MARKETING MANAGEMENT

1. Nature and defnition of marketing management

Meaning and importance of products
Importance of product innovation
Planning and development of new product
Product line and product mix
Major product line strategies
actors in!uencing c"ange in product mix
Planned o#solescence and fas"ion

$randing% pac&aging% la#eling and image #uilding factors
2. Price-pricing system

Meaning and importance of price and pricing
s'stem(o#jective
Procedure for price determination
$asic met"ods of setting price

Price polices and strategies
3. Distribution structure

)"annel of distri#ution

Nature of retail mar&et% economics #asis of retailing and its
)lassi*cation+ Retailer,sw"ole seller and met"ods of operation+

-esigning and managing c"annel of distri#ution+
Managing of p"'sical distri#ution
4. Promotional activities
T"e promotional program
)ampaign concept
Promotional mix. sales promotions% personal selling
Nature and importance of advertising
-evelopment of advertising

)/NTENT0
!" #$N%& '1. $N"%(D!)"$N
1+1 de*nition Mar&eting management
1+2 Meaning and importance of products
1+2Nature of mar&eting management
1+3 Product% classi*cation of a product
1+4 Importance of product innovation
1+5 Planning and development of new product
1+6 product life c'cle
1+7 Product line and product mix
1+8 actors in!uencing c"ange in product mix
1+9 Planned o#solescence and fas"ion
11: $randing% Pac&aging%;a#eling and image #uilding factors
!"#$N%& '2. P($)%-P($)$N* +,+"%-
2+1 Meaning and importance of price
2+2 Pricing s'stem(o#jective
2+3 Procedure for price determination /R $asic met"ods of setting
price
2+4 Price polices and strategies
!" #$N%& '3 D$+"($.!"$N +"(!)"!(%
)"annel of distri#ution
Nature of retail mar&et
Economics #asis of retailing and its )lassi*cation
Retailer,s w"ole seller
Met"ods of operation+
-esigning and managing c"annel of distri#ution
Managing of p"'sical distri#ution
!" #$N%& '4 .P(-"$N/# /)"$0$"$%+
T"e promotional program
Promotional mix
0ales promotions
Personal selling
Nature and importance of advertising
-evelopment of advertising


utline '1
1+1 Mar&eting management
1+2 Nature and de*nition of mar&eting management
1+3 Meaning and importance of products
)lassi*cation of product
1+4 Importance of product innovation1+5 Planning and development of
new product

Reasons of failure of new product

New Product 0trateg'

1+6 Product line and product mix

Product mix
Major Product.Mix 0trateg'
Product line
Major product line strategies
1+7 actors in!uencing c"ange in product mix1+8 Planned o#solescence
and fas"ion

Nature of planned o#solescence
Nature of 0t'le < as"ion
as"ion adoption process
Mar&eting consideration in fas"ion
1+8 $randing% pac&aging% la#eling and image #uilding factors
-arketing -anagement
1.1 12at is marketing management3 -arket=.
Mar&et is a place w"ere #u'ers and sellers meets and goods and
services sales and #u's producers+

-arketing&-
It is a total s'stem of #usiness activities design to plan promote
and distri#ute want satisf'ing goods and services to target
mar&et+
-arketing management&-
It can #e de*ne as a art and science of c"oosing target volume
and getting &eeping and growing customer to creating delivering
and communicating superior customer value+
%4planation&-
1> 0cience and art2> )"oosing target mar&et3> Getting% &eeping%
growing customer ?4ps>
15 -arketing -anagement is bot2 a +cience as 6ell as an /rt&-
Mar&eting Management is #ot" a science as well as an art+ T"e
science of mar&eting management provides certain general
principles w"ic" can guide t"e managers in t"eir professional
e@ort+ T"e Art of Mar&eting management consists in tac&ling
ever' situation in an e@ective manner+ As a Matter of fact% science
s"ould not #e over.emp"asiAed nor s"ould art #e discounted t"e
science and t"e art of mar&eting management go toget"er and
are #ot" mutuall' interdependent and complimentar'+ Mar&eting
Management is t"us a science as well as an art+ Itcan #e said
t"at.Bt"e art of Mar&eting management+

25 )2oosing target -arket&-
A mar&eter can rarel' satisf' ever'one in a mar&et+ Not ever'one
li&es t"e same soft -rin&% automo#ile% college% and movie+
T"erefore% mar&eters start wit" mar&et segmentation+ T"e'
identif' and pro*le distinct groups of #u'ers w"o mig"t prefer or
reCuire Dar'ing products and mar&eting mixes+ Mar&et segments
can #e identi*ed #' examining -emograp"ic% ps'c"ograp"ic% and
#e"avioral di@erences among #u'ers+ T"e *rm t"en decides
w"ic" segments present t"e greatest opportunit'Et"ose needs
t"e *rm can meet in a superior fas"ion+
35 -arketing -i4
Mar&eters use numerous tools to elicit t"e desired responses from
t"eir target mar&ets+ T"ese tools constitute a mar&eting mix
Mar&eting mix is t"e set of mar&eting tools t"at t"e *rm uses to
pursue its mar&eting o#jectives in t"e target mar&et+ As s"own in
igure 1.3% Mc)art"' classi*ed t"ese tools into four #road groups
t"at "e called t"e four Ps of mar&eting= product% price% place% and
promotion+ igure 1.3 T"e our P )omponents of t"e Mar&eting
Mix


1.2 Nature 7 $mportance of -arketing -anagement
$-P("/N)% 8 -/(9%"$N* -/N/*%-/*%-%N"
It would #e diFcult to imagine t"e world wit"out mar&eting+ $ut it
ma' #e eCuall' diFcult to appreciate t"e importance e@ective
mar&eting pla's most aspect of our lives+ Ge ta&e for granted t"e
media t"at are largel' supported #' advertising+ T"e vast
assortment of goods distri#uted t"roug" stores close to 'our
"omes% and t"e ease wit" w"ic" we can ma&e purc"ases+ ;ets
consider for a moment "ow mar&eting pla's a major role in t"e
glo#al econom' % in t"e American socioeconomic s'stem in an'
individual organiAation and in 'our life+
15 *lobally&-
Pro*t and growt" o#jectives are most li&el' to #e ac"ieved
t"roug" a com#ination of domestic and international mar&eting
rat"er t"en solel' from domestic mar&eting+ Hntil t"e late 197:s
American *rms "ad a large and secure domestic mar&et+ T"e onl'
signi*cant foreign competition was in selected industries% 0uc" as
agriculture% or for relativel' narrow mar&ets% suc" as luxur'
automo#iles+ $ut t"is c"ange domesticall' t"roug" t"e 198:s as
more foreign *rms developed attractive products% "oned t"eir
mar&eting expertise% and t"en successfull' entered t"e H0
mar&et+ Imported products in some industries% suc" as oFce
eCuipment% autos% apparel% watc"es and consumer electronics%
"ave #een ver' successful+ As a result in recent 'ears t"e H+0+ "as
#een importing more t"en its exports% creating large annual trade
de*cits+
25 Domestically&-
Aggressive% e@ective mar&eting practices "ave #een largel'
responsi#le for t"e "ig" standard of living in t"e Hnited 0tates+
T"e eFcienc' of mass mar&eting I extensive and rapid
communication wit" customers t"roug" wide verit' of media and
a distri#ution s'stem t"at ma&es products rapidl' availa#le.
)om#ined wit" mass production #roug"t t"e cost of
man' products wit"in reac" of most customers+

a5 %mployment and costs&-
G"en we get an idea of signi*cant mar&eting in t"e H+0+ econom'
#' loo&ing at "ow man' of us are unemplo'ed in same wa' in
mar&eting and "ow muc" of w"at we spend covers t"e cost of
mar&eting+ $etween one t"ird and one fourt" of t"e H+0+ civilian
la#or force is engaged in mar&eting activities+
b5 )reating !tility&-
A customer purc"ases a product #ecause it provides satisfaction+
T"e Gant satisf'ing power of a product is called its utilit' and it
#ecomes in man' forms+ It is t"roug" mar&eting t"at muc" of a
products utilit' is created+
35 rgani:ationally&-
Mar&eting consideration s"ould #e integral part of all s"ort and
long range planning in an' compan'+ Jere,s w"'=

T"e success of an' #usiness comes from satisf'ing t"e wants of
its customers w"ic" is t"e social and economic #asis for t"e
existence of all organiAations+

Alt"oug" man' activities are essential to a compan',s growt" %
mar&eting is t"e onl' one t"at produce revenue directl'+
a5 +ervices marketing&-
T"e H+0 "as gone t"roug" from primaril' manufacturing econom'
to t"e world,s *rst service econom'+ As opposed to goods%
services are activities t"at are t"e o#ject of a transaction+ or
example transportation% communication entertainment% medical
care% *nancial services% education and repair services account of
over two t"ird of t"e nation,s gross domestic product+
b5 Not for proft marketers&-
-uring 198:s and earl' 199:s man' not for pro*t organiAations
realiAed t"' needed e@ective mar&eting programs to ma&e up for
s"rin&ing government su#sidies a decrease in c"arita#le
contri#ution and ot"er unfavora#le economic+
Not for pro*t organiAations need to improve t"eir image and gain
greater acceptance among donors% government agencies% news%
media% and consumers all of w"ic" collectivel' determine an
organiAation,s success+
45 Personally&-
)onsider "ow man' mar&eters view 'ou as a part of t"eir mar&et+
Git" people li&e 'ou in mind% *rms suc" as Ni&e% D0A% and
Microsoft "ave designed products% set prices% created
advertisement and c"osen t"e #est met"ods of mar&eting t"eir
product availa#le to customers+ In response customers watc"es
TD+ Git" its commercials #u' various articles over internet and
instores etc +Mar&eting occupies a large part in our dail' life+
0tud'ing mar&eting will ma&e 'ou #etter informed+ Kou will "ave a
#etter idea for w"' some *rms are successful and
ot"er seemingl' run #usiness fail+ More especiall' 'ou will
discover "ow *rms go a#out deciding w"at products to o@er% and
w"at price is to c"arge+ Mar&eting will "elp 'ou understand t"e
man' forms of promotion and "ow t"e' are used to inform and
persuade customers+ And it will "elp 'ou t"e modern miracle of
eFcient distri#ution t"at ma&e product availa#le w"en and
w"ere #u'ers want t"em+
NATHRE / MARKETING MANAGEMENT
-arketing as a process&-
Mar&eting is a process t"at mar&eting managers execute+ In a
num#er of instances% a mar&eting manager does not manage
people% #ut manages t"e mar&eting process+ A product manager
is an example of suc" a mar&eting managerL s("e manages t"e
mar&eting process for a product wit"in a larger mar&eting
organiAation+ Ge% as consumers% see t"e results of t"at process in
t"e form of products% stores% s"opping malls% advertisements%
sales pitc"es% promotions% prices% etc+ T"is process usuall'
involves four p"ases+
/nalysis&-
Mar&ets must #e understood% and t"is understanding !ows from
anal'sis+ Mar&eting managers spend wee&s anal'Aing t"eir
mar&ets #efore t"e' underta&e t"e development of mar&eting
plans for in!uencing t"ose mar&ets+

Planning&-
/nce a mar&et is understood% mar&eting programs and events
must #e designed for in!uencing t"e mar&etMs customers and
consumers% and even t"e *rmMs competitors+
%4ecution&-
T"e mar&eting events are executed in t"e mar&ets=
advertisements are run% prices are set% sales calls are made% etc+
-onitoring&-
Mar&ets are not static entities and t"us must #e monitored at all
times+ After events execute% t"e' need to #e evaluated+ T"e
planning assumptions upon w"ic" t"e upcoming events are #ased
must #e continuall' testedL t"e' are not longer true t"en t"e
events ma' need modi*cation+
"2e D (oles of a marketing manager&-
Mar&eting managers pla' man' roles% and we can descri#e t"em
wit" words t"at #egin wit" t"e letter -=
Detective&-
T"e mar&eter is c"arged wit" understanding mar&ets% and t"us
must spend considera#le time learning a#out consumers%
competitors% customers% and conditions in t"e mar&ets+ T"is
learning ta&es man' forms= formal mar&eting researc" studies%
anal'sis of mar&et data% mar&et visits% and discussions wit"
people in t"e mar&ets+ T"e result of t"ese studies include insig"ts
a#out mar&et conditions% and t"e identi*cation of pro#lems and
opportunities in t"e various mar&ets+
Designer &-
/nce a pro#lem or opportunit' "as #een identi*ed% t"e mar&eter
turns "er("is attention to designing mar&eting programs t"at
solve t"e pro#lems and(or capture t"e opportunities+
Decision maker&-
Mar&eting is a group process t"at involves man' di@erent people%
eac" of w"om ma' #e designing mar&eting programs and events+
T"us t"e mar&eter must ma&e decisions a#out w"ic" programs to
execute+
Place&-
Mar&eting managers are involved in decisions a#out w"ere t"e
product is o@ered to t"e consumer in terms of t"e c"annels of
distri#ution+
/perating wit"in constraints=.
Mar&eting managers must underta&e all of t"e a#ove activities
wit"in various constraints% all of w"ic" start wit" t"e letter )+
None of t"ese constraints are under t"e direct control of t"e
mar&eting managersL some can #e in!uencedL all can #e
understood+
)ompetition&-
/t"er companies are competition for t"e same consumers and
c"annels of distri#ution+
)2annels&-
Retail stores% electronic mar&ets% communications media exist to
serve t"e mar&eter+ In t"e s"ort run% t"e' must #e accepted as
constraintsL in t"e long run% t"e mar&eter can exert some control
over t"em +++ even verticall' integrate into t"e c"annels+
)onsumers&-
)onsumers "ave
needs and wants
+ T"e mar&eters must understand t"ose needs
#efore t"e' can design mar&eting programs aimed at impacting
consumer
wants+

)onditions&-
Mar&ets are not static #ut in constant evolution under t"e
in!uences of t"e econom'% c"anging tastes and fas"ions%
population d'namics% etc+

)ompany&-
)ompan' policies% procedures% practices% and cultures place
constraints upon t"e mar&eting resources and programs t"at t"e
mar&eter can deplo'+
Mar&eting is )olla#oration=.
T"e nature of mar&eting reCuires mar&eting managers and
professionals to wor& toget"er on all aspects of mar&eting+ It is
common for t"e mar&eting manager to #e at t"e center of a set of
activities #eing wor&ed on #' people wit"in t"e compan' ?sales
force% promotion manager% product development teams% etc+> and
outside t"e compan' ?ad agencies% consultants% mar&eting
researc" *rms% etc>+ T"us mar&eting managers must spend
considera#le time in consultation and colla#oration wit" ot"er
people+

1.1 -eaning and importance of products and
classifcation of product
P(D!)" D%8$N/"$N
Product&-
A product is a set of tangi#le and intangi#le attri#utes w"ic" ma'
include% pac&aging% color% price% and Cualit'% #rand% and seller
reputation and seller services+ T"e *rst commandant in mar&eting
is t"e customer and t"e second is t"e product+ In narrow sense
product is t"e product is set of #asic attri#utes assem#led in an
identi*ed form+ Eac" product is identi*ed #' a commonl'
understood descriptive name% suc" as steel% insurance% tennis
rac&ets etc+

