Marketing Management

MARKETING MANAGEMENT
MARKETING CONCEPT
MODULE 1 (3 Hours)
Introduction: Nature and scope of Marketing, Evolution, Various Marketing orientations,
Marketing Vs Selling concept, Consumer Need, Wants and Demand concepts.
DEFNITION
“The Marketing concept is a point of view on business. It enumerates that any business is
essentially a need satisfying process”. It also enunciates that all the goals of the
organization including profit be realized three ‘customer orientation’. Integrated
management action and generation of customer satisfaction.
CONCEPTS OF MARKETING.
THE EXCHANGE CONCEPT
The exchange concept of marketing, as the very name indicates, holds that the exchange
of a product between the seller & the buyer is the central idea of marketing. While
exchange does form a significant part of marketing as a mere exchange process would
amount to a gross undermining of the essence of marketing. A proper scrutiny of the
marketing process would readily reveal that marketing is much broader than exchange.
Exchange, at best, covers the distribution aspect and the price mechanism involved in
marketing. The important aspects of marketing, such as concern for customer, generation
of value satisfaction creative selling & integrated action for serving the customer, get
completely overshadowed in the exchange concept of marketing.
THE PRODUCTION CONCEPT
It is one of the oldest concepts of business. The production concept holds that consumers
will prefer products that are widely available and inexpensive. Managers of production-
oriented businesses concentrate on achieving high production efficiency, low costs, mass-
distribution. They assume that consumers are primarily interested in product availability
and low prices. This orientation makes sense in developing countries, where consumers
are more interested in obtaining the product than in its features. It is also used when a
company wants to expand the market.
Some service organizations also operate on production concept. Many medical & dental
practices are organized on assembly-line principles, as are some government agencies.
Although this mgt orientation can handle many cases per hour, it is open to charges of
impersonal and poor-quality service.
THE PRODUCT CONCEPT
The product concept is somewhat different from the production concept. Whereas the
production concept seeks to win markets & profits via high volume of production and
low unit costs, the product concept seeks to achieve the same result via product
excellence- improved products, new products and ideally designed & engineered
products. It also emphasis on quality assurance. Managers in these organizations focus on
making superior products & improving them overtime. They assume that buyers admire
well-made products and can evaluate quality & performance. Mgt might commit the
Better-mousetrap fallacy, believing that it will lead people to beat a path to its door.
Example:- web T V
THE SELLING CONCEPT
The selling concept holds that consumers and businesses, if left alone, will ordinarily not
buy enough of the organization’s products. The organization must, therefore, undertake
an aggressive selling and promotion effort. This concept assumes that consumers
typically show buying inertia or resistance & must be coaxed into buying. It also assumes
that the co. has a whole battery of effective selling and promotion tools to stimulate more
buying.
The selling concept is practiced most aggressively with unsought goods, goods
that buyers normally do not think of buying, such as insurance, encyclopedias, and
funeral plots. It is also practiced in non-profit area by fund raisers, college admission
offices, & political parties.
THE MARKETING CONCEPT
This concept emerged in mid-1950 and challenged the preceding concepts. The
MARKETING concept was born out of the awareness that marketing starts with
determination of consumer wants & ends with the satisfaction of those wants. The
concept puts the customer at both the beginning and the end of business. It stipulates that
the company should be organized totally around the marketing function, anticipating,
stimulating & meeting customer’s requirements.
The concept rests on the realization that a business cannot succeed by supplying
products and services that ae not properly designed to serve their needs. Every depart. &
every worker and every manager will “THINK CUSTOMER” &”ACT
CUSTOMER”. Evidently, the concept represent a radically new approach to business.
Marketing concept represents essentially a change in orientation on the part of mgt
towards business.
The marketing concept rests on four pillars:

1. Target market- EX:TERRA LYCOS
2. Customer needs-EX:NOKIA & SONY ERRICSON
3. Integrated marketing-
4. Profitability-EX:DISNEY, WALL-MART
THE CUSTOMER CONCEPT
The ability of a company to deal with customers one at a time has become practical as a
result of advances in factory customization, computers, the internet, & database mktg
software. In this concept the companies hope to achieve profitable growth through
capturing a larger share of each customer’s expenditures by building high customer

loyalty & focusing on customer lifetime value. The required information collection
hardware, and software may exceed payout. It works for best co. that normally collect a
great deal of individual customer information, carry a lot of products that can be cross-
sold, carry products that need periodic replacement or upgrading, & selling products of
high value.
THE SOCIETAL MARKETING CONCEPT
”... make marketing decisions by considering consumer’s wants, the company’s

requirements, consumer’s long-run interests and society’s long-run interests.”
”Principles of Marketing” by Kotler/Armstrong, Prentice Hall
Societal marketing blends social, company and customers wants.”
The Societal Marketing Concept. This concept holds that the organization’s task is to
determine the needs, wants, and interests of target markets and to deliver the desired
satisfactions more effectively and efficiently than competitors (this is the original
Marketing Concept). Additionally, it holds that this all must be done in a way that
preserves or enhances the consumer’s and the society’s well-being.
Unfortunately, satisfying customers’ short-term needs may not be compatible with

society’s needs. For instance, your customers may prefer large automobiles, disposable
diapers, hamburgers, no-deposit bottles, etc. Society is better off if we drive small cars,
use cloth diapers, and eat soy burgers. Should a firm worry about its customers’ short-
term needs, or consider what is best for society.
The modern time is the time of information, peoples are more aware of sensitive
issues which the earlier generations did not know, like shortage of resources, health
issues, environmental deterioration.
And the reason of this well learned society is ubiquity of information, through the means
of electronic media and print media, and internet now is playing very important part in
providing up to date information at the rate of just one click. So this generation have
developed the ability to judge any marketing strategy, whether it is correct or not?
The societal marketing concept calls upon marketers to build social & ethical
considerations into their mktg practices. They must balance and juggle the often
conflicting criteria of company profits, consumer want satisfaction, & public interest.
This orientation arose as some questioned whether the Marketing Concept is an

appropriate philosophy in an age of environmental deterioration, resource shortages,
explosive population growth, world hunger and poverty, and neglected social services.
Are companies that do an excellent job of satisfying consumer wants necessarily acting in
the best long-run interests of consumers and society?
The marketing concept possibily sidesteps the potential conflicts among consumer
wants, consumer interests, and long-run societal welfare.:
EXAMPLE:
The fast-food hamburger industry offers tasty but unhealthy food. The hamburgers have a
high fat content, and the restaurants promote fries and pies, two products high in starch
and fat. The products are wrapped in convenient packaging, which leads to much waste.
In satisfying consumer wants, these restaurants may be hurting consumer health and
causing environmental problems.
Societal marketing, argues Kotler, P. (1972, p. 837) should generate consumer

satisfaction as well as the long term well-being of the consumer, society and their
ecology. As Christians this is a definition that fits well within our ethic, and within
the Christian mission. So marketing can accept the Church why has the Church not
embraced marketing management as the basis of its missionary strategy?
Extending the Principles of Marketing
As noted above, the principles of marketing are being extended to such areas as the
marketing of ideas, political marketing, and even marketing the volunteer army.
Whenever there is some type of exchange, it is important to understand marketing.
Politicians, for instance, understand that they must segment voters and select a target
market(s). A good politician does research to learn what voters want (jobs, increase in
social security, homeland security, health insurance, strengthening the traditional family,
etc.). Direct mail and Internet marketing with different messages for different groups is
one tool being used by shrewd politicians. One interesting fact that is being studied after
the 2004 Presidential election is the fact that 97 out of 100 of the fastest growing counties
mainly exurbs voted RepublicanExurbs. are too far from urban areas to be considered
Suburbs but too large to be considered rural.
Even libraries have started using marketing. Libraries are being defined as a place to find
information, not only books. (If they define themselves solely as a place to borrow books
they are suffering from marketing myopia.) This is why libraries have numerous
computers and wireless networks so that anyone with a laptop can access the Internet.
Libraries also have DVDs since they are almost as important as books. Incidentally, there
is a revolution in the area of book publishing, a new kind of book is the eBook.
Libraries are also places where young children whose mothers work can do their
homework after school.
Colleges are also using sophisticated marketing tools to attract students. This is becoming
a hot area since colleges find themselves competing for students. Research shows that
students choose schools based on reputation, convenience, and course offerings.
Hospitals are also becoming marketing-oriented. Patient satisfaction is becoming very
important to hospitals. Customer satisfaction is very important in marketing (indeed, that
is what the marketing concept is all about). Today, hospitals and colleges are learning
about the importance of satisfying patients and students, respectively. Do you think this
college has done a good job satisfying you?
Can marketing help a church expand its membership? Read "The Soul of the New Exurb"
by Jonathan Mahler (New York Times Magazine, March 27, 2005, pp. 30-50) to learn
how Pastor Lee McFarland built a mega-church (weekly attendance of 2,000+) in the
exurb of Surprise, Arizona; weekly attendance is 5,000. Before building the church,
McFarland did some marketing research and asked only two questions: "What's your
favorite radio station?" "Why do you think people don't go to church?" What he found
was that the people living in Surprise liked rock music; they did not go to church because
they did not own fancy clothing, did not like to be asked for money, and felt that the
church sermons they heard in the past were not relevant to their lives. His church has no
crosses or other religious icons; no stained glass and it looks like a mall. Krispy Kreme
doughnuts are served ($16,000 a year spent on the doughnuts), the dress code is lax, and
Pastor McFarland wears a T-shirt and jeans. Half of each service is devoted to Christian
rock. McFarland's "sermons" deal with what he calls "successful principles of living."
People are attracted to the church for various reasons including aerobics classes, child
care, counseling, financial planning, etc. Radiant has small groups for all kinds of people:
widows, divorced, etc. This is known as getting people in through the side door (going to
church for Sunday sermon = front door). Small groups allow people to share their pains
and hopes. Outdoor advertisement for the church: "Isn't It Time You Laughed Again?"
with a picture of happy family.
The church has a branch of Celebrate Recovery, a Christian program for recovering
addicts that is similar to the 12-step program of Alcoholics Anonymous. Recovering
addicts can feel comfortable talking about their Christian beliefs at the Celebrate
Recovery meetings.
CASE STUDY
PROBLEM STATEMENT :
In order for McDonald’s to reach its goal of "par excellence", it must use the full meaning
and definition of marketing. Marketing is giving the target market what they want, when
and where they want it, at a price they are willing to pay for it.
REFLECTION / OPINION
For McDonald’s to achieve its "par excellence", they must focus on the fact that there is
an ever changing market and that the wants and needs of consumers are constantly
changing. Since McDonald’s has been around for forty-one years, it is safe to say that
they are the father of the fast food industry and that they have set an example for others to
follow.
When Ray Kroc bought the first McDonald’s in 1955, he focused on what people
wanted. With this focus came the utilization of Mr. Kroc’s theory of QSC ( quality,
service, and cleanliness ).
QSC successfully got McDonald’s off the ground, but as times changed, the company
saw many more market segments and opportunities. In the 1970’s and 1980’s once again
McDonald’s lead the way in the fast food industry. The changes we saw included, for
example, the fact that women were now a major part of the work force and dual income
families were becoming a more common occurrence. McDonald’s became a mastermind
of marketing toward specific markets by pioneering ideas such as breakfast menus,
healthier choices and alternatives, and "adult" foods. McDonald’s has truly evolved into
a world power by paying attention to the needs and wants of the changing market and
adjusting to these needs.
LINKING THEORY :
Ray Kroc saw early on what needed to be done. He changed what was at one time a
product orientation, into a marketing orientation. Back in 1955, this was still a new type
of management. From the beginning, Kroc was already in the forefront of marketing.
Marketing orientation focuses on the customer and what they want in a product, rather
than product orientation which focuses on the product itself. McDonald’s has taken every
aspect of marketing orientation and utilized the philosophy to its fullest. McDonald’s has
focused in on the customer needs and wants, sometimes even putting the ideas into the
consumer’s mind before they even knew what they wanted or expected. McDonald’s
could deliver! They have done extensive market analysis and product development based
on this analysis. They have packaged their food and priced it exactly to the market
segment which they have targeted.
Showing McDonald’s innovations in marketing even further, is its early adaptation of
societal marketing. Societal marketing takes into account the overall concerns of the target
market, the environment, for example. McDonald’s got rid of their one time innovative
styrofoam packaging and replaced it with more environmentally sound paper packaging.
They stress the fact that they are environmentally aware, by reminding us not to litter, etc.,
on their various forms of packaging. Another example if societal marketing is the Ronald
McDonald House. This is probably McDonald’s largest community service project. It
demonstrates the way that McDonald’s is willing to give something back to the
very communities that support the company. These examples as well as the various
events that McDonald’s promotes, such as the Olympic Games, puts their name
worldwide. This makes it difficult for us ever to forget of the existence of McDonald’s.
McDonald’s also uses a theory referred to as relationship marketing. Relationship
marketing is defined as marketing to protect the customer base. The customer is
viewed as an asset and the company’s marketing goal is to attract, maintain, and
enhance customer relationships.
There are five main criteria that must be met for a successful relationship marketing
strategy and they are as follows :
1) There needs to be an ongoing and periodic desire for the product or service by the
customer.
2) The service customer controls the selection of the service supplier.
3) There are alternative suppliers of the service.
4) Customer loyalty is weak and switching is common and easy.
5) Word of mouth is an especially potent form of communication about the product.
All of these criteria are met by the fast food industry, and McDonald’s has generally
had a very successful relationship marketing strategy, especially through the
implementation of the QSC program.
McDonald’s has definitely exceeded the definition of success. How many other
businesses can say they have served billions and billions? McDonald’s has done an
incredible job taking an intangible product and virtually dissipating any perception of
risk associated with service products. Whether someone orders a burger, McNuggets, or a
fish fillet, they know that their expectations will be met every time.
SOLUTION :
A clear solution for McDonald’s to continue its success is to stay focused. For years,
McDonald’s has had the unique ability to adapt to the changing market, and that, along
with their QSC program and innovative product development, has kept them on top.
As long as McDonald’s seems to make our lives easier, by giving us a consistent,
valued product, the company will always be in existence.
Example: 1
•Proctor & Gamble Pakistan has introduced the brand of fat free oil to prevent the
growing ratio of heart disease. •Various automobile manufacturers are focusing more on
producing CNG cars that is not only environmental friendly but it is also very
economical. So this trend is getting popular very quickly. One can verify it by observing
the increasing number of CNG stations. •There are various companies that are favoring
the use of recycled paper to aid more life to trees.
But, Pakistan is an under develop country, there are 35% Pakistani’s that are living below
the poverty line, Availability of Clean water, High Standard Education, Pollution are the
big concerns for Pakistan consumers.
•White collar person in Pakistani society can not buy a bottle of mineral water for its
supper unless it is in his economical range. •Virtual University could not be successful if
it had a same fee criteria as that of others institutions. •People would not use CNG cars if
it was expansive.
EXAMPLE-2
PATAGONIA world-class climber yvon chouinard founded Patagonia in 1966 by selling

rock climbing hardware from the trunk of his car. By the time the company changed its
focus to selling soft goods & apparel in mid-1970, Patagonia was committed to two main
goals: providing the highest quality gear for outdoor enthusiasts, & “implement[ing]
solutions to the environmental crisis.” The co. gave an earth tax of one percent of sales or
ten percent of pre tax profits (whichever is greater) to “activists who take radical and
strategic steps to protect habitat, wilderness, & biodiversity.” however, as Patagonia
expanded, many aspects of its operations contributed to the environmental pollution the
company worked so hard to counter. After an internal study in 1990’s the company
sought to use materials & fabrics that would minimize its impact on the environment,
such as synchilla fleece made from recycled plastic bottles and the 100 percent organic
cotton used in every cotton product. The corporate culture avidly supports activism, as
evidenced by a company program through which employees receive pay to work up to
two months in an organization. Patagonia sent 70 of its 900 employees abroad on such
trips in 1999.
Patagonia is practicing a form of the societal marketing concept called cause-related

marketing.
EXAMPLE-3
A FAST FOOD restaurant offers tasty but unhealthy food. These foods have fat content
& the restaurant promotes fried stuff. These are high in fat. The products are wrapped in
convenient packaging. In satisfying consumer wants, these restaurants may be hurting the
consumer health.
Companies see cause-related marketing as an opportunity to enhance their corporate

reputation, raise brand awareness, customer loyalty, build sales,& increase press
coverage. They believe that customers will increasingly look for signs of good corporate
citizenship that go beyond supplying rational & emotional benefits.
Concepts for the Nineties
Philip Kotler
 Lean Marketing
o Prestige Marketing - More for More
o Value marketing - More for the same
o Supervalue marketing - More for less
e.g.,Walmart, Dell, Lexus
Concepts
 Customized marketing
o Segments
o Niche
o Customized
 e.g., Schwinn Bicycles, Bank Services
Concepts
 Relationship Marketing
o The product is all you get
o We provide a hotline if you want to reach us
o We want to create continuous value for you
BENEFITS OF MARKETING CONCEPT
CONCEPT BENEFITS IN THE ORGN:
Concept enables the organization to deep abreast of changes.
Long term success is assured to an enterprise only if it recognizes that the needs of the
market are paramount.
Concept gives great importance to planning, research and innovation and its decisions are
no longer based on lunch, but on reliable data relating to the consumers.
It enables the firm to move more quickly to capitalize on market opportunities
Greater attention is given to the product planning and development to that merchandising
can become more effective.
Demand side of the equation of exchange is honoured more and supply is adjusted to
changing demand. Hence more emphasis is given to research and innovation.
Marketing system based on the marketing concept assures integrated view of business
operations and indicated interdependence of different departments of a business
organization.
Interests of the enterprise and society can be harmonized as profit through service is
emphasized.
CONCEPT BENEFITS OF CUSTOMER.
Low price, better quality and ready stocks at convenient locations are some of the
benefits that accuse to the customers. He can chose, he can bargain, he can complain and
the complaint will be attended to. He can buy on cash or on credit or on installments. He
can even return it material if he is not satisfied with it.
CONCEPT BENEFITS TO THE SOCIETY
If a guarantee that only products that are required by the consumers are produced there by
it ensures that the country’s economic resources are channelized in the right direction. If
acts as a ‘change agent’ and a value adder is society. It makes economic planning more
meaningful and more relevant to the life of the people. It creates good entrepreneurs and
managers in the society and also improves the standard of living.
DIFFERENCES BETWEEN SELLING & MARKETING
SELLING MARKETING
Selling is sales oriented. Marketing is customer oriented.
Selling starts with seller. Marketing starts with buyer &

Focuses on the needs of buyer.
Selling converts Marketing converts consumer

product into cash. needs into product.
Selling has a short term Marketing has a long term goals.

Goals . & strategies
In selling activity produ- In marketing consumer’s needs,

ct is the prime concern. Wants & performance is prime
concern.
Selling views business Marketing views business as

as goods producing pro- customer satisfying pocess.
cess
In selling cost Consumer determines price;

determine-es price. Price determines costs.
Selling views customer as Customer is the very purpose

Last link in business. Of the business.
Selling focuses on sales Marketing focuses on identify-

Volume growth. Ing profit making opportunities.
DISTRIBUTION OF CHANNELS
INTRODUCTION
Of the four elements of marketing mix viz., product, price, promotion and
distribution, distribution [i.e., the channels of distribution and physical distribution] is the
most important element. The success or failure of a firm depends largely upon the
efficiency of distribution
CHANNELS OF DISTRIBUTION
MEANING
The term ‘channel’ is derived from the French word ‘canal’ meaning artificial
water way for transportation or irrigation so, channel of distribution refers to the
pathway, path or route taken by goods as they flow or move from the point of production
to the point of consumption or use.
In the words of Prof. W. Stanton “channel of distribution is the route taken by the
goods as they move from the producer to the ultimate consumer or industrial user”
According to Philip kotler “every producer seeks to link together the set of
marketing intermediaries that best fulfill the firm’s objective. This set of marketing
intermediaries is called the marketing channel [also trade channel or channel of
distribution]”
ROLES OF CHANNELS OF DISTRIBUTION

Distribution channel have a distinctive role in the successful implementation of
marketing plans and strategies. These channels perform the following marketing function
in the machinery of distribution.
1. The searching out of buyer and seller [contacting]
2. Matching goods to the requirements of the market [merchandising]
3. Offering products in the form of assortments or packages
4. Persuading and influencing the prospective buyer to favour a certain product
and its maker [personal selling / sales promotion]
5. Implementing pricing strategies in such a manner that would be acceptable to
the buyers and ensure effective distribution
6. Looking after all physical distribution functions
7. Participating actively in the creation and establishment of market for a new
product
8. Offering pre and after-sale services to customers
9. Transferring of new technology to the users along with the supply of products
and playing the role of change agents eg. in the agriculture green revolution in
our country
10.Providing feedback information, marketing intelligence and sales forecasting
services for their regions to their supplier
11. offering credit to retailers and consumer
12. Risk-bearing with reference to stock holding transport
CHANNEL FUNCTION AND FLOWS
A marketing channel performs the work of moving goods from producers to
consumers. It over comes the time, place, and possession gaps that separate goods and
services from those who need or want them. Members of the marketing channel perform
a number of key functions.
o They gather information about potential and current customers,
competition, and other actors and forces in the marketing environment
o They develop and disseminate persuasive communication to stimulate
purchasing
o They reach agreement on price and other terms so that transfer of
ownership or possession can be effected
o They place orders with manufactures
o They acquire the funds to finance inventories at different levels in the
marketing channels
o They assume risks connected with carrying out channel works
o They provide for the successive storage and movement of physical
products
o They oversee actual transfer of ownership from one organization or
person to another
CONFLICT AND CONTROL IN CHANNELS

To manage distribution channels effectively require an understanding of both
conflict and control, including technique to
(1) Decrease conflict, or at least its negative effects, and
(2) Increase a firm’s control within a channel
Channel conflict exists when one channel member perceives another channel
member to be acting in away that prevents the first member from achieving its
distribution objectives. Firms in one channel often compete vigourously with
firms in other channels; this represents horizontal conflict. Even within the same
channel, firms disagree about operating practices and try to gain control over
other members’ actions; this illustrates vertical conflict.
HORIZONTAL CONFLICT
Horizontal conflict occurs among firms on the same level of distribution.

Basically horizontal conflict is a form of business competition. It may occur
among:
o Middlemen of the same type: Mary vale hardware (an independent
retailer) Versus Fred’s Friendly Hardware (another independent retailer)
o Different types of middlemen on the same level Fred’s Friendly Hardware
(an independent retailer) Versus Lowe’s points area (a single department
in a store within a giant chain
A primary sources of horizontal conflict is scrambled merchandising, in
which middlemen diversify by adding product lines not traditionally
carried by their type of business
VERTICAL CONFLICT
Vertical conflict typically occurs between producer and wholesaler or between producer
and retailer
PRODUCER VERSUS WHOLESALER
A producer and a wholesaler may disagree about aspects of their
relationship
Why do conflicts arise? Basically, manufacturers and wholesalers have
differing point of view on the one hand, manufacturers think that wholesalers neither
promote products aggressively nor hold sufficient inventories
On the other hand, wholesalers believe that producers either expect too
much, such as requiring an extensive inventory of the product, or do not understand the
wholesaler’s primary obligation to customers.
To bypass wholesalers, a producer has two alternatives
o Sell directly to consumer: producers may employ door to door, mail-
order, or online selling. They may also establish their own distribution
centers in various areas or even their own retail store in major markets
o Sell directly to retailers: under certain market and product condition,
selling directly to retailers is feasible and advisable. An ideal retail market
for this option consists of retailers that buy large quantities of a limited
line of products
To avoid being bypassed in channels, wholesalers need to improve their

competition position
o Improve internal performance: many wholesalers have modernized
their operations. Functional, single-story warehouse have been built
outside congested down town areas and mechanized materials-
handling equipment has been installed
o Provide management assistance to customers: wholesalers have
realized that improving customers operation benefits all parties. Thus
many of them offer programs to assist their customers in areas such as
layout, merchandise selection, promotion and inventory control
o Form a voluntary chain: in this form of vertical marketing system a
wholesaler contractually agrees to furnish management services and
volume buying power to a group of retailers. In turn, the retailers
promise to buy all, or almost all, their merchandise from the
wholesaler
o Develop middlemen’s brands: some large wholesalers have
successfully established their own brands. Super value has developed
its Favorite brand for groceries and super chill for soft drinks. A
voluntary chain of retailers provides a built in market for the
wholesaler’s brands
Producer versus Retailer

Conflict between manufacturers and retailers- in fact between any two
parties is likely during tough economic times. Conflict is also bound to
occur when producers complete with retailers by selling through
producers owned stores or over the internet.
Producer and retailer may also disagree about terms of sale or
conditions of the relationship between the two parties. In recent years
large retail chains have demanded not only lower price but also more
service from suppliers. Producers sometimes find it costly, if not nearly
impossible, to comply with the retailers new policies
Both producers and retailers have methods to gain more control.

Manufacturers can
1. Build strong consumer brand loyalty: meeting and surpassing
customer’s expectations is a key in creating such loyalty
2. Establish one or more forms of a vertical marketing system:
Procter and gamble uses the administered types of VMS
whenever possible
3. Refuse to sell to uncooperative retailers: this tactic may not be
defensible from a legal stand point
4. Arrange alternative retailers: squeezed by large retail chains,
some producers are building their distribution strategy around
smaller specialty store
5. Develop store loyalty among consumers: skillful advertising
and strong store brands are means of creating loyal customers
6. Improve computerized information system: information is
power. Knowing what sells and how fast it sells is useful in
negotiating with suppliers
7. form a retailer co-operation : in this type of vertical marketing
system, group of relatively small retailers brands together to
establish and operate a wholesale warehouse
WHO CONTROLS CHANNELS?

Every firm would like to regulate the behavior of the other
members in its distribution channel. A company that is able to do
this has channel control. Channel power is the ability to influence
or determine the behavior of another channel member.
There are various sources of power in distribution channel.
They include:
o Expertise: for example, possessing vital technical
knowledge about the product or valuable information
about customers
o Rewards: providing financial benefits to co-operative
channel member.
o Sanctions: penalizing un co-operative firms or even
removing them from the channel
IMPLEMENTATION OF MARKETING CONCEPT
Marketing implementation is the process that turns marketing strategies and plans into
marketing actions in order to accomplish strategic marketing objectives. Implementation
involves day to day, month to month activities that effectively put the marketing plan to
work.
CUSTOMER ORIENTATION
The concept enable the industrial and business firms to understand the nature and the
mission of their business form the point of view of customer.
By storing and analyzing data supplied by customers, gathered from third parties, and
collected form previous transactions, a marketer is able to better understand a customer’s
needs and preferences.
Marketers have discovered that ensuring relationships are built on trust and mutual
commitment, require a lot of time and effort to create and maintain and are not
appropriate for every exchange situation.
A typical description of the importance of the consumer as per the marketing concept is
seen in the words of Peter F Drucker “ The purpose of any business is to create a
customer it is a customer who determines what a business is”.
With the adaptation of the marketing concept the consumer became the focal point of the
business
Basically company’s sale each period come from 2 group: new customers and repeat
customers. It always costs more to attract new customers than to retain current customers.
E.g. Motorcycle Company Harley- Davidson has created a club (the Harley owners
group) for bike owners. It offers more than 650000 members insurance, travel planning,
roadside emergency service, free safety lessons, etc.
INTEGRATED MANAGEMENT ACTION
Integrated management action simply means that all the different management functions
in the business must be tightly integrated with one another, keeping marketing as the
pivot.
All the activities should lead to a favorable impact on the consumer and for this to
happen, all functional areas of the business have to be properly aligned with marketing.
In organization that do not practice integrated management the different functions/depts.

of the organization are preoccupied with the optimization of their specific activities often
at the cost of optimization of the overall result.
In organizations that practice integrated management marketing, the management insists

on absolute coordination of all company actions keeping marketing customer as the
focus.
E.g. Sony, Honda.
CONSUMER SATISFACTION
The marketing concept believes that it is not enough if a firm has customer orientation it
is essential that such an orientation lead to consumer satisfaction.
The concept believes that it is not enough if a firm markets its products successfully in
the short run. It must keep growing, keeping consumer satisfaction as the foundation of
its growth.
The concept effectively contracts the temptations of short sighted management attitudes
by its emphasis on consumer satisfaction.
E.g.
REALISING ORGANISATIONAL GOALS
If a firm has succeeded in generating customer satisfaction, if basically implies that a

firm has given a quality product and company has offered competitive price and prompt
service.
Only when these factors act and interact, complementary and supporting one another, will
a product with all the attendant features necessary to satisfy the consumers emerge.
MARKETING CONCEPT
DEFNITION
“ The Marketing concept is a point of view on business. It enumerates that any business
is essentially a need satisfying process”. It also enunciates that all the goals of the
organization including profit be realized three ‘customer orientation’. Integrated
management action and generation of customer satisfaction.
BENEFITS OF MARKETING CONCEPT
 CONCEPT BENEFITS IN THE ORGN:
Concept enables the organization to keep abreast of changes.
Long term success is assured to an enterprise only if it recognizes that the needs of the
market are paramount.
Concept gives great importance to planning, research and innovation and its decisions are
no longer based on lunch, but on reliable data relating to the consumers.
It enables the firm to move more quickly to capitalize on market opportunities
Greater attention is given to the product planning and development to that merchandising
can become more effective.
Demand side of the equation of exchange is honored more and supply is adjusted to
changing demand. Hence more emphasis is given to research and innovation.
Marketing system based on the marketing concept assures integrated view of business
operations and indicated interdependence of different departments of a business
organization.
Interests of the enterprise and society can be harmonized as profit through service is
emphasized.
 CONCEPT BENEFITS OF CUSTOMER.
Low price, better quality and ready stocks at convenient locations are some of the
benefits that accuse to the customers.
He can chose, he can bargain, he can complain and the complaint will be attended to.
He can buy on cash or on credit or on installments. He can even return it material if he is

not satisfied with it.
 CONCEPT BENEFITS TO THE SOCIETY
If a guarantee that only products that are required by the consumers are produced there by
it ensures that the country’s economic resources are channelized in the right direction.
If acts as a ‘change agent’ and a value adder is society.
It makes economic planning more meaningful and more relevant to the life of the people.
It creates good entrepreneurs and managers in the society and also improves the standard
of living.
IMPORTANCE OF MARKETING:
CREATING UTILITY:
A Customer purchases a product because it provides satisfaction. The want
satisfying power is called its utility. it comes in many forms. It is through marketing that
much of a product’s utility is created. There are different kinds of utilities:-
Form utility:
R.M Converted to Finished product. Understand customers
Requirements Form utility is primarily associate with production- the physical or
chemical changes that make a product more valuable.
Eg: Lumber is made into furniture is an example of form utility.
Place Utility
Channel Distribution Physical Distribution Customer As per customers Requirement
Place utility exists when a product is readily accessible to potential customers. An auction
on the net can increase the number of buyers and sellers, but once products are purchased
they still have to be delivered quickly and in condition. Physically moving a purchased
item to a successful bidder in an essential element of its value.
Time Utility
Warehouse making available goods customer When needed As per customers
Requirement
Person Utility:
Marketer Established Contact Customer Understand Customers Requirements
Exchange Utility
Seller Transfer Goods to Buyer as per Customers
Requirement MARKETING FUNCTIONS
The scope of marketing is very wide. A number of functions are inherent in any
marketing on the basis of various utilities like (in II) time and place utility and (III)
possession utility.
I FUNCTION 1.Buying Function

OF EXCHANGE 2.Assembly Function
3.Selling Function.
II FUNCTION OF 1.Transporation
PHYSICAL 2.Inventory Management
DISTRIBUTION 3.Ware Housing
4.Material Handling
III FUNCTION 1.Financing

OF FACILITIES 2.Risk Taking
3.Standardization
4.After Sales Service
(I) FUNCTIONS OF EXCHANGE
a) BUYING FUNCTION:
A Manufacturer is required to buy raw material for production purposes
similarly a wholesaler has to buy good from manufacturer for selling it to
retailer. A retailer sell the goods to the customers. The function to buying
has to be done at various levels. Buying involves transfer of ownership
form seller to buyer.
b) ASSEMBLY FUNCTION:
Goods purchased form various sources and assembled at one place to suit
the requirement of the buyer.
c) Selling Function:
Selling function involves sales of goods from seller to buyer. Selling
function is very important to all organizations due to the fact the selling
has to be done against severe competition.
II FUNCTION OF PHYSICAL DISTRIBUTION:
a. TRANSPORATION:
This include mode of transport selection of transporter or carrier freight consideration
like freight paid or to pay routing, scheduling, processing claim in case of transit
damage etc.,
b. INVENTROY MANAGEMENT:
This includes:
1. Short term fore casting
2. Product size and location of warehouse
3. Just in time
4. Push or pull strategy adoption.
5.
c. WARE HOUSING:
The following functions are included:
1. Space requirement
2. Suitability of location
3. Layout design
4. Physical arrangement
d. MATERIAL
HANDING: This includes:
1. Equipment Selection
2. Equipment Replacement
3. Storage methods
4. Receipts and issue (F I F I or L I F O )
III FUNCTIONS OF FACILITIES:
a. FINANCING :
This means extending credit facilities during selling. It an organization has to do
this. It must have adequate working capital. Marketer has to plan.
a. Short term finance

b. Long term finance
This financier’s are provided by

a. Banks like nationalized or
b. Financial institutions like ICICI, IDBI
c. Credit societies
d. Government agencies like KIDB, KSFC etc.,
b. RISK TAKING
There are innumerable risk. Which a marketer has to bear while marketing a
product. Risk arises due to unforeseen circumstances. Risks can be insured
also.
Eg. Risks due to fire and accidents.
But some risks cannot be insured.

