MODULE 1

Concepts of Marketing

MEANING
Marketing is about identifying and meeting human and social needs. One of the
shortest good definitions of marketing is “meeting needs profitably.”

DEFINITION
The American Marketing Association offers the following formal definition:
Marketing is the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and
society at large.

What is Marketing Management?

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.

SCOPE OF MARKETING
• GOODS
Physical goods constitute the bulk of most country’s production and marketing
efforts. Each year, U.S. companies market billions of fresh, canned, bagged, and
frozen food products and millions of cars, refrigerators, televisions, machines, and
other mainstays of a modern economy.

• SERVICES
As economies advance, a growing proportion of their activities focuses on the
production of services. The U.S. economy today produces a 70–30 services-to-goods
mix. Services include the work of airlines, hotels, car rental firms, barbers and
beauticians, maintenance and repair people, and accountants, bankers, lawyers,
engineers, doctors, software programmers, and management consultants.

• EVENTS
Marketers promote time-based events, such as major trade shows, artistic
performances, and company anniversaries. Global sporting events such as the
Olympics and the World Cup are promoted aggressively to both companies and fans.

• EXPERIENCES
By orchestrating several services and goods, a firm can create, stage, and market
experiences. Walt Disney World’s Magic Kingdom allows customers to visit a fairy
kingdom, a pirate ship, or a haunted house.
• PERSONS
Artists, musicians, CEOs, physicians, high-profile lawyers and financiers, and other
professionals all get help from celebrity marketers. Some people have done a
masterful job of marketing themselves such as David Beckham, Oprah Winfrey, and
the Rolling Stones.

• PLACES
Cities, states, regions, and whole nations compete to attract tourists, residents,
factories, and company headquarters. Place marketers include economic development
specialists, real estate agents, commercial banks, local business associations, and
advertising and public relations agencies. The Las Vegas Convention & Visitors
Authority succeeded with its provocative ad campaign, “What Happens Here, Stays
Here,” portraying Las Vegas as “an adult playground.”

• PROPERTIES
Properties are intangible rights of ownership to either real property (real estate) or
financial property (stocks and bonds). They are bought and sold, and these exchanges
require marketing. Real estate agents work for property owners or sellers, or they buy
and sell residential or commercial real estate. Investment companies and banks market
securities to both institutional and individual investors.

• ORGANIZATIONS
Organizations work to build a strong, favourable, and unique image in the minds of
their target publics. In the United Kingdom, Tesco’s “Every Little Helps” marketing
program reflects the food marketer’s attention to detail in everything it does, within
the store and in the community and environment.

• INFORMATION
The production, packaging, and distribution of information are major industries.
Information is essentially what books, schools, and universities produce, market, and
distribute at a price to parents, students, and communities. The former CEO of
Siemens Medical Solutions USA, Tom McCausland, says, “[our product] is not
necessarily an X-ray or an MRI, but information. Our business is really health care
information technology, and our end product is really an electronic patient record:
information on lab tests, pathology, and drugs as well as voice dictation.”

• IDEAS
Every market offering includes a basic idea. Charles Reason of Revlon once
observed: “In the factory we make cosmetics; in the drugstore we sell hope.” Products
and services are platforms for delivering some idea or benefit. Social marketers are
busy promoting such ideas as “Friends Don’t Let Friends Drive Drunk” and “A Mind
Is a Terrible Thing to Waste.”
NATURE
• CUSTOMER FOCUS
Marketing is a customer-cantered function of a business. It aims at finding out what
customers want and fulfilling their needs by delivering them the right products.

• CREATES MARKET OFFERING

Marketing provides offers of various goods and services to potential customers. It is
the one that communicates all information regarding products like its prices, uses,
quality, and technology to customers.

• EXCHANGE ORIENTED
It is a process which aims at exchanging products among buyer and seller. Marketing
attracts and influences people to buy the products of the company.

• CONTINUOUS ACTIVITY
Marketing is a regular and continuous activity of business for selling their products.
Businesses always need to monitor the marketing environment and should
accordingly plan, implement, and control all marketing programs.

• GOAL-ORIENTED
Marketing is a goal-oriented business activity that aims at achieving the desired sales
and profitability. It focuses on approaching more and more customers and thereby
satisfying their needs by delivering them the required goods or services.

• MANAGE 4Ps
It is a combination of four elements that are product, place, price and promotion. The
whole marketing system is made up of these variable factors which are influenced by
customer behaviour, competition, trade factors, etc.

• CREATES UTILITIES
Marketing creates various utilities such as form utility, time utility, and place utility. It
creates form utility by manufacturing the right product using inputs, time utility by
storing goods in warehouses, and place utility by delivering goods properly to end
customers.

• ECONOMIC PROCESS
It is a process that involves exchanges of goods in monetary terms. Marketing is one
by means of which monetary transactions as per the exchange value of goods take
place for transferring goods among buyers and sellers.

EVOLUTION OF MARKET
Marketing is not done only by the marketing department, every employee has an impact on
the customer. Marketers must properly manage all possible touch points like store layouts,
package designs, product functions, employee training, and shipping and logistics. To create
a strong marketing organization, marketers must think like executives in other departments,
and executives in other departments must think more like marketers. Interdepartmental
teamwork that includes marketers is needed to manage key processes like production
innovation, new-business development, customer acquisition and retention, and order
fulfillment.

Let’s review the evolution of marketing;

• THE PRODUCTION CONCEPT

The production concept is one of the oldest concepts in business. It holds that consumers
prefer products that are widely available and inexpensive. Managers of production-oriented
businesses concentrate on achieving high production efficiency, low costs, and mass
distribution. This orientation has made sense in developing countries such as China, where
the largest PC manufacturer, Legend (principal owner of Lenovo Group), and domestic
appliances giant Haier have taken advantage of the country’s huge and inexpensive labour
pool to dominate the market. Marketers also use the production concept when they want to
expand the market.

• THE PRODUCT CONCEPT

The product concept proposes that consumers favour products offering the most quality,
performance, or innovative features. However, managers are sometimes caught in a love
affair with their products. They might commit the “better mousetrap” fallacy, believing a
better product will by itself lead people to beat a path to their door. As many start-ups have
learned the hard way, a new or improved product will not necessarily be successful unless it’s
priced, distributed, advertised, and sold properly.

• THE HOLISTIC MARKETING CONCEPT

The holistic marketing concept is based on the development, design, and implementation of
marketing programs, processes, and activities that recognize their breadth and
interdependencies. Holistic marketing acknowledges that everything matters in marketing and
that a broad, integrated perspective is often necessary.
Holistic marketing thus recognizes and reconciles the scope and complexities of marketing
activities. The four broad components characterizing holistic marketing are: relationship
marketing, integrated marketing, internal marketing, and performance marketing.

• THE SELLING CONCEPT

The selling concept holds that consumers and businesses, if left alone, won’t buy enough of
the organization’s products. It is practiced most aggressively with unsought goods (goods
buyers don’t normally think of buying such as insurance and cemetery plots) and when firms
with overcapacity aim to sell what they make, rather than make what the market wants.
Marketing based on hard selling is risky. It assumes customers coaxed into buying a product
not only won’t return or bad-mouth it or complain to consumer organizations but might even
buy it again.

• THE MARKETING CONCEPT

The marketing concept emerged in the mid-1950s as a customer-centred, sense-and-respond

philosophy. The job is to find not the right customers for your products, but the right products
for your customers. Dell doesn’t prepare a PC or laptop for its target market. Rather, it
provides product platforms on which each person customizes the features he or she desires in
the machine.

The marketing concept holds that the key to achieving organizational goals is being more
effective than competitors in creating, delivering, and communicating superior customer
value to your target markets.

Selling focuses on the needs of the seller; marketing on the needs of the buyer. Selling is
preoccupied with the seller’s need to convert his product into cash; marketing with the idea of
satisfying the needs of the customer by means of the product and the whole cluster of things
associated with creating, delivering, and finally consuming it.
HOLISTIC MARKETING CONCEPT

The holistic marketing concept is based on the development, design, and implementation of
marketing programs, processes, and activities that recognizes their breadth and inter-
dependencies. Holistic marketing recognizes that "everything matters" with marketing and
that a broad, integrated perspective is often necessary.
Four components of holistic marketing are :
1. Relationship marketing,
2. Integrated marketing,
3. Internal marketing, and
4. Social responsibility marketing.

Holistic marketing is thus an approach to marketing that attempts to recognize and reconcile
the scope and complexities of marketing activities. Figure below provides a schematic
overview of four broad themes characterizing holistic marketing.

1. Relationship marketing:
Relationship marketing has the aim of building mutually satisfying long-term relationships
with key parties’ customers, suppliers, distributors, and other marketing partners in order to
earn and retain their business. Relationship marketing builds strong economic, technical, and
social ties among the parties. Relationship marketing involves cultivating the right kind of
relationships with the right constituent groups. Marketing must not only do customer
relationship management (CRM), but also partner relationship management (PRM) as well.
Key constituents for marketing are customers, employees, marketing partners (channels,
suppliers, distributors, dealers, agencies), and members of the financial community
(shareholders, investors, analysts).

2. Integrated Marketing:
The marketer's task is to devise marketing activities and assemble fully integrated marketing
programs to create, communicate, and deliver value for consumers. The marketing program
consists of numerous decisions on value-enhancing marketing activities to use. Marketing
activities come in all forms. One traditional depiction of marketing activities is in terms of the
marketing mix, which has been defined as the set of marketing tools the firm uses to pursue
its marketing objectives. McCarthy classified these tools into four broad groups, which he
called the four Parts of marketing: product, price, place, and promotion.

3. Internal Marketing:

Holistic marketing incorporates internal marketing, ensuring that everyone in the

organization embraces appropriate marketing principles, especially senior management.
Internal marketing is the task of hiring, training, and motivating able employees who want to
serve customers well. Internal marketing must take place on two levels. At one level, the
various marketing functions sales force, advertising, customer service, product management,
marketing research must work together. At another level, marketing must be embraced by the
other departments; they must also "think customer." Marketing is not a department so much
as a company orientation.

4. Social Responsibility Marketing:

Holistic marketing incorporates social responsibility marketing and understanding broader
concerns and the ethical, environmental, legal, and social context of marketing activities and
programs. The cause and effects of marketing clearly extend beyond the company and the
consumer to society as a whole. Social responsibility also requires that marketers carefully
consider the role that they are playing and could play in terms of social welfare.

EXTENDED MARKETING MIX

Marketing is the process of generating strategies to create
interest to products or services sold by the business firms. For developing a marketing
strategy, it is good to begin by analysing the marketing mix. The marketing mix is a concept
used by the business people to meet their marketing objective.
Earlier there were four P’s (Place, Price, Promotion,
Product) in marketing, which is known as marketing mix. Now it is extended to 7 P’s which
is known as extended marketing mix. They are:
• Product
• Price
 • Place
• Promotion
• People
• Process.
• Physical evidence
• Product: Products refers to the goods and services produced by the organization.
The consumer will buy these products to satisfy their needs. They are paying for the
benefit produced by it.
• Price: Price is the amount charged for a product. Pricing depends on the effects on
demands of the product and the profitability of the firm.
• Place: Goods are sold for the consumers. The product should be available at the right
place which is convenient for the customers.
• Promotion: Promotion is the process of informing, persuading, influencing the
consumers to make a choice of the product. It is a way to inform the consumers about
the price, features, availability of the products to attract more customers.
• People: Anyone who comes in contact with the customers will make an impression
and will have a effect on consumer satisfaction.
• Process: The process of giving a service and the behaviour of the people who are the
delivering the product.
• Physical evidence: In case a customer choosing to use a service, it is treated as a
risky business because they are buying something intangible. A service can’t be seen
before it is delivered. So, it is necessary to show the customers what type of service
they are buying.

The marketing mix is to applicable to marketers to perform

their day to day work. A good marketer will adapt the theory to their individual
model. It will help the marketer’s ability to change the communications.

KEY CUSTOMER MARKETS

The Key Customer Markets
: Consumer, Business, Global, and Non-profit & Government.

1. Consumer Market:

Companies selling mass consumer goods and services such as juices, cosmetics,
athletic shoes, and air travel establish a strong brand image by developing a superior
 product or service, ensuring its availability, and backing it with engaging
communications and reliable performance.

2. Business Market:

Companies selling business goods and services often face well-informed professional
buyers skilled at evaluating competitive offerings. Advertising and Web sites can play
a role, but the sales force, the price, and the seller’s reputation may play a greater one.

3. Global Market:

Companies in the global marketplace navigate cultural, language, legal, and political
differences while deciding which countries to enter, how to enter each (as exporter,
licenser, joint venture partner, contract manufacturer, or solo manufacturer) how to
adapt product and service features to each country, how to set prices, and how to
communicate in different cultures.

Example of Global market well-known companies, Coca-cola, Domino’s, Airbnb

4. Non-profit and Governmental Markets:

Companies selling to non-profit organizations with limited purchasing power such as

churches, universities, charitable organizations, and government agencies need to
price carefully. Much government purchasing requires bids of buyers often focus on
practical solutions and favour the lowest bid, other things equal.

Market Space:

The market space in marketing is defined as a virtual market place in the commercial
world, where the limitations of physical boundaries are not applicable. It is an
integration of numerous areas that are considered market places technology or an
exchange environment that is operated by electronic information. examples of market
space are micro-blogging sites, e-commerce platforms, etc.

VALUE CHAIN
A value chain specifies what product needs production, what steps are involved in the
production process, and who will do what task.

It is an array of processes or activities that allows a company to add value to their articles or
products and includes the production, marketing as well as provisions for after-sales services
to its customers.
VALUE CHAIN MANAGEMENT
Value chain analysis is a very useful management tool that helps to identify key activities
which yields to the creation of superior product or service that is of high value to the
customer. The analysis helps to maximize profits by creating superior product or service for
which the customers are willing to pay a premium price that exceeds the cost of production.
Value chain analysis is often called the value chain management since it encompasses the
monitoring and control of all the underlying activities to create a competitive advantage.
Some of the benefits of effective value chain management are:

• Better product-planning, research & development by creating cross-platform teams;

• Standardization of processes by measuring the metrics of the business;
• Reduction in cost by optimizing the value chain components or activities;
• Improved flow of materials and products through accurate forecasting of sales as well
as demands;
• Improvement in after-sales services and customer support through coordinated
operations

According to Porter, companies can increase their profits by using value chain
analysis in two different ways:

1. Cost leadership: Cutting production costs and streamlining processes in order to

increase profitability

2. Competitive differentiation: Increasing perceived value by offering a unique or highly

valued service

For example, if your company develops apps, you can gain cost leadership by cutting
contracting costs, or gain competitive differentiation by creating more value in your product
to demand a higher price tag. Both methods lead to a boost in profit margin.

You can also combine the two methods. For example, if you sell your product or service
across many regions, states or countries, your target audience and production costs most
likely differ by location. You may have an opportunity to gain a cost leadership advantage in
a region with high production costs by renegotiating contracts. And simultaneously, you may
also be able to gain a competitive differentiation in a region where there is an opportunity to
boost perceived value.

Basic Concepts of Value Chain Analysis

Harvard’s Michael Porter has proposed the value chain as a tool for identifying ways to
create more customer value. According to this model, every firm is a synthesis of activities
performed to design, produce, and market, deliver, and support its product. Nine strategically
relevant activities—five primary and four support activities—create value and cost in a
specific business.
The primary activities are (1) inbound logistics, or bringing materials into the business; (2)
operations, or converting materials into final products; (3) outbound logistics, or shipping out
final products; (4) marketing, which includes sales; and (5) service.
Specialized departments handle the support activities—(1) procurement, (2) technology
development, (3) human resource management, and (4) firm infrastructure. (Infrastructure
covers the costs of general management, planning, finance, accounting, legal, and
government affairs.)

Primary activities includes:

1. Inbound Logistics: Includes receiving goods from suppliers, storing, material

handling, stock control and distribution of raw materials to production units;
2. Operations: A sequence of activities like machining, assembling, packaging, etc. of
final products manufactured from natural materials and thereby adding value to
products;
3. Outbound Logistics: Includes a collection of finished products, their storage, and
distribution to wholesalers, retailers and customers;
4. Marketing & Sales: Activities like advertising, promoting the final products, public
relations, etc., to spread awareness among the target audience for creating a demand
for the product;
5. Service: This refers to after-sales services like maintenance, warranty etc., to
maintain the product value.

Support activities includes:

1. Firm Infrastructure: This refers to the various management activities undertaken in

every firm including planning, financing, quality control, legal and governmental
issues, etc.;
2. Human Resources Management: Includes management of employees and staffs
like, recruitment, retention, training, promotion, and transfer of employees;
3. Technology Development: The Research & Development (R&D) department where
technology is used to understand the current statistics and trends of the market and
apply them to add value to the products;
4. Procurement: Involves creating a supply chain of all the necessary consumable
inputs like man, material, and machinery within the stipulated budget of the firm.

Examples1.Starbucks

Primary activities

• Inbound logistics: This refers to the agents of the company purchasing coffee beans in
Africa, communicating the importance of quality standards in the coffee beans and
building strategic partnerships with suppliers.
• Operations: Starbucks is currently in over 50 countries, with both direct stores
operated by the company and licensing deals.
 • Outbound logistics: The normal process is Starbucks selling their products in store
without any intermediaries. Recently, there are now retail products available in select
supermarket chains.
• Marketing and Sales: There is no heavy investment in marketing, but specials and
tastings are common, especially when new stores open.
• Service: One of their main objectives is to provide superior levels of customer service.

Support activities

• Infrastructure: This is all of the general activities that are required to keep the stores
operational, like management, finance, legal support and government relations.
• Human Resources: There are a wide range of training programs available for staff,
who are considered to be one of Starbucks most important resources.
• Technological development: They make use of technology to save costs, and deliver a
consistent tasting coffee, anywhere in the world.
• Procurement: All the purchasing that is required to produce the end products, like the
coffee beans, raw food items as well as the buildings, and machinery.

Based on the mix of activities above, Starbucks has capitalized on an international demand
for delicious coffee that has guests coming back again and again to experience the superior
levels of service, and a coffee that always tastes great. If you’re interested in focusing on
customer service, this recent post outlines many great ways that you can improve your own
organizations customer service.

Primary activities

• Inbound logistics: This includes all of the sourcing activities to procure and
standardize all of the produce, ingredients and materials to bake pizza’s fast,
consistently, and delicious – in house. They capitalize on economies of scale, and use
massive global purchase orders to source the best prices on raw products for their
restaurants.
• Operations: By targeting areas where there is an affinity for Italian food, Pizza Hut
operates in a huge number of countries globally with a licensing model where stores
are managed by a local franchise owner.
• Outbound logistics: There are two models that Pizza Hut capitalizes on, in store
dining and their home delivery service.
• Marketing and Sales: There is a large investment in marketing to drive additional
sales, and compete with the other fast food chains.
• Service: The entire goal of Pizza Hut is to offer value to their customers in affordable
and convenient pizza that everyone can enjoy.

Support activities

• Infrastructure: Again, this includes every other activity that is required to keep the
stores in business, such as finance, legal, etc.
• Human Resources: To keep the costs down staff are typically junior, and unskilled.
• Technological development: The process they have created to have unskilled chefs
cooking the pizza is their biggest asset. Breaking down the complicated method into
simple steps that can be repeated again and again for consistently great pizza.
 • Procurement: The purchasing and activities required to produce the pizza, the raw
food, and all of the buildings, and equipment needed to cook and deliver the pizzas.

Based on these activities, Pizza Hut is leading the market in producing pizza that is
both affordable, and can be delivered to your door in under 30 minutes (in most
cities). This convenience is what sets them apart from many other competing options
for meals, like going out to dinner or preparing a meal at home yourself, and they use
a strong campaign and marketing focus to entice customers to use them over similar
competitors in the fast form.

MARKETING ENVIRONMENT
Marketing Environment is the combination of external and internal factors and forces which
affect the company’s ability to establish a relationship and serve its customers.

The marketing environment of a business consists of an internal and an external environment.

The internal environment is company-specific and includes owners, workers, machines,
materials etc.

The external environment is further divided into two components: micro & macro.

The micro or the task environment is also specific to the business but is external. It consists
of factors engaged in producing, distributing, and promoting the offering.
The macro or the broad environment includes larger societal forces which affect society as a
whole. It is made up of six components: demographic, economic, physical, technological,
political-legal, and social-cultural environment.

Internal Environment
The internal environment of the business includes all the forces and factors inside the
organization which affect its marketing operations. These components can be grouped under
the Five Ms of the business, which are:

Men:
The people of the organization including both skilled and unskilled workers.
Minutes:
Time taken for the processes of the business to complete.
Machinery:
Equipment required by the business to facilitate or complete the processes.
Materials:
The factors of production or supplies required by the business to complete the processes or
production.
Money:
Money is the financial resource used to purchase machinery, materials, , and pay the
employees.
The internal environment is under the control of the marketer and can be changed with the
changing external environment. Nevertheless, the internal marketing environment is as
important for the business as the external marketing environment. This environment includes
the sales department, the marketing department, the manufacturing unit, the human resource
department, etc.

External Environment
The external environment constitutes factors and forces which are external to the business
and on which the marketer has little or no control. The external environment is of two types:

• Micro marketing environment

• Macro marketing environment

Macro Environment
The micro-component of the external environment is also known as the task environment. It
comprises of external forces and factors that are directly related to the business. These
include suppliers, market intermediaries, customers, partners, competitors and the public

Suppliers:
Suppliers include all the parties which provide resources needed by the organization.
Market intermediaries:
Market intermediaries include parties involved in distributing the product or service of the
organization.
Partners:
Partners are all the separate entities like advertising agencies, market research organizations,
banking and insurance companies, transportation companies, brokers, etc. which conduct
business with the organization.
Customers:
Customers comprise of the target group of the organization.
Competitors:
Competitors are the players in the same market who targets similar customers as that of the
organization.
Public:
Public is made up of any other group that has an actual or potential interest or affects the
company’s ability to serve its customers.

Macro Environment
The macro component of the marketing environment is also known as the broad environment.
It constitutes the external factors and forces which affect the industry as a whole but don’t
have a direct effect on the business. The macro-environment can be divided into 6 parts.

➢ Demographic Environment
The demographic environment is made up of the people who constitute the market. It is
characterized as the factual investigation and segregation of the population according to their
size, density, location, age, gender, race, and occupation.

➢ Economic Environment
The economic environment constitutes factors which influence customers’ purchasing power
and spending patterns. These factors include the GDP, GNP, interest rates, inflation, income
distribution, government funding and subsidies, and other major economic variables.

➢ Physical Environment
The physical environment includes the natural environment in which the business operates.
This includes the climatic conditions, environmental change, accessibility to water and raw
materials, natural disasters, pollution etc.

➢ Technological Environment
The technological environment constitutes innovation, research and development in
technology, technological alternatives, innovation inducements also technological barriers to
smooth operation. Technology is one of the biggest sources of threats and opportunities for
the organization and it is very dynamic.

➢ Political-Legal Environment
The political & Legal environment includes laws and government’s policies prevailing in the
country. It also includes other pressure groups and agencies which influence or limit the
working of the industry and/or the business in the society.

➢ Social-Cultural Environment
The social-cultural aspect of the macro-environment is made up of the lifestyle, values,
culture, prejudice and beliefs of the people. This differs in different regions.

DIFFERENCE BETWEEN SALES AND MARKETING

Sales and Marketing are two business functions within an organization. They both impact
lead generation and revenue. The term sales refers to all activities that lead to the selling of
goods and services. And marketing is the process of getting people interested in the goods
and services being sold.
Marketing informs and attracts leads and prospects to a company and product or service.
Sales, on the other hand, works directly with prospects to reinforce the value of the
company’s solution to convert prospects into customers.
These two business functions are different. But they share a common goal to attract prospects
and convert them to customers, ultimately generating revenue.
There are few general differences between marketing and sales. For example, marketing
focuses its efforts on the general public or larger groups of people, while sales targets smaller
groups of people or subsets of the general public.
Differences between Sales & Marketing:
Sales Marketing
Centres around the present Centres around the future
Focused on one-to-one transactions Focused on one-to-many transactions
Meets needs in an opportunistic manner Meets needs in a strategic manner
Makes a push Pulls people in
Allows for a two way dialogue Directs one way messages
Provides short term advantages Facilitates long term sustainable success

MARKETING RESEARCH
Market research is the process of determining the viability of a new service or
product through research conducted directly with potential customers. Market research allows
a company to discover the target market and get opinions and other feedback from consumers
about their interest in the product or service.
This type of research can be conducted in-house, by the company itself, or by a third-party
company that specializes in market research. It can be done through surveys, product testing,
and focus groups. Test subjects are usually compensated with product samples and/or paid a
small stipend for their time. Market research is a critical component in the research and
development (R&D) of a new product or service.

MARKETING RESEARCH PROCESS

 • Identify the problem:

If your marketing research process is not goal oriented it is the least likely to be
successful. It can be a singular long term goal that your process tries to achieve or
multiple short term goals, or a mix of both. What you need to do is identify the key issues
within your business and analyze how marketing can be a solution to these issues. This
will serve as the roadmap to creating your marketing research plan as you will now know
the particular aspects to look for.

An effective market research is meant to deliver data that will be analyzed to create
solutions. And thus, the primary step towards creating the research plan is to know the
problems that will need to be solved.

• Develop the research plan:

There are multiple ways a research can be conducted; through interviews, surveys, tests,
etc. If you know what your research is trying to achieve, it is now time to pick out the
right tools that will help you succeed in your research. Since any professional market is
huge in size this task may seem like an impossible one, however once the structure is in
place the process will be much simpler. A step by step marketing research plan should be
able to cover all aspects of your company. Make sure that you are also checking for data
that already exists within the system. This can help you save a lot of time by ensuring that
you don’t run similar tests all over again.

• Conduct research:
 there are two major types of data, qualitative and quantitative. Both these types of data
are important relating to what problems you are trying to solve through your market
research. It is safer to collect both types of data in equal proportions to ensure that your
research does not lack any of its important aspects. The data also needs to be updated,
unbiased, and valid. A data centric marketing research process is bound to be successful.

