
the
its products.
Transportation
It
represents the
physical
movement of goods from
the
place of production to the
of consumption.
As the markets are geographically scattered,
strategy
in
Many
assists
corporate
transportation
bridging
giants,
systems
the
such
to
distance
as
ensure
between
Nirma
the
and
timely
the
delivery
an effective transportation
manufacturer
Bisleri,
are
of
place
now
products.
and
the
using
Such
customer.
their
own
transportation
systems also serve the purpose of promotions.
Storage and Warehousing

Storage
the
of
involves
the
preservation
time of their consumption.

products.
warehouses.
The
storage
Storage and
of products
This function
function
warehousing
makes
right
is crucial
sense
the t i m e of their
for the
only
create the place and
to make sense of the balance between supply and
from
collection
after
the
production
and
distribution
establishment
time utility and
to
of
help the firm
demand.
Page
13
01.
eBook
Standardization and Grading

Both,
standardization
products.
Quality and
and g r a d i n g
are closely connected
quantity control
standards and
functions that give uniformity to
grades help expand
the market.
Risk Taking
Risk
is
an
number
of
unavoidable
risks
government
rightfully
because
policies,
said
feature
that
of
any
of changes
technology,
marketing
is
business.
in
consumer
and
losses
risk-taking
marketer
buying
from
In
products
behavior,
natural
activity.
down the chances of risk t h r o u g h proper planning and
of
all
has
price,
face
competition,
calamities.
situations,
to
Hence,
firms
try
it
to
is
cut
forecasting.
Financing
Marketing
cannot
commence
without
the
impossible to conduct a bus iness without the

Marketers can arrange finance from
By accepting
an advance from
By accepting
money from
Marketing
The
on
potential
needs
of an
organization
market
information.
customers
understand
and
supply
of
money.
proper flow of adequate and
It
is
nearly
cheap finance.
the two sources:

wholesalers, for the supply of the products.
the banks and
granting
agencies to sell their products.
Information
success
based
smooth
the
from
of the
upon
Organizations
time-to-time.
customers'
wants
depends
buying
customers,
This
and
collect
in
Such
turn,
accurate
and
marketing
behavior.
which,
timely
decisions,
evaluate
information
information
helps the
which
information
helps
also
are
about
organizations
helps
organizations
identify
in
the
designing
appropriate products for the satisfaction of customers' needs and wants.
1 . 8 Core M a r k e t i n g Concepts
Here are some core marketing concepts,
Needs, Wants, and
Needs
shelter,
are
extended
Philip
Kotler:
human
required
to
necessities,
stay
alive.
such
as
Education,
air,
food,
healthcare,
water,
and
clothing,
entertainment
and
are
forms of needs.
Needs turn
need
are
by
Demands
fundamental
which
which are explained
into wants when
requirement.
Demand
they
are directed
to
particular
items
that
exists only when the want is accomplished
the w i l l i n g n e s s of the customer to pay for a specific
might
satisfy
the
by the a b i l i t y and
product.
Page
14
01.
eBook
Exchange and Transactions
Exchange involves activities that are related
to obtaining the product, service or ideas in
return for something.
For an exchange to take place, the following conditions are required:
Two parties, at least, are required for an exchange process.
Each party involved
Parties involved
The exchange
in the exchange is free to accept or reject the other's offer.
in the process trust that it is appropriate to deal with other party.
process that takes
place between the parties should
provide benefit
and satisfaction.
Each
one
party
and
in
the exchange
provide
the
process
delivery
must
of the
be able to communicate with
products
and
services
required
by
the other
the
other
party.
sol1'ething of value
tJ\Onev,credlt,labor, 900ds
So/J"Jeth/ng of value
Goods, services, ideas
Fig.
If two
parties
have
negotiated
agreeable terms, then
Transaction
is
defined
1.Sa:
Process of Exchange
to arrive
at
a conclusion
where they
mutually
settle
on
it can be said that a transaction has taken place.
as the
process of transfer of trade
parties, at agreed conditions, with a time and
values
between
two
or more
place of agreement.
Page 1 5
01.
F u n d a m e n t a l s of Marketing
eBook
Consumer and Customer
Many
times,
difference
the terms
between
customer
consumer and
the
is one who
two.
buys
customer are
A consumer
is
the
product or service,
used
actual
interchangeably
user
of a
but
product
either for t h e i r own
or
there
is a
service.
consumption
or for
others.
For example,
restaurant
if a restaurant
is
individual
considered
buys
a juicer
buys a juicer for making juice to serve
for
customer
his
or
her
and
not
own
use,
the
actual
then
the
its
patrons,
consumer.
individual
then
However,
is
referred
the
if
to
an
as
consumer.
Market
The
word
market
is derived
from
the
Latin word
Marcatus,
which
means a place where
business is conducted.
According
sharing
to
a
Philip
Kotler,
particular
"A
need
market
and
who
consists
might
of
be
all
the
willing
potential
to
able
customers
to
engage
in
exchange to satisfy that need."
Marketing
Mix
Marketing
mix
to
their marketing
pursue
are
product,
is the
price,
marketers need
divide
relatively
each
called
place,
meet
market
market
market
and
the
into
homogeneous
psychographic, and
After
objectives
and
needs.
that
is adopted
To
achieve
The four
success
by
the organizations
Ps of marketing
in
the
mix
marketplace,
examine all the elements of the marketing
needs
small,
tools
in the target market.
promotion.
Positioning, and
cannot
the
set of marketing
to understand
Target Markets,
Marketers
unique
mix.
Segmentation
and
wants
distinct,
Such
and
grouping
of
the
entire
identifiable
is
done
on
market.
groups
the
or
basis
Thus,
marketers
segments,
of
with
demographic,
behavioral differences.
segmentation,
segment and
the
marketer
decides which
identifies
and
assesses
segment gives m a x i m u m
the
attractiveness
opportunity,
of
which
is
positions
in
target market.
For each
target
market,
the
the mind
of its target customer, with some key benefit.
marketer d e s i g n s the
product or
service
that
it
Page
16
01.
Marketing
eBook
Environment
Marketing
environment
macroenvironment.
comprises
two
Microenvironment
production, distribution,
and
environments,
consists
of
microenvironment
factors
that
are
involved
and
in
the
promotion of market offerings.
A company's macroenvironment consists of the demographic environment,
political-legal
environment,
environment,
socio-cultural
environment,
economic
environment,
natural
and technological environment.
1 . 9 C o m p a n y Orientation toward the Marketplace

The
five
main
competing
concepts
under
which
organizations
conduct
marketing
activities are:
1.
Production Concept
This
is
one
consumers
in
cost.
of the
prefer
oldest
low
management
costs,
and
mass
organization wants to expand
2.
in
gives
According
available
attention
distribution.
in
to
This
to
it,
the
firms
believe
market
attaining
concept
and
high
is
useful
that
are
low
production
when
an
its market.
Product Concept
Product concept
performance,
on
making
believes that consumers prefer products that are better in quality,
and
features.
better
quality
An
organization
products
and
customers can appraise quality and
3.
business.
products that are generally
Therefore,
efficiency,
concepts
that follows t h i s concept concentrates
improving
them
over
time,
assuming
that
performance.
Selling Concept
The
selling
concept
believes
that consumers and
enough of the organization's

proper
selling
and
which
buyers,
encyclopedias,
overcapacity
market
wants.
company
and
t h a n creating
promotion
generally,
and
and
so
their
This
the
products,
This
not
think
on.
Most
plan
is to
concept
consumer,
does
as
concept
of
companies
sell
it
ordinarily
unless they are persuaded
effort.
do
businesses will
not
establish
emphasizes
useful
buying,
apply
what they
is
a
on
such
this
make,
for
unsought
life
when
rather t h a n
long-lasting
selling
what
goods,
insurance,
they
have
make what the
bond
between
they
have,
products that the market wants.
buy
to do so through
as
concept
not
Page
17
the
rather
01.
4.
Marketing Concept
According
to
depends on
the
marketing
identifying
better satisfaction
and
5.
eBook
than
needs and
is
Marketing
the
newest
organizations
target
markets,
interests.
societal
This
and
not
but
also,
initiative
marketing
achieving
T h i s concept
higher sales and
to
to
identify
protect
demands
in
General
that
concept
for
organizational
wants of its target markets and
marketing.
concerns
Holdings Corporation,
green
of
only
concept
ethical
key
believes
goals
in delivering
that customer focus
profits.
Concept
concept
exist
the
its competitors.
values are ways to achieve
Societal
It
the
concept,
helps
helps
Societal
and
the
that
their
satisfy
the
individual's
marketing
marketing
Electric, and
establish
marketing
in
needs
and
society's
activities.
have
wants
of
its
long-term
should
Companies
that
include
like
Sears
begun to announce the
long-lasting
distinguishing
holds
best
professionals
Coca-Cola
their
an organization
or
concept
survival.
The
itself from
its
societal
rivals and
strengthens its positioning, as well.
1.10
H o l i s t i c Marketing
According
to
Philip
development,
and
design,
activities
marketing
aims
associated
with
Kotler,
that
at
"The
and
marketing
implementation
recognizes
recognizing
marketing
Holistic
their
and
activities.
of
marketing
breadth
reconciling
and
the
Organizations
concept
based
programs,
and
align
complexities
their
on
the
processes,
interdependencies."
scope
that
is
marketing
Holistic
that
are
strategies
with the fluctuations in their market, emerge as successful organizations.
Holistic
marketing
marketing,
marketing
marketer
and
integrated
performance marketing.
activities
has
entails
to
and
creation
communicate
and
of
marketing,
internal
The marketer
integrated
deliver
value
is
involved
marketing
for
marketing,
in
the development of
programs.
consumers.
relationship
In
addition,
Fig.1.lOa
d i s p l a y s the
four elements of holistic marketing.
the
Page
18
01.
eBook
Products and
Senior
services
management
Marketing
Other
department
departments
Communications
Channels
sales revenue
Brand and
Community
Ethics
Customers
Partners
Channels
Environment
Fig.
Integrated
Integrated
the
and
1.lOa:
marketing
is an
emerging
professional
integrated
marketing
satisfaction.
is
to
From
the
the
mix
helps
view,
point
of view,
marketing
Dimensions
Different
marketing
marketing
their
mix
developed
marketing
activities
and
place, and
marketing
is
the
new field
of marketing.
activities
deliver
and
to
maximum
The job of
put
together
customer value
these activities u n d e r the name of marketing
influence
mix
important themes of integrated
price,
marketers
potentially,
communicate
McCarthy categorized
seller's
buyer's
and,
develop
plans to
with the 4Ps, which are product,
Marketing
Holistic Marketing
Marketing
marketing
fully
Legal
promotion.
trade
is
to
mix
channels
crafted
give
to
and
target
influence
maximum
customers.
buyers
customer
and
benefit.
from
Two
are:
effectively
communicate
and
deliver
value
and
satisfaction.
When
these
marketing
activities
are
synchronized
effectively,
they
deliver
maximum effect.
Page
19
01.
Internal
Marketing
According
to
marketing
the
customer
marketing
legendary
means
employees
Internal
and
that
writers
firms
supporting
orientation
marketing
but a l so
on
undertakes
day
market
marketing
of
an
customers.
evolves
mission,
Thus,
employees is
it
is
not effective,
According
to
Gronroos,
maintain
and
enhance
customers
met,
promises." The
long-term
and
main
relationship
service.
improve
hiring,
and
should
of
that
be
customer
team
not
only
training,
and
contact
to
on
stresses on
provide
an
the
external
employees.
motivation,
Internal marketing
employees
well-educated
products
unless
and,
that
when
the
and
this
necessary,
is
done
of relationship
customers,
promise
whereas,
to
skilled
promotes the
the
and
primary
informed
and
or
first
about
the
expectations
communication
at
by
to
also
to
profit,
mutual
marketing
in
is
order to
is
between
of
key constituents and
to
and
terminate
so
that
of
the
build
and
and
profits.
service
high
efficiency,
promotes
the
partners,
relationship
and
relationships
The
satisfaction
of
trust,
and
of
healthy,
relationship,
of
all
fulfillment
maintain
productivity,
with
promise,
sustain
and
the
customers'
financial
community
profitability.
members
marketing.
establish,
objectives
by the concern for customer benefit,
endorse
marketing
identify
exchange
make
leads to customer satisfaction
pillars
are
services,
internal
marketing
stakeholders,
is characterized
employees,
important
they
concept
"Relationship
with
wants, which
Customers,
among
which
"Internal
better results in the external market cannot be attained.
aim
relationships,
needs and
four
Trust
the
that
other
and
its key constituents,
are
as
its
as
emphasizes
needs of customers.
benefits
said
Marketing
are
and
the
Relationship
parties
from
organization
organization's
and
work
marketing,
such
Armstrong,
motivate
to
marketing
Gary
role of employees in achieving the organization's effectiveness.
Internal
with
and
and
people
internal
tasks,
Kotler
orient
service
Present
satisfaction."
Philip
must
employees who want to satisfy the

central
eBook
of
Marketers
the
must
maintain
harmony
design programs that give a fair return to all shareholders.
Page 20
01.
eBook
Performance Marketing
According
to
marketing
activities
Philip
and
and
Kotler,
"Holistic
understanding
programs.
It
the
also
marketing
returns
addresses
to
incorporates
the
business
broader
performance
from
concerns
marketing
and
their
legal,
social, and environmental effects."
The two important points in this context are:

Financial Accountability
Top
management
investment
customer
evaluating
Social
The
in
terms
database.
of
the
top
asks
marketing
establishment
management
of
is
the
managers
brand,
engaged
in
to
and
the
of
the
the
marketing
has
whole
society.
Social
as environment and
the
broadened
decisions on
ethics,
its
scope
responsibility
society,
from
marketing
as a whole.
the
deals
Social
have a considerable effect on
company
the
with
way
of
responsibility
issues,
long-term
has
recyclable computers and
differentiate itself from competitors and
to build
the
overall
Hewlett-Packard
launched
and
the
It gives a wide range of options for organizations to excel.

printers that
survival of
For example,
have enabled
it to
customer preference.
N o n - t r a d i t i o n a l Marketing
The application of marketing
has broadened
its scope from
its traditional
boundaries of a
profit-making organization. The four major non-traditional types of marketing

1.
their
increasing
broader
an organization.
1.11
explain
Marketing
consequence of marketing
such
always
profitability,
Thus,
Responsibility
to
organization
their marketing efforts.
influence
buyers,
of an
Person
Person
are:
Marketing
marketing
engages
in
activities
that
are
interest or to change the attitude of the target

Entertainers,
lawyers,
marketing
build
to
personalities
Toshiba,
to
Adidas,
authors,
their
sell
and
and
sports
reputations.
their
products
Jaypee
Many
or
Cement
to
to
develop
market toward
figures,
all
use
business firms,
services.
try
aimed
For
promote
concept
charities use
of
renowned
companies
products
by
person
such
linking
connection with cricket superstar Sachin Tendulkar.
and
a particular person.
the
example,
their
attention
Page 2 1
as
the
01.
Celebrity endorsement
this
marketing
Amitabh
2.
Place
Place
can
is an extended
change
Bachchan,
eBook
and
the
M.S.
form
person's
of person
name
into
marketing.
a great
The smart use of
brand.
Salman
Khan,
Dhoni are few examples that fall u n d e r t h i s category.
Marketing
marketing
changing
regions,
their
and
involves
attitude
nations
activities
or
are
behavior
trying
to
vacationers,
investors, companies,
is
as Incredible
marketed
that
India
are aimed
toward
promote
the
and
has
particular
their
new citizens,
to attract
the
area
destinations,
etc.
In
target
or
in
place.
order
the tourism
become one of the
market
by
Cities,
to
attract
industry,
India
many famous
spots
for tau rism.
However,
the
marketing,
or
her
due to
personal
personalized
3.
Cause
its static and
experiences,
place
is
difficult,
multifaceted
constructs
as
nature.
the
compared
Each
user,
product
place
to
traditional
on the
basis of his
that
leads
to
highly
place products.
to
David
Kurtz and
L.
identification
and
Louis
marketing
E.
of
Boone,
a
"Cause
social
marketing
as
prevention of drink and
literacy, environment
organizations
facebook,
to
marketing
positive
create
with
and
protection,
take
advantage
awareness
the
aim
long-term
initiatives, ultimately,
of
of
among
relationship
with
social
or
idea
Companies
their
websites,
are
such
such
involved
approaches
customers.
to
drive, etc.
networking
sales-oriented
boost up the company's
cause,
refers to
includes a variety of concerns,
society.
short-term,
marketing
issue,
selected target markets." Cause
Many
4.
of
Marketing
According
the
marketing
Such
in
to
cause
as
cause
build
marketing
image.
Event Marketing
Event
marketing
identifying
Companies
and
is
meeting
promote
the
many
performances,
and
s p o n so r s h i p
events
of
management
needs
the
help
raise
by
to
events,
public
linking
achieve
customers
anniversaries.
strengthens the company's image,
of
time-based
company
that
process
such
Event
objectives
who
as
attend
trade
marketing
awareness.
Such
through
an
event.
shows,
also
artistic
includes
marketing
their products with the events.
Page 22
also
01.
eBook
1 . 1 2 Chapter Summary
Marketing
obtain
is
what
social
they
and
need
managerial
and
want
process
through
by
which
creating,
individuals
offering,
and
and
groups
exchanging
products of value w i t h others.
Marketing
carries
storage and
marketing
out
eight
warehousing,
universal
functions
standardization
and
of
buying,
grading,
selling,
transportation,
risk taking,
financing,
and
information.
A market consists of all the
potential customers
sharing
a particular need
might be w i l l i n g
to engage in exchange to satisfy that need.
Marketing
is
mix
the
unique
set
of
marketing
tools
that
is
adopted
and
who
by
the
organizations to pursue their marketing objectives in the target market.
According
to
the
product
concept,
firms
believe
that are generally available in the market and
Product
concept
quality,
performance, and
The
selling
enough
believes
concept
proper selling
and
According
the
to
believes
satisfy
marketing
identifying
marketing
the
needs
Holistic
marketing
marketing, and
products
are low in cost.
prefer
that consumers and

products,
those
products
that
businesses
will
are
ordinarily
unless they are persuaded
the needs and
better
in
not
buy
to do so through
the
key
for
achieving
organizational
wants of its target markets and
holds that
wants
entails
in delivering
of
organizations exist
its
integrated
target
markets
not
but
only
also,
to
to
identify
and
protect
the
interests.
marketing,
internal
marketing,
relationship
performance marketing.
The four major non-traditional types of marketing are:

o
Person marketing
Place marketing
Cause marketing
Event marketing
goals
its competitors.
concept
and
concept,
individual's or society's best long-term
prefer
promotion effort.
better satisfaction than

Societal
consumers
consumers
features.
of the organization's
depends on
that
that
Page 23
Marketing
Planning
02.
Marketing
Planning
eBook
2 . 1 Introduction
Marketing
the
that
planning
process
senior
activities.
of
planning
executives
Marketing
establishing
positioning
is one
of the crucial
future
spend
activities
most
planning
marketing
strategies,
to
time
the
choosing
in
organization.
organizational
planning
evaluation
a
target
you
will
and
of
Marketing
goals.
It
designing
marketing
market,
for competitive advantage, and
designing
allocating
planning
is
Define plan and
Differentiate between
marketing
opportunities,
branding
resources.
its objectives
Define marketing
Explain
List the steps in
Illustrate the components of marketing
strategic p l a n n i n g
plan and
marketing
planning
its objectives
process and
planning
and
identify mistakes in
planning
is
believed
be able to:
planning
achieve
their
involves
objectives,
looking
of
tasks of an
process
process
plan
Page 25
and
02.
Marketing
Planning
eBook
2 . 2 Definition a n d Objective of P l a n s
BusinessDictionary.com
course
within
how,
of
action
defines
(scheme)
aimed
a specific timeframe.
and
whom,
by
and
plan
as,
at
"A
achieving
It explains
often
written
in
includes
specific
detail
best
account
of
intended
goal(s)
or
what needs to
be
case,
expected
future
objective(s)
done,
case,
when,
and
worst
case scenarios."
2.2.1
As
Definition of Business Plan
mentioned
prepared
by
objectives
they
in
will
for
be
strategies,
the
and
management
near
is
and/or
of
the
statement,
future
It
serves
threats
as
and
And
cash
business
summarize
one
modified
it
When
to
its
"A
of documents
and
years)
to
prepared
past,
to
set
operational
guide
contains
statement,
is,
the
conditions
the
also
plan
three
as
details
usually
flow
to
b l u e p ri n t
emerge.
investors)
firm.
to
(usually
continually
prospective
performance
income
firm's
achieved.
opportunities
(lenders,
BusinessDictionary.com,
and
firm's
show
and
pro-forma
illustrate
and
external
present,
and
new
audience
forecasted
balance
how
how
policies
change
for
financial
the
sheet,
financing
being sought will affect the firm's financial position."
2.2.2 Objectives of Business Plan

A business plan
of action.
needs
A business
to
be
purposes;
is a written document, which gives detailed

plan
implemented
includes financial,
in
business
marketing,
function.
information for future course
and
operational
business
the key objectives of a business p l a n are listed
plan
is
planning,
used
for
which
various
below:
To Raise Capital
A very
basic
requirement
of any
business
is capital.
Organizations
use a
business
plan to:
Raise capital for a new business or businesses.
Accumulate additional funds for existing
Borrow a loan or a trade credit.
business
plan
also
acts as
systematic
business or businesses.
approach
to
get
the
required
funds
the business.
Page 26
for
02.
Marketing
Planning
eBook
To Manage Operations
A business
for
plan
managing
Effectively
h i g h l i g h t s the
day-to-day
function
activities
of a
and
business.
strategies
It
to
also
acts
achieve
as a framework
the
objective
of
business.
To Expand
Market
expansion
could
expand
internationally,
current
business,
goals and
2.3
the Market
be
national
international.
If an
then a business plan gives an
financial
status,
objectives of entering
Difference
or
and
performance
the foreign
organization
intends
to
idea about the organization's
records.
It
also
illustrates the
market.
between
Strategic
done
organizational
Planning
and
Marketing
Planning
Strategic
planning
operational
Whereas,
planning.
marketing
organization and
Strategic
plan
It makes
planning
is
done
focuses
competitors,
focuses on
to
set
priorities,
resource
allocation,
sure that every employee works toward
is an activity that
a common
is done to set the marketing
and
the mission
for
on
the
the
overall
segmenting,
strengths and
and
functioning
of
targeting,
weaknesses
the
organization.
positioning,
of the
objectives of the organization,
product.
whereas,
whereas,
marketing
for
plan
d ec i d i n g
focuses
distribution of a product or service offered
on
on
capital
sales,
marketing
planning
borrowing
Definition of a Marketing
According
directing
to
Philip
and
Kotler,
coordinating
and
advertising,
being
cost
b ra n d i n g ,
and
by the company.
2.4 Definition a n d Objectives of a Marketing

2.4.1
Plan
Plan
"A
marketing
the
marketing
plan
effort.
is
It
the
central
operates at
instrument
for
a strategic and
tactical level."
the
planning
broad
objectives
of
Strategic
Strategic
has
Whereas,
demand
its customer base and the ways to reach those customers.
effective,
goal.
goals of the
focuses on deciding
plan
and
the strategies to achieve those g o a l s .
planning
marketing
product,
is
Page 27
02.
Marketing
Planning
eBook
2.4.2 Objectives of a Marketing
Marketing
sales
planning
people
approach.
and
is
done
customer
Plan
mainly
on
feedback.
the
basis
of
Therefore,
primary
the
information,
objectives
are
It describes the marketing goals that an organization would
the tenure of a plan and
talks about the crucial
issues that could
that
very
is,
field
specific
in
like to achieve in
affect the achievement
of marketing goals.
The objectives of a marketing
State the current
plan are to:
situation of the organization,
product or service
using
SWOT or
situation analysis.
State the current business environment in which the organization is competing.
Describe the marketing objective of an organization.
Describe
the
actions
and
strategies
to
be
undertaken
to
achieve
the
marketing
objectives.
State the resources required
to implement the strategies.
Ascertain the market orientation.
2 . 5 Frequent Mistakes in P l a n n i n g
Marketing
planning
marketing
the
aim
plan
of
is
huge
is less defined.
achieving
consideration
of
the
A marketing
desired
target
importance
audience
and
but
plan
marketing
Process
the
is used
goal.
the
assistance
The
correct
to
develop
good
to communicate thoughts with

plan
is
modified
knowledge
of
to
their
take
into
needs
and
requirements.
Frequent mistakes that occur d u r i n g

The Speed
The
speed
of the
of the
the p l a n n i n g
process are:
Process
planning
process
should
be
reasonable;
competitors take the early entry advantage and

aspects of p l a n n i n g ,
it should
not
be
so
slow that
not so fast that it misses out the crucial
in a hurry.
The Amount of Data Collected
In marketing
in
planning,
estimating
market
collecting accurate and

conditions,
sufficient data
competitive
trends,
is very
and
important.
customer
It helps
needs
and
requirements. There are various sources of data collection that managers can use. They
can use a primary source or secondary source, whichever provides the right information.
Providing a prescription for data collection effort would
not be sensible.
Page 28
02.
Marketing
Planning
People Involved
It
is
often
prefer
said
line
that,
Planning
"the
managers
professional
as well,
in the
eBook
to
planners.
people
get
who
more
plan
are
involved
in
the
people
planning,
who
rather
execute."
than
Companies
outsourcing
it
to
It is also important to involve the line managers of other functions
so as to get more ideas and
information.
The Structure
There should
which
be a formal
structure for
indirectly d i s c i p l i n e s the work.
planning.
It also
Structure helps
helps
in
executing
in d i sc i p l i n i n g
the thoughts
planners,
in a
proper
structure.
Length of the
Organizations
length must
the whole
plan.
So,
Plan
set
formal
guidelines
be balanced.
plan
and
If the
would
for
length
ignore
it.
the optimal
is long,
If the
it is advised to make a balanced
length
of
plans.
managers would
length
is
short,
marketing
it
It
is
set
so
that
not be interested
may
omit
key
the
to read
points of the
plan.
Frequency of Planning
Problems
frequent
arise
planning
erratic and
However,
updates
in
an
organization
and
revaluation
if
of
can a l so make the p l a n n i n g
if planning
is done
in the market and
changes happening
the
frequency
strategies
can
process feel
less frequently than
the
of
planning
make
the
is
not
proper.
organization's
More
behavior
like a burden.
needed,
product strategies may
it
not
may
miss out on
be able to adapt
the
latest
to the
latest
in the market environment.
Insufficient Senior Management Leadership
Senior
management
Commitment
from
the
plays
senior
turnover of senior managers

and attitudes
key
role
in
management
is frequent,
so
have different notions, which
making
is
successful
essential.
people
from
In
the
different
prevent proper market
marketing
marketing
plan.
field,
backgrounds,
the
values,
planning effort.
Page 29
02.
Marketing
Planning
2 . 6 The P l a n n i n g
eBook
Process
The Planning Process
Fig. 2.6a: The Planning

Source:
Mary Ann Pezzullo,
Marketing for Bankers (American
Process
Bankers Association,
1982), Washington
D.C. p. 32
In
Fig.
2.6a, there is no starting or e n d i n g of the planning
is continuous in
In the initial
Then,
takes
on
time.
implies that
it
nature.
stage, objectives are defined
this
process, which
basis,
After
product
strategies
development,
and 'collection
are
strategies
developed.
are
and
analyses' of data are done.
Developing
implemented
and
product
after
strategies
implementation,
strategies are evaluated.
Evaluation of the
implemented
such as competition,
ongoing
Planning
while
plan
and
customers, etc.,
changes occurring
are monitored
and
in the external environment,
accordingly,
it
is updated
in the
process.
is
an
ongoing
implementing
planning
process.
Circular
planning
enough,
so
it
can
and
is
process.
evaluating
done
be
The
so
and
strategies,
that
modified
new
with
it
does
information,
which
is yet again taken as an
not
updated
updated
get
fixed.
information.
Planning
The
input
input
should
from
is
in
be
the
derived
the
next
flexible
updated
Page 30
02.
Marketing
information
Planning
can
be
eBook
revised,
market can be integrated
as
required,
in
order to
Top-down
In
planning,
planning
preferred
that
new
events
in
the
planning:
Planning
top-down
control
sure
in the process for next year's p l a n n i n g .
There are two main approaches to marketing

1.
make
in
the
the
top or
activities
middle-level
for junior-level
organization
because
management
employees.
it
provides
The
a
people
set
top-down
goals and
approach
consistent
direction
is
to
marketing effort.
2.
Bottom-up Planning
In
bottom-up
planning,
information
from junior-level employees.

the
planning
process.
This
on
competitors,
customers,
Junior management people,
approach
is
encouraged
here,
etc.
is
gathered
play a vital
because junior
role
in
management
employees get a chance to involve themselves in the corporate p l a n n i n g .
Both
approaches
people
bring
approach,
in
have
their
their
own
expertise
significance.
and
vast
In
top-down
experi ence,
planning,
whereas,
top
in
management
the
bottom-up
the people who actually implement the strategies are involved, which
understand ground
realities and
brings in updated
helps to
information.
Page 3 1
02.
Marketing
Planning
eBook
2 . 7 Steps in P l a n n i n g
The steps for the p l a n n i n g
Process
process are:
Fig.
2.7a: Steps in
Planning
Process
1
Source:
Step
Donald R.
1:
Lehmann,
Update
Updating
planning
Historical
historical
is
Russell
often
data
S.
Winer, Lehmann, Analysis for Marketing Planning, 6 h Edition
Data
means
assumed.
gathering
Updated
the
past
data
information.
of
the
The
coming
data
year
is
for
not
marketing
available
in
advance, so decisions are taken on the basis of previous year's data.
For example,
on
the
planning
basis of the
for next year will
previous year's data.
happen
now.
It may also
Therefore,
happen
the p l a n n i n g
that
you
will occur
have to work on
the data of past two or three years d u e to delay in the data collection process.
Hence,
planning
available,
old
is done
figures
mainly
should
be
on
forecast
replaced
or assumptions.
with
new
When
information
the
updated
because old
data
figures
merely an estimation, whereas, new figures are the real and updated ones.
Page 32
is
are
02.
Marketing
Planning
eBook
Step 2: Collect Current Situation

Data
collection
currently
focuses
present.
the
current
On this basis,
that the time period

match.
on
when
Since the data
Data
situation.
In
situation anal ysis
the data collected
is collected
and
other
words,
is done.
it
However,
the time period
and then analyzed,
focuses
it
on
the
data
is often observed
of data analysis do
the analyzed
result and
not
the actual
situation differ, due to the time period.
Step 3:
Data
Data Analysis
anal ysis
status,
etc.
is
done
Data
to
forecast
analysis
may
competitor's
not
be
actions,
quantitative,
consumer
that
is,
behavior,
it
does
economic
not
require
calculations for the analysis.
In
fact,
marketing
opinions,
threats
quotes,
to
data
is
always
interpretations,
business.
qualitative.
etc.
Qualitative
It
is
This analysis
data
and
based
helps
in
on
description,
portraying
quantitative
data
anecdotes,
opportunities and
should
be
analyzed
differently.
Step 4:
Develop Objectives, Strategies, and
Developing
helps
to
period.
objectives
know
in
Referring
and
detail
to
how
the
formulating
resources,
can
Developing
marketing
document
loss
product
steps,
crucial
is
it
activities
going
can
be
to
be
said
of
the
managed
that
planning
during
strategic
process.
the
thinking
It
planning
cannot
be
reliable information.
marketing
are taken
are
mix
of
the
into consideration.
company,
A strategy
its
mission,
helps to
vision,
know
objectives
how an
objective
be achieved.
Step 5 :
The
etc.
the
above
done without accurate and
While
strategies
Programs
in
plan
cannot
a marketing
statement.
evaluating
Financial
In
strategies
plan
Documents
be
made
its
includes two things,
marketing
are
without
budget,
discussed.
It
the
financial
marketing
costs
segregates
the
documents.
budget and
involved
amount
in
the
financial
profit and
implementing
allocated
to
and
particular
marketing activity.
For
example,
budget
is
creating
prepared
for
budget
for
an
implementing
event
and
marketing
spending
strategies.
necessary amount for the activity, as well as, controlling
it
accordingly.
It
helps
in
Similarly,
spending
expenses.
Page 33
the
02.
Marketing
The
profit
and
generating.
the
Planning
loss
statement
A profit and
company.
It
is
eBook
outlines
loss statement
necessary
to
effect of the strategies designed
It also includes the product and
set
marketing
Step 6:
Before
the
plan
management.
Final
an
appropriate
or
loss
marketing
sales
price.
It
organization
is
expenses made
by
depicts
the
financial
plan.
business for which the marketing

budget,
an
plan
is being
designed.
such as cost of sales, distribution expenses,
here.
Plan
reaches
Senior
profit
lists the sales and
expenses, are also included
Negotiate
much
in the marketing
Some expenses from the marketing

and
how
its
final
phase,
management
may
it
is
negotiated
have
certain
several
views
times
that
with
may
senior
vary
from
manager-to-manager.
Plans
are
discussed
resources
are
to
be
involvement and
to
Step 7:
Measure
detailed
For
in
utilized.
management
Negotiation
processes
of senior authorities.
must
if
code,
be
environment,
and disciplined
effectiveness
It
can
it
be
which
should
process should
company
so
monitored
can
shared
measured.
be
be used
distributes
be
from
Step 8:
Audit
Audit
the
planning
the
plan
final
process.
actual
the
take
may
take
corporate
long
as
time
much
flyers
when
Getting
result
varies.
stage
It
in
helps
after the
If the
size
t ake a long time and,
the
in
planning
reducing
plan
and
and
divisional
because
time to
of
or
according
coupons,
customer
feedback
of
the
complete,
to
might
the
forms
it
should
uses
those
filled
by
be
be
information.
activity.
sent
coupons
the
some
with
an
and
its
customer
helps
activity.
process.
It
is
done
the discrepancy
the
There
to measure the marketing
implemented.
nature
ultimately,
is
time-to-time.
updated
measure the efficiency of a particular marketing
is
because
Progress
plan
the
example,
identical
senior
implement the earlier steps.
marketing
changes
the
approval
as it did
The
with
The
business
check
consistency
between the estimated
time
is
to
taken
big,
to
strategy
audit
the
in
the
result and
marketing
implementation
it will affect the audit time.
Page 34
will
02.
Marketing
Planning
eBook
2.8 Steps for Developing an Effective Marketing