T"ere are man' de*nitions of product #' di@erent aut"ors+

1.A product is a set of tangi#le and intangi#le attri#utes% w"ic"
ma' include pac&aging% color% price% Cualit'% #rand and seller,s
services and reputations+
2.Product is a service t"at provides t"e #ene*t of a comforta#le
nig"t rest at a reasona#le price+
3.Product is a place t"at provides sun and sand% relaxation%
romance% cross cultural experiences and ot"er #ene*ts+
%4planation&-
Ge treat eac" #rand as separate product+ An' c"ange in a feature
?design% color% siAe% pac&ing> "owever minor% creates anot"er
product+ Eac" suc" c"ange provides t"e seller wit" an opportunit'
to use a new product+ A product ma' #e a good% service% place%
person or idea+ )ustomers #u' products to satisf' t"eir needs+
)lassifcation of product&-
Products or goods are #asicall' of two t'pes+?1>+ )onsumer
goods?2>+ Industrial goods+


)onsumer goods&-
)onsumer products are produced for personal consumption #'
"ouse"olds+ T"ere are four t'pes of consumer goods+
?1>+ )onvenience goods&-
Goods t"at t"e consumer usuall' purc"ase freCuentl'%
immediatel'% and wit" t"e minimum of e@ort in comparison and
#u'ing for most #u'ers% convenience goods include man' food
items% inexpensive cand'% drugs li&e aspirin and toot" paste%
"ardware items suc" as lig"t #ul#s and #atteries+ )onvenience
goods "ave low price an are not greatl' a@ected #' fad and
fas"ion+ A manufacturer prepares t"ese products to distri#ute it
widel' and rapidl'+
?2> +2opping goods&-
A tangi#le product for w"ic" a consumer wants to compare
Cualit'% price and per"aps st'le in several stores #efore ma&ing a
purc"ase is &nown as s"opping goods+ Examples of s"opping are
furniture% automo#iles% major appliance etc+ T"e process of
searc"ing and comparing continues as long as consumer feels
satisfaction+ T"e s"opping goods can #e divided into
"omogeneous and "eterogeneous goods+ T"e "omogeneous
goods are similar in Cualit' #ut di@erent in price+ T"e
"eterogeneous products are di@erent in Cualit' and prices+
?3> +pecialty goods&-
A tangi#le product for w"ic" a customer give preference to a
strong #rand and "e wants to expend su#stantial time and e@ort
in locating t"e desire #rand is called a specialt' good+ Examples
of specialt' goods are men,s suits% stereo sound eCuipment%
"ealt" foods% p"otograp" eCuipment% new automo#iles and
certain "ome appliances+ T"e specialt' goods do no involve
t"e #u'er,s ma&ing comparisons% t"e #u'er onl' invest time to
reac" t"e dealers carr'ing t"e wanted products+
?4> !nsoug2t goods&-
An unsoug"t good is a new product from w"ic" a consumer is not
aware+ More people are unaware of interactive movies+ An electric
car mig"t #e an unsoug"t good for most people% #ecause t"e' are
unaware of it+ $at"room tissue made strictl' from cotton *#er
would seem to #e an unsoug"t good+ A *rm faces a ver' diFcult%
per"aps impossi#le advertising w"en tr'ing to mar&et unsoug"t
goods+ Mar&eters mar&et unsoug"t goods #' placing ads on #us.
stop #enc"es or in c"urc" #uildings+
$ndustrial goods;.usiness goods&-
Industrial products are purc"ased to produce ot"er products or for
use in a *rm,s operations+ Industrial products are purc"ased on
t"e #asis of organiAation,s goals and o#jectives+ /n t"e #asis of
t"eir uses and c"aracteristics% industrial or #usiness products can
#e classi*ed into seven categories+
15.(a6 material&-
Raw materials are t"e #asic materials t"at actuall' #ecome part
of t"e product+ T"e' are provided form mines% forests% oceans%
farms and rec'cled solid wastes+
25.8abricating -aterials and parts;)apital items&-
Major eCuipment includes large tools and mac"ines used for
production purposes+ Examples are rat"er% cranes% 0tamping
mac"ines+
35. /ccessory %<uipment&-
Accessor' eCuipment does not #ecome part of t"e *nal product
#ut is used in production or oFce activities+ Examples include%
"and tools% t'pe writers% fractional "orse power motors etc+
Accessor' eCuipments are less expensive t"an capital items+
45.)omponent Parts&-
)omponent parts #ecome a part if t"e p"'sical product and eit"er
are *nis"ed items read' for assem#l' or are products t"at enter
t"e *nis"ed product completel' wit" no furt"er c"ange inform% as
w"en small motors are put into vacuum cleaners and tires are
added on automo#iles+ 0par& plugs% tires% cloc&s and switc"es are
all component parts of t"e automo#ile+

=5.Process material&-
Process materials are used directl' in t"e production of ot"er
products+ Hnli&e component parts% "owever process materials are
not identi*a#le process materials are furt"er fa#ricated+
or example% Pig iron is made into steal and Karn is woven into
clot"+
>5.+upplies&-
0upplies facilitate productions% #ut t"e' do not #ecome part of "e
*nis"ed product+ Paper% pencils% oils% cleaning agents and paints
are examples
+
?5.$ndustrial +ervices&-
Industrial services include maintenance and repair services+ ?e+g+L
window cleaning% t'pewriter repair> and #usiness advisor'
services+ ?e+g+L legal% management% consulting% advertising%
mar&eting researc" services>+ T"ese services can #e o#tained
internall' as well as externall'+
1+2 Product innovation 7 $mportance of product innovation
$-P("/N)% 8 P(D!)" $NN0/"$N

T"e main purpose of #usiness is to satisf' customers and to ma&e
pro*t fundamentall'L accompan' ful*lls t"is purpose t"roug" its
products+ New product planning and development are ver'
important for an organiAation,s success+ T"e new products must
satisf' customers need as well as must #e pro*ta#le for t"e *rm+
ReCuirement for growt"=.
0ooner or later% man' products #rands #ecome outdated+ T"eir
sales volumes and mar&et s"ares drop #ecause of c"anging
desires or superior competing products+
%4amples of outdated products&-
@
/nce successful products t"at are now #ecome outdated include
fountain pen% audiocassettes+
@Now man' dated products are #ecoming successful rapidl' for
example% w"ite cloud #at"room tissue% computers% etc+ T"us t"e
guideline for management is innovating or die+ Introduction a new
product at t"e rig"t time can "elp sustain a *rm+ In fact%
companies t"at are leaders in terms of pro*ta#ilit' and sales
growt" o#tain 39N of t"eir revenues from new products+ 0ome
*rms t"at were successful innovators for long periods li&e Ni&e%
Procter and Gam#le% "aven,t maintained a stead' !ow of new
products in recent 'ears+ 0ome of t"eir competitors "ave #een
more successful+ $usiness pro*ta#ilit' and success depends on
innovation+ I we innovate well% we will ultimatel' win+
Aig2 8ailure (ates&-
or man' 'ears% Ot"e rule of t"um#P "as #een t"at a#out 8:N of
new product fail+ New products "ig"er failure rate is due to no
c"ange in existing products or new products are not #eing
di@erent t"at existing products+ or example% Daseline after s"ave
lotion% Pepsi A+M% and arra" 0"ampoo+ A new product is also fail if
it does not deliver on its promise+ urt"er% a product can #e failed
if it is perceived as o@ering poor value in relation to its price+
/t"er factors t"at can undermine new products include poor
positioning and lac& of mar&eting support+ irms t"at are
inattentive to t"eir new products can face "ig"er failures+ irms
and organiAations t"at e@ectivel' manage product innovation can
get "ig"er advantage% "ig"er sales and pro*ts and solid
foundation for t"e future+
Planning and development of a new product
N%1 P(D!)"
T"ere are several possi#le categories of new products+ Eac"
separate categor' ma' reCuire Cuite a separate mar&eting
programmed to ensure a reasona#le pro#a#ilit' of mar&et
success+ T"ree considera#le categories of new products are=.
15 Products 62ic2 are really innovative&-
Trul' uniCue% e+g+% a "our restores% cancer cure products for w"ic"
t"ere is a real used #ut for w"ic" no existing su#stitutes are
considered satisfactor'+ In t"is case we also includes product t"at
are Cuite di@erent from existing product #ut satisf' t"e same
need+
25 (eplacement for e4isting products&-
T"at are signi*cantl' di@erent from existing goods+ Annual
model% c"ange automo#iles and new fas"ions in clot"ing% #elong
to t"is categor'+
35 $mitative Product&-
T"at are new to a particular compan' #ut not new to mar&et%
wit" a Ome.tooP product+ Per"aps t"e &e' criterion as to w"et"er a
given product is new is "ow to intend mar&et perceives it+ If
a #u'er perceives a product is signi*cantl' di@erent from
competitive goods in some c"aracteristics t"en it is a new
product+
Reasons of failure of new product=.
T"e new product fails due to certain reasons in mar&et+
T"e idea is good% #ut mar&et siAe is overestimated+

T"e product is not well.designed+

T"e product is incorrectl' positioned in mar&et% no advertised
e@ectivel' and over. priced+

T"e product fails to gain suFcient distri#ution coverage or
support+

-evelopment costs are "ig"er t"an expected+

)ompetitors *g"t #ac& "arder t"an expected+

rgani:ing ne6 product development&-
)ompanies "andle organiAational aspects of new product
development in several wa's+ Man' companies assigned
responsi#ilit' for new product ideas to product manager+ $ut
product managers are often #us' in managing existing lines t"at
t"e' give little time and e@ort to new products ot"er t"an line
extensions+ T"e' also lac& speci*c s&ills and &nowledge needed to
develop and critiCue new product+
Ne6 Product +trategy&-
A new product strateg' is a statement identif'ing t"e role of new
product is expected to pla' in ac"ieving corporate and mar&eting
goals+ New product development process
+tages&-
A new product is #est developed t"roug" a series of eig"t
stages+As compared to unstructured development t"e formal
development of new product provides #ene*ts suc" as improved
team wor&% lesser wor&% earlier failure detection and most
important "ig"er success rate+
15.$dea generation&-
T"e new product -evelopment process wit" t"e searc" for ideas+
New product ideas comes t"roug" interacting wit" various group
of people % suc" as customer% scientists% competitors % emplo'ees
and top management+ )ompanies can also *nd good ideas #'
searc"ing competitor,s products and services+ rom t"is t"e' can
*nd out w"at t"e customers li&es and disli&e a#out competitors
products+ T"e' can #u' t"eir competitors products% ta&e t"em a
part and #uild #etter ones+ Man' companies also encourage
emplo'ees particularl' t"ose on production line to come fort"
wit" ideas% often o@ering cas" reward for good suggestion+
New product ideas also come from inventors% universit' and
commercial la#oratories% advertising agencies+ As t"e ideas start
to !ow% one will sprat anot"er% and wit"in a s"ort time "undred
of new ideas ma' #e #roug"t to surface+
25 $dea screening& -Idea screening is second stage in new product
development once a large pool of ideas "as #een generated #'
w"at ever t"eir means% t"eir num#er "ave to #e pruned to
managea#le level+ In screening ideas t"e compan' must avoid
two t'pes of error+
Drop error& -
/ccurs w"en t"e compan' dismisses an ot"erwise good idea+
*o error& -
Mean adoption of poor ideas
T"e purpose of screening is to drop poor ideas as earl' as
possi#le+ Man' companies reCuire t"eir executives to write up
new product on a standard form t"at can #e received #' anew
product committee+ T"e write up descri#es product idea% target
mar&et and competition+ It ma&es some roug" estimate of mar&et
siAe% product price% development cost and rate of return+
35 )oncept development and testing& -
A product idea is possi#le product t"e compan' mig"t o@er to t"e
mar&et+ A product concept is an ela#orated version of ideas
expressed in a meaningful consumer terms+ T"roug"out t"e
stages of idea generation and screening% t"e developers are onl'
wit" t"e product idea% general concept of w"at product mig"t #e+
)oncept development involves man' Cuestions,> G"o will #u' t"e
new productQ ii> G"at is t"e primar' #ene*t of new productQ iii>
Hnder w"at circumstances% t"e new product ma' #e usedQ
)oncept testing&-
)oncept testing involves presenting t"e product concept to
appropriate target consumers and getting t"eir reactions+
45 -arketing +trategy& -
ollowing t"e successful concept test% t"e new product manager
will develop a preliminar' mar&eting strateg' plan for introducing
t"e new product into mar&et+ T"e plan consists of t"ree parts+ T"e
*rst part descri#es t"e target mar&et siAe% structure and #e"avior%
t"e planned product positioning and sales% mar&et s"are% pro*t
goals soug"t in t"e *rst few 'ears+ T"e second part outlines t"e
planned price% distri#ution strateg' and mar&eting #udget for *rst
'ear+ T"e t"ird part of mar&eting strateg' plan descri#es t"e long
run sales and pro*t goals and mar&eting strateg' overtime+
=5 .usiness /nalysis& -
T"e next step in new product development is #usiness anal'sis+
T"e mar&et must project costs% pro*t and return on investment for
t"e new product if it were placed in mar&et+ $usiness anal'sis is
not a s"ort processL it is a detailed realistic projection of #ot"
maximum and minimum sales and t"eir impact on econom' or
compan'+ or some products suc" as anot"er cand' #ar%
mar&eters can use existing sales data to guide t"emselves+ $ut
wit" a product% for w"ic" sales data does not exist% onl'
estimation can #e used+
>5 Product Development& -
If t"e result of #usiness anal'sis is favora#le t"en a protot'pe of
t"e product is developed+ In development stage% t"e idea is given
in a concrete or tangi#le form+ Hp to now% t"e product "as existed
onl' a word description% a drawing or a protot'pe+ T"is step
involves a large investment+ T"e compan' will determine w"et"er
t"e product idea can #e translated into a tec"nicall' and
commerciall' feasi#le product+
?5 "est marketing& -
After management is satis*ed wit" functional and ps'c"ological
performance% t"e product is read' to #e dressed up wit" a #rand
name and pac&aging and put into a mar&et test+ Test mar&eting
involves "ow large t"e mar&et is and "ow consumers and dealers
react to "andling% using and repurc"asing t"e product+ T"e
amount of test mar&eting is in!uenced #' investment cost and
ris& on one "and and time pressure and researc" cost on t"e
ot"er+
B5 )ommerciali:ation& -
As t"e compan' goes a"ead wit" commercialiAation% it will face its
large gest costs todate+ T"e compan' will "ave to contract for
manufacturing facilit'+ Anot"er major cost is mar&eting
%4ample&-
To introduce a major new consumer pac&aged good into t"e
national mar&et% t"e compan' ma' "ave to spend #(w R2: million
and R8: million in advertising and promotion in t"e *rst 'ear+ In
t"e introduction of new food products% mar&eting expenditures
t'picall' represents57N of sales during t"e *rst 'ear

