Materials management

Marketing
Marketing process is defined as the process of

business activities that direct the flow of goods

and services from the producer to the consumer
to satisfy their wants or needs.
Marketing is the process of planning and
executing the conception, pricing, promotion, and
distribution of ideas, goods, services to create
exchanges
that
satisfy
individual
and
organizational goals.

..
2
2

Marketing = ?
Marketing management is the art and science of
choosing target markets and getting, keeping, and
growing customers through creating, delivering, and
communicating superior customer value.

3
3

The components of marketing concept are as under:

a. Satisfaction of Customers: In the modern era, the
customer is the focus of the organization. The organization
should aim at producing those goods and services, which
will lead to satisfaction of customers.
b. Integrated marketing: The functions of production,
finance and marketing should be integrated to satisfy the
needs and expectations of customers.
c. Profitable sales volume: Marketing is successful only
when it is capable of maximizing profitable sales and
achieves long-run customer satisfaction.

Simple Marketing System

Communication

Industry

(a collection
of sellers)

Goods/services

Money

Information

Market

(a collection
of Buyers)

5
5

Functions of marketing
For goods to move from manufacturing to

consumer ,marketing managers should see that

certain marketing functions .

Selling
Buying
Transportation
Storage
Risk bearing
Standardization & Grading
Financing
Market information

Selling - producers function within a free market to sell products to

consumers.
Buying - people have the opportunity to buy products that they
want.
Transportation -products must be physically relocated to the
locations where consumers can buy them. This is a very important
function. Transportation includes rail road, ship, airplane, truck,
and telecommunications for non-tangible products such
as market information.
Storage - products must be stored and protected until they are
needed. This function is especially important for perishable
products such as fruits and vegetables.
Risk bearing - insurance companies provide coverage to protect
producers and marketers from loss due to fire, theft, or natural
disasters.

Grading and Standardizing - Many products are graded in order to

conform to previously determined standards of quality. For
example, when you purchase US No. 1 Potatoes, you know you
are buying the best potatoes on the market.
Financing - banks and other financial institutions provide money
for the production and marketing of products.
Market Information - information from around the world about
market conditions, weather, price movements, and political
changes, can affect the marketing process.Market information is
provided by all forms of telecommunication, such as television,
the internet, and phone.

Marketing

Marketing is the sum of all activities that take you to a

sales outlet. After that sales takes over.

Marketing is all about creating a pull, sales is all about

push.

Marketing is all about managing the four Ps

product
product

price
price

place
place

promotion
promotion

9
9

The 4 Ps & 4Cs

Marketing
Mix

Convenience
Place

Product
Customer
Solution

Price

Promotion

Customer
Cost

Communication
10
10

Marketing

Selling

Focuses on Customers needs.

Customer enjoys supreme
importance.
Converting customers needs into
product.
Profits through customer
satisfaction.
Emphasis is given on product
planning and development to match
products with the market.
Integrated approach to marketing is
practiced.

Focuses on sellers needs.

Product enjoys supreme

The principle of caveat vendor (let

the buyer beware) is followed.

the seller beware) is followed.

importance.
Converting product into cash.
Profits through sales volume.
Emphasis is placed on sale of

products already produced.

Fragmented approach to selling is
practiced.
The principle of caveat emptor (let

Who is a Customer ??
CUSTOMER IS . . . . .
Anyone who is in the market looking at a product /
service for attention, acquisition, use or consumption
that satisfies a want or a need

12
12

How Do Consumers Choose Among

Products & Services?
Value - the value or benefits the customers gain from
using the product versus the cost of obtaining the
product.
Satisfaction - Based on a comparison of performance
and expectations.
Performance > Expectations => Satisfaction
Performance < Expectations => Dissatisfaction

13
13

The Marketing Plan

A written document that acts as a guidebook of
marketing activities for the marketing manager

14
14

Drivers of Customer Satisfaction

Many aspects of the firms value proposition contribute
to customer satisfaction:

The
The core
core product or service offered

Support
Support services
services and
and systems
systems

The
The technical
technical performance
performance of
of the
the firm
firm

Interaction
Interaction with
with the firm
firm and
and itit employees
employees

The
The emotional
emotional connection
connection with
with customers
customers

Ability to add value and to differentiate as a firm focuses

more on the top levels

15
15

Stages of Customer Interaction

16
16

What Changed in Marketing

New Economy

Old Economy

Organize
Organize by
by product
product units
units
Focus
Focus on
on profitable
profitable transactions
transactions
Look
Look primarily
primarily at
at financial
financial
scorecard
scorecard
Focus
Focus on
on shareholders
shareholders
Marketing
Marketing does
does the
the marketing
marketing
Build
Build brands
brands through
through advertising
advertising
Focus
Focus on
on customer
customer acquisition
acquisition
No
No customer
customer satisfaction
satisfaction
measurement
measurement
Over-promise,
Over-promise, under-deliver
under-deliver

Organize by customer segments

Focus on customer lifetime value
Look also at marketing scorecard
Focus on stakeholders
Everyone does the marketing
Build brands through performance
Focus on customer retention
Measure customer satisfaction and
retention rate
Under-promise, over-deliver

17
17

Marketing research
Marketing research is a systematic

problem analysis, model building and

fact finding for the purpose of
improved
decision-making
and
control in the marketing of goods and
services.
It is the systematic gathering,
recording, and analysis of qualitative
and quantitative data about issues
relating to marketing products and
services. The goal of marketing
18
18

Marketing research

Marketing
Marketing research
research is
is the
the means
means by which the
the information
information necessary

to
to run
run a business
business is obtained.
ItIt helps
helps an
an entrepreneur
entrepreneur to
to take
take decisions
decisions concerning
concerning the type of
product,
product, the
the price policy, the channel of distribution, and sales
promotion
promotion can
can be
be made
made rightly
rightly with the
the help
help of
of marketing
marketing information
at
at the
the right
right time.
time.
It is the
the gathering,
gathering, recording,
recording, and analysis of all facts
facts about
about problems
problems
relating
relating to
to the transfer and sale of goods and services from producer
producer
to
to consumer.
consumer. For
For example, a hotel should find out what all services
are
are needed
needed to
to satisfy
satisfy its
its customers
customers and the soft toy manufacturer
making
making teddy bears needs to find out ifif children
children really want purple
teddy
teddy bears
bears and
and so
so on.
on.
Every
Every company,
company, irrespective
irrespective of
of size,
size, must
must research
research its
its market,
market,
customers
customers and competition; initially to set it on the right course and
then
then continually
continually to monitor
monitor its
its performance.
performance.
Small-scale
Small-scale firms are often unable to afford continuous marketing
research.
research.
However,
However, they
they can
can use
use personal contacts and other informal methods
for
for collecting
collecting required
required information
information about
about markets.
markets.

Marketing information can be collected from the following sources:

Primary Sources
1. Customers: Consumers being the final users of products or
services can be an invaluable source of primary data. A
representative sample of consumers may be selected and
information obtained from them regarding the quality, design,
package, price, etc. of the firms products.
2. Dealers: The dealers can provide information about the
marketing policies of the competitors.
3. Salesman: Salesmen remain in personal contact with the
customers. They can, therefore, supply data to the marketing
manager relating to the buying habits and preferences of
customers.

Secondary Sources
1. Press: Newspapers like the Economic Times and Magazines like
Business Today and trade directories regularly publish data about
various industries.
2. Government Publications: Bulletins, periodicals, journals and
magazines of different ministries and departments of the Central and
State Government.
3. Publications of financial institutions: Publications of Reserve Bank of
India, public financial institutions and commercial banks.
4. Foreign governments and international agencies: Publications of
agencies like the United Nations, the World Bank, the ILO
5. Publications of trade associations: Trade associations and Chambers
of Commerce collect and publish useful data for the benefit of their
members.
6. Private concerns and research institutions: Business data published by
research institutes like National Council of Applied Economic Research,
Indian Institute of Foreign Trade, etc.

ADVERTISING
Advertising is any paid form of non personal presentation
and promotion of ideas, goods, or services by an identified
sponsor.
Advertising is generally regard as a form of communication
for the purpose of which is to convey concepts about
company goods and services by means of words, pictures
,diagrams, sounds, music, colour, symbols and shapes.
Advertising message can be conveyed by many methods .
A firm can deliver its message through an advertising media,
a single service or media more than one service.

The Five Ms of Advertising

Message

Mission
Sales
goals
Advertising
objectives

Money

Message generation

Factors to
consider:

Message evaluation
and selection

Stage in PLC

Message execution

Market share
and consumer base
Competition
and clutter
Advertising
frequency
Product
substitutability

Social-responsibility
review

Media
Reach, frequency,
impact
Major media types
Specific media
vehicles
Media timing
Geographical
media allocation

Measurement
Communication
impact
Sales
impact

Advertising media
Newspapers

Advantages: Flexibility, timeliness; good local market coverage;

broad acceptance, high believability
Limitations: Short life; poor reproduction quality; small
pass-along audience.