Eg. Changes due to Govt. policies, risks due to increased
Competition, technological risks and business cycle risks.
c. STANDARDIZATION:
Buyers refer standardized goods. This will prevent the buyer form wasting his
time in inspecting or examining the goods. Standardization and growing is a
part of marketing function. Standardization is a process of setting up standards
to manufacture products which confirms to a set of Specifications.
Standardization, Size, shape, dimension colour etc.,
Grading is also a part of standardization. It is a process of sorting our goods

into a number of graded, according to some characteristics such as quality and
size grading is usually necessary for those products over which the producer
cannot exercise any control in terms of physical properties. Example: Food
Grains, Fruits etc.,
d. AFTER SALES SERVICE

This is very important in case of industrial products whether final product or an
intermediate. Hence, arrangement of after sales service has become an
increasingly important function. Therefore, marketer has to plan for after sales
service.
Eg. Repairs, replacement, maintenance, etc.
OTHER FUNCTIONS OF MARKETING
In addition to the above, marketing has several other functions as follows:
1. Product planning and development

2. Packaging
3. Pricing
4. Market Research.
5. Promotion etc.,
1.Product Planning:
A Product planning is something which is a business offers to customers. Hence

product planning, product improvement, product development, product diversification are
all parts of product management, profitability depends on product mix planning. Product
planning involves adding dropping a modifying a product. Sometimes product line
planning may have to be undertaken by marketer.
2. PACKAGING:
Provides protection and improves aesthetic appeal. This enable the marketer to sell more.
The two important aspects of packaging are:
a. Labeling
b. Branding
3. PRICING:
Pricing is nothing but the value of the product in terms of money. It is the amount paid by
the buyer to the seller. Profitability is decided by the price. Marketer need to formulated
pricing strategies.
4. MARKET RESEARCH :
Market research involves systematic gathering recording and analyzing of data about
relating to the marketing of goods and services.
However different authors describe marketing function in different ways. Above we have
mentioned one of those methods. Another way of classification of marketing function is
as follows Mc.Garrv.
Classified marketing function in to 6 categories.

a. Contractual: Buyers Sellers are brought together for marketing transaction.
b. Merchandizing: This is concerned with making products acceptable to the market.
c. Pricing :
d. Propaganda: Buyers are informed about the activities of organizations.
e. Physical distribution: Consisting of transportation storage etc.,
f. Termination: This is the end of marketing activity.
INTRODUCTION :
The word “MARKETING” is originated from the Latin noun
“MORCATUS”, which means “A place where business is conducted”. It is a place
where buyers and sellers meet, and exchange goods and services for money.
Evolution of Marketing:
The stage of Barter:
 Agriculturists and craftsmen were the main producers of this era.

 After meeting his own requirements the sulphur were disposed in their immediate
neighbors.
 There was no elaborate distribution system as the habits and needs of the people and
the prevailing technology did not demand such a system.
 Marketing under those conditions meant a task of producing the basic necessities of
life and exchanging them with known consumer groups in the immediate
neighborhood. This represented the stage of barter in the evolution of marketing.


The stage of Money Economy:

 In this next stage of evolution money came into picture.
The change was limited to the replacement of the barter system by the money system
with the result that pricing became the chief mechanism of marketing.
The stage of Industrial Competition:
 Far reaching changes took place in this stage.

 This stage introduced new products, new systems of manufacture, new modes of
transportation and methods of communication.
 This stage brought about changes in the physical and economic environment of man.
 Mass production became the order of the day and variety of low-priced goods became
available in abundance.
 The industrial revolution also generated the income revolution that sustained the mass
production and mass distribution unleashed by the industrial revolution.
The Stage of Competition:
 The ever increasing number and size of the producing firms generated the
phenomenon of competition, which was not known in the agriculture and handicrafts
economy or in the early stage of Industrial Evolution.

 The main task of the industrial firms was disposal or distribution of whatever they
 produced. In the subsequent stage, meeting competition became the chief issue.
 The situation demanded a conscious effort to face the competitors and the firms had
to ensure that their products were accepted in preference to those of their competitors.
The Emergence of Marketing:
 After the Second World War there war there was a substantial increase in population.

 New industrial concerns sprang up rapidly and a great variety of new products and
 services strengthened the consumer market.
 Consumer had abundant choices and consumer began to occupy a place of unique
importance.
 The businessmen who got consumers who are well educated and endowed with a
good discretionary income realized that it was not enough if they made a onetime sale
of their products to the consumers.

 They had to make available their products at a price that was advantageous to the
consumer. They also had to ensure that complaint from the consumer about the
product was attended to promptly and if required after sales servicing had to be
provided and that led to the emergence of marketing.
MARKETING MIX
In marketing Planning we use marketing information to assess the situation. We have

to select specific marketing targets in the form of market segments. For each segment
or sub division of the market we have formulate a combination of a number of
devices or types of marketing activities that are integrated into single marketing
programme to reach a particular target or market segment. The combination of these
marketing methods or devices is known as the marketing mix.
A successful marketing strategy must have a marketing mix as well as a target

market for whom the marketing mix is prepared. The elements or variables that make up
a marketing mix are only four:
1. Decisions on product or service.
2. Decisions on price.
3. Decisions on promotion.
4. Decisions on distribution.
These four Ingredients are closely interrelated.
In the simplest manner, the basic marketing mix is the blending of four inputs or sub
mixes which form the core of the marketing system.
1. Product Mix
2. Price Mix
3. Distribution Mix
4. Promotion Mix.
The outputs are optimum productivity and satisfaction.
PRODUCT MIX PRICE MIX

1. BRAND 1. PRICING STRATEGY
2. COLOUR 2. PRICING POLICY
3. STYLE 3. BASIC PRICE
4. DESIGN 4. TERMS OF CREDIT
5. PRODUCT LINE 5. DICOUNTS
6. PACKAGE 6. ALLOWANCES
7. WARRANTY
8. SERVICE
MARKETING STRATEGY
MARKETING MIX
FOCUSSED ON
TRAGET MARKET
PROMOTION MIX PLACE MIX

1. PERSONAL SELLING DISTRIBUTION
2. ADVERTISING CHANNELS
3. PUBLICITY 1. WHOLESALERS
4. SALES PROMOTION 2. RETAILERS
a) DELERS AIDS 3. MERCANTILE AGENTS
b)CONSUMBER AIDS
PHYSICAL DISTRIBUTION
1. TRANSPORT
2. WARE HOUSING
3. INVENTORY
MARKETING MIX STRATEGY
PROMOTION MIX
SALES PROMOTION
OFFERING MIX ADVERTISING
PRODUCTS DISTRIBUTION
TARGET
SERVICES SALES FORCE CHANNELS
CONSUMERS
PRICES
PUBLIC
RELATIONS
DIRECT MAIL
TELE MARKETING
AND INTERNET
The above figure shows the company preparing an offering mix of Products, Services,
Prices and utilizing a Promotion Mix of Sales Promotion, Advertising, Sales Force,
Public Relations, Direct Mail, Tele Marketing and Internet to teach the trade channels
and the target customers.
Robert Louterborn suggested that the sellers four Ps correspond to the customers
four Cs
FOUR Ps FOUR Cs
Product Customer Solution

Price Customer Cost
Place Convenience
Promotion Communication.
PRODUCT MIX
A Product Mix (also called Product Assortment) is the set of all products and
items that a particular seller offers for sales.
The word “Product Mix” is used to describe the assortment of different product
types that a company produces and markets. The Product line is the number of
brands or related Products in each Products type.
Example: Have four major Product Lines: Detergents, Toothpaste’s, Soaps. For each
line there are a number of brands and the number of different brands represents the
length of Product Line and the numbers of different lines represents the width of the
Product Mix.
 HINDUSTAN LEVER LTD., has a Product Line consisting of Soaps, Detergents,

Cosmetics etc.,

 PHILIPS has a wide range in audio systems and home appliances.
BRANDS :
brand is a name, term, sign, symbol or design or a combination of Thom,
intended to identity the goods or services of one seller or group of sellers and to
differentiate Thom form those of competitors.
PACKAGE :
Includes the activities of designing and producing the container for a product. The
container is called the package and it might include up to three levels of material,
Old Spice after shave lotion is in a bottle that is in a cardboard box that is in a
corrugated box (shipping Package) containing six dozen of Old Spice.
Example : MAURTHI UDYOG LTD – MARUTHI 1000

MARUTHI UDYOG LTD., has a product Maruthi 1000 designed to have the
following attributes.
 Superior Road Grip
 Added Safety
 Luxurious Interiors
 Eco Friendly
PRICE MIX :
Price is an important consideration in buying decisions price also denotes Quality

in the consumer’s mind – a Psychological factor. For same products, when many
identical brands are competing with each other for consumer preference, the price
may be important influencing factor price is the basic vehicle for telling the
consumer about the value and associated conditions of a particular product.
Price is an important element of marketing mix. It may be defined as the value of

product attributes expressed in monetary terms, which a consumer pays or
expected to pay in exchange. Pricing is a marketing function, pricing influences
the profit level, the operational level etc., the following factors determine the
price of a product.
 Pricing Objectives
 Demand for a Product or Services
 Competition
 Profitability
 Distribution channels
Example: 1. Price of “PEUGEOT 309” The Premier Peugeot Limited plans to use the
market based pricing where it well exploit the market fully aiming at charging a price
that will be close to Maruthi’s 1000, which is priced at Rs: 4 lakhs approximately.
The company plans to attack the market of Maruthi’s 1000 by an after of a better
product for a little more.
2. Price of “ACCENT” The Hyundai Motor Company plans to follow the

market penetration pricing, initially pricing the car at lower or same price to attract a
larger number of customer, preferably permanent ones. It plans to offer of something
more for the same price.
Price of “ACCENT” Rs: 5 lakhs.
PLACE MIX :
The marketer has the responsibility of making his product available near the place
of consumption so that the consumers can easily buy it. If the brand preferred by
the consumer is not easily available at the convenient lactation, he may buy some
other brand. Thus a marketer has to ensure that his product is available to the
target consumers whatever required. There are two major areas in place mix:
1. Marketing channels
2. Physical distribution
It is true that channel decisions affect other marketing mix elements, and
involve a relatively long-term commitment of resources. It may take a marketer
year to build up relations with the intermediaries and sometimes these are
contractual. As we know, intermediaries are independent organizations and
therefore, their needs must be taken into account while evaluating carious channel
alternatives. In fact, the success of a company’s marketing effort depends to a
larger extent on the soundness of its distribution network, physical distribution
involves transportation, warehousing, material handling and bulk packaging
among others, same of theses activities will also be performed between the
various links in the channel in order to get the optimum results. For many years,
physical distribution was a neglected area of marketing management, but now
companies have become generally conscious of its importance in the overall
marketing strategy.
Example : HM-MITSUBISHI CARS IN INDIA.
The company plans to use both one X zero level of channels of distribution.
The company launched: LANCER” in the four metropolitan cities, viz., Delhi,
Mumbai, Calcutta and Chennai besides Cochin also.
The total number of dealers appointed in India is 135. The dealer will be
provided training and help under the corporate identity programme.
The present widespread dealer network of the Hindustan Motors will handle
sales, services, and spare parts activities.
The dealer and engineers will be trained under the company in house
programmers in India as well as abroad.
PROMOTIONAL MIX :
Marketing promotion is a management process through which an organization

develops, presents and evaluates a series of messages to an identified audience so,
effective promotion depends on :
 The nature of communication

 The target audience
 The environment in which it is received
 The medium used to transmit the message.
Example :1. “OPELASTRA” Car in India. The tools and media used.
The company will use various strategic tools and media to
tap the potential customers and keep the current ones.
Advertising in print media (newspapers, Magazines and

dailies), using tele media like Television, Videotapes and
also through outdoor advertising are a few of the tools used
by the company besides other like exhibits and fairs,
demonstration etc.,
 The company has a database of 20,000 likely buyers to

whom direct mailers have been sent.
 The company has also conducted “Car Clinics” for over

two months to gauge the customers response in an effort to
balance quality and price.
Example :2. Hyundai Motor Company Car in India.

The tools and media used.
 The company uses massive communication using tools and
media like print, T.V. , Outdoor advertising, Exhibition and
fairs, Video tapes etc.,
 The global theme used is “Commitment of customer
satisfaction”
 The Company however may not use newspaper as on
advertising media on large scale, except where it is the
most popular print media and only way to reach the
customer.
PRODUCT MIX:
Product is the thing possessing utility. It has four components:

1. Product range 2. Service after Sale 3.Brand 4.Package.
The product management evolves product mix in consultation with marketing

manager.
PRICE MIX:
Price is the valuation placed upon the product by the offerer. It has to cover
pricing, discounting, allowances and terms of credit. It deals with price
competition.
PLACE MIX :
Distribution is the delivery of the product and right to consume it. It includes
channels of distribution, transportation, warehousing and inventory control.
PROMOTION MIX :
Promotion is the persuasive communication about the product by the offerer to the
prospect. It covers advertising, personal selling, sales promotion, publicity, public
relations, exhibition etc.,
INTEGRATED MARKETING:
When all the company’s departments work together to serve the customer’s
interests the result is integrated marketing.
Integrated marketing takes places on two levels.
First, the various marketing functions- sales force, advertising, customer service,
product management, marketing research – must work together too often the sales
force thinks product managers set prices or ` sale quotas :too high”, or the
advertising campaigns. All these marketing functions must be coordinated form
the customer’s print of view.
Second: marketing must be embraced by the other departments; they must also
“think customer” marketing is far too important to be left only to the marketing
department. Marketing is not a department so much as a company wide
orientation. Xerox goes so far as to include in every job description an
explanation know that customer attitudes are affected by Xerox billing accuracy
and promptness in returning calls.
The various marketing functions like sales, advertising, customer service, market
research must work together. Secondly other departments like manufacturing,
engineering, all departments must work together. Sometimes engineer complains
that sales/marketing people are “always protecting the customer and not thinking
of company’s interest”, he went on to blast customer for asking for too much”,
this feeling should be removed, if we have to practice integrated marketing. In
fact today’s marketing concepts shown in the diagram.
CUSTOMERS FORNT
LINE PEOPLE MIDDLE
MANAGEMENT TOP Modern Customer
AMANGEMENT oriented organization chart.
At the top are customer, next in level are the frontline people who meet and
satisfy the customer. Under them are the middle managers, whose job is to
support the front line people to serve to customers.
NEEDS
Needs are basic satisfaction of human beings. Food , clothing, shelter etc are the
basic needs of human needs
MEANING OF MARKET
“ A market is a physical place where buyer and sellers gathered to exchange

goods”
Economists describe a market as “ a collection of buyers and sellers who transact

over a particular product or product class”.
Business people often use the term market to cover “ Various Groupings of
customers”
MEANING OF MARKETING
“ Marketing is a social and managerial process by which individuals and groups attain
what they need and want through creating, offering and exchanging products of value
with others”
“A System of interacting business activities designed to plan, price, promote and

distribute want, satisfying products and services to present and potential customers”.
“Marketing is the performance of business activities that directs the flow of goods and
services form the producer to the consumer”.
“Marketing is designed to bring about desired exchange with target audiences for purpose
of mutual gain”.
MODERN DEFINITION OF MARKETING
A total system of business, an ongoing process of (1) Discovering and transacting

consumer needs and desires into products and services (through planning and producing
the planned demand)
2. Creating demand for these products (through promotion and pricing)
3. Serving the consumer demand through planned physical distribution (with the help of
marketing channels and then
4. Expanding the market even in the face of keen competition”.
DEFINITION FOR MARKETING MANAGEMENT
“Marketing management is the process of planning and executing the conception, pricing,
promotion and distribution of ideas, goods, services to create exchanges that satisfy
individual and organizational goals”.
THE SCOPE OF MARKETING
Marketing is typically seen as the flash of creating promoting, and delivering goods and
services to consumers and businesses. In fact marketing people are involved in marketing
types of entities goods services, experiences, event, person, places. Properties,
organization information and ideas.
1. Goods : physical goods constitute the bulk of most countries production and
marketing effort in developing nations, goods- particularly food, commodities
clothing and housing are the mainstay of the economy.
2. Services: At economies advance a growing proportion of their activities are
focused on production of services. The US economy today consists of a 10-30
services to good mix. Service include the work of airlines, hotels can rental firms,
barbers and beauticians, maintenance and repair people, dog kennels and dog
therapists, as well as professionals working with in or for companies, such as
accounts lawyers, engineers, doctors, software programmers and management
consultants.
3. Experiences: by orchestrating several services and goods, one can create, stage,
and market experiences. There is a market for different experiences, such as
spending a week at a base ball camp playing with some retired baseball greats,
playing to conduct the Chicago symphony orchestra for five minutes, or climbing
mount Everest.
4. Events: Marketers promote time – based events such as the Olympics, company
anniversaries, major trade shows, sports events, and artistic performances, there is
a whole profession of meetings planners who work out the details of an event and
stage it to come off perfectly.
5. Persons: Celebrity marketing has become a major business. Years ago some one
seeking same would hire a press agent to plant stories in newspapers and
magazines. Today artists, musicians, CEO’s, physicians high profile lawyers and
financiers, and other professionals are drawing help from celebrity marketers.
6. Places : cities, states, regions, whole nations compete actively to attract tourists,
factories, lump any head quarters and new residents. Ireland has performed as an
outstanding place marketer, having attracted more than 500 companies to locate
their plants in Ireland.
7. Properties : Properties are intangible rights of ownership of either real property or
financial property. Properties are brought and sold, and this occasions a marketing
effort.
8. Organizations: Organizations actively work to build a strong, favorable image in
the mind of their publics. We see corporate identity ads by companies seeking
more public recognition. Philips puts out ads with the tag line “let’s make things
better”. Universities, museum and performing arts organization all lays plans to
boost their public image to compete more successfully for audiences and funds.
9. Information: Information can be produced and marketed as a product. This is
essentially what schools and universities produce and distribute at a price to
parents, students, and communities. Encyclopedias and most notification books,

market information. We buy CDs and visit the internet for information.
10. Ideas: Every marketing offering includes a basic idea at its core. marketers search
hard for the core need they are trying to satisfy. A church example, must decide
whether to market itself as a place of worship or a community center.
NEEDS, WANTS, & DEMAND
NEEDS: NEED is a state of felt deprivation of some basic satisfaction. People require
food, clothing, shelter, safety belonging, esteem and a few other things to survival. These
NEEDS are not created by their society or by marketers.
WANTS: WANTS are desires for specific satisfiers of these deeper needs.
For example: if a person needs a vehical to travel to his office he can go for two
wheelers, but if he specifically buys a car or a FOUR WHEELER that becomes a want.
DEMAND: DEMANDS are wants for specific products that are backed up by an ability
& willingness to by
them. For example: .
PUSH AND PULL STRATEGY: (Kotler)
In managing its intermediaries, the firm must decide how much effort to devote to push
versus pull marketing. A Push strategy involves that manufacturer using its sales force
and trade promotion money to induce intermediaries to carry, promote and sell the
product to end users. Push strategy is appropriate where there is low brand loyalty in a
category, brand choice is made in the store, the product is an impulse item, and product
benefits are well understood.
A pull strategy involves the manufacturer using advertising and promotion to induce
consumers to ask intermediaries for the product, thus inducing the intermediaries to order
it. Pull strategy is appropriate when there is high brand loyalty and high involvement in
the category, when people perceive differences between brands, and when people choose
the brand before they go to the store. Companies in the same industry may differ in their
emphasis on push or pull.
Designing a channel system involves four steps:

1. analyzing customer needs,
2. establishing channel objectives
3. identifying major channel alternatives, and

4. Evaluating major channel alternatives.
Promotion - push and pull strategies

"Push or Pull"?
Marketing theory distinguishes between two main kinds of promotional strategy - "push"
and "pull".
PUSH:
A “push” promotional strategy makes use of a company's sales force and trade promotion
activities to create consumer demand for a product.
The producer promotes the product to wholesalers, the wholesalers promote it to retailers,
and the retailers promote it to consumers.
A good example of "push" selling is mobile phones, where the major handset
manufacturers such as Nokia promote their products via retailers such as Carphone
Warehouse. Personal selling and trade promotions are often the most effective
promotional tools for companies such as Nokia - for example offering subsidies on the
handsets to encourage retailers to sell higher volumes.
A "push" strategy tries to sell directly to the consumer, bypassing other distribution
channels (e.g. selling insurance or holidays directly). With this type of strategy, consumer
promotions and advertising are the most likely promotional tools.
PULL:
A “pull” selling strategy is one that requires high spending on advertising and consumer
promotion to build up consumer demand for a product.
If the strategy is successful, consumers will ask their retailers for the product, the retailers
will ask the wholesalers, and the wholesalers will ask the producers.
A good example of a pull is the heavy advertising and promotion of children's’ toys –
mainly on television. Consider the recent BBC promotional campaign for its new pre-
school programme – the Fimbles. Aimed at two to four-year-olds, 130 episodes of
Fimbles have been made and are featured everyday on digital children's channel
CBeebies and BBC2.
As part of the promotional campaign, the BBC has agreed a deal with toy maker Fisher-
Price to market products based on the show, which it hopes will emulate the popularity of
the Tweenies. Under the terms of the deal, Fisher-Price will develop, manufacture and
distribute a range of Fimbles products including soft, plastic and electronic learning toys
for the UK and Ireland.
In 2001, BBC Worldwide (the commercial division of the BBC) achieved sales of £90m
from its children's brands and properties last year. The demand created from broadcasting
of the Fimbles and a major advertising campaign is likely to “pull” demand from children
and encourage retailers to stock Fimbles toys in the stores for Christmas 2002.
Promotion
To sell an offering you must effectively promote and advertise it. There are two basic
promotion strategies, PUSH and PULL.
 The PUSH STRATEGY maximizes the use of all available channels of

distribution to "push" the offering into the marketplace. This usually requires
generous discounts to achieve the objective of giving the channels incentive to
promote the offering, thus minimizing your need for advertising.
 The PULL STRATEGY requires direct interface with the end user of the offering.
Use of channels of distribution is minimized during the first stages of promotion
and a major commitment to advertising is required. The objective is to "pull" the
prospects into the various channel outlets creating a demand the channels cannot
ignore.
Using Push-Pull Strategy In Public Relations Push-Pull Strategy is not a new concept;
it's been around for a while. Its two components
- Push Strategy and Pull Strategy - can be utilized either exclusively or in combination,
and it is probably more useful to discuss each separately, because Push-Pull simply is the
combination of the two. Although often thought of as marketing tools, Both push and pull
principles fit very well into the public relations model and are used in strategic campaigns
to determine the efficacy of persuasive methods.
One of the earliest definitions of public relations I learned was, "Public relations is doing
good things and talking about it." You could say that Pull Strategy has "doing good
things" at its heart, and that Pull Strategy is more concerned with the "talking about it"
element.
PULL STRATEGY involves talking directly to your primary audience with the express
purpose of persuading them to take a specific action favorable to your organization. It
depends on your organization's ability to "pull" the target audience into the fold, and is
most powerful when you have developed a solid reputation as a leader in the field.
In other words, an organization's strength and exemplary actions are used to attract
supporters.
Consistent, exemplary action leads to people trusting your organization. This earned trust
boosts your credibility, and when people can believe you, this in turn solidifies your
company's reputation in society. And, it is this reputation that serves as your operational
foundation and determines the image that people have of you. I call this the Action-Image
Continuum.
All of this smoothes the way for acceptance of your message and your calls for support.
In short, exemplary action pulls your potential supporters toward you and makes it easier
to persuade them to take action on your behalf. A good example would be a member of
your organization personally taking a potential member by the hand and walking him or
her through the recruitment process.
PUSH STRATEGY uses the benefiting organization's communications channels and
influencing audiences to convince potential supporters that it's in their best interest to join
your organization or support its causes.
You generally will be communicating with a large group of potential supporters, and will
choose from a gamut of communications tools in Push Strategy. It's everything from
brochures to direct mail, from newsletters to phone calls, from speeches to exhibits, from
email to websites.
Basically, the purpose of push is to get the word out about your organization or cause.
However, you must give something of value to the audience - something that will push
them, that will nudge them toward you, that will position them to be enlightened by your
organization's good name and image, that will break through the inertia and get them to
do something on your behalf. That something of value could be entertainment,
knowledge, expertise, "how to" or "did you know" tips, perhaps even samples.
PUSH-PULL STRATEGY is a combination of the two strategies - planning and timing
your "pull" initiatives with your "push" initiatives. You use persuasive methods directly
with your primary audience (pull), while at the same time, you utilize existing or new
targeted communications tools (push).
A good example of "push-pull" would be a college-level pre-professional organization
whose members are often "lost in the cracks" before they join the sponsoring professional
association. The pre-professional organization can "talk up" and "push" professional
membership until their faces turn blue, but once their members leave the fold (graduate),
it then becomes the responsibility of the sponsoring association to latch on to them and
"pull" them into the professional group.
Question: What are marketers talking about when they say Push vs. Pull?
Answer: "Push" tactics are typically promotions directed at re-sellers or other members
of the distribution channel. Again, there are different types, including training
programs, trade allowances, cooperative advertising, and the provision of
point-of-purchase displays. These are intended to provide incentives to the
channel to "push" a firm’s product toward the customer.
A "Pull" strategy is usually advertising directed at the end consumer. It works

to increase end demand, thus "pulling" a product through the distribution
channel.
Push-Pull strategy
.
The business terms push and pull originated in the marketing and advertising world, but
are also applicable in the world of electronic content and supply chain management. The
push/pull relationship is that between a product or piece of information and who is
moving it. A customer "pulls" things towards themselves, while a producer "pushes"
things toward customers.
Content
In a "push" system the consumer does not request the product to be developed; it is
"pushed at" the end-user by promotion. An example of this is a perfume product. Women
do not request to smell a fragrance they never smelled before; it is simply "pushed" at
them, through the right advertisement.
In a "pull" system the consumer requests the product and "pulls" it through the delivery
channel. An example of this is the car manufacturing company Toyota. Toyota only
produces cars when they have been ordered by the customers.
Supply chains
With a push-based supply chain, products are pushed through the channel, from the
production side up to the retailer. The manufacturer sets production at a level in accord
with historical ordering patterns from retailers. It takes longer for a push-based supply
chain to changes in demand, which can result in overstocking or bottlenecks and delays
(the bullwhip effect), unacceptable service levels and product obsolescence.
In a pull-based supply chain, production and distribution are demand driven so that they
are coordinated with actual customer orders, rather than forecasted demand.
A supply chain is almost always a combination of both push and pull, where the interface
between the push-based stages and the pull-based stages is known as the push-pull
boundary. An example of this would be Dell's build to order supply chain. Inventory
levels of individual components are determined by forecasting general demand, but final
assembly is in response to a specific customer request. The push-pull boundary would
then be at the beginning of the assembly line. At this point on the supply chain timeline,
it is typically coordinated through a buffer inventory.
Push Then Pull Marketing

Marketing is like rowing. You pull hard on the oars to go forward, then lift them out of
the water and push them back to finish the stroke and get ready for the next pull. Once
you've got the sequence of the stroke right, you and your boat slip forward through the
water and build speed and momentum. If you push when you should be pulling, the boat
goes backwards, or, even worse, you lose your balance and fall into the bottom of the
boat.
One of the biggest mistakes people make in marketing their services is to simply PUSH
information about their services and themselves out to prospects and hope that this will
result in attracting prospects. Unless you are already a household name and in such
demand that your phone is ringing off the hook, this approach rarely attracts the numbers
of new clients you want. The result is that most marketing falls into the bottom of the
boat instead of propelling your business forward.
An alternative to the typical push and hope approach to marketing is to PULL prospects
in and then in the context of a growing relationship, PUSH useful information out to
them. If you want prospects to remember your firm when they have a need for your
services, start by attracting their interest.
Generate interest by focusing on what your potential clients want and the problems
they need solved. Use this client centered marketing strategy to pull prospects in so you
can push your expertise out to them. Give them ideas they can apply instead of
information about credentials, or past clients. Like rowing your boat, you won't move
very far unless you repeat the sequence again and again.
Are you pulling prospects in or just pushing your information out? Review your
marketing materials to see if you have the sequence right. Take a look at your web site,
brochures, newsletters, correspondence and proposals.
PULL TACTICS - 'Client' Centered
Do your marketing materials
1. Begin with a clear identification of the niche market(s) you work with?
2. Lead with client problems and concerns?

3. Use the two elements above to create a picture that your target market can identify
with?
4. Provide useful ideas that your target market can use and that demonstrates your
expertise?
1. Focus on you, your services and staff?

2. Focus on glowing testimonials and your client list?
Which works best? Both. The challenge is getting the emphasis and order right. The pull
then push marketing sequence that works to move your business forward involves the
following:
1. Create resources that pull prospects to you and your firm
2. Get prospects to give you their contact information (Most firms let over 99% of the
people who see their information go away and never follow up)
3. Push useful information out to self-selected prospects on a regular basis. (Remember
the majority of buyers won't make a purchase until they've had a minimum of 5-6
contacts with your firm.)
When your prospects have a compelling need, they will turn to the firm that they've had
regular communication with, know and trust. At some point prospects will want more
details about your services, credentials and testimonials. But this is often the last
information you need to provide.
Use the pull then push strategy to get your marketing moving. You'll be amazed as you
watch both your prospect and client lists grow and your business gains momentum.
SERVICE MARKETING:
Definition:
Services are defined as identifiable, intangible, activities that are the main object
of a designed to provide want-satisfaction to customers.
For marketing purposes, services are separated into two categories:
 Services that are main purpose or object of transaction.