1.3 Product life cycle
P(D!)" #$8% ),)#%
A product life c'cle consists of t"e aggregate demand over an
extended period of time for all #rands comprising a generic
product categor'+ A product life c'cle can #e grap"ed #' plotting
aggregate sales volume for a product categor' over a time%
usuall' 'ears+ It is also wort"w"ile to accompan' t"e sales
volume curve wit" t"e corresponding pro*t curve for t"e product
categor'+ As s"own in t"e *gure 9+2After all a #usiness in
interested in pro*t not in just sales+ T"e s"ape of t"ese two
curves varies from one product categor' to anot"er+ 0till for most
categories% t"e #asic s"ape of t"e relations"ip #etween t"e sales
and t"e pro*t curves are illustrated in *gure 9+2+ In t"is t'pical life
c'cle t"e pro*t curve for most new product is negative% satisf'ing
a loss% t"roug" muc" of introductor' stages+ In t"e later part of
growt" stage% t"e pro*t curve starts to decline w"ile t"e sales
volume is still rising+ Pro*t declines #ecause t"e companies in an
industr' usuall' must increase t"eir advertising and selling e@orts
or cut t"eir prices to sustain sales growt" in t"e face
of intensif'ing competition during t"e maturit' stage+ T"e product
life c'cle consist of four stages
15 $ntroduction&-
-uring introduction stage% some times called pioneering stage% a
product is launc"ed into t"e mar&et in a full scale of mar&eting
program+ It "as gone t"roug" product development% including
idea screening% protot'pe% and mar&et test+ T"e entire product
ma' #e new% suc" as t"e Aipper% t"e video cassette recorder% etc
for a new product t"ere is ver' little competition+ Jowever% if t"e
product "as tremendous promise% numerous companies ma'
enter into t"e industr' earl' on+ T"at "as occurred wit" digital TD%
introduced in 1988+Introduction is t"e most ris&' and expensive
stage #ecause su#stantial dollars must #e spent not onl' to
develop t"e product #ut also to see& consumer acceptance of t"e
o@ering+
25 *ro6t2&-
In t"e growt" stage on mar&et acceptance stage% sales and pro*t
rise freCuentl' at a rapid rate+ )ompetitors enter t"e mar&et%
often in large num#er if t"e pro*t outloo& is particularl' attractive+
Mostl' as a result of competition pro*t start to decline nears t"e
end of t"e growt" stage+ As a part of *rm,s e@orts to #uild sales
and in turn% mar&et s"are% prices t'picall' decline graduall' during
t"is stage+ S,T"e onl' t"in t"at matters is if t"e exponential growt"
of 'our mar&et is faster t"en t"e exponential decline of 'our
prices,,
-aturity&-
-uring t"e *rst part of t"e maturit' stag% sales continue to
increase% #ut at a decreasing rate+ G"en sales level o@% pro*ts of
#ot" producers and middle.man decline+ T"e primar' reason
increase price competition+ 0ome *rms extends t"eir product lines
wit" new models% ot"er come up wit" a new improved version of
t"eir primar' #rand+ -uring t"e later part of t"is stage marginal
producers t"ose wit" "ig" cost or no di@erentiate advantage drop
out to t"e mar&et+ T"e' do so #ecause t"e lac& suFcient
customers or pro*t+

Decline&-
or most products a decline stage% as gauged #' sales volume for
t"e total categor' is inevita#le for one of t"e following reason+
A #etter or less expensive product is developed to *ll t"e same
need+
T"e need for product disappears% often #ecause of ot"er product
development+
People simpl' grow tired of a product so disappear from t"e
mar&et+
#engt2 of product life cycle&
T"e lengt" of product life c'cle from t"e start of introduction
stage to t"e end of decline stage varies across t"e product
categories+ It ranges from a few wee&s or a s"ort season ? for a
clot"ing fas"ion> to man' decades ? for autos or telep"ones>+ And
it varies #ecause of di@erences in t"e lengt" of individual stages
from one product categor' to t"e next+

%4ample&-
To introduce a major new consumer pac&aged good into t"e
national mar&et% t"e compan' ma' "ave to spend #(w R2: million
and R8: million in advertising and promotion in t"e *rst 'ear+ In
t"e introduction of new food products% mar&eting expenditures
t'picall' represents57N of sales during t"e *rst 'ear
1.? Product line and product mi4
P(D!)" -$C 7 P(D!)" #$N%
Product -i4& -
A product mix is t"e set of all t"e products o@ered for sale #' a
compan'+ T"e structure of product mix "as widt"% dept"% lengt"
and consistenc'+ or
Product mix can #e de*ned as=.
OProduct mix is de*ned as% t"e set of all product lines and items
t"at a particular seller o@ers for sale to #u'ers+P
T"e product mix is also &nown as product assortment+ /r factors
in!uencing c"ange in product
-i4 1idt2&-
T"e widt" of t"e product mix refers to "ow man' product lines t"e
compan' carries+
8or %4ample&-
proctor < gam#le mar&ets a fairl' wide product mix consisting of
man' product lines including food% "ouse"old% cleaning %
mec"anical% cosmetics and personal care products

Dept2&-
T"e dept" of t"e product mix refers to "ow man' varieties are
o@ered of eac" product in t"e line+
8or e4ample& -
P<G )rest toot" paste comes in t"ree siAes and two formulations
?paste %gel>
#engt2&-
T"e lengt" of t"e product mix refers to t"e total num#er of items
in its product mix+
8or e4ample&
P<G t'picall' carries man' #rands wit"in eac" line It sells eig"t
laundr' detergents% six "and soaps % six s"ampoos% < four dis"
was"ing detergents+
)onsistency& -
T"e consistenc' of t"e product mix refers to "ow closel' relate
t"e various product lines are in end.use% production reCuirements%
distri#ution c"annels or in some ot"er wa'+
8or e4ample& -
P<G product lines are consistent insofar as t"e' are consumer
products t"at go t"roug" t"e same distri#ution c"annels+ T"e
lines are less consistent insofar t"e' provide di@erent functions
for #u'ers+ T"ese four dimensions of t"e product mix provide t"e
"andles for de*ning t"e compan',s product strateg'+ T"e
compan' can adopt product lines% t"us widening its product mix+
-aDor Product--i4 +trategy& -
Manufacturers we several major strategies in managing t"eir
product mix+
15 %4pansion of product mi4& -
A *rm ma' decide to expand its present mix #' increase t"e
num#er of lines or t"e dept" wit" in t"e lines+ Now lines ma' #e
related or unrelated to t"e present products+ T"e compan' ma'
also increase t"e num#er of items in its product mix+
25 )ontraction of product mi4& -
Anot"er product strateg' is to t"in out t"e product mix% eit"er #'
eliminating entire line or #' simplif'ing t"e assortment wit" in a
line+ T"e s"ift from fat and long lines to t"in and s"ort lines% is
designed to eliminate low.pro*t products and to get more pro*t
from fewer products+ T"ere are man' examples of product mix
contraction% sometimes involving will &nown *rms+ or example%
Hnilever% and Englis"% -utc" *rm decided to produce more t"an
1::: #rands from its total set of a#out 16::+ T"e compan' wants
to concentrate its mar&eting resources on t"e 4:: or so remaining
#rands including ;ipton teas% ;ever soap t"at generate 9:Nof
annual revenues+
35 /lteration of e4isting product& -
In spite of developing a complete new product% management
s"ould ta&e a fres" loo& at t"e compan',s existing products+
/ften% improving and esta#lis"ed product can #e more pro*ta#le
and less ris&' t"an developing a completel' new one+or material
goods% especiall'% redesigning is often t"e &e' to products%
renaissance pac&aging "as #een a ver' popular area for product
alteration% particularl' in consumer products+
45 Positioning t2e product& -
Positioning of product in t"e mar&et is a major determinant of
compan' pro*ts+ A product position is t"e image t"at t"e product
projects in relation to competitive product and to ot"er products
mar&eted #' t"e same compan'+ Mar&eting executives can c"oose
from a variet' of positioning strategies+ T"ese strategies can #e
grouped into following six categories=
15. positioning in relation to a competitor& -
Position is directl' against t"e competition+
25. positioning by product attribute& -
T"e compan' associates its product wit" some product features+

35. positioning by price and <uality&-To position on "ig" price%
"ig" Cualit' or low price% low Cualit' #asis+
45. Positioning in relation to product use.
=5. Positioning in relation to a target market& .?Mar&et
0egmentation>
>5. Positioning in relation to product class& - ?Associating t"e
Product> a class of product+
?5 "rading up 7 trading do6n& -
As product strategies% trading up and trading down involves%
essentiall'% an expansion of t"e product line and a c"ange in
product positioning+ Trading up means adding a "ig"er priced
prestige product to a line in t"e "ope of increasing t"e sales of
existing lower priced products+ G"en a compan' going on a polic'
of trading up% at least two wa's are open wit" respect to
promotional emp"asis+
E15 T"e seller ma' continue to depends upon t"e older%
lower.priced product for t"e #ul& of t"e sales volume and
promote it "eavil' or
E25 T"e seller ma' graduall'% promote t"e new product and
expect it to s"are a major sales volume +A compan' is said
to #e trading down w"en it adds a lower priced item to its
line of prestige products+ T"e compan' wants to sale its
products rapidl'+
Product #ine
A product line includes a group closel' related products t"at are
considered a unit #ecause of mar&eting% tec"nical or end.use
consideration+
Defnition& -
A #road group of products intended for essentiall' similar uses
and possessing reasona#l' similar p"'sical c"aracteristics%
constitutes a product line+ /r
OA product line is de*ned asP A product line is a group of products
t"at are closel' related% eit"er #ecause
E15 T"e' function in a similar manner+
E25. 0old to t"e same customer groups
E35+ Mar&eted t"roug" t"e same t'pe of outlets%
E45. all wit" in a given price ranges+ )lot"ing is an example of
product line+ $ut in a di@erent context% sa' in a small specialt'
s"op% men,s furnis"ings ?s"irts% ties and under wears> and men,s
read'.to.wear ?suits% jac&ets% topcoats and stoc&s> would eac"
constitute a line+ T"ere are product line managers for
refrigerators% stoves and was"ing mac"ines+
Product line decisions% management and responsi#ilities=.
Product line decisions are concerned wit" t"e com#ination of t"e
individual products o@ered wit"in a given line+ T"e product line
manager supervises several product managers w"o are
responsi#le for t"e individual products and t"e line+ -ecisions
a#out a product line are usuall' incorporated into a mar&eting
plan at t"e divisional level+ 0uc" a plan speci*es c"anges in
t"e product lines and allocation to t"e products in eac" line+
Generall'% product line managers "ave t"e following
responsi#ilitiesL
1+)onsidering expansion of a given product line
2+)onsidering candidates for deletion from t"e product line
3+Evaluating t"e e@ects of t"e product addition and deletions on
t"e pro*ta#ilit' on t"e ot"er items in t"e line+
4+Allocating resources to individual products in t"e line on t"e
#asis of mar&eting strategies recommended #' product
managers+
1.F Planned obsolescence and fas2ion
P#/NN%D .+#%N)%N)% /ND 8/+A$N
American consumers seem to #e constantl' searc"ing for Ow"at,s
newP #ut not too new+ T"e' want newness% new products% new
st'le and new colors+ Jowever t"e' want to #e moved gentl' out
of t"eir "a#itual patterns% not s"oc&ed out of t"em% 0o%
conseCuentl'% man' manufacturers use a product strateg' of
planned o#solescence+ T"e purpose of t"is strateg' is to ma&e an
existing product out.of.date and to increase t"e mar&et
for replacement of products+ )onsumers often satisf' t"eir t"irst
for newness t"roug" fas"ion+ And producers of fas"ion rel'
"eavil' on planned o#solescence+
Nature of planned o#solescence= .
T"e term planned o#solescence is used to refer to eit"er two
developments+
Ei5. "ec2nological obsolescence& -
T"e signi*cant tec"nical improvements result in a more e@ective
product+ or example cassette t'pes made p"onograp" records
out.modes and t"en compact discs rendered cassettes o#solete+
T"is t'pe of o#solescence is generall' considered to #e sociall' or
economicall' desira#le #ecause t"e replacement product o@ers
more #ene*ts or at a lower cost+
Eii5. +tyle obsolescence& -
In st'le o#solescence super*cial c"aracteristics of a product are
altered so t"at new model is easil' di@erentiated from t"e
previous model+ 0t'le o#solescence sometime
called ps'c"ological or fas"ion o#solescence is intended to ma&e
people feel out of date+ If t"e' continue to use old
models+ Normall'% w"en people criticiAe planned o#solescence%
t"e' mean st'le o#solescence+

Nature of +tyle 7 8as2ion& -
Alt"oug" t"e words st'le and fas"ion are often used
interc"angea#l'% #ut t"ere is a clear distinction+ A st'le is a
distinctive manner of construction or presentation in an' art%
product+ T"us we "ave st'le in automo#iles% in furniture and in
music+ A fas"ion is an' st'le t"at is popularl' accepted or
purc"ased #' successive group of people over a reasona#l' long
period of time+ Not ever' st'le #ecomes fas"ion+ To #e considered
a fas"ion or to #e called fas"iona#le% a st'le must #e accepted #'
man' people+
8as2ion adoption process& -
T"e fas"ion adoption process re!ects t"e concept of
1> )ultural% social class and reference group in!uences on
consumer #u'ing #e"avior+
25 DiGusion of innovation& -
T"us fas"ion adoption process is a series of #u'ing waves t"at
arise as a particular st'le is popularl' accepted is one group t"en
anot"er group and anot"er% until it *nall' out of fas"ion+ T"is
movement representing t"e introduction% rise% popular
culmination and decline of t"e mar&et,s acceptance of a st'le is
referred to as fas"ion c'cle+ T"ere are t"ree t"eories of fas"ion
adoption+
E15."rickledo6n& -
G"ere a given fas"ion c'cle follows downward t"roug" several
socioeconomic levels+
E25. "rickle across& -
G"ere t"e c'cle moves+ JoriAontall' and simultaneousl' wit"in
several socio economic levels+
E35"rickle up& -
G"ere a st'le *rst #ecomes popular at lower socioeconomic
levels and t"en !ows upward to #ecome popular among "ig"er
levels+