The steps to develop an effective marketing
Step
1: Creating
know
the
current
status
take the organization,
and
the interest of potential
Executive
provides
plan are:
the Executive Summary
The executive summary is an

to
Plan
summary
of the
why
on
brief
the
company,
the
investors.
is
information
important section of the business plan.
business
what
idea
level
could
the
management
be successful.
It
is
intends
used
It also h i g h l i g h t s the strength of the overall
description
current
manage the product or service,
at
It allows the reader
about
market
the
product
situation,
and the allocated
or
service
information
on
b u d g e t of the marketing
to
to g r a b
plan.
offered.
It
strategies
to
plan.
Step 2: Analyzing the Environment
Analyzing
the
environment
various factors,
an
essential
part
of
the
marketing
plan.
It
helps
with
such as:
To identify the threats developing
threat
could
innovative
is
be
in the environment
anything-competitors,
products,
government
taxes,
price
wars,
introduction
of
new
and
etc.
To identify the opportunities in the market
Analysis
the
is
done
to
organization's
strategic
alliances,
identify
the
advantage.
developing
opportunities
in
O p p o rt u n i t i e s
new
the
could
market,
market
be
and
exploit
mergers,
international
them
for
joint
ventures,
and
capturing
market,
new market d u e to ineffective competitors.
The
environmental
factors,
such
analysis
of
an
organization
The marketing
The current target market
The organization's current marketing
The
while
keeping
in
mind
severa
l
Marketing
marketing
environment
environment
Technological,
marketing
environment can
marketing
objectives and
performance
Environment
cultural,
the
done
as:
The
is
strategy
is analyzed
on
the
Environmental,
also
of
an
be
said
to
be
organization
basis of
and
Political,
Legal
the external
and
affects
Economical,
(PESTEL)
environment
the
business
Socio
that
influences
activity
organization.
The
Analysis.
Page 35
of
an
02.
Marketing
Planning
eBook
The marketing environment
is divided
into two levels:
Microenvironment
It
refers
to
factors
stakeholders,
that
suppliers,
are
closely
related
to
the
intermediaries, customers,
etc.
organization,
such
as
its
Macroenvironment
As
mentioned
it
is
above,
related
to
PESTEL analysis
broad
aspect.
is considered
It
includes
a macroenvironment,
demographic,
because
geographic,
and
psychog raphic factors of the environment.
The Current Target Market(s)
The
organization
examines
whether
organization's strategic planning

basis
of demographic,
usage
The
the
or not.
psychographic,
targeted
market
is
right,
The analysis of the target
and
geographic
factors
and
according
to
the
market is done on the

also,
on
the
product
in that particular market.
organization
acceptance
level
offers
of
the
product
product
in
based
the
on
target
certain
market
needs.
and
It
assure
has
to
examine
that
the
need
of
the
the
target audience is fulfilled.
The Organization's Current Marketing Objectives and
company
must
objectives, and
Step 3:
The
framework
and
then,
marketing
objectives,
take corrective action,
measure
performance
against
those
if needed.
Performing a SWOT Analysis
third
external
set
Performance
step
that
is
to
perform
helps
environment.
Threats, as shown
to
SWOT
analyze
SWOT
in
is
the
an
analysis.
SWOT
company's
acronym
for
analysis
internal
Strengths,
is
well-established
environment,
Weaknesses,
as
well
Opportunities,
Fig. 2.Sa.
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats
Fig.
as,
2.Sa: SWOT Analysis
Page 36
02.
Marketing
Planning
eBook
Strengths
Strength
is
the
business
is
good
organization
innovative
ability
to
at.
organization
that
capacity
Strengths
achieve
products
characteristics
and
or
are
the
business.
an
are
some
effectively
set
business
of
over
that
It
others.
is
It
that
help
product
strength.
competitors.
should
of activities
expertise,
advantage
than
of a
examples
considered from a business point of view and
is
Marketing
organization
more
It
competencies
objectives.
services
give
operate
its
of a
an
quality,
a
set
helps
Strengths
of
the
must
be
achieving
its
be clearly defined.
Weaknesses
The
inability
objectives
requires
and
are
constraints
known
as
improvement.
implement
employees,
Weakness
external
should
Weakness
viewpoint.
is
strategy.
resources, and
always
business
weaknesses.
marketing
limited
of
be
that
This
the
is
restrict
the
limitation
Lack
of
area
or
it
from
where
an
hindrance
marketing
organization
to
develop
expertise,
or
inefficient
poor product quality are some examples of this.
considered
Organizations
from
need
to
an
internal,
be
as
realistic
well
and
as,
from
identify
an
their
weaknesses soon, so as to overcome them.
Opportunities
Opportunities are a set of positive circumstances in the business environment that

help to achieve objectives.
the
business.
If utilized
Opportunities
are
properly,
favorably
they can generate
exploited
for
huge
business
profits for
gain.
Market
trends are also considered opportunities for a business.
Threats
Threats are negative events that may create

their
objectives.
innovative
SWOT
analysis
organization
Threats
products,
is
an
analyze
can
exist
government
important
itself
with
in
policies,
element
a
the
market
hindrances for
form
of
businesses to achieve
competitors,
new
entrants,
etc.
of
the
point
marketing
of
view
plan,
and
which
plan
its
helps
strategies
accordingly.
an
Page 37
02.
Marketing
Step 4:
Planning
Developing
Marketing Objectives
Marketing
objectives
marketing
of
eBook
are
product
set
or
intends to achieve through
Marketing
objectives
environmental
the
organization.
and
time
frame
for
organization.
Marketing
These
objectives
derived
It
is
also
objective
achieving
from
based
has
this
various
In
the
Devising
fifth
define
on
the
common
particular
analyses,
are
what
such
resources
related
an
as
and
to
the
organization
objective?"
The
SWOT
overall
question-"What
gives a clear picture of the marketer's intent regarding
Step 5:
objectives
its activities.
etc.
Each
the
products.
are
analysis,
by
will
objectives of
be
answer
analysis,
to
the
outcome
this
question
the offering.
Marketing Strategies
step,
the
effective marketing
company
outlines
how
of
to
achieve
its
objectives
by
formulating
strategies.
Target Markets
target
market
marketing
thus,
is
activity.
needs
to
be
market
It
is
very specific.
short
of
and
element.
It
element
of
to
the
at
marketing
4
Ps
is also said
to its
to
but
which
is where a company
makes the
promotion,
professionals
the
of
Place,
same
ideas
mix
in
the
People,
Process,
organization
its
In
of
in
should
for
own
the
the
organization
intends to sell
pricing,
and
Implementing
At
sixth
step,
the
and
The
reveal
its
aims
its
product and
distribution
of
it
is
marketing
of the
and
extended
Physical evidence.
is used
the
7
and
its
each
service.
Each
key
role
in
mix
is
Price,
mix consists of
The marketing
by the organization,
strategies.
Marketing
company
Plan
will
set
framework
to
implement
its
marketing
strategies.
be
about
Ps-Product,
products.
modified
mix
should
marketing
The marketing
for
mix
or
plays
to
marketing
details
product
product,
uses to generate demand
The
necessary
marketing
case
be a controllable tool, which
planning
organization.
significance
services,
and
the
Promotion.
plans
has
case
and
time,
and
strategies.
Step 6:
the
by
Price,
marketing
Promotion,
according
but
mixture
elements that an
mix
used
Ps-Product,
is
formulating
Place,
at
cost effective.
tool
concise
restricted
It
people,
Mix
marketing
consists
group
The target market
product very easy and
Marketing
or
Page 38
02.
Marketing
Planning
eBook
Marketing Organization
This
section
products,
of the
marketing
regions or
types
plan
As
how
of customers-to
indicates where decision-making
Activities,
details
the firm
will
implement
its
be organized-by
marketing
functions,
strategies.
authority w i l l rest within the marketing
It
also
unit.
Responsibilities, and Timetables for Completion
mentioned
earlier,
opportunities
to
implemented
at
marketing
competitors
the
right
or
so
place
plan
fast
and
at
should
that
the
not
crucial
right
be
so
points
time.
It
slow
are
also
that
it
missed.
focuses
It
on
loses
its
should
be
the
medium
responsible for the execution of these activities.
It
may
the
be the
intermediary,
advertising
senior
agency,
management
or
who
who
the
is assigned
would
create
marketing
the sales
an
promotion
attractive
manager
is
task of the
advertisement.
the
main
authority
time,
in
product or
Ultimately,
that
will
be
the
held
responsible for the execution of the activity.
Marketing
benefit
activity
from
planning,
launched
the
be
market.
It
certain
at the
advantage;
should
date
is
implemented
should
set
to
time of a festive
otherwise,
This aspect of the
it will
not
start
at
the
right
lose
the
opportunity
the
season,
it
marketing
should
to
activities.
follow
the
its
If
gain
maximum
competitors.
While
to
product
schedule,
in
is
order
be
to g a i n
lose its charm.
marketing
plan
achieve the marketing objectives.
h i g h l i g h t s the marketing
activities that are planned
to
For example:
What are the types of goods or services to be marketed?
What should the pricing
What kind of distribution channel should
What
promotional
order to
strategy be?
strategy
or
be u s ed ?
promotion
tool
should
be
used
to
promote
the
product?
Step 7:
Evaluating the
Evaluation
Marketing
is the final step
in
marketing activities p l a n n e d
Activities
should
updating
new
be
marketing
planning.
It is used
to evaluate the outcomes of
to achieve the objectives.
monitored
activities,
Plan
in
and
order
evaluated
to
achieve
frequently.
objectives.
It
helps
in
Evaluation
modifying
also
and
helps
Page 39
in
02.
Marketing
identifying
Planning
the
key
organization should
Market
situation
organization
advised
to
areas
that
need
improvement.
The
marketing
should
environmental
reassess and
compare
the
actual
changes
update
itself,
outcomes
with
take
place
according
the
over
to
them,
promotional
period
the current
objectives
to
of
the
of
time.
situation.
know
if
the
An
It
is
planned
in the right place.
There are different ways of evaluating the plan, such as, observing
analyzing
activities
be accountable.
and
activities are falling
eBook
collecting
activities
for
feedback
direct
from
response,
the
customers
checking
the
or
the sales figures and
clients,
conversion
monitoring
rate,
analyzing
Return on Investment (ROI), etc.
Page 40
the
the
02.
Marketing
Planning
eBook
2.9 Chapter S u m m a r y
The
marketing
process.
plan
is
the
most
important
It is a roadmap to achieve marketing
output
of
the
marketing
goals.
It keeps the resources focused
on the objective of the business.
for
marketing
marketing
The steps
plan
is
essential
the
planning
success
of
any
business.
It
directs
all
activities of an organization.
in
planning
process include:
1.
Update historical data
2.
Collect current situation data
3.
Data analysis
4.
Develop objectives,
5.
Developing
6.
Negotiate fi n a l
7.
Measure progress
8.
Audit
strategies, and
programs
financial documents
plan
The main components of a marketing
p l a n are:
Creating the executive summary
Analyzing
Performing
a SWOT analysis
Developing
marketing
Devising
Implementing
Evaluating
the environment
marketing
objectives
strategies
marketing
the marketing
plan
plan
Page 4 1
the
Marketing
Environment
I T M
03.
Marketing
Environment
eBook
3 . 1 Introduction
Marketing
ensuring
is a
the
organizations
such
key
earnings
are
unstable
environments
function
of any organization,
and
working
market
growth
in
of
unsteady
conditions,
constantly.
This
helps
an
which
enterprise.
and
disorderly
organizations
involves the challenging

In
present
environments.
need
organizations
the
to
identify
scan
new
task
scenario,
To
cope
their
up
of
most
with
operating
opportunities
and
threats.
Many
big
brands failed,
market. Thus,
to spot and
mainly,
the long-term
because they could
not understand
survival of an organization
the d y n a m i c s of the
largely depends on
its capability
respond efficiently to key changes in its marketing environment.
After reading t h is chapter, you w i l l
be able to:
Define marketing
environment
Explain the elements of marketing environment
Page 43
03.
Marketing
Environment
3 . 2 M e a n i n g and
Understanding
is
the
organizations do
functioning
Definition of M a r k e t i n g
the concept of environment
environment
environment
where
of any
of
marketing
Kotler,
and
forces
and
face
rough
Any
on
the
affect
transactions and
fluctuation
in
its
and
internal
point of marketing,
marketing
they function closely
weather
The functioning
changes
company's
that
starting
implements
plans.
as it
Business
with the environment.
environmental
if
they
fail
in
economic
study
of
marketing
the
factors
adjust
changes
conditions.
This
marketing
environment
a company's
to
of an organization
new technological developments,
depends
"A
organization
external
environmental conditions.
consumers,
is the actual
Environment
that
The
affect
the
business enterprise.
may
the government,
an
not work in a v a c u u m ;
consists
Organizations
of
eBook
ability
to
with
is affected
in
the taste
signifies
environment.
consist
develop
of
changing
by a changes
and
that
the
success
to
external
maintain
factors
successful
relationships with the target markets."
the
environment
order
to
both,
microenvironment and
their marketing
of
Philip
of an
organization
will
have
serious
impact
on
its
functioning. Therefore, organizations analyze their environment on a continuous basis,
identify
in
preferences
According
the
and
the
their opportunities
and
threats.
macroenvironment.
The
marketing
environment
in
comprises
It helps an organization while designing
strategies.
Purpose of Environmental Analysis
Environmental analysis is conducted
to:
Know the threats and opportunities of the market where an organization operates.
Help
managers
designing
Keep
an
marketing
Know
the
situation
avoid
benefits
of
opportunities,
and
minimize
threats
while
strategies.
organization
rig ht time and
take
attentive
so
that
they
can
grab
the
right
opportunity
at
the
the threats.
important
is presenting
trends
of
the
market
and
determine
whether
current
threats and o p p o rt u n i t i e s .
Page 44
03.
Marketing
Environment
3.3 Internal a n d
An
organization
consists of the
Levens
both,
the
marketing,
internal and
that
internal
that
implementation
communicate
External E n v i r o n m e n t
components
Michael ,
including
the
has
eBook
of
external environments.
are within
the organizational
environment
occur
within
marketing
organizational
the
of
business
organizational
practices
policies
The
and
within
parameters.
involves
all
functions
of
an
practices
internal environment
According
those
a
in
employees
and
to
activities,
business.
organization,
to
It
order
is
to
internal
shareholders.
External
environment
organization
and
have
refers
the
to
elements
capability
organization's external environment
Microenvironment or Task
The
microenvironment
is
macroenvironment
organization
is
nearer
to
an
stated
its
suppliers,
earlier,
the
is
customers.
marketing
Macroenvironment
marketing
functioning
into two
broad
the
of
parameters
the
of
the
organization.
The
categories:
organization
and
consists
of the
elements
Environment
broadly
dispersed
and
influences
the
functioning
of an
indirectly.
Microenvironment
serve
the
outside
the fundamental operation of the organization.
3.4 Components of Marketing

As
are
Environment
Macroenvironment or General
The
affect
is d i v i d ed
that affect the performance and
to
that
the
An
external
firm's
p l a n n i n g and
environment
immediate
organization's
intermediaries,
consists of the
Environment
is
environment
divided
that
microenvironment
competitors,
larger societal
two
impinges on
includes
publics,
forces that
into
have
layers.
its ability
the
and
company,
customers.
a strong
impact
strategies.
to
Page 45
on
03.
Marketing
Fig.
Environment
gives
3.4a
better
eBook
understanding
of
the
components
of
the
marketing
environment:
Fig.
3.4.1 The
3.4a: Components of Marketing
Environment
Microenvironment
The microenvironment can

affect the functioning
be best understood
by understanding
its
key elements,
which
of an organization.
Key elements of the marketing
microenvironment are:
The Company
The first component of microenvironment

philosophy
of top-level
company.
Top-level
objectives,
managers
management
mission,
take
management
and
decisions
vision
within
have
is
for
the
is the company
a
profound
deeply
the
itself.
effect
involved
company.
parameters
in
This
that
are
The mission,
on
the
vision, and
functioning
formulating
planning
established
the
helps
by
of
the
policies,
marketing
the
top-level
management.
All
departments
resource,
and
of
production,
actions.
company,
etc.,
According
about consumers and
to
have
the
work in
such
a
as
strong
marketing
harmony,
research
impact
concept,
and
on
all
the
development,
marketing
of these
finance,
human
department's
departments
must
in order to deliver better customer services.
Page 46
plans
think
03.
Marketing
Environment
eBook
Suppliers
S u p p l i e r s are companies or i n d i v i d u a l s that
the
production
considerable
and
and
the
of
goods
effect
sudden
damage
on
price
and
the
services.
functioning
rise of raw
customer
trust
provide raw
of
The
a
materials
and
supplier's
company.
by
materials to other companies for
Supply
suppliers can
confidence
in
the
environment
can
shortages,
affect
long-run.
sales
Close
have
labor
in
the
strikes,
short-run
relationships
with
suppliers are an effective way to remain competitive.
Marketing
Intermediaries
Marketing
between
intermediaries
producers
distribute
and
be
firms
ultimate
products to final
service agencies,
can
buyers.
Marketing
the
firms
that
markets.
agencies,
the
means
point
use
the
to
intermediaries
difficulties
gaps
that
resellers'
of
as
has
separate
the flow of goods and
financial
from
connecting
sell,
include
promote,
resellers,
link
and
marketing
intermediaries.
producers and
in
companies
and
the
handling
in
and
Marketing
promoting
advertising
sell
them
moving
to final
of
physical
service agencies
their
agencies,
products
to
marketing
are
target
research
marketing consultants.
credit
companies,
insurance
companies)
lenders.
become significant d u e to
Intermediaries
manufacturers from
organizations,
as
companies
destination.
banks,
distribution.
act
retailers.
final
borrowers and
help
goods
includes
(such
that
intermediaries
involved
sales promotions specialists,
possession
now
assistance
role of intermediaries
growing
to
distribution
channel funds between
The
activities
of o r i g i n
provide
Physical
Financial
buy
include wholesalers and
distribution
from
They
physical distribution firms, and
consumers. They
goods
individuals
buyers.
Resellers are distribution channels that
Physical
or
such
as
increasingly wider markets and
overcome
ultimate
Pantaloons
and
the
users.
place,
Many
Shoppers
time,
and
manufacturers
Stop,
to
smoothen
services.
Competitors
Every
sell
company
the
affected
same
by
the
comes
product
actions
across
range.
and
a wide
The
range
of competitors.
marketing
behaviors
of
Competitors
environment
competitors.
Thus,
of
are
company
monitoring
and
those
is
who
strongly
analyzing
Page 47
03.
Marketing
the
Environment
competitor's
environment
improve its position
eBook
is
important,
if
an
organization
wants
to
maintain
or
in the market.
Publics
According
to
Philip
Kotler,
"A
public
is any group
interest in an organization's ability to achieve
or
hamper
company's
ability
to
concrete steps to manage a healthy

up
public
publics.
relations departments,
Every
company
faces
carry
out
that
has an
its objectives." The
its
objectives.
relationship with
its key
Smart
public.
in order to maintain a positive
several
important
actual
publics,
or
potential
public can
companies
of
take
Many companies set
relationship with
some
help
which
are
various
discussed
below:
Financial
Publics
Relationships with financial

the
ability
of
company
investment houses,
Media
institutes are very
and
to
publics
include
banks,
must
cultivate
good
relationships
radio and
with
television
media
organizations,
such
as
stations.
Government Publics
Company
management
while formulating
Citizen-action
firm's
Local
Every
plans.
into
account
the
government's
Management must
developments
be aware of recent changes
influence the company's operations.
d ec i s i o n s
are
sometimes
environmental groups,
questioned
minority g r o u p s , and
by
citizens,
consumer
others.
Publics
company
community
relations
and
take
Publics
marketing
organizations,
must
marketing
in the laws that can
Financial
influence
stockholders.
newspapers, magazines, and
funds.
as they directly
Publics
Companies
obtain
important,
faces
local
organizations.
officer to
deal
with
publics
Large
the
that
include
organizations,
community,
neighborhood
generally,
hire
answer questions,
residents
a
attend
community
meetings,
contribute to useful causes.
and
Page 48
03.
Marketing
General
Environment
Publics
A company
toward
eBook
its
needs to understand
products
and
the approach and
services
in
the
perception of the general
marketplace.
company
in the p u b l i c directly affects consumer buying
Internal
Publics
company's
board
to
of directors.
educate
the
internal
its
public
Companies
internal
company's
consists
of
usually
public.
When
environment,
workers,
use
the
they
The
perception
newsletters,
managers,
memos,
and
of a company
automatically
of
the
and
the
habits.
volunteers,
employees
public
spill
positive
other
are
means
happy
attitude
with
in
the
marketplace.
Consumers
Consumers
are
organization
consumers.
very
designs
Only
by
marketing
studying
an effective marketing
shut down
the
important
mix.
business.
aspect
programs
the
trends
the
according
microenvironment.
to
of consumer
Changes in the
At the
of
same time,
the
tastes
behavior,
are
successful
preferences
companies can
needs of consumers,
if they
and
if left
observed
plan
unobserved,
properly,
of
for
may
the company
can capture an attractive market opportunity.
3.4.2 The Macroenvironment

The
macroenvironment
microenvironment,
organizations
of
where
directly
or
an
organization
company
indirectly.
later, affect the company's
The
can
is
interact
elements
relationship with
hazier,
with
of the
its customers,
as
compared
identifiable
individuals
macroenvironment,
suppliers,
to
the
and
sooner
or
intermediaries, and
so on.
Key elements of the marketing
macroenvironment are:
Demographic Environment
The
first
macroenvironmental
demographic
Demography
and
location.
segment.
pattern,
is the
An
as
study
people
of h u m a n
organization
Changes
in
force
the
that
are
needs
very
to
population's
the
scrutinized
important
population with
studies
be
component
regards to
demographic
demographic
very
sex,
pattern
age,
to
characteristics
carefully
of
the
the
market.
race, ethnicity,
identify
have
its
target
significant
effect on the functioning of an organization.
is
Page 49
03.
Marketing
Demographic
strategies
strongly
Environment
characteristics
and
products
allied
to
the
to
eBook
help
an
reach
its
organization
target
consumer-buying
develop
market.
pattern
target audience responds to a specific marketing
well-planned
Demographic
and
are
smart
marketing
characteristics
indicators
of
are
how
the
mix.
Important trends of the d e m o g r a p h i c environment are:
Growing
Population
Growing
population
organization.
imposes
Thus,
serious
organizations
need
trends of the population of the country

Indian
census
characteristics.
suited
for
it.
is
It
more
helps
an
The following
organization
is
population growth of India, which
to
on
the
understand
before formulating
reliable
data
effect
source
of
formulate
provided
by
the
2001
1,02,87,37,436
2011
1,21,01,93,422
and
Data on the Growing
demographic
companies
any
marketing
The
on
plans
mix.
population
that
are
best
1 9 0 1 to 2 0 1 1 :
Population
84,64,21,039
market
and
has increased four times from
1991
the
an
M i n i s t r y of Home Affairs on the
23,83,96,327
knowing
of
characteristics
marketing
1901
Without
mix
the
information
Census Years
T a b l e 3.4.2a:
marketing
that
Population of India
features,
carefully
companies
scan
the
cannot
market
survive
can
in
grab
the
major
opportunities to grow.
Literacy and Occupation
Literacy
is another dimension
compared
year
the
to the year
2011.
Increased
demand
pattern.
to the
for
1995,
of understanding
74
literacy
quality
Improved
population.
spending
Levels of Population
percent of the
percentage
products,
literacy
levels
in
saving
power
business of the b a n k i n g
the
turn,
improved
A significant increase in occupational
power and
demographic environment.
population
affects
which,
also
the
of customers.
the
in
India
demand
for
influences
is
directly
and
consumption
capacity
levels automatically
This
in the
information
the
occupancy
literate
As
of
the
increased
the
provides a
stimulus
sector.
Page 50
03.
Marketing
Environment
eBook
ICICI
--
bank
with
its
corporate
J,c,c,_
cards,
GI
I'
,,,,
travels
cards,
credit
cards,
''O
and
the
debit cards
working
is trying
class
with
to capture
an
effective
means of communication.
The Changing
An
improved
Now,
more
increase
working,
in
Role of Women
literacy
and
the
they
more
rate
Indian
number
have
opened
less
women
of working
time
to
for companies like Whirlpool and
A Changing
new
doors
are
and
working
couples.
manage
and
Quite
their
job
opportunities
hence,
one
obviously,
home.
This
as
can
more
provides
LG to come up with time-saving
women.
observe
women
an
are
opportunities
appliances.
F a m i l y Pattern
Modern
family
India
favors
system,
as
the
of
urban
active
families
part
in
consumption
families
smaller
food,
must understand
the
products.
the
apartments,
compact
needs of nuclear families,
now
the
taking
purchasing
advocate
and
to
The children
are
the
of
nuclear
compared
traditional j o i n t family.
marketers
for
and
Smaller
demand
for
ready-to-cook
vehicles.
which are growing
Thus,
more
rapidly now.
Geographical S h i ft
The
significant
migration
of
population
from
doors of opportunities for m a n y companies and

to
warm
places
like
Mumbai,
for cooling equipment,
Kolkata,
Pune,
to
urban
areas
entrepreneurs.
and
Chennai
has
opened
new
Migration
of groups
increased
demands
like coolers, a i r conditioners, etc.
Residents
sale
of
of
showcase
areas
big
cities
luxurious
international
rural
brands,
their
provide
also
account
products,
such
products
stimulus
in
to
as
for
an
which
Gucci
India.
help
and
Growth
many
increased
many
Armani,
in
sectors,
to
suburban
such
Page 5 1
as
03.
Marketing
Environment
automobile,
understand
furniture,
eBook
and
the changing
food
trends
industries.
Therefore,
of consumers
organizations
before developing
any
need
to
product and
service.
Economic Environment
It
is
defined
interest
and
sum
that
need
to
the
the prevailing
the
rates
Marketers
inflation,
as
total
of all
infiuence
understand
economic factors,
the
the
purchasing
income
pattern,
as
inflation,
spending
level
where
of
it
income,
ability
of
consumers.
unemployment,
is operating
wealth,
the
so they
rate
can
Some of the economic trends are described
of
grab
below:
Income Level
Income
is
an
important
understanding
the
segment
target
Central
their
Statistical
increase
of
income
trends
audience
and
very
Organization
as
9.4%
component
compared
easily.
of
2007,
to
the
year
2003,
level,
profits.
According
many
from
Goldman
w i l l quadruple by the year 2020, affecting
environment.
country,
to
data
Indian
which
marketers
published
economy
was
By
can
by
the
showed
Per
3.8/o.
an
capita
7.4/o to 8 . 4 % .
international
to
the
According
year
income
made
economic
the
With an
and
the
in
also increased
increased
of
statistics
income of the country had
market
and
business cycle of the economy
market opportunities.
such
brands entered
Sachs,
India's
into the Indian
per capita
income
the business of many organizations.
Stages of Business Cycle
Business
four
cycle
reflects
the
phases-prosperity,
business
cycle
affects
prosperity phase,
automatically
During
the
causes
times,
fluctuations
in
recession,
depression,
and
the
spending
power
of
there is full employment and
provides stimulus to the spending
economic
decline
consumers
expenses
periodic
in
slowdown,
income
focus
wherever
and
more
possible.
is
affects
toward
an
the
economy.
recovery.
consumers
is
Each
divided
stage
differently.
into
of
During
the
the
power of consumers.
increase
spending
in
of
unemployment,
consumers.
products
organizations
in order to
It
a rise in gross national product that
low-priced
Therefore,
environment on a regular basis,
there
an
must
and
cut
scan
which
During
down
the
bad
their
economic
know where the economy is heading.
Page 52
03.
Marketing
Environment
eBook
Inflation
Price rise reduces the

and
higher
trouble
in
prices
paying
may
forecasting
ability of consumers.
negatively
the
affect
future and
sales.
accurately
It adds to the cost of production

Fluctuations
assessing
in
the
price
prices and
create
returns
from
investments.
Political-Legal
Organizations
operates
the
or
Environment
must
plans
marketing
understand
to
operate.
activities
of
environment includes a l l
the
political
Change
an
in
environment
political
organization.
laws,
marketing
fiscal
and
policies,
system
import and
regulations
international
of an
can
negatively
political
in
affect
environments
order to
grab
new
is
policies,
has
to
the
by
major
the
impact
Kotler,
pressure
government's
of an
impact
of an enterprise,
opportunities.
where
a s i g n i fi c a n t
Philip
customs duties.
functioning
a
country,
it
on
"Political
groups that
individuals in a society."
affected
and
have
the political front affects the working

strategies,
the
government agencies, and
enterprise
export
climate
According
influence or l i m i t various organizations and
The
of
The
monetary
Ignorance of laws,
organization.
on
business.
and
rules,
Domestic
and
Development
on
so organizations must adjust their
organizations
must
be
aware
of the
major regulations that can affect their business activities.
The
government
work
system
environment
unfortunately,
the
for
also
they operate and
an
country
also
organization
government
government's form and
Organizations
in
is
not
to
always
philosophy can
have
is
influences
stable
and
stable
the
legal
are
replicate
in
a
Moreover,
packaged
the
food
brand
it
is
food
is
to
of
require
already
India,
the
government
which are actively
involved
has
in
set
up
many
to
denote
marketing
regulatory
affairs.
Thus,
ideal
government
Changes
have
but
in
the
it
is
in
which
India, companies
special
the
pure
bodies,
in
country
available
the red dot to denote non-vegetarian
In
the
For example,
compulsory
items
The
effect on the business.
business,
that
activity.
cooperative.
environment
then make the appropriate decisions.

that
business
cooperative
and
have a profound
understand
the
in
approval
the
green
vegetarian
to
market.
dot
on
items
all
and
items.
such
as
important to
SEBI
and
TRAI,
understand
Page 53
the
03.
Marketing
laws
and
the
marketing
Environment
guidelines
set
Socio-Cultural
Beliefs,
the
regulatory
bodies,
in
order
to
avoid
any
kind
of
political
ideology and
culture,
is another
social
environment.
modify t h e i r products,
nation.
p h i l o s o p h y of major
political groups
strategies of an organization.
Environment
environment
values,
socio-cultural
Proper
class,
Many
as well as,
understanding
important
lifestyle,
big
component of the
and
brands,
the
attitude
such as Van
their marketing
of
the
of
macro-environment.
people
Heusen,
LG,
constitute
and
the
McDonald's,
mix to suit the cultural environment of
socio-cultural
environment
is
necessary
for
the
It has two main components:
success of an organization.
these
i n d i v i d u a l s that influence the marketing
Socio-Cultural
by
issues.
Marketers also understand

and
eBook
Culture
According
beliefs,
to
the
words
standards,
of
Mitchell,
knowledge,
"Culture
morals,
is a set
laws,
of
and
learned
core
behaviors
values,
by
shared
individuals and societies that determines how an individual acts, feels and
views oneself and
the
formulation
of
others".
marketing
Cultural characteristics are

strategies,
ignoring traditions, values,
beliefs, and
Case Study of Kellogg's:
From
Kellogg's
is
one
of
the
most
The
mix that
time
of
other
its
early
global
traditional
markets.
breakfast
convenience
depicted
not
at
entry,
foods.
is
to
company
habits
In
for the
identical
The
of
its
all
healthy.
This
The
cultural aspect that

their breakfast,
h u rt
initial
company
lead
Indian
that
to
market,
which
to
mix.
to business
in
the
it
at
the
used
for
transform
modern
cereal
commercials,
reason
not
and
of
the
and
also,
the
the
and
Kellogg's
sentiments
understand
with corn flakes, they

for
cost
blunders.
U.S.
of
another
warm
milk
in
whereas, the corn flakes were preferably consumed
Another
The
in their breakfast was
emotions
could
brands
Indian consumers preferred
hot m i l k was mixed
palatable.
global
aimed
Indians
the
marketing
convenience foods.
that what Indians were eating
homemakers.
When
used
as,
religion can
successful
producer of cereal and
it
well
as they g u i d e
Tasteless to Tasteful
world's leading
marketing
as
important,
low
demand,
became moist and

was
deemed
to
with cold
were no
be
the
milk.
longer
premium
Page 54
03.
Marketing
pricing
Environment
adopted
eBook
by the company.
The
prices of its
comparison to its nearest competitors,
Due to a l l these problems,

compared
products were way
like Mohan's Corn
Kellogg's sales declined
to the sales of the
by 25
previous month of March,
too
much
in
Flakes.
percent
in April,
1 9 9 5 , as
1995.
India-specific Strategies Adopted by Kellogg's
To
hit
the
Indian
marketing
products
small
also
mix.
To
used
which
specific
and
again,
overcome
in the Indian
packets,
Shakti
market
Hindi
Ca l c i u m
the
market,
had
Kellogg's
pricing
issue
the company
a price tag
words
Shakti)
revised
of 10.
(Corn
to
grab
Flakes
the
of
its
its
launched
Kellogg's
with
Iron
attention
of
users.
Kellogg's
then
successful
Frosties
decided
brands,
(April
business,
evening
Kellogg's
Kellogg's
by
launch
Chocos
1997),
snacks.
to
The
surprise
in
of
(September
India.
In
order
promoted
success
and
two
their
these
sales
highly
1996)
and
to expand
these
of
its
brands
variants
picked
its
as
took
up
significantly
in
the
subsequent
months.
Thus,
in the
as
organizations need
market.
religion,
beliefs,
cultural and
in
Japan,
Marketers
to adapt to new cultural characteristics,

need
customs,
to examine other important components of culture,
values,
societal differences.
may
fail
in
India.
In
For
example,
mourning
the
should
pork
and
cultural
are
also
is
not
be
many
aware
banned
used
dimension
of
in
the
festivals,
It has
the country where they are p l a n n i n g
Companies
if they want to survive
in
They
been observed
situations,
also
need
to
learn
about
that strategies that are
companies
have
successful
to adapt the
culture
Muslim
for
country
the
religious
practices
countries,
black
packaging.
Thus,
before
designing
and
it
is
prevailing
white
are
important
marketing
in
of
the
to
country.
colors
of
understand
strategies
for
organization.
the
to operate.
about
Japan
etc.
such
Page SS
an
03.
Marketing
Environment
eBook
Social Class
Each
society
standards,
norms.
of
to
on
the
women,
many
jobs.
brands,
foods,
This
like
to
that
of them
cater
changing
to
pattern,
of society
which
are
has
known
its
as
own
class
of
Indian
are
taking
increase
Knorr,
the
needs
trends
for
With
an
and
to
class
they
strategies
lifestyle
MTR
behavior
Each
structure
so
leads
classes.
Companies
segment.
the
and
have
the
effective
in
social
consumption
properly,
target
changes
the
values
understand
design
each
up
lifestyle
of
consumers.
society
can
terms
in
effect
pattern
of
of different
These
strong
need
consists
of
in
came
of
up
the
society,
the
demand
with
Indian
so
an
for
excellent
society.
that
packaged
they
range
food.
of
Organizations
design
their
Many
big
ready-to-cook
should
analyze
marketing
mixes
accordingly.
Natural
Environment
The
natural
environment
the
means
of
concern
includes all
production
about
the
by
protection
destruction
of environments
etc.
Business,
conditions,
enterprises
as
itself,
it
can
should
affect
take
Since
environment,
against
has
natural
marketers.
natural
resources,
the
all
with
to
forms
open
the
steps
limit
1960s,
particularly,
of
of
of
harmful
effects
on
has
as
been
to
i n p u t for
growing
shortage
climatic
roads,
changing
environment
needed
regard
changing
construction
of the
their
there
with
pollution,
awareness
functioning
to
the
mining,
develop
resources that are
conditions,
buildings,
natural
of
dams,
environment
in
many
ways.
community,
Business
as
far
as
possible.
Some important trends of natural
resources are:
Scarcity of Raw Materials
Air and
Air
water seem
pollution
to
affects the
water crises are faced

coal,
food,
resources
be
and
for
making
life
by
forest
infinite
resources
of residents of urban
people in
should
their
but these are facing
a l so
many
be
products
semi-urban
parts of the world.
used
are
and
wisely.
now
the
cities,
whereas,
Resources such as oil,
Companies
facing
l ong- run dangers.
that
problem
require
of
considerable
price rise.
these
Page 56
03.
Marketing
Environment
Increased
Industrial
eBook
Level of Pollution
activities
always
of chemical wastes,
non-biodegradable
rising
spoil
the
mercury
products
quality
levels
(such as
in
of the
natural
the oceans,
bottles,
plastics)
environment.
and
increasing
Dumping
garbage of
have adversely affected
the
natural environment.
Concern
for
the
Companies are
pollution
natural
now
controls,
manufacturing
and
environment-related
Technological
The
21''
better
the
to
in
is
considered
shaping
marketplace
mind
J.
K.
and
customers.
the
products,
operations.
for
many
recycled
companies.
materials,
Companies
are
superior
realizing
that
business for them.
With
such
technological
lives of i n d i v i d u a l s .
creating
opportunities
advancement,
defines
for
such
as
the
technology
as
improves
shortening
very
era.
rapidly
Sony,
It
Technology
is
one
of
the
businesses a l l over the world.

increases the
marketers.
the
The
Internet,
momentum
word
It
phones,
in
brings
stem
as,
"a
exciting
of the
and
systematic
tasks."
products,
technology
provide
Wal-Mart,
and
more
Apple
It
cell
of
scientific
or
leads to the development of new
and
life
application
gives
cycle,
options
have
cost
new
to
effective
products
consumers.
increased
their
services
are
to
flooded
Many
research
development budget to cope with changes in the technological environment.
plays
of change
Technology
smart
most
much more.
knowledge to practical
services,
market
companies,
be a good
heart surgery, and
organized
products
into
by
Galbraith
other
biodegradable
the destiny of people and
the
technical
research, open
Environment
Century
role
provides
energy-efficient
activities can
dramatic forces shaping

a vital
environment
Page 57
big
and
03.
Marketing
Environment
eBook
3 . 5 Chapter S u m m a r y
company's
marketing
environment
consists
that affect a company's a b i l i t y to develop and
of
the
external
factors
and
forces
maintain successful transactions and
relationships with the target markets.
External
components
broad categories:
Microenvironment
of
the
marketing
Microenvironment and
environment
can
be
classified
into
two
macroenvironment.
is the firm's immediate environment that
impinges on
its ability
to serve its customers.
The
macroenvironment
is
broadly
dispersed
and
influences
the
functioning
of an
organization indirectly.
The key elements of microenvironment are:
The company
Suppliers
Marketing
Competitors
Publics
Consumers
Demography
ethnicity, and
is
intermediaries
the
study
of
human
population,
with
regards
to
sex,
age,
race,
location.
Important trends of the demographic environment are:

o
Growing
Literacy and occupation
The changing
A changing family pattern
Geographical shift
According
agencies,
individuals
to
and
population
Philip
levels of population
role of women
Kotler,
pressure
"Political
groups
that
environment
influence
or
includes
limit
all
various
laws,
government
organizations
in a society."
Page 58
and
Consumer
Buying Behavior
I T M
04. Consumer Buying
Behavior
eBook
4 . 1 Introduction
The
essence of marketing
meeting
looking
the
for
marketing
customers.
changes
needs
fresh
of
target
emerging
strategies
Gaining
that
is the
take
customers
customer
require
a
consumer.
the
360-degree
place
Effective
satisfactorily.
trends
that
organization
view
throughout
marketing
of
their
both,
life
Marketing
spur
to
their
for
connect
day-to-day
helps
identifying
managers
opportunities
completely
span,
requires
are
them.
with
activities
marketers
design
always
Winning
its
the
T h i s chapter provides a better understanding of consumer dynamics.
this chapter,
you will
be able to:
Define consumer behavior
E x p l a i n the
Identify the characteristics that affect consumer behavior
Explain the buyer decision
Black Box Model of consumer behavior
target
and
products in the right way.
After reading
and
process for new products
Page 60
the
right
04. Consumer Buying
Behavior
eBook
4.2 C o n s u m e r Behavior: An
According
to
behavior
of
services
final
for
consumer
to
Kotler,
"Consumer
buyer
consumers-individual
personal
behavior
marketplace,
goods
Philip
Enigma
consumption."
helps
which
them
products
consumers.
Even
are
to
and
obsolete,
believe
which
and
refers
to
households-that
Marketers
decide
brilliantly
behavior
is
the
product
market if consumers do not identify themselves with
buy
a fair
products
which
engineered
that
may
goods
required
strategy
be
buying
and
understanding
are
best
the
in
to
of
the
present
unsuccessful
in
the
it.
4.3 Significance of U n d e r s t a n d i n g C o n s u m e r Behavior

It
is
necessary
for
marketers
to
understand
consumer
behavior
due
to
the
following
reasons:
It
helps
in
developing
ways
for
the
more
efficient
utilization
and
target
marketing,
of
marketing
resources.
For successful
market
an understanding
of consumers and
It will be highly useful
The
study
of
segmentation
in exploiting
consumers
it
is
necessary
to
have
their behavior.
marketing
enables
opportunities.
marketers
to
shape
the
future
of
their
organizations.
4.4 B l a c k Box M o d e l of C o n s u m e r Behavior