Eg: You rent a car from enterprise. The company makes a car available (A
tangible good). But what you are purchasing is accessibility to transportation.
Because you are buying the use of the car, not the car itself, this is a service
transaction.
 Service that support or facilitate the sale of good or any other service.
Eg: When you rent a car from enterprise, you can also obtain collision
insurance, the use of a cellular phone, and an electronic navigational device. These
are called supplementary or support services because you obtain them only in
conjunction with renting a car.
NATURE AND IMPORTANCE OF SERVICES:
 Services are the major source of employment more than 80% of the non-farm
labor force is employed in service industries. The industries in which job
growth will be the fastest are data and information and management,
institutional and in home health care education and financial services.
 The services account for over one half of consumer expenditures is
impressive, but is still grossly understates the economic importance of
services. And hence spending for business services. And hence spending for
business services will continue to grow.
 As commerce has become increasingly complex and competitive , managers
have found that calling on specialized service providers is effective and
efficient. This is resulting in many tasks formerly performed by regular
employees, from research and training to advertising and distribution are
increasingly being “Outsourced” to “specialists”.
SCOPE OF SERVICES
Scope of services can be recognized both for Profit and non business services
organizations for profit services firms sell to consumers or other business with profitable
operations as a primary goal. This category is classified by industry:
_ Housing & other structures: Rental of offices, warehouses, hotels, motels, apartments,
houses & firms
_ Household operations: House maintenance & repairs, security, landscaping &

household cleaning
_ Recreation & Entertainment: Theatres, Spectator sports, amusement parks,

participating sports, restaurant meals & resorts.
_ Personal care: Laundry, dry cleaning, spas
_ Medical & Health care: Physical & Mental medicinal services, dental, nursing,
Physiotherapy
_ Private Education: Vocational schools, nursery schools, continuing education

programs
_ Professional business services: Legal, accounting, advertising, marketing research,

public relations & Management consulting
_ Financial services: Personal & business insurance, banking, credit & loans service,
Brokerage service & investment councelling.
Non business service organizations are of two types. One type is ‘not for profit’
Service organization which have a profit goal because growth & continued existence
depend on generating revenue in excess. However PROFIT is secondary to the N-F-P’s
primary objective. In many cases N-F-P’s operate in a fashion very similar to for-profit
businesses eg.
_ Educational: Private grade schools, High schools, Colleges & Universities
_ Healthcare: Hospitals, Nursing homes, Health research organizations
_ Professional & Trade: Labor unions, Certificate groups, professional associations,

trade associations & lobbying groups
_ Social concerns: Organizations dealing with family planning, civil rights, termination
of smoking, environmental concerns.
The second type of non-business organization is a non-profit organization which

provides services but does not have a profit or surplus objective, eg.
Federal, State & Local Govt. agencies. The provide services, often charging for them &
may even operate in competition with for-profit businesses, eg.
U.S. National part service competes with private forms of outdoor recreation.
CHARACTERISTICS OF SERVICES
There are 4 characteristics that differentiate services from goods. They are:
- Intangibility
- Inseparability
- Heteroginity
- Perishability
INTANGIBILITY
As services are intangible, it is impossible for prospective customers to sample- feel, see,
hear, taste or smell i.e a service before the buy it. Four promotional strategies that may be
used to suggest service benefits & reduce the effort of intangibility are:
- Visualization
eg. Carnival cruise lines depicts benefits of cruises
- Association
eg. Connecting service with tangible goods. Prudential Insurance suggests
stability & security with its rock of Gibralter. Merrill Lynch
- Physical representation
Eg. American Express uses colour – gold or platinum for the credit card
services to symbolize wealth & prestige.
Documentation
There are 2 forms of documentation:
i) Past performance
eg. A hospital can document its past performance by pointing out in its ads how many
babies have been born & cared for in its obstetrics department.
ii) Future capability

eg. A hospital chooses to stress its capability by highlighting the specialized
equipment it has if an emergency arise during the delivery of a baby.
Websites are a vulnerable tool in reducing the intangibility of a service. They make it
possible for marketers to present extensive information, use animation & sound & answer
a site visitors specific questions via e-mail.
Eg. Royal Carribbean Cruise line.
Inseparability
 Services cannot be separated from the seller of the service. Many services are created
, dispensed and consumed simultaneously .
Eg: Dentists create and dispense almost all their services at the same time
and they require the presence of the consumer for the services.
 Service Inseparability means that service providers are involved concurrently in
 the production and marketing efforts.
 Eg: One physician can treat only so many medical patients in a day.
 From a marketing standpoint inseparability limits distribution. It frequently means
that direct sale is the only possible channel of distribution and an individual
seller’s services can be sold only when direct contact is possible.
 An exception in this feature is some services are sold by a person wois
 representing the creator-seller.
Eg: Travel agent , insurance broker etc.
HETEROGENITY
 It is difficult if not impossible for a service firm , or even an individual seller of

services to standardize output. Each unit of the service is some what different
from every other unit of the same service because of an factor in production and
delivery.
Eg : Delta airlines does not give same quality of service on each flight, or
even to each passenger on the same flight.
PERISHABILITY
 As a market commodity a service has a high degree of perishability. Time element

assumes unique importance. If a service is not used today it is lost for ever. It
cannot be stored. It cannot be carried forward. Utilized services are economic
losses .
Eg: A building unoccupied , a person unemployed , credit not utilized ,
empty rooms in a 5 star hotel represents perishable nature of services.
DIFFERENCES BETWEEN SELLING & MARKETING
SELLING MARKETING
Selling is sales oriented. Marketing is customer oriented.
Selling starts with seller. Marketing starts with buyer &

Focuses on the needs of buyer.
Selling converts Marketing converts consumer

product into cash. needs into product.
Selling has a short Marketing has a long term goals.

term Goals . & strategies
In selling activity produ- In marketing consumer’s needs,

ct is the prime concern. Wants & performance is prime
concern.
Selling views business Marketing views business as

as goods producing customer satisfying pocess.
pro-cess
In selling cost Consumer determines price;

determine-es price. Price determines costs.
Selling views customer as Customer is the very purpose

Last link in business. Of the business.
Selling focuses on Marketing focuses on identify-

sales Volume growth. Ing profit making opportunit-
ies.
CONCEPTS OF MARKETING.
THE EXCHANGE CONCEPT
The exchange concept of marketing, as the very name indicates ,holds that the exchange
of a product between the seller & the buyer is the central idea of marketing. While
exchange does form a significant part of marketing as a mere exchange process would
amount to a gross undermining of the essence of marketing. A proper scrutiny of the
marketing process would readily reveal that marketing is much broader than exchange.
Exchange, at best, covers the distribution aspect and the price mechanism involved in
marketing. The important aspects of marketing, such as concern for customer, generation
of value satisfaction creative selling & integrated action for serving the customer, get
completely overshadowed in the exchange concept of marketing.
THE PRODUCTION CONCEPT
It is one of the oldest concepts of business. The production concept holds that consumers
will prefer products that are widely available and inexpensive. Managers of production-
oriented businesses concentrate on achieving high production efficiency, low costs, mass-
distribution. They assume that consumers are primarily interested in product availability
and low prices. This orientation makes sense in developing countries, where consumers
are more interested in obtaining the product than in its features. It is also used when a
company wants to expand the market.
Some service organizations also operate on production concept. Many medical &
dental practices are organized on assembly-line principles, as are some government
agencies. Although this mgt orientation can handle many cases per hour, it is open to
charges of impersonal and poor-quality service.
THE PRODUCT CONCEPT
The product concept is somewhat different from the production concept. Whereas the
production concept seeks to win markets & profits via high volume of production and
low unit costs, the product concept seeks to achieve the same result via product
excellence- improved products, new products and ideally designed & engineered
products. It also emphasis on quality assurance. Managers in these organizations focus on
making superior products & improving them overtime. They assume that buyers admire
well-made products and can evaluate quality & performance. Mgt might commit the
Better-mousetrap fallacy, believing that it will lead people to beat a path to its door.
Example:- web T V
THE SELLING CONCEPT
The selling concept holds that consumers and businesses, if left alone, will ordinarily not
buy enough of the organization’s products. The organization must, therefore, undertake
an aggressive selling and promotion effort. This concept assumes that consumers
typicallyshow buying inertia or resistance & must be coaxed into buying. It also assumes
that the co. has a whole battery of effective selling and promotion tools to stimulate more
buying.
The selling concept is practiced most aggressively with unsought goods, goods
that buyers normally do not think of buying, such as insurance, encyclopedias, and
funeral plots. It is also practiced in non-profit area by fund raisers, college admission
offices, & political parties.
THE MARKETING CONCEPT
This concept emerged in mid-1950’s and challenged the preceding concepts. The
MARKETING concept was born out of the awareness that marketing starts with
determination of consumer wants & ends with the satisfaction of those wants. The
concept puts the customer at both the beginning and the end of business. It stipulates that
the company should be organized totally around the marketing function, anticipating,
stimulating & meeting customer’s requirements.
The concept rests on the realization that a business cannot succeed by supplying
products and services that ae not properly designed to serve their needs. Every depart. &
every worker and every manager will “THINK CUSTOMER” &”ACT CUSTOMER”.
Evidently, the concept represent a radically new approach to business.
Marketing concept represents essentially a change in orientation on the part of mgt
towards business.
The marketing concept rests on four pillars:

1. Target market- EX:TERRA LYCOS
2. Customer needs-EX:NOKIA & SONY ERRICSON
3. Integrated marketing-
4. Profitability-EX:DISNEY, WALL-MART
THE CUSTOMER CONCEPT
The ability of a company to deal with customers one at a time has become practical as a
result of advances in factory customization, computers, the internet, & database mktg
software. In this concept the companies hope to achieve profitable growth through
capturing a larger share of each customer’s expenditures by building high customer
loyalty & focusing on customer lifetime value. The required information collection
hardware, and software may exceed payout. It works for best co. that normally collect a
great deal of individual customer information, carry a lot of products that can be cross-
sold, carry products that need periodic replacement or upgrading, & selling products of
high value.
THE SOCIETAL MARKETING CONCEPT
It holds that the organization’s task is to determine the needs , wants, & interests of target
markets & deliver the desired satisfaction more effectively & efficiently than competitors
in a way that preserves or enhances the consumer’s & society’s well-being.
The societal marketing concept calls upon marketers to build social & ethical
considerations into their mktg practices. They must balance and juggle the often
conflicting criteria of company profits, consumer want satisfaction, & public interest. EX:
PATAGONIA, BEN &JERRY’S
MODULE 2 (2 Hours)
Understanding the market environment: Assess the impact of micro and
macro environment.
Services: Importance, distinctive characteristics of services, service mix
(2 Hours)
Marketing Environment
MARKETING ENVIRONMENT
MICRO ENVIRONMENT MACRO ENVIRONMENT
 SUPPLIERS DEMOGRAPHIC
MARKET SOCIO-
INTERMEDIAR CULTURAL
IES
ECONOMIC
 MARKET/DEMA
ND POLITICAL
THE NATURAL
CONSUMER
TECHNOLOGY
INDUSTRY
AND LEGAL
COMPETITION
 GOVERNMENT
POLICIES
Customer
Life style Customer
Marketing activities
Impact on firms
marketing decision
Examination of competitive marketing forces
Potential
entrants
Bargaining Industry Bargaining

power of competitors power of
Revelry among
Substitutes
WHY ANALYSE THE MARKETING ENVIRONMENT?
Knowledge of Marketing Environment is Central to Marketing Management.
Marketing management rests squarely on the knowledge of the marketing environment.

Environment plays a crucial role in marketing and that securing the right fit between the
environment and the firm, using the marketing mix as the tool, is the crux of marketing.
The firm has to know where the environment is heading, what trends are emerging
therein and what should be its response to the environmental changes. Only by analyzing
the environment, can the firm grapple with these issues.
Strategic Response to Environment is Possible only with Proper Environment

Analysis
Facilitating the corporation’s strategic response to the changes taking place in

environmental factors is the ultimate purpose of environment analysis. The firm has to
come up with alternative programmes and strategies in line with environmental realities.
This is possible only with proper environment analysis. It helps strategic response by
highlighting opportunities, the pursuit of which will help the firm attain its objectives. It
helps assess the attractiveness and probability position of these opportunities, and helps
prepare a shortlist of those which are relevant to the firm and which can be pursued by it.
Purpose of Marketing Environment Analysis
 To know where the environment is heading; to observe and size up the relevant
events and trends in the environment.

 To discern which events and trends are favorable from the standpoint of the firm,
and which are unfavorable; to figure out the opportunities and threats hidden in
the environmental events and trends.

 To project how the environment – each factor of the environment – will be at a
future point of time.

 To assess the scope of various opportunities and shortlist those that can favorably
impact the business.

 To help secure the right fit between the environment and the business unit, which
is the crux of marketing; to help the business unit respond with matching product-
market strategies; to facilitate formulation of a marketing strategy in the right
way-in line with the trends in the in the environment and the opportunities
emerging therein.
Spotting the Opportunities and Threats
Spotting the opportunities and threats is the central purpose here. It is in the environment
that the firm finds its opportunities; it is in the environment that it finds the threats it has
to encounter; and it is by tapping the opportunities present and countering the threats
embedded therein that the firm achieves its growth objective. The starting point is thus to
spot the opportunities and threats.
The Task Involved in Marketing Environment Analysis
Marketing environment analysis is the process of gathering, filtering and analysing

information relating to the marketing environment. Involved in the process are the tasks
of monitoring the changes taking place in the environment and forecasting the future
position in respect of each of the factors. The analysis spots the opportunities and threats
in the environment, and pinpoints the ones that are specifically relevant to the firm.
The purpose and significance of a marketing environment analysis will become more
clear when we go through the chapters on Strategic Planning and Marketing Planning.
COMPONENTS OF A MODERN MARKETING INFORMATION SYSTEM
The major responsibility for identifying significant market place changes falls to the
company’s marketers. They must be the trend trackers and opportunity seekers.
Marketers have disciplined methods for collecting information and they spend more time
interacting with customers and observing competition.
Marketers also have extensive information about low consumption patterns vary across
countries. The companies with superior information enjoy a competitive advantage
develop better opportunities and execution.
Scanning The Marketing Environment
Change in macro environment is the primary basis for market opportunity the company
must start its search for opportunities and threats with the firm macro environment. The
macro environment consists of all the factors that affect the company operations and
performance. Companies need to understand the trends and mega trends characterizing
the current macro environment. This is critical to identify and responds to unmet needs
and trends in the market place.
Many businesses operate in environment where important forces change. Environment

scanning is the process of acquiring the necessary information about these changes to
allow marketers to identify and interpret trends. These are five environmental forces that
business must monitor, they are social, economic technological, competitive and
regulatory. By identifying these trends that are related to each of these forces business
can develop and maintain the successful marketing programs. Several trends that most
business can develop and maintain the growth diversity of the US population. The
increasing use of wireless technology and new legislation used in related to intellectual
property and privacy.
It is realized now by all the marketers that environment provides opportunities and
threats. The company should be able to identify the significant changes in the macro
environment. Modern marketers believe that environmental scanning would provide a
continuous link between he company and consumers. A marketer has to design his
marketing strategy based on current marketing environment.
Ex:- auto sector, telecom sector information technology sector any change in the
environment in likely to affect the business.
Television giants like Weston, Nalco, and Bush lost their market to Samsung, Sansui,
videocon etc…..
Hindustan motors and premier automobiles lost their prominent position in the Indian
market to maruthi udyog’s during 80s.
INTERNAL RECORDS AND MARKETING INTELLIGENCE
By analyzing the information got by the internal reports on orders, sales, prices, costs,
inventory levels, receivables, payables and so on the marketing managers can sport
important opportunities and problems. The order-to-payment cycle-orders are sent by
sales representatives, dealers and customers to the firm.
The sales department prepares invoices and transmits copies to various departments. The
shipped items are accompanied by shipping and billing documents that are sent to various
others departments. Internet and extranet improve the speed, accuracy and efficiency of
the order-to-payment cycle. Customers favour firms that can timely deliver items. The
sales representatives and customers fax or e-mail their orders. The computerized
warehouses quickly fill these orders. The billing department sends out invoices as quick
as possible.
Sales information systems : - The managing of inventory is very important in this system.
The marketing managers need timely and accurate reports on current sales. Interpretation
of the data by company should be carefully done to prevent wrong signaling.
Technological gadgets are revolutionizing the sales information systems and allowing
representatives to have up-to-the second information.
Databases, Data mining and Data Warehousing – The organising of information in

databases like customer databases, product databases, sales person databases are
combined from different databases. This helps in scoring customers according to
purchase frequency and monitory value.
These data are then warehoused by the companies and make them easily accessible to
decision makers.
Data mining is done by skilled analysts in sophisticated statistical methods that garner
fresh insights into neglected segments.
THE MARKETING INTELLIGENCE SYSTEM

When the internal records supply results data, the marketing intelligence system supplies
happenings data. It is a set of procedures and sources managers use to obtain everyday
information about developments in marketing environment. This is done by reading
books, newspapers, trade publications, talking to customers, suppliers and distributors.
The quality of marketing intelligence can be improved by the following steps.
 Company can train and motivate sales force to spot and report new developments.

 Company can motivate distributors, retailers and other intermediaries to ass along
important intelligence.

 A company can network externally.

 A company can set up a customer advisory panel.

 A company can take advantage of the government data resources.

 A company can purchase information from outside supplies.

 A company can use online customer feedback systems to collect competitive
intelligence.
There are companies that circulate the marketing intelligence. The staff scans the internet
and major publications, abstract relevant news and disseminates a news bulletin to
marketing managers. If collects and files relevant news and disseminates the information
and assists managers in evaluating new information.
ENVIRONMENTAL FACTORS SPECIFIC TO THE BUSINESS

CONCERNED/ MICRO ENVIRONMENT
This implies the factors and forces in the immediate environment, which influence the
company’s ability to serve its market. These forces are related to a specific enterprise to
form part of its total marketing system.
Suppliers
Suppliers are either individuals or business houses. They combined together

provide resources that are needed by the company. Now the company necessarily should
go for the developing specifications, searching the potential suppliers, identifying and
analyzing the suppliers who offer best mix of quality, delivery, reliability, credit,
warranties and obviously low cost. The developments in the supplier’s environment have
a substantial impact on the marketing operations of the company since supply planning
has become more important and scientific in recent years. To the extend the companies
can lower thrir supply costs and increase their product quality, they in natural course can
gain a competitive advantage in the market. Price trend need constant check and careful
scrubbing shortages have to be fully monitored and plans should have to be made to
avoid the grip of supply shortages on marketing sfforts regarding advertising, marketing,
research, sales, training and marketing consultancy the marketing marketing managers
are sole decisions makers.
Market intermediaries
Market intermediaries are either business houses or individuals who come to aid
of the company in promoting, selling and disturbing the goods to the ultimate consumers.
They are middlemen , distributing agencies, market service agency and financial
institutions.
Middlemen come into being help overcome the discrepancies in the quantities,
place time, assortment and possession that would other wise exist in a given condition.
It is a advantageous and sufficient to work through the established marketing channels

instead of creating one and thus gains for experiment.
Of course, it is not easy to select and work with middleman but the marketing managers
must ensure an effective management and satisfaction of marketing channels to enlist
their long lasting support on patter terms.
The marketing managers have to decide the most cost effective modes of transportation
while balancing the considerations of the cost, delivery, speed and safety.
Market/Demand
Market/demand is the first in this category. The aspects to be studied here include:
a. Nature of the demand
b. Size of the demand, present and potential
c. Changes taking place in demand
d. Invasion of substitute products
e. Changes taking place in consumption pattern/buying habits
The Consumer
Consumer tastes and preferences keep fluctuating:
Factors to be monitored:
 According to the firm, what is the basic need the product serves?

 According to the consumer, what is the need it serves?

 What constitutes customer value in the business as per their
 Perception?

 What benefits do the consumers look for in the product?

 Of the many benefits they look for , what are their
 Preferences/priorities/rankings?


 Who are the consumers (number, location, etc.)?

 Purchasing power of the consumers.
 Buying behaviour; buying motives; buying habits.


 Brand loyalty

 Personality traits/attitudes.
Industry and competition:
Industry and competition constitutes the other major component of the

environment that is specific to a firm. Knowledge about industry and competition is a
fundamental requirement for developing marketing strategy.
Government policies:
 Governments are often large purchasers of goods and services.


 Governments subsidise select firms and industries.

 Governments protect home producers against foreign
 Competition.

 Governments ban fresh entry in select industries.

 Governments off and on ban certain technologies and products.
MEGA / MACRO ENVIRONMENT
FACTORS Demographic environment
Since business depends on people, it is obvious that demographics is a major

element to be studied in environment analysis. As a matter of fact, several factors
reacting to population, such as size, growth rate, age distribution, religious composition
and literacy levels, need to be studied. Aspects such as composition of workforce,
household patterns, regional characteristics, population shifts, etc., also need to be
studied, as they all are part of the demographic environment.
Socio-cultural environment
Socio- cultural environment is another important component of the mega

environment. Culture, traditions, beliefs, values and lifestyles of the people in a given
society constitute the socio- cultural environment. These elements decide to a large
extent, what the people will consume and how they will buy.
Culture: Culture is the combined result of factors like religion, language, education and
upbringing. In any society, some cultural values are deep-rooted; they do not change
easily and are termed core cultural values. There are also values and practices, which
constitute secondary cultural values; they are more amenable to change and can be
moulded and manipulated relatively more easily. Meaningful information on the
consumption habits, lifestyles and buying behaviour of the people can be obtained
through a survey of the socio-cultural environment. Cultural shifts carry with them
marketing opportunities as well as the threats. That is why, close monitoring of the
cultural environment becomes important.
Social class: Social class is one important concept in socio-cultural environment. Any
society is composed of different social classes. A social class is determined by income,
occupation, location of residence, etc., of its members. Each class has its own standards
with respect to lifestyle, behaviour, etc., they are known as the class values or class
norms.
Economic environment
Economic environment is a vital component of mega environment. The factors to be

considered under economic environment are listed below:
 General economic conditions.

 Economic conditions of different segments of the population; their disposable
income, purchasing power, etc.
 Rate of growth of the economy, rate of growth of each sector of the economy.

 Agriculture

 Industry

 Consumer goods

 Capital goods

 Services

 Infrastructure

 Imports
 Exports
 Income, prices, and consumption expenditure (size and patterns).

 Credit availability and interest rates.
 Savings rate/capital formation.
 Inflation rate.
 Behaviour of capital markets.
 Foreign exchange reserves.
 Exchange rates.
 Tax rates.
 Prices of important materials.
 Energy scene (cost, availability, etc.).
 Labour scene (cost, skill availability, etc.).
Changing position of women: The changing position of women in the society is a case
in point. In India, the position of women, especially in the growing middle – class
segment of the population, is indeed changing fast. From the role of a simple housewife,
she is now being transformed into an educated employed member, sharing the
responsibilities of the home with the man.
In an environmental survey, therefore, one actually looks for such shifts taking place,
since they can end up as opportunities or threats for the firm.
Some facts on the economic environment of India: If we continue with the example of
India. The Indian economy has been witnessing good growth in recent years, 6 percent
plus on an average. The year 19998-99 saw the growth rate accelerating to 6.8 percent
from 5 percent in 1997-98.it grew by approximately 6 percent in 1999-2000.India’s per
capita income, however to be low. Industrial growth was 6.2 per cent in 1999-2000.
Political environment
Political environment too is a major component of the mega environment for an

industrial/business firm. In fact, economic environment is often a by-product of the
political environment, since economic and industrial policies followed by a nation greatly
depend on its political environment. Moreover, developments on the political front keep
affecting the economy all the time; industrial growth depends to a great extent on the
political environment; legislations regulating business are also often a product of the
political configuration.
Natural resources: Business firms depend on natural resources. The extent to which the
country/region under reference is endowed with these resources has an impact on the
functioning of the firm. A raw material is one major part of these resources and firms are
concerned with their availability.
Ecology: Firms are also concerned with ecology. In modern times, all societies are very
much concerned about ecology, especially about issues like environmental pollution,
protection of wild life and ocean wealth.
Climate: climate is another aspect of the natural environment that is of interest to a

business firm. Firms with products whose demand depends on climate, and firms
depending on climate – dependent raw materials will be particularly concerned with this
factor. These firms have to study the climate in-depth and decide their production
locations and marketing territories appropriately.
Technology Environment
Options available in technology: The firm has to analyse carefully the overall
technology environment and the technology options available in the given industry. The
level of technology prevailing generally in the country is also a concern for the firm.
Government’s approach in respect of technology: Regulations by the government in

matters relating to technology often restrict the freedom of operation of business firms.
There may be areas where the governments may support the use of modern technology;
there may be areas where they may ban technologies that are potentially unsafe.
Technology selection: it is possible that several levels of technologies are floating at the
same time in an industry. Firms have to scan the technology environment and select
technologies that will be appropriate for the firm and the given product – market
situation. They have to forecast technological trends, assess current and emerging
technologies, and develop the inputs for right technology choice.
Examples of technological changes:
 Fax machines revolutionsing inter-communications.


 Use of computers in data processing.

 Shopping by television: teleshopping.

 TV commercials telephone interviews super market scanners

 Increasing consumer information.
Legal Environment/Business Legislation

Business legislation can be classified into the following broad categories, based on the
area covered by them.
 Corporate affairs

 Consumer protection

 Employee protection

 Sectoral protection
 Corporate protection(protecting companies from each other ,preventing unfair
competition)
 Protection of society as a whole against unbridled business behaviour
 Regulations on products, prices and distribution
Globalization, Advances in Technology and Deregulation
We can say with some confidence that “the marketplace isn’t what it used to be.” It is
radically different as a result of major, sometimes interlinking societal forces that have
created new behaviors, new opportunities, and new challenges:
Changing Technology:
The digital revolution has created an Information Age. The Industrial Age
was characterized by mass production and mass consumption, stores stuffed with
inventory, ads everywhere, and rampant discounting. The Information age promises to
lead to more accurate levels of production, more targeted communications, and more
relevant pricing. Moreover, much of today’s business is carried on over electronic
networks: intranet, extranets, and the internet.
Globalization:
Technological advances in transportation, shipping, and communication

have made it easier for companies to market in other countries and easier for consumers
to buy products and services from marketers in other countries.
Deregulation:
Many countries have deregulated industries to create greater competition

and growth opportunities. In the United States, long-distance telephone companies can
now complete in local markets and local phone companies can now offer long distance.
Similarly, electrical can now enter other local markets.
Transaction Marketing And Relationship Marketing
The destination between transaction marketing and relation ship marketing is as follows.
The forces are not on just getting the customer but to retain the customer.
Transaction Marketing Relationship Marketing
Forces is on single sales Orientation is on product benefit

Short time focus Long time focus
Moderate customer contact High customer contact
Little or no commitment to customer High customer commitment
Quality concern lies only with production Quality concern of all
people
To get the best benefit from relationship marketing there should focus should be:
 Build downstream relationship with customer by delivering value



 Build upstream relationship through supply chain


 Focus the organization and work towards brand loyalty
MARKETING RESEARCH
Introduction
To undertake marketing effectively, business need information. Information about

customer wants, market demand, competitors, distribution channel etc.
Marketers often complain that they marketing information of the right kind, or have too
much of the wrong kind. The solution is an effective marketing information system. The
information needed by marketing managers comes from three main sources:
INFORMATION SOURCESS
INTERNAL
COMPANY
INFORMATION MARKETING MARKETING
INTELIGENCE RESEARCH
CUSTOMER
PROFILES&SEVICE
REPORTS, STOCKS
1. Internal company information:

E.g. sales, orders, customer profits, stocks, customer service reports etc.
2. Marketing intelligence:
This can be information gathered from many sources, including suppliers, customers,
distributors, marketing intelligence is a catch-all term to include all the every day
information about developments in the market that helps a business prepare and adjust its
marketing plans.
3. Marketing research:
Management cannot always wait for information to arrive in bits and pieces from
internal sources. Also, sources of most intelligence cannot always be relied upon to
provide relevant or up-to-date information.
Marketing research consists of all the activities that enable an organization to obtain the
information it needs to make decisions about its environment, marketing mix, and present
or potential customers. More specifically, marketing research is the development,
interpretation, and communication of decision oriented information to be used in all
phases of the marketing process. This definition has two important implications:
Research plays a role in all three phases of the management process in marketing
planning, implementation and evaluation.
SJBIT, Bangalore
It recognizes the researcher’s responsibility to develop information, which includes

defining problems, gathering and analysing data, interpreting results, and presenting the
information in such a way that it is useful to managers.
Importance of marketing research
IMPORTANCE OF MARKETING RESEARCH
HELP PICK AND CHOOSE CUSTOMER AND MAKE

FOCUSED OFFERS
HELPS KNOW WHICH PRODUCTS MOVE IN THE

MARKET AND WHY
HELPS NEW ENTRANTS PLAN THEIR CHANNELS BY

STUDYING EXISTING ONES
Marketing research (MR) too plays an equally important role in marketing management.
Interestingly, while marketing research uses marketing information as its input, It
simultaneously generates more of it as its output. It aids decisions on each element of the
marketing mix product, distribution, promotion, and pricing.
Let us see the benefits that flow to the firm from marketing research in greater detail, by
taking thru areas of marketing research-research on consumers, research on product and
research on distribution.
Helps pick and choose customers, and make focused offers:
Marketer’s especially business to business marketers and service marketers like hotels,
banks and airlines normally try to know their customers individually. They develop a list
of their prospects/customers and gather all essential details about them their profits,
lifestyle, requirements and buying habits. They call this a “customer database”. We saw
the basics of customer database in this topic. Below example shows how the “Hyatt
Regency Hotel” reaches out to its patrons on an individual basic, using a customer
database.
“With customer database Hyatt Regency Reaches out to specific categories of patrons”.
 World over, the hotel industry is a large uses of database marketing.

 In India too, some large hotels have been using this techniques.
 The Hyatt regency hotel in Delhi is one example
 Through its customer database, the Hyatt has been able to reach specific
categories of people such as administration executives and travel manager of large
organizations, who normally play a key role in hotel reservations.
 The Hyatt customer database contains lists of patrons classified suitably.
Helps know which products move in the market and why:
The year 2001 was a year of very poor growth for the FMCG sector in India.
Example:
 Data from MR agency org-MARG has revealed that in 2000-01, through the
FMCG sector as a whole stagnated, with a nominal growth of 1.5%, a number
of FMCG products/branch achieved a double digit growth rate.
 To be precise 27 of the 87 FMCG product categories that org-marg trots
witnessed double digit growth during the 12 months ending September 2001.
  The test questions are:
 Can you add value to products?
 Can you cater to the latest demands/preferences of consumers?
 Can you help consumers to upgrade habits?
Helps new entrants plan their channel by studying existing users:
Often new entrants into an industry/market conduct some research on existing

distribution channels for the product and gain useful insights on the channel practices
existing in the industry.
Example:
Before entering into the Indian passenger car market, Toyota conducted a study on the
dealer networks of the various passenger car manufacturers operating already in the
Indian market. The findings from the study were very useful to Toyota in planning its
marketing. The main finding was that dealer network is a key success factor for any car
venture.
The marketing research system:

Marketing managers often commission formal marketing studies of specific problems and
opportunities. They may request a market survey, a product-performance test, a sales
forecast by region or an advertising evaluation.
The marketing research can be defined a s the systematic design, collection, analysis, and
reporting of data and findings relevant to a specific marketing situation facing the
company.
Example:
FUJI PHOTO FILM:- at eh highest level, Fuji relies on data from market research
syndicate NDP group to study the market for products ranging from digital cameras to
ink jet photo paper. Fuji also does custom research with a variety of research partners,
and it conducts internal research for projects requiring quick information such as changes
to package design. Regardless of how the marketing research data are collected it is a top
priority for Fuji, which has had to adapt its film and digital imaging products to a rapidly
changing market place. “if you don’t have market research to help you figure out what is
changing and what the future, will be you will be left behind” says Fuji’s director of
category management and trade marketing.
The marketing research process:
Effective marketing research involves the six steps shown in figure below. We will
illustrate these steps with the following situations:-
American airlines (AA) are constantly looking for new ways to serve its passengers it
was one of the first companies to install phone handsets. Now it is reviewing many new
ideas, especially to cater to its first class passengers on very long flights, many of whom
are business people whose high priced tickets pay most of the freight. Among these ideas
are:
1. To supply an internet connection with limited access to web pages and email
messaging.
2. To offer 24 channels of satellite cable T.V
3. To offer a 50-cd audio system.
So in order to develop a marketing research process on this example.
The following steps are been implemented and they are as follows:
DEFINE THE PROBLEM AND

RESEARCH OBJECTIVES
DEVELOP THE
RESEARCH PLAN
COLLECT THE
INFORMATION
ANALYZE THE
INFORMATION
PRESENT THE
INFORMATION
Meaning of marketing information:

MAKE THE
In the words of Tousley, Clark and Clark,
DECISION includes all facts,
estimates, opinions and other information decision affecting the
marketing of goods and services”
Marketing information covers information on the following:

a) What product is wanted by the consumers, i.e. what should be the type, quality,
size, shape, colour etc of the product?
b) At what time do they want it? I.e. whether the consumers want it throughout the
year or only during a particular season.
c) In what quantity is the product wanted? i.e. what is the size of the market for the
product.
d) How should the product be made available to the consumers? i.e. what should be
the channel of distribution for the product?
e) At what price should the product be sold?

f) Whether there is any competition already in the market?
g) How many new customers can be attracted to purchase the product and how?
Importance of marketing information:
“Marketing information acts as the eyes and ears of an organization.” The importance of
marketing information to marketing can be compared with the importance of military
intelligence to the defense of a country.
Its importance arises from the following factors or reasons:

1) Under the present system of mass production in anticipation of demand, the
production of the right type of goods in the right quantity is possible only when
the producer knows the exact requirement of the customers.
2) In the modern marketing system, there is a long chain of intermediaries between
the primary producer and the final consumer.
3) The demand of the customers, their tastes, preferences, fashions etc are ever
changing. So to know the changes in the tastes and preferences of the consumers,
marketing information is important.
4) Marketing information creates confidence in the minds of the producers to meet
any challenging situation or condition in the market.
5) Marketing information contributes to the efficiency of marketing by reducing
waste and minimizing the costs involved in marketing.
6) It helps the producer to asses the strength and weakness of the competition and
make suitable changes in his marketing techniques to force the competition.
7) By minimizing marketing risks, marketing information makes market financing
easier.
8) By increasing the efficiency of marketing activities, marketing information
contributes to the success of not only the individual business, but also helps the
community as a whole.
9) Marketing information is of at most importance in the distribution of goods.
Meaning of marketing information system:
In the words of Samuel V Smith, “a marketing information system is an interacting,

continuing, future oriented structure of people, equipment and procedures designed to
generate and process an information flow to aid managerial decision making in a
company’s marketing program”
According to Philip Kotler, “marketing information system is a structured, interacting,

complex of persons, machines, and procedures designed to generate an orderly flow of
information collected from both intra and extra firm sources for the use as the basic for
decision making in specified responsibility areas of marketing management”
As the computers became common business tools in the early 1960’s firms were able to
collect, store and manipulate larger amounts of data to aid marketing decision makers.
Out of this capability developed the “marketing information system (MKIS) an on going,
organized procedure to generate, analyze, disseminate, store, and retrieve information for
use in making marketing decision.
The ideal MKIS

 Includes real time data
 Generates regular reports and recurring studies as needed.
 Analyses data using statistical analysis and mathematical models that represent
the real world.
 Integrates old and new data to provide information updates and identify trends.
MKIS
REQUESTS FOR INFORMATION SYSTEM AND
PROCEDURES FOR DATA:
MARKETING COLLECTION
ANALYZING
MANAGER STORAGE
REGULAR AND CUSTOISED REPORTS R
DISSEMINATON
Designing a marketing information system:
To build an effective MKIS marketing manager must identify the information that will
help them make better decision. Working with researchers and system analysts, managers
then determine whether the data needed are available within the organization or must be
procured, how the data should be organized, the form in which the data should be
reported and the schedule according to which the data will be delivered.
A well designed MKIS can provide a continuous flow of this type of information for
decision making.
An MKIS is of obvious value in a large company, where information is likely to get lost
or distorted as it becomes widely dispersed.
How well can MKIS functions depend on three factors:
 The nature and quality of the data available.