Also make sure that the type of data you collect is feasible for the instruments you have
chosen in step 2. Ensuring that each step is related to the others is a key to successfully
creating a marketing research plan.

• Analyze Process:

Now that you have collected the data the next big question is how the solutions will be
devised from it. The first step is to digitalize the data so that the analysis tools can be used
on them easily. Create different tables, charts, and graphs to understand the acute
functionalities of your business and how the market aspect ties into them. This will reveal
to you the major data trends that exist in your business process and how marketing can
help enrich them.

Summaries are highly helpful while dealing with multiple reports and charts. Another
aspect that one should look into is usage of Big Data and AI based tools in the analysis
process. This provides better and more accurate results.

Analyze and report findings:

At the end of the data collection and analysis process a thorough report needs to be
created. This will help you easily communicate your findings to teams and managers who
will be part of the marketing research process. If the research team and the marketing
team are separate, the result presentation stage becomes crucially important in
communicating the ideas and solutions devised from the data. There are industry specific
methods that you can cater to or you can create your own method that will suit your
team’s understanding.

• Take Action:

As stated before, the marketing process is highly volatile and can only be created keeping
in mind the needs of the current market and its trends. So, the actions taken in this step
will ensure that the data centric structure incorporates the market persona. The type of
market you are dealing in and your business goals will both be taken into consideration
before the marketing process actually begins.
A holistic marketing strategy is as much based on data as it is on real life experiences. So
make sure that you have plenty of both before running a marketing campaign. A
successful marketing campaign should be able to boost brand awareness as well as
achieve particular goals.

MARKETING INFORMATION SYSTEM

A marketing information system (MIS) consists of people, equipment, and procedures to
gather, sort, analyse, evaluate, and distribute needed, timely, and accurate information to
marketing decision makers. It relies on internal company records, marketing intelligence
activities, and marketing research.
The company’s marketing information system should be a mixture of what managers think
they need, what they really need, and what is economically feasible. An internal MIS
committee can interview a cross-section of marketing managers to discover their information
needs.

COMPONENTS OF MARKETING INFORMATION SYSTEM

A. INTERNAL RECORDS
To spot important opportunities and potential problems, marketing managers rely on internal
reports of orders, sales, prices, costs, inventory levels, receivables, and payables.
The Order-to-Payment Cycle
The heart of the internal records system is the order-to-payment cycle. Sales representatives,
dealers, and customers send orders to the firm. The sales department prepares invoices,
transmits copies to various departments, and back-orders out-of-stock items. Shipped items
generate shipping and billing documents that go to various departments. Because customers
favor firms that can promise timely delivery, companies need to perform these steps quickly
and accurately. Many use the Internet and extranets to improve the speed, accuracy, and
efficiency of the order-to-payment cycle.
Sales Information Systems
Marketing managers need timely and accurate reports on current sales. Companies that make
good use of “cookies,” records of Web site usage stored on personal browsers, are smart
users of targeted marketing. Many consumers are happy to cooperate: A recent survey
showed that 49 percent of individuals agreed cookies are important to them when using the
Internet. Not only do they not delete cookies, but they also expect customized marketing
appeals and deals once they accept them.
Databases, Data Warehousing, and Data Mining
Companies organize their information into customer, product, and salesperson databases—
and then combine their data. The customer database will contain every customer’s name,
address, past transactions, and sometimes even demographics and psychographics (activities,
interests, and opinions). Instead of sending a mass “carpet bombing” mailing of a new offer
to every customer in its database, a company will rank its customers according to factors such
as purchase recency, frequency, and monetary value (RFM) and send the offer to only the
highest-scoring customers. Besides saving on mailing expenses, such manipulation of data
can often achieve a double-digit response rate.
Companies make these data easily accessible to their decision makers. Analysts can “mine”
the data and garner fresh insights into neglected customer segments, recent customer trends,
and other useful information. Managers can cross-tabulate customer information with product
and salesperson information to yield still-deeper insights. Using in-house technology, Wells
Fargo can track and analyse every bank transaction made by its 10 million retail customers—
whether at ATMs, at bank branches, or online. When it combines transaction data with
personal information provided by customers, Wells Fargo can come up with targeted
offerings to coincide with a customer’s lifechanging event. As a result, compared with the
industry average of 2.2 products per customer, Wells Fargo sells 4 products.7 Best Buy is
also taking advantage of these new rich databases.

B. MARKETING INTELLIGENCE

The Marketing Intelligence System

A marketing intelligence system is a set of procedures and sources that managers use to
obtain everyday information about developments in the marketing environment. The internal
records system supplies results data, but the marketing intelligence system supplies
happenings data. Marketing managers collect marketing intelligence in a variety of different
ways, such as by reading books, newspapers, and trade publications; talking to customers,
suppliers, and distributors; monitoring social media on the Internet; and meeting with other
company managers.
A company can take eight possible actions to improve the quantity and quality of its
marketing intelligence. After describing the first seven, we devote special attention to the
eighth, collecting marketing intelligence on the Internet.

1) Train and motivate the sales force to spot and report new developments.
2) Motivate distributors, retailers, and other intermediaries to pass along important
intelligence.
3) Hire external experts to collect intelligence.
4) Network internally and externally.
5) Set up a customer advisory panel.
6) Take advantage of government-related data resources.
7) Purchase information from outside research firms and vendors.

8) Collecting Marketing Intelligence on the Internet

Thanks to the explosion of outlets available on the Internet, online customer review boards,
discussion forums, chat rooms, and blogs can distribute one customer’s experiences or
evaluation to other potential buyers and, of course, to marketers seeking information about
the consumers and the competition. There are five main ways marketers can research
competitors’ product strengths and weaknesses online.

• Independent customer goods and service review forums. Independent forums include
Web sites such as Epinions.com, RateItAll.com, ConsumerReview.com, and
Bizrate.com. Bizrate.com collects millions of consumer reviews of stores and
products each year from two sources: its 1.3 million volunteer members, and feedback
from stores that allow Bizrate.com to collect it directly from their customers as they
make purchases.
 • Distributor or sales agent feedback sites. Feedback sites offer positive and negative
product or service reviews, but the stores or distributors have built the sites
themselves. Amazon.com offers an interactive feedback opportunity through which
buyers, readers, editors, and others can review all products on the site, especially
books. Elance.com is an online professional services provider that allows contractors
to describe their experience and level of satisfaction with subcontractors.
• Combo sites offering customer reviews and expert opinions. Combination sites are
concentrated in financial services and high-tech products that require professional
knowledge. ZDNet.com, an online advisor on technology products, offers customer
comments and evaluations based on ease of use, features, and stability, along with
expert reviews. The advantage is that a product supplier can compare experts’
opinions with those of consumers.
• Customer complaint sites. Customer complaint forums are designed mainly for
dissatisfied customers. PlanetFeedback.com allows customers to voice unfavourable
experiences with specific companies. Another site, Complaints.com, lets customers
vent their frustrations with particular firms or offerings.
• Public blogs. Tens of millions of blogs and social networks exist online, offering
personal opinions, reviews, ratings, and recommendations on virtually any topic—and
their numbers continue to grow. Firms such as Nielsen’s BuzzMetrics and Scout Labs
analyse blogs and social networks to provide insights into consumer sentiment.

Communicating and Acting on Marketing Intelligence

In some companies, the staff scans the Internet and major publications, abstracts relevant
news, and disseminates a news bulletin to marketing managers. The competitive intelligence
function works best when it is closely coordinated with the decision-making process. Given
the speed of the Internet, it is important to act quickly on information gleaned online.

Here are two companies that benefited from a proactive approach to online information,
• When ticket broker StubHub detected a sudden surge of negative sentiment about its brand
after confusion arose about refunds for a rain-delayed Yankees–Red Sox game, it jumped in
to offer appropriate discounts and credits. The director of customer service observed, “This
[episode] is a canary in a coal mine for us.”
• When Coke’s monitoring software spotted a Twitter post that went to 10,000 followers from
an upset consumer who couldn’t redeem a prize from a MyCoke rewards program, Coke
quickly posted an apology on his Twitter profile and offered to help resolve the situation.
After the consumer got the prize, he changed his Twitter avatar to a photo of himself holding
a Coke bottle.

CONCEPT OF BIG DATA

Every organization today has enormous data that keeps on increasing every minute. To
manage such data, you need advanced technology. Big data analytics is bringing in a new
revolution in the field of big data concepts analysis. Big data analyses a large amount of data
to get deeper knowledge about the data and find out its hidden patterns and correlations. It
will help the business to understand the information in a better manner. It will help the
business to identify the data that is more important to the organization.

WHAT IS BIG DATA?

An exact definition of “big data” is difficult to nail down because projects, vendors,
practitioners, and business professionals use it quite differently. With that in mind, generally
speaking, big data is:

• large datasets
• the category of computing strategies and technologies that are used to handle large
datasets

In this context, “large dataset” means a dataset too large to reasonably process or store with
traditional tooling or on a single computer. This means that the common scale of big datasets
is constantly shifting and may vary significantly from organization to organization.

Big data concepts analytics important

Big data has been in the major focus since its inception in the business field. Many
organizations understand the importance of Big data and use it for their business.
Big data introduction helps the business to identify new business opportunities and to
increase their efficiency. This, in turn, will help to increase their profit by gaining a lot of
customers. In today’s world, Big data concepts are considered more important due to the
following reasons
➢ Reduced cost: big data technologies are more cost-effective. And it is the best tool to
store huge data at a lower cost. It also helps to identify more efficient ways of doing
business.
➢ Quick decision making: With the help of in-memory analytics and the power to
analyse new sources of data, Big data helps business to analyse the data and
information more quickly than before. Based on learning through analysis, the
business can take a smart decision.
➢ New products and features: Through proper analytics, Big data concepts know the
customer’s needs and satisfaction. So they always deliver what the customers want.
Some companies also create new products using big data analytics to satisfy their
customers’.
Using big data concepts analytics an organization can increase sales, efficiency, operations,
customer service, and risk management. Big data analytics helps to improve the speed of the
business process and reduce the complexity of the operations.

STRATEGIC MARKETING PLANNING

 Market-oriented strategic planning is the managerial process of developing
and maintaining a viable fit between the organisation’s objectives, skills, and resources and
its changing market opportunities.

The aim of strategic marketing planning (SMP) is to shape and reshape the company’s
businesses and products so that they yield target profits and growth.

The elements of a plan

There are nine major steps required to develop a well-crafted, strategic
marketing plan:

1. Set your marketing goals

2. Conduct a marketing audit
3. Conduct market research
4. Analyse the research
5. Identify a target audience
6. Determine a budget
7. Develop marketing strategies
8. Develop an implementation schedule
9. Create an evaluation process

1. Set your marketing goals:

Once you’ve decided to market your practice, you need to set realistic and measurable
goals to achieve over the next 18 to 24 months. This time span allows you to plan
activities around community events that are in line with your marketing goals.

2. Conduct a marketing audit:

A marketing audit is a review of all marketing activities that have occurred in your
practice over the past three years. Be as thorough as possible, making sure to review
every announcement, advertisement, phonebook ad, open house, brochure and
seminar and evaluate whether it was successful.

3. Conduct market research:

The purpose of market research is to draw a realistic picture of your practice, the
community you practice in and your current position in that community. With this
research, you can make fairly accurate projections about future growth in the
community, identify competitive factors and explore non-traditional opportunities.

4. Analyse the research:

 Next, need to analyse the raw data you collect and summarize it into meaningful
findings that will be the foundation for determining which marketing strategies make
the most sense and will get the best results for practice The research will identify the
wants and needs of current and potential patients and will help to define target
audience.

5. Identify a target audience:

With the help of market research analysis, should be able to identify your practice’s
“target audience,” which is the specific group of patients to which you’d like to direct
marketing efforts. The target audience might include patients of a certain age, gender,
location, payer type or language/ethnicity and patients with certain clinical needs.
Keep in mind that your target audience should not only be the patients you want to
attract but also the people who can influence and provide exposure to that segment of
the population.

6. Determine a budget.
Before you can decide what specific marketing strategies you want to implement to
achieve your goals, you need to examine your financial information and come up with
a marketing budget.

7. Develop marketing strategies.

With your budget in place, you can begin to define specific marketing strategies that
will address your goals, reach your target audience and build your patient base. For
example, one strategy related to the goal of increasing patient satisfaction might be to
make the office more patient friendly.

8. Develop an implementation schedule

An implementation schedule is a time-line that shows which marketing actions will be
done when and by whom. The schedule should also include the cost of each marketing
action and how it fits into the budget estimates for the 24-month period. When creating
the schedule, carefully consider how the activities will affect the current practice
operations and whether there are sufficient resources (such as staff, time and money) to
accomplish the necessary tasks.

9. Create an evaluation process.

The value of a marketing plan is its effectiveness, which requires deliberate and timely
implementation and monitoring and evaluation of results. It’s important to measure
your results against the standards you set in establishing your goals.
Example of Strategy in Marketing Planning
Successful marketing requires careful planning, often based on the results of thorough
market research. Planning typically involves the creation and implementation of
strategies to achieve a desired goal, such as increasing market share or gaining wider
distribution. Planning can occur in one or more areas of the marketing mix, which
includes pricing, promotion, product and place, also known as channels of distribution.

Price strategy
A small business can implement a marketing plan based on a pricing strategy. One
common tactic is to become known as the price leader in the market by offering lower
prices than the competition on high-demand items. An opposite strategy can be used
by a company wishing to be recognized as the quality leader, as higher prices may
evoke an image of reliability or expert craftsmanship. A quality pricing strategy is
often accompanied by a promise of delivering superior customer service.

Promotional Strategies
A marketing plan can also consist of a strategy based on heavy promotional activities
to spread the word about a product or business. The company may create a
multipronged advertising campaign consisting of various types of media to convey a
specific message. It can also develop specific promotions aimed at increasing market
share. For example, the company may saturate a market with coupons to entice
consumers to try its products, with the ultimate goal of getting them to switch from a
competitor on a permanent basis.

Product Strategies
Marketing planning can include developing product strategies. One example is to
expand a successful product line by adding complementary products. A company can
also add to its product mix, which is the total assortment of products it sells, by
focusing on adding more product lines. Another strategy is to change a product's
packaging to make it more appealing than a competitor's or to create the perception
that the product has also been improved.
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

MARKETING
The process of planning and executing the conception, pricing, promotion, and
distribution of ideas, goods, and services to create exchange that satisfy individual and
organizational needs

MARKETING ECOSYSTEM
Ecosystem marketing is the process of positioning your idea, message or product in
the right ecosystems to gain visibility, engage prospects, capture attention, and create
customers. It is the process of discovering, analyzing, understanding, and taking marketing
actions – in four distinct yet interrelated ecosystems:

Company, Competitor, Category, and Customer.

BUYER BEHAVIOUR
Buyer behaviour refers to the decision and acts people undertake to buy products or
services for individual or group use. It’s synonymous with the term “consumer buying
behaviour,” which often applies to individual customers in contrast to businesses.

Buyer behaviour is the driving force behind any marketing process. Understanding
why and how people decide to purchase this or that product or why they are so loyal to one
particular brand is the number one task for companies that strive for improving their
business model and acquiring more customers.

TYPES OF BUYER BEHAVIOUR

Buyer behaviour is always determined by how involved a client is in their decision
to buy a product or service and how risky it is. The higher the product price, the higher the
risk, the higher the customer’s involvement in purchase decisions. Based on these
determinants, four types of buyer behaviour are distinguished:
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

1. COMPLEX BUYING BEHAVIOUR

This type of behaviour is encountered when consumers are buying an expensive,
infrequently bought product. They are highly involved in the purchase process and
consumers’ research before committing to a high-value investment. Imagine buying a house
or a car; these are an example of a complex buying behaviour.

2. DISSONANCE-REDUCING BUYING BEHAVIOUR

The consumer is highly involved in the purchase process but has difficulties
determining the differences between brands. ‘Dissonance’ can occur when the consumer
worries that they will regret their choice.

Imagine you are buying a lawnmower. You will choose one based on price and
convenience, but after the purchase, you will seek confirmation that you’ve made the right
choice.

3. HABITUAL BUYING BEHAVIOUR

Habitual purchases are characterised by the fact that the consumer has very little
involvement in the product or brand category. Imagine grocery shopping: you go to the
store and buy your preferred type of bread. You are exhibiting a habitual pattern, not strong
brand loyalty.

4. VARIETY SEEKING BEHAVIOUR

In this situation, a consumer purchases a different product not because they weren’t
satisfied with the previous one, but because they seek variety. Like when you are trying out
new shower gel scents.
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

FACTORS INFLUENCING CONSUMER BEHAVIOUR

1. CULTURAL FACTOR
FACTOR # 1. CULTURE:
The most fundamental determinant of a person’s wants and behaviour is the
culture. It comprises of the norms, learned values, rituals, and symbols of society, that are
transmitted by the means of both the language and symbolic features of the society. The
growing child acquires a set of values, perceptions, preferences, and behaviours through his
or her family and other key institutions.

FACTOR # 2. SUB-CULTURE:
Each culture comprises of smaller sub-cultures that gives more specific
identification and socialisation for their members. Sub-cultures have nationalities, religions,
racial groups, and geographic regions. Many sub-cultures make up significant market
segments, and marketers often design products and marketing programs tailored to their
needs.

FACTOR # 3. SOCIAL CLASS:

Social stratification in exhibited by all humans virtually. At times, stratification
takes the form of a caste system where the members of different castes are reared for certain
roles and cannot change their caste membership. Quite frequently, stratification takes the
form of social classes.
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

Social classes are relatively homogenous and enduring divisions in a society, which
are hierarchically ordered and whose members share same values, interests, and behaviour.

2. SOCIAL FACTORS
FACTOR # 1. REFERENCE GROUP:
In general parlance, a reference group can designate to a person or a group that
serves as a point of comparison (or reference) for an individual informing either general or
specific values, attitudes or behaviour. Every human being because of his sociable nature
prefers to evaluate his abilities and opinion based on the comparison of others abilities and
opinions.

FACTOR # 2. FAMILY:
Family members plays an important role in determining social behaviour. The
family is the most important consumer buying organisation in society, and it has been
researched extensively.

Family is of two types:

(i) Family of Procreation – A direct influence on every buying behaviour it

comprises one’s spouse and children. Marketers are interested in the roles and
influence of the husband, wife and children on the purchase of different products and
services.

(ii) Family of Orientation – From parents a person acquires an orientation towards

religion, politics, self-worth etc. In countries where parents live with their grown
children, their influence can be substantial.Husband-wife involvement varies widely
by product category and by stage in the buying process. With evolving consumer
lifestyles buying roles changes.
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

FACTOR # 3. ROLES AND STATUSES:

In various groups an individual participates-family, clubs, and organisations. The
person’s position in each group can be defined in terms of role and status. A role carries
activities that a person is expected to perform. Each role carries a status. A Court Justice has
more status than a manager, and a manager has more status than an office clerk.
People choose products that communicate their role and status in society. It is
evident as the company presidents often drive Mercedes, wear expensive suits, and drink
Chivas Regal scotch. Marketers are aware of the status symbol potential of products and
brands.

3. PERSONAL FACTORS
Personal characteristics also influences buyer’s decision including the buyer’s age
and stage in the life cycle, occupation, economic circumstances, lifestyle, and personality
and self-concept.

FACTOR # 1. AGE AND STAGE IN THE LIFE CYCLE

Needs of a person changes with age and at different stages of his life. Not only this,
but his tastes and habits change with age for clothes, food, furniture, recreation etc. The
family life cycle influences consumption levels and patterns. They eat baby food in the
early years, most foods in the growing and mature years, and special diets in the later years.

FACTOR # 2. OCCUPATION AND ECONOMIC CIRCUMSTANCES

A company president will buy expensive suits, air travel, country club membership,
and large sailboat etc. Occupation also influences a person’s consumption pattern. A blue-
collar worker will buy clothes, work shoes, and lunchboxes. Marketers try to identify the
occupational groups that have above-average interest in their products and services.
Product choice is greatly affected by economic circumstances; spendable income
(level, stability, and time pattern), savings and assets (including the percentage that is
liquid), debts, borrowing power, and attitude towards spending versus saving.
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

FACTOR # 3. LIFESTYLE
A lifestyle is the person’s pattern of living in the world as expressed in activities,
interests, and opinions. Lifestyle portrays the “whole person” interacting with his or her
environment. People from the same sub-culture, social class, and occupation may lead quite
different lifestyles.
Marketers search for relationships between their products and lifestyle groups. For
instance, a computer manufacturer might find that most computer buyers are achievement-
oriented. The marketer may then aim the brand more clearly at the achiever lifestyle.

FACTOR # 4. PERSONALITY AND SELF-CONCEPT:

Personality is usually described in terms of self-confidence, dominance, autonomy,
deference, sociability, defensiveness, and adaptability. Each person has a distinct
personality that determines its buying behaviour. By personality, we mean distinguishing
psychological characters that lead to relatively consistent and enduring responses to
environment.
Personality can be a useful variable in analysing consumer behaviour, provided that
personality types can be classified accurately and that strong correlations exist between
certain personality types and product or brand choices. For instance, a computer company
might discover that many prospects show high self-confidence, dominance, and autonomy.
Self-concept is related to personality the totality of person’s thoughts and feelings with
reference to himself or herself as the object. Marketers try to device brand images that
match the target market’s self-image. It is possible that a person’s actual self-concept (how
he views himself) differs from his ideal self-concept (how he would like to view himself)
and from his others-self-concept (how he thinks others see his).

3. PSYCHOLOGICAL FACTORS
FACTOR # 1. MOTIVATION
An individual have a number of needs some of them are needs are
biogenic as they arise from physiological states of tension such as hunger,
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

Thirst, discomfort. Other needs are psychogenic; they arise from psychological
states of tension such as the need for recognition, esteem, or belonging. A need
becomes a motive when it is aroused to a sufficient level of intensity. A motive
is a need that is sufficiently pressing to drive the person to act.

FACTOR # 2. BELIEFS AND ATTITUDES:

Beliefs and attitudes are acquired by people determines their buying behaviour. A
belief is a descriptive thought that a person holds about something. Beliefs maybe based on
knowledge, opinion, or faith. They may or may not carry an emotional charge.
Manufacturers are very interested in the beliefs people carry in their heads about their
products and services.

FACTOR # 3. LEARNING:
When people act, they learn. Learning includes changes in an individual’s
behaviour arising from experience. Most human behaviour is learned or acquired. Learning
theorists that learning is produced through the interplay of drives, stimuli, cues, responses,
and reinforcement. A drive is a strong internal stimulus impelling action. Cues are minor
stimuli that determine when, where, and how a person responds.

FACTOR # 4. PERCEPTION:
A motivated person is ready to act. How the motivated person actually acts is
determined by his or her perception of the situation. Perception is the process by which an
individual selects, organises, and interprets information inputs to create a meaningful
picture of the world. Perception depends not only on the physical stimuli but also on the
stimuli’s relation to the surrounding field and on conditions within the individual.
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

BUYERS MOTIVE

Buying motive is the urge or motive to satisfy a desire or need that makes people
buy goods or services

.
CLASSIFICATION OF BUYING MOTIVE

PRODUCT BUYING MOTIVES:

Product buying motives refer to those influences and reasons, which prompt (i.e.
induce) a buyer to choose a particular product in preference to other products. They include
the physical attraction of the product (i.e. the design, shape, dimension, size, colour,
package, performance, price etc. of the product) or the psychological attraction of the
product (i.e. the enhancement of the social prestige or status of the purchaser through its
possession), desire to remove or reduce the danger or damage to life or body of the
possessor, etc. In short, they refer to all those characteristics of a product, which induce a
buyer to buy it in preference to other products.
Product buying motives may be sub-divided into two groups,
(1) emotional product buying motives
(2) rational product buying motives.
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

(1)EMOTIONAL PRODUCT BUYING MOTIVES:

When a buyer decides to purchase a product without thinking over the matter
logically and carefully (i.e., without much reasoning), she is said to have been influenced
by emotional product buying motives. Emotional product buying motives include the
following:

1. PRIDE OR PRESTIGE:
Pride is the most common and strongest emotional buying motive. Many buyers are
proud of possessing some product (i.e., they feel that the possession of the product increases
their social prestige or status). In fact, many products are sold by the sellers by appealing to
the pride prestige of the buyers.

2. EMULATION OR IMITATION:
Emulation, i.e., the desire to imitate others, is one of the important emotional
buying motives.

3. AFFECTION:
Affection or love for others is one of the stronger emotional buying motives
influencing the purchasing decisions of the buyers. Many goods are purchased by the
buyers because of their affection or love for others.

4. COMFORT OR DESIRE FOR COMFORT:

Desire for comfort (i.e., comfortable living) is one of the important emotional
buying motives.

5. SEX APPEAL OR SEXUAL ATTRACTIONS:

Sex appeal is one of the important emotional buying motives of the buyers. Buyers
buy and use certain things, as they want to be attractive to the members of the opposite sex.
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

Men and women buy cosmetics, costly dresses, etc., because of this
emotional motive, i.e., sex appeal.

6. AMBITION:
Ambition is one of the emotional buying motives. Ambition refers to the desire to
achieve a definite goal.

7. DESIRE FOR DISTINCTIVENESS OR INDIVIDUALITY:

Desire for distinctiveness, i.e., desire to be distinct from others, is one of the
important emotional buying motives. Sometimes, customers buy certain things, because
they want to be in possession of things, which are not possessed by others.

8. DESIRE FOR RECREATION OR PLEASURE:

Desire for recreation or pleasure is also one of the emotional buying motives. For
instance, radios, musical instruments, etc. are bought by people because of their desire for
recreation or pleasure.

9. HUNGER AND THIRST:

Hunger and thirst are also one of the important emotional buying motives.
Foodstuffs, drinks, etc. are bought by the people because of this motive.

