Module II Marketing mix Marketing mix: meaning - product, product mix- product life cycle - importance of branding -packaging

and labelling. Marketing mix Marketing identifies consumers needs and supplies various goods and services to satisfy those needs most effectively. So the businessman needs to: (a) produce or manufacture the product according to consumers need; (b) make available it at a price that the consumers find reasonable; (c) supply the product to the consumers at different outlets they can conveniently approach; and (d) inform the consumers about the product and its characteristics through the media they have access to. So the marketing manager concentrates on four major decision areas while planning the marketing activities, namely, (i) products, (ii) price, (iii) place (distribution) and (iv) promotion. These 4 Ps are called as elements of marketing and together they constitute the marketing mix. All these are inter-related because a decision in one area affects decisions in other areas.

while fixing the price. In fact, pricing is a very crucial decision area as it has its effect on demand for the product and also on the profitability of the firm. Place: Goods are produced to be sold to the consumers. They must be made available to the consumers at a place where they can conveniently make purchase. The organisation has to decide whether to sell directly to the retailer or through the distributors/wholesaler etc. Promotion: If the product is manufactured keeping the consumer needs in mind, is rightly priced and made available at outlets convenient to them but the consumer is not made aware about its price, features, availability etc, its marketing effort may not be successful. Therefore promotion is an important ingredient of marketing mix as it refers to a process of informing, persuading and influencing a consumer to make choice of the product to be bought. Promotion is done through means of personal selling, advertising, publicity and sales promotion.

PRODUCT
Product refers to the goods and services offered by the organisation for sale. Here the marketers have to recognise that consumers are not simply interested in the physical features of a product but a set of tangible and intangible attributes that satisfy their wants. For example, when a consumer buys a washing machine he is not buying simply a machine but a gadget that helps him in washing clothes. It also needs to be noted that the term product refers to anything that can be offered to a market for attention, acquisition, or use. Thus, the term product is defined as anything that can be offered to a market to satisfy a want. It normally includes physical objects and services. In a broader sense, however, it not only includes physical objects and services but also the supporting services like brand name, packaging accessories, installation, after sales service etc. William J. Stanton Product is a set of tangible and intangible attributes including packaging, colour, price, manufacturers prestige, retailers prestige and manufacturers and retailers services which buyer may accept as offering satisfaction of wants and services. Jerome McCarthy A product is more than just a physical product with its related functional and aesthetic features. It includes accessories, installation, instructions on use, the package, perhaps a brand name, which fulfills some psychological needs and the assurances that service facilities will be available to meet the customer needs after the purchase.

According to Philip Kotler Marketing Mix is the set of controllable variables that the firm can use to influence the buyers response. The controllable variables in this context refer to the 4 Ps [product, price, place (distribution) and promotion].

Product : Product refers to the goods and services offered by the organisation. All these are purchased because they satisfy one or more of our needs. We are paying not for the tangible product but for the benefit it will provide. So, in simple words, product can be described as a bundle of benefits which a marketeer offers to the consumer for a price. Product can also take the form of a service like an air travel, telecommunication, etc. Thus, the term product refers to goods and services offered by the organisation for sale.

Price: Price is the amount charged for a product or service. It is the second most important element in the marketing mix. Fixing the price of the product is a tricky job. Many factors like demand for a product, cost involved, consumers ability to pay, prices charged by competitors for similar products, government restrictions etc. have to be kept in mind

PRODUCT CLASSIFICATION nsscollegerajakumari

Product can be broadly classified on the basis of (1) use, (2) durability, and (3) tangibility. 1. Based on use, the product can be classified as: (a) Consumer Goods; and (b) Industrial Goods. (a) Consumer goods: Goods meant for personal consumption by the households or ultimate consumers are called consumer goods. This includes items like toiletries, groceries, clothes etc. Based on consumers buying behaviour the consumer goods can be further classified as : (i) Convenience Goods; (ii) Shopping Goods; and (iii) Speciality Goods. (i) Convenience Goods : convenience goods are bought frequently without much planning or shopping effort and are also consumed quickly. Buying decision in case of these goods does not involve much preplanning. Such goods are usually sold at convenient retail outlets. (ii) Shopping Goods: These are goods which are purchased less frequently and are used very slowly like clothes, shoes, household appliances. In case of these goods, consumers make choice of a product considering its suitability, price, style, quality and products of competitors and substitutes, if any. In other words, the consumers usually spend a considerable amount of time and effort to finalise their purchase decision as they lack complete information prior to their shopping trip. It may be noted that shopping goods involve much more expenses than convenience goods. (iii) Speciality Goods : Because of some special characteristics of certain categories of goods people generally put special efforts to buy them. They are ready to buy these goods at prices at which they are offered and also put in extra time to locate the seller to make the purchase. In fact, prior to making a trip to buy the product he/she will collect complete information about the various brands. Examples of speciality goods are cameras, TV sets, new automobiles etc. (b) Industrial Goods: Goods meant for consumption or use as inputs in production of other products or provision of some service are termed as industrial goods. These are meant for non-personal and commercial use and include (i) raw materials, (ii) machinery, (iii) components, and (iv) operating supplies (such as oil, stationery etc).

washing machine etc. Such goods generally require more of personal selling efforts and have high profit margins. In case of these goods, sellers reputation and presale and after-sale service are important determinants of purchase decision. (b) Non-durable Goods: Non-durable goods are products that are normally consumed in one go or last for a few uses. Examples of such products are soap, salt, pickles, sauce etc. These items are consumed quickly and we purchase these goods more often. Such items are generally made available by the producer through large number of convenient retail outlets. Profit margins on such items are usually kept low and heavy advertising is done to attract people towards their trial and use. 3. Based on tangibility, the products can be classified as: (a) Tangible Goods; and (b) Intangible Goods. (a) Tangible Goods : Most goods, whether these are consumer goods or industrial goods and whether these are durable or non-durable, fall in this category as they have a physical form, that can be touched and seen. Thus, all items like groceries, cars, raw-materials, machinery etc. fall in the category of tangible goods. (b) Intangible Goods : Intangible goods refer to services provided to the consumers. Services are essentially intangible activities which provide want or need satisfaction. Medical treatment, postal, banking and insurance services etc., all fall in this category.

Product Line

2. Based on Durability, the products can be classified as : (a) Durable Goods; and (b) Non-durable Goods. (a) Durable Goods : Durable goods are products which are used for a long period i.e., for months or years together. Examples of such goods are refrigerator, car,

A product line is a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges. For example, Nike produces several lines of athletic shoes, Motorola produces several lines of telecommunications products, and AT&T offers several lines of long-distance telephone services. PRODUCT MIX. nsscollegerajakumari

A product mix (or product assortment) consists of all the product lines and items that a particular seller offers for sale. The product mix of a company, which is generally defined as the total composite of products offered by a particular organization, consists of both product lines and individual products. A product line is a group of products within the product mix that are closely related, either because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges. One of the realities of business is that most firms deal with multi-products .This helps a firm diffuse its risk across different product groups/Also it enables the firm to appeal to a much larger group of customers or to different needs of the same customer group . For example; Bajaj Electricals, a household name in India, has almost ninety products in its portfolio ranging from low value items like bulbs to high priced consumer durables like mixers and luminaries and lighting projects .The number of products carried by a firm at a given point of time is called its product mix. This product mix contains product lines and product items .In other words its a composite of products offered for sale by a firm. PRODUCT-MIX ANALYSIS Since top management is ultimately responsible for the product mix and the resulting profits or losses, they often analyze the company product mix. The first assessment involves the area of opportunity in a particular industry or market. Opportunity is generally defined in terms of current industry growth or potential attractiveness as an investment. The second criterion is the company's ability to exploit opportunity, which is based on its current or potential position in the industry. The company's position can be measured in terms of market share if it is currently in the market, or in terms of its resources if it is considering entering the market. These two factorsopportunity and the company's ability to exploit itprovide four different options for a company to follow. 1. High opportunity and ability to exploit it result in the firm's introducing new products or expanding markets for existing products to ensure future growth. 2. Low opportunity but a strong current market position will generally result in the company's attempting to maintain its position to ensure current profitability.

3. High opportunity but a lack of ability to exploit it results in either (a) attempting to acquire the necessary resources or (b) deciding not to further pursue opportunity in these markets. 4. Low opportunity and a weak market position will result in either (a) avoiding these markets or (b) divesting existing products in them. These options provide a basis for the firm to evaluate new and existing products in an attempt to achieve balance between current and future growth. This analysis may cause the product mix to change, depending on what management decides. The most widely used approach to product portfolio analysis is the model developed by the Boston Consulting Group (BCG). The BCG analysis emphasizes two main criteria in evaluating the firm's product mix: the market growth rate and the product's relative market share. Once the analysis has been done using the market growth rate and relative market share, products are placed into one of four categories.

Stars: Products with high growth and market share are know as stars. Because these products have high potential for profitability, they should be given top priority in financing, advertising, product positioning, and distribution. Cash cows: Products with a high relative market share but in a low growth position are cash cows. These are profitable products that generate more cash than is required to produce and market them. Dogs: Products in the category are clearly candidates for deletion. Such products have low market shares and unlike problem children, have no real prospect for growth.

As can be seen from the description of the four BCG alternatives, products are evaluated as producers or users of cash. Products with a positive cash flow will finance high-opportunity products that need cash.

Product Life Cycle.

Like human beings, products also have a life-cycle. From birth to death, human beings pass through various stages e.g. birth, growth, maturity, decline and death. A similar life-cycle is seen in the case of products. The product life cycle goes through multiple phases, involves many professional disciplines, and requires many skills, tools and processes. Product life cycle (PLC) has to do with the life of a product in the market with respect to nsscollegerajakumari

business/commercial costs and sales measures. To say that a product has a life cycle is to assert three things:

Products have a limited life, Product sales pass through distinct stages, each posing different challenges, opportunities, and problems to the seller, Products require different marketing, financing, manufacturing, purchasing, and human resource strategies in each life cycle stage.

The introduction stage starts when the new product is first launched. Introduction takes time, and sales growth is apt to be slow. In this stage, as compared to other stages, profits are negative or low because of the low sales and high distribution and promotion expenses. Much money is needed to attract distributors and build their inventories. Promotion spending is relatively high to inform consumers of the new product and get them to try it. It is highly unlikely that companies will make profits on products at the Introduction Stage. Products at this stage have to be carefully monitored to ensure that they start to grow. Otherwise, the best option may be to withdraw or end the product.
C)Growth Stage

A product's life cycle, abbreviated PLC, the life cycle refers to the period from the products first launch into the market until its final withdrawal and it is split up in phases. Since an increase in profits is the major goal of a company that introduces a product into a market, the products life cycle management is very important. The understanding of a products life cycle, can help a company to understand and realize when it is time to introduce and withdraw a product from a market, its position in the market compared to competitors, and the products success or failure. The products life cycle period usually consists of five major steps : Product Development, Introduction Stage, Growth Stage, Maturity Stage and finally Decline Stage. These phases exist and are applicable to all products or services from a certain make of automobile to a multimillion-dollar lithography tool to a one-cent capacitor. These phases can be split up into smaller ones depending on the product and must be considered when a new product is to be introduced into a market since they dictate the products sales performance.

If the new product satisfies the market, it will enter a growth stage, in which sales will start climbing quickly. The early adopters will continue to buy, and later buyers will start following their lead, especially if they hear favorable word of mouth. Attracted by the opportunities for profit, new competitors will enter the market. They will introduce new product features, and the market will expand. The Growth Stage is characterised by rapid growth in sales and profits. Profits arise due to an increase in output (economies of scale)and possibly
better prices. At this stage, it is cheaper for businesses to invest in increasing their market share as well as enjoying the overall growth of the market. Accordingly, more amount and efforts are invested in promotional activities. The firm uses several strategies

to sustain rapid market growth as long as possible. It improves product quality and adds new product features and models. It enters new market segments and new distribution channels. By spending a lot of money on product improvement, promotion, and distribution, the company can capture a dominant position. In doing so, however, it gives up maximum current profit, which it hopes to make up in the next stage.

) Product Development:
Product development phase begins when a company finds and develops a new product idea. This involves translating various pieces of information and incorporating them into a new product. A product is usually undergoing several changes involving a lot of money and time during development, before it is exposed to target customers via test markets. B) Introduction Stage: D) Maturity Stage The Maturity Stage is, perhaps, the most common stage for all markets. it is in this stage that competition is most intense as companies fight to maintain their market share. Here, both marketing and finance become key activities. Marketing spend has to be monitored carefully, since any significant moves are likely to be copied by competitors. nsscollegerajakumari

This maturity stage normally lasts longer than the previous stages, and it poses strong challenges to marketing management. Most products are in the maturity stage of the life cycle, and therefore most of marketing management deals with the mature product. Competitors begin marking down prices, increasing their advertising and sales promotions, and upping their R&D budgets to find better versions of the product. The company might also try modifying the productchanging characteristics such as quality, features, or style to attract new users and to inspire more usage. It might improve the product's quality and performanceits durability, reliability, speed, or taste. Or it might add new features that expand the product's usefulness, safety, or convenience. For example, Sony keeps adding new styles and features to its Walkman and Discman lines, and Volvo adds new safety features to its cars. Finally, the company can try modifying the marketing miximproving sales by changing one or more marketing mix elements. It can cut prices to attract new users and competitors' customers. It can launch a better advertising campaign or use aggressive sales promotionstrade deals, centsoff, premiums, and contests. E) Decline Stage The sales of most product forms and brands eventually dip. The decline may be slow, as in the case of oatmeal cereal, or rapid. Sales may plunge to zero, or they may drop to a low level where they continue for many years. This is the decline stage. Sales decline for many reasons, including technological advances, shifts in consumer tastes, and increased competition. As sales and profits decline, some firms withdraw from the market. They may drop smaller market segments and marginal trade channels, or they may cut the promotion budget and reduce their prices further. Carrying a weak product can be very costly to a firm. A weak product may take up too much of management's time. It often requires frequent price and inventory adjustments. It requires advertising and sales force attention that might be better used to make "healthy" products more profitable. A product's failing reputation can cause customer concerns about the company and its other products. Then, management must decide whether to maintain, harvest, or drop each of these declining products. Management may decide to harvest the product, which means reducing various costs (plant and equipment,

maintenance, R&D, advertising, sales force) and hoping that sales hold up. If successful, harvesting will increase the company's profits in the short run. Or management may decide to drop the product from the line. It can sell it to another firm or simply liquidate it at salvage value. The Product Life Cycle can be extended by two ways either by modifying the target market by finding and adding new users etc or by modifying the product Adding new features, variations, model varieties will change the consumer reaction create more demand therefore you attract more users To prevent the product going into decline you modify the product Ultimately, depending on whether the product remains profitable, a company may decide to end the product. Examples Set out below are some suggested examples of products that are currently at different stages of the product lifecycle:

INTRODUCTION GROWTH MATURITY DECLINE Third Portable Personal generation Typewriters DVD Players Computers mobile phones Handwritten E-conferencing Email Faxes letters iris-based Cheque personal Smart cards Credit cards books identity cards

The concept of PLC is a very useful since it provides knowledge about the developments at various phases of a products life. The marketing manager can adopt suitable strategies if he knows the pattern of profits and promotional efforts based on stages of products life.

BRANDING
American Marketing Association (AMA) definition describes a brand as a name, word, mark, symbol, device or a combination thereof, used to identify goods or services of one seller and to differentiate them from those of competitors. Brand name helps a consumer in instant recall, and this serves an important function for differentiating competing products of similar nature. A legally protected brand name is called a trademark.

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Umbrella branding and individual branding Under umbrella branding all the products gel the same brand name. This is also called family branding. Godrej, Vidoecon and L&T follow this kind of policy. One basic advantage of using the Family brand is that it reduces the costs of product launching and promotional expenditure substantially. The firm has to promote only one brand, which, if successful, would be able to sell the entire product line. Under the individual branding each product is given a different name. For example, Hindustan Lever sells its products under different brand names like Rin, Surf, Lux, etc. Importance of branding. Branding as an aspect of product marketing can be analysed from two different standpoints: that of buyers and of sellers. It is also possible to have a societal viewpoint. a) Buyers The buyers can derive several advantages: A brand generally denotes uniform quality. It makes shopping easier. Competition among brands can, over a period of time, lead to quality improvements. Purchasing a socially visible brand can give psychological satisfaction to the buyer.

considered as positive. Brands also help in better dissemination of product knowledge; better knowledge can contribute to more scientific and rational decision making. Selecting a Brand name Finding an appropriate name for a new product is a difficult task. The following points should be taken into account in selecting a brand name. 1). A Brand name should reflect directly or indirectly some aspect of the product, viz. benefit, function, etc. For example, the name `BURNOL' immediately connotes that the product has to do something with bums. 2). A Brand should be distinctive, especially if the product requires such distinction, e.g., a name like `CHANCELLOR' for a cigarette conjures up ideas of status, power and opulent life style. 3). A Brand name should be easy to pronounce and remember. Examples are VIMAL, HAMAM, etc. 4). It should be such that it can be legally protected, if necessary.

Packaging
A package is basically an extension of the product offered for sale. Sometimes the package is more important than the product it contains as it contains the product and protects it till the consumer is ready for the consumption or use. Some marketers even call packaging a 'fifth P', along with product, price, promotion and place. Packaging is necessary to deliver the product to the consumer in sound condition. According to Philip Kotler and Gary Annstrong, the packaging may include up to three levels of material. The primary package is the product's immediate container. If you consider a toothpaste, the tube holding the toothpaste is the primary package. The secondary package is the card board material that protects the primary package and that is thrown away when the product is about be used. The shipping packaging is the packaging necessary to store, identify, and ship the product (a carton in this case, which contains hundred toothpaste units). Finally labeling is part of packaging and consists of printed information appearing on or with the package. To summarize the key functions of packaging we can say that packaging should perform the following basic functions: it should (1) protect, (2) appeal, (3) perform, (4) offer convenience to the end-users, and (5) be costeffective. We will now discuss these five key functions of packaging. nsscollegerajakumari

There are, however, some negative aspects as well Since brand development costs money, product prices tend to go up. Taking advantage of the popularity of a brand, a manufacturer may reduce quality gradually.

b) Sellers A marketer can also derive certain advantages such as: It helps in product identification. product offering from Differentiate

competitors
In a highly competitive market, it can carve out a niche for itself through product differentiation. If brand loyalty can be developed through successful promotion, the firm will be able to exert quasi-monopolistic power.

But to obtain the advantages, it is necessary for the manufacturer to invest resources in promoting the brand name. c) Societal view From a macro-standpoint, a brand's role in improving and maintaining product quality can be

I ) Protection: The primary function of packaging is to protect the products from the environmental and physical hazards to which the product may be exposed in transit from the manufacturer's plant to the retailer's shelves and while on display on the shelves. It helps to avoid i) Breakage due to rough handling, 2) Extremes of climatic conditions which may lead to melting, freezing, etc, 3)Contamination, either bacterial or nonbacterial, such as by dirt or chemical elements. 4) Absorption of moisture or odors of foreign elements. And 5) Loss of liquid or vapors. 2) Appeal: The package is increasingly being used as a marketing tool. The importance is also increasing clue to the changed structure of retail business, especially the emergence of self-service stores. In the case of consumer products, package serves as a silent salesman. The following characteristics have been identified to help a package perform the self-selling tasks: i) The package must attract attention ii) The package must tell the product story iii) The package IIIUSL build confidence iv) The package must look clean and hygienic v) The package must be convenient to handle, to carry out, to store and to use vi) The package must reflect good value 3) Performance: This is the third function of a package. It must be able to perform the task for which it is designed. This aspect becomes critical in certain types of packaging. For example, an aerosol spray is not only a package but also an engineering device. If the package does not function, the product itself becomes totally useless. 4) Convenience: The package must be designed in a way, which is convenient to use. It should be convenient not only to the end user but also to the distribution channel members, such as wholesalers and retailers. From the intermediaries standpoint the convenience relates to handling and stocking of packages. From the standpoint of the domestic or institutional end users, the convenience would refer to the ease of using the package, such as opening and closure of the package, the repetitive use value, disposability etc. 5) Cost-effectiveness: The package finally must be cost-effective. Packaging cost as a percentage of product cost varies dramatically from one industry to another, from less than one percent in engineering industry to more than ten percent in the cosmetics industry.

tampering and also can have tamper-evident features to help indicate tampering.

Packaging Strategies Packaging plays a greater role in the promotion of the product. It serves the core function of protection and also provides information to the consumers. For example, Colgate Dental Cream is always perceived in a red color package. When the company decided to go for a sales promotion program of giving 20% extra for every purchase of a 100 grams toothpaste, it brought a yellow strip marked with 20% extra on red as a promotional tool which could catch the attention of the customer on the shelf immediately. Some of the widely used promotional packaging techniques include 1) Discount Packing :a word or sentence in distinctive colour is superimposed on the package, announcing the special price discount being offered. This is the most widely used form. 2) Coupon-Pack: A coupon of certain values, either as a part of the package or placed separately in the package, can be redeemed after the purchase of the product. 4) Prime Packaging: A specially made package having either a re-use or prestige value is referred to as prime package. Instant coffee packed in glass tumblers having colours is an example of the first type. 5) Self-Liquidators: The buyer has to send to the company a number of packages or part thereof as evidence of buying the product. In return, he may purchase additional quantity of the same product at reduced prices or be rewarded with a different product. Bundle Packaging: Placing more than one unit in one container is referred to as bundle or multiple packaging. This packaging strategy increases the sales to a large extent. This is seen in bathing and washing soap category in India.

LABELLING:
The label is the text printed on a product package or, in the case of items like clothing, attached to the product itself. Legally, labels include all written, printed, or graphic material on the containers of products that are involved in interstate commerce or held for sale. The main body of legislation governing

6) Security - Packaging can play an important role in

reducing the security risks of shipment. Packages can be made with improved tamper resistance to deter

packaging and labeling is the Fair Packaging and Labeling Act of 1966. It mandates that every product nsscollegerajakumari

package or label specify on its "principal display label" (the part of the label most likely to be seen by consumers) the following information: 1) the product type; 2) the producer or processor's name and location; 3) the quantity (if applicable); and 4) the number and size of servings (if applicable).

8)Statement of Contents The contents of a product must be accurately described on its packaging label according to local regulations.

Labeling Decisions: 1)Brand Name: It is necessary for the label to contain the brand name. It has to be decided that how should that brand name appear on the product. 2) Label Text, Graphics and Design: Text, graphics and design on the label must be carefully selected because label in as important part of branding process. It plays a role in communicating the image and identity of a company. 3) Features and Benefits Listing a products key benefits on its label helps support the brand promise and can help differentiate the product from others, while reaching out to customers seeking those particular benefits. 4)Weights and Measures Weights on measure of a product are important for stocking, inventory and selection. There are international standards that apply for formatting this information. Identifying the weights and measures of products helps customers select the appropriate amount of product to suit their needs. 5)Instructions for Use Listing a products key benefits on its label helps support the brand promise and can help differentiate the product from others, while reaching out to customers seeking those particular benefits 6)Package Inserts Package inserts, which may contain instructions for using a product, are made when the information cannot fit on the product itself. 7)Safety Hazards Possible dangers that could result from misusing a product must be identified on products to reduce liability and comply with regulations.

Module III Pricing Pricing policies objectives factors influencing pricing decisions - different pricing strategies: skimming- penetration Market structure channel of distribution and its importance

Pricing
Pricing is the process of determining what a company will receive in exchange for its products. This is perhaps the most important decision taken by marketer, as it is the only revenue earning function and success and failure of the product may depend upon this decision. Therefore, the decision regarding how much to charge should be taken such that the price is acceptable to the prospective buyers and at the same time fetches profits for the company. Price determination is very important aspect of strategic planning. Marketers fix the price of the product on the basis of cost, demand or competition. Dell, which allows customers to customize the product adopted flexible pricing methods. In contrast, Indian oil companies product prices are fixed by the government where company does not have any control. Price is the consideration in terms of money paid by consumers for the bundle of benefits he/she derives by using the product/ service. In simple terms, it is the exchange value of goods and services in terms of money. Pricing (determination of price to be charged) is another important element of marketing mix and it plays a crucial role in the success of a product in the market. If the price fixed is high, it is likely to have an adverse effect on the sales volume. If, on the other hand, it is too low, it will adversely affect the profitability. Hence, it has to be fixed after taking various aspects into consideration. Factors influencing pricing decisions The factors usually taken into account while determining the price of a product can be broadly described as follows:

(a) Cost: No business can survive unless it covers its cost of production and distribution. In large number of products, the retail prices are nsscollegerajakumari 8

determined by adding a reasonable profit margin to the cost. Higher the cost, higher is likely to be the price, lower the cost lower the price. (b) Demand: Demand also affects the price in a big way. When there is limited supply of a product and the demand is high, people buy even if high prices are charged by the producer. But how high the price would be is dependent upon prospective buyers capacity and willingness to pay and their preference for the product. In this context, price elasticity, i.e. responsiveness of demand to changes in price should also be kept in view. (c) Competition: The price charged by the competitor for similar product is an important determinant of price. A marketer would not like to charge a price higher than the competitor for fear of losing customers. Also, he may avoid charging a price lower than the competitor. Because it may result in price war which we have recently seen in the case of soft drinks, washing powder, mobile phone etc. (d) Marketing Objectives: A firm may have different marketing objectives such as maximisation of profit, maximisation of sales, bigger market share, survival in the market and so on. The prices have to be determined accordingly. For example, if the objective is to maximise sales or have a bigger market share, a low price will be fixed. Recently one brand of washing powder slashed its prices to half, to grab a bigger share of the market. (e) Government Regulation: Prices of some essential products are regulated by the government under the Essential Commodities Act. For example, prior to liberalization of the economy, cement and steel prices were decided by the government. Hence, it is essential that the existing statutory limits, if any, are also kept in view while determining the prices of products by the producers.
Pricing strategies. A firm must set a price for the first time when it develops a new product, introduces its regular product into a new distribution channel or geographical area, and enters bids on new contract work. In setting a products price, marketers follow a six-step procedure: (1) selecting the pricing objective; (2) determining demand; (3) estimating costs; (4) analyzing

competitors costs, prices, and offers; (5) selecting a pricing method; and (6) selecting the final price 1.) Price skimming. Price skimming is a pricing strategy in which a marketer sets a relatively high price for a product or service at first, then lowers the price over time. It is a temporal version of price discrimination/yield management. The objective with skimming is to skim off customers who are willing to pay more to have the product sooner; prices are lowered later. The success of a price-skimming strategy is largely dependent on the inelasticity of demand for the product either by the market as a whole, or by certain market segments. High prices can be enjoyed in the short term where demand is relatively inelastic. In the short term the supplier benefits from monopoly profits, but as profitability increases, competing suppliers are likely to be attracted to the market (depending on the barriers to entry in the market) and the price will fall as competition increases. The main objective of employing a price-skimming strategy is, therefore, to benefit from high short-term profits (due to the newness of the product) and from effective market segmentation. There are several advantages of price skimming Where a highly innovative product is launched, research and development costs are likely to be high, as are the costs of introducing the product to the market via promotion, advertising etc. In such cases, the practice of price-skimming allows for some return on the set-up costs By charging high prices initially, a company can build a high-quality image for its product. Charging initial high prices allows the firm the luxury of reducing them when the threat of competition arrives. Skimming can be an effective strategy in segmenting the market. A firm can divide the market into a number of segments and reduce the price at different stages in each, thus acquiring maximum profit from each segment For prestige goods, the practice of price skimming can be particularly successful, since the buyer tends to be more prestige conscious than price conscious. Similarly, where the quality differences between competing brands is perceived to be large, or for offerings where such differences are not easily judged, the skimming strategy can work well. 2) Penetration pricing. nsscollegerajakumari

Penetration pricing involves the setting of lower, rather than higher prices in order to achieve a large, if not dominant market share. This strategy is most often used businesses wishing to enter a new market or build on a relatively small market share. This will only be possible where demand for the product is believed to be highly elastic, i.e. demand is price-sensitive and either new buyers will be attracted, or existing buyers will buy more of the product as a result of a low price. A successful penetration pricing strategy may lead to large sales volumes/market shares and therefore lower costs per unit. The effects of economies of both scale and experience lead to lower production costs, which justify the use of penetration pricing strategies to gain market share. Penetration strategies are often used by businesses that need to use up spare resources (e.g. factory capacity). Before implementing a penetration pricing strategy, a supplier must be certain that it has the production and distribution capabilities to meet the anticipated increase in demand. The most obvious potential disadvantage of implementing a penetration pricing strategy is the likelihood of competing suppliers reduce their prices also, thus nullifying any advantage of the reduced price. A second potential disadvantage is the impact of the reduced price on the image of the offering, particularly where buyers associate price with quality. 3) Prestige pricing Prestige pricing refers to the practice of setting a high price for an product, throughout its entire life cycle as opposed to the short term opportunistic, high price of price skimming. This is done in order to evoke perceptions of quality and prestige with the product or service. For products for which prestige pricing may apply, the high price is itself an important motivation for consumers. 4) Pre-emptive pricing Pre-emptive pricing is a strategy which involves setting low prices in order to discourage or deter potential new entrants to the suppliers market, and is especially suited to markets in which the supplier does not hold a patent,

or other market privilege and entry to the market is relatively straightforward. By deterring other entrants to the market, a supplier has time to Refine/develop the product Gain market share Reduce costs of production (through sales/ experience effects) Acquire name/brand recognition, as the original supplier

5) Follower pricing -- This strategy entails the business owner adopting follow-the leader approach and setting prices in response to all major competitors. This is a reactive strategy that assumes that the dominant leader will not respond to price competition from the new product or service. 6) Psychological pricing approach is suitable when consumer purchases are based more on feelings or emotional factors rather than rational, such as love, affection, prestige, and self-image etc
7) Odd-Even Pricing: Marketers sometimes set their product prices that end with certain numbers. The assumption is that this type of pricing helps sell more of a product. It is supposed that if the price is Rs. 99.95, consumers view it not as Rs. 100 and certain types of consumers are attracted more by odd prices rather than even.

8) Loss Leader Pricing: Sometimes large retail outlets use loss leader pricing on wellknown brands to increase store traffic. By attracting increased number of consumers to store the retailers hope that sales of routinely purchased products will rise and increase sales volume and profits. This compensates for the lower margins on loss leader brands. 9) Superficial Discounting: It is superficial comparative pricing. It involves setting an artificially high price and offering the product at a highly reduced price. The communication might say, Regular price was Rs. 495, now reduced to Rs. 299. This is a deceptive practice and often used by retailers.
10) Special Event Pricing: This involves coordinating price cuts with advertising for seasonal or special situations to attract consumers by offering special reduced prices. nsscollegerajakumari 10

SELECTION OF A PRICING METHOD

After selection of the pricing strategy or strategies to accomplish the pricing objectives, a company decides about a pricing method. A pricing method is a systematic procedure for setting the prices on a regular basis. The pricing method structures the calculation of actual price of a product based on considerations of demand, costs, and competition.
1 Cost-based Pricing Cost-based pricing methods are fairly common. Price is determined by adding either rupee amount or a percentage to the products cost to achieve the desired profit margin. Cost-based pricing methods do not take into consideration factors such as supply and

providing the basic service plus a variable usage rate. For example telephone service providers charge a monthly fixed price plus variable per call charges for calls beyond a certain number.
Bid Pricing

demand, or competitors prices. They are not necessarily related to pricing policies or objectives.
11.9.2 Markup Pricing

This type of pricing involves submitting either a sealed or open bid price from the marketer for buyers consideration. The buyer notifies potential suppliers to submit their bids by a fixed date. The buyer evaluates these quotations in terms of quoted prices, product specifications, and the ability of suppliers to deliver specified products according to the buyers schedule when and where needed. Usually the lowest bidder is awarded the contract.

In markup pricing a certain predetermined percentage of products cost, called markup, is added to the cost of the product to determine the price.
11.9.3 Competition-based Pricing

Channel of distribution and its importance.

Distribution involves the physical movement of products to ultimate consumers. A distribution channel consists of the set of people and firms involves in the flow of a product, as it moves from producer to ultimate consumer or business users. A distribution channel always include both the producers and final customer for product as well as any middle man.(retailers or wholesalers). Types of channels & distribution:Common channels for distribution of consumer goods, business goods and services are discussed below. 1) Distribution of channel goods:There are five channels are used for distribution of tangible goods to ultimate consumer. a) Producer---->Consumer: The shortest, simplest channels of distribution for distributing gods are from producer to consumer. It involves no middle man. The producer may sell from door to door or by mail. Door to Door:In these channels companies use their representatives to sell their gods from door to door such as insurance magazines, newspapers, milk etc. By Mail:Some companies also sell their products by mails. A farmer sells their fruit and vegetables directly to consumer at road is also using this method. It is short and direct method. b) Producer Retailer Consumer:Many large retailers buy directly from manufacturers and agricultures large no. of our purchases are mad through this channel such as automobiles, clothing, gasoline etc. In this case manufacturers keep contact with retailers, take purchase orders. The retailers then sell to ultimate consumers. nsscollegerajakumari 11

This approach is also called going rate pricing. Competition-based pricing pushes the costs and revenues as secondary considerations and the main focus is on what are the competitors prices. This pricing acquires more importance when different competing brands are almost homogeneous and price is the major variable in marketing strategy, such as cement or steel.
11.9.4 Demand-based Pricing

Companies using this method mainly consider the level of demand. The price is high when the product demand is strong and low price when the demand is weak. This approach is fairly common with hotels, telephone service companies, and museums etc.
Perceived-value Pricing

Many companies perceived-value pricing. In this approach the price is based on customers perceived value of a product or service. The company must deliver the promised value proposition it communicates to its target customers. And of course, it is important that customers must perceive this value.
Two-part Pricing

This pricing method is fairly common with service providing companies. They charge a fixed price for

C) Producer Wholesaler Retailer Consumer:This type of channel mostly used by small manufacturers and small retailers to distribute such things that have a large market need. The products such as drugs, lumber, hardware and many food items are distributed in such channel process. d) Producer Agents Retailers Consumers:Instead of using wholesaler many producers prefer to use manufacturers agents, a broker or some other agents middleman to reach the retail market. A glass marker selected a food broker to reach store market. e)Producer Agent Wholesaler Retailer Consum er:To reach small retailers, the producers often use agent middleman, who in turn cal on with wholesales that sell to small stores. Agent can be especially useful for making contacts and bringing buyers and sellers together. They are common in food industry, where they are called food brokers. 2) Channels for Distribution of Business Gods:a) Producers Industrial Users:This direct channel is used for most expensive products. Manufacturers of large installations such as air planes, generators etc use this channel. b) Producer Industrial Distribution Users:Producers of operating supplies and small accessory equipment frequently use industrial distributors to reach their market.

Create Sales Resellers create demand for the marketers product. In some cases resellers perform an active selling role using persuasive techniques to encourage customers to purchase a marketers product. Offer Financial Support Resellers often provide programs that enable customers to more easily purchase products by offering financial programs that ease payment requirements. These programs include allowing customers to: purchase on credit; purchase using a payment plan; delay the start of payments; and allowing trade-in or exchange options. Provide Information Companies utilizing resellers for selling their products depend on distributors to provide information that can help improve the product. High-level intermediaries may offer their suppliers realtime access to sales data including information showing how products are selling by such characteristics as geographic location, type of customer, and product location. . Channel Members Create Utility: Marketing channels create time, place, and possession utility. Time utility refers to making products available to customers when they want them. They create place utility by making products available in locations, where customers desire them to be available for buying. Possession utility means customers having access to obtain and have the right to use or store for future use. This may occur through ownership or some arrangements such as rental or lease agreements that entitle the customer the right to use the product. . Other Functions: Distribution channels share financial risk by financing the goods moving through pipeline and also sometimes extend the credit facility to next level operators and consumers as well as handle personal selling by informing and recommending the product to consumers, and partly look after physical distribution such as warehousing and transportation, provide merchandising support, and furnish market intelligence.

Importance of Distribution Channels Cost Savings in Specialization Members of the distribution channel are specialists in what they do and can often perform tasks better and at lower cost than companies who do not have distribution experience. Marketers attempting to handle too many aspects of distribution may end up exhausting company resources as they learn how to distribute. Reduce Exchange Time Not only are channel members able to reduce distribution costs by being experienced at what they do, they often perform their job more rapidly resulting in faster product delivery. Customers Want to Conveniently Shop for Variety Marketers have to understand what customers want in their shopping experience. Resellers Sell Smaller Quantities Not only do resellers allow customers to purchase products from a variety of suppliers, they also allow customers to purchase in quantities that work for them. Suppliers though like to ship products they produce in large quantities since this is more cost effective than shipping smaller quantities.

Module IV Promotion:- Advertising objectives and functions - types of advertising - personal selling and direct marketing - sales promotion.

Promotion.
Promotion is the aspect of selling and advertising, or communicating the benefits of the product or service, to the target customers or the market segment involved in order to persuade them to purchase such products or services. nsscollegerajakumari 12

It includes selling through advertising as well as the sales force. Besides, a certain amount of promotion is done through special seasonal discounts, competitions, special price reductions, etc. collectively called sales promotion. A promotion mix (sometimes called a marketing communications mix) is the particular combination of promotional methods a firm uses to reach a target market. Marketers can use several promotional methods to communicate with individuals, groups, and organizations. Advertising, personal selling, direct marketing, sales promotion, and publicity are the five major elements in an organizations promotion mix.

the attention of the public, especially by paid announcements. IMPORTANCE AND OBJECTIVES. Advertising has an indispensable place for itself in the marketing mix of a firm. Advertising is likely to make greater contribution when buyer awareness is minimal and when the product has features normally not observable to the buyer. 1. Advertising informs the customers about product attributes. It can help to sell products, by giving information what product is, what it does, where it can be found etc. It informs possible customers of what is an offer, and persuades them to buy the goods. 2. In the case of new products, it can begin to develop a reputation for the product and to the Company. In modern market conditions, where the differences between competing products are fairly marginal, an established reputation can make the difference between market leader and others. If we look at the brands which have been successful for 30, 40 or 50 years like Bajaj, Lux, Colgate etc, they have been continuously advertised.

advertisin g

Personal selling Promotio n mix

Direct marketing

Sales promotio n

publicity

Promotions role is to communicate with individuals, groups, or organizations to directly or indirectly facilitate exchanges by informing and persuading one or more of the audiences to accept an organizations products. To facilitate exchanges directly, marketers communicate with selected audiences about their companies and their goods, services and ideas.

3. Advertising is a weapon of competition as well as merely a way of achieving sales. It helps in distinguishing one brand from its competitors, it can affect consumer preferences and tastes and can differentiate product from competitive offerings. 4. Even in competitive markets, advertising is used as a way of reminding customers that the brand exists and retaining their confidence in it ability to meet their needs. It can also keep the product in customers mind during off seasons. For example most of the COCACOLA ads, and ads of FEVICOL are designed primarily to remind primarily people about these products. 5. Advertising affects the economy also. It can encourage economic growth, investments and jobs. It maintains competition by informing customers. In that way it can even brake monopoly. 6. The effect of advertising on the Co, and industry are also very high. Advertising can provide increasing return and will reduce marketing risk and uncertainty. It can provide free information and can even serve as a tool for quality control. 7. Advertising can support and motivate distributors. In many cases from car to electronic equipments, the advertisement will often include lists of stores or nsscollegerajakumari 13

Advertising
In modern times advertising prevails in all areas of human life. Advertising constitutes one of the four components of a firms promotion mix, which in turn forms an integral element of the firms marketing mix. Advertising is an impersonal mass selling and communication method. It makes use of various types of media to reach the target public in short time. Being persuasive in nature, advertising broadly aims in gaining exposure, creating awareness and changing attitudes of customers in favor of sponsors products. Advertising can be defined as any paid form of nonpersonal presentation and promotion of ideas, goods or services by an identified sponsor. Norman. A. Hart says that advertising is the action of calling something to

dealers selling the products, to make sure that the prospective customers can find them. 8. Advertising provides a revenue for the media; and the entertainment and informational value of advertising is also important. Government and various social institutions and groups also make use of advertising, to raise issues, influence ideas, affect legislation or even to protect the animals and forests. Advertising also helps to eliminate the seasonal fluctuations in sales, makes the product known widely, keep a steady demand and even to appoint best available employees. So advertising helps to 1. To announce a new product or service: 2. To expand, the to new buyers: Here what has been successfully sold to one segment of the market is advertised to a new segment. 3. To announce a modification: 4. To announce a price change 5. To announce a new pack 6. To make a special offer: 7. To announce the location of stockiest: 8. To educate customers: 9. To maintain sales 10. To recruit staff: 11. To attract investors: 12. Advertising makes distribution easier. 13. Advertising benefits the customers. They come to know about the products and product information 14. Advertising creates goodwill for the manufacturers of quality products because of constantly associating the name of the manufacturers with the standard products. TYPES OF ADVERTISING. Several categories of organizations are large users of advertising, most important among them being the manufacturing, trading and service firms, non-profit institutions and the government agencies. Advertising can also be classified according to types. The principal means of classification are: (1) by geographical spread, such as national, regional and local, (2) by target group, such as consumer advertising, Industrial advertising or trade advertising, (3) by type of impact such as: i) primary demand or selective demand advertising and (ii) direct or indirect action advertising and (iii) institutional advertising 1. Geographical Spread: On the basis of geographical spread, advertising can be classified as a. National, b. Local and c. Global.

a. National Advertising: Some manufacturers may think that their target is, the entire country. They select media with a countryside base. Generally large, established firms belong to this category. Among them are Hindustan Lever, Brooke Bond, Larsen & Toubro, Escorts, Associated Cement Companies and the like. b. Local Advertising: Small firms may like to restrict their business to State or regional level. The area to be covered would generally be a state, city or a town and media would be selected which principally relates to that area. c. Global Advertising: Multinational firms treat the world as their market. Firms such as National IBM or Sony or Ford advertise globally, e.g., in periodicals like Times, Readers Digest. 2. Target Group: It is on the basis of target groups aimed at it can further be divided into sub category as: a. Consumer Advertising b. Industrial Advertising c. Trade Advertising d. Professional Adverting. a. Consumer Advertising: A very substantial portion of total advertising is directed to buyers of consumer products who purchase them either for their own use or for their households. The fact that buyers of consumer items are generally very large and are widely distributed over a large geographical area enhances the importance of advertising as a marketing tool. The preponderance of such advertising can be seen by looking into at random any general print media, such as newspapers and magazines etc. These advertisements are intended to promote sale of the advertised products by appealing directly to the buyers/consumers. Such advertising is called consumer advertising. b. Industrial Advertising: Industrial advertising on the other hand refers to those advertisements which are issued by the manufacturers/distributors to the buyers of industrial products. This category would include machinery and equipment, industrial intermediates, parts and components, etc. c. Trade Advertising: Advertisements, which are directed by the manufacturers to the distribution channel members, such as wholesalers or retailers, are called trade advertising. The objective of such advertising is to promote sales by motivating the distribution channel members to stock more or to attract new retain outlets. d. Professional Advertising: There are certain products for which the consumers themselves are not responsible for the buying choice. The classic examples are nsscollegerajakumari 14

pharmaceuticals where the decision is made by doctors while the consumers are the patient. Other types of advertisements are Public Relations Advertising (PRA) Organizations these days are concerned with the type of image they project they have to communicate their objectives to the general public. They also have to Intake the public understand what their activities are. Public relations, in short, try to build rapport with various constituents of public such as employees, customers, local authorities, pressure groups, vendors, customers, shareholders, government and public at large. Public relations advertising helps to maintain this relationship. Its main objective is to build a good corporate image. It represents management and communicates its policies, problems and performances to the public. Public Service Advertising Public Service Advertising (PSA) is also institutional advertising, which seeks to promote important social issue. It is created to promote greater awareness of public causes. The examples of such social issues, which have been promoted, are handicapped children and their help, national integration, flood donation, AIDS etc Political Advertising As most of the political advertising is directed to public, it comes under the category of public relations advertising. Political advertising is created either by political parties or candidates. Mostly we come across such advertising at the time of elections. Election advertising either lists the achievements of the party of candidate or propagates their ideological basis. Financial Advertising When public limited companies invite the general public to subscribe to the share capital of the company, it is called financial advertising. In a broader sense, it includes all advertising by financial industry such as banks, car loan companies, insurance companies, nonbanking financial companies etc. Financial advertising motivates the public to invest, educate the public on various aspects of the issue, works in favour of the brokers/underwriters, and builds a good corporate image. Directory Advertising Another type of advertising is called directory because people refer to it to find out how to buy a product or service. The best known form of directory advertising is the Yellow Pages, although many different kinds of directories perform the same function.

Direct-Response Advertising Direct-response advertising can use any advertising medium, including direct mail, but the message is different from that of national and retail advertising in that it tries to stimulate a sale directly. The consumer can respond by telephone or mail, and the product is delivered directly to the consumer by mail or some other carrier. Business-to-Business Advertising Business-to-business advertising includes messages directed at retailers, wholesalers, and distributors, as well as industrial purchasers and professionals such as lawyers and physicians. Advertisers-place most business advertising in business publications or professional journals. Institutional Advertising Institutional advertising is also called corporate advertising. These messages focus on establishing a corporate identity or winning the public to the organizations point of view. Interactive Advertising Interactive advertising is delivered to individual consumers who have access to a computer and the Internet. Advertisements are delivered via Web pages, banner ads, and so forth. In this instance, the consumer can respond to the ad, modify it, expand it, or ignore it. DIRECT AND INDIRECT ADVERTISING. If the message is to be communicated to specific persons, the advertising is direct. The advertiser may write letters to consumers directly persuading them to buy his product or service. Indirect advertising is meant for people at large. Advertising made through indirect media can be heard and seen by any body.
INDOOR AND OUT DOOR ADVERTISING

The media which are available to the modern advertisers are really numerous. One can sit indoors and read news papers, magazines, journals, listen to radio, and see TV. These Medias are called indoor Medias. On the other hand outdoor advertisements are seen out doors. These advertisements are so located, so as to catch the eye of the passers immediately. Eg are posters, hoardings, neon signs etc. because out door advertisements are fixed at some specific places, people are able to see them again and again and there fore their impact is better. PRINT OR PRESS MEDIA. Press advertising remains the most popular and effective method of publicity today. News papers and magazines have become the part of the culture and life of the people today. It plays a very important part in nsscollegerajakumari 15

advertising. Press publicity takes two forms - News Papers and Magazines. NEWS PAPERS. Perhaps the oldest , powerful and the most popular media available to advertisers is news paper. It can communicate the information to a large number of people and is also able to reach the most interior part of the country. News papers has become the most common habit of literate people. MAGAZINES AND JOURNALS. Besides news paper, magazines and journals which are published at frequent intervals also forms another media of advertising. Magazines and journals are periodicals published monthly or quarterly and generally contain articles and news of current interest. Journals are published on subjects like trade, industry, agriculture, commerce, banking, economy, religion, politics, etc. some times specific magazines and journals enjoy a longer life than news papers. DIRECT MAIL ADVERTISING. This is one of the oldest media of advertising. Direct mail advertising is a way of sending sales messages directly to the prospects, either through post or through salesman or dealers. This is a kind of printed advertising carried on by having direct contact with prospects through postal services. This method is suitable for explaining details about products and services. RADIO ADVERTISING. Radio advertising appeals through the ears. Now a days, several broad casting stations all over the world are selling time for the purpose of commercials. TELEVISION ADVERTISING. Another development in advertising media in our country is TV. It provides a scientific synchronization of features of sound, sight and motion, that no other medium has been able to provide. That is why TV is the best selling mode of advertising ever invented. Other types include posters, painted display, window display, trade fairs, and skywriting. DIRECT MARKETING.

MAJOR CHANNELS MARKETING

FOR

DIRECT

1. Face to Face Selling - Many companies use direct sales force or agents to locate prospects and develop them into customers. Amway, Avon and Tupperware are examples of such companies. 2. Direct Mail - Direct mail marketing involves sending an offer , announcement , reminder or other item to a person. Using highly selective mailing lists , direct marketers send out millions of mail pieces each year letters , flyers ,foldouts etc. 3. Catalog Marketing - In catalog marketing, companies may send full-line merchandise catalogs, specialty consumer catalogs, and business catalogs, usually in print form but also sometimes as CDs, or online catalogues. 4. Telemarketing - Telemarketing involves the use of the telephone and call centers t attract prospects, sell to existing customers, and provide service by taking orders and answering questions. Telemarketing helps companies increase revenue, reduce selling costs, and improve customer satisfaction. 5. E-marketing - The newest channels for direct marketing are electronic. E-business describes a wide variety of electronics platforms, such as the sending of purchase orders to suppliers via electronics data interchange (EDI) or extranets; the use of fax and email to conduct transactions; the use of ATMs, and smart cards to facilitate payment and obtain digital cash; and the use of the Internet and online services.

Sales Promotion. Sales promotion is a Short-term incentives to encourage the purchase or sale of a product or service. It is about stimulating customers to buy a product.

Direct marketing is the use of consumer-direct (CD) channels to reach and deliver goods and services to customers without using marketing middlemen. Direct marketers can use a number of channels to reach individual prospects and customers: direct mail, catalog marketing, telemarketing, interactive TV, kiosks, Web sites, and mobile devices. They often seek a measurable response, typically a customer order, through direct-order marketing. Direct marketing has been a fast-growing avenue for serving customers, partly in response to the high and increasing costs of
reaching business markets through a sales force.

Sales Promotion is An activity designed to boost the sales of a product or service. It may include an advertising campaign, increased PR activity, a freesample campaign, offering free gifts or trading stamps, arranging demonstrations or exhibitions, setting up nsscollegerajakumari 16

competitions with attractive prizes, temporary price reductions, door-to-door calling, telemarketing, personal letters on other methods. Objectives of Sales Promotion i. To introduce new products ii. To attract new customers and retain the existing ones iii. To maintain sales of seasonal products iv.To meet the challenge of competition (i) To introduce new products: Many companies distribute free samples while introducing new products. The consumers after using these free samples may develop a taste for it and buy the products later for consumption. (ii) To attract new customers and retain the existing ones: Sales promotion measures help to attract or create new customers for the products. While moving in the market, customers are generally attracted towards the product that offers discount, gift, prize, etc on buying. These are some of the tools used to encourage the customers to buy the goods. Thus, it helps to retain the existing customers, and at the same time it also attracts some new customers to buy the product. (iii) To maintain sales of seasonal products: There are some products like air conditioner, fan, refrigerator, cooler, winter clothes, room heater, sunscreen lotion, glycerin soap etc., which are used only in particular seasons. To maintain the sale of these types of products normally the manufactures and dealers give off-season discount. For example, you can buy air conditioner in winter at a reduced price. Similarly you may get discount on winter clothes during summer. (iv) To meet the challenge of competition: Todays business faces competition all the time. New products frequently come to the market and at the same time improvement also takes place. So sales promotion measures have become essential to retain the market share of the seller or producer in the product-market.

ii. it helps to introduce new products in the market by drawing the attention of potential customers; iii. when a new product is introduced or there is a change of fashion or taste of consumers, existing stocks can be quickly disposed off; iv. it stabilizes sales volume by keeping its customers with them. In the age of competition it is quite much possible that a customer may change his/her mind and try other brands. Various incentives under sales promotion schemes help to retain the customers. From the point of view of consumers. Sales promotion is important for consumers because i. the consumer gets the product at a cheaper rate; ii. it gives financial benefit to the customers by way of providing prizes and sending them to visit different places; iii. the consumer gets all information about the quality, features and uses of different products; iv. certain schemes like money back offer creates confidence in the mind of customers about the quality of goods; and v. it helps to raise the standard of living of people. By exchanging their old items they can use latest items available in the market. Use of such goods improves their image in society.

Importance of Sales Promotion The business world today is a world of competition. A business cannot survive if its products do not sell in the market. Thus, all marketing activities are undertaken to increase sales. Producers may spend a lot on advertising and personal selling. Still the product may not sell. So incentives need to be offered to attract customers to buy the product. Thus, sales promotion is important to increase the sale of any product. Let us discuss the importance of sales promotion from the point of view of manufacturers and consumers. From the point of view of manufacturers. Sales promotion is important for manufacturers because i. it helps to increase sales in a competitive market and thus, increases profits;

Consumer sales promotion techniques. Price deal: A temporary reduction in the price, such as happy hour Cents-off deal: Offers a brand at a lower price. Price reduction may be a percentage marked on the package. Price-pack deal: The packaging offers a consumer a certain percentage more of the product for the same price (for example, 25 percent extra). Coupons: coupons have become a standard mechanism for sales promotions. Free-standing insert (FSI): A coupon booklet is inserted into the local newspaper for delivery. On-shelf couponing: Coupons are present at the shelf where the product is available. Checkout dispensers: On checkout the customer is given a coupon based on products purchased. On-line couponing: Coupons are available on line. Consumers print them out and take them to the store. Online interactive promotion game: Consumers play an interactive game associated with the promoted product. Rebates: Consumers are offered money back if the receipt and barcode are mailed to the producer. Contests/sweepstakes/games: The consumer is automatically entered into the event by purchasing the product. Point-of-sale displays:nsscollegerajakumari 17

o Dump bin: A bin full of products dumped inside. o Lipstick Board: A board on which messages are written in crayon. o Necker: A coupon placed on the 'neck' of a bottle. Trade sales promotion techniques. Trade allowances: short term incentive offered to induce a retailer to stock up on a product. Dealer loader: An incentive given to induce a retailer to purchase and display a product. Trade contest: A contest to reward retailers that sell the most product. Point-of-purchase displays: Extra sales tools given to retailers to boost sales. Training programs: dealer employees are trained in selling the product. Push money: also known as "spiffs". An extra commission paid to retail employees to push products. Trade discounts (also called functional discounts): These are payments to distribution channel members for performing some function.

7. In some cases the nature of the product or service is such that the chances of a sale are much more through personal selling when compared to other modes. 8. A Salesman explains to his customers how well the p r o d u c t he is selling can satisfy their needs. He gives them opportunity to make more enquiries about his product. This helps then to match their needs and the product. 9. He informs them of new products and explains to them how best they can use these products. 10. He may also give a demonstration of use and also explains to them the precautions they should take while using the products. 11. He provides their after-sales service also.

IMPORTANCE OF PERSONAL SELLING 1. The increase in complexity of products and services has increased the importance of personal selling. Suppliers, producers or manufacturers of highly specialised and technical products such as computers, computer softwares, etc. depend more heavily on personal selling. 2. Ever growing competition from domestic and foreign sources has also increased the importance of salespersons in the marketing effort of a firm. 3. When the nature of the product is such that the buyer needs special information in order to use it properly, the sales representatives act as a consultant to the consumer to apprise him or her of the products technicalities and usage. They also provide help and guidance for choosing a product of ones own choice. 4. In case of industrial products, the promotion mix mostly consists of personal selling rather than advertising. Being a high value and complex product, personal contact with the customer is essential to convince him or her of the products quality, value and utility. 5. Companies which cannot afford a large outlay for advertising on a regular basis finds personal selling a more reliable method. 6. The power of negotiation for services and their price increases with personal selling.

SALES PERSONNEL : QUALITIES. Some people say salespersons are born salespersons while others believe that training can help in making good salespersons. Irrespective of these opinions a good salesperson has certain qualities and abilities as a result he or she is able to perform better than others. Let us discuss the qualities of a good salesperson. Philip Kolter has identified two basic qualities of a good salesperson namely, empathy and persuasion. But others have listed more. Some of the qualities of a good salesperson are as follows: 1) Ability to estimate customers needs and desires : He or she is alert and quickly determines what the customer wants and the best way to sell. 2) Ambition: He or she likes to do a good job and is interested in getting ahead with the company. 3) Appearance: Appearance mean a lot today and the successful salesperson is neat and organised. He or she presents himself or herself well in person. Also, he or she keeps his or her desk, books and manuals neat and ready for use. 4) Business Sense: He or she understands that you are in business to make a profit and quickly learns the ins - and - outs of the organisation. 5) Courtesy : He or she reveals a sincere desire to help customers and treats them as guests even when he or she visits their places of business.
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6) Creativeness : Imagination, vision and the ability to create ideas make a salesperson dynamic. 7) Curiosity : He or she wants to learn all he or she can about his or her products and customers. 8) Enthusiasm: There is nothing that can drain away a prospects buying interest more than a halfdead salesperson. Dullness should be left at home. A salesperson must radiate enthusiasm during and after the sales call. 9) Figure Sense : He or she should have the mathematical ability to figure and fill up order form correctly and to make the necessary reports. 10) Flexibility : A good salesperson is able to adapt himself or herself to a variety of customers. Each contact may require adapting the sales talk, speech habits and even appearance. 11) Friendliness : A salesperson should be able to make people like him or her and he or she must like to meet people 12) Handwriting : He or she must write legibly so that his or her paper work can be readily understood by his or her office people and by his or her customers. 13) Health : Good health generates energy and energy is needed to sell. Poor health prevents many salesperson from fulfilling their potentials. 14) Integrity : A salesperson must be trusted to do his or her job well. He or she cannot help but be successful when his or her customers trust him or her. 15) Interest in job : He or she likes selling and working for the company. 16) Knowledge : In some businesses, a salesperson must also have a through knowledge of the highly specialised products or services his or her employer offers. In some cases, this knowledge can be gained only by years of experience. 17) Loyalty: He or she must be able to impress upon his or her customers the idea that his or her company is the best in the business. 18) Mental ability: He or she has the intelligence to understand your products and those of your competitors. He or she must know how to use words, to understand and direct people and remember names and faces. He or she should also be able to understand prospective customers and know how to act under varying conditions. 19) Motivation : He or she must have more than just an interest is selling. Psychologists have found certain predominant patterns in people who have become really successfull salesperson. They live in

the present and not in the future. They do want power over others and prefer not to work under close supervision. 20) Originality : He or she is constantly searching for new ideas to be used in selling the products and suggests better ways of doing things. 21) Persuasiveness : Very few products of any type actually sell themselves. They must be sold. Your salesperson must have the ability to get people to agree. There are situations when persuasiveness may vary keeping in view the consumers response. 22) Poise : His or her maturity is reflected in his or her behaviour. He or she should be positive, confident, energetic and business like. He or she should be able to demonstrate to the customers that he or she knows what he or she is talking about. 23) Self-control: He or she can handle difficult people and situations calmly. 24) Self-starter : Your salesperson works well without constant supervision and is able to make decisions on his or her own. 25) Speech : He or she can speak clearly and maturely in a natural tone. He or she can emphasize sales points with sincerity and friendliness. Types of salemen Following are the main types of saleman.
(1) Manufacturer's Salesmen: Manufacturer's salesmen are employed by manufacturers to sell the products to the wholesalers, retailers, consumers. They may be of following types:1. (a) Pioneer Salesmen: They are responsible for introducing new products or services in the market. They are highly talented and experienced in launching new products. They search for wholesalers, retailers, dealers, customers in the new market area. They motivate the channel members to store the manufacturer's product and they create demand for these new products.

(b) Re-Sale Salesmen: These salesmen call on established wholesalers, retailers, dealers at regular intervals to procure repeated orders. They explain the improvements made in the product to the existing dealers. They explain different schemes bunched by manufacturers for the dealers. Their main work is to procure repeat orders and maintain good relations with existing dealers.
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(c) Merchandising Salesmen: These salesmen are appointed by manufacturer to ensure better display of their manufacturer's product in retail counters. For this, various incentive schemes are launched by manufacturers to ensure better display. These salesmen execute these display schemes and ensure better display of their manufacturer's products in retail counters. (d) Missionary Salesmen: These salesmen are responsible for establishing new sales territories, finding dealers, stockists for the existing products in the new sales territories. They persuade the dealers to stock manufacturers product. They demonstrate and provide knowledge regarding product, to the dealers and train them to clear possible queries and doubts of customers. (e) Creative Salesmen: Creative salesmen create the desire and demand to buy the product. Earlier the job of salesmen was just to execute order for existing demand. But now salesman also create and maintain the demand of product/service of their organisation. These salesmen provide detailed knowledge about the benefits and utility of the product and tell the prospective customers about risk they are exposed to by not using this product. Modem day salesmen are creative salesmen.
(2) Wholesaler's Salesmen: These salesmen are appointed by wholesalers. They procure orders from retailers, execute these orders in time, ensure regular and timely supply of products to the retailers and act as collection agents for wholesalers. (3) Retailer's Salesmen: They are appointed by retailers to sell the products to the consumers, Retailer's salesmen con be of two types: (a) Indoor or Counter Salesmen: The indoor salesmen sit on the retail counter and sell the products to the customers who visit retailer's shop. They do the selling job inside the retailer's showroom. (b) Outdoor or Touring Salesmen: Outdoor salesmen are travelling salesmen. They visit the customers' place on behalf of retailer. They carry the samples with them. They show these samples to the prospective customers and procure orders for retailers.

furniture books, vacuum cleaners, automobiles, A.Cs. refrigerators, etc. Usually, o salesman represents a single product or product line. The salesman is given special training to have the detailed knowledge of that special product or product line. (5) Industrial Salesmen: They sell technical and industrial products to business houses. They are also called sales engineers. They have technical knowledge of their products, 'They are appointed by business units dealing in industrial goods such as plant and machinery. C.T. scan machines. X-ray machines, supercomputers, etc. These products are very costly, technical and their inslallation is a complex job. Persons with technical knowledge are appointed as industrial salesmen. (6) Exporter's Salesmen: They are appointed to sell the products to distributors located in foreign countries. Such salesmen are expected to know the language of the countries for which they are appointed;. They must have complete knowledge of procedure of foreign trade and import-export documentation.

TYPES OF SELLING JOBS Merchandise Deliveries: The sales person, whose primary job is to deliver the product usually against routine orders-popularly called sales and delivery boys. Inside Order-taker: Working inside a store the primary job of such a sales person is to service the customer's request or suggest appropriate product to meet customer wants; such type of salespersons are popularly called retail salesman. Outside Order-taker: The salespersons engaged in the task of taking orders from the resellers. They normally do not use hard selling approach for making orders. Missionary Salesperson: The salesperson whose primary job is to educate, give product detailing, build goodwill or create primary demand for the product. Strictly speaking, missionary salespersons are not permitted to take orders. Sales Engineer: The salesperson who acts as a technical consultant to the client and as per the need helps him to design products or production system for the client. This type of salesperson is popularly called Technical Salesperson. nsscollegerajakumari 20

(4) Speciality Salesmen: These salesmen are concerned with promotion and sale of special goods These special goods can be expensive

Tangible Product Seller: The salesperson whose job is to sell tangible products such as furniture, appliances, automobiles, etc. The job involves abilities to persuade and convince the customer. Intangible Product Seller: Here the salesperson is associated with selling intangible products or services such as advertising services, insurance, education, etc., the common factor being difficulty in immediate demonstration of the perceived benefits of the product. This selling job requires perhaps the greatest degree of a creativity in the salesperson. THEORIES OF SELLING AIDAS Theory This theory is based on the premise that during a sales presentation, the prospect consciously goes through five different stages. There are ATTENTION, INTEREST, DESIRE, ACTION AND SATISFACTION. In fact the name of this theory has been derived from the initial letters of these five words. The proponents of this theory believe that the salesperson should design the presentation in a manner which takes care of all these stages in the process of selling.

The details of five components of AIDAS theory are as follows: i) Attention The salesperson should attract the prospect to the presentation before he or she actually goes into the details of the same. This is to ensure that the prospect becomes receptive to the presentation. Let us understand the need for securing attention. We would all appreciate the fact that usually the prospect may be busy in his or her routine jobs or his or her daily assignments. Thus, before meeting the salesperson, the prospects mind may be involved in something other than the topic which even remotely concerns the product about which the salesperson is going to talk. Unless the salesperson involves the prospects mind in the presentation, his or her total effort may go unnoticed or unregistered. Drawing the prospects attention, therefore, tantamounts to dissociating him or her from other assignments and involving him or her in the presentation, both physically and mentally, as to gain maximum from the sales meeting. ii) Interest Once the salesperson has successfully gained the prospects attention, he/she should maintain the interest of the prospect throughout the presentation. In other words, the salesperson should ensure that the prospect remains glued to his or her presentation throughout its length and that he or she does not wander away from the same either mentally or physically. The salesperson should attempt to be aware of the interest, likes, dislikes, attitude and motivation of the prospect and should proceed with the presentation, keeping in view all these factors. iii) Desire

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The next step in the sales process as per AIDAS theory, is to create a strong desire in the prospects mind to purchase the product. The salesperson should consciously try to bring the prospect into this stage of readings to the point of buying the product. He or she should concentrate on projecting the benefits of the product to the prospect. One should even go to the extent of presenting benefits according to the motivation of the prospect. It is imperative to note that desire for a product can be instilled if the need can be adjudged. A salesperson should find out the needs or requirements of the prospective buyer and present the product in such a manner that it would seem to fulfill all the needs of the prospect. The salesperson should also be prepared to anticipate the resistance to his or her sales presentation in terms of objections or questions from the prospect. Not only that, one should be prepared with several answers and explanations to the anticipated objections. iv) Action Once the salesperson has been successful in taking the prospect through the three stages, as discussed above, he or she should induce the prospect into actually buying the product. It would be interesting for us to understand that even after going through the three stages of attention, interest and desire, the prospect may still have some doubt or some inertia which will stop him or her from taking the final decision of actually buying the product. Hence, it becomes an important task of the salesperson to help the prospect in taking the final decision. The salesperson tries to push the prospect into a

exercises the technique of closing very skillfully. This is what is expected of a salesperson in this stage. v) Satisfaction Once the prospect has placed an order, the salesperson should ensure that the prospect carries the impression of having taken the right decision. He or she should always thank the prospect and even go to the extent of saying, I appreciate your choice for taking an excellent decision. The salesperson should also ensure that the delivery of the order takes place within the time frame and all other promises are kept, regarding installation, free servicing, etc. Moreover, the sales person should try to keep in touch with the prospects and should keep inquiring about the efficient performance of the purchase. Different firms use various methods for this like feedback forms, etc. THE SELLING PROCESS Step 1 Preparation: Before starting the selling job, a salesperson should make a valuable investment of time and resources to know the products he will be selling, know the customers (i.e. customer types, buying motives and buying process) to whom he will be selling; know the competitors against whom he will be selling, and finally know the philosophy, policies and range of products of his company, In short, he should be well equipped with the fundamentals of selling. Step 2 Prospecting: This step of the selling process deals with locating and preparing a list of prospective customers. Prospects can be located through (1) identifying the potential of buying more in the existing customers, (2) recommendations of existing customers, (3) winning back lost
'

customers, (4) attracting competitor s customers,

'

situation to take a decision. And he or she

(5) customers information request from advertisement, (6) newspaper announcements, (7) public records, (8) directories like telephone, trade association etc., (9) other salesmen, (10) references from friends, neighbours and business associates, and (11) cold canvassing, that is, going from doorto-door. The located prospects should first he qualified broadly in terms of (i) whether they want the product and how intense their want is, (ii) whether they have the adequate purchasing power, and (iii) nsscollegerajakumari 22

whether and who possesses the power or authorisation to purchase and spend the required money. The qualifying of prospects is the process of separating the prospects from the suspects. It is worth-mentioning here that the ability to prospect is the most essential ability of a successful salesperson. A good salesperson keeps examining, weeding out the already tapped prospects and updating his lists of prospects, and remains in constant search of new prospects. Step 3 Preapproach: The qualifying process of separating prospects from suspects further requires that the salesperson should possess detailed information relating to the prospects in terms of existing products consumed, their scale of operation, product range, their buying size, frequency, budget and the process, etc. In short, obtain customer orientation. The sources of information for the purpose include company annual reports, other salespersons, other suppliers to the prospects, census of manufacturers, professional journals, newspapers and market intelligence, The availability of the above information in as detailed a manner as possible will help the salesperson in ranking the prospect in terms of their priority to the company. Good salespersons use the above information in classifying the prospects in A, B and C categories in terms of the immediacy of the attention to be given to them. Step 4 Approach: `First impression counts'. As such, this step needs to be carefully planned. This step has two distinct parts. One, of meeting the customer with a positive set of mind, and the second, is make an impact on him. For the former, referrals of reliable persons known to prospects, canine after fixing an appointment, use of door openers, help. For the latter the salesperson should equip himself with the key benefit to be emphasised, samples or new literature to be handed over, etc. Step 5 Sales Presentation: Through advance information relating to the prospect every effort should be made to match the product offered to the needs/problems faced by the customer. The sales presentation should generally go according to the AIDA-attention, interest, desire, and action approach. How can this be done? Use of key

benefit or a problem solver, or a unique act of the salesperson results in gaining attention. When used attentively this part also provides opportunity to get the main point of the initial statements made by the prospect. The presentation should proceed in a straightforward manner to help the prospect know that you understand his problem and that is the reason of your being there. To convince the prospect as early as possible, the salesperson should offer evidence through demonstration of the product, use of exhibits, models, sharing Of acts, citing examples of its successful applications/usage, showing testimonials, etc. The overall approach should be to build credibility and confidence in the supplying company, its products, and also in its competence to render specialised type of service to the, complete satisfaction of its customers. The flexibility of the sales presentations can range from the `Canned' or previously prepared presentation, to those allowing the salesperson
'

complete freedom in the presentation. Though both the extremes, or even the hybrid of the two, have their own situational suitability, the important point to note is that salesmanship, being a showmanship function, must arouse active participation of the prospect in the presentation process. This can be done by introducing some action which would keep the prospect captivated. One possible way would be a joint review of the problem faced by the prospect. Another is helping the prospect imagine the projected benefits of owning the product. Step 6 Handling Objections: It is in the last phase of the sates presentation step that the prospects start expressing doubts, or raising objections whether relating to price, need for more time to think, satisfied with the existing product/supplier or product quality claims. These doubts or objections should be welcome and they should be answered with confidence. There is certainly no doubt that the prospect has to be thoroughly, convinced that the product would satisfy his need. The ability of the salesperson of mind reading of the prospects, enables him to anticipate the prospect's objections and reactions. The golden rules for handling objections are: (1) welcome the objection and show respect to the prospect, and (2) do not argue with the prospect. nsscollegerajakumari 23

Even when the objections raised are half-backed or trivial in nature, the salesperson should handle the situation tactfully. Only in extreme necessity, should a salesperson ask the prospect to adequately explain his problem faced. Even under these circumstances courtesy should not be lost sight of, and while the discussion is on, the salesperson should start recounting the benefits of the product agreed upon, and lead the prospect to make a favourable decision. It should be remembered that handling objections sharpens the selling skills of the salespersons. Step 7 Closing the Sale: Closing is that aspect of the selling process in which the salesperson asks the prospect to buy the product. There is a critical point during each presentation when the salesperson should ask for the order. Pending the location of the critical point, as the objections are being met, the salesperson should help reduce the choice of options, summarise the benefits of buying, and the consequences of not buying, and if need be, make use of the big idea appeal of buying `now' at that moment. The salesperson should have the ability of catching the buying signals given by the prospect and should act on them fast. Some such signals are
v

business and valuable word-of-mouth publicity. The follow-up is a good source of feed back too. Meaning of Sales

Training

Training substitutes or supplements experience of sales personnel. It helps to achieve improved job performance. It helps the new sales personnel to perform their jobs satisfactorily and It increases the performance of existing sales personnel. Sales training methods accelerate the process of learning. Training is the act of increasing the knowledge and skills of an employee for doing a particular job. Training involves the development of skills which are usually necessary to perform a specific job. The purpose of training is to bring a positive change in the knowledge, skill attitude of sales force and to improve the performance of work.. Training gives knowledge about sales techniques, nature of work, market conditions, competitions, market strategies, general information about the company, technical features of the product etc. According to Edwin B. Hippo, "Training is the act of increasing the knowledge and skill of an employee for doing a particular job." According to H.L.Hanson, Sales Training is teaching the salesmen how to do their jobs better." Thus, training refers to the process by which the skill and abilities of employees are increased. It helps to improve the performance level of employees. Training is needed not only for newly recruited employees who are to learn the method of performing their jobs but also for its present employees because of rapid environmental changes.

changing the sitting/standing position and mo ing closer to the product; reading the instructions on the product; perusing the testimonials; showing hesitation in being able to afford; asking for another demonstration, if applicable; checking the warranty or asking questions relating to warranty terms. These signals, show that the time is ripe to start taking the order.

Step 8 Post-sale Follow-up: The selling process does not come to an end by writing the order. A few repetitions reassuring the benefits of the product keep the customer sold. Follow-up provides an opportunity to ensure that the product is being rightly used, and if necessary to re-explain the method of using, handling, and storing of the product when not in use. This builds favourable feelings and nurtures strong buyer-seller relationships. Post-sale follow-up not only reinforces the customer's confidence in the salesperson and his company but also tends to keep competition out. This also helps generate repeat

Group Training Methods

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When training programme is directed to group of persons, it is known as Group Training Method. When various persons arc to be trained regarding common sales techniques, common sales policies, changes in marketing environment, then the purpose of training is to communicate with a group. So group training methods are used. In these methods, cost of training per trainee is less. Group Training Methods are
(1) Lecture Method: In this method, training is given in classroom environment in which trainer gives lecture and trainees listen and watch his lecture and then raise their doubts and questions, It is one of the simplest ways of imparting knowledge to the trainees. A very large group can be trained at a very low cost. This method can ba effective provided, the lecturer uses examples, demonstration and audio-visual aids in delivering his lecture. Nowadays projectors, screens, charts, graphic are used by the trainer lo increase the effectiveness of lecture. This method is more appropriate in giving theoretical knowledge; but in this method practical knowledge cannot be delivered effectively. This method is used in initial stages of sales training, particularly when trainees are very large in number. (2) Role Playing: In this method training starts with trainer describing the situation, Then directing the trainees to play the role of salesmen and prospective customers. Trainee plays the assigned role and then trainer evaluates their effectiveness and suggests how the performance of each trainee can be improved. This method is a creative method of training and trainees are much involved in the training process. It develops their communication skills, overcomes their hesitation, improves their confidence and thus helps to increase the skills of trainees. This method helps the trainees to get better understanding of actual sales situation. (3) Group Discussion: In this method, trainees are classified in different groups. Each group may have 15-20 trainees. Each group is assigned some activities or problems related to selling. They discuss these activities or problems and try to reach at the possible solution. Each group is supervised by experienced trainer who observes their activities. At the end of group-discussion, trainer gives his own views.

by an expert or group of experts. Salesmen of the organisation attend these conferences as participants. The experts give knowledge of new sales techniques to Ihe participants. These conferences discuss specific sales-relatedproblems like how to redress consumer complaints, how to maximise consumersatisfaction etc. In the last stage of conference, group discussion is suggestions from the experts regarding specific problems of their salesterritories. In this part of conference, they can freely interact as no hierarchy is followed in this session. Thus, informal discussion is also a part of sales conference. This method includes merits of both lecture method and group discussion method. (5) Programmed Learning: In this method total training work is divided in various stages. At each stage some sales literature is provided to the trainees. They are guided about the literature by the trainer and then they are given a test to evaluate their learning. Only those trainees are promoted to second stage of training who have scored well in the test. If their performance in the test is not satisfactory, then they are again referred to the trainer of first stage. In the second and subsequent stages, the same process is followed. The main advantage of this method is that the trainer can take immediate feedback of trainees at various stages, within the training process. (6) Demonstration: In this method trainees are given demonstration of the product. This method is appropriate for imparting training for technical and complex products .It demonstrates the technical features of the product so that they can effectively demonstrate the product, its features, uses; where sales personnel are supposed to give demonstration to prospective customers.

(7) Visual Training: Here training is given with the aid of some audio-visual devices developed especially for this purpose. These aids include video-tapes, C.D.s, floppies, cassettes, films, etc. These programs shows the actual steps in selling process. This is an interesting method of training, but only experts in the subject can prepare such devices. (8) Case Study: Case is a sale related problem or a set of data that represents sale related activity. Trainees are asked to analyze case, identify problem and find out a solution. Usually cases relating to real life sales problems are designed. But designing such cases is a difficult job. This method is extensively used for training high level nsscollegerajakumari 25

(4) Sales Conference Method: In sales-conference method, training is given in both formal and informal ways. These conferences are addressed

sales ofricials.lt develops their decision-making ability. (9) Sensitivity Training: Its aim is to develop patience, understanding and trust among sales persons. Here a small group of trainees is constituted, whereas trainees interact with each other without any structured plan. From time to time trainer provides his useful suggestions. The participants learn group-behaviour i.e. how to behave in group. It increases tolerance power and patience of trainees. (10) Management Games :- A variety of management gmes have been developed for training lo sales executives. The management games are played in the general spirit of other games, meaning thereby, that every competing team tries to win. Under the management game method, the trainees are divided into different teams. The teams are asked lo determine sates price, forecast sales, make sales policies/strategies, device sales control and cost control methods etc. in given circumstances. All the teams act as the competitive companies. The decisions made by competing teams are evaluated. Management games are designed to be dose representation of real life situations. In management games executives learn to reach at a solution.

experienced salesmen and afterwards they discuss the sales call with experienced salesmen and thus learn by accompanying the experienced salesmen. In the later stage the trainees perform the sales call and experienced salesmen watch them, followed by discussion and appraisal. This method provides theoretical and practical training and trainees learn in the actual environment of the job. (2) Correspondence COURSES. : This method is suitable for training salesmen who are widely scattered and their number is large. In such cases, training is imparted through correspondence. Printed training materials are sent by mail to the trainees working at different places. Trainees read the study material and thus team through correspondence. If the trainees find any problem in understanding the contents of such materials, clarifications an sought through correspondence.

(3) Job Rotation Training: In this method, trainees are rotated in different selling departments such as distribution-deportment, market research department, publicity department, packing department, debt-collection department, sales promotion department, etc. Thus trainees gain practical knowledge for different types of selling activities.

Individual Training Methods When training programme is directed towards individual salesman, It is known as Individual Training. When the aim of training Is to educate or train a specific person then training is Imparted at individual level. It is more common at executive levels. Here cost of training per trainee is high. When the persons to be trained are working at different levels or have significant difference in educational background then they can better be trained at individual level. individual training methods are less common in comparison to Group Training Methods. Various individual training methods are discussed below:
(1) On the Job Training: In this type of training, salesmen are trained while performing their duties under the guidance of experienced salesmen. Here newly-appointed salesmen accompany the experienced salesmen at the time of making sales call to the prospective customers. In the first stage, they simply watch the sales call made by

(4)Personal discussions : Sometimes sales problems or doubts are discussed by sates personnel with their superiors/higher level executives/colleagues. In this method, sates personnel get training along with their routine selling activities. While performing their selling activities if salesmen feel any problem/doubt, they clarify it by discussing it with their higher officials/colleagues. Usually, route plans, sales call plans, etc. are discussed by the sales personnel with their superiors. (5) Training in universities, , Colleges: Some companies make their salesmen join
universities/colleges in evening classes. The fees for these courses is borne by the company. When the salesmen join these courses, they come to know about latest sales techniques. It helps to increase their skill and abilities.

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Module V Marketing research definition, scope and process. Marketing risk and marketing Audit

Marketing Research
Marketing Research is an important component of the Marketing Information System. Marketers need to acquire good understanding of their own markets to monitor the changing environment. They need information to assess their own past performance as well as to prepare future marketing plans. Hence they require timely and accurate information on their consumers and competitors as well as on the performance of their products. In todays highly competitive and complex environment consumer needs are changing at a fast pace. Hence decision making is very challenging. Marketing research is the function that links the consumer, customer, and public to the marketer through information - information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Philip Kotler defines Marketing Research as the systematic design, collection, analysis and reporting of data findings relevant to a specific marketing situation facing the company.

4. Distribution : The information can be obtained about the effectiveness of channel member their motivation level and what needs to be done to improve their motivation level, in identifying the training needs etc. 5. Promotion : Vital information can be obtained regarding the media habits of consumers which can provide vital inputs for the media planning. Advertising effectiveness can also be measured by pre and post testing techniques which can help in identifying the best advertisement and its impact on the consumers. The consumers response both qualitative and quantitative can help in identifying the best sales promotion technique for ones product or service.

Uses of market research

A wide variety of information used to support marketing decisions can be obtained from market research. A selection of such uses are summarized below:

Information about the market

Analysis of the market potential for existing products (e.g. market size, growth, changing sales trends) Forecasting future demand for existing products Assessing the potential for new products Study of market trends Analysis of competitor behavior and performance Analysis of market shares Information about Products Likely customer acceptance (or rejection) of new products Comparison of existing products in the market (e.g. price, features, costs, distribution) Forecasting new uses for existing products Technologies that may threaten existing products New product development Information about Pricing in the Market Estimates and testing of price elasticity Analysis of revenues, margins and profits Customer perceptions of just or fair pricing Competitor pricing strategies Information about Promotion in the Market Effectiveness of advertising Effectiveness of sales force (personal selling) Extent and effectiveness of sales promotional activities Competitor promotional strategies Information about Distribution in the Market Use and effectiveness of distribution channels Opportunities to sell direct Cost of transporting and warehousing products Level and quality of after-sales service

Scope of Marketing Research The scope of marketing research is very wide and it provides useful information about all the aspects of marketing, for instance: 1. Product or service features desired by the customers : This information can be collected from the customers through a well defined research instrument. Furthermore the relative importance of various features can also be obtained. 2. Pricing : The information regarding the prices charged by the competitors for the same and nearly same products or services can be obtained by market survey. 3. Consumer Behaviour : The research can be conducted to know about buying habits of the consumers. Information can be obtained regarding why consumers buy something; when do they buy it; from where they buy; how much do they buy; who accompanies them during the shopping etc. Information to these key question will help the marketer in improving his offering.

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Marketing Research Process

The marketing research process consists of a series of activities: defining the issue or problem to be studied, examining secondary data, generating primary data (if necessary), analyzing information, making recommendations, and implementing findings.

4. What technique of data collection should be used? 5. How much will the study cost? 6. How will the data be collected? 7. how the researcher is going to analyse data etc. Stage 3 : Collecting Data Once the problem has been defined, the research techniques chosen, and the sample to be analyzed selected, the researcher must actually collect the needed data. At this stage, it is very important to keep the quality of the data under control by ensuring accurate unbiased answers and by seeking the entire respondents co operation. In case the researcher has to appoint data collectors to collect the information from respondents, they must be well trained and motivated. Data can be classified into primary and secondary. Primary data are those data which are collected by the researcher himself and hence are fresh in nature. Primary data can be collected by using A) Survey : Primary data are commonly generated by survey research. In general, a survey is any research effort in which data are gathered systematically from a sample of people by means of a questionnaire. Researchers using surveys may collect data by means of telephone interviews, mailed questionnaires, personal interviews (either door-to-door or in shopping malls or some other public place), or some other communication method such as fax or the Internet. Mail Survey In many countries, the mail survey is the most appropriate way to gather primary data. Lists are collected, or purchased, and a pre-designed questionnaire is mailed to a sample of respondents. Questionnaire consists of a set of questions logically arranged and presented to the respondents to answer. Questionnaire is the most commonly used instrument for collection of primary data due to its flexibility. It needs to be carefully prepared and pre tested before being used for actual data collection. Mystery Shopping Companies will set up mystery shopping campaigns on an organizations behalf. Often used in banking, retailing, travel, cafes and restaurants, and many other customer focused organizations, mystery shoppers will enter, posing as real customers. They collect data on customer service and the customer experience. Telephone Interview This method is very quick way for gathering information. The method is interactive, in case any clarification is required, but such an interview typically should be short. Personal Interview This is the most versatile method which can be adapted to any kind of research subject. Personal Interviews can be undertaken after arranging interviews at the nsscollegerajakumari 28

1. Defining Research Problem. It is said that a problem well defined is a problem half solved. A careful and precise definition of the marketing problem will lead to useful and relevant results which can solve the marketing problem. Each research project should have one or more objectives which form the broad frame within which research has to be conducted. It is very important to formulate the problem properly as being the first step in the process; any error in this can mislead the entire study towards incorrect and erroneous results. The best way to express a research objective is as a well-constructed, testable hypothesis. A hypothesis is an unproven proposition or a possible solution to a problem, a statement that can be supported or refuted by empirical data.

STAGE 2 : PLANNING THE RESEARCH DESIGN After researchers have clearly identified the research problem and formulated a hypothesis, the next step is to develop a formal research design. The research design is master plan that identifies the specific techniques and procedures that will be used to collect and analyze data about a problem. It consists of: 1. Who collects the data? 2. What information should be collected? 3. Who or what should be studied?

respondents premises or at Shopping Malls by stopping people and requesting interview. Online Interviews There are many ways to collect information through the internet. A Company can put a questionnaire on its web site and offer incentive to people to answer. Advantages of online Interview are that it is very inexpensive and can be very fast.

number of entries, the researcher has a reasonable picture of purchasing behavior.

B) Experiment : Experiments have long been used by scientists attempting to discover cause-and-effect relationships. Marketing researchers use experimental techniques in the marketplace, and in controlled, or laboratory, situations. For example, McDonald's conducted experiments in the marketplace to determine if it should add a single-slice McPizza to its menu. C) Observation : If the purpose of a research effort is to note actions that are mechanically or visually recordable, observation techniques can form the basis of that effort. Observation research involves the systematic recording of behaviour, objects, or events as they are witnessed. Mystery shoppers. (Researchers disguised as customers,) store employees, or product demonstrators might subtly observe consumer reactions to prices, products, package designs, or display cases, leaving the consumers unaware that their behaviour was being observed. D) Focus Groups Focus groups are made up from a number of selected respondents based together in the same room. Highly experienced researchers work with the focus group to gather in depth qualitative feedback. Groups tend to be made up from 10 to 18 participants. Discussion, opinion, and beliefs are encouraged, and the research will probe into specific areas that are of interest to the company commissioning the research. E) Projective techniques Projective techniques are borrowed from the field of psychology. They will generate highly subjective qualitative data. There are many examples of such approaches including: Inkblot tests - look for images in a series of inkblots Cartoons - complete the bubbles on a cartoon series Sentence or story completion Word association - depends on very quick (subconscious) responses to words etc. F) Diaries Diaries are used by a number of specially recruited consumers. They are asked to complete a diary that lists and records their purchasing behavior of a period of time (weeks, months, or years). It demands a substantial commitment on the part of the respondent. However, by collecting a series of diaries with a

Secondary Data These are data which are already collected for other objectives. i.e. it already exists. The biggest advantages of secondary data are that (1) they are always less expensive to collect than primary data and (2) they can be obtained rapidly. There are a number of such sources available to the marketer like :Trade associations National and local press Industry magazines National/ international governments Internet / Web sites Informal contacts Trade directories Published company accounts Business libraries Professional institutes and organizations Omnibus surveys Previously gathered marketing research Census data Public records etc.
Stage 4 : Analyzing the Data Once a researcher has completed what is called the fieldwork by gathering the data needed to solve the research problem, those data must be processed. Data processing ordinarily begins with a job called editing, in which surveys or other data collection instruments are checked for omissions, incomplete or otherwise unusable responses, illegibility, and obvious inconsistencies. Editing : Checking completed questionnaires or other data collection forms for omissions, incomplete or otherwise unusable responses, illegibility, and inconsistencies. Once the data collection forms have been edited, the data undergo coding. That is, meaningful categories are established so that responses can be grouped into classification usable for computer analysis. For example, for a survey focusing on response differences between men and women, a gender code, such as 1 = male and 2 = female, might be used. After editing and coding, the researcher is ready to undertake the process of analysis. Data analysis may involve statistical analysis, qualitative analysis, or both. The type of analysis used should depend on management's information requirements, the research hypothesis, the design of the research itself, and the nature of the data collected. The coded data is then tabulated to provide frequency distributions. Tabulated data is now analyzed. Averages nsscollegerajakumari 29

and measures of dispersion are computed for the major variables. Advanced Statistical Techniques such as the t-test of two means, the chi-square test, and correlation analysis are commonly used to analyze data. Here the data is converted to information which may be used in decision making. Stage 5 : Drawing Conclusions and Preparing a Report The purpose of marketing research is to aid managers in making effective marketing decisions. therefore, the end result of the research process must be a report that usefully communicates research findings to management. Normally, the findings are presented in the form of a report which should present the following aspects of the research undertaken. General Format of a Report 1. Introduction An introduction to background of the marketing problem and the firm. 2. Statement of Purpose Statement of purpose and objectives of the study including hypothesis/hypotheses is/ are proposed. 3. Research Methodology Methodology of data collection used and tools used, Sampling Procedure used and Sample Size, Limitations of the study if any. 4. Analysis of Data Includes tables /graphs and statistical analysis used along with data interpretation. 5. Findings and Conclusions Major findings and conclusions. 6. Recommendations Recommendations for action. 7. Appendix and Bibliography. Stage 6 : Following Up After the researcher submits a report to management, he or she should follow up to determine if and how management responded to the report. The researcher should ask how the report could have been improved and made more useful.

Characteristics: 1. Comprehensive : The marketing audit covers all the major marketing activities of a business, not just a few trouble spots. It would be called a functional audit if it covered only the sales force, pricing, or some other marketing activity.
2. Systematic : The marketing audit is an orderly examination of the organizations macro and micromarketing environment, marketing objectives and strategies, marketing systems, and specific activities. 3. Independent : A marketing audit can be conducted in six ways : self-audit, audit from across, audit from above, company auditing office, company task force audit, and outsider audit. 4. Periodic : A periodic marketing audit can benefit companies in good health as well as those in trouble. A marketing audit starts with a meeting between the company officer(s) and the marketing auditor(s) to work out an agreement on the audits objectives, coverage, depth, data sources, report format, and time frame. A detailed plan as to who is to be interviewed, the questions to be asked, the time and place of contact, and so on is prepared so that auditing time and cost are kept to a minimum. The marketing audit examines six major components of the companys marketing situation.

Marketing audit
Marketing control is divided into two parts. They are operation control and strategic control. Operation control involves assessing the current activities against annual plan and taking corrective actions. Strategic control is used to assess whether existing strategic plans of the company meets the opportunities exist for it. Marketing audit is used as a strategic control tool. According to Philip Kotler marketing audit is comprehensive, systematic, independent and periodic examination of a companys environment, objectives, strategies and activities to determine problem areas and opportunities and to recommend a plan of action to improve the companys marketing performance. nsscollegerajakumari 30

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