 The ways in which the data are processed and presented to provide usable
information.
 The ability of the operators of the MKIS and the managers who use the output to
work together.
THE SCOPE AND OBJECTIVES OF MARKETING RESEARCH:-
1) Marketing research is used in the formulation of all marketing plans, policies,

programs and procedures.
2) It is employed for control and evolution of these plans, policies, etc…When they are
brought in to the practice.
3) It is used in reducing and minimizing all marketing costs, particularly selling,
advertising, promotion and distribution costs.
4) Marketing problems demanding best solution through marketing research can be
classified under three heads:
a) problems relating to the product it self; product includes branding, packaging
and labeling and services.
b) Problems relating to consumer markets.
c) Problems relating to each phase of the entire marketing process
5) Programmes of marketing research incidentally provide insurance cover for the
survival and growth of the business in a dynamic economy.
6) Marketing management through marketing research can bring about the sale of right
product (brand and package) through right channels to right customers at right places and
at right prices by evolving right plans, policies and programs with the help of right
personnel.
7) The main objective of marketing research is to enable manufactures to make goods
acceptable and saleable and to see that they reach the market more easily, quickly,
cheaply and profitably without sacrificing consumer interest.
Scope of marketing research:

 Diagnosing the current situation or problem based on detailed information.
 Clearly identifying competitive strengths and weakness.
 Constantly analyzing what happened in the market place.
 Planning to watch company’s strengths with market opportunities by outlining
objectives for product and market development and dividing strategies and tactics
to achieve them.
 Watching out continuously for threads to the achievement of those plans
 Monitoring the progress of strategy implementation.
MODULE 4 (7 Hours)
Product decisions: Concept, product hierarchy, diffusion process, New
product development, Product Life cycle, Product mix strategies. Concept of
Branding, Brand perception, Brand equity,
Packaging / Labeling: Packaging as a marketing tool, requirement of
good packaging, Role of labeling in packaging (2 Hours)
4- PRODUCT PLANNING AND DEVELOPMENT
The Meaning Of Product
The product is a set of basic attributes assembled in an identifiable form or the

product is a bundle of all kinds of satisfaction of both material and non-material kinds
ranging from economic utilities to satisfaction of a social-psycho-logical nature or A
product is a set of tangible and intangible attributes.
A product supplies two kinds of utility:-

1) Economic utility
2) Supplementary utility in the form of social psychological
benefits.
We treat each brand as a separate product. For example the two internet service
providers. America online and MSN are different products, the brand name suggests a
product difference to the consumer and this brings the concept of want salts faction in to
the definition.
PRODUCT CONCEPT
The product is the most tangible and important single component of the marketing
programme. The product policy and strategy is the cornerstone of a marketing mix. Good
products are key to market success. Product decision are taken first by the marketers and
these decisions are central to all other marketing decisions such as price, promotion and
distribution. Product is the vehicle by which a company provides consumer satisfactions.
It is the engine that pull the rest of the marketing programme.
The product concept has 3 dimensions:-
1) Managerial Dimension :-
It covers the core specifications or physical attributes, related services, brand, package,
product life cycle, and product planning and development. The product offering must
balance with consumer citizen needs and desires. Product planning and development can
assure normal rate of return on investment and continuous growth of the enterprise.
2) Consumer Dimension
To the consumer a product is actually a group of symbols or meanings. People buy this
not only for what they can do, but also for what they mean. Each symbol communicates
certain information. Product represents both utility and non-utility aspects i.e., tangible
and intangible things. A relevant product is one that is perceived by the consumer as per
intentions of the marketer. Consumer accepts product as bundle of satisfaction rather than
as physical things.
3) Social Dimension:-
To the society salutary and desirable products are always welcome as they fulfill the
expectations of social welfare and social interest. Salutary product yield long-run
advantages but may not have immediate appeal. Desirable products offer both benefits
immediate satisfaction and long-run consumer welfare. Society dislikes the products
which only give immediate satisfaction but which sacrifice social interests in long-run-
marketers have to fulfill the following social responsibilities while offering the products
to consumer.
1. Conversation & best use of natural resources, 2. Safety to users, 3. long-run

satisfaction of consumers. 4. Quality of life concern for better environment 5. Fulfillment
of Govt. regulations relating to composition, packaging, labeling, promotion & pricing of
many products 6. Ecomarked products would be environment friendly.
Managerial View 1. PRODUCT WANT SATISFYING Consumer View Point

Point PRODUCTS
2. SOCIALLY RESPONSIBLE
1. BASIC PROPERTIES PRODUCT INNOVATION 1. A GROUP OF
INDICATING WHAT SYMBOLS
THE PRODUCT IS, 2. EACH SYMBOL
SERVICE, AN IDEA.
COMMUNICATES
2. SERVICES OFFERED.
INFORMATION
3. PACKAGE
4. BRAND 1. 3. PERCEPTION OF
5. PRODUCT LIFE CAUSES AND
CYCLE MANAGER MEANING GIVEN
6. PRODUCT PLANNING TO THOSE
AND DEVELOPMENT CAUSES
7. PRODUCT MIX 4. FAVORABLE
PERCEPTION
LEADS TO
PURCHASE OF
THE PRODUCT
5. RELEVENT
SOCIETAL VIEW POINT
PRODUCT GIVES
MATERIAL
SATISFACTION,
1. SAFETY TO USERS PSYCHO-SOCIAL
2. CLAIM ON THE USE OF RESOURCES
SATISFACTION
3. RELAIABLE PRODUCT INFORMATION
4. IMPACT ON ENVIRONMENT
(freedom from pollution)
5. LONG-RUN SOCIAL BENEFITS
PRODUCT MIX STRAGETIES
The product mix refers to the total number of product lines carried by a firm.
Where each line reflects one type of product. The product mix is composed of several
products lines. A group of closely related products constitutes a product line.
PRODUCT MIX STRATERY

For example: Kodak’s product mix consists of two strong lines information and
image products. NEL’s basic product mix consists of communication and computer
products.
A company’s product mix will have a certain width, length, depth and
consistence.
The width product mix refers to how many different product lines
The company carries
The length product mix refers to the total number of items in its product mix
The depth product mix refers to how many variants are offered to each product in
the line.
The consistency of the product mix refers to how closely related the various line
are in end use.
Production requirements, distribution channels, or some other way.
These four dimension of the product mix provides the handles for defining the company’s
product strategy.
Product – mix planning is largely the responsibility of the company’s strategic

planners. They must assess, with information supplied by the company marketers, which
product lines to grow, maintain, harvest and divest.
PRODUCT HIERARCHY
Product hierarchies stitch from basic needs to particular items that satisfy these needs.
There are 7 levels.
1. Need family: The core need that underlies the product family
2. Product family :All the product classes that can satisfy a core
need with reasonable effectiveness.
3. Product class :A group of products within the product family recognized

as having a certain functional coherence
4. Product line : A group of products within a product class that are closely related
because they function in a similar manner or are sold to the same customer groups or
are marketed through the same types of outlets or fall within given price ranges.
5. Product type :Those items within a product line that share one of several
possible forms of the products.
6. Brand :The name associated with one or more items in the product line
that is used to identify the source or character of the item.
7. Item :A distinct unit within a brand or product line that is distinguishable by

size, price, appearance, or some other attribute.
Levels Of Product
Their are 5 levels of product, they are

1) Core-benefit:- The fundamental service or benefit that the customer
is really buying.
2) Generic Product:- It is the basic version of a product.
3) Expected Product:- It is the set of attributes and condition that buyers
normally expect and agreed to where they purchase this product.
4) Augmented Product:- Additional services and benefits that distinguish
the companies offer from competitors offer.
5) Potential Product:- Some of the most successful companies add
benefits to their offer that not only satisfy a customer but also delight
the customer.
Product Mix Strategy
1) Expansion of product mix

In this , the company enters with a new product in the product line.
For example the post office serving banking facilities at home.
2) Contraction of product mix

In this, the company deletes some product in product line which are not
profitable.
For example : Tata cosmetics, HMT – bulbs, tractor
3) Alteration of product mix

In this the products are altered in its design, its usage(whether product can
work for more usage) and its operations( to get new customer's).
For example: Food processor, Thomson TV which can be used as computer
monitor.
4) Trading up and Trading down

In this they Introduce the costlier product in to the product line and
introducing the cheaper product.
5) Product differentiation and market segmentation

Physical products vary in their POTENTIAL for their Differentiation. At
one extreme we find products that allow little variation: chicken, steel, aspirin.
At the other extreme are products capable of high differentiation, such as
Automobiles, buildings, & furniture.
It involves viewing the market as different demand curve, providing different
BRANDING
Branding strategy indicates how firm choose to use branding as an integral part of
its overall marketing strategy. Branding is the best means to capture and retain the
customer demand in a competitive market.
A brand is a name, term, sign, symbol or design or a combination of them.

Intended to identify the goods or services of one seller or group of sellers and to
differentiate them from those of competitors. A brand is a signature ion a constantly
renewed, creative process. A product is what the company makes. Branding is the
practice of giving a specified name to a product or group of products from one seller.
TYPES OF BRANDS
1. Individual brand name
Each product has a special and unique brand name, such as surf, aspro etc. The
manufacturer has to promote each individual brand in the market separately.
2. Family brand name

This method of branding assumes that end uses of all products under a family
brand are similar and the products are not dissimilar. Family brand name enables
creation of strong shelf display.
3. Umbrella Brand
We may have for all products the name of the company or the manufacturer.
When a group of products are given the same brand name, it becomes a case of
umbrella brand.
4. Combination Device
Each product has an individual name but it also has the umbrella band to indicate
the business house producing the product.
5. Private or middle mans brands:
Sometimes, some manufacturers leave their products for branding by the
distributors/retail chains as per the letters choice. Such brands are called middle
man’s brand.
PACKAGING:
Packaging may be defined as the general group of activities in the planning of a product.
These activities concentrate on formulating a design of the package and producing an
appropriate and attractive container or wrapper for a product of packaging is the activities
of designing and producing the container or wrapper for a product. The container or
wrapper is called the package. The packaging concept defines what the package should
basically be or do for the particular product. Package design itself can act as a registered
brand. But packing is merely a physical action and provides a handling convenience.
Packaging must also convey a required product image. Packaging is a market necessity.
The public does not want just the product. They want explanation, assurance,
encouragement. Confident and praise. Packaging also needs to harmonize with consumer
usage. Package is an invaluable aid to delusion making by the customers the package is
important information we to many buyers.
Packaging completes the sales cycle triggered by advertising, and secures a

meaningful market share. Marketing management prefers a package with is attractive,
simple to produce easy to store, easy to handle, convenient for display and involves
minimum marketing cost. Packaging decorates and beautifies the product so as to lead the
consumer impulsive buying. Packaging itself is a device of sales promotion.
LABELLING
The label may be a simple tag attached to the product or an elaborately designed
graphic that is part of the package. Packaging, branding and labeling go together and
constitute an integral part of product. It gives verbal ingormn about the product and the
seller.
Labeling has social significance consumer criticion centers round charge of false.
Misleading and defective packaging and labeling. Labels give helpful information on the
following.
1. Brand name, 2. Name & address of producer 3. Weight, measure, count, 4.

Ingredients by percentages where possible 5. Directions for the proper use of the product.
6. Cautionary measures concerning the product & it use, 7. Special care of the product. 8.
Recipes on food products 9. Nutritional guidelines, 10. Date of packing & date of expiry.
11. Retail price & 12. Unit for comparison.
Consumer want grade labeling to be made compulsory. The label should also help in
unit-price comparison.
Labelling system must enable consumers to determine quality and compare

products. Misleading labels will invite prospective & penalty.
On the whole, consumers welcome informative labels.
NEW PRODUCT DEVELOPMENT
SIGNIFICANCE OF NEW PRODUCTS

New product development is a major component of the firms product policy. It is
not enough if existing product lines are appraised properly. Products are positioned
effectively and brand decisions are taken wisely. For higher levels of growth, a firm has
to look beyond its existing products.
MAKING NEW PROFITS

New products become necessary from the profit angle too. Products that are
already established often have their limitations in enhancing the profit level of the firm. It
thus becomes essential for business firms to bring in new products to replace old,
declining and losing products. New products become part and parcel of the growth
requirements of the firm and in many cases, new profits come only through new products.
New products offer new avenues of growth and thus secure the viability and
sustainability of the firm. The risk gets spread over a large number of products. Old ones
and new ones.
CLASSIFICATION OF NEW PRODUCTS:

New products can be broadly classified into two groups:
i) New products arising out of technological innovations.
ii) New products arising out of marketing oriented modifications.
The first group includes intrinsically new products having a new functional utility.
The second group includes products that come out of marketing oriented innovations on
existing products. These are essentially new versions of existing products; the newness
may be due to some modification in the ingredients used, kor some changes in design, the
addition of a new feature, a change of package etc., The newness may also be due to
repositioning of the existing product, or finding new use for the existing product, or
offering the existing product with new sales appeal to a new market segment.
IMPORTANCE OF PRODUCT INNOVATION

A business exists to satisfy customers while making a profit. Fundamentally, a
company fulfills this dual purpose through its products. New product planning &
development are vital to an organization success. This is particularly true now, given (1)
Rapid technological changes, which can make existing products absolute and;
(ii) The practice of many competitors to copy a successful product, which can neutralize
an innovative products advantage. Thus as emphasized by a top executive at Pillsbury.
“In the end, the company with the most new products wins”. Of course, these new
products must be satisfying to customers and profitable for the firm.
PLANNING AND DEVELOPMENT PROCESS

GENERATION OF
NEW PRODUCT SCREENING OF CONCEPT DEVELOP
IDEAS NEW IDEAS MENT & TESTING
PRODUCT TEST COMMERCIALISAT

BUSINESS DEVELOPMENT MARKETING ION &
ANALYSIS PROGRAMME EVALUATION
STAGES IN NEW PRODUCT DEVELOPMENT
New product development in respect of intrinsically new products goes through seven
important stages as shown above:-
GENERATION OF NEW PRODUCT IDEA:-

New product development starts with an idea. A system must be designed for stimulating
new ideas within an organization and then reviewing them promptly. In one study 80% of
companies pointed to customers as their best source for new product ideas. A growing
number of manufacturers are encouraging in some cases, requiring suppliers to propose
innovations. And franchise systems frequently turn their owner managers ideas into
highly successful products. Such as the egg Mcmuffin sandwich at McDonald’s and
annual club memberships at Moto photo film processing shops.
We visualize the detailed features of a model product. Ideas may be contributed

by scientists, professional designers, rivals customers, sales force, top management,
dealers etc., We may need sixty new ideas to get one commercially viable product.
Consumer’s problems are the most fertile ground for the generation of new
product ideas. This is equally true for both industrial and consumer products. In a variety
of products, ranging from shampoos to computers, customers generate clues leading to
new product ideas.
IDEA SCREENING:- We have to evaluate all ideas and inventions. Poor or bad ideas
are dropped and through the process of elimination only most promising and profitable
ideas are picked up for further detailed investigation and research.
In this stage, the various new product ideas are put under rigorous screening by
evaluation committees.
Answers are sought to questions like:
 Is there a felt need for the new product?

 Is it an improvement over the existing product?
 It is close to our current lines of business? or does it take us to a totally new line
of business?
 Can the existing production and marketing organizations handle the product? Or
does it need extra expertise in production and marketing front?

The more attractive looking ideas pass on to the concept testing stage.
4) CONCEPT DEVELOPMENT AND TESTING:

All ideas that survive the process of screening (preliminary investigation) will be
studied in details. They will be developed into mature product concepts. We will have
precise description for the ideas and features of the proposed. At this stage we can
incorporate consumer meaning into our product ideas. Concept testing helps the
company to choose the best among the alternative product concepts. Consumers are
called upon to offer their comments on the precise written description of the product
concept viz., the attributes and expected benefits.
After the new product idea passes the screening stage, it is subjected to ‘concept
testing’ ‘concept testing’ is different from market test/test marketing, which takes
place at a later stage. What is tested at this stage is the “product concept” itself-
whether the prospective consumers understand the product idea, whether they are
receptive towards the idea, whether they actually need such a product and whether
they will try out such a product it it is made available to them. In fact, in addition to
the specific advantage of getting the consumer’s response to the product idea, this
exercise incidentally helps the company testing is of special importance when a
totally new product-in contrast to a ‘me too’ product – is being planned for
introduction.
4. BUSINESS ANALYSIS :
Business analysis is the next stage. This stage is of special importance in the new product
development process, because several vital decisions regarding the project are taken
based on the analysis done at this stage. This stage will decide whether from the financial
and marketing point of view, the project is worth proceeding with. Investment analysis
and profitability analaysis of the project under different assumptions are made at this
stage. The project’s over all impact on the corporation’s financial position with and
without the new product are estimated and compared.
Business analysis is a combination of Marketing research, cost benefit analysis

and assessment of competition. We have demand analysis, lost analysis and profitability
analysis. Business analysis will prove the economic prospects of the new product
concept. It will also prove roundness and viability of the selected product concept from
business view point. Now we can proceed to concentrate on product development
concentrate on product development programme, the proposed product must offer a
realistic profit objective.
5. PRODUCT DEVELOPMENT PROGRAMME :-
We have three steps in this stage, when a paper idea is duly converted into a
physical product. (a) prototype development giving visual image of the product, (b)
consumer testing of the model or prototype and (c) branding, packaging and labeling,
consumer testing of the model products will provide the Ground for final selection of the
most promising model for mass production and mass distribution.
6. TEST MARKETING:-
In test marketing, the new product, with the support of the chosen Marketing mix, is
actually lauched and marketed in a few select ‘test’ cities / towns / other territories. The
selected ‘test markets’ will be representative of the final market.
Test marketing needs careful handling care is required in the first place in
selecting the ‘test markets’ case is also required in monitoring the marketing is also a
time consuming process; it has to be carried out for a fairly long duration in order to
obtain reliable indications. It is possible for competitors k to manipulate the test
marketing process and make the results unreliable.
In India, many companies are now resorting to test marketing before
commercialization of new products. For example when HLL lauched organics, the
shampoo with glucasil, it did some test marketing, as a post of which, it sampled around
30 million sachets in selected markets territory both urban /semi-urban.
7. COMMERCIALIZATION:
At this stage the company takes the decision to go in for large – scale manufacturing and
marketing of the product. It yets to this stage only when all the previous steps provide
favourable signals. At this stage, the company fully commits itself to commercialize the
new product with the required investments in manufacturing and marketing. Now, the
straligies discussed in this is on marketing statesy over the product.
PRODUCT LIFE CYCLE

A Product passes through certain distinct stages during its life, and this is called the
product Life Cycle. The utility of the PLC concept lies in the fact that each stage in the
cycle is characterized by a Typical Mkt behavior and consequently, each stage lends itself
to the application of certain specific Marketing strategy. Understanding the PLC concept
and Managing it effectively can help in prolonging the profitable phases of a product’s
lifespan.
Stages in Product Life Cycle :
Introduction Growth Maturity Decline
S
A
L
Sales
E
Loss / TIME
There are four stages in PLC :
1) Introduction stage
2) Growth stage
3) Maturity stage
4) Decline stage
1) INTRODUCTION STAGE:-
During this stage, the product is in its introductory stage. At this stage, there may not be
a ready market for the product. Sales are low; The product undergoes Teething troubles;
profits seem a remote possibility; demand has to be created & developed; & customers
have to be promoted to try out the product. Obviously, this stage poses several problems
for the marketer. The complexity of the problems and the duration of the stage depend
upon the nature of the product, its price, its technological newness and the consumer’s
view of the product.
One of the crucial decisions to be taken in this stage is the pricing strategy to be
adopted. Discussing the strategy options in respect of the new product, no past data or
comparisons are available and the firm normally opts for one of the following strategies:
i) Market Skimming ii) Market penetration.

The market skimming strategy involves high prices, taking advantage of early entry and
the relative novelty of the product in the market introduction state.
ii) Penetration pricing involves low prices, with a view to having a good Market
coverage & eventually a mass Market for the product. It also aims at keeping the
competition out.
Another crucial are demanding attention at this stage is Mkt development &
promotion. As mentioned earlier, this is the stage when demand has to be created and
developed. The firm has to invest heavily in promotion & wait for the reward.
2) GROWTH STAGE:-
In this stage, customers have become aware of the product and its benefits, and
usage is growing. It is now in the interest of the innovating firm to achieve repaid market
access and penetration to se itself apart from the competition. Therefore firms wish to
accomplish maximum sales acceleration and constant incremental improvements
afterward. During this stage, supplies often have to increase plant capacity and run
promotional campaigns to consolidate and extend their share of the new market. These
actions require and extend their share of the new market. These actions requires
substantial investments, which usually absorb most profit. As a result, this part of the life
cycle may demand further net investment. Because of the increasing volume, prices
usually drop. Attracted by the growth in the Mkt, further competitions may enter, but
direct price competition tends not to be a major favour. This growth in sales, of
customers and of supplies can be explosive. The emphasis on promotion of the brand at
this stage way well be to establish consumer attitude toward the product. Marketing and
distribution efficiency become decisive favour at this stage.
3) MATURITY STAGE :-
No product or market can grow forever, eventually all the significant uses will
have been developed . The sales curve will flatten, and the market or product will have
reached a maturity. In the Mkt Maturity stage, demand tends to reach a saturation point.
And, there is enough supply from several competing sources. Dealers may dictate Terms
to the various competing firms. Price competition becomes intense and the pioneer tries
to distinguish his brand by substantial product differentiation and exploits the brand
loyalty he has built up. The pioneer feels compelled to communicate directly with the
consumers, since by now, dealers, have become multi-brand dealers. The pioneer may try
out product and packaging modifications & promotional deals & make special offers to
new Mkt Segments so that his sales volume do not shrink. Long term & short – term
marketing plans are implemented to profitably prolong the maturity stage, because the
pioneer may try out product & packaging modifications & promotional deals & make
special offers to new Mkt segments so that his sales volume do not shirnk. Long-term and
short –term marketing stage, because the pioneer knows that if this is not prolonged, it
could be easily lead in to the stage of Mkt delaine. Relatively low prices, increased
Marketing costs, keener competition and lesser profits characterize this stage.
4. DECLINE STAGE:-
In the dealine stage, sales being to fall. The demand for the product shrinks,
probably due to new & functionally advanced products becoming available in the Mkt.
Or the Mkt becoming apathetic to the product. In any case, prices & margins get
depressed; total sales and profit diminish. Some firms at this stage may try to link up the
sale of these producer with some other premium products they have developed and thus
try to stretch the life for the dealing product. Firms do perceive at this stage the
impending totally dealing product. Firms do perceive at this stage the impending total
dealine and prepare for the gradual phasing out of the product. Successful firms quite
often keep new producer ready in queue to fill the vaccum created by the dealine of
existing products.
CONCEPTS OF PLC HELPS MARKETING STRATEGY FORMULATION :

1. Facilitates pre-planning the product launch.

2. Facilitates prolonging the profitable phase.
3. Facilitates investment decisions on products.
4. Facilitates choice of appropriate entry strategy
5. Facilitates choice of the right time to exist.
6. Provides useful clues for managing customs.
1. FACILITATES PRE-PLANNING THE PRODUCT LAUNCH :

Many firms are seen to slip in Pre-planning new product launch. As a results, they
the bitter experience of suddenly entering the Mkt with a new product & struggling
with if, not knowing how to handle the problems peculiar to that stage. Wish the help
of the PLC concept, it is possible to foresee and predict the profile of the proposed
product’s life, The event that are likely to take place in the Mkt & the issues on
pricing, channel & promotion that are likely to come up.
2. FACILITATES PROLONGING THE PROFITABLE PHASE :-

The PLC concept can also be of help to the marketing man in prolonging the
profitable life phase of a produce. Some products get in Troubles in their maturity stage.
Powerful relation from competitors may threaten the product with a no-ware-growth &
no-more maturity situation and push them in to dealing.
The following are the strategic routes available to a firm for extending the
profitable stage of the life cycle of a product:
 Finding out new users for the product.

 Finding out new user for the product.
 Popularizing more frequent use of the product.
 Making the product more distinctive to the consumers.
3. FACILITATES INVESTMENT DECISIONS ON PRODUCTS:-
In a corporation’s long-term planning too, the PLC can be of help. In modern

days, produce part folio planning is becoming a crucial subject. PLIC is a tool and I has
can investment decisions on products, the firm can assign investment to the right
producer & avoid committing heavy resources on wrong produces.
4. FACILITATES CHOICE OF APPROPRIATE ENTRY STRATEGY :
As a new product Travels through in life, dift firms join the Mkt with their respective
versions at diff stages. Some join in the early stager, others Join Midway and yet others
join still later. Four distinct entry pastures are possible for a firm seeking entry into the
Mkt:
 As an ‘innovator’ at the introduction stage in the PLC as the product.