The
Black
the
behavior
include
Box
inner
mode l
of
an
is
based
individual
needs,
regards consumer
model
compares
the
is
thoughts,
model
with the mind
on
the work of psychologist

affected
and
behavior as a
transformation
of the consumer, which
Advertisements,
presentation
by
by
range
influences
processing
mind,
where
of consumers,
of the
input.
it
is
such
process
Thus,
processed
it
external
that
of
Lewin,
personal
who
influences
environmental
responding
changes
to
the
studied
stimuli.
(which
factors).
The
stimulus
Black
into
how
This
Box
response
remains hidden from the outer world.
pitchmen,
as
of
process of
come u n d e r the scope of the stimulu s and

consumer's
interactions
Ku rt
needs,
opinions of family
members and
act as the input for the
to
generate
motives,
highlights
the
the
black
observable
attitude,
learning
box,
friends who
that is,
response.
etc.,
importance of studying
the
all
the
Internal
affect
the
psychological
Page 6 1
04.
Consumer Buying
dimension
Behavior
of consumers,
which
eBook
helps
marketers
understand
the
working
of
the
Black
Box model.
Fig. 4.4a gives a broader perspective of the consumer black box m o d e l :
Transformation
Input
process
Output
Black Box
Consumer
(buyer's mind)
behavior
Internal factors
Decision
Stimuli
External factors
Marketing mix
Product
Price
Place
Promotion
Need and motives
Purchases
Perception and self-concept
No purchase
Attitude
Request for more
Learning
Personality
information
Others
Social class
Family
culture
Reference group
Opinion leadership
Fig. 4.4a: Black
Box Model of Consumer Behavior
Page 62
04. Consumer Buying
Behavior
eBook
4.5 Characteristics Affecting Consumer Behavior

Cultural,
social,
personal,
and
psychological
characteristics
affect
consumer
buying
behavior.
Cultural
Social
Personal
Culture
Psychological
Age and life
Reference groups
cycle stage
Motivation
Occupation
Perception
Subculture
Buyer
Economic situation
Family
Leaming
Lifestyle
Beliefs and
Personality and
Roles and status
Social class
Fig. 4.Sa:
Source:
Characteristics Affecting Consumer Behavior
Philip Kotler, Armstrong, Agnihotri,
Ehsan
ul
Haque,
Principles of Marketing,
Characteristics Affecting Consumer Behavior:

Cultural
culture,
factors
stress
subculture,
purchasing.
Thus,
and
attitudes
self-concept
the
deep
social
and
classes
marketers need
broad
play
Cultural
influence
an
to understand
13th Edition.
Factors
on
important
Pearson,
consumer
role
in
the role played
buying.
influencing
Buyer's
consumer
by them.
Culture
According
basic
to Philip
values,
behaviors
from
learned
institutions."
to
of
and
Each
the
adjust
wants,
and
by a member of a society
influences,
behavior
failure
perceptions,
family
cultural
Kotler, "Culture is a set of
other
society
which
consumers.
to
the
to
find
has
important
a
affect
An
culture
culture
the
and
buying
organization's
can
affect
its
functioning.
Marketers
might
be
are
always
required
identifying
in the
cultural
marketplace.
shifts,
in
For example,
the use of cosmetics these days provides marketing
order
out
new
products
the shift of male consumers

opportunities to
that
toward
several companies.
Page 63
04.
Consumer Buying
Brands,
such
Behavior
as Nivea and
eBook
Emami, are trying
to g a i n
these opportunities that arise from
the cultural shift.
Subculture
According
to
distinctive
who
Jim
Blythe,
groups
share
behaviors
of
customs
that
members
of
religions,
racial
fall
under
same
groups,
and
category
Punjabi
subculture:
Mandi,
Punjabi
Food
Lahore,
street
symbolizes
Sikhs
are
groups.
Numerous products and

with
from
examples
of
regions
all
Muslims,
key
subculture
services,
religious
other
Nationalities,
subcultures.
and
beliefs,
which are
ceremonies
and
at these subcultures.
in
the
enthusiasm of life.
Marketers must
identify whether the
it
candidate
an
tactors."
geographic
of
celebrations, are targeted
Gawal
meanings,
them
society.
are
society
have distinct values,
Hindus,
associated
cultural
distinguish
the
the
within
environmental
Members of subculture
and
people
common
and
"Subcultures
attractive
marketers
grab
them
with
according
for
chance
to
make
beliefs and
special
marketing
available
profits
values of a
in
by
each
or
not.
particular
Analysis
subculture
designing
products
of
segment.
and
subculture,
make
subculture
helps
It
also
marketing
provides
programs,
to their needs.
Social Class
According
to
relatively
members
Social
share
is
and
determined
and
many
in
classes
ordered
other
of
society's
divisions
interests,
terms
are
and
whose
behaviors."
income,
variables of the
education,
individuals
society.
Marketers must
identify the dynamics of social class
within the same social class, generally,
"Social
s i m i l a r values,
assets,
who make up
individual
Kotler,
permanent
class
occupation,
Philip
because an
tends to show similar buying
behavior.
Page 64
04.
Consumer Buying
Social
classes
furnishings,
difference
classes.
depict
leisure
distinct
activity,
between
Brands
Behavior
like
Gucci
products
and
different
eBook
and
brand
automobiles.
social
Thus,
classes and
focus on
preferences,
marketers
design
the upper classes,
such
as
clothing,
need
to
understand
products that appeal

offering
to
home
the
different
top-quality watches
that
serve as a status symbol.
A consumer's behavior is
groups, family, and
influenced
by
Social
social factors,
Factors
such as the consumer's
reference
social roles and status.
Reference Groups
In
the
direct
words
of
Philip
Kotler,
(face-to-face)
behavior."
Friends,
or
"Reference
indirect
celebrities,
groups
influence
clubs,
and
comprises
on
religious
an
groups
that
individual's
groups,
can
all
have
attitude
act
as
a
or
reference
groups.
Marketers
need
to
study
the
following
categories
of
reference
groups
for
better
understanding of consumer b e h a v i o r :
Membership groups
Membership g r o u p s comprise the few

exert a strong
influence on consumers.
all come under this category.
Friends,
interact,
family members, and
The members of t h i s group
the transmission of values and
but close members, who
play an
meet, and
peer groups
important role in
beliefs.
Aspirational groups
Aspirational
groups
personalities
and
are
groups
millionaires
are
that
people
examples
hope
of this
to
be
category.
a
To
part
of.
be
part
Sports
of the
aspirational g r o u p , the i n d i v i d u a l has to meet the norms of that g r o u p .
Dissociative groups
Dissociative
groups
are
defined
as
groups
whose
values
or
behavior
person
refuses.
Page 65
04. Consumer Buying
Marketers
must
think
Behavior
of
ways
eBook
to
reach
and
wherever the influence of reference groups
influence
is strong.
the
group's
opinion
leaders,
Marketers try to approach opinion
leaders by:
Identifying the demographic and
psychographic characteristics of opinion leaders.
Identifying the preferred media of opinion leaders.
Directing messages at opinion leaders.
Brands
like
Reebok and
known
celebrities
as
L'Oreal
brand
have
used
well
ambassadors,
by
getting them for in-store promotions.
Family
The
family
behavior.
influence
services.
is
one
of
the
Organizations
of
the
are
husband,
For example,
powerful
paying
wife,
Brooke
stories of their w e d d i n g s ,
print interesting
most
attention
and
Bond
organizations
kids
Red
in order to
to
in
Label
influencing
identifying
the
in
of
purchase
India
the
of
consumer-buying
roles
and
various
promotes
relative
products
its consumers to
increase the sales of their product.
and
send
They assure
to
stories on their packs, along with family photographs.
The structure,
size, and
consumer-buying
nuclear
family
whereas,
(head)
in
of
decision.
are
taken
For
by
example,
both,
decisions
husband
a joint family, decisions are taken
the
evaluating
member
system of the family also affect the
family.
the
of
the
Most
organizations
consumption
family
who
role
and
makes
are
and
by the
wife,
Karta
continuously
behavior
the
in
final
of
the
purchase
decisions.
Children are also playing a pivotal role in the family's buying

decisions. They are actively influencing
drinks,
health
drinks
(such
as
Boost,
the family's buying

Bournvita),
decisions in the fields of soft
restaurants,
clothing,
etc.
Page 66
Thus,
04. Consumer Buying
marketers
of
Behavior
restaurants,
eBook
mobile
phones,
advertisements on channels like N i c k and
Social
soft
etc.
are
now
playing
Pogo.
Roles and Status
The person's position in each group can be defined

to
drinks
Philip
Kotler,
perform-each
statuses
and
products and
"A
role
roles
role
consists
of
the
carries a status."
through
their
brand
in terms of role and status. According
activities
Marketers
that
generally
associations,
and
services that communicate their role and
person
is
expected
communicate the
customers
status in
society.
usually
to
various
choose
For example,
company's president would often drive a luxury car, wear expensive brands, and eat in a
5-star restaurant, all of which reflects their higher social status.
Personal
characteristics,
buyer's
decision
is
also
influenced
stage in the life cycle, occupation,
by
personal
economic situation,
Factors
such
personality and
as
buyer's
age,
self-concept, and
lifestyle.
Age and Stage in the Life Cycle
An
individual's
Changes
age.
and
in
buying
areas,
pattern of various
such
as food,
Organizations often
develop
Unilever's
appropriate
new
choose
products and
entertainment,
their target
products and
product ' P o n d s Age
and
services changes over a lifetime.
clothing
segments on
services for each
Miracle',
are frequently
the
with
basis of life cycle stages
stage.
targets the 30
linked
For example,
Hindustan
plus women's category,
who
are conscious of their looks and want to look pretty.
Buying
patterns
affected
such
by the family life cycle.
as,
migrating
late
to
opportunities,
stages
of consumers
of
professionals,
marriages,
abroad
buying
career
etc.,
for
are also
Trends,
children
better
of assets at early
by
opened
working
the doors of
new opportunities to the marketers.
job
Page 67
04. Consumer Buying
Behavior
eBook
Occupation
The occupation
look
for
the
accordingly.
in
your
of a person
spendable
You
should
products
products
that
are
manufacturing
affects the consumption

income
of
the
target
pattern.
market
As a marketer,
and
develop
you
your
also figure out the occupational groups that are more
and
services.
required
by
An
organization
specific
companies in Sialkot,
can
occupational
Pakistan,
even
be
group.
an
For
expert
products
interested
at
example,
should
making
instrument
s u p p l y surgical tools across the globe.
Economic Situation
The
choice
Marketers
and
of
of
interest
the
product
is
greatly
income-sensitive
rates.
If a
goods
recession
retune the price of products,
is
influenced
must
follow
inevitable,
by
consumer's
trends
in
marketers
economic
personal
can
situation.
income,
redesign,
savings,
reposition,
and
in order to offer more value to target customers.
Personality and Self-concept

A
consumer's
complete
behavior
personality
understanding
and
also,
better understanding
strategies
identify
and
the
of
guide
organizations also use
has
the
them
distinctive
consumer's
in
a concept
of self-concept
advertising
preferences
match t h e i r tastes and
their
to
helps
campaigns.
of
personality
formulating
related
By
influence
on
will
appropriate
personality
their
help
buying
marketers
products
called
consumers
and
and
person's
marketers develop the

understanding
know
services.
products
Many
A
marketing
marketers
and
their
self-concept.
company's
self-concept,
develop
behavior.
services
can
that
preferences.
Lifestyle
Lifestyle
is
an
understanding
important
of
the
consumer's value and
factor
lifestyle
how
that
affects
concept,
an
consumer-buying
organization
it influences consumer-buying
For
gets
behavior.
to
With
know
the
changing
behavior.
example,
address
affluent
the
God rej
evolving
urbanites
tried
lifestyles
with
to
of
its extensive
range of products.
clear
Page 68
04.
Consumer Buying
Behavior
eBook
An
individual's
perception,
buying
learning,
choices are
beliefs, and
influenced
by
Psychological
the
psychological
Factors
factors of motivation,
attitudes.
Motivation
Motivation
is
motivated
by
wants.
Kotler,
Thus,
the
driving
needs
force
and
when
consumer-buying
"Motive
is
th at
need
leads
needs
people
are
to
backed
act
by
behavior is stimulated
that
is
sufficiently
as
they
do.
purchasing
Human
power,
actions
they
by motivation. According
pressing
to
direct
the
are
become
to
Philip
person
to
seek satisfaction."
Maslow's Hierarchy of Needs
This
theory
Maslow
has
been
identified
self-actualization
five
proposed
basic
needs.
Fig. 4.Sb
needs are
the
needs,
According
needs before higher-level

the higher-level
by
psychologist
starting
to
with
Maslow,
Abraham
Maslow
physiological
individuals
needs affect t h e i r behavior.
must
in
needs
satisfy
the
and
year
ending
their
In countries where income
is h i g h ,
is the diagrammatic representation of Maslow's Hierarchy of Needs.
Lower-level
needs
with
lower-level
important to consumer behavior.
Fig. 4.Sb:
1943.
Page 69
04.
Consumer Buying
Behavior
eBook
illustrates the products that are designed to satisfy the needs of each level.
Table 4.Sa
Product
Level
Physiological needs
Food, water, medicines,
vitamins, exercise equipment and gym
memberships, health care and cleansing

and
Safety needs
products, sleep aids
mattresses, etc.
Health and
life insurance, computer antivirus software, smoke
and carbon monoxide detectors, antibacterial cleaners,
business
protection, auto safety features, etc.

Socia
needs
Cosmetics, food, entertainment, fashion, appliances and

f u r n i s h i n g s , c l u b s and organizations, cars,
Esteem needs
home
etc.
Fashion, jewelry, gourmet foods, electronics, cosmetics,

cars, credit cards,
investments,
sports and
luxury
hobbies, travel, spas,
etc.
Self-actua ization
Education, cultural events, sports and
needs
seminars, technology, travel,
Table 4.Sa:
Source:
Louis.
E.
Boone,
Products
L.
hobbies, motivational
investments, etc.
Designed to Satisfy the Needs of Each
Level
Kurtz, Contemporary Marketmg
Perception
According
selects,
to
Philip
Kotler,
organizes,
and
picture of the world." An
d u e to three perceptual
retention.
pay
"Perception
interprets
is
the
information
i n d i v i d u a l can
process
by
inputs
have different
to
which
create
individuals
to
to
all
meaningful
processes-selective attention, selective distortion, and
these
screen
individual
perceptions of the same object
I n d i v i d u a l s are exposed to numerous stimuli every day
attention
an
stimuli.
out
most
Selective
of
the
attention
is
information
but it is not possible to
defined
they
selective
are
as
the
ability
exposed
of
to.
the
Thus,
organizations work really hard to g a i n the attention of their target customers.
According to
to
interpret
This
Philip
information
suggests
customers
selective
Kotler,
and
that
the
also,
retention,
"Selective distortion describes the tendency of people

in
a way that will
organization
study
how
consumers
must
customers
try
support what they
to
will
understand
respond
remember the good
to
the
their
already
mindset
of
believe."
its
promotional
points of brands
that
they
tools.
like
forget the good points of competitors.
target
Page 70
In
and
04. Consumer Buying
Behavior
eBook
Learning
According
that
to
arise
cues,
Philip
from
stimuli,
l ea r n i n g
are
Kotler,
"Learning
experience."
responses,
classical
and
strong
example,
bad
drives,
when
buying
conditioning
using
woman
experience.
a Pillsbury
and
buys a
If she
happens
operant
cues,
pack of
two
the
most
conditioning.
and
providing
buying
These
she
Thus,
of
can
learning
the
will
to
theories
learning
reinforcement.
have an
she
drives,
approaches
by connecting
positive
experience,
be reinforced.
interaction
popular
for a product
Pillsbury Atta,
has a good
response w i l l
through
The
establish demand
motivating
Atta more frequently-her

buying
Learning
reinforcement.
teach marketers that they should

with
involves changes in an individual's behavior
For
either good
probably
probability
use
or
the
is greater of
product.
Beliefs and Attitude
According
about
to
Philip
Kotler,
something."
'beliefs' that
Understanding
brand
toward
their
offerings
and
into
beliefs
professionals
have about
their
existing
of Indians,
paying
products and
attitude
is
very
those attitudes and
products
are
thought that a person
attention
services.
This
to
and
services.
attitudes
rather
McDonald's
has
valuable
for
marketers,
so
forms
successful
than
trying
become
company,
to
alter
huge
hit
in
the
By
basis
of
they
develop
positive attitude
generally,
them.
the
the
behavior.
that
consumers can adopt a more
holds
identifying
images a n d , ultimately, affects customer b u y i n g
consumer
means for persuading
belief is a descriptive
Marketing
customers
t h e i r product and
"A
tries
matching
category
to
fit
its
attitudes
of fast
food
restaurants of India.
4.6 Types of Buying

Henry Assael
identified
Decision Behavior
four types of buying
decision
behaviors,
buyer involvement and the degree of differences among
based
on
the degree of
brands.
Page 7 1
04. Consumer Buying
Behavior
eBook
Fig. 4.6a shows the types of buying
behavior:
High involvement
Low involvement
Significant differences
between brands
Few differences
between brands
Fig. 4.6a:
Source:
In complex
Behavior
of
Behavior
buying
significant
type
Decision
Henry Assael, Consumer Behavior and Marketing Action.
Complex Buying
of
Types of Buying
behavior,
differences
behavior
when
consumers are
among
the
product
is
involved
available
in a buying
brands.
high-priced,
Usually,
bought
process and
consumers
occasionally,
are aware
exhibit
risky,
and
this
highly
self-expressive.
A marketer of high-involvement products

information
make
and
users
analyzing
aware
about
between other brands,
consumers
is
based
example,
the
the
when
maximum
those
fact
their
Buying
buying
in a purchase
on
behavior
consumers,
all
of
the
is
features.
This
to
brands
brands
characterized
see small differences
purchase
consumers want
number
high-involvement
a l so
products.
helps
in
They
need
distinguishing
buy
is
in
an
extreme
brands.
brought
The
these
same.
products
This
is
involvement
high
infrequently,
home furnishings or curtain
selling
are
costly,
by
in
because
their
and
material,
similar
of
involvement
price
perceived
risky.
they
range.
For
view
For
difference
between the brands is insignificant.
to
the advantages of their product.
behavior
the
the structure of collecting
Behavior
but they
that
of
product
by explaining
Dissonance-reducing
Dissonance-reducing
the
needs to understand
Page 72
04.
Consumer Buying
Habitual
When
Buying
Behavior
eBook
Behavior
products are
bought with
low
involvement and
it falls under the category of habitual

or
eggs,
usually,
consumers
any superstore and
Variety Seeking
Some
brand
buying
little
behavior.
involvement.
significant
For example,
They
simply
brand
while
go
to
differences,
buying
the
bread
market
or
pick up the products.
Buying
situations
difference.
switching
show
buying
little
Behavior
are
Here,
characterized
consumers
by
low
frequently
takes place for the sake of variety,
involvement
do
plenty
but
of
with
brand
considerable
switching.
Brand
rather than dissatisfaction.
4.7 The Buyer Decision Process

The
consumer
buying,
given
buying
consumers
process
miss
out
passes
or
sometimes,
five
main
reverse
of
However,
these
stages.
in
Information
Evaluation of
Purchase
Postpurchase
search
alternatives
decision
behavror
Need
recognition
unfulfilled
need
initiates
or
problem.
stimuli take
be converted
the
place when
into a drive.
Buyer Decision Process
buying
The
need
process,
is
in
activated
which
by
the
a person's basic needs get
The
figure
process:
Need
Recognition
regular
The
recocmnon
Need
Internal
stages.
some
below shows the five stages of the buyer decision
Fig. 4.7a:
to
through
pace of consumer
the
consumer
internal
and
identifies
external
stimuli.
higher to the threshold
problem
identification
can
an
be
level,
pretty
fast or fairly slow.
Sometimes,
the
consumer
is
unaware
about
the
employ advertisements or sales personnel to aid

needs or problems.
Marketers should
is likely to generate those needs,
problem
or
need.
the activation of the
be aware of consumer
so that they can
Usually,
marketers
recognition of such
needs and
also,
plan appropriate marketing
about what
strategies.
Page 73
04. Consumer Buying
Behavior
eBook
Information Search
Once the consumer identifies the
need
is
stage,
information
search.
In
this
information that w i l l satisfy the need
In
internal
memories,
search,
and
outside search
if
the
are
unable
to get enough
the
the
next
consumer
stage of the
searches
buying
process
for
specific
product
the
product
in
or problem.
consumers
they
or problem,
search
for
to
enough
find
information.
information
about
information,
The external
search
they
will
includes
look
several
their
for
the
sources,
such as:
Personal sources,
which
P u b l i c sources, which
include media, consumer-rating
Commercial
which
sources,
include family members, friends,
consist
of
and
neighbors.
organizations, etc.
advertisements,
salespeople,
dealers,
and
websites.
The
extent
the
of the
product
commercial
influence
category.
sources
The
that
information comes from
As
more
offered
information
brand
way that
of these
are
sources
consumer,
skillfully
varies
with
usually,
controlled
the
gets
by
buyer's characteristics
maximum
the
marketers.
information
The
most
personal or public agencies, which are independent
is obtained,
increases.
Thus,
awareness
marketers
and
knowledge
should
design
from
effective
bodies.
of the consumer about
their
it makes their prospective consumers aware and
and
marketing
mix
in
the
such
provide knowledge about their
brands.
Evaluation of Alternatives
After
gathering
subsequent
sufficient
stage
of
information
evaluation
of
buying
The
the
consumer
marketer
needs
information to reach at the brand
to
moves
into
recognize
selection.
the
how
It is to
in all
situations.
evaluation
and
the
of
particular
doing
situation,
buyers
product,
that the consumer does not use the single or simple process of evaluation
The
after
the
alternatives.
the consumer processes the gathered

be noted
about
to
the
alternatives
buying
careful
situation.
calculation
same consumer may

discover
that
marketers to take solid
by
how
and
In
one
rational
buy the
they
consumers
situation,
thought
product on
will
depends
evaluate
on
consumer
process,
trusting
the
the
individual
may
whereas,
his or
different
buy
in
consumer
a
product
some
her intuition.
alternatives
Study of
help
steps to influence them.
other
Page 74
the
04.
Consumer Buying
Purchase
At
Consumers
stage,
usually
intention
buy
and
consumers grade the

the
the
is the attitude of others.

mobile
The
on
factor
the
However,
and
the
may
the
the
brand,
person close to
the unexpected
such
but
you
purchase
of
expectations,
have an
intention
of
you
arises
The
should
buyer
advantages
consumer.
in
process.
of
on
The first
product,
Hence,
the
factor
low-priced
mobile phone.
purchase
the
intention.
between
buy a
buy a low-priced
adverse effect
the
not always result
buying
says that
income,
that
purchase
intention
and
purchase
even
the
is
price.
intention
purchase
in actual purchase.
Behavior
behavior is the final
meets
the
may
make the
factors
situational factors.
expected
factors
the consumer will
product
as
preferences do
postpurchase
level
favorite
purchase decision affects the
If a
unexpected
Postpurchase
product,
is
factors
alter
intention and
The
most
b r a n d s and
phone, then there is a possibility that you would
second
built
eBook
Decision
the evaluation
purchase
Behavior
the
expected
consumer,
the
evaluate
it
consumer
is
the
level
makes
stage of the
product and
or
not.
him
happy.
If the
happy.
Larger the gap
level
the expected
level of dissatisfaction. Thus,
If
or
level, then the consumer is more than
between
buying
the
her
product
fails
unhappy;
the
After
check if the actual
purchased
and
process.
product
product
marketers make only those
if
to
it
purchasing
the
performance of
meet
meets
surpasses
performance,
the
the
expected
level
of
the expected
greater
is the
promises that their product can
deliver so that consumer can be satisfied.
4.8 The Buyer Decision Process for New Products

According
through
final
to
Philip
which
an
adoption" and
Kotler,
the
individual
adoption
passes
process
from
adoption as the decision
is
first
by an
defined
as,
learning
individual
"the
about
to
mental
an
process
innovation
become a regular user
of the product.
to
Page 75
04.
Consumer Buying
Behavior
Stages in the Adoption
eBook
Process
Usually, consumers pass through five stages in the adoption process:

1.
Awareness
During
th i s
stage,
information
about
consumers
the
become
product
is
aware
lacking
of
or
the
has
product's
little
existence,
information
but
about
the
about
the
product.
2.
Interest
At
th i s
stage,
product and
3.
the
consumer
is interested
gets
prompt
to
seek
out
information
to learn about the product.
Evaluation
After gathering
enough
information
advantages of the product and

4.
about the
product,
the
prospect considers the
makes the decision whether to try it or not.
Trial
The consumer tests the
new
product to determine whether the
product fulfills the
needs or not.
s.
Adoption
At this final stage, the consumer purchases the new product for regular use.
When
company
adoption
the
same
introduces
process of that
pace
either.
product
For
those
process q u i c k l y whereas some
new
product
instantly.
who
begin
in
They do
adopted
the
the
the
process
market,
not
do
not
pass the adoption
product,
much
people
later.
some
of
start
process
them
the
with
accept
For major products,
the
there
are some sets of people who never begin the process at a ll.
A consumer
usually
falls
u n d e r one of the
five
main
adopter categories,
depending
the time taken to adopt the new product.
Page 76
on
04.
Consumer Buying
Behavior
eBook
Fig. 4.Sa shows the five main adopter categories:
34%
34%
2.5%
3.5%
Early
Early
Late
majority
majority
!
l
adopters:
X = 2cr
x -e
Time of Adoption of Innovations
Fig. 4.Sa: Adopter Categorization on the
Basis of Relative Time of Adoption of
Innovations
Source:
Everett M.
Rogers,
Diffusion of Innovations
Innovators
Innovators are defined
it.
They
young,
are
as the first 2. 5 percent users who try the
venturesome
in a good
financial
and
test
or
try
new
products
position, well educated, and
at
new
certain
product and
risk.
adopt
Innovators
are
have h i g h social status.
Early Adopter
Early
adopters are
market.
have
They
strong
early and
the
second
are frequently
influence
in
set
of
users who
described
their groups.
represent
as the o p i n i o n
the
leaders
13.5
in
percent
of the
their social
An early adopter adapts to
the
new
total
system
product
and
ideas
very carefully.
Early Majority
Early
by
majority
the
constitute
opinions
of
the
the
34
early
percent
adopters
of the
and
total
adapt
market.
to
the
They
new
are
strongly affected
innovation
before
the
average consumer.
Late Majority
Late
majority
consists
of 34
percent
when most of the market has tried
of the
total
market
and
adapt
to
the
new
product
it.
Page 77
04. Consumer Buying
Behavior
eBook
Laggards
Laggards constitute the

are
high
resistance
to
16
percent
change.
It
of total
is
market,
difficult
to
which
convert
are
these
bound
by
traditions and
consumers,
as
they
loyal to the current products with the low risk taking abilities.
Page 78
are
04. Consumer Buying
Behavior
eBook
4.9 Chapter S u m m a r y
Consumer
buyer
individuals and
behavior
refers
households that
to
the
buying
buy goods and
behavior
of
Black Box model
is based on the work of psychologist Kurt Lewin.
Cultural,
personal,
buying
and
psychological
consumers,
services for personal consumption.
social,
final
characteristics
affect
the
consumer
behavior.
Complex
buying
behavior,
and
behavior,
variety
dissonance
seeking
buying
reducing
behavior
buying
are
behavior
the
four
habitual
types
of
buying
buying
decision behaviors.
The five main stages of the buying decision

o
Evaluation of alternatives
Information search
Need
Purchase decision
Postpu rchase behavior
recognition
The adoption
process
passes from first
Consumers
process are:
pass
is defined
as the mental
learning about an
through
the
five
process through which an
individual
innovation to final adoption.

stages
of
the
adoption
process,
which
are
follows:
o
Awareness
Interest
Evaluation
Trial
Adoption
Page 79
as
Market
Segmentation,
Targeting, and
Positioning
OS.
Positioning
eBook
5 . 1 Introduction
Companies
efforts
the
to
achieve
market
However,
market,
Thus,
can
or
across
and
the
financial
they
are
the
have
large
with
in
more
well
and
markets
get
to
good
build
dedicated
Their
needs
realized
of
that
number,
in order to be successful,
serve
their
success.
identifying
companies
as
globe,
their
they
buyers
cannot
companies must
clear
include
scattered,
returns from.
efforts
and
working
and
professionals,
an
so
in-depth
they
connect
have
making
understanding
can
with
are
serve
all
different
them
buyers
buying
of
well.
in
the
patterns.
identify the part of the market that they
Recently,
distinctive
most
image
companies are
in
the
minds
choosing
of
their
one
target
customers.
This
chapter
gives
better
segmentation, targeting, and
After reading this chapter,
understanding
of
the
concepts
of
marketing
positioning.
you
will
be able to:
Define market segmentation,
List the steps involved
Identify the variables of market segmentation
Describe how to choose a differentiation and
D i s t i n g u i s h the terms product positioning
Identify
Explain
positioning
key
targeting, and
in segmenting
positioning
a market
and
positioning
brand
strategy
positioning
errors
repositioning
Page 8 1
05.
Market
Segmentation, Targeting, and
Market
segmentation
success
of
customers.
an
is often
involves
possible to connect with

to
be
unbeaten,
eBook
Definition of Market Segmentation
organization
This
Positioning
described
depends
providing
all
marketers
as
on
the
its
divide
keystone of
ability
right
the customers
should
the
to
products
in
broad
the
satisfy
and
and
market
present
the
marketing.
needs
services.
diverse
into
day
its
However,
markets.
smaller
of
target
it
Thus,
The
is
not
in order
homogeneous
groups
with distinctive needs and wants.
According
into
to
Philip
Kotler,
homogeneous
selected
Market
needs.
as
subsets
market
segmentation
It also
market.
market,
For
market
positioning
segment,
of
customers,
target
helps
helps them
based
"Market segmentation
to
be
marketers
where
reached
identify
segmentation,
are
inter-linked
concepts.
After
subset
may
distinct
that
break
up
have
and
be
mix."
homogeneous
the selected
large
has
a market
conceivably
target
heterogeneous
Market segmentation,
company
of
marketing
strategies toward
the
it is ready to start its market targeting
any
subdividing
customers
organizations
on some meaningful characteristics.
the
with
the
to focus their efforts and
is
targeting,
defined
its
and
market
positioning.
Objectives of Market Segmentation

The objectives of market segmentation are:
To
know
can
the
varying
be reached
buying
by d e s i g n i n g
behavior
of
customers,
appropriate marketing
To make the activities of the firms customer-oriented.
To
To
identify
the
needs,
be created
buying-motives,
that
potential
or markets can
priorities,
customers
strategies.
identify areas where customers can
so
and
tastes
be expanded.
of
the
targeted
customers.
Benefits of Market Segmentation

Market segmentation
helps to:
Distinguish one consumer group from another in a product market.
Avoid
the wastage of marketing efforts and
Know
the
specific
needs of each
segment
resources in unprofitable segments.

and
devise an
attractive
marketing
to meet the needs of each segment.
Acquire greater competitive capability and
Provide opportunities to expand
distinctive excellence.
the market.
Page 82
mix
OS.
5 . 3 Criteria for Effective

In
order
to
be
effective,
each
measurability, accessibility,
eBook
Market Segmentation
proposed
stability,
and
segmentation
substantiality
needs
(Thomas,
to
pass
tests
for
1980).
Measurability
The size,
Positioning
purchasing
power, and
profile of the segments can be measured.
Accessibility
Marketers
are
able
to
reach
their
market
segment
effectively,
in
terms
of
communication and distribution.
Stability
The consumer behavior of each segment must
be predictable over time.
Substantiality
The
market
segment
must
be
sufficiently
large
and
profitable,
for
firm
to
pay
back its efforts.
In
1996,
Baker
proposed
uniqueness as the extra
This creates d i s p a r i t y with

stability
and
uniqueness
segmentation.
designed
Donthu and
and
Action-ability
for attracting
and
include
Cherian
criteria
(1994)
action-ability
is defined
for an effective
and
as
Kotler et a l .
condition
for
as the degree to which effective
segmentation.
( 1 9 9 4 ) , who skip
effective
market
programs can
be
serving customers.
5.4 Levels of Market Segmentation

According
to P h i l i p Kotler, the four levels of market segmentation are:
Segment Marketing
A market
abilities,
segment
consists
geographical
organization
to
create
of
locations,
a
distribution channels and
more
set
and
of customers
buying
fine-tuned
that
habits.
product
or
have
similar
Segment
service
wants,
marketing
offering.
purchasing
enables
The
choice
an
of
communications channels become much easier with the help of
segment marketing.
Page 83
05.
Niche
Positioning
eBook
Marketing
niche
is
more
narrowly
unique
defined
customer
segment
--
looking
RingGuord
an
for
effective
products
RingGuard
and
and
different
mix
cost
services
from
benefits.
efficient
to
mass
of
Niche
way
specific
marketing,
of
set
as
marketing
selling
specific
of audience.
it
is
It
concentrates
is
on
<'
fulfilling
19GtJgf':' _ ,
example,
Guard,
skin
infections caused
the
needs
the
of
product
by
Philip
Members of a niche w i l l
The niche is not attractive to many competitors.
The
has
to
size,
disposable
niche
marketing
readily
try
to
pay a p r e m i u m .
income,
understand
growth,
the
needs
As the marketing
to
Kotler,
the
"Local
needs
and
marketing
wants
facility
of
money
NRI
from
branches
abroad.
In
to
serve
the
the
same
of
local
needs.
rate,
of the
stability,
customers,
effectiveness
of
the
increases,
foreign f i l m s that were released
Those
who
support
the other
on
hand,
production
local
and
Kerala,
are
marketing
groups-cities,
banks
have
members
whose
loved
ones
Spiderman
3 was
released
broke all
records, with
regard
consider
against
costs.
nationalized
local
advertising
in
to
marketing
A brand's
argue
overall
a waste of efforts.
that
image
is
it
has an
lost
if the
adverse
product
message are different in different areas.
and
in India.
marketing
those who
in
brands
many
family
movie
tailoring
customer
For example,
needs
way,
involves
the five different regional languages in I n d i a . The movie
and
are:
little may become more lucrative.
neighborhoods and even specific stores."
effect
requirement of treating
profitability.
into
Philip
promotions
On
Ring
Marketing
According
send
niche
For
pay more for a product that satisfies these needs.
the niches that are, apparently, too
the
market.
Pharmaceuticals,
have a set of s i m i l a r but unmet or underserved
sufficient
accessibility, and
Local
Paras
Kotler,
Members of a niche
so that customers can
of
defined
by bacteria or f u n g i .
Marketers who are
specific
concentrates on the
Characteristics of an attractive niche, cited
niche
Page 84
OS.
Individual
of marketing.
buy.
eBook
Marketing
Companies can
to
Positioning
They
now
Now,
offer customers
individual
customers are actively
use the
Internet
to
talk with suppliers and dealers,
Many firms are allowing
search
for
and often,
products d u e
taking
part
in
information,
to
increased
deciding
what
analyze the
their consumers to design
products and
not
is
difficult
as
for
the
and
Companies
such
Berger Paints follow the customization strategy
as
of
Asian
is
surely
firm.
customization
complex
cost
products,
sector.
of the
above the
However,
paints.
how
service,
every
the automobile
over and
like
or
customization
increases
products
and
services of their choice.
for
such
for
buy
product
Implementation
well
to
design a product they want.
However,
worked
sophistication
product
r eg u l a r price.
customization
Paints,
It
Shalim ar
has
Paints,
in their p a i n t retailing.
5 . 5 Patterns of Market Segmentation

Market
segment
can
be
established
in
several
ways.
One
of
the
well-liked
ways
is
identify preference segments. The three patterns of market segmentation are:
(a)
Homogeneous
(b)
Diffused
( c)
Preferences
Preferences
Clustered
Preferences
..
:-::.' 1
,.
.. . . .
11:,I
,:;.:,:..
. ..
. ..
..
..
.....
:..:.:
. ....
\:
I.1::,,I
.
:.
...
.....
. . :,, .
.
.. .
1
... .
..
'::.-:
. . .
Fig. 5.Sa:
Source:
Philip Kotler,
Patterns of Market Segmentation
Marketing Management,
Millennium
Edition (pdf)
Page 85
to
05.
Market
Positioning
eBook
Homogeneous Preferences
It
indicates
markets,
the
market
marketers
can
where
use
consumers
the
usually
undifferentiated
have
similar
marketing
preferences.
strategy,
as
In
there
such
are
no
segments.
Diffused
It
Preferences
indicates
marketers
the
market
have
to
adopt
where
consumers
differentiated
have
strategies
highly
by
scattered
introducing
preferences.
several
Thus,
brands
in
the
market.
Clustered
Here,
the
Preferences
market discloses diverse
preference clusters called
The first firm that enters the market has the following
natural
market
segments.
options:
The firm w i l l select the biggest market segment.
The firm develops a n u m b e r of brands for different segments.
5.6 Steps in S e g m e n t i n g a Market