10. HABIT:
Habit is one of the emotional considerations influencing the purchasing decision of the
customers. Many customers buy a particular thing because of habit.

(2) RATIONAL PRODUCT BUYING MOTIVES:

When a buyer decides to buy a certain thing after careful consideration (i.e. after
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

thinking over the matter consciously and logically), s/he is said to have been influenced by
rational product buying motives. Rational product buying motives include the following:

1. SAFETY OR SECURITY:
Desire for safety or security is an important rational buying motive influencing
many purchases.

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

3. RELATIVELY LOW PRICE:

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

4. SUITABILITY:
Suitability of the products for the needs is one of the rational buying motives.
Intelligent buyers consider the suitability of the products before buying them.

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

6. DURABILITY OF THE PRODUCT:

Durability of the product is one of the most important rational buying motives.
Many products are bought by the people only on the basis of their durability.
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

7. CONVENIENCE OF THE PRODUCT:

The convenience of the product (i.e. the convenience the product offers to the
buyers) is one of the important rational product buying motives. Many products are bought
by the people because they are more convenient to them.

PATRONAGE BUYING MOTIVES:

Patronage buying motives refer to those considerations or reasons, which prompt a
a buyer to buy the product wanted by him from a particular shop in preference to other
shops. In other words, they are those considerations or reasons, which make a buyer,
patronize a particular shop in preference to other shops while buying a product. Patronage
buying motives also may be sub-divided into two groups.
a) Emotional patronage buying motives
b) Rational patronage buying motives.

A. EMOTIONAL PATRONAGE BUYING MOTIVES:

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

1. APPEARANCE OF THE SHOP:

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

2. DISPLAY OF GOODS IN THE SHOP:

Attractive display of goods in the shop also makes the buyers patronise a particular
shop.
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

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

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

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

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

B. RATIONAL PATRONAGE BUYING MOTIVES:

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

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

2. LOW PRICE CHARGED BY THE SHOP:

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

3. CREDIT FACILITIES OFFERED:

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

prefer to make their purchases from a shop which offers credit facilities.

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

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

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

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

8. REPUTATION OF THE SHOP:

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

BUYERS ROLE

1. INITIATOR
First identifies the need to buy a particular product or service to solve an
organizational problem.
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

2. INFLUENCER
Their views influence the buying centre’s buyers and deciders. This is where the
children come into play, and place huge pressure on their parents, through the desire to
secure a toy and to gain acceptance and equality with their peers.

3. DECIDER
Ultimately approves all or any part of the entire buying decision, whether to buy,
what to buy, how to buy and where to buy. In our case, the first parent to succumb to the
child’s pressure.

4. BUYER
Holds the formal authority to select the supplier and to arrange terms of condition.

5. USER
Consumes or uses the product or service. Generally the whole family.

6. GATEKEEPER
Controls information or access (or both) to decision-makers and influencers. This is
where the government comes into action, or at present provides a lack of action. Equally
responsible is the Advertising Federations that take the government’s self-regulation
requirement and conveniently allow fast–food marketing to continue.

CONSUMER DECISION PROCESS (BUYER DECISION PROCESS)

The consumer decision process also called the buyer decision process, helps
markets identify how consumers complete the journey from knowing about a product to
making the purchase decision. Understanding the buyer buying process is essential for
marketing and sales. The consumer or buyer decision process will enable them to set a
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

marketing plan that convinces them to purchase the product or service for fulfilling the
buyer’s or consumer’s problem.
John Dewey introduced 5 stages which consumers go through when they are considering a
purchase:

1. PROBLEM OR NEED RECOGNITION

Need recognition of Problem Recognition is the first stage of the buyer decision
process. During need or problem recognition, the consumer recognizes a problem or need
satisfied by a product or service in the market. It starts with the basic need like air, water,
food and shelter. It may also start with a step ahead of basic need. The company should
understand the consumer need and focus on to satisfy it. In the need recognition, the
companies can find out the need of the consumer and creates marketing strategies. For
instance; a person is hungry then the food is its desire, but a good food may satisfy it. So,
the company should focus on to satisfy the need of consumer.

2. INFORMATION SEARCH
Information Search is a stage in the Consumer Decision Process during which a
consumer searches for internal or external information. Information search is considered the
second of five stages that comprise the Consumer Decision Process. During this stage, a
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

consumer who recognizes a specific problem or need will then likely be persuaded to search
for information, whether it be internally or externally. This is also when the customer aims
to seek the value in a prospective product or service. During this time, the options available
to the consumer are identified or further clarified.
Information search can be categorized as internal or external research:

1. Internal research refers to a consumer’s memory or recollection of a product,

oftentimes triggered or guided by personal experience. This is when a person tries to
search their memory to see whether they recall past experiences with a product, brand,
or service. If the product is considered a staple or something that is frequently
purchased, internal information search may be enough to trigger a purchase.

2. External research is conducted when a person has no prior knowledge about a product,
which then leads them to seek information from personal sources (e.g. word of mouth
from friends/family ) and/or public sources (e.g. online forums, consumer reports) or
marketer dominated sources (e.g. sales persons, advertising) especially when a person’s
previous experience is limited or deemed inefficient.

3. EVALUATION OF ALTERNATIVES
With the information in hand, the consumer proceeds to alternative evaluation,
during which the information is used to evaluate” brands in the choice set.
Evaluation of alternatives is the third stage of the buying process. Various points of
information collected from different sources are used in evaluating different alternatives
and their attractiveness.
While evaluating goods and services, different consumers use different bases.
Generally, the buyer evaluates the alternatives based on the product’s attributes, the degree
of importance, belief in the brand, satisfaction, etc. to choose correctly.
A marketer must know how the consumer processes information to arrive at brand
choices. Consumers do not always follow a simple and single evaluation process. Rather
several evaluation processes are in practice.
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

4. PURCHASE DECISION
At this stage of the buyer decision process, the consumer buys the product. After
the alternatives have been evaluated, consumers decide to purchase products and services.
They decide to buy the best brand. But their decision is influenced by others’ attitudes and
situational factors. Usually, the consumer will buy the most preferred brand.
But two factors might influence the purchase intention and the purchase decision. The first
factor is the attitudes of other people related to the consumer.
The second factor is unexpected situational factors. The consumer may form a
purchase intention based on factors such as expected price and expected product benefits.
However, unexpected events may alter the purchase intention. Thus, preferences and even
purchase intentions do not always lead to actual purchase choice.

5. POST-PURCHASE EVALUATION
In the buyer decision process’s final stage, post-purchase-purchase behavior, the
consumer takes action based on satisfaction or dissatisfaction.
In this stage, the consumer determines if they are satisfied or dissatisfied with the
purchasing outcome. Here is where cognitive dissonance occurs, “Did I make the right
decision.”
At this stage of the buyer decision process, consumers take further action after
purchase based on their satisfaction or dissatisfaction.
If the product falls short of expectations, the consumer is disappointed; if it meets
expectations, the consumer is satisfied; if it exceeds expectations, the consumer is
delighted.

ORGANIZATIONAL BUYING PROCESS

Organizational Buying Process Refer to the process through which any

organization goes through in order to make any purchase or buying decision.Every
Organization and Industry has to purchase various goods and services in order to keep their
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

business running. The behavior of an organization shown in buying goods or services is

called organizational buying behavior. The organizations buy goods or services for business
use, resale, produce other goods or provide services.
Any Organization go Through these 6 Stages In order to make a buying Decision:

1. PROBLEM/NEED RECOGNITION
Organization Buyer always Start with the problem recognition with identification
of demand for a particular product in the market. It can be a need of buying more inventory
like printer, bench or to solve a particular problem like under production by buying more
machine. Unlike Consumer need Recognition is not always a complex it can be routine
work. Problem Recognition is not always for solving a problem it can also be to grab an
opportunity in the market. In this organization see and identify the problem of their end
customers and also their consumption pattern.

2. PRODUCT SPECIFICATION
This Stage Involve Clearly Understanding the problem in hand and laying down all
the general characteristics of the product or service that might solve the given problem. For
any organization, it is necessary to estimate the exact quantity and the period in which
Product need to be delivered.

3.PRODUCT AND VENDOR SEARCH

In this stage, it's time to find the required product and the list of all the vendors available.
Organizations need to collect a lot of information from various resources such as Company
Files, Current supplier detail, Records, directories, Connections, Websites, Word of mouth
in order to get a list of suppliers.

4.PRODUCT AND VENDOR EVALUATION

In this step as we searched and made a list of all the available vendors and alternatives
available to us. Then we need to evaluate all those alternatives in order to select the most
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

appropriate among them.We will evaluate all the vendor available to us on various
parameter and basis such as:-

• Product quality
• Price
• warranty
• credit availability
• reliability
• value Analysis
• cost analysis
• Capability of Supplier
• Reputation of Supplier
• After-sale Service

The supplier will also be evaluated on the basis whether or not they can supply the requires
quantity of products and their after-sale service.

5. OUTLET SELECTION AND PURCHASE

This step involves the selection of the final product and the supplier based on the
information gathered during the Evaluation Process also in this stage we will finally select
our vendor.

6.POST PURCHASE EVALUATION

This is the last step of organization buying Process. This step involves the
evaluation of the performance of the supplier by the organization. The major part of the
post-purchase evaluation is the service of the supplier, quality of the product delivered,
delivery on time, customer response, After-sale service by the supplier, etc. The motive of
the step is to minimize the dissatisfaction and to encourage customers to tell us our mistakes
to make improvements.
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

BUYING CENTER
Webster and Wind call the decision-making unit of a buying organization the
buying center. It consists of “all those individuals and groups who participate in the
purchasing decision-making process, who share some common goals and the risks arising
from the decisions.” The buying center includes all members of the organization who play
any of seven roles in the purchase decision process.

1. Initiators—Users or others in the organization who request that something be purchased.

2. Users—Those who will use the product or service. In many cases, the users initiate the
buying proposal and
help define the product requirements.
3. Influencers—People who influence the buying decision, often by helping define
specifications and providing
information for evaluating alternatives. Technical people are particularly important
influencers.
4. Deciders—People who decide on product requirements or on suppliers.
5. Approvers—People who authorize the proposed actions of deciders or buyers.
6. Buyers—People who have formal authority to select the supplier and arrange the
purchase terms. Buyers may
help shape product specifications, but they play their major role in selecting vendors and
negotiating. In more
complex purchases, buyers might include high-level managers.
7. Gatekeepers—People who have the power to prevent sellers or information from
reaching members of the buying center. For example, purchasing agents, receptionists, and
telephone operators may prevent salespersons from contacting users or deciders
Several people can occupy a given role such as user or influencer, and one person may play
multiple roles. A purchasing manager, for example, is often buyer, influencer, and
gatekeeper simultaneously. She can decide which sales reps can call on other people in the
organization, what budget and other constraints to place on the purchase, and which firm
will actually get the business, even though others (deciders) might select two or more
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

potential vendors that can meet the company’s requirements.

A buying center typically has five or six members and sometimes dozens. Some
may be outside the organization, such as government officials, consultants, technical
advisors, and other members of the marketing channel.

TAPPING INTO GLOBAL MARKETS

The world has dramatically shrunk in recent years. Countries are increasingly
multicultural, and products and services developed in one country are finding enthusiastic
acceptance in others. A German businessman may wear an Italian suit to meet an English
friend at a Japanese restaurant, who later returns home to drink Russian vodka and watch a
U.S. movie on a Korean TV. Emerging markets that embrace capitalism and consumerism
are especially attractive targets. Some marketers are finding success both in developing and
developed markets. Consider the rapid ascent of Hyundai. Although the opportunities for
companies to enter and compete in foreign market are significant, the risks can also be high.
Companies selling in global industries, however, really have no choice but to
internationalize their operations.

COMPETING ON A GLOBAL BASIS

Some companies have long been successful global marketers—firms like Shell,
Bayer, and Toshiba have sold around the world for years. In luxury goods such as jewellery,
watches, and handbags, where the addressable market is relatively small, a global profile is
essential for firms like Prada, Gucci, and Louis Vuitton to profitably grow. But global
competition is intensifying in more product categories as new firms make their mark on the
international stage.
In China’s fast-moving mobile-phone market, Motorola found its once-promising
share drop to the point where it was only the eighth-ranked competitor behind a slew of new
entrants. To better understand the Chinese market, Starwood’s CEO and top management
team even temporarily relocated to Shanghai for five weeks in 2011. Sixty percent of guests
in their hotels in China were native Chinese, and the firm anticipated a wave of Chinese
travelers going abroad.
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

For a company of any size or any type to go global, it must make a series of decisions.
We’ll examine each of these decisions here.

DECIDING WHETHER TO GO ABROAD

Most companies would prefer to remain domestic if their domestic market were
large enough. Managers would not need to learn other languages and laws, deal with
volatile currencies, face political and legal uncertainties, or redesign their products to suit
different customer needs and expectations. Business would be easier and safer. Yet several
factors can draw companies into the international arena:
• Some international markets present better profit opportunities than the domestic
market.
• The company needs a larger customer base to achieve economies of scale.
• The company wants to reduce its dependence on any one market.
• The company decides to counterattack global competitors in their home markets.
• Customers are going abroad and require international service.
Before making a decision to go abroad, the company must also weigh several risks:
• The company might not understand foreign preferences and could fail to offer a
competitively attractive product.
• The company might not understand the foreign country’s business culture.
• The company might underestimate foreign regulations and incur unexpected costs.
• The company might lack managers with international experience.
• The foreign country might change its commercial laws, devalue its currency, or
undergo a political revolution and expropriate foreign property.

DECIDING WHICH MARKETS TO ENTER

In deciding to go abroad, the company needs to define its marketing objectives and
policies. What proportion of international to total sales will it seek? Most companies start
small when they venture abroad. Some plan to stay small; others have bigger plans.
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

●HOW MANY MARKETS TO ENTER

The company must decide how many countries to enter and how fast to expand.
Typical entry strategies are the waterfall approach, gradually entering countries in sequence,
and the sprinkler approach, entering many countries simultaneously. Increasingly, firms—
especially technology-intensive firms or online ventures—are born global and market to the
entire world from the outset.
The company must also choose the countries to enter based on the product and on
factors such as geography, income, population, and political climate. Competitive
considerations come into play too. It may make sense to go into markets where competitors
have already entered to force them to defend their market share as well as to learn from
them how they are marketing in that environment.

●EVALUATING POTENTIAL MARKETS

However much nations and regions integrate their trading policies and standards,
each market still has unique features. Readiness for different products and services and
attractiveness as a market depend on the market’s demographic, economic, sociocultural,
natural, technological, and political-legal environments.
How does a company choose among potential markets to enter? Many companies
prefer to sell to neighbouring countries because they understand them better and can control
their entry costs more effectively. It’s not surprising that the two largest U.S. export markets
are Canada and Mexico or that Swedish companies first sold to their Scandinavian
neighbours.

●SUCCEEDING IN DEVELOPING MARKETS

One of the sharpest distinctions in global marketing is between developed and
developing or emerging markets such as Brazil, Russia, India, China, and South Africa.
These five countries have formed an association dubbed “BRICS” (for Brazil, Russia, India,
China, and South Africa). Another developing market with much economic and marketing
significance is Indonesia. Some have begun grouping that country and South Africa with
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

Columbia, Vietnam, Egypt, and Turkey, dubbing them CIVETS to raise their profile. These
markets offer many opportunities but also many challenges

●MARKETING STRATEGIES FOR DEVELOPING MARKETS

Successfully entering developing markets requires a special set of skills and plans
and an ability to do a number of things differently and well. Consider how these companies
pioneered ways to serve “invisible” consumers in these markets:
• Grameenphone marketed cell phones to 35,000 villages in Bangladesh by hiring village
women as agents who leased phone time to other villagers, one call at a time.
• Colgate-Palmolive rolled into Indian villages with video vans that showed the benefits of
tooth brushing.
• Corporación GEO builds low-income housing in Mexico, featuring two-bedroom homes
that are modular and expandable.
These marketers capitalized on the potential of developing markets by changing
their conventional marketing practices. Selling in developing areas can’t be “business as
usual.” Economic and cultural differences abound, a marketing infrastructure may barely
exist, and local competition can be surprisingly stiff.

●DEVELOPING AND DEVELOPED MARKETS

Competition is also growing from companies based in developing markets. Wipro
of India, Cemex of Mexico, HTC from Taiwan, and Petronas of Malaysia have emerged
from developing markets to become strong multinationals selling in many countries. Often
the key is to both develop a global business model and build a global brand that will
effectively work in all the targeted markets.

DECIDING HOW TO ENTER THE MARKET

Once a company decides to target a particular country, it must choose the best
mode of entry with its brands. Its broad choices are indirect exporting, direct exporting,
licensing, joint ventures, and direct investment. Each succeeding strategy entails more
commitment, risk, control, and profit potential.
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

●INDIRECT AND DIRECT EXPORT

Companies typically start with export, specifically indirect exporting—that is, they
work through independent intermediaries. Domestic-based export merchants buy the
manufacturer’s products and then sell them abroad. Domestic-based export agents,
including trading companies, seek and negotiate foreign purchases for a commission.
Cooperative organizations conduct exporting activities for several producers—often of
primary products such as fruits or nuts—and are partly under their administrative control.
Export-management companies agree to manage a company’s export activities for a fee.
Indirect export has two advantages. First, there is less investment: The firm doesn’t have to
develop an export department, an overseas sales force, or a set of international contacts.
Second, there’s less risk: Because international marketing intermediaries bring know-how
and services to the relationship, the seller will make fewer mistakes.

●LICENSING
Licensing is a simple way to engage in international marketing. The licensor issues
a license to a foreign company to use a manufacturing process, trademark, patent, trade
secret, or other item of value for a fee or royalty. The licensor gains entry at little risk; the
licensee gains production expertise or a well-known product or brand name.

●JOINT VENTURES
Historically, foreign investors have often joined local investors in a joint venture
company in which they share ownership and control. To reach more geographic and
technological markets and to diversify its investments and risk, GE Capital—GE’s re-tail
lending arm—views joint ventures as one of its “most powerful strategic tools.” It has
formed joint ventures with financial institutions in South Korea, Spain, Turkey, and
elsewhere. Emerging markets, especially large, complex countries such as China and India,
see much joint venture action.
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

●DIRECT INVESTMENT
The ultimate form of foreign involvement is direct ownership: The foreign company can
buy part or full interest in a local company or build its own manufacturing or service
facilities. Cisco had no presence in India before 2005, but it has already opened a second
headquarters in Bangalore to take advantage of opportunities in India and other locations
such as Dubai.

●ACQUISITION
Rather than bringing their brands into certain countries, many companies choose to acquire
local brands for their brand portfolio. Strong local brands can tap into consumer sentiment
in a way international brands may find difficult.

DECIDING ON THE MARKETING PROGRAM:

International companies must decide how much to adapt their marketing strategy to
local conditions. At one extreme are companies that use a globally standardized marketing
mix worldwide. Standardization of the product, communication, and distribution channels
promises the lowest costs. At the other extreme is an adapted marketing mix, where the
producer adjusts the marketing program to each target market.

●GLOBAL SIMILARITIES AND DIFFERENCES

The vast penetration of the Internet, the spread of cable and satellite TV, and the
global linking of telecommunications networks have led to a convergence of lifestyles.
Increasingly shared needs and wants have created global markets for more standardized
products, particularly among the young middle class.
Consumer behavior may reflect cultural differences that can be pronounced across
countries. Hofstede identifies four cultural dimensions that differentiate countries:
1. Individualism versus collectivism—In collectivist societies, the self-worth of an
individual is rooted more in the social system than in individual achievement (high
collectivism: Japan; low: United States).
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

2. High versus low power distance—High power distance cultures tend to be less egalitarian
(high: Russia; low: Nordic countries).
3. Masculine versus feminine—This dimension measures how much the culture reflects
assertive characteristics more often attributed to males versus nurturing characteristics more
often attributed to females (highly masculine: Japan; low: Nordic countries).
4. Weak versus strong uncertainty avoidance—Uncertainty avoidance indicates how risk-
aversive people are (high avoidance: Greece; low: Jamaica).

●MARKETING ADAPTATION
Because of all these differences, most products require at least some adaptation.62
Even Coca-Cola is sweeter or less carbonated in certain countries. Rather than assuming it
can introduce its domestic product “as is” in another country, a company should review the
following elements and determine which add more revenue than cost if adapted:
• Product features
• Labelling
• Colours
• Materials
• Sales promotion
• Prices
• Advertising media
• Brand name
• Packaging
• Advertising execution
• Advertising themes
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

●GLOBAL PRODUCT STRATEGIES

Some type of products travel better across borders than others – food and beverages
marketers have to contend with widely varying tastes.

●GLOBAL COMMUNICATION STRATEGIES

Changing marketing communications for each local market is a process called
communication adaptation. If it adapts both the product and the communications, the
company engages in dual adaptation.

●GLOBAL PRICING STRATEGIES

Multinationals selling abroad must contend with price escalation and transfer prices
(and dumping charges). As part of those issues, two particularly thorny pricing problems are
gray markets and counterfeits.

Price Escalation:- A Gucci handbag may sell for $120 in Italy and $240 in the United
States. Why? Gucci must add the cost of transportation, tariffs, importer margin, wholesaler
margin, and retailer margin to its factory price. Price escalation from these added costs and
currency-fluctuation risk might require the price to be two to five times as high for the
manufacturer to earn the same profit.

Transfer Prices:- A different problem arises when one unit charges another unit in the
same company a transfer price for goods it ships to its foreign subsidiaries. If the company
charges a subsidiary too high a price, it may end up paying higher tariff duties, though it
may pay lower income taxes in the foreign country. If the company charges its subsidiary
too low a price, it can be accused of dumping, charging either less than its costs or less than
it charges at home in order to enter or win a market. Various governments are watching for
abuses and often force companies to charge the arm’s-length price-the price charged by
other competitors for the same or a similar product.
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

DECIDING ON THE MARKETING ORGANIZATION

Companies manage their international marketing activities in three ways: through
export departments, international divisions, or a global organization.

●Export Department: A firm normally goes into international marketing by simply

shipping out its goods. If its international sales expand, the company organizes an export
department consisting of a sales manager and a few assistants.

●International Division: Many companies become involved in several international

markets and ventures. Sooner or later they will create international divisions to handle all
their international activity. The international division is headed by a division president, who
sets goals and budgets and is responsible for the company’s international growth.

●Global Organization: Several firms have become truly global organizations. The global
operating units report directly to the chief executive or executive committee, not the head of
international division.
Bartlett and Ghosal have proposed circumstances under which different approaches work
best. They distinguish three organizational strategies:

1) A global strategy treats the world as a single market

2) A multinational strategy treats the world as a portfolio of national opportunities
3) A “glocal” strategy standardizes certain core elements and localizes other elements

WHAT IS STP MARKETING?

In a nutshell, the STP marketing model means you segment your market, target
select customer segments with marketing campaigns tailored to their preferences, and adjust
your positioning according to their desires and expectations.
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

SEGMENTATION
The first step of the STP marketing model is the segmentation stage. The main goal
here is to create various customer segments based on specific criteria and traits that you
choose. The four main types of audience segmentation include:

GEOGRAPHIC SEGMENTATION: Diving your audience based on country, region,

state, province, etc.

DEMOGRAPHIC SEGMENTATION: Dividing your audience based on age, gender,

education level, occupation, gender, etc.

BEHAVIOURAL SEGMENTATION: Dividing your audience based on how they interact

with your business: What they buy, how often they buy, what they browse, etc.

PSYCHOGRAPHIC SEGMENTATION: Dividing your audience based on “who” your

potential customer is: Lifestyle, hobbies, activities, opinions, etc.

TARGETING
Step two of the STP marketing model is targeting. Your main goal here is to look at
the segments you have created before and determine which of those segments are most
likely to generate desired conversions (depending on your marketing campaign, those can
range from product sales to micro conversions like email signups).
Your ideal segment is one that is actively growing, has high profitability, and has a low cost
of acquisition:

SIZE: Consider how large your segment is as well as its future growth potential.

PROFITABILITY: Consider which of your segments are willing to spend the most money
on your product or service. Determine the lifetime value of customers in each segment and
compare.
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

REACHABILITY: Consider how easy or difficult it will be for you to reach each segment
with your marketing efforts. Consider customer acquisition costs (CACs) for each segment.
Higher CAC means lower profitability.

There are limitless factors to consider when selecting an audience to target – we’ll get into a
few more later on – so be sure that everything you consider fits with your target customer
and their needs.

POSITIONING
The final step in this framework is positioning, which allows you to set your
product or services apart from the competition in the minds of your target audience. There
are a lot of businesses that do something similar to you, so you need to find what it is that
makes you stand out.
All the different factors that you considered in the first two steps should have made
it easy for you to identify your niche. There are three positioning factors that can help you
gain a competitive edge:

SYMBOLIC POSITIONING: Enhance the self-image, belongingness, or even ego of your

customers. The luxury car industry is a great example of this – they serve the same purpose
as any other car but they also boost their customer’s self-esteem and image.

FUNCTIONAL POSITIONING: Solve your customer’s problem and provide them with
genuine benefits.

EXPERIENTIAL POSITIONING: Focus on the emotional connection that your

customers have with your brand.

The most successful product positioning is a combination of all three factors. One way to
visualize this is by creating a perceptual map for your industry. Focus on what is important
for your target customers and see where you and your competitors land on the map.
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

COMPETITOR ANALYSIS
A competitive analysis is a strategy where you identify major competitors and research their
products, sales, and marketing strategies. By doing this, you can create solid business
strategies that improve upon your competitor's.
It also enables you to stay atop of industry trends and ensure your product is consistently
meeting and exceeding industry standards.

Let's dive into a few more benefits of conducting competitive analyses:

• Helps you identify your product's unique value proposition and what makes your product
different from competitors', which can inform future marketing efforts.

• Enables you to identify what your competitor is doing right. This information is critical
for staying relevant and ensuring both your product and your marketing campaigns are
outperforming industry standards.
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

• Tells you where your competitors are falling short — which helps you identify areas of
opportunities in the marketplace, and test out new, unique marketing strategies they
haven't taken advantage of.