Traditionall'% t"e tric&le down t"eor' "as #een used to explain t"e
fas"ion adoption process+ or example% designers of women,s
apparel *rst introduce a st'le to opinion leaders in upper
socioeconomic groups+ If t"e' accept t"e st'le% it Cuic&l' appears
in leading fas"ion stores+ 0oon t"e middle income and t"en low
income mar&ets want to emulate t"e leaders and t"e st'le is
mass mar&eted+ As its popularit' wanes% t"e st'le appears in
#argain price stores and *nall' is no longer considered
fas"iona#le+ T"e tric&le up process also explains some product
adoption processes+ )onsider "o st'les of music suc" as TaAA and
rap #ecome popular+ Also loo& at #lue pants and jac&ets% at"letic
footwear,s+ T"e' were popular *rst wit" lower socioeconomic
groups and later t"eir popularit' Otric&led upP to "ig"er income
mar&ets+ Toda' t"e tric&le across t"eor' #est explains t"e
adoption process for most fas"ions+ Now t"e designers of
expensive fas"ions are displa'ing t"eir new o@erings on t"e
internet+ Git"in eac" class% t"e c"esses are purc"ased earl' in
season #' opinion leaders t"e innovators+ If t"e st'le is accepted%
t"e sales curve rises as it #ecomes popular wit" earl' adopters
and late adopters+ Eventuall' sales decline as st'le loses
popularit'
-arketing consideration in fas2ion& -
In fas"ion merc"andising accurate forecasting is critical to
success+ T"is is extremel' diFcultL "owever% t"e fore caster must
dial wit" complex sociological and ps'c"ological factors+ or
example% noticing an upward trend in late 1998 sales for a T.s"irts
wit" deep D.nec&% a #anana repu#lic merc"andiser ea #anana
repu#lic merc"andiser emp"asiAed t"is st'le in spring 1999+ Now
t"e deep D.nec& s"irts #ecome a "ot seller+
1' .randingH Packaging and labeling
.(/ND$N*
T"e word #rand is compre"ensive% it encompasses ot"er narrower
terms+ A #rand is a name and a mar& intended to identif' t"e
product of one seller or groups of sellers and di@erentiating t"e
product from competing products+ A #rand name consists of
words% letters and num#ers t"at can #e vocaliAed+ And a #rand
mar& is t"e part of #rand t"at appears in t"e form of s'm#ol%
design or distinctive color+ A #rand mar& is recogniAed #' sig"t
#ut cannot #e expressed+ G"en a person pronounces t"e #rand
name+ Trademar& is a #rand t"at "as #een adopted #' a seller
and given legal protection+ /ne met"od of classif'ing #rand is on
t"e #asis of w"o owns t"em+ T"us we "ave producer,s #rands and
middle men,s #rand and later #eing owned #' retailer or w"ole
sellers+
(eason for branding and non-branding& -
In t"e past% producers and intermediaries sold t"eir goods out of
#arrels% cases wit"out an' superior identi*cation+ And #u'ers
depend upon seller,s integrit'+ T"e earliest signs of #randing
were t"e Omedieval guildsP e@orts reCuire crafts people to product
t"emselves and consumer against inferior Cualit'+ $ut toda'
#randing is suc" a strong force t"at "ardl' an't"ing goes
un#randed+ 0o called commodities do not "ave to remain
commodities+ e+g+% salt is pac&aged in distinctive container%
oranges are stamped wit" growers cane and fres" food products
suc" as c"ic&en% tur&e' are increasingl' #eing sold under strongl'
advertised #rand name+
.randing +trategies& -
$ot" producer and middlemen faces strategic decisions regarding
#randing of t"eir goods and services+

E/5. ProducerIs +trategies& -
Producer,s most deciding w"et"er to #rand t"eir products and
w"et"er to sell an' or all of t"eir output under middlemen,s
#rands+
E15. marketing entire output under producerIs o6n brands& -
)ompanies t"at rel' strictl' on t"eir own #rands usuall' are ver'
large% well.*nanced and well.managed T"e examples are I+$+M
t"at "as #road product lines% well esta#lis"ed distri#ution s'stem
and large s"ares of mar&et+ $randing of fa#ricating parts and
materials 0ome producers use a strateg' of #randing fa#ricating
parts and materials+ Git" t"is strateg'% t"e seller see&s to
develop a mar&et preference for its #randed parts or materials+
T"e strateg' is most li&el' to #e e@ective w"en particular t'pe of
fa#ricating parts or materials "ave two c"aracteristics+
?1> T"e product is also consumer good t"at is #roug"t for
replacement+
?2> T"e item is a &e' part of *nis"ed products% a microprocessor
wit"in a personal computer% for example Intel developed t"e
slogan%P Intel insideP to strengt"en its product,s position+ T"e
campaign #ecome so successful t"at some computer ma&ers%
including I$M feared t"at #rand of personal computer would
#ecome less important t"an t"e #rand of microprocessor
contained in mac"ine+
E35 -arketing under middlemenIs brand& -
A wide spread strateg' among manufacture is to sell part or all of
t"eir output to middlemen for #randing #' t"ese customers+ irms
suc" as $orolen and Keller "ave t"eir own well.&nown #rands and
t"e' also produce goods for #randing #' middlemen+ T"is
approac" allows a manufacturer to O"edge its #etsP
A compan' emplo'ing t"is strateg' "opes t"at its own #rands will
appeal to some lo'al customersL w"ere as middlemen,s #rands
are of interest to ot"er+ /ne draw#ac& of t"at strateg' is t"at t"e
manufacturer ma' lose some customers for its own #rands+
E.5. -iddlemenIs +trategies& .
T"ere are also some middlemen strategies+ )arr' onl' producer,s
#rands Most retailers and w"ole sellers follow t"is polic'% #ecause
t"e' do not resources to promote a #rand and maintain its Cualit'+
)arr' #ot" producers and middlemen,s #rand Man' large retailers
and some large w"olesaler stoc& popular producers #rands and
also "ave t"eir own la#els+ Middlemen ma' own #rands% in place
of or in addition to producer,s #rands% #ecause it increases t"eir
control over t"eir target mar&ets+ urt"er more% middlemen
usuall' can sell t"eir #rands at prices #e low t"ose of
producer,s #rands and still earn "ig"er gross margins+
)arry *eneric products& -
Generic products are simpl' la#eled according to t"e contents
suc" as peanut #utter% cottage c"eese+
+trategies common to producers 7 middlemen& -
Producers and middlemen ali&e must c"oose strategies wit"
respect to #randing t"eir product mixes% #randing for mar&et wit"
ot"er companies+
.randing 6it2in a product mi4& -
At least t"ree di@erent strategies are used #' *rms t"at sell more
t"an one product

/ separate name for eac2 product&
T"is strateg' is emplo'ed #' ;ever $rot"ers and proctors
and Gam#le+ T"e compan' name com#ined wit" a product
name+ Examples include To"nson,s Pledge and To"sons Glo.
coat+T"e compan' name alone= Toda' few companies rel'
exclusivel' on t"is polic'+ $randing for mar&et saturation
Git" freCuenc'% *rms are emplo'ing a multi #rand strateg'
to increase t"eir total sales in a mar&et+ T"e' "ave more
t"an one #rand of essentiall' some product+
)o branding& -
Most often% two companies or two divisions wit"in t"e same
compan' agree to place #ot" of t"eir respective #rands on a
particular product or enterprise+ T"e agreement termed as
co #randing or dual #randing+ )o #randing "as potential #ene*ts
and draw#ac&s+ )o.#randing can #e provide added revenues for
one or #ot" of t"e participating *rms% suc" as fee paid to 0un&ist
Growers #' Generals Mills in order to use 0un&ist name as
pac&ages of $ett' )roc&er lemon #ar mix+ T"e #iggest potential
draw#ac&s to co.#randing are possi#le over.exposure of a #rand
of name+
P/)9/*$N*
Most p"'sical products "ave to #e pac&aged+ /ne pac&age% suc"
as co&e #ottle is world famous+ Man' mar&eters "ave called
pac&aging a *ft" OPP along wit" product% price place
and promotion+ Pac&aging is de*ned as all t"e activities of
designing and producing t"e container for a product+
Purpose < importance of pac&aging


?1>+ Protest t"e product on its wa' to customer+
?2>+ Provide protection often t"e product is purc"ased+
?3>+ Jelp gain acceptance of t"e product from middleman+
?4>+ Jelp persuade consumer to #u' t"e product+ Jistoricall'%
pac&aging was intended primaril' to provide protection+ Toda'
pac&aging is a major factor in gaining distri#ution and promotion+
And pac&aging ma' #ecome a product,s di@erential advantage% or
at least a signi*cant part of it+ T"at was certainl' true wit" coca.
cola and its distinctive cont our glass #ottle+
Packaging +trategies& -
In managing t"e pac&aging of a product% executive must ma&e t"e
following strategic decisions+
15. Packaging t2e product line& -
A compan' must decide w"et"er to develop a famil' resem#lance
w"en pac&aging related products+ amil' pac&aging uses eit"er
"ig"er similar pac&age for all products wit" a common and clearl'
noticea#le feature+ amil' pac&ages ma&es since w"en products
are of similar Cualit' and "ave a similar use+
25. -ulti packaging& -
or man' 'ears% t"ere "as #een a trend toward multiple.
pac&aging% t"e practice of placing several units of same product
in one container+ or example% de"'drated soups% motor oil% #eer%
cand' #ars and count less ot"er products are pac&aged in
multiple units+
35. c2anging t2e package& -
G"en somet"ing is detected in pac&age t"en compan' must
c"ange a poor feature in an existing pac&age+ or t"is *rm,s need
to consider continuing developments suc" as new
pac&aging materials% uncommon s"apes% innovative closures% all
t"ese are intended to provide a #ene*t to middlemen and to
consumer and as a result are selling points for mar&ers+
#/.%#$N*
A la#el is t"e part of product t"at carries information a#out t"e
product and t"e seller+ A la#el ma' #e t"e part of pac&age% or it
ma' #e a tag attac"ed to product+ /#viousl' t"ere is close
relations"ip among la#eling% pac&aging and #randing+
T'pes of la#els
E15 / brand label& -
Is simpl' t"e #rand alone applied to t"e product or pac&age+?
25. Descriptive label& -
Gives o#jective information a#out product,s use% care%
instruction and performance+
E35. / grade label& -
Identi*es t"e product,s judged Cualit' wit" a letter% num#er or a
word+ $rand la#eling is an accepta#le form of la#eling #ut it does
not suppl' suFcient information to a #u'er+ -escriptive la#eling
provides more product information #ut not necessaril' all t"at is
needed or desired #' a consumer in ma&ing a purc"ase decision+
+tatutory labeling re<uirements& -
;a#eling "as received its s"are of criticism+ or example%
consumers "ave c"arged t"at la#els contain incomplete or
misleading information and t"ere were a confusing num#er of siAe
sand s"apes of pac&ages for a given product+ T"e pu#lic,s
complaints a#out false or deceptive la#eling and pac&aging "ave
lead to a num#er of federal la#eling and pac&aging "ave lead to a
num#er of federal la#eling laws+
#a6s& -
T"e ood and -rug Act 19:6 and its amendment% t"e food% drug
and cosmetic Act 1938 provide explicit regulations for la#eling
drugs% food% cosmetic and t"erapeutic devices+
Design& -
/ne wa' to satisf' customers and gain a di@erential advantage is
t"roug" product design% w"ic" refers to arrangements of
elements t"at collectivel' from a good or service+ Good design
can improve t"e mar&et a#ilit' of a product% #' ma&ing it easier to
operate% upgrading its Cualit'% improving its appearance and
reducing production costs+ or example % computer programs are
supposed to assure t"at an' new software is ver' user.friendl'+
According to an I$M% executive% design "as #ecome a strategic
mar&eting tool+ -esign is receiving more and more attention for
several reasons+
?1>+ rapidl' advancing tec"nologies are generating not onl' few
products t"at need attractive 'et functional designs% #ut also new
materials t"at can en"ance design capa#ilit'+
?2>+ A growing num#er of *rms "ave turned to low prices as a
competitive tool+ or example% for most consumer and #usiness
goods% ranging from furniture to electronic eCuipment design "as
long #een recogniAed as important+
)olor& -
;i&e design% product color often is t"e determining factor in a
consumer,s acceptance or rejection of a product% w"et"er it is a
dress% a ta#le or an automo#ile+ In fact color is so important% t"at
H+0 0upreme )ourt con*rmed in earl' 1995 t"at color of a product
or its pac&aging can #e registered as a part of trade mar& under
t"e ;an"am Act+ )olor #' itself can Cualif' t"e trademar& status
w"en according to court,s ruling it identi*es and distinguis"es
a particular #rand and t"us indicates its resources+ $ut poor color
c"oices results in di@erential disadvantages+ or example if a
garment manufacturer or a person responsi#le for purc"asing
merc"andiAe for a retail store guesses wrong on w"at will #e
fas"iona#le color in women,s color disaster ma' ensure+
0o% in s"ort% color is extremel' important for pac&aging as well
as for product itself+
Juality& -
T"ere is no agreed de*nition of product Cualit'% even t"oug" it is
universall' recogniAed as signi*cant+ /n professional societ'
de*nes product Cualit' as t"e set of features and c"aracteristics
of a good or service t"at determines its a#ilit' to satisf' needs+ In
Cualit'% personal taste is deepl' involved% w"at 'ou li&eQ Anot"er
person ma' disli&e+ $eside personal taste% individual expectations
also a@ect judgment of Cualit'+ Uualit' was t"e most mentioned
#asis for a strong di@erential advantage+ At least an enterprise
needs to avoid di@erential disadvantages related to a product
Cualit'+I0/ 9::: is a set of related standards of Cualit'
management t"at "ave #een adopted #' a#out 6: countries
including H+0 companies t"at meet I0/ 9::: standards are
awarded a certi*cate w"ic" often put t"em in a favora#le position
wit" a large customers+
P($)%-P($)$N* +,+"%- utline '2
2+1 Meaning and importance of price
2+2 Pricing s'stem(o#jective
Pro*t oriented goals
0ales oriented goals
0tatus Uuo goals
;imitation

2.3 Procedure for price determination
/R
$asic met"ods of setting price
)ost plus pricing
$alance #etween demand and suppl'=.
Price set in relation to mar&et alone=.
$rea&even point