 As an ‘early follower’ in the early growth stage.
 As an ‘segment’ in the late growth stage
 As a ‘me-too’ in the maturity stage.
5. FACILITATES CHOICE THE RIGHT TIME TO EXIT :
The PLC concept can even help in deciding the right time to exit from a Mkt &
minimize the damage and costs of exit.
6. PROVIDES USEFUL CLUES FOR MANAGING CUSTOMERS :
Customer experience with the company changes as the product passes through its
PLC. As such, the PLC concept can be a useful tool in Managing customer. As a product
mover through the various phases of its life cycle, the consumer also moves on the path o
his experience in respect of the product. Though this change is reflected in the product.
Though this change is reflected in the shifts in the demand for the product through the
PLC stager. The marketing man will gain a great deal if he knows what actually happens
to the consumer during this process. The change in the experience level of the consumer
has some implication for the ‘Co-consumer relationship and consequently knowledge of
this change will help effective of customers.
MODULE-5
PRICING DECISIONS
MODULE 5 (4 Hours)
Pricing decisions: Pricing concepts for establishing value, Impact of Five
“C”s on pricing, Pricing strategies-Value based, Cost based, Market based,
Competitor based, New product pricing,
Pricing
“Meaning of price is the amount of money and or other items with utility needed to
acquire a product. Recall that utility in an attribute with the potential to satisfy wants”
MICAL J ETZEL,
WILLIAM J STAMTON,
BRUCE J WACKER
Price is probably the single most important decision in marketing in price. This is partly
because price is generally believed to have an important or impact on sales volumes. If
the price is too high and the market is competitive, sales may be correspondingly
reduced. Indeed many economists would see price as the main determinants of sales
volume. On the other hand, many of the more sophisticated marketers have found ways to
reduce the impact of price and sometimes have managed to increase sales by raising the
price.
Pricing is undoubtedly a vital decision area in marketing. Price is the only element in the
marketing mix of a firm that generates revenue. This helps to determine the profitability
of the business.
Importance of pricing
Price is significant in our economy in the consumers mind, and in an individual firm.
Price is the only element in the marketing mix of a firm that generates revenue. All
else generate the cost.
Price and sales volume together decide the revenue of any business. As sales volume
itself is dependent to a considerable extent on price, the latter becomes key to the revenue
of the business.
Price is also the most important determinant of the profitability of the business. The
importance of pricing as follows in those fields.
In the economy
A products price influences wages, rent, interest and profits, price is a basic regulator
of the economic system because it influences the allocation of the factors of production.
Labour, land and capital.
High wages attract labour, high interest rates attract capital and so on. As an allocator of
resources, price determines what will be produced (supply) and who will get the goods
and services produced. (Demanded).
Criticism of the American system of reasonably free enterprise and in turn, public
demand for added restraints on the system often triggered by negative reactions to prices
or pricing policies.
To reduce the risk of government intervention, business needs to establish prices in a
manner and at a level that consumers and government officials consider socially
responsible.
In the customers mind
Some prospective customers are interested primarily in low prices, where as another
segment is more concerned with other factors, such as service, quality, value and brand
image. Its safe to say that few, if any customers are attentive to price alone or use
entirely oblivious to price.
One study identified four distinct segments of shoppers brand loyal’s (relatively
uninterested in price), system beaters (prefer certain brands to buy but try to buy them at
reduced price), deal shoppers (driven by low price) and uninvolved, (seemingly not
motivated by either brand preference or low prices).
Price is also important as a component of value, to recent years customers, both in
consumer and business market, have come to expect and have sought better value in the
goods and service they purchase, value in the ratio of perceived benefits to price and any
other incurred costs. Example of other incurred costs for consumers include time
associated with shopping for the product, gasoline used traveling to the place of purchase.
And perhaps aggravation assembly the product, online shopping can reduce some
of these other costs, such the effort of traveling from one store to another however it
may amplify some costs, such as the perceive risk of buying a product without seeing it
in person.
When we say a product has ample value, we don’t necessarily mean it is
inexpensive or has a very low price, rather, good value indicates that a particular product
has the kinds and amounts of potential benefits such as quality, image purchase
convenience consumers expect at a particular price level.
In the individual firm
A products price is a major determinant of the market demand for it. Through
prices, money comes into an organization. Thus price affects a firm’s competitive
position, revenues and net profit.
According to Mckinsey consultant “pricing is extremely important because small
changes in price can translate into huge improvements in profitability”. In fact in a study
of 1000 companies the Mckinsey firm found that a 1% increase in price would improve
profits by 7% assuming no change in sales volume.
Pricing objectives
Profit Oriented Goals:-
Profit goals may be set for short or long term .A company select me of two profit oriented
goals for its pricing policy.
(a)ACHIEVE A TARGET RETURN:
A firm may price its product to achieve a target return a specified percentage return on its
sales or on its investments .Many retailers and wholesalers use a target return on sales as
a pricing objectives for short periods such as a year or a fashion season. they add an
amount to the cost of the product ,called a markup to cover anticipated operating expense
and provide a desired profit for the period.
Achieving a target return on investment is measured in relation to a firms networth (its

assets minus its liabilities). This pricing goal is often selected by the leading firm in an
industry .Target return pricing is used by industry leaders. Because they can set their
pricing goal more independently of competition than smaller firms in the industry.
(b)MAXIMISE PROFIT:-
The pricing objectives of making as much money as possible is probably followed more
than any other goal. the trouble with this goal is that to some people ,profit maximization
has an ugly cannotation ,suggesting profiteering high prices and monopoly where prices
are unduly high and entry into the field is severely limited ,public criticism can be
expected .If market conditions and public operations do not bring about reasonable prices
government may intervene.
In both economic theory and business practice ,however ,these is nothing wrong with
profit maximization .Theoreotically , if profits become high in an industry because supply
is short in relation to demand new capital will be attracted to increase production capacity
.This will increase supply and eventually reduce profits .In the market place it is difficult
to find many situations where profitering has existed over an extended period of time.
Substitute products are available .Purchase are postponable and competition can increase
to keep prices at a reasonable level.
A profit maximization goal is likely to be for more beneficial to a company if it is

pursued over the long terms .To do this ,however ,firms may have to accept modest
profits or even losses over the short term.
For example :- a company a new geographical market or introducing a new product

frequently does best by initially setting low prices to build a large clientele repeat the
firm to maximize its profits over the long term .
The goal should be to maximize profits on total output rather than on each single product . In
fact, a company may maximize total profit by setting law relatively unprofitable
prices on some products in order to stimulate sales of others.
SALES ORIENTED GOALS:-
In some companies , management ‘s pricing is focused on sales volume or the pricing

goal may be to increase sales volume or to maintain or increase the firms market share.
(a)INCREASE SALES /VOLUME:-
This pricing goal of increasing sales volume is typically adopted to a achieve rapid
growth or to discourage other firms from entering a market .The goal is usually stated as
percentage increase in sales volume over some period ,say, one year or three years.
Management may seek higher sales revenues by discounting or by some other aggressive
pricing strategy occasionally companies are willing to incur a loss in the short run to
expand sales volume or meet sales objectives. clothing stores run end of season sales and
to dealers after rebates and below – market loan rates new cars many vacation slots .such
as golf courses and resorts reduce prices during off –season to increase sales volume.
MAINTAIN /INCREASE MARKET SHARE:-
In some companies ,both large and small the pricing objectives is to maintain or
increase market share.
Why is market share protected or purchased so vigorously ? In growing fields, such as

computers and other technology based products ,companies want large share in order to
gain added out with vendors drive down production costs and for project a dominant
appearance to consumers .In order to gain a foothold in the market place, may electronic
commerce firms emphasized market share or sales volume over profits at least in the
short run perhaps that’s one reason why so many of these dot-com went out of business.
Most of the industries today are not growing much if at all and haze excess production
capacity .many firms need added sales to utilize their production capacity more fully
and in turn , gain economics of scale and better profits ,because the size of the pie is not
growing is most cases ,business that need added volume have to grab a bigger slice of
the pie-that is greater market share.
Pricing Strategies: A Best Practices Overview
Few would argue that the Internet and other sophisticated technologies have radically
changed the business environment, often in ways we can't even detect yet. And prices and
margins in virtually every industry are facing downward pressures like never before. But
what does the future of pricing strategy look like? That depends on who you ask.
We turned to three experts on pricing issues -- TEC speakers R. Sam Bowers and
Douglas Gilliss and former TEC speaker Eric Mitchell -- to get their take on this issue.
Interestingly, while they tend to agree on the symptoms of the problem and the overall
diagnosis, they do not agree on the cure. All three acknowledge that new technology,
unlimited access to information and increasing global competition are conspiring to
"commoditize" entire industries and force prices into a seemingly endless downward
spiral. Their opinions diverge, however, when it comes to the response they believe
CEOs and companies should take to counter those relentless market forces.
When faced with constant demands from customers to lower prices, Mitchell and Gilliss
support a value-added approach. In essence, they feel that companies can overcome
commodity pressures and maintain high margins by finding narrower market niches to
compete in and then focusing on adding value to the customer in order to differentiate
themselves from the competition. When customers understand the difference you bring to
the table, they willingly pay a higher price.
Not so, counters Bowers. He believes that the value-added mindset is a relic of the old
economy, that in the new economy the process of commoditization is inevitable and
unstoppable. By fighting it, you only make matters worse by raising your costs higher,
which makes it impossible for you to lower price and still make money. In a world where
customers have many vendors they consider to be equals, says Bowers, the only way to
make money is by continually lowering your cost structure so that you can compete on
price. Companies that continue to employ a value-added approach will soon cost
themselves right out of business.
Which strategy is right for your business? Only you can decide. However, whether you
adopt a value-added or low-cost approach, a well thought-out strategy will generate far
better results than a knee-jerk response to competitive pressures or changing conditions in
the marketplace.
SPECIAL PRICING STRATEGIES AND SITUATION
to be effective in setting initial prices, evaluating existing prices, and adjusting them as
necessary, a firm needs to be aware of a variety of special pricing strategies and
situations.
one price and flexible price strategies

early in its pricing deliberations, management should decide whether to adopt a one price
or flexible price strategy. under a one price strategy, a seller charges the same price to all
similar customers who buy identical quantities of a product. under a flexible price
strategy, also called a variable price strategy, similar customer may pay different prices.
when buying identical quantities of a product, this practice is normally legal.
most organizations follow a one price strategy, this strategy shifts the focus from price to
other factors, such as product quality. a one price strategy can build customers confidence
in a seller, whether at the manufacturing, wholesaling or retailing level-because the buyer
does not have to worry that the other customer paid lower prices. thus, with a one price
strategy, weak bargainers need not think they are at a disadvantage.
several airlines, continental and US airways for eg, have used aggressive flexible pricing
to enter new markets and to increase their market shares on existing roots ( however this
strategy hasent produced consistent profit for either enterprises). their new business
comes from two sources. passengers now fly on other airlines and passengers would not
fly at higher price. especially in the second group demand for air travel is highly elastice.
the trick is to keep apart the segment of pleasure, travellers(in which demand tends to be
elastic) and the segment of business travellers (in which demand is typically inelastic).
airlines seperates these segments by placing restriction on lower price tickets requiring
advance purchase and a saturday night stay in the destination city for example. flexible
pricing is also used in many other fields.
price lining
price lining involves selecting a limited number of prices at which a business will sell
related products. it is used extensively by retailer of apparel. the athletic store, for
instance, sells several styles of shoes at $39.88 a pair, another group at $59.95 and a third
assortment at $79.99.
for the customers, the main benefit of price lining is that it simplifies buying decisions.
for the retailers, price lining helps in planning purchases. the buyer for the athletic store
can go to market. looking for shoes that can be sold at one of its three prie points.
odd pricing
odd pricing, another psychological strategy, is comonly used in retailing. odd pricing sets
prices at uneven (or odd) amounts, such as 49 cents or $19.95, rather than at even
amounts. odd pricing is often avoided in prestige stores or on higher-priced items.
expensive men's suits, for example, are purchased at $750, not $749.95.
Leader pricing and unfair practices acts.

Many firms primarily retailers temporarily cut prices on a few items to attract the
customers. This strategy is called leaders pricing. The items on which prices are cut are
termed leaders; if the leader is priced below the stores cost, it’s a loss leader.
Leader should be well - known, heavily advertised products that are purchased
frequently. For example, for a while, Amazon.com cut the base price of currently popular
books of 50%. As stated in one article, “Amazon may be able to treat best - selling books
as loss leaders that attract customers into its online stores where they can be tempted by
other merchandise that isn’t priced so cheaply”. But to improve profit margins, Amazon
and other book sellers eventually scaled back the discount on the best sellers. Unfair trade
practices act sometimes called unfair sales act to regulate leader price. Typically these
laws prohibit retailer or whole seller from selling an item below invoice cost plus some
stipulated amount varying from state to state.
According to this law reduce retailer’s freedom to set prices going a step further,
the purpose of a business isto make a project on the total enterprice, not necessarily on
each transaction. Thus unfair practises acts limit retailor ability to determine how best to
generate profits. Also, the minimum prices stipulated by these laws may result in higher
prices which hurts consumers pocket books. In some states those laws have been declared
unconstitutional.
High – low pricing and everyday low pricing.

Many retailer specially super markets and department stores that wants to engage in
price competition rely on high low pricing. This strategy entails between regular and sale
prices. On the most visible products offered by a retail firm. Frequent price reductions are
combined with aggressive promotion to convey an image of very low price. By starting
with relatively high prices, retailers can boost their projects through sales to the segment
of shoppers that really wants the product and is not very price sensitive. Then prices can
be cut by various amounts from the basis of quantities of remaining inventory for various
products. Practices of high - low pricing is common; in fact, according to one study, over
60 % of transactions in department stores involved “bale”(i.e; lower than original) prices.
given the need to change prices frequently, high low pricing can be costly. It also
may cause some consumers to not purchase at regular prices, but always wait for reduced
prices. Further the concern is that most transactions are made at decreased prices, which
means that the so called low prices are normal rather than real bargains.
For a retailer that intends to compete on the basis of price, the alternative to high-
low pricing is every day low pricing. Basically, everyday low pricing involves
consistently low prices and few if any temporary price reduction. This strategy is featured
by some large discounters, such as wal-mart and family dollar, warehouse clubs.
Their are several reasons for EDLP. Retailers expect that it will improve their
profit margins because. The average sales price will be higher than would be the case
with high-low pricing. Further, retailers can point to their use of ELDP. When negotiating
lower purchase prices from suppliers and operating expenses should be licensed, with
profit boosted.
Because of lower level of advertising.
Which is better EDLP or high –low pricing? A controlled expected compared the effects
of the two pricing strategies on 26 product categories in a chain of 86
grocery stores . EDLP increased sales where as high – low pricing resulted in slightly
lower volume .
Most important profits fell 18% with EDLP but jumped almost with high-low pricing
unaware of or ignoring this research , numerous firms rely on everyday low pricing.
RESALE PRICE MAINTENANCE .

Some manufacturers want to control the prices at which middlemen resell their
products ; this is termed as resale price maintenance .manufacturer seeks to do this to
protect the brands image.
Publicity ,they state that their control of prices . and avoidance of discounted prices
provides middlemen with ample profit margins . In turns consumers should be able to
expect sales help and other services when they buy the manufacturers products from
middleman , critics , however , clam that control over prices leads to inflated prices and
examine profit .
One way in which producers can gain a bit of control and perhaps provide guidance to
retailers is with a suggested list price . This price is set by a manufacturers at a level that
provides retailers with their normal markups .To illustrate a producers sells to, say a
hardware store a certain product for $9.95 , which would furnish the store with its normal
markup of 40% of selling price .This is only a suggested retail price, retailer have the
right to sell the product for less or more than the suggested price.
Other manufacturers try even harder to control their products retail prices. A
manufactures may even threaten to stop shipment of products to retailers that prices
products substantially below suggested list prices.
Is it legal to act aggressively in order to control retail prices?
The price controls were prohibited by the federal consumer Goods Pricing Act of
1975.According to this law , a producer no longer can set resale and impose them on
resellers.
pricing strategies - penetration pricing

Penetration pricing involves the setting of lower, rather than higher prices in order to
achieve a large, if not dominant market share.
This strategy is most often used businesses wishing to enter a new market or build on a
relatively small market share.
This will only be possible where demand for the product is believed to be highly elastic,
i.e. demand is price- sensitive and either new buyers will be attracted, or existing buyers
will buy more of the product as a result of a low price.
A successful penetration pricing strategy may lead to large sales volumes/market shares
and therefore lower costs per unit. The effects of economies of both scale and experience
lead to lower production costs, which justify the use of penetration pricing strategies to
gain market share. Penetration strategies are often used by businesses that need to use up
spare resources (e.g. factory capacity).
A penetration pricing strategy may also promote complimentary and captive products.
The main product may be priced with a low mark-up to attract sales (it may even be a
loss-leader). Customers are then sold accessories (which often only fit the manufacturer’s
main product) which are sold at higher mark-ups.
Before implementing a penetration pricing strategy, a supplier must be certain that it has
the production and distribution capabilities to meet the anticipated increase in demand.
The most obvious potential disadvantage of implementing a penetration pricing strategy

is the likelihood of competing suppliers following suit by reducing their prices also, thus
nullifying any advantage of the reduced price (if prices are sufficiently differentiated the
impact of this disadvantage may be diminished).
A second potential disadvantage is the impact of the reduced price on the image of the
offering, particularly where buyers associate price with quality.
pricing strategies - skimming

The practice of ‘price skimming’ involves charging a relatively high price for a short time
where a new, innovative, or much-improved product is launched onto a market.
The objective with skimming is to “skim” off customers who are willing to pay more to
have the product sooner; prices are lowered later when demand from the “early adopters”
falls.
The success of a price-skimming strategy is largely dependent on the inelasticity of

demand for the product either by the market as a whole, or by certain market segments.
High prices can be enjoyed in the short term where demand is relatively inelastic. In the
short term the supplier benefits from ‘monopoly profits’, but as profitability increases,
competing suppliers are likely to be attracted to the market (depending on the barriers to
entry in the market) and the price will fall as competition increases.
The main objective of employing a price-skimming strategy is, therefore, to benefit from
high short-term profits (due to the newness of the product) and from effective market
segmentation.
There are several advantages of price skimming
• Where a highly innovative product is launched, research and development costs are
likely to be high, as are the costs of introducing the product to the market via promotion,
advertising etc. In such cases, the practice of price-skimming allows for some return on
the set-up costs
• By charging high prices initially, a company can build a high-quality image for its
product. Charging initial high prices allows the firm the luxury of reducing them when
the threat of competition arrives. By contrast, a lower initial price would be difficult to
increase without risking the loss of sales volume
• Skimming can be an effective strategy in segmenting the market. A firm can divide the
market into a number of segments and reduce the price at different stages in each, thus
acquiring maximum profit from each segment
• Where a product is distributed via dealers, the practice of price-skimming is very

popular, since high prices for the supplier are translated into high mark-ups for the dealer
• For ‘conspicuous’ or ‘prestige goods’, the practice of price skimming can be

particularly successful, since the buyer tends to be more ‘prestige’ conscious than price
conscious. Similarly, where the quality differences between competing brands is
perceived to be large, or for offerings where such differences are not easily judged, the
skimming strategy can work well. An example of the latter would be for the
manufacturers of ‘designer-label’ clothing.
Reactive and Proactive Changes:-
After as initial prices is set a number of situations may prompt a firm to change its price.
As costs increase , for instance, management may decide that raising price is preferable to
maintaining price and either cutting quality or prompting the product aggressively .
Accordingly to a pricing consultant ,its wise to raise price gradually and with little tem
fare. Temporary price cuts may be used to sell excess inventory or to introduce a new
product .Also if a company market share is deciding because a strong competition its
executive may react initially by reducing price. Decreasing price makes then most sense
when enough new customers are attracted to offset .The smaller profit margin per sale.
nevertheless , for many products a better long-term alternative to a price reduction is
improving the overall marketing program .
Any firm can safely assume that its competitors will change their price- soon or later.
Consequently ,every firm should have guidelines on how it will react .If a competitors
looses price, a short delay in reacting probably will not be perilous however if a
competing firm reduces price, a prompt response normally is required to avoid losing
customer.
FLAT-RATE PRICING:
A variation of the one-price strategy, received from attention
lately. under such an arrangement , a purchaser pays a stipulated single price and then can
consume a little or as much of the product desired. An example of highly successful flat-
rate pricing is the single admission feet charged by the Walt Disney co. at its amusement
parks. Some years ago, America online switched to a flat rate of $19.95 per month for
unlimited time online. Flat - rate pricing should be used only for products with a low
managerial cost and as one writer states “for which there is limit to demand.
SINGLE-PRICE STRATEGY:
Is an extreme variation of the one-price strategy. Not only one all
customers charged the same price, but al items sold by the firm carry a single price. This
approach, which originated many decades ago, involves offering frugal shoppers a
variety of merchandise ranging from grocery items to cosmetics at a single price.
Price war:-
A price was may begin when one firm decreases its price in an effort to increase its sales
volume and or market share. The battle is on if other firms retaliate ,reducing price on
their competing producers .Additional price decrease by the original price cutter and or
its competitors .
Status Quo goals
Two closely related goals stabilizing price and meeting competition are the least
aggressive of all pricing goals. They are intended simply to maintain the firms current
situation that is the status quo with either of these goals, a firm seeks to avoid price
competition.
Price stabilization often is the goal in industries where
The product is highly standardized
One large firm such as Phelps dodges in the copper industry. Historically acted as a
leader in setting their prices. Smaller firms in these industries tend to follow the leader
when setting their prices.
What is the reason for such pricing behaviour?
A price cut by anyone firm is likely to be matched by all other firms in order to remain
competitive, therefore no individual firm gains but all may be suffer smaller profit, a
price boost is unlikely to be matched, but price boosting firm faces a differential
disadvantage, because other elements of a standardized product such as gasoline as
perceived to be fairly similar. Even in industries where there are no price leaders,
countless firms deliberately price their products so meet the prevailing market price.
FACTORS INFLUENCING PRICING
INTERNAL FACTORS
# corporate and marketing objectives of the firm.

# the image sought by the firm through pricing.
# the characteristics of the product
# the price elasticity of demand of the product
# the stage of the product in its life cycle
# use pattern and turn around rae of the product
# costs of manufacturing and marketing
# extent of distinctiveness of the product and extent of differentiation practised.
# other elements of the marketing mix of the firm and their interaction with pricing.
# composition of the product line of the firm.
EXTERNAL FACTORS
# Market characteristics (these are related to demand , customer and competition)

# Buyer behaviour with respect to the product .
# Bargaining power of major customer.
# Bargaining power of major suppliers.
# Competitors pricing policy.
# Government controls or regulation and pricing
# Other relevant legal aspects.
# Societal or social consideration
# Understanding reached, if any with price
PRICING OBJECTIVES
profit is one of the major objectives of the pricing firms usually adopt profit optimisation
rather than profit maximisation of the objectives as they consider optimum profit over
along period to be a sounder objectives than maximum profits in the short term
obviously. Optimum is a relative term here and its definition with vary from firm to firm.
The firm must evolve a clear idea of the optimum from its perception of business
realities and the objectives and standards it has set for itself.
Every marketing activity include pricing should be directed towards a goal. The
management should describe on its pricing objective before determining the price itself.
OBJECTIVES FIRM SEEK IN PRICING
* Profit maximisation in the short term.

* Profit optimisation in the long term
* A minimum returns on investment.
* A minimum returns on sales turnover
*Achieving a particular sales volume
*Achieving a particular market share
* Deeper penetration of the market
* Entering new market.
* Target profit on the entire product line, irrespective of profit less in individual
products.
* Keeping competition out or keeping it under check.
*Keeping parity with competition.
*Stability prices and margins in the market.
*Providing the commodities at prices affordable by weaker sections.
* Providing the commodities or services at prices that well stimulate
economic development.
MODULE 6 (6 Hours)
Distribution decisions: Meaning, Purpose, Channel alternatives available to
the marketing manager, Factors affecting channel choice, Channel design and
Channel Management decision, Channel conflict, Distribution system,
Multilevel Marketing (Network Marketing)
INTRODUCTION
Of the four elements of marketing mix viz., product, price, promotion and
distribution, distribution [i.e., the channels of distribution and physical distribution] is the
most important element. The success or failure of a firm depends largely upon the
efficiency of distribution
MEANING
The term ‘channel’ is derived from the French word ‘canal’ meaning artificial
water way for transportation or irrigation so, channel of distribution refers to the
pathway, path or route taken by goods as they flow or move from the point of production
to the point of consumption or use.
In the words of Prof. W. Stanton “channel of distribution is the route taken by the
goods as they move from the producer to the ultimate consumer or industrial user”
According to Philip kotler “every producer seeks to link together the set of
marketing intermediaries that best fulfill the firm’s objective. This set of marketing
intermediaries is called the marketing channel [also trade channel or channel of
distribution]”
ROLES OF CHANNELS OF DISTRIBUTION

Distribution channel have a distinctive role in the successful implementation of
marketing plans and strategies. These channels perform the following marketing function
in the machinery of distribution.
13. The searching out of buyer and seller [contacting]
14. Matching goods to the requirements of the market [merchandising]
15. Offering products in the form of assortments or packages
16. Persuading and influencing the prospective buyer to favour a certain product
and its maker [personal selling / sales promotion]
17. Implementing pricing strategies in such a manner that would be acceptable to
the buyers and ensure effective distribution
18. Looking after all physical distribution functions
19. Participating actively in the creation and establishment of market for a new
product
20. Offering pre and after-sale services to customers
21. Transferring of new technology to the users along with the supply of products
and playing the role of change agents eg. in the agriculture green revolution in
our country
22. Providing feed back information, marketing intelligence and sales forecasting
services for their regions to their supplier
23. offering credit to retailers and consumer
24. Risk-bearing with reference to stock holding transport
CHANNEL FUNCTION AND FLOWS

A marketing channel performs the work of moving goods from producers to
consumers. It over comes the time, place, and possession gaps that separate goods and
services from those who need or want them. Members of the marketing channel perform
a number of key functions.
o They gather information about potential and current customers,
competition, and other actors and forces in the marketing environment
o They develop and disseminate persuasive communication to stimulate
purchasing
o They reach agreement on price and other terms so that transfer of

ownership or possession can be effected
o They place orders with manufactures
o They acquire the funds to finance inventories at different levels in the
marketing channels
o They assume risks connected with carrying out channel works
o They provide for the successive storage and movement of physical
products
o They oversee actual transfer of ownership from one organisation or
person to another
SELECTING THE TYPE OF THE CHANNEL
Firms may rely on existing channels, or they may devise new channels to better
serve current customers and to reach new prospects. Most distribution channels include
middlemen, but some do not. A channel consisting only of producer and final customer,
with no middlemen providing assistance is called direct distribution. A channel of
producer, final customer and at least one level of middlemen represents indirect
distribution.
All marketing intermediaries do not operate at the same tier, they operate at different
tiers. Each distinctive tier of intermediaries is referred to as “LEVEL” in the channel and
each link is referred to as a “CHANNEL MEMBER. The number of “LEVELS”
determines the “length of the channel”; the more the levels, the longer is the channel. The
number of “MEMBERS” does not determine the “LENGTH” of the channel.
Producers vary in their ability to attract qualified intermediaries. Toyota was able to
attract new dealers for its NEW LEXUS. When producers find it easy or difficult to
recruit intermediaries, they should at least determine what characteristics distinguish the
better intermediaries. They will want to evaluate number of years in the business, other
lines carried, growth and profit record. If the intermediaries are sales agents, producers
will want to evaluate the number and character of other lines carried and the size and
quality of sales force. If the intermediaries are department stores that want exclusive
distribution, the producer will want to evaluate locations, future growth potential and type
of clientele.
CHANNEL CHOICE:-
Marketing channel decisions considerably influence all other marketing

decisions such as pricing and promotion. Channel decisions also require special special
attention as these involve long term commitments to the other firms with whom
marketers enters into a contract. A distribution system is a key external resource equally
important with the key internal resources. The most fundamental factor for channel
choice and channel management is economic criteria i.e. cost and profit criteria. Channel
decisions are not made entirely on the basis of rational economic analysis. We have to
consider a number of factors such as the nature of the product, market trends, completion
outlook, pricing policies, typical consumer needs and needs of the manufacturer.
The other factors are:-
 PRODUCT – For perishable goods speedy movement needs shorter channel or

route of distribution. For durable and standardized goods longer and diversified
channel may be necessary.

 MARKET – Consumer market, retailer is essential. If the market size is large we
have many channels. For highly concentrated markets, direct selling is enough.
Size and average frequency of customer’s orders also influence the channel
decision. Wholesaler and retailer are required in the sale of food products.
MIDDLEMEN – Can provide wanted marketing services will be given first

preference. They must accept marketing policies and programmes of the
manufacturers and actively help in their implementation.
COMPANY – The company’s size determines the size determines the size of the
Market, size of its larger accounts and its ability to get middlemen’s co-operation.
A big firm may have shorter channel. The company’s product mix influences the
pattern of channels.
MARKETING ENVIRONMENT – This influences channel decision. During

recession and depression, shorter and cheaper channel is always preferable.
Technological inventions also have an impact on distribution.
COMPETITORS – Marketers closely watch the channels used by rivals. Many a

time, similar channels mat be desirable to bring about distribution of products.
CHANNEL DECISION:-
The first problem of channel design is whether you want direct sale to
consumer or indirect sale i.e. sale through middlemen. Under the direct sale the
channel problems in company operations as most of the system’s components are
parts of the company organization. The company must choose whether to attempt
exclusive distribution or combination of all the three. The decision is made after a
careful analysis of product, consumers, dealers, company objectives and policies
and the conflict within the channels and other relevant factors. The company must
resolve channels and bring the product profitability to the market.
THE 3 MAIN CHARACTERISTICS INVOLVED IN SELECTION OF

CHANNEL ARE AS FOLLOWS:
 PRODUCT CHARACTERISTICS

 CONSUMER CHARACTERISTICS

 MIDDLEMEN CHARACTERISTICS
PRODUCT CHARACTERISTICS:
It refers to the various characteristics of a product such as its class whether

consumer product or industrial product. Its bulk and size, its uses, its price, the
rapidity of fashion change, the frequency of its purchase, the sales and after sales
services required by the product. The product characteristics have a considerable
influence on the selection of the channel distribution.
CUSTOMER CHARACTERISTICS:
It refers to the number of potential buyer, their geographical dispersion,

their frequency and regularity of purchases, buying motives. The customer
characteristics influence the selection of channels of distribution.
MIDDLEMEN CHARACTERISTICS:
It refers to the number of the middlemen available for distributing the

products, their willingness to undertake the work of distribution, their location,
their size and financial strengths, their products lives, their sales potentiality, their
behavior etc. The middlemen characteristics also exert considerable influence on
the selection of the channels of distribution.
FACTORS AFFECTING THR CHOICE OF CHANNLES ARE AS FOLLOWS
It is a firm and its customer oriented and it should be proper.
1. Market considerations:
a. Type of the market

b. Number of potential customers
c. Geographic concentration of the market
d. Order size.
2. Product considerations
a. Unit value
b. Perish ability
c. Technical nature
3. Middlemen considerations
a. Services provided by middlemen

b. Availability of desired middlemen
c. Producer’s and middlemen’s policies
4. Company considerations
a. Desire for channel control
b. Service provided by seller
c. Financial resources.
DESIGNING DISTRIBUTION CHANNELS:-

A company wants a distribution channel that not only meets customers
need but also provides a differential advantage. To design channels that
satisfy customer and outdo competition an organized approach is required.
We suggest a sequence of four decisions.
- specify theories of distribution.
- select the type of channel.
- determine intensity of distribution
- choose specific channel members.
DESIGNING A CHANNEL SYSTEM:-

We have seen that a firm can take its product to the user in more ways
than one. It can use different types of intermediaries; it can also structure its
channel in different ways.
FOR EXAMPLE, it can have a single tier or a two tier or a three tier
channel structure.
1. FORMULATING THE CHANNEL OBJECTIVES:

Formulation of channel objectives is the first step in designing a
channel system. The objective clarifies what is sought to be achieved by
having the channels. All firms seek to realize certain common objectives
by having the channels.
a. CHANNEL OBJECTIVES WILL DECIDE CHANNEL DESIGN:-

Channel objectives will determine the channel design the firm
should adopt, when Hindustan lever lays down the objectives that life boy
should be available in more than 80% of the villages of India, its channel
design takes shape in line with this objective.
b. CHANNEL OBJECTIVES DIFFER FROM FIRM TO FIRM;

CONSEQUENTLY, THEIR CHANNEL DESIGN DIFFERS:-
We see that often channel design of firms differ from one another.
Even within a given industry, different firms have different channel
designs. This is so because their channel objectives differ. Even in respect
of those objectives, which are by and large common for all firms, we can
see variations, in emphasis from firms to firm.
2. IDENTIFYING CHANNEL FUNCTIONS:-

Identification of the function to be performed by the channel is
the next in designing the channel system we have already discussed the
channel system. We have already discussed the channel functions in
detail. Suffice to add here that channel design depends on the functions
expected of the channel and the channel function must be identified in
the specific context of the firm in order to get practical direction in
designing the channel system.
a. LINKING CHANNEL DESIGN TO PRODUCT

CHARACTERISTICS: Different products require different channel
systems. The firm should analyze the characteristics of the product and
choose the channel system that matches the product best
b. INDUSTRIAL AND CONSUMER PRODUCTS NEED DIFFRENT

CHANNEL:
Industrial and consumer products usually need different channels as
they differ from each other in several vital respects.
c. ONLY SOME INDUSTRIAL PRODUCTS ARE AMENABLE FOR

SELLING THROUGH CHANNELS:
First of all, among industrial products, only some are amenable for
selling through channels. The firm should check whether its items are
appropriate for selling through channels/distribution.
d. EVEN WITHIN CONSUMER PRODUCTS, CHANNEL

REQUIREMENTS OF DIFFERENT PRODUCTS MAY VARY:
Even within consumer products, different products may need different
channels. In the chapter on buyer behavior we came across three distinct
categories products within consumer goods –viz (1) convenience goods (2)
shopping goods and (3) specialist goods .we have seen that different
categories of goods require different channel systems, since buying behavior
and buying habits differ ,depending on the category
e. PRODUCT INTERVIEWS TYPE AND NUMBER OF CHANNEL

MEMBER AS WELL
Product characteristics influence not merely the channel design to be opted
for; they often influence even the type and number of Intermediaries needed.
f. EVALUATION OF THE DISTRIBUTION ENVIRONMENT:-

While selecting the channel design, the firm should also take into
account the distribution environment obtaining in the country/territory. It
should evaluate the vital features of the distribution environment and ensure
that the proposed channel design is compatible with them.
3. EVALUATION OF COMPETITORS CHANNEL DESIGN:-

The firm should also study the competitors channel patterns before
deciding its channel design. While the firm may not necessarily follow the
competitors in channel design, it should analyze the plus and minus of the
channel pattern adopted by each of its major competitors.
4. MATCHING THE CHANNEL DESIGN TO COMPANY

RESOURCES:- Choice of channel is also governed by the resources
available with the organization.
a. FIRMS WITH LIMITED RESOURCES SETTLE FOR

CONVENTIONAL CHANNEL:-
Firms with limited resources and small volume of business will
normally find it difficult and uneconomical to opt for own channels. For
such firms, establishing branch showrooms/depots/ retail outlet of their
own will result in a high cost unit of distribution, which they cannot
afford.
b. FIRMS WITH LARGER RESOURCES HAVE ORE OPTIONS:-

Firms with larger resources and larger marketing operations can go
in for varied distribution channels. Intact, in INDIA, in several
businesses, firms which are strong in resources, usually operate two
parallel channels, one reaching out to the customer through company
depots and showrooms, and the through conventional intermediaries.
5. EVALUATING THE ALTERNATIVE AND SELECTING THE

BEST:-
The firm must evaluate these alternative designs and choose the best among
them. Actually, two distinct evaluations.
a. ECONOMIC EVALUATION; BALANCING COST, EFFICIENCY

AND RISK:-
Cost and efficiency are the two main parameters in economic evaluation.
Often though not necessarily, the two are directly proportional.
b. CONCEPT EVALUATION; FLEXIBILITY AND

CONTROLABILITY:-
Conceptual evaluation is also equally important. It has to be used for
assessing the flexibility and controllability of the alternative. It is possible
that economic evaluation points to one particular alternative as superior,
while conceptual evaluation gives it a low rating.
c. SOME VITAL ASPECTS IN FINALISING THE CHANNELS:-The

job is not over with the selection of the basic channel design. Within a given
design; different arrangements are possible. It means that further decisions
are needed. The important aspects to be decided are:
- channel intensity
- Number of tiers
- The appropriate variant within the design
d. CHOOSING THE CHANNEL INTENSITY:-

While two firms may go for the same channel design, they may
need different intensities. It depends on the position of the firm- its
objectives and strategies, its sales, profits, and market coverage, present and
projected, and its resources.
e. CHOOSING THE NUMBER OF TIERS CORRECTLY:-

The second decision concerns the number of tiers. How many tiers
should the channel have this issue is related in a way to channel intensity. in
a majority of cases, the choice will be between single tiers and two tiers,
while in a few cases, firms may find it necessary to going for a three tier
channel. When a firm opts for a sole selling agency or marketer the latter
will have their own channel arrangement and the tiers that operate under
them automatically become a part of the firm’s channel.
f. COMPARITIVE MERITS OF SINGLE TIERS AND TWO TIERS

CHANNEL:-
The single tier pattern provides better motivation to each member
in the channel, as in such a pattern, the rate discount is available in full
measure to the retailer. The pattern also brings in savings to the firm by the
avoidance of multiple transports and handling the firm can also service all
the outlets directly in this pattern.
The two tier pattern helps quicker outflow of stocks and more
intensive coverage of the market. But, it results in lower profits to retailer as
the available trade margin has to be shared between two tiers. it also
weakens the principles control over the outflow compared to single tier
pattern.
g. SELECTING APPROPRIATE VARIATE WITHIN A GIVEN

DESIGN:-
Usually, within a given channel design different variants can be
thought of. For example, firm A and firm B may opt for the same channel
design consisting of conventional wholesalers and retailers. Still their
approaches within the model can vary from one another. Firm A may opt for
a wholesaler-weighted system, while firm B for a retailer weighted system.
h. AN EYE ON THE FUTURE IS ESSENTIAL:-

Once a channel structure is created and channel members are put
in place and channel compensations are streamlined, it will be difficult for
the firm to exit from that structure and put a alternative in its place.
i. ONE UNIFIED SYSTEM:-

The firm has to handle wholesaling, retailing and other forms of
selling as one unified system and not as separate entities. The linkage among
them in the tears of functions, costs and efficiency being quite strong,
looking at them as independent entities will lead to sub-optimization of the
channel management task as a whole.
j. BUILDING CHANNEL SYSTEM BY BOTTOM UP METHOD:

The purpose of having marketing channels is to serve channel
customer needs effectively. This means that the prime task in channel
design is to determine the type of retailers who are best suited to serve
customer needs in the specific context and develop the distribution
DIRECT MARKETING
While discussing non-store retailing methods in the chapter on contemporary channel

scenario in India, we had mentioned that we shall be discussing direct marketing in a
separate chapter as they differ from non-store retailing.
A) Nature and scope of direct marketing:-
Let us first find answers to the following basic questions:

 What does direct marketing mean?
 How does it differ from conventional mass marketing?
 How does it differ from non-store retailing? What are the features of that
distinguish it clearly?
 And, why should it be treated as a distinct/special form of marketing?