Television

Advantages: Combines sight, sound, motion; high attention;

high reach; appealing to senses
Limitations: High absolute costs; high clutter; fleeting exposure;
less audience selectivity

Direct Mail

Advantages: Audience selectivity; flexibility, no ad competition within same medium; allows personalization
Limitations: Relative high cost; junk mail image

Radio

Advantages: Mass use; high geographic and demographic

selectivity; low cost
Limitations: Audio only; fleeting exposure; lower attention;
nonstandardized rates; fragmented audiences

Magazines

Advantages: High geographic and demographic selectivity;

credibility and prestige; high-quality reproduction;
long life; good pass-along readership
Limitations: Long ad purchase lead time; waste circulation;
no guarantee of position

Outdoor

Advantages: Flexibility; high repeat exposure; low cost;

low message competition
Limitations: Little audience selectivity; creative limitations

Sales promotion
oo Sales production technique includes

short term incentives like discounts,

free gifts and contents to stimulate
sales of the product.

o These incentives are entirely useful

when a new
launched.

product

is

being

o Sales promotion techniques build the

bridge between the product and the

consumer.

Sales promotion methods:

Consumer promotion
Trade promotion
Sales force promotion
Good public relations
Display
Product exhibition, demonstration &

conferences
Product packaging

Consumer
Consumer Promotion
Promotion
Consumer-Promotion
Objectives
Entice
EnticeConsumers
Consumersto
to
Try
TryaaNew
NewProduct
Product
Lure
LureCustomers
CustomersAway
Away
From
FromCompetitors
CompetitorsProducts
Products
Get
GetConsumers
Consumersto
toLoad
LoadUp
Up
on
onaaMature
MatureProduct
Product
Hold
Hold&&Reward
Reward Loyal
Loyal
Customers
Customers
Consumer
ConsumerRelationship
Relationship
Building
Building

Consumer-Promotion
Tools
Samples
Samples
Coupons
Coupons
Cash
CashRefunds
Refunds
Price
PricePacks
Packs
Premiums
Premiums

Advertising
Advertising
Specialties
Specialties
Patronage
Patronage
Patronage
Rewards
Rewards
Rewards
Contests
Contests
Sweepstakes
Sweepstakes
Games
Games

Point-of-Purchase
Point-of-Purchase
Displays
Displays

Trade Promotions

Trade-Promotion
Objectives

Trade-Promotion
Tools

Persuade
PersuadeRetailers
Retailersor
or
Wholesalers
Wholesalersto
toCarry
CarryaaBrand
Brand

Price-Offers
Price-Offers

Premiums
Premiums

Give
GiveaaBrand
BrandShelf
ShelfSpace
Space

Allowances
Allowances

Promote
PromoteaaBrand
Brandin
in
Advertising
Advertising

Buy-Back
Buy-Back
Guarantees
Guarantees

Patronage
Patronage
Displays
Rewards
Rewards
Discounts
Discounts

Push
PushaaBrand
Brandto
toConsumers
Consumers

Free
FreeGoods
Goods
Contests
Contests

Push
PushMoney
Money
Specialty
Specialty
Advertising
Advertising
Items
Items

Major
Major Public
Public Relations
Relations Tools
Tools
Public
Public
Service
Service
Activities
Activities

Web
Web Site
Site

Speeches
Speeches

Corporate
Corporate
Identity
Identity
Materials
Materials
Audiovisual
Audiovisual
Materials
Materials

News
News

Written
Written
Materials
Materials

Special
Special
Events
Events

LO 1

The Role of Distribution Activities

in Marketing
Types of Distribution Channels
Direct channel
A distribution system without

intermediaries

Indirect channel
A distribution system with one or more

intermediaries.

Dual distribution
A distribution system with more than one

channel.

LO 1

Alternati
ve
Channels
of
Distribut
ion

Exhibit 8-1

Product Life Cycles

Product life cycle (PLC) is the cycle through which every
product goes through from introduction to withdrawal or
eventual demise.
Product life cycles describe the changes in consumer
demand over time. No product can be in demand forever.
Trends, technology and lifestyles change, which affects
consumer demand.