2.4 Price polices and strategies
pricing strategies
New product
Pricing an imitative products
Product mix pricing strategies
$'e product pricing
Product #rindle pricing
Price adjustment strategies
P($)$N* 2.1
Meaning and importance of price
-eaning&-
Price goes #' man' ot"er names% rent% fare% rate% interest% toll%
premium and even #ri#e #ut all t"ese names add up to one
t"ing+OPG"at consumers pa' for product or servicesPP
+ervices&-
Price is an o@er or experiment to test t"e plus of mar&et+ Prices
are alwa's on trail+ If customers accepted t"e o@er t"en t"e price
is *ne+ If t"e' reject it% t"e price is not *ne+ Price is all around us%
we pa' rent for our apartment% tuition for education% and fee to
our p"'sician+ T"e air line% railwa's% taxes and #usiness
companies c"arge us a fare+ In economics t"eor'% we learn t"at
price% value and utilit' are related concepts+ Htilit' creates value
measures price
Price&-
T"ere are man' de*nition of price1> Price is a value expressed in
terms of dollars% )ents% Rupee or an' ot"er monetar' medium
of exc"ange+2>+In summar'% price is value placed on goods and
services+ Price is t"e amount of mone' needed to acCuire some
com#ination of ot"er good services+3> Price is w"ic" is exc"anged
in order to acCuire somet"ing else of value+
$mportance of price&-
15.$n economy&-
Products prices ma' #e wages% rent% interest and pro*ts+ T"ese
prices paid for factors of production% land la#or% capital and
entrepreneurs"ip+ Price t"us is a #asic regulator of income s'stem
#ecause it in!uences t"e allocation and retaining t"e factors of
production to t"eir most eFcient use+ Price as allocator of source
determinations w"at will #e produced ?suppl'> and w"o will get
goods and services t"at are produced ?-emand>+ Price "elps to
determine a compan',s pro*ts+ It is pro*t t"at ena#le companies
to spend mone' for researc" and development+ Pro*ts
lead to new tec"nolog' and #etter products t"at provide more
satisfaction and an improved standard of living+ Prices in!uences
t"e spending and saving "a#its of consumers+ G"en t"e price of
product rises% consumers #u' less+ G"en prices decreases% people
#u' more+ In setting prices mar&eters must consider t"ese long
run e@ects as well as t"eir own desire for pro*t s+
25."o an individual frm&-
a> or an' #usiness *rm% pro*ts are determined #' di@erence
#etween its revenues and its costs+ $ut pro*ts revenue depends
on price c"arged #' *rm and Cuantit' of product sold+ Pro*t V
total revenue I total cost /r Pro*t V ?price x Cuantit'>. total
cost+ #> A product,s price "as a strong e@ect on its sales+ or some
products% an increase in price %ma' result in an increase in sales
revenue % for ot"er products reduction in price ma' result in
increase in sales revenue+ c> T"e price of a product determines
w"ere it will #e sold% w"en retailers can realiAe "ire pro*ts #'
carr'ing "ire price items% t"e' are more li&el' to "andle suc"
products+ d> Pricing can e@ects a *rm,s entire mar&eting program%
w"ic" in turn% determines t"e *rm,s success as well as t"e total
satisfaction provided to consumers and societ' in general+
)onclusion&-
It is clear t"at price is important to mar&eters% #ot" #ecause of
pro*t eCuation and #ecause of s'm#olic aspects of a products
price+
35. (elations2ip to product <uality&-
)onsumers rel' "eart' on price% w"en t"e' must ma&e purc"ase
decisions wit"in complete information+ If t"e price is "ig"er% t"e'
perceived goods Cualit'+ )onsumer,s Cualit' perceptions can also
#e in!uenced #' suc" t"ings as so reputation and advertising+
2.2 pricing system;obDectives
P($)$N* .K%)"$0%+
Management s"ould decide on its pricing o#jectives #efore
determining t"e price+ T"e main goals in pricing are oriented
toward pro*t% towards sales or towards maintaining t"e status+
T"us t"e' are
15 Proft oriented goals&-
Pro*t ma' #e set for s"ort run or for longer period of time+
A> Ac"ieve a target return=.
A *rm ma' price its products to ac"ieve a certain percentage
return an its sales or on its investment+ 0uc" goals are used #'
middleman and producers+ Man' retailers are w"ole sellers use
t"e target return as a pricing o#jective for s"ort run periods suc"
as a 'ear or fas"ion season+
%4ample&-
T"e t'pical target return for manufacturers t"at are leaders in
t"eir industr' I e+g+ lever #rot"ers% 0uAu&i motors etc ranges *rm
1: to 2: percent after pa'ing taxes+
.5 -a4imi:ing proft&-
It is t"e goal of almost all companies t"at t"e' enjo' maximum
pro*t+ T"e term pro*t maximiAation "as an ugl' imagination+
People consider it "ig" prices and monopol'+ T"eoreticall' if
pro*ts #ecome "ig" #ecause suppl' is s"ort in relation to -emand
new capital will #e attracted in t"is *eld+ T"is will increase suppl'
and decrease pro*t to normal level+ To maximiAe pro*t over t"e
long run *rms ma' "ave to accept s"ort run losses+ A *rm
entering a new geograp"ic mar&et or introducing a new product
does #est #' selling at low price to #uild large client+
25 +ales oriented goals&-
In some companies% management,s pricing attention is focused
on sales volume rat"er t"en on pro*ts+ In t"is situation t"e pricing
goal ma' #e a> To increase sales volume+ #> To maximiAe or
increase mar&et s"are+
a5 "o increase sales volume&-
T"is pricing goal is usuall' stated as a percentage increase in
sales volume over period of time% sa' 1 'ear or 3 'ears+ $ut it is
not necessar' t"at due to increase in sales volume pro*t will also
increase+ 0o due to t"is reason management some times willing
to ta&e a s"ort run loss+ Increased sales ena#le t"at compan' to
get a foot. "old in its mar&et+
b5 -aintain or increase -arket s2are&-
In some companies% t"e major pricing o#jective is to increase t"e
s"are of mar&et "eld #' *rm+ Mar&et s"are of compan' s"ows
"ealt" of compan' and its important goals+ A price war is started
w"en one *rm cuts its price in an e@ort to increase its mar&et
s"are+
35 +tatus Juo goals&-
To closel' related goals I sta#iliAing prices and meeting
competition are least aggressive of all pricing goals #ecause t"e'
are designed to maintain t"e pricing status Cuo+
a5 Price stabili:ation&-
Price sta#iliAation is goal in industries wit" a price leader+
Especiall' in industries w"ere demand can !uctuate freCuentl'
and w"ere leader some time tr' to maintain sta#ilit' in
t"eir pricing+ A major reason for see&ing sta#ilit' in pricing is to
avert price wars w"et"er demand is increasing or decreasing+
b5 -eet competition&-
)ountless *rms price t"ere products simpl' to met t"e
competition+
;imitation=.
1> -i@erentiated products features of favorite #rands ma' #e
more important to customer t"en price+
2>w"en economic condition are good and customer feel ric" t"en
price is not rated as important as products planning or
promotional activities+
3> -uring t"e period of recession and in!ation% pricing #ecomes
extremel' important+

2.3 Procedure for price determination
-%"AD+ 8 +""$N* P($)%
T"ere are t"ree met"ods of setting price
1> Price is #ased on total cost plus a desired pro*t+?#alance
#etween suppl' and demand+
2> Prices are #ased on marginal anal'sis+
3> Prices are #ased onl' on competitive mar&et condition+
15 )ost plus pricingL
It means t"at costing t"e prices of one unit of a product is eCual
to t"e total cost of t"e unit plus t"e desired pro*t on t"e unit+
%4ample&-
0uppose t"e total *xed cost ?T)> of compan' for production is
R3:%::: t"e management w"is"es to earn R 2:%::: as pro*t and
*rm "as decided to produce 4:: units+ T"us t"e formula for
determination of price is eCual to T)WTD)W Projected pro*t
divided #' units produced. 3:% ::::W9:%:::W2:%:::?divided #'>
4::T"is cost plus pricing approac" ensure t"at desired pro*t level
will #e ac"ieved "owever % it relies on forecasts w"ic" can #e
dangerous #ecause costs often c"ange rapidl'+ T"ere are some
situations w"ere cost plus pricing approac" to pricing is perfectl'
suita#le+

8or e4ample&-
T"e price of some products remain suita#le from 'ear to 'ear e+g+
Mil& % #read% paper c"ips etc+ T"e cost plus pricing s'stem is useful in
suc" *elds w"ere t"e *rms are given a jo# or government contract
#ecause t"e demand is &nown+ 0etting price can #e determined
as 0+P V )WM G"ere 0+P V setting price )V cost MV mar&up+
Dra6backs&-
1> It relies on forecast cost+
2> T"is met"od also fails to ensure t"at "ow muc" Cuantit' of
output will actuall' #e sold+
25 .alance bet6een demand and supply&-
Anot"er met"od of setting price involves #alancing demand wit"
cost to determine t"e #est price for pro*t maximiAation+ T"is
met"od is t"us #est suited for companies w"ose pricing goals are
to maximiAe pro*t+ 0ome companies can use t"is met"od to
compare prices determined #' di@erent met"ods+ T"e *rm in
mar&et of perfect competition "as "oriAontal demand curve w"ic"
s"ows single seller "as control over price and "is production can
#e sold at t"e mar&et price+ $ut industr' "as downward slopping
curve w"ic" s"ows industr' can sell more units on lower price
t"at at "ig"er price+
35 Price set in relation to market alone&-
15 *oing rate pricing&-
In t"is met"od% *rm #asis its price largel' on competition and pa'
less attention to its own cost and demand+ Going rate pricing is
Cuite popular w"ere demand elasticit' is diFcult to measure+
a5 Pricing belo6 competition level&-
A variation of mar&et. #ased pricing is to set a price at some point
#' discount retailers+ T"ese stores o@er fewer services and
operate on principle of low mar& up and "ig" volume+
b5 Price above competition level&-
Producers or retailers sometimes set t"eir prices a#ove mar&et
level+ Hsuall' a#ove mar&et pricing wor&s onl' w"en t"e product
is distinctive or w"en seller "as acCuired prestige in its *eld+ E% g
prestigious stores of jewelr'% clot"ing% perfumes etc+
25 +ealed- .id pricing&-
In t"is met"od price on expectations of "ow competitors price
rat"er t"en to *rms costs or demand+ T"e *rm wants to win
contracts and t"is reCuires pricing lower t"en ot"er *rms+ Ket t"e
*rm cannot set its price #elow cost+
35 +elect t2e fnal price&-
$efore selecting t"e *nal price% t"e compan' must evaluate some
additional consideration+
a5 Psyc2ological pricing&-
T"e seller s"ould consider t"e ps'c"olog' of prices+ Ma' people
relates prices wit" Cuantit'% man' sellers #elieve t"at price s"ould
#e 299% 1+95 rat"er t"en 2:: or 2::+
b5 $mpact of price on ot2er parties&-
Management also considers t"e reaction of ot"er parties on t"e
price selected+ Jow will t"e distri#utors and dealers feel itQ Jow
will competitor react t"e priceQ Etc+
45 .reakeven point&-
A #rea&even point is t"e Cuantit' of product at w"ic" t"e sellers
revenue eCual to t"e total costs assuming a certain selling price+
T"us t"ere is deferent #rea&even point for eac" di@erent selling
price+ T"e #rea&even point ma' #e found wit" t"is formula% Total
*xed cost $rea& even point V 0elling price I average varia#le cost
2.4 Price strategies

P($)$N* +(/"%*$%+
A compan' not sets a single price #ut a pricing structure t"at
covers di@erent items in its line+ T"is pricing structure c"ange
wit" products life c'cles+ T"e compan' adjusts product price to
re!ect c"anging costs and situations+ T"ere are man' price
strategies availa#le tomanagement+
1> New product pricing strategies%
2> Product mix pricing strategies%
3> Price adjustment strategies+
15 Ne6 product pricing strategies&-
New product pricing strategies include%
?1> Pricing on innovative product+
2> Pricing on innovative product+ Pricing innovative include su#
"eading as
?a> Mar&et s&imming pricing+
?#> Mar&et penetration pricing% G"ic" "ave #een discussed earlier+
15 Pricing imitative products&-
A compan' t"at involves pricing imitative products faces a
product positioning pro#lem+ It must decide w"ere to position t"e
product on Cualit' < price+
?1> Positioning in relation to competitors+
?2> Positioning #' price and Cualit'+
?3> Positioning in relation to target mar&et+
?4> Positioning in relation to product class+
25 Product mi4 pricing strategies&-
In t"is case% t"e *rms% loo&s for set of prices t"at maximiAe t"e
pro*t on t"e total product mix+

T"e product mix pricing strategies "as to face di@erent degree of
competitors
E15 Product line pricing&-
)ompanies usuall' develop product lines rat"er t"an single
product+ In t"is t'pe of pricing management must determine t"e
price steps to set #etween t"e various product in a line+
E25 ptional product pricing&-
Man' companies use optional product pricing.o@ering to sell
optional or accessor' products along wit" t"eir main products+ A
car #u'er can order electric windows etc+ Pricing t"ese options is
a pro#lem+ Automo#ile companies must decide to o@er options in
#ase price+
E35 )aptive product pricing&-
)ompanies t"at ma&e product w"ic" must #e used along wit" a
main product use captive product pricing e+g+% laser #lades%
camera *lms and computer software+
E45 .ye product pricing&-
In producing processed needs petroleum products% c"emicals and
ot"er products+ T"ese are often #' products+ In t"e #' product
"ave no value% t"is will a@ect t"e product pricing% t"e
manufacturers s"ould accept an' price t"at cover more t"an cost+
E=5 Product brindle pricing&-
Hsing product #rindle pricing sellers often com#ine several of
t"eir products and o@er t"e #rindle at a reduced price+
Price adjustment strategies -iscounts and allowances=.
-iscount and allowances results in a deduction from t"e list price
in t"e form of cas" or somet"ing else+
15 )as2 discount&-
)as" discount is a price reduction to #u'ers w"o pa' t"eir #ills
promptl'+ T"e t'pical example is 2(1:L n(3: w"ic" means t"e
#u'er can deduct 2N from t"e cost #' pa'ing t"e #ill wit"in 1:
da's+
25 Juantity discounts&-
A Cuantit' is a deduction in price to #u'ers w"o #u' large volume+
T"e discount ma' #e #ased on dollar amount+ Uuantit' discounts
are o@ered #' seller to encourage customer to #u' in large
amount+
35 )umulative and non-cumulative <uantity&-
A non cumulative discount is #ased on t"e siAe of an individual
order of one or more products+ )umulative discounts are #ased on
t"e total volume purc"ased over a period of time+
45 "rade or functional discounts&-
Trade or functional are o@ered #' manufacturers to trade c"annel
mem#ers w"o performed certain functions suc" as selling% storing
and record &eeping+
=5 Promotional discounts&-
T"ese are pa'ments or price reduction to reward dealers for
participating in advertising and sale support programs+
>5 +easonal discounts&-
A seasonal discount is a price reduction to #u'ers w"o #u'
products or services out of seasons+
?5 "rade-in-allo6ances&-
T"ese are price reduction granted in a sold item w"en #u'ing a
new one+ It is common in automo#ile companies+
B5 /llo6ance&-
Allowance is anot"er t'pe of reduction from list price e+g+
promotional allowances% trade in allowances etc+
Price Determination
T"e sellers can and some sellers do c"arge di@erent prices from
di@erent people for t"e same product% or same price of di@erent
products+ T"is is &nown as determination+ It s"ould #e &ept in
mind t"at seller often c"arge more prices on inelastic consumer
and less from elastic one+
D$+"($.!"$N +"(!)"!(%
/utline :3
3.1 )2annel of distribution
-istri#ution
)"annel of distri#ution
T'pes of c"annels < distri#ution
3.2 Nature of retail marketH
Retailing Nature of Retail
3.3 %conomics basis of retailing and its )lassifcation.
)lassifcation f (etailers
12ole selling
3.4 (etailerIs 62ole seller and met2ods of operation.
)lassifcation of 62ole seller
Met"ods of operation+
3.= Designing and managing c2annel of distribution.
-anaging of p2ysical distribution