B) Difference between direct marketing and conventional marketing:
To put in a nutshell, direct marketing CDM is the process by which a firm

approaches its customers on one-to-one basis and markets its products
directly to them. In conventional marketing, a firm approaches the
customers on a mass basis and sells to them indirectly.
Let us examine this difference in detail.

 Conventional marketing is mass marketing: DM is demassified marketing.
Direct marketing is demassified marketing; it deals with customers on a

one-to-one basis. In conventional marketing the marketer sells to a
multitude of customers treating them as a mass; he uses mass production,
mass communication and mass distribution devices. While mass
marketing targets the average customers of the chosen segments and
develops its offer for the average customer, DM targets the individual
customers and develops its offer for him
 DM Deals Customers Directly; Conventional Marketing Deals Them

Indirectly:-
In direct marketing, the marketer sells to the customers directly; he

reaches out to them directly, communicates with them directly and also
delivers the product to them directly. The Marketer knows his customer
and has on his hands a specific profile of each individual customer.
 DM is Interactive Marketing; Conventional Marketing is a One-Way Activity:-
Thirdly, whereas conventional mass marketing is a one-way activity to large

extent, direct marketing is interactive to a large extent.
For example, while mass marketing has to remain content with one-way
message flowing from to the firm to the market, direct marketing enjoys the
advantages of two-way communication, between the firm and every one of the
customers
 DM does not Involve Marketing channels/stores; Conventional Marketing

Relies Heavily on it;-
In conventional mass marketing activity normally takes place through
marketing channels/intermediaries/stores. In the marketing, it takes place without
such channels/stores.
 DM does not Involve Advertising/Mass Promotion; Conventional Marketing

Relies Heavily on it:-
Absences of advertising /mass promotion are other major distinguishing

features of DM. While conventional mass
Marketing heavily relies on promotion on a mass basis for generating demand, DM
believes in promotion on one-to-one basis.
[c] Difference between DM and non store retailing:-

Now, let us turn to the difference between direct marketing and non-store
retailing.
DM and Non-Store retailing are not synonymous; DM is a Marketing, Method;

Non-store retailing is just a retailing Method:-
Just because DM does not involve marketing channels/stores, one should not
assume that DM and non-store retailing are synonymous with one another. Absence of a
store in the retailing process is only one of the features of DM. The point is that there are
other parameters defining DM and these are absent in non-store retailing.
 DM Compresses the steps in the Marketing Process:-
Direct Marketing tackles all the component tasks of marketing, such as

customer identification /demand generation, product adaptation, packaging
modification, distribution, price negotiation, marketing communication, and
sales promotion in an integrated and compressed manner. It eliminated all
intermediaries and handles the consumer directly and in one action. It also
reaches the product to the customer directly.
[D] DM Scores over mass marketing on many courts:-

DM scores over mass marketing significance as it confess many unique benefits.
 Delivers Near-Perfect Solutions to Customers Problems:-
Direct marketing facilities delivering near-Perfect solutions to customer’s

problems. As the marketer is able to contact the customer individually, he can know
exactly what the customer wants and make it available to him. With such two-way
information, the marketer is able to five-tune his offer and match it with the customer’s
requirements. DM is intact, information-led marketing with the back-up of information; it
offers better solutions to customer’s problems.
 Provides for Customization:

In mass marketing, the products on offer are all mass-produced and there is
very little customization. Also, with wells marketing, which is one major from of
direct marketing, the offers can be completely customized.
Levi Strauss can be cited as an example. To ensure quality and reduce
errors, Levi Strauss makes each of jeans from start to finish by a single group of
workers.
The case of Dell Computers explained in the following chapter is another

good example.
 Helps Achieve Excellence in Product and services:-
Direct marketing is better placed for offering products and services of

excellence. Several marketing scholars and practitioners are of the views that mass
marketing has so conditioned the consumers as to be satisfied with unsatisfactory
products and has restricted even their expectations. Direct marketing is a welcome
way-out in the respect.
 Facilities sharper segmentation and Targeting:-
Direct marketing also supports accurate segmentation and targeting of the

market, which inform facilitates formulation of more fine-tuned marketing strategies.
 Facilitates Relations Building:
Direct marketing scores over mass marketing convincingly when it comes

to building customer relations. The concept of relationship marketing has been
gaining ground in recent times. As the market place gets more competitive, product
clutter more prominent and consumer more discerning, it is only through devices
likes relationships marketing that the marketer can acquire a competitive advantage.
 Cost-Effective:-
Direct marketing is also more cost-effective. This is largely because it

eliminates channel costs and advertising costs, the two dominant elements of costs in
conventional marketing.
 Eliminates channel costs:-
In many cases, channel costs/retail margins now amount to 50% and more
of total marketing costs. As a result conventional mass marketing is becoming a costly
method of selling products. It also saves costs of credit to wholesalers and retailers. As
the products are sold by passing the conventional ware-house-depot-distributor-retailer
rigmarole, the hassles are also less.
 Eliminates advertising costs and communicates more effectively:-

DM also saves advertising costs, which may account for up to 30% of total
marketing costs. It also ensures more effective communication compared to mass
advertising routes. Advertising addresses consumers and mares and does not demand
immediate attention. DM is better focused and also demands immediate attention.
Developments in IT have also lowered the overall cost- per-contact. DM has
thus become more attractive now from the cost angle.
 Benefits the consumers too:-

Besides conferring so many benefits on the marketer, direct marketing brings
substantial benefits to the consumers too. It enables consumers to shop at their homes. It
saves their time and they see it as convenient and hassles-free.
In short, DM is a potent technique of marketing and over the years, its scope
popularity has been increasing and costs falling
(E) Requisites for success of DM:-

Direct marketing is sometimes mistaken as a job of just maintaining a list of
names and addresses, and sending occasional letters to those in the list, in reality, direct
marketing is an intricate task, involving many steps. And there are several requisites for
its success.
 Comprehensive, Reliable and updated database

To begin with, a comprehensive, reliable and update database of
consumers is essential for the success of a direct marketing program. Analysis has shown
that lack of proper database is the primary database for several direct marketing
programmes ending up as mail programmes.
 Careful and close targeting of markets/prospects:-

Close targeting is an equally important requisite. DM’s potential is not realized,
when it is not targeted closely. In fact, the ultimate aim in direct marketing is to target the
customers on an individual basis.
 Service guarantee and product warranty:-

Direct marketing proves particularly effective when it is backed by service
guarantee. Like- wise, a good warranty too improves its effectiveness. Consumer should
feel free to return the product if it falls short of their expectations.
 Backroom logistics:-
The backroom logistics should be perfect. For example, once the response start
flowing in, there must be a mechanism for attending to them promptly. Also, there should
be, also a systematic follow-up. Reminded mailers should also go out promptly wherever
applicable. Fast delivery of the product is the most vital part of backroom logistics.
 An eye for details:-

An eye for details is essential here. For example, case should be taken in
designing the mailer. The outside envelope, the sale letter, the reply form and the reply
envelope all must be developed carefully. Also, the response to enquiries should be swift.
 Sustained effort:-
Finally, it must be said that to derive full benefit out of direct marketing, it must
be adopted as on integral part of the marketing Endeavour, direct marketing is not so
effective when it is carried out as a one-shot effort.
(F)Forms of direct marketing:-

Direct marketing has several forms. The major ones are listed. DM has so many
forms essentially because it incorporates a variety of media. Catalogue marketer use the
catalogue as the tool. All these marketing methods basically do the same thing, they
gather customer names and sell their products direct to them.
The newer tools actually permit more effective and more sophisticated
direct marketing.
 Mail order, marketing/catalogue marketing:-
Mail order marketing (MOM) catalogue marketing, also known as mail order
business (MOB), is one of the well-established methods of direct marketing. Since many
mail order marketers. Since many mail order marketers use catalogue for communication
with the consumer, this form of marketing is often referred to as catalogue marketing.
 Otto Burlington:-
Burlington’s is an established MOB. Burlington’s markets a wide range of
products through this method. It is now expanding its business and is also planning a
video catalogue. Made of payment can be VPP, demand draft, cheque, money orders or
credit card.
 First mail order company:-

First Mail Order Company has been focusing on customers in the smaller cities,
people who have the money but do not have the access to products.
 Anjali textiles:-
Mail order marketing is resorted to even in products like textiles, anjali mills,
Bangalore, for example, has been marketing a substantial part of its sarees through mail
order. The sales take place as per mail orders placed by the customers.
 Other example:-
Mother care, India, another MOB, has set its target on mothers who buy items
meant for kids. Jewelers, Surat diamond is also doing same MOB.
 Direct mail marketing:-
Direct mail marketing (DMM) is similar to MOM. Usually, when a trading house
markets various products by mail order, we refers to it as MOM or MOB and when a
manufactures markets his products by the same method, we refer to it as DMM.
 HLL using DM for Denim aftershave:-
HLL had relied on direct mail to a sizeable extent in marketing its aftershave
brand, denim. The target was the members of elite clubs in the metros. Each prospect was
mailed a three- color brouch are with a scratch n ‘sniff coating as a sample.
 Campaigns by datamatics direct:-
We had mentioned earlier that datamatics direct is one of the leading independent
direct marketing outfits in India. It relies heavily on direct mail
 Datamatics campaign for ANZ bank:-
To cite one example, datamatic direct did a direct mail campaign for ANZ bank’s
loan on equity shares. Business reply cards formed part of the mail to elicit orders from
customers.
 Datamatic campaign for LUX soap:-
In another direct mail campaign, datamatics focused on HLL’s LUX soap. The
direct mail communication stated that mail orders received through the enclosed business
reply card would receive prompt attention and the item on order would be delivered at the
doorsteps of the customers and cash could be paid on delivery.
MIDDLE MEN
LEVELS OF DISTRIBUSTION
1. MANUFACTURE CUSTOMER
2 MANUFACTURE WHOLESALER RETAILER CONSUMER
3 MANUFACTURE AGENT WHOLESALER RETAILER CONSUMER
4 MANUFACTURE AGENT RETAILER CONSUMER
Middle men or intermediaries are individuals or independent business concerns

that start between the manufacturers or producers and the final consumers or industrial
users and sender services in connection with the purchase and sale of goods as they move
from the manufacturers or producers to the final consumers or industrial users.
Role or functions of the middlemen in the distribution of goods:

Middlemen perform a number of functions in the marketing of goods.
1. The main function of middlemen is to provide the connecting link between the
manufacturers or producers and the final consumers or industrial uses.
2. They perform the functions of concentration, equalization, and dispersion of
goods efficiently.
3. They add place, time and possession utilities to goods.
4. They reduce the marketing activities to an optimum number. This results in a
number of economies in marketing.
5. As they are specialists in their respective sub-functions of marketing, they are
able to perform the marketing functions efficiently and economically.
6. They undertake the functions of storage and transportation of goods on behalf of
the producer sellers and the buyers.
7. They provide valuable marketing information to the producer-sellers and the
buyers
8. They assume marketing risks also
9. They provide financial assistance to the suppliers as well as the customers.
10. They conduct marketing of goods efficiently and economically on behalf of
numerous small producers who do not have enough financial resources and sales
force to undertake direct selling to the final consumers
TYPES OF MIDDLEMEN:
Middlemen may be broadly classified into two types. They are
1. Agent middlemen, functional middlemen or mercantile agents
2. Merchant middlemen
Agent middlemen or functional middlemen are those middlemen who
perform various marketing functions without taking title to goods.
Merchant middlemen are those middlemen who perform various
marketing functions and also acquire and transfer title to goods.
MEANING OF AGENT MIDDLEMEN:

Agent middlemen are independent business concerns who actively assist in the
transfer of title to goods from the sellers to the buyers without acquiring the ownership of
those goods or title to those goods. They just act as agents and assist in the purchase or
sale of goods on behalf of others for a certain percentage or fixed amount of commission.
CHARACTERISTICS OF AGENT MIDDLEMEN:

1. Agent middlemen may come either between the manufacturers and the
wholesalers or between the manufacturers and the retailers or between the
manufacturer and the consumers.
2. They may work either for the sellers or for the buyers or for both.
3. They may work either for the sellers or for the buyers or for both.
4. As they do not take up the ownership of goods, they do not bear the ordinary risks
of marketing.
5. They work on commission basis.
TYPES OF AGENT MIDDLEMEN:

1. Brokers.
2. Commission Agents.
3. Manufacturer’s agents.
4. Selling agents.
Brokers: A broker is a agent middlemen engaged in the negotiation of a contract of

sale or purchase for a seller or buyer. His main duty is to being the seller and the
buyer together and negotiates the terms of the transaction and leaves the acceptance
of the terms of the transaction to the parties concerned. He does not take possession
of the goods. Usually, a broker works for the seller but he is free to work even for the
buyer.
Commission Agents: A commission agent is an agent middleman who sells or buys

goods for his principle for a commission. He can sell or buy goods in his own name.
He takes possession of the goods, which he handles. A commission agent has more
powers than a broker.
Manufacturers Agents: A manufacturer’s agent is an independent person or

business concern employed by a manufacturer to sell a part of his products in a
specified area.
A manufacturer agent sells goods on behalf of a manufacturer in a limited area
at the manufacturer. But he has continuous relations with his principle.
Manufacturers’ agents are very useful to the manufacturers.
Selling Agents: A selling agent is an agent middleman who is employed by a

manufacturer for the sale of his entire output in the entire market for a certain
commission. He has discretion to determine the prices and the terms and conditions of
sale without consulting his principal.
WHOLESALERS
Wholesalers are individuals or business firms who will sell products to be

used primarily for resale or for industrial use. The wholesaler is a bulk purchaser with
the object of resale to retailers or other traders after breaking down his “Bulk” in
smaller quantities.
CHARACTERISTICS:
The main characteristics of a wholesaler are:
1. He is a merchant middleman.
2. He is a middleman or intermediary between the manufacturers or producers and
the retailers.
3. A true wholesaler acts neither as a manufacturer nor as a retailer, but merely acts
as an intermediary between the manufacturers and retailers.
4. He generally deals in one or a few classes of goods related to one another.
5. As he specializes in one or a few classes of goods. He is considered to be an
expert in the class or classes of goods in which he deals.
TYPES:
On the basis of their function, wholesaler be divided into three categories.
There are:
1. Manufacturer wholesaler: A manufacturer wholesaler is one who combines

manufacturing activities along with the wholesale business. He may sell not only
his own goods (i.e., the goods manufactured by his). But also the goods to other
manufactures (i.e., the goods of other manufactures bought by him in bulk for the
purpose of resale)
2. Retailer wholesaler: A retailer wholesaler is one who combines his wholesale
business with retail business. He buys goods in large quantities from the
manufactures and sells them not to the retailers, but to the ultimate consumers
directly through his own shops.
3. Wholesalers Proper or Merchant Wholesalers: Is one who concentrates only

on the wholesaling business (i.e., buys goods in large quantities from the
manufactures and resells them is small quantities to the retailers)
The wholesalers may be sub – divided into two categories. They are:
i. Service wholesalers: Service wholesalers are those wholesalers who
perform all the marketing functions and render to the manufactures
and retailers all the services expected of them.
ii. Limited Function Wholesalers: Limited function wholesalers are those
wholesalers who perform only a few of the marketing functions of the
wholesalers.
The service wholesalers may be further subdivided into different categories either: a)
On the basis of the degree of specialization,
b) On the basis of the territory covered by them.
FUNCTIONS:
A wholesaler performs a number of functions. His main functions are:
1. Linking: A wholesaler links the manufacturers with the retailers. In other words,
the goods produced by the producers are distributed to the retailers through the
wholesaler.
2. Assembling: The wholesaler purchases goods from numerous manufactures or
producers spread out in different parts of the country and assemble them at one
place.
3. Storing: The wholesaler’s stores the goods purchased by him from the numerous
producers in his warehouse, and dispatches to the retailers on demand.
4. Grading: The wholesaler sorts out the goods in his warehouse into different
grades on the basis of their quality, size, shape etc., and there by increase the
utility of the goods.
5. Packing and labeling: The wholesaler splits the large packages purchased by
him from the manufactures into small lots, packs them, relabels them and keeps
them ready for dispatch in convenient quantities.
6. Transporting: The wholesaler arranges for the transportation of goods from the
manufactures to his warehouse. He also arranges for the transportation of goods
from his warehouse to the retailers.
7. Risk – bearing: By owning and holding goods under his custody, the wholesaler
assumes the risks arising out of fall in price, change in demand, damage,
deterioration of quality, theft, fire etc.,
8. Financing: The wholesaler, often, grants credit facilities to the retailers. He
provides credit even to small manufacturers.
9. Dispersing: The wholesaler disperses or sells the goods to the retailers in time in
the quantities required by the retailers.
10.Informing: The wholesaler collects information about the tastes and needs of
the consumers through the retailers and passes it on to the manufacturers.
11.Pricing: The prices fixed by the wholesaler have a bearing on the resale prices
of the retailers.
12.Equalizing Prices: By adjusting the supply of stocks according to the demand,
the wholesaler helps in the equalization of prices between places and between
times.
SERVICES OF THE WHOLESALER TO MANUFACTURERS AND RETAILERS:

The Wholesaler renders many useful services to the manufacturers as well As to
the retailers. They are:
Wholesaler’s services to the Manufacturers:

The wholesaler renders many useful services to the manufacturers as well as to
retailers. They are:
1. The wholesaler collects small orders from the retailers and places a bulk order
with the manufacturer.
2. The wholesaler provides the manufacturer with a ready market and thereby,
enables the manufacturer to concentrate on his production without bothering
about distribution.
3. As the wholesaler undertakes to hold large stocks of goods, he relieves the
manufacturer of the trouble, expense and risk of holding large stocks of goods.
4. By placing bulk orders with the manufacturers, the wholesaler enables the
manufacturer to carry on his production on a large scale and enjoy the benefits of
large-scale production.
5. By undertaking advertising and sales promotion on behalf of the manufacturer,
the wholesaler reduces the advertising and selling expenses of the manufacturer.
6. By taking the goods from the manufacturer then and there, the wholesaler helps
the manufacturer to keep his capital circulating.
7. The wholesaler collects information regarding the tastes and fashions of the
consumers through the retailers and passes it on to the manufacturers.
8. Sometimes, the wholesaler collects raw materials from small and scattered
producers and sells them in bulk to the manufacturers.
Wholesaler v/s Retail trade:
Wholesale operates on a large - scale in the central market and act as the first
outlet in distribution. Retailers operate on a small - scale and in the local markets, selling
directly to the consumers a wide variety of goods to satisfy numerous and changing wants
of customers.
Wholesale business needs large capital, wholesale prices and margins are
relatively lower, and the business can be carried on with or without a showroom. Retail
business requires limited capital, the prices and margins are relatively higher and the
business requires a shop with or without display.
ORGANISATION OF WHOLESALE BUSINESS

OR WHOLESALERS ORGANISATION:
A wholesaler is required to hold huge stocks. Further, he has to grant credit to the
retailers as well as the manufacturers. Therefore, wholesale business is generally,
organized on a large scale as a joint stock company or as a partnership firm. As a
wholesale business is large in size. Its organization is divided into sections and
departments. Generally, its organization is divided into two sections. They are:
1. Administrative Section: It is concerned with finance, accounts, correspondence,

records and filing and general administration. It is sub - divided into
i. Finance and accounts department.
ii. Correspondence Department
iii. Records and filing Department
i. Finance and Accounts Department : This department is concerned

with the receipt and payment of cash, and is responsible for
maintaining the accounts of the whole organization. Accounts relating
to purchases and sales, receipts and payments of money, debtors and
creditors, etc., are maintained by this department. It is also responsible
for the preparation of the financial budget of the whole organization.
This department is in charge of the chief Accountant.
ii. Correspondence Department: This department looks after the

correspondence of the whole concern. The receipt of letters and the
writing of suitable replies to the letters received are the main functions
of this department.
iii. Records and filing departments : This department preserves the

letters and other records of the concern for future ready reference by
adopting suitable method of filing and indexing. This department also
is in the charge of the secretary.
2. Executive section:
The executive section is concerned with buying, selling, credit, advertising,
warehousing and dispatching. It is sub-divided into:
i. Buying Department : This department is responsible for making

purchases for the whole concern. The department for ascertaining the
types of goods demanded by the public. This department is in the
charge of the purchase manager.
ii. Selling Department : This department is responsible for the selling of

the products of the concern. This department is in the charge of the
sales manager.
iii. Credit Department: This department is concerned with the

sanctioning of credit to approved customers and collection of debts. It
is in the charge of the credit managers
.
iv. Publicity and Advertising Department : This department is
responsible for advertising the products of the concern. It is in the
charge of the publicity manager.
v. Warehousing Department : This department is concerned with the

proper storage and warehousing of goods of the concern. It is in the
charge of the ware house keeper or store keeper.
vi. Dispatch department : This department is concerned with the dispatch

of goods to the retailers according to their instructions. It also arranges
for the transport of goods to the retailers. This department is in the
charge of the warehouse keeper or storekeeper.
RETAILERS
Retailing is a trading activity directly related to the sale of goods or services to the
ultimate customer or consumer for personal, non-business use. A retailer is the last
middleman in the machinery of distribution and he is responsible to satisfy recurrent
wants of consumers.
Retail selling is a trade of varied goods in small quantities to the final consumer.
There are 3 distinguishing features of retail trade. The retailer deals in small quantities
and his business is usually local in character. Secondly retail trade always shows
tendency towards variety as it has to satisfy innumerable wants of consumers. Thirdly, a
retailer, by operating near about the residential areas of consumer, sells his wares directly
to consumers. Manufactured goods are worthless until they pass Acid test of retail
distribution. The retailer alone can offer safe and reliable goods to customers.
RETAILER
(Middlemen in distribution)
Buying for consumers Selling for products

1. Anticipating wants 1. Expert seller
2. Breaking of bulk 2. Advertiser of goods
3. Transport and warehousing 3. Bulk Breaking.
4. Financing 4. Marketing
5. Product guarantees 5. Storage.
6. Repairs & Installation. 6. Feedback source of
Consumer needs reaction.
NATURE AND SCOPE OF RETAILING
We have seen that providing place, time, form and possession utilities to
consumers is the essence of distribution management. Retailing takes care of a major part
of this task.
FUNCTIONS OF ALL KINDS OF RETAILERS;

1. A Retailer aims at giving maximum local convenience to consumers.
2. Consumer need not store the commodity beyond thin normal requirements. Any
article in any quantity is always available on demand at the retailers shop.
3. A retailer usually maintains which variety of stocks, consumers are provided
variety of choice and hence selection becomes easier for them.
4. Though personal salesmanship, window display and demonstration a retailer
attracts customers to new goods and supplies information about the arrival of new
goods.
5. A retailer sells not merely the goods but service to the customers.
6. Retailer’s acts as the last outlet for distribution of goods within the country. A
retailer is the connecting link between the wholesaler and the consumer.
7. Retailers are absolutely essential in meeting daily demands of consumers for fresh
food sniffs, vegetables, fruits, and milk, numerous daily works.
8. Personal services offered by retailer to their regular customers assure individual
satisfaction. Retailers help customers in making wise selection of goods.
9. Specialized retailers offer durable and costly consumer goods on installment sale
basis. Even ordinary retailers give credit to their customers.
10. Retailers have personal contacts with the consumers and users of their products.
CHARACTERISTICS OF ITINERANT RETAILERS:

1. They hold limited stocks
2. As their stocks are limited, they can dispose of their stocks in a day or two
3. They generally sell goods of low quality, and so their goods are low priced.
4. Their prices are not fixed but are subject to bargaining.
5. They usually sell goods of household consumpti8on like vegetables, eggs,
stationeries etc.
6. They are not particular about building up their reputation or goodwill, as they go
on changing their place of business.
7. Their business needs very low capital investment.
8. As they exhaust or dispose of their stocks in a day or two, generally they do not
suffer from fluctuations of prices.
9. They provide maximum conveniences to the consumers, as they bring the goods
to the very door steps of the consumers.
PERQUISITES OF RETAIL TRADE:

1. Strategic Planning: Retailer must also have the planning of sound strategies.
Product assortment, price strategies and promotional methods need special
attention.
2. Physical Facilities: It is said that there are 3 keys to retail success. Location,
location and location. The ultimate success of the retail store is governed by
favorable location.
3. Price: Appropriate price strategy can have the greatest market appeal particularly
in inflation. Low price with reasonable quality and due service can work wonders
in retailers.
4. Promotion: Unique advantages of promotional campaigns explain considerable
success in retailing.
5. Buying: A retailer can acquire highly desirable product assortment, indicating
good values to his customers, through shrewd buying practices and sound
decision making ability. He should act as a expert buying agent on behalf of his
customer.
6. Service: Retailers give non-price competition essentially through personalized
services. Prompt and courteous service, quality assurance, sale on approval. Many
back guarantee, service often sale, free home delivery, grant of credit securing
goods to satisfy individual taste and liking, offer of expert advice to customers
and comfort and convince in the store all these are welcome by customers and
their patronage goes to such retailers.
7. Efficient management: Better planning, organization and control can offer
efficient retail options. Proper selection, training, remuneration and motivation of
sales force will also assure higher efficiency.
LARGE SCALE RETAIL ORGANISATIONS:

The large-scale organizations owned by partnerships and companies are:
1. Super markets/Bazaars.
2. Combination Stores.
3. Departmental stores.
4. Chain/Multiple shops.
5. Hyper markets.
6. Discount stores.
7. Retail catalogue showrooms.
8. Manufacturers showrooms
9. Factory outlets or off Price retailers
10. Shopping centers in (Suburban areas)
ADVANTAGES OF LARGE SCALE RETAILING:

1. Benefits of bulk purchases
2. Superior management personnel and specialized management practices in the
forms of better planning, organization and control and consequent benefits of
specialization at all levels.
3. Benefit of mechanization and automation in retailing operations.
4. Financial Strength due to adequate capital resources
5. Effective use of advertising and salesmanship techniques
6. Full scope for experimentation, innovation and marketing research.
7. Development and promotion of their own brands.
8. Maximum risk bearing capacity
CONFLICT AND CONTROL IN CHANNELS

To manage distribution channels effectively require an understanding of both

conflict and control, including technique to
(3) Decrease conflict, or at least its negative effects, and
(4) Increase a firm’s control within a channel
Channel conflict exists when one channel member perceives another channel
member to be acting in away that prevents the first member from achieving its
distribution objectives. Firms in one channel often compete vigourously with
firms in other channels; this represents horizontal conflict. Even within the same
channel, firms disagree about operating practices and try to gain control over
other members’ actions; this illustrates vertical conflict.
HORIZONTAL CONFLICT
Horizontal conflict occurs among firms on the same level of distribution.
Basically horizontal conflict is a form of business competition. It may occur
among:
o Middlemen of the same type: Mary vale hardware (an independent
retailer) Versus Fred’s Friendly Hardware (another independent retailer)
o Different types of middlemen on the same level Fred’s Friendly Hardware
(an independent retailer) Versus Lowe’s points area (a single department
in a store within a giant chain
A primary sources of horizontal conflict is scrambled merchandising, in
which middlemen diversify by adding product lines not traditionally
carried by their type of business
VERTICAL CONFLICT
Vertical conflict typically occurs between producer and wholesaler or
between producer and retailer
PRODUCER VERSUS WHOLESALER

A producer and a wholesaler may disagree about aspects of their
relationship
Why do conflicts arise? Basically, manufacturers and wholesalers have
differing point of view on the one hand, manufacturers think that wholesalers neither
promote products aggressively nor hold sufficient inventories
On the other hand, wholesalers believe that producers either expect too
much, such as requiring an extensive inventory of the product, or do not understand the
wholesaler’s primary obligation to customers.
To bypass wholesalers, a producer has two alternatives
o Sell directly to consumer: producers may employ door to door, mail-
order, or online selling. They may also establish their own distribution
centers in various areas or even their own retail store in major markets
o Sell directly to retailers: under certain market and product condition,

selling directly to retailers is feasible and advisable. An ideal retail market
for this option consists of retailers that buy large quantities of a limited
line of products
To avoid being bypassed in channels, wholesalers need to improve their

competition position
o Improve internal performance: many wholesalers have modernized
their operations. Functional, single-story warehouse have been built
outside congested down town areas and mechanized materials-
handling equipment has been installed
o Provide management assistance to customers: wholesalers have
realized that improving customers operation benefits all parties. Thus
many of them offer programs to assist their customers in areas such as
layout, merchandise selection, promotion and inventory control
o Form a voluntary chain: in this from of vertical marketing system a
wholesaler contractually agrees to furnish management services and
volume buying power to a group of retailers. In turn, the retailers
promise to buy all, or almost all, their merchandise from the
wholesaler
o Develop middlemen’s brands: some large wholesalers have
successfully established their own brands. Super value has developed
its Favorite brand for groceries and super chill for soft drinks. A
voluntary chain of retailers provides a built in market for the
wholesaler’s brands
Producer versus Retailer

Conflict between manufacturers and retailers- in fact between any
two parties is likely during tough economic times. Conflict is also bound
to occur when producers complete with retailers by selling through
producers owned stores or over the internet.
Producer and retailer may also disagree about terms of sale or
conditions of the relationship between the two parties. In recent years
large retail chains have demanded not only lower price but also more
service from suppliers. Producers sometimes find it costly, if not nearly
impossible, to comply with the retailers new policies
Both producers and retailers have methods to gain more control.