The steps for selecting a market are:
Fig. S.6a: Steps in Segmenting

Source:
1.
Charles W.
Lamb, Joseph F.
Hair, Jr., Carl
D.
Mac Daniel,
a Market
Marketing
Choose a market or product class for study
The first step

study.
The
functional,
is to define the overall
selected
a totally
market
can
be
marketplace or product class to

the
one
new segment or a new
in
which
segment that
the
is
be taken for
company
linked
is
already
to a market or
product class.
Page 86
OS.
2.
Select a basis or bases for segmenting
This
3.
Positioning
step
ca l l s
for
managerial
successful
segmentation
substantial,
identifiable,
insight,
design
the market
vision,
must
accessible, and
eBook
and
understanding
produce
market
of the
market.
segments
that
are
responsive.
Choose segmentation descriptors
The
next step
is choosing
segmentation,
Descriptors
marketing
spot
psychographic
the
the
segmentation
professionals
particular
segmentation,
descriptor.
must
select
segmentation
it
might
use
After selecting
the
segmentation
variables
lifestyle,
to
use.
attitude,
If
and
the
basis of
descriptors.
firm
selects
personality
as
descriptors.
4.
Profile and analyze segments
The
of
profile
purchase,
and
profit
market
brand
possibilities.
and
by
usage,
This
profit
step
marketing
loyalty
information
opportunity,
segment,
toward
can
risk,
then
estimated
the
be
brand,
used
uniformity
growth,
and
to
with
frequency
long-term
rank
the
the
firm's
sales
potential
task
and
other factors that are significant to the company.
is
natural
outcome
of
the
segmentation
process
and
influences
the
mix of an organization.
Design, implement, and
Product,
distribution,
maintain appropriate marketing mixes
promotion,
is used to get equally satisfying
5.7
market
Select target markets
This
6.
present
segments
objectives,
5.
i n c l u d e s the size of the
and
pricing
strategies are the marketing
mix that
exchange l i n k s with target markets.
Bases for S e g m e n t i n g Consumer Markets
Major segmentation variables for segmenting
Geographic Segmentation
Demographic Segmentation
Behavioral Segmentation
Psychographic Segmentation
the market are:
Page 87
OS.
Positioning
eBook
preferences, as most consumers were vegetarians.
Brands,
such
as Titan,
Sonata,
Maggi,
"'
and
to
Top
Ramen,
match
the
launched
changing
n u m b e r of
lifestyle
of
products
Indian
users.
TfN
RAGA
Titan
launched
It/eaves
Raga,
a series of watches,
Nebula,
and
Regalia
to
such as
appeal
Edge,
different
lifestyle segmentation.
5.8 Bases for Segmentation of Business Markets

Business
market
segmenting
the
and
type
be
divided
consumer
market can also

size
can
market,
be segmented
of
buying
by
using
such
on the
situations.
some
as
of
the
geography
variables
and
usage
basis of product-related
Demographic
that
factors,
variables
are
are
rate.
used
for
business
such as customer
the
main
basis
of
segmentation.
The
major
segmentation
Bonoma and
Benson
P.
variables
for
business
markets
that
were
given
by
Thomas
V.
Shapiro are:
Demographic
Industry:
Which
Company size:
Location:
industries should we serve?
What size companies should
What geographical areas should
we serve?
we serve?
Operating Variables
Technology:
User or
What customer technologies should
nonuser
status:
Should
we
serve
we
serve
heavy
we focus on?
users,
medium
users,
light
users
or non-users?
Customer
capabilities:
Should
customers
that
require
many
or
few
services?
Purchasing Approaches
Purchasing-function
centralized
organization:
or decentralized
Should
purchasing
we
serve
companies
with
organization?
Page 9 1
highly
05.
Market
Power
structure:
Should
financially dominated,
Nature
strong
of
and
serve
companies
that
eBook
are
engineering
dominated,
so on?
relationship:
Should
we
serve
companies
with
which
we
have
relationship or s i m p l y go after the most desirable companies?
General
existing
we
Positioning
purchase policies:
Should
we serve companies that
contracts? Systems
purchases? Sealed
Purchasing
Should
criteria:
we
prefer leasing? Service
bidding?
serve companies that are seeking
quality?
Service?
Price?
Situational
Factors
Urgency:
Should
we
serve
companies
that
need
quick
and
sudden
delivery
or
service?
Specific
application:
Should
we
focus on
certain
applications of o u r
product
rather
than all applications?
Size of order:
Should
we focus on
large or small orders?
Personal Characteristics
Buyer-seller
similarity:
Should
we
serve
companies
whose
people
and
values
are
s i m i l a r to ours?
Attitude toward
risk:
Loyalty:
we serve companies that show h i g h
Should
Should we serve
risk-taking or risk-avoiding
customers?
loyalty to their suppliers?
5 . 9 Market Targeting
Once
an
initiate
many
and
organization
market
and
select
ones
target
Evaluating
An
targeting.
which
of designing
has
identified
its
market-segment
Marketers evaluate
to
target
segments.
and
enter.
According
to
each
Here,
Philip
opportunities,
segment,
you
look
Kotler,
in
at
order to
how
"Market
strategies to build the right relationships with
it
is
ready
determine
companies
targeting
to
how
evaluate
consists
right customers."
Market Segments
organization
must
consider
the
following
factors
while
evaluating
various
market
segments:
Segment Size and Growth
Firms,
at
segment
the
has
relative term,
time
the
of
right
which
selecting
size
and
potential
growth
implies that the
right
segment,
must
characteristics
size for a
large
or
analyze
not.
firm
whether
Right
is a large
size
is
a
a
segment
Page 92
:.1
and
the
:.:rn
right
size
for
small
characteristic for a l l firms, as
it
firm
is
}.:
eBook
small
segment.
reflects h i g h sales and
Growth
is
desirable
profits.
Segment's Overall Attractiveness
Marketers
potential
should
pay attention on
entrants,
profitability.
competitors.
The
and
the
substitute
segment
is
relative
less
factors,
products
attractive
power of the
such as competitors
while
if
it
buyers,
evaluating
contains
high
in
the
strong
the market,
segment
and
for
aggressive
t h r e a t of substitute,
etc.
also
affects the attractiveness of the segment.
Organization's Objectives and
Even
if the
segment's
size,
Resources
growth,
and
must analyze its own objectives and

dismissed
example,
because
Audi
they do
wants to
not
get
not
make
company should
good
resources.
match
the organization's
resources are
business
sense
to
is
right,
the organization
not
long-term
large and
objectives.
growing
but finds
suitable for that market.
enter
this
preferably enter into a segment that
but also the one that
are
Some attractive segments could
into a market that
the company's objectives and

does
attractiveness
market
For
that
Hence,
segment.
is not only
be
So,
it
the
large and growing
is a b l e to meet the company's objectives and
resources.
Selecting Target Market Segments
After
analyzing
the
various
which market segments

patterns or targeting
it
market
should
segments,
target.
the
company
The company
will
decide
many
and
has to consider the following
five
strategies of target market selection:
Single-segment
Selective
Product
Market
Full market
concentration
specialization
specialization
specialization
coverage
Mt
Mz
Ml
Mt
Mz
Ml
Mt
P,
P,
P,
P,
P,
P,
P,
P,
P,
P,
P,
P,
P,
P,
P,
P = Product
F i g . 5.9a:
Source:
how
Five
Ml
M = Market
Patterns of Target Market Selection
Derek F. Abell, Defining the Business: The Starting
Mz
Point of Strategic Planning
Page 93
05.
Market
Positioning
eBook
Single-Segment Concentration
By using
it.
single-segment concentration, firms select just one segment and
Single-segment
its segment,
firm
can
concentration
which,
in turn,
be a leader
in
there
particular
are
high
some
segment
company
be
to
gain
higher
attain a stronger market
segment through
knowledge
presence.
of
The
single-segment concentration,
profits for the firm.
risks
can
the
helps the firm
its market
which can surely result in
However,
helps
focus on
associated
attacked
by
with
single
segment-concentration.
competitors
any
time.
Thus,
many
companies try to operate in more t h a n one segment at a time.
Selective Specialization
In
selective
conduct
firm's
specialization,
business.
Each
resources and
company
of these
objectives.
segments
However,
the market segments that are selected
chooses
is
number
attractive
there
is
of
market
and
little or
segments
compatible
no
with
interaction
to
the
between
by the firm.
Product Specialization
By
adopting
product
build
sells
and
product specialization
sells
a strong
it
to
image
syringes
to
various
strategy,
target
a firm
segments.
specializes
Using
in a particular product segment.
hospitals
and
laboratories
is
this
in
making
strategy,
a specific
firm
can
A syringe manufacturer that
good
example
of
product
specialization.
Market Specialization
With
market
particular
an
specialization,
target
assortment
hospitals.
Using
market.
of
the
For
only
strategy,
become the source of a d d i t i o n a l
Full
to
the
on
surgical
satisfying
instruments
laboratories,
firm
can
build
products, which
many
needs
of a
manufacturer
sells
universities,
a
strong
colleges,
reputation
and
and
can
its customers can use.
Market Coverage
With full
market coverage,
providing
them
a wide
full
market
coverage
a company tries to satisfy the
range of products.
market coverage strategy.

the
concentrates
example,
products
this
firm
IBM and
strategy.
Only
big
Coca-Cola are
needs of all segments
companies can
by
undertake a full
some of the companies that use
These companies
cover the
whole
market
Page 94
with
:.1
their
:.:rn
two
main
}.:
eBook
strategies-undifferentiated
marketing
and
differentiated
marketing.
In
undifferentiated
ignore
market
marketing
segment
or
mass-marketing
differences
and
follow
philosophy
the
single
approach,
marketing
marketers
mix
for
the
whole market.
In
differentiated
marketing,
with separate offers for each
firm
decides
to
target
multiple
market
segments
segment.
Market Targeting Strategies: Additional Considerations
Philip
Kotler
has
identified
the two
additional
considerations
in
evaluating
and
selecting
segments:
Segment-by-Segment Invasion
It
would
should
be
not
wise
for
blocked
markets.
organization
to
enter
one
be aware of the organization's future
develop a long-lasting
confronts
an
Plans
The
invasion
markets.
strategy
plan.
The
for
plans.
A company's
invaders
entering
then
into
segment
Sadly,
invasion
work
blocked
out
at
time
the
rivals
many organizations fail to
plan can
be thwarted
strategy
markets
and
calls
to
for
break
a
when
into
mega
it
such
market
approach.
Ethical Choice of Market Targets
In ethical
market targeting,
for what.
Market
may
u n d u e advantage of certain
take
promote
targeting
potentially
the
sometimes
harmful
not only the company's
issue
products.
is
so much
generates
vulnerable
Socially
interests but also
not
as to who
public
groups
is
targeted
controversy
because
(such as children)
responsible
marketing
but
how
and
marketers
or they
may
calls for targeting
interests of those who are targeted.
Page 95
05.
Market
5 . 1 0 Differentiation a n d
According
offering
to
and
market."
the
Philip
image
Positioning
outcome
in
brand
proposition,
To
position
ways
way
to
be
the
product
and
members
to
possibility
of
Positioning
Position
in
products
with
result
of
packed
Al
target
market
the
also
such
a
on
are
have
as
not
Jack
of
Trout.
product
the
Positioning
with
strategy
is
target
some
is
specific
Positioning
distinct
value
b u y the product.
marketers
need
only
to
need
plan
perceive
differentiate
steel,
example,
unique
the
to
chicken,
For
brand
basis
graphical
evaluation
maps
are
also
are
help
of
of
HUL
efficient
the
the
and
positioning
product
themselves.
whereas,
makes
identity.
features,
perceived
the
representations
category
known
organizations,
simple.
the
positioning
some
Rin
as
form,
Some
planned
in
such
distinct
but
products
are
products
and
Companies
as
by
attributes
perceptual
consumers
marketer
to
of
Surf
can
quality,
consumer
(such
maps.
in
identify
For
segments and
selecting
example,
position
particular attribute.
the
firm
relation
their
have
Excel
high
laundry
differentiate
customization,
itself with
the
same
perceptions
price,
allow
to
of
their
style,
competing
appearance,
marketers
their
important
to
quality).
know
competitor's
competitors
and
for
its
product.
indicate
P o s i t i o n i n g Strategy
and
quality
attribute,
Each company must differentiate
positioning
can
enter
if users are
strategies
into
willing
new
to
is
easy
market
pay for that
itself with a distinct mix of benefits
that can attract a significant amount of customers.
how
or not.
differentiation
known
as
They
5 . 1 1 C h o o s i n g a Differentiation a n d
and
and
minds
company's
Maps
maps
some
the
the
same to the target customers.
They
whether to change t h e i r current positioning
For
designing
in
Reis
develop
marketplace,
their offering.
of
place
by
to
act
so on.
maps
by
develop
services
products
Position
developed
strategies
end
differentiation.
reliability, and
Positioning
distinctive
communicate the
The
differentiate,
or
products
to
the
more than the competitor.
detergents-each
products
was
planned
of their
successful,
difficult
their
then,
is
a reason for which the customer would
also value them
To
occupy
eBook
Positioning
"Positioning
concept
building.
design
that
to
of following
characteristics and
helps
Kotler,
Positioning
Page 96
OS.
Differentiation and
1.
Positioning
positioning comprise the following
Identifying
set
of
differentiation
eBook
steps:
competitive
advantage
on
which
company can build its positioning

The
basis
depends
of
on
establishing
identifying
competitive advantage,
of
providing
fulfill
one
the
of
better
promises
higher
promised
basis of product,
Through
basis
style,
they
to
on
Companies
can
then
the
Some companies can

train
the
differentiate
requires
brand
2.
must
build
in
differentiate
its
can
bet ter
positioning,
so
To
itself in
its
that
gain
terms
companies
positions
product
customers
way.
position
differentiate
features,
services
can
and
such
differentiate
so
as
on.
must
product as
it conveys the
themselves
themselves
by
their
Many
timely,
on
the
on
the
offering
firms
speedy,
differentiate
careful
effectively
delivery.
designing
their
performances.
differentiate themselves on
employees
t h e i r offers
with
channels or people.
companies
form,
solid
if a company
Companies
image,
of
To
differentiate
channels, expertise, and
and
it
users.
basis
also
relationships
customers
For example,
differentiation,
the
of
value.
make.
design,
themselves
needs
profitable
the company must differentiate and
services,
product
of
the
customer
quality,
quality
long-term
better
on
the
laborious efforts and
than
basis
hard
their
of
work.
brand
the
basis of
competitors.
image.
Symbol s,
people.
Companies
Developing
like
They
recruit
can
strong
Nike's Swoosh,
even
image
give strong
recognition.
Choosing the right competitive advantage

Companies must
its
positioning
differences and
d ec i d e on
strategy.
which
At
this
which ones they
potential differentiating
point,
need
the
company
attribute
must
it w i l l
decide
establish
how
many
to promote.
How many differences to promote
Some
marketers consider that firms should
a single attribute.
proposition
sell
itself
promotes
that
as
themselves on
They believe that a company s h o u l d
for each of its

number
one
brands and
in
itself as 'everyday
companies
position
should
that
low
position
stick to that.
particular
prices'.
their
offering
on
basis of
develop a unique value
This
attribute.
Another
the
school
helps the company to

For
of
multipl e
important when there are m u l t i p l e companies who claim
to
example,
marketers
attributes.
be
D-Mart
believes
This
number one
particular attribute.
Page 97
is
in a
05.
Market
Positioning
eBook
Which differences to promote
All
brand
differences are
worth considering
Important:
The
not
always
significant
if it satisfies the following

differentiator
attribute
or
worthy.
The
differentiator
is
conditions:
gives
value
benefit
to
the
company's
target customers.
The company can offer its difference in a d i s t i n g u i s h i n g
Distinctive:
Communicable:
The
differentiator attribute
is communicable and
way.
observed by
the company's buyers.

Affordable:
Customers are able to pay the difference.
Profitable: The firm
The
Preemptive:
introduces the difference profitably.
differentiator
attribute
is
difficult
for
the
competitor
to
replicate.
Selecting an overall positioning strategy
The
five
value
illustrated
yellow
in
proposition
Fig.
5.lla.
represents
best
options
In
the
that
a firm
figure,
blue
marginal
proposition,
might
use
represents
and
to
establish
the
orange
its
positioning
winning
value
represents
the
proposition,
losing
proposition.
Price
More
The same
Less
More
"'
The
same
..
Less
Fig. 5 . 1 la:
Possible Value
are
Propositions
Page 98
value
OS.
Positioning
eBook
More for More
This strategy
provides the
highest q u a l i t y
to cover its cost. This strategy is used

quality' and
gives the consumer h i g h
products or services and
at the
highest
price
by the company that positions its product as ' h i g h

prestige.
Rolex and
Audi are some companies that
give the buyer more benefits for higher prices.
More for the Same
Competitors can attack the company's 'more for more' strategy by introducing
a product
with more benefits for the same price.
The Same for Less
This
strategy
is adopted
when
the company
wants to
gain
market
share.
the positioning of a product that offers the same benefits for low prices.
such
as
Big
Bazaar and
D-Mart,
use such a positioning
strategy,
This
involves
Popular brands,
which offers the same
products at substantial discounts.
Less for Much
Here,
Less
the company cannot match the benefits offered
to the customers and
thus, offers
the products at lower prices.
More for Less
The positioning of a product that offers more benefits at a lower price is a powerful value
proposition.
The
company
can
offer
which completely transforms the

be
continued
in
the
long-run,
more
for
level of the
less
when
it
business world.
as competitors adopt
their
discovers
new
innovation,
Unfortunately,
this cannot
business
models
to
match
or
improve the offered product.
Characteristics of Successful
Positioning
The important characteristics of successful positioning are:
Relevance:
Marketers should
position their offering on the basis of the benefits
that are relevant to the target market.
Clarity:
The position
should
be well defined,
clear,
and
easy to understand
for
the target audience.
Distinctiveness:
Marketers
of their target audience.

the price and
should
try
to create a u n i q u e
image
in
the
When they fail to do so, they are compelled to fight on
promotion with their parallel brands.
minds
Page 99
05.
Coherence:
bring
Positioning
All the elements of the marketing
out the coherence to brand
Commitment:
Marketers
eBook
mix should
be
integrated
well
to
position.
should
stay
committed
to
the
firm
brand
position
adopted
by
them for their brands.
Believable:
A position
If the
is
brand
segment;
of
low
adopted
quality,
by
the
and
if the
for
firm
its
has
it is difficult for the target audience to
should
positioned
it
be
in
believable.
the
premium
believe it.
5 . 1 2 Bases of Positioning
The bases of positioning are:
Attribute
Positioning
positioning
on the bases of key attributes or features such
as d e s i g n ,
size,
number
of years etc.
Use or application
Positioning
to
be better than
its competitor.
the product as a leader in a particular product category.
by associating
the product with a specific class of users.
by using
emotion focuses on
how a product makes customers feel.
Customer benefit positioning
Positioning
by c l a i m i n g
Emotion positioning
Positioning
the product
Product user positioning
Positioning
it with use or a p p l i ca t i o n .
Product category positioning
Positioning
the product by connecting
Competitor positioning
Positioning
positioning
by associating
the product or brand with customer benefits.
Price and quality positioning
Positioning
by giving
emphasis on
high
price as a signal of q u a l i t y or low
price as a
signal of value.
Page 100
OS.
5 . 1 3 Positioning
Positioning
eBook
Errors
The major p o si t i o n i n g errors suggested
by P h i l i p
Kotler are:
Under Positioning
This
or
refers to
product.
the
situation
Consumers
do
when consumers
not
know
have a vague
anything
idea
extraordinary
about a
or special
particular
about
brand
that
brand
or product.
Over Positioning
In
this
situation,
consumers
have
narrow
picture
or
understanding
of
brand
or
product.
Doubtful
In
such
brand
Positioning
situation,
find
it
in terms of the product's features,
Confused
It
consumers
results
difficult
to
believe
on
the
claims
made
by
the
price or manufacturer.
Positioning
when
marketers change their
brand
positioning
too
frequently
or make
many
claims about the brand.
5 . 1 4 Product Positioning a n d
product
however,
they
technically
positioned
by the marketers against other brands competing
Issues in
Product Positioning
Deciding
Selection
in which
of
the
is used
Positioning
Many times the term

are
positioning
Brand
different.
Fundamentally,
product category,
the
product
decides
category
interchangeably with
is
the
brand
positioning;
that
is
competition
is of utmost
that
importance.
product
will
while deciding the product category:
Where and as what the new market offering
What are the needs of consumers that the product
What are the substitute products?
What are the skills of the company that w i l l fight
been
in the same product class.
new offer will compete
Following are the questions that are raised
it
brand
w i l l fig ht?
is going
to satisfy>
here?
Page
101
face.
05.
Market
Issues in
Brand
Positioning
Positioning
The important questions w h i l e deciding the brand
positioning
What are the distinctive c l a i m s of the different brands?
What are the other competing
What is most favorite and
Is there any gap

yes,
eBook
are:
brands in the particular product category?
yet vacant position?
between
expectation and
availability of the competing
brands?
If
what are the new attributes that can fill this gap?
5 . 1 5 Repositioning
According
to
Rosalind
Masterson
and
David
marketing process of maneuvering a brand

people's minds relative to competing
Repositioning
Pickton,
from
"Repositioning
is
the
its current position to a new in
brands."
is done d u e to the following
reasons:
Firms reposition their products to g a i n the new opportunities in the marketplace
Products are repositioned
To target
To show advancement in quality
at the time of d ec l i n i n g
sales
products in some other market
Repositioning of Cadbury Diary M i l k (CD M )
Cadbury
its
Diary
chocolates,
consumed
by
Milk
is
which
all
standard
were
segments.
once
The
M i l k as a product that awakened
In
1994
example
of
considered
campaign
the
to
be
meant
'Real Taste of
the little kid
1994,
repositioning.
brand
Cadbury
for
Life'
kids,
India
to
repositioned
product
that
positioned
Cadbury
the
Taste
is
Diary
in every a d u l t .
came
up
with
'Real
of
Life'
:adt,o Daori- Mlks n

e R!.11
campaign to
a,ltol llle 'IIJ,rkl,"""
b u i l d a strong
appeal
in the older segments.
.. ,llnrlIO
>0tm,.,,.rolrll:1t,,,<1
With
that
new
campaign
Cadbury
'Khaane
waalon
Diary M i l k lovers need
ko
khaane
ka
bahana
chahiye,'
Cadbury
showed
an excuse to eat.
Page
102
OS.
In 2004,
meetha
boost
Positioning
eBook
Cadbury India came up with another campaign 'Kuch

ho
the
jaaye',
sales
of
(Let's
the
have
some
chocolates
by
sweets)
making
that
it
aimed
parallel
to
with
traditional sweets ( m i t h a i ) .
Campaign
using
tag l i n e 'Pappu
paas
ho gaya' was
such
hit
ffqrJ:{,,r:tlff."f"f -;;,,.:",:
that it became a part of street l a n g u a g e .
fiFY.fil&
e;<r
With
.]l.'l"lliifl
new
commercial
'Meetha
hai
khaana
aaj
pehli
.........
3U"I t1t::-.:ll clltf"t -
tareekh
hai',
Cadbury
salaried
Indians .
Diary
M i l k tried
to connect with
most
11'.flQet'ff
...
In
year
launched,
consuming
2010,
the
showing
'Shubh
the
Aarambh'
Indian
campaign
traditional
custom
sweets before any auspicious b e g i n n i n g .
Page 1 0 3
was
of
05.
Market
With
mein
the
5.16
Prof.
current
kuch
Cadbury
Positioning
campaign
meetha
ho
eBook
'Khaane
jaye,'
ke
baad
Cadbury
meethe
portrays
Diary M i l k as a dessert.
Repositioning Strategies
David
Jobber identifies four major strategies for repositioning:
Product
Same
Different
Same
Different
Fig. 5 . 1 6 a :
Image
Repositioning Strategies
Repositioning
In
this
situation,
of
the
product
both,
product
changes.
By
and
following
change the image of the product in
target
markets,
such
remain
strategy,
the
unchanged,
aim
of
the
only
the
image
marketer
its target segment.
Page
104
is
to
:;1
:.1
:.:rn
KFC
tries
vegetarian
to
change
}.:
its
eBook
image
by
adding
more
and
more
items into its menu to cater the Indian customers.
Product Repositioning
By adopting
such a strategy,
materially changed.
Intangible
In
this
Most
marketers
new
keep the target market same,
models of cars fall
but the product is
under this category.
Repositioning
strategy,
marketer
targets
different
market
segments
by
retaining
the
same
product.
Lucozade
moved
is
from
the
best
targeting
example
of t h i s
category,
sick people to positioning
as
it
itself
as a health d r i n k .
Tangible
This
is
Repositioning
the
most
fundamental
strategy in
which
both
product
and
target
markets
are
changed.
For
on
example,
shifted
Avon
into
initially
California
was
into
Perfume
door-to-door
Company
and
book
then
selling,
and
became Avon-the
company for women.
later
Page
105
05.
Positioning
eBook
5 . 1 7 Chapter S u m m a r y
Market
segmentation
subdividing
where
be reached
with a distinct marketing
To
be effective,
Segment
any
the
customers,
accessibility,
is
each
subset
may
proposed
stability, and
marketing,
of a market
conceivably
be
into
homogeneous
selected
as
subsets
market
target
of
to
mix.
segmentation needs to pass tests for measurability,
substantiality.
niche
marketing,
local
marketing,
and
individual
marketing
are four levels of market segmentation.
Steps to segmenting the market are:

1.
Choose a market or product class for study
2.
Select a basis or bases for segmenting
3.
Choose segmentation descriptors
4.
Profile and analyze segments
5.
Select target markets
6.
Design,
implement,
and
the market
maintain appropriate marketing
The major segmentation variables for segmenting

o
Geographic segmentation
Demographic segmentation
Behavioral segmentation
Psychographic segmentation
Market
targeting
consists
of
designing
strategies
mixes
the consumer market are:
to
build
the
right
relationships
with the rig ht customers.
Positioning
is
the
act
of designing
the
company's
offering
and
image
to
occupy
distinctive place in the m i n d s of the target market.
Attribute
product
positioning,
category
customer
benefit
use
or
positioning,
positioning,
application
product
and
price
positioning,
user
and
competitor
positioning,
quality
positioning,
emotion
positioning
are
positioning,
the
basis
of
positioning.
Under
positioning,
over
positioning,
doubtful
positioning,
and
confused
positioning
are the four major positioning errors.
Repositioning
is
the
marketing
position to a new one,
Image
repositioning,
in an
of
maneuvering
i n d i v i d u a l ' s mind
product
are four major repositioning
process
repositioning,
brand
relative to competing
intangible
from
its
current
brands.
repositioning,
and
tangible
strategies.
Page
106
Creating a n d
Managing
the Product
06. Creating and
Managing the
Product
eBook
6 . 1 Introduction
A
product
purchase
lies
target
satisfy
of
the
their
organization's
needs
and
marketing
wants.
When
an
organization's
product
Thus,
does
it may fail-unless it makes modification
product needs knowledge of fundamental
and
packaging
are
two
important
the firm
successful,
from
its
company
hardcore competition
should
distinguish
its
in
mix
planning.
product
design
has understood
not
satisfy
its existing
its
Consumers
needs
the
market
Creating
which
are
position of the
in
often
product,
commodity-type
product
by
linked
giving
it
with
and
also
markets.
this chapter,
you will
a distinctive
be able to:
Define product and
its related
Identify product characteristics
Classify products
Explain
Identify different stages of product
E x p l a i n the major brand
Explain
product-line and
packaging
and
concepts
product-mix
life cycle
strategy decisions
labeling
Page
the
help
Thus,
that simplifies customer choice in the market.
After reading
be
needs of
target
product.
to
product concepts.
concepts,
These two concepts h e l p create a distinct
distinguish
be
to
market.
successful
product.
heart
is the test of whether or not the organization
requirements,
Branding
the
products
effective as it
its
at
108
to
value
06.
Creating and
Managing the
6.2 M e a n i n g a n d
Products
product
are
the
is the
crucial
Product
eBook
Definitions of a Product
medium
heart of the
through
marketing
which
mix and
firms
try
to
meet
decides the fate
customers'
of an
needs.
organization
in the
marketplace.
Some important definitions of product are:

According
offered
to
to
Armstrong
market
and
for
Philip
attention,
Kotler,
product
acquisition,
use,
is,
or
"Anything
that
consumption
can
and
be
that
might satisfy a want or need."
According
to
attributes,
prestige
William
including
and
wants and
Stanton,
J.
packaging,
services,
which
the
product
color,
buyer
is
price,
may
set
of
tangible
manufacturers
accept
as
offering
and
intangible
and
retailers'
satisfaction
of
needs."
A product is a set of tangible and

A product
"A
intangible attributes that satisfies the customer's need.
includes:
Goods:
car
Experiences:
Services:
Concepts:
Ideas:
Propositions:
Places:
Events:
Nations:
Properties:
Organizations:
Information:
holiday
hotels and
package
restaurants
family p l a n n i n g
youthfulness
patriotism
Chennai
car rally
India
shopping
mall
Nutrition
Foundation of I n d i a
www.icwai-wirc.org
Page
109
06.
Creating and
Managing
the
Product
eBook
6 . 3 Product Characteristics
The main characteristics of a product are:
Tangible attributes
Tangibl e
touched
attributes
attributes
its
physical
features
that
can
be
of
the
product
are
in
the
form
of
services
that
cannot
be
Associated attributes
Features,
such as brand
products
that
assist
name,
packaging,
marketers
to
and
labeling
discriminate
its
are associated
product
attributes of
from
that
of
its
brand(s).
Exchange value
Exchange
value
for a price,
of a
product
which should
can
be
described
as
its
ability
of getting
exchanged
be acceptable by the seller as well as by the buyer.
Customer satisfaction
Customers are pleased
represent
or seen.
competing
product
Intangible attributes
touched
the
or seen.
Intangible
of
only if the product features match their perception.
Satisfaction of business needs

Product
should
be
sense of infusing
able
to
make
profits
for
the
business;
otherwise
there
resources for its survival.
Page
110
is
no
06.
Creating and
Managing the
Product
eBook
6.4 Classification of Products

Products
are
classified
products-as depicted
under
in
Fig.
two
6.4a
main
categories-consumer
products
and
industrial
below.
Classification of Products
Consumer
Industnal
Products
Products
Convenience products
Raw materials
Shopping
products
Major equipment
Speclality products
Accessory equipment
Unsought products
Component parts
MRO supplies
Process materials
Business services
Fig. 6.4a: Classification of Products
Consumer Products
Consumer products are those

personal or household
are
purchased
It is further categorized
by
i n d i v i d u a l s to
satisfy
their
as:
Convenience Products
Convenience
consumers.
bread,
products
Products
butter,
making
needs.
products that
etc.
Shopping
stocked
Purchase
in
low-cost
products
a typical convenience
of convenience
products
purchased
store are
involves
frequently
soaps,
tea,
minimum
by
sugar,
decision
Products
products are usually more costly than convenience products and
by fewer retail outlets.

information
and
relatively
effort on the part of the consumer.
Shopping
price,
are
style,
about
and
the
Consumers usually purchase these

product
after-sales
or
by
service.
comparing
Products
like
several
products after gathering

brands
washing
refrigerators are some common examples of s h o p p i n g
are sold
on
the
machines,
basis
of
televisions,
products.
Page
111
06.
Creating and
the
Product
eBook
Specialty Products
According
unique
group
to
of
Rolex,
American
Marketing
characteristics
buyers
These
effort."
Managing
are
brand
habitually
products
Armani, and
and
Association,
are
"Specialty
identification
willing
distributed
by
to
one
for
make
or
which
very
products
a
significant
special
few
having
purchasing
outlets.
Brands
like
Chanel are examples of specialty products.
Unsought Products
Unsought
they
products
are aware
are
they
new
are
products
not w i l l i n g
about
to
buy
which
them
consumers
right
now.
are
Fire
unknown
or
if
extinguishers are
classic examples of unsought products.
Industrial
Products
According
to
products
which
American
are
Marketing
destined
to
Association,
be
sold
"Industrial
primarily
for
products
use
in
Raw
Raw
other
as:
Materials
material
is the
to produce any
those
producing
goods or rendering services." These products are further categorized
are
basic unprocessed
physical item.
Natural products:
Fish,
Agricultural products:
material,
Raw materials
petroleum,
Fruits,
which
requires further
processing
include:
iron, silver, etc.
vegetables, cotton, etc.
Major E q u i p m e n t
Major
equipment
products.
Equipment
Major
is
consists
of
equipment
commonly
machinery
is
known
and
expensive
as
large
and
tools
used
'installation'.
Diesel
product
is
in
used
the
to
manufacture
product
engines
and
process.
boilers
are
some examples of major e q u i p m e n t .
Accessory
Accessory
These
Equipm ent
equipment
equipments
short-lived
and
m a c h i n e s , and
are
are
is
tangible
relatively
not
part
less
of
that
expensive
the
final
than
product.
used
in
major
production
equipment.
Computer
process.
They
software,
drilling
typewriters are some examples of accessory eq u i p m e n t .
Page
are
112
06.
Creating and
can
parts
be finished
processing
eBook
become
parts
ready
part
of the
finished
for assembly
product
or they
can
be
in
two
parts
conditions-they
that
need
bit
of
before the actual assembly.
MRO Supplies
MRO
supplies are defined
production and
as maintenance,
operations,
part of the finished
Product
Component Parts
Component
Managing the
but do
product.
repair, and
operating
not form a part of final
For example, oil,
paper,
items that help in
product.
They are not a
pens, etc.
Process Materials
Processed
materials
process of other
for
these
are
products.
materials.
products
Unlike
Plastics
that
raw
and
are
used
materials,
corn
syrup
directly
some
in
the
processing
are
some
are
used
manufacturing
has
examples
of
to
be done
processed
materials.
Business Services
Business
services
operations.
Legal,
are
intangible
marketing
of business service.
products
research,
that
and
financial
by
organizations
services fall
in
under the
their
scope
Hiring an outside source to provide services internally depends
on the cost linked with each alternative and
how regularly the services are used.
Page 1 1 3
06. Creating and
Managing the
Product
eBook
6 . 5 Levels of Products
While
planning
the
market
offering,
product levels. The following
marketers
should
concentrate
figure h i g h l i g h t s the different product
Fig. 6 . S a :
on
the
different
levels.
Levels of Products
Core Benefit
It
is
the
really
need
most
buying.
basic
Thus,
in the most
level.
It
represents
organizations
the
make
basic
sure
service
that
their
or
benefit
product
or
that
the
service
buyer
is
satisfies
basic sense.
Basic Product
Basic
hotel
products contain
that
are
rooms i n c l u d e basic amenities,
Expected
At
values
this
the
that
engineering
adequate
necessary
such as beds,
for
it
to
function.
towels, closets,
For example,
and toilets.
Product
level,
attributes
totally
marketer
customers
student
library
who
develops
usually
pays
facilities,
the expected
expect
high
excellent
Marketers who are about to
an
launch
expected
from
fees
for
product
course
or
may
It
is
defined
service.
expect
For
good
placements,
and
comprehensive
new
need
to
product
product that consumers want to
the
product.
keep
in
mind
as
set
example,
of
an
classrooms,
study
material.
the qualities of
buy.
Page
114
06.
Creating and
Augmented
Augmented
by
firm
value
product
to
is an
distinguish
product.
facilities,
customer
etc.
It
is
product
possible
marketer
It
that
features
adds
like
of
the
the
an
and
after-sales
augmented
company's
benefits
competitor,
guarantee,
develops
to
cost,
so
to
enhance
service,
product
the
brought about
that
company
the
warranty,
surpasses
must
verify
pay enough to cover the a d d i t i o n a l cost or not.
is 'tomorrow's
under
the
given
in that category.
product',
of 267
that carries a l l
technological,
improvements and
economic,
Here, a company seeks a l l
attract its customers-thus creating

top speed
from
services and
Product
product
prevailing
its
The
whether customers can
Potential
eBook
outcome of the additional
includes
expectations.
Potential
Product
Product
of the
credit
Managing the
customer d e l i g h t .
and
finesse
competitive
possible ways to
that
conditions
satisfy,
hold, and
Bugatti Veyron Super Sport with a
miles per hour is an example of potential
product.
6.6 Product-line
According
of
the
similar
to
William
closely
M.
linked
technology,
Pride
and
products
price
0.
that
range,
C.
Ferrell,
are
"A
product
considered
marketing,
and
end
produces
as
'i
as
Kno'
product-line,
aware
Each
of
of
'Aim'.
of
the
key
decisions
that
an
organization
has
to
For
To
in
take
is
set
of
the
example,
ITC
matches
have
organizations
needs
such
the
best
must
and
product-line
reveals the requirements of different target segments or the diverse

One
because
safety
consumers'
item
refers to the
unit
user."
line
and
line
be
wants.
generally
needs of customers.
about
its
product-line
length.
Product-line
product
length
lines.
If the
refers
line
the product-line is too
to
the
number
is too short,
of
items
a manager can
l o n g , a m a n a g e r can drop
the
company
increase
carries
profits
in
each
by a d d i n g
items.
items to increase profits.
Page
of
115
its
If
06. Creating and
The following
Managing the
Product
eBook
table displays the product-line and the product-line length of HUL.
Product-line 1
Product-line 2
Product-line 3
Product-line 4
Food and Drink
Home Care
Personal Care
Water Purifier
Pure it
Bru
Rin
CLINIC PLUS+
Kissan
Surf excel
AXE
Knorr
Activ Wheel
Pepsodent
Brooke Bond
Comfort Fabric
LAKME
Conditioner
Lipton
Vim
Dove
MAGNUM
Cif
Lifebuoy
modern
Dom ex
Fair & Lovely
KWALITY WALL'S
Sunlight Color Guard
POND'S
Annapurna
Magic water saver
Pears
LUX
Rexona
Sunsilk
ELLE 18
aviance BEAUTY
SOLUTIONS
Closeup
TRESemme
Hamam
Vaseline
CLEAR
LEVER ayush
therapy
Breeze
SURE
Table 6.6a:
Product-line and
Product-line Length of H U L
Page
116
06.
Creating and
Managing the
A company can expand