3.1 )2annel of distribution
D$+"($.!"$N&
-istri#ution involves t"e p"'sical movement of products to
ultimate consumers+ -istri#ution is not simpl' a matter of moving
products into t"e "ands of consumers% it involves a products
movement t"roug"out all stages of development from *nding
resources% t"roug" manufacturing to *nal sales+
Distribution )2annels&-
A distri#ution c"annel consists of t"e set of people and *rms
involves in t"e !ow of a product% as it moves from producer to
ultimate consumer or #usiness users+ A distri#ution c"annel
alwa's include #ot" t"e producers and *nal customer for product
as well as an' middleman+?retailers or w"olesalers>+
"ypes of c2annels 7 distribution&-
)ommon c"annels for distri#ution of consumer goods% #usiness
goods and services are discussed #elow+
15 Distribution of c2annel goods&-
T"ere are *ve c"annels are used for distri#ution of tangi#le goods
to ultimate consumer+
a5 Producer----M)onsumer&
T"e s"ortest% simplest c"annels of distri#ution for distri#uting
gods are from producer to consumer+ It involves no middle man+
T"e producer ma' sell from door to door or #' mail+
Door to Door&-
In t"ese c"annels companies use t"eir representatives to sell t"eir
gods from door to door suc" as insurance magaAines%
newspapers% mil& etc+
.y -ail&-
0ome companies also sell t"eir products #' mails+ A farmer sells
t"eir fruit and vegeta#les directl' to consumer at road is also
using t"is met"od+ It is s"ort and direct met"od+


b5 Producer--(etailer)onsumer
)onsumer&-
Man' large retailers #u' directl' from manufacturers and
agricultures, large no+ of our purc"ases are mad t"roug" t"is
c"annel suc" as automo#iles% clot"ing% gasoline etc +In t"is case
manufacturers &eep contact wit" retailers% ta&e purc"ase orders+
T"e retailers t"en sell to ultimate consumers+
)5 Producer 12olesaler (etailer )onsumer
)onsumer&-
T"is t'pe of c"annel mostl' used #' small manufacturers and
small retailers to distri#ute suc" t"ings t"at "ave a large mar&et
need+ T"e products suc" as drugs% lum#er% "ardware and man'
food items are distri#uted in suc" c"annel process+
d5 Producer- /gents (etailer )onsumers
)onsumers&-
Instead of using w"olesaler man' producers prefer to use
manufacturer,s agents% a #ro&er or some ot"er agent,s
middleman to reac" t"e retail mar&et+ A glass mar&er selected a
food #ro&er to reac" store mar&et+
e5 Producer /gents 12olesaler (etailer )onsumer
)onsumer&-
To reac" small retailers% t"e producers often use agent
middleman% w"o in turn cal on wit" w"olesales t"at sell to small
stores+ Agent can #e especiall' useful for ma&ing contacts
and #ringing #u'ers and sellers toget"er+ T"e' are common in
food industr'% w"ere t"e' are called Ofood #ro&ersP+
25 )2annels for Distribution of .usiness *ods&-
a5 Producers-$ndustrial !sers&-
T"is direct c"annel is used for most expensive products+
Manufacturers of large installations suc" as air planes% generators
etc use t"is c"annel+
b5 Producer$ndustrial Distribution-!sers&-
Producers of operating supplies and small accessor' eCuipment
freCuentl' use industrial distri#utors to reac" t"eir mar&et+

c5 Producer /gent-!ser&-
irms wit"out t"eir own mar&eting department *nd t"is c"annel+
Also a compan' t"at wants to introduce a new product or enter a
new mar&et ma' prefer to use agents rat"er t"an its own sales
force+
d5 Producer /gent $ndustrial Distributers !sers&-
T"is c"annel to similar to previous one+ It is used w"en it is not
possi#le to sell t"roug" agents directl' to #usiness users+
35 Distribution of +ervices&-
T"e intangi#le nature of services creates special distri#ution
reCuirements+ T"ere are onl' two common c"annels+
a5 Producer)onsumer&-
As service is intangi#le so it reCuires direct contact #(w consumer
and producer+ T"us direct c"annel is used% as for man'
professional services suc" as "ealt"% care% legal advice
and personal services as "air cutting etc+
b5 Producer-/gent-)onsumer&-
G"ile direct distri#ution is often necessar' for a service to #e
performed% producer consumer contact ma' not #e reCuired for
&e' distri#ution activitiesL Agents freCuentl' assist service wit"out
producer+ Man' services as travel% loading% advertising media and
insurance use agents+
3.2 Nature of retail market
(%"/$#$N*
Retailing includes all activities associated wit" selling goods and
services to ultimate consumers for personal or non #usiness use+
It ma' #e done t"roug" retail stores+
Retail 0ales=.
An' *rm manufacturers retailer or w"olesaler t"at sells some
t"ing to ultimate consumer for t"eir personal use is called retail
sale+
(etailer&-
It is #usiness enterprise t"at sells primaril' to "ouse"old
consumers for non #usiness use+ T"e word O-ealerP is also used
for retailer
Nature of (etail&-
15 %asy "o %ntry into (etailing&-
2>It is easier to go into retailing t"an an' ot"er trade% profession
or line of #usiness+ To start a manufacturing *rm one must "ave
mone' to acCuire a plant% eCuipment and material+ $ut to operate
a retail store% no exams are reCuired and necessar' #usiness
licenses are eas' to acCuire+ Man' under formed and poorl'
Cuali*ed people enter in t"e *eld and son fail+
35 %conomic Kustifcation 8or (etailing&-
To get into retailing is eas' #ut to forced out is just as eas'+ T"us
to survive to retailing% accompan' must perform its primar' role i.
e to provide gods and services to customer+

0econdl' role i.e% to serve producer and w"olesaler+ T"is dual
responsi#ilit' is #ot"% t"e justi*cation for retailing and &e' to
success in retailing+
15 +i:e 8 (etail -arket&-
T"ere is a large no+ of retail stores in t"e world+ In spite of t"e
population #oom and raising consumer incomes over t"e past
t"ree decades% t"ere "as #een no apprecia#le c"ange in t"e
num#er of retail stores+ 0ales t"roug" retail store increased from
late 196:%s to earl' 199:%s due to increase in per capital income%
in spite of increase in price goods% total sales and per capital retail
sales "ave increased+
25 )ost and Proft of (etailers&-
T"e total average operating expenses for al retailers com#ined
are a#out 25N to 27N of retail sales+
G"olesaling expenses are estimated at a#out 8N of w"olesaling
sales+ Retailers cost and pro*t ver' depending on t"e t'pe of
operation and major product line+ Jig"er retail costs are generall'
related to t"e expense of dealing directl' wit" ultimate consumer+
3.3 %conomics basis of retailing and its )lassifcation
)lassifcation of (etailers&-
T"ere are four classi*cations of retailers+ T"ese are
1+ $' 0ale.Dolume
2+$' Product ;ine
3+$' ore /f /wners"ip
4+$' Met"od /f /peration5+

15 .y sales volume&-
0ale volume is useful #asis for classif'ing retail stores% #ecause
stores of di@erent siAes present di@erent management pro#lems+
$u'ing% Promotional% inancing personal relations and expense
control al in!uenced signi*cantl' #'% w"et"er a store sales
volumes large or small+ /n t"is #asis relating is #ot" a large scale
and small scale operation+
15 .y product line&-
Ge can group t"em into two categories
a5 *eneral -erc2andi:ed +tore&-
General Merc"andiAed store carr' a large no+ of product lines+
-epartmental store are t'pe of general merc"andiAed store wit"
largest sale volume+
b5 #imited #ine +tore&-
;imited line store is considera#le assortment of goods #ut in onl'
one or few related lines+ Ge identif' t"ese stores #' t"e name of
t"e product+ Examples are ood store% s"oe store% furniture,s
store% and ladies ware store and so on+
35 .y form of o6ners2ip&-
Anot"er useful wa' of classif'ing retail stores is #ased on
owners"ip+ T"us a retailer ma' operate t"e #usiness
independentl' or ma' #e part of c"ain+ T"e major store owners"ip
categories are
a5 $ndependent +tore&-
In an independent store% t"ere are close personal relations"ip #(w
customers and retailers+ A#out 9:N of operations fall into t"is
categor'+ lower s"op% to#acco s"op% #oot" store fall in t"is
categor'+
b5 )orporate )2ain +tores&-
A corporate c"ain store is an organiAation of two or more stores%
centrall' owned and managed% t"at generall' "andle t"e same
line of products on t"e same level in distri#ution structure+
45 .y met2od of operation&-
T"e four t'pes of retailers% classi*ed #' met"od of operation+
a58ull +ervice (etailing&-
ull service retailing is stic& Cuite prevalent% alt"oug" its used
"as declined during t"e last 3: 'ears% w"ile t"e super mar&et
discount retailing% non retailing store "as increased during t"e last
3 decades+

b5 +uper -arket (etailing&-
0uper mar&et will #e de*ned as a large scale retailing institutions
o@ering a variet' of merc"andiAe including ?meat and dair'
products>+
c5 "elep2one (etailing&-
Telep"one retailing involves t"e sales of goods and services over
t"e telep"one+ It is a growing form of retailing+ Telep"one orders
are pu#lis"ed #' advertisement in news papers% magaAines and
on radio and on TD+
d5 0ending -ac2ine (etailing&-
Retailing is non personal form of selling in w"ic" customers #u'
products directl' form convenientl' located mac"inist+
)#/++$8$)/"$N 8 (%#/$#%(+

$' sales volume $' product line $' form of owners"ip $' met"od
of operation General merc"andiAe ;imited line Independent store
)orporate c"ain Non store retail -iscount Retail 0upermar&et ull
0ervice retail Mail order Retailing -oor to door retailing Telep"one
Dending


35 Discount (etailing&-
T"e modern discount "ouses are large stores t"at are freel' open
to t"e pu#lic% advertised widel' and carr' a complete selection of
well &nown #rands of "ard goods ?furnis"ing jewel etc>+T"e' sell
#elow nationall' advertised list price+
45 Non +tore (etailing&-
T"ere are four important stores of non important stores of
retailing+
a5 -ail rder&-
Mail order retailing ma' involve catalogue% advertising t"roug"
mass.media+ It "as #ot" advantages and disadvantages
b5 Door "o Door (etailing&-
T"e process in w"ic" all t"e transactions occur in t"e consumer,s
"ome+ -oor to door sales ma' #e conducted #' producers or
retailers+

c5 "elep2one (etailing
d5 0ending -ac2ine (etailing
3.4 62ole seller and met2ods of operation.

1A#% +%##$N*
Defnitions&-
G"ole selling includes all sales made to an' person or
organiAation ot"er t"an ultimate consumers% w"o use t"e product
for personal non #usiness purpose+ An' transaction from one
producer to anot"er producer is a w"ole selling exc"ange+ G"ole
selling and w"ole sell trade consists of t"e sale% and al activities
directl' related to sale of goods and services to parties for resale%
use in producing ot"er goods or service or operating an
organiAation+

)lassifcation of 62ole seller&-
T"ere are t"ree categories of w"ole sale1>L Merc"ant G"ole
0eller 2L Agent and $ro&er 3>= Manufacturer G"ole 0elling
15& -erc2ant 12ole +eller&-
T"ese are sometimes called jo##ers and distri#utors+ T"e' are t"e
largest single group of w"ole seller w"ic" are measured eit"er #'
sale or #' no+ of esta#lis"ments+ T"ere are two t'pes of merc"ant
w"ole sellers

a>ull 0ervice G"ole 0elling
#>;imited 0ervice G"ole 0elling
a5& 8ull +ervice 12ole +elling&-
ull service w"ole service almost all t"e service t"at a w"ole
seller can provide suc" a carr'ing stoc& can provide suc" a
carr'ing stoc& using a sale force% o@ering a credit% ma&ing
deliveries and providing management assistance+ T"e' are
divided into two groups+
15. *eneral -erc2andise 8ull +ervices&-
T"e' "andle a #road line of non peris"a#le items suc" as drugs%
cosmetics% "ardware, setc+ T"e' provide full range of services
15 #imited #ine 8ull +ervice 12ole +elling
=.;imited line service w"ole seller carr' out a few product lines
#ut o@er a full range of service+ T"e' are also called industrial
distri#utors+
b5 #imited +ervice 62ole selling&-
;imited service w"ole selling o@er service to t"eir suppliers and
customers+ T"ere are several t'pes of limited service w"ole
selling+
15 )as2 and )arry 12ole +elling&-
)as" and w"ole sellers "ave a limited line of fast moving goods
and sell to small retailers for cas" and normall' do not dollars+
25 Drop +2ipping 12ole +elling&-
-rop s"ipper w"ole sellers operate in #ul& industries suc" as coal
and "eav' eCuipment+ T"e' do not p"'sical possession products+
35 "ruck;1agon 12ole +ellers&-
T"ese are also called truc& jo##ers+ T"e' perform a selling or
delivering function+ T"e' carr' a limited line of semi.peris"a#le
merc"andise ?mil&% #reads% snac&s> w"ic" t"e' sell for cas" as
t"e' ma&e t"eir rounds to supermar&ets% small groceries% "ospital%
"otels and cafeteria etc+
45 -aterial rder 12ole +elling&-
Male order w"ole sellers send catalogue to retailer% industrial and
institutional customers% generall' for cosmetics% speciall' food
and ot"er small items+ /rders are *lled and sent #' mail% truc& or
ot"er means of transport+
25 /gents and brokers&-
T"ese middlemen never own t"e products+ T"eir activit' is
#ringing #u'ers and sellers toget"er and facilitating t"e sale+
$ro&ers are paid #' t"e part' w"o "ire t"em+ T"e' do not involve
in *nancing+

Agents and #ro&ers wor& on commission #asis% ranging from 2 to
6N+ /f t"e selling price+ T"e' perform useful function for small
producers w"o cannot a@ord t"e "ig" cost of "iring% training and
pa'ing t"eir own sales force+
35 $nside or manufacturing 62ole selling&-
T"is t'pe of w"ole selling consists of w"ole selling operations
conducted #' #u'ers and sellers t"emselves rat"er t"an t"roug"
independent w"ole seller+ T"ere are two t'pes of w"olesaling+

a5 +ale .ranc2es and Nces&-
Manufacturers often set up t"eir sales #ranc"es and oFces
improve inventor' control% selling and promotion+
25& Purc2asing Nces&-
Man' w"ole sellers set t"eir oFces in mar&et centers suc" as
;a"ore and Karac"i+ T"ese purc"asing oFces perform a role
similarl' to t"at of agent or #ro&ers #ut are t"e part
of organiAation+
3.= Designing and managing c2annel of distribution

7-anaging of p2ysical distribution

D%+$*N$N* D$+"($.!"$N )A/NN%#+
To design c"annels t"at satisf' customers and out of competition%
an organiAed approac" is reCuired+ Ge suggest a seCuence of four
decisions+1>