Manufacturers can
8. Build strong consumer brand loyalty: meeting and surpassing

customer’s expectations is a key in creating such loyalty
9. Establish one or more forms of a vertical marketing system:
Procter and gamble uses the administered types of VMS
whenever possible
10.Refuse to sell to uncooperative retailers: this tactic may not
be defensible from a legal stand point
11.Arrange alternative retailers: squeezed by large retail chains,
some producers are building their distribution strategy around
smaller specialty store
12.Develop store loyalty among consumers: skillful advertising
and strong store brands are means of creating loyal customers
13.Improve computerized information system: information is
power. Knowing what sells and how fast it sells is useful in
negotiating with suppliers
14.form a retailer co-operation : in this type of vertical
marketing system, group of relatively small retailers brands
together to establish and operate a wholesale warehouse
WHO CONTROLS CHANNELS

Every firm would like to regulate the behavior of the other members in its
distribution channel. A company that is able to do this has channel control. Channel
power is the ability to influence or determine the behaviour of another channel
member.
There are various sources of power in distribution channel.
They include:
o Expertise: for example, possessing vital technical knowledge about the product
or valuable information about customers
o Rewards: providing financial benefits to co-operative
channel member.
o Sanctions: penalizing unco-operative firms or even
removing them from the channel
PHYSICAL DISTRIBUTION
Types of Distrbution Function
Marketing represents two different but closely interrelated distribution functions.

-> Demand-oriented function
-> Supply-oriented function
Demand-Oriented Function
These are concerned with the search for and simulation of consumer demand. The
channels of distribution viz.,
wholesellers, retailers and all type of marchant agent perform these demand orianted
function.
Supply-Oriented Function
These are concerned with physical product flow these activities revolve around the
notion of movement and they
represent physical distribution as a planned movement (physical flow) of production
from the supplier to the firm and from the firm to the dealers or resellers
economically quickly and efficiently.
Distribution cover two problems are:
Channel mangement representing demand -oriented marketing operation.
Physical distribution management representing supply-oriented marketing operation.
i.e all activities involved in physically moving and storing product in process of
marketing. In marketing
pavlance it is called logistics.
Physical Distribution
The marketing process is not complete . Simply by creating superb product and creatinga
customer by aggressive
salesmanship. Delivering the product to the customer at the right time and place is an
equally importent function in
marketing.In the process of marketing this vital function is called physical distribution.
Physical distribution involves of physical flow of

MODULE 7 (8 Hours)
Marketing communication: Concept of communication mix, communication objectives,
steps in developing effective communication, stages in designing message, Advertising:
Message content, Structure, Source, Advertising Budget, Measuring effectiveness of Ad.
Hierarchy of effects in advertising Promotion: Promotion mix, kinds of promotion, Tools and
Techniques of sales promotion, Push-pull strategies of promotion.
Personal selling: Concept, Features, Functions, Steps involved in Personal Selling
Publicity / public relation: Meaning, Objective, Merits/Demerits.
Direct Marketing: Meaning, Features, Functions, Merits/Demerits, Role of media in DM
Basic concepts of e-commerce, e-business, e-marketing, m-Commerce, marketing.
PROMOTION
Introduction:
Promotion is a form of communication with an additional element of persuasion to accept

ideas, products, and services and hence persuasive communication becomes the heart of
promotion, the third element of marketing mix. In essence, promotion is the spark plug of our
marketing mix and an important marketing strategy. People must know that right product at
the right place is available at the right price. It is said that in a competitive market without
promotion nothing can be sold.
In marketing effective communication is absolutely necessary even though you have a superb
product, best package and also you offer a fair price.
PROMOTION:
It is the process of marketing communication to inform, persuade, remind and influence
consumer or users in favor of your product or service. Promotion has three specific purposes.
It communicates marketing information to customers, users and resellers’ .Promotion
persuades and convinces the buyer and influences his or her behavior to take the desired
action.
It is defined as the coordinated self initiated efforts to establish channels of information and
persuasion to facilitate or foster the sale of goods or services, or the acceptance of ideas or
points of view. “It is a form of non price competition”.
Integrated marketing communication
Introduction:
Marketers have a variety of promotional tools at there disposals. So make effective use of
them, a companies personal selling, advertising and often promotional activities should form a
co-ordinates promotional program within its total marketing plan. However these activities are
fragmented in many firms within potentially damaging consequences. For ex: advertising
directions and sales force managers may come into conflict over resources, or the sales forces
may not be adequately informed about the defects of a particular sales promotion effort. These
would not happen if the elements comprising promotion were part of an integrated
manufacturing communication (IMC) effort, a strategic business process used to plan,
develop, execute, and evaluate co-ordinates communication with and organization public.
IMC begins with a strategic planning effort designed to co-ordinate promotion with product
planning, pricing and distribution the other marketing mix elements. Promotion is influenced
for instances by how distinctive a product is and whether its planed price is above or below
competition.
IMC Elements:
Organizations that have adopted an IMC philosophy tend to share several characteristics,
notably:
1) An awareness of the target of the audiences information sources as well as there media
habits and preferences.
2) An understanding of what the audience knows and believes that relates to the desired
response.
3) The use of a mix of promotional tools, each with specific objectives but all linked to a
common over all goal.
4) A carefully timed, continuous flow of information adopted to the audience information
needs.
PROMOTION AND MARKETING:
From a marketing perspective promotion is intended to further the objectives of an

organization.. It makes use of various tools to perform three essential promotional roles-
informing, persuading and reminding target audiences. The relative importance of these roles
depends on the circumstances faced by the firm.
The most useful product will be a failure of no one knows it exists, so the first task of
promotion is to inform. Beyond simply being aware of a product or brand, customers must
understand what benefits it provides, how it works, and how to get it. These are just a few
examples of information provides channel members and consumers. In electronic appliance
industry for example, Palm uses advertising to educate the market about the operation and
features of each new generation of handhelds. In another instance, when a small Canadian
firm was facing with consumers who could not understand its toy called X-zylo, a gyroscopic
cylinder that can be thrown 100 yards, the inventor informed the retailers and consumers
about it with demonstrations at fairs, in company parking lots and on school playing fields.
Another purpose of promotion is persuasion. Intense competition among firms puts

tremendous pressure on the promotional programs of sellers. In an economy with an abundant
supply of products, consumers have many alternatives of satisfying even basic physiological
needs. As a result, persuasive promotion is essential. Campbell Soup Co. has been marketing
condensed soup for over 100 years, and accounts for 80% of all soup sales in US. It is one of
the most recognized brands and packages in the country. Studies show that virtually every
household has some Campbell’s Soup in the pantry. Yet the firm spends over $100 million a
year advertising soup. Partly, because it regularly introduces new flavors but more important,
because its primary products are condensed soups that require some minimal preparation and
as one industry analyst quipped, “If your under 70 years old you buy ready-to-serve soup”.
Thus Campbell’s faced with intense competition from alternative easier-to-prepare foods, uses
promotion to persuade soup buyers.
Consumers also must be reminded about a product’s availability and its potential to satisfy.
Sellers bombard the market place with thousands of messages every day in hopes of attracting
new consumers and establishing markets for new products. Given the intense competition
Promotion as an personal and impersonal effort by a seller or the seller’s representative to
inform persuade or remind a target audience.
PROMOTION METHOD:-
Promotion to whomever it is directed is an attempt to influence. There
are four form of promotion:-
(I) Personal Selling

(ii) Sales Management
(iii) Sales Promotion
(iv) Publicity and Public Relation
(i) Personal Selling :- It is a direct presentation of a product to a prospective customer by

a representative of the organization selling it. Its takes place face to face or over the
telephone, and it may be directed to a business person or a final consumer.
(i) It enhances customer’s confidence in the seller.
(ii) It promotes long term business relation through personal intimacy.
(iii) It provides a human touch to business transaction.
(iv) It helps facilitates the seller to understand each customer’s needs and preferences more
clearly.
(v) It helps to satisfy a customer by modifying the product as per the customer choice and
preferences.
(vi) Personal selling followed by personal service helps to build long term relation between
the business and the customer.
(vii) It helps keep up with the competition in the market, based on product’s customization
as per customer’s preferences.
(viii) It is a powerful and effective tools in convincing the customers about the product.
(ix) Through personal selling the time log between introducing a product ct through the
media and actually selling it, is reduced.
(x) It provides prospective customers with a better understanding of product and an
interactive opportunity to relays with the sales personal.
MAJOR STEPS IN EFFECTIVE SELLING
Most training program view the selling process as consisting of several steps that the
sales person must master. These steps focus on the goal of getting new customers
and obtaining orders from them. However most sales people spend much of their
time maintaining existing accounts and building long term customer relationships.
PROSPECTING
PREAPPROACH APPROACH
AND QUALIFYING
PRESENTATION
AND
HANDLING
CLOSING FOLLOW-UP
OBJECTION
 Prospecting and Qualifying:-The first step in selling process is prospecting

identifying qualifies potential customers. The sales person must often approach
many prospects to get just a few sales. Although the companies supplies some
leads, sales people used skill in finding their own. They can ask current
customers for the names of prospects. They can join organizations to which
prospects belong or can engage in speaking and writing activities that will draw
attention. They can search for names in news papers or directories and use the
telephone and male to track down leads. Sales people use to know how to qualify
leads that is how to identify the good ones and screen out the poor ones.
Prospects can be qualified by looking at their financial ability, volume of
business special needs, location and possibilities for growth.
 Pre-approach:-
Before calling on a prospect the sales person should learn as much as possible about
the organization (what is needs, who is involved in buying) and its buyers(their
characteristics and buying styles). This step is known as the pre approach.
The sales person should all objectives, which may be to qualify the prospects, to
gather information, or to make immediate sales. Another task is to divide on the best
approach, which might be a personal visit, a phone call or a letter. The best timing
should be considered carefully because many prospects are busiest at certain times.
Finally, the sales person should give thought to an overall sales strategy for the
account.
 Approach:-During the approach step, the sales person should know how to meet
and greet the buyer and to get the relationship off to a good start. This involves
the sales person appearance, opening lines and follow up remarks. The opening
line should be positive. The opening might be followed by some key questions to
learn more about the customers needs or by showing a display or sample to
attract the buyer’s attention and curiosity.

 Presentation and Demonstration:-During the presentation step of selling
process, the sales person tells the product “ story” to the buyer, showing how the
product will make or save money. The sales person describes the product
features and concentrates on presenting customers benefits. Using a need
satisfaction approach, the sales person starts with a search for the customers need
by getting the customers to do most of the talking.
Sales presentation can be improved with demonstrations aids, such as booklets,
flipcharts, slides, video tapes, video disks and product samples if buyers can see or
handle the product, they will better remember its features and benefits.
 Handling Objections:-Customer always have objections during the presentation

or when asked to place an order. The problem can be either logical or
physiological and objections are often unspoken. In handling objections, the
sales person should use a positive approach, sick out hidden objection, asked the
buyer to clarify any objections, take objections as opportunity to provide more
information and turn the objection into reason for buying. Every sales person
need training and skills of handling objections.
 Closing:-After handling the prospects objections, the sales person now tries to
close the sell. Some sales people do not get around to closing or do not handle it
well. They may lack confidence, fail guilty about asking for the order, or fail to
recognize the rig ht movement to close the sell. Sales people should know how to
recognize closing signals from the buyer, including physical actions, comments
and questions.

 Follow Up:-The last step in the selling process “follow up” is essential to store
customer satisfaction and repeat business. Right after closing, the sales person
should complete any details on delivery time, purchase terms, and other matters.
The sales person then should schedule a follow up call when the initial order is
received to make sure there is proper installation, instruction and servicing.
Managing the Sales Force
Recruiting, selecting
Training
Supervising
Motivating
Evaluating
Sales force management is defined as the analysis, planning, implementation, and

control of sales force activities. Effective management of the sales force is needed to
implement the company’s chosen sales force design and achieve its sales objectives.
Sales force management covers the steps in recruiting and selecting, training,
supervising, motivating, and evaluating representatives
o Recruiting and selecting sales representatives

At the heart of a successful sales force is the selection of effective representatives.

One survey revealed that the top 27 percent of the sales force brought in over 52
percent of the sales. Beyond differences in productivity is the great waste in hiring
the wrong people. The average annual turnover rate for all industries is almost 20
percent.
After management develops suitable selection criteria, the next step is to recruit
applicants by various means, including soliciting names from current sales reps,
using employment agencies, placing print and on-line job ads, and contacting
graduating college students. Selection procedures can vary from an informal
interview to prolonged testing and interviewing. Although test scores are only one
information element in a set that includes personal characteristics, references, past
employment history, and interviewer reactions,
 Training Sales Representatives

Today’s customers expect salespeople to have deep product knowledge, offer ideas
to improve customer operations, and be efficient and reliable. These demands have
required companies to make a much higher investment in training their sales reps.
Companies use training to help sales reps:
(1) Know and identify with the company;
(2) learn about the company’s products;
(3) Know customers’ and competitors, characteristics;
(4) Make effective sales presentations; and
(5) understand sales procedures and responsibilities.
Training time varies with the complexity of the selling task and the type of person
recruited into the sales organization. Training often involves a variety of methods,
including role playing, audio- and videotapes, CD-ROMs, and Web-based distance
learning.
 Supervising Sales Representatives

New sales representatives need more than a territory, a compensation package, and
training—they also need proper supervision. Reps paid mostly on commission
generally receive less supervision, while those who are salaried and must cover
definite accounts are likely to receive substantial supervision. In the course of
supervising sales reps, successful companies set norms for calls on customers and
prospects, and they help reps make the most efficient use of sales time.
 Motivating Sales Representatives

Some ambitious sales representatives are self-starters who will put forth their best
effort without any special coaching. The majority of reps, however, require more
encouragement and special incentives. This is especially true of field selling, which
can be frustrating because reps usually work alone, keep irregular hours, are often
away from home, frequently lack the authority to do what is necessary to win an
account, and sometimes lose large orders they have worked hard to obtain. Most
people, more over, require incentives, such as financial gain or social recognition, to
operate at full capacity.
Sales Quotas
Many companies set sales quotas prescribing what reps should sell during the year.
Quotas can be set on dollar sales, unit volume, margin, selling effort or activity, and
product type. After setting quotas, management often ties salesperson compensation
to degree of quota fulfillment. Sales quotas are developed from the annual marketing
plan..
Supplementary Motivators
Companies use additional motivators to stimulate sales force effort. One motivator is
the periodic sales meeting, a social occasion that also serves as an important tool for
education, communication, and motivation. Many companies sponsor sales contests
to spur the sales force to a special selling effort above what is normally expected.
 Evaluating Sales Representatives
Sources of Information
Management can obtain information about reps in several ways, including sales
reports, personal observation, customer letters and complaints, customer surveys,
and conversations with other sales representatives. These reports provide raw data
from which sales managers can extract key indicators of sales performance:
(1) Average number of sales calls per rep per day,

(2) Average sales call time per contact,
(3) Average revenue per sales call,
(4) Average cost per sales call,
(5) Entertainment cost per sales call,
(6) Percentage of orders per hundred sales calls,
(7) Number of new customers per period,
(8) Number of lost customers per period, and
(9) Sales force cost as a percentage of total sales.
Sales Management:-
It is defined as – “The overall management of sales and it refers to only a special application
of the process of management as a whole”.
Marketing stresses the importance of satisfying customer’s needs and wants through process
of exchange. Marketing occurs virtually in every aspect of life. Sales management plays an
important role in marketing, especially for firms business to – business market. Personal
selling is the most frequently used promotion technique in business markets and management
of the sales force is an important quality component of any selling effort.
MARKETING SELLING
CORPORATE
OBJECTIVE IS TO OBJECTIVE IS TO
INCREASE MARKET INCREASE SHARE
SHARE
OBJECTIVE IS TO
INCREASE PROFIT
STRATEGY IS
STARTEGY IS TO SELECTED PROFIT TO
PENETRATE MARKET SELECTED CUSTOMER
STARTEGY
TACTICS TACTIC TO PENETRATE

TO GROUP OF STORE
MANAGERS
RELATIONSHIP OF SALES STRATEGY TO MARKETING AND CORPORATE

PLANS
Advertising :
It is non personal communication paid for by a clearly identified sponsor promotion ideas,
organization or product. The term advertising originates from the Latin ‘advert’ that means to
turn sound. Advertising thus denotes the means employed to draw attention to any object or
purpose. In the marketing context, advertising has been defined as ‘any paid form of
presentation and promotion of ideas, goods or services by an identified sponsor. Through an
advertisement, the advertiser intends to spread his ideas about his product offering among his
customer and prospects.
Then they can make five critical decisions, known as the five Ms:
Mission: What are the advertising objectives?

Money: How much can be spent?
Message: What message should be sent?
Media: What media should be used?
Measurement: How should the results be evaluated?
FEATURES
1. It is a unique means of non-personal or mass communication announcing the sales of

goods or services. It can help to introduce a new product quickly.
2. The advertising is non-personal salesmanship performing similar functions like
personal salesmanship. It is a silent but forceful salesmanship. It helps to presale a
product.
3. It is an openly sponsored sales message regarding any product or service, i.e. the
sponsor can be identified.
4. It is a paid communication- part for by the sponsor (advertisers) to the media owner
(seller of advertising space or time)
5. advertising message can be addressed to numerous persons at a time – they may be

readers, listeners, viewers collectively called audience of advertisement.
FACTORS INFLUENCING THE MEDIA SELECTION IN

ADVERTISEMENT
The factors influencing the media selection in advertisement are:
1. Objectives of an ad . The purpose of a particular ad and the goals of the entire

campaign influence which media to use. If an advertiser has a short lead time,
local news paper or radio may be the medium to use.
2. Audience coverage. The audience reached by the medium should match the
geographic area in which the product is distributed. Furthermore, the selected
medium should reach the desired types of prospects with a minimum of wasted
coverage-that is, reach people who are not prospects for the product. Many
media, even national and other large-market media can be targeted at small,
specialized market segments.
3. Requirement of the message: The medium should fit the message. For e.g.,
magazines provide high-visual reproduction that attract attention along with
printed messages that can be carefully read and evaluated. As a result, they are
well suited to business-to-business advertising.
4. Time and location of the buying decision: If the objective is to stimulate a

purchase, the medium should reach prospective customer when and where they
are about to make their buying decisions.
5. Media cost: The cost of each medium should be considered in relation to the
amount of funds available to pay for it and its reach or circulation.
THE RECENT TRENDS IN ADVERTISING MEDIA ARE:
Medias Advantages disadvantages:
Newspapers Flexibility; timeliness good local Short life; poor reproduction

market coverage; broad acceptance; quality;
high believability small “pass-along” audience
Combines sight, sound, and motion; High absolute cost; high clutter;
Television appealing to the senses; high fleeting exposure; less audience
attention; high reach selectivity
Direct mail Audience selectivity; flexibility; no Relatively high cost;” junk mail”
ad image
competition within the same
medium; personalization
Radio Audio presentation only; lower
Mass use; high geographic and attention than television;
demographic selectivity; low cost no standardized rate structures;
fleeting exposure
Outdoor Flexibility; high repeat exposure; Limited audience selectivity;
low creative
cost; low competition limitations
Yellow Excellent local coverage; high High competition; long ad purchase

Pages believability; wide reach; low cost lead time; creative limitations
Newsletters Very high selectivity; full control; Costs could run away
interactive opportunities; relative
low costs
Brochures Flexibility; full control; can Overproduction could lead to

dramatize runaway costs
messages
Telephone Many users; opportunity to give a Relative high cost unless volunteers
personal touch are used
Internet High selectivity; interactive Relatively new media with a low

possibilities; relatively low cost number of users in some countries
Sales Promotions:
It is sponsor- funded, demand stimulating activity designed to supplement advertising and

facilitated personal selling it frequently consist of a temporary incentive to increase a sale or
purchase. Many sales promotions are directed at consumers the premium occurred by fast-
food outlets in conjunction with popular movies are examples.
It is an important instrument in marketing the lubricate the market efforts. Sales promotion
is a bridge or a connecting link covering the gap between advertising and personal
salesmanship, the two wings of promotion.
The Objectives of Sales Promotion are:
1) To gain the additional market share or additional revenue.

2) To expand the target market.
3) To develop favorable consumer experience with the product.
4) To add extra value to the product and develop brand fancies.
Sales Promotion Tactics
Consumer-directed
Samples Trade-directed
Coupons Price offs
Cash refund offers Allowances
Price offs Free goods
Premiums Sales contests
Prizes Spiffs
Patronage rewards Trade shows
Free trials Specialty advertising
Tie-in promotions
Publicity and Public Relation:
Public relations encompasses a vide verity of communication efforts to contribute to

generally favorable attitudes and opinions toward an organization and it’s products. Unlike
most advertising and personal selling, it does not include a specific sales message. The targets
may be customers, stock holders, an government agency or a special interest group. PR can
take many farms including newsletters, annual reports, lobbying and support of charitable
civic events.
Publicity is a special form of public relation that involves news stories about an organization
or its products. Like advertising it consists of an impersonal message that reaches a mass
audience through the media. But several futures distinguish publicity from advertising. It is
not paid for, the organization that is the subject of the publicity as little or no cover over it,
and if appears as news and therefore has greater credibility
Than advertising. Organization activity seek good publicity and frequently provide the
material for it in the form of news releases, press conference and photographs. When a picture
of company’s CEO appears on the cover of a business publication and is accompanied by a
flattering article in the magazine, it is often attributable to the efforts of the firms public
relations department. There also is of causes bad publicity which organization try to avoid or
deflect.
PUBLICITY IS A MORE POWERFUL TOOL THAN ADVERTISING AND SALES

PROMOTION
Advertising is any paid form of non-personal presentation and promotion of

ideas, goods, or services by an identified sponsor. Developing an advertising program
involves setting objectives, setting a budget, choosing the advertising message, determining
how the message will be generated, evaluating and selecting messages, executing the
message, developing media strategies by establishing the ad’s desired reach, frequency, and
impact and then choosing the media that will deliver the desired results and evaluating the
communication and sales effects of the advertising.
Sales promotion consists of a diverse collection of incentive tools, mostly short
term that are designed to stimulate trial or quicker or greater purchase of particular
goods or services by consumers or the trade. Sales promotion includes tools for consumer
promotion, trade promotion, and business- and sales force promotion. In using sales
promotion, as in using advertising, a company must set its objectives, select the tools, develop
the program, pretest the program, implement and control it, and evaluate
the results. Although the use of sales promotion is growing—and the technique tends to
increase sales and market share in the short run—it is not generally considered a long-term
brand-building technique.
A public is any group that has an actual or potential interest in or impact on a
company’s ability to achieve its objectives. Public relations (PR) involves a variety of
programs designed to promote or protect a company’s image or its individual products.
Marketing public relations (MPR) is often used to support corporate or product promotion and
image-building. MPR can affect public awareness at a fraction of the cost of advertising, and
is often much more credible. The main tools of PR are publications, events, news, speeches,
public-service activities, and identity media.
In considering when and how to use MPR, management must establish the marketing
objectives, choose the PR messages and vehicles, implement the plan carefully, and evaluate
the results. Results are usually evaluated in terms of number of exposures and cost savings;
awareness, comprehension, or attitude changes; and sales-and-profit contribution.
Customer Relationship Management

Customer relationship management is an ongoing interaction between buyer and the sender in
which the seller continuously improves its understanding of the buyers need and the buyer
become increasing loyal to the seller because its needs are being so well satisfied.
Customer relationship management encompasses the capabilities, methodologies and

technologies that support an enterprise in managing customer relationships.
The general purpose of Customer relationship management is to enable organizations to better

manage their customer through the introduction of reliable systems, proceeds and procedures
FORMING STRONG CUSTOMER BRAND
Companies that want to form strong customer brand need to attend to the following
basics:-
 Get cross-departmental participation in planning and managing the customer satisfaction

and relation process.
 Integrate the voice of the customer in all big decision.
 Create superior product, service, and experience for the target market.
 Organize and make accessible a database of information on individual customer needs,
preference, contract, purchase frequency and satisfaction
 Make it easy for customers to reach appropriate company. Personal and express their
needs, perceptions and complains
 Run award programs recognizing outstanding employees.
(i) Adding Financial Benefits.

(ii) Adding Social Benefits.
(iii) Adding Structural Ties.
(i) Adding Financial Benefits:- in the financial benefits that company can offer two
programs
(a) Frequency Programs

(b) Club Marketing Programs
(a) Frequency Programs:- Frequency programs are design to provide rewards to customers
who buy frequently and substantial amounts. Frequency market is an acknowledgement of the
fact that 20% of the companies customers might accounts for 80% of its business.
Typically, the first company to
introduce an frequency program gains the most benefit specially if competitors are slow to
respond. After competitors respond frequency programs can become a financial burden to all
the offering companies but some companies are more efficient or creating in managing.
(b) Club Marketing Programs:- Many companies have created club marketing
program(CMP) to bond customers closer to the company. Club membership can be open to
everyone, who purchases a product or service or it can be limited to an affinity group of those
willing to pay a small fees.
Although open club are good for building a database or snagging customers from
competitors, limited membership club are more powerful long term loyalty builders.
These clubs attracts and keep those customers who are
responsible for the largest portion of business.
(ii) Adding Social Benefits:- Company personal work on increasing social want with
customers by individualizing and personalizing the customer relationship.
In essence, thoughtful companies turn their customer
into clients. Hence they draw some distinction.
 Customers may be nameless to the institutions: clients can’t be nameless.

 Customers are served as part of the mass or as a part of larger segments: clients are served
on an individual basic.
 Customers are served by anyone who happens to be available: clients are served by the
professional assign to them.
(iii) Adding Structural Ties:-

The company may supply customers with special equipment or computer linkagers that helps
to customers manage orders, payroll and inventory
Hence there are some sequential for collecting structural ties with the customer. The marketer
aims should be to increase the consumers proclivity to repurchase the companies brand, his
suggestion as follows:
Create long-Term Contract:- A news paper subscription replace the need to buy a news
paper each day. A 20 year mortgage replaces the need to re-borrow the money each year.
 Charge a lower Price to Consumers who buy larger supplier:- Offer lower prices to
people who agreed to be supplied regularly with a certain brand of tooth paste, detergent
or beer.

 Turn the product into a long-term service:- Some of the examples clears the point,
Daimler-Chrysler is considering selling miles of reliable transportation instead of car,
with the consumer able to order different car at different time, such as a station wagon for
shopping and convertible for the weekend
AIM OF CUSTOMER RELATIONSHIP MANAGEMENT

C.R.M is to produce high customer equity customer equity is the total of the discounted
lifetime values of all of the firm’s customer clearly, the more loyal the customer, the higher
the customer equity.
RUST, ZEITHANAL, AND LEMON DISTINGUISH THREE DRIVERY OF

CUSTOMERS EUITY :-
1. Value Equity
2. Brand Equity
3. Relationship Equity
1. Value Equity :- Value equity the customer objective assessment of the utility of an
offering based on perception of its benefits relative to its cast, the cabdriver of value
equity are quality price and convenience.
Each industry has to define the specific factors underlying each sub driver in order to find
program to improve value equity.
For Example:- An airlines passenger might define quality as seat width. A hotel guest might
define quality as room size.
Value equity makes the biggest contribution to customer equity when product are
differentiated and when they are more complex and need to be evaluated.
2. Brand Equity :- Brand equity is the customer subjective and intangible assessment of the
brand, above and beyond its objectively perceived value the sub drivers of brand equity are
customer brand awareness, customer attitude towards the brand and customer perception of
brand ethic, brand equity is more important than the other driver of customer equity where
product are less differentiated and have more emotional impact.
3. Relationship Equity:- Relationship Equity is the customer tendency to stick with the
brand, above and beyond include loyalty program, special recognition and treatment program,
community building program.
Relationship equity is especially important where personal relationship count for a lot and
where SUSPECT suppliers out of habit or inertia.
DISQUALIFIED
PROSPECT PROSPECT
FIRST TIME
CUSTOMER
REPEAT
CUSTOMERS
STEPS OF ATTRACTING AND KEEPING
CLIENTS
INTERACTIVE
OR
EX-CUSTOMER
MEMBERS
RAGHAVENDRA. A
SJBIT, ADVOCATE
PATRNERS
The starting point is everyone who might conceivably buy the product or service. From these
co-determine the most likely prospect, which it hopes to convert into first time customers and
then into repeat customers, and clients people whom the company boy very specially and
knowledgeable. Then next changes is to turn clients into member by starting a membership
programs that offers benefits to customers who join, and then into advocates, customers who
enthusiastically recommend the company and its product and service to others. The ultimate
challenge to turn advocate into partners.
Some customers inevitably became inactive or drop out. The challenge is to
reactivated dissatisfied customers through win back strategy. It is often earlier to re-attract ex-
customers than to find new ones.
HOW MUCH SHOULD A COMPANY INVERST IN BUILDING LOYALTY SO

THAT THE COST DO NOT EXCEED THE GAINS !
The level of investment vary with the level of customer as prospect to customers and
last as partner hence they are:-
 BASIC MARKETING
 REACTIVE MARKETING
 ACCOUNTABLE MARKETING
 PROACTIVE MARKETING
 PARTNERSHIP MARKETING
Basic Marketing:- The sales person simply seller the product.
Reactive Marketing:- The sales person tells the product and encourage the customer to call if
the question, comments and complaints.
Accountable Marketing:- The sales person called the customer to check whether the product
is making expectation. The sales person also as/is the customer for any product or service
improvement, suggestions, and any specific disappointments.
Proactive marketing:- The co-works continuous with its large customers to help improve
there performance.
Partnership marketing:- The co-works continuous with its large customers to help improve
there performance.
Most Co. practice only basic marketing when there markets contain many customers and
there unit profit margin are small. In the market with few customers and high profit margins,
most sellers will move towards partnership marketing.
RELATIONSHIP MARKETING
What is relationship marketing ?

Is the process of creating, maintaining and enhancing strong, value laden relationship with
customers and stake holders.
Relationship marketing is an integrated effort to identified, maintain and build a network
with individuals customers and to continuously strengthen the network for the benefit of both
the sides, through interactive, individualized and value added contracts over a long period of
time.
THE RELATIONSHIP MARKETING FOCUSES ON
(i) integrating customers service and quality with a market orientation.

(ii) Focus on getting and keeping customers
(iii) Focus on total relationship between first and its customers, suppliers and key
markets on an on going basic.
 A relationship marketing is a major challenge for high performance companies is that of

building and maintaining viable business in a rapidly chaining market place.
 They must recognize the core elements of the business and how to maintain a viable fit
between there stake holders, processes.
 To create customer satisfaction, companies, and must manage there value chain as well as
the whole value delivery system in a customer centered way. The company’s goal is not
only to get customer, but even more importantly to retain customers.
 The relationship marketing is concerned with working, developing, and enhancing
relationship with the relationship market within the organization and building substantial
external relationship with the supplier referred source, influence markets and recruitments
market.
CUSTOMER RELATIONSHIP MARKETING

Customer relationship marketing provides the key to retaining customers and evolve
providing financial and social benefits as well as structural ties to the customers.
Companies must decide how much relationship marketing to invest in different market
segments and individual customers, from such levels as basic, reactive, accountable,
proactive, and full partnership. Much depends on estimating customer life time value against
the cost stream required to attract and retain these customers.
MODULE 8 (6 Hours)
Marketing Planning: Meaning, Concepts of Marketing plan, Steps involved in planning.