• Learn through customer reviews what's missing in a competitor's product, and consider
how you might add features to your own product to meet those needs.

• Provides you with a benchmark against which you can measure your own growth.

COMPARATIVE MARKET STRATEGY:

Competitive Strategy is defined as the long-term plan of a particular company in
order to gain competitive advantage over its competitors in the industry. Such type of
strategies plays a very important role when industry is very competitive and consumers are
provided with almost similar products.

Types of competitive strategies

According to Michael Porter, competitive strategy is devised into 4 types:
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

1. COST LEADERSHIP
The objective of the firm is to become the lowest cost producer in the industry and
is achieved by producing in large scale which enables the firm to attain economies of scale.

2. DIFFERENTIATION LEADERSHIP
Under this strategy, firm maintains unique features of its products in the market
thus creating a differentiating factor. With this differentiation leadership, firms target to
achieve market leadership. And firms charge a premium price for the products (due to high
value-added features). Superior brand and quality, major distribution channels, consistent
promotional support etc. are the attributes of such products. E.g., BMW, Apple

3. COST FOCUS
Under this strategy, firm concentrates on specific market segments and keeps its
products low priced in those segments. Such strategy helps firm to satisfy sufficient
consumers and gain popularity. E.g., Sonata watches

4. DIFFERENTIATION FOCUS
Under this strategy, firm aims to differentiate itself from one or two competitors,
again in specific segments only. This type of differentiation is made to meet demands of
border customers who refrain from purchasing competitors’ products only due to missing of
small features. It is a clear niche marketing strategy. E.g., Titan watches

Examples of competitive strategy

There can be several examples based on the four parameters given by Michael Porter. Some
examples are given below:

1. COST LEADERSHIP: Micromax smart phones and mobile phones are giving good
quality products at an affordable price which contain all the features which a premium
phone like Apple or Samsung offers
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

2. DIFFERENTIATION LEADERSHIP: BMW offers cars which are different from other
car brands. BMW cars are more technologically advanced, have better features and have got
personalized services

3. COST FOCUS: Sonata watches are focused towards giving wrist watches at a low cost
as compared to competitors like Rolex, Titan, Omega etc

4. DIFFERENTIATION FOCUS: Titan watches concentrates on premium segment which

includes jewels in its watches.

MARKET LEADERSHIP STRATEGIES

Market leadership is not simple task. Other firms continually challenge the leader’s
strengths or try to take advantages of its weaknesses. The leader firm might become weaker
or old-fashioned against new entrants as well as existing rival firms. It firm can use one or a
combination of three strategies to retain its leadership

1. Expand the total market strategy:

Market leader firms can normally gain the maximum when the total market expands. The
focus of expanding the total market depends on where the product is in its life cycle.

2. Defending market share strategy:

When the leader tries to expand the total market size, it must also continuously defend its
current business against enemy attacks. For example, Coca-Cola must constantly maintain
its guard against Pepsi-Cola. Similarly, Hero Honda should constantly maintain its guard
against Bajaj, Honda, Suzuki and TVS in the two-wheeler market.

3. Expanding the market share strategy:

Market leaders can improve their profitability by increasing their market shares, like HUL,
Procter and Gamble, McDonald’s and Titan. In conclusion, market leaders who stay on top
have learned the art of expanding the total market, defending their current territory, and
increasing their market share and profitability
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

MARKETING CHALLENGES:
Diversity and Convergence: This diversity is created by the demography, tech-
savvy versus non-tech-savvy behaviour, regional disparities, religion, and ethnicity. But
there is also a convergence among all segments of the market on account of new
consumption values.

Catering to the Affluent: There is now a growing segment of affluent customers.

Luxury goes beyond the materialistic aspect; it is emotional and also experiential. Catering
to this segment requires creating an aspirational, emotional, and experiential platform. New
symbols of affluence today are common in any city and its shopping areas. Exhibitionism of
wealth is rampant through indulgence in platinum and diamond jewellery, diamond studded
watches, Mont Blanc pens, other accessories, etc. Each of these is marketed through
aspirational and experiential marketing plans

Poor Markets Also Need Marketing: the poor customer is also a very important
market segment which today no marketer can ignore. The poor customer does not exist in
rural areas alone. There are the urban poor as well. Hence, while evolving a marketing plan,
one should not ignore urban poverty. The challenge therefore lies in not only adapting
marketing programmes to this segment but also in innovating for this market.

Consumer Communities: Increasingly, one can witness citizen groups coming

together to raise their voice on social issues like rape, corruption, child abuse, etc.
Technology, today, is one of the biggest facilitators in the growth of consumer communities.
Social networks like Facebook, LinkedIn, Twitter, blogs, text messages, and WhatsApp are
some of the technology tools which are being used not just to communicate but also to bring
flash mobs on the streets. This is not just restricted to metro cities. Many firms and brands
use these media to connect with these, primarily young, communities

Need for Innovation: Innovation is no longer now an optional aspect for firms in the
market. It is critical for companies to innovate for survival and growth. Large emerging
markets like India present challenges which require both incremental and breakthrough
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

innovations. In order to pursue innovative paths, firms need to develop consumer insights.
For this, it is important to study not just the consumption of existing products or services
but also consider non-consumers and the reasons for their non-consumption.

FOLLOWERS AND NICHERS CUSTOMERS RELATIONSHIP

MANAGEMENT:
Customer relationship management refers to the art of managing good customer
relationships and prospective customers. It is all about understanding who is our customers
and What are the potential of the customers, and nurturing the relationships we have with
them. It is about identifying client expectations and how we meet or go beyond their
expectations. Customer relationship management model can be further categorized into
below stages

Awareness – It is the first touchpoint where prospects try to know more about our brand
as a whole.

Discovery – Then we learn and identify the needs of the prospects and share information
to fulfil their requirements.

Evaluation – Moving ahead the prospects compare and evaluate our products/services
with our competitors.

Intent – Finally our prospect is convinced and made a decision of buying from us.
Purchase – After making the payment the deal is done and the prospect converts into our
customer.

Loyalty – Make a follow-up after purchase to determine customer success with our
product and ask for referrals.
Customers are the heartbeat of all businesses. Therefore, creating good customer
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

engagement examples by strengthening relationships with clients is crucial for business

success. Through good and bad times, maintaining a healthy customer relationship with all
your customers will help in sustaining the performance of your business.

LOYALTY PROGRAM
Loyalty program is a program or system made by companies to give additional benefits to
loyal customers. A loyalty program is a tool or strategy adopted to retain good customers by
giving them additional benefits like goodies, cashback, vouchers etc. This helps companies
build a strong repeat consumer base.

Customer s loyalty program examples

• Paid programs (DoorDash)
• Subscription programs (Dirty Lemon)
• Community programs (Sephora)
• Gaming program (Starbucks)

TYPES OF LOYALTY PROGRAMS

MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

engagement examples by strengthening relationships with clients is crucial for business

success. Through good and bad times, maintaining a healthy customer relationship with all
your customers will help in sustaining the performance of your business.

LOYALTY PROGRAM
Loyalty program is a program or system made by companies to give additional benefits to
loyal customers. A loyalty program is a tool or strategy adopted to retain good customers by
giving them additional benefits like goodies, cashback, vouchers etc. This helps companies
build a strong repeat consumer base.

Customer s loyalty program examples

• Paid programs (DoorDash)
• Subscription programs (Dirty Lemon)
• Community programs (Sephora)
• Gaming program (Starbucks)

TYPES OF LOYALTY PROGRAMS

1.Discount-This type of a loyalty program gives discounts to regular customers on the price
which is being offered
2.Points System- This loyalty program encourages more shopping. The more a customer
shops or buys, the more points he or she will get, and which can be redeemed in the next
purchases.
3.Cashback- Cashback loyalty program is mostly for credit card or online shopping
customers, who are given cashback based on their purchases.
4.Club Cards or Programs- . Club card loyalty program gives free services or goodies or
better incentives to customers.
5.Partnerships- Companies partner with other brands and offer loyalty program which
benefits both partners.
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

BENEFITS OF A LOYALTY PROGRAM

1. A loyalty program helps in retaining good customers.
2. It helps to reduce unwanted customers.
3. A good brand loyalty program helps in creating more brand awareness.
4. A good customer database is collected over a period of time based on customer loyalties
& needs.
5. Repeat customers help in driving the repeat business.

DISADVANTAGES OF LOYALTY PROGRAMS

1. Every loyalty program is a cost to the company in terms of discounts, cashback etc.
3. Difficult to manipulate or control consumer behavior despite having the best loyalty
programs.
4. Loyalty programs never ensure that a customer would not end up switching brands.

CUSTOMER LIFETIME VALUE

Customer lifetime value (CLV) describes the net present value of the stream of future
profits expected over the customer’s lifetime purchases. The company must subtract from
its expected revenues the expected costs of attracting, selling, and servicing the account of
that customer. The lifetime value of a customer, or customer lifetime value (CLV),
represents the total amount of money a customer is expected to spend in your business, or
on your products, during their lifetime.
CLV = Average Purchase Value x Average Purchase Frequency Rate x Average
Customer lifespan
Customer Lifetime Value examples
Calculate the Average Purchase Frequency Rate
To calculate this number, you need to know how many visits the average customer
makes to one of their locations within a week. The average observed across the 5 customers
in the report was found to be 4.2 visits. That makes the Average Purchase Frequency Rate
4.2
MARKETING | BUYER BEHAVIOUR & MARKETING ECOSYSTEM

Calculate Customer Value

The Average Customer Value of Starbucks was reported to be $24.30.To calculate this, you
need to look at 5 customers individually, then multiply their Average Purchase Value by
their Average Purchase Frequency Rate. This allows you to know much revenue the
customer is worth to Starbucks within a week. You repeat this calculation for all 5
customers and get the result of $24.30.
 MODULE: 3

Product

A product is any offering by an organization to satisfy the needs and wants of customers.
Product may include goods, services, information, and ideas. An organization needs to take
several crucial decisions regarding the product it produces.

Concept of Product

Product refers to a goods or service that satisfies the needs and wants of customers.
It is offered in the market by an organization to earn revenue by meeting the requirements of
customers. Product is an asset of an organization and referred as the backbone of marketing mix.

According to Peter Drucker, “Suppliers and especially manufacturers have market

power because they have information about a product or a service that the customer does not and
cannot have, and does not need if he can trust the brand. This explains the profitability of
brands.”

Goods and Services Continuum

The division of consumables into services is a simplification: these are not discrete
categories. Most business theorists see a continuum with pure service at one endpoint and pure
tangible commodity goods at the other. Most products fall between these two extremes. For
example, a restaurant provides a physical good (prepared food), but also provides services in the
form of ambience, the setting and clearing of the table, etc. Although some utilities, such as
electricity and communications service providers, exclusively provide services, other utilities
deliver physical goods, such as water utilities. For public sector contracting purposes, electricity
supply is defined among goods rather than services in the European Union, whereas under
United States federal procurement regulations it is treated as a service.
Levels of Product
The needs of customers vary according to their economic conditions and social situations.

Different Product Levels

o Core Product: Includes the key feature of a product. It forms the basis for other product
offering levels. For example, the key feature of a car is to travel from one place to
another. Therefore, a simple and small car with no additional features is a core product.
o Basic Product: Includes some added benefits along with the basic feature of a product.
For example, a clean and spacious car is the basic product.
o Expected Product: Refers to a product that is desired by customers. It varies from
individual to individual depending on other factors, such as social class. For example, a
customer buying a car may expect an air conditioner and music system in it.
o Augmented Product: Includes additional attributes of a product as compared to products
offered by competitors. The additional benefits satisfy rational customers more in terms
 of value. For example, a car may have special in-built features, such as LCD TV or
refrigerator.
o Potential Product: Compares the benefit derived from the product in future with the
current product. It creates a value for customers beyond their expectations. For example,
a high technology gadget car with good ambience and comfort is a potential product.

Product Classification

A product can be classified on the basis of its tangibility, durability, and usage. The
classification of a product affects the pricing, place, promotion, and distribution policies of an
organization.

Classification of Product

1) Tangibility: Divides products into two types, which are mentioned as follows;

 Tangible Products: Refer to the products that can be touched and felt. For example,
bottle, brush, bed, and mug.
  Intangible Products: Refer to the products that can only be felt but cannot be
touched. For example, insurance and medical treatments are the services that can only
be felt but cannot be touched.
2) Consumer-based Products: Refer to the products that are consumed by customers and not
resold in the market. Consumer-based products are divided into three different types of
products, which are as follows;
 Specialty Products: Attract the attention of some specific consumers based on their
interest, hobbies, profession, or tastes. When a customer has a specific need then he/
she is satisfied only with a specific product. In this case, the customer does not
compromise and make more efforts to find the specific product. For example, if an
individual wants Canon camera of 15 megapixels with Electro-Optical System (EOS)
technology then he/ she will not purchase any substitute product.
 Unsought Products: Refer to the products that are not well known in the market. The
customers are highly skeptical of buying those products. For example, earlier, few
customers were aware about LED TV in India. Now, the organizations aggressively
market this product by appointing various famous Bollywood celebrities as their
brand ambassadors.
 Shopping Products: Represent the products that are bought by the customers after a
precise study of products’ merits and demerits, prices, and packaging. For example,
before buying a washing machine, a customer will research through different shops,
neighbours, and resources. After research, he/ she will buy the best suitable washing
machine out of available options.
3) Industry-based Products: Refer to the products that satisfy the requirements of a particular
industry. These are the products or materials required by the industry to process and deliver
finished products to its customers. These are further classified as follows:
 Raw Materials: Refer to the materials that are used in the manufacturing of a
product. For example, timber, iron ore, gold, and tobacco are used to manufacture
furniture, building, jewellery, and cigarette, respectively.
 Capital Products: Include the products that facilitate the processing and production
of different products. This type of product requires huge infrastructure and after sales
services. For example, forklifts are used by organizations to carry raw materials.
  Maintenance and Repair Supplies: Refer to the products that are required to
process and produce a finished product. For example, lubricants and tools are
essential for the maintenance and repair of various industrial equipment.
4) Durability: Refers to the life span of a product. The durable products provide benefits for a
longer period of time. On the other hand, nondurable products are purchased for immediate
consumption. For example, eatables or beverages are nondurable products; whereas,
refrigerators, televisions, or clothes are durable products.

Production Decisions

In decisions on producing or providing products and services in the

international market it is essential that the production of the product or service is well planned
and coordinated, both within and with other functional area of the firm, particularly marketing.
For example, in horticulture, it is essential that any supplier or any of his "out grower" (sub-
contractor) can supply what he says he can. This is especially vital when contracts for supply are
finalized, as failure to supply could incur large penalties. The main elements to consider are the
production process itself, specifications, culture, the physical product, packaging, labeling,
branding, warranty and service.

Product Line Analysis

Product line includes the list of some specific products with similar attributes
and functions. An organization classifies its different product offerings on the basis of specific
preferences of customers. Product line analysis helps an organization to produce and strategically
position similar products. Generally, an organization offers different product lines and conducts
market research for its each product line.

The four major decisions that are included in the product line analysis are as follows:

o Build: Refers to creating a product line. It requires huge investment from the
organization to introduce a product line
o Maintain: Refers to balancing and managing the product line in the competitive market
o Harvest: Refers to reaping the benefits derived from the product line
 o Divest: Refers to a situation when an organization disposes off its non-profitable product
line before profit turns into loss. It is very important for an organization to find out the
return on investment from different product lines. This can be done with the help of sales
and profit analysis of different product lines of an organization.

Example: Let us demonstrate the sales and profit analysis of ABC Limited by understanding its
different product lines.

As shown in Figure; we can see that ABC Steel Limited is the most
profitable product line of ABC Limited. ABC Limited can focus on its other product lines where
profit is not good in comparison to sales. ABC Motors Limited needs strategic planning to
increase its profit percentage.

Product Mix Analysis

The combination of product lines of an organization is called product mix or

product assortment. Product mix is a set of similar or non-similar products produced by an
organization. There can be one or more product lines in a product mix. The product mix of an
organization has four elements;

Following are the elements of a product mix;

 o Width: Refers to the total number of product lines in an organization. In Figure-4, food,
home care, personal care, water, nutrition, and beauty products are the six product lines
that are collectively called width of product mix.
o Length: Refers to the total number of items available in a product mix. In Figure-4, the
length of the product mix of Hindustan Unilever Limited is 34.
o Depth: Refers to the total number of items in a product line. In Figure-4, the product line
of personal care has the depth of 13 items.
o Consistency: Measures the extent to which product lines of an organization are related
with each other. For example, if an organization produces shampoos, oil, conditioners,
and other hair care products then it maintains consistency in its product lines.

Example: Hindustan Unilever Limited

Product Life Cycle
Products, like people, have a life cycle. They are born, grow, mature and finally
decline and die. The innovation of a new product and its degeneration into a common product is
termed as the life cycle of a product.
The product life cycle (PLC) identifies and explains the stages that a product may
go through from the moment it is launched on to the market to the moment it is withdrawn.
Knowledge of the PLC can help identify important marketing environmental factors that
managers should be aware of before they decide upon the most effective marketing effort.

Product Life Cycle Strategies

1. Strategies during Product Development Stage:

 Focus is on product
 Emphasis is on cost reduction Trials are the main tools
 Exploring of the market starts
 Publicity of the product (about its coming)
 Minimum expenses to be maintained during this period
 Production capacity must be looked after
 Quality must be checked
 Focus on work is to be given
 A good introducer of the product is required
 In-house working should be emphasized.
2. Strategies during Introduction Stage:
 Persuade people to try the products.
 Stress should be on advertising to inform the customer about the product
 Give introductory offers by providing some attractive gifts to entice the customers.
 Give a valid reason to the customers to buy the product
 Dealers should be given good discounts
 There should be selective distribution to focus on target customers
 Skimming pricing should be followed to earn higher profits in the initial stages
 Removing the product deficiencies must be focused on
3. Strategies during Growth Stage:
 Aggressive advertising is required to stimulate the sales of the product
 Availability of the product should be ensured to a large number of customers
 Modifications or new versions of the product are required to be introduced to fulfill
the requirement of different customer classes. Strengthening of the distribution
channels are required so that the product is easily available wherever required.
 Focus should be on developing the brand image through promotional activities
 Competitive prices must be maintained to grab the market.
 Activities should be customer oriented; an emphasis should be given on customer
services to satisfy them to a maximum level.
4. Strategies during Maturity Stage:
 More and more emphasis is required on the brand image in order to differentiate the
product from products of the competitors.
 More benefits may be provided to the customers e.g. extending the warranty period,
guarantee period etc.
 Change in packaging may be introduced (Reusable packaging).
 Packaging may be used as a silent salesman by making it more attractive.
 Requirement to explore the new markets for the product.
 New uses of the product may be developed.
 New users of the product may be developed.
 New Technology can be adopted to enhance the quality of the product.
 New features can be added to enhance the value of the product.
5. Strategies during Decline Stage:
 More emphasis on the promotional schemes
 Distribution cost should be reduced and the benefit should be transferred to the
customers
 More value addition to the product can be done.
 Packaging will play a very important role at this stage also, so it should be focused
on.
 Cost of production should also be reduced.
  Economy packs of the products should be introduced.
 Try to increase the life of the stage
 Emphasis is on sales volume with minimum profit margins.
Brand

A brand is a product, service, or concept that is publicly distinguished from other

products, services, or concepts so that it can be easily communicated and usually marketed.
A brand name is the name of the distinctive product, service, or concept. Branding is the process
of creating and disseminating the brand name.

Definition of Brand
Branding is the name, design, type, symbol or any other features which tend to
distinguish a tangible product or intangible product, service or concept from that of its
competitors in the eyes of customers. With time, the image of the product, service or concept is
associated with a certain level of quality, credibility and satisfaction for the customers.
Brand Concepts

 Brand Name: It is that name which is given by the manufacturer or maker of the product

or a range of products. A brand name is most often trademarks.

 Brand Attribute: This includes brand characteristics and its core values. Brand attributes

include consistency, credibility, sustainable, relevancy and appealing.

 Brand Positioning: This involves determining where the brand is standing in the

competitive market. Positioning is that unique or distinctive position that the brand holds
in the market or in the mind of consumers.
 Brand Identity: This is the way in which any business perceives its brand. This is

basically the image of the brand from the point of view of its maker and how the maker
wants it to be perceived by consumers.
 Brand Image: It is the perception of customers about a particular brand. It is basically

how consumers perceive the brand.

 Brand Personality: Brands also have the characteristic to speak and behave with

customers. Brand personality can be associated with human personality traits such as the
brand of being caring, luxurious, and honest, etc.
  Brand Awareness: This refers to the degree to which customers are familiar with a

particular brand.
 Brand Loyalty: This refers to the tendency of a particular group of customers who will

continue buying the particular brand instead of other similar brands in the market.
 Brand Association: Brand association is a link which a customer creates in his mind

about the brand. This link should be positive so that the brand is perceived as positive.
 Brand Equity: This is the impact a brand can impose over the purchasing decision of a

customer. It is a set of brand assets and liabilities which can either add or subtract from
the brand value.
 Brand Extension: This type of branding strategies basically uses a well-established

brand name for launching a new product or new product category.

 Co-Branding: This is amongst brand management strategies which make use of

multiple brand names of a product or service as a part of a strategic alliance.

 Sonic Branding: This refers to the use of sound in advertising a particular product or

service. The underlying concept is that when a customer hears that sound, they will think
of that particular product.
Marketing of Services

Services marketing typically refers to both business-to-consumer (B2C)

and Business-to-Business (B2B) services, and includes marketing of services such
as telecommunication services, financial services, all types of hospitality, tourism, leisure and
entertainment services, car rental services, health care services and professional servicesand
trade services.

Extended Marketing mix for services

The services marketing mix is an extension of the 4Ps framework. The essential
elements of product, promotion, price and place remain but three additional elements – people,
physical evidence and process are included to the 7Ps mix. The need for the extension is due to
the high degree of direct contact between service providers and its customers, the highly visible
nature of the service process, and the simultaneity of the production and consumption.
 Product: In the case of services, the “product” is intangible, heterogeneous and perishable.
Moreover, its production and consumption are inseparable. Hence, there is scope for
customizing the offering as per customer requirements, and the actual customer encounter
therefore assumes particular significance. However, too much customization would
compromise the standard delivery of the service and adversely affect its quality. Therefore,
particular care has to be taken in designing the service offering.
 Pricing: Pricing of services is tougher than pricing of goods. While the latter can be priced
easily by taking into account the raw material costs, in the case of services there are
attendant costs–such as labour and overhead costs–that also need to be factored in.

E.g.: A restaurant not only has to charge for the cost of the food served but also has to
calculate a price for the ambiance provided.

 Place: Since service delivery is concurrent with its production and cannot be stored or
transported, the location of the service product assumes importance. Service providers have
to give special thought as to where the service is provided. A fine dining restaurant is better
located in a busy, upscale market as opposed to the outskirts of a city. A holiday resort is
better situated in the countryside away from the rush and noise of a city.
 Promotion: Since a service offering can be easily replicated, promotion becomes crucial in
differentiating a service offering in the mind of the consumer. Service providers offering
identical services such as airlines or banks and insurance companies invest heavily in
advertising their services. This is crucial in attracting customers in a segment where the
services providers have nearly identical offerings.
 People: People are a defining factor in a service delivery process, since a service is
inseparable from the person providing it. A restaurant is known as much for its food as for
the service provided by its staff. The same is true of banks and department stores.
Consequently, customer service training for staff has become a top priority for many
organizations today.
 Process: The process of service delivery is crucial since it ensures that the same standard of
service is repeatedly delivered to the customers. Most companies have a service blue print
which provides the details of the service delivery process, often going down to even
defining the service script and the greeting phrases to be used by the service staff.
PRODUCT PACKAGING

Packaging means the wrapping or bottling of products to make them safe

from damages during transportation and storage. It keeps a product safe and marketable and
helps in identifying, describing, and promoting the product. Different kinds of products need
different kinds of packaging, for example, liquid products are packed in barrels and bottles;
whereas, solid products are wrapped. The organizations use special containers for fragile
products, such as glassware.

Functions of Product Packaging

o Protection from damage: Refers to the protection of products from getting affected
during their transportation and storage.
o Prevention from evaporation: Refers to liquid products that evaporate under the
sunlight and need a special kind of packaging.
o Protection against spoilage: Refers to the protection of those products that are spoiled in
contact with dust, water, and insects.
o Protection against leakage: Implies that liquid products should be kept in containers to
avoid leakage.
o Convenience of customers: Makes products convenient to use by the customers.
Following are the various kinds of product packaging:
o Consumer Packaging: Refers to the kind of packaging that fulfills the requirements of
household consumption with the right volume of product. For example, gas cylinder, ink,
oil, and tooth paste.
o Family Packaging: Refers to the identical packaging of all the products of an
organization. It has some strong elements common to each product package of the
organization. The shape, size, color, or appearance of the products can be similar. For
example, Asian Paints packages all its products in a similar way that gives a sense of
belongingness of a same family.
o Reuse Packaging: Refers to the packaging that can be reused after the consumption of
products. For example, glass jar packages can be used after the consumption of the
product.
 o Multi-packaging: Refers to the packaging in which an organization puts more than one
product. Johnson’s baby care set is an example of multi-packaging.

Product Labeling

Label is a small tag placed or attached to a product to identify the product. It is a

part of packaging and includes brand name, weight, directions of use, ingredients, and nutritional
information about the product. It carries information about the product and plays an important
role in product branding and packaging.

Kinds of Brand Label

 Brand Labels: Refer to the labels that are mainly used by cosmetic manufacturers to
popularize their brands. For example, Revlon and L’Oreal.
 Grade Labels: Provides information about the quality of products. For example,
electronic appliances, such as televisions and refrigerators, have star ratings that
denote their quality. A four-star rated electronic appliance would be better than a
three-star rated appliance.
 Descriptive Labels: Give detailed information about the product. For example, dairy
items and repellents.
 Informative Labels: Describe the main objectives of the product. They include
instructions to use the product. For example, medicines and hair dye. Product labeling
is very useful for organizations and customers.