6.6.1
Product
eBook
its product-line in two ways:
Product-line Stretching
Product-line
range.
stretching
Line stretching
Downward
is
can
process
of
lengthening
be u p w a r d , downward
line
the
Downward
market
Product-hne
stretching
filling
Upward line
Two-way
stretching
stretching
line
and
To
present
Product-line
Line Stretching
stretching
stretches
its
occurs
lines
company may stretch downward

o
its
or both ways.
Fig. 6 . 6 . l a : Ways of Expanding
Downward
beyond
Product-line
stretching
product-line
fill
the
market
gap
when
downward
company
by
introducing
due to the following
by
adding
operates
low-end
in
the
low-price
upper-end
line.
The
catch
the
reasons:
items
or
it
would
attention of a new competitor.

o
Low-end
Upward
Upward
be quite attractive.
Line Stretching
line
market and
following
market segment may
stretching
decides to
occurs
enter
when
into
the
company
high-end
operates
of the
at
market.
the
It
is
low-end
of
because of the
reasons:
For higher growth
For higher m a r g i n s
To position
itself as a full-line manufacturer
the
Page
117
06.
Creating and
Managing
the
Product
eBook
Two-way Stretching
Companies that
in
operate
in
middle
range
products try
to
stretch
their
product-line
both directions.
6 . 6 . 2 Product F i l l i n g
Product filling
occurs when a company adds
The reasons for line filling
new
items within the existing
range of line.
are as follows:
To earn extra
profits
To establish an
To close door for competition
image of f u l l - l i n e manufacturer
6 . 7 Product-mix
According
items
to
that
organization
Displayed
Philip
Kotler,
particular
comprises
"'Product-mix
seller
its
offers
for
product-mix,
consists
sale."
it
is
of
Total
a l so
all
the
product
number of
known
as
product
product
lines
lines
of an
assortment.
below is the product-mix of Amul.
Fig. 6.7a:
and
Product-mix of Amul
Page
118
06.
Creating and
Managing the
Product
eBook
Dimensions of Product-mix
A company's product-mix has four dimensions, which are given in the following figure:
Fig. 6.7b:
Dimensions of Product-mix
Product Width
Product width means the n u m b e r of product lines offered

as
product
said
breadth.
If the
company
carries
six
product
by a company.
lines,
its
It is also known
product-mix
width
to be six. The product-mix width of H U L is four as shown in the following t a b l e .
Page 1 1 9
is
06. Creating and
Managing the
Product
eBook
Product-mix width
Product-line1
Food and
Produc.t-line 2
Product-line 3
Product-line 4
Hon1e Care
Personal Care
Water Purifier
Pureit
Drink
Bru
Rin
CLINIC PLUS+
Kissan
Surf excel
AXE
Knorr
Activ Wheel
Pepsodent
Brooke Bond
Comfort Fabric
LAKME
Conditioner
Lipton
Vim
Dove
MAGNUM
Cif
Lifebuoy
modern
Dom ex
Fair & Lovely
KWALITY WALL"S
Sunlight Color Guard
POND"S
Annapurna
Magic water saver
Pears
LUX
Rexona
Sunsilk
ELLE 18
aviance BEAUTY
SOLUTIONS
Closeup
TRESemme
Hamam
Vaseline
CLEAR
LEVER ayush
therapy
Breeze
SURE
Table 6.7a:
Product-mix Width of H U L
Page
120
06.
Creating and
M a n a g i n g the
Product
eBook
Product Depth
Product depth
line.
If
means the
Hamam
Abhyanga
comes
Snaan
number of variants offered
in
Soap,
three
and
variants
Hamam
by every
(Hamam
Scrub
Bath
product
Sampoorna
Soap)
and
in
in each
Snaan
two
product
Soap,
sizes,
Hamam
then
it
has
depth of six.
Product Length
Product
lines.
length
refers to the total
number of items a company
offers w i t h i n
its
product
Here is an example of HUL.
Length of food and d r i n k product-line ; 9

Length of home care p r o d u c t - l i n e ;
Length of personal care product-line ; 23

Length of water purifier product-line ;
Product-mix l e n g t h ; 42
Average length ; 42/4 ; 10. 5
Product Consistency
According
the
to
Philip
various
channels,
Kotler,
product
and
in
"Product
lines are
various
in
other
consistency
end
use,
ways."
refers
production
HUL's
product
to
how
closely
requirements,
related,
distribution
lines are consistent
so far,
as
they are consumer goods that go through the same distribution c h a n n e l s .
6.8 Product Life Cycle ( P L C )

This
concept
was
"The
product
sales
history
known
as
developed
life
cycle
of the
its
is
introduction,
decline
(death).
an
Professor Theodore
attempt
product-sales
metaphor that traces the

to
by
The
history
growth,
stages of a
length
to
Levitt.
recognize
pass
maturity
According
the
through
and
and
the
duration
distinct
four
decline."
product's acceptance,
of
from
PLC
to
Philip
stages
stages.
PLC
its
is
in
the
These
are
biological
introduction
fluctuate
from
Kotler,
(birth)
product
product.
Page 1 2 1
to
06. Creating and
Given
Managing the
Product
eBook
below is a diagrammatic representation of PLC.
Sales
,;:
0
"
0.
"O
Profit
Introduction
Growth
Maturity
Decline
Time
Fig.
Source:
It
is
Philip Kotler,
not
phases
Kevin Keller,
necessary
of
the
that
product
introduction stage and
6.Sa:
Abraham
products
life
Product Life Cycle
Koshy,
Mithileshwar Jha,
introduced
cycle.
It
may
be
then straightaway get
the
marketplace
possible
that,
move
product
through
may
all
the
reach
the
into the decline stage.
The stages of product life cycle are explained

1.
in
Marketing Management
below:
Introduction
This
In
is the first stage of PLC.
this
stage,
the
product
create awareness and
After
the
launch
of
is
introduced
in
the
market
and
promoted
to
develop the market.
reputed
foods, there was a period
products,
of lull
for
such
as
Maggi
numerous years
noodles
and
frozen
before they entered
the
phase of fast growth.
Profit
cost
m a r g i n s are
low
because
sales are
low and
promotion and
distribution
is h i g h .
Heavy
investments are
required
for
promotions
because consumers
need
to
be educated about the product.
Good
build
amount
of cash
is
required
to
catch
the
attention
of distributors
their inventories.
Page
122
and
06. Creating and
Production cost is also
Two
main
pricing
eBook
h i g h at this stage.
strategies
used
by
marketers
for
new
products
at
the
introduction stage are:

o
Skimming
In
this
strategy,
initially and
o
Pricing
then
Penetration
This
is
the
marketer
usually
sets
high
price
on
the
product
lowers the price at later stages.
Pricing
opposite
prices initially,
2.
and
of
then
skimming
pricing.
increase the
Here,
marketers
set
low
price at later stages.
Growth
If a
new
product
next stage, which
In
this
stage,
There is an
Spending
is
well-accepted
the
market,
it
presses
forward
to
the
is the growth stage.
the
product
is
accepted
increase in sales and
on
in
promotion
is
in
the
market
and
profits
increase.
revenues of the company.
same
or
little
higher
as
compared
to
the
previous stage.
At t h i s
stage,
there
is a possibility that competitors would
enter
in
the
same
segment.
3.
Distribution
is the key aspect for success of this stage.
Maturity
This is the
It
longest stage and
poses tough challenges to marketers.
is a stage where the product
is accepted
by most
potential
buyers and
the
market gets saturated.
It is a period
Competition
of slowdown
is
most
in sales growth.
intense
in
this
stage
and
forces
companies to
innovate
or develop diverse product features.
4.
Decline
Decline is a phase when sales and
It m a i n l y
happens due to
new and
profits fall off.

advance
products available
in
the
market
or due to market shrinkage.
Unit cost of a product increases.
Firms either remove the product from the market or stretch

with their other successful
it in combination
products.
Page
123
06. Creating and
6 . 1 0 Definition and
According
symbol
to
or
American
design,
or
eBook
M e a n i n g of Brand
Marketing
Association,
a combination
of
them,
"A
brand
intended
is
to
name,
identify
term,
the
sign,
goods
or
services of one seller or group of sellers and
to differentiate them from those of
competitors."
hands of the marketers.
in
Brand
differentiating
Branding
gives
is an
their
unique
important
company's
individuality
products and
services.
The following
table lists brand
Meaning
Attributes
tool
products
to
in
the
and
services
products and
from
those
of
assists consumers
meanings, their description, and
It
its
in
helps them
competitors.
identifying
corresponding examples.
Description
Example
A brand Introduces certain attributes to
Mercedes suggests expensive,
the mind.
durable, well-built, high-prestige

vehicles.
Benefits
Attributes must be translated Into
The attribute 'durable' could
functional and emotional
translate Into the functional
benefits.
benefit. For example, "I won't

have to buy another car for
several years."
Values
The brand
may represent a certain
Mercedes stands for high

performance, safety
culture.
and
prestige.
Culture
The brand
may represent some culture.
Mercedes represents German

culture:
organized,
efficient, and
high quality.
Personality
User
The brand can
project a certain
Mercedes may suggest a non-
personality.
nonsense boss or a reigning lion.
The brand suggests the kind of
Mercedes vehicles are more likely
customer who purchases or uses the
to be bought by SS-year-old top
product.
level managers than by 20-yearold store executives.
Table 6.10a: Brand Meanings, Their Description and Corresponding Examples

Source:
Philip Kotler Marketing Management (pdf)
the
Page
125
06.
Creating and
Managing
the
Product
eBook
6 . 1 1 Importance of Branding
The following
points h i g h l i g h t the importance of b r a n d i n g :
Im proves Market Identity

Branding
helps the organization
effective way,
placing
its
products and
services
so that the organization gets market image and
Provides Legal
A brand
in
in
the market
in
an
identity.
Protection
name provides l eg a l
protection with
respect to:
The substantial promotional expenses occurred
on
building
The special features of the product from the competitors.
the
product.
Builds Customer Loyalty

Brand
name
helps
in
attracting
customer
loyalty,
which
directly
boosts
the
sales
of the
product.
Increases Profit Margins

Brand
loyalty directly influences the profit margins of the product.
Enhances Corporate Image

Due
to
key
branding
characteristics,
such
as
product
quality
and
performance
standards,
strong
is known to build a positive corporate image in the m i n d s of customers.
Aids Market Segmentation

Branding
helps the firm to segment the markets and
offer a wide range of the product to
address the specific needs of each segment.
Page
126
06.
Creating and
Managing the
Product
eBook
6 . 1 2 Important Terms Associated with

Some important terms associated
Brand
to
consisting
American
of a
intended
and
differentiate
numbers
Marketing
word,
that is
or
branding are:
Name
According
to
with
Branding
that
to
letter,
Association,
and
group
"Brand
of words
or
name
letters
is
part
of a brand
comprising
name
identify the goods or services of sellers or a group of sellers

them
can
be
from
those of competitors."
vocalized
or
pronounced.
For
It consists
example,
of letters,
Dell,
words
Philips,
Liril,
Aquafina.
Brand
Mark
According
appears
the
to
in
William
the
pictorial
vocalized.
J.
form
or
of
symbolic
For example,
Stanton,
symbol,
"A
brand
design
representation
mark
is
the
or distinctive
used
for
part
of
coloring
product
the
or
brand
which
lettering."
identification
that
It
can
is
be
Nike's swoosh.
Trade Mark
According
to American
part of a brand
that
Marketing Association, trade mark is defined
is given
legal
protection
because
it
as, "a brand or
is capable of exclusive
appropriation."
Trade Name
A trade
name is a commercial and
legal
name under which a company does its business.
6.13
Major Brand Strategy Decisions
Major
brand
decisions
sponsorship, and
brand
involve
brand
positioning,
development, which are shown
Brand positioning
Brand name selection
in
name
selection,
Fig. 6 . 1 3 a .
Brand sponsorship
..
Attributes
brand
Manufacturer's brand
Brand development
llj
Line extension
Selection
Private brand
Brand extention
Benefits
Protection
Beliefs and values
Mulbrands
Licensing
Co-branding
Fig. 6 . 1 3 a :
M a j o r Brand Strategy
New brands
Decisions
Page
127
brand
06.
Creating and
6.13.1
Brand
designing
the
Product
eBook
Positioning
Organizations
customers.
Managing
need
to
According
the
position
to
C.
company's
their
brands
brand
Anandan,
offering
clearly
and
in
the
positioning
image
so
that
minds
refers
it
of
to,
occupies
their
"the
target
act
of
distinctive
and valued place in the target customers' minds."
A brand can be positioned at any of these three levels:
At the basic level, a brand can be positioned on the basis of product attributes.
Consider
the
unique
Lifebuoy
offers the benefit of removing
green
handwash
that
99.9/o germs by c h a n g i n g
color from white to green in just 10 seconds.
A brand can be better positioned
in terms of desirable benefit.
Mamy
style
Poko
Pants
diapers
that
offers
fit
the
around
benefit
the
of
baby's
pant
waist
comfortably.
Strong
brands are
brands that
have
positioned
themselves on
the basis of strong
beliefs and values.
Brands
like
Cadbury
and
Proctor
usually follow this strategy and

passion
and
excitement
of
&
Gamble
try to create the
their
brand
among
consumers.
When
positioning
a brand,
vision of what the brand
the marketer should
establish a mission
for the
brand
must be and do.
Page
128
and
06.
Creating and
6 . 1 3 . 2 Brand
Selecting
sell
a good
well.
eBook
as well as appropriate brand
needs to take.
A good
the following
Product
Name Selection
a management
not
M a n a g i n g the
brand
name
is one of the trickiest decisions that
Even a well-designed
name adds value
product with an ordinary
to the
product.
A brand
name
name may
should
have
desirable qualities:
A brand
It
name should
should
be
easy
give a notion of the key
to
pronounce,
product benefits and
remember,
and
spell.
For
quality.
example,
Lux
and
Maruti.
It should
Brand
It should
A brand
name should
convey positive meaning
A brand
name should
be short and
6.13.2.1
giving
name should
brand
combined
names
have the capability of legal
be u n i q u e and distinctive.
Brand
Individual
name
reflect a product or service category, for example,
to
different brand
Newsweek.
protection and
For example,
registration.
Kodak.
and
fit into the company image.
simple.
Name Strategy
name,
with
their
blanket family name,
individual
products.
product
Given
separate family brand
name
below
are
is
the
strategies
name, and
used
diagrammatic
by
corporate
organizations
representation
name strategies:
Individual Brand
Name
Blanket Family Name
Brand Name Strategy
Separate Family Brand Name
Corporate Name Combined

with Individual Product Name
Fig:
6.13.2.la:
Brand
Name Strategies
Page
129
for
of the
06.
Creating and
Individual
When
Managing
company
into
multi
multi
product
individual
uses
different
segment
position.
brand
Blanket Family
policy
is
brand
eBook
to
names
branding.
because
Procter
names
(baby care), Oral
This
Product
Names
practice is known as i n d i v i d u a l
enter
the
it
By u s i n g
helps
& Gamble
each
of
its
for
to
in
each
different
its
different
such a strategy,
create
India
of
separate
follows this
product
products,
the
the company tries to

brand
policy
image
by giving
categories,
such
through
different
as
Pampers
B (Mouth care), and Wella ( h a i r care).
Names
followed
by
Tata.
The
blanket
family
name
of
the
company
diverse product categories such as salt, tea, coffee, automobiles, and
Separate F a m i l y Brand
is
used
in
steel.
Name
When a company uses separate names for its various products, the practice is known as
separate
family
branding.
Sears
Kenmore for its appliances and
Corporate
follows
this
strategy
Kellogg's combines corporate and
individual
Raisin
Flakes.
and
Hewlett-Packard.
Kellogg's
Corn
The company
giving
family
brand
name
Craftsman for its tools.
Names Combined With Individual
Bran,
by
name
Product Names
names
Other
in
Kellogg's
examples
legitimizes and
the
Rice
include
individual
Krispies,
Honda,
name
Kellogg's
Sony,
individualizes
the new product.
6.13.3
Brand
Sponsorship
The manufacturer has four sponsorship options that are depicted
in the figure below:
Manufacturer's Brand
Private Brand
Brand Sponsorship Options
Licensed Brand
Co-brand
Fig:
6.13.3a:
and
Brand Sponsorship Options
Page
130
06.
Creating and
National
National
by
the
Managing the
eBook
Brand
brand
or manufacturer's
manufacturer.
under their own
Private
Product
For
brand
example,
brand
names.
brand
refers to
refers to the
companies
brands that are created
like
Pepsi
and
that
is owned
Dell
sell
and
their
owned
products
Brand
Private or store
the
brand
name
by
resellers
(wholesalers
and retailers).
Licensed
It
is an
brand
Brand
agreement
between
the owner of a brand
and
a company
that wants to
use the
name on its products in exchange for a license fee.
Co-brand
Co-branding
branding
is
is a combination of two or more

a
nice
approach
expression that their favorite

branding
music and
is
that
both
the
persuade
brand
brands
6 . 1 3 . 4 Brand
names to form
customers
earn
profits.
For
a single product.
psychologically
has a lot more to offer.
exercise together when they developed
allows shoes to talk to an
A firm
to
brand
An
example,
by
important
Nike
the Sports Kit,
and
giving
them
Apple
brought
a wireless system
iPod.
four choices for developing
brands:
Line Extensions
Brand
Extensions
Brand Development
Strategy
Multibrand
New Brands
Fig:
6.13.4a:
Brand
an
highlight of co
Development
has the following
Co
Development Strategy
Page
131
that
06.
Creating and
Line
Managing
the
Product
eBook
Extension
Line extension
forms,
color,
and
as Vegetable
important
is the expansion
flavor in
Atta
parent brand.
It
the same
Noodles,
aspect
of
line
of the existing
Maggi
is a cost and
product class.
Masala,
extension
established
is
and
that
all
brand
Maggi with
Cuppa
the
Mania
products
name
in
terms of new
its different variants,

exhibits
draw
risk-effective means of boosting
such
line extension.
their
identity
from
An
the
the sales of a product.
Brand Extension
Brand
extensions
into
new
itself
into
product
the
immediate
occur
new
when
category.
product
recognition
company
Maggi
with
category
and
quick
costs that are u s u a l l y required
to
uses
its
its
existing
existing
of sauces,
acceptance
established
soups,
to
promote a new
brand
etc.
new
to
brand
brand
products.
brand
name
extend
name
extended
extension
It
reduces
itself
gives
an
advertising
in the marketplace.
Multibrands
When
under
the
Gamble
company
in
category.
share
same
by
introduces
product
India
uses
number
category,
the
multibranding
The underlying
catering
to the
principle
by
of
practice
offering
behind
needs of many
similar
this
brands
is
known
number
branding
segments,
with
as
of
different
brand
multibranding.
similar
brands
name
Procter
in
the
&
same
is to capture most of the market
allowing
a company
distributor shelf space. The main disadvantage of multibranding

obtain only a small market share and
to
lock up
is that each
brand
more
might
none of them may be very profitable.
New Brands
A
firm
uses
wants
to
brand
names
new
create
are
brand
new
strategy
brand
appropriate.
in
when
new
Tata
its
existing
product
Motors
with
brand
category
its
new
name
for
brand
is
which
Tata
fading
none
Ace
or
of
when
the
targeted
it
firm's
small
transporters.
6 . 1 4 Elements of B r a n d i n g
The important elements of branding are:
Brand
Identity
Brand
identity
make
the
is
brand
brand-customer
a bundle
of all
recognizable
bond.
It
is
features,
in
much
the
associations or
minds
more
than
of
favorable connotations,
consumers.
brand
Brand
positioning,
identity
imaging,
creates
and
Page
the
physical
attributes.
which
132
06.
Creating and
Brand
Image
Keller
defined
Managing the
brand
image
as,
Product
eBook
"Perceptions
about
brand associations held
in consumer memory." Brand
picture of how
think about
key
feature
consumers
of a
goodwill as well.
strategies
the
that
and
Brand
positive
the
image
distinctive
The
1990).
set
brand associations.
brand
and
the
of
For a consumer,
boosts
brand
attributes
customer's
loyalty
of a
mind
perceptions about a
(Keller,
Hsieh,
by
image
and
with the assistance of strong
favorable
in
reflected
the
image is the complete mental
brand.
image
is created
brand
To a
particular
as
Pan, and
is
particular
linked
brand
the
is the
improves
marketing
brand
to
an
with
offering
consumer forms
Setiono)
Equity
Brand
equity
equity
of
satisfied
and
by
brand
memory.
Zinkhan,
as reflected
and
A good
relate
consumer's
(Dobni
brand
brand
is
the
overall
particular
with
properly
it,
and
strength
product
is
resellers are
communicated
of
the
high
in
brand
market
keen to sell
so
that
it
it.
in
if
Brand
builds
the
market.
many
For
customers
equity should
strong,
example,
unique,
are
brand
happy
and
be carefully crafted
favorable
consumer
associations and experiences of the brand.
Brand
1.
equity arises from the sequential

The
company
has
to
develop
building
processes, which are:
positive
brand
awareness
and
association
of
brand among the customers.

2.
The company
3.
The company has to draw-out a proper customer response to the
4.
The
most
brand and
Brand
brand
equity
has to develop a meaning of its brand
difficult
step
In
to
establish
strong,
active
of the user.
brand.
relationship
between
the
customer.
provides
substantial
a power to capture the
source.
is
in the mind
highly
emotional connection
major
competitive
between
competitive
portion
market,
brand
and
advantage
to
the
of market share and
forging
strong
customer is the
brand
key
firm
as
it
gives
source of solid
equity
on
the
income
basis
of
ingredient for the success
of any new venture.
the
Page
133
06.
Creating and
Managing
the
Product
eBook
6 . 1 5 Packaging
According
container
to
or
environment
size,
crowd
that
for
has
both
is divided
Primary
an
"Packaging
sellers
effect
involves
It acts as
product."
adverse
appearance
of competing
Packaging
Kotler,
wrapper for
shape, and
important
Philip
on
the
designing
a wall
product.
and
between
An
producing
the
attractive
product and
package
promotes the product at the time of purchase.
and
customers
as
it
helps
in
identification
the
of
of
the
right
Packaging
is
product
in
brands.
into the following
packaging
refers
to
three categories:
the
packaging
that
is
in
immediate
direct
contact
with the content or product.
Secondary packaging
is external to
displaying
the product on the shelves.
Tertiary
or
shipping
facilitates the protection,
primary
packaging
handling, and
refers
packaging
to
the
and
plays a pivotal
packing
role in
arrangement
that
transport.
Functions of Packaging
Packaging
has the following
important functions:
It a i d s in devising
It provides protection against damage and
It makes distribution channels accessible.
It helps
It provides necessary
in
suitable pricing
strategies.
spoilage.
image b u i l d i n g .
information about the
product.
Advantages of Packaging
Packaging
has the following
advantages:
It conveys brand
It helps consumers to identify the product with
It adds value to the product.
It
creates
visual
message at the t i m e of purchase.
impact
of
packaging,
which
its u n i q u e selling
is
an
important
points (USPs).
form
of
non-verbal
communication.
Page
134
06.
Creating and
Managing the
Product
eBook
6 . 1 6 Decisions on Packaging
Decisions on packaging
have to entail the following
areas:
Package Materials
Marketers
metal,
have to choose from
wood,
depends
on
cellophane,
the
production and
several
plastic,
nature of the
packaging
and
materials,
styrofoam.
product,
point
Choice
such as glass,
of
of consumption,
the
paperboards,
packaging
distance
material
between
time
of
consumption.
Cost
Choice of the packaging
material also affects the package cost.
very careful while deciding about the
Size, Shape, Color, and

All
these
factors
greatly
its
products from
be
package.
Design of Package
affect
the
consumer's
that of its competing
basis of a successful
So, a marketer should
brands.
choice
Shape,
and
size,
help
and
the
firm
to
differentiate
color together form
the
package d e s i g n .
Promotion Strategy
Packaging
plays an
so that they can
important role in
promotion.
merge with major sales
Packages should
be engineered
properly
promotions.
Page
135
06.
Creating and
Managing
the
Product
eBook
6 . 1 7 Labeling
Label
is
information
simple
about
tag
the
attached
product
and
the
the
product
seller.
package
itself or as a tag
Labeling
involves three important decisions:
Grade
labels
numbers,
affixed
to
refer
to
letters, and
Descriptive
labels
or
label
designed
can
graphic.
appear
as
It
graphics
carries
on
the
on the product.
the
quality
of
the
product
important
benefits
offered
for
sale
in
terms
of
words.
explain
the
or
characteristics
offered
for
sale.
Informative labels
refer to the care,
use, and
preparation of the product.
Advantages of Labeling
Labeling
It
has the following

helps
in
advantages:
identifying
the
product
or
brand
in
the
market
which
is
flooded
numerous products.
It promotes the product in the highly competitive market.
It helps
in grading
the product.
Page
136
with
06. Creating and
eBook
6 . 1 8 Chapter Summary
A product
price,
is a set of t a n g i b l e and
manufacturers
accept as offering
and
retailers'
prestige
satisfaction of wants and
Products
are
classified
industrial
products.
A product-line
intangible attributes,
refers
under
to
the
two
set
Product-line
length
refers to
main
which
the
categories-consumer
of the closely
the
services,
packaging,
color,
buyer
may
products
and
needs.
as a u n i t because of the s i m i l a r technology,
and
including
linked
products
price range,
number of
items
the
that
marketing,
company
are considered
and end
carries
in
user.
each
of
its product lines.
Downward
line
market and
stretching
occurs
when
stretches its lines downward
Product-mix
consists
of
all
the
is
an
attempt
company
by
product
operates
in
the
upper
end
introducing a low-price line.
lines
and
items
that
particular
seller
offers for sale.
The
product
history
of
growth,
the
Skimming
cycle
product.
maturity, and
marketer
life
and
Sales
to
history
recognize
passes
the
distinct
through
four
stages
in
the
sales
stages-introduction,
decline.
penetration
pricing
are
two
main
pricing
strategies
used
by
s for new products that are at the introduction stage.
brand
is
intended
to
name,
term,
sign,
symbol
or
design,
or
combination
of
them,
identify the products or services of one seller or group of sellers and
to
differentiate them from those of competitors.
Major
brand
decisions
sponsorship, and
Brand
positioning
brand
involve
brand
Individual
corporate
brand
name
refers to
name,
the act of designing
firm
has
four
multibrands, and
Packaging
valued
blanket
combined
organizations for g i v i n g
brand
name
selection,
with
family
the company's offer and
image
Label
so
place in the target customers' minds.

name,
individual
separate
product
family
name
are
brand
name,
strategies
and
used
by
names to their products.
choices
for
developing
brands-line
extension,
brand
extension,
new b r a n d s .
involves
designing
and
producing
the
container
or
wrapper
product.
brand
development.
that it occupies a distinctive and
positioning,
is a simple tag
attached
to the product or a designed
graphic.
Page 137
for
Pricing
07.
Pricing
eBook
7 . 1 Introduction
Pricing
value
is
of
believed
p r o fit s
not just
a
an
an
fluctuations in
Pricing
that
elegant
is
attached
marketer
product
organization.
can
Pricing
to
tries
to
attract
is
never
label
on
product.
communicate
premium
with
pricing
permanent
It
its
and
because
is
the
intended
customer.
can
there
garner
are
It
is
huge
always
pricing d u e to various factors.
decisions
overlook
n u m b e r that
commodity
that
for
their
are
considered
pricing
uncertainties, the pricing
to
strategies.
be
However,
decisions need
you
will
complex
and
difficult;
even
after
hence,
facing
many
marketers
complexities
to be appropriate.
be able to:
Define pricing
Explain the strategic role of pricing
Describe the pricing
Explain the factors affecting
Explain
Describe economic approach to pricing
Describe pricing
objectives
pricing
decisions
how companies price their products
strategies
Page
139
and
07.
Pricing
eBook
According
to
Philip
Definition of Pricing
Kotler,
or service, or the sum
"Price
is
the
amount of
money
charged
for
a product
of the values that customers exchange for the benefits of
having or using the product or service."
The amount of money charged

are
different
names
price,
pays
for
buying
cost
of
manufacturing,
manufacturer.
to
product
Until
o n l y element in
or
for
such
marketing
as
service.
cost
today,
buying
of
price
mix,
fees,
fares,
Price
is
sales
is
the
which
impact on the bottom
profitability
with
the
of an
help
considerably.
a b l e to
of
price.
Many
made
and
In
the
values
few
known
of certain
and
is
are
price.
that
components,
profit
There
person
such
margin
buying
as
of
decision.
The
price.
be changed
created
and
pricing
low-price
as
etc.,
wages,
A little change
years,
adopting
is
of a consumer's
mix, which can
past
are
up
toll,
distribution,
key aspect
Customer
organizations
purchase high-end
rent,
line of an organization.
organization.
or service
produces revenue,
Price is a flexible element of marketing

great
a product
quickly.
in
price can affect the
relationships
practices
models
P r i c e s have a
so
have
that
are
built
changed
customers
are
products.
7 . 3 The Strategic Role of Price

Pricing
strategy
cautiously
is
the
evaluated.
d u e to the following
Pricing
important
has
been
part
one
of
of
marketing
the
Price has a great effect on demand
and
Price/volume
of
important
relationship
is
one
ultimately
the
most
important
Pricing
of the
customer
of
it
must
marketing
be
mix
control
measures
for
management.
Competitive prices have direct impact on costs and
price
aspects
and
influences the sales revenue.
indicates the quality,
important
planning
reasons:
marketing
An
most
step
in
offering.
attitude
planning
and
image, value, and
controlling
While evaluating
surveys,
the
competitive
the
improvements in productivity.
status of the product.
marketing
strength
and
pressures,
and
mix
is deciding
weakness of a
government
on cost and
pricing
policies
strategy,
are
into consideration.
Page
140
taken
07.
Pricing
eBook
7.4 Objectives of Pricing

Pricing
is one of the crucial
objectives of pricing
Pricing
elements of marketing
It
is
important
with the help of a diagram
in
Fig. 7.4a.
before designing
objectives are explained
the pricing
mix.
to
determine the
policies.
Pricinq Objectives
Profltabilitv
Volume-oriented
I mage-onented
Stabhzation
objectives
objectives
objectives
onented
objectives
(a) Profit
(a) Maximization of
(a)
sales revenue
maximization
Maintaining an
(a) Maintaining stable
image
prices
(b) Maximization of
(b) Target return
market share
(c)
(c) Satisfactory
Maxirmzatton of
Fig. 7.4a:
While
designing
objectives
view
of
of the
pricing
pricing.
labor
costs.
and
marketer
organization's
by certain factors,
and
policies
cash
Pricing Objectives
strategies,
must
flow
to
these
determine
marketer
pricing
requirements and
such as constitutional
Due
factors,
policies,
the
must
be
objectives
the
external
clear
from
about
the
limitations
market competition, demand
organizational
priorities
of
pricing
the
point
of
enforced
behavior,
objectives
are disturbed.
The aim
of an
organization
of their products
based
is to capitalize on
on that a i m .
profits;
There are
so
organizations
not m a n y firms whose
decide
the
prices
business objective
is to achieve greater sales volume.
Pricing
objectives are divided
Profitability-oriented
into four categories:
Objectives
Profit Maximization
One of the main

capitalize
before
on
calling
its
it
business objectives is profit maximization.

profit
in
off from
short
the
period.
market.
In
This
the
is
the
initial
An organization tries to
period
stages
after
of a
the
launch
product's
Page
life,
141
and
it
is
07.
Pricing
eBook
recommended
for
an
strategy to gain good
organization
to
follow
market share and
'low
price
and
low
profit'
margin
h i g h sales volume.
Target Rate of Return
Target
rate of return
organization
sales.
It
has
is the expected
done.
Target
level
rate
of
of profit from
return
also acts as a measurement tool
is
in
the
to gauge
the
the
investments that the
form
of
marketing
percentage
of
performance of
new organizations.
Satisfactory
Some
Profits
organizations
choose
policy.
do
satisfactory
Satisfactory
enables
an
change
according
not
level
focus
of
profit
level of profits
organization
to
to
do
time
much
as
on
profit
the
foremost
is an amount
future
d i s t r i b u t i o n , and cost of advertising.
of
increase
Therefore,
objective
Satisfactory
in
cost
of
instead
of
that covers overall
investments.
because
maximization;
their
they
pricing
costs and
level
profits
production,
also
might
cost
an organization must timely
of
review
the satisfactory level of profits.
Volume-oriented Objectives
Maximization of Sales Revenue
With
the
help
maximum
profit
run
sales
with
the
stability.
such
of
revenue.
Business
statement
to
maintain
portion of sales
In
the
past,
margins
due
is
etc.
sales
volume,
Organizations
intention
resource scarcity,
low
highest
of
making
experts
untrue
the
that
times
To cover overhead
sufficient
sales
organizations
generally
maximum
believe
in
many
sales.
high
of
and
in
This
sales
high
costs,
volume,
charged
tried
small
inflation,
in
sustain
percentage
objective
result
to
ensured
high
greater
of
long
profits
but
competition,
many small firms keep t h e i r p r ic e s
this
process,
they
fail
to
get
good
revenue.
many
to
organizations
high
prices
and
were
also
unsuccessful
because
of
in
safeguarding
unbending
their
profit
competition
from
overseas exporters.
Maximization of Market Share
Maximization
Research
market
of
studies
market
share
indicate
share of an
that
is
there
organization
one
of
is
(Tellis,
the
an
main
inbuilt
1988;
objectives
of
relationship
Sethuraman
and
an
organization.
between
Tellis,
price
1991).
Page
142
and
In
07.
Pricing
eBook
situation where sales volume of an organization

competition,
electronic
an
organization
goods
must
manufacturing
keep
on
increases along
observing
organizations
reduced
its
with the growth
market
prices
of
share.
their
in
Many
products
to
capture maximum market share.
Organizations make market share as their objective d u e to several
reasons:
Market share is easy to measure in comparison to other pricing objectives.
Market share helps an organization
in deciding
its competitive
position
in the
industry.
o
Market share is also linked
belief of business growth.
Maximization of Customer Volume
Many
organizations
share and
to
customer
the
volume
prices
of
Such
is
tickets
objective
maintain
selling
sell
their
increase the
spite of decreasing
of
their
the
to
products
at
low
prices
sales of their products.

aviation
industry.
increase
traffic,
The
to
maximum
market
best example of m a x i m i z i n g
Commercial
which
gain
airline
ultimately
companies
increases
the
reduce
profits
in
the profit m a r g i n .
pricing
donation
is
more
levels.
suitable
for
Non-profit
non-profit
organizations
organizations
attract
that
more
try
to
people
by
When
an
their products at comparatively low prices.
Image-oriented
with the fundamental
Objective
Maintaining an Image
The
image
of a firm
organization,
products,
which
it can
plays
is
affect
an
important
known
the
careful w h i l e formulating
for
its
image of an
its pricing
role
in
its
high-end
market
performance.
products,
organization.
So,
introduces
an
low-price
organization
must
be
objectives.
Stabilization Objective
Maintaining Stable Prices
Minor changes
be
predicted
prefer
to
in
or
have
price can
controlled
stable
premise of stable
prices
bring
about
under typical
prices
as
for
price
their
positive or
negative
responses that cannot
business conditions.
products.
stability
is
Hence,
Managers,
considered
an
organizations
usually
indication
prefer
of a
healthy
business.
Page
the
143
07.
Pricing
eBook
7 . 5 Factors Affecting
Many economic and
Some of these
known
as
internal
that
function
factors.
inside
Factors
Fig. 7.Sa:
that
organization
function
are
a pricing
controllable
outside
the
decision.
and
hence
organization
are
pricing decisions are explained
Factors Affecting
Pricing
below.
Decisions
Factors
Organizational Setup
Pricing
is
also
range
decisions
of
product
which
are
responsible
taken
for
is
comprises
department,
Marketing
upper-level
the
experts
overall
their
responsible
Generally,
for
from
management
pricing
strategy
market
actual
'decision
as
of an
and
organization.
sorting
segments.
price
making'
marketing
is responsible for fixing
The
technicalities
committee
well
as
in
from
wide
lower-level
and
an
the
It
individual
organization,
the
production
the price of a product.
Mix
Price is one of the most

of
the
considering
mainly
strategies.
by
framing
products,
management
the
role when taking
known as external factors.
Internal and external factors effecting
Internal
Decisions
non-economic factors play a key
factors
uncontrollable and
Pricing
marketing
mix
are
important elements of the marketing
interrelated.
Any
decision
taken
affect the functioning
of the other three elements.
Thus,
strategy,
the
marketing
taken
changes
and
overall
modifications
strategy
must
be
must
done
be
for
mix.
any
All the elements
one
element
while framing
considering
into
the
the
pricing
consideration.
overall
Page
Even
marketing
strategy.
can
144
07.
Pricing
eBook
Costs
Pricing
decisions
manufacturing
consideration
for
other
based
product.
correct
on
costs,
out-of-pocket
costs,
on
the
Generally,
pricing
such
as
costs, and
cost
fixed
decision.
incurred
cost
and
by
variable
Management
incremental
costs,
the
organization
cost
should
replacement
are
also
taken
in
into
maintain
costs,
its
opportunity
controllable costs.
Objectives
decisions
offer there
defined
External
are
should
be
mainly
influenced
a specific
pricing
so that the decision-making
by
pricing
objective.
objectives.
Each
For
objective
each
should
product
be clearly
becomes easy.
Factors
Demand
The demand
of product
influences its pricing and
Number and
Price of the competitor's product
Nature and
Consumer preferences
A detailed
the
focus
Pricing
are
demand
itself is influenced
by:
size of competitors
economic capacity of customers
study of the above-listed
factors is important in
pricing
decision.
Competition
Competition
majorly
must take pricing

competitors'
affects
the
pricing
decision
of
an
organization.
decisions on the basis of thorough study and
pricing
strategies.
This
also
helps
an
marketer
in-depth analysis of
organization
to
work
on
their
future p l a n s of pricing.
Suppliers
Suppliers
raw
play
material
key
rises,
role
it
in
will
pricing
charge
ultimately the manufacturer w i l l

final
product
decisions.
an
In
case
increased
of suppliers,
price
to
the
if the
price
manufacturer
of
and
pass it on to the consumer. Therefore, the price of
rises.
Economic Atmosphere
The
economic
policy
of
an
atmosphere
organization.
of
particular
Monopoly
region
enables
an
or
country
organization
affects
to
the
pricing
charge
Page 1 4 5
prices
07.
Pricing
eBook
according
or
to
its desired
recession,
frame
the
profit
adversely
pricing
margin.
affect
policy
the
Adverse economic
pricing
according
to
policies.
current
periods,
such as
Therefore,
economic
inflation
marketers
period
and
must
based
on
economic forecast.
Government Control
In
many
countries,
organizations
government
the pricing
to
government
efficiently
controls
manage
the
is the only customer to whom
the
pricing
markets.
For
organizations
policies
some
of
private
industries,
sell their
products.
decisions are more distinct due to the impact of government
the
Here,
bodies.
7 . 6 How C o m p a n i e s Price?
Pricing
in
is done
charge;
Here,
then
even
in
in
large companies,
low-level
approved
railroads
many ways.
etc.,
by
pricing
management
the
pricing
In case of small companies,
is
is
set
people
upper-level
considered
by
put
to
be
an
senior
accounts, and
people
from
sales are invited
various
division
forward
management.
separate departments that decide the correct

decisions,
the
pricing
In
the
product
pricing
companies
important
pricing
and
is done
aspect.
of a
departments,
such
person
managers.
which
manufacture
These
as
line
product,
that
for a product.
by the
companies
While making
finance,
is
oil,
have
pricing
production,
to give their valuable i n p u t s .
7. 7 Setting the Price

