PRINCIPLES OF MARKETING

UNIT 1: INTRODUCTION TO MARKETING

The term Marketing is derived from the Latin word ‘Mercatus’ which refers to “a place where business is
conducted”.
Marketing is a form of communication between a business house and its customers with the goal of selling its
products or services to them. Goods are not complete products until they are in the hands of customers.
Marketing is that management process through which goods and services move from concept to the customer.

Meaning and Definition of Marketing

Marketing is the process by which companies engage with their target audience to promote their products or
services. It encompasses a wide range of activities such as advertising, market research, branding, sales, and
distribution.
Marketing refers to performance of set of activities essential to direct, regulate and facilitate the flow of goods
and services from the manufacturer to ultimate consumer in the process of distribution. These activities
include market analysis, market planning, product planning, product development, pricing of product or
services, physical distribution, warehousing, financing, risk bearing etc.
As per American Marketing Association, ‘marketing is a process of planning and executing the conception,
pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and
organizational objectives.’

Nature of Marketing
1. Marketing is an economic function: marketing embraces all the business activities involved in getting goods
and services, from the hands of producers into the hands of final consumers. The Business steps through which
goods progress on their way to final consumers is the concern of marketing.

2. Marketing is a Legal process by which Ownership transfers: In the process of marketing the ownership
of goods transfers form seller to the purchaser to the end user.

3. Marketing is a Managerial function: According to managerial or system approach- “marketing is the

combination of activities designed to produce profit through ascertaining, creating, stimulating, and satisfying
the needs and/ or wants of a selected segment of the market.

4. Marketing is system of Interacting Business Activities: Marketing is the process through which a business
enterprise, institution, or organization interacts with the customers and stakeholders with the objective to earn
profit, satisfy customers, and manage relationship. It is the performance of business activities that direct the
flow of goods and services from producers to consumer or user.

5 Marketing is a social process: Marketing is the delivery of a standard of living to society. Societal marketing
performs three essential functions:
a. Knowing and understanding the consumer’s changing needs and wants
b. Efficiently and effectively managing the supply and demand of products and services
c. Efficient provision of distribution and payment processing systems.
6. Marketing is a philosophy based on consumer orientation and satisfaction.

7. Marketing had dual objectives- profit making and consumer satisfaction.

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

Importance of Market ng in Business

1. Helps in business planning and decision making: Marketing helps in business planning as it helps to
shape the product from its production to it reaching the customers. The 4Ps of marketing help the business
to make sure what alternatives are better for the growth of the business and help to make decisions that
prove beneficial for the customers.
2. Product development: The product part of the 4Ps provides alternatives for developing the product
regarding its branding, labelling, packaging, and how it should be brought into the market. Moreover,
customer feedback and market research provide a blueprint of how the product has to be further modified
to suit the needs of the consumers.
3. Effective consumer engagement: with the use of various platforms online and offline, the company can
gain consumer engagement in some form or another. In personal selling, for example, salesmen interact
with the customers and get to know their needs.
4. Builds relationships among customers: marketing always tries to establish a cordial relationship with the
customers. Modern marketing deals with the customers as they are the king. Hence continuous efforts make
customers satisfied. And this helps them stay with the brand or company for a long time.
5. Marketing creates revenue options: When marketing techniques convert the leads to actual sales. It
ultimately increases revenue. Hence, marketing is crucial to generating and increasing revenue by
communicating the products with potential customers.
6. Set better goals for your business: Marketing helps the business know about the customers' demands and
needs. They could set their goals according to these.
7. Build a reputation for brand: effective marketing tends to impact the customers' minds. Hence, they build
brand awareness among them.
Market Concept
The marketing concept means whenever a company plans and implements to maximize profit by boosting sales,
meeting customer’s needs, and surpassing competitors. The goal is to devise a situation that serves both parties;
the customer and the company.
The idea behind the marketing concept is to predict and satisfy the needs and wants of customers better than the
competitors.
 Needs – it is something inevitable for the existence of life; many adverse things can occur without
it. The worst-case situation would be death. Needs cover many things, like food, shelter, self-
development, security, social belonging, self-esteem, and respect.
 Wants – wants are our desires and wishes in life; our social setup and culture mold our wants.
 Demands – when our desires, needs, and wants are backed by our ability to pay, they become
demands.

Types of Marketing Concept

Production Concept
This concept was based on the assumption that customers are primarily interested in products which are
accessible and affordable. This concept was introduced at a time when business was focused mainly on
production. It says that a business will be able to lower costs by producing more quantity or mass production of
goods. Solely focusing on producing goods may lead to the firm deviating from its objective.

Product Concept
The product concept is based on the assumption that customers will be more inclined towards products that are
offering more quality, innovative features and top-level performance.
In this type of marketing concept, a business focuses on creating high-quality products and refining it every
time in order to develop a better and improved product.

Selling Concept
While the previous two concepts focused on production, the selling concept is focused on selling. It believes
that customers will be buying products only when the product is aggressively marketed by the company. It does
not focus on building relationships with customers, and ensuring customer satisfaction is also not deemed
necessary.
Marketing Concept
A marketing concept places the center of focus on the customer. All the activities that are undertaken by an
organization are done keeping the customer in mind. The organizations are more concerned about creating value
propositions for the customers, which will differentiate them from the competition.

Societal Marketing Concept

This is the fifth and most advanced form of the marketing concept. Here the focus is on needs and wants of the
customer as well as ensuring the safety of the customer and society first. It believes in giving back to society
and making the world a better place for all human beings.

MARKETING APPROACH
1. Product or Commodity Approach
2. Institutional Approach
3. Functional Approach
4. System Approach
5. Decision making approach
6. Social approach
7. Holistic approach

1. Product or Commodity Approach:

Under the commodity approach the focus is placed on the product or it is an approach on the marketing on
commodity wise basis. In other words, the study relates to the flow of a certain commodity and its movement
from the original producer right up to the ultimate customer.
2. Institutional Approach:
In the institutional approach, the focus is on the study of institutions- middlemen, wholesalers, retailers,
importers, exporters, agencies, warehousing etc., engaged in the marketing during the movement of goods.
The approach is also known as middlemen approach. Here, emphasis is given to understand and analyses
the functions of institutions, who are discharging their marketing functions.
This system pays attention to the problems and functions of marketing institutions-transporting, banks and
other financial institutions, warehousing, advertising, insurance etc.
3. Functional Approach:
The functional approach gives importance on the various functions of marketing. In other words, one
concentrates attention on the specialized services or functions performed by marketers. In this approach,
marketing splits into many functions-buying, selling, pricing, standardization, storage, transportation,
advertising, packing etc.
In this approach, marketing is regarded as “business of buying and selling and as including those business
activities involved in the flow of goods and services between producers and customers.”
4. System Approach:
The system approach can be defined as “a set of objects together with the relationships among them and
their attributes.” Systems focus on interrelations and interconnections among the functions of marketing.
The system examines marketing connections (linkage) inside as well as outside the firm.
5. Societal Approach:
The marketing process is regarded as a means by which society meets its own consumption needs.
Therefore, attention is paid to ecological factors (sociological, cultural, legal etc.) and marketing decisions
and their impact on the society’s well-being.
6. Decision making approach:
In successful marketing, decision making occupies an important place. The marketing manager should be
very expert and competent in his job so that he takes proper decisions for marketing the goods and services.
The decision is based on two variables which can be classified as ‘uncontrollable’ and ‘controllable’.
Uncontrollable’ variables relate to economic, sociological, psychological and political forces which are the
basic causes of market changes. On the other hand, ‘controllable’ variables are within the control of the
organization.
7. Holistic approach:
A holistic approach means to provide support that looks at the whole person, not just their mental health
needs. The support should also consider their physical, emotional, social and spiritual wellbeing. A holistic
approach focuses on a person's wellness and not just their illness or condition.