33
33

Phases of Product Life

Cycles

34
34

Product Life Cycles

Sales

maturity
decline
growth
decision
point

introduction
Time

The traditional product life cycle

consists of five stages.

35
35

Unit 2

Product Life Cycles

Introduction Stage

When a product is first introduced

a product launch occurs. It may occur
regionally, provincially, or nationally,
depending on predicted demand.

36
36

Unit 2

Product Life Cycles

Introduction Stage

Launching a new product is very

expensive, so initially the price is
high. Costs involved include:
machinery, set-up, training,
promotion, storage, packaging,
market research.
PS3 during the introduction stage was

$900
Microwaves when they were introduced
Unit 2
37
37

Product Life Cycles

Introduction Stage
Who buys at this stage?

Curious people, those

who always want new

things first:
- early adopters
- trendsetters.
38
38

Unit 2

Product Life Cycles

Introduction Stage

Main purpose of marketing is to

inform the consumer about new
products and to establish the value
equation as early as possible.
Communicate the benefits that this

product/service will offer you

39
39

Unit 2

Product Life Cycle

Products currently in introduction

Sales

Growth Stage

growth

Time

Product Life Cycles

Growth Stage
After adopters find and use a
product, others will follow. The
product is visible, consumers
see/hear others use it. Reputation
spreads through word of mouth and
advertising.

42
42

Unit 2

Product Life Cycles

Growth Stage
Manufacturers advertise heavily
will the product profit or fail?
The product may even be scrapped at
this stage. If it is and it has lost
money, it is called a bust.

43
43

Unit 2

Product Life Cycles

Growth Stage
The faster a product reaches the

growth stage, the sooner it starts

making a profit.
The first company to enter a market
will pay the most for development
and advertising, but it will have a
major advantage: no competition.
44
44

Unit 2

Growth Stage

Product Life Cycles

Growth Stage
As competitors enter the market,

companies strive to maintain their

market share: the companys sales
as a percentage of the total for the
market.

46
46

Unit 2

Product Life Cycles

Growth Stage

Factors preventing companies

from realizing profit are called
barriers to entry.
These may include:
small market size
cost of R&D
ad expenses
equipment costs...
47
47

Unit 2

Product Life Cycles

Growth Stage
Eventually only the most competitive

products remain on the market.

Competitors stimulate market growth
through advertising and wide
distribution.

48
48

Unit 2

Product Life Cycles

Growth Stage
A company may produce a low-priced

version of a product to establish a

minimum price for a specific line,
called a low-end product. Usually
not sold under a well-known brand
name.

49
49

Unit 2

Growth Stage

Product Life Cycles

Maturity Stage
The period during which

sales start to level off

Sales

maturity

51
51

Time

Unit 2

Product Life Cycles

Maturity Stage

Marketers keep the brand name in

front of consumers. Often the success
and longevity of the product is
highlighted.

52
52

Unit 2

Product Life Cycles

Maturity Stage
Because major costs have been

recuperated and the cost of sales and

distribution is low, products usually
make large profits during this stage.

53
53

Unit 2

Product Life Cycles

Maturity Stage
Often times companies will take this

profit to develop new products and

product launches.

EXAMPLE: Disney took profits from

its amusement parks to launch a

cruise ship line. This also expands
their brand name into a new market.
54
54

Unit 2

Maturity Stage (LONG

TIME)

Maturity Stage (Shorter

Time)

Product Life Cycles

Decline Stage
Occurs when a company cannot find

new consumers for their product.

Profits decrease; marketers try to
find the reason for the decline.
Sales

decline

57
57

Time

Unit 2

Product Life Cycles

Decline Stage
If it is a temporary decline
it may be reversed by a small price
change in the design
new ad campaign
Change in the packaging

58
58

Unit 2

Decline Stage

59
59

Unit 2

Product Life Cycles

Decision Point Stage
The final stage of the product life
cycle. Marketers must make
important decisions regarding a
products future.
Sales

decision
point
60
60

Time

Unit 2

Product Life Cycles

Decision Point Stage
A product may be reformulated,

repackaged, and reintroduced.

Most often maintenance of a product
involves new promotion and new
pricing.

61
61

Unit 2

Product Life Cycles

Decision Point Stage
If it looks like there is little hope for

significant profitdue to market

saturation, decreased demand, or
otherwisea suggestion may be made
to abandon the product.

62
62

Unit 2