Marketing Organisation: Evolution of Modern Marketing department,
Factors influencing the size of the marketing organisation, various types of

marketing structures/organisation
Marketing Audit: Meaning, Features of marketing audit,
various components of marketing audit.
Concept Of Marketing Planning.
The exact length and layout will vary from company to company; a marketing
plan usually contains the sections. Smaller business may create shorter less formal
marketing plans, where as corporate frequently require highly structure marketing plans.
To guide implantation effectively, every part of the plan must be described in
considerable detail. Sometime a company will post its marketing plan on an internal
website, which allows managers and employees in different location to consult specific
sections and collaborate on additions.
1. Executive summary.
This section summarizes the main goals recommendations and points as an
overview
for senior manager who must read and approve the marketing plan.
2. current marketing situation.
marketing managers discuss the overall market identity the market
segments they will target and provide information about the company
current situation.
 Market description.
By description the targeted segments in detail marketers provide contest
for the marketing strategies and detailed action programs discussed later in
the plan.
 Product review.
The product review should summarize the main features for all of the
company products. the information may be organized by product line by
type of customer by market by order of product introduction.
 Competitive review.
Markets list the most important channels provide an overview of each
channel arrangement and mention any new developments or trends.
3. Strengths weaknesses opportunities and threat analysis.
Strengths: strengths are internal capabilities that can help the
company reach its objectives.
Weakness. Weaknesses are internal elements that may interfere with the company’s
ability achieve its objectives.
Opportunities. Opportunities are external elements that the elements that he company
may be able to exploit to its advantages.
Threats. Threats are current or emerging external element that may possibly challenge
the company’s performance
4. Objectives and Issues :-

The company’s objectives should be defined in specific terms so management an
measure progress and if needed, take corrective action to stay on track. This section
describes any major issues that might affect the company’s marketing strategies and
implementation.
5. Marketing strategy :-
It is based on a positioning of product differentiation.
6. Action programs.
Action programs should be coordinated with the resources and activities of other
department including production finance, purchasing etc.
7. Budgets :-
Budget serve two main purposes :- To project profitiability and to help
managers plan for expenditures, scheduling and operations related to each
programe.
7. Controls:-
Control help management measures results alter the plan is implemented and
identify any problem or performance variations that need corrective action.
WHAT IS SCOPE OF STRATEGIC MARKETING PLANNING?
To transform marketing strategy into marketing programs, marketing mangers must

make basic decision on marketing expenditure, marketing mix and marketing alloction.
1. Positioning :-
A positioning built on meaningful differences, supported by
appropriate strategy and implementation, can help the company build competitive
advantage.
2. Product strategy :-
Summarize the broad logic that will guide decisions made about the
marketing mix in the period covered by the plan.
3. Pricing strategy :- Attracting desirable channel partners and taking market share.
4. Distribution strategy :- Channel strategy is to use selective distribution through
well-known stores and online retailers.
5. Marketing communication strategy :-

By integrating all messages in all media, we will enforce the brand name and
the main points of product differentiation, especially our exclusive voice- recognition
features.
6. Marketing Research :- To support development, implementation and evaluation

of strategies and action programs,
7. Marketing organization :-
The marketing department may be organized by function, as in this
sample, by geography, by product by customer.
What is a marketing audit?
A marketing audit helps a business identify its most urgent marketing communications
challenge. It can be a time consuming operation but the information gained can be
invaluable to your business.
A strong marketing process is central to the success of your enterprise. A marketing
audit will help you to identify the greatest untapped opportunities available to you.
Utilizing the practical experience that One Vision has developed through working with
clients across a whole range of industries, One Vision is developing a new toolkit to
enable you to self audit your marketing process.
The Marketing Audit will be a workbook system that will enable you to audit your
marketing without the need for additional training or additional consultancy support.
If you would like to be alerted when the Marketing Audit is published, please register
your details below. This does not place you under any obligation to purchase, and we will
simply email you to advise when the Marketing Audit is available.
The Marketing Audit is just one in a range of practical tool kits designed to enable you to
leverage the maximum value from your business.
It begins with a short review of the business' marketing, creative, and media platforms.
Marketing solutions companies such as One Vision Ltd can help with recommendations,
which can then be undertaken to improve current strategies or introduce more effective
activities.
A typical marketing audit includes the following steps:
STEP ONE: Identify your areas of need.
The following items are important needs for my business
Research
 Determine which vertical industries or narrow target markets to pursue.

 Learn more about the customer's needs.
 Learn more about the customer's perceptions of my product/service: how is my
product/service positioned in the customer's mind?
 Learn more about what motivates the customer to purchase my product/service
and/or my competitor's product/service.
 Research internal attitudes towards products and service vs. the market's
perception.
 Conduct internal and/or external research using the Internet.
Marketing
 Create a marketing plan.

 Create a media schedule.
 How to promote our product/service using free or paid seminars.
 Determine how to market our product/service or business at trade shows. Train
staff with an in-house seminar on:........................
 Learn strategies for marketing our product/service during a recession.
Advertising
 Develop a new creative platform for our corporate image or advertising campaign.
 Improve overall effectiveness and persuasiveness of print ads.
 Determine how to effectively promote product/service on a limited advertising
budget.
 Generate more inquiries from our print advertising.
Design
 Create a new corporate image.

 Produce effective sales brochures, catalogues and other marketing literature.
 Design, write and produce a company newsletter.
 Create an effective company brochure or capability report.

 Produce and use a video or audio tape to promote our product/service.
 Write and publish a book, booklet, or special tape to promote our product/service.
Public Relations
 Publish more press releases.

 Get articles by company personnel written and published in industry trade
journals.
 Determine how to get good case histories and user stories written and published.
Direct/Database Marketing
 Plan and implement a direct mail campaign or program.

 Increase direct mail response rates.
 Generate more qualified leads.
 Follow-up
 Determine how to make all our marketing communications more responsive and
accountable.
 Develop strategies for responding to and following up on inquiries.
 Create effective inquiry fulfillment packages.
New Media
 Create a multi-media presentation.

 Marketing through the Internet.
STEP TWO: Provide a rough estimate of your budget for marketing, creative and
media.
Have the following items (either previous or current) ready for review:
 Marketing and advertising budget Advertising ratios (advertising expenses as a

percentage of revenue)
 Strategic plans
 Research reports
 Trade information
 Trade associations
 Staff experience
 Corporate philosophy and mission statement
 Advertising and promotions used in the past
 Use of colors
Category sale:
 By total category for the last three to five years.

 By month January to December for each year.
 By weekly total for each year.
Advertising and promotional expenditures:
 By total category for the last three to five years.

 By month January to December for each year.
 By yearly total to date.
Average sales:
 By month, for as many months as possible.
Promotions
 Samples of all past promotions and advertising (last two years minimum).
 Amount, quantities and timing of co-op programs.
Competition
 List your top competitors.

 List your second and third-ranked competitors.
 Samples of past competitors' promotions.
Other
 Other economic, environmental or trend issues that may affect your business.
 Which promotional mediums have given you the best returns?
 Reasonable and probable growth for this year and the next four years (i.e. as a
percentage increase/decrease from the previous year).
 The issues or tasks you do now that you wish to outsource to an agency like One
Vision Ltd.
 Future plans and goals for expansion, revenue growth, and timing for these goals.
ONE VISION TIP:

Help Yourself Become a Better Marketeer
Marketing intelligence alerts you to competitive developments, helps you identify key
issues faster, and reveals internal weaknesses.
You can gain valuable insights into marketing by:
 Reading unsolicited letters from customers to gauge their real likes and dislikes.
 Reading newspapers, trade journals, financial and economic reports (of yours and
related industries).
 Asking receptionists, sales reps and other staff what they know.
 Putting together a marketing intelligence file, filling it with articles, and using it
for future reference in business plans.
 Spending a few hours tracking down free sources of information from
governments, associations, universities, libraries and databases and the Internet.
 Visiting competitors' outlets. Read their promotional and corporate material to
find out what key messages they are giving customers and why.
 Investigating your own business practices by interviewing your current staff,
reviewing your past financial statements and performing a marketing audit.
TO SUM UP: A marketing audit reviews your marketing, creative and media efforts,
puts them in perspective with your current target market and shows opportunities to
realign your strategies so you can get more effective results from your marketing dollars.
What are the Elements of a Systematic Marketing Audit?
Part One: The Marketing Environment Review
A. Markets
 What are your organization’s major markets and public?

 What are the major market segments in each market?
 What are the present and expected future size and characteristics of each market
or market segment?

B. Customers
 How do customers and the public rate your company in relation to its
competition?
 How do different classes of customers make their purchase decisions? Influences?
 What are the evolving needs and satisfaction levels of customers?

C. Competitors
 Who are your organization’s major competitors?

 Who are the second and third-ranked competitors?
 What trends can be foreseen in competition?

D. Macro-environment
GENERAL: What are the main developments with respect to demographics, economy,
technology, government and culture that will affect your organization’s situation?
SPECIFIC: Economic-Demographic
 What does your company expect in the way of inflation, material shortages,
unemployment and credit availability in the short and long run?
 What effect will forecasted trends in the size, age distribution, and regional
distribution of population have on your business?
Technology
 What major changes are occurring in product/process technology that will affect
you? How?
 What are the major generic substitutes that might replace this product?
Political-Legal
 What laws are being proposed that may affect marketing strategy? 
 What National, provincial and local agency actions should be watched? 
Social-Cultural
 What attitude does the public have about businesses like yours and products such
as the ones your company makes?
 What changes are occurring in consumer lifestyles and values that affect your
company's target markets and marketing methods?
Part Two: The Marketing System Review
Objectives
 What are your organization’s overall long-term and short-term objectives? What
are your marketing objectives?
 Are these objectives stated in a clear order of priority and in a form that allows
planning and measurement of achievement?
 Are the marketing objectives reasonable for your organization, given its
competitive position, resources and opportunities?
Program/Strategy
 What is your organization’s core strategy for achieving its objectives? 

 Is it likely to succeed?
 Is your organization allocating enough (or too many) resources to accomplish the
marketing tasks?
 Are your marketing resources allocated to various markets, territories and

products of your organization in the best way possible?
 Are your marketing resources allocated to the major elements of the marketing
mix (i.e. product quality, personal selling/contact, promotion and distribution) in
the best way possible?
Implementation
 Does your organization develop an annual marketing plan? Is it effective? 

 Does your organization implement control procedures (monthly, quarterly, and
yearly) to ensure your annual objectives are being achieved? 
 Does your organisation carry out periodic studies to determine the contribution
and effectiveness of various marketing activities?
 Does your organisation have an adequate marketing information system to service
the needs of managers for planning and controlling operations in various markets?
Organisation
 Does your organisation have a high-level marketing officer to analyse, plan and
implement the marketing work of your organisation?
 Are others directly involved in marketing activity?
 Does your staff need more training, incentives, supervision or evaluation?
 Are the marketing responsibilities structured to serve the needs of different
marketing activities, products, markets and territories in the best way possible?
 Does staff understand and practice the marketing concept?
Part Three: Detailed Marketing Activity Review
Products
 What are your main products?

 What are the generic products?
 Should any products be phased out?
 Should any products be added to the line?
 What is the general state of health of each product and the product mix as a
whole?
 Does the product line meet the demands of the market?
Prices
 To what extent are prices set on cost, demand, and/or competitive criteria?
 What would be the likely response of demand to higher or lower prices? 
 Does your organisation use temporary price promotions and, if so, how effective
are they?
Distribution
 Are there alternative methods of distributing your product that would result in
more service or less cost?
 Does your organisation give adequate service, along with the product, to
customers?
 What are the main trade channels bringing products to customers?
 What are the efficiency levels and growth potentials of the different trade
channels?
Personal Selling
 Is your sales force large enough?

Is it organised along the best lines of specialisation (territory, market, product)?
 Does the sales force show high morale, ability, and effectiveness?
 Are they sufficiently trained?
 Do they have enough incentives?
 Are the procedures adequate for setting quotas and evaluating performance?
Advertising
 Does your organisation clearly state its advertising objectives?

 Does your advertising get its messages across?
 Are the themes, graphics and copy effective?
 Are the chosen media adequate?
Publicity
 Does your organisation have a carefully formulated program of publicity? 
Sales Promotion
 Does your organisation use sales promotions and, if so, are they well conceived?
Marketing Audit.
How to conduct a marketing audit?
The marketing audit is a fundamental part of the marketing planning process. It is

conducted not only at the beginning of the process, but also at a series of points during
the implementation of the plan. The marketing audit considers both internal and external
influences on marketing planning, as well as a review of the plan itself.
There are a number of tools and audits that can be used, for example SWOT analysis for
the internal environment, as well as the external environment. Other examples include
PEST and Five Forces Analyses, which focus solely on the external environment.
In many ways the marketing audit clarifies opportunities and threats, and allows the
marketing manager to make alterations to the plan if necessary.
This lesson considers the basics of the marketing audit, and introduces a marketing audit
checklist. The checklist is designed to answer the question, what is the current marketing
situation? Lets consider the marketing audit under three key headings:
 The Internal Marketing Environment.

 The External Marketing Environment.
 A Review of Our Current Marketing Plan.
1.The Internal Marketing Environment.
What resources do we have at hand? (i.e. The FIVE 'M's):
 MEN (Labor/Labour).
 MONEY (Finances).
 MACHINERY (Equipment).
 MINUTES (Time).
 MATERIALS (Factors of Production).

 How is our marketing team organised?
 How efficient is our marketing team?
 How effective is our marketing team?
 How does our marketing team interface with other organisations and internal
functions?
 How effective are we at Customer Relationship Management (CRM)?
 What is the state of our marketing planning process?
 Is our marketing planning information current and accurate?
 What is the current state of New Product Development? (Product)
 How profitable is our product portfolio? (Product)
 Are we pricing in the right way? (Price)
 How effective and efficient is distribution? (Place)
 Are we getting our marketing communications right? (Promotion)
 Do we have the right people facing our customers? (People)
 How effective are our customer facing processes? (Process)
 What is the state of our business's physical evidence? (Physical Evidence)
2. The External Marketing Environment.
As a market orientated organisation, we must start by asking - What is the nature of our
'customer?' Such as:
 Their needs and how we satisfy them.

 Their buyer decision process and consumer behaviour.
 Their perception of our brand, and loyalty to it.
 The nature of segmentation, targeting and positioning in our markets.
 What customers 'value' and how we provide that 'value?.'
What is the nature of competition in our target markets?
 Our competitors' level of profitability.

 Their number/concentration.
 The relative strengths and weaknesses of competition.
 The marketing plans and strategies of our competition.
What is the cultural nature of the environment(s)?
 Beliefs and religions.

 The standards and average levels of education.
 The evolving lifestyles of our target consumers.
 The nature of consumerism in our target markets.
What is the demography of our consumers? Such as average age, levels of population,
gender make up, and so on. How does technology play a part?
 The level of adoption of mobile and Internet technologies.

 The way in which goods are manufactured.
 Information systems.
 Marketing communications uses of technology and media.
What is the economic condition of our markets?
 Levels of average disposable income.

 Taxation policy in the target market.
 Economic indicators such as inflation levels, interest rates, exchange rates and
unemployment.
Is the political and legal landscape changing in any way?
 Laws, for example, copyright and patents.

 Levels of regulation such as quotas or tariffs.
 Labour/labor laws such as minimum wage legislation.
3. A Review of Our Current Marketing Plan
 What are our current objectives for marketing?

 What are our current marketing strategies?
 How do we apply the marketing mix? (Including factors covered above in (a))
 Is the marketing process being controlled effectively? 
 Are we achieving our marketing budget?
 Are we realising our SMART objectives?
 Are our marketing team implementing the marketing plan effectively?
 Levels of staffing.
 Staff training and development.
 Experience and learning.
Leaders are proactive. They make change happen instead of reacting to change. The
future requires corporate leadership with the skills to integrate many unexpected and
seemingly diverse events into its planning. Every organization must plan for change in
order to reach its ultimate goal. Effective planning helps an organization adapt to change
by identifying opportunities and avoiding problems. It sets the direction for the other
functions of management and for teamwork. Planning improves decision-making. All
levels of management engage in planning.
What is Strategic Planning?
Strategic planning produces fundamental decisions and actions that shape and guide what
an organization is, what it does, and why it does it. It requires broad-scale information
gathering, an exploration of alternatives, and an emphasis on the future implications of
present decisions. Top level managers engage chiefly in strategic planning or long range
planning. They answer such questions as "What is the purpose of this organization?"
"What does this organization have to do in the future to remain competitive?" Top level
managers clarify the mission of the organization and set its goals. The output needed by
top management for long range planning is summary reports about finances, operations,
and the external environment.
Strategic planning is the process of developing and analyzing the organization's

mission, overall goals, general strategies, and allocating resources. A strategy is a course
of action created to achieve a long-term goal. The time length for strategies is arbitrary,
but is probably two, three, or perhaps as many as five years. It is generally determined by
how far in the future the organization is committing its resources. Goals focus on desired
changes. They are the ends that the organization strives to attain. Traditionally strategic
planning has been done annually. However, many companies are doing away with annual
business plans altogether and moving to a system of continuous planning, to permit
quicker response to changing conditions. Thus, the strategic plan involves adapting the
organization to take advantage of opportunities in its constantly changing environment.
Chunka Mui and Larry Downes in Unleashing the Killer App: Digital Strategies for
Market Dominance (Harvard Business School Press, 1998) suggest that strategic
planning will be replaced by "digital strategy." They make the argument that business
change originates with technology -- particularly with new computer-based products and
services that transform industries, the way American Airlines' SABRE system
transformed travel. Top management must formulate digital strategies (software and
digitally delivered services) that not only support business but also actually dictate how
business is done.
The planning process is rational and amenable to the scientific approach to problem
solving. It consists of a logical and orderly series of steps. Strategic planning sets the
stage for the rest of the organization's planning. The tasks of the strategic planning
process include:
WHAT ARE THE STEPS FOR STRATEGIC PLANNING?
*Define the mission.

*Conduct a situation or SWOT analysis by assessing strengths and weaknesses and
identifying opportunities and threats.
*Set goals and objectives.
*Develop related strategies (tactical and operational).
*Monitor the plan.
Define the mission. A mission is the purpose of the organization. It is why the
organization exists. Thus, planning begins with clearly defining the mission of the
organization. The mission statement is broad, yet clear and concise, summarizing what
the organization does. It directs the organization, as well as all of its major functions and
operations, to its best opportunities. Then, it leads to supporting tactical and operational
plans, which, in turn leads to supporting objectives. A mission statement should be short -
no more than a single sentence. It should be easily understood and every employee
should be able to recite it from memory. An explicit mission guides employees to work
independently and yet collectively toward the realization of the organization's potential.
The mission statement may be accompanied by an overarching statement of philosophy
or strategic purpose intended to convey a vision for the future and an awareness of
challenges from a top-level perspective
WHAT IS SWOT ANALYSIS?
Conduct a situation or SWOT analysis by assessing strengths and weaknesses and

identifying opportunities and threats. A situation or SWOT (Strengths, Weaknesses,
Opportunities, Threats) analysis is critical to the creation of any strategic plan. The
SWOT analysis begins with a scan of the external environment. Organizations must
examine their situation in order to seek opportunities and monitor threats. Sources of
information include customers (internal and external), suppliers, governments (local,
state, federal, international), professional or trade associations (conventions and
exhibitions), journals and reports (scientific, professional, and trade).
SWOT is the assumptions and facts on which a plan will be based. Analyzing strengths
and weaknesses comprises the internal assessment of the organization. Assess the
strengths of the organization. What makes the organization distinctive? (How efficient is
our manufacturing? How skilled is our workforce? What is our market share? What
financing is available? Do we have a superior reputation?) Assess the weaknesses of the
organization. What are the vulnerable areas of the organization that could be exploited?
(Are our facilities outdated? Is research and development adequate? Are our technologies
obsolete?) What does the competition do well?
Analyzing opportunities and threats comprises the external assessment of the

environment. Identify opportunities. In which areas is the competition not meeting
customer needs? (What are the possible new markets? What is the strength of the
economy? Are our rivals weak? What are the emerging technologies? Is there a
possibility of growth of existing market?) Identify threats. In which areas does the
competition meet customer needs more effectively? (Are there new competitors? Is there
a shortage of resources? Are market tastes changing? What are the new regulations?
What substitute products exist?) The best strategy is one that fits the organization's
strengths to opportunities in the environment.
The SWOT analysis is used as a baseline for future improvement, as well as gap analysis.
Comparing the organization to external benchmarks (the best practices) is used to assess
current capabilities. Benchmarking systematically compares performance measures such

as efficiency, effectiveness, or outcomes of an organization against similar measures
from other internal or external organizations. This analysis helps uncover best practices
that can be adopted for improvement. (See Camp, R. C. Benchmarking: The search for
industry best practices that lead to superior performance. Norcross, GA: Industrial
Engineering and Management Press, 1993.) Benchmarking with other organizations can
help identify a gap. Gap analysis identifies the progress required to move the organization
from its current capabilities to its desired future state. In this way, the organization can
adapt to the best practices to improve organizational performance.
Set goals and objectives. Strategic goals and objectives are developed to bridge the gap
between current capability and the mission. They are aligned with the mission and form
the basis for the action plans. Objectives are sometimes referred to as performance goals.
Generally, organizations have long-term objectives for such factors as return on
investment, earnings per share, or size. Furthermore, they set minimum acceptable
standards or common-sense minimums. In addition, certain limitations, either explicit or
implicit, such as "must provide jobs for existing employees" may exist. Objectives
elaborate on the mission statement and constitute a specific set of policy, programmatic,
or management objectives for the programs and operations covered in the strategic plan.
They are expressed in a manner that allows a future assessment of whether an objective
has been achieved.
Develop related strategies (tactical and operational). Tactical plans are based on the
organization's strategic plan. In turn, operational plans are based on the organization's
tactical plans. These are specific plans that are needed for each task or supportive activity
comprising the whole. Strategic, tactical, and operational planning must be accompanied
by controls. Monitoring progress or providing for follow-up is intended to assure that
plans are carried out properly and on time. Adjustments may need to be made to
accommodate changes in the external and/or internal environment of the organization. A
competitive advantage can be gained by adapting to the challenges.
What is Tactical Plans?
Top level managers set very general, long-term goals that require more than one year to
achieve. Examples of long-term goals include long- term growth, improved customer
service, and increased profitability. Middle managers interpret these goals and develop
tactical plans for their departments that can be accomplished within one year or less. In
order to develop tactical plans, middle management needs detail reports (financial,
operational, market, external environment). Tactical plans have shorter time frames and
narrower scopes than strategic plans. Tactical planning provides the specific ideas for
implementing the strategic plan. It is the process of making detailed decisions about what
to do, who will do it, and how to do it.
Introduction
 Tactical planning deals primarily with the implementation phase of the planning
process
 Tactical planning turns strategy into reality
 Tactical planning usually has a 1-2 year time horizon
 Tactical planning is usually tightly integrated with the annual budget process
Elements of tactical planning
 Project plans and RFCs

 Project budgets
 Project reviews
 Monthly reports
 Annual reports
Project plans
 Project planning requires consideration of many issues

 o Existing environment
o User needs
o Available expertise o
Alternative solutions
o Budget and time constraints
o Support issues
 Project teams are generally assembled to address these issues
Project teams and RFC's
 RFC: Request for Comments

 The RFC serves two primary functions
o It provides a framework to direct activities of the project team

o It acts as a vehicle for gathering input and providing information to
stakeholders outside the project team
 Development of an RFC will likely require research and consultation with
vendors (including possibly a formal request for information)

 The RFC may result in consensus decisions but it does not guarantee that outcome
if the alternative implementation options are many and the preferable solution not
so obvious
 Serves as a resource for an RFP
Structure of an RFC
 Executive summary
 Statement of overall goal

 Summary of existing environment
 Outline of technical issues, possibly including a technology primer
 Evaluation of tactical alternatives
 Evaluation of existing vendor offerings
 If possible (i.e., a reasonable consensus exists within the project team) a proposed
course of action, including timeframe and budget
Implementation Plan
 The RFC may serve as a framework for an implementation plan

 More detailed implementation planning is often required
 Use of project management software is desireable
 Use of regularized reporting via electronic and face-to-face meetings is usually
required
 For information updates, electronic updates are most efficient; when issues need
to be resolved, a meeting is usually more effective
Annual Reports
 An annual report plays an important role in tactical planning

 Provides a summary of the mission and goals of the organization
 Reviews accomplishments based on project goals outlined in previous year's
report
 Proposes changes in project direction or organization
 Outlines project goals for the coming year
 Should be keyed into the annual capital and operating budget plans
Monthly reports
 Help project managers to organize tasks and monitor progress

 Should be part of the normal work process and not busy work
 Each project should be given a project number
 Monthly summary should include overview of work accomplished in previous
month
 Monthly summary should note any slippage in implementation target date
 Monthly summary should note any outstanding issues that require management
attention
What are Operational Plans?
Supervisors implement operational plans that are short- term and deal with the day-to-
day work of their team. Short-term goals are aligned with the long-term goals and can be
achieved within one year. Supervisors set standards, form schedules, secure resources,
and report progress. They need very detailed reports about operations, personnel,
materials, and equipment. The supervisor interprets higher management plans as they
apply to his or her unit. Thus, operational plans support tactical plans. They are the
supervisor's tools for executing daily, weekly, and monthly activities. An example is a
budget, which is a plan that shows how money will be spent over a certain period of
time. Other examples of planning by supervisors include scheduling the work of
employees and identifying needs for staff and resources to meet future changes.
Resources include employees, information, capital, facilities, machinery, equipment,
supplies, and finances.
Operational plans include policies, procedures, methods, and rules. The terms themselves
imply different degrees of scope. A policy is a general statement designed to guide
employees' actions in recurring situations. It establishes broad limits, provides direction,
but permits some initiative and discretion on the part of the supervisor. Thus, policies are
guidelines. A procedure is a sequence of steps or operations describing how to carry out
an activity and usually involves a group. It is more specific than a policy and establishes
a customary way of handling a recurring activity. Thus, less discretion on the part of the
supervisor is permissible in its application. An example of a procedure is the sequence of
steps in routing of parts. A method sets up the manner and sequence of accomplishing a
recurring, individual task. Almost no discretion is allowed. An example of a method is
the steps in cashing a check. A rule is an established guide for conduct. Rules include
definite things to do and not to do. There are no exceptions to the rules. An example of a
rule is "No Smoking."
Monitor the plan. A systematic method of monitoring the environment must be adopted
to continuously improve the strategic planning process. To develop an environmental
monitoring procedure, short-term standards for key variables that will tend to validate the
long- range estimates must be established. Although favorable long-range values have
been estimated, short- term guidelines are needed to indicate if the plan is unfolding as
hoped. Next, criteria must be set up to decide when the strategy must be changed.
Feedback is encouraged and incorporated to determine if goals and objectives are
feasible. This review is used for the next planning cycle and review.
Introduction
 Deals with the day-to-day and week-to-week work routine

 Focus is on routine operational tasks and long-term projects
 Primary goal is to communicate
 In many organizations, people are asked to do both
 Weekly meetings are often used to coordinate efforts and review progress
 Weekly or monthly summaries are often used to inform others
Structure
 The structure of operational planning is closely related to organizational structure

 In a traditional hierarchical organization (i.e., UNIX team, network engineering

team), team leaders usually assemble with a senior manager on a regular basis to
share information
 Additional periodic meetings are often required to coordinate efforts with other
units (i.e., the systems group should meet with the user services group on a
regular basis)
 In a process-oriented organization, teams are more ad-hoc in nature, so a
mechanism must be put in place to insure communication
Electronic versus face-to-face "meetings"
 Both means of communication should be used

 Sometimes, there is no substitute for face-to-face interaction
 The worst face-to-face meetings are those where everyone simply makes
announcements and disseminates information (that can be accomplished more
effectively electronically)
 Periodic summaries should be distributed outside the team
Discuss Annual marketing Plan.
Annual marketing plan is a short term marketing plan, covering one year. A separate
annual plan is prepared for each product plan is prepared for each product line, major
product, brand or market.
Each marketing plan incorporates strategies and tactics relating to the market mix for a
particular plan deals with tactical details which are ignores in strategic marketing plan. It
gives complete guidance to all marketing executives in each step of marketing operations.
Thus it itself acts as a ready reckoner to the marketing personnel.
Overall corporate mission, corporate objectives and corporate strategies are determined
by the top corporate management, under comprehensive business planning. Each strategic
business unit management will be responsible for determining the unit objectives,
strategies tuned with the corporate mission and strategies. Under each SBU we will have
functional plans for each functional area. Marketing department will have its own
marketing objectives, strategies and marketing programmes, of course, turned with
general and SBU objectives and strategies.
Marketing program will cover strategies relating to relating to all components of
marketing mix (4 ‘P’s).
What Are The Major steps in marketing planning?
1. Study of internal environment through marketing information and research

facilities.
2. Study of internal environment through sales audit and cost analysis.

3. Determination of overall mission and goals.
4. Assessing marketing opportunities.
5. Determination of company objectives.
6. Laying sown company strategies.
7. Fixing specific marketing strategies.
8. Developing marketing strategies in each area of marketing mix.
9. Integrating marketing mix and providing time bound.
10 mplementing marketing plans and marketing control.
Checklist of Annual Marketing Plan:-

1. Situation analysis on market demand, market environment and market
performance, sales forecast.
2. Determination of marketing goals on assessment of marketing opportunities.
3. Review of marketing goals on assessment of marketing opportunities.
4. Developing integrated marketing mix for each marketing segment.
5. Plans of action with schedules, assignment of responsibility and grant of
authority. Thus, marketing.
6. Marketing tactics, e.g., discounts allowances, prices, gifts and any other support
during the year to manoeuvre the market.
7. Continuous monitoring of performance, comparison of actual results with the set
standards, and removal of deficiencies. The marketing objectives are the standards
for comparison. Aggressive marketing leadership plus effective marketing control
assure marketing success even against intense competition.

Marketing Management

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MARKETING MANAGEMENT

THE EXCHANGE CONCEPT

THE PRODUCTION CONCEPT

THE PRODUCT CONCEPT

THE SELLING CONCEPT

THE MARKETING CONCEPT

The marketing concept rests on four pillars:

THE CUSTOMER CONCEPT

capturing a larger share of each customer’s expenditures by building high customer

THE SOCIETAL MARKETING CONCEPT

”... make marketing decisions by considering consumer’s wants, the company’s

Societal marketing blends social, company and customers wants.”

Unfortunately, satisfying customers’ short-term needs may not be compatible with

This orientation arose as some questioned whether the Marketing Concept is an

Societal marketing, argues Kotler, P. (1972, p. 837) should generate consumer

Extending the Principles of Marketing

Suburbs but too large to be considered rural.

PATAGONIA world-class climber yvon chouinard founded Patagonia in 1966 by selling

Patagonia is practicing a form of the societal marketing concept called cause-related

Companies see cause-related marketing as an opportunity to enhance their corporate

Concepts for the Nineties

BENEFITS OF MARKETING CONCEPT

CONCEPT BENEFITS IN THE ORGN:

Concept enables the organization to deep abreast of changes.

It enables the firm to move more quickly to capitalize on market opportunities

CONCEPT BENEFITS TO THE SOCIETY

Selling is sales oriented. Marketing is customer oriented.

Selling starts with seller. Marketing starts with buyer &

Selling converts Marketing converts consumer

Selling has a short term Marketing has a long term goals.

In selling activity produ- In marketing consumer’s needs,

Selling views business Marketing views business as

In selling cost Consumer determines price;

Selling views customer as Customer is the very purpose

Selling focuses on sales Marketing focuses on identify-

ROLES OF CHANNELS OF DISTRIBUTION

CONFLICT AND CONTROL IN CHANNELS

Horizontal conflict occurs among firms on the same level of distribution.

To avoid being bypassed in channels, wholesalers need to improve their

Producer versus Retailer

Both producers and retailers have methods to gain more control.

WHO CONTROLS CHANNELS?

IMPLEMENTATION OF MARKETING CONCEPT

INTEGRATED MANAGEMENT ACTION

In organization that do not practice integrated management the different functions/depts.

In organizations that practice integrated management marketing, the management insists

If a firm has succeeded in generating customer satisfaction, if basically implies that a

BENEFITS OF MARKETING CONCEPT

 CONCEPT BENEFITS IN THE ORGN:

Concept enables the organization to keep abreast of changes.

It enables the firm to move more quickly to capitalize on market opportunities

 CONCEPT BENEFITS OF CUSTOMER.

He can buy on cash or on credit or on installments. He can even return it material if he is

 CONCEPT BENEFITS TO THE SOCIETY

If acts as a ‘change agent’ and a value adder is society.

I FUNCTION 1.Buying Function

III FUNCTION 1.Financing

(I) FUNCTIONS OF EXCHANGE

II FUNCTION OF PHYSICAL DISTRIBUTION:

III FUNCTIONS OF FACILITIES:

a. Short term finance

This financier’s are provided by

But some risks cannot be insured.

Grading is also a part of standardization. It is a process of sorting our goods