+pecify "2e (ole f Distribution
=.A c"annel strateg' s"ould #e designed wit" in t"e context of t"e
entire mar&eting mix+ irstl'% t"e *rm,s mar&eting o#jectives are
review and t"an t"e roles assigned to product% price and
promotion are speci*ed+ Eac" element ma' "ave separate role or
two elements ma' "ave toget"er roles+ or Example A
manufacturer of pressure gauges ma' use #ot" middle man and
direct mail advertising to convince customers+
25 +elect t2e "ype of )2annel&-
/nce distri#ution role is speci*ed% t"e most suita#le t'pe of
c"annel for t"e companies, product must #e determined+ At t"is
point a *rm needs to decide w"et"er middleman will #e used in its
c"annel and% if so% w"ic" t'pe of middle man+
3> -etermine Intensit' of -istri#ution=.
T"e next decision relates to intensit' of distri#ution t"at is% t"e
mo+ /f middle man used at t"e w"olesale and retail levels+
$ecause of t"e desires of prospective customers good 'ear
found it necessar' to intensit' its distri#ution and as a result%
started selling most of a tire lines t"roug" discount outlets+
45 )2oose +pecifc )2annel -embers&
T"e last decision concerns t"e selection of speci*c *rms to
distri#ute t"e product+ 0ometimes a compan' tr'ing to mar&et a
new product% it "as little c"oice regarding w"ic" c"annel
mem#ers to use+ In t"is case% t"e compan' goes must wit" t"ose
middleman t"at are willing to distri#ute t"e product
P2ysical distribution&-
P"'sical distri#ution consists of all activities concerned wit"
moving activities t"e rig"t amount of t"e rig"t products to t"e
rig"t place at t"e rig"t time+P"'sical distri#ution for
manufacturers includes t"e !ow of raw materials from t"eir
sources of suppl' to t"e production line and t"e movement of
*nis"ed goods from end of t"is production line to *nal user,s
locations+ Middleman manages t"e !ows of goods onto t"eir
s"elves as wells t"eir s"elves to customer "omes% store or ot"er
places of #usiness+
/ctivities
=.T"e activities of p"'sical distri#ution are order processing%
inventor' control% inventor' location and ware"ousing% materials
"andling and transportation+
0trategic Hse of P"'sical -istri#ution=.
T"e management of p"'sical distri#ution can ena#les compan'
to satisf' customers need #itterl' #' reducing operating costs+
T"e management of p"'sical distri#ution can also e@ect aFrms
mar&eting mix+

P%(-"$N/# /)"$0$"$%+

/utline :4
4+1 Promotional activities
T"e promotional program
)ampaign concept
4+2 Promotional mix. sales promotions%4+3Personal selling
Personal selling process
Prospecting
Uualif'ing prospects
Prospects
Re.approac" to individual
Presenting t"e sales messages
Past sale services
4+4 Nature and importance of advertising
4+5 T'pes of advertising4+6 eatures of advertising
4+7 -evelopment of advertising+

-eveloping advertising campaign

-e*ning o#jectives
Esta#lis"ing a #udget
)reating a message
0electing media
Kellow pages

4+8 Aim of advertising+

P(-"$N
4.1 Promotional activities
rom a mar&et perspective% promotion serves t"ree essential
roles.it informs% persuades and reminds prospective and current
customers and ot"er selected audience a#out a compan' and its
products+
"o inform&-
T"e most useful product or #rand will #e consider failed% if no one
&nows t"at it is availa#le+ $ecause distri#ution c"annels are often
long% a product ma' pass t"roug" man' "ands a producer and
consumers+ T"erefore% a producer must inform middleman as well
as #usiness users and ultimate consumers a#out a product+
G"olesalers in turn must inform retailers and retailers must
inform consumers+
"o persuade&-
Anot"er purpose of promotion is to persuade+ T"e intense
competition among di@erent industries as well as among di@erent
*rms in t"e same industr' puts a tremendous pressure
on promotional programs of sellers+ In our econom' of a
a#undance% we need strong persuasive promotion% #ecause
consumers "ave man' alternatives to c"oose from+ or example%
in case of luxur' product% for w"ic" sales depend on its a#ilit' to
convince consumers t"at t"e product,s #ene*t exceed t"ose of
ot"er luxuries% persuasive is even more important+
"o remind&-
)onsumer also must #e reminded a#out products availa#ilit' and
its potential to satisf'+
4.2 Promotional mi4- sales promotion
Determining t2e promotional mi4&-
A promotional mix is an organiAation,s com#ination of personal
selling% advertising sales promotion and pu#lic relation+ An
e@ective promotional mix is a critical part of virtuall' all

mar&eting strategies+ Product di@erentiation% mar&et
segmentation% trading up and trading down and #randing all
reCuires e@ective promotion+ -esigning e@ective promotional mix
involves a num#er of strategic decisions a#out *ve factors+
15 "arget audience&-
-ecision on promotional mix will #e greatl' in!uenced #' target
audience+ T"e target ma' #e *nal consumer% w"o could #e furt"er
de*ned as existing customer or new prospects+ In some order to
gain t"eir support in distri#uting a product or in case of a
compan' a#out to ma&es stoc& o@ering+ A promotion program
aimed primar' at middlemen is called pus" strateg' and
promotion program directed primaril' at end users is called pull
strateg'+ Hsing a pus" strateg' means a c"annel mem#er directs
its promotion primaril' at t"e middlemen t"at are next lin&
forward in t"e distri#ution c"annel+ Git" a pull strateg'%
promotion is directed at end users usuall' ultimate consumers+
25 Promotion obDectives&-
A target audience can #e in an' one of six stages of #u'ing
readiness+ T"ese stages awareness% &nowledge% li&ing%
preference% conviction% and purc"ase are called "ierarc"'
of e@ects% #ecause t"e' represent stages a #u'er goes t"roug" in
moving toward a purc"ase and eac" descri#es a possi#le
o#jective or e@ect of promotion+ T"e goal of promotion is to get
t"e prospect to t"e *nal or purc"ase stage+
i5 /6areness& -
At t"e awareness stage% t"e seller,s tas& is to let t"e #u'er &now
t"at t"e product or #rand exists+ Jere t"e o#jective is to #uild
familiarit' wit" product and #rand name+
ii5 9no6ledge& -
Knowledge goes #e'ond t"e awareness to learning a#out a
product,s feature+

iii5 #iking& -
;i&ing refers to "ow t"e mar&et feels a#out t"e product+
Promotion can #e used to move ac&nowledgea#le audience from
#eing indi@erent to li&ing a #rand+ A common tec"niCue is to
associate t"e item wit" an attractive s'm#ol or person+
iv5 Preference& -
)reating preference involves distinguis"ing among #rands suc"
t"at t"e mar&et *nds 'our #rand more attractive t"an alternative+
It is not uncommon to li&e several #rands of t"e same product #ut
t"e customer can,t ma&e a decision until one #rand is preferred
over t"e ot"er+
v5 )onviction& -
)onviction entails t"e actual decision or commitment to
purc"ase+ or example a student ma' prefer I$M over a clone%
and not 'et #e convinced to #u' a computer+ T"e promotion
o#jective "ere is to increase t"e strengt" of #u'er,s need+
vi5 Purc2ase& -
Purc"ase can #e dela'ed or postponed inde*nitel'% even for
customers w"o are convinced t"e' s"ould #u' a product+ T"ere
ma' #e some situational factor involved suc" as not "aving
enoug" mone' at t"at moment or natural resistance to price+
35 Nature of Product&-
0everal product attri#utes in!uences t"e promotional mix+ Ge
consider t"ree t"at are signi*cant are=
i5 !nit value& -
A product wit" low unit value is usuall' relativel' uncomplicated%
involves little ris& for #u'er and must appeal to mass mar&et to
survive+ As a result% advertising would #e primar' promotional
tools+ In contrast "ig" unit value products are complex and
complicated+
ii5 Degree of customi:ation& -
If a product is adapted to an individual customer need% personal
selling is important+ Jowever t"e #ene*ts of most standardiAed
products can #e e@ectivel' communicated in advertising+
Alt"oug" t"is principle "olds true for man' products% it is #eing
c"allenged #' *rm implementing mass customiAation+
iii5 Presale and Post sale services& -
Products t"at must #e demonstrated for w"ic" t"ere are trade in%
or t"at reCuire freCuent servicing to sta' in good wor&ing order
lend t"emselves to personal selling+
iv5 +tages in product life cycle& -
Promotional strategies are in!uenced #' product life c'cle.
stages+ G"en a new product is introduced prospective #u'er must
#e informed a#out its existence and its #ene*ts and middlemen
must #e convinced to carr' it+ T"us #ot" advertising and personal
selling are critical in a product introductor' stage+ At introduction
a new product also ma' #e somet"ing of novelt'% o@ering
excellent opportunities for pu#licit'+ ;ater% if a product #ecomes
successful% competition intensities and more emp"asis is placed
on persuasive advertising+
v5 8unds available& -
Regardless of t"e most desira#le promotional mix% t"e amount of
mone' availa#le for promotion is often t"e ultimate determinant
of mix+ A #usiness wit" more funds can ma&e more e@ective use
of advertising t"an a *rm wit" limited *nancial resources+ or
example% television advertising can carr' a particular promotional
message to for more people and at a lower cost per person t"en
most ot"er media+

4.3 Personal selling
P%(+N/# +%##$N* P()%++
Personal selling is t"e individual to individual communication+ It
"as some advantages over advertising+ Personal selling provides
t"e "uman touc" t"at is #ac&ing in adverting+ T"e value of
personal selling as a promotional activit' depends on t"e product
#eing o@ered and mar&et involved+ Inexpensive consumer
products can #e mar&eted successfull' t"roug" personal selling+
Personal selling process=.
T"e personal selling process is a logical seCuence of four steps
t"at a sales person ta&es in dealing wit" a perspective #u'er+ T"e
process is designed to produce some desired consumer actions
and ends wit" a follow.up to ensure customer satisfaction+ T"e
desired action usuall' is a purc"ase #' t"e customer+ Prospecting
Reproac"
Presentation
Post sale service
?i> Identif'ing prospective customers+
?ii> Uualif'ing prospects
?i> Information
?ii>Ja#its
?iii> Preferences
/$D/
?i> Attention
?ii> Interest
?iii>-esire
?iv>Action
?i>Reduce decision $uild good will


a5 $dentifying& -
T"e identi*cation process is an application of mar&et
segmentation+ $' anal'Aing t"e *rm,s data#ase of pas and
current customers% a sales rep can determine c"aracteristics of an
ideal prospect+ )omparing t"is pro*le to a list of potential
customers will produce a set of prospect+ A ;ist of potential
customers can #e constructed using suggestions from current
customers% trade associations and industr' directories+
Jualifying prospects&-
After indentif'ing prospective customers% a seller s"ould Cualif'
t"em% t"at is determine w"et"er t"e' "ave necessar' willingness%
purc"asing power and aut"orit' to #u'+ To determine willingness
to #u'% a seller can see& information a#out an' c"anges in t"e
prospect,s situation+ or example% a #usiness *rm or a "ouse"old
consumer ma' "ave "ad a recent pro#lem wit" an insurances
provider+ In t"is case t"ere ma' #e an opportunit' for a sales
person from a competing insurer to get t"at prospect,s #usiness+
To determine a prospect,s *nancial a#ilit' to pa'% a seller can
refer to credit rating services+ or "ouse"old consumers or small
#usiness% a seller can get credit information from a local credit
#ureau+ Indentif'ing w"o "as aut"orit' to #u' is a #usiness or a
"ouse"old can #e diFcult+ or example% a purc"asing agent ma'
"ave #u'ing aut"orit'% #ut w"at "e or s"e #u's ma' depend on
t"e recommendation of an oFce secretar'+
E25 (e-approac2 to individual prospects&-
$efore calling on prospects% sales people s"ould conduct a pre
approac".learning all a#out t"e companies and persons to w"om
t"e' "ope to sell+ T"is mig"t includes *nding t"at w"at products
t"e prospects "ave used in t"e past% w"at t"e' are now using and
t"eir reactions to t"ese products+ In #usiness to #usiness selling a
sales person or selling team s"ould *nd out "ow #u'ing decisions
are made in customer,s organiAation+


0ales people s"ould tr' to get all t"e information% so t"e' will #e
a#le to tailor t"eir presentation to individual #u'er+
E35 Presenting t2e sales messages&-
Git" t"e appropriate pre approac" information% a sales person can
design a sales presentation t"at will attract t"e prospect,s
attention+ T"e sales person will t"en tr' to "old t"e prospect,s
interest w"ile #uilding a desire for t"e product% and w"en t"e time
is rig"t% attempts to stimulate action #' closing sales+ T"is
approac" is called AI-A ?Attention interest% desire and action> is
used #' man' organiAation+
a5 /ttract attention t2e approac2&-
irst tas& in a sales presentation is to attract t"e prospect,s
attention and to generate curiosit'+ In case w"ere t"e prospect is
aware of a need and is see&ing a solution #' simpl' stating t"e
0ellers )ompan' and product ma' #e enoug"% provided #'
compan'+ or example% if sales person was o@ered to t"e
prospects #' a customer% t"e rig"t approac" mig"t #e to start out
#' mentioning t"is common acCuaintance% or a sales person
mig"t suggest t"e product #ene*ts #' ma&ing some startling
statement+
b5 Aold interest and arouse desire&-
After attracting t"e prospect,s attention t"e c"allenge for sales
rep is to "old it and stimulate a desire for product wit" a sales
presentation+ or example% some companies train t"eir sales
people to use a canned sales tal&% a memoriAed presentation
designed to cover all points determined #' management to #e
important+
c5.-eet obDections and close t2e sale&-
After explaining products and its #ene*ts% a sales person s"ould
tr' to close t"e sale% t"at is o#tain action on t"e consumer,s part+
Periodicall' in a presentation% t"e sales person ma' venture a trial
close to test t"e prospect,s willingness to #u'+

T"e trial close tends to uncover t"e #u'er,s o#jection+ A sales
person s"ould encourage t"e #u'er to state t"eir o#jections+ T"en
t"e sales person "as an opportunit' to meet t"e o#jections and
#ring out additional product #ene*t or reemp"asiAe previousl'
stated points+
E45 Past sale services&-
An e@ective selling jo# does not end w"en t"e order is written up+
T"e *nal stage of a selling process is a series of post sale
activities t"at can #uild customer goodwill and la' t"e
groundwor& for future #usiness+ Post sale services reduce t"e
customer,s post purc"ase cognitive dissonance+ In t"is *nal stage
of personal selling% a sales person can minimiAe t"e customer,s
dissonance #'?1> 0ummariAe t"e products% #ene*t after purc"ase+
?2> Repeat w"' product is #etter t"an ot"er alternative+?3>
Emp"asiAing "ow satis*ed customer will #e wit" product+
/D0%("$+$N*
Advertising is an art of in!uencing t"e customers t"roug" paid
non.personal presentation to purc"ase and posses a product+ It
can also #e de*ned as Oan' paid form of non.
personal presentation and promotion of ideas goods or services
#' an identi*ed sponsor+ T"e two main o#jectives of advertising
are to expose a product to a large mar&et and to encourage t"e
#u'er to accept t"e product+
4.4 Nature and importance of advertising
Nature /#jectives of advertising=.
Esta#lis" advertising o#jectives to optimiAe performance of t"e
product or service% and Meet advertiser needs+
1> )ommunication e@ects are anal'Aed and assessed for t"eir
a#ilit' to ac"ieve 0peci*ed responses+
2> $rand awareness o#jectives t"at en"ance #u'er empat"'
wit" t"e product or service are developed% evaluated% and
determined+
3> $rand attitude o#jectives t"at en"ance positive #u'er #rand
evaluation and distinguis" rational and emotional responses to
#rand attitude are developed% evaluated% and determined+
4> $rand purc"ase intention o#jectives t"at encourage #u'er
purc"ase action are developed% evaluated% and determined+
5> /#jectives t"at ac"ieve t"e reCuired e@ects for t"e product or
service are developed and integrated to meet overall #rand
strateg' and advertising o#jectives+
6> Proposed advertising o#jectives are assessed for t"eir
compati#ilit' wit" advertiser needs for t"e development and
execution of e@ective messages and advertisements t"at ac"ieve
advertising and mar&eting o#jectives+
7> Provisions are made for monitoring% evaluating% and adjusting
advertising responses to ensure t"at t"ese continue to meet
#rand strateg' and advertising o#jectives+
$mportance of advertising&-
Advertising is of great importance in our world of competition+ It is
important for #ot" seller and #u'er+ Even t"e government cannot
do wit"out it+ irst% of all% advertising introduces new products to
general pu#lic+ or example% t"e pu#lic come to &now a#out
useful new medicines for some diseases+ Ge often learn a#out
new mac"ines for agriculture and industr' for ads+
+econdly&-
Advertising introduces di@erent #rands of same product+
Advertisement tells a#out Cualities of eac" #rand and we can
easil' select+
8or e4ample&-
T"ere are t"ree di@erent #rands of #ic'cle produced #' same
compan'+