Advantages of Product Labeling

 Helps customers to know about the ingredients and characteristics of the product
 Maintains consistency in the price of the product in different geographical areas
 Makes the product popular among customers
 Provides assistance to customers to assess the quality of the product

Limitations of Product Labeling

 Serves only literate customers

 Makes the product expensive
  Makes no effect if the product is customized
 Gives inadequate information about the product

WARRANTIES

All sellers are legally responsible for fulfilling a buyer’s normal or reasonable
expectations. Warranties are formal statements of expected product performance by the
manufacturer. Products under warranty can be returned to the manufacturer or designated repair
center for repair, replacement, or refund. Whether expressed or implied, warranties are legally
enforceable.
Example: A company such as Procter & Gamble promises general or complete satisfaction
without being more specific—”If you are not satisfied for any reason, return for replacement,
exchange, or refund.” A. T. Cross guarantees its Cross pens and pencils for life. The customer
mails the pen to A. T. Cross (mailers are provided at stores), and the pen is repaired or replaced
at no charge.

GUARANTEES

Guarantee is a step ahead of warranty wherein the company is so confident of

their product, that they offer repair or replacement of the product. In short, if there is any
problem in the product, the company will first try to repair the product and then if not repaired, it
will offer free replacement. Guarantees reduce the buyer’s perceived risk. They suggest that the
product is of high quality and the company and its service performance are dependable. They can
be especially helpful when the company or product is not well known or when the product’s
quality is superior to that of competitors.

Example: Hyundai’s and KIA’s highly successful 10-year or 100,000 mile power train warranty
programs were designed in part to assure potential buyers of the quality of the products and the
companies’ stability.

New Market Offerings

New Market Offerings is a process through which development of new core

products or services takes place in order to augment them for building market offerings, and
bringing them to market. In the present globalization era, the rapid product development
strategies are being adopted for winning the competitive advantage as well as the first mover
advantage. However, the core of these strategies is the market orientation concept that is
incorporating the customers’ needs and wants in the new market offerings.

Market offerings are some combination of products, services, information, or

experiences offered to a market to satisfy consumer needs or wants. Market offerings are not just
limited to physical products; they can also include services such as intangible like activities or
benefits offered for sale, but have no ownership.

Types of New Products

 New-to-the-world Products (really new Products): The alternative expression for new-
to-the-world products (really new products) already indicates that this is what most
people would define as a new product. These products are inventions that create a whole
new market. Examples: Polaroid camera, the iPod and iPad, the laser printer and so on.
 New-to-the-firm Products (new Product Lines): Products that take a firm into a category
new to it. The products are not new to the world, but are new to the firm. The new
product line raises the issue of the imitation product: a “me-too”.

Eg: P&G’s first shampoo or coffee, Hallmark gift items, AT&T’s Universal credit card and
so on.

 Additions to existing Product Lines: These are simple line extensions, designed to flesh
out the product line as offered to the firm’s current markets. Examples: P&G’s Tide
Liquid detergent, Bud Light, Special K line extensions (drinks, snack bars, and cereals).
 Improvements and Revisions to existing Products: Current products made better.
Examples: P&G’s Ivory Soap and Tide power laundry detergent have been revised
numerous times throughout their history, and there are countless other examples.
 Repositioning: Repositioning are products that are retargeted for a new use or
application. Examples: Arm & Hammer baking soda repositioned as a drain or
refrigerator deodorant; aspirin repositioned as a safeguard against heart attacks. Also
 includes products retargeted to new users or new target markets. Marlboro cigarettes
were repositioned from a woman’s cigarette to a man’s cigarette years ago.
 Cost Reductions: Finally, cost reductions complete the six categories of new products.
Cost reductions refer to new products that simply replace existing products in the line,
providing the customer similar performance but at a lower cost. May be more of a “new
product” in terms of design or production than marketing.

New Product Development Stages

There are seven stages in the new product development process, which cover everything from
brainstorming to launch.

Stage 1: Idea Generation

During the first stage, our goal is to brainstorm ideas for a product, focusing on
solving our customers’ problems. Create buyer personas, perform research, and dig deep into
their issues. We can use as many sources of information as we need, not just our customers.
Speak to our suppliers, distributors, competitors, and employee contributions. We don’t want to
limit our ideas in any way in stage 1. Instead, create a list of ideas while trying to focus on
creating value for our customers.

Stage 2: Idea Screening

One of the key benefits of the new product development process is being able to sift
through all our ideas and pick one with the greatest chance of success. The first stage exists
solely to generate ideas without any kind of filter. Now is the time to start reducing our ideas. To
ensure our idea is feasible, perform a proof of concept check, plus consult as many people
internally as we can, checking different aspects such as the technical side of things, cost of
production and resources, and marketability. Listen to our engineers, designers, and marketers
very closely.

Don’t forget to check if a similar product already exists or is under development

by a competitor. Do we have any significant advantage over it? If it’s not unique in any way, we
may need to drop it from the list of approved ideas unless we can convince our customers that
ours is the superior product.

Stage 3: Concept Development and Testing

After narrowing down our ideas, we will really put them to the test by
developing our concept and testing it during this stage. Concept Development: The difference
between screening a new idea and developing it into a concept is vital. Only after creating
alternative concepts for the idea can we evaluate its attractiveness to customers. Our concepts
should be as precise as possible to provide meaning and be properly tested. Creating vague or
general concepts won’t allow us to test the validity of your idea correctly.

Concept Testing: Once we have developed our concepts, test them by presenting it to a select
group of consumers. Does our concept have a strong enough appeal? We can tweak our concept
until we find success, but don’t be afraid to throw out any concepts which fail to grasp our
consumers’ attention and provide value.

Stage 4: Market Strategy and Business Analysis

After completing the concept development and testing stage, it’s time to design a
marketing strategy and analyze our product’s attractiveness from a business perspective.

Marketing Strategy: Layout how we are going to market your product and reach your target
audience. We will need to define our value proposition, outline our planned selling price, and
include our marketing budget for the business analysis.
Business Analysis: Performing an in-depth business analysis will help us to decide whether our
new product idea is worth the financial investment and resources we need to dedicate to it.
During this analysis, we need to outline the total sales forecast, estimated costs, profit
projections, and define our overall objective. Sometimes our business goal may be to penetrate
the market, not necessarily achieve a positive ROI.

The bottom line to answer here is: will our new product be financially attractive or meet your
business goal?

Stage 5: Product Development

By now, we finalized an idea, created a marketing strategy, and performed a

thorough business analysis. Which means it’s time for our product to kick-start our product
development cycle, the outcome being a finished, marketable product. The new product
development process doesn’t define how to actually develop the product. That depends on our
company’s preference for development. Our designers, engineers, and developers will need to
work together to create the finished product, which can take anywhere from days to years,
depending on our product and the resources available.

Stage 6: Test Marketing

Testing is a critical stage which we need to complete before

commercialization. Here, we will be challenging our product’s validity and our marketing
strategy using alpha and beta testing.

o Alpha testing is when our product is delivered to test engineers who evaluate its
performance in-case of any issues which need to be addressed.
o Beta testing is when real groups of consumers receive our product to give their
feedback. To get the most out of beta testing, be open to every single comment, and try
not to get emotionally attached to our product in any way.

Stage 7: Commercialization

After the testing stage, we will know whether we are ready to launch or
return to an earlier stage. The commercialization phase means we are prepared to launch our new
product into the market, and it means more than just advertising. We will need to ensure that our
production, distribution, marketing, sales, and customer support team are all in place to ensure a
successful launch and ongoing campaign.

Examples of the new product development process

Firstly, using electric cars to see how the new product development strategy can
help us. In this scenario, let’s imagine rechargeable vehicles don’t exist yet, and we are
responsible for each of the new product development stages.

Example 1: Electrifying

Stage 1; Idea Generation: We come up with the idea to create the world’s first electric car,
which adds value to our customers by saving money on fuel and helping the environment.

Stage 2; Screening: This idea passes our proof of concept check, and our designers and
engineers agree it can be done.

Stage 3; Concept Development and Testing: We develop a specific concept. Our electric
vehicle will be targeting families. It will be reasonably priced and won’t be a sports or SUV
vehicle. We go on to test our concept’s appeal and find it strongly resonates with people looking
for an alternative to oil-powered cars—both for its cost-savings and environmental friendliness.

Stage 4; Marketing Strategy & Business Analysis: Thanks to our concept development and
testing, we know how to market our new product, create a business objective, and conclude the
new product will be financially attractive.

Stage 5; Product Development: We successfully create and test various prototypes before
finalizing our design.

Stage 6; Test Marketing: Before pulling the trigger and entering the market, we first check our
product’s viability and our marketing plan with alpha and beta testing. After some fine-tuning,
we are happy with the results and proceed to stage 7.

Stage 7; Commercialization: It’s time to introduce our new electric car to the market for the
final stage.
Diffusion of Innovation

Diffusion of Innovation Theory, developed by E.M. Rogers in 1962, is one of

the oldest social science theories. It originated in communication to explain how, over time, an
idea or product gains momentum and diffuses through a specific population or social system.
The end result of this diffusion is that people, as part of a social system, adopt a new idea,
behaviour or product.

Adoption of a new idea, behaviour or product (i.e., innovation) do not

happen simultaneously in a social system; rather it is a process whereby some people are more
apt to adopt the innovation than others. When promoting an innovation to a target population, it
is important to understand the characteristics of the target population that will help or hinder
adoption of the innovation.

There are five established adopter categories:

1. Innovators: These are people who want to be the first to try the innovation. They are
venturesome and interested in new ideas. These people are willing to take risks and are
often the first to develop new ideas.
2. Early Adopters: These are the people who represent opinion leaders. They enjoy
leadership roles and embrace change opportunities. They are already aware of the need to
change and so are very comfortable adopting new ideas.
3. Early Majority: These people are rarely leaders but they do adopt new ideas before the
average person. That being said, they typically need to see evidence that the innovation
works before they are willing to adopt it.
4. Late Majority: These people are sceptical of change and will only adopt an innovation
after it has been tried by the majority.
5. Laggards:These people are bound by tradition and very conservative. They are very
sceptical of change and are the hardest group to bring to board. Strategies to appeal to
this population include statistics, fear appeals, and pressure from people in the other
adopter groups.
The stages by which a person adopts an innovation and whereby diffusion is accomplished,
include awareness of the need for an innovation, decision to adopt (or reject) the innovation,
initial use of the innovation to test it and continued use of the innovation.

There are five main factors that influence adoption of an innovation, and each factor is at
play to a different extent in the five adoption categories.

1. Relative Advantage: The degree to which an innovation is seen as better than the idea,
program or product it replaces.
2. Compatibility: How consistent the innovation is with the values, experiences and needs
of the potential adopters.
3. Complexity: How difficult the innovation is to understand and/ or use.
4. Trialability: The extent to which the innovation can be tested or experimented with
before a commitment to adopt is made.
5. Observability: the extent to which the innovation provides tangible results.

Limitations of Diffusion of Innovation theory

 Much of the evidence for this theory, including the adopter categories, did not originate
in public health and it was not developed to explicitly apply to adoption of new
behaviours or health innovations.
  It does not foster a participatory approach to adoption of a public health program.
 It works better with adoption of behaviours rather than cessation or prevention of
behaviours.
 It doesn’t take into account an individual’s resources or social support to adopt the new
behaviour.

Example:

This is an example based on launching new software to the different groups.

 Innovator:shows the software on key software sites such as Techcrunch or Mashable,

providing marketing material on the website, with relevant information that leads to
possible sales with downloads.
 Early Adopters: creates guides and adds to the major software sites, providing
marketing materials such as studies, guide and FAQs.
 Early Majority: blogger outreach with guest blog posts and provide links to social media
pages, key facts and figures and ‘how to’ YouTube videos.
 Late Majority: encourages reviews, comparisons and shares press commentary on the
website, provides a press section and social proof with information and links to review,
testimonials, third party review sites, etc.
 Laggards: it’s probably not worth trying to appeal to this group.

Pricing Policies and Strategies

Pricing Policy is the policy of a company or business that guides the price
setting of its goods and services that are offered for sale. In setting prices, the business will take
into account the price at which it could acquire the goods, the manufacturing cost, the market
place, competition, market condition, brand and quality of product.

Common Pricing Policies

  One Price Policy:It offers the same price to all customers who purchase products under
the same conditions and in the same quantity. Most companies use a one-price policy
because it makes pricing easier and customers like it.
 Flexible Price Policy: It offers the same product and quantities to different customers at
different prices. For example, grocery stores might give frequent shoppers discount
prices. Flexible pricing has become easier because companies now have access to
databases that keep track of different price scales.

Pricing Strategy in marketing is the pursuit of identifying the optimum price of a product. A
pricing strategy takes into account segments, ability to pay, market conditions, competitor
actions, trade margins and input costs amongst others. It is targeted at the defined customers and
against competitors.

Types of Pricing Strategies

 Penetration Pricing:It is a pricing strategy where the price of a product is initially set
low to rapidly reach a wide fraction of the market and initiate word of mouth. This
strategy is mostly used by businesses wishing to enter a new market or build on a
relatively small market share. An example of penetration pricing would be Amazon’s
Kindle Fire. They offered their tablet for much cheaper rate than any other tablets on the
market.
 Skimming Pricing:The practice of price skimming involves charging a relatively high
price for a short time where a new, innovative or much improves product is launched on
the market. The objective of skimming is to skim off customers who are willing to pay
more to have the product sooner; prices are lowered later when demand from the early
adopters falls. For example, prices of iphone12 falling few months after the launch.
 Competitive Pricing: It is setting the price of a product or service based on what the
competition is charging. This pricing method is used more often by businesses selling
similar products, since the services can vary from business to business, while the
attributes of a product remain similar. For example, in order to grab market share, Pepsi
generally start to drop prices and shortly after, Coca Cola decide to decrease theirs
slightly but not for all their products.
  Economy Pricing:A valuation technique which assigns a low price to selected products.
Economy pricing is widely used in the retail food business for groceries such as canned
and frozen goods sold under generic food brands where marketing and production costs
have been kept to a minimum.
 Bundle Pricing:In bundle pricing, companies sell a package or set of goods or services
for a lower price than they would charge if the customer bought all of them separately.
Common examples include option packages on new cars, value meals at restaurants and
cable TV channel plans.
 Discount Pricing: Businesses use discount pricing to sell low-priced products in high
quantities. With this strategy, it is important to cut costs and stay competitive. Large
retailers are able to demand price discounts from suppliers and make a discount pricing
effective. Occasional discounts and discounts that reward loyal customers are effective.
 Prestige Pricing:Marketing strategy where prices are set higher than normal because
lower prices will hurt instead of helping sales, such as for high-end perfumes, jewellery,
clothing, cars, etc. It is also called image pricing. Prestige pricing has a direct correlation
with the brand and the perception of the customers over the image of the company.
 Full Cost Pricing: It is a price setting method under which the producer adds together
the direct material cost, direct labour cost, selling and administrative costs and overhead
costs for a product. This method is commonly used in situations where the products and
services are provided based on the specific requirements of the customers; thus, there is
reduced competitive pressure and no standardized product being provided. This method
may also be used to set long-term prices that are sufficiently high to ensure a profit after
all the costs have been incurred.

Factors Affecting Pricing Determination

Price is the only element of marketing mix that helps in generating

income. Therefore, a marketer should adopt a well-planned approach for pricing determination.
The marketer should know the factors that influence the pricing determination before setting the
price of a product.
 Factors affecting price determination

 Organizational Objectives: Affect the pricing determination to a great extent. The

marketers should set the prices as per the organizational goals. For instance, an organization
has set a goal to produce quality products, thus, the prices will be set according to the quality
of products. Similarly, if the organization has a goal to increase sales by 18% every year,
then the reasonable prices have to be set to increase the demand of the product.
 Costs: Influence the price setting decisions of an organization. The organization may sell
products at prices less than that of the competitors even if it is incurring high costs. By
following this strategy, the organization can increase sales volumes in the short run but
cannot survive in the long run. Thus, the marketers analyze the costs before setting the prices
to minimize losses.
 Legal and Regulatory Issues: The legal and regulatory laws set prices on various products,
such as insurance and dairy items. These laws may lead to the fixing, freezing, or controlling
of prices at minimum or maximum levels.
 Competition: Affects prices significantly. The organization matches the prices with the
competitors and adjusts the prices more or less than the competitors. The organization also
assesses that how the competitors respond to changes in the prices.
 Pricing Objectives: Help an organization in determining price decisions. For instance, an
organization has a pricing objective to increase the market share through low pricing.
Therefore, it needs to set the prices less than the competitor’s prices to gain the market share.
Giving rebates and discounts on products is also a price objective that influences the
customers ‘decisions to buy a product. Thus, these are the major factors that influence the
pricing decisions. Let us now discuss the process of setting the prices in the next section.

Setting the Price

A firm must set a price for the first time when it develops a newproduct, when
it introduces its regular product into a new distribution channel or geographical area, and when it
enters bids on new contract work. The firm must decide where to position its product on quality
and price.

When setting the price of a new product, marketers must consider the
competition’s prices, estimated consumer demand, costs, and expenses, as well as the firm’s
pricing objectives and strategies.

Steps in Setting a Pricing Policy

1. Selecting the Pricing Objective

2. Determining Demand

3. Estimating Costs

4. Analyzing Competitors’ Costs, Prices, and Offers

5. Selecting a Pricing Method

6. Selecting the Final Price

Step 1: Selecting the Pricing Objective

The company first decides where it wants to position its market offering. The
clearer a firm’s objectives, the easier it is to set price. Five major objectives are: survival,
maximum current profit, maximum market share, maximum market skimming, and product-
quality leadership.

 Survival: Companies pursue survival as their major objective if they are plagued with
overcapacity, intense competition, or changing consumer wants. As long as prices cover
variable costs and some fixed costs, the company stays in business. Survival is a short-run
objective; in the long run, the firm must learn how to add value or face extinction.
 Maximum Current Profit: Many companies try to set a price that will maximize current
profits. They estimate the demand and costs associated with alternative prices and choose the
price that produces maximum current profit, cash flow, or rate of return on investment. This
strategy assumes the firm knows its demand and cost functions; in reality, these are difficult
to estimate. In emphasizing current performance, the company may sacrifice long-run
performance by ignoring the effects of other marketing variables, competitors’ reactions, and
legal restraints on price.
 Maximum Market Share: Some companies want to maxi7mize their market share. They
believe a higher sales volume will lead to lower unit costs and higher long-run profit, so they
set the lowest price, assuming the market is price sensitive. Texas Instruments famously
practiced this market-penetration pricing for years. The company would build a large plant,
set its price as low as possible, win a large market share, experience falling costs, and cut its
price further as costs fell.
 Maximum Market Skimming: Companies unveiling a new technology favour setting high
prices to maximize market skimming. Sony has been a frequent practitioner of market-
skimming pricing, in which prices start high and slowly drop over time. When Sony
introduced the world’s first high-definition television (HDTV) to the Japanese market in
1990, it was priced at $43,000. So that Sony could “skim” the maximum amount of revenue
from the various segments of the market, the price dropped steadily through the years—a 28-
inch Sony HDTV cost just over $6,000 in 1993, but a 42-inch Sony LED HDTV cost only
$579 20 years later in 2013.
 Product-Quality Leadership: A company might aim to be the product-quality leader in the
market. Many brands strive to be “affordable luxuries”—products or services characterized
by high levels of perceived quality, taste, and status with a price just high enough not to be
out of consumers’ reach. Brands such as Starbucks, Aveda, Victoria’s Secret, BMW, and
 Viking have positioned themselves as quality leaders in their categories, combining quality,
luxury, and premium prices with an intensely loyal customer base.

Step 2: Determining Demand

Each price will lead to a different level of demand and have a different
impact on a company’s marketing objectives. The normally inverse relationship between price
and demand is captured in a demand curve. The higher the price, the lower the demand. For
prestige goods, the demand curve sometimes slopes upward. Some consumers take the higher
price to signify a better product. However, if the price is too high, demand may fall.

 Price Sensitivity: The demand curve shows the market’s probable purchase quantity at
alternative prices, summing the reactions of many individuals with different price
sensitivities. The first step in estimating demand is to understand what affects price
sensitivity. Generally speaking, customers are less price sensitive to low-cost items or items
they buy infrequently. They are also less price sensitive when (1) there are few or no
substitutes or competitors; (2) they do not readily notice the higher price; (3) they are slow to
change their buying habits; (4) they think the higher prices are justified; and (5) price is only
a small part of the total cost of obtaining, operating, and servicing the product over its
lifetime.
 Estimating Demand Curves: Most companies attempt to measure their demand curves
using several different methods.
o Surveys can explore how many units consumers would buy at different proposed prices.
Although consumers might understate their purchase intentions at higher prices to
discourage the company from pricing high, they also tend to actually exaggerate their
willingness to pay for new products or services.
o Price experiments can vary the prices of different products in a store or of the same
product in similar territories to see how the change affects sales. Online, and e-commerce
site could test the impact of a 5 percent price increase by quoting a higher price to every
40th visitor to compare the purchase response. However, it must do this carefully and not
alienate customers or be seen as reducing competition in any way.
o Statistical analysis of past prices, quantities sold, and other factors can reveal their
relationships. The data can be longitudinal (over time) or cross-sectional (from different
locations at the same time). Building the appropriate model and fitting the data with the
proper statistical techniques call for considerable skill, but sophisticated price
optimization software and advances in database management have improved marketer’s
abilities to optimize pricing.
 Price Elasticity of Demand: Marketers need to know how responsive, or elastic, demand is
to a change in price. Consider the two demand curves in (Figure1). In demand curve (a), a
price increase from $10 to $15 leads to a relatively small decline in demand from 105 to 100.
In demand curve (b), the same price increase leads to a substantial drop in demand from 150
to 50. If demand hardly changes with a small change in price, we say it is inelastic. If
demand changes considerably, it is elastic.

The higher the elasticity, the greater the volume growth resulting from a 1 percent
price reduction. If demand is elastic, sellers will consider lowering the price to produce more
total revenue. This makes sense as long as the costs of producing and selling more units do not
increase disproportionately. Price elasticity depends on the magnitude and direction of the
contemplated price change. It may be negligible with a small price change and substantial with a
large price change. It may differ for a price cut than for a price increase, and there may be a price
indifference band within which price changes have little or no effect.
 Finally, long-run price elasticity may differ from short-run elasticity. Buyers may
continue to buy from a cur-rent supplier after a price increase but eventually switch suppliers.
Here demand is more elastic in the long run than in the short run, or the reverse may happen:
Buyers may drop a supplier after a price increase but return later. The distinction between short-
run and long-run elasticity means that sellers will not know the total effect of a price change until
time passes.

Step 3: Estimating Costs

Demand sets a ceiling on the price the company can charge for its product. Costs
set the floor. The company wants to charge a price that covers its cost of producing, distributing,
and selling the product, including a fair return for its effort and risk. Yet when companies price
products to cover their full costs, profitability isn’t always the net result.

Fixed and Variable cost: A company’s costs take two forms, fixed and variable.

Fixed costs, also known as overhead, are costs that do not vary with production level or sales
revenue. A company must pay bills each month for rent, heat, interest, salaries, and so on,
regardless of output.

Variable costs vary directly with the level of production. For example, each tablet computer
produced by Samsung incurs the cost of plastic and glass, microprocessor chips and other
electronics, and packaging. These costs tend to be constant per unit produced, but they’re called
variable because their total varies with the number of units produced.

Target Costing: Costs change with production scale and experience. They can also change as a
result of a concentrated effort by designers, engineers, and purchasing agents to reduce them
through target costing. Market research establishes a new product’s desired functions and the
price at which it will sell, given its appeal and competitors’ prices. This price less desired profit
margin leaves the target cost the marketer must achieve.

The firm must examine each cost element—design, engineering,

manufacturing, sales—and bring down costs so the final cost projections are in the target range.
When ConAgra Foods decided to increase the list prices of its Banquet frozen dinners to cover
higher commodity costs, the average retail price of the meals increased from $1 to $1.25. When
sales dropped significantly, management vowed to return to a $1 price, which necessitated
cutting $250 million in other costs through a variety of methods, such as centralizing purchasing
and shipping, using less expensive ingredients, and designing smaller portions.

Step 4: Analysing Competitors’ Costs, Prices, and Offers

Within the range of possible prices identified by market demand and company costs, the firm
must take competitors’ costs, prices, and possible reactions into account. If the firm’s offer
contains features not offered by the nearest competitor, it should evaluate their worth to the
customer and add that value to the competitor’s price. If the competitor’s offer contains some
features not offered by the firm, the firm should subtract their value from its own price. Now the
firm can decide whether it can charge more, the same, or less than the competitor.

Value-priced competitors: Companies offering the powerful combination of low price and high
quality are capturing the hearts and wallets of consumers all over the world. Value players, such
as Aldi,JetBlue Airways, Southwest Airlines, Target, and Wal-Mart, are transforming the way
consumers of nearly every age and income level purchase groceries, apparel, airline tickets,
financial services, and other goods and services.

Traditional players are right to feel threatened. Upstart firms often rely on serving one or a few
consumer segments, providing better delivery or just one additional benefit, and matching low
prices with highly efficient operations to keep costs down. They have changed consumer
expectations about the trade-off between quality and price. One school of thought is that
companies should set up their own low-cost operations to compete with value-priced competitors
only if: (1) their existing businesses will become more competitive as a result and (2) the new
business will derive some advantages it would not have gained if independent.