An
organization
product,
decides
on
price
at
several
occasions,
such
as
when
developing
introduction of a regular product in a new channel or in a new
There are certain
steps in setting
Fig.
the price that are explained
7.7a: Six-Step
region, etc.
in detail below:
Procedure of Setting the Price
Page
146
new
07.
Pricing
Step
eBook
1: Selecting the Pricing Objective
Objectives of a firm
becomes
profit,
easy.
should
There
maximum
be clear.
are
five
market
When
major
share,
objectives are clear,
pricing
maximum
the
pricing
objectives-survival,
market
skimming,
of a product
maximum
and
current
product-quality
leadership.
The major pricing objectives are:
Survival
Survival
is the
changing
stay in
consumer
wants,
of organizations
intense
when
competition
or
they
over
are
weighed
capacity.
down
with
Organizations
variable costs are covered.
Maximum Current Profit
organization
decides the
Maximum
try
to
does
fix
the
price
analysis
price which could
on
that
the
will
capitalize
basis
of
generate maximum
on
market
present
demand
and
often
desire
volume
leads
their
to
low
market
unit
shares.
the market as price sensitive, organizations fix low prices.
and
costs
and
It
is
high
often
profit.
Market S k i m m i n g
skimming
and
sales
of
Considering
high
high
maximization
that
Market
cost,
An
profits.
considered
Maximum
profits.
Market Share
Organizations
objective
business until some fixed costs and
Organizations
main
the
is
the
pricing
price comes down
consumer electronics industry.
technique
over time.
in
which
Market
price
of
skimming
In competitive conditions,
a
is
product
is
initially
m a i n l y observed
such techniques could
in
be
critical.
Product-Quality Leadership
Organizations
prefer
provide high-end
high
to
be
product-quality
products at affordable prices.
in quality, taste, and
status but are priced
leader.
Organizations
It tries to provide
try
hard
to
products that are
within the customer's reach.
Page 147
07.
Pricing
Step 2:
Determining
Demand
The
eBook
Demand
varies according
relationship
between
to price and
price and
affects the marketing
demand
is explained
objective of an organization.
below with
the
h e l p of demand
curve.
(a) Inelastic Demand
(b) Elastic Demand
f 150
" 150
100
- - - - - - - - - - T - -
- - - - -
- - - - - - 1 - - - - - - - - - - -
'
,100
'
'
'
I
'
1000
1050
Quantity Demand per lleriod
Quantity Demand per Period
Fig. 7 . 7 b :
Source:
Philip
Kotler,
Inelastic Demand
Kevin
Lane
1500
50-0
Keller,
Fig.
Abraham
Koshy,
7.7c:
Mithileshwar Jha,
Elastic Demand
Marketing
Management,
13th
Edition.
Price Sensitivity
The
demand
curve
curve
illustrates
indicates
the
customer
Estimation of the demand

less
price
there
are
sensitive
no
purchase of quantities
is initiated
in certain
substitutes
responses
or
at different
that
have
price
various
intervals.
price
with the analysis of price sensitivity.
situations,
such as when
competitors,
when
they
they
feel
buy
the
low cost
high
price
Demand
expectations.
Customers are
products, when
of
product
is
acceptable, etc.
Estimating
Demand Curves
Organizations measure
their demand
curves with
the
help
of various methods explained
below:
Surveys
It gives
different
an
organization
a fair
idea
about the
units
price intervals.
Here,
customers can d e v a l u e their intention of purchasing
a product so that the organization does not fix h i g h
purchased
by
the consumer at
prices.
Page
148
07.
Pricing
eBook
Price Experiments
price
experiment
comparable
is
about
territories
to
charging
witness
the
different
effect
experiments must be done carefully and
factors
analysis
help
an
of quantities
organization
to
be from d ifterent locations and
Price
Demand
change
it should
sold,
know
previous
their
same
prices
on
product
sales.
in
Pricing
not estrange customers.
in
to
price.
variation
Step 3:
in
when
there
For example,
the
is
hardly
be elastic when
witnessed
s'l50
However,
demand
in demand
policies,
The
and
various
statistical
other
data
could
of time.
in
any
decline
of
Fig.
was considerable,
finalize
the
includes
price
product,
which
product.
It also includes the
variation
in
curve of Fig.
in
demand
the
7.7c,
it
after
in
7.7b,
from
in
changes
price
in
price.
change,
demand
and
after a slight
the price increase from

units
1050
increase
that is, from
cost
of a
of
product
price
to
was
units.
1000
same
but
the
on
the
of
selling
the
are
costs
1 5 0 0 units to 500 u n i t s .
production,
profit
keeping
cost
Levels of Production
There
of cost-fixed
costs
organization,
irrespective
are
two
incurred
costs
types
by
are
the
sure
to
be
incurred
Variable cost varies according
of
and
analyzes
of
the
organization
fixed
cost
cost
per
charges a
and
unit
every
of
month.
price
levels of production,
cost
production
that mainly
is
For
the
costs
and
incurred
cost
covers
an organization
Fixed
revenue
example,
levels.
costs
or
production
salaries,
For example,
rent,
levels.
interest,
requirement of
as
which
the
must
total
is
total
cost.
known
A
as
production
price the
manufacturer
average
costs.
cost.
also
The
As there are
product cleverly so that the
costs of all the levels of production are covered.
that
by the manufacturer.
known
level,
costs.
sales
to the production
variable
at
mind
distribution,
variable
raw material w i l l vary according to units produced
total
in
margin for an organization.
Types of Costs and
various
after making
is considerable change
the demand
little
curve
there
in demand
Estimating Costs
Organizations
Fixed
pricing
correlations.
over a period
know the variations occurring
inelastic
is said
to
s'lOO
must
is
demand
The
different
the
Elasticity of Demand
Marketers
etc.
for
Statistical Analysis
Statistical
are
of
prices
Page 149
07.
Pricing
There
eBook
are
various
profitability
carry
out
(better
of a
an
other
costs
related
product
when
selling
accounting
known
as ABC
method,
Step 4:
to
which
accounting).
out the actual cost that is linked
to
By
the
various
is
the
to the selling
of
retailers
known
using
Analyzing Competitor's Costs,
production
as
ABC
or
communicate
the
with superior features

competitor's
lower,
Even
of their
activity-based
method,
and
price,
the
slight
change
in
suppliers,
etc.
have
proposition
little
creates
organization
must
to
analyze
the
organization
can
when
information
exceptional
manufacturers
cost
accounting
manufacturer can
find
Prices, and Offers
product
incite
reaction
there are fewer companies,
customers
the
their
In addition,
customers,
must
if
it
organizations
offers
product
After thorough evaluation of the

decide
whether
it
should
charge
its competitor.
pricing
The
analyze
of a product to each customer.
in comparison to the competitors.
same or higher price than
distributors,
when
product
value
To
customers,
Organizations must first t h i n k over the price of the competitor.

must
product.
of
of
the
the
reactions
competitors
product
is
product.
problems.
competitor's
To
competitors,
in
three
homogenous
in
nature,
is
customers,
definite
await
present
from
competitor
a
with
and
strong
competitor's
financial
scenarios
when
value
response,
situation,
recent
an
sales
record, corporate objectives, and customer loyalty.
Step 5:
Selecting a Pricing
For setting
demand
a price,
schedule,
Method
there are three major considerations for an organization-customers'
the
cost
function,
and
the
competitor's
price.
Organizations
use
the
method that comprises one or more of these considerations.
Different methods of pricing are explained
Markup
Markup
Pricing
pricing
is
organization can
and
then add
First,
considered
the
most
straightforward
pricing
method.
approximately calculate the total cost of manufacturing
a profit m a r g i n , a l so known as a markup,
a manufacturer
formula:
below:
needs to find
out the
Here,
a product
to the price of the product.
u n i t cost of a
product
by
the following
Unit cost , Variable Cost+ Fixed costs

Unit Sales
an
Page
150
07.
Pricing
eBook
After getting
the u n i t cost,
a manufacturer
needs to find
Markup Price=
help of the following formula:
the markup
price with the
Unit Cost
1 - Desired Return on Sales
Target-return
Organizations
Investment
Pricing
use
target-return
(ROI).
pricing
to
decide
The formula for target-return
the
target
rate
of
Return
On
price is:
.
Unit cost+ Desired Return x Invested Capital
T arge t - Ret urn P r i c e = -------Un-t
i -Sa
e
l -s------'--
Perceived-value
Organizations
Pricing
price
their
products
includes various elements,

the
channel
Advertisement
sales
the
such as the
deliverables,
and
on
the
force
are
basis
buyer's
image of the
warranty
marketing
of customer's
quality,
mix
perceived
product
and
elements
customer
that
Value
Many
are
organizations
have
high
instance,
Going-rate
Going-rate
same
or
also
to
Low
catch
Pricing
pri cing.
It
by
buyers.
intends to
the
become a
attention
(EDLP)
is
by reputed organizations like Big
pricing
is
price
based
than
Organizations
Auction-type
pricing
technique
low-cost
of
Bazaar,
the
key
By
producer and
of value-conscious
one
price.
in
customers.
value
pricing
D-Mart, etc.
its
on
competitors'
nearest
prefer the
pricing.
competitor.
going-rate
It
Organizations
is
pricing
the
most
technique
charge
accepted
when
less,
pricing
measuring
in competitive response.
Pricing
With
the
growth
good
example of this kind
type pricing
is
products at a comparatively low
the cost becomes difficult or when there is uncertainty
used
Pricing
more
technique.
goods
Everyday
value
high-quality
the organization
quality
techniques used
implemented
provide
this technique,
provides
For
support.
Pricing
which organizations
using
It
performance,
organizations to improve the perceived-value in the minds of potential
value.
of
Internet,
of pricing
is to clear used
auction-type
pricing
is
majorly
is seen at ebay.com.
The
acceptable.
idea
behind
auction
goods or surplus inventories.
Page
very
151
07.
Pricing
Step 6:
All
eBook
Selecting the
organizations
organizations
activities,
Final
need
need
to
company
to
Price
finalize
think
pricing
on
over
pricing
various
policies,
their
products.
factors,
such
gain-and-risk
as
sharing
While
impact
finalizing
the
of
marketing
pricing,
other
and
the
price,
impact
of
price on other parties.
Impact of Other Marketing Activities
Other
marketing
consideration
considered
generally
activities,
while
such
deciding
on
insignificant when
seen
that
other
as q u a l i t y
the
final
of a brand,
price
Organizations
make
than
price,
consumers
departments.
and
consistency
policies
The
and
main
the profit g a i n e d
this
type
accept the
of
in
the
approve
intention
Sometimes
other benefits
are
more
are taken
in
product shipping and
pricing
the product.
concerned
about
into
It
is
is
customer
handling, etc.
is
price
of a
decisions,
to
be
product
many
aware
and
the
pricing
organizations
of the
prices
policies.
establish
quoted
by
To
pricing
salespersons
by the company from those prices.
Gain-and-Risk Sharing
In
product.
etc.,
Policies
prefer
pricing
the
it comes to q u a l i t y and
support activities, on-time delivery of a product,
Company Pricing
of
advertising,
pricing,
Pricing
perceived
marketer's offer.
Here,
level
of
risk
is
high,
so
if a marketer cannot
or she is solely responsible for bearing
a consumer
provide the
might
promised
refuse
value,
to
he
risk fully or partly.
Impact of Price on Other Parties

While
pricing,
suppliers,
organizations
competitors,
regulations,
sales
need
to
force,
consider
etc.
their
associates,
marketer
laid down by the respective authorities,
must
such
also
as
take
distributors,
the
rules
and
into consideration while p r i c i n g .
7.8 Approaches to Pricing

Due
to
extremely
methods.
Over
the
uncertain
years,
into consideration factors,
and
variable
organizations
factors,
have
used
marketers
various
such as competition, cost, and
prefer
pricing
traditional
methods
pricing
by
market d e m a n d .
Page
152
taking
07.
Pricing
eBook
Certain approaches to
Cost-oriented
Demand-oriented
Competitive pricing
Cost-oriented
In
pricing
pricing
total
cost
predetermined
of
manufacturing
percentage
of
profit
is
product
added
to
is
taken
it.
Less
into
price
pricing.
Pricing
In this type of p r i c i n g
consideration.
the
simplicity are advantages of cost-oriented
Demand-oriented
product.
pricing
pricing,
and
competition and
that
below:
Pricing
cost-oriented
consideration
are explained
technique,
While
using
There
are
value pri cing, charging
the price of a product
this
pricing
many
types
technique,
of
is set on the basis of demand
the
market
demand-oriented
what the traffic w i l l bear,
peak-load
response
pricing,
is
such
taken
as
for
into
perceived
pricing, etc.
Competitive Pricing
As
the
While
name
pricing
consideration,
competitive
competition
suggests,
a
competitive
product,
rather
pricing
organizations
than
cost
and
pricing-customary
is
done
take
demand
pricing,
the
on
the
basis
competitors'
factors.
below
There
of competitor's
pricing
are
competition
three
pricing.
structures
main
pricing,
into
types
and
of
above
pricing.
7.9 E c o n o m i c Approach to P r i c i n g
Economic
approach
d e m a n d ' factors.
pricing
studies
the
relation
between
'price'
and
The market situations on which the presumption of pricing
perfect competition,
to
monopoly, and
'supply
is based
and
are
monopolistic competition.
Perfect competition
It
is
is a market situation where there are many

homogenous
in
nature.
From
the
buyers and
analysis
of
sellers,
perfect
and
the
competition,
product
following
features are observed:

o
A larger number of buyers and
sellers
A homogeneous product
Free entry and exit for organizations
Buyers and
sellers having correct
knowledge
regarding
market conditions
Page
153
07.
Pricing
In
eBook
perfect
competition,
the
demand
setting the price of a product,
and
supply
factors
are
more
responsible
rather than the behavior of buyers and
for
sellers.
Monopoly
It
is a market situation where there
market
is
managed
by
that
is a single seller and
particular
seller.
The
many
buyers.
characteristics
of
The whole
monopoly
market conditions observed are:

o
S i n g l e producer in the industry
No competition
Product does not have any close substitute
Many monopolists charge the

the
price as
that
much as they
product.
Therefore,
price desired
require,
a
but
by
them.
it could
monopolist
needs
also
to
They
lead
be
have the power to
to decrease
cautious
raise
in demand
while
pricing
of
its
products.
Monopolistic Competition
In
monopolistic
having
competition,
intense
competition
little monopoly d u e to differentiation
is
observed
in their product.
among
small
sellers
The characteristics of
monopolistic competition are:

o
Sellers in
large number
Differentiation
Entry and exit freedom to organizations
in
product
7.10
P r i c i n g Strategies
Pricing
decisions
pricing
challenges of a market,
are
based
on
of action to adopt the changing
The various types of pricing
the
organization's
pricing
policies
of
pricing.
strategies are designed.
It
To
is also
encounter
known
as
situations of the market.
strategies:
Geographic Price Policy
Leader Pricing
Psychological Pricing
Skimming
Penetration
Pricing
Pricing
Page
154
the
plan
07.
Pricing
eBook
Geographic
While
Price
pricing,
shipping
policy
Policy
geographical
factors
heavy machines and
represents
the
organization must
are
metals,
pricing
taken
into
consideration,
especially
as their cost of transportation
structure
of
an
organization,
so
the
is huge.
pricing
in
case
The
of
pricing
policy
of
an
be apparent.
Leader Pricing
In
leader pricing
strategy,
the market
leader fixes a
other members follow the same pricing.

that acquires maximum
framing
the
pricing
market
policies,
particular
Here the leader is referred
share or influences the
a loss
price for the
leader needs to
industry
be cautious
product and
to as an organization
to a great extent.
While
because a single mistake
can affect its market position.
Psychological
Psychological
the
pricing
products are
instead
priced
at odd
that affects the psychology of a customer.
numbers for
instance;
price of a
product
prices is just of 1,
is
set
Here,
for 99
but customers see it
difference.
Skimming
Pricing
skimming
cream
is a type of pricing
of 100. The difference between the two
as a big
In
Pricing
pricing,
revenue
reduced
from
manufacturer
the
market
charges
before
because the manufacturer
it
very
gets
high
price
initially
competitive.
Over
so
as
to
time,
recovers all the expenditures incurred
skim
prices
on the
the
are
product
and also p u l l s out enormous profits.
Penetration
Penetration
Pricing
pricing
is
organization
prefers
entering
capturing
and
stay ahead
totally
to
opposite
introduce
the market.
its
to
skimming
product
with
prrcmg.
very
This type of pricing
low
In
penetration
price
strategy
with
an
pricing,
intention
of
helps an organization to
in competitive atmosphere.
an
Page
155
07.
Pricing
eBook
7 . 1 1 Chapter S u m m a r y
The
amount of money
There are different

a person
charged
names to
pays for buying
buying
price,
such
as
product
fees,
or
fares,
service
rent,
is
toll,
known
as
wages,
price.
etc.
that
a product or service.
Pricing objectives are d i v i d e d

volume-oriented
for
into four categories-profitability-oriented
objectives,
image-oriented
objectives,
and
objectives,
stabilization
objectives.
Factors
setup,
affecting
marketing
competition,
pricing
mix,
decisions
costs and
are
internal
objectives;
and
factors,
is done
in
person
in-charge;
many
in
ways.
large
In
case
companies,
of small
pricing
as
external factors,
s u p p l i e r s , economic atmosphere, and
Pricing
such
such
as demand
government control.
companies,
is
organizational
set
by
pricing
the
is
division
done
and
by
the
product
l i n e managers.
The six steps for setting
price are:
1.
Selecting
2.
Determining
3.
Estimating
4.
Analyzing competitor's costs,
5.
Selecting a pricing
6.
Selecting the final
Cost-oriented
the pricing
objective
demand
costs
prices, and
offers
method
price
prrcmg,
demand-oriented
pricing,
competitive
pricing
are
approaches to p r i c i n g .
Perfect
competition,
monopoly,
and
monopolistic
competition
are
said
to
be
the
economic approaches to pri cing.
Geographic
and
price
penetration
policy,
pricing
leader
pricing,
psychological
are the various types of pricing
pricing,
skimming
pricing,
strategies.
Page
156
Marketing
Channels
I T M
08.
Marketing Channels
eBook
8 . 1 Introduction
The
world
pricing,
and
of
and
marketing
promotion
services from
global
marketing
components,
finished
With
and
the
is
vibrant.
of a
product,
place of
has
Marketing
but
production
given
rise
manufactured
to
also
not
only
concerned
to the
supply
goods
is
concerned
with
the
about
movement
place of consumption.
chain,
together
and
which
links
focuses
production,
goods
Development
the
on
of
raw
the
of
material,
movement
of
goods to the consumer.
the
expansion
manufactured
these two
at
points
of
markets,
different
distribution
locations
needs to coverage,
and
sold
hence,
problems
at
different
have
increased.
locations.
The
Goods
gap
the concept of distribution channel
between
has
developed.
After reading
this chapter,
you will
be able to:
Define channel of d i s t r i b u t i o n
Explain the flow and
E x p l a i n the levels of distribution channel
Discuss the behavior and organization of channel
E x p l a i n the channel design decision
Discuss about marketing
functions of channel
logistics and
supply chain management
Page
are
158
been
08.
Marketing
Channels
eBook
8.2 Definition of C h a n n e l of Distribution

According
in
the
to
E . W . Cundiff and
direct
or
indirect
R. S. Still,
transfer
of
"Channel of distribution is a path
the
title
producer to ultimate consumers or industrial
According
to
marketing
company
American
channel
agents
is
Marketing
structure
and
of
dealers,
to
product
as
it
moves
traced
from
users."
Association,
"A
channel
of
intra-company organization,
wholesalers
and
retailers
distribution
units
and
through
or
intra
which
commodity product or service is marketed."
8.3 C h a n n e l Functions a n d
Channel
Functions
Agencies or firms that
are
involved
members of a marketing channel.
Flows
Collect
information
analyze
various
of
distribution
of goods and
services are considered
These members perform the following
regarding
ways
in
functions:
potential customers, current customers,
effective
distribution;
analyze
risks
competitors;
associated
with
the
channel.
Develop
the
strong
product.
and
effective communication
Negotiate
the
price of product and
process of transfer of ownership and

by
placing
Develop
orders and
good
potential
relationships
customers.
that
a
is,
such as
from
backward
information,
Make
with
Match
the demand
in
purchase
initiate the
the
market
is,
existing
flow,
for
proper
from
physical flow, and

Functions such
customers
negotiation, and finance flow from
customers
and
establish
storage
of
contacts
goods,
with
efficient
right movement of goods.
promotional
that
possession.
provisions
producer to customers.
flow,
various other terms to
to
delivering goods on time.
handling of goods, and
Functions,
to encourage consumers
to
title flow constitute forward
as ordering
company.
and
Some
flow,
payment constitute
functions,
such
both the ends.
Page
159
as
08.
Marketing Channels
eBook
Types of functions that a distribution c h a n n e l performs are:
Spatial
Discrepancy
Spatial discrepancy occurs when there is distance between the place of production
and consumption.
End-users are scattered, therefore, a product has to reach every
part of the target location in a cost-effective manner.
Temporal
Temporal
Discrepancy
discrepancy
manufactured
cases,
and
customers
reduced
is
the
have
by stocking
the
difference
time
to
when
wait
between
the
for
product
the
the
is
product.
time
actually
when
product
consumed.
Temporal
goods in the right quantity and
the
In
discrepancy
at the right
places.
is
some
can
be
Generally,
temporal discrepancies occur in case of automobile manufacturing.
Need for Breaking the Bulk
Products
are
manufactured
smaller quantities.
need
in
Therefore,
bulk
when
quantities,
but
are
discrepancies occur
generally
consumed
between them,
there
for breaking the b u l k . Thus, a customer can buy the product according
usable q u a n t i t y .
in
is a
to the
In most cases, this function is unnoticed.
The
best
goods,
example
where
in quantities,
the
Cadbury
Dairy
but
are
there
are
breaking
products
the
bulk
manufactured
is
FMCG
are
large
but they are broken down according
the orders placed
they
of
by distributors and
Milk
chocolates are
mainly
some
sold
as
instances,
where
retailers.
available
single
to
pieces.
they
are
in
bulk,
However,
also
sold
as b u l k , as per customer requirement.
The
Need for Assortment
A customer is always in search of variety.

in fact,
A company cannot sell a s i n g l e product;
it produces large quantities of a single product.
Consumers generally prefer
a variety of goods in small quantities.
In festive seasons,
the
company
in
you get festive packs with several
small
quantities
product assortment and
in
one
is most preferred
pack.
This
products of
is
known
by customers.
Page
160
as
08.
Marketing
Channels
eBook
Chocolate
good
refers to
the
Cadbury's
and
sweets
pack
of
Haldiram's
are
examples of product assortment.
a discrepancy
requirements
rather than
and
men
aftershave
a shaving
of
buying
For example,
kit,
the
them
in
the
which
lines
produced
Consumers
prefer
by
the
buying
manufacturer and
all
items
together
individually.
prefer buying
lotion
product
consumer.
all the shaving
together and
not
products,
individually.
like razor,
Therefore,
shaving
they
prefer
foam,
buying
provides all the items in a s i n g l e pack.
Discrepancy of Quantity
It refers to the difference

the
of
actual
goods
requirement
for
its
quantity according
Channel
between the quantity
of the
consumer.
economical
reasons,
produced
A manufacturer
whereas,
by
the manufacturer and
produces
consumer
large
requires
quantity
a
small
to usage.
Flows
A c h a n n e l flow
consumer.
to
of
Discrepancy of Assortment
It
pack
is a pipeline through
These
flows
are
which
designed
for
goods and
smooth
make them available for the consumer in
services flow from
movement
of goods
manufacturer to
and
the most efficient manner,
services,
and
without affecting
t h e i r cost.
The five different types of channel flows are explained

1.
Physical
Physical
below:
Flow
flow
is
associated
with
where the goods flow in forward
the
flow
physical
direction, that
Fig. 8 . 3 . l a :
of
goods.
is, from
Physical
This
is
a forward
flow
manufacturer to customer.
Flow
Page
161
08.
Marketing
2.
Title
Title
Channels
eBook
Flow
flow
is
associated
with
manufacturer to customers.
the
transfer
Here,
of title
or
ownership
transportation does
not
of goods
from
play an active role,
the
as it
is the transfer of title or ownership.
2. Title Flow
Fig. 8 . 3 . l b :
3.
Title Flow
Payment Flow
Payment
services.
flow
is
backward
Here, the flow
flow
is directed
associated
with
the
payments
of
goods
and
from the customers to the manufacturer.
3. Payment Flow
I
F
l
i\i
l
+
l
i1

iiii
l
l
'l
l
,__

l
l@
il
m
@
II
H
l
r--lilil
i
l
l
I
,I+--l
lll
l
l
iiii
l
ll

l
ii
ll
l
:liif
l: l
i
Fig. 8.3.lc:
4.
Information
Flow
Information flow
ends,
from
feedback.
5.
is associated
suppliers
in
the
with
form
the flow of information;
of promotions and
from
it
is directed
customers
in
from
the form
of
Flow
flow
is
associated
with
make the consumers aware about
information
it.
It
from the manufacturer to customers,
about
is directed
the
product
in the forward
or
service,
direction,
that
S. P,omotlo, Flow
lirfi
Fig. 8 . 3 . l e :
to
is,
as complete information on the product flows
from the manufacturers to customers.
Ffrilii1
both
Both parties actively participate in the exchange of information.
Promotion
Promotion
Payment Flow
Promotion
Flow
Page
162
08.
Marketing
Channels
eBook
8.4 C h a n n e l Levels
Channel
various
levels are designed

ways.
These
consumer usage.
8.4.1
to make goods and
levels
involve
intermediaries
The manufacturer and
Consumer Marketing
services available to consumers through

to
make
the
product
available
for
the consumer are key aspects in every channel.
Channels
There are four types of consumer marketing channels levels, which are explained
O Level
2 Level
I Level
below:
3 Level
Fig. 8 . 4 . l a : Consumer Marketing Channels

Source:
Philip
Kotler,
Kevin
Lane
Keller,
Abraham
Koshy,
Mithileshwar
Jha,
Marketing
Management,
13rn
Edition
Zero-level Channel
It
is
also
known
as
direct
marketing
t h e i r products to consumers.
For
example,
Eureka
Forbes
channel
because
the
manufacturers
There are many companies engaged

sells
its
water
purifiers
and
directly
sell
in direct marketing.
vacuum
cleaners
directly
to
customers (door-to-door s e l l i n g ) .
Direct
marketing
personalization.
distributors,
helps
Moreover,
an
organization
customers
get
in
building
products
at
the
huge
best
customer
price
since
base
there
are
retailers or resellers.
Page
with
163
no
08.
Marketing
Channels
eBook
One-level Channel
One-level
channel
the consumer.
consists
It cou Id
of only
single
intermediary
between
manufacturer
and
be only a retailer or a wholesaler.
Two-level Channel
Two-level
channel
consumer;
two-level
consists
of
two
intermediaries
these are generally a wholesaler and

channels
for
smooth
movement
of
a retailer.
their
two-level channels mainly for their biscuits and
between
manufacturer
Many
products.
packaged
food
and
the
FMCG companies follow
For
example,
ITC
follows
vertical.
Three-level Channel
A three-level channel consists of three intermediaries between the manufacturer and

consumer;
these are generally a wholesaler,
who buys goods from
wholesalers and
sells it to
In foreign countries, jobbers play a key

products from wholesalers and
8.4.2 Industrial
to
distributors,
sell
who
manufacturer can
the
industrial
branches
industrial
can
in
a retailer.
Jobber is a person
retailers.
role in the meatpacking
sell them to s m a l l
B2B
directly to
in
turn,
the
marketing.
industrial
sell
also use its
customers.
sell
and
industry;
they
buy
meat
retailers.
Marketing Channels
These channels are used

sales force
a jobber,
the
the
industrial
customers.
goods
to
to
industrial
the
It can
industrial
representatives or
Alternatively,
goods
An
sales
goods manufacturer can

also
its goods
customers.
branches to
manufacturer's
distributors,
sell
who
The
to
sell
the
or
Page
164
to
sales
goods
customers.
goods
sell goods directly
then
its
industrial
industrial
representatives
can
use
to
08.
Marketing
Channels
eBook
o Level
2 Level
l Level
3 Level
Manufacturer
Fig. 8.4.2a:
Source:
Philip
Kotler,
Kevin
Lane
Industrial
Keller,
Abraham
Marketing
Koshy,
Channels
Mithileshwar
Jha,
Marketing
Management,
13th
Edition
8.5 C h a n n e l Behavior and O r g a n i z a t i o n

8.5.1
Channel
distribution
wholesaler,
members
in
the
Behavior
channel
and
retailer,
of the channel
channel.
channel
consists
The
member.
who
are
channel,
To
of
get
intermediaries,
associated
with
interdependent.
overall,
accomplish
the
is
such
one
Each
channel
manufacturer,
another
member
responsible
overall
as
for
has a
the
goals,
for
common
specific
success
all
of
channel
distributor,
benefit.
All
responsibility
each
individual
members
should
achieve
overall
work mutually and efficiently.
At
times,
channel
interest
channel
goals.
members
Generally,
rather than
should
channel
focusing
give
up
their
members
individual
work
on overall channel
goals
according
goals,
which
to
to
their
ultimately
own
business
leads to c h a n n e l
conflict.
8.5.2 Channel Conflict
Channel
conflict
Individual
refers to
members
coordination.
dispute
cannot
between
perform
channel
well
if
members over their
other
channel
All c h a n n e l s are integrated with each other,
roles and
members
are
goals.
not
in
so that they work in tandem to
Page
165
08.
Marketing
smoothen
Channels
trade.
Poor
eBook
coordination
between
the
different
channel s
leads
to
channel
conflict.
Channel conflict arises due to various reasons:
Traditional
view
of
channel
members
and
their
inability
to
upgrade
themselves
with modern techniques of c h a n n e l management.
Manufacturers
sideline
customers through
their
channel
members
sell
their
products
directly
to
phone or Internet.
Disintermediation of c h a n n e l members.
Focusing
on
and
individual
management could
company
goals
rather
than
focusing
on
overall
channel
generate channel conflict.
Channel conflicts are majorly of two types-vertical conflict and
horizontal conflict.
Vertical Conflict
Vertical
conflict
wholesalers,
production
and
occurs
at
different
levels
of
the
same
channel.
Manufacturers,
retailers have certain expectations from each other like product q u a l i t y ,
schedules,
and
effective
marketing.
If
these
expectations
are
not
met,
vertical channel conflicts arise.
Horizontal Conflict
Horizontal
conflicts
occur
between
franchisees that are at the

retailer
B.
Therefore,
same
channel
level.
a customer
is
members,
such
as
two
or
more
retailers
Retailer A offers a product at a lesser
bound
to
buy from
retailer A.
Such
or
price than
disparity
causes
horizontal conflict.
Reasons
offered
of
horizontal
are
low
pricing,
by one dealer, unethical practices,
8.5.3 Vertical
Vertical
conflicts
Marketing
marketing
producer,
system
wholesaler,
particularly
designed
specifically
d e s i g n ed
and
to
to
System
is
extra
services
etc.
in
work
which
the
together
improve channel efficiency

avoid
advertising,
(VMS)
system
retailer,
aggressive
conflicts
between
core
to
and
group
fulfill
channel
customer
marketing
channel
of
members,
needs.
VMS
effectiveness.
members
who
are
VMS
Page
is
pursuing
i n d i v i d u a l goals.
is
166
08.
Marketing
Channels
eBook
There are three types of V M S s :
Corporate VMS
Corporate
VMS
is
type
production
and
controls a l l
production and
of
distribution
come
franchising
system
under
single
where
the
consecutive
ownership.
Here,
stages
a company
of
itself
distribution.
Starbucks Coffee Company

any
channel
is the best example of corporate V M S .
opportunity
and
controls
every
Starbucks
It does not offer
outlet
from
its
head
it
alone
office.
Administered VMS
In
administered
VMS,
one
of
the
channel
members
is
so
powerful
that
coordinates the activities of other members.
For
example,
big
companies
coordination
from
policies, and
shelf space.
like
their channel
HUL
and
Coca-Cola
demand
members in terms of displays,
high
level
promotions,
of
pricing
Contractual VMS
Individual
for
their
channel
mutual
wholesalers, and
For
example,
members
are
benefit.
connected
Under
retailers operate
franchising
this
with
system,
independently,
organizations
each
like
other
on
contractual
manufacturers,
distributors,
but on a contractual
Pizza
Hut
and
basis
basis.
McDonald's
work
on
contractual V M S .
8.S.4 Horizontal
Marketing System
Horizontal
marketing
companies
unite to explore and
may
combine
their
system
resources
is
type
out
resources,
of
the
marketing
production
and
work
and
on
marketing
new
a
Horizontal
opportunity
facilities,
by
channel
marketing
temporary
marketing
in
or
system
resources.
which
opportunity.
basis
combining
marketing
t h e i r supply chain network while working
of
capitalize
maximize their potential of e a r n i n g .

most
(HMS)
as
two
The
a joint
or
companies
venture
is established
resources,
such
Companies
as
may
more
to
make
financial
also
together.
Page
to
167
share
08.
Marketing
Two
products
could
do
are
alone.
competitors
For
Channels
eBook
marketed
In
together to
horizontal
accomplish
marketing
much
system,
more
than
companies
what one
may
unite
member
with
their
if it makes a w i n - w i n situation for each other.
example,
post
offices
Mahindra-Renault got
to P h i l i p
in which
a single
India
started
selling
insurance
into a joint venture for a sedan
8 . 5. 5 Multiple Channel
According
in
mutual
funds;
and
named 'Logan'.
Distribution System
Kotler multichannel distribution

firm
and
sets up
two
or more
system
marketing
is,
"A distribution system
channels to
reach
one
or
more customer segments."
In
the
past,
services.
This
Companies
limited
and
companies
was
were
the
focused
traditional
dependent
modern
on
only
techniques
advancement of technology and
sing le
channel
on
were
channels
where
single
not
increase
many
channel
introduced
in
to
customer
market
intermediaries
because
at
that
base,
multiple channels to market to distribute their products and
Many
also
companies
known
as
have
hybrid
adopted
channel
Multichannel distribution
a multichannel
because
system
of
approach
various
their
customer
time.
involved.
base
However,
companies
reach
have
was
with
the
introduced
of
their customers.
distribution
is one of the most efficient channels
out to customers through various ways, as explained
were
and
services.
to
means
the
products
in the diagram
involved
because
it
It
in
is
it.
reaches
below .
iii
FE@@f
cataloos,
t
Gary Armstrong,
lint\iuM
Fig. 8.5.Sa:
Kotler,
ltlmihll
Philip
Ti57137
rnterner
Source:
IWMIN
Multichannel
Prafulla
Y.
Aqnihotri,
Sales
fo=
IWWM
Distribution System
Ehsan
ul
Haque,
Principles
of Marketing,
Edition
Page
168
13t1i
08.
Marketing
One
of
the
includes
Channels
key
components
storage
organization
eBook
and
of
multilevel
distribution,
must execute a strong
ensure smooth flow of goods and
Multichannel
Efficient
Bulk
marketing
and
technology.
and
productive
e-mails
and
SMSs
about new updates and
and
in
market
supply
chain
analysis
of
management.
finished
goods.
It
An
management system
to
relationship with customers.
are
with
adopted
access to customers to
allow
is
consistent supply chain
momentum
methods
It gives easy
helps
strong
gained
marketing
organizations
to
the
by
advancement
organizations
purchase a
reach
their
of
with
product with
customers
and
technology.
the
help
of
a s i n g l e click.
inform
them
offers.
8.5.6 Changing Channel Organizations