CUSTOMER VALUE
Customer value is the customer’s perception of the worth of the product or service. Worth can mean several
things: the benefit these products or services provide to target market, or the value for money they offer.

CUSTOMER CREATION
Customer creation is the final phase of the customer development model (with customer discovery and customer
validation directly preceding it). It describes any activity that drives customers into sales funnel or in other
words, turning potential customers into paying customers.

SELLING Vs. MARKETING

SELLING MARKETING
Definition
The selling theory believes that if companies and The marketing theory is a business plan, which
customers are dropped detached, then the customers affirms that the enterprise’s profit lies in growing
are not going to purchase enough commodities more efficient than the opponents, in
produced by the enterprise. manufacturing, producing and imparting
exceptional consumer value to the target
marketplace.
Related to
Constraining customer’s perception of commodities Leading commodities and services towards the
and services. consumer’s perception.
Beginning point
Factory Marketplace
Concentrates on
Product Consumer needs
Perspective
Inside out Outside in
Business Planning
Short term Long term
Orientation
Volume Profit
Cost Price
Cost of Production Market ascertained
 MARKETING MANAGEMENT
Marketing management refers to the control and operations of various marketing activities and the people
involved in those activities, such as managers, marketing management professionals, contractors, and more.

Marketing management is “planning, organizing, controlling and implementing of marketing programmes,

policies, strategies and tactics designed to create and satisfy the demand for the firms’ product offerings or
services as a means of generating an acceptable profit.”

Importance of Marketing management

1. Analyzing Market Opportunities: Marketing management collects and analyses information
related to consumer’s needs, wants and demands, competitor’s marketing strategies, changing
market trends and preferences. This helps to identify market opportunities.

2. Determination of Target Market: Marketing management helps to identify the target market
that the organization wishes to offer its product.

3. Planning and Decision Making: Marketing management helps to prepare future course of action.
Planning relates to product introduction, diversification. Decision making regarding pricing,
selection of promotional mix, selection of distribution channel is taken by the marketing
management.

4. Create on of Customer: Consumers determine the future of the market. Therefore, providing the
best product to the consumer according to their preference is the important task of marketing.
Marketing management helps in creation of new customers and retention of current customers.

5. Helps in Increasing Profit: Marketing caters to the varied and unlimited needs of consumers.
Marketing management helps to increase profit and sales volume. This is achieved by expansion
of market and increasing customers.

6. Improvement in Quality of Life: Marketing management aims at providing innovative product

and services to the customers. Marketers continuously strive to incorporate new technology and
mechanism in their product to provide more satisfaction to customers than before. This improves
quality of life and makes life of consumers easier than before.

7. Employment Opportunities: Marketing process is a combination of different activities like

research work to assess the marketing environment, product planning and development,
promotion, distribution of product to customers and after sales service. Marketing process requires
researcher, production engineer, different distribution intermediaries, sales personnel also creates
employment opportunities in advertisement section. Thus marketing management opened up
different employment avenues thus creating employment opportunities.

MARKETING ENVIRONMENT
A company's marketing environment includes every element that may affect its ability to connect with its
customers. This can include internal elements such as resources, equipment and a company's corporate structure.
It can also include external components like existing customers, delivery platforms and top competitors. Both
internal and external conditions can affect how a customer responds to a business and determine how a business
might grow.
MICRO-MARKETING ENVIRONMENTS
Micro-marketing environments often have a direct impact on business operations. Learning about the
components of microenvironments can help a company decide how to handle conflicts and improve
relationships with external partners and consumers. Here are some elements that comprise a micro-marketing
environment:
1. Suppliers: Suppliers provide raw materials, services or goods to a company. The prices, service availability
and product quality that a supplier offers can affect the cost and condition of products that customers
purchase.

2. Distributors and resellers: Distributors help companies store and deliver their goods, often using
warehouses. They also assist organizations by delivering products safely and on time. They may represent
a specific brand, especially if they deliver to different outlets.
Resellers may also deliver goods, but they often purchase them from a company first before selling them
for a profit. For example, most retailers are resellers.

3. Partners: Partners are organizations that a company collaborates with to develop a product,
deliver a service or provide a promotion. Typically, the members of a partnership include two or
more companies that may operate in similar industries.

4. Customers: Customers exercise a major influence on a company's marketing environment.

Companies may collect information about customer behaviors and opinions to help inform future
business decisions.
To manage this aspect of its marketing environment, a company may monitor the changes in
customer preference and behavior and adjust its offerings as needed. For example, if a company
receives negative feedback about a product, it might alter its product development practices.

5. Competitors: A company's competitors are part of its microenvironment because they directly
affect daily business operations. A company can determine its position in the market to decide on
strategies that can help it outperform its competition. Competing businesses often share customers,
so it's helpful to monitor how the competitors are succeeding to understand ways that the company
you work for might improve.

6. The public: The public includes any person who might engage with the company. The public can also
include potential investors and people who refer new customers to the business. Understanding the public
as a group of potential customers can help you target new markets to increase brand awareness.

MACRO-MARKETING ENVIRONMENTS
1. Demographic environment: Demography is the study of populations. This environment includes
the size and density of a particular population and the common occupations people have. It also
covers the age, race and gender of prospective customers in a demographic group.

2. Economic environment: A company's economic environment refers to the factors that influence consumer
buying habits and the company's performance. A company's economic environment may fluctuate based on
government funding, credit availability, market trends, interest rates and shifts in the global economy.
 3. Natural environment: A natural environment, or physical environment, refers to both the location a business
operates and the place it sources any natural resources it needs. Here are a few common factors that impact
the natural environment of a business:
 A shortage or surplus of raw goods
 A fluctuation in the cost of energy
 A change in the quality of air
 Natural disasters
 Climate change
 A change in government policies

4. Technological environment: A technological environment includes a specific market, technological

equipment and innovative practices and products. Technology like laptops, automated machines and social
media can all improve an organization's productivity and reach. In this type of marketing environment, it's
important for companies to understand customer behavior.
5. Political environment: Changes in a country's national or local political situation can modify a company's
external marketing environment. Politics might determine tariffs, regulations and other standards that affect
the cost of purchasing goods and conducting business operations. Political environments may sometimes
influence the global economy, which can alter the behavior of a market.
6. Social environment: A social environment refers to the way companies and consumers respond to social
experiences. For example, an organization might donate a portion of its earnings to nonprofits or government
agencies that help communities in need.
7. Cultural environment: Similar to social environments, a cultural environment refers to the way local
communities interact with each other and your brand. Depending on the region, this type of marketing
environment can vary widely. Some factors that influence a cultural environment include people's opinions
about their community, other social groups and the company.

MARKETING MIX
Marketing Mix is a set of marketing tool or tactics, used to promote a product or services in the market and sell
it. It is about positioning a product and deciding it to sell in the right place, at the right price and right time
The components of the marketing mix consist of 4Ps Product, Price, Place, and Promotion.
Product in Marketing Mix:
A product is a commodity, produced or built to satisfy the need of an individual or a group. The product can be
intangible or tangible as it can be in the form of services or goods. It is important to do extensive research before
developing a product as it has a fluctuating life cycle, from the growth phase to the maturity phase to the sales
decline phase.

Price in Marketing Mix:

The price of the product is basically the amount that a customer pays for to enjoy it. Price is the most critical
element of a marketing plan because it dictates a company’s survival and profit. Things to keep on mind while
determining the cost of the product are, the competitor’s price, list price, customer location, discount, terms of
sale, etc.,

Place in Marketing Mix:

Placement or distribution is a very important part of the marketing mix strategy. We should position and
distribute our product in a place that is easily accessible to potential buyers/customers.

Promotion in Marketing Mix:

It is a marketing communication process that helps the company to publicize the product and its features to the
public. It is the most expensive and essential components of the marketing mix, that helps to grab the attention
of the customers and influence them to buy the product. The promotion might include direct marketing,
advertising, personal branding, sales promotion, etc.
 UNIT 2: CONSUMER BEHAVIOR & MARKET SEGMENTATION
CONSUMER BEHAVIOR
Consumer Behavior is the study of individual or groups and the processes that are used to select and dispose
of product or services in order to satisfy the needs and wants.

Consumer or buyer behavior is that subset of human behavior that is concerned with decisions and acts of
individuals in purchasing and using products.

Definition
According to Philip Kotler “consumer buying behavior refers to the buying behavior of final consumers-
individuals and households who buy goods and services for personal consumption”.

IMPORTANCE OF CONSUMER BEHAVIOUR

1. Marketers can understand the expectation of the consumers
2. Kind of products liked by the consumers
3. In order to find success for the existing as well as launching of new products
4. Application of Marketing efforts according to the taste and preferences of the consumers.
5. To create and retain the existing customers

CONSUMER BUYING BEHAVIOUR PROCESS

1. Perceived want or desire- buying process begins when a person begins to feel that a certain need or desire
is arisen, and it has to be satisfied. Needs may be ignited by internal or external stimulation.

2. Information search- The marketers must provide relevant information through various promotional
strategies. Marketers must provide reliable, up-to-date and adequate information and guidance. This is the
pressing demand of consumerism.

3. Evaluation of alternatives- with the available information the consumers will now evaluate the alternatives
(products or brands). The product is first viewed based on its utilities and information of the product is
collected. Brand image helps in evaluation of alternative; these alternatives are again selected based on their
attributes.

4. Purchase decision- while the consumer is evaluating the alternatives, she/he will develop some likes and
dislikes about the alternative brands. This attitude towards brands influences her/his intention to buy. Factors
such as social factors, situational factors and perceived risk influences the buying decision.

5. Post purchase experience and behavior- the brand purchased, and the product used provide feedback of
information regarding attitudes. If the level of satisfaction derived as per the expectations. It will create
brand preference influencing future purchase.
 FACTORS INFLUENCING CONSUMER BUYING BEHAVIOUR
Consumer behaviour is influenced by various factors that determine the product and brand preferences of
consumers. It is essential for the companies to understand the impact of these factors on consumer buying
behaviour because it helps in designing better marketing strategies to appeal consumer preferences.

I. Psychological factors
These are factors that directly affects the psychic of a person, and every person has his own psychological
framework as a result every individual reacts differently to same subject.
Following are the psychological factors that affect the consumer behaviour:
a) Motives- A motive is a drive or an urge for which an individual seeks satisfaction. So motive is an
inner urge that moves a person to initiate the purchase action to satisfy his need or want.
b) Perception- it is a process through which a consumer’s mind receives, selects, organises and interprets
sensory and physical stimulation into a meaningful and coherent picture.
c) Learning- Consumer learning is a process where consumers acquire knowledge and experience from
purchase and consumption of product.
d) Beliefs- These beliefs are based on certain real facts or sometimes it may be notion or opinion that a
person has.
e) Attitudes- it is a learned predisposition influenced by the perception and personality. It is very difficult
to change the attitude because it is a result of continued learning.
f) Personality- Personality is usually described in terms of traits like self-confidence, dominance,
adaptability etc.

II. Personal factors

a) Age- it is one of the important personal factors influencing buying behaviour people buy different
products at their different stages of lifestyle.
b) Family life cycle- people buy different goods and services over their lifetime. Consumption is also
shaped by the stage of the family cycle.
c) Education- Consumer behaviour of an educated man would be very different from that of an
uneducated man. Ex- use of educational facilities, purchase of newspapers, magazines etc.
d) Occupation- the lifestyles and buying considerations and decisions differ widely according to the
nature of the occupation.
e) Income- it is another factor which influence in shaping the consuming pattern. Buying pattern of
people differs with different levels of income.

III. Social factors

a) Family- the taste, likes, dislikes, lifestyles etc. of the members are rooted in the family buying
behaviour.
b) Reference groups- a reference group is group of people that serves as a point of comparison for an
individual in the formation of his general or specific values, attitudes or behaviour.
c) Roles and status- People choose products that communicate their role and status in society.
Companies must be aware of status of potential consumers to design their marketing strategy.
d) Opinion leaders- a consumer is also influenced by the advice he receives from his friends, neighbors,
peers and colleagues about what products and services he should buy.
IV. Cultural factors
a) Culture- it influences considerably the pattern of consumption and the pattern of decision making.
Consumers operate within cultural framework of their family and society and purchase those products
that fit only their cultural framework.
b) Sub-culture- it refers to a set of beliefs shared by a sub-group of the main culture, which include
nationalities, religious, racial groups and geographic regions.
c) Social class- consumer behaviour is determined by the social class to which they belong. They are
upper class, middle class and lower class. These influence the buying behaviour.

V. Economic factors
a) Personal income- it is a determinant of his/her buying behaviour. An increase in the disposable
income leads to an increase in the expenditure of various items.
b) Family income- it refers to the aggregate income of all the members of a family. The surplus family
income, remaining after the expenditure on the basic needs of the family, is made available for buying
shopping goods, durables and luxuries.
c) Income expectation- it is an important determinant of buying behaviour. If a person expects an
increase in his income, he is tempted to spend more on his buying and vice versa.
d) Savings- a change in the amount of savings leads to a change in the expenditure of an individual. If a
person decides to save more out of his present income, he will spend less on comforts and luxuries.
e) Liquid assets- it includes cash in hand, cash at bank, marketable securities etc. if an individual has
more liquid assets, he goes in for buying comforts and luxuries and vice versa.
f) Consumer credit- it influences consumer behaviour. If a consumer credit is available on liberal terms,
expenditure on comforts increases as it induces consumers to purchase these goods and raise their living
standards.

MARKET SEGMENTATION
Market Segmentation can be defined as the process of dividing the whole market into small subgroups based
on shared characteristics like age, gender, taste, preferences, etc.

Market segmentation is a way of aggregating prospective buyers into groups or segments, based on
demographics, geography, behavior, or psychographic factors, in order to better understand and market to
them.

Market segmentation is a marketing strategy that divides a broad target market into subsets of consumers with
common needs, preferences, or characteristics. This approach allows businesses to tailor their marketing
efforts and products to meet the specific needs of different groups.

Benefits/Importance of Market Segmentation

1. Enhanced Targeting: Segmentation enables businesses to identify and focus on the segments most likely
to purchase their products.
2. Personalized Marketing: Companies can create personalized marketing campaigns by understanding
different segments.
3. Resource Allocation: Segmentation helps businesses allocate their marketing resources efficiently.
4. Competitive Advantage: Market segmentation provides a competitive advantage by allowing businesses
 to tailor products and marketing strategies to meet specific customer needs, differentiating them from
competitors.
5. Market Expansion: Identifying and targeting new customer segments through segmentation increases
opportunities and growth in previously untapped markets.
6. Customer Retention: Tailoring products and services to specific customer segments enhances satisfaction
and loyalty, improving customer retention.
7. Product Development: Understanding distinct customer segments drives targeted product development,
leading to offerings that better meet specific needs and preferences.

BASIS OF MARKET SEGMENTATION

The main bases for segmentation are geographic, demographic, psychographic, and behavioral.
 Geographic Segmentation:
This method divides the market based on location, such as region, city, or climate. For example, a fast-
food chain might offer different menu items in different regions.

 Demographic Segmentation:
This segmentation uses factors like age, gender, income, education, and occupation to group
customers. H&M might have different sections for men, women, and children, catering to specific
demographic needs.

 Psychographic Segmentation:
This approach focuses on psychological characteristics like lifestyle, values, interests, and personality
traits. It helps understand the "why" behind customer decisions.

 Behavioral Segmentation:
This method groups customers based on their purchasing behavior, usage patterns, or brand loyalty. For
example, a retailer might segment customers by purchase frequency, order size, or product usage.
 UNIT 3: PRODUCT AND PRICING
PRODUCT
In marketing, a product is anything offered to the market to satisfy a need or want. It can be a physical item, a
service, an experience, or even an idea.
In other words, a product is something that can be seen or experienced, created to meet the needs or desires of
consumers. It can be a physical item, a service, an experience, or even a concept.

Definition
According to William Stanton, “Product is complex of tangible and intangible attributes, including
packaging, colour, price, prestige, and services, that satisfy needs and wants of people.”

Characteristics of Product:
1. Product is one of the elements of marketing mix or programme.
2. Product includes both good and service.
3. Product is a base for entire marketing programme.
4. It includes tangible and non-tangible features or benefits.
5. It is a vehicle or medium to offer benefits and satisfaction to consumers.

Product classification
Product classification is a foundational concept in marketing that categorizes products based on specific
characteristics, consumer behavior, and usage patterns.
Basis of Classification
Products are classified based on several factors, including:
 Consumer Behavior: How often the product is purchased and the effort involved in the buying decision.
 Price Sensitivity: The cost of the product and how it impacts the purchasing decision.
 Product Usage: The role the product plays in the consumer’s life and its frequency of use.

Product can be classified into two groups, such as:

1. Consumer Product
2. Industrial Products

Consumer Products:
Consumer products are those items which are used by ultimate consumers or households and they can be used
without further commercial and engineering processes.
Consumer products can be divided into four types as under:
1. Convenience Products
Convenience products are items that consumers purchase frequently with minimal effort and
consideration. These products are essential for everyday life and are typically low-cost and widely
available.
Characteristics:
 High Purchase Frequency: Consumers buy these products often, often out of habit.
 Low Price: They are generally inexpensive, which encourages frequent purchases.
 Minimal Effort: The buying process is quick and straightforward, with little need for comparison or
research.
Examples: Everyday essentials such as snacks, beverages, toiletries, and cleaning supplies etc.,
2. Shopping Products
Shopping products are items that consumers purchase less frequently and usually with more consideration.
These products often involve a comparison of features, quality, and price before making a decision.
Characteristics:
 Moderate to High Purchase Frequency: Consumers buy these products occasionally, often after careful
thought.
 Higher Price: These products are generally more expensive than convenience items.
 Comparison and Research: Consumers invest time in researching and comparing options before
purchasing.
Examples: Electronics, clothing, furniture, and appliances are common shopping products.

3. Specialty Products
Specialty products are high-end, unique items that have a distinct appeal to specific consumer segments.
Consumers seeking these products are often brand-loyal and willing to go to great lengths to obtain them.
Characteristics:
 Low Purchase Frequency: These products are bought infrequently but with significant intent.
 Premium Price: Specialty products command a higher price due to their exclusivity and perceived value.
 Strong Brand Loyalty: Consumers are typically very loyal to specific brands and may actively seek out
these products.
Examples: Luxury items such as high-end watches, designer handbags, and exclusive cars.

4. Unsought Products
Unsought products are items that consumers do not regularly think about or plan to purchase until a
specific need arises. These products are often associated with emergencies or situations that require
immediate attention.
Characteristics:
 Varied Purchase Frequency: Purchased only when a specific need or emergency arises.
 Variable Pricing: Prices can vary widely depending on the product and urgency.
 Need-Driven: The decision to purchase is driven by necessity rather than desire.
Examples: Life insurance, emergency repair services, and first-aid supplies.

Industrial Products
Industrial goods are used to create other products. They are used in manufacturing or in maintaining and
repairing machinery and equipment.
1. Raw materials
Raw materials are goods that have yet to be processed and are used to make other products. They support
a diverse range of industries, such as agriculture and textiles, and contribute to global economic growth.
2. Processed materials
A processed material is something that has been refined in some way so it can be used in another
product’s manufacturing process.
3. Capital goods
Capital goods are anything that is needed for the production process, such as machines, major equipment,
or tools. Raw materials and processed materials are needed to make capital goods. A computer, for
instance, requires metals, glass, and plastic.
4. Intermediate goods
Intermediate goods are those products used in the manufacturing process of final goods, but are not
themselves final goods. Intermediate goods can include parts and components used to produce a final
product.
5. Component parts
A component part is what makes up a bigger system or product. Component parts can refer to anything
from the parts that make up a machine. For example, to make a car, the component parts include the
engine, transmission, and brakes, among others.
6. Accessory equipment
Accessory equipment doesn’t contribute to the core operation of a process or system but improves its
efficiency, safety, or quality.

PRODUCT LINE
 Product line – Product Line refers to a group of products that function in a similar manner, sold to the same
customer groups via same distribution channels and fall within the same price range.

PRODUCT MIX
A product mix is the set of all product lines and items that a particular seller offers for sale to buyers.
For example, a company's product mix may be constituted of cosmetics, toiletries, and medicine. Again, each
of the line may have sub line, such as cosmetics may be broken down into powder, lipstick, nail polish, etc.

BRANDING
 Branding is the process of creating a unique identity for a product or company through a name, symbol,
design, or other visual or auditory elements.
 It involves building a positive image and perception in the minds of consumers, which can lead to brand
loyalty and preference.
 Branding helps differentiate a product from competitors, communicate its value, and build a strong
reputation.

PACKAGING
 Packaging refers to the materials that encase and protect a product during storage, transportation, and display.
 It plays a crucial role in attracting customers, conveying information about the product, and ensuring its
safety.
 Effective packaging can enhance the perceived value of a product and contribute to its overall brand image.

LABELLING
 Labelling involves providing information about the product through printed text, logos, or other designs on
the packaging.
 Labels provide essential details like ingredients, nutritional information, usage instructions, warnings, and
safety precautions.
 They also reinforce the brand identity, help consumers make informed decisions, and ensure compliance with
legal regulations.
PRODUCT LIFE CYCLE
The product life cycle in marketing describes the stages a product goes through from its introduction to the
market until its eventual removal.
These stages are typically divided into introduction, growth, maturity, and decline. Understanding these stages
helps businesses develop effective marketing strategies for each phase and maximize profitability.

The product life cycle is the length of time that a product is available to customers. It starts when a product (a
good or a service) is introduced into the market and ends when it's removed from the shelves.

Stages in the Product Life Cycle

The four stages in the product life cycle are:
1. Introduction
2. Growth
3. Maturity
4. Decline

1. Introduction Stage
This is the initial stage where a new product is launched into the market. Characterized by low sales and high
marketing costs, the focus is on educating consumers about the product and building awareness.
In this stage, company profit is small (if any) as the product is new and untested. The introduction stage
requires significant marketing efforts, as customers may be unwilling or unlikely to test the product.
Marketing efforts should be focused on the customer base of innovators – those most likely to buy a new
product. There are two price-setting strategies in the introduction stage:
 Price skimming: Charging an initially high price and gradually reducing (“skimming”) the price as the
market grows.
 Price penetration: Establishing a low price to quickly enter the marketplace and capture market share,
before increasing prices relative to market growth.
2. Growth Stage
 As the product gains traction, sales increase rapidly, and market acceptance grows. This stage requires
effective distribution channels, increased production, and aggressive marketing to maintain momentum.
 In the growth stage, the market grows, competition intensifies, sales rise, and the number of customers
increases.
 Price undercutting in the growth stage tends to be rare, as companies in this stage can increase their sales by
attracting new customers to their product offerings.

3. Maturity Stage
 Sales growth slows down as the market becomes saturated. Competitors may enter the market, leading to
increased price competition and a need for product differentiation or innovation to maintain market share.
 The market grows to capacity, and sales growth of the product declines. In this stage, price undercutting and
increased promotional efforts are common as companies try to capture customers from competitors.
 The biggest challenge in the maturity stage is trying to maintain profitability and prevent sales from declining.
Retaining customer brand loyalty is key in the maturity stage. In addition, to re-innovate itself, companies
typically employ strategies such as market development, product development, or marketing innovation to
ensure that the product remains successful and stays in the maturity stage.

4. Decline Stage
 Sales begin to decline as consumer preferences shift, new technologies emerge, or the product becomes
outdated. Businesses may need to consider product extensions, new marketing strategies, or even
discontinuation of the product.
 In the decline stage, sales of the product start to fall and profitability decreases. This is primarily due to the
market entry of other innovative or substitute products that satisfy customer needs better than the current
product. There are several strategies that can be employed in the decline stage, for example:
 Reduce marketing efforts and attempt to maximize the life of the product for as long as possible (called
milking or harvesting).
 Slowly reducing distribution channels and pulling the product from underperforming geographic areas.
 Selling the product to a niche operator or subcontractor. This allows the company to dispose of a low-
profit product while retaining loyal customers.

NEW PRODUCT DEVELOPMENT

New Product Development (NPD) is the process that combines research, design, and engineering to turn
ideas into products that meet real customer needs.
Unlike improving existing products, new product development focuses on bringing entirely new concepts to
life from initial research and ideation to market launch.

New product development refers to the complete process of bringing a new product to market. This can
apply to developing an entirely new product, adding features to an existing one to keep it attractive and
competitive, or introducing an old product to a new market.
Stage in New Product Development Process
1. Idea generation
 Idea generation involves brainstorming for new product ideas or ways to improve an existing product.
During product discovery, companies examine market trends, conduct product research, and dig deep into
users' wants and needs to identify a problem and propose innovative solutions.
 There are two primary sources of product development ideation. Internal ideas come from different areas
within the company—such as Marketing, Customer Support, the Sales team, or the Engineering
department. External ideas come from outside sources, such as studying your competitors and, most
importantly, feedback from your target audience.

2. Idea screening
 This second step of new product development revolves around screening all your generated ideas and
picking only the ones with the highest chance of success. Deciding which ideas to pursue and discard
depends on many factors, including the expected benefits to your consumers, product improvements most
needed, technical feasibility, or marketing potential.
 The idea screening stage is best carried out within the company. Experts from different teams can help
you check aspects such as the technical requirements, resources needed, and marketability of your idea.

3. Concept development and testing

 A product concept is a detailed description or blueprint of the idea. It should indicate the target market for
the product, the features and benefits of the solution that may appeal to the customers, and the proposed
price for the product. A concept should also contain the estimated cost of designing, developing, and
launching the product.
 Once concepts developed, test each of them with a select group of consumers. Concept testing is a great
way to validate product ideas with users before investing time and resources into building them.

4. Marketing strategy and business analysis

 The marketing strategy serves to guide the positioning, pricing, and promotion of your new product.
Once the marketing strategy is planned, product management can evaluate the business attractiveness of
the product idea.
 The business analysis comprises a review of the sales forecasts, expected costs, and profit projections. If
they satisfy the company’s objectives, the product can move to the product development stage.

5. Product development
 The product development stage consists of developing the product concept into a finished, marketable
product. This stage usually involves creating the prototype and testing it with users to see how they interact
with it and collect feedback.

6. Test marketing
 Test marketing involves releasing the finished product to a sample market to evaluate its performance
under the predetermined marketing strategy. There are two testing methods you can employ:
 Alpha testing is software testing used to identify bugs before releasing the product to the public
 Beta testing is an opportunity for actual users to use the product and give their feedback about it
 The goal of the test marketing stage is to validate the entire concept behind the new product and get ready
to launch the product.
7. Product launch
 At this point, the new product is ready to introduce to the market. Ensuring that Product, Marketing, Sales,
and Customer Support teams are in place to guarantee a successful launch and monitor its performance.
 To better understand how to prepare a go-to-market strategy, there are some essential elements to consider:
 Customers: Understand who will be making the final purchasing decisions and why they will be
purchasing the product.
 Value proposition: Identify what makes different from the competition and why people should
choose to buy the product
 Messaging: Determine how you will communicate the product’s value to potential customers
 Channels: Pick the right marketing channels to promote the products, such as email marketing,
social media, SEO, and more.

PRICING
Pricing is the process of setting a specific value to a product or service against customer purchases.
Pricing is a process of fixing the value that a manufacturer will receive in the exchange of services and goods.
Price is the amount of money charged for a product or service, or the sum of the values that consumers
exchange for the benefits of having or using the product or service.

Significance of Price
1. Defining Product Value:
Price acts as a signal of a product's quality and value to consumers. A higher price can suggest premium
quality, while competitive pricing can appeal to budget-conscious buyers. This helps position the product
within the market and attract the right target audience.
2. Impacting Demand:
Pricing strategies directly affect how customers perceive the value of a product and influence their
purchasing decisions. The right price can drive demand by making the product more attractive to the target
audience.
3. Differentiating the Brand:
Pricing can be used to differentiate a brand, whether as a luxury option, a value-for-money choice, or
something in between. This helps establish a unique position in market and attract a specific customer base.
4. Supporting Profitability:
A well-designed pricing strategy ensures that marketing efforts lead to sustainable revenue and profits.
It's crucial to consider production costs, target market, and customer behavior when setting prices.
5. Attracting Customers:
Price can create the first impression and significantly influence customers' decisions to purchase.
Setting the right price encourages consumers to choose a product over competitors.
6. Highlighting Value:
Pricing helps highlight the value of a product by aligning its benefits with its cost.
This helps customers understand why they should pay for the product and its perceived benefits.
7. Building Customer Loyalty:
A well-defined pricing strategy can contribute to customer loyalty by offering perceived value and
competitive pricing. This can lead to repeat purchases and positive word-of-mouth marketing.
8. Managing Demand and Market Dynamics:
Pricing flexibility and responsiveness to market changes are crucial for businesses to stay competitive.
Adjusting prices in response to changes in demand, supply, or competitive landscape allows businesses to
optimize revenue and maintain profitability.
Factor Affecting Pricing Decisions
Pricing decisions play a significant role in designing marketing mix. These decisions interconnect marketing
actions with financial objectives of the company. Marketing manager decides the price of the product keeping
in mind the impact of various internal and external factors. Internal factors are within the control
of marketing manager, however, he has no control over external factors.

Various internal and external factors which impinge on the pricing decisions of a company/firm have been
described as follows:
I. Internal factors: Internal factors affecting pricing decisions include cost of production, pricing objectives,
product life cycle, marketing mix, pricing policies and product differentiation.
 Pricing Objectives: A company lays down objectives which act as benchmarks against which the
prices are fixed. These act as standards. So every pricing decision should consider various pricing
objectives of the company which may be price stability, sales maximization, profit maximization,
increased market share, meeting competition or earning a target rate of return.
 Cost of Production: Cost is an important consideration while fixing the price of product. Both cost
and price have a close relationship. Many companies use cost plus method. While some companies
use demand or competition based method for price fixation. Whatever may be the method of pricing,
the aim should be to cover the cost of production and make some surplus.
 Product life cycle: Every product passes through different stages i.e. introduction, growth,
maturity and decline. Each stage of product life cycle has a great influence on pricing decisions.
 Pricing Policies: Pricing policies are the general guidelines which provide a framework to the
marketing manager to fix prices in a way that will match market needs.
 Product differentiation: Product differentiation is the ability of manufacturer to create
distinctiveness of product through design, shape, package, colour or brand name. Product
differentiation allows a marketer to fix higher price when it is done better than competitors.

II. External Factors: These are the factors which are beyond the control of company but have
significant influence on its pricing decisions. These factors need careful analysis and interpretation.
Some of the important external factors are described below:

 Competition: No organization can remain unaffected by its competitors. It has to plan its move and
counter moves as per the level of competition prevailing in the market unless it has monopoly.
Competition affects the pricing decisions of management. Management has to consider the pricing
policies, objectives, strategies, strengths and weakness of competitors while determining price of the
product.
 Economic conditions: Inflationary or deflationary conditions prevailing in the economy affect the
pricing decisions. During inflation, high prices are fixed to meet the rising costs. In boom period, the
prices are increased to cover increasing distribution and promotion cost and to earn sizable profit.
However, during recession period, prices are reduced to a considerable extent.
 Government regulations: Government regulations influence the pricing decisions of a firm. The firm
has to set prices within the framework of government regulations. In case prices are fixed
by government, it has no choice than to accept it. The Government has framed laws to restrict
monopoly and unnecessary price hikes. Thus a firm cannot fix higher prices at its own.
 Distribution Channel: The use of intermediaries (wholesalers, retailers, distributor, sole agent)
for distribution of goods is an important factor that influences pricing decisions. Intermediaries
facilitate the flow of goods from manufacturer to final consumer. They are rewarded with commission
or trade discounts. To cover this commission or trade discounts, high prices are fixed. Thus, pricing
decisions are affected due to channel structure.
 Image of the company: Market image of an organization in terms of reliability, quality, durability,
after sale services, product mix and technology affects its pricing decisions.
 Consumer behaviour: Buying pattern of consumer has impact on pricing decision of
an organization. If consumers buy the product frequently, lower price may be fixed. It will result in
more sales and high overall profit.
 Suppliers: The price of product is directly affected by cost of raw materials or various fabricated
parts. Obviously, the suppliers of these inputs will influence the pricing decisions. If suppliers raise
the price, the manufacturers are forced to raise the price of final product.
 UNIT 4: PROMOTION AND DISTRIBUTION
PROMOTION
In business, "promotion" refers to the activities that communicate the benefits of a product or service to
potential customers and encourage them to make a purchase. It's a vital component of the marketing mix,
aiming to inform, persuade, and remind consumers.
In Marketing, the process of Promotion includes all the activities that persuade and make the customers aware
of the product making them interested in purchasing them.

Purpose and Importance of Promotion

1. Increase Brand Awareness: Promotion makes potential consumers aware of what is available on the
market, but it can also help to build brand equity. Brand equity is the overall value of a brand, based on
consumer perception.
2. Recall Brand Value: Businesses may improve the image of their brands and survive competition in the
market by promoting their products regularly. Promotions can draw attention to a brand’s distinct qualities,
such as superior quality, reliability, or outstanding customer service.
3. Increase Customer Traffic: Promotions can attract more customers and increase customer traffic. Time-
limited promotional activities like contests, giveaways, or samples can generate interest among customers
and create opportunities for sale.
4. Increase Sales and Profits: One of the main purposes of marketing is to increase the sales of the business.
Once the customers are properly made aware of the product or service, they buy those products that they
find worthy of purchase.

Characteristics of Promotion
1. Providing Information: One of the main characteristics of promotion is to persuade potential consumers
to purchase their products or services. This can be done by providing information about the qualities,
advantages, and values of the product or services known to the customers.
2. Limited Time: Promotions are often time-limited. For example, advertisements on TV, contests, or
giveaways are all promotional activities that are limited up to a specific time. As a result, both customers
and sellers have to act in that limited time frame.
3. Different Channels of Approach: There are several ways through which the seller can promote its brand
product or services. Some of these platforms include media, such as television, radio, print ads, and direct
mail, as well as electronic media, such as websites, emails, social media, and search engine marketing. These
channels make it easier to reach more customers and increase sales.
4. Adapt to Changes: Promotional activities must be by the changes in the economic as well as technological
world. Earlier, the companies would advertise their brand’s product, or services through mediums like
newspapers or posters, etc. But now, with the technological change, the interest of a large number of
audiences has shifted to electronic media.
5. Building Awareness: Promotion helps to create awareness about a product service or brand among the
target audience. This allows the customers to know about the existence and the usage of the product.
6. Creating Interest: The main purpose of promotion is to generate positive interest and impression among
the buyers. This encourages the customers to further explore the products.
7. Reinforcing: Promotion does not only include creating customers but also has the role of reinforcing the
loyalty of existing customers. This can be done by keeping the existing customers informed and updated
about their products with the help of promotional campaigns.
 TYPES OF PROMOTION
ADVERTISEMENT
Advertising is a paid form of mass communication that consists of the special message sent by the specific
person (advertiser or company), for the specific group of people (listeners, readers, or viewers), for the
specific period of time, in the specific manner to achieve the specific goals.

In other words, Advertising includes oral, written, or audiovisual message addressed to the people for the
purpose of informing and influencing them to buy the products or to act favorably toward idea or institution.

According to Philip Kotler, “Advertising is any paid form of non-personal presentation and promotion of
goods, services, or ideas by an identified sponsor.”

Characteristics
1. Tool for Market Promotion:
There are various tools used for market communication, such as advertising, sales promotion, personal selling,
and publicity. Advertising is a powerful, expensive, and popular element of promotion mix.

2. Non-personal:
Advertising is a type of non-personal or mass communication with the target audience. A large number of
people are addressed at time. It is called as non-personal salesmanship.

3. Paid Form:
Advertising is not free of costs. Advertiser, called as sponsor, has to spend money for preparing message,
buying media, and monitoring advertising efforts.

4. Wide Applicability:
Advertising is a popular and widely used means for communicating with the target market. It is not used only
for business and profession, but is widely used by museums, charitable trusts, government agencies,
educational institutions, and others to inform and attract various target publics.

5. Varied Objectives:
It is targeted to increase sales, create and improve brand image, face competition, build relations with publics,
or to educate people.

6. Use of Media:
Advertiser can use any of the several advertising media to convey the message. Widely used media are print
media (newspapers, magazines, pamphlets, booklets, letters, etc.), outdoor media (hoardings, sign boards,
wall-printing, vehicle, banners, etc.), audio-visual media (radio, television, film, Internet, etc.), or any other to
address the target audience.

7. Advertising as an Art:
Message creation and presentation require a good deal of knowledge, creativity, skills, and experience. So,
advertising can be said as an art.

8. One-way Communication:
Advertising involves the one-way communication. Message moves from company to customers, from sponsor
to audience. Message from consumers to marketer is not possible. Marketer cannot know how far the
advertisement has influenced the audience.
 SALES PROMOTION
Sales promotion refers to short-term incentives. The main purpose of sales promotion is to encourage buyers
to make immediate purchases within a fixed period using various market strategies that include discounts,
coupons, contests, or gifts. Such strategies often draw in customers and increase direct sales of the promoted
products or services.

Characteristics
1. Short-Term Focus
Sales promotions are typically designed to be implemented for a limited period, often with a specific deadline,
to create a sense of urgency.
2. Incentive-Driven:
They offer tangible benefits to consumers, such as discounts, free products, or loyalty points, to encourage
immediate purchase or engagement.
3. Targeted:
Sales promotions can be tailored to specific customer segments, such as first-time buyers, high-value
customers, or those responding to particular offers.

4. Can Be Expensive:
Implementing and managing sales promotions can be costly, requiring careful planning and budgeting.

PERSONAL SELLING
It is a promotional strategy that allows the marketer to orally communicate with the customers. This type of
promotion helps to establish a relationship with customers and helps them understand their needs. Another
benefit of this method is that it is possible to get immediate feedback from customers and act according to the
change in situation.

Philip Kotler says, “Personal selling is a type of personal or local presentation by the firm’s sales force for
the motive of making sales and building customer relationship.”

Characteristics
1. Face to Face Interaction-
This means that there is face to face interaction between buyers and sellers. The seller tries to understand the
needs of the buyers and provide the product matching the customer needs.

2. Two Way Dialogue: -

The customer will respond in case he has certain objections while the seller will respond with an appropriate
solution to customer problems.

3. Immediate Feedback-
As compared to other forms of promotion is that various immediate feedback of consumers that will help the
salesman to act accordingly.

4. Art of Persuasion
It means that in personal selling, salesperson persuades the customers to buy the product he convinced the
customer and win his confidence so that sales are achieved.

5. Flexible
It means that the nature of the product will be varied, personal selling will be also depending upon the
consumer preferences. For Example– Personal selling styles will be different for industrial products.
 DIRECT MARKETING
Direct marketing is defined as a marketing strategy that is used by businesses to introduce a product, service,
or idea directly to consumers through some channels without intermediaries.

Direct marketing refers to directly reaching out to customers which can be done through various means such
as email marketing, direct mail, telemarketing, door-to-door sales, etc.

Characteristics
1. No middlemen
In direct marketing system, selling and buying take place keeping direct contact between marketers and
customers through different media.

2. Customer oriented
In direct marketing, relationship between sellers and customers becomes deep as well as strong. The sellers
give emphasis on the wants, desires of each customer. It is one-to-one marketing.

3. Forms
The channels which help to conduct direct marketing are taken as its forms. So, there are many forms of direct
marketing. They are direct mail, and catalogue marketing, telemarketing, television marketing, Internet
marketing, etc.

4. Direct channel
The producers themselves deliver products to the customers directly. Customers also keep direct contact with
producers or distributors through different media. Selling and buying take place directly between them.

5. Direct contact
Since no middlemen remain in this form, direct contact is established between sellers and customers.
Producers can keep contact with customers one by one.

ONLINE PROMOTION
Online marketing, also known as digital marketing or internet marketing, is a form of marketing that uses the
internet and technology to connect with potential customers.

Digital marketing, also called online marketing, is the promotion of brands to connect with potential
customers using the internet and other forms of digital communication. This includes not only email, social
media, and web-based advertising, but also text and multimedia messages as a marketing channel.

Characteristics
1. Global Reach: Online marketing allows businesses to reach a vast global audience, regardless of their
physical location.
2. Cost-Effectiveness: Compared to traditional marketing methods, digital marketing often offers a lower cost
per customer acquisition.
3. Measurable Results: Online marketing allows for tracking and measuring the performance of campaigns
in real-time, providing data-driven insights into effectiveness.
4. Targeted Audience: Digital marketing enables businesses to target specific demographics, interests, and
behaviors, ensuring that their messages reach the right people.
5. Interactivity and Engagement: Online marketing facilitates two-way communication and interaction
between brands and consumers, building stronger relationships.
6. Personalization: Digital marketing allows for tailoring marketing messages and offers to individual
customer preferences and behaviors, creating a more relevant experience.
7. Flexibility and Scalability: Online marketing campaigns can be easily adjusted and scaled up or down
based on performance and needs.
8. Accessibility: Online marketing is easily accessible through various devices and platforms, making it
convenient for businesses to reach their target audiences.

PROMOTIONAL MIX
The Promotion Mix is the blend of several promotional activities (Advertising, personal selling, sales
promotion, public relations, direct marketing) used by business to create, maintain and increase the demand
for a product.

FACTORS AFFECTING PROMOTION MIX

Main factors influencing promotion mix has been briefly discussed as under:
1. Type of Product:
Type of product plays an important role in deciding on promotion mix. Product can be categorized in terms
of branded products, non-branded products, necessity products, luxury products, new products, etc. All these
types of products need different promotional tools. For example, advertising is suitable for the branded and
popular products. Personal selling may be fit for non-branded products. Advertising, personal selling, sales
promotion and publicity – all four tools – are used for a newly launched product to get a rapid consumer
acceptance.
2. Use of Product:
Product may be industrial product, consumable and necessity product, or may be luxurious product that
affects selection of promotion tools and media. For example, advertising and sales promotion techniques
are widely used for consumer goods while personal selling is used for industrial goods.
3. Purchase Quantity and Frequency:
Company should also consider purchase frequency and purchase quantity while deciding on promotion mix.
Generally, for frequently purchase product, advertising is used, and for infrequently purchase product,
personal selling and sales promotion are preferred.

4. Fund Available for Market Promotion:

Financial capacity of company is a vital factor affecting promotion mix. Advertising through television,
radio, newspapers and magazines is too costly to bear by financially poor companies while personal selling
and sales promotion are comparatively cheaper tools.

5. Size of Market:
Type of market or consumer characteristics determine the form of promotion mix. Education, location,
income, personality characteristics, knowledge, bargaining capacity, profession, age, sex, etc., are the
important factors that affect company’s promotion strategy.

6. Stage of Product Life Cycle

Product passes through four stages of its life cycle. Each stage poses different threats and opportunities.
Each stage needs separate marketing strategies.
7. Level of Competition
Promotional efforts are designed according to type and intensity of competition. All promotional tools are
aimed at protecting company’s interest against competition.

8. Promotional Objectives
Different objectives can be achieved by using different tools of promotional mix. If company’s objective is
to inform a large number of buyers, advertising is advisable. If company wants to convince limited
consumers, it may go for personal selling.

DISTRIBUTION
A set of middlemen or intermediaries who help an organization in the flow of goods and services from the
manufacturers to the consumers are known as Channels of Distribution.
The intermediaries along with the help in the physical movement of goods, also help in the movement or title
or transfer of ownership.

Types of Distribution Channels/Level

The two types of channels of distribution or distribution level are Direct Channel and Indirect Channel.

1. Direct Channel (Zero Level)

As the name suggests, a direct channel or zero level is a distribution level through which an organization
directly sells its products to the customers without the involvement of any intermediary.
2. Indirect Channels
When a middleman or intermediary is involved in the distribution process, it means the organization is
using Indirect Channels of Distribution. The indirect channels of distribution can be classified into three
categories; viz., One Level Channel, Two Level Channel, and Three Level Channel.

i) One-Level Channel
One level channel means that there is only one intermediary involved between the manufacturer and the
customer to sell the goods. This intermediary is known as a retailer. In simple terms, under one level channel,
the organizations supply their products to the retailers who sell them to the customers directly. For
example, goods like clothes, shoes, accessories, etc., are sold by companies with the help of a retailer.

ii) Two-Level Channel

A most commonly used channel of distribution that involves two intermediaries for the sale of products is
known as Two Level Channel. The intermediaries involved are wholesalers and retailers. The producer sells
their products to wholesalers in bulk quantity, who sells them to small retailers, who ultimately supply the
products to the customers. This channel is generally used to sell convenient goods like soaps, milk, milk
products, soft drinks, etc.

iii) Three-Level Channel

Three level channel means that there are three intermediaries involved between the manufacturer and the
customer for the sale of products.
The three intermediaries involved are Agent, Wholesalers, and Retailers. It is usually used when the goods
are distributed across the country and for that different distributors are appointed for different areas.
 FACTORS DETERMINING CHOICE OF CHANNELS
1. Product Related Factors: The selection of distribution channel is affected by the products manufactured
by a company. Some of the related factors are as follows:
 Industrial/ Consumer Product: As industrial products are usually technical, expensive, bulky
and purchased by few buyers, direct or short channels should be used. In the case of consumer
goods, long or indirect channels are used because such goods are standardized, less expensive,
less bulky, non-technical and frequently bought products.
 Perishability: Perishable products like fruits, vegetables, milk, etc., must be sold through short
channels, whereas for non-perishable items like toothpaste, soap, etc., long channels are preferred.
 Degree of Complexity: Products which are complex and require technical advice or guidance,
direct channels should be used, but for simple and non-technical products, long channels should
be used.
2. Company Characteristics:
 Financial Strength: If a company is financially strong, then it can easily opt for direct channels.
But if a company is not financially strong, then indirect channels should be used.
 Degree of Control Desired: Short or direct channels are used if a company wants to exercise
full control over distribution. But, if a company does not want to exercise control over the
distribution, then indirect channels should be preferred.
3. Market Factors:
 Size of Market: It is economical to use more intermediaries if the size of the market is large
with numerous customers. Direct or short channels are preferred if the market size is small
with a limited number of customers.
 Geographical Concentration: It is better to go with direct or short channels of distribution
if buyers are concentrated in a small geographical area. But if buyers are scattered over a
wide geographical area, then companies should opt for indirect channels.
 Quantity Purchased: If the average size of the order is small, then longer channels should
be preferred, but if the size of the order is large, then direct channels should be used.
4. Environmental Factors: The choice of channel is also affected by environmental factors, like
economic condition, government policy, statutory provisions, technological development, etc. For
example, shorter channel is used during depression to achieve economy in the distribution of goods.
 UNIT 5: RECENT DEVELOPMENTS IN MARKETING
Marketing which was originated as mere exchange of goods and services has changed its force with the
passage of time. In the present scenario, various new advancements have taken place which helps in
growth and development. The current chapter concentrates on understanding the contemporary issues
in marketing.

SOCIAL MARKETING
The term “social marketing” was coined by Philip Kotler and Gerald Zaltman in 1971. At the time, it was
used to describe marketing actions that could change social behavior. “Social marketing is the design,
implementation, and monitoring of programs designed to influence the acceptability of social ideas and that
embeds planning, pricing, communication, distribution, and marketing research considerations.”

Features of Social Marketing

1. The advertisement campaign doesn’t necessarily show a product.
2. It’s not meant for furthering profit
3. It reflects upon a social idea.
4. It may use marketing to reduce consumption of a product that is socially undesirable.
5. It doesn’t relate to the product of the company.
6. It often uses emotional appeal that is shocking, scary and informative.
7. It aims at quality of life, health, environment and a reduction in social skills

ONLINE MARKETING/DIGITAL MARKETING

Online marketing is a way of marketing in which deals with internet services. Online marketing is a technique
where the user can reach various online information with the help internet.
Different types of digital marketing:
1. Search Engine marketing: Search engine marketing (SEM) is a form of Internet marketing that involves
the promotion of websites by increasing their visibility in search engine results pages (SERPs) primarily
through paid advertising.
2. Search engine optimization (SEO) is the process of improving the quality and quantity of website
traffic to a website or a web page from search engines.
3. Display Advertising: Display advertising is the process of promoting a product or service through visual ads
on websites, social media channels and digital platforms. Many advertisers use display ads to encourage
potential customers to take a specific action, like request a quote or purchase a product.
4. Social Media Marketing: Part of online marketing, social media marketing includes social media sites like
Facebook and Twitter to communicate directly with customers. Companies are able to gather information
regarding consumer’s habits, choice, and preferences from these social media sites. They can create content
for different segments of consumers they want to target. The consumers can respond to the
companies online, as per their convenience.
5. E-mail Marketing: Email marketing is a marketing strategy where businesses send promotional
messages to people in mass quantities. It is typically used to generate sales by sharing promotional offers,
nurturing leads, or expanding the impact of content marketing efforts.
6. Referral Marketing: Referral marketing is the method of promoting products or services to new
customers through referrals, usually word of mouth. It's a comprehensive strategy to encourage
passionate customers and brand advocates to directly refer their inner network to your business.
7. Pay per click Marketing: Pay-per-click (PPC) is a method of purchasing targeted advertising space
on Internet platforms that takes advantage of organic search terms. Advertisers pay the owners of a web space,
such as a search engine results page or a specific webpage, a certain amount of money each time an Internet
user clicks on their specific ad.
8. Blogging: The process of blog marketing includes publishing content about industry news, market trends,
products and services, and relevant topics to establish expertise and credibility.

SERVICES MARKETING
A service can be defined as “any act or performance that one party can offer to another that is essentially
intangible and does not result in the ownership of anything.” Its production may or
May not be tied to a physical product. From the organization’s view point, service is a process, but it is an
experience for the customers

Characteristics
1. Intangibility: Services are intangible i.e. you cannot feel the service until you experience it
personally.
2. Variability: The quality of service depends on the service provides, they are not homogenous or
we can say they are variable.
3. Inseparability: The service provider cannot be separated from the service.
4. Perishability: You cannot store the services.
5. Ownership: There is no transfer of ownership of services. The buyer doesn’t become the owner
of the service once consumed

GREEN MARKETING
Green marketing involves development and promotion of products and services that are capable of
satisfying customer s wants and need for quality, performance, affordable‟ pricing and convenience without
having any detrimental effect on the environment.
American Marketing Association defines green marketing as: "the marketing of products that are presumed to
be environmentally safe.”
Examples of green marketing
Digital tickets by Indian railways
No polythene bags for free
Wipro green machines
Introduction of CNG in Delhi
Lead free paints from nerolac

RURAL MARKETING
Rural marketing is often referred as the movement of goods, services and ideas to rural areas by using marketing
tools and techniques. The aim is to satisfy rural consumers in order to achieve organization’s objectives.

SEARCH ENGINE MARKETING(SEM)

SEM is the process of increasing traffic and visibility of your website, product and services through search
engine.
MOBILE MARKETING
Mobile marketing is a marketing approach that sees brands and businesses using a variety of
techniques to promote their business, brand, product, or service directly to mobile users.

SOCIAL MEDIA MARKETING

Social media marketing (SMM) (also known as digital marketing and e-marketing) is the use of social media—
the platforms on which users build social networks and share information to build a company's brand, increase
sales, and drive website traffic.

EMAIL MARKETING
According to marketers, the email market is a digital strategy used to reach existing or potential customers.
Because email gives marketers the ability to reach people in nearly every segment. In this way, marketers
can interact with their target audience, promote their business, and most importantly, drive sales or web
traffic to their companies.

NETWORK MARKETING
Network marketing refers to a medium of marketing that numerous business owners use to expand their
businesses. Manufacturers often use such a tremendous medium to deal with numerous distributors to enhance
their business productivity. Other sub-distributors under them lead to a great network of distributors.
They operate at different levels of the distribution chain and ensure good sales.