Step 5: Selecting a Pricing Method

Given the customer's demand schedule, the cost function, and competitors’ prices, the company
is now ready to select a price. Companies select a pricing method that includes one or more of
these three considerations. We will examine seven price-setting methods: mark-up pricing,
target-return pricing, perceived-value pricing, value pricing, EDLP, going-rate pricing, and
auction-type pricing.
 Mark-up Pricing: The most elementary pricing method is to add a standard mark-up to
the product’s cost. Construction companies submit job bids by estimating the total project
cost and adding a standard mark-up for profit. Lawyers and accountants typically price by
adding a standard mark-up on their time and costs.
 Target-Return Pricing: In target-return pricing, the firm determines the price that yields
its target rate of return on investment. Public utilities, which need to make a fair return on
investment, often use this method
 Perceived-Value Pricing: An increasing number of companies now base their price on
the customer’s perceived value. Perceived value is made up of a host of inputs, such as
the buyer’s image of the product performance, the channel deliverables, the warranty
quality, customer support, and softer attributes such as the supplier’s reputation,
trustworthiness, and esteem. Companies must deliver the value promised by their value
proposition, and the customer must perceive this value. Firms use the other marketing
program elements, such as advertising, sales force, and the Internet, to communicate and
enhance perceived value in buyers’ minds.
 Value Pricing: Companies that adopt value pricing win loyal customers by charging a
fairly low price for a high-quality offering. Value pricing is thus not a matter of simply
setting lower prices; it is a matter of reengineering the company’s operations to become a
low-cost producer without sacrificing quality to attract a large number of value-conscious
customers.
 EDLP: A retailer using everyday low pricing (EDLP) charges a constant low price with
little or no price promotion or special sales. Constant prices eliminate week-to-week price
uncertainty and the high-low pricing of promotion-oriented competitors. In high-low
pricing, the retailer charges higher prices on an everyday basis but runs frequent
promotions with prices temporarily lower than the EDLP level.
 Going-Rate Pricing: In going-rate pricing, the firm bases its price largely on
competitors’ prices. In oligopolistic industries that sell a commodity such as steel, paper,
or fertilizer, all firms normally charge the same price. Smaller firms “follow the leader,”
changing their prices when the market leader’s prices change rather than when their own
demand or costs change. Some may charge a small premium or discount, but they
 preserve the difference. Thus, minor gasoline retailers usually charge a few cents less per
gallon than the major oil companies, without letting the difference increase or decrease.
 Going-rate pricing is quite popular. Where costs are difficult to measure or competitive
response is uncertain, firms feel it is a good solution because they believe it reflects the
industry’s collective wisdom.
 Auction-Type Pricing: Auction-type pricing is growing more popular, especially with
scores of electronic marketplaces selling everything from pigs to used cars as firms
dispose of excess inventories or used goods. These are the three major types of auctions
and their separate pricing procedures:
o English auctions (ascending bids) have one seller and many buyers. On sites
such as eBay and Amazon.com, the seller puts up an item and bidders raise their
offer prices until the top price is reached. The highest bidder gets the item.
English auctions are used today for selling antiques, cattle, real estate, and used
equipment and vehicles. Kodak and Nortel sold hundreds of patents for wireless
and digital imaging via auctions, raising hundreds of millions of dollars.
o Dutch auctions (descending bids) feature one seller and many buyers or one
buyer and many sellers. In the first kind, an auctioneer announces a high price
for a product and then slowly decreases the price until a bidder accepts. In the
other, the buyer announces something he or she wants to buy, and potential
sellers compete to offer the lowest price. Ariba—acquired by SAP in 2012—
runs business-to-business auctions to help companies acquire low-priced items
as varied as steel, fats, oils, name badges, pickles, plastic bottles, solvents,
cardboard, and even legal and janitorial work.
o Sealed-bid auctions let would-be suppliers submit only one bid; they cannot
know the other bids. The U.S. and other governments often use this method to
procure supplies or to grant licenses. A supplier will not bid below its cost but
cannot bid too high for fear of losing the job. The net effect of these two pulls is
the bid’s expected profit.

Step 6: Selecting the Final Price

Pricing methods narrow the range from which the company must select its final price. In
selecting that price, the company must consider additional factors, including the impact of other
marketing activities, company pricing policies, gain-and-risk-sharing pricing, and the impact of
price on other parties.

 Impact of Other Marketing Activities: The final price must take into account the brand’s
quality and advertising relative to the competition. In a classic study, Paul Farris and David
Reibstein examined the relationships among relative price, relative quality, and relative
advertising for 227 consumer businesses and found the following:
o Brands with average relative quality but high relative advertising budgets could
charge premium prices. Consumers were willing to pay higher prices for known
rather than for unknown products.
o Brands with high relative quality and high relative advertising obtained the highest
prices. Conversely, brands with low quality and low advertising charged the lowest
prices.
o For market leaders, the positive relationship between high prices and high advertising
held most strongly in the later stages of the product life cycle.
These findings suggest that in many cases price may not be necessarily as important as
quality and other benefits.
 Company Pricing Policies: The price must be consistent with company pricing policies. Yet
companies are not averse to establishing pricing penalties under certain circumstances.
Airlines charge $200 to buyers of discount tickets who change their reservations. Banks
charge fees for too many withdrawals in a month or early withdrawal of a certificate of
deposit. Dentists, hotels, car rental companies, and other service providers charge penalties
for no-shows. Although these policies are often justifiable, marketers must use them
judiciously and not unnecessarily alienate customers. Many companies set up a pricing
department to develop policies and establish or approve decisions. The aim is to ensure
salespeople quote prices that are reasonable to customers and profitable to the company.
 Gain-and-Risk-Sharing Pricing: Buyers may resist accepting a seller’s proposal because
they perceive a high level of risk, such as in a big computer hardware purchase or a company
health plan. The seller then has the option of offering to absorb part or all the risk if it does
not deliver the full promised value.
 Impact of Price on Other Parties: How will distributors and dealers feel about the
contemplated price? If they don’t make enough profit, they may choose not to bring the
product to market. Will the sales force be willing to sell at that price? How will competitors
react? Will suppliers raise their prices when they see the company’s price? Will the
government intervene and prevent this price from being charged?

----------------------------------------------------------------------------------------------------------------
 Module 4

SUPPLY CHAIN
Whereas marketing channels connect the marketer to the target buyers, the supply chain Describes
a longer channel stretching from raw materials to components to final products that are carried to
final buyers.
For example, the supply chain for women’s purses
Starts with hides, tanning operations, cutting operations, manufacturing, and the marketing
channels that bring products to customers. This supply chain represents a value
Delivery system. Each company captures only a certain percentage of the total value generated by
the supply chain. When a company acquires competitors or moves upstream Or downstream, its
aim is to capture a higher percentage of supply chain value.
The supply chain, which Stretches from raw materials to the final products for final buyers,
represents a value Delivery system. Marketers can capture more of the supply chain value by
acquiring Competitors or expanding upstream or downstream.

THE VALUE DELIVERY PROCESS

The traditional—but dated—view of marketing is that the firm makes Something and then sells it,
with marketing taking place during the selling Process. Companies that take this view succeed
only in economies marked by Goods shortages where consumers are not fussy about quality,
features, or Style—for example, basic staple goods in developing markets. In economies with
many different types of people, each with individual Wants, perceptions, preferences, and buying
criteria, the smart competitor
Must design and deliver offerings for well-defined target markets. ThisRealization inspired a new
view of business processes that places marketing at The beginning of planning. Instead of
emphasizing making and selling,Companies now see themselves as part of a value delivery
process.
We can divide the value creation and delivery sequence into three phases.
1 . choosing the value is the “homework” marketers must do before any Product exists. They must
segment the market, select the appropriate target,and develop the offering’s value positioning. The
formula “segmentation, Targeting, positioning (STP)” is the essence of strategic marketing.
2 . providing the value. Marketing must identify specific product Features, prices, and distribution.
3 . Communicating the value by utilizing the Internet, advertising, sales force, And any other
communication tools to announce and promote the product. The value delivery process begins
before there is a product and continues Through development and after launch. Each phase has
cost implications.
Multi channel marketing
Today’s successful companies typically employ multichannel marketing, using two or more
marketing channels to reach customer segments in one market area. HP uses its sales force to sell
to large accounts, outbound telemarketing to sell to medium-sized accounts, direct mail with an
inbound phone number to sell to small accounts, retailers to sell to still smaller accounts, and the
Internet to sell specialty items. Each channel can target a different segment of buyers, or
different need states for one buyer, to deliver the right products in the right places in the right
way at the least cost. When this doesn’t happen, channel conflict, excessive cost, or insufficient
demand can result. Launched in 1976, Dial-a-Mattress successfully grew for three decades by
selling mattresses directly over the phone and later online. A major expansion into 50 brick-and-
mortar stores in major metro areas was a failure, however. Secondary locations, chosen because
management considered prime locations too expensive, could not generate enough customer
traffic. The company eventually declared bankruptcy.

INTEGRATING MULTICHANNEL MARKETING SYSTEMS

Most companies today have adopted multichannel marketing. Disney sells its videos through
multiple channels: movie rental merchants such as Netflix and Redbox, Disney Stores (now
owned and run by The Children’s Place), retail stores such as Best Buy, online retailers such as
Disney’s own online stores and Amazon.com, and the Disney Club catalog and other catalog
sellers. This variety affords Disney maximum market coverage and enables it to offer its videos
at a number of price points.Here are some of the channel options for leather-goods maker Coach.
An integrated marketing channel system is one in which the strategies and tactics of selling
through one channel reflect the strategies and tactics of selling through one or more other
channels. Adding more channels gives companies three important benefits. The first is increased
market coverage. Not only are more customers able to shop for the company’s products in more
places, as noted above, but those who buy in more than one channel are often more profitable
than single-channel customers. The second benefit is

VALUE NETWORKS
A supply chain view of a firm sees markets as destination points and amounts to a linear view of
the flow of ingredients and components through the production process to their ultimate sale to
customers. The company should first think of the target market, however, and then design the
supply chain backward from that point. This strategy has been called demand chain planning.
A broader view sees a company at the center of a value network—a system of partnerships and
alliances that a firm creates to source, augment, and deliver its offerings. A value network
includes a firm’s suppliers and its suppliers’ suppliers and its immediate customers and their end
customers. It also incorporates valued relationships with others such as university researchers
and government approval agencies.
THE DIGITAL CHANNELS REVOLUTION
The digital revolution is profoundly transforming distribution strategies. With customers—both
individuals and businesses—becoming more comfortable buying online and the use of smart
phones exploding, traditional brick and replaced mortar channel strategies are being modified or
even replaced.
Online retail sales (or e-commerce) have been growing at a double-digit rate; apparel and
accessories, consumer electronics, and computer hardware are the three fastest-growing
categories. Skeptics initially felt apparel wouldn’t sell well online, but easy returns, try-on tools,
and customer reviews have helped counter the inability to try clothes on in the store. As brick-
and-mortar retailers promote their online ventures and other companies bypass retail activity by
selling online, they all are embracing new practices and policies. As in all marketing, customers
hold the key.Customers want the advantages both of digital—vast product selection, abundant
product information, helpful customer reviews and tips—and of physical stores—highly
personalized service, detailed physical examination of products, an overall event and experience.
They expect seamless channel integration so they can:
• Enjoy helpful customer support in a store, online, or on the phone
• Check online for product availability at local stores before making a trip
• Find out in-store whether a product that is unavailable can be purchased and shipped
from
another store to home
• Order a product online and pick it up at a convenient retail location
• Return a product purchased online to a nearby store of the retailer
• Receive discounts and promotional offers based on total online and offline purchases

The Role of Marketing Channels

Why does a producer delegate some of the selling job to intermediaries, relinquishing control
over how and to whom its products are sold? Through their contacts, experience, specialization,
and scale of operation, intermediaries make goods widely available and accessible to target
markets, offering more effectiveness and efficiency than the selling firm could achieve on its
own.Many producers lack the financial resources and expertise to sell directly on their own. The
William Wrigley Jr. Company would not find it practical to establish small retail gum shops
throughout the world or to sell gum online or by mail order. It is easier to work through the
extensive network of privately owned distribution organizations. Even Ford would be hard-
pressed to replace all the tasks done by its almost 8,500 dealer outlets worldwide.

CHANNEL FUNCTIONS AND FLOWS

The main function of distribution channel is to assemble the goods from different manufacturer
and make it available to the consumer. Apart from this, the channel members also perform a
number of other functions like buying, carrying inventory, selling, transporting, financing, etc.
These functions enable products and information flow from manufacturer to user in a timely and
efficient manner.
The main functions performed by the distribution channels are the following.

Function # 1. Financing:
Intermediaries usually make advance payments for goods and services, thereby, providing
necessary working capital to the manufacturers for their day-to-day operations. Though the
manufacturers may extend credit, payment is made in advance, even before the product is bought,
consumed and paid by the ultimate consumer.

Function # 2. Assists in Merchandising:

Through merchandising, they help reinforce the awareness about the product among customers.
While visiting a retail shop, customer’s attention can be allured by an attractive display of the
product/brand increasing his awareness and interest. Merchandising, especially display,
complements the selling efforts of the company and acts as a silent salesman at the retail outlet.

Function # 3. Provides Market Intelligence:

Market intelligence and feedback to the principal are rendered by channels. In the nature of things,
channels are in a good position to perform this task, since they are in constant and direct contact
with the customers. They feel the pulse of the market all the time.

Function # 4. Assortment of Products:

It leads to the customer convenience as channels of distribution help the consumers to buy goods
in convenient unit lots, packs and assorted varieties of the products. In order to use the economics
of scale and to minimise the overall production cost, goods and services are produced in bulk.
But these goods and services consumed in smaller quantity so there is essentially the need of
breaking the bulk. It is carried out by channel intermediaries.

Function # 5. Price Stability:

A middleman also works to maintain price stability in the market. Many a time the middlemen
absorb an increase in the price of the products and continue to charge the customer the same old
price. This is because of the intra-middlemen competition. He also maintains price stability by
keeping his overheads low.

Function # 6. Promotion:
Sales incentive programmes are designed by middlemen aiming to building customers traffic at
the other outlets. Channels of distribution perform promotional activities like advertising, personal
selling and sales promotion etc., so as to be useful to the producer in achieving greater market
share in sales and market coverage of the products.

Function # 7. Provides Salesmanship:

Salesmanship is provided by marketing channels. As they help in introducing and establishing new
products in the market. Under some cases, buyers go by the recommendations of the dealers. The
dealers establish the products in the market through their persuasive selling and person-to-person
communication. They also provide pre-sale and after-sale service to the buyers.

Function # 8. Title:
The title to the goods, services and trade are taken by middlemen under their own names. It helps
in eliminates the risks between the manufacturer and middlemen, also enabling middlemen to be
in physical possession of the goods, which in turn helps. Then to meet customer demand at very
moment it arises.

Function # 9. Helps in Production Function:

Leaving the marketing problem to middlemen who specialise in the profession the producer can
concentrate on the production function. Their services can best utilised for selling the product. The
finance, required for organising marketing can profitably be used in production where the rate of
return would be greater.

Function # 10. Matching Demand and Supply:

The major function of intermediaries is to assemble the goods from many producers in such a
manner that a customer can affect purchases with ease. The goal of marketing is the matching of
segments of supply and demand.

Function # 11. Pricing:

While pricing a product, the producer should invite the suggestions from the middlemen as they
are very close to the ultimate users and know what they can pay for the product. Pricing may be
different for different markets or products depending upon the channel of distribution.

Function # 12. Standardising Transactions:

Standardising transactions is another function of marketing channels. Like the milk delivery
system, the distribution is standardised throughout the marketing channel so that consumers do not
need to negotiate with the sellers on any aspect, whether it is price, quantity, method of payment
or location of the product. By standardising transactions, marketing channels automate most of the
stages in the flow of products from the manufacturer to the customers.

What is Channel Levels?

Channel level is a means used to transfer merchandise from the manufacturer to the end user
through retailer and other necessary intermediaries. An intermediary in the channel is called an
agent/middleman. Channels normally vary from two-level channels without intermediaries to five-
level channels with three intermediaries.
For example, a leather handbag manufacturer who prepares handbags and sells it directly to the
customer is in a two-level channel. A poultry farmer sells chicken and eggs to a restaurant supplier,
who sells to individual restaurants, who then serve the customer, is in a four-level channel.
Agents/intermediaries in the channel of distribution are used to facilitate the delivery of the
merchandise as well as to transfer title, payments, and information about the merchandise.

Channel Levels:
Each layer of distribution intermediaries that performs some work in bringing the product to its
final consumer is a channel level.
(i) A Zero Level Channel:
A zero level channel, commonly known as direct marketing channel has no intermediary levels. In
this channel framework manufacturer sells merchandise directly to customers. An example of a
zero level channel would be a factory outlet store. Many service providers like holiday companies,
also market direct to consumers, bypassing a traditional retail intermediary – the travel agent.

Eureka Forbes, leaders in domestic and industrial water purification systems, vacuum cleaners, air
purifiers & security solutions is pioneered in direct selling that makes it an Asia’s largest direct
sales organization.
The remaining channels are known as indirect-marketing channels.
(ii) A One Level Channel:
A one level channel contains one selling intermediary. In consumer markets, this is usually a
retailer. The consumer electrical goods market in the United Kingdom is typical of this
arrangement whereby producers such as Sony, Panasonic, Canon etc. sell their goods directly to
large retailers such as Comet, Dixons and Currys which then sell the goods to the final consumers.

(iii) A Two Level Channel:

A two level channel encompasses two intermediary levels – a wholesaler and a retailer. A
wholesaler typically buys and stores large quantities of merchandise from various manufacturers
and then breaks into the bulk deliveries to supply retailers with smaller quantities. For small
retailers with limited financial resources and order quantities, the use of wholesalers makes
economic sense.
This agreement tends to work paramount where the retail channel is jumbled – i.e. not dominated
by a small number of large, dominant retailers who have an encouragement to cut out the
wholesaler. Distribution of drugs/ pharmaceuticals in the Europe and United Kingdom is typical
example of such arrangement.

(iv) A Three Level Channel:

A third level channel, as the name implies, encompasses three intermediary levels – a wholesaler,
a retailer and a jobber. In the poultry industry, products like mutton, chicken, eggs etc. are first
sold to wholesalers; he then sells it to jobbers, who sell to small and unorganized retailers.
One point in this regard, is to be noted that the levels of distribution vary from industry to industry
and country to country. In Japan, food distribution system usually may involve as many as five or
six levels while rest of the world, rely on two to three levels distribution network.

CHANNEL MANAGEMENT
Channel management involves the marketing and sales strategies your company uses to reach and
satisfy consumers, the techniques you use to support your partners who help with the distribution
process, and how you manage vendors.

When establishing your channel management solutions, you must set clear goals for each channel.
(A channel is how you intend to sell your goods or services to your target audience). In addition
to clear goals for each channel, you want to:

• Define the policies and procedures to manage your channels

• Identify which products you offer that are suitable for a particular channel, and
• Develop sales and marketing programs for each channel to meet the actual needs of your
target customer, not what you think their needs are.

The main types of channel management include:

• Channel architecture: Channel architecture is the basic framework for your channel. It
encompasses how the product is provided by the producer to the consumer.

• Channel strategy: This aspect involves your sales and distribution blueprint, such as how
you plan to expand your market and what specific action plans you will put in place to
improve your e-commerce channel.
 • Channel design: How will you implement new channels? For instance, you may create an
affiliate program to encourage certain types of people and companies to help sell and
promote your product.

• Sales management: This aspect involves how you will manage sales and other partners.
This could include things such as what incentives you will offer to drive sales.

• Channel conflict: How do you plan to address conflict between channels that are unfair to
one party or counterproductive? For instance, if you are using an e-commerce solution that
undercuts your affiliates, you must address this conflict. When designing channels, you
must pay careful attention so one channel does not create a conflict for another channel.

• Relationship management: This aspect involves establishing and managing relationships

with vendors, affiliates, etc., over time.

• Brand experience: How do you plan to develop a brand experience that is consistent
across all channels, including if you sell online, through social media, etc., as well as
physical locations such as stores, boutiques, and more? For instance, if your brand voice
emphasizes making customers feel loved and appreciated, this should happen no matter
where your customers go. For example, various beauty brands make their customers feel
pampered. This is much easier to do in person, as this can allow you to massage, apply
makeup, etc. Nevertheless, the online experience must also go above and beyond to give
the same personal touch by using the right words, offering exclusive deals, etc.

• Pricing: This method involves using channel-based pricing strategies. For instance, a
luxury bakery that only sells certain products in upscale areas is an example of pricing as
channel management.

• Sales and operations planning: This method involves taking the time to match the goods
or services you are producing with the general demand. For instance, if you have a product
or service that is more popular during certain times of year (i.e., Christmas), you want to
increase production in the spring or summer.

• Revenue management: How will you optimize revenue for your available inventory? For
instance, a retail store may sell swimsuits at full price until near the end of the summer, at
which time it would likely discount the inventory to make more room for fall and winter
products.

• Distribution: This aspect is focused on how you will deliver on your obligations to both
channel partners and customers. For example, this could include properly managing
logistics, such as product exchanges and returns.

CHANNEL DESIGN DECISION

The channel design decision can be broken down into seven phases or steps.
 1. Recognizing the need for a channel design decision
2. Setting and coordinating distribution objectives
3. Specifying the distribution tasks
4. Developing possible alternative channel structures
5. Evaluating the variable affecting channel structure
6. Choosing the “best” channel structure
7. Selecting the channel members

Recognizing the Need for a Channel Design Decision

Many situations can indicate the need for a channel design decision. Among them are:
1. Developing a new product or product line
2. Aiming an existing product to a new target market
3. Making a major change in some other component of the marketing mix
4. Establishing a new firm
5. Adapting to changing intermediary policies
6. Dealing with changes in availability of particular kinds of intermediaries
7. Opening up new geographic marketing areas
8. Facing the occurrence of major environmental changes
9. Meeting the challenge of conflict or other behavioural problems
10. Reviewing and evaluating

Setting and Coordinating Distribution Objectives

In order to set distribution objectives that are well coordinated with other marketing and firm
objectives and strategies, the channel manager needs to perform three tasks:
1. Become familiar with the objectives and strategies in the other marketing mix areas and any
other relevant objectives and strategies of the firm.
2. Set distribution objectives and state them explicitly.
3. Check to see if the distribution objectives set are congruent with marketing and the other general
objectives and strategies of the firm.

Specifying the Distribution Tasks

The job of the channel manager in outlining distribution functions or tasks is a much more specific
and situational dependent one. The kinds of tasks required to meet specific distribution objectives
must be precisely stated. In specifying distribution tasks, it is especially important not to
underestimate what is involved in making products and services conveniently available to final
consumers.

Developing Possible Alternative Channel Structures

The channel manager should consider alternative ways of allocating distribution objectives to
achieve their distribution tasks. Often, the channel manager will choose more than one channel
structure in order to reach the target markets effectively and efficiently.

Evaluating the Variables Affecting Channel Structure

Having laid out alternative channel structures, the channel manager should then evaluate a number
of variables to determine how they are likely to influence various channel structures.

Choosing the “Best” Channel Structure

In theory, the channel manager should choose an optimal structure that would offer the desired
level of effectiveness in performing the distribution tasks at the lowest possible cost.

RETAILING
Retailing is the distribution process of retailer getting the goods (either from the manufacturer,
wholesaler, or agents) and selling them to the customers for the actual use.
In simple terms, retailing is the transaction of small quantities of goods between a retailer and the
customer where the good is not bought for the resale purpose.
What Is A Retailer?
A retailer is a person or a business who sells small quantities of goods to the customers for the
actual use.
Retailing Types
Retailing can be divided into five types. Here are the types of retailing that exists today –
● Store retailing: This includes different types of retail stores like department stores,
speciality stores, supermarkets, convenience stores, catalogue showrooms, drug
stores, superstores, discount stores, extreme value stores etc.
● Non-store retailing: Non-store retailing is a type of retailing where the transaction
happens outside conventional shops or stores. It is further divided into two types –
direct selling (where the company uses direct methods like door-to-door selling)
and automated vending (installing automated vending machines which sell offer
variety of products without the need of a human retailer).
● Corporate retailing: It involves retailing through corporate channels like chain
stores, franchises, and merchandising conglomerates. Corporate retailing focuses on
retailing goods of only the parent or partner brand.
● Internet retailing: Internet retailing or online retailing works on a similar concept
of selling small quantities of goods to the final consumer but they serve to a larger
market and doesn’t have a physical retail outlet where the customer can go and touch
or try the product.
● Service retailing: Retailers not always sell tangible goods, retail offerings also
consists of services. When a retailer deals with services, the process is called service
retailing. Restaurants, hotels, bars, etc. are examples of service retailing.
Retailing Examples
The most common examples of retailing are the traditional brick-and-mortar stores like Walmart,
Best Buy, Aldi, etc. But retailing isn’t limited to them. It also includes small kiosks at the malls,
online marketplaces like Amazon and eBay, and even the restaurants which sell food and service.
Wholesaling
Wholesaling is the act of buying goods in bulk from a manufacturer at a discounted price and
selling to a retailer for a higher price, for them to repackage and in turn resell in smaller quantities
at an even higher price to consumers. Due to the large quantities purchased from the manufacturer
at a discounted price, the wholesaler can also pass on this discount to retailers. The retailer sells at
a price that reflects the overall cost of doing business.