The
nature
and
technological
intent
changes
of
and
marketing
growth
intermediaries are eliminated

intermediaries are emerging
Many
companies
traditional
now
members
themselves
in
pace
sell
are
with
of online
are
changing
marketing.
With
due
to
the
impact
disintermediation,
and the products directly go to the end-user.
to
of
channel
New forms of
replace traditional ones.
directly
to
transforming
the
channel s
final
buyers,
their
competitors.
eliminating
processes
Many
with
Multilevel
the
intermediaries.
advanced
Marketing
methods
(MLM)
Many
to
keep
groups
like
Amway also sell their products directly to their customers.
It
is
the
coverage
dealing
most
of
efficient
Internet.
way
From
for
the
sellers
buyer's
to
point
sell
their
of view,
products,
the
product
because
is
of
the
cost-effective
is with a sing le organization.
Page
169
wide
and
08.
Marketing Channels
eBook
8 . 6 C h a n n e l Design
Decisions
Designing a marketing c h a n n e l involves analysis of customer needs, establishing channel

objectives,
Shown
Step
identifying and
evaluating
below are steps performed
1:
by management w h i l e d e s i g n i n g
a channel system:
Analyzing Customer Needs
Marketers
must
understand
the
c h a n n e l must produce certain
major c h a n n e l alternatives.
service
levels expected
by
the
customer.
A distribution
services for its customers.
Lot Size
Lot size
is the n u m b e r of units customers want to buy.
in
he or she would
bulk,
advantage.
prefer to
Therefore,
buy
from
b u l k - b u yi n g
If a customer wants to
buy
a manufacturer or wholesaler for cost
service
should
be
available
with
the
manufacturer or the wholesaler.
Waiting and
Customers
delivering
desired
Delivery Time
do
not
goods.
prefer
They
company
products as fast as
Spatial
not
mind
must
they
prefer
switching
to
channels,
another
which
are
fast
manufacturer
if
in
the
or delivery time.
ensure
that
channel
is
efficient
enough
to
deliver
possible.
Convenience
manufacturer
companies
opened
do
time;
product has a long waiting
Therefore,
waiting
by
offers
make
the
it
easy
convenience
for
company.
to
customers
This
saves
customers
to
get
on
the
time
for
buying
product
and
product.
through
many
transportation
Here,
outlets
costs
of
consumer.
Product Variety
Customers
want
variety
in
products.
increases the chance of buying
They
the product,
prefer
which
product
assortment
that
is really needed.
Service Backup
Service
backups
are
additional
or
add-on
includes credit facility, free delivery,
services
installation,
provided
repairs,
by
the
channel.
etc.
Page
170
This
08.
Marketing
Channels
eBook
Step 2: Setting Channel Objectives
Companies,
channel
various
with
respect
objectives.
segments;
to
the
Generally,
and
then
targeted
levels
company
decides to
of
customer
identifies
serve
that
the
service,
level
of
state
service
particular segment
by
marketing
expected
using
by
the
best
on
the
channels.
All
marketing
channel
objectives
stated
at
mind.
The
primary
meet
its
strategic
present,
formed
on
by
procedures
on
investment.
distribution
of an
In
must
be
framing
with
addition,
the
market
the
must
volume,
is
in
framed
channel
channel
intention
be
is
to
operational
and
an
an
expansion
in
organization
to
organization
must
external environments.
as
an
economic
product,
objectives
should
While
entity,
profitability
keeping
flexibility.
depend
future
facilitate
of achieving
of a
will
the
objectives,
designed
share
future
keeping
considered
market
coverage,
done
the internal and
organization
objectives
sales
intensity,
While
members
Channel
involving
they
activities
competitors, and
channel
investment.
and
of a distribution
objectives.
channel
the
so
objective
consider its customers,
A distribution
planning
in
mind
and
the
profitability,
be
formed
designing
which
return
traditional
and
in
the
is
return
terms
of
distribution
channel, competitor's distribution channel must also be taken into consideration.
Step 3:
The
Identifying
next
step
Organizations
cost.
after
prefer
Therefore,
intermediaries
Major Alternatives
defining
the
delivering
the
organizations
available,
channel
exact
consider
number
of
objectives
product
is
to
channel
to
identify
their
alternatives.
target customer
alternatives
intermediaries
channel
based
needed,
at
on
and
the
least
types
terms
of
and
responsibilities of each c h a n n e l member.
Types of Intermediaries Available
An
organization
could
be
needs to identify the types of intermediaries existing
associated
in
continuing
the
channel.
Channel
merchants, agents, and facilitators. Their roles and
in the market,
intermediaries
are
who
identified
responsibilities are detailed
as
below:
Merchants
Merchants,
the
such as
product,
merchants,
and
how
then
they
as the ownership
sold
wholesalers and
resell the
sell
the
retailers,
product to
stock.
the
below their MRP by wholesalers or big
product,
the end-user.
Variations may
belongs to the merchant.
buy
ownership
Generally,
occur
For example,
take
in
pricing
many
of
it depends on
and
FMCG
retail supermarkets like Big
discounts
products are
Bazaar.
Page
171
08.
Marketing
Channels
eBook
Agents
Agents
main
are
brokers
or
responsibility
customers,
they
representatives
is
may
to
search
negotiate
for
the
of
manufacturers
customers.
price
on
or
During
behalf of the
sales
their
agents.
Their
interaction
manufacturer
with
but
they
do not take the ownership of goods.
Facilitators
Facilitators
(also
distribution
process.
process,
sales
called
they do
and
as
support
members)
are
A l t h o u g h facilitators lend
not
purchase
take the ownership

terms
on
behalf
a supporting
of goods.
of
the
channel
members
hand
assist
in
in the distribution
Facilitators do
organization.
who
They
not
are
negotiate on
in
search
of
innovative channels of marketing to reach their target customers.
Number of Intermediaries Needed
Organizations
efficient
working
distribution
explained
have
to
of
decide
the
the
marketing
strategies-exclusive,
number
of
channel.
intermediaries
Organizations
selective,
and
they
decide
intensive
require
based
distribution.
for
on
the
three
These
are
below:
Exclusive Distribution
It
is
strategy
distribution
of
geographical
and
in
which
products
areas
using
high- end
suitable
for
channels
and
become
Intensive
is
company
in
a
gives
selected
single
market
exclusive
regions.
and
selected
but
as
outlet.
It
selected
channels
is
suitable
dealers
cover
for
for
large
high-end
frequently.
introduced
competition
For example,
to
Rolls
in
the
market,
increases,
Royce
sells
its
other
cars
they
are
marketing
only
through
regions.
Distribution
coverage.
products,
channels,
are
right
Exclusive
exclusive
products
necessary.
distribution
product.
luxury
exclusive
exclusive dealers in
It
luxury products, which are not purchased
When
on
followed
Organizations
Intensive
which
strategy,
distribution
are
bought
use
is
by
all
the
mainly
organization,
available
used
frequently.
availability of the product rather t h a n the
an
in
aiming
channels
case
of
Organizations
to
at
maximum
distribute
convenience
mainly
or
focus
FMCG
on
nature of the store.
Page
their
172
the
08.
Marketing
Channels
For example,
medical
eBook
Parle glucose
stores.
All
FMCG
biscuits are available
companies
follow
the
even
at
a small
intensive
' p a a n ' shop
distribution
and
strategy
to
make their products available at every shelf.
Selective Distribution
In
selective
product.
It
distribution,
is followed
only
few
selected
by an organization
outlets
selling
are
used
to
distribute
durables or shopping
goods,
the
such
as home appliances.
Consumers
to
prefer to
compare
prices
competitors and
Terms and
Before
inquire more and
and
opinions.
Selective
organization
channel
and
and accepted
more t i m e
by
distribution
visiting
strategy
several outlets
is
used
to
limit
to reduce distribution cost to increase profits.
Responsibilities of Channel
taking
spend
members on
responsibilities
Members
board,
there are
of channel
certain
members,
terms and
which
need
to
conditions
be
of an
discussed
with
by a channel member.
The major points of discussion are:
Responsibility of Channel
The
responsibilities
defined
to
avoid
members need
Sales
The
of
Members
channel
conflict.
In
members
addition,
to be communicated
and
the
organization
allocations
of
must
responsibilities
be
for
clearly
channel
properly.
Policy
channel
members
commissions,
exchange,
as
discounts,
and
well
and
replacement
as
the
organization
monthly
of
sales
products
must
quota.
during
the
agree
Terms
the
related
warranty
percentage
to
of
payments,
or guarantee
period
must be clearly defined.
Territory and
specific
channel
Market
territory
or
members are
demarcation
and
reg ion
must
supposed
allocation
be
allocated
to cater to
helps
in
only
to
the
channel
the allocated
preventing
conflicts
members
territory.
Such
between
Page
area
channel
members.
and
173
08.
Marketing
Step 4:
Channels
Evaluating
After identifying
done based
eBook
Major Alternatives
alternatives,
on the following
Economic criteria
Control criteria
Adaptive criteria
the
next step
is evaluating
those alternatives.
Evaluation
is
three criteria:
Economic Criteria
In
economic criteria,
involved
in
customers.
buy,
the cost
it
should
The
main
not
involved
be
higher
objective
here
in
distribution
than
is
to
the
make
of
products
benefits
the
to
product
is evaluated.
the
The
organization
available
for
cost
and
its
customers
to
at the least possible cost and time.
Many
They
companies
prefer
including
believe
training
that
them
intermediaries.
their
and
sales
making
forces
them
can
sell
efficient
This also reduces cost, which
more
to
do
products
better
is shared
and
sales
services.
rather
than
with the intermediaries.
Control Criteria
Involving
sales
agency
generally
over sales and
distribution,
on
who
customers
understand
control can
the
buy
as
be achieved
control
sales agencies are
bulk
technicalities
creates
quantities.
of
Sales
product
and
problems.
independent
agencies
to
are
handle
Companies
firms.
not
They
lose
mainly
efficient
promotion
control
focus
enough
effectively.
to
More
if less number of intermediaries is involved.
Adaptive Criteria
An adaptive criterion
changing
with
environment of markets.
the
environmental
marketing
the
and
because
member must
of
the
itself to the
be flexible enough
long-term
to adjust
commitments
of
the
Management Decisions
channels
distribution
selecting
changes
A channel
member to familiarize
channel.
8.7 Channel
Managing
refers to the a b i l i t y of a channel
of
channel
evaluating
is the
goods
most
and
members,
important
services.
motivating
task for a company

Managing
channel
channels
members,
because
it directly affects
includes
managing
tasks,
channel
such
conflicts,
channel members.
Page
as
174
08.
Marketing
8.7.1
Channels
eBook
Selecting Channel
Companies
select
have
them
as
intermediary,
certain
selection
intermediaries.
their
(employees
Members
and
business
criteria
Criteria
differ
background,
warehouse),
through
relevant
as
which
per
financial
they
screen
intermediaries,
capability,
experience,
such
location,
customer
members
as
their
and
type
of
resources
relationships,
market
reputation, etc.
However,
criteria
objectives
of
differ
the
8.7.2 Managing and

is
motivate their
restricted
to
intermediaries
one
A marketer
the
employees
for
depending
on
intermediaries
well.
key
to
Individual Channel
aspects
increase
alone.
Such
in
the
channel
through
trade
work
Organizations
efficiency.
organization
motivations
Members
organizations.
their
An
first
understand
his
or
their business outlook,
of channel
members surely results in
There
certain
are
hunt
and
help
an
However,
must
professionally
motivation
constantly
organization
is
not
motivate
to
achieve
their
needs
its
long-term
its intermediaries.
must
t h e i r perception,
company
Marketers
Motivating
of
as
to
management firms, and advertisements.
employees
success through
company
organization.
associations' database,
Motivation
from
ways
of
her channel
and
the
members,
business
practices they
and
use.
wants,
Motivation
improved q u a l i t y of work.
motivating
channel
members;
some
of
them
are
discussed
below:
Partnership Technique
In
partnership
channel
partners.
objectives,
done
to
technique,
and
avoid
organizations
They get
the task to
conflict
consider
their
into a m u t u a l
agreement,
be
along
performed
between
the
with
organization
channel
members
which defines
its
channel
their
the goals,
the companies'
and
as
policies.
the
It
members,
is
to
carryout work in a successful manner.
Many
organizations
communicate
coordinating
with
implement
their
sales, service,
Partner
partners
in
promotions, and
Relationship
valuable
Management
manner.
It
also
(PRM)
helps
customer database.
Page
175
to
in
08.
Marketing
The
Channels
objective
members,
eBook
of such
which
technique
ultimately
is to
builds
make a strong
trust
factor
relationship
and
with
motivates
the
the channel
member
to
provide superior value to the end-user of the product.
Reasonable Discounts and Commissions

Discounts and
percentage
strong,
commissions are the m a i n motivating
of discounts
and
providing
provided
to
the
channel
commissions on achieving
factors for intermediaries.
member
certain
makes
its
profit
sales target
The
margin
motivates the
employees to sell more.
Organizations
also
provide
incentives
achievement or business provided
Channel
An
may
the company and

and
competitor
when
form
a channel
on
also
information,
sales
activities,
and
and
so
certain
that
the c h a n n e l members meet on a common

They
Organizations
profile
kind
member council
grievances.
Training the
working
or
sales
target
by the channel member.
discuss
current
etc.
the views of channel members are taken
are solved
cash
Member Council
organization
views
in
their ideas and
The
management
of
platform to share their
work,
council
the
plans,
industry
becomes
into consideration;
more
and
active
their grievances
proposals are executed effectively.
Members
train
their
channel
performance level.
customers,
after-sales
members
Training
service
on
various
programs
skills
like selling
management,
etc.
to
skills,
are
improve
selling
provided
to
their
high
by
an
organization to its channel members.
Periodic
training
updated
about the current
on
utilizing
relationship
and
is
best
provided
the
organizations
h a p p e n i n g s in the
practices
between
by
to
provide
industry.
superior
the organization and
to
channel
keep
It
the
channel
members
is also done to train them
value
to
members
customers.
is the
key to
Cordial
success
a driving-force in a competitive environment.
Controlling Channel Conflicts

Channel
difference
of
view.
conflicts
in
can
affect
organizational
These
differences
channel
'goals
and
can
harm
performance.
objectives' and
the
channel
Many
in
channel
times,
there
member's
performance.
is
point
Organizations
Page
176
08.
Marketing
conduct
Channels
formal
eBook
sessions
to
discuss
the
disputes
and
reasons
of
differences
between the organizations and the channel members.
There
are
members,
various
sources
of
conflicts
between
the
organization
and
channel
such as:
Difference
in
marketing objectives related
Organizations
directly
dealing
with
to profitability.
large
customers
without
involving
channel members.
o
Channel members promoting
Difference
of
opinion
on
competitor's products for higher profit m a r g i n .
market
conditions
and
stocking
of
goods
by
the
channel members.
o
Differences over commissions and
Conflicts
of
territories,
which
discounts.
lead
to
internal
competition
between
channel
members.
8.7.3
Evaluating Channel
Organizations
evaluate
members
do
put
in
who
efforts
efforts,
if
to
not
termination,
the
channel
perform
motivate
channel
Members
the
members
well
are
channel
do
organization
replace the terminated
members'
not
performance
initially
counseled
members
perform
searches
for
from
again.
well,
another
and
Even
then
time
to
time.
re-trained.
after
they
competent
Channel
Organizations
contributing
are
certain
terminated.
channel
member
member.
A channel member is evaluated on the following
Sales achieved
by the channel member vs.
Customer delivery time
Ability to resolve customer complaints
Market feed back
Increase in
standards:
sales quota
new customer base
After
Page
177
to
08.
Marketing
Channels
eBook
8 . 8 Marketing Logistics a n d Supply C h a i n
Management
According
defined
to
Philip
implementing,
related
and
marketing
Kotler,
controlling
information
from
the
points
logistics
physical
of
origin
flow
to
is
of
as,
materials,
points
of
"Planning,
final
goods,
consumption
to
and
meet
customer requirements at a profit."
Marketing
delivering,
logistics
and
its customers.
is also
known
controlling
as
physical
distribution
the 'flow of goods',
'marketing
of goods.
It
materials',
involves
and
Organizations feel that u n i q u e competitive advantage can
planning,
'information' to
be created
with
the efficient use of market logistics.
Organizations are focusing

achieve
great
customers
more on
competitive
with
the
help
logistics for various
advantage
of improved
by
providing
logistics.
reasons.
low
Second,
logistics
Management
upgrades
its
{TQM),
will
it
processes
play
using
key
in
good
and
service
to
customers can
logistics.
Just-in-Time
role
organizations can
and
organization
both save huge costs with the implementation of improved
As
prices
First,
creating
(JIT)
and
competitive
Total
Quality
advantage
for
organizations in terms of excellent product delivery.
Marketing
logistics involves:
Outbound
Outbound
distribution
movement
Outbound
Inbound
It
is
one
incoming
of
is
goods
distribution
packaging,
Distribution
related
from
to
the
production
inc ludes dispatch
labeling, and
distribution
units
to
of
finished
distributors
management,
goods.
or
to
It
involves
end-users.
quality assurance,
shipping,
loading.
Distribution
of the
key
of goods
storage
plant.
finished
goods.
This
areas
(mainly
of
raw
material
logistic
is
process.
material)
further
from
used
in
Inbound
logistics
suppliers to
the
the
production
is
related
production
process
to
Page
to
the
unit
or
produce
178
08.
Marketing
Channels
Reverse Distribution
Reverse
logistics
to a producer.
Goods are
for
is
returned
repairs
impact
analyzed.
get
of
related
or
if they
on
to
upstream
related
and
damaged
For
logistics
this analysis,
Philip
is returning
from
of goods that were
or unwanted.
example,
a customer or
recalling
They
of
can
cars
reseller
previously sold.
also
by
be
returned
certain
car
rectify some technical fault.
better performance and
According
are
recycling.
marketing
Based
to the movement of goods
Reverse distribution
manufacturer to
The
eBook
the
channel
operations
planning
supply
downstream
chain
the
members
must
be
implemented
to
the c h a n n e l .
flows
suppliers,
channel
be done and
management
value-added
among
of
should
proper coordination from
Kotler,
information
on
of
is
defined
materials,
company,
as,
"Managing
final
goods,
resellers
and
and
final
consumers."
S u p p l y chain
delivery
channel
management
concentrates
network of goods and

objectives,
which
services.
are
mainly
on
improving
It is implemented
on-time
delivery,
the flow
of goods and
the
by the organization to achieve
improved
profitability,
and
reduced
costs.
Supply
chain
organization
management
tries
hard
to
refers
to
the
implement
distribution
best
supply
process
chain
of the
practices
organization.
to
reduce
cost
Every
as well
as time of delivery.
Major Logistic
Functions
Major logistic functions include:
Warehousing
Production
and
organizations
need
warehouses to
goods
store
the
occurs
their
at
goods
available as
discrepancies
in
different
until
per
they
the
'required
time
are
demand
intervals.
sold.
Goods
are
of customers.
quantity'
Therefore,
and
'timing'
and
the
stored
in
Storage
of
and
makes
products are available at the time of purchase.
Organizations
warehouse.
storing
to
make them
eliminates
sure that
consumption
need
to
decide
Most organizations
their
goods.
If
the
on
the
use
goods
type
of
warehouse
location
storage warehouses or distribution
are
stored
for
moderate
to
long
of
the
centers for
periods,
Page
179
then
08.
Marketing Channels
eBook
storage warehouses
moved
Distribution
from one place to another,
Warehouses
makes
year.
are used.
it
need
to
possible
Some
throughout
for
goods
the
be
product
year,
friendly,
to
manufactured
so
to
when
goods are to
be
rather than storage purpose.
organizations
are
centers are used
cope
so
stock
out
their
carry
in
up
that
the
not
spoilt.
production
particular
with
is
season
demand,
Warehousing
throughout
but
are
in
warehousing
the
demand
facility
is
usage
in
desirable by organizations.
Inventory Management
The
handling
production
goods.
It
finished
is
controlling
known
may
as
be a raw
to
record
is
tied
one
up
make
of the
with
of
goods,
management.
material,
which
assets
the
to
Time (JIT) and
used
be used
organization.
Mismanagement
Inventory
material
by
storage,
Inventory
It
of
for
and
is actually
processing,
companies
for
also
signifies
inventories
management
sure that goods are available when
strategies
its
the
or
stock of
it may
be
in the market.
of an
stock.
is
of accomplishment of the movement and
Common
source
inventory
losses for an organization.

plan
of
goods, which are to be sold
Inventory
that
is
and
the
results
includes developing
they are
investment
required
in
financial
a purchase
and
keeping
usage of goods.
inventory
management
are
Just-In
requirement p l a n n i n g .
Transportation
Organizations
physical
consider
distribution
of
transportation
goods.
It
is
as
the
the
most
source
of
important
distribution
cost
of
center
goods
in
the
from
the
production u n i t to the end-user.
Transportation
is
mainly
includes
responsible
both
for
inbound
the
as
delivery
well
as outbound
performance
movement of goods.
of goods
and
the
condition
It
in
which they arrive.
Transportation
also
also
while
calculated
transport,
affects
the
deciding
organizations
pricing
the
evaluate
price
every
of
products,
of a
as
product.
available
the
While
mode
to
transportation
deciding
fulfill
the
cost
is
mode
of
objective
of
the
Page
180
08.
Marketing
excellent
railways,
Channels
delivery
eBook
system
helps
in
information
smooth
Information
partners
reasonable
cost.
Transportation
modes
include
roadways, airways, and waterways.
Logistics Information
Logistics
at
system
functioning
systems
play
Management
key
help
role
by
is
of
part
of
logistics
an
and
organizations
sharing
organization's
decision
manage
information
making
their
so
information
that
for
supply
better
system.
logistic
chains.
It
system.
Channel
logistics decisions
can be taken.
Information, such as customer transactions,

and
customer
data
logistics point of view.
are
strongly
billing,
connected
to
shipment and
channel
inventory levels,
performance,
S i m p le , accurate, and accessible information
the organization so that
it can capture,
from
is preferred
process, and share channel information.
Page 1 8 1
a
by
08.
Marketing Channels
eBook
Distribution
channel
is
concerned
the place of production to the
channel
flow
manufacturer
flow, and
to
movement
of goods
and
services from
place of consumption.
pipeline
consumer.
the
through
Physical
which
flow,
title
goods
flow,
or
services
payment
flow,
flow
from
information
promotion flow are types of channel flow.
Levels of channel
channel ,
is
with
and
conflict;
are classified
as zero-level c h a n n e l ,
three-level channel.
merchant
and
Horizontal and
agent
one-level
vertical are
intermediaries
are
two
channel,
two-level
two forms of channel

forms
of
marketing
intermediaries.
There
are
Horizontal
three
types
Marketing
of
channel
System
systems-Vertical
(HMS),
and
Multichannel
Channel design decision has the following

1.
Analyze customer needs
2.
Establish channel objectives
3.
Identify major channel alternatives
4.
Evaluate major channel alternatives
Marketing
physical
logistics
flow
of
is
defined
goods,
and
as
System
(VMS),
Distribution System.
four steps:
planning,
related
Marketing
implementing,
information
from
and
points
of
controlling
origin
to
the
meet
customer requirements at a profit.
Major
logistics
transportation, and
functions
include
warehousing,
inventory
management,
logistics information management.
Page 182
Integrated
Marketing
Communications
09. Integrated
Marketing Communications
eBook
9 . 1 Introduction
Marketing
is m u c h more than just developing a product,
product available for use.

the
people
target
who
audience,
organizations
said.
are
In
modern
strongly
the
associated
stakeholders,
wonder what
to
marketing,
say,
with
internal
when
pricing a product, and
organizations try to communicate with
them.
Such
employees,
to
making a
say,
how
people
and
often
Due to competition, many organizations strive hard
the
and
mainly
general
to
whom
comprise
public.
it
the
Many
should
be
to attain customers' attention,
making communication very difficult.
Consumers actively participate in the communication
process,
know
what
what
should
use
type
to
of communication
spread
the
message
is
preferred
about
and
the
product.
which
type
For
helps organizations
of communication
effective
communication,
organizations use a blend of various types of communication.
After reading this chapter, you will be able to:
Define integrated marketing communication
O u t l i n e the communication
E x p l a i n marketing
E x p l a i n the steps in developing effective communications
process
communication mix
they
Page
184
09.
Integrated
Marketing
9.2 Meaning and

Integrated
Marketing
integrating
all
making
people
Organizations
reach
the
their
consistent,
marketing
invest
and
effective
According
American
to
IMC
(IMC)
of
the
of
is
message
Marketing
is
or
money
in
integrated
to
concept
communication.
products
amount
audience.
services.
tools
about
huge
products and
eBook
Definition
Communications
aware
target
Communications
its
It
is
services
print
very
target
Association,
of
way
that
and
an
of
audience
so
aims
informing
at
and
sells.
advertisements
as
to
about
planning
that
organization
electronic
carefully
"A
marketing
deliver
the
clear,
organization's
process
assure that all brand contacts received by a customer or prospect
to
designed
to
for a product,
service, or organization are relevant to that person and consistent over time."
According
to
marketing
American
communications
comprehensive
communication
sales
Association
plan
planning
that
and
public
provide clarity, consistency and
purpose
of
response of the
integrating
target audience.
the target audience and
Right
communication
should
be
the
clear,
the
example,
strategic
general
precise,
key
and
working of the communication
added
roles
of
advertising,
combines
concept
value
of
variety
direct
these
of
a
of
response,
disciplines
to
Process
marketing
The desired
to
the
"A
maximum communications impact."
communications
response
by designing a coordinated
is the
Agencies,
recognizes
relations-and
9.3 A View of C o m m u n i c a t i o n
The
Advertising
that
evaluates
disciplines-for
promotion,
of
effective
is
achieved
to
gain
mainly
the
by
desired
identifying
and effective promotional strategy.
promotional
understandable.
is
strategies.
Marketers
must
The communication
first
understand
process.
Page
185
the
09.
Integrated
Marketing
Communication
Communications
process is explained
eBook
with the help of a d i a g r a m .
KiiUtMM .. liH+HUIi ..
lM+HUIi .. IBiiVi@E
.....
.. lfrMI ..
I
- - - -IEi+Bil_. - Sender's field
Receiver's field
of experience
of experience
Fig. g.Ja:
Source:
Philip
Management:
Kotler,
parties,
the
decoding,
process.
Armstrong,
process
tools, and
process,
Gary
Elements in the Communication Process

Prafulla
A South Asian Perspective,
Communication
message
Noise
communication
is
consists
functions.
response,
and
and
the
- - - l;iM+Hil-----
Pearson,
of
Agnihotri,
the
nine
media
elements.
element
process is explained
act
are
in
Ehsan
ul
Haque,
Pnncrples
of
Marketing
13th Edition.
The sender and
feedback
final
Y.
elements
are
the receiver are the two main
as
the
the
These
main
four
communication
main
functions
communication
in detail
tools.
of
system.
the
divided
into
parties in the
The
encoding,
communication
Each
element
of the
below.
Sender
The
in
sender is a
his or
want
to
her
party who
intention
target and
sends
information
of communication.
the
kind
of
response
to
the other
Senders must
they want
party.
know
from
A sender
must
be clear
the type of audience they
them;
and
accordingly
encode
the message for their target audience.
Encoding
Encoding
tag lines,
means
which
information
to
converting
signify
be
the
information
idea
converted
into
or concept.
and
on
the
message
Encoding
is
receiver's
with
done
the
mainly
knowledge
help
by
of
of
symbols
deciding
on
interpreting
information.
Page
186
or
the
the
09. Integrated
eBook
Message
It
is
a set of information
easily
under st andable.
that a sender wants
message
to
send.
must
be
which
helps to
The
effective
message
enough
so
must
that
it
be
clear and
motivates
the
customer to buy the product.
Media
Media
the
is a communication channel,
receiver.
Television,
communication,
radio,
newspapers,
pass the message from
magazines,
Internet,
etc.
the sender to
are
channels
of
which carry the message of the sender and deliver it to the receiver.
Decoding
Decoding
and
is
process
of
receiver decodes
meaning
understanding
it
according
to the message according
to
the
the
message.
receiver's
sender
encodes
understanding.
to the knowledge and
the
message
receiver gives
beliefs the receiver possesses.
Receiver
Receiver
is
according
to
respond
to
person
his
who
or
the
her
receives
the
knowledge.
message.
The
message.
The
The
receiver
feelings
and
is
receiver
likely
ideas
of
interprets
to
the
listen,
the
message
understand,
receiver
influence
and
their
understanding of the message.
Response
The
action
product,
of a
buying
person,
a
after
product,
receiving
using
it,
the
message,
suggesting
it
to
is
known
other
as
response.
people,
etc.
all
Liking
come
the
under
response.
Feedback
The
response of a receiver through which a sender gets an
quality
of a
important
complaint,
message
element
is
referred
of the
criticism,
to
as
feedback.
communication
protest,
etc.,
or
it
It
process.
could
be
is
idea about effectiveness and
believed
that
Feedback could
positive,
such
feedback
be
as
is
negative,
very
such
compliment,
as
praise,
etc.
Noise
The
interruption
distracts
the
or
disturbance
receiver's
misunderstanding
of
the
in
attention
message
the
communication
while
by
the
receiving
receiver.
process
the
For
is
message.
example,
known
It
while
as
can
noise.
result
listening
Page
to
187
It
in
the
09.
Integrated
there
Marketing
radio,
if
is
loss
signal
is considered
as
of
Communications
signal
and
person
eBook
misses
noise in the communication
the
advertisement,
that
loss
of
prospects
to
process.
9.4 Marketing Communications Mix

Marketing
buy
their
c o m m u n i ca t i o n s
products.
relationships with
usage,
With
the
help
Marketing
marketers
convince
communication
its customers.
It
is used
to
helps
make
their
an
customers
organization
and
build
people aware about
and
the
maintain
product,
its
its existence, etc.
advancements
marketer
and
in
the
technology
customer
and
has
wide
been
usage
of Internet,
extremely
easy
communication
and
fast.
It
between
bridges
the
gap
between the marketer and the consumer.
Some
elements
of
marketing
communication
mix
are
explained
with
the
help
of
diagram:
Integrated Marketing Communications
Personal
Sales
Public
Direct
selling
promotion
relations
marketing
Advertising
Fig. 9.4a:
Integrated
Advertising
According
to
presentation
Philip
and
Kotler,
promotion
advertising
of
ideas,
is,
"Any
goods,
paid
or
form
services
of
by
nonpersonal
an
identified
sponsor."
Advertising
and
is
one
advertisement
organization
television,
wants
radio,
of
is
to
the
important
modes
misunderstood.
pass
to
its
communication.
Advertising
target
newspapers, magazines,
of
audience.
consists
of
Advertising
Many
times,
information,
can
be
marketing
which
done
through
Internet, etc.
Page
an
188
09.
Integrated
Marketing
Communications
eBook
Personal Selling
As
the
name
se l l i n g could
suggests,
personal
be for giving
business-to-business
is
meeting
the
presentations on a product,
prospect or for convincing

in
selling
for solving
the customer to buy a product.
processes or
industrial
customers
goods
personally.
doubts and
Personal selling
because
it
Personal
queries of a
is mainly done
requires extra
effort to
convince the buyer to buy such goods.
Sales Promotion
Sales
promotion
customer.
such
as
To
comprises
promote
distributing
small
sales,
free
incentives to
organizations generally
gifts,
money-off coupons,
promotion activities are conducted
Sales
promotion
activities
motivate the
are
in shopping
mainly
sometimes organizations conduct such

is done to motivate the channel
conduct
product
malls d u r i n g
conducted
purchase
for
sales
of a
product
promotion
samples,
etc.
by
activities,
Usually,
sales
festive season.
end-users
of
product,
but
activities for t h e i r channel members as well.
This
members for the promotion of their product only.
Public Relations
Public
relation
employees,
concerned
publicity
public
is
an
organization's
suppliers,
with
the
through
about
an
communication
stakeholders,
image
public
of
the
relations.
organization's
government
organization.
For
its
people,
employees,
and
Organizations
example,
project
with
when
kick-off,
the
such
general
do
not
newspaper
newspaper
as
customers,
public.
It
is
pay
for
getting
informs
the
general
does
not
receive
any
monetary g a i n s from the organization.
Direct Marketing
Direct
use
of
aimed
marketing
direct
at
customized
in b u i l d i n g
is
mail,
an
catalogs,
specific
according
a good
interaction
person.
to
between
promotion
Therefore,
an
calls,
the
the type of customer.
organization
online
and
its
marketing,
message
can
be
Direct marketing
is
customers
etc.
The
quickly
with
message
drafted
interactive and
relationship with customers.
the
Page
189
is
and
helps
09.
Integrated
Marketing
9 . 5 Developing
Marketers
believe
Organizations
eBook
Effective C o m m u n i c a t i o n s
that
invest
Communications
effective
communication
is
billions of rupees for developing
the
key
effective
to
product
success.
communication
to
reach
their target audience.
The steps in developing an effective communication channel are discussed
Step
The
1:
Identifying the Target Audience
process of identifying
target
below.
audience.
decision,
and
the target audience
Current
the
people
users,
starts with clarity
prospective
influencing
the
customers,
buying
decision
in
mind,
people
are
regarding
taking
considered
the
as
the
buying
the
target
a u d i e n c e . They can also be special public, groups, general public or i n d i v i d u a l s .
Target audience greatly affects the organization's decision on what should
be said,
it should
it. The target
be said, when and where it should
audience should
also
be segmented
be said, and who w i l l be saying
in terms of their product usage and
brand
how
loyalty
communication strategy could differ on the basis of segmentation.
Step 2:
After
Determining the Communication Objectives
identifying
objectives;
the
which
target
are
audience,
decided
on
the
the
next
basis
of
Marketers mainly desire a purchase response;

is
step
the
is
determining
response
that
the
a
communication
marketer
but getting a purchase response
desires.
instantly
rare.
There
are
six
buyer-readiness
stages
purchase decision. The marketer should
through
which
buyer
passes
while
making
know the current stage of the prospect and then
frame the communication objectives accordingly.
The six buyer-readiness stages include:
Awareness
The target audience might

or
only
few
things
be unaware of the product,
about
the
product.
Therefore,
marketer is to create awareness about the product.

shampoo,
marketers
which
make
is
being
people
distributed
aware
about
as
free
the
the
know o n l y the name
very
first
step
in
through
detail
newspapers,
because
helps
people get
chance to use the product.
for
For example, a new variant of
sachets
product
might
Page
190
09. Integrated
eBook
Knowledge
After spreading
know
about
stage.
and
the awareness of the product,
the
product.
Therefore,
For example, after using
disadvantages
of
the
the
marketers are confident that
target
the shampoo,
product.
They
audience
is
now
consumers w i l l
will
also
at
the
people
knowledge
know the advantages
ascertain
if
the
shampoo
is
suitable for their hair or not.
Liking
After
providing
buyers
the
to the
product,
favorable
knowledge
about
stage of l i k i n g .
with
about
the
help
that
the
Hence,
of
product.
product,
a marketer
brand
For
the
marketer
provides
ambassador,
example,
so
informing
wants
more
that
move
information
the
about
to
about
consumer
ingredients
the
feels
in
the
shampoo, tips for usage, etc.
Preference
This
is a
product
stage
over
where
other
brands.
shampoo after using

bottle,
to th at
while
a consumer
For
its sachet,
ignoring
is
favorable
example,
when
he or she w i l l
other shampoo
about
brands.
the
product
consumer
likes
purchase the same

Here,
particular shampoo while making a buying
and
prefers
a
the
particular
brand's shampoo
the consumer gives
preference
decision.
Conviction
Conviction
them.
the
Marketers
about the
is
stage
use
where
the
effective
customers
promotion
believe
mix
tools
that
to
the
product
generate
is
best
positive
for
feelings
product.
Purchase
In this stage,
believed
that
product.
the consumer takes the final decision of purchasing

only
communication
product
should
also
cannot
provide
stimulate
high
value
the
to
the product.
customers
customers
to
to
It is
buy
make
the
their
buying decision easier.
Step 3:
After
Designing a Message
determining
effective
Action
the
message.
(AIDA)
communication
The
model
in
message
mind.
is
The
objectives,
designed
AIDA
the
marketer focuses
keeping
model
puts
Attention,
forward
on
Interest,
desirable
designing
Desire,
traits
Page
of
191
an
and
good
09.
Integrated
message.
Marketing
While
designing
Communications
content of the message) and
message,
the
eBook
marketer
must
decide
what
to
say
(the
how to say (the structure and the format of the message).
Message Content
To get the desired
will
help
response, a marketer has to find
in generating
the desired
out a theme or a type of appeal that
response from the target audience.
There are three types of appeals, they are:
Emotional appeals
The
marketer
guilt.
Emotional
that
motivate
attention and
uses
emotional
appeals
a
are
used
purchase.
build
appeals,
It
is
as
love,
stimulate
believed
the
that
joy,
and
positive
or
emotional
humor to
negative
appeals
fear
and
emotions
draw
more
u p more confidence in the brand.
Moral appeals
Moral appeals are mainly used
instance
to
such
safe
driving,
cleaner
to
insist people to
environment,
lend
a hand
for social causes,
for
etc.
Social appeals
Social
appeals are
encouraging
are
used
labor,
used
to
bring
in
a social cause for the
for a social
cause,
behavioral
in
the
betterment of the society.
like eradication
stop cruelty to animals,
change
of AIDS
and
target
audience
by
Many advertisements
polio,
prevention
three
message
of child
etc.
Message Structure
While designing
issues.
The
first
message,
issue
is
to
marketer
describe
suggests that marketers are
should
also
a conclusion
overcome
or
more affluent in asking
leave
it
to
the
questions and
audience.
structure
Research
allow the audience to
reach their own conclusions.
The
second
issue
is whether to
present
the strongest arguments first could
The
third
product
its
issue
(that
limitations
is
in
message
one-sided
(that
get strong
structure
argument)
is two-sided
the strongest arguments first or last.
is
attention.
whether
or to
argument).
Presenting
to
mention
present
the
only
product's
Usually while selling
the
strengths
strengths
a product,
of
along
with
a one-sided
argument is most preferred.
the
Page 192
09. Integrated
eBook
Message Format
For
designing
instance,
while
message,
making
the
print
headlines, attention-grabbing
While
designing
choose
the
television
Thus,
the
words,
message
the
designing
communicator
advertisement,
pictures, and
for a
sounds,
advertisements,
while
marketing
radio
and
then
the
all
effective
the
the
needs
marketers
strong
should
format.
decide
For
on
the
color.
advertisement,
voices.
above
If
the
the
message
elements
communication,
the
marketers
is
should
to
be
marketers
should
be
carefully
designed
carefully
must
for
planned.
consider
every
important detail carefully.
Step 4: Selecting
The
next
step
communication
Media Channels
is
selecting
channels,
channels
namely,
of
communication.
personal
There
communication
are
channels
two
and
types
of
non-personal
communication channels.
Personal Communication Channels
Personal
communication
through
chat.
face-to-face,
Personal
channels
allow
two
over-the-telephone,
communications
are
or
more
people
to
person-to-audience,
successful
because
they
communicate
and
allow
through
personal
directly
e-mail
or
addressing
and feed back.
Certain
personal communication channels are directly controlled
example,
personal
are
not
salespeople of the company contact the target

communications
directly
(family
regarding
controlled
members,
friends,
by
the
and
the
product
reach
organization.
neighbors),
buyers in
buyers
This
by the organization.
through
channel
consumer
the market.
advocates,
But other
channels,
includes
and
For
which
social
factors
online
buying
guides.
In
the
personal
affecting
the
expensive,
communication
buying
and
attitudes
infrequently
customer reviews on
Positive
faster.
aware
days,
about the
of
people.
purchased
word-of-mouth
Word-of-mouth
products.
For
plays
has
an
more
instance,
important
weightage
consider the
role
for
in
risky,
potential
of
Flipkart.com or tripadvisor.com.
word-of-mouth
These
channel,
moves
fast;
organizations
new
product
in
do
whereas
not
try
the market;
to
negative
reach
word-of-mouth
millions
they just try
to
of
people,
reach
moves
even
making
them
thousands of people
Page
193
09. Integrated
in
an
effective
way
and
these
thousand
eBook
people,
in
turn,
help
the
organization
reach
m i l l i o n s of people.
Usually,
people
decorators,
ask
financial
suggestions,
they
ambassador
for
working
suggestions from
consultants,
act
on
their
them.
other
doctors,
people for
lawyers,
Organizations
product,
so
that
the
take
hotels,
hotels,
etc.
certain
personal
insurance agents,
If
steps,
people
like
communication
interior
believe
hiring
in
brand
channel
starts
for them.
Non-personal Communication Channels
Non-personal
feedback or
includes
communication
personal
mass
channels
contact.
media,
sales
that
promotions,
public
spread
at
relations,
messages
more than
exhibitions
one
with
person.
and
no
This
events,
and
below:
Mass Media
Mass
media
and
newspapers);
(television
and
channels
These channels are aimed
experiences. These are explained
are
comprises
and
network
radio);
display media
various
forms
of
m ed i a
electronic
(posters and
media,
such
(satellite,
and
media
(audiotape,
as
print
media
cable);
(magazines
broadcast
videotape,
and
Web
media
page);
billboards).
Sales Promotions
Sales promotions consist of product promotions (free samples and

promotions
(display
allowances
and
advertisements);
and
coupons);
sales-force
trade
promotions
(contest for sales representatives).
Public Relations
Public
relations
Within
the
of
organization,
organization;
and
consist
it
is
communications
it
directed
is
directed
towards
within
towards
consumers,
and
the
outside
employees
stakeholders,
the
and
organization.
outside
associates,
the
media,
the government.
Exhibitions
Examples
lifestyle
of
and
endorsing
exhibitions
machinery
are
trade
exhibitions,
shows,
etc.
property
Such
shows,
exhibitions
auto
play
exhibitions,
key
role
business-to-business products.
Page
194
in
09. Integrated
Events and
Events and
eBook
Experiences
experiences consist of cause events, entertainment,
sports events, and
activities, which are informal and create new interactions with the target audience.
Step S:
Establish the
Setting
takes.
the
marketing
Here,
you
will
This
promotional
There
is
used
by
activities.
It
is
are
the
one
of
the
toughest
how a company
decisions
decides on
its
that
an
organization
promotion
budget of advertising are explained
budget.
The
below.
small
starts
the
organizations
with
total
that
have
revenues,
remaining a m o u n t .
limited
deducting
Some
amount
operating
to
invest
expenses
in
from
percentage of the final amount
is
promotions.
certain
shortcomings
promotional activities on
it
about
the total
capital outlay from
spent on
is
Method
method
it and
budget
learn
four methods of setting
Affordable
Budget
most
sales.
important
in
this
method
Promotion
factor
for
the
as
it
is considered
success
of
totally
ignores
to be of least
firm.
This
the
effect
of
priority even when
method
often
causes
under-spending on promotional activities.
Percentage-of-sales Method
In
percentage-of-sales
percentage
various
method,
of forecasted
advantages
as
it
sales
is
promotion s p e n d i n g ,
selling
However,
certain
there
availability
complex
of
are
funds
rather
organizations
and
easy
method,
spent
on
there
is
no
advertisement;
it
use
price, and
than
and
in
done
The
assists
to
this
opportunities.
promotion
budget
percentage-of-sales
in
finding
the
at
certain
method
relationship
method.
In
this
It
is
followed
method,
or
calculation
considering
the
on
deciding
competitor's
on
long-term
budget d u e to year-on-year sales.
specification
is
sales.
their
has
between
profit per unit.
limitations
because of the variation
sales
to
current
set
In
the
basis
of
planning
is
percentage-of
percentage
spending
power
to
be
or
by
following the legacy.
Competitive-parity
In
competitive-parity
spending
power.
advertising
Method
method,
marketer
promotion
observes
budgets
the
are
set
competitor's
by
matching
the competitor's
advertisements
or
expenditure estimations of the industry t h r o u g h secondary sources,
Page
gets
and
195
the
then
09.
Integrated
sets
the
there
Marketing
company's
promotion
method
organization
setting
It
is
accordingly.
This
method
is
rarely
used
because
Method
considered
sets
its
the budget
budget
to
be
on
2)
Deciding the tasks required
3)
Calculating
Deciding on
marketing
promotion
of the
budget
purpose
of
setting
promotion.
method.
The
The
method
of
all
tool
same industry.
to achieve the objectives
the approximate cost of performing
method
for calculating
it is difficult to find
combining
logical
the promotional objectives
is the most complex
Integrated
basis
most
involves:
Defining
Step 6:
the
the
1)
this method,
by
budget
eBook
is no justification on the authenticity of this method.
Objective-and-task
This
Communications
Each
promotional
use.
budgets.
Moreover,
while using
objectives.
Mix
communications
it w i l l
promotion
tasks.
out the task that will achieve the defined
Promotion
the
the determined
imply that the
tools.
Promotion
promotion tool
promotion
Organizations
mix
must
varies according
is explained
in detail
to
mix should
determine
be designed
what
organizations,
blend
even
in
of
the
below.
Advertising
Advertising
is
very
useful
in
reaching
example, advertisements on television

so that the message gets registered
masses
that
are
expressive
organization
visuals,
building
to
print,
a
market
sound,
good
its
in the minds of consumers.
color.
image
sales.
advertising
products
and
long-term
generating
nature,
in
For
of
geographically.
reaches audiences worldwide and
one of the best ways for an organization that wants to
Being
scattered
with
Advertising
the
product
example,
launch
used
as
of
Television advertising
is
the
usage
is
it gets repeated
reach the masses.
allows
effective
For
for
well
new
of
as
soft
d r i n k variant by Pepsi.
Advertising
company
has some
limitations.
salespersons.
promotional
tool.
Target
one-way communication
It
lacks the
Advertising
audiences
is
personalization
considered
rarely
pay
as
attention
the
or
element that
most
respond,
is fulfilled
expensive
form
considering
it
process.
Page
by
196
as
of
a
09.
Integrated
Marketing
Communications
eBook
Personal Selling
As
the
and
name
seller.
Personal
suggests,
Personal
selling
customers.
In
is
personal
selling
plays
mainly
personal
selling
a
selling,
it helps in selling
key
responsible
role
for
interaction
in
some
developing
a salesperson
customer feel confident while buying

products;
is direct
must
a product.
as well as g i v i n g
stages
a
be
between
of
strong
two
the
people,
buying
Personal
selling
process.
relationship
sufficiently effective
to
buyer
with
the
make the
is very effective for new
a demonstration on
product usage.
Sales Promotions
People witness free distribution of product samples,

These
the
activities
attention
come
of
under
sales
consumers
decision gets q u i c k t h r o u g h
by
promotion.
offering
sales
free coupons,
A sales
purchase
promotion,
but
product contests,
promotion
incentives
tool
to
is
used
buyers.
to
attract
The
its effects are still short-term
etc.
buying
in
nature
because it cannot be repeated frequently like advertisements or personal s e l l i n g .
P u b l i c Relations
People
have
relations.
message
Information
is
sent
relations could
relations
tendency
are
salespeople.
in
be
to
trust
passed
the
form
economical
mainly
used
It is also used
realistic
through
of
public
information
and
for
things,
effective
people
which
relations,
and
if
who
not
used
provided
makes
in
with
stay
is
mainly
people
believe
sales-oriented
other
away
public
in
it.
effort.
Public
tools.
Public
promotional
from
by
advertisements
and
to exaggerate the products of a company.
Direct Marketing
Direct
marketing
public.
the
Telephone
purview
according
designed
Direct
is
to
of
the
at
marketing,
direct
particular
catalogs,
marketing.
customer's
As
person;
direct
direct
mail,
therefore,
online
marketing
understanding.
is
Message
direct
marketing
marketing,
specific,
content
in
it
etc.
can
come
be
direct
is
less
under
customized
marketing
is
qui ckly.
marketing
facilitates
the messages can

end.
aimed
Direct
interaction
be modified
marketing
is
between the consumer and
according
considered
to the response generated
very
effective
for
the organization,
from
developing
the consumer's
strong
customer
relationships.
and
Page
197
09.
Integrated
Marketing
Word-of-mouth
Word-of-mouth
Communications
Marketing
could
be
in
the
done online as well as offline.

advice from
family
form
people.
is
or friends or go
very
effective
Word-of-mouth
is
of advice,
suggestion,
For example, while buying
the product and are currently using
Word-of-mouth
eBook
fast
online
to
see
information
a product,
reviews
from
or
review.
It
is
you may take some
the
people
who
bought
it.
because
when
it
mainly
works
have
positive
people
on
the
experiences
experiences
but
of other
it
is
faster
when people have negative experiences.
Step 7:
Measure
Results
Organizations invest huge amounts in developing communications.

needs
to
be
accountable
communication
in
strategies,
terms
the
of
revenue
management
and
outcome.
measures
the
So,
After
impact
the management
implementation
of
of
communication
strategies on the target a u d i e n c e .
Target audiences are questioned
on
they
message,
really
remember
from
the
attitudes towards the message.

of
people
buying
the
product,
how many times they saw the message,
Managing
American
number of people
Integrated
Association
Communication
as,
"A
of
regarding
the
message,
points
and
their
A marketer also collects data on the basis of the number
finally the n u m b e r of people suggesting
Step 8:
response
the
Advertising
of
and
preferring
the
product,
and
it to other people.
Marketing
concept
liking
Communications
Agencies
marketing
defines
Integrated
communication
Marketing
planning
that
recognizes the added value of a comprehensive plan."
The
plan
example,
marketer
assesses
sales
all
forms
promotion,
combines
all
forms
of
communication
direct
of
marketing,
to
measure
advertising,
communications
so
that
it
their
and
effectiveness;
public
provides
relations.
consistency
clarity and also helps to know the impact of the message on the target audience.
for
Page
198
and
09.
Integrated
Coordinating
Coordination
the utmost
Marketing
Communications
Media
of media
happens
among
all forms of communication, that is,
Implementing
many
forms
of communication;
the
complications
who
For example,
but
to
attain
personal as well as non
Eureka Forbes sells its products using
personal selling, advertising, sales promotion, etc.
IMC
implementing
specialists
various
impact, a marketer must use a combination of both
personal channels of communication.
While
eBook
are
integrated
due
rarely
to
marketing
several
familiar
with
reasons.
all
the
communications,
First,
types
big
of
organizations
organizations
communication
hire
tools.
observe
several
Second,
multinational organizations hire number of communication agencies, which are located

other
countries
and
servicing
different
verticals;
this
directly
results
in
dissemination of the product d u e to lack of coordination in communication.
Page 1 9 9
in
image
09. Integrated
eBook
Integrated
at
Marketing
integrating
all
the
Communications (IMC)
marketing
tools
is a concept of marketing,
of communication
for
informing
which aims
and
making
people aware about products or services.
Sender,
encoding,
message,
media,
decoding,
noise are elements in the communication
Elements
of
marketing
personal s e l l i n g ,
communication
receiver,
response,
feedback,
process.
mix
are
advertising,
sales
promotion,
p u b l i c relations, and direct marketing.
Steps in developing
effective communication are as follows:
1.
Identifying
2.
Determining
3.
Designing a message
4.
Selecting
5.
Establish the budget
6.
Deciding on
7.
Measure resu Its
8.
Managing
the target audience

the communication objectives
media channel s
promotion mix
integrated
marketing
and
communications
Page 200
M a r k e t i n g of
Services
I T M
10.
Marketing of Services
eBook
1 0 . 1 Introduction
The service sector plays an
as developed
25
to
goods
30
countries.
years
and
marketing
service sector.
or more.
Even
After reading
has
important
The
service
also
achieved
level
in
sector
generated
In many countries,
in
role
of
influencing the growth of developing
has witnessed
huge
exceptional
employment
saturation,
which
opportunities.
turned
the contribution of services
India, the service sector contributes around
this chapter,
you will
growth
The
attention
in their GDP
SO
in
as well
the
growth
towards
is 70
percent of G D P .
Define services
Distinguish
E x p l a i n service marketing
E x p l a i n characteristics and
Discuss the reasons for growth and career opportunities in the service industry
Discuss the ethical
issues
and
service marketing
mix
nature of services
in
of
the
percent
be able to:
between goods marketing
last
service marketing
Page 202
10.
Marketing
of Services
eBook
1 0 . 2 Definition of Services
'Service' as a term
is as old
as mankind
and
Few definitions of service are mentioned

According
to
benefits,
or
American
Marketing
satisfactions
which
began with self-service among
below:
Association,
are
humans.
offered
service
for
sale,
is
defined
or
as,
provided
"Activities,
in
connection
with the sale of goods."
Kotler
offer
and
to
define
Bloom
another
ownership
of
that
service
is
anything.
as,
"Any
essentially
Its
activity
or
intangible
production
may
or
benefit
and
may
that one
does
not
be
party
not
result
tied
to
can
in
the
physical
product."
10.3
Difference
between
Goods
Marketing
and
Services
Marketing
The
fundamental
However,
due
to
principles
unique
of
goods
marketing
characteristics
and
of services,
services
marketing
specialized
are
marketing
common.
strategy
is
required.
The
following
table
highlights
differences
between
goods
marketing
and
services
marketing:
Goods Marketing
Goods
are
tangible.
Therefore,
Services Marketing
they
stand
as an evidence to convince customers.
Services
difficult
are
to
convince
Therefore,
customer
service-unless,
company's
accepted
intangible.
and
it
to
is
well-advertised
it
is
buy
widely
in
the
market.
While
selling
the seller and
goods,
connectivity
the customer is very
between
While
selling
limited.
possible
way
services,
to
convince
enables great connectivity

and
When
customer
ownership
of goods
purchases
goods,
gets transferred
to
a seller, and
the
In
the
transferred
case
of
seller
This
between a buyer
new
ownership
relations.
cannot
to the purchaser.
purchaser.
every
a customer.
helps build
services,
tries
Page 203
be
10.
Products
are
eBook
manufactured
on
certain
Standardization
because
standards, which cannot be compromised.
and
Goods are produced
using
raw material.
it
of
services
varies
is
according
not
to
possible
the
choice
preference of people.
Services
are
cannot
intangible;
used.
be
according
to
Services
the
raw
material
are
produced
and
requirements
d e m a n d s of consumers.
Quality
goods
of
because
goods
cannot
once
changed,
be
produced
cannot
be
modified.
Services
can
be
modified;
services are customized.

of
service
can
be
in
fact,
many
Therefore,
improved
from
quality
time
to
time.
Goods
can
be
distributed
channels,
such
as
dealers,
factory
retail
through
outlets,
outlets,
multiple
Services
authorized
different
direct
sales
agents, online s h o p p i n g , etc.
limited.
can
be
distributed
channels,
Very
less
but
or
no
involved.
For example,
ticket,
person
can
the
through
options
are
intermediaries
for
go
booking
to
either
are
a flight
a
travel
agent or book online.

While
selling
goods
departments
marketing)
(such
deal
with
front-end
only
as,
sales
customers
for
and
selling
as well resolving grievances.
Various departments of an organization are

involved
in
customers.
giving
It
also
services,
teams,
Ps
of
a marketing
marketing
consideration.
Place, and
taken
The 4 Ps are:
Product,
setups
and
into
Price,
warehouses
10.Ja:
the
after-sales
designing
Ps
are
of
and
consideration.
7Ps
Promotion,
People, and
Process.
Services do
not
the
telecom
sales
teams,
plan
are:
for services,
are
Product,
Physical
require any
taken
sort
into
Price,
evidence,
of storage
or manufacturing facilities.
.
of
technical departments.
marketing
The
from
support
a marketing
service
in
to
type
interact with
Difference between Goods Marketing and Service
on
example,
a customer can
In
Place,
to store goods.
Table
for goods,
Promotion.
Manufacturing
required
plan
are
depends
For
customer care,
designing
service
best
service a customer wants to avail

organization.
In
the
Marketing
Page 204
10.
eBook
1 0 . 4 Services Marketing
While
learning
Mix
basic concepts of marketing,
services marketing,
Ps of marketing
mix are
important,
but
in
7 Ps are important.
The 7Ps of service marketing
are explained
below:
Product
The
product
addition,
and
in
service marketing
service
products
are
cannot
be seen or touched;
immeasurable.
For
it is intangible
example,
services
in
in
nature.
hotels,
In
resorts,
hospitals are products in service marketing.
Price
Pricing
a
price
in
service
of
marketing
service,
consideration.
Then,
the
a
is
more complex
labor
profit
cost,
margin
than
material
is
added
in
cost,
to
product
and
the
marketing.
overhead
total
cost,
cost
which
While
are
d ec i d i n g
taken
decides
the
into
final
price of the service.
Place
In
case
of service
marketing.
marketing,
place
is
altogether
a different
phenomenon
from
product
It decides the location where the service will be so l d .
For
example,
located
in
a quiet
bustle of the city;
the
resort
attract
crowded
is
to
for
Mahindra
place,
and
atmosphere
Club
away from
because the
provide
their
customers
if
resorts
fresh
guests.
it
were
the
hustle
purpose of
and
It
are
relaxing
would
situated
place.
Page 2 0 5
not
in
10.
eBook
Promotion
One
of
the
marketing
is
witnessed
An
most
promotion.
huge
organization
competitive
important
The
competition
needs
to
atmosphere
aspects
service
between
promote
and
of
to
service
sector
Phoren Return at
has
organizations.
to
survive
make
in
people
this
9999
aware
hd!Go,
about
its
existence.
Hence,
hotels,
resorts,
I
ndia
'
s
coolest
olr1io&
-e
fk.l!ng obfood
with
cbly
banks,
CY'ld drut fights to BcM,gkok, Dubai Md Singapore from
and
airlines spend
promotions.
huge amounts on
For example,
extensively
in
Indigo
newspapers
and
advertising
Airlines
on
the
Seemoo2011.
and
Wekome abroodl
advertised
Internet
to
make people aware of the lowest fares they offer.
...... .._
People
comprise
stakeholders
the
People
of
key
employees,
of an
customers,
organization.
components
in
Employees
service
.........
...... ..._
and
are
marketing.
---
one
"'-""'be.
. o,,t,oi
They
S,35mn
..... &hs.,pt.
t 9999 fletlxn ftn
S: 15 pn
w.11.'
lstSept..
, 9999 fwl.m kn
1>:SSan
w....
ISlhSept.
t 9999 flm.fn ,...
35-
'"--'
4
: IS pr,
..... l!rdO<t
t 9999 Ren.m hn
21',d Od;
.
t 9999 Rc4.m kn
------ ..-- ..------------
---- ...
have
the
ability
organization.
especially
on
to
influence
Organizations
the
train
growth
their
customer service and
on
of
an
employees,
interpersonal
golndiGo.in
:;o::..-
-o-,
skills to
provide the
best
service
to
their customers.
Process
Process
is
McDonald's
should
Process
be
is
manner
delivers
effective
reflected
in
which
quick
service
service
enough
in
to
service
is
without
provide
delivered
affecting
service
blueprinting
as
because
to
its
per
it
the
customer.
service
the
For
quality.
customer's
describes
the
example,
The
process
expectations.
way
in
which
the
service is to be delivered.
Physical
Physical
and
Evidence
evidence
great
consists
customer
arrangement
in
of tangible
experience.
restaurant,
aspects,
Some
hygiene
which
examples
in
hospitals,
support
are
providing
ambience
and
Physical evidence also acts as a competitive advantage
in
of
well-dressed
good
resort,
staff
in
service
seating
airlines.
in service marketing.
Page 206
10.
Marketing
of Services
eBook
1 0 . S Characteristics of Services
Services
have
five
characteristics
that
significantly
affect
the
designing
of
marketing
programs.
I n t a n q l b illt y
Inseparability
Variability
Characteristics of Services
Perishabillty
Lack of Ownership
Fig.
1 0 . S a : Characteristics of Services
Intangibility
A service cannot
be
seen
he or she experiences it.

it.
For example,
feeling
when
rejuvenated.
or touched.
Buyers often
A consumer
is
uncertain
about
the
service
unless
prefer an evidence of a service before they opt for
services of a spa
These experiences
are availed, an
help
i n d i v i d u a l can
buyers form an
see the
results
opinion about the
by
quality of
service, either good or bad.
Inseparability
Services
cannot
be
separated
from
service are done simultaneously.

location.
For
example,
service
provider.
Service quality
McDonald's,
KFC,
and
Production
standards should
Starbucks
and
not
provide
consumption
of
vary according
to
the
same
service
standards worldwide.
Variability
Customers
experience different
For example,
different
service
if
seat,
a customer travels
different
marketing
encourages
an
service
is
meal,
and
considered
organization
to
as
be
in
quality
the
same
different
an
every
airline
hospitality
opportunity
innovative
time
and
by
service
every
from
time,
is
he
different
service
surprises
rendered
or
she
staff.
will
get
with
a
in
Variability
delightful
experiences.
them.
Variability
organization.
customers
to
Page 207
10.
eBook
Perishability
Services cannot
cannot
be used
d e p a rt ed .
once.
be
stored.
later.
It
needs
For example,
A movie ticket cannot
to
an
be
utilized
airline
be used
immediately.
ticket cannot
after the movie
An
be used
service
after the flight
is missed;
In short, u n l i k e products, services cannot be stored
unutilized
it can
be used
has
only
for later use.
Lack of Ownership
In
product
However,
the
marketing,
in
case of
ownership
restaurant,
10.6
products
services,
cannot
it is served
be
they
first
are
transferred.
to you,
Implications
are
produced,
first
For
then
purchased
example,
sold,
and
when
and
then
you
finally
c o n s u m ed .
consumed.
order
Therefore,
food
item
in
but it does not belong to you.
of
Service
Characteristics
and
Ways
of
Overcoming Them
The
following
table
displays
service
characteristics,
its
implications,
and
strategies
to
overcome t h e m :
Service
Implication
Marketing Strategy
Characteristic
Intangibility
Services cannot be touched or felt.
So,
As services are intangible,
the q u a l i t y of service cannot be judged
the seller has to
in advance.
communicate its benefits to

convince a customer.
There are many companies and
Therefore, a seller should
professionals who provide similar
first communicate the
services. Therefore, services cannot be
service benefits.
patented or copyrighted.
Most consumers are always
Unlike products, services are promoted
brand conscious. They do
through particular channels.
not prefer to use local or

unbranded goods unless left
with no choice. Therefore, a
company should
brand
its
product and communicate it

wisely to its customers.
Page 208
10.
eBook
The best way to sell

services is to add
personalization element.
Sellers should always
maintain good
relationships
with their customers-this

shows personalization.
Sellers should
provide good
q u a l i t y at a reasonable
price.
This will help the
seller penetrate into the

market easily.
Every service has some

tangible element involved
it.
in
A company should
communicate t h i s tangible
element to its customers by
using
graphical or physical
representations.
Inseparability
A service
cannot
provider
because
consumption
time.
be
separated
its
happens
from
production
at
the
its
and
same
As production and
consumption of service
h a p p e n s at the same time,

the service provider should
involve the consumer in the
production
process.
For example, allowing
the
consumer to watch the

making of a food
developing
software by
visiting client's
S u c h a strategy
useful
item,
place, etc.
is very
because a consumer
can observe the making
Page 209
of a
10.
eBook
service and judge the

quality of the service at the
same time.
A consumer often expects

the delivery of a service by
a particular staff.
organization
Hence, an
must be
efficient e n o u g h to deploy
staff requested
consumer and
by the
manage the
other process.
Heterogeneity
Each and
every service and
are different,
its delivery
hence the q u a l i t y of
service is difficult to standardize.
As delivery of service is
very
i m p o rt a n t , careful
selection and
training
personnel should
To give every customer a similar
behavioral
experience,
people involved
heterogeneity needs to be
controlled.
of
be done;
norms for the

in
providing
service must be defined.
More the people involved

providing
in
service, more is
the cost incurred
by the
company to deliver the

service.
Ultimately, the
service gets costly.

human
Hence,
intervention must be
reduced, automated
processes shou Id
encouraged.
be
Common
examples are mobile bill

drop
boxes,
passbook
update machines, etc.
Perishability
Services are non-perishable;
they
Capacity utilization and
cannot be stored. They
to
creativity
need
be
is very
necessary.
Page 2 1 0
10.
eBook
consumed
at the same time.
once sold cannot

back.
be returned or taken
For example, services of doctors,
lawyers,
stored
In
Services
beauticians, etc.
cannot be
Effective strategies must be

used
to cope up with the
fluctuating
demands of a
service.
for later use.
service marketing, demand
forecasting
is a major issue for
marketers because of its perishable

nature.
Ownership
Customers can use services,
cannot own them.

bought, then
but they
Services are first
produced, and
A company
needs to stress
on advantages and
finally
of using
benefits
a particular service
consumed.
Ownership cannot be
to a customer.
It also needs
transferred
to a customer.
to communicate the variety

of service offered
by the
company at various levels,

if any.
Table
10.6a:
Implications of Service Characteristics and

Ways of Overcoming Them
1 0 . 7 Reasons for Growth of Services

There are six m a i n
reasons for growth
in the services sector.
Economic Affluence
Economic affluence
group
of consumers
income,
as
well
has created
The
increased
for
with
their
as
demand
demand
carried
is a major factor for the service

and
the
rural
households
expenditure
capacity
for many goods and
personal
improved
services,
standard
luggage themselves,
in
of
but
the
of
sector's growth.
high-income
Indian
The
group
household
is
has
middle-income
increasing.
increased,
which
services.
travel,
living
tourism,
of
people.
now most
entertainment,
For example,
people
prefer to
in
use a
etc.
has
greatly
the
past,
people
porter service to
carry the luggage.
The
Page 2 1 1
10.
Increase in
There
have
is an
Leisure Time
increase
witnessed
getting
eBook
an
in
leisure time
increase
entertained,
etc.,
in
in today's
growth.
which
life.
People
encourages
Therefore,
prefer
growth
to
in
services
spend
the
related
their
tourism
to
time
and
leisure,
travelling,
entertainment
industry.
Apart from t r a v e l l i n g , entertainment, and

education,
training,
has
an
given
and
impetus
skill
to
personal care,
development
educational
people now spend
for themselves as well
services,
soft
skill
as
more time on
their children.
development
institutes,
This
and
kindergarten schools.
Increase in
The
Percentage of Working
percentage of working
women
have
various
opportunities
women
easy
creches,
The
for
and
demands
innovative and
roles
of
to
number
simple.
household
women
is
Women
increasing
perform
of
in
products
Examples
of
rapidly.
their
and
such
Apart from
personal
services
services
lives.
that
are
professional
This
make
health
factor
the
has
created
of
working
life
services,
career,
which
include
domestic help, fitness services, etc.
working
women
are
encouraging
service
organizations
to
be
more
creative in their approach.
Greater Life Expectancy

There
has
been
an
significant growth
audience
increase
in
the
average
life
of
people.
This
has
culminated
in the population of senior citizens. The services catering
have also
increased.
For example,
medical
services,
nursing
in
to this target
services,
financial
services, etc.
Increase in Product Innovations

There are some
invention
of
products that
mobile
phones
indirectly give a boost to the service sector.
gave
boost
to
telecom
network
providers
For example,
and
computers
gave a boost to software companies.
When
more
service
elements
changing
pushes
innovative
times,
the
products
attached
to
consumers
manufacturers
are
them.
have
to
launched
This
become
focus
in
gives
more
their
the
market,
push
to
conscious
attention
on
there
the
of
is
an
service
quality
quality
than
increase
sector.
cost,
With
which
improvement
Page 2 1 2
in
and
10.
Marketing
innovations.
of Services
In
this
process,
eBook
many
more
services
have
emerged
on
account
of
product
innovation.
Shift in Customer Preferences

Earlier generations did
not avail
many
in customer's preference provided

food,
computers,
travel,
picnic
services as compared
to today's generation.
Shift
more opportunities to services like entertainment, fast
resorts,
educational
institutions,
counseling,
retailing,
etc.
To
meet
compete
the
to
demand
provide
of
best
today's
growing
services to
the
customer
people,
preferences,
which
leads
to
many
organizations
immense growth
of the
industry.
1 0 . 8 Career Opportunities in the Service Sector

Employment
sector.
opportunities
There
Entrepreneurs
value,
are
have
certain
huge
communicating
generating
have
reasonable
augmented
areas
business
effectively,
profits.
The
in
the
due
service
opportunities
using
Indian
to
cost
increased
sector,
in
which
exploiting
effective
service
sector
growth
are
those
means
is
an
in
the
still
areas
for
service
untapped.
by
creating
delivery,
example
of
and
increasing
employment opportunities.
Recent trends suggest that demand

as
banking,
manage
trading,
their
financial
financial
for finance professionals
institutions,
activities.
New
and
and
real estate
emerging
is on
the
rise.
prefer finance
sectors,
such
as
Sectors such
professionals to
retail
sector,
can
also provide many job opportunities.
Advertising
client
industry
servicing,
has also
production,
provided
media
many job
department,
opportunities
market
in
the areas of creativity,
research,
event
management,
etc.
Page 2 1 3
10.
eBook
1 0 . 9 I n d u s t r i e s Classified
The
service
sector
is
an
important
u n d e r Service Sector
element
of
economy.
It
contributes
percent to the GDP of I n d i a . There are major industries involved
Here
is a list of major industries that are classified
1.
Transport and
3.
p u b l i c utilities
Communications
4.
Health services
5.
Wholesale and
6.
Legal services
7.
Hospitality services
8.
Educational services
9.
Personal services
1 0 . Tourism
services
1 1 . Business services
12.
State and
13.
14.
Social organizations offering
Table
10.10
services
10.9a Industries Classified
Emerging
Options
for
the
SO
under the service sector:
Entertainment services
Accounting
than
in the service sector.
2.
retail trade
more
local government services

services
under Service Sector
Youth
of
India
rn
Service
Sector
The top ten emerging
1.
Software
Foreign
options for the youth of I n d i a
Engineering
IT companies
provide information and
These companies have outsourced
support services to their customers.
t h e i r operations
job opportunities in the I n d i a n software
2.
in the service sector are:
in India and
created
many
new
industry.
Call Center
Call
in
centers
case
of
are
any
undergraduates
resolve
the
medium
problems
who
customer
or
have
queries
of interaction
queries.
sound
Call
between
centers
computer
politely.
This
customers
often
knowledge
industry
has
and
hire
fresh
and
who
provided
the
company,
graduates
are
and
trained
millions
of
to
job
opportunities in the past decade.
3.
Animation/Graphics
Employment
market
of
demand
video
of an
games
or
animator and
computer
graphic designer
games
has
increased
is
high.
the
The expanding
job
prospects
those who have the necessary s k i l l s .
Page 214
for
10.
Skilled,
laborious,
and
eBook
experienced
positions as art directors
animators/graphic designers can
in the field
of game
production
or some
advance their
other m u l t i m e d i a
companies.
4.
Hospitality
With
the
an
rise,
field
5.
increase
which
in
corporate,
ultimately
of commerce,
provides
science,
event
sector
offers
management,
great job
copywriting,
Tourism
Management
To
part
be
experience
individual
of
the
has
Employment
private
travel
enriching
great job
hospitality
opportunities
to
industry
graduates
is on
from
the
management, etc.
one
or
in
directorates and
opportunities
etc.
and
cargo
is
by
industry,
giving
skills,
personal experience,
are
get
client
Advertising
tourism
communication
can
in
servicing,
considered
space
to
be
selling,
the
right
creative skills.
enjoyable
opportunities
sector,
companies
and
good
about travel through
available
a job
in
companies,
is
whereas
make
services
to
personality,
the
users.
and
travel
If
an
knowledge
probably the best job.
both
travel
should
quality
pleasant
it
in
one
private and
companies,
in
the
public
hotels,
public
departments of tourism of the center and
sectors.
airlines,
sector,
one
In
the
transport
can
work
in
the state.
Radio Jockeying
FM
as
radio
a
has
career
people,
8.
family travel,
hotel and tourism
industry for people possessing
7.
and
Advertising
Advertising
6.
leisure,
become
is
one
gaining
of the
main
momentum
in
sources
India.
of entertainment.
Radio
jockeys
Radio jockeying
not
only
entertain
but they also provide latest information to keep the public updated.
TV Presentation/ Journalism
This field
has
given
is extremely
a
importance
stimulus
of
professionals,
innovative and
to
media,
television
there
is
both for print and
versatile.
and
The increasing
journalism
sharp
increase
industry.
in
the
number of channels
With
the
demand
increasing
of
working
electronic media.
Page 2 1 5
10.
9.
eBook
Investment Banking
Investment
provide
advice
acquisitions,
having
banking
is
to
and
one
their
joint
competency
of
the
clients
ventures.
in
math
emerging
on
This
and
fields
in
investment
industry
is
India.
Investment
options,
very
economics
along
one of the glamorous
fields;
such
much
with
as
suitable
bankers
mergers,
for
degree
in
people
business
ad ministration.
10.
Fashion
Photography
Fashion
photography
with
fashion
big
is
houses.
This
industry
and
requires creative
gives
a chance
people;
to
work
therefore you
will
find that many fashion houses hire people having creative skills.
1 0 . 1 1 Ethics in Services Marketing

There
have
been
various
ethical
issues and
concerns
regarding
the service
industry.
few of these are discussed ahead.
Aggressive
Promotions through Telemarketing or
Telemarketing
calls are u s u a l l y
made when
advertisements in which they are not

listen
to
the telemarketer,
salesperson may land
which
of customer
However,
be annoying
at
busy.
normally
ignore
in telemarketing they have to
times.
Even
or
By Permission
in
personal
selling,
potential
customer's
Marketing)
privacy
is
also
certain rules governing the privacy of a customer. There should

a customer should
People
up at an u n u s u a l time, which irritates the customer.
Invasion of Privacy (Rectified
Invasion
prospects are
interested.
can
Personal Selling
be called or contacted for advertising and
major
issue.
There
are
be a specified time when
sales promotion.
Customer
friendly promotional activities are considered good ethics in marketing of services.
Misleading
Misleading
company.
charges
Claims
claims
Many
or
are
p r o h i b i t ed
and
are
considered
dishonesty
on
brands provide false information to the customer and
information,
practices are considered
which
is
unethical
known
to
the
customer
at
later
the
part
of
the
have many hidden

stage.
Such
in service marketing.
Page 2 1 6
false

Introduction To Marketing - Itm University

Enviado por

Dados do documento

Título original

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Introduction To Marketing - Itm University

Enviado por

Direitos autorais:

Formatos disponíveis

- - - - - -

Company Orientation toward

Difference between Strategic Planning and

Steps for Developing

Black Box Model of Consumer Behavior

The Buyer Decision

The Buyer Decision

Process for New

Market Segmentation, Targeting, and

Criteria for Effective

Levels of Market Segmentation

Patterns of Market Segmentation

Bases for Segmentation of Business Markets

Definition of Market Segmentation

Managing the Product

Product Life Cycle (PLC)

Important Terms Associated

The Strategic Role of Price

How Companies Price?

Economic Approach to Pricing

Definition of Channel of Distribution

10. Marketing of Services

Difference between Goods Marketing

Implications of Service Characteristics and

Reasons for Growth of Services

Career Opportunities in the Service Sector

Ethics in Services Marketing

under Service Sector

Options for the Youth of India

individuals relate marketing

solutions that deliver

the customers and

Today's successful organizations are simply

personal s e l l i n g , advertisement or promotion.

benefits to the manufacturers and

organizations are encircled

more than the act of selling

quality service and

but are also

After reading t h i s chapter,

Describe the nature of marketing

Explain the core concepts in marketing

Explain the different categories of non-traditional marketing

between marketing and

fit into the needs of their target customers.

products or services that

the needs of customers profitably.

Some important definitions of marketing are:

creating, offering and exchanging products of value with others."

relationships in a dynamic environment."

point of view of its final

people think that

result, that is, from the customer's point of view."

are synonyms of each other

but there are

The differences between marketing

activities that start from

that are undertaken for

the distribution of products

satisfaction of the needs of

that are produced

customers, even after the

The objective of marketing