"2irdly&-
Government can ver' pro*ta#l' advertise its sc"emes and
policies+ It can tell general pu#lic w"at it mig"t do for good of
nation+
8ourt2ly&-
It is t"roug" advertisements t"at we come to &now of new service
jo#s+ Uuali*ed people appl' for t"em and get adjusted in life+
8ift2ly&-
Advertisement is a dependa#le and e@ective means of expanding
education and of #ringing students to educational institutions+
0c"ools% colleges and universities advertise t"eir classes% courses%
and fees and attract students for admission+ Advertising can also
#e "armful+ G"en advertisement misstates Cualities of t"eir
products% t"e' misguide pu#lic+ G"en manufacturers advertise
"armful products li&e cigarettes% t"e' da a disservice+ Advertising
is useful aXwit"in proper limits+ T"ese limits )lear' la' down #'
religion% law and our traditions+
4.= "ypes of advertising
"ypes of advertising&-
Mentioned #elow are t"e various categories or t'pes of
advertising=
Print Advertising I Newspapers% MagaAines% $roc"ures% liers
T"e print media "ave alwa's #een a popular advertising medium+
Advertising products via newspapers or magaAines is a common
practice+ In addition to t"is% t"e print media also o@ers options li&e
promotional #roc"ures and !iers for advertising purposes+ /ften
t"e newspapers and t"e magaAines sell t"e advertising space
according to t"e area occupied #' t"e advertisement% t"e position
of t"e advertisement ?front page(middle page>% as well as t"e
readers"ip of t"e pu#lications+ or instance an advertisement in a
relativel' new and less popular newspaper would cost far less
t"an placing an advertisement in a popular newspaper wit" a "ig"
readers"ip+ T"e price of print ads also depend on t"e supplement
in w"ic" t"e' appear% for example an advertisement in t"e gloss'
supplement costs wa' "ig"er t"an t"at in t"e
newspaper supplement w"ic" uses a mediocre Cualit' paper+
utdoor /dvertising I $ill#oards% Kios&s% Trades"ows and Events
/utdoor advertising is also a ver' popular form of advertising%
w"ic" ma&es use of several tools and tec"niCues to attract t"e
customers outdoors+ T"e most common examples of outdoor
advertising are #ill#oards% &ios&s% and also several events and
trades"ows organiAed #' t"e compan'+ T"e #ill#oard advertising
is ver' popular "owever "as to #e reall' terse and catc"' in order
to gra# t"e attention of t"e passers #'+ T"e &ios&s not onl'
provide an eas' outlet for t"e compan' products #ut also ma&e
for an e@ective advertising tool to promote t"e
compan',s products+ /rganiAing several events or sponsoring
t"ose ma&es for an excellent advertising opportunit'+ T"e
compan' can organiAe trade fairs% or even ex"i#itions for
advertising t"eir products+ If not t"is% t"e compan' can organiAe
several events t"at are closel' associated wit" t"eir *eld+ or
instance a compan' t"at manufactures sports utilities can
sponsor a sports tournament to advertise its products+
.roadcast advertising I Television% Radio and t"e Internet
$roadcast advertising is a ver' popular advertising medium t"at
constitutes of several #ranc"es li&e television% radio or t"e
Internet+ Television advertisements "ave #een ver' popular ever
since t"e' "ave #een introduced+ T"e cost of television
advertising often depends on t"e duration of t"e advertisement%
t"e time of #roadcast ?prime time(pea& time>% and of course
t"e popularit' of t"e television c"annel on w"ic" t"e
advertisement is going to #e #roadcasted+ T"e radio mig"t "ave
lost its c"arm owing to t"e new age media "owever t"e radio
remains to #e t"e c"oice of small.scale advertisers+ T"e radio
jingles "ave #een ver' popular advertising media and "ave a
large impact on t"e audience% w"ic" is evident in t"e fact t"at
man' people still remem#er and enjo' t"e popular radio jingles+
)overt /dvertising I Advertising in Movies
)overt advertising is a uniCue &ind of advertising in w"ic" a
product or a particular #rand is incorporated in some
entertainment and media c"annels li&e movies% television s"ows
or even sports+ T"ere is no commercial in t"e entertainment #ut
t"e #rand or t"e product is su#tl' ? or sometimes evidentl'>
s"owcased in t"e entertainment s"ow+ 0ome of t"e famous
examples for t"is sort of advertising "ave to #e t"e appearance of
#rand No&ia w"ic" is displa'ed on Tom )ruise,s p"one in t"e
movie Minorit' Report% or t"e use of )adillac cars in t"e movie
Matrix Reloaded+
+urrogate /dvertising I Advertising Indirectl'
0urrogate advertising is prominentl' seen in cases w"ere
advertising a particular product is #anned #' law+ Advertisement
for products li&e cigarettes or alco"ol w"ic" are injurious to "eat"
are pro"i#ited #' law in several countries and "ence t"ese
companies "ave to come up wit" several ot"er products t"at
mig"t "ave t"e same #rand name and indirectl' remind people of
t"e cigarettes or #eer #ottles of t"e same #rand+ )ommon
examples include osters and King*s"er #eer #rands% w"ic" are
often seen to promote t"eir #rand wit" t"e "elp of surrogate
advertising+
Public +ervice /dvertising I Advertising for 0ocial )auses
Pu#lic service advertising is a tec"niCue t"at ma&es use of
advertising as an e@ective communication medium to conve'
sociall' relevant messaged a#out important matters and social
welfare causes li&e AI-0% energ' conservation% political integrit'%
deforestation% illiterac'% povert' and so on+ -avid /gliv' w"o is
considered to #e one of t"e pioneers of advertising and mar&eting
concepts "ad reportedl' encouraged t"e use of advertising *eld
for a social cause+ /gliv' once said% BAdvertising justi*es its
existence w"en used in t"e pu#lic interest . it is muc"too powerful
a tool to use solel' for commercial purposes+B+ Toda' pu#lic
service advertising "as #een increasingl' used in a non.
commercial fas"ion in several countries across t"e world in order
to promote various social causes+ In H0A% t"e radio and television
stations are granted on t"e #asis of a *xed amount of Pu#lic
service advertisements aired #' t"e c"annel+
)ele#rit' Advertising
Alt"oug" t"e audience is getting smarter and smarter and t"e
modern da' consumer getting immune to t"e exaggerated claims
made in a majorit' of advertisements% t"ere exist section of
advertisers t"at still #an& upon cele#rities and t"eir popularit' for
advertising t"eir products+ Hsing cele#rities for advertising
involves signing up cele#rities for advertising campaigns% w"ic"
consist of all sorts of advertising including% television ads or even
print advertisements+
4.> 8eatures of advertising
8eatures of advertising&-
Nan and a#er ?2::4>
made a *rst attempt to identif' four uniCue features of
advertising compared to ot"er forms of communication #'
reviewing t"e literature and logic reasoning+
T"ese features included
consumer s&epticism%
message repletion%
message coordination
)lutter+ $uilding on t"eir stud'% we provided a more o#jective
view of w"at ma&es advertising uniCue+ Ge gat"ered w"at can #e
called expertsM opinions on w"at ma&es advertising uniCue
t"roug" a surve' wit" a s'stematicall' drawn sample of
researc"ers in various *elds of communication+ T"ese results
indicate a num#er of uniCue features of advertising t"at "ave
often #een ignored in previous wor&+ 0even uniCue features of
advertising are identi*ed t"roug" t"issurve'+ T"ese uniCue
features are
untrustwort"iness of t"e source%
appeal to emotions%
message repetition%
explicit conclusions%
variet' of media c"annels%
message coordination%
Persuasion goal+ T"ree c"aracteristics identi*ed "ere%
untrustwort"iness of t"e source% message repetitions% and
message coordination% "ave also #een identi*ed in t"e previous
stud' as t"e uniCue featuresof advertising+ 0urprisingl'% message
competition was not perceived as a uniCue feature of advertising
as compared to ot"er form of communication+
4.? Development of advertising+
D%0%#P$N* /N /D0%("$+$N* )-P/$*N
An advertising campaign consists of all t"e tas&s involved in
transforming a t"eme into coordinated advertising program to
accomplis" a speci*c goal for a product or #rand+ T'picall'% a
campaign involves several di@erent advertising messages%
presented over an extended period of time using a variet' of
media+ An advertising campaign is planned wit"in t"e framewor&
of overall strategic mar&eting plan and #roader promotional
program+ T"e framewor& is esta#lis"ed w"en management=
?1> Identi*es t"e target audience+
?2> Esta#lis"es t"e overall promotional goals+
?3> 0et t"e total promotion #udget+
?4> -etermine t"e overall promotional t"eme+Git" t"ese tas&
completed t"e *rm can #egin formulating an advertising
campaign+ T"esteps in developing a campaign are developing
o#jectives% esta#lis"ing #udget% creating message% selecting
media and evaluating e@ectiveness+
15 Defning obDectives&-
T"e purpose of advertising is to sell somet"ing% a good service%
idea to person or a place+ T"is goal is reac"ed #' setting speci*c
o#jectives t"at can #e expressed in individual ads incorporates
into an advertising campaign+ T"e main advertising o#jectives are
to=
a5. +upport personal selling& -
YAdvertising ma' #e used to support personal selling+

b5. $mprove dealers relations& -
G"olesalers and retailers used advertising to improve dealer,s
relations+
c5. introduce a ne6 product& -
)onsumers need to #e informed ever a#out line extensions t"at
ma&e use of familiar #rand names+
d5. e4pand t2e use of product& -
Advertising ma' #e used to expend t"e use of product+
25 %stablis2ing a budget&-
/nce a promotion #udget "as #een esta#lis"ed% it must #e
allocated among various activities comprising t"e overall
promotional program+ /ne met"od t"at t"e *rm uses to extend
t"eir #udget is cooperative advertising% w"ic" isa joint e@ort #'
two or more *rms intended to #ene*t eac" of t"e participants+
T"ere are t'pes of cooperative ads+ Dertical and "oriAontal+
Dertical advertising involves *rms on di@erent level of distri#ution+
JoriAontal cooperative advertising is joint advertising in w"ic" two
or more *rms on same level of distri#ution% suc" as group of
retailers% s"are t"e costs+
35 )reating a message&-
G"atever t"e o#jective of an advertising campaign% t"e individual
ads must accomplis" two t"ings= get and "old t"e attention of
audience and in!uence t"e audience in a desired wa'+ T"ere are
man' wa's to ac"ieving attention% surprising% s"oc&ing% amusing
and arousing curiosit' are all common tec"niCues to gain
attention+ If t"e ad succeeds in getting t"e audience,s attention%
t"e advertiser "as few second to transmit a message to in!uence
#e"avior+ T"e message "as two elements% t"e appeal an
execution+
45 +electing media&-
)reation of message can #e discussed #efore selecting t"e
advertising media in w"ic" to place ad T"e advertiser must ma&e
decision #efore selecting media+
?i> G"ic" t'pe of media will #e usedQ
?ii> G"ic" categor' of t"e selected medium will #e usedQ
?iii> G"ic" speci*c media ve"icles will #e usedQ
E15 Ne6s Paper&-
As advertising medium newspapers are !exi#le and timel'+ T"e
life of newspaper is ver' s"ort+ T"e' are discarded soon after
#eing read+ In man' cities circulation of dail' newspapers is
decreasing% #ecause of growt" of internet+
E25 "elevision&-
Television com#ines motion% sound and special visual e@ects+ In
T+D message can #e presented #itterl'+ Jowever% TD ads lac&
performance% so t"e' must #e seen and understood immediatel'+
E35 Direct mails&-
-irect mail "as t"e potential of #eing most personal and selective
of all media+ $ecause t"e direct mail goes onl' to t"e people% t"e
advertiser wis"es to contact% t"ere is almost no wastage
coverage+
E45 (adio&-
Radio is low cost per t"ousand medium #ecause of its #road
reac"+ Nearl' 8:N of American listens to t"e radio dail'+ Radio
commercials can #e produced in less t"an a wee&% at a cost for
#elow T+D+ $ecause radio ma&es onl' an audio impression+
E=5 ,ello6 pages&-
T"e 'ellow pages are a source of information from w"ic" most
consumers are familiar+ T"e' are used #' consumers at or ver'
near #u'ing decisions+
E>5 -aga:ines&-
MagaAines are t"e medium to use w"en "ig" Cualit' printing and
color are desired in an add+ MagaAines can reac" a national
mar&et at a relativel' low cost per reader+
E?5 ut-of-Aome advertising&-
0pending out of "ome advertising is growing at a#out 1:N a 'ear+
Most of out.of."ome advertising is for local #usinesses+?
=5 %valuating t2e advertising eGort&-
Top executive want to proof t"at advertising is wort"w"ile+ T"e'
want to &now w"et"er dollar spent on advertising are producing
as man' sales as could #e reaped from dollars spent on ot"er
mar&eting activities+
DiNculty of evaluations&-
It is "ard to measure sales e@ectiveness of advertising+ T"ese
diFculties arise due to=
?1> -i@erent o#jectives
?2> E@ects overtime
?3> Measurement pro#lems+ Met"ods used to measure
e@ectiveness Ad e@ectiveness means are eit"er direct or indirect+
-irect test w"ic" compile t"e responses to an add or campaign%
can #e used onl' wit" anew t'pes of ads+ Indirect tests measures
somet"ing ot"er t"an actual #e"avior+

4.B 8ive aim of advertising
8$0% /$- 8 /D0%("$+$N*
1+Increasing t"e sales of t"e product(service
2+)reating and maintaining a #rand identit' or #rand image+
3+)ommunicating a c"ange in t"e existing product line+
4+Introduction of a new product or service+
5+Increasing t"e #uAA.value of t"e #rand or t"e compan' T"ere
are various aims of advertising #ut t"e primar' aim is to attract
t"e sales for t"e compan'+ In fact% t"e ultimate aim of an'
organiAation is to en"ance its pro*ta#ilit' and it is onl' possi#le
w"en t"e compan' ma' attract more sales+ T"e second aim of
advertising is to en"ance t"e visi#ilit' of t"e products and
services among t"e consumers+ In ot"er words% advertising is
aimed to increase t"e awareness of t"e customers+ Advertising
also pla's an important role to #uild t"e image of t"e organiAation
in t"e mar&et+ T"roug" ads t"e compan' can #uild t"e image
w"ic" it wants to ma&e in t"e minds of t"e people+ T"erefore%
nowada's% companies spend a "uge amount of t"eir #udgets on
advertising and promotional strategies+