Types of Wholesalers
1.Merchant wholesalers
These are the most common type of wholesalers used in the FMCG industry , agriculture industry
or private label industry quite simply merchant wholesalers are the one who buy directly from the
manufacturer, store the product and then sell it to the customer. They might sell in any channel
and they are not restricted to sell do retail early or to online only.
Example: a vegetable wholesaler buys produce directly from the farm and stocks it at his own
warehouse. He then sells this products to the local retail outlets or even to end customers .he may
also sell to restaurants. However, any loss of the produce due to spillage or any other reason is a
cost to the merchant wholesalers.
2.Full service wholesalers
They are most commonly observed in consumer durables or engineering products. The full service
type of wholesalers is as the name suggests giving full service to the end retailer. These wholesalers
mainly operate in the retail market and sell products to a reseller (a retailer in this case) everything
expect service of the product is the responsible of the full service wholesaler.
Example: Samsung wants to expand its operation in region A but it does not have a sales office in
that region. So it appoints a distributor in region A .f this distributor solely Responsible for order
picking, delivery, training sales associates, promotions and everything for the Samsung brand. He
is now a full service word sailor. However, for service of the product, there is a different service
franchise opened in the same region.
3.Limited service wholesalers
A limited service wholesaler is someone who stocks the products of the company and sells it in a
limited channel. He does not have a large turnover or does not cover all channels of the company.
Example :company X wants to sell its products online but it knows that if it allow local distributors
to sell online, there will be a huge price war. As a result, company X appoints an exclusive online
wholesaler. This online wholesaler has only one job - to purchase the product and stock it and sell
it online. So whenever an order comes from Amazon or eBay, this wholesaler gives the mission to
Amazon or eBay. That’s his only job
The same way- there are other limited service wholesalers .two are mentioned below:
Cash and carry wholesalers: strong FMCG products are sold as cash and carry. Immediate
payment is demanded on a delivery of material.
Logistics wholesalers : A Milk Wholesaler who delivers whole truck of milk across the market.
His only work is to deliver the milk and not to get orders for the company.
4. Brokers and agents
Most commonly observed in the real estate industry or in the chemical markets. A broker assumes
no risk will stuff he asked the producer or the manufacturer on one side and he has the buyer on
the other side. The work of the broker is to get the deal done and he gets a Commission on the
deal.
5. Branches and mini officers
Although branches and mini officers do not come in the various type of wholesalers, this are
common way for companies to start selling their products in a region they are targeting. A branch
can also be called a type of wholesaling wherein the branch directly picks the orders from the end
customers in bulk and ensure and choose the supply and reorders from the customers
Example : paper company like B2B or 3M knows that large companies require a lot of print paper
across the month. This companies then established branch officers which also act as his sales
office. They pick a bulk order of paper and the company might transport the complete order from
the warehouse to the company.
6. Specialized wholesalers
These are wholesalers who do wholesale of specialized items only . example- A used car
wholesaler who sells directly to customers or the other used car dealers. He specialized in used
cars and knows the in’s and outs of selling a used car to customers or refurbishing the used car.

Franchising
Franchising is a form of business by which the owner (franchisor) of a product, service or method
obtains distribution through affiliated dealers (franchisees). If buying an existing business doesn't
sound right for you but starting from scratch sounds a bit intimidating, you could be suited for
franchise ownership.
Examples of well-known franchise business models include McDonald's (NYSE: MCD),
Subway, United Parcel Service (NYSE: UPS), and H. & R. Block (NYSE: HRB). In the United
States, there are franchise business opportunities available across a wide variety of industries.

Teleshopping
A form of non-store or in-home retailing in which the consumer can purchase goods and services
shown on television; the purchaser telephones an order, or orders with the aid of a computer, and
the products are delivered to the home.

COMMUNICATING VALUES
Effective communicating values to the stakeholders of a company is of much
Importance. Value creation involves including those elements in a product or service that
Are fully informed to the customers and they are willing to pay for it is what we called
“value”. Value communication involves communicating credibly the benefits of the product.

The value of communication is based on relevant and timely

Information, without such information, there can be no effective communication. Marketing
Communication helps to move products, services from manufacturers to end users and builds and
maintains relationship with customers, prospects, and other important stakeholders in the
company. Good communication skills are skills that facilitates people to communicate.
Value is not just a single element (price), it encompasses a range of
Attributes of the goods and services for which customers are willing to pay.

VALUE COMPONENTS

Value can be separated in to 7 components

1. Service
2. Response
3. Variety
4. Knowledge
5. Quality
6. Guarantee
7. Price

The 4 core values of communication

• Personal Responsibility
This is about taking ownership for every single feeling, thought, action and
reaction.
• Personal integrity
This is about our connection to the heart
• Authenticity
It is the value of being different from integrity
• Equal Dignity

It is the value giving all the person the equal position

MARKETING COMMUNICATIONS MIX OR PROMOTION MIX

A company’s total marketing communications mix (or promotion mix) consists of the specific
blend of advertising, sales promotion, public relations, personal selling and direct marketing tools
that the company uses persuasively to communicate customer value and build
customer relationships.

Elements of promotional mix or marketing communications mix are also called as tools, means,
or components. Basically, there are five elements involved in promotional mix.
1. ADVERTISING:

Advertising is defined as any paid form of non-personal presentation and promotion of ideas,
goods, and services by an identified sponsor. It is a way of mass communication. It is the most

popular and widely practiced tool of market promotion. Major part of promotional budget is

consumed for advertising alone.

Various advertising media:

• television
• radio
• newspapers
• magazines
• outdoor means
 • broadcast
• print
• online

Characteristics of advertising are:

i. Adverting is non-personal or mass communication. Personal contact is not possible.

ii. It is a paid form of communication.

iii. It is a one-way communication.

iv. Identifiable entity/sponsor-company or person gives advertising.

v. It is costly option to promote the sales.

vi. It can be reproduced frequently as per need.

vii. Per contact cost is the lowest.

viii. Various audio-visual, print, and outdoor media can be used for advertising purpose.

ix. It is a widely used and highly popular tool of market promotion.

2. SALES PROMOTION:

Sales promotion covers those marketing activities other than advertising, publicity, and personal

selling that stimulate consumer purchasing and dealer effectiveness. Sales promotion mainly

involves short-term and non-routine incentives, offered to dealers as well consumers.

The popular methods used for sales promotion are:

• demonstration
• trade show
• exhibition
• exchange offer
• seasonal discount
• free service
• gifts
• contests
• discounts
• coupons
• displays
Characteristics of sales promotion are:
i. The primary purpose of sales promotion is to induce customers for immediate buying or dealer

effectiveness or both.

ii. Excessive use of sale promotion may affect sales and reputation of a company adversely.

iii. It is taken as supplementary to advertising and personal selling efforts.

iv. It involves all the promotional efforts other than advertising, personal selling, and publicity.

v. It consists of short-term incentives, schemes, or plans offered to buyers, salesmen, and dealers.

vi. It involves non-routine selling efforts.

3. PERSONAL SELLING:

Personal selling includes face-to-face personal communication and presentation with prospects

(potential and actual customers) for the purpose of selling the products. It involves personal

conversation and presentation of products with customers. It is considered as a highly effective

and costly tool of market promotion.

Personal selling includes:

• sales presentations
• trade shows
• incentive programs.

Characteristics of personal selling are:

i. Personal selling is an oral, face-to-face, and personal presentation with consumers.

ii. Basic purpose is to promote products or increase sales.

iii. It involves two-way communication.

iv. Immediate feedback can be measured.

v. It is an ability of salesmen to persuade or influence buyers.

vi. It is more flexible way of market communication.

vii. Per contact cost is higher than advertising.

viii. It involves teaching, educating, and assisting people to buy.
4. DIRECT MARKETING

Direct connections with carefully targeted individual consumers both

to obtain an immediate response and to cultivate lasting customer relationships the use of
telephone, mail, fax, email, the Internet and other tools to communicate directly with specific
consumers.

Direct marketing includes:

• catalogues
• telephone marketing
• kiosks
• internet

Characteristics of direct marketing are:

i. Direct marketing involves obtaining favorable presentation about company or company’s
offers upon radio, television, or stage that is not paid for by the sponsor.

ii. It is a non-paid form of market promotion. However, several indirect costs are involved in

it.

iii. It may include promotion of new product, pollution control efforts, special achievements

of employees, publicizing new policies, etc., for increasing sales. It is primarily concerns

with publishing or highlighting company’s activities and products. It is targeted to build

company’s image.

iv. Company has no control over publicity in terms of message, time, frequency, information,

and medium.

v. It has a high degree of credibility. Direct marketing is more likely to be read and reacted

by audience.

vi. It can be done at a much lower cost than advertising.

5. PUBLIC RELATIONS:

The public relations is comprehensive term that includes maintaining constructive relations not

only with customers, suppliers, and middlemen, but also with a large set of interested publics.

Public relations include publicity, i.e., publicity is the part of public relations.

Building good relations with the company’s various publics by obtaining

favorable publicity, building up a good corporate image, handling or heading off unfavorable
rumors, stories and events.

Public relations includes:

• press releases
• sponsorships
• special events
• twitter

Characteristics of publicity are:

i. Public relations is a paid form of market promotion. Company has to incur expenses.

ii. Public relations activities are designed to build and maintain a favorable image for an

organization and a favorable relationship with the organization’s various publics.

iii. It is an integral part of managerial function. Many companies operate a special department for

the purpose, known as the public relations department.

iv. It involves a number of interactions, such as contacting, inviting, informing, clarifying,

responding, interpreting, dealing, transacting, and so forth.

v. Public relations covers a number of publics – formal and informal groups. These publics may

be customers, stockholders, employees, unions, environmentalists, the government, people of local

community, or some other groups in society.

vi. Public relations activities are undertaken continuously. It is a part of routine activities.

vii. All the officials, from top level to supervisory level, perform public relations activities.

viii. In relation to modern management practices, the public relations is treated as the profession.
 The main objective of marketing communication is to exchange the information

about the product and organization with the help of promotion in order to create awareness

amongst the customers and all other stakeholders. Thus promotion plays an important role in

marketing communication and is considered as one of the most important components of the

marketing communication.

MANAGING MARKETING COMMUNICATION

Integrated marketing communication is an approach to promote products and services (brand
promotion) where various modes of marketing are integrated so that similar message goes to the
customers. According to integrated marketing communication, all aspects of marketing
communication work together to promote brands more effectively among end-users and also for
better results. Brands are promoted through advertising, sales promotions, banners, hoardings,
public relations, social networking sites and so on simultaneously to increase brand awareness
among potential end-users.’
One of the most effective ways to promote brands is through effective communication.
Organizations need to communicate well with not only the potential customers but also existing
customers. Communicating effectively not only strengthens relationship with your clients but also
gives organizations an edge over competitors. Remember, effective communication enables
message and relevant information to reach the recipients in the desired manner. Why would a
customer invest in your brand if he/she is not aware of the product’s features and benefits? The
unique selling points of brands need to be communicated well to the end-users by effectively
integrating various brand promotion tools.

Following are the various ways which enable organizations to communicate effectively with
customers:-
1. Advertising
2. Online Promotions
3. Direct Marketing
4. Hoardings, Banners
5. PR Activities
6. Internet, Emails and so on.
Marketers need to promote two way communication with customers. The feedback of customers
is essential and should be monitored regularly, if you really wish to survive in the long run. Your
customers must be able to reach you conveniently for them to develop a sense of attachment and
loyalty towards your brand.
Various modes of brand communication need to be managed effectively so that similar message
reaches customers. For Example if your advertisement says your products are eco friendly, the bill
boards, and banners must also share the same message. The integration needs to be done smartly
and effectively.
1) The first step towards managing integrated marketing communication is to identify the target
audience. You need to understand who all are the customers who would actually benefit from your
products. Understand their needs and expectations.
2) The second step is to know what you intend to communicate. No brand promotion tools would
help unless and until you are really sure of what you want to share with your potential and existing
customers.
3) Carefully design your message. Check the content of the message, message structure, format,
spellings and so on.
4) The next step is to identify the various channels of communication. You need to be really careful
while selecting the channel of communication so that the right message goes to the right customer
at the right place and right time.
5) Allocate right resources for brand promotion. Decide how much can you spend on various
marketing and promotional activities. A marketer needs to wisely assign budgets for various
promotional activities such as advertising, PR activities, banners and so on.
6) The most crucial step is to measure the results of integrated marketing communication. Find out
whether the combination of all marketing tools has actually helped you reach a wider audience and
promote your brands more effectively.
 MODULE - 5
Marketing Control
Marketing control is the process by which firms assess the effects of their marketing activities
and programs and make necessary changes and adjustments. Marketing control implies
application of controlling system to marketing activities. And it involves verifying and rectifying
marketing performance.

Marketing control is the process of monitoring the proposed plans as they proceed and adjusting
where necessary.

Control involves measurement, evaluation, and monitoring. Resources are scarce and costly so it
is important to control marketing plans. Control involves setting standards.

Marketing Control Process

Marketing control is a four step process
1. Define Marketing Objectives
2. Set Performance Standards
3. Compare Results Against Standards
4. Corrections and Alterations

Resources are scarce and costly so it is important to control marketing plans. Controlling
marketing plan is not an one time activity, it is a series of actions, and it is required to be done
regularly. Marketing control process starts with the review of the marketing objectives.
After defining/redefining marketing objectives, performance standards are set. Performance
standards provide benchmarks to enable managers and employees to decide how they are
progressing towards achieving objectives.
Actual results are compared against standards. If the actual results are in direction to the
expected results, their is no problem in marketing plan and its execution.
If actual results are deviated from the expected results, their is requirement to correct and alter
marketing plan to bring the results back to the desired level.

Goal setting What do we want to achieve?

Performance Measurement What is happening?

Performance Diagnosis Why it is happening?

Corrective Action What should we do about it?

 This control model applies to all levels of the organization. Top management sets annual sales
and profit goals; each product manager, regional district manager, sales manager, and sales rep is
committed to attaining specified levels of sales and costs. Each period, top management reviews
and interprets the results. Marketers today have better marketing metrics for measuring the
performance of marketing plans. Four tools for the purpose are sales analysis, market share
analysis, marketing expense-to-sales analysis, and financial analysis.

Example

If an objective states where you want to be and the plan sets out a road map to your destination,
then control tells you if you are on the right route or if you have arrived at your destination

Types of Marketing Control:

Type of Control Prime Responsibility Purpose of Control Approaches

1. Top management To examine whether the • Sales analysis

Annual-plan Middle management planned results are being • Market share analysis
control achieved. • Sales-to-expense ratios
• Financial analysis
• Market-based scorecard
analysis
2. Marketing controller To examine where the Profitability by:
Profitability company is making and • product
control losing money. • territory
• customer
• segment
• trade channel
• order size
3. Line and staff To evaluate and improve Efficiency of:
Efficiency control management the spending efficiency • sales force
Marketing controller and impact of marketing • advertising
expenditures • sales promotion
distribution
4. Top management To examine whether the • Marketing-effectiveness
Strategic control Marketing auditor company is pursuing its rating instrument
best opportunities rating • Marketing audit
instrument with respect • Marketing excellence
to markets, products and review
channels • Company ethical and
social responsibility review
ANNUAL-PLAN CONTROL

ANNUAL-PLAN CONTROL Annual-plan control ensures the company achieves the sales,
profits, and other goals established in its annual plan. At its heart is management by objectives.
First, management sets monthly or quarterly goals. Second, it monitors performance in the
marketplace. Third, management determines the causes of serious

Performance deviations. Fourth, it takes corrective action to close gaps between goals and
performance.

PROFITABILITY CONTROL

PROFITABILITY CONTROL Companies should measure the profitability of their products,

territories, customer groups, segments, trade channels, and order sizes to help determine whether
to expand, reduce, or eliminate any products or marketing activities. The chapter appendix shows
how to conduct and interpret a marketing profitability analysis.
EFFICIENCY CONTROL

EFFICIENCY CONTROL Suppose a profitability analysis reveals the company is earning

poor profits in certain products, territories, or markets. Are there more efficient ways to manage
the sales force, advertising, sales promotion, and distribution? Some companies have established
a marketing controller position to work out of the controller’s office but specialize in improving
marketing efficiency. These marketing controllers examine adherence to profit plans help
prepare brand managers’ budgets, measure the efficiency of promotions, analyze media
production costs, evaluate customer and geographic profitability, and educate marketing staff on
the financial implications of marketing decisions.

STRATEGIC CONTROL

STRATEGIC CONTROL Each company should periodically reassess its strategic approach to
the marketplace with a good marketing audit. Companies can also perform marketing excellence
reviews and ethical/social responsibility reviews.
Marketing Audit
Definition: The Marketing Audit refers to the comprehensive, systematic, analysis, evaluation
and the interpretation of the business marketing environment, both internal and external, its
goals, objectives, strategies, principles to ascertain the areas of problem and opportunities and to
recommend a plan of action to enhance the firm’s marketing performance.

The marketing audit is generally conducted by a third person, not a member of an organization.
Components of Marketing Audit

1. Macro-Environment Audit: It includes all the factors outside the firm that influences
the marketing performance. These factors are Demographic, Economic, Environmental,
Political, and Cultural.
2. Task Environment Audit: The factors closely associated with the firm such as Markets,
Customers, Competitors, Distributors and Retailers, Facilitators and Marketing Firms,
Public etc.that affects the efficiency of the marketing programs.
3. Marketing Strategy Audit: Checking the feasibility of Business Mission, Marketing
Objectives and Goals and Marketing Strategies that have a direct impact on the firm’s
marketing performance.
4. Marketing Organization Audit: Evaluating the performance of staff at different levels
of hierarchy.
5. Marketing Systems Audit: Maintaining and updating several marketing systems such as
Marketing Information System, Marketing Planning System, Marketing Control System
and New-Product Development System.
6. Marketing Productivity Audit: Evaluating the performance of the Marketing activities
in terms of Profitability and Cost-Effectiveness.
7. Marketing Function Audit: Keeping a check on firm’s core competencies such as
Product, Price, Distribution, Marketing Communication and Sales Force.
Thus, the marketing audit helps to determine how well a firm’s marketing department is carrying
out the marketing activities. And how much it is adding to the overall performance of the
organization.
Example of Marketing Audit with its step-by-step process

Marketing Challenges Faced Globally

1. Providing the ROI of Marketing Activities

Measuring the ROI (return on investment) of your marketing activities has remained a
top marketing challenge globally year-over-year. It continues to be a vital way for
marketers to understand the effectiveness of each particular marketing campaign or piece
of content. Plus, proving ROI often goes hand-in-hand with making an argument to
increase budget: No ROI tracking, no demonstrable ROI. No ROI, no budget. Although
return on investment is a crucial stat that shows your campaigns success or progress,
tracking the ROI of every single marketing activity isn't always easy, especially if you
don't have two-way communication between your marketing activities and sales reports.

2. Securing Enough Budget

when we have a great, revenue-generating idea, you still usually need to get your budget
approved by a higher-up.

Securing more budget is a pressing challenge for marketing globally. And often, getting more
budget is easier said than done -- especially for smaller organizations that aren't working with
sizable nor flexible marketing spend. But the key to securing more money for your team might
not be that complex.

3) Managing Website

Although managing a website is consistently a challenge to marketers, it seems to be growing

less threatening.

Managing a website was the fourth biggest challenge for marketers. And chances are, the
website's performance is high on the list of priorities. It's an asset that works around the clock to
draw in visitors, convert them, and help to hit goals, after all. Issues with website management
include a variety of different factors, from writing and optimizing the content to designing
beautiful webpages.

4) Targeting Content for an International Audience

Targeting is a key component of all aspects of marketing. To be more effective at targeting, one
of the first things any marketer needs do is identify their buyer personas to determine who it is
they should be marketing to. If expanding internationally, it can be a big challenge not only to
figure out the best ways to market to an international audience but also to organize and optimize
your site for different countries. However, exchange rates are marketers’ biggest challenge with
international marketing.

5) Training Your Team

As companies scale and technologies continue to evolve, training your team will become a
greater challenge for marketers.

Whether it's training them on the concepts and tools they'll be using every day or making sure
they're achieving their full potential, the struggle is real across the board.

6) Hiring Top Talent

Hiring top talent is another challenge marketers commonly report experiencing.Many companies
are shifting more resources to inbound marketing, which means higher and higher demand for
top marketing talent. But supply simply isn't keeping up. From sourcing the right candidates to
evaluating for the right skills, finding the perfect person could take months ... or more.

7) Delivering an Account-Based Marketing Strategy

Account-based marketing (ABM) is a new trend, which is a growth strategy in which marketing
and sales collaborate to create a personalized buying experience for an identified set of accounts.
However, interestingly, the most common challenge with ABM is delivering a personalized
experience.
Currently, there aren't a lot of software that are focused on account-based marketing. Many
companies that are implementing ABM strategies are using manual methods, which means some
accounts are getting lost in the cracks.
Social Media Marketing
“Social media marketing (SMM) is the use of social media websites and social networks to
market a company’s products and services.”

“Social media marketing is the process of creating tailored content for each social media
platform to drive engagement and promote your business.”

Social media marketing is all about connecting with your audience or customers and helping
them understand your brand better. It is incredibly beneficial to business growth.

Five key pillars of social media marketing

1) Strategy: This step involves determining goals, the social media channels to be used, and
the type of content that will be shared.

2) Planning and Publishing: Businesses should draft plans of what their content will look
like (i.e. will there be videos? Photos? How much script?) and decide when it will be put
out on the platform.
 3) Listening and Engagement: Monitoring what users, customers, and others are saying
about the posts, brands, and any other business assets. This may require the adoption of a
social media engagement tool.

4) Analytics and Reporting: Part of being on social media is knowing how far posts are
going, so reports of engagement and reach are very important

5) Advertising: Purchasing ads on social media is a great way to promote and further
develop a brand.

Because audiences can be better segmented than more traditional marketing channels, companies
can ensure they focus their resources on the audience that they want to target using social media
marketing. Some of the metrics used to measure the success of social media marketing (which is
also known as digital marketing and e-marketing) include:

• Website reports, such as Google Analytics

• Return on investment (ROI)
• Customer response rates or the number of times customers post about a company
• A campaign's reach and/or virality or how much customers share content.

Benefits Of Social Media Marketing

The concept of social media marketing has evolved over the years. A few years ago, the sole
purpose of using social media channels was to generate website traffic.

1. SMM Consistently Warms Up A New Audience For Your Business.

There’s nothing worse than facing a cold audience or people who haven't interacted with your
brand before.

Social media marketing opens up doors to tools and tactics that make it easy to warm up a new
audience for your business.

Facebook and other social platforms allow you to use content to connect with the potential
audience and warm them up. While it’s hard to get people’s attention, you can easily break
through the noise with engaging content.
For example, creating an interesting Facebook video ad can drive people to know more about
you.

2. SMM Builds Stronger Relationships With Customers.

Successful brands connect and engage with their social media audiences to build lasting
relationships.

For instance, when they share something on a platform, they respond to whoever leaves a
comment or question to provide them any assistance they may need.

Rather than selling your products or services, you can simply ask your social media followers
questions about your products or share something that could make life easier for your audience.

This way, you build trust and show them how much you care about their needs and opinions.

For example, one of our best social media strategies that we use is our Entrepreneur Cooperative
Facebook Community.

We use this Facebook group as a place to talk about life and business, share cool thoughts and
strategies, and really just get to know other like-minded people like us.

A Facebook group is a great way to use social media to grow a loyal audience of people who will
advocate for your business or brand for a lifetime.

3. SMM Generates More Leads & Conversions.

Platforms like Facebook, Instagram, Twitter, and Linkedin allows companies to generate leads.
We can use a mix of paid and organic tactics to boost conversions.

Video marketing, paid ad campaigns, giveaways, and email opt-ins are some of the leading
strategies to get prospects into your sales funnel.

For example, running a giveaway campaign on Facebook can help you boost your list of
qualified email addresses.

Since everything happens online, SMM is a measurable, quicker, and easier way to build a
database of prospects. With increased visibility, your business finds plenty of opportunities for
conversion.

Compelling content can lead your social media followers to your company’s website and turn
them into loyal customers.
4. SMM Gives You A Leg Up On Competitors.

There’s a lot to learn from your competitors’ social media presence, especially if just started
exploring social media and lack good marketing ideas.

Progressive companies always monitor their competition to see what’s working for them and
whatnot. Tracking what your competitors are up to should be a key part of your social media
marketing strategy.

For example, if paid Facebook ads are generating good results for your competitors, you should
try it too. However, you shouldn’t copy your competition in a way that could hurt your
reputation. Make sure to stand out.

5. SMM Is Cost-Effective
Social media marketing is probably the most cost-efficient and diverse way of promoting a
business.

It doesn’t cost anything to create a profile on most social networking sites. In case we want to
run a paid campaign to boost your content, the cost is relatively low as compared to other
advertising platforms.

Digital Marketing Platform

Modern marketing relies on technology to analyze the comprehensive performance of a
marketing campaign, and help guide future strategies and decision making. The best way to
define a digital marketing platform is to break it down into its two parts: digital marketing and
digital business platforms.

Digital Marketing
Digital marketing refers to any marketing initiative that leverages online media and the internet
through connected devices such as mobile phones, home computers, or the Internet of Things
(IoT). Common digital marketing initiatives center around distributing a brand message through
search engines, social media, applications, email, and websites.

Today, digital marketing often focuses on reaching a customer with increasingly conversion-
oriented messages across multiple channels as they move down the sales funnel. Ideally,
marketing teams will be able to track the role each of these messages / channels played in
reaching their ultimate goal.

Digital marketing Platform

platforms are tools that provide multiple business or technology capabilities. While there are
tools to address specific functions within one business need, such as a single tool to schedule
social media updates alone, platforms support multiple functions across these needs. Platforms
typically enable a more extensive set of functions with APIs, integrations, and partnerships with
other applications or data sources.

A digital marketing platform is a solution that supports a variety of functions within the realm of
marketing over the internet. According to Gartner, it is important to note that to classify as a
platform, the solution cannot claim to support every component of digital marketing – but will
rather cover functionality like media buying, performance measurement and optimization, and
brand tracking. However, it may not cover other marketing efforts like SEO, social media.

Types of Digital Marketing

1. Social Media Marketing Platforms

Social media platforms allow marketers to reach their prospects in a myriad of ways. First,
marketing teams can use these channels to distribute paid ads and sponsored content. Each
platform has a way for marketing teams to create paid ad campaigns and segment users so these
ads appear on the feeds of target audience members. While each platform is different, most have
capabilities that allow marketing teams to place ads based on location, job title, interests, age,
etc.

Social media is also a great way to promote products or resources organically to your followers,
and engage with consumers. Chances are, people that follow your brand on social media have
likely purchased from you in the past. Interacting with them on social media or answering
customer service-oriented questions is a great way to ensure continued engagement with the
brand and cultivate positive experiences and customer loyalty.

Finally, marketing teams can use social media to build their brand and establish a voice that can
make them popular to follow and share.

For example, Wendy’s flippant and funny tone has made them exceptionally popular on Twitter,
commonly earning likes, retweets, and responses.
2. Influencer Marketing

Another effective way to harness digital channels to reach target audiences is with influencer
marketing. Brands can partner with celebrities, sites, or others that are considered experts in their
field, that share similar values. Brand can then reach these influencers’ followers with branded
content and offers. Many marketers have found success with influencer marketing, with 9 out 10
noting that it was the same or better than other channels they use. Additionally, 1 out of 2 women
based a purchase decision on a recommendation from an influencer.

Example; GoPro partnered up with this Colorado-based influencer, Loki, whose followers
include many outdoor enthusiasts. This put their product in front of their target audience, with a
recommendation from a like-minded, trustworthy source.

3. Email Marketing

Email marketing campaigns allow organizations to stay connected with prospects and customers,
sending them customized newsletters or offers based on past shopping history or brand
engagements. If an individual has interacted with a few of your branded touchpoints – like an
email offer for 10 percent off the items they have been considering, or free shipping - may be
what ultimately brings about a conversion. Nearly 60% of consumers say that email plays a role
in their purchase decisions. Furthermore, transactional emails are more likely to be opened by
subscribers.

4. Content Marketing

Content marketing allows marketing teams to be proactive in answering their users’ questions.
Marketing teams create content, videos, and other assets to answer questions or provide context
to consumers throughout the three stages of the buyer’s journey:

• The awareness stage: Buyer realizes they have a need

• The consideration stage: Buyer determines a course of action to meet this need
• The decision stage: Buyer decides on a product / service to purchase to meet the need

For example, a consumer might realize they need new shoes to wear to the gym. The marketing
team for an activewear company may produce a piece about what features you need from a
running shoe, as opposed to what you need if you focus on strength training. Looking at this
content, the buyer determines they need a pair of running shoes that meets that criteria. Another
piece of content might show the most popular running shoes and their price points. Once they are
educated on these factors, they decide. The guidance offered by your brand throughout will
likely result in them purchasing from you. Content marketing is often less expensive than other
forms of marketing, while producing nearly 3 times as many leads.
5. Search Engine Optimization (SEO) Marketing.

Search engine optimization often goes hand in hand with content marketing. When the customer
from the above example is conducting research for which gym shoes to buy, they will probably
click on one of the first three results that appear on Google. With this in mind, the athletic shoes’
marketing team wants to ensure their article appears in those top results. This is done by
optimizing content for user experience and ensuring the technical elements are in place to enable
search engine crawlers to easily find and index this content.

6. Pay-per-click (PPC)

Pay-per-click is a form of paid advertising that allows marketing teams to essentially purchase
traffic to their website. Marketers place ads on websites or search engines such as Google and
Microsoft Bing, and pay a fee each time the ad is clicked on. These ads often appear at the top of
the search results page, andare typically determined by bids on specific keywords, while banner
ads on websites usually have set prices.

7. Affiliate Marketing

Affiliate marketing is similar to referral programs, it involves working with outside individuals
or companies under the agreement that they promote your product in exchange for a commission
from each sale that can be attributed to their efforts. This is a way to cut down on costs and
outsource some of the heavy lifting of promotion, however, you’re putting your brand's
reputation in someone else’s hands, so this type of marketing often requires more extensive
monitoring and tracking.

An example of affiliate marketing would be when an ad running on a podcast or radio show

offers a discount code for listeners to use when purchasing the product. The customer may
receive 30% off their purchase, for example, and in return, the show gets a small percentage of
each purchase that is made using the code.
Social Marketing

According to Philip Kotler, Nancy Lee and Michael Rothschild; Social marketing can be defined
as- “A process that applies marketing principles and techniques to create, communicate, and
deliver value in order to influence target audience behaviors that benefit society (public health,
safety, the environment, and communities) as well as the target audience.”

Principles and Techniques

Social marketing principles and techniques are most often used to improve
public health, prevent injuries, protect the environment, increase involvement in the community,
and enhance financial well-being. Those engaged in social marketing activities include
professionals in public sector agencies, nonprofit organizations, corporate marketing departments
and advertising, public relations, and market research firms. A social marketing title is rare, and
social marketing is most likely to fall within the responsibility of a program manager or
community relations or communications professional.

Social Marketing Planning Process

Step: 1 Describe the Background, Purpose and Focus for the Planning Effort
Step: 2 Conduct a Situation Analysis
Step: 3 Select and Describe the Target Audience
Step: 4 Set Marketing Objectives and Goals (Behavior, Knowledge, Beliefs)
Step: 5 Identify Audience Barriers, Benefits and the Competition
Step: 6 Craft a Desired Positioning Statement
Step: 7 Develop a Strategic Marketing Mix (The 4Ps)
o Product
o Price
o Place
o Promotion
Step: 8 Determine an Evaluation Plan
Step: 9 Establish a Campaign Budget and Find Funding
Step: 10 Outline an implementation plan
 GREEN MARKETING

What is Green Marketing?

• Green marketing is the marketing of environmentally friendly products and services. It is

becoming more popular as more people become concerned with environmental issues and
decide that they want to spend their money in a way that is kinder to the planet.
• Green marketing can involve a number of different things, such as creating an eco-
friendly product, using eco-friendly packaging, adopting sustainable business practices,
or focusing marketing efforts on messages that communicate a product’s green benefits.
• This type of marketing can be more expensive, but it can also be profitable due to the
increasing demand.
• Examples of green marketing include advertising the reduced emissions associated with a
product’s manufacturing process, or the use of post-consumer recycled materials for a
product’s packaging. Some companies also may market themselves as being
environmentally-conscious companies by donating a portion of their sales proceeds to
environmental initiatives, such as tree planting

IMPORTANCE OF GREEN MARKETING

• It reduces the use of plastic and plastic-based products.

• It increases the consumption of natural products and reduces chemical products.
• It creates a demand for herbal medicines, natural therapy, and Yoga.
• It aware the reuse of the consumer and industrial products.
It makes nature healthy.

ADVANTAGES OF GREEN MARKETING

• A company can enter new markets when it brings attention to positive environmental
impact.
• Gain more profit from green marketing.
• Green marketing brings a competitive advantage.
• Raise awareness on important environmental or social issues.
• It makes the company out the line, which help them to gain profit in a long time.

DISADVANTAGES OF GREEN MARKETING

• Change leads to costs.

• It is hard and costly to get Green Certifications.
• Companies may intentionally or unintentionally make false claims regarding the
environmental friendliness of their products, a process known as “greenwashing.
• Sometimes customers don’t accept natural products because it is costly as a comparison
to normal products.

GREEN MARKETING EXAMPLE IN INDIA

• Tata Consultancy service is well established eco-friendly company. It has more than 80%
green score. Now, it is creating technology for agricultural and community benefits.
• Indusland Bank is the first bank which is started paperless ATM in India. Which helps to
reduce to the cutting of the trees.
• MRF has launched the ZSLK series and which is about creating eco- friendly tubeless
tires.
• Johnson and Johnson is also using green products. Which is environment-friendly as well
as body friendly too.
CONSUMERISM

History

Although consumerism is commonly associated with capitalism and the Western world, it is
multi-cultural and non-geographical, as seen today in Tokyo, Singapore, Hong Kong, Shanghai,
Taipei, Tel Aviv and Dubai, for example. Consumerism, as in people purchasing goods or
consuming materials in excess of their basic needs, is as old as the first civilizations (Ancient
Egypt, Babylon and Ancient Rome, for example). Since consumerism began, various individuals
and groups have consciously sought an alternative lifestyle through simple living.

While consumerism is not a new phenomenon, it has only become widespread over the 20th
century and particularly in recent decades, under the influence of neoliberal capitalism and
globalization.

Popular media used “Consumerist” as a short-form for “ConsumerActivist”. Webster’s

dictionary added “the promotion of the consumer’s interests” alongside “the theory that an
increasing consumption of goods is economically desirable” under “Consumerism”.

Meaning

Consumerism is an organized social movement intended to strengthen the rights and

power of consumers relative to sellers. Alert marketers view it as an opportunity to serve
consumers better by providing more consumer information, education, and protection.

Consumerism” refers to a movement by consumers to ensure fair and honest (ethical)

practices on the part of manufacturers, traders, dealers and services providers in relation to
consumers. The movement may be regarded an attempt by individual consumer activists and
consumer associations for creating consumer awareness about the malpractices in the market and
finding ways and means to protect their interests. This movement will be successful if consumers
are aware of their rights and responsibilities while using goods and services.

It aims to remove those injustices, and eliminate those unfair marketing practices, e.g.,
misbranding, spurious products, unsafe products, planned obsolescence, adulteration, fictitious
pricing, price collusion, deceptive packaging, false and misleading advertisements, defective
warranties, hoarding, profiteering, black marketing, short weights and measures, etc.”

Definition

“Consumerism is an organized movement of citizens and government agencies to

improve the rights and power of buyers in relation to sellers.”

Or

Consumerism – A social force within the business environment designed to aid and
protect buyers by exerting legal, moral and economic pressures on businesses.

Rights of Consumers

Today consumers face various problems on account of competition in the market,

misleading advertisements, availability of inferior quality of goods and services, etc. Hence
protection of consumers’ interest has become a matter of serious concern for the Government as
well as public bodies. It is to safeguard the interest of consumer’s government has recognized
certain rights of consumers. Various rights of consumers that are recognized by Government of
India are following;

• Right to safety: Consumers have a right to be protected against marketing of goods which are
injurious to health and life. As a consumer if you are conscious of this right, you can take
precautions to prevent the injury or if injury is caused in spite of precaution, you have a right to
complain against the dealer and even claim compensation. For example, if you buy any
medicine, the pharmacy selling it can be held responsible if the medicine proves harmful. Again
if gas cylinder is used for cooking, you have to check that it does not leak when it is supplied to
you. If it starts leaking afterwards, the supplier will be liable to pay compensation if the leakage
of gas leads to fire and causes injury or death to anyone.

• Right to be informed: Consumers also have the right to be informed about the quantity,
quality, purity, standard or grade and price of the goods available so that they can make proper
choice before buying any product or service. Also, where necessary, the consumer must be
informed about the safety precautions to be taken while using the product to avoid loss or injury.
Taking the example of gas cylinder again, the supplier must inform the user to stop the flow of
gas with the help of the regulator when it is not in use.

• Right to choose: Every consumer has the right to choose the goods needed from a wide variety
of similar goods. Very often dealers and traders try to use pressure tactics to sell goods of poor
quality. Sometimes, consumers are also carried away by advertisements on the TV. These
possibilities can be avoided if consumers are conscious of this right.

• Right to be heard: This right has three interpretations. Broadly speaking, this right means that
consumers have a right to be consulted by Government and public bodies when decisions and
policies are made affecting consumer interests. Also, consumers have a right to be heard by
manufactures, dealers and advertisers about their opinion on production and marketing decisions.
Thirdly, consumers have the right to be heard in legal proceedings in law courts dealing with
consumer complaints.

• Right to seek redress: If and when any consumer has a complaint or grievance due to unfair
trade practices like charging higher price, selling of poor quality or unsafe products, lack of
regularity in supply of services etc. or if he has suffered loss or injury due to defective or
adulterated products, he has the right to seek remedies. He has a right to get the defective goods
replaced or money refunded by the seller or dealer. He also has the right to seek legal remedies
in the appropriate courts of law. Through this right the consumers are assured that their
complaints will receive due attention. This right also provides for due compensation to
consumers if they have suffered a loss or are put to inconvenience due to the fault of the supplier
or manufacturer.

• Right to consumer education: To prevent market malpractices and exploitation of consumers,

consumer awareness and education are essentially required. For this purpose, consumer
associations, educational institutions and Government policy makers are expected to enable
consumers to be informed and educated about

(a) The relevant laws which are aimed at preventing unfair trade practice.

(b) The ways in which dishonest traders and producers may try to manipulate market practices to
deceive consumers.
(c) How consumers can protect their own interest.

(d) The procedure to be adopted by consumers while making complaints.

Responsibilities of Consumers

There is a well known saying that ‘there cannot be rights without responsibilities’.
Having examined the consumer rights and the purpose served by them, it is necessary to consider
whether consumers should also be responsible enough to be entitled to exercise their rights.

• Responsibility of self-help: It is always desirable that a consumer should not depend on the
seller for information and choice as far as possible. As a consumer, you are expected to act in a
responsible manner to protect yourself from being deceived. An informed consumer can always
take care of his/her interest more than anyone else. Also, it is always better to be forewarned and
forearmed rather than getting remedies after suffering a loss or injury.

• Proof of Transactions: The second responsibility of every consumer is that the proof of
purchase and documents relating to purchase of durable goods should be invariable obtained and
preserved. For example, it is important to get a cash memo on purchase of goods you should
remember that in case you have to make any complaint about defects in goods, the proof of
purchase will enable you to establish your claim for repair or replacement of the goods.
Similarly, durable consumer goods like TV, refrigerator, etc. carry warranty /guarantee cards
issued by the dealers. The cards entitle you to get the service for repairs and replacement of parts
free of cost during a certain period after purchase.

• Proper claim: Another responsibility that consumers are expected to bear in mind is that while
making complaints and claiming compensation for loss or injury, they should not make
unreasonably large claims. Very often, consumers have to exercise their right to seek redressal in
a court. There have been cases in which consumers claimed huge compensation for no apparent
reason. This is regarded as an irresponsible act which should be avoided.

• Proper use of Product/services: Some consumers, especially during the guarantee period,
make rough use of the product, thinking that it will be replaced during the guarantee period. This
is not fair on their part. They should always use the products properly.
Besides the above responsibilities, consumers should be conscious of some other responsibilities.

• They should stick to the agreement made with manufacturers, traders and service providers.

• They should make timely payment in case of credit purchases.

• They should not tamper with the media of services, like electric and water meters, bus and train
seats, etc.

Traditional sellers’ rights include the following:

• The right to introduce any product in any size and style, provided it is not hazardous to personal
health or safety, or, if it is, to include proper warnings and controls

• The right to charge any price for the product, provided no discrimination exists among similar
kinds of buyers

• The right to spend any amount to promote the product, provided it is not defined as unfair
competition

• The right to use any product message, provided it is not misleading or dishonest in content or
execution

• The right to use buying incentive programs, provided they are not unfair or misleading

Traditional buyers’ rights include the following:

• The right not to buy a product that is offered for sale

• The right to expect the product to be safe

• The right to expect the product to perform as claimed

In comparing these rights, many believe that the balance of power lies on the seller’s
side. True, the buyer can refuse to buy. But critics feel that the buyer has too little information,
education, and protection to make wise decisions when facing sophisticated sellers.

Consumer advocates call for the following additional consumer rights:

• The right to be well informed about important aspects of the product

• The right to be protected against questionable products and marketing practices

• The right to influence products and marketing practices in ways that will improve “quality of
life”

• The right to consume now in a way that will preserve the world for future generations of
consumer

Consumerism in India

In India, as a developing economy, it is felt that the plights of the consumers are not
different from that of the counterparts in the rest of the world. In spite of the fact that not all the
Indian consumers are well educated and hence, unable to comprehend and understand the
complex methods of marketing, they are also exploited and very often become victims of false
claims for products, mislead by deceptive advertisements, misled by packaging, poor after sales
service and so on. Because of the above felt abuses, there is observed and seen a growing
consumer awareness leading to the growth of consumerism and an increasing demand for
consumer protection in India.

Consumerism can be said to be a still in its infancy stage. But the consumer movement is
slowly gaining momentum.

Rapid rise in the consumer earnings, fall in the savings rate resulting in generating
increasing amounts of disposable income to be spent on consumer products and services. With
the advent of the information age bringing with it real time images of the global life style; and
thus making high spender and budget shoppers spend lavishly on products and services.
 RED OCEAN STRATEGY

A red ocean strategy involves competing in industries that are currently in existence. This
often requires overcoming an intense level of competition and can often involve the
commoditization of the industry where companies are competing mainly on price. For this
strategy, the key goals are to beat the competition and exploit existing demand.

“ The key goals of the red ocean strategy are to beat the
competition and exploit existing demand.”

One industry in which a red ocean strategy would be necessary is the soft drink industry. This
industry has been in existence for a long time, and there are many barriers to entry. There are
industry leaders in place such as Coke and Pepsi, and there are also many smaller companies
also in competition for market share. There’s also limited shelf space and vending spots,
well-established brand recognition of popular, current brands, and many other factors that
affect new competition. This causes the soft drink industry to be very competitive to enter
and succeed in.

FEATURES OF RED OCEAN STRATEGY

• They focus on competing in a market place which already exists.

• They focus on beating the competition.

• They focus on the value/cost trade-off. The value/cost trade-off is the view that a
company has the choice between creating more value for customers but at a higher
cost, or reasonable value for customers at a lower cost. In contrast, those who attempt
a blue ocean strategy aim to achieve differentiation and at the same time, low cost.
• They focus on exploiting existing demand.

• They focus on execution in better marketing, lower cost base etc.

ADVANTAGES OF RED OCEAN STRATEGY

Less Risky
The first and foremost advantage of the red ocean strategy is that it is less risky because when
you have an established market than there is no need to create any new demand for the
product rather you have to concentrate only on the competitors pricing and customer service
as opposed to blue ocean strategy where the company has to develop demand or find a new
market for the product which we all know is not an easy thing to do and hence it is a very
daunting task.

Clarity about Future

In the case of red ocean strategy company has clarity with regards to market as well as
customers taste and preference which in turn helps in the company focusing on the product as
well as the marketing strategy in a better way as opposed to blue ocean strategy which is like
a black box as you never know what’s in store as far as market and consumer reaction to the
product is concerned.

Good for Companies having Limited Resources

Red ocean strategy is ideal for those companies which have limited resources because if the
company has limited resources and it follows the blue ocean strategy and if it does not
succeed then it will never be able to do business again which is not the case with red ocean
strategy where there is this margin of safety as the company operates in an already
established market and it’s less risky. In simple words, companies that have limited resources
should first adopt a red ocean strategy and once they are established and have resources to
tackle any failure then they can go for a blue ocean strategy.
DISADVANTAGES OF RED OCEAN STRATEGY

No Chance of Extraordinary Profit

The biggest disadvantage of the red ocean strategy is that in the case of this strategy there is
no scope of the company earning extraordinary profit because of the presence of competitors
in the market and hence company earns a normal rate of return on the cash sales credit sales
done by the company. In simple words, this strategy can help the company in surviving but it
cannot help the company in attaining extraordinary growth and become a market leader in
their industry.

Economics of Scale is Required

In this strategy, since there are competitors present in the market company cannot keep the
price of product high rather they have to keep the prices at a competitive level, and hence the
company has to achieve economics of scale so as to reduce costs and earn good profit
margins. In simple words the company is not able to achieve economics of scale in the
production and marketing stage under this strategy than chances are companies will not be
able to compete with competitors following the red ocean strategy.

Less Exciting
In the case of blue marketing strategy companies take the risks and implement creative ideas
and ways to spur demand for its products which makes it exciting as well as challenging as
far as the company is concerned but in the case of red ocean strategy, there is no such
excitement as the company has to follow the industry and competitors as price their products
accordingly. In simple words, the red ocean strategy is a simple ride where there are no ups
and downs while the blue ocean strategy is more like a roller coaster ride having many ups
and downs. As one can see from the above that red ocean strategy has pros as well as cons
and that is the reason why a company should carefully analyze its product and marketing
strategy and see if it can go for the blue ocean strategy because if the company goes for this
strategy than the company will have to be on its toes all the time as competitors can take the
market share from the company anytime.

EXAMPLES:-

1.A good example of Red Ocean Strategy is the European airline operator Ryanair (or
Southwest if you like in the US). They are competing very successfully in the already
saturated red ocean of the short-haul airline business. Their strategy is focused on providing a
low-cost no-frills airline. It is able to achieve low costs through many methods including
using secondary airports further away from a city than the main airport, allowing only online
booking and check-in, and requiring customers to pay for all extras, amongst other methods.
With Ryanair, the service isn’t great of differentiated in some way from other carriers, but it
is cheap.

2.Red Ocean companies like Indigo and Spice Jet in India, Ryan Air in Europe and
Southwest in the USA successfully penetrated in an already saturated ocean of short-haul
airlines business.
BLUE OCEAN STRATEGY
Blue ocean strategy is the simultaneous pursuit of differentiation and low cost to open up a new
market space and create new demand. It is about creating and capturing uncontested market space,
thereby making the competition irrelevant. It is based on the view that market boundaries and
industry structure are not a given and can be reconstructed by the actions and beliefs of industry
players

The distinctive characteristics of a blue ocean are :

* New unknown market

* There is no competition as there are no competitors

* You can simultaneously use differentiation and low price strategies

* Seeking for potential customers

* Demand development is required

* Defining the (yet) non-existent needs

* Giving innovation a sense of purpose

Top 4 reasons for using the blue ocean strategy

1. High level of competition in red oceans:

Sometimes, competition in the market can reach such a level that supply will highly exceed demand.
In this case, you are going to need to have some extremely sharp teeth. Or maybe the market entry
barriers are so high that you won’t even be able to get in there in the first place. Anyway, you will
have 3 options: 1) eat competitors; 2) be eaten; 3) go for a blue ocean.

2. Crisis in the industry:

This is about the situation where the market is in the decline stage. Customers are no more
interested in its products. Even if the number of competitors and supply isn’t increasing, the number
of interested buyers is reducing. As a result, there is no point in staying in such a market.
3. Your company doesn’t have a brand identity and customers don’t know anything about you:
Efforts to achieve popularity and recognition of your brand become a perfect engine for the
progress of your company. Reaching a blue ocean is a great option to draw attention and create a big
name.
4. Mass consumption

This is about markets with a large number of substitute goods. The toothpaste market can serve as
an example. If there is a discount by Sensodyne, customers are likely to buy it and forget about their
habitual toothpaste by, say, Colgate. The determining factor for choosing a product here is its price,
not its USP or brand name. That’s why there is no sense to compete in innovations on a red market.
Companies just have to monitor competitors’ actions in their pricing policy and adjust theirs’
accordingly.

The advantage and disadvantage of Blue marketing strategies are:

Examples of blue ocean strategy

• Nintendo Wii
The first example of blue ocean strategy comes from computer games giant, Nintendo, in the
form of the Nintendo Wii.The Nintendo Wii launched in 2006 and at its heart is the concept
 of value innovation. This is a key principle of blue ocean strategy which sees low cost and
differentiation being pursued simultaneously.To reduce costs, Nintendo did away with the
hard disk and DVD functionality found in most game consoles and reduced the processing
quality and graphics.

• Cirque de Soleil
This list would not be complete without mentioning Cirque de Soleil, arguably one of the
most famous examples of blue ocean strategy in action. Formed in Canada in the early
1980s, the company has since gone on to entertain 155 million people in over 300 cities.
Doing away with live animal acts enabled the company to reduce its cost base, whilst the
introduction of live music and a storyline, inspired by the world of theatre, and an emphasis
on human physical skill helped Cirque du Soleil to create new elements that had never
before been seen in the world of the circus.
 INTRODUCTION TO MARKETING ANALYSIS
A marketing analysis is a study of the dynamism of the market. It is the attractiveness of a
special market in a specific industry. Marketing analysis is basically a business plan that
presents information regarding the market in which you are operating in. It deals with various
factors and should not be confused with market analysis.

A marketing analysis is done so that you can formulate a strategy on how to run your
business. By taking into consideration certain factors, you will know how to operate your
business.

Dimensions of Marketing Analysis

There are certain dimensions which help us to perform a marketing analysis. These things
help us understand the market we operate in better. These dimensions include;

▪ Market Size
▪ Growth rate of the market
▪ Market trends
▪ Market profitability
▪ Key success factors
▪ Distribution channels
▪ Industry cost structure

Market Size
The size of the market is a key factor in a marketing analysis. The bigger the market the more
competitors you are likely to have. For a big market, you need to make sure your products
and services stand out. Otherwise, the customers can easily switch to a rival product. Not
only that, a bigger market makes you rethink your pricing policy.

Growth rate of the market

The market growth rate is a huge factor in any sort of marketing analysis. This is because you
get the idea of how long the said market will last. Before you make an investment you need
to analyze the market’s growth rate. If it is likely to grow over time then you can invest more
in it. If it has no growth then you are likely to be discouraged from investing anything at all.
How much time and importance you give to the market depends on its growth rate.

Market Trends
Market trends are a significant part of the marketing analysis. Having knowledge about the
trends help you to decide what kind of product you are going to sell. When you are starting
off a business you need to know what the current trend is. What is the thing that the
customers like? How much they are willing to spend? What other trends may capture their
attention? These are the sort of things which will go on your analysis.

Market Profitability
Most companies’ motive to get into the business is to make a profit. In other words, they are
profit-motive businesses. So before getting into a business you need to analyze the
profitability of the market. If the market has a good profitability then only you are going to
invest heavily. Otherwise, it would be a waste of your time and capital. In order to calculate
the profitability of the market, there are a few things one has to consider. These things
include; buyer power, supplier power, barriers to entry and so on.

Key Success Factors

The key success factors are those elements which help the business to achieve great success
in the market. Such elements are required to stand out among the rest of the competition.
These are things which you did well that have enabled you to produce great results. Key
success factors include;
1. Technology progress
2. Economies of scale
3. Efficient utilization of resources

Distribution Channels
Distribution channels are very important for a business. Without those, you won’t be able to
get your products to your customers. So it becomes a big factor in a marketing analysis. This
is because you need to assess how well the channels are. If the existing ones are good enough
or you need to develop newer ones. Sometimes you come up with brand new channels like
online marketing.

Industry Cost Structure

The industry cost structure is a significant factor while running a business. It basically sees
how much cost is required to get your products for sale. Sometimes firms can come up with
ways to decrease that cost and thereby make a bigger profit without increasing the market
price. Doing a marketing analysis will help you to come up with newer ways to reduce cost.
At the same time, it helps to create strategies for developing competitive advantage of